The Crisis Enters Year Five

The Crisis Enters Year Five
by Richard D. Wolff

The current global capitalist crisis began with the severe contraction in the housing markets in mid-2007. Welcome to Year Five. A usual inventory of where things stand begins with the good news: the major banks, the stock market, and corporate profits have largely or completely "recovered" from the lows they reached early in 2009. The US dollar has fallen sharply against many currencies of countries with which the US trades, enabling US exports to rebound from their crisis lows.

However, the bad news is what prevails notwithstanding the political and media hypes about "recovery." The most widely cited unemployment rate remains at 9% for workers without jobs but looking. If we use the more indicative U-6 unemployment statistic of the US Labor Department's Bureau of Labor Statistics instead, then the rate is 15%. The latter rate includes those who want full-time but can only find part-time work and those who want work but have given up looking. One in six members of the US labor force brings home little or no money, burdening family and friends, using up savings, cutting back on spending, etc. At the same time, the housing market remains deeply depressed as 1.5 to 2 million home foreclosures are scheduled for 2011, separating more millions from their homes. After a short upturn, housing prices nationally have resumed their fall: one of those feared "double dips" is thus already under way in the economically vital housing market.

The combination of high unemployment and high home foreclosures guarantees a deeply depressed economy. The mass of US citizens cannot work more hours -- the US already is number 1 in the world in the average number of hours of paid labor done per year per worker. The mass of US citizens cannot borrow much more because of debt levels already teetering on the edge of unsustainability for most consumers. Real wages are going nowhere because of high unemployment enabling employers everywhere to refuse significant wage increases. Job-related benefits (pensions, medical insurance, holidays, etc.) are being pared back. There is thus no discernible basis for a substantial recovery for the mass of Americans. The US economy, like so many others, is caught in serious stagnation, partly due to the economic crisis that began in 2007 and partly due to the way in which most governments responded to that crisis.

Thus US businesses and investors increasingly look elsewhere to make money. Rapidly rising consumption cannot be expected in the US, but it is already back where production is booming: China, India, Brazil, Russia, parts of Europe (especially Germany). Growth-oriented activity is leaving the US economy, where it used to be so concentrated. The US was already becoming less important as a production center as profit-driven major US corporations shifted manufacturing jobs to cheaper workers overseas, especially in China. In recent decades, those corporations' export of jobs expanded to include more and more white-collar and skilled work, outsourced to India and elsewhere. Now, US corporations are also increasingly spending their office, advertising, legal, lobbying, and other budgets in the expanding markets, not inside the US.

continued

http://mrzine.monthlyreview.org/2011/wolff260511.html

Rather, they represent 'higher productivity', ie, squeezing more work out of fewer workers by both more automation, overtime and the old fashioned 'speed up'.