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Inflation, morbid symptom of capitalism’s crises
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- 24 September 2022 859 hits
Inflation is the latest way the capitalist system’s crises are deepening the oppression of workers around the world. Capitalism is driven by competition and profit accumulation and generates global economic and political instability, preventing stability and wellbeing for the world’s working class. While inflation is depriving U.S. workers of some of life’s necessities, the U.S.’s export of inflation to other countries is even more devastating. We fight to replace this absurd system with a worker-run planned economy – communism.
What is Inflation?
Inflation is a rise in average prices of goods and services. In the U.S., the annual core inflation rate rose to 6.3 percent in August. Adding in food and energy costs lifts the inflation rate to 8.3 percent annually. Food prices alone in the U.S. are rising over 11 percent annually, increasing hunger and poverty, while rising at an even faster pace in less developed countries. Wages are not rising similarly so workers’ purchasing power is falling.
After 40 years of relative stability, why inflation in the U.S. now? Causes include the monopoly power of corporations, government aiding corporations, and COVID shutdowns and shortages caused by supply chain disruptions and war. Wage raises are not a cause of inflation but an effort to keep up.
Different responses to crises, same goal of maximizing profit
Capitalists and the government responded differently to the financial crisis of 2007-2009 and today’s ongoing COVID crisis.
Threats to profits during the 2007-2009 crisis led capitalists to lay off workers and cut wages and benefits (labor costs account for 60-70% of production costs). To suppress resistance, the capitalists divide and weaken workers through racism and sexism, oppose new union creation (e.g., Amazon), and outlast or break strikes. Unemployment (which reached 10% in 2009) served to further weaken workers, as competition for jobs led to lower wages. Labor’s share of national income fell while productivity (output per worker) rose sharply and profits remained strong during this earlier period.
COVID created another profitability crisis for capitalists with consumer spending plummeting and supply chain disruptions forcing up the bosses’ costs. As the pandemic began to recede, the bosses faced a relative labor shortage (the official unemployment rate reached 3.5% of the labor force, the lowest point in decades) because many workers quit working or retired during the “great resignation.” To recruit workers back, many firms raised money wages (albeit lower than the rate of inflation) and improved benefits slightly, which cut into their profits. The resurgence in the labor movement, with union organizing and strikes, compounded this threat.
Unlike the financial crisis, the COVID crisis caused shortages of key inputs for capitalist production at a time when they have been less able to force down wages. The capitalists have instead taken advantage of inflationary pressures to bolster profits through price increases. From 2021-2022, 59.3 percent of change in prices has gone to swell profit margins; 38.3% of price increases were for the increased cost of non-labor inputs that capitalists had to buy; and only 7.9 percent of the increased prices went to labor costs (J. Bivens, EPI, 4/21). The higher prices cut the purchasing power of workers across the board, obliterating any improvements in money wages.
Myths about the “the market” are used to convince workers that capitalism is fair
How can the bosses inflate prices across the board so readily? Isn’t capitalism’s “market competition” system supposed to keep prices in line with costs of production? In a competitive market, capitalists would have to sell their goods at the same price as their competitors. But the 20th century saw the rise of huge corporate monopolists which have cornered the market. Today’s monopolists are price makers and set prices as they wish. They are able to escape the “discipline of the market.” Monopolists still cannot raise prices so high that the number of people willing to buy their products falls so low as to actually reduce their revenues. However, in industries like food, housing, and energy where people have few alternatives, capitalists have “gone big” on price increases, generating profits over and above their usual profitable exploitation of workers.
To end this insanity workers must seize state power
Governments (the State), far from representing the interests of all the people, carry out policies that reinforce the capitalist system of exploitation. These policies are usually geared to help the extremely wealthy monopolists. When there is an economic crisis, the state can create lots of money and encourage lower interest rates to help such businesses. The executive branch, usually with Congress’s agreement, bails out major banks, insurance companies, and corporations, including the hundreds of billions of dollars it provided during the 2007-2009 financial crisis.
During COVID many workers could not buy products or pay rents, so to protect vendors and landlords the government issued checks to families, which incidentally temporarily lessened hunger and evictions. Congress gave large appropriations to big pharma, both enhancing their billions in profits while providing vaccines to workers. More workers survived -- and kept generating profits for the bosses.
With today’s inflation, capitalists and their state enhance their profits, while depriving workers of needed products and services. The system is stacked against the working class.
U.S. imperialists export inflation
As bad as inflation is in the U.S., it is far worse in other countries. Why? After World War II, the U.S. was able to establish the dollar as the world’s reserve currency. Oil and many other globally traded goods are therefore priced in dollars, helping keep the demand for dollars high. Increases in the U.S. interest rates over the past year have made the dollar even more attractive to investors, raising the dollar’s value further. A rising dollar means that the currencies of other countries lose value, making their imported goods that are priced in dollars even more expensive in those countries. This has led to higher inflation rates in other countries and even greater distress.
Capitalism is a system of crises, wars, and suffering
Imperialist war and rivalry disrupt the world economy with inflationary pressures as well. The war in Ukraine, for example, led to European boycotts of Russian energy resources. The resulting shortages have driven up prices of key products. Russia has prevented food exports from Ukraine, creating massive shortages globally and crushing countries like Sri Lanka, Somalia, and Pakistan.
Capitalist classes prefer stable prices, keeping inflation rates at around 2%. When inflation exceeds such rates, the capitalists use the state to fight inflation by creating recessions. This is sometimes called “cooling off the economy.” They raise interest rates and shrink the money supply. This forces workers to forgo credit-dependent big-ticket items like automobiles and houses, while the costs of debt skyrocket and businesses are forced to lessen their borrowing for expansion. As a result, millions of workers get laid off and wages fall. Many small businesses go bankrupt and many large businesses close or are taken over by larger companies. Capitalism swings between crises, creating one (inflation) and trying to solve it with another (recession)!
Why can’t economic distress be solved without increased prices? Why can’t abundance, or scarcity, be shared among all workers equitably? Capitalism, run by the dominant class for its own profit, simply can’t allow it because such a system undermines profits.
With today’s inflation, despite multiple causes, U.S. capitalists are grabbing the opportunity to maximize their profits at our expense, by reducing our real wages and saddling the world with even more severe inflation. The instability and uncertainty promote deeper global economic, political, and military conflicts. Why should workers tolerate such chaos? We need to smash capitalism!
Have you wondered about chemicals or other harmful substances in our food and water? Do you assume governmental agencies—the FSIS (Food, Safety, Inspection Service), the FDA (Food and Drug Administration) and the CDC (Centers for Disease Control)—look out for our best interest, health, and well-being? Are we safe with high quality food and water? After reading this article, ask yourself these questions again.
Weed killer in our bodies
A Time Magazine online article 2017, (October) reviews several studies, showing that glyphosate, a weed killer known as Roundup, is increasingly showing up in people’s bodies. Here’s some evidence:
A study published in JAMA tracked people over the age of 50 in Southern California from 1993-1996 to 2014-2016. Researchers found that the percentage of people who tested positive for glyphosate shot up by 500 percent in that time period.
One trial from the United Kingdom, in which rats were fed low levels of glyphosate throughout their lives, found that the chemical contributed to a higher risk of nonalcoholic fatty liver disease.
Recent studies have found that many weeds are now resistant to Roundup, so growers are using more Roundup. (The Guardian 7/9). A CDC study found glyphosate was present in more than 80 percent of urine samples drawn from children and adults (The Guardian 7/9). This chemical is linked to cancer, a finding scientists have called “disturbing” and “concerning.” Lianne Sheppard (University of Washington) co-authored a 2019 analysis that found that glyphosate exposure increases the risk of non-Hodgkin lymphoma.
And whether it’s weed killer or lead in our water this attack on the working class is viciously racist. There’s even now a phrase for it: environmental racism (nydailynews.com, 1/28/20).
Lead in workers’ water puts bosses’ racist system at work
In 2014, Flint, Michigan, changed its water supply from Lake Huron to the polluted Flint River without testing the water. The Michigan Department of Environmental Quality (MDEQ) declared the water safe to drink.
Residents of Flint immediately exposed the brown color and odor coming from their taps on social media, which the Flint officials dismissed. The child lead poisoning rate doubled. Hurley Medical Center created a health registry and proved that lead in the water was poisoning children. Flint has a population that’s 54% Black. As often is the case, Black workers suffer from the most extreme forms of environmental terrorism.
In 2021, nine Michigan officials, including the former Michigan Governor, were finally indicted on criminal charges including manslaughter and neglect of duty for polluting Flint water. In June 2022, the Michigan Supreme Court tossed out the indictments on procedural grounds.
The situation in Flint is repeated over and over nationwide. While the government treats an industry’s action to pollute rivers, lakes, waterways and the ocean as a sacrosanct right, the working class’s need for clean water is treated as a luxury. Fifty percent of U.S. lakes and rivers are “too polluted for swimming, fishing, and drinking(EcoWatch, 3/29 ).”
San Francisco Bay is polluted with radiation from Navy shipyards and banned industrial chemicals, mercury from gold and silver mining. The Pacific Ocean is polluted with radiation from atomic bomb testing and the Fukushima meltdown. The list goes on and on.
The State exists to serve the needs of capitalists, not workers
As you ponder our safety regarding the basic necessities of life, food and water, remember the social and economic benefits from pollution are reaped by the capitalist class while the social costs are paid by the working class.
Weed-killer glyphosate in our urine and lead-fouled water in our taps are just two examples of neglect of public health by U.S. governmental authorities, federal, state and local. The entire food and water supply is poisoned by pollutants, pesticides and additives like sugar, preservatives, salt and unhealthy oils. The FDA doesn’t prevent the food industry from profiting by pushing harmful foods on us. Why don’t they protect us from bad food and foul water? Why is there no effective public health system in the U.S.?
Why don’t governments care? Because the purpose of government (the state) under capitalism is to serve the interests of the capitalist class. If harmful food and water is more profitable for the capitalists, then the government protects their right to supply it, over the dead bodies of the working class.
Some say that politicians and officials are bought off and the working class can root out corruption to correct the problem. Denying our class’ basic needs is a function of, not corruption, but capitalism itself. This has been going on since the beginning of capitalism– whatever the capitalists want, the government makes sure they get it. The role of government is to serve the needs of their masters, the capitalist class.
Progressive Labor Party calls to build a new society, governed by and for the working class. To do so, we need to smash capitalism and its state.
Life under capitalism is getting worse
The Next Recession, 9/11–Life expectancy fell in the US in 2021 to its lowest since 1996, the second year of a historic retreat, mainly due to COVID-19 deaths…disparity in life expectancy between men and women widened last year to the highest in more than two decades, with American men now expected to live just 73.2 years, nearly six fewer years than women.
Deaths from COVID-19 contributed to over half of the overall decline in U.S. life expectancy last year. But COVID was not the only factor in the decline. Drug overdoses and heart disease are also major contributors,the data showed…Suicide-related deaths are the third-leading contributor to the decline in life expectancy for American men.
The decrease in US life expectancy was highly racialized: as the largest decreases in 2020 occurred among American Indian/Alaska natives, hispanics, Black and Asian populations. For native Americans and Alaska natives, life expectancy fell to 65, close to the national average during World War II…China’s life expectancy at birth is now higher than that of the US…“The stagnation in life expectancy reflects deep societal challenges — not just in our health system but also in our economic and political systems,” said Dave Chokshi, a physician and former NYC health commissioner.
Israel’s Mossad admits it helped murder thousands of Palestinian refugees
The Cradle, 9/9–According to Israeli newspaper Haaretz, the office of the Israeli prime minister, which oversees and directs the Mossad, released the dateless document that implicates the intelligence agency in the atrocities carried out by right-wing Lebanese Christian militias. The document in question…exposes the Mossad’s role in, and facilitation of, weapon transfers that were used in the two-day, round-the-clock massacre of Palestinian civilians in the Sabra and Shatila refugee camps.
The bloody massacre took place in 1982, between 16-18 September at a camp under siege by the Israeli army, leaving thousands of Lebanese and Palestinian civilians dead, raped, and injured by the militias to whom Israeli occupation forces provided passage, weapons, and protection…“Goyim killing Goyim,” [Israeli President Menachim] Begin is famously quoted as saying in a bid to disavow any Israeli role in the events.
However, as Pultizer prize-winner Patrick J. Sloyan revealed in his book When Reagan Sent the Marines, [Israeli general Ariel] Sharon met with the Phalangist militia leaders the day after the assassination of president Bachir Gemayel, and abetted them in avenging his death. Sharon told the commander of the Lebanese Forces Militia Elie Hobeika: “I don’t want a single one of them left,” in reference to the Palestinians in the camps in Beirut.
Mining companies steal and poison in Colombian state of La Guajira
IGWIA, 9/16–Despite this Caribbean region’s natural wealth, Wayuu children in La Guajira are dying of hunger and thirst. Exploitation by multinationals, a lack of rainfall and the contamination of their wells only add to historical injustices. Today nearly 40% of the population of La Guajira does not enjoy optimal nutrition,...Indigenous children… are malnourished and since the beginning of 2021, 17 Wayuu children have died from malnutrition.
In recent years, plundering by multinationals, who exploit their resources in exchange for low-quality jobs, and pollution have only added to these historical debts...La Guajira is blessed with many natural riches: coal, gas, salt, sun and wind. The only ones benefiting from this wealth are the Colombian State and a few multinationals.
The Indigenous people blame more than 30 years of coal mining for contaminating their reservoirs. As if that were not enough, the mining companies have obtained licenses to divert rivers and exploit the riverbeds. As a result, the wells that the Indigenous people used to rely on to get through the summer have dried up. The State, however, has declared the extractive industries to be of “national interest”, condemning communities to involuntary resettlement and displacement.
Queen Elizabeth and her predecessors presided over much of the most deadly imperialism in history (see editorial about her much-delayed death, page 2). At its peak, England seized nearly one quarter of the Earth’s landmass and oppressed nearly 20 percent of the world’s population. Here are some lowlights of the British rulers’ 400 years of racist, blood-soaked colonial expansion:
- Between 1641 and 1808, Britain kidnapped and forcibly moved more than 3 million workers from Africa to the Americas. About 15 percent died en route; the rest were sold into lifetimes of horror.
- During the 1848-1849 Potato Famine in Ireland, a direct result of British economic policies, one million workers in Ireland were killed; another one million were forced to flee.
- In 1903, to prevent a feared Russian occupation of Tibet, Britain used the British Indian Army to invade the country and massacre more than 700 protesting workers. A British officer told his men to “bag as many as possible.”
- In 1909, Britain’s Parliament passed what became South Africa’s first constitution. With the British working hand-in-hand with the racist Boers, new laws stripped Black workers of all political rights and their land, and paved the way for the legalized segregation and vicious exploitation of apartheid.
- In 1943, more than 3 million workers in India died of starvation after Winston Churchill forced the colony to export all of its wheat to feed British troops during World War II. Four years later, the British Raj partitioned India and Pakistan, an arbitrary division that uprooted 10 million workers and killed over a million more in unnecessary religious conflicts.
- In 1950, a British general conceived of the Briggs Plan to combat communist organizing in Malaysia. British troops forcibly relocated 10 percent of the country’s population to concentration camps.
- In the 1950s, as Queen Elizabeth toured the globe for photo opportunities, Britain fought off an uprising by the anti-colonial Mau Mau movement by imprisoning more than a million workers in barbed-wire concentration camps. Many, including women and children, faced “systematized violence and brutality and torture” with “forced labor and starvation policies” (Vox News, 9/13).
Transit workers not scared by bosses’ tactics
At an early morning rally in front of a transit repair shop in Chicago, a railcar repair worker called for workers to fight back against the bosses. His words rang out as the workers cheered him on with encouragement, honking horns and smiles. "The bosses have tried to divide us, pit us against each other and disrespect us with low wages and poor working conditions."
A militant shop steward organized and spoke at the rally. A coworker told him how one of the low level bosses has been breaking the contract, giving overtime to his friends, and trying to micro-manage the workers. This big-boss wannabe had an opportunity to do the right thing - but he refused. He instead drove past our rally and called us some names, and said he would kick our butts.
The coworker who wanted to resolve issues with him was threatened with physical harm by another coworker! But our brave friend said he wanted to come to another rally and speak on the bullhorn!
The threats of this stooge rang hollow as one worker remarked, "We have been through life, and we have been through death (already) with Covid!"
The working class is in a life and death battle with capitalism every day. From the pandemic to floods from climate change to starvation, homelessness and increased gun violence against each other - it is capitalism that has created the conditions for all of these deadly things to keep on happening!
The ruling class in Chicago is intensifying their efforts to win workers to support fascism in the form of more police on buses and trains. But as communists, we say there will be no justice and no safety for the working class under capitalism!
The members of the Chicago Transit Justice Coalition will increase our efforts to organize the workers to fight back against the bosses, the sellout union officials and their rotten contracts. We are having discussions and debates about the role of the police. Members of the Progressive Labor Party will continue to distribute CHALLENGE to the workers and struggle to get more readers to spread the ideas of communist revolution.
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Death to royals, power to the working class
“Our hearts are broken” is the message of the bourgeois British media to the world on the death of Queen Elizabeth who is the symbol of 400 years of slavery, colonialism, genocide, racism and imperialism that has caused millions of horrible deaths and billions suffering lives of poverty and misery worldwide.
The contradiction of a 96 year old queen, one of the richest women in the world, living in one of her castles attended by the best medical care and servants and the daily worldwide pictures of babies with only skulls with bulging eyes for heads and just ribs and sticks for bodies and legs dying by the millions from malnutrition and lack of medical care in Somalia, Ethiopia, Afghanistan, Yemen and worldwide breaks my worker’s heart. Workers worldwide must recommit to end this murderous capitalist profit system from the British Empire to the U.S Empire and nascent Chinese and Russian empires. Fight for communism!
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PL’ers at Labor Day
In the U.S., Labor Day is celebrated every first Monday of September. This date is a federal holiday. This year we found out that a community group that fights for workers’ rights and is led by liberal politicians was invited. We activated some PLP comrades who already participate in this mass organization. But this organization, together with other primarily Latin organizations that are now a coalition, was in charge of “opening the march.” The slogan of this march was to seek support for the Coalition of Excluded Workers and Unemployed Workers. Along the way, we handed out 100 CHALLENGEs and several hundred Party leaflets where we declared that we welcome fellow immigrants and families sent from Texas to New York City (see page 4).
As several comrades have already been working in this mass organization, there were several PL’ers helping in this event. One young PL’er arrived early to help with materials, transportation, food, and giving leadership, while the other PL’ers distributed CHALLENGE, Party leaflets, and had conversations with the workers. The young PL’er was also in charge of writing several signs for the march. While the liberal leaders of the organization marched with slogans like “Say yes to unions and yes you can,” the young PLer sharpened the struggle with slogans like “Workers united will never be defeated.” The PL’er also noticed how some participants had liberal slogans written on their masks, so the young PL’er decided to write on his mask “Eat the rich!—F*ck taxes!” Several participants seemed to appreciate it.
We also talked with some attendees. We came to the conclusion that this date does not have the warmth of MayDay: International Workers’ Day and it is absurd to try to forget the Strike in Chicago that originated this unforgettable conquest of the eight hours of work in the world. The number of attendees and the joy of the participants was remarkable. It is important for communists to participate in these mass organizations, not only to lead, but also to sharpen the struggle with our communist politics and ideas. WORKERS OF THE WORLD UNITE!
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