BY JACK BARNES  
If you read or listen to the business news, you'll hear the phrase: "Sears took a 'onetime charge' of $1.3 million this quarter." Or Philip Morris, or Borden, or NCR, or others. That is simply an accounting phrase for the consequences of mounting capitalist overproduction. It registers the large-scale devaluation and destruction of capital-turning products into cut-rate commodities, as owners seek to clear their inventories at the best returns possible under the circumstances.

Interest rates are low in the United States, even with the small hikes in February and late March by the Federal Reserve Board. They've been dropping in capitalist Europe and Japan too. But even if real interest rates hit zero or drop below (as they have at various times in this century, taking inflation into account), capitalists won't borrow to invest in new plants and equipment unless they can turn a higher rate of profit by doing so than by using their money capital in other ways.

Why would capitalists take out a loan to invest in a new factory, if the upshot is not only that they have to pay back the loan--even at little or no interest--but also that they end up losing money on their investment? The answer is, they won't and they aren't. Businesses aren't taking the loans. Only twice in this century in the United States have commercial and industrial loans declined for three consecutive years--1934 to 1937, and 1991 to 1993. That fact alone is worth thinking about.

The big Merrill Lynch brokerage and investment banking firm put out a year-end report in late 1993 entitled "The Meek Inherit the Earth." It painted a picture of the world capitalist economy that is scary from the viewpoint of their class. The report said that profit rates continue to decline and outlets for profitable investment in expanded production continue to shrink in the major industrialized countries. Barriers to the expansion of capital continue to proliferate, the report said, although not in those words. In this situation, it advised that the road to profits was what the employing class calls "increased productivity"--that is, squeezing fewer workers to produce more value at lower wages, while cutting down other production costs as well.  
 
Downsizing and pressure on profit rate
All that downsizing accomplishes in and of itself, however, is to put greater pressure on the rate of profit, as the bosses seek to make more off the labor of relatively fewer workers. It also poses a sharper threat to outstanding loans and to assets of all kinds whose paper values are bloated. What the capitalists call downsizing limits the expansion of the mass of surplus value and increases as a percentage of capital that portion that Marx called constant capital--the portion laid out for everything other than wages for labor power. And that puts further downward pressure on profit rates. It's not only an important theoretical question; it's one with utmost practical implications right now....

We should always remember that big political explosions in the world--not just stock market collapses, banking crises, sudden shortages, and so on--will continue to trigger economic and social catastrophes in the capitalist world.

In the imperialist epoch above all, as Lenin and Trotsky taught us, politics is concentrated economics; economic phenomena don't simply run their course irrespective of class struggles, wars, and revolutions. Major shifts in the curve of capitalist development have been triggered by developments outside the economy per se, or rather, outside the lawful operations of the capitalist business cycle. Neither we nor anyone else has any timetables. No one can know beforehand what combination of economic and political developments may set off such a catastrophe--although history gives us good reason to believe that wars and preparations for war will be a weighty element.

We have nothing to take back from the SWP's 1988 resolution and the accompanying popular pamphlet, An Action Program to Confront the Coming Economic Crisis. Capitalism is becoming more and more vulnerable to a worldwide crisis that will bring in its wake mass unemployment, ruination of working farmers, homelessness, destruction of small businesses, and impoverishment on a scale not experienced since the 1930s. It will devastate the Third World, the majority of whose toilers have already faced a deterioration of economic and social conditions for almost a quarter century. And it will open a new stage in the social and political crisis of the imperialist countries.

Millions of working people today believe that such a prospect is a distinct possibility. They are already being shaken by the instability inherent in the evolution of world capitalism. This explains the receptivity to revolutionary literature even before the onset of such a social catastrophe or major class battles.

The "lack of stability," wrote Bolshevik leader Leon Trotsky in the 1920s, "the uncertainty of what tomorrow will bring in the personal life of every worker, is the most revolutionary factor of the epoch in which we live." The "tranquil mode of existence" of the labor officialdom for nearly a quarter century prior to World War I, Trotsky wrote, had "also exerted its influence upon the psychology of a broad layer of workers who are better off."

All that was changed, Trotsky explained, by the economic and social crisis of capitalism that the rival ruling classes of North America, Europe, and Japan had failed to resolve through the worldwide slaughter they had inflicted on humanity. The resulting "absence of stability drives the most imperturbable worker out of equilibrium," Trotsky wrote. "It is the revolutionary motor power."
 
 
Related article:
U.S. economy slows as profits fall and unemployment rises  
 
 
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