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Capitalism crisis create huge reserves of labor which boost profits and inequalities

by Bernard Male Nyembo

vendredi 27 avril 2012 - Mis à jour le mercredi 23 janvier 2013

A non eurocentric opinion.

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Today there is a common understanding that “the crises” threatens to reinforce poverty as we know it. There is no doubt that, between 2007-2009, the “system” in Europe and the United States suffered a severe crisis that hit the foundations of its financial system and threatened to bankrupt its ‘leading sectors’. The consequences are worst in Africa. Meanwhile, the ‘crises of capital’ has been converted into a strategic advantage for furthering the most fundamental interests of capital : the enlargement of profits, the consolidation of capitalist rule, the greater concentration of ownership, the deepening of inequalities between capital and labor and the creation of huge reserves of labor to further augment their profits.

This situation led to a stagnation and continuing recession in North America and the Euro-zone, with GDP data hovering between negative to zero growth. Their argument is backed by data citing double digit unemployment in both regions. They frequently correct the official data which understates the percentage unemployed by excluding part-time, long-term unemployed workers and others. The ‘crises’ argument is strengthened by citing the millions of homeowners who have been evicted by the banks, the sharp increase in poverty and destitution accompanying job loses, wage reductions and the elimination or reduction of social services. “Crisis” is also associated with the massive increase in bankruptcies of mostly small and medium size businesses and regional banks.

The destructive effects of the « System »

The current “system” makes a strong case, demonstrating the profound and pervasive on the lives of the great majority of humanity. The problem is that there is a growing social adversity, declining income and employment has been a major factor facilitating the rapid and massive recovery of the profit margins of most large scale corporations. However, some countries like Brazil, China and India did not suffer even a recession.

In a report published on February 20, 2012 by Prof. James Petras, he points out the crises of the Capitalism as follows, “...Even during the worst years of the Euro-US decline, the Asian giants grew on average about 8%. Latin America’s economies especially the major agro-mineral export countries (Brazil, Argentina, Chile, ) with diversified markets, especially in Asia, paused briefly (in 2009) before assuming moderate to rapid growth (between 3% to 7%) from 2010-2012. By aggregating economic data from the Euro-zone as a whole the advocates of global crises, overlooked the enormous disparities in performance within the zone. While Southern Europe wallows in a deep sustained depression, by any measure, from 2008 to the foreseeable future, German exports, in 2011, set a record of a trillion euros ; its trade surplus reached 158 billion euros, after a155 billion euro surpluses in 2010. (BBC News, Feb. 8 2012). While aggregate Euro-zone unemployment reaches 10.4%, the internal differences defy any notion of a “general crises”. Unemployment in Holland is 4.9%, Austria 4.1% and Germany 5.5% with employer claims of widespread skilled labor shortages in key growth sectors. On the other hand in exploited southern Europe unemployment runs to depression levels, Greece 21%, Spain 22.9%, Ireland 14.5%, and Portugal 13.6% (FT 1/19/12, p.7).

In other words, in Developed Countries, “the crises” does not adversely affect some economies, that in fact profit from their market dominance and techno-financial strength over dependent, debtor and backward economies.

The most aggressive shedding of workers in history

Because of the higher levels of unemployment among youth they have a greater propensity for direct action ‘against the system’ ; while older workers with higher levels of employment (and unemployment benefits) have shown a greater propensity to rely on the ballot box and engage in limited strikes over job and pay related issues. The vast concentration of unemployed among young workers means they form the ‘available core’ for sustained action ; but it also means that they can only achieve limited unity of action with the older working class experiencing single digit unemployment. However, it is also true that the great mass of unemployment youth provides a formidable weapon, in the hands of employers to threaten to replace employed older workers. Today, capitalists constantly resort to using the unemployed to lower wages and benefits and to intensify exploitation (dubbed to “increase productivity”) to increase profit margins. Far from being simply an indicator of ‘the system’, high levels of unemployment have served along with other factors’ to increase the rate of widen social inequalities.

The entire ideology that justified profits based on its “risks”, by imposing the new dogma of “too big to fail” in which the some big corporations guarantee profits even when facing bankruptcy, providing they are billion dollar firms. Under the ideology of “regaining competitiveness” some governments encourage employers to engage in the most aggressive shedding of workers in modern history. For us, increased productivity and profitability should be a product of a state labor policy and encouraging the private sector.

Leaning on the Diaspora

But in Developing countries, the situation is worsening day after day : bad governance, corruption, immigration, no planning for job creation, no priorities, etc. We propose that the so called “international aid” must be stopped, and converted into endowments, ethical investments, and or loans/debts directly to the qualified members from the Diaspora. They are the engines for job creation and must be considered new Partners for making positive changes in their homelands. UNCTAD can facilitate and can advocate, instead of dealing with unethical governments. I can assist identify some professional from the Diaspora equipped with a robust international experience in Developed Countries, and longing to bring their experience back home.

Encourage the Social Capitalism, and involve the Diaspora in Jobs Creation, and Social Transformation. The current “Trade System” has demonstrated conclusively, that it thrives through the degradation of tens of millions of workers and rejects the endless pleas for reform and regulation. Consequences are non-quantifiable in Africa and in other poor countries. The “System” cannot be harnessed to raising living standards or ensuring employment free of fear of large scale, sudden and brutal firings. The System, as we experience it over the past decade and for the foreseeable future, is in polar opposition to social equality, democratic decision-making and collective welfare.

Since the “System” generates predators, and since ‘reforms’ and regulations have dismally failed, it is time to consider a fundamental systemic transformation that begins via the international community, through selected international institutions, including the UNCTAD.

We do not preach Socialism, however, we believe that most governments should revisit Capitalism, and transform it into “Social Capitalism”.

The workplace democracy

Such an approach may involve the large-scale reorganization of the economy, the transfer of trillions from the coffers of predator classes’ of no social utility to the public welfare. This change can finance a productive and innovative economy based on Agri-business, new Ethical Banks, Education and Research, Energy, Etc. Yet, Social Capitalism could replace the everyday terror of dismissal with the security that brings confidence, assurance and respect to the workplace.

Workplace democracy is should be at the heart of the vision of 21st of UNCTAD, and to share it with other governments, and stakeholders. Such an audacious vision includes for example, nationalizing the banks and eliminating Stock Exchanges Houses (including, Wall Street) ; redesigning financial institutions to create productive employment, to serve social welfare and to preserve the environment, etc. The Diaspora should be invited to participate in negotiations and the transformation of the local and the international “System” in place. The benefits will be multiple and will impact the immigration too.

Bernard is an international trade and development specialist, San Francisco (California) based. He defines himself as an Ethical Entrepreneur, involved in simple and realistic solutions to fight efficiently against unemployment and hunger through the creation of sustainable and valuable jobs.