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ECONOMIC CRISIS & MARKET TURBULENCE, II**

Resistance and Alternatives

By S. A. Shah

INTRODUCTION:

There are an increasing number of mainstream reports/commentaries acknowledging conditions of recession prevailing in the US economy as well as affirming the likelihood of the recession continuing into 2009. Of course, in several areas/countries of the corporate globalized world the economic conditions are disastrous with devastating consequences of hunger, malnutrition, large scale human displacement/migration accompanied by violent conflict.

Economic crisis is a significant feature of the contemporary economies of the world. The term crisis refers to a major turning point in the evolution of economies characterized by rising unemployment, serious threats of inflation and recession, declining rates of profit and intensified market rivalry. The crisis conditions contributing to growing political instability as well as the spread of resistance (Mertes, 2004; Fisher & Pouniah, 2003).

• It is useful to place the contemporary crisis of capitalism in a perspective of relative macro-economic indicators as follows:
• In 2007 the world GDP reportedly stood at US $55 trillion
• The world population in 2006 was just over 6 billion (200 countries +)
• 5 major capitalist economies in 2007 reported GDP levels at:
-- USA, US $ 13 trillion
-- Japan, US $ 4.2 trillion
-- Germany, US $ 2.6 trillion
-- U.K., US $ 2.0 trillion
-- France, US $ 1.8 trillion
Total world GDP (2006) of the 5 countries stood at US $23.4 trillion
Total population (2006) of the 5 countries stood at 1.26 billion
The simple average GDP for the 5 countries was US $ 4.3 trillion
The simple average rate of economic growth was 2-3% per year
• The 4 BRIC countries reported, in 2007, GDP levels at:
-- Brazil, US $ 1.6 trillion
--Russia, US $ 1.7 trillion
--India, US $ 4.0 trillion
--China, US $ 10 trillion
The total GDP level (2007) for BRIC countries stood at US $ 17.3 trillion
The total BRIC population (2007) was 5.2 billion
The simple average GDP for BRIC countries (2007) stood at US $ 4.3 trillion
The simple average rate of economic growth for BRIC countries was 4% per year
• The two largest Asian countries, China & India (CHINDIA) reported GDP (2006) levels at:
-- China, US $ 10 trillion
-- India, US $ 4 trillion
The total GDP (2006) stood at US $ 14 trillion
The total population (2006) was 2.4 billion
The simple average GDP was US $ 7 trillion
The simple average rate of economic growth was 7-8% per year
With a significantly higher rate of economic growth for the BRIC and CHINDIA group of countries there is an ongoing shift of economic levels/activity from USA/EURO towards Asia.

This short note provides an outline of the economic sequence of changes that periodically generates turbulence in capitalist market economies. The emphasis is on BOTH the triggering tendencies as well as select causes of trends. The most significant determinant being a decline of the rate of profit (return on investment) after 1965-’73 (Brenner, ’96; Moseley, 2000).

Sequence of Change:
1. Recovery from the Great Depression of the 1930’s, specifically in the USA, was achieved by a significant government intervention (public works & subsidies) and the preparation for/waging of WW II. By the second half of the 1940’s the economies of Europe lay ruined by the destruction wrought by war. Industrial and agricultural productive capacity was reduced to low levels. The USA was the only major economy that had not suffered direct war related destruction. On the contrary productive capacity was enlarged which enabled the US to emerge as the leading economic power of the decade 1945-’55 (Vatter,’53 &’85). For about 12-13 years thereafter the US economy consolidated its leading economic position.

2. Since the second half of the 1960’s there has been a growing experience of economic turbulence in both the primary ‘developed’ industrial economies and the secondary ‘developing’ economies (Brenner,’06).

The specific changes in the ‘developed’ capitalist economies are, in summary(Brenner,‘06; Glyn,’06) as follows:
--Conditions of prosperity and boom tend to increase income and savings;
--Rising incomes trigger growing demand; enlarged savings contribute to higher investment which is the basis for both an increased production capacity as well as higher productivity;
--Market competition tends to spur a rapid increase in the capacity to produce as well Pressures to contain costs(labor & material inputs);
--Over time goods & services produced tend to run up against constraints of the limits of effective demand(relative slowdown of wages. Herein lie the triggers compelling a search for external(overseas) markets;
--Uneven & unequal growth of the domestic economy(leads and lags between economic sectors/regions) tends to deepen demand stagnation - private and public;
--Credit expansion through finance liberalization(changes in interest rates and rate of money circulation) are brought into play to counter declines in effective demand;
--Stemming from the above sequence of change in policy/regulations the stage is set for the growth of ‘asset bubbles’, rise in speculative financial activity which together influence and bring about financial/economic turbulence

3. From the second half of the 1970’s through 2007 the attempts to reverse the declining rate of profit have not been successful (Brenner, 2007) except for temporary & short periods.

4. Economic instability with greater market turbulence contributes to a generation of the politics of authoritarian rule in order to ensure the domination of capital(Raskin,’03; Phillips,’03; Barnett,’04; Palast,’06; Warner,’07).

5. The familiar resistance of mainly maintaining labor unions is no longer sufficient to challenge the rule of capital(economic dominance of big corporations and the political authority of a small minority). Alternatives need to be actively explored/elaborated in order to mobilize a effective challenge to the existing status quo(Hyman, ’75; Fitch,’06; Silver,’03; Brody,’05).

Resistance:
The economics and politics of corporate market globalization delivers social systems/structures characterized by the 3-D’s -
DISPLACEMENT - rural to urban and further into urban slums/ghettos

DIVISION - growing inequality of income & wealth within economies and between countries

DEGRADATION - as social unrest & conflict; as environmental destruction and health disorders; as authoritarian governance; as cultural homogenization.

Resistance to corporate globalization calls for a mobilization of the ’silent majority’ towards neighborhoods of care & cooperation committed to establish communities of social solidarity - examples can be examined in the ongoing work of VIA CAMPESINO, WORLD SOCIAL FORUM as well as documented in the magazines Color Lines , the NEW INTERNATIONALIST & the author Mike Lebowitz,’07.

In the words of the MST (Landless Workers Movement - Brazil):
AGAINST Barbarism, EDUCATE
AGAINST Individualism, SOLIDARITY

Critical investigation for social change necessitates a three level interactive process:

FIRST, structurally speaking, the core feature of analysis is social division or class & its dynamic (Carchedi. ‘87)

SECOND, movement/change in society is derived (in the sense of correspondence) from social relations particularly the contradictions at the level of structure & system (Ollman, B.’93).

THIRD, enduring changes in society are fundamentally linked (corresponding to the balance of class forces) with the tendency of the decline in the rate of profit - return on investment (McMurtry, J. ‘78).

REFERENCES:
Thomas Barnett. THE PENTAGONS NEW MAP.‘04. N.Y., Putnam;
Robert Brenner. “The Economics of Global Turbulence”. NEW LEFT REVIEW.#229. May-June,1998; Robert Brenner. THE ECONOMICS OF GLOBAL TURBULENCE.2006. NY/London,Verso;
Robert Brenner. “Structure vs. Conjuncture”. NEW LEFT REVIEW.#43. Jan.-Feb.,2007;
David Brody. EMBATTLED LABOR.2005. U. Of Illinois Press;
William Fisher & T.Pouniah (Eds.) ANOTHER WORLD IS POSSIBLE. 2003. N.Y.,Zed Press;
Robert Fitch. SOLIDARITY FOR SALE.2006. N.Y. Public Affairs;
Andrew Glyn. CAPITALISM UNLEASHED.2006. N.Y./London, Oxford U.Press;
Richard Hyman. INDUSTRIAL RELATIONS.1975. London,Macmillan;
Michael Lebowitz. BUILD IT NOW. 2007. N.Y., Monthly Review Press;
Fred Moseley. “Reply to Brenner”. HISTORICAL MATERIALISM. 2000.;
Greg Palast. ARMED MADHOUSE.2006. N.Y., Dutton;
Kevin Phillips. WEALTH & DEMOCRACY.2003. N.Y., Broadway Books;
Kevin Phillips. “Numbers Racket”. HARPER’S MAGAZINE.May 2008;
Jamin Raskin. OVERRULING DEMOCRACY. 2003. N.Y., Routledge;
Beverly Silver. FORCES OF LABOR.2003. Ithaca(N.Y.), Cornell U. Press;
Vatter, Harold G. THE US ECONOMY IN THE 1950’s. 1953. N.Y., Norton;
Harold G. Vatter. THE US ECONOMY IN WW II.1985. N.Y., Columbia U. Press;
Carolyn Warner.THE BEST SYSTEM MONEY CAN BUY. 2007.Ithaca(NY), Cornell U. Press.

**(Revised: Aug.-Sept.’08)

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