$$$ boom: bonanza for the rich, misery for working class

The following is an abridged version of a report by the Communist Party 
of the USA Economics Commission.

The decade of the 1990s has seen far-reaching changes, affecting all 
countries, including the United States. 

The decade began with the disastrous development of the counter-
revolutionary destruction of the Soviet Union and its basic socialist 
structure, along with similar setbacks throughout Eastern Europe, 
devastating the economy, culture and living conditions of the people.

This gave US imperialism a great boost towards its goal: to be sole 
superpower. The United States has pursued this aim with cruelty and the 
ruthless killing, directly and indirectly, of many millions.

Meanwhile, the gap between the super-rich and the rest of us grows wider. 
The US has led in economic and technological growth, in the profits of its 
ruling class, in the rate of exploitation of labour and in the export of 
capital.

Monopolisation of industry has proceeded very rapidly, as has the spread of 
inequalities within, as well as between, classes.

There has been rapidly expanding inequality between the US-led bloc of 
imperialist countries — including NATO members in Europe, Japan and Canada 
— and the rest of the world, which is objectively neo-colonial.

As the living standards of more than a billion people in these countries 
have been drastically reduced, the plunder of resources and labour by US 
and other monopoly corporations has been unrestrained.

For two years the capitalist world has been in the grip of a severe 
financial crisis, which is still spreading. The neo-colonial countries bear 
the brunt of the crisis.

Among the most advanced capitalist countries, Japan has been most seriously 
hit.

In the US, the decade began with a rather mild crisis in 1990. But starting 
with the second half of 1992, there has been a continuous recovery, and at 
this stage, aspects of boom for eight years without interruption.

However, the current increase in idle capacity is one indicator that a 
crisis may be looming.

Economic growth has been powered by computerisation of society and by rapid 
advances in communications technology, including the Internet.

Financial extremes have developed, notably the rise in prices on the stock 
market reaching far beyond the growth in economic activity and profits. 
This is an important factor ripening a major crisis of overproduction.

Militarisation

The main driving force of the US economy is soaring military outlays. 
Military spending is budgeted to increase $110 billion over a six-year 
period.

To that has been added $10-$20 billion for the war against Yugoslavia. This 
initiated the US campaign to control all of southeastern Europe — on the 
road to the Ukraine and the Caspian Sea area with its oil — and 
northeastward toward Moscow.

The anti-Communist content of this drive signifies that the Cold War has 
never really ended but has taken on new forms and targets.

The attitude of the most powerful sector of the US ruling class is 
expressed by The New York Times and its foreign affairs columnist, 
Thomas L Friedman.

The cover of the March 28 New York Times Magazine shows a gigantic 
fist wrapped in an American flag. The article's subhead reads, "From 
supercharged financial markets to Osama Bin Laden, the emerging global 
order demands an enforcer."

"That's America's new burden", Friedman wrote. "The hidden hand of the 
market will never flourish without a hidden fist. McDonald's cannot 
flourish without McDonnell Douglas, the designer of the F-14.

"And the hidden fist that keeps the world safe for Silicon Valley's 
technologies is called the United States Army, Air Force, Navy and Marine 
Corps."

Friedman sees his view as fitting in with globalisation of the economy. 
Friedman sees globalisation as an environment in which the United States 
can take control of the world and its capitalists can reap maximum profits.

The US working class

A modest rise in real wages and decline in unemployment has occurred over 
the past year. But the situation of the lowest paid and poorest section of 
the working class has worsened.

There are still 5.8 million officially counted as unemployed, or 9.9 
million according to the officially acknowledged fuller "alternative" 
measure of unemployment. Many times more workers with jobs are threatened 
with the wave of "downsizing" pervading corporate America.

Because of the slash in anti-poverty benefits at federal, state and local 
levels, especially the drive to get people off welfare, conditions have 
actually worsened for many who get jobs: low wages, expenses for child 
care, getting to and from work, etc.

Reports from many major population centres indicate rising impoverishment, 
more people resorting to food kitchens to reduce hunger, and an increase in 
evictions.
Economic discrimination against African Americans, Latinos and other people 
of colour continues.

In a recent speech, Federal Reserve Chairman Alan Greenspan 
uncharacteristically said what he clearly meant: the US economy is 
"steadily depleting the pool of available workers", that is, providing jobs 
to the unemployed. He warned that this might enable workers to win pay 
increases and reduce the rate of exploitation. 

Commenting on this, economist Paul Krugman wrote: "Even liberal economists 
like myself grudgingly accept the conclusion that a responsible Fed must 
sometimes raise interest rates in order to limit the number of jobs and 
maintain a suitably high rate of unemployment.

"But the scene remains an ugly one. A group of comfortable men and women in 
suits are deliberately acting to limit the job prospects of some of their 
worst-off fellow citizens."

The continuous downtrend in real wages since 1973 has been accompanied by 
the more extreme impoverishment of the lowest paid workers, along with a 
spectacular upsurge in the take of those at the top.

Since 1968 the real minimum wage has declined 32 percent, practically one-
third. The situation would be even worse, except for the modest minimum 
wage increase forced through the Republican Congress in 1996 by an 
increasingly militant labour movement.

Hundreds of thousands of low-wage workers have been helped by recent 
organising victories like that of the 80,000 home health-care workers in 
California earlier this year.

These are not yet enough to change the overall picture, but are laying the 
base for future political as well as contract victories.

Meanwhile, executive compensation has gone through the roof. The highest 
paid CEO, Disney's Michael Eisner, took in $576 million in 1998. In 1978, 
the highest paid got "only" $2 million.

This year, the highest paycheck announced so far is Charles B Wang's of 
Computer Associates International — $670 million! That's over $1,500 per 
minute.

In the time it takes to drink a cup of coffee, Wang gets as much as a 
minimum-wage worker earns in an entire year of full-time work.

According to the AFL-CIO, a worker earning $25,000 in 1994 would get 
$138,350 today — if his pay increased as fast as his bosses'! We estimate 
that 22 percent of gross profits — surplus value — goes for the 
compensation of high-ranking executives and that share has been rising.

What are the qualifications for such high-paying jobs? The most important 
in recent years has been the ruthlessness and effectiveness in reducing 
labour costs by some combination of speedup, longer hours of work for their 
employees, and, most of all, laying off thousands of workers.

Financial contradictions

Throughout the first part of the 1990s, consumers saved about six percent 
of their income. But thereafter the rate of savings declined continuously, 
vanishing by December 1998 and becoming minus 1.1 percent by May 1999.

The net "dissaving" so far this year is unprecedented since the great 
crisis of the 1930s, and has given rise to expressions of concern in the 
business and financial press.

The continuous "bull market" of recent years has much to do with these 
results. For millions of people, the stock market has become a medium of 
gambling.

Capital gains on investments have become an important share of income for 
the half of the population above the median income. That includes direct 
investment in stocks and bonds and investment in mutual funds based on such 
investments.

The number of shareholder accounts in equity mutual funds went up 450 
percent during the 1990s, reaching 104 million in 1997. Assets in these 
funds also multiplied nearly 10 times, reaching $2.4 trillion in 1997.

The prices of corporate stocks have multiplied about 10 times since 1980, 
perhaps three times as fast as the increase in corporate gross profits. 
Shareholders have seen their stock portfolios increase in value (on paper) 
so they borrow freely to pay for current purchases.

If the stock market falls, millions will default, resulting in foreclosures 
and repossessions. The vulnerability of the stock market is most 
graphically expressed in the prices of internet stocks, the medium of stock 
market gambling for many.

Initial Public Offerings (IPOs) of such stocks, which have done no business 
and have no prospect of becoming real factors, are immediately gobbled up 
at five to 10 times the initial offering price.

Floating on dreams and prayers

Companies floating a dream and a prayer have market valuations equal to 
those of giants like General Motors.

Barron's columnist Alan Abelson warns, "Ignorant investors, buying wildly 
speculative stocks on credit define an accident waiting to happen. It could 
be triggered by a string of unbroken down days. The new on-line brokerage 
firms have no experience handling such situations."

Contributing to financial instability, consumer debt is at its highest 
levels, with the biggest increase among the lowest 40 percent of the 
population.

The 30 percent drop in stock prices in 1987 did not trigger a general 
cyclical decline in the economy. But overall conditions are much more 
vulnerable today, and a major bear market (downturn) is more likely to be 
associated with a crisis of overproduction in the "real" economy.

Odds are strongly in the direction of a real "bear market" sometime in the 
next five years.

World financial crisis

The world financial crisis, now two years old, has spread further. In Asia, 
where the crisis started, there has been easing, but no real stabilisation. 
The crisis has deepened in Japan.

US companies have started to buy up distressed corporations, real estate 
and privatised state property at bargain prices.

The crisis has spread further in South America, where the United States has 
a more sizable and leading economic and political involvement. Brazil, 
Chile, Ecuador, Venezuela and Peru face increasing unemployment and 
currency crises.

The human costs are shown by the 15 percent decline in purchases of food 
staples in Argentina. Mexico is the only major Latin American country that 
has stabilised its situation, partly because of the strong influx of US 
capital under NAFTA, at great cost to US and Mexican workers.

Throughout the rest of Latin America, expectations of declines in Gross 
Domestic Product this year have widened as unemployment soars — to 10 
percent in Chile, 14 percent in Argentina. Several Central American 
countries are still suffering economic crises because of devastating 
hurricane damage.

The world financial crisis has spread to southeastern Europe, most acutely 
to Yugoslavia as a direct result of the US bombing attacks. Albania, 
Macedonia, Hungary, Romania and Bulgaria are also involved.

It is difficult to see how Russia can avoid default on its huge 
international debt.

Washington is attempting to trade a few billion dollars of IMF loans — 
which would be earmarked solely to cover payments due on the existing debts 
— for unilateral Russian disarmament.

Despite the crises surrounding it, the Chinese economy continues to grow, 
assisted by large government programs to offset unemployment as industries 
are rationalised. Official data show a growth rate of more than eight 
percent this year.

Washington recognises China as basically a socialist country, despite the 
inroads of capitalist enterprises. As such it sees China as an enemy and 
conducts a steady flow of propaganda against it on grounds of "human 
rights", Tibet and spying, with warnings against Chinese actions to support 
its sovereignty over Taiwan.

The strong Chinese economy, and the ability of Cuba to escape the world 
financial crisis, shows the superiority of socialism over capitalism.

Unfortunately the AFL-CIO has joined the official US chorus of anti-Chinese 
propaganda, echoing CIA distortions about human rights violations and 
singling out Chinese imports as a cause of job losses in the United States.

The world financial crisis will be resolved by the kinds of programs pushed 
through the IMF and the US Treasury, at the expense of the working class in 
the countries of the world. It can also be resolved by successful working 
class revolutions.

The US has strengthened its role as the dominant imperialist power in the 
world.

The US economy has, for now, been stabilised through military stimulus and 
profits from cheap access to world oil, natural and agricultural resources, 
and labour. Loot flows into the US from world capitalists seeking a safe 
haven.

Most of the benefits have gone to the wealthiest of the capitalist class, 
which is largely united behind an aggressive political and economic agenda 
at home and abroad.

The Communist Party, on the other hand, advances a program for meeting the 
needs of the people: full employment through massive public works programs 
paid for by cutting military spending and taxing the rich; doubling the 
minimum wage and Social Security benefits, reducing the workweek, major 
affirmative action programs, repealing anti-labour laws and all-out support 
for union organising drives.

Conditions for a financial crisis are developing. Such an inevitable 
downturn will worsen the conditions of those already suffering and remove 
the illusion of stability and prosperity from many who appear to benefit 
from today's economy.

During an economic crisis, the weakness of capitalism becomes visible to 
large numbers.

While big business will try to shift the full cost onto the working class, 
our ability to resist takebacks and extend our rights depends in large 
measure on the strength and direction of the labour movement and other 
people's movements, not least of which is the Communist Party.

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People's Weekly World