Unfinished Hammering of Labor and Production

On May 28, 2020, John Lonski, chief economist at Moody’s Capital, said:

Both the troubling outlook for debt repayment and the unfinished hammering of an already weak labor market underscores the highly speculative nature of the latest rallies by equities and corporate bonds. In addition, corporate earnings have yet to escape from a now deep contraction.1

The inherently chaotic, anarchic, unplanned, and violent nature of the “free market” ensures that the outmoded capitalist economic system always lurches from crisis to crisis and is never free of upheavals and instability.

The absence of conscious human planning and control of the economy means no balance and coordination exist in the economy. It means economic unevenness, disharmony, and distortions prevail. Even in 2020, everything about the economy is left to chance, spontaneity, irrationalism, and mystery—the “invisible hand.” People are supposed to believe that the economy cannot even be understood, let alone controlled and operated in a pro-social crisis-free manner. Adding insult to injury, we are repeatedly told that, for better or worse, we have to accept that “this is just the way it is.” The chaotic and anarchic nature of production and governance under capitalism is a main reason why the response to the current health crisis is very inadequate.

To restore “equilibrium,” to recalibrate production and consumption, capitalism must regularly shed workers and productive capacity until it is “ready” once more to start all over again from the ashes of its own wreckage and destruction. It must repeatedly self-destruct and take everything down with it. The ruling elite like to cynically prettify this widespread ruin by calling it “creative destruction.”

The destruction of productive capacity has taken many forms over the years and includes imperialist wars, mergers, layoffs, pay cuts, benefit reductions, factory closings, bankruptcy proceedings, and more. This is how capitalism renews and extends its life.

It has become more clear in 2020 that the irrational destruction of society’s productive capacity that started in 2008 was not enough to preserve capitalism. Twelve years after the “Great Recession” no capitalist economies have really recovered. Capitalism needs to destroy more labor and production before hitting rock bottom and re-starting. The “COVID Pandemic” has provided a convenient pretext and cover for this inevitable destruction of productive capacity.

The loss of 40 millions jobs in the past 10 weeks is just one sign of this inhuman shedding of productive capacity. The rise of personal and corporate bankruptcies is another sign. The elimination of thousands of businesses also shows that capitalism remains “over-leveraged” and still has a long way to go before it can hit the “re-set button.”

Policies, regulations, and laws may mitigate certain economic realities, but they cannot change the inherently anarchic logic and operation of such an anachronistic system. This is why the idea of “reforming” or “improving” capitalism is wishful thinking.

The need for a vibrant, self-reliant, diverse economy controlled by working people, not private competing interests, is greater than ever. An alternative to the existing aim, motivation, and organization of the economy is needed here and now. An economy that concentrates more wealth and power in the hands of a tiny ruling elite is only going to ensure more and deeper crises.

Part of moving forward involves overcoming entrenched capital-centered ideas about workers and the economy.

A capital-centered perspective views workers as a derogatory “cost of production,” whereas a human-centered outlook views humans as the most valuable asset in life and the only source of value. Workers, according to this latter perspective, are not a cost or liability to anyone. They are not disposable or simply a number in a budget. As the producers of wealth and operators of the economy, workers must control the social product they alone produce and use it to ensure the extended balanced reproduction of society and the well-being of its members so as to avoid frequent crises, recessions, and depressions that regularly ruin the lives of millions.

There is a pro-social alternative to the chaos, anarchy, and violence of the “free market.” We do not have be dominated by an economic setup that endlessly wreaks havoc on people worldwide. The productive capacity of society can and must be brought under conscious human control.

  1. Moody’s Analytics,  Capital markets research, May 28, 2020. []
Shawgi Tell is author of the book Charter School Report Card. He can be reached at stell5@naz.edu.. Read other articles by Shawgi.