Despite the media trumpeting the end of the U.S. economic crisis, the U.S. is in a depression. This depression is a necessary part of the capitalist system and reflects capitalism’s racist nature. Ultimately, the only way to make conditions better for workers worldwide is communist revolution. 

Capitalism is unplanned and competitive — the measure of success of any company is maximum profit. U.S. manufacturing is in long-term decline compared to its world rivals, mainly due to the falling rate of profit in highly automated U.S. industries. Since the 1970s, falling wages for U.S. workers have meant they can’t buy the very commodities they produce. This in turn has led to one new credit gimmick after another. The latest of these were mortgage scams, which caused home prices to soar. The inevitable collapse of those prices has set off a chain reaction of foreclosures and economic crises. 

Jobless ‘Recovery’

Conditions of workers in Africa, Asia and South America are much worse than those of U.S. workers. But workers here are already at depression-era levels of unemployment. A U.S. Federal Reserve chief concedes that the “official” national unemployment rate would skyrocket to 16% from 9.7% if discouraged workers are added to figures (Agence France-Presse, 8/28/09). Include those workers who work part-time but would take a full-time job if they could find one and that number goes to 21%, fully 30 million workers. 

In Detroit, the former center of the U.S. auto industry, the official unemployment rate is 28.9%, the highest number since records started being kept (ABC News 8/28/09). The New York Times (NYT) reports (8/11/09) that about a third of the unemployed have been jobless for more than six months, the highest number ever.

Unemployment depresses wages and benefits, improving the boss’s bottom line at the cost of higher exploitation of employed workers. Whatever “recovery” takes place for bosses’ profits, it will be a jobless one for workers.  

Racist Devastation

This crisis has a particularly racist character. Even before this depression started, one-third of the so-called black middle class “was already in danger of falling to a lower economic level” (NYT, 9/13/09). As bad as white workers have been hit, black and Latino workers have suffered even more. 

Subprime and other lousy mortgages were aimed disproportionately at black and Latino workers in urban areas. As mortgage rates adjusted upward, more and more black workers couldn’t pay their bills. Also, by 2010 “40% of African-Americans nationwide will have endured patches of unemployment or underemployment”  (NYT, 9/13/09). Those factors combined have spelled devastation for many black workers.

Two Paths: Endless Profit Wars or Communist Revolution 

The strategy of the U.S. Federal Reserve and Obama’s economic team “was to create staggering amounts of money out of thin air” (NYT, 8/20/09). They printed hundreds of billions of dollars, not backed up by actual value, and used that money to “stimulate” the economy. This has created a budget deficit of $1.8 trillion. U.S. rulers are arguing amongst themselves about what to do next. But it will take nothing short of a major war or series of wars for U.S. and other bosses around the world to get out of this crisis. 

During the Great Depression, the economic growth of 1934-1936 was followed by government spending cuts. But another collapse followed in 1937-1938. What ended the Depression and gave the U.S. capitalists an advantage over it’s competitors was the destruction of German, French, and British factories in World War II and the mobilization of millions of unemployed into the U.S. military. 

How sick is the capitalist profit system? When the loss of 540,000 jobs in one month is considered “a good sign”! That’s how the economic pundits reacted to the government’s jobless figures for April, since they were allegedly lower than job losses for the previous two months. But even that figure is suspect.