An economic crisis is sweeping the world; only a few countries are out of its jaws and none of them have the capacity to drag the rest of the world along with them.
This is no ordinary cyclical crisis in which a decline in economic activity is followed by a robust revival that raises income and creates jobs.
Not since the 1930s has the world experienced a crisis of such depth, duration and consequences for working people worldwide.
It is as much structural and institutional as it is cyclical.
The neoliberal model of bubble debt-driven growth and accumulation has come apart at its seams in country after country. Like Humpty Dumpty it can't be put back together again in the same old way.
Most countries and regions are locked into slow growth and stagnation; only a few – China among them – are growing at respectable rates. In the Global South the impact is catastrophic. Deeper poverty is layered onto deep poverty.
And Europe teeters on the edge of disaster. Greece is the immediate epicenter. Its economy is unraveling and the class struggle is intensifying, thanks in large measure to the draconian loan conditions imposed on the Greek people by the European Union and the International Monetary Fund. A default on government debt is in the realm of possibility, which in turn could easily disrupt financial markets in Europe and perhaps elsewhere in the world.
It's no wonder there is little evidence that a dynamic and broad upturn on a global level is in the making. If anything, the prognosis for the world economy in the short and long run is not promising.
The only winners so far are the wealthiest families and corporations. Out of this crisis they have emerged with their profits, power and privileges intact. A few have fallen by the wayside to be sure, but only to be swallowed by bigger rivals – as Marx predicted.
For all practical purposes, finance capital, which includes non-financial corporations such as GE, Ford and others, continues to sit at the apex of the economy.
Status of U.S. economy
After a weak and lopsided recovery heavily favoring the capitalist class, the U.S. economy looks to be on the cusp of a new downturn. The much-talked-about double dip is knocking on the door.
The signs are everywhere.
The housing market is in the throes of another slide downward. Both housing prices and startups are down while foreclosures are up.
Consumer spending limps along too, as working people postpone purchases and pay down their debt.
Economic growth rates are paltry, failing to meet earlier very modest projections.
Credit remains tight as banks are reluctant to lend.
Investment lags as businesses, awash in $2 trillion in investible funds and underutilized production capacity, are reluctant to sink money into new plant and equipment as long as demand for goods and services muddles along.
Export markets remain weak, despite the fall in the dollar's value on international currency markets. And there is little hope that this will significantly improve since much of the world — and Europe in particular — is in a similar or worse economic predicament.
Real wages are flat, contributing to the slack in consumer markets.
Worst of all, the jobless rate is 9.1 percent officially. And unofficially, unemployment is roughly 15 percent. All together 25 million people are either unemployed or underemployed.
Behind these economic indicators lie people – real live people facing evictions, foreclosures, dwindling income, a jobless future, homelessness, hunger, worry, insecurity, broken spirits and shortened lives.
Behind these economic indicators lies a crisis that is exacting its worst suffering on the poorest and most vulnerable members of our society.
Behind these economic indictors lie young people who are out of school, out of jobs, and out of luck.
Behind these economic indicators lies the scourge of racial and gender discrimination and oppression. This crisis, while indiscriminate in its destruction, exacts a higher price from people of color and women. This is reflected in every index that measures social and economic wellbeing.
Unfortunately, short of finding a new developmental path that restructures the economy, institutions and power in the interests of the world's working people, it is hard to see how the U.S. and world economy will get their mojo back.
Even mainstream economists see no easy solution to the financial crisis and the Great Recession. In a recent column, Lawrence Summers, the former economic advisor for the Obama administration, writes that we run the danger of a lost decade much like Japan if we don't stimulate the demand side of the economic equation – that is, create jobs and raise incomes of low- and middle-income people.
Thus, an immediate question is: what is required to throw the economy and job growth on an upward trajectory?
An anti-crisis program
We favor a program that combines immediate measures with far-reaching demands. What worked in the early decades following World War II is inadequate now given the nature and scope of the crisis.
Then, working-class consumers were eager and able to buy goods and services, now they are weighed down by household debt; then the housing market was growing in cities and suburbs, now it is contracting. Then the growth curve of mass production industries, led by auto, was upward, now these same industries are smaller and employ far fewer workers; then the U.S. was an unrivaled economic juggernaut worldwide; now global markets are crowded and competition is fierce. Then a social compact existed between capital and labor, now capital has declared war on labor; then confidence in the dollar as a means of payment and store of value was high on international markets, now confidence is eroding. Then U.S. workers enjoyed ample job opportunities in a relatively protected labor market, now U.S. workers find themselves in a labor market that is worldwide, thanks to globalization and the entry of the working classes of China, India, and Russia. Then global warming and the environmental crisis didn't imperil humanity's future; now they do.
In these new conditions, simple Keynesian policies – that is, stimulus spending (pump priming) – will ease the crisis, but won't attack it in a fundamental way. Thus economic stimulus should be combined with a more ambitious program for immediate relief, jobs, equality, sustainability, and peace.
1. Immediate relief
A moratorium on foreclosures and evictions. Reset mortgages so payments are affordable. Unemployment compensation from job to job, increase benefits. Increase food stamps, WIC, children's health insurance, and low-income energy assistance. Turn banks and financial institutions into a democratically-run public utility and democratize the Federal Reserve Bank.
Assist deficit-ridden state and local governments so they can preserve services and jobs. Fund "ready-to-go" infrastructure projects.
2. A peacetime, green jobs economy
Enact massive public works job creation to make existing buildings energy efficient, construct new schools, hospitals, affordable housing, mass transit and bridges. Give priority to areas hurt by loss of manufacturing, loss of family farms and highest unemployment areas.
Major projects to increase efficiency and lower cost of solar, wind and biomass electricity generation. Immediate program to cut greenhouse gas emissions and for environmental cleanup. Restore federal energy regulation and encourage public ownership of utilities.
Enact the Employee Free Choice Act to enable workers to form unions without intimidation.
Extend Medicare to all. Fully fund public education from preschool through higher education and technical training. No privatization of Social Security or Medicare. Protect Medicaid. Expand and improve benefits.
3. Restore civil rights, the Bill of Rights and separation of powers
Affirmative action in employment, education and housing. End the "school to prison" pipeline. Outlaw hate crimes.
Preserve Roe v. Wade.
Pass immigration reform with amnesty, a path to citizenship, no militarization of the borders, and no exploitative guest worker programs. Stop the raids and deportations. No human being is illegal.
Repeal the Patriot Act. Restore Habeas Corpus rights. No more torture.
Expand voting rights. Enact publicly-financed elections, same-day registration, and voting rights for ex-felons. Restore the Fairness Doctrine in media.
4. Strength through peace
Complete the withdrawal of U.S. troops from Iraq, with no bases or U.S. corporations left behind. Full care for returning veterans. No war on Iran. Withdraw troops from Afghanistan. Assistance to Iraqi people to rebuild their country. End the bombing of Libya and encourage a ceasefire and political solution to the conflict.
Adopt a new foreign policy accenting diplomacy and respect for all nations. Renew commitment to the UN's peace role. End trade policies that enrich corporations while destroying jobs. Ratify climate change agreements.
Enforce nuclear non-proliferation, work to abolish nuclear weapons. Cut Pentagon spending in half, close down U.S. bases around the world.
Of course, we aren't so naive to think that we can win such a program at this moment; the balance of class and social forces doesn't allow it. A necessary, but not sufficient, condition for its realization would be a landslide victory in the 2012 elections.
