It's the Economy, Stupid!...Right?

i'm no expert in economics, but here's what i've been able to gather about the economic trouble we're all in right now. in the fall of last year one sector of the economy fell apart. basically a huge amount of loans were made to people who couldn't possibly pay them back (remember all those "refinancing" and "debt consolidation" commercials on TV?). the loan companies that made these sales then turned around and sold the debt to investors all over the world. apparently these "subprime" mortgage loans sold like hotcakes. the problem? well, remember how in those commercials they talked about "adjustable interest rates"? at the time the loans were made interest rates were incredibly low and so lots of people thought they could afford the loans (and the loan sharks did their best to rake in the cash). but the interest rates actually began to rise and people realized that they couldn't afford their payments.

terror struck "the market". billions of dollars were riding on these loans and if people couldn't pay them back then companies who held their debts would lose a lot of money. what this translates into is a loss in profits. see, companies predict what their earnings are going to be and then investors buy shares in order to get a cut of the profits. but when a company announces that it will be making considerably less money than it predicted, the investors start to jump ship, which lowers the price of the stock, which in turn makes it difficult for the company to make money through stock sales. now the company that is holding bad debts has not only lost money on those debts, but has also lost the ability to recover that money through stock sales, a double loss. now multiply this across thousands of companies and you can see why there's economic trouble.

now, the neoliberal economists would have us believe that this is simply the result of greedy lenders and ignorant borrowers. they want us to think that this crisis is the product of bad investments. their solution is to "let the market work it out," meaning let wome folks go broke. meanwhile those with lots of money can buy up the destroyed companies and, when the good times return, sell them high. depressions and recessions, after all, are a GOOD thing for the superrich, because they eliminate small businesses and competitors, leaving only the major corporations who can weather the storm.

"that's economics," they say. "what we need are smarter investors and for people to stop spending more than they earn." meanwhile politicians are promising tax cuts (for who?) to "put money back in Americans' pockets." financial responsibility and cuts in government taxes (and therefore government services) are the remedy. sound familiar? it should, it's the classic economic conservative line. "small government" (that is when it comes to controlling markets) and placing responsibility for economic conditions on individuals.

but the problem isn't that people are living luxuriously beyond their means. the problem is that while income has remained the same or declined for most folks, the cost of essential commodities has steadily risen. this has been especially true in the last year when food and energy prices have skyrocketed along with unemployment and wage freezes (or cuts). a decline in "real wages" means a decline in the buying power of one's wages. for example, if, like me, you make $8.75/hr this will buy a certain amount of food and pay a certain number of bills. but if gas and food prices increase, along with the costs of healthcare, education, and housing that same $8.75 will not buy as much. needless to say, when prices go up it is a rare company that gives workers a proportional raise to match the cost of living. the result is that wages buy less and less with every passing year. real wages have been on the decline since 1964.

no wonder, then, that people live more and more on credit. and credit that they can't possibly repay. in order to go through college you gotta dish out money many people don't have. not going to school may be more affordable in the short run, but it will mean steadily declining earning power as the economy slumps. or maybe you want to buy a car or a house. i mean, just buying the most basic long-term goods for the "middle-class" lifestyle is unreachable for so many people who are used to that life. so what the economists are telling them is that they need to accept the fact of their decline in social and economic position. "living within one's means" translates into downward class mobility, not "responsible spending".

for those of us already at the bottom, we will increasingly find out that the well goes still deeper. those who think food shortages caused by lack of money rather than scarce food supplies were something restricted to Mexico should check rising food prices. your food might make more profit for agribusiness in donald trumps cars than in your stomach. they're calling it "biofuel". unemployment is eating up more people. we can expect to work more hours and more jobs just to stay afloat. we can expect employers to take advantage and crack down on any resistance or "insubordination."

but is this all economics? yes and no. economics is nothing but social relations of power represented through objects and money exchange. the cause of this economic crisis is not foolish spending, it's the insoluble contradiction of capitalism: workers cannot buy back what they themselves produce. the less you pay workers, the less they can afford to buy. and, in the end, workers are consumers. if capitalists can't sell their products, they can't realize their profits. so capitalism is increasingly wracked by economic credit crises in which, periodically, huge purchases will turn out to be unpayable and we will fall into a recession or depression.

this will not go away. the more wealth is concentrated in the hands of the wealthy, the more we will see these crises, and the US will not at all be immune to them. say good bye to the "first world", my fellow americans!

but there's hope: organizing for power. revolutionary organizing is the only way out of this mess. tax cuts won't work, they only weaken government programs, which really means cutting out service for the most poor. corporate taxes definitely won't work. personal savings can't help if your money is worth less and less because companies are raising prices. the choice is between increasingly vicious struggles between the have-nots over the crumbs or radical organizing, popular and revolutionary democracy, and the expropriation of the wealthy.

it's not the economy, it's power, compañer@s!