Figure from EPI
Unemployment in the US, according to official figures, stands close to 16%. Millions upon millions of people want full time employment, but are denied it. Why are they denied employment? Not because there isn't enough surplus capital laying around. The ruling class is literally hoarding heaps of it right now. Factory equipment, raw materials, and funds sit idle alongside masses of workers who desperately need work to make ends meet. Why aren't the two combined together? It can't be because the population is simply too satisfied and has no need of things that workers could produce using that equipment and raw materials. The economic crises has devastated millions. Unmet human needs abound. But how can that be? Why is it that millions of unemployed workers, desperate for work, are kept at arms length from masses of unused capital, when there are so many unmet human needs? What does this say about the basic priorities of our economic system?
Unemployment is devastating. It can entail eviction, foreclosure, going without meals, mounting debt, family collapse, deep insecurity, and health crises. In addition to the crushing effects it has on one's finances, it can also be a punishing blow to one's self esteem and sense of self-worth. That is because unemployment is often discussed as if it were a purely personal problem. If you're unemployed, it must be that you just haven't tried hard enough to find work. Or maybe you're just undeserving. You have no one to blame but yourself.
Of course, that is bullshit. At any given time, there are fixed number of jobs and a fixed number of people looking for them. The number of jobs is always smaller than the number of job-seekers. Even during boom periods. It's simple arithmetic. The main issue isn't whether some individual person "tried hard enough" to find work. The main issue has to do with the total number of jobs available at any given time.
Of course, if it's not the moralizing "personal responsibility" line on unemployment, it's the fatalistic "weather" perspective that dominates. According to the "weather" perspective, unemployment should be thought of as if it were the same as bad weather. Just as the shifting of temperatures or the movement of destructive storms is beyond our control, so is the unemployment rate. Maybe we can learn to better predict when and where it will increase or decrease, but by and large we have to accept that it is largely a process beyond our control. Human intervention in both meteorological and economic matters boils down to an apolitical process of "scientific management" from which we can expect very little.
But this image of unemployment as a "natural" process we can neither understand nor control is not just false. It plays a particular political function: it obscures the fact that unemployment is persistent feature of economic systems based on profit.
As I noted above, we are witnessing a situation in which masses of surplus labor sit idle side by side masses of surplus capital amidst a world of human need. For Marxist theorist David Harvey, this is the definition of a capitalist economic crisis: "surplus capital and surplus labour existing side by side with seemingly no way to put them back together".
But why aren't they put together? If there are tons of unmet human needs, tons of people willing to work, and tons of machines, raw materials, etc. what's keeping them from being combined to meet those human needs? The answer is simple: profitability.
Our society is one in which there are masses of capital, unused, sitting side by side masses of labor, which are unemployed, simply because it is not sufficiently profitable for the ruling class to combine them at the present moment. Right now, those with vast resources and millions in assets are, in effect, waiting for more profitable investment opportunities to come along. They can afford to wait, after all, because they don't have a mortgage to pay, a family to feed, or bills to pay. There's no urgency. They're under no duress to hire anybody or invest in anything. They are perfectly happy to sit and wait until they can get the kind of return on their investments that they've come to expect. Meanwhile, millions of people are forced to endure escalating degrees of economic misery and all that accompanies it, with little hope of anything changing in the short run.
The same system that over-works people to the bone f0r poverty wages when its profitable to do so, casts workers aside and denies them employment when exploiting them is no longer lucrative. Either workers are exploitable or they are redundant and expendable. If the capitalist doesn't want to buy their labor-power they do not find work. For the worker in capitalism, the only thing worse than being exploited, it seems, is not being exploited. At no point in this process are the goals of human development or meeting human needs paramount. Profit is the law of the land.
Accordingly, for both of the major capitalist parties, the answer to this calamity, to the extent that it is discussed as a calamity at all, is to restore profitability to the system. Both parties think that the way to reduce unemployment is to once again make it profitable for the ruling class to invest their masses of capital. Of course, they disagree about how to do that. But they agree that that's the way to fix the problem. All we need to do, they tell us, is to find a way to induce the ruling class to invest their huge surpluses by making it worth their while. If we can just get the big profits flowing back in the direction of the ruling class everything will be puppy dogs and ice cream.
To say that this is remarkably short-sighted is a massive understatement. As we know, capitalism is a highly unstable system in which devastating crises (with high unemployment) are frequent. But set that aside. How are the politicians from the two major parties going about trying to restore profitability?
One strategy is to bailout corporations by injecting billions of dollars in public funds into them. The Federal Reserve revealed that more than $3.3 Trillion has been spent doing just that since 2008. That means that toxic assets were purchased by the government, thereby allowing private losses to be transformed into public losses.
A related strategy is austerity. Austerity is required because of the massive amounts of toxic private assets were transferred to public rolls. This massive increase in public indebtedness, combined with sinking revenues from taxation, has unsurprisingly caused public budgets to tank. But rather than asking the ruling class to pick the mess that it made, governments are forcing the masses of the population to pay for the crisis by accepting cuts to our standard of living (e.g. cuts to public transit, housing, health care, education, unemployment benefits, basic city services, utilities, you name it).
Another strategy, related to the austerity, is to weaken the bargaining power of labor. Because the ruling class won't budge, the thought is that the State should try to force labor to give up ground. That means some combination of union-busting, layoffs, wage and pension cuts, and so on. If wages can be driven down low enough to make it profitable enough for the ruling class to invest again, then this strategy will have achieved its basic goal. This is what lies behind the assault on the stronger public sector unions in the US right now.
Of course, even from a ruling class perspective, these strategies are deeply contradictory. First of all, as the example of Greece has clearly shown, austerity only further depresses the economy. By eviscerating the living standards of ordinary people, their purchasing power takes a hit as well. And by gutting unions and imposing wage cuts and salary freezes on workers, demand is similarly pushed down. This, of course, means that there is nobody to buy all of the shit that capitalists sell on the market. The old solution to this problem, popularized in the 1970s, was to pick up the slack in demand by giving everybody a credit card. But, for obvious reasons, this isn't a solution available to the ruling class at the moment. Austerity is not a viable way out of this crisis. To be sure, the ruling class can eek out a meager existence for 10-15 years or so amidst stagnant growth rates and high unemployment. But austerity provides no path to short term recovery.
Austerity, however, is what the ruling class knows best. It is rooted in a theory and practice that has been the bread and butter of economic policy for more than 40 years: neoliberalism. Whereas that set of ideas and practices is experiencing a deep crisis, it is not the case that the ruling class has decided to abandon it. It is still the ruling dogma, even if voices calling for a return to Keynesian demand-management are more frequent today than they were in the 1980s and 90s. The ruling class is not a well-oiled machine that learns quickly from what's going on around it. It is still convinced that austerity, which is no more than good ol' IMF-style structural adjustment, is the only way forward.