The Self-Destructive Logic of Capitalism and the Occupy Movement

After three years of economic crisis that has caused increasing economic hardship for most of the world population, the year 2011 started with a blast of hope in the form of a revolutionary wave of demonstrations and protests in the Arab world. This wave swept through more than fifteen countries in northern Africa and the Middle East and inspired similar uprisings throughout Europe. The Indignados movement in Spain and the popular uprising in Greece during the summer were followed on October 15 by one of the largest global protests against economic and social injustice in history, throughout 951 cities in 82 countries. This worldwide protest was part of a growing global uprising known as the Occupy movement that had begun less than a month earlier in New York City and which called itself Occupy Wall Street (OWS). In the context of popular struggles that preceded it – like the civil rights movement in the US in the 1960s, the occupation of land by the Brazilian Landless Workers’ Movement (MST) in the early 1980s, the indigenous uprisings in Latin America that emerged in the early 1990s, and the occupation of factories in Argentina after the 2001 crisis – the Occupy movement can be seen as the latest and most effective form of popular resistance to capitalism throughout the globe. In this article I discuss how the current global crisis of capitalism is presenting humanity with the opportunity for revolutionary change towards a more humane and sustainable world.

Marx’s analysis of capitalism is today more relevant than ever.¹ According to Marx the capitalist system is based on the production, expansion, and appropriation of value by the capitalist class through the exploitation of nature and of human labor. In this social system, the surplus value obtained in the production process is appropriated by the capitalist class in the form of profit. Profit thus becomes “the lifeblood of capitalism,” and capitalists in their obsession to maximize it face a violent struggle on two fronts: against the workers in the production process, and against other capitalists in the marketplace.² In this two-front struggle, those capitalists who are able to introduce labor-saving technology will prevail. On the one hand, this technology allows them to control workers more efficiently by increasing their productivity, by threatening them with layoffs, and by periodically implementing this threat. On the other hand, in the struggle against other capitalists, labor-saving technology lowers the unit cost of the commodities produced, which in turn allows those who have introduced it to cut their selling prices and thus drive competitors out of the market.

But labor-saving technology at the same time carries a very high cost to capitalists, as it forces them to adopt a self-destroying strategy of survival in which they reduce the profit-creating component of production (labor), negating in the process the ability to create value and the profit engine that drives the system. This self-destructive mechanism, which Marx identified as being the driving force of individual capitalists, is also present in the workings of the system as a whole. The capitalist economy moves over time in cycles: periods of expansion are followed by periods of contraction (recessions). During recessions the competitive struggle among individual capitalists intensifies and the general destruction of capital becomes the mechanism for generating new periods of accumulation. At this macro level the destructive mechanism operates at two levels: that of the social environment (by creating high levels of unemployment and weakening the economic status of workers, so as to reduce the cost of labor) and that of the natural environment (by putting the resource-base at risk, so as to reduce the cost of raw materials and energy).

If we apply Marx’s insight regarding the self-destructive logic of capital to the working of the US capitalist system, we can see the disastrous effects of this mechanism on America’s social and natural environments since the so called “Great Recession” started in December 2007. During these last four years the social destruction included the increase in unemployment to 9% of the labor force (approximately 14 million people). In effect, the system no longer needs them. The social tragedy created by capitalism also includes the worsening of economic conditions for those who remain employed. This is shown in the evolution of household income. In the US, income for the top 1% of households increased by 234% between 1970 and 2010, while the income of 99% of households remained constant, fluctuating between decreases of -3% and increases of 6% throughout most of this period. The increasingly unequal distribution of income can also be seen by comparing the average pay of chief executive officers (CEOs) with that of US workers. The ratio went from 24-to-1 in 1970 to 243-to-1 in 2011.³

Capitalism’s destructive impact on the social fabric is complemented by its devastating effect on the natural environment. The adoption of a new drilling technique known as hydraulic fracturing, or fracking, by energy companies has led to an economic boom in the natural gas industry and to the reduction of energy costs based on natural gas to historically low levels.⁴ Celebrated by capitalist firms as a great technological breakthrough that has lowered the cost of energy used in production, fracking has also caused an environmental catastrophe with fatal health consequences throughout poor rural communities in the US.⁵

Although it seems unthinkable that any human society will tolerate this ongoing attack on its social fabric and natural environment, the destructive logic of the capitalist system continues to be implemented in the US and worldwide without any major obstacles simply because it benefits a corporate minority in power that continues to place the drive for profit maximization over anything else. For example, Caterpillar Inc. is successfully pressuring workers at a Canadian factory to accept a cut of 50% in their wages and benefits by citing lower wages not in China or Mexico, but in the US.⁶ The US, with its loss of 2.3 million jobs during the latest period of general capital destruction (2008-09), complemented by “more-flexible” work practices and an increase in automation, has become the new pool of cheap labor. US manufacturing labor costs per unit of output in 2010 were 13% below the level of a decade earlier and far below the unit labor costs in Canada, where they increased by 18%. Along with lower wages, Caterpillar is also benefiting from cheaper energy as a result of the unrestricted adoption of fracking by US energy companies. At the worldwide level the conservative International Energy Agency (IEA) in its World Energy Outlook of November 9, 2011, warned that dangerous climate change caused by capitalism’s addiction to fossil fuels will be irreversible within five years and urged governments to do what they could to prevent this outcome. But governments have shown, as recently as the December 2011 UN-sponsored Climate Change Summit in Durban, South Africa, that they are not willing to contradict the logic of capitalism. In fact, even the left today finds itself adopting and supporting a destructive model of development based on the unlimited exploitation of fossil fuels and other natural resources, as is the case with the self-identified socialist governments of Venezuela, Bolivia, and Ecuador.

As it responds to the worldwide economic crisis, capitalism shows its continuing strength by activating its own destructive mechanisms. The Occupy movement has the power to unleash what is probably the only force capable of stopping this ongoing destruction: the force of masses of people rejecting this brutal system while working together to build a more humane and sustainable society. In the words of the occupiers themselves:

Fueled by anger at the growing disparities between rich and poor, frustrated by government policies that benefit a tiny elite at the expense of the majority, and tired of the establishment’s failure to address fundamental economic inequalities, Occupy Wall Street offered a new solution. We built a People’s Kitchen to feed thousands, opened a People’s Library, created safer spaces, and provided free shelter, bedding, medical care, and other necessities to anyone who needed them. While cynics demanded we elect leaders and make demands on politicians, we were busy creating alternatives to those very institutions. A revolution has been set in motion and cannot be stopped.⁷

Notes

1. The following discussion of Marx’s insights is based on the three volumes of Capital.

2. In Marx’s own words: “The production of surplus-value, or the making of profits, is the absolute law of this mode of production.” Capital, Vol. 1, New York: Vintage Books, 1977, 769. See also Anwar Shaikh “The Power of Profit,” Social Research, Vol. 71, No 2, Summer 2004, for a discussion of how the profit motive and the war-like struggle for profits among capitalist firms have been “pacified” in the economics literature. 3. Lawrence Mishel and Josh Bivens, Occupy Wall Streeters are right about skewed economic rewards in the United States, Economic Policy Institute Briefing Paper #331, 2011.

4. Fracking is a process of injecting water, sand, and chemicals into deep shale formations to free trapped natural gas. The major risk of fracking is contaminating groundwater with fracking fluid. Other risks include air pollution, destruction of roads and bridges, seismic activity caused or exacerbated by the hydrofracking process’s underground detonations, contamination of farmland, and over-extraction of fresh water from lakes and other sources.

5. Mary Beth Adams “Land Application of Hydrofracturing Fluids Damages a Deciduous Forest Stand in West Vergina”, Journal of Environmental Quality, Vol. 40, No. 4, 2011. This two-year study concluded that hydrofracturing fluids are so hazardous to forest life that they should be treated as toxic waste. A separate study by Stephen G. Osbon et al, “Methane contamination of drinking water accompanying gas-well drilling and hydraulic fracturing” Proceedings of the National Academy of Science, Vol. 108, No. 20, 2011, provided for the first time evidence that linked fracking with patterns of drinking water contamination so severe that some faucets can be lit on fire.

6. James R. Hagerty and Kate Linebaugh, “In the U.S., a Cheaper Labor Pool,” Wall Street Journal, January 6, 2012.

7. From http://occupywallst.org/