The Current U.S. Economic Boom in Historical Perspective (Pt 1)

U.S capitalism has been in decline for decades. Within that long-term trend, U.S. capitalism continues to experience cyclical booms. During its dramatic rise between 1865 and 1929, the U.S. economy experienced three major financial panics—1873, 1893 and 1907—along with numerous lesser recessions. However, the increase of the number of workers employed in manufacturing—which represents the core of capitalist production and the core of the working class—that occurred during the industrial booms of that era was greater than the declines that occurred during recessions. In the years 1945-1979, though the number of workers in manufacturing began to decline relative to overall employment—a symptom of capitalist decay—that number continued to grow in absolute terms.

However, since the recession 1979-82, known as “the Volcker shock,” the pattern has reversed. The U.S. economy has continued to experience cyclical booms—defined as periods of above-average business activity in terms of industrial production, manufacturing, and overall employment and trade—as well as recessions. But the rise in manufacturing employment during booms—if any—has been far less than the declines during recessions. Therefore, the year 1979, which marks the beginning of the Volcker shock recession, represents the most important turning point—not excepting 1929—in the history of U.S. capitalism.

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One Response to “The Current U.S. Economic Boom in Historical Perspective (Pt 1)”

  1. citizencokane Says:

    Great article! I am the office manager/accountant and occasional field assistant/handyman for a small business that specializes in moving and installing industrial machinery in the Midwestern U.S., and I have observed a number of interesting trends:

    1. Sales (i.e. orders to unload/install/relocate machinery) have gone way way up over the past three years. I will refrain from giving an exact number for reasons of wanting to keep my job, but if you ask any of the businesses in our industry locally they’d tell you business is up by at least several tens of percent over the last several years.
    2. The new metal lathes and break-presses that we install for companies come about 80% of the time from China and 20% of the time from Germany. A lot of the time, this entails removing American-made 1950s-era machines to make room for these new fully-computerized machines, and the old machines either get scrapped about half the time for about $100/ton (~$1000 total for a typical 20,000-lb machine) or are re-sold at a huge discount to smaller businesses.
    3. Small customers will usually try to pay their invoices within two weeks (perhaps trying to make a good impression), whereas big customers will take their sweet time, paradoxically, and go right up to 45 days on-the-dot to pay their invoices. I predict that, as the boom ripens the preconditions for a new crisis of overproduction, I will start to see the small customers in particular become later and later in their payments.
    4. Felony convictions are no longer an absolute impediment to getting a job. Several years ago, we used to be able to get “normal” workers with a bit of handyman experience for $10/hr. Last year, we got laughed at by respondents for putting out that sort of offer on craigslist. Shortly after that, my boss started hiring temp laborers through a day-labor agency for $10/hr, all of whom happened to be ex-cons. Most of them turned out to be great workers who worked hard and generally had a bit of practical handyman skills already, although the main problem with them was that their attendance tended to be a bit inconsistent due to lacking personal transportation, needing to meet parole officers, having to move frequently, troubled home lives, other personal issues, etc. These guys were getting seriously ripped off too. My wife and I were renting an apartment for $475/mo, utilities and internet included, whereas these guys couldn’t afford two months’ deposit or get their credit history approved and had to settle for worse-quality apartments paying $175/week, plus having to pay ridiculous car insurance rates if they did try to get a car instead of using the horrible city bus system. If you figure, at $10/hr, their take-home way was about $350/week, there was no freaking way they were ever going to “get ahead” after paying 50% of their income on rent. Pretty demoralizing, I have to imagine. Pretty often they would run into some new legal trouble or have some drama break out with a fellow temp worker and get re-assigned to a different business, and the inconsistency started to affect my boss’s ability to have enough workers to meet job commitments on some days, so now my boss is offering $13/hr to try to get some more “consistent” employees again. Of course, I also know what “time & material” rates he actually charges businesses for, and what his rate of profit is after taxes, insurance, overhead, repairs, and everything, but it would probably be crossing a legal line to talk about that (pretty much everything else I’ve said up to this point is publicly-available knowledge).
    5. Right now my boss keeps buying new moving equipment (cranes, etc.) and talking about “expanding the business.” Demand doesn’t even occur to him as an issue. He knows his competitors in town on a personal basis and sometimes hires them as subcontractors for extra help if they have a piece of equipment that would work better for a job, and my boss’s attitude right now is that “there’s plenty of fish in the sea for all of us.” My guess is, that “generous,” “brotherly” attitude (towards fellow petty-capitalists, that is) will change come the next crisis of generalized overproduction.

    Anyways, I was wondering if you would ever revisit an issue you touched on in a footnote two months ago, where you said:

    “Should we oppose immigration in an attempt to defend the value of labor power, or at least the real wages of workers in the imperialist countries? If you look at things as a trade unionist, the answer might be yes. In that case, your aim is to create the greatest possible shortage of labor power on the market in order to shift the relationship of forces from the buyers of labor power—the capitalists—to the sellers of labor power—the workers. But if your aim is to transform global capitalism into socialism—a world socialist revolution—the answer must be an unconditional no! The attitude toward immigration tends to be the dividing line between reactionary economic nationalist forces that operate within the workers’ movement and the revolutionary forces within that movement. More on this next month.”

    It doesn’t look like you ever really went back to this issue, which is a shame because I consider this one of the most important issues of Trump’s presidency. I’m hoping you revisit it and explain, in particular, how we can make the aim of transforming global capitalism into socialism seem realistic…because, otherwise, as you pointed out, the only “rational” alternative is to look at things like a trade-unionist, which means shutting the competition for your wage-labor out of the market as much as possible, regardless of what disadvantages that has for those “competitors” (your fellow wage-laborers).

    I have often been cynical about trade union struggles. I know that, as per Marx, increases in wages come out of surplus value and profit instead of directly driving up inflation, as the erroneous iron-law-of-wages would have it. But I can’t help but feel that, unless union wage gains are partially translated into some sort of class-wide “strike fund” or “support fund” to help sustain class-wide struggles, trade union struggles only end up creating a labor aristocracy, which means we communists do not really have any dog in that fight and would be wise to not waste our precious time, attention, energy, etc. as activists on trumpeting those union struggles…UNLESS, of course, they have a line like the IWW that explicitly ties the union gains to an intention to help the class struggle as a whole.

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