For Workers, Capitalism Doesn’t Make a Lot of Sense

One of the stories we read in the newspapers is about the idea that the government, as well as corporations, need to operate in an environment of transparency. The facts are that those who have power work diligently to make sure working people will not uncover the basic facts of the capitalist system.

Entire sections of the news media are dedicated to reporting on the wellbeing of corporations. If there is a sharp upturn or decline in stock market prices, this might be a front-page story. The theme of all these stories is that working people and capitalists have similar interests. However, when we look at rarely mentioned facts, that idea boils down to a mixture of nonsense and absurdities.

Working people’s frame of reference comes from the jobs we do every day. We go to work, do what we’re told, and earn enough money to pay for some of the things we want and need. In the past, workers went on class battles called strikes. The result was that many workers won pensions, and after a lifetime of work they might have paid for college education for their children, a vacation home, and a comfortable retirement.

Today most workers see that environment as a relatively beneficial time in the past. We can see how the system works by taking a close look at the institutions that hold capitalism together.

Banks

Workers come in contact with banks when we need a mortgage to purchase a home. In order to purchase a home, first there needs to be a profit for the corporation that builds the home. Then, the banks sell what might be a 15 or 30-year loan. The workers who pay a mortgage learn that they will pay for this house many times over during the course of the mortgage.

Looking at these mortgages, we see that most of the money workers pay for their homes is in interest to banks. Banks require that the interest on mortgages be paid off first before the principal. Currently banks require an additional insurance charge that will cover payments on the mortgage in the event that workers loose a job. In addition workers must pay other insurance fees as well as taxes and utilities on this house. If a worker manages to pay off this mortgage, that worker can still loose the home for failure to pay taxes.

We might also think about the fact that most, if not all corporations, depend on financing for the day-to-day operations of their business. The interest payments made for these loans are not seen as profits, but as expenses for the corporations. So, while a corporation might claim they are loosing money, the facts might be that banks continue to profit from a corporation that shows no profit.

We should also consider that the only thing a bank does is move money from one location to another. Bankers never do the actual work required in providing for the goods and services working people want and need. These would include: food, clothing, housing, transportation, communication, health care, education, and exposure to culture—art, music, sports, recreation, film, theater, etc. However, banks receive interest payments from the corporations that manage all these enterprises.

Insurance Companies

Insurance companies also profit because banks require workers to pay for insurance in order to qualify for a mortgage. The government also requires workers to pay exorbitant insurance premiums just to drive a car. We should keep in mind that insurance agents never do the actual work to build homes or cars.

Hospitals are required to keep patient information confidential. However, every patient is required to sign a waver that allows doctors and hospitals to give patient information to insurance companies. We might ask the question: Why do insurance companies demand that patients sign this waver?

Clearly doctors study for eight or more years to qualify for treating patients. So, one would think that the diagnosis and treatment plan of doctors would be sufficient to care for patients.

However, insurance companies are in business to maximize profits. One way they can do this is to second-guess the treatment plans of doctors. So, while insurance companies have claimed they are health care “providers,” in reality they are in business to minimize payments for health care.

Advertising agencies

We might think about the fact that all newspapers, commercial radio and television stations rely on advertising for their survival. We might also think about how advertising is not meant to give a rational explanation of what product is the best value. Advertising is about promoting one product over others and only pretends to be objective. Last year over $200 billion was spent on advertising.

Why do corporations spend such vast amounts of money on advertising? In the capitalist system there is a routine decline in the percent of profits on investment. In the above paragraphs we see how corporations must pay exorbitant amounts of money for finance capital as well as insurance and advertising. Because of this reality, corporations are continually obsessed with cutting costs and selling more commodities.

This obsession with selling more commodities is the reason why corporations invest obscene amounts of money in advertising. While this vast amount of money adds no value to commodities, advertising clearly increases the prices for all the things we purchase every day.

One of the goals of advertising agencies is to promote an image of beauty that conforms to a 20 to 25 year old runway model. By doing this these agencies try and instill insecurities in most women about their appearance. By promoting these insecurities corporations sell billions of dollars worth of cloths, jewelry, makeup, and shoes.

In my opinion some of the most beautiful women in the history of the world would include: Harriet Tubman, Mother Jones, Ida Wells, Fannie Lou Hamer, and the Cuban revolutionary Celia Sanchez.

The government

From the time we are young, the government as well as the media indoctrinates us with the idea that we live in a “democracy,” where there is “liberty and justice for all.” The only evidence that supports this claim is that working people have the right to pull levers in voting booths on one day every year. The press routinely ignores candidates that aren’t in the Democratic or Republican Parties. This means that most people don’t even know the names of many of the candidates who are running for office.

Then, we work at jobs where we must do as we are told, or we might be terminated from employment. Employers and not workers are the ones who control the work environment. We have no control over the prices we pay, and little control over the wages we earn. Yet, people who have power routinely argue that we live in a “democracy.”

Clearly immigrants who come from many other nations argue that working people have more rights here than in their home country. We might consider that U.S. based corporations routinely profit off of workers in nations where wages might be $2 per day or less. Clearly a worker who lives in that environment has a strong incentive to come to a nation where the wages are significantly higher. That reality doesn’t make the United States a genuine democracy.

Workers throughout the world have ultimately the same interests. We would like all our family members to have the things we need, as well as some of the things we want. However, at times the government argues that workers in this country need to go to war against workers in other countries. Why?

Before the First and Second World Wars the British government literally ruled most of the world. The contending powers murdered close to eighty million people in those two wars. The Second World War determined what capitalist nation would be the next super-power. After the Second World War the United States went to war against the people of Korea and Vietnam in order to consolidate it’s position as the new world’s super-power.

Understanding this reality, we can say that wars promoted by capitalist powers in no way advance the interests of workers or small farmers. While the government argues that the wars of the past defended our freedom, the reality is that these wars have defended the interests of the most affluent families in the world.

For a combination of circumstances, the victory of the Union Army in the Civil War did benefit workers by abolishing slavery. However, a few years after this war the government also legalized Jim Crow segregation that effectively denied Black people citizenship rights in this country.

The corporate march to disaster

In the year 1929 an international depression erupted throughout the world. This meant that the United States experienced about 30% unemployment and most workers received a cut in pay. This depression lasted for about nine years and only ended because of the international holocaust of the Second World War.

We might consider that in the years of the depression there were sufficient numbers of workers as well as materials to make a dramatic improvement in the standard of living. However, history teaches us that in those years there was a sharp decline in the standard of living. Why?

The problem was, and continues to be, that there are too many commodities on the market that can be sold for a profit. As I’ve attempted to show, the real price of production of commodities is a small fraction of the price we pay. Included in the prices we pay are: interest payments to banks, insurance, advertising, as well as taxes to the government.

None of these payments add value to the goods and services we all want and need. However, in the capitalist system these expenses are all absolutely necessary for corporations to exist.

We might also consider that most of the so-called assets of banks are the loans they have. When a sufficient number of borrowers are unable to make payments on their loans, banks close their doors. The government has stepped in to insure the assets of banks, but that insurance policy will run out of money when there is a widespread run on the banks.

So here we can see how routine business practices that corporate officers view as successful by necessity lead to a full-scale financial disaster.

Workers

In the history of the world, we have seen working people take power in the Soviet Union and in the revolutionary government of Cuba. The Soviet government was betrayed by those who supported the politics of Joseph Stalin. Cuba continues to have a revolutionary government, but it is a largely underdeveloped nation. While the Cuban government gave everyone the right to education and health care, most Cuban people do not have many of the conveniences of workers in the developed world.

However, both these revolutions demonstrate that working people have the potential to transform the world and to work in harmony with the environment. In this blog I’ve attempted to show how there are tremendous resources that could be used to eliminate poverty in the world. In the next paragraph I will give just one more example of the enormous wealth that could be used to eliminate poverty if we had a workers government that makes human needs a priority over profits.

Anyone who reads this blog can Google the question: How much money is invested in derivatives? Google’s answer to this question is $1.2 quadrillion. Then, we can Google the question: What is the population of the world? Google’s answer is about 7.6 billion.

Now, we can divide the money invested in derivatives by the world population. The answer is close to $160,000 for every woman, man, and child on the planet earth. This obscene amount of money is not being used in any enterprise that might benefit workers. Derivatives merely sit as extremely complex bets on the future of the economy.

While Bernie Madoff and Michael Milken went to prison for violating the laws that regulate bonds, the inventors of derivatives received Nobel Prizes. Comparing the money lost by Milken and Madoff to the money invested in derivatives is like comparing a flea to an elephant.

So, the vast wealth that has already been created by workers would be sufficient to eliminate poverty in the world. This wealth as well as a rational political leadership would also eliminate the underlying reasons for war and discrimination. So, why hasn’t this happened already?

For quite a while, most workers in the developed nations have had sufficient resources with respect to our basic needs. While there is widespread hunger and homelessness, most workers have a place to live, food to eat, as well as transportation and a cell phone. In this blog I’ve attempted to show why these conditions will not continue.

My opinion is that when workers are denied the basic means to live, many will be open to the idea of taking power so that human needs and not profits become the priority. We should keep in mind that working people produce literally everything we want and need. Capitalists profit by moving money from one place to another.

In order to move in this direction we need to develop a different way of thinking and examine those who struggled in the past. Instead of thinking just about how to provide for our families, we need to think about how an injury to one is an injury to all. As Malcolm X once said: “Either we will all be free or no one will be free.”