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Grave System Error

The economy is in a kind of balance with massive underemployment..Growth in purchasing power of upper income persons cannot balance the loss in purchasing power of normal, low-income and unemployed persons.. Unemployment is a capitalist law..

Permanent Mass Unemployment. Possibilities Exist for the Economy and Politics Despite Capitalist Laws

By Klaus Fischer

[This article published in: Junge Welt, 3/31/2005 is translated from the German on the World Wide Web,  http://www.jungewelt.de/2005/03-31/013.php.]

With AEG/Electrolux in Nuremberg, 1750 jobs are acutely endangered. Rival Bosch Siemens home entertainment will cancel up to 400 positions. The reason is the pressure from cheap suppliers, particularly from Asia. This casts a spotlight on the situation of the whole German labor market. A trend is clear, not a temporary state of emergency.

Employees of the home entertainment branch are in the same position as the autoworkers of Opel and engineers. They have become superfluous deadwood for their businesses. Massive cuts in pay and working hours or dismissal threaten them. The market orders this.


In most cases, making specific businesses responsible for dismissals would be nonsense. On the executive floors, people do not act maliciously but follow the laws given by the capitalist way of production. There is no escape from these laws.

The first goal of every entrepreneur is to realize the greatest possible profit with the invested capital. From the view of capital donors, this profit is their wage, the price of their readiness for risk and the goal of every enterprise. A high capital return is an indispensable prerequisite for the existence of every enterprise. Without profit, there is no survival on the market. Without adequate profit, the business cannot grow, i.e. invest, open new sales markets, research and develop competitive products. Whatever does not grow perishes.

This economic Darwinism sets the rules of the game and is the subject of daily discussions and reflections on the economy. Specific possibilities on the amount and use of profits exist for every individual business. While one business family amasses immense wealth and consumes excessively, another invests a large part of the profit in the business, acts socially, builds company apartments, day-care centers for employees and allows the personnel to share in the profit. This is often true for family-led businesses. On the other hand, prominent employees dominate in the mammoth corporations and so-called public companies with broad stock ownership.

The state model offers possibilities in using profits. Its first task is guaranteeing the efficient functioning of the capitalist mode of production. However the state can focus on the whole while every entrepreneur can only think and act in the company framework. The state can promote, break, issue restrictions and redistribute through taxes. Occasionally like today it strikes system-conditioned limits.

Businesses are in a global competition through the dismantling of protective state measures like tariffs or trade restrictions. The worldwide economic system is extremely complex and exists in constant upheaval. The global financial markets that have grown beyond all propriety have developed into the greatest uncertainty factor of capitalist production. Speculation occurs on these markets beyond the reality of producing goods and services. Functioning enterprises are often eliminated and destroyed this way.

Nevertheless the main reason for worldwide - and German - unemployment is the fact that fewer and fewer people produce more and more goods and services. The economy is in a kind of balance with massive underemployment as the British economist John Maynard Keynes described. Studies have shown that the incomes of employees tend to fall while the revenues of businesses rise. This has considerable effects on social structures in individual countries and reduces purchasing power. Growth in purchasing power of upper income persons cannot balance the loss in purchasing power of normal, low income and unemployed persons in Germany or worldwide. If less is consumed, fewer producers are needed to meet the demand. The expansion of the service sector cannot compensate for this since starvation wages are paid in many areas. All this describes a dilemma from which there seems no escape. Unemployment is a capitalist law that we subjectively perceive as an error in the system.

When the official unemployment figures are announced in Nuremberg for the month of March, the usual explanations will follow. The "harsh winter," "Hartz IV" and the weak economy are made officially responsible for stagnation at a record level. Society and state have possibilities of reducing unemployment within the system. Redistribution and an active employment policy are dismissed as insignificant by the political leadership and the opposition. Instead neoliberal measures are seized that further intensify the problem and the social conflict. The state uses its possibilities as little as capital. The reason is more in the ignorance and incompetence of its representatives than in the system.

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