Sep 23, 2018
September 15 was the ten-year anniversary of Lehman Brothers bankruptcy. When that big Wall Street bank declared it couldn’t meet payments on its own debt, it owed over half a trillion dollars. It was the largest bankruptcy ever.
The collapse of Lehman threatened to bring with it the collapse of the whole financial system, starting in the U.S., rapidly spreading around the world. The world’s biggest banks were linked with each other. They held each other’s debts. Many had pushed mortgages they knew could never be repaid, and then turned them into speculative instruments, which they sold to other banks – right up to the day before Lehman declared bankruptcy.
Lehman’s declaration of bankruptcy was also a declaration of capitalism’s bankruptcy. Not only did the banking system collapse. The economy went into a nose dive.
The bankers had no answer for the catastrophe that their own mad drive for profit had created. Governments around the world had no answer other than to prop up the same banks that had created the disaster. They gave the banks wide access to credit – with governments themselves going trillions of dollars in debt to do so.
The banks that were rescued did not put government money into productive investment. That was the only rational thing to do – on the level of society as a whole. It would have created jobs, increased wages and started to repair the basic infrastructure that has been left in bad repair for decades: roads, water systems, schools and so many other necessities.
But to do that would have required planning on the level of the whole society. And the big banks, like capitalism itself – don’t consider the good of society as a whole. Each acted individually to maximize its own profit. Financial speculation promised more rapid profit than productive investment, so each bank poured its government handout into new fields of speculation.
Today, the stock markets are in the stratosphere – almost double where they were before the crash of 2008. Computers, with their ability to calculate faster than any human, are used to make profit faster – and to create “virtual money.” Vast sums of money whip around the world, searching for even bigger profit. For now, the banks are rolling in money. But they’ve created a new house of cards, awaiting a new collapse.
Not only do we face the threat of a future catastrophe. Today, we are paying for the government’s rescue of the banks.
The public services that a humane society would necessarily offer and maintain continue to degrade. Roads, public transit, schools, bridges, drinking water, sewer lines, dams, levees to protect against floods – they are all starved for funds. Schools throw out generations of people without even a basic education, not to mention the skills needed in a modern world. The money needed for social necessities has gone to bail out the banks.
It’s not just the banks. The whole capitalist class lives on the increased exploitation of those of us who work. That’s why wages today are lower than they were in the 1990s. It’s why only 63% of the working-age population has a job today, compared to 67% at the end of the 1990s. It’s why so many more jobs today are temporary, or part-time, or contract work, or under the table.
Capitalism is a worn-out system. The growth of capitalism once meant an increase in the standard of living of the working class. But that time is long past. To increase profit, the capitalist class today has no means but to push down the standard of living of the whole working class.
Capitalism is a decrepit system. It needs to be thrown out. The working class, which has every reason to get rid of it, has the power to do it. And the workers’ position in society, in the heart of production, gives them the possibility.
The problem is for working people to become aware of the power their own class holds. We could get rid of capitalism and build a new collective society. But to do it, we need the big picture – far beyond what we see today.