Jul 1, 2002
World Com, the second largest long-distance telephone company, announced that it is laying off 17,000 workers. It had already laid off 6,000 workers earlier this year. Not only is World Com destroying the livelihoods of tens of thousands of workers and their families, laying waste to countless communities that depend on these workers’ wages; it is also dumping the very people who provide and maintain long distance service for 20 million customers, who run a big part of the infrastructure for the internet, who provide local telephone service in some parts of the country, etc.
As a result, maintenance and repairs on existing networks will not get done and new networks will not be built. That spells more breakdowns, more emergencies – a big step backwards.
The heads of the company have been caught cooking their accounting books on a massive scale. For many years, they made profits look a lot bigger than they actually were.
World Com is not the exception. Some of the biggest companies in the country – Enron, General Electric, Dynergy, Xerox, Global Crossings, Adelphia – have been caught doing the same thing. In fact, the big question is whether there are any big companies that didn’t engage in massive fraud!
For years, these same bosses had trumpeted a “New Economy.” The stock market kept on going up, like a magical money-making machine for the entire capitalist class. The bosses took the wealth that the working class produced and poured much of it into financial speculation pushing land and stock market prices ever higher. Prices on Wall Street lost all connection with production and the real economy, a big bubble.
Executives began to employ a multitude of tricks to make profits look higher than they actually were because this led to even higher stock prices. And higher stock prices brought tremendous advantages. It opened up cheap and plentiful credit that allowed companies to finance expansion, to speculate on all kinds of markets, buy and sell companies, back up their own borrowing – or even turn around and loan money to others at a higher rate of interest.
Corporate executives, along with their bankers, consultants and accountants reaped vast wealth in just a few short years. Executives made sure that much of their compensation was in stock options, which they then sold. Banks and financial companies raked in enormous fees and commissions by putting together mergers and buyouts, floating stocks and bonds, etc.
This couldn’t go on forever. Two years ago, stock prices began to drop. With their stock price falling, a lot of these companies were suddenly shut out of cheap credit markets. Banks sometimes even began to call in loans. These companies began to face debt crises, and a wider panic.
The capitalist class justifies its wealth and position in society with the claim that it manages investment and production. In fact, the capitalist class is just a parasite on the working class. The capitalists’ drive for profit leads it to destroy jobs and the standard of living of the working class, that is, of the people who do all the work, produce all the wealth and make society run. At the same time, the capitalists lay waste to the productive economy.
The working class has no reason to let this situation continue. Nor does it need to. Hundreds of millions strong, the working class has the potential to impose its own interests.