(Weekly Organ of the Communist Party of India (Marxist)
August 30, 2009
Capitalism's Logic: Profits Before People
NEARLY exactly two years after a global financial collapse that hit the world with a severity not seen since the great depression of the 1920s and 1930s, two giant financial corporates of the collapsed Wall Street emerged from the ruins. JP Morgan Chase announced a record $ 2.7 billion profit in the second quarter of 2009. Earlier, another giant Goldman Sachs reported record gains in the same quarter.
have done at the expense of one of the
biggest rescue operations by the State under capitalism.
They have benefited from billions of dollars
of bailout packages from the ordinary tax payers funds and cheap
financing to climb over.
reported profits, however, do not suggest
a turn around in the recession or tiding over the crisis.
Recovering on the basis of the cushion
provided by the government, JP Morgan took over two former Wall Street
Bear Stearns and Washington Mutual - last year in two government
assisted transactions. On the other hand,
regional and small banks continue to collapse all across the
At the other
end of the spectrum, the
On the other hand, nine of the financial firms that were among the largest recipients of the bailout packages paid more than 5,000 of their traders and bankers bonuses of more than $ 1 million apiece for 2008 according the New York Attorney General. In January this year, president Obama called financial institutions shameful for giving themselves nearly $ 20 billion in bonuses when the economy was faltering and the government was spending billions to bailout financial institutions. Obviously, this doesn't seem to have had any impact on these financial institutions. The bonus pools of these nine banks that received bailout packages this year was $ 32.6 billion while their cumulative losses were over $ 81 billion. They will once again get bailout packages to `cover' these losses.
This is the
capitalist way of emerging from
recession by putting profits before people.
While common people continue to get ruined, tax payers money
to be doled out in unprecedented amounts to bailout the corporates. Additionally, the
Instead, if such huge amounts involved in the bailout packages were utilised through public investments, this would have resulted in large scale generation of employment. This, in turn, would have contributed to enlarging the aggregate levels of domestic demand which, in turn, would have boosted sustainable growth of manufacturing. This would have been an approach that would have put people before profits. Similarly, instead of giving bailout packages, if these financial corporates were outrightly nationalised, then such manifestations of nauseating capitalist vices such as `bonuses to executives' could have also been prevented.
However, to expect a humane solution under capitalism is not merely naïve but is unscientific. For capitalism is a system whose raison d'etre is the maximisation of profits. This can only happen with greater exploitation of the working people. Clearly, the popular struggles for bailout packages for the people rather than corporates must be mounted as an integral part of the overall struggle for the socialist alternative to capitalism.
(August 26, 2009)