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International Trade Union Confederation (ITUC)
World Social Forum
Belém do Para, Brazil,
27 January -1 February 2009
No to the casino economy!
The increasingly insecure living and working conditions of millions of
workers worldwide is one of the main causes of the crisis we currently
face. This crisis primarily concerns the unfair distribution of wealth, which
has distorted the global economy. The financial crisis, which is the result
of a long process of financialisation of the economy, has further
aggravated existing economic problems, in both the North and the South.
The developing countries have a huge shortage of decent jobs, since the
latter are not being generated by their economic growth. This decent work
crisis is compounded by the high cost of living and the impact of the world
food crisis. This is leading to situations of endemic poverty. The
industrialised countries are not immune either: the number of working
poor in the United States rose sharply over the eight years of the Bush
administration. In Europe, wage moderation - despite the rise in both
inflation and productivity- has reduced purchasing power.
Almost all countries have increasingly insecure employment conditions,
with a casualisation of the employment relationship and a deregulation of
labour markets. We face a poverty crisis, certainly, but also, and above all,
a crisis based on blatant inequalities, which have become intolerable from
both a social and economic viewpoint. The neo-liberal policies of the last
20 years have reached their limit, since, for the aforementioned reasons,
impoverished workers are no longer consuming enough to keep the
economy running.
The United States is the largest consumer in the world and the reduction
of the real purchasing power of its middle class has repercussions well
beyond its borders. The high level of consumption in the US was sustained
not through wages but through credit. As a result US workers spent
beyond their means and become indebted. The ease with which
mortgages could be obtained, including for the poorest families via the
subprime mortgages, relied on the price of houses, which was pushed
artificially high by a speculation bubble. Complex financial products were
created in order to pass on these “toxic assets” to the financial markets.
The relentless pursuit of short-term profits, against a background of
reckless economic and financial liberalisation, is what chiefly characterises
today’s financial markets. Casino capitalism is largely responsible for the
extension of the crisis to the whole planet. The financial markets have
become a source of easy money and no longer fulfil their main task of
financing the real economy. During the last few decades, speculation on
financial markets has provided much better opportunities for short-term
profit than providing loans to companies willing to innovate, win new
markets or create decent jobs. As a result, workers’ futures have been
sacrificed to feed the offshore bank accounts of some unscrupulous
speculators. Governments and the international institutions have closed
their eyes, adopting the “laissez faire” principle in its most literal sense,
and as such have been accomplices.
The other key aspect of this crisis relates to the excessive opening of
markets and non-intervention by states. By way of example, China has
managed to accumulate huge reserves that are allowing it to finance the
US debt. Chinese workers, who are not allowed the freedom to form unions
to defend their collective interests, have made spectacular increases in
their productivity levels over the last 20 years. They work on 21st century
machines but are paid 19th century salaries! This globalisation has pitted
the workers of the North against those of the South to the benefit of the
multinationals and private investment funds whose profits have
continuously increased.
Huge imbalances have also developed between the financial sector and
the real economy, between rich and poor countries, between overpaid
managers and underpaid workers. Inequalities between men and women
have remained large. And the policies of repression and discrimination
against trade unionists, which have contributed to the process of wealth
concentration, have directly reduced the bargaining power of workers
compared to that of their employers.
Whilst the current crisis is financial, economic and social, it also has an
environmental dimension. It has become clear that our planet’s resources
will not cope with the extension of the consumption model of the
industrialised countries to the rest of the 6 billion people that inhabit it.
That is compounded by the effects of climate change, which are forcing us
to take collective measures to reduce greenhouse gases. There are glaring
inequalities here too, since the poor peoples are suffering more acutely
from the negative impact of climate change. The measures taken need not
only to be environmentally efficient but also socially just.
What model can we put forward to get out of this multifaceted crisis?
This crisis is proof of the unsustainable nature of the neo-liberal policies
adopted in the last few decades, which have promoted the deregulation
and liberalisation of markets and the privatisation of public services. This
market fundamentalism has concentrated wealth whilst thumbing its nose
at global public goods such as the environment, health, social protection,
food safety and, indeed, global financial stability.
The current recovery plans are necessary, but insufficient. It is not enough
to inject money into the economy, we need to change its principles to
make sure it generates social justice, development for all, equity, stability
and long-term prosperity.
Tomorrow’s world will no longer have a single superpower but will be
multipolar, as the regional integration processes intensify. Multilateralism
needs to be protected within this multipolar world, which otherwise runs
the risk of exacerbating poverty and creating deeper inequalities between
countries. But it is high time that this multilateralism embraced social
issues. The unions and the whole of civil society must insist that
employment related issues are placed at the core of the new system of
global economic governance that still needs to be built. The ILO has a vital
role to play here.
Within this multipolar world, the state needs to recover its rightful position
and assume its role. It must ensure a socially just and environmentally
responsible new economic system is established. Public intervention is the
sole guarantor of social cohesion. However the corruption of certain public
bodies must be penalised and opposed by organised groups, including the
unions. The central banks must become publicly accountable and stop
bowing to the demands of the powerful financial lobby.
The strengthening and broadening of public social protection systems is
urgently needed. A Global Social Protection Fund to help the poorest
countries needs to be established. Increasing the levels and quality of
state aid to developing countries is essential. Establishing socially just
transitions towards ecologically sustainable forms of production is vital.
Setting fair rules for world trade to support national development plans
and prevent inequalities from deepening, is crucial. The priority must be to
establish decent minimum wages and real salaries in line with productivity
gains. And respect of the right of workers to form free trade unions and
negotiate collectively on the redistribution of profits is a key requirement.
The relations between industrial, emerging and developing countries need
to be established on a new basis. The current global economic and
financial system is not serving the interests of the workers in developing
countries. Reimbursing the foreign debt is strangling the poorest
countries. The terms under which they can borrow are unfair, as they are
made to bear all the fluctuation risks. The current system allows
industrialised countries to pursue counter-cyclical monetary and fiscal
policies by imposing pro-cyclical policies on developing countries. That
means the international financial institutions (IFIs) are partly responsible
for the disastrous social consequences in these countries and also for the
global financial instability. The economic and financial conditionality
imposed by the IFIs must end and the latter’s governance needs to be fair.
The time has come to build a new global economic and financial
architecture. However, none of the existing institutions has the legitimacy
or the credibility to fulfil that task successfully.
Regulation of the financial markets is required urgently. The speculation
needs to be restricted and markets must focus on financing the real
economy. More particularly, speculation on commodity markets must be
banned. Derivatives markets need to be brought back under the control of
the public authorities. Off-shore financial centres and other fiscal havens
need to be closed. Taxation of financial transactions can provide new
funds to help reduce inequalities. The obscene salaries of managers,
bankers and other financial intermediaries should be regulated. As part of
the necessary reform of the financial sector, priority must be given to the
social economy by promoting cooperatives, mutual societies and microcredit
agencies, including in developing countries.
The new economic system needs to generate green growth. As well as the
urgent need to ensure the survival of our planet, environmental protection
provides huge opportunities for job creation. Public investment in
infrastructure, public transport and renewable energies are needed all
over the world. Economic growth needs to be supported by ecologically
responsible investment.
In conclusion
It is time to build an economic system that is environmentally sustainable,
socially just and balanced in geo-political terms. This model will need to
take into account the aspirations of peoples and the proposals of the trade
union movement and the other players of civil society. From now on,
economic growth should create decent jobs and protect the environment
and its benefits should be shared, so that the unprecedented level of
inequalities we face today is significantly reduced.
The Wall St. Bailout: A Socialist Perspective
A Statement of the National Executive Committee of the
Committees of Correspondence for Democracy and Socialism
Oct. 3
Under extreme pressure The House of Representatives has just passed a revised more than $700 billion bailout bill that contains tax cuts for businesses and individuals, an increase in coverage of insurance on deposits, a few provisions of social value, and a bevy of “sweeteners” for politicians running for reelection. The bill makes a vague promise that the Treasury Secretary now has the “authority” to use some funds to “help homeowners” But for the million who have already been foreclosed or millions more facing loss of their homes, prospects remain very grim. The legislation also does nothing to cap outrageous CEO salaries and guarantees nothing for besieged taxpayers.
Rep. Dennis Kucinich continues to ask the right questions: “Why have we not considered any alternatives other than to give $700 billion to Wall Street? Why aren’t we asking Wall Street to clean up its own mess? Why aren’t we passing new laws to stop speculation, which triggered this? Why aren’t we putting up new regulatory structures to protect investors? How do we even value the $700 billion in toxic assets? Why aren’t we helping homeowners directly with their debt burden? Why aren’t we helping American families faced with bankruptcy? Why aren’t we reducing debt for Main Street instead of Wall Street?”
On the same day when the loss in September of an additional 159,000 jobs was announced (added to 605,000 already lost this year) Democratic leaders tacitly admitted the legislation’s failures, promising to come back next year with presumably larger Democratic majorities and a Democratic White House to enact a major stimulus package to restart the economy. The Democrats also promised to investigate Wall Street with the aim of enacting punitive measures. The Democrats, and all elected officials, must be urgently held to that promise.
A comment in a Boston Globe report on September 30 remains valid: “Even after the federal government starts buying mortgage-related assets…the fundamental weakness of the US economy will remain, including distressed housing markets, deteriorating labor markets, and faltering consumer spending as families struggle under heavy debt, high prices for food and energy and uncertainty about their jobs.” Emergent homeless tent cities across the country underscore the tragedy and urgency of the growing crisis.
The crisis for working people is real. The need for action requires the united voices of opposition across social, political and geographical lines that brought down the original bailout bill. The urgent need now is for action to stop the hemorrhaging of jobs, to complete the extension of unemployment insurance just voted by the House, to deal forcefully to stop home foreclosures and to address the needs of the public with the same vigor that was exercised to address the finance industry’s credit crisis.
Capitalism is the Root Cause of the Crisis
John McCain and right wing members of Congress have uncharacteristically launched an assault on Wall Street venality and corporate greed. They ignore their own duplicity in deregulation that led to victimizing millions and their own demands for more tax breaks on capital gains and overseas profits. Their new pseudo-populism among other things is aimed at papering over their fears of “creeping socialism.” Glen Beck, CNN’s right wing talking head declared that “Greed, not capitalism, is the cause” of the crisis, declaring the system out of bounds for dissection and challenge.
Greed and mindless criminal behavior on Wall Street merit the condemnation of an outraged public. While greed is crucial, blaming it for the current crisis is like blaming a lighted match for blowing up a gas-filled room while ignoring the gas that been accumulating for a long time. The root cause is capitalism itself and not since the Great Depression have so many begun to turn a critical eye towards “free market fundamentalism” and towards capitalism.
The lifeblood of value from which profit is derived is labor. But labor under capitalism is never compensated at its full value. While the price of labor is determined by what is required for its survival and by its own struggles for a greater share of the value it creates, capital seeks through exploitation to appropriate the value that remains which becomes the source of profit in commodity exchange. The wealth created by production must inevitably overproduce, because the vast majority that labors is unable to recoup the full production that it generated. The result is cyclical crises that last until overproduction is expended or until new productive needs emerge.
In recent decades, capitalism has staved off crisis by government spending (from taxes taken significantly from workers) and by extending credit (from which additional profits are gained from interest payments). This works for a while, but the underlying contradictions inevitably surface and periods of recession and depression commence. Cyclical crises are driven also by competition that forces capitalists to buy new equipment to reduce costs of production and maintain or raise profits. A fundamental aim is to reduce wage costs and benefits, further deepening the cyclical crisis and wreaking havoc on workers and small businesses that serve them.
Labor, the source of wealth is allowed only a fraction of what it creates. That remains the core contradiction at the heart of capitalism – and at the heart of the present calamity.
In the long run, costly military production aggravates the crisis. It fails to generate new value and drags down the overarching civilian economy that increasingly needs new investment to sustain its vigor. Adding to capitalism’s growing profit problems are looming environmental catastrophe and the shrinkage of existing energy sources, especially oil and its escalating price.
In the late sixties and early seventies, the end of an extended post World War II expansion loomed. Facing serious debt and balance of international payments problems due to enormous outlays for the Vietnam War, Richard Nixon took the United States off the gold standard, letting the dollar float on world markets, opening the door to intensified global economic competition and currency speculation. Nixon’s action upset the mechanisms put in place at the Bretton Woods conference during World War II to assure stability in global economic relations and assure the dominance of the victorious industrial powers.
During that period, the problems and contradictions of capitalism deepened. Major industrial sectors virtually shut down as capitalists sought to minimize falling rates of profit by shifting production to low wage countries with tax policies strongly favorable to business and hostile to labor unions. For large numbers of workers, well-paying industrial jobs were replaced by low wage, non-union service employment.
For the industrial production that remained, labor was subjected to a major assault on unionization by industry and government underscored by Ronald Reagan’s destruction of the air traffic controllers’ union in 1981. With a sharp decline in union protections and the freezing of union growth, wages stagnated and declined while labor was pressed to greater productivity often under the threat of shutdowns and removal to low wage countries.
With globalized production, major corporations and government turned their backs on domestic support for education, health care and social services for working people, contributing to a decline of schools, to deteriorating cities and to serious neglect of the nation’s infrastructure. At the same time, those with economic and political power exalted individual greed for the rich while preaching a doctrine of “personal responsibility” for the working class, capping welfare benefits, marginalizing the poor and the unemployed and creating a growing prison-industrial complex embedded in racism.
With the weakening of the industrial structure, the financial system became capitalism’s cash cow. Traditionally, credit has functioned as an engine to start and sustain enterprise and compensate for the inability of labor to buy back all it creates. Capitalists paid interest on credit by turning over a portion of value created by labor to financial institutions. Today, a “financial industry” has overshadowed the real production of goods. Riding a tide of “free market” deregulation, exchanges of speculative paper have become the sources of dizzying fortunes – fortunes that created no new wealth but are the fruit of cynical ponzi schemes that ultimately squeeze out of the working and middle classes whatever is left of their resources.
The sub-prime mortgage crisis is a searing example of the crude exploitation that characterizes the “finance industry.” Millions of people, many who qualified for “prime” mortgages, were steered to mortgages designed to trigger impossibly high interest, while making huge fees for brokers and lenders.
Those mortgages were packaged into “mortgage-backed securities,” sold repeatedly worldwide at ersatz profit, spreading the poison through he global financial structure. That has added to the already oppressive nature of globalized capitalism whose “race to the bottom” in search of maximal profits has burdened much of the developing world with intractable debt, forced reduction of social spending at the behest of the International Monetary Fund, and acquiescence in the intense exploitation of their own national labor. All that has accelerated disease, hunger and grinding poverty – widening the massive disparity between rich and poor on a world scale.
Ultimately, the growing impoverishment of millions of working people combined with the crooked nature of the sub-prime market, caught up with Wall Street’s speculative binge, causing the present crisis. The credit system again proved ultimately incapable of cushioning the inherent contradictions of capitalism – an exploited labor force without the resources to sustain the system.
Without incessant protest and demand from an aroused public, the interests of the finance industry will continue to be aggrandized. And the crisis will only deepen. The mortgage crisis actually pales in comparison to credit card debt that runs into trillions of dollars. The political moment demands action.
The Immediate Need: Fund the People, not Wall Street
CCDS joins with a range of progressive organizations and movements that have made proposals to effectively deal with the immediate crisis – beyond the deeply flawed legislation just passed by Congress and signed by the President.
Forecloses must be halted. Bankruptcy courts must be allowed to restructure mortgages and lenders must be required to refinance mortgages as lower, fixed rates.
Wall Street and the super rich must pay for their own bailout. CEO salaries and golden parachutes must be sharply reined in. A wealth surcharge on incomes over ten million dollars would add 300 billion dollars to the treasury. A sales tax on Wall Street trade in stocks of one penny for every four dollars invested would yield one hundred billion dollars a year.
Those funds should jump start a massive program to repair the nation’s infrastructure and launch a green alternative energy program that will create millions of new jobs. Unemployment benefits must be increased and retraining programs launched. Nothing less than a "New New Deal" is required to address the financial stress facing working people.
Wars in Iraq and Afghanistan must end; military spending must be reduced; the billions saved should be plowed into jobs, and social services green energy development and infrastructure improvements.
The costs of health care constitute the greatest single source of financial strain on working people. Universal single payer health insurance must be enacted.
We urge that the principal contours of this program be advanced and forcefully enunciated in the crucial election campaign by Barack Obama and progressive candidates at all levels.
CCDS takes special note of the impact of the crisis on the country’s African American population and other oppressed nationalities. The historic patterns of segregated housing through “red lining” and other practices have left many African Americans with few alternatives than to accept sub-prime mortgages to escape forced sub-standard housing. That factor, combined with the growing depressed economic circumstances of African Americans and replicated in other communities of color has contributed to extensive stripping of the financial resources of those communities. An end to targeted racist policies should be a central demand for relief from the ravages of the present crisis.
Socialism: The Ultimate Answer
CCDS believes that the ultimate solution to the crisis requires the elimination of capitalism and the institution of a political and economic system founded on democratic principles of service to the needs and interests of the working majority for good of society as a whole.
The starting point for the democratic socialist reconstruction of society can begin with the nationalization of banking and all financial services. That demand is embedded in the nation’s political tradition. The Populists advanced it in the late 1890s and the early 20th century Socialist Party advocated it. They were motivated by a profound belief that the nation’s credit and finances, created by labor, should be democratically owned and controlled by working people to build and sustain material production, education, health care, housing and food for the good of all. That essential principle is more valid than ever.
Nationalization of energy, oil in particular, should also be a foundation for the democratic and socialist revitalization of society. The earth’s natural resources rightfully belong to all. The corporate owners of energy have demonstrated their inability by nature of their class interest to utilize the massive wealth created by those industries to confront the environmental crisis and to curb their super profits to benefit society. Basic social and economic problems at this juncture cannot be solved without nationalization of energy.
With those foundations of social ownership established, working people can explore other forms of ownership that can end capitalism’s insoluble contradictions and chart a course for national and global security, peace and justice.
CCDS is committed to explore, educate and organize for a socialist vision and socialist reality as the historically mandated road to a better life for all humanity.
A Final Word: The Coming Elections
The combined impact of financial crisis, threatened environmental catastrophe, growing unemployment, rising inflation of food costs and health care is a tsunami of storms that will confront a new administration in 2009.
That gathering crisis also engenders an historic opportunity to advance major change – to prioritize the needs of the working majority, to forge a master plan to rebuild the country, create millions of green jobs, advance education and health care, end the wars and launch a new constructive multilateral foreign policy. That requires both the immediate need to defeat the far right and John McCain. It also requires the broadest unity of all forces for progress, left and center to build a powerful bottom-up consensus for progressive change without which a new administration could not advance major change against the power of entrenched corporate interests.
In the midst of darkness, the light of progress can shine through. It is up to all working people and their allies to make that progress possible and everlasting.
National Executive Committee
CCDS
Charlene Mitchell
Mark Solomon
Mildred Williamson
Renee Carter
Marian Gordon
Michael Kaufman
Duncan McFarland
Ted Pearson
Harry Targ
Steve Willett
Advisory Committee
Timuel D. Black
Professor (emeritus) City College of Chicago
Noam Chomsky
Professor, MIT
Angela Davis
Author, Professor, Activist
Ruby Dee
Actress, poet, playwright
Donna DeWitt
President, South Carolina State AFL-CIO
Elaine Hagopian
Professor of Sociology, Simmons College
Connie Hogarth
Cofounder, former Executive Director of WESPAC C. Hogarth Center for Social Action, Manhattanville College
Manning Marable
Director Institute for Research in African-American Studies, Columbia University
Elizabeth (Betita) Martinez
Director, Institute for MultiRacial Justice
Eugene "Gus" Newport
Former Mayor of Berkeley
Jack O'Dell
Movement organizer, journalist, foreign policy specialist
Pete Seeger
Musician, writer, environmentalist
Toshi Seeger
Environmentalist, grandmother
Don White
CISPES - L.A.
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