Greetings of solidarity!
In the name of the working class of the Philippines, the Partido ng Manggagawa or Labor Party, extends the long hand of solidarity to the workers of Japan and other countries who are participating in the November Workers Rally. The call of the November Workers Rally for the establishment of a nationwide network of militant unions in Japan to lead the revival of the labor movement and the fight against the onslaught of neoliberal globalization is utterly correct and necessary.
All over the world, workers are facing the vicious attack of the capitalists and their governments against labor standards and workers rights. As international capitalism plunges into a deep and historic crisis, the race to the bottom in wages and working conditions worsens ever more. The working class is being made to pay the price of a crisis that is not of its own making.
We fully understand the plight of the 1047 dismissed national railway workers. We also recognize the negative impact of privatization and deregulation on workers and the people. In fact the very same issues animate the struggles that are being launched by workers in the Philippines.
In the Philippine Airlines, our national flag carrier, more than half of the workforce, some 3,000 workers, is facing retrenchment. Regular unionized employees will be replaced by agency workers who will have cheaper wages, less benefits, no security of tenure and no right to organize. While the plight of workers when the Philippine Airlines was nationalized was no heaven, it has become hell after the flag carrier was privatized and bought by the second richest man in the Philippines.
The fight for job security and workers rights at Philippine Airlines is the biggest labor dispute in the country. Not only is it a litmus test of the labor policy of the new government in the Philippines but it is a trailblazer struggle for the workers movement. The future of labor relations and the labor movement depends on the outcome of the fight between labor and capital in Philippine Airlines.
The defense of labor standards and workers rights is the content of the struggle at Philippine Airlines and in other establishments, factories, shops and offices in our country. In fact it is the same everywhere else for workers. In Japan, you call agency workers as dispatch workers. In the Philippines we call them contractual workers. The term is different but the conditions are the same for all workers exploited by the greed of capitalists.
The same issues confront workers in the Philippines that are employed by Japanese transnational corporations. Many of the 600,000 export zone workers in the Philippines are employees of Japanese companies, which are arguably the biggest investors at the moment. The most prevalent issues of export zone workers are violations of mandated labor standards, restrictions on the freedom to organize, and restraints on the right to peaceful concerted actions including strikes.
Indeed there is much that binds the workers of the Philippines and Japan in particular and of other countries in general. If not for the labor dispute at Philippine Airlines, I would have also participated in the international conference and workers rally in Japan. Still the workers of the Philippines are one in spirit with the call and demands of the November Workers Rally for defense of workers rights and the fight against neoliberal globalization.
Gerry Rivera
Vice Chairperson, Partido ng Manggagawa (PM)
President, Philippine Airlines Employees’ Association (PALEA)
Showing posts with label crisis of capitalism. Show all posts
Showing posts with label crisis of capitalism. Show all posts
Friday, October 29, 2010
Friday, November 27, 2009
PM files intent to run for party-list, endorses senate bid of Gen. Danny Lim
Press Release
November 27, 2009
The labor group Partido ng Manggagawa (PM) formally files its intent to participate in the party-list elections before the Commission on Elections this morning in a bid to regain its place as the consistently independent working class voice in Congress.
According to PM Chair Renato Magtubo, his party’s proclaimed mission of defending workers’ rights and advancing their struggles for better living conditions and broader political rights, is both an “unfinished battle” and a “pressing agenda” amidst the persisting global economic crisis where so much in the world of work are at stake.
“Today’s crises call not for the usual prescription but a thorough overhaul of our economic fundamentals, and therefore the need for a new breed of representatives who will fearlessly pursue pro-poor policy changes,” said Magtubo.
The first union president to become a party-list representative, Magtubo and the PM served the 11th, 12th and 13th Congress with a record of tirelessly pushing for the enactment of the living wage and other bills on legislated wage increase, and the amendments to the Labor Code to strengthen workers’ fundamental rights to organize, collectively bargain and to strike.
Support for Lim
PM also used the occasion of its filing to announce its support to the senatorial bid of Brig. Gen. Danny Lim.
Magtubo and his followers joined Lim first in the latter’s filing of his Certificate of Candidacy before proceeding to the filing of PM’s manifestation to participate in the party-list election.
“Gen. Danny Lim deserves due recognition not only for being an outstanding officer of the armed forces but also for being an icon of incorruptible and principled fighters among our workingmen in uniform,” explained Magtubo.
The group said they will also campaign for other candidates who will come out with solid platforms for labor and the poor.
November 27, 2009
The labor group Partido ng Manggagawa (PM) formally files its intent to participate in the party-list elections before the Commission on Elections this morning in a bid to regain its place as the consistently independent working class voice in Congress.
According to PM Chair Renato Magtubo, his party’s proclaimed mission of defending workers’ rights and advancing their struggles for better living conditions and broader political rights, is both an “unfinished battle” and a “pressing agenda” amidst the persisting global economic crisis where so much in the world of work are at stake.
“Today’s crises call not for the usual prescription but a thorough overhaul of our economic fundamentals, and therefore the need for a new breed of representatives who will fearlessly pursue pro-poor policy changes,” said Magtubo.
The first union president to become a party-list representative, Magtubo and the PM served the 11th, 12th and 13th Congress with a record of tirelessly pushing for the enactment of the living wage and other bills on legislated wage increase, and the amendments to the Labor Code to strengthen workers’ fundamental rights to organize, collectively bargain and to strike.
Support for Lim
PM also used the occasion of its filing to announce its support to the senatorial bid of Brig. Gen. Danny Lim.
Magtubo and his followers joined Lim first in the latter’s filing of his Certificate of Candidacy before proceeding to the filing of PM’s manifestation to participate in the party-list election.
“Gen. Danny Lim deserves due recognition not only for being an outstanding officer of the armed forces but also for being an icon of incorruptible and principled fighters among our workingmen in uniform,” explained Magtubo.
The group said they will also campaign for other candidates who will come out with solid platforms for labor and the poor.
Thursday, April 23, 2009
Labor party opposes commission in lieu of wage hike proposal
Press Release
April 23, 2009
The labor party Partido ng Manggagawa (PM) expressed its opposition to the proposal by the Makati Business Club that workers be given commissions instead of wage increases because of the economic difficulties. “This is wholesale theft of the working class that is little different but much worse than the syndicated estafa perpetrated by Legacy on its middle class planholders,” stated Renato Magtubo, PM chairperson.
He added that “This proposal is another illustration of the vicious attempt by capitalists to exploit the crisis in order to lower labor standards and demolish workers’ rights. Workers will not pay for the crisis sparked by the capitalists. At the root of the global recession is the problem of global underconsumption. There is a lack of demand for the commodities produced worldwide due to two decades of a global race to the bottom in wages and working conditions. Thus shortchanging the workers in the midst of the crisis will aggravate instead of mitigate the effects of the global recession.”
PM announced that the coming Labor Day mobilization will be “one big protest against capitalist schemes and scams against the workers.” The labor party will lead more than a thousand displaced workers and urban poor in a Lakbayan that will start on the eve of May 1 then merge the next day with the Labor Day rally by various groups.
For Labor Day, PM is pushing for a “bailout of the workers and the poor” that includes unemployment subsidy, tax refund, reform and expansion of public employment program, health insurance for the displaced, and moratorium on demolitions. The group is also demanding a reversal of the policies of liberalization, deregulation and privatization.
“The capitalists reject a wage hike because it is a one-size-fits-all formula that favors workers yet a commission is no different though it benefits employers and disadvantages employees. If capitalists are willing to experiment in a win-win solution, we propose a mandatory unionization of all workers and collective bargaining negotiations on the basis of particular conditions of the different industries and enterprises,” explained Magtubo.
Magtubo asserted that “Through collective bargaining, labor and management can work out the wages and working conditions appropriate to the circumstances of their industries and firms. For example, the electronics industry is collapsing but in dollar-earning sunrise industries like BPO’s and call centers, capitalists can very well afford to give generous wage hikes to their workers via collective bargaining agreements with unions.”
April 23, 2009
The labor party Partido ng Manggagawa (PM) expressed its opposition to the proposal by the Makati Business Club that workers be given commissions instead of wage increases because of the economic difficulties. “This is wholesale theft of the working class that is little different but much worse than the syndicated estafa perpetrated by Legacy on its middle class planholders,” stated Renato Magtubo, PM chairperson.
He added that “This proposal is another illustration of the vicious attempt by capitalists to exploit the crisis in order to lower labor standards and demolish workers’ rights. Workers will not pay for the crisis sparked by the capitalists. At the root of the global recession is the problem of global underconsumption. There is a lack of demand for the commodities produced worldwide due to two decades of a global race to the bottom in wages and working conditions. Thus shortchanging the workers in the midst of the crisis will aggravate instead of mitigate the effects of the global recession.”
PM announced that the coming Labor Day mobilization will be “one big protest against capitalist schemes and scams against the workers.” The labor party will lead more than a thousand displaced workers and urban poor in a Lakbayan that will start on the eve of May 1 then merge the next day with the Labor Day rally by various groups.
For Labor Day, PM is pushing for a “bailout of the workers and the poor” that includes unemployment subsidy, tax refund, reform and expansion of public employment program, health insurance for the displaced, and moratorium on demolitions. The group is also demanding a reversal of the policies of liberalization, deregulation and privatization.
“The capitalists reject a wage hike because it is a one-size-fits-all formula that favors workers yet a commission is no different though it benefits employers and disadvantages employees. If capitalists are willing to experiment in a win-win solution, we propose a mandatory unionization of all workers and collective bargaining negotiations on the basis of particular conditions of the different industries and enterprises,” explained Magtubo.
Magtubo asserted that “Through collective bargaining, labor and management can work out the wages and working conditions appropriate to the circumstances of their industries and firms. For example, the electronics industry is collapsing but in dollar-earning sunrise industries like BPO’s and call centers, capitalists can very well afford to give generous wage hikes to their workers via collective bargaining agreements with unions.”
Monday, February 9, 2009
Workers Manifesto for the New Millennium
(This document was written by Ka Popoy Lagman when he was then secretary-general of the Partido ng Manggagawang Pilipino [PMP], an underground revolutionary political party of the Filipino working class established January 30, 1999. It was published as a paid advertisement in the Philippine Daily Inquirer on January 30, 2000.)
A specter is haunting labor – the specter of Globalization.
Wage-workers in industrial and developing countries, skilled and unskilled laborers, manual and mental workers, urban and rural proletarians – all are ravaged by this global scourge with lost jobs and low pay, wage freeze and wage cuts, downsized and diminished benefits, factory closures and run-away shops, contractualization and casualization of labor, strike-breaking and union-busting.
As the sun rises on year 2000, labor cannot but ask: What does the future hold for the working class in the new millennium?
The prophets of Globalization talk of "free markets" and "free trade". But how about freeing labor from wage-slavery?
Progress, they say, will ultimately trickle down. The point, however, is when? In every decade since the 1950’s, the working people produced more wealth than the total output of mankind since the dawn of civilization some 12,000 years ago. But the gap between the rich and the poor is wider and deeper than ever in history. Even in America, the richest of all nations, only one percent of its wealth is shared by 80 percent of its population.
Despite all the advances in social production, billions today still have no food on their tables, clothes on their backs and roofs over their heads. If this is the meaning of capitalist progress and civilization, how does it differ from a cannibal who has learned to use knife and fork? The last 100 years of capitalism has been a century of over-abundance for the owners of capital and utter deprivation for those who live only by the sale of their labor.
Using the yardstick of history, four centuries of capitalism is short compared to earlier social systems. But as soon as it emerged, its every progress has sparked epic class struggles. The last hundred years of capitalism eminently has been a history of wars and revolutions, of liberation struggles of oppressed nations against imperialist countries, and of class battles between the proletariat and the bourgeoisie.
Anti-capitalist revolutions broke out even as the rule of capital has yet to conquer the entire globe. At its peak, socialist states covered a quarter of the world’s area and a third of the human population.
The collapse of socialism in the last decades of the 20th century has emboldened the bourgeois elements of society to vilify it as a utopian dream. But what they pass off as the vindication of capitalism is merely their class bias showing. That communism inspired hundreds of millions to life and death struggle and Marxist revolutions were victorious in scores of countries is incontrovertible proof of their firm roots in material conditions and social realities.
The period of the two world wars ushered in the first wave of socialist revolutions. With hindsight and foresight, it was only a dress rehearsal for the real revolution that can now begin with the advent of the third world war – the global offensive of capital versus labor. The revolutionary proletariat will arise, like the phoenix from the ashes, stronger and wiser.
Globalization has inaugurated not a post-industrial society but the unadorned class rule of the international bourgeoisie and the insatiable pursuit of profit by monopoly capital. Class antagonisms have not been attenuated but on the contrary are heightened.
Proletarianization of the population proceeds as never before. Unarguably, the working class is the absolute majority in the world. The so-called services are being industrialized, that is put under the regime of mechanized production and social labor. The modern office is little different from the automated factory. In both, low pay, long hours and insecure jobs are the norm. Professions are transformed from independent livelihood into wage-labor. Mental workers are joining manual laborers in organizing unions to protect their interests as wage-slaves.
Globalization has unleashed not so much the creative power of capital as its destructive forces. The genie of finance capital has been liberated by the liberalization of trade and investment and has left a path of destruction in its wake. Intensified global competition is the anarchy of production multiplied and the crisis of overproduction internationalized.
Capitalism in the age of Globalization is hopelessly bound up in its innate contradictions brought to their peak. And the proletariat is inevitably impelled to revolt by the vicious attacks against their living standards and social rights.
Globalization by its very nature transforms the economic turmoil in one nation into a world crisis. It obliges the workers struggle in one country to become an international fight.
The world is witnessing the rebellion of the advanced forces of production against outmoded capitalist relations, the contradiction between the socialized forms of production and bourgeois private property exploding into crisis and revolution.
It is Marxism rather than capitalism that is passé. Marx was a visionary who saw far ahead of his time. What he described applies more to the Globalization of our era than the capitalism of his age. And what he foretold will only now truly come to be.
No doubt revolutionary movements which predict the fall of capitalism will be likened to religious sects which prophesize the end of the world. Let these conceited bourgeois pundits beware the lesson of history. The lords of capital will be no different from the slaveholders and landlords of yore who thought they would rule forever until the rising of the former working classes brought their delusions crashing upon their heads.
Let the capitalists celebrate the coming millennium with pomp and pretense for it will be their last. The bourgeois reich will not last a thousand years. Pax capitalista will not even survive the new century.
The first decade of the new millennium will be the eve of the socialist revolution in the era of Globalization.
The Battle in Seattle is the sign of the times. It comes on the heels of historic general strikes in France and South Korea, and in other advanced and backward countries. They are a portent of the brewing storm of working class revolution that will sweep imperialist Globalization to its grave.
The new millennium will see the titanic last battle between the forces of the proletariat and the bourgeoisie. The day of judgment is at hand and the armageddon of capitalism is near.
The workers have nothing to lose but their chains. They have a world to win. Workers of the world, unite!
A specter is haunting labor – the specter of Globalization.
Wage-workers in industrial and developing countries, skilled and unskilled laborers, manual and mental workers, urban and rural proletarians – all are ravaged by this global scourge with lost jobs and low pay, wage freeze and wage cuts, downsized and diminished benefits, factory closures and run-away shops, contractualization and casualization of labor, strike-breaking and union-busting.
As the sun rises on year 2000, labor cannot but ask: What does the future hold for the working class in the new millennium?
The prophets of Globalization talk of "free markets" and "free trade". But how about freeing labor from wage-slavery?
Progress, they say, will ultimately trickle down. The point, however, is when? In every decade since the 1950’s, the working people produced more wealth than the total output of mankind since the dawn of civilization some 12,000 years ago. But the gap between the rich and the poor is wider and deeper than ever in history. Even in America, the richest of all nations, only one percent of its wealth is shared by 80 percent of its population.
Despite all the advances in social production, billions today still have no food on their tables, clothes on their backs and roofs over their heads. If this is the meaning of capitalist progress and civilization, how does it differ from a cannibal who has learned to use knife and fork? The last 100 years of capitalism has been a century of over-abundance for the owners of capital and utter deprivation for those who live only by the sale of their labor.
Using the yardstick of history, four centuries of capitalism is short compared to earlier social systems. But as soon as it emerged, its every progress has sparked epic class struggles. The last hundred years of capitalism eminently has been a history of wars and revolutions, of liberation struggles of oppressed nations against imperialist countries, and of class battles between the proletariat and the bourgeoisie.
Anti-capitalist revolutions broke out even as the rule of capital has yet to conquer the entire globe. At its peak, socialist states covered a quarter of the world’s area and a third of the human population.
The collapse of socialism in the last decades of the 20th century has emboldened the bourgeois elements of society to vilify it as a utopian dream. But what they pass off as the vindication of capitalism is merely their class bias showing. That communism inspired hundreds of millions to life and death struggle and Marxist revolutions were victorious in scores of countries is incontrovertible proof of their firm roots in material conditions and social realities.
The period of the two world wars ushered in the first wave of socialist revolutions. With hindsight and foresight, it was only a dress rehearsal for the real revolution that can now begin with the advent of the third world war – the global offensive of capital versus labor. The revolutionary proletariat will arise, like the phoenix from the ashes, stronger and wiser.
Globalization has inaugurated not a post-industrial society but the unadorned class rule of the international bourgeoisie and the insatiable pursuit of profit by monopoly capital. Class antagonisms have not been attenuated but on the contrary are heightened.
Proletarianization of the population proceeds as never before. Unarguably, the working class is the absolute majority in the world. The so-called services are being industrialized, that is put under the regime of mechanized production and social labor. The modern office is little different from the automated factory. In both, low pay, long hours and insecure jobs are the norm. Professions are transformed from independent livelihood into wage-labor. Mental workers are joining manual laborers in organizing unions to protect their interests as wage-slaves.
Globalization has unleashed not so much the creative power of capital as its destructive forces. The genie of finance capital has been liberated by the liberalization of trade and investment and has left a path of destruction in its wake. Intensified global competition is the anarchy of production multiplied and the crisis of overproduction internationalized.
Capitalism in the age of Globalization is hopelessly bound up in its innate contradictions brought to their peak. And the proletariat is inevitably impelled to revolt by the vicious attacks against their living standards and social rights.
Globalization by its very nature transforms the economic turmoil in one nation into a world crisis. It obliges the workers struggle in one country to become an international fight.
The world is witnessing the rebellion of the advanced forces of production against outmoded capitalist relations, the contradiction between the socialized forms of production and bourgeois private property exploding into crisis and revolution.
It is Marxism rather than capitalism that is passé. Marx was a visionary who saw far ahead of his time. What he described applies more to the Globalization of our era than the capitalism of his age. And what he foretold will only now truly come to be.
No doubt revolutionary movements which predict the fall of capitalism will be likened to religious sects which prophesize the end of the world. Let these conceited bourgeois pundits beware the lesson of history. The lords of capital will be no different from the slaveholders and landlords of yore who thought they would rule forever until the rising of the former working classes brought their delusions crashing upon their heads.
Let the capitalists celebrate the coming millennium with pomp and pretense for it will be their last. The bourgeois reich will not last a thousand years. Pax capitalista will not even survive the new century.
The first decade of the new millennium will be the eve of the socialist revolution in the era of Globalization.
The Battle in Seattle is the sign of the times. It comes on the heels of historic general strikes in France and South Korea, and in other advanced and backward countries. They are a portent of the brewing storm of working class revolution that will sweep imperialist Globalization to its grave.
The new millennium will see the titanic last battle between the forces of the proletariat and the bourgeoisie. The day of judgment is at hand and the armageddon of capitalism is near.
The workers have nothing to lose but their chains. They have a world to win. Workers of the world, unite!
Tuesday, January 6, 2009
Cebu workers to push for “return to work” in preventive mediation today
Press Release
January 6, 2009
In the preventive mediation called today by National Conciliation and Mediation Board (NCMB) officials, union leaders of Giardini del Sole, Inc., one of the biggest furniture manufacturing and exporting companies in the country, will demand that all workers be allowed to return to work.
“If the negotiations fail then we will push through with filing a notice of strike on the basis of union busting,” declared Eulito Fin Jr., vice president of Nagkahiusang Puwersa nga Mamumuo sa Giardini (NPMG) and a member of the Partido ng Manggagawa (PM) in Mandaue City. Unions in Mandaue, Lapu-Lapu and Cebu are already preparing for sympathy actions to the Giardini workers.
Yesterday more than 300 Giardini workers held an impromptu protest at the factory gates upon learning that only 50 of the workmates were allowed to work. In the afternoon, they marched to the NCMB office with the intention of filing a notice of strike. The workers are alleging that despite management’s filing of an application with the Department of Labor and Employment, the so-called temporary shutdown was illegal since they did not receive any notice to the effect.
“Workers will only agree to a temporary shutdown after the lapse of the required 30 days notice and upon opening of the company books to prove its claim of losses or lack of demand. And while temporarily shutdown, management must provide a subsidy with counterpart assistance from the local government and national agencies so that workers will not die of hunger,” explained Fin. The union will demand P5,000 and a sack of rice per month or a total of P300,000-P400,000 for the maximum 6 months duration of a temporary shutdown. “That is drop in the bucket compared to the tons of company profit in the last 22 years. We also insist that management remit in full our SSS payments so we can take out loans and claim benefits,” said Fin.
Renato Magtubo, national chairperson of PM, stated that “The Giardini case illustrates the urgency of a bailout scheme for workers affected by the crisis. The SSS, GSIS and the OWWA must use its funds to subsidize private sector workers, government employees and overseas contract workers respectively until they can find work up to a maximum of six months.”
He added that “The emergency work program of the government must be radically reformed. The patronage system must be exorcised from it by putting the employment program under the co-ownership if not control of people’s organizations. Also minimum labor standards at the very least must be guaranteed instead of the present setup where the ‘kamineros’ and ‘oysters’ are hired on a contractual basis for below minimum wages. The scope of the work program must not be limited to those who will be laid off due to the global crisis since it is imperative to give jobs to the four million who were unemployed even before the crisis struck.”
The Giardini workers however still suspect that the management is merely using the global crisis as an alibi to bust the newly established union. Last November the management dismissed the union president and treasurer and suspended active union members. ###
January 6, 2009
In the preventive mediation called today by National Conciliation and Mediation Board (NCMB) officials, union leaders of Giardini del Sole, Inc., one of the biggest furniture manufacturing and exporting companies in the country, will demand that all workers be allowed to return to work.
“If the negotiations fail then we will push through with filing a notice of strike on the basis of union busting,” declared Eulito Fin Jr., vice president of Nagkahiusang Puwersa nga Mamumuo sa Giardini (NPMG) and a member of the Partido ng Manggagawa (PM) in Mandaue City. Unions in Mandaue, Lapu-Lapu and Cebu are already preparing for sympathy actions to the Giardini workers.
Yesterday more than 300 Giardini workers held an impromptu protest at the factory gates upon learning that only 50 of the workmates were allowed to work. In the afternoon, they marched to the NCMB office with the intention of filing a notice of strike. The workers are alleging that despite management’s filing of an application with the Department of Labor and Employment, the so-called temporary shutdown was illegal since they did not receive any notice to the effect.
“Workers will only agree to a temporary shutdown after the lapse of the required 30 days notice and upon opening of the company books to prove its claim of losses or lack of demand. And while temporarily shutdown, management must provide a subsidy with counterpart assistance from the local government and national agencies so that workers will not die of hunger,” explained Fin. The union will demand P5,000 and a sack of rice per month or a total of P300,000-P400,000 for the maximum 6 months duration of a temporary shutdown. “That is drop in the bucket compared to the tons of company profit in the last 22 years. We also insist that management remit in full our SSS payments so we can take out loans and claim benefits,” said Fin.
Renato Magtubo, national chairperson of PM, stated that “The Giardini case illustrates the urgency of a bailout scheme for workers affected by the crisis. The SSS, GSIS and the OWWA must use its funds to subsidize private sector workers, government employees and overseas contract workers respectively until they can find work up to a maximum of six months.”
He added that “The emergency work program of the government must be radically reformed. The patronage system must be exorcised from it by putting the employment program under the co-ownership if not control of people’s organizations. Also minimum labor standards at the very least must be guaranteed instead of the present setup where the ‘kamineros’ and ‘oysters’ are hired on a contractual basis for below minimum wages. The scope of the work program must not be limited to those who will be laid off due to the global crisis since it is imperative to give jobs to the four million who were unemployed even before the crisis struck.”
The Giardini workers however still suspect that the management is merely using the global crisis as an alibi to bust the newly established union. Last November the management dismissed the union president and treasurer and suspended active union members. ###
Monday, January 5, 2009
Delete the patronage system from the emergency work program
Press Statement
January 5, 2009
Renato Magtubo
Chairperson
The government’s emergency work program could have been a good start for the new year but immediately it turned in the wrong direction. By making the work program’s implementation skewed towards the home provinces and political bailiwicks of cabinet secretaries, it ensured that the project would be strangled by patronage politics. Economics will then serve the interests of politics.
The emergency work program must be radically reformed. The patronage system must be exorcised from it by putting the employment program under the co-ownership if not control of people’s organizations.
Also minimum labor standards at the very least must be guaranteed instead of the present setup where the “kamineros” and “oysters” are hired on a contractual basis for below minimum wages. No matter that it is a dirty job as long as it is decent work.
The public employment program should not be limited to street cleaning and whitewashing walls but must include restoring the environment and building housing for the poor aside from the usual public works projects. Given the sorry state of the environment and the backlog in public housing, just these two sectors are significant enough to provide millions of jobs for a start.
The scope of the work program must not be limited to those who will be laid off due to the global crisis. It is imperative to give jobs to the four million who were unemployed even before the crisis struck. Since the private sector apparently is not interested in hiring them, then it is the responsibility of the government to establish a state employment program.
The government must subsidize all workers who will be retrenched because of the ongoing crisis. The SSS, GSIS and the OWWA must use its funds to subsidize private sector workers, government employees and overseas contract workers respectively until they can find work up to a maximum of six months.
As to the billion peso question, where will the government get the money to spend on the work program and unemployment subsidy for the workers and the poor, the easiest answer is for the state to save that part of the budget that is automatically appropriated for debt payment—interest alone is equivalent to 30% of the national appropriations and together with the principal amounts to 70%—and instead use it to finance this vastly expanded social program. Not paying the banks for the debt, legitimate or otherwise that we ostensibly owe them, is a light punishment for the high crimes that they have done.
January 5, 2009
Renato Magtubo
Chairperson
The government’s emergency work program could have been a good start for the new year but immediately it turned in the wrong direction. By making the work program’s implementation skewed towards the home provinces and political bailiwicks of cabinet secretaries, it ensured that the project would be strangled by patronage politics. Economics will then serve the interests of politics.
The emergency work program must be radically reformed. The patronage system must be exorcised from it by putting the employment program under the co-ownership if not control of people’s organizations.
Also minimum labor standards at the very least must be guaranteed instead of the present setup where the “kamineros” and “oysters” are hired on a contractual basis for below minimum wages. No matter that it is a dirty job as long as it is decent work.
The public employment program should not be limited to street cleaning and whitewashing walls but must include restoring the environment and building housing for the poor aside from the usual public works projects. Given the sorry state of the environment and the backlog in public housing, just these two sectors are significant enough to provide millions of jobs for a start.
The scope of the work program must not be limited to those who will be laid off due to the global crisis. It is imperative to give jobs to the four million who were unemployed even before the crisis struck. Since the private sector apparently is not interested in hiring them, then it is the responsibility of the government to establish a state employment program.
The government must subsidize all workers who will be retrenched because of the ongoing crisis. The SSS, GSIS and the OWWA must use its funds to subsidize private sector workers, government employees and overseas contract workers respectively until they can find work up to a maximum of six months.
As to the billion peso question, where will the government get the money to spend on the work program and unemployment subsidy for the workers and the poor, the easiest answer is for the state to save that part of the budget that is automatically appropriated for debt payment—interest alone is equivalent to 30% of the national appropriations and together with the principal amounts to 70%—and instead use it to finance this vastly expanded social program. Not paying the banks for the debt, legitimate or otherwise that we ostensibly owe them, is a light punishment for the high crimes that they have done.
Saturday, December 13, 2008
Solidarity with Republic workers, UE Local 1110
December 12, 2008
Armando Robles, UE Local 1110 President
and the Workers of Republic Windows and Doors
Greetings of solidarity!
On behalf of the working class of the Philippines, the Partido ng Manggagawa (Labor Party-Philippines) expresses its support for the struggle of the Republic workers and extends its congratulations to your victorious fight. Your militant struggle is a shining example to the workers of the world of how to fight and how to win in the period of globalization and in the context of the crisis.
The particular case of Republic Windows and Doors reveals in stark contrasts the gross inequities and double standard of the system. The workers are being made to bear the burden of resolving the crisis that is not of their own making. The innocent masses are being punished for the crimes of a few. Corporate losses are socialized but profits remain privatized.
Truly the workers can only depend upon our own movement and our own struggle to protect and advance our common interests. You have rediscovered for a new generation of US workers the value of the sit down strike and direct action that in the 1930’s resulted in the greatest gains in unionization, wages and job security in American history. Your successful fight is an inspiration not just for fellow workers in the US but for all workers anywhere in the world.
In the Philippines, the initial impact of the global economic crisis is already being felt in the export-oriented factories whose clients are in the US, Japan and Europe. Permanent closures, temporary shutdowns and work rotation have in the last four months affected thousands of garments, electronics and furniture workers. These retrenchments and rotations are the herald of the grave unemployment that will result when the global recession reaches maturity and fully impacts the Philippines.
Thus the workers in the Philippines, through the Partido ng Manggagawa, are campaigning for economic relief in the face of the economic calamity in the form of a bailout of the poor not the rich. This means a subsidy for laid off workers until they can find new jobs, a tax refund for all workers amounting to two months pay and a public employment program for the four million unemployed Filipinos. Beyond these immediate issues, we are also pushing longer term demands, among them is reopening closed factories through confiscation if necessary.
Workers in the Philippines and in America are brothers and sisters in struggle. Ironically this is partly due to the legacy of US occupation of the Philippines. Likewise, Filipinos and Latinos share a cultural heritage rooted in Spanish colonialism. But more than that, under globalization, all workers now have the same problems—low wages, insecure jobs, part-time work, loss of benefits, deteriorating services, labor repression, vanishing health and pension plans, etc.
Workers are being forced by the capitalists to compete with workers in other countries in a race to the bottom in wages and working conditions. Instead the workers of the world must link up in arms in solidarity to lift ourselves out of poverty and destitution.
The story of the fight and victory of the Republic workers has not broken through the corporate controlled mainstream media in the Philippines. But through the labor press and mass meetings, we will report your successful fight to the workers in the Philippines for they have lessons to learn from it. And when the workers of the Philippines recapture the tradition of our militant unionism of the 1980’s, then we can share the lessons of our own experiences too to the workers of the US and the world.
For labor solidarity,
Renato Magtubo
Chairperson, Partido ng Manggagawa
President, Fortune Tobacco Labor Union
Gerry Rivera
Vice-Chairperson, Partido ng Manggagawa
President, Philippine Airlines Employees Association
Armando Robles, UE Local 1110 President
and the Workers of Republic Windows and Doors
Greetings of solidarity!
On behalf of the working class of the Philippines, the Partido ng Manggagawa (Labor Party-Philippines) expresses its support for the struggle of the Republic workers and extends its congratulations to your victorious fight. Your militant struggle is a shining example to the workers of the world of how to fight and how to win in the period of globalization and in the context of the crisis.
The particular case of Republic Windows and Doors reveals in stark contrasts the gross inequities and double standard of the system. The workers are being made to bear the burden of resolving the crisis that is not of their own making. The innocent masses are being punished for the crimes of a few. Corporate losses are socialized but profits remain privatized.
Truly the workers can only depend upon our own movement and our own struggle to protect and advance our common interests. You have rediscovered for a new generation of US workers the value of the sit down strike and direct action that in the 1930’s resulted in the greatest gains in unionization, wages and job security in American history. Your successful fight is an inspiration not just for fellow workers in the US but for all workers anywhere in the world.
In the Philippines, the initial impact of the global economic crisis is already being felt in the export-oriented factories whose clients are in the US, Japan and Europe. Permanent closures, temporary shutdowns and work rotation have in the last four months affected thousands of garments, electronics and furniture workers. These retrenchments and rotations are the herald of the grave unemployment that will result when the global recession reaches maturity and fully impacts the Philippines.
Thus the workers in the Philippines, through the Partido ng Manggagawa, are campaigning for economic relief in the face of the economic calamity in the form of a bailout of the poor not the rich. This means a subsidy for laid off workers until they can find new jobs, a tax refund for all workers amounting to two months pay and a public employment program for the four million unemployed Filipinos. Beyond these immediate issues, we are also pushing longer term demands, among them is reopening closed factories through confiscation if necessary.
Workers in the Philippines and in America are brothers and sisters in struggle. Ironically this is partly due to the legacy of US occupation of the Philippines. Likewise, Filipinos and Latinos share a cultural heritage rooted in Spanish colonialism. But more than that, under globalization, all workers now have the same problems—low wages, insecure jobs, part-time work, loss of benefits, deteriorating services, labor repression, vanishing health and pension plans, etc.
Workers are being forced by the capitalists to compete with workers in other countries in a race to the bottom in wages and working conditions. Instead the workers of the world must link up in arms in solidarity to lift ourselves out of poverty and destitution.
The story of the fight and victory of the Republic workers has not broken through the corporate controlled mainstream media in the Philippines. But through the labor press and mass meetings, we will report your successful fight to the workers in the Philippines for they have lessons to learn from it. And when the workers of the Philippines recapture the tradition of our militant unionism of the 1980’s, then we can share the lessons of our own experiences too to the workers of the US and the world.
For labor solidarity,
Renato Magtubo
Chairperson, Partido ng Manggagawa
President, Fortune Tobacco Labor Union
Gerry Rivera
Vice-Chairperson, Partido ng Manggagawa
President, Philippine Airlines Employees Association
Friday, November 21, 2008
The global crisis is a crisis of capitalism
It is time for the workers and the poor in the Philippines to prepare for the worse the moment its government keeps on repeating the mantra that the economic fundamentals remain good and thus there is little to worry about effects of the global recessionary trend. The world found itself in the present mess precisely because of such blind faith in neoliberal fundamentalism.
The shallow basis for such declarations from the government is supposedly the fact that most of Philippine exports are being sent to China rather than the US. But China is just a transit point or a gigantic department in the assembly line that spans the globe. Thus exports to China will simply be assembled there and then ultimately sent to the US, Japan or Europe as finished products. Such is the international division of labor under the era of globalization.
Now here’s the rub. Japan just recently admitted that it is in recession. It is now officially in the same rickety boat as Germany and Italy, or for that matter most of the European Union countries. Despite the Bush government still being in denial about a recession, there are already some pundits in the US that are talking about the prospect of a depression.
The fact that US and Japan, the two biggest economies in the world and the final market for most exports, are in recession spells double trouble for the Philippines. In addition, US, Japan and Europe are the destination for a significant section of the nine million overseas Filipinos and the source for a large part of their $14 billion yearly remittances through official channels. Therefore Filipino migrants and their precious dollars, yens and euros are in clear and present danger when the recession extends and deepens. There is no doubt about the fact that migrant workers will be the most vulnerable when layoffs and closures hit their host countries.
While it may take some time for the howling winds of the so-called perfect economic storm to hit the shores of the Philippines, the initial impact is already being felt in the export-oriented factories whose clients are in the US, Japan and Europe. Reductions in the workforce and workdays are being implemented in the export zones and industrial estates in proportion to the reduction of orders from abroad. The permanent closures, temporary shutdowns and work rotation have happened in the last three months. And they have affected not just hundreds but thousands of garments, electronics and furniture workers in these industrial areas. These retrenchments and rotations are the herald of the grave unemployment that will result when the global recession reaches maturity and fully impacts the Philippines.
Capitalist greed
Myths about the crisis should be cleared up so that its real roots can be examined. The popular explanations peddled by the mainstream media and government officials in the US is that the crisis is simply due to the corruption, excess and greed of the investors, brokers and speculators of Wall Street.
It would be hard to accept as gospel truth such conventional opinion in the US. Just before the undeniable meltdown in the financial markets and the rapid descent to an economic recession, the American government officials and mainstream media were saying that the economic fundamentals are sound and that the problems are manageable. Yet we have to understand that such errors and hubris are not borne out of stupidity but of hypocrisy, for such well-told lies serve the purpose of conditioning the minds of the American people, especially workers.
It is indeed true that good old capitalist greed played its part in the disaster on Wall Street. Still corruption, excess and avarice are all in the nature of capitalism since the motor of this system is intense competition and the race for profit. It is simply business as usual for capitalists to covet the most profit in the shortest time. And yet it is not everyday or every year that capitalism falls into a historic crisis. Therefore the roots of the crisis go beyond capitalist greed.
Subprime housing
Practically everyone agrees that the immediate cause of the present problem lies in the subprime housing loan failure. It has been more than a year since the subprime housing crisis erupted with millions of ordinary Americans having risky credit ratings duly failing on their amortizations.
The crisis exploded with the number of homeowners unable to pay amortizations reaching a critical mass. This September, four million Americans, about 10% of the total, were either very late in their payments or were having their homes repossessed. Thus Freddie Mac and Fannie May, the two main mortgage companies in the US, were in the red by $3.1 billion just for the three months from April to June.
The fact that several millions of working class American families could not afford to shell out money for their monthly home amortizations is already a sign of the contradiction that ultimately lies behind the economic crisis in the US. The wages and income of the ordinary American family cannot keep up with the escalating costs of living, including home payments. And this is all due to the changes wrought by globalization—the wave of retrenchments and layoffs, the temporary and part-time nature of jobs, the continuous decline in real wages and the dismantling of the social wage and welfare for the poor. The discrepancy between the nominal wage and the cost of living reflects in the oversupply of housing compared to the capacity to pay of the people. The crisis of overproduction (oversupply of commodities vis-Ã -vis effective demand for it) is an essential characteristic of capitalism. And it is clearly illustrated in the sector of housing for the working class.
Deregulation and financialization
The quantum leap from a problem in just one line of industry (in this case the subprime housing sector) to a crisis of the whole of the economy is due directly and entirely to the deregulation and financialization that has become defining features of the era of globalization. The mortgage companies sold their mountains of mortgage papers to the banks. The banks in turn resold these subprime mortgage papers (repackaged as securities called collateralized debt obligations or CDO’s) to so-called institutional investors such as other banks, investment houses and pension funds.
The complicated and repeated selling of these papers, and the invention of different financial instruments called derivatives, and even the exotic credit default swaps, is the way for financial institutions to make profit out of the money capital of investors. In the world of finance capital, profit is magically squeezed out from paper, even debt papers of risky debtors.
Here we can see an element of the so-called excess and corruption. Though lacking the capability to pay, ordinary Americans were enticed by various gimmicks (like the floating interest rate) to take out risky loans.
Still it is important to understand that this is not just the dishonesty of some individuals but the irresponsibility of the system itself. In a situation where so much of the wealth in the US and the world is in the form of finance capital that seeks big returns in the quickest time, it becomes entirely natural even logical for investors to grab the opportunity of a “get rich quick scheme” in the subprime housing sector, and the buying and selling of CDO’s and other financial instruments.
It is in this way that the subprime housing sector is connected to the world of finance capital. That is why the moment millions of high-risk Americans defaulted on their mortgages, the biggest commercial and investment banks, and even insurance companies, were suddenly left holding toxic debts and tons of debt papers that had no way of being paid.
The problem is similar to, though not exactly the same as, the Asian financial crisis of 1997. It is no different since it is due to speculation by finance capital. In the years before 1997, finance capital flooded the stock exchanges and real estate markets of the so-called emerging countries of Asia, including the Philippines. But the underlying economic problems cannot be hidden, especially from speculators, and when the time of reckoning came, finance capital withdrew in a flash and thus the stock markets and exchange rates collapsed like a house of cards. In the present case, finance capital descended upon the subprime housing sector and the business of trading CDO’s until the new bubble burst in due time.
Speculation
There is no more apt word to describe the modus operandi of finance capital than speculation. “Profit” from speculation does not arise from the creation of new wealth and new value as in the case of production of commodities.
New wealth or value is generated in society only through the investment of money capital in the world of production, and the creation of products after the expenditure of labor power. Profit is extracted from the unpaid labor of workers and is then realized after the sale of the commodities.
Speculation by finance capital is however as different as heaven is from earth. “Profit” is fashioned not through the exploitation of workers but through trading in the stock exchanges, real estate, mortgage papers, futures market or other financial instruments. In the world of speculation, money miraculously generates “profit” from money without the mediation of the process of production. In essence, this is no different from gambling.
So on the one hand, there is the real economy where new wealth is created from the application of labor power to produce goods and services. On the other hand, there is the casino economy of finance capital where speculation is the mode of operation. With capitalism entering the stage of financialization, the shadow of speculation is not far behind.
Speculation is the illegitimate child of the deregulated world of finance capital. Finance capital rushes into a mania of investing in the popular business of the day where there is an expectation of high profits. Prices and profits thereby artificially inflate as long as investments keep pouring in. At the start the bubble will grow bigger and bigger seemingly as if the sky is the limit. But the bubble will burse the moment it becomes clear that the prospect of high profits is all hot air. All speculative ventures or bubbles can only end in a crash since no new wealth is created in this world. But like an addict that cannot kick the habit, finance capital will just move on to the next mania of the moment.
The crucial question is why such a significant part of the wealth of the US and the world is tied up as speculative investments? Why is this money capital not invested in the production of goods and services, in the creation of jobs in the light of massive unemployment? Or why is it not invested in agricultural production, in the farming of land in the light of the food crisis besetting the world? In answering this question, we can arrive at the roots of the present crisis.
Capitalists would rather put in their money capital in the mania of speculation instead of the world of production since the rate of profit is greater. It is in the nature of capital that it seeks the level where the rate of profit is higher, just like water seeking the lowest point due to the pull of gravity. It does not matter to capitalists whether it is speculation or production. The important thing is profit, and the bigger the profit in the shorter amount of time, the better.
Crisis of overproduction
Yet why is it that the rate of profit is greater in speculation rather than production given that new wealth in created only in the making of commodities? Thus opens up the secret of the innate contradictions of capitalism. If there is a glut in a certain sector of the market then profit is difficult to realize. The rate of profit falls and capitalists are obliged to shift their money capital to other lines or industries. But if the glut permeates all industries, if the crisis of overproduction is generalized, then the prospect of a bigger rate of return in the world of speculation and its mania of bubbles beckons the capitalists.
In the age of globalization, two factors come together to explain this situation. First, the innate tendency to overproduction has been exacerbated by the cheapening of wages in combination with a gigantic increase in the productivity of labor in the era of globalization. Surplus commodities clog the markets as people do not have the capacity to buy since their wages come up short and many do not have work. The crisis of overproduction is worldwide in scale as the epidemic of wage cheapening, work flexibilization, factory closures, job retrenchments, union busting, cutback in social spending, regressive taxation and other policies accompanying globalization are being implemented across the board and across all borders.
The great inequality of wealth in the US is a key link in explaining overproduction. The productivity of the American worker rose by 60% since 1979 but the wage of male workers fell by 5% over the same period. Some 33 million, one out of every four US worker, live below the poverty line. From 2000 to 2007, the number of poor in the US jumped by 15% or 5.4 million. In the same span of time, wages were frozen but profits leaped by 13% every year. The share of profit in the national wealth is at its peak in the US for the past 64 years while the share of salaries is at its lowest since 1929.
The leap in productivity is expressed in the flood of products and services. Yet the expansion of markets is hindered by the lack of effective demand. The crisis of overproduction is at the root of the recession in the US and global economy.
The reason the crisis exploded only now is that for a time the extension of consumer credit delayed the onset and attenuated the gravity of the problem. As a result millions of Americans are buried in credit card debt or have taken out second mortgages on their houses. One in every four American spends 40% of their monthly income just to pay their debts. The personal savings rate of Americans went negative in 2005 for the first time since the Great Depression of the 1930’s.
The “comfortable” lifestyle of the US worker was sustained only by accumulating debt. In truth, the American dream was only a myth and the middle class status of the working class was only an illusion. Only by extending consumer credit was the US able to extend the economic boom and delay the inevitable crash. Yet delaying the onset of the crisis only meant a more severe crash when the hour of reckoning came. The mountain of consumer debt could not remain unpaid without destabilizing both the real economy and the financial markets.
Second, the crisis of overproduction squeezed the rate of profit and led capitalists to make a detour from the world of production to the mania of speculation. The deregulation of financial markets in the period of globalization aggravated the crisis. The lifting of controls and supervision by the government over the movement of finance capital led directly to the excess and insanity of investors, brokers and speculators in Wall Street. Exotic financial instruments were invented, and then sold and resold all for the purpose of squeezing more “profit” from “paper.”
By the time millions of Americans defaulted on their mortgages and the subprime housing bubble exploded, the madness of finance capital was exposed for all to see. The biggest commercial and investments banks in the US and in the world, together with other financial institutions like insurance companies, were left holding bundles of worthless papers. In an instant, billions of dollars worth of financial papers evaporated.
Punishing the innocent
In short, finance capital lost in a high-risk gamble. But on the argument that they are too large to go under, they are being bailed out by the US and other OECD governments. And ultimately it will be the mass of workers who will foot the bill of saving the finance capitalists. It will be the taxes of autoworkers, teachers and janitors who will rescue the bankers, investors and brokers.
In the US, the $700 billion fund reserved as bailout, in addition to the more than $100 billion already spent to rescue some financial companies, will eventually come from the pockets of the workers. Thus while capitalist profit remains private, the business losses are socialized.
Imagine Joe the plumber handing over his hard-earned tax dollars to the CEO of AIG on the premise that the investors, speculators and bankers are too big to fail. When a worker loses his daily pay betting on lottery, he cannot ask for food stamps from the state, especially with the dismantling of the welfare system. But now governments are handing out corporate welfare to the rogues whose excess and greed are the immediate cause of the financial meltdown.
The crisis that is ultimately rooted in the contradiction of overproduction has led to the mania of speculation by finance capital. And the bursting of the finance bubble is now on a blowback to the world of production. The extensive and deep losses by the finance capitalists has now made them misers and reluctant to extend loans to industrial capitalists lest they bleed even more. Industrial capitalists are squeezed by the credit crunch precisely at the time that they need the lifeline of commercial credit with profit realization hindered by glutted markets.
Permanent closures, temporary shutdowns, work rotation and cost cutting will be the coping measures of industrial capitalists. Retrenchments, layoffs, wage cuts, reduced work hours and informalization of jobs for the workers will be the inevitable result.
Therefore the workers and the poor will be made to bear the burden of resolving the crisis that is not of their own making. The innocent masses are being punished for the crimes of a few.
The working class all over the world will be asked by the ruling classes to sacrifice for the sake of the nation. The workers and the poor must not buy into this cheap sales talk. Workers are the last to benefit from an economic boom but now they are the first to be sacrificed in the midst of a global recession.
The workers must fight for its independent demands and its own class interests. The unprecedented crisis that capitalism is passing through is also a historic opportunity for the workers to advance its immediate and ultimate agenda.
The shallow basis for such declarations from the government is supposedly the fact that most of Philippine exports are being sent to China rather than the US. But China is just a transit point or a gigantic department in the assembly line that spans the globe. Thus exports to China will simply be assembled there and then ultimately sent to the US, Japan or Europe as finished products. Such is the international division of labor under the era of globalization.
Now here’s the rub. Japan just recently admitted that it is in recession. It is now officially in the same rickety boat as Germany and Italy, or for that matter most of the European Union countries. Despite the Bush government still being in denial about a recession, there are already some pundits in the US that are talking about the prospect of a depression.
The fact that US and Japan, the two biggest economies in the world and the final market for most exports, are in recession spells double trouble for the Philippines. In addition, US, Japan and Europe are the destination for a significant section of the nine million overseas Filipinos and the source for a large part of their $14 billion yearly remittances through official channels. Therefore Filipino migrants and their precious dollars, yens and euros are in clear and present danger when the recession extends and deepens. There is no doubt about the fact that migrant workers will be the most vulnerable when layoffs and closures hit their host countries.
While it may take some time for the howling winds of the so-called perfect economic storm to hit the shores of the Philippines, the initial impact is already being felt in the export-oriented factories whose clients are in the US, Japan and Europe. Reductions in the workforce and workdays are being implemented in the export zones and industrial estates in proportion to the reduction of orders from abroad. The permanent closures, temporary shutdowns and work rotation have happened in the last three months. And they have affected not just hundreds but thousands of garments, electronics and furniture workers in these industrial areas. These retrenchments and rotations are the herald of the grave unemployment that will result when the global recession reaches maturity and fully impacts the Philippines.
Capitalist greed
Myths about the crisis should be cleared up so that its real roots can be examined. The popular explanations peddled by the mainstream media and government officials in the US is that the crisis is simply due to the corruption, excess and greed of the investors, brokers and speculators of Wall Street.
It would be hard to accept as gospel truth such conventional opinion in the US. Just before the undeniable meltdown in the financial markets and the rapid descent to an economic recession, the American government officials and mainstream media were saying that the economic fundamentals are sound and that the problems are manageable. Yet we have to understand that such errors and hubris are not borne out of stupidity but of hypocrisy, for such well-told lies serve the purpose of conditioning the minds of the American people, especially workers.
It is indeed true that good old capitalist greed played its part in the disaster on Wall Street. Still corruption, excess and avarice are all in the nature of capitalism since the motor of this system is intense competition and the race for profit. It is simply business as usual for capitalists to covet the most profit in the shortest time. And yet it is not everyday or every year that capitalism falls into a historic crisis. Therefore the roots of the crisis go beyond capitalist greed.
Subprime housing
Practically everyone agrees that the immediate cause of the present problem lies in the subprime housing loan failure. It has been more than a year since the subprime housing crisis erupted with millions of ordinary Americans having risky credit ratings duly failing on their amortizations.
The crisis exploded with the number of homeowners unable to pay amortizations reaching a critical mass. This September, four million Americans, about 10% of the total, were either very late in their payments or were having their homes repossessed. Thus Freddie Mac and Fannie May, the two main mortgage companies in the US, were in the red by $3.1 billion just for the three months from April to June.
The fact that several millions of working class American families could not afford to shell out money for their monthly home amortizations is already a sign of the contradiction that ultimately lies behind the economic crisis in the US. The wages and income of the ordinary American family cannot keep up with the escalating costs of living, including home payments. And this is all due to the changes wrought by globalization—the wave of retrenchments and layoffs, the temporary and part-time nature of jobs, the continuous decline in real wages and the dismantling of the social wage and welfare for the poor. The discrepancy between the nominal wage and the cost of living reflects in the oversupply of housing compared to the capacity to pay of the people. The crisis of overproduction (oversupply of commodities vis-Ã -vis effective demand for it) is an essential characteristic of capitalism. And it is clearly illustrated in the sector of housing for the working class.
Deregulation and financialization
The quantum leap from a problem in just one line of industry (in this case the subprime housing sector) to a crisis of the whole of the economy is due directly and entirely to the deregulation and financialization that has become defining features of the era of globalization. The mortgage companies sold their mountains of mortgage papers to the banks. The banks in turn resold these subprime mortgage papers (repackaged as securities called collateralized debt obligations or CDO’s) to so-called institutional investors such as other banks, investment houses and pension funds.
The complicated and repeated selling of these papers, and the invention of different financial instruments called derivatives, and even the exotic credit default swaps, is the way for financial institutions to make profit out of the money capital of investors. In the world of finance capital, profit is magically squeezed out from paper, even debt papers of risky debtors.
Here we can see an element of the so-called excess and corruption. Though lacking the capability to pay, ordinary Americans were enticed by various gimmicks (like the floating interest rate) to take out risky loans.
Still it is important to understand that this is not just the dishonesty of some individuals but the irresponsibility of the system itself. In a situation where so much of the wealth in the US and the world is in the form of finance capital that seeks big returns in the quickest time, it becomes entirely natural even logical for investors to grab the opportunity of a “get rich quick scheme” in the subprime housing sector, and the buying and selling of CDO’s and other financial instruments.
It is in this way that the subprime housing sector is connected to the world of finance capital. That is why the moment millions of high-risk Americans defaulted on their mortgages, the biggest commercial and investment banks, and even insurance companies, were suddenly left holding toxic debts and tons of debt papers that had no way of being paid.
The problem is similar to, though not exactly the same as, the Asian financial crisis of 1997. It is no different since it is due to speculation by finance capital. In the years before 1997, finance capital flooded the stock exchanges and real estate markets of the so-called emerging countries of Asia, including the Philippines. But the underlying economic problems cannot be hidden, especially from speculators, and when the time of reckoning came, finance capital withdrew in a flash and thus the stock markets and exchange rates collapsed like a house of cards. In the present case, finance capital descended upon the subprime housing sector and the business of trading CDO’s until the new bubble burst in due time.
Speculation
There is no more apt word to describe the modus operandi of finance capital than speculation. “Profit” from speculation does not arise from the creation of new wealth and new value as in the case of production of commodities.
New wealth or value is generated in society only through the investment of money capital in the world of production, and the creation of products after the expenditure of labor power. Profit is extracted from the unpaid labor of workers and is then realized after the sale of the commodities.
Speculation by finance capital is however as different as heaven is from earth. “Profit” is fashioned not through the exploitation of workers but through trading in the stock exchanges, real estate, mortgage papers, futures market or other financial instruments. In the world of speculation, money miraculously generates “profit” from money without the mediation of the process of production. In essence, this is no different from gambling.
So on the one hand, there is the real economy where new wealth is created from the application of labor power to produce goods and services. On the other hand, there is the casino economy of finance capital where speculation is the mode of operation. With capitalism entering the stage of financialization, the shadow of speculation is not far behind.
Speculation is the illegitimate child of the deregulated world of finance capital. Finance capital rushes into a mania of investing in the popular business of the day where there is an expectation of high profits. Prices and profits thereby artificially inflate as long as investments keep pouring in. At the start the bubble will grow bigger and bigger seemingly as if the sky is the limit. But the bubble will burse the moment it becomes clear that the prospect of high profits is all hot air. All speculative ventures or bubbles can only end in a crash since no new wealth is created in this world. But like an addict that cannot kick the habit, finance capital will just move on to the next mania of the moment.
The crucial question is why such a significant part of the wealth of the US and the world is tied up as speculative investments? Why is this money capital not invested in the production of goods and services, in the creation of jobs in the light of massive unemployment? Or why is it not invested in agricultural production, in the farming of land in the light of the food crisis besetting the world? In answering this question, we can arrive at the roots of the present crisis.
Capitalists would rather put in their money capital in the mania of speculation instead of the world of production since the rate of profit is greater. It is in the nature of capital that it seeks the level where the rate of profit is higher, just like water seeking the lowest point due to the pull of gravity. It does not matter to capitalists whether it is speculation or production. The important thing is profit, and the bigger the profit in the shorter amount of time, the better.
Crisis of overproduction
Yet why is it that the rate of profit is greater in speculation rather than production given that new wealth in created only in the making of commodities? Thus opens up the secret of the innate contradictions of capitalism. If there is a glut in a certain sector of the market then profit is difficult to realize. The rate of profit falls and capitalists are obliged to shift their money capital to other lines or industries. But if the glut permeates all industries, if the crisis of overproduction is generalized, then the prospect of a bigger rate of return in the world of speculation and its mania of bubbles beckons the capitalists.
In the age of globalization, two factors come together to explain this situation. First, the innate tendency to overproduction has been exacerbated by the cheapening of wages in combination with a gigantic increase in the productivity of labor in the era of globalization. Surplus commodities clog the markets as people do not have the capacity to buy since their wages come up short and many do not have work. The crisis of overproduction is worldwide in scale as the epidemic of wage cheapening, work flexibilization, factory closures, job retrenchments, union busting, cutback in social spending, regressive taxation and other policies accompanying globalization are being implemented across the board and across all borders.
The great inequality of wealth in the US is a key link in explaining overproduction. The productivity of the American worker rose by 60% since 1979 but the wage of male workers fell by 5% over the same period. Some 33 million, one out of every four US worker, live below the poverty line. From 2000 to 2007, the number of poor in the US jumped by 15% or 5.4 million. In the same span of time, wages were frozen but profits leaped by 13% every year. The share of profit in the national wealth is at its peak in the US for the past 64 years while the share of salaries is at its lowest since 1929.
The leap in productivity is expressed in the flood of products and services. Yet the expansion of markets is hindered by the lack of effective demand. The crisis of overproduction is at the root of the recession in the US and global economy.
The reason the crisis exploded only now is that for a time the extension of consumer credit delayed the onset and attenuated the gravity of the problem. As a result millions of Americans are buried in credit card debt or have taken out second mortgages on their houses. One in every four American spends 40% of their monthly income just to pay their debts. The personal savings rate of Americans went negative in 2005 for the first time since the Great Depression of the 1930’s.
The “comfortable” lifestyle of the US worker was sustained only by accumulating debt. In truth, the American dream was only a myth and the middle class status of the working class was only an illusion. Only by extending consumer credit was the US able to extend the economic boom and delay the inevitable crash. Yet delaying the onset of the crisis only meant a more severe crash when the hour of reckoning came. The mountain of consumer debt could not remain unpaid without destabilizing both the real economy and the financial markets.
Second, the crisis of overproduction squeezed the rate of profit and led capitalists to make a detour from the world of production to the mania of speculation. The deregulation of financial markets in the period of globalization aggravated the crisis. The lifting of controls and supervision by the government over the movement of finance capital led directly to the excess and insanity of investors, brokers and speculators in Wall Street. Exotic financial instruments were invented, and then sold and resold all for the purpose of squeezing more “profit” from “paper.”
By the time millions of Americans defaulted on their mortgages and the subprime housing bubble exploded, the madness of finance capital was exposed for all to see. The biggest commercial and investments banks in the US and in the world, together with other financial institutions like insurance companies, were left holding bundles of worthless papers. In an instant, billions of dollars worth of financial papers evaporated.
Punishing the innocent
In short, finance capital lost in a high-risk gamble. But on the argument that they are too large to go under, they are being bailed out by the US and other OECD governments. And ultimately it will be the mass of workers who will foot the bill of saving the finance capitalists. It will be the taxes of autoworkers, teachers and janitors who will rescue the bankers, investors and brokers.
In the US, the $700 billion fund reserved as bailout, in addition to the more than $100 billion already spent to rescue some financial companies, will eventually come from the pockets of the workers. Thus while capitalist profit remains private, the business losses are socialized.
Imagine Joe the plumber handing over his hard-earned tax dollars to the CEO of AIG on the premise that the investors, speculators and bankers are too big to fail. When a worker loses his daily pay betting on lottery, he cannot ask for food stamps from the state, especially with the dismantling of the welfare system. But now governments are handing out corporate welfare to the rogues whose excess and greed are the immediate cause of the financial meltdown.
The crisis that is ultimately rooted in the contradiction of overproduction has led to the mania of speculation by finance capital. And the bursting of the finance bubble is now on a blowback to the world of production. The extensive and deep losses by the finance capitalists has now made them misers and reluctant to extend loans to industrial capitalists lest they bleed even more. Industrial capitalists are squeezed by the credit crunch precisely at the time that they need the lifeline of commercial credit with profit realization hindered by glutted markets.
Permanent closures, temporary shutdowns, work rotation and cost cutting will be the coping measures of industrial capitalists. Retrenchments, layoffs, wage cuts, reduced work hours and informalization of jobs for the workers will be the inevitable result.
Therefore the workers and the poor will be made to bear the burden of resolving the crisis that is not of their own making. The innocent masses are being punished for the crimes of a few.
The working class all over the world will be asked by the ruling classes to sacrifice for the sake of the nation. The workers and the poor must not buy into this cheap sales talk. Workers are the last to benefit from an economic boom but now they are the first to be sacrificed in the midst of a global recession.
The workers must fight for its independent demands and its own class interests. The unprecedented crisis that capitalism is passing through is also a historic opportunity for the workers to advance its immediate and ultimate agenda.
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