The Cybernetic Revolution and the Crisis of Capitalism (page 3 of 11)
By Jerry Harris and Carl Davidson
The Chicago Third Wave Study Group

Alongside this first contradiction is the second--increasing the scope of reproduction while decreasing the ability of society to bear the cost. Industrial capitalism needs to grow. Not only is it pushed on by its need to accumulate; its nature is that of an expanding mass society. Mass production, mass markets, and mass consumption are all part of industrial civilization. It therefore needs more space, more materials, more energy, and more labor. It needs to expand its use of the conditions of production, and "externalize" their cost. This not only led to the crisis in nature, but also in our cities and infrastructure.

Structural Crisis of Industrial Capitalism

This crisis began with the reintroduction of fierce competition from Europe and Japan. Nixon was forced to recognize this when he ended the Breton Woods agreement in 1971 and the dollar had to compete with other currencies. By 1973 U.S. profitability had fallen to 9.5% compared to 16.5% in 1952. (N.Y. Times, March 28, 1983). This renewed competition meant the liberal social contract between labor and capital was at an end. American living standards peaked in 1973, and have been on a steady decline every since. In what was now a more competitive world, the struggle for accumulation become fiercer, driving down the wages and benefits of workers.

This crisis hit full force in the 1980s when unions were forced into contract concessions resulting in billions of dollars in givebacks throughout the economy. While this helped profits, it meant less money for consumption. The results have been staggering. U.S. income has dropped from number one in the world to number ten. Real weekly earnings are 19% below 1973 levels, while the median income of families headed by those under the age of 30 has fallen 32%. Over 20% of our children live in poverty. Since 1988 the average net worth of American households has fallen 12%, or about $5,000 per family. These figures also expose the racist nature of the U.S. economy: median white households are worth $44,408; Latino households $5,345; and Black households $4,604. (Chicago Tribune, January 1994). Its no wonder that American factories are shutting down, they simply can't sell to a population making less real income than the generation before it.

Capital flight has been a major tool to reassert profitability. The continuing pressure to lower wages and other costs has meant shutdowns and layoffs here combined with greater penetration into the Third World. Corporations make use of a global labor market where wages often average $4 a day. Why pay Detroit autoworkers $12 an hour, when Ford can pay 75 cents an hour in Jalisco, Mexico? NAFTA is only the latest result of this trend.

These drastic drops in working-class income were also accompanied by the large Reagan cuts in welfare and urban spending. Just as corporations attacked workers to lower the cost of their first contradiction, the state cut spending to lower cost in the second contradiction. As individual capitalists "externalized" or dumped more of their potential costs, such as pollution, on the public, they also weakened the overall health of capitalist society. Government debt, the tax crisis, urban decay and violence are all reflections of the crisis in the conditions of production. As profits become weaker in the private sector, the corporations attack the wage structure and force the state to assume more of their costs. In turn the state finds itself deeper in debt and crisis, and must cut costs by attacking its social programs, selling off its forests, letting the infrastructure decay, etc.