Introduction: The Recent Economic Crisis
In December of 2007, the United States entered a recession. Nine months later, the failure of investment bank Lehman Brothers triggered a financial crisis that spread across the Atlantic to Europe. As the recession in the United States and Europe deepened, the world economic crisis spread to Asia as their export-oriented economies slowed. The greatest economic crisis of capitalism since the Great Depression of the 1930s engulfed almost every major economy in the world, with the exception of China. [1]
As the crisis developed, mainstream economists, the Federal Reserve, and Federal government officials tried to explain away the problem. When the problems in the mortgage market began in 2006, they said that it would be "contained" to so-called sub-prime mortgages made to borrowers who were considered to be poor credit risks. Then the housing market as a whole began to sink, and they said that it would not cause a recession. As the economy began to lose jobs and the recession started, they said that Europe and Asia would be fine and that our exports to the rest of the world would help the United States. Finally, when the financial crisis exploded on Wall Street and shook the world economy, the Federal Reserve and Federal government jumped into action and the finger pointing began.
The Federal Reserve reduced interest rates to near zero in a failed attempt to combat the recession, then went on a lending spree, pumping about a trillion and a half dollars into banks, financial institutions, and bond markets. The Federal Government cut taxes, loaned hundreds of billions of dollars to bailout banks and other financial institutions, and increased spending on social programs and infrastructure, leading to a trillion and a half dollar federal budget deficit for the 2009 Fiscal Year. [2]
The dominant free market school of economics reeled in shock as the capitalist system teetered on the edge of calamity. They saw the economic crisis as unthinkable and impossible and tried to blame it on the government, overlooking the fact that the government had pursued their free market policies of deregulation, free trade, and cuts in social programs for the last thirty years.
Keynesian advocates of government borrowing and spending to fight recessions had been on the defensive for thirty years. The worldwide economic crisis gave them a new lease on life, as they returned with ideas to increase regulation and the role of the government in banking and health care in addition to their spending stimulus. [3]
But while the economic debate between the free-marketers and Keynesians heated up, both sides have ignored the only school of economics that actually explains why recession and economic crisis is a regular feature of capitalism. This school is Marxism, based on the economic analysis of Karl Marx, V.I. Lenin, and others.
A Marxist Analysis of Capitalist Economic Crisis
Marxism lacks both the mathematical fantasies of free-market economics, and the determination to save capitalism found in Keynesian economics. Instead Marxism begins with the reality that the means of production of goods and services, the land, buildings, and machinery that workers need to produce, are owned by a small group of wealthy capitalists. In the United States, the wealthiest 1% of the population owns almost half of all financial assets, such as stocks, that represent ownership of productive forces. This means that the vast majority of people (in the United States about 90%) must work for others to make a living. [4]
Under capitalism workers' wages are not determined by the value of the product of their labor, but instead by the value of their labor power, or the goods and services needed to sustain them and their families. The value of labor power is reflected in the wages and benefits of workers as well as social benefits provided by the government. The value of labor power is not set but is historically determined, and can vary from country to country and time to time depending on a number of factors. These factors include: what workers are able to win in the class struggle, the condition of the reserve army of labor, the extent of national and colonial oppression, and the necessary level of training and education of the average worker. [5] [6]
The difference between the value of the goods and services created by labor, and the value of labor power, or wages that the workers are paid, is surplus value, which goes to the capitalists who own the means of production. Surplus value is the source of capitalist profits. The more that the capitalists can force down wages the greater their profits. This is what Marx called exploitation. This could be seen clearly in the second three months (April to June) of 2009, where corporate sales fell due to the recession, while corporate profits soared as layoffs, wage cuts, and harder work by the remaining workers boosted their bottom line. Indeed, over the course of the entire 2001-2007 expansion of the economy typical household incomes (adjusted for inflation) actually fell despite economic growth. At the same time profits grew to record levels. [7]
Unlike the kings and emperors of ancient and medieval times, the capitalists today do not spend their gains from exploitation only on luxuries, temples, and armies. While they do live lives of luxury, most surplus value is reinvested into expanding their businesses. This accumulation of capital also contributes to the rapid technological advances seen under capitalism, as the capitalists use their profits from exploitation to develop new innovations that they hope will help them better compete with other capitalists. [8]
But these processes of exploitation and the accumulation of capital lead to a fundamental contradiction: exploitation and the capitalists' drive to lower wages limit the ability of the masses of workers to consume. At the same time, the accumulation of capital and technological innovation are constantly increasing the ability of capitalist businesses to produce. This contradiction between reduced ability to consume and the increased ability to produce leads to periodic crisis of overproduction, or what is generally called a recession or depression.
The most recent crisis of overproduction could be seen as more and more stores were closed and factories closed down. Millions of homes stood empty and unsold goods piled up. This was most visible at auto dealers whose inventories of unsold cars soared. At the same time millions of workers were laid off, evicted from their homes, and suffered from cuts in government services and public schools.
These crises of capitalism also pave the way to recovery. As businesses close down, the means of production are destroyed, reducing the excess capacity to produce that helped to lead to the crisis. Less capital increases the rate of profit, which encourages more investment spending by the capitalists. The increase in unemployment allows the capitalists to hire back workers at even lower wages, also increasing profits. Combined with new markets for their goods and services, these factors allow the economy to begin growing again, which in turn recreates the conditions for another crisis of overproduction. Thus there is a pattern of economic expansion followed by recession, or what is known as the business cycle. Here in the United States there is a recession every four or five years on average. There have been 33 official recessions since 1857 in the United States [9].
Capitalism and Women
The rise of capitalism meant a transition from feudal exploitation of peasant women by their lords to capitalist exploitation of women workers. Many, and often most, workers in the earliest factories organized along capitalist lines, such as clothing factories, were adult women and girls. These women faced intense exploitation, often working 16 or more hours a day, six days a week. Deaths from overwork were not uncommon. [10]
From the infamous Triangle Shirtwaist Factory fire in 1911 in New York City which killed 129 female and 17 male garment workers, to the 2013 collapse of a building holding garment factories in Dhaka, the capital of Bangladesh, where at least 1,127 workers, again almost all women, were crushed to death, women workers are often made to work under some of the worst and most dangerous conditions.
These conditions have moved women workers to militant struggle, such as the 1929 Loray Mills Strike in Gastonia, North Carolina. Workers there and at other textile mills across the south went on strike against the "stretch-out" that increased their work as much as two-fold while at the same time the bosses cut their wages. This strike was led by communists.
These workers struggles, as well as the militant struggles of African Americans and the women's movement that resulted in advances made from civil rights laws, have improved the status of women in the workplace. One example is the growing number of women in many professional occupations such as doctors, lawyers, and managers.
At the same time, women are still far from equal in the workplace. Adjusted for their level of education, women workers earn from 65.1% to 70.1% as much as men. Within many occupations women are still segregated into the lower-paid jobs. Women workers in the United States suffer from a lack of paid maternity leave and shortages of affordable, quality childcare. [11]
The unequal status of women is also seen in the much higher rates of poverty among women and women headed households. Overall, adult women are more likely to live in poverty than men (16.3% for women vs. 13.6% for men), and elderly women are much more likely to be poor (11.0% for women 65 years and older vs. only 6.6% for older men). Single women who head up a household are almost twice as likely to be poor as single male head of households (30.9% for women vs. 16.4% for men). [12]
Economic Status of LGBTQ people
Even though there have been historic strides in the legal status of Lesbian, Gay, Bisexual, Transgender and Queer (LGBTQ) people recently, continuing discrimination against LGBTQ people exists in all areas of society. The economic status of LGBTQ people is not equal to that of heterosexuals. Gay and Bisexual men only earn 60 to 90 cents for every dollar earned by heterosexual men with similar education and experience. Poverty and unemployment rates are higher for LGBTQ people, and they are more likely to receive government aid based on having low incomes. LGBTQ youth are much more likely to become homeless than straight youth. A recent survey in San Francisco shows that 29% of the homeless identified as LBGTQ, as opposed to only 15.4% of the total population. LGTBQ people are also more likely to lack health insurance. [13]
The Development of Capitalism into Imperialism
Another characteristic of capitalism pointed out by Marx is the tendency for businesses to grow in size. This comes from the process of accumulation itself, or what Marx called the concentration of capital, and from the tendency of bigger businesses to crush and absorb their smaller rivals, or what Marx called the centralization of capital. This process of concentration and centralization of capital can be seen today in the airline industry, where four large firms control almost 85% of the market. In the United States and other capitalist countries more and more industries are dominated by a handful of giant firms. This centralization began in manufacturing, and then spread to transportation, communication, retail, banking, food production, and restaurants. [14]
By the end of the 19th Century, this process had led to a new stage of capitalism, the stage of monopoly. In 1917 this was described by Lenin who listed five features of monopoly capital: first, the concentration and centralization of capital into a few large firms in each industry, who have monopoly power; second, the merger of banking and industrial capital into finance capital; third, the export of capital, fourth the division of the world among monopoly corporations, and fifth, the division and re-division of the world among a handful of imperial powers. [15]
Lenin pointed out the rise of what he called "finance capital" and of a financial oligarchy that profits from speculation in stocks, land, and other financial securities. Here in the United States in the 21st century, the fact that the so-called "FIRE" industries (Finance, Insurance, and Real Estate) made 40% of the profits of large corporations shows the importance of finance capital. [16]
In the 16th to 19th centuries merchants expanded trade around the world. But by the late 19th century up to today, profits from capital invested abroad have greatly exceeded profits from trade. This export of capital (as opposed to goods and services) can be seen in the growth of multinational corporations and the huge amount of foreign direct investment today. This is what is referred to as imperialist globalization. [17]
Last, but not least, Lenin criticized the idea that the growing economic ties among capitalist nations would lead to more harmonious relations. Instead he pointed out the growing competition and conflict among the imperial powers for control of raw materials, markets, and opportunities to invest. These conflicts exploded into World Wars I and II. Today there are also mistaken theories that capital is now transnational and that national governments do not matter as much. The reality is that economic contradictions are growing among countries, both the rising economies of the so-called "BRIC" (Brazil, Russia, India, and China) and the established economic powers of the United States, Western Europe, and Japan. The most recent example of this is the growing military tensions in Eastern Europe, following the U.S.-backed overthrow of the Ukrainian government followed by Russia's annexation of the Crimea.
Lenin said that imperialism was the monopoly stage of capitalism. Our view of the world economy today is that these basic features that Lenin identified almost one hundred years ago: the centralization of capital in gigantic corporations, the growth of finance capital, the export of capital and formation of international corporations, and the growing competition between economic powers, still hold true. The models of competitive markets that mainstream economics is based on are by and large myths designed to explain and defend the status quo. [18]
National Oppression, Capitalism, and Imperialism
Capitalism in the United States began with the seizure of land from the indigenous peoples of North America, leading to genocidal conquest of Native Americans. Millions of Africans were taken as slaves to the "New World" and some 15 million died in the so called "Middle Passage" across the Atlantic. The wealth created by Black slaves on Native Peoples' land was not only the basis of the southern plantation owner class, but also basis for northern merchants and bankers who also profited from the slave trade. [19]
National oppression of people of African, American, and Asian descent continued through the 19th century in the United States, which was largely a period of competitive capitalism in the north and slavery in the south. In addition to the continuing genocide of indigenous peoples, and the transition from slavery to semi-feudal exploitation of African American tenant farmers, the United States also seized northern Mexico by force and subjugated the Mexican people of the Southwest. Large numbers of Chinese workers were also brought in to work the mines and build the railroads in the west.
The rise of monopoly capitalism or imperialism saw the continuation of national oppression. After a brief period of gains after the Civil War, African Americans faced Klan terror and Jim Crow segregation following a deal between the rising monopoly capitalists of the north and the former plantation owners in the south to end reconstruction. Anti-Chinese terror also rose after the racist exclusion of Chinese immigrants in 1882, and spawned new segregationist laws in the West, Midwest, and North such as restrictive covenants.
One of Lenin's less recognized observations was about how the rise of monopolies and imperialism changed the nature of immigration. In the period of rising, competitive capitalism, immigration largely consisted of movement of peoples in developing capitalist economies in Europe to colonies and former colonies of the European powers. But with the rise of monopoly capitalism, immigration more and more consisted of movement of peoples from the colonies and other oppressed nations to Europe as monopoly corporations sought to expand their reserve army of labor to include the whole world. [20]
This can be seen in the monopoly capitalist countries (the United States, Western Europe, and Japan) where the vast majority of immigrants come from the developing nations of Africa, Asia, Latin America, and the Caribbean. These immigrants and their children have become oppressed nationalities in the imperial nations. Here in the United States, African Americans in the south, Chicanos in the southwest, and peoples of Hawai'i have been forged into oppressed nations. [21]
National oppression also contributes to economic inequality in the United States. Many of the poorest communities in the United States are on Native American reservations, towns in Texas where the Chicano Nation borders Mexico, etc. The long-standing relative poverty in the South is rooted in the national oppression of African Americans and the African American Nation. African American and other oppressed nationalities are subject to higher rates of arrest and conviction, and longer prison sentences. Prison records then make it much harder to get jobs.
This intense national oppression creates a material division between whites and oppressed nationalites, distorting the class consciousness of many white workers and thereby impeding multinational working class unity. But despite the reality of this material division, white workers are still exploited, and national oppression drives down conditions for them too. For example, in the Black Belt South, the historic home of the African American nation, the poverty rate and mortality (death) rate for whites, while lower than African Americans, is HIGHER than the rates for whites in the South who live outside the African American nation. [22]
Immigration from the Third World and continuing national oppression has contributed to the growth of the lower stratum of the working class. African Americans and immigrants from Asia, the Caribbean, and Latin America make up the bulk of what Marx referred to as "the reserve army of labor," the unemployed and underemployed workers that capitalists can draw upon when needed without having to raise wages, and to be released at will — in other words the "last hired and first fired." This can be seen today in the rates of unemployment for oppressed nationalities that are almost twice as high as the rates for whites. [23] [24]
Capitalism, Imperialism, and the Environment
The rise of capitalism and the profit motive went hand in hand with destroying the environment. Some of the worst environmental disasters in imperialist countries in modern times have included London's 'Great Smog' of 1952 which killed some 12,000 people and the mercury poisoning at Minamata Bay, Japan which came to light in 1956 and killed nearly 2,000 and crippled many more. Here in the United States there are more than a thousand so-called 'Superfund' sites in the United States where industrial and military waste have poisoned the land and water. The recent oil spill by British Petroleum in the Gulf of Mexico is another example of the monopoly capitalists' abuse of the environment. [25]
In reaction to the ravages of capitalism on the environment exposed by Silent Spring (1962, by Rachel Carson), and inspired by the mass struggle of African Americans for equality and the anti-war movement of the 1960s, the modern environmental movement began in the United States. This movement won many struggles that have limited environmental damage and cleaned up some of the most polluted places in the United States.
One of the ways that the monopoly capitalists have been able to continue to destroy the environment is to move the most dangerous manufacturing to countries in the Third World. This practice led to the most deadly industrial accident ever in 1986, when the Union Carbide (now owned by chemical giant Dow Chemicals) plant in Bhopal, India killed between 4,000 and 16,000 people, permanently injured thousands more, and caused tens of thousands to suffer.
Another corporate practice is to concentrate their environmental destruction in poor working class and oppressed nationality communities. This practice, often known as 'environmental racism', has a particularly severe impact on indigenous peoples in the United States, whose lands have been used to dump military and industrial wastes. Another example is the use of workers of indigenous descent for uranium mining, which poisons them and their families in the Navajo nation.
One of the most urgent environmental issues is climate change, where the production of so-called 'greenhouse gasses' (mainly carbon dioxide and methane) is leading to rising temperatures and more extreme weather events such as heat waves, droughts, and flooding. This is happening worldwide and hitting hardest the poorer nations of the Third World, as well as small island nations who face rising seas caused by ice melting near the north and south poles.
Corporations such as General Electric (who designed the nuclear reactors at the doomed Fukushima Daiichi nuclear plant in Japan) are trying to use the issue of climate change to get more government subsidies for nuclear power plants. These plants are not only expensive (thus the need for government subsidies) and dangerous (Fukushima Daiichi in 2011), but also produce radioactive wastes that can linger for hundreds of thousands of years. [26] [27]
There is a close relationship between the nuclear power industry, the production of nuclear weapons, and destruction of the environment. The Hanford site in the state of Washington which began production of plutonium during the World War II Manhattan Project to produce atomic bombs is today the site of a nuclear power plant and holds some two-thirds of high-level radioactive wastes in the United States.
Economic Crisis and the Role of the State under Monopoly Capitalism
Under monopoly capitalism the crisis of overproduction is centered in the production of capital goods (or what mainstream economics refers to as "investment spending"). This can be seen in the most recent recession in 2007, which began with a downturn in the housing market, and the previous recession in 2001, which began with a downturn in computers, routers, service, fiber optic cable, etc. that formed the backbone of the internet. [28]
This goes hand in hand with the general tendency towards overcapacity, or the ability to produce more than what can be sold. Even before the last recession broke out, there was overcapacity in many industries, including auto, steel, airlines, retail, etc. This overcapacity means that there are a lack of profitable investment outlets in the production and distribution of goods and services, leading to a tendency towards stagnation, or prolonged periods of crisis. These long periods of crisis under monopoly capitalism can be seen in the Great Depression of the 1930s. [29]
The Great Depression was only overcome by the gigantic destruction of capital during World War II and the stimulus to the economy provided by the reconstruction efforts. Continuous military spending on the Cold War with the socialist countries and wars to suppress national liberation struggles in Korea and Vietnam also stimulated the economy. There were also the relatively cheap and abundant land and energy that drove a wave of suburbanization, stimulating construction, auto manufacturing, and other industries. These combined to create an economic boom in the United States.
The role of the Federal government also changed with the Great Depression and World War II. Earlier it played little direct economic role, but beginning in the 1930s the Federal government began to play a much larger role in regulating industries, especially banking, through social welfare programs such as social security, and in the allocation of credit through the Federal Reserve bank and mortgage lender Fannie Mae. This was in addition to the economic stimulus of vast military spending.
The government also developed policies to try to stabilize the economy. The Federal Reserve Bank began to raise and lower interest rates to try to even out the flow of credit by the private banking system. The Federal government also began to raise and lower taxes and spending to offset the changes in investment spending on capital goods. While these policies did have an impact on the timing, duration, and depth of crises of overproduction, they in no way were able to eliminate this fundamental feature of capitalism, as the business cycle continued in the post-World War II period. [30]
But by the 1970s, many of the factors leading to the post-war boom had played out. The reconstruction of Western Europe and Japan was completed and these countries played an increasingly competitive role. The era of cheap energy came to an end with the decline in U.S. oil production and the maturation of OPEC into an effective bloc against US and other imperialist oil corporations. This led to renewed economic crisis and a decade of Stagflation (combination of rising inflation and rising unemployment) during the 1970s. [31]
In the 1980s, monopoly capitalism found a new way to increase exploitation and profits and at the same time expand its markets. Reaganomics meant a new anti-union line by the government and the trimming of social welfare programs that aided workers. At the same time there was a huge expansion of credit to maintain and expand consumer spending in the face of declining wages. In the last ten years the boom in the housing markets has been another source of credit for consumer spending. In 2005 alone some $600 billion in spending came from refinancing home mortgages. [32]
The most striking change was the massive buildup in debt across the economy beginning in the 1980s. Households, businesses, and the government have all seen their debts grow much faster than the overall economy. The United States is borrowing more from other countries to pay for a growing trade deficit. The biggest explosion in debt was in the financial sector, where a combination of deregulation of banking, new information technology, and capital unable to find profitable investment elsewhere fed into a boom in lending and financial speculation. [33]
One of the fastest growing sectors of debt today is student loans, which have topped one trillion dollars and is the single largest form of consumer (non-mortgage) debt. The rapid rise in student debt was fueled by state government budget cuts leading public colleges to raise their tuition. While claiming that they have no money and must raise tuition, they continue to give huge raises to administrators. Student loan debt often weighs heavily on young borrowers as it cannot be discharged through bankruptcy. [34]
Another source of debt and bankruptcy among U.S. workers are medical costs. The United States, virtually alone among capitalist nations, does not have universal health care and instead has a patchwork of health care made up of for-profit insurance companies and hospital chains, as multiple government programs and non-profit hospitals. The profit margins and inefficiencies of a decentralized health care system makes U.S. health care the most expensive among capitalist nations, costing 50% more than single-payer government insurance such as in Canada, twice as much as government run national health care such as in Britain, and almost three times as much as Japan where the government imposes strong price controls on medical services. [35]
Not only does U.S. health care cost more but it also leaves almost 50 million people without any health insurance at all. It is no surprise that the United States has some of the worst health care outcomes among capitalist nations, with higher infant mortality rates and lower life spans. Despite being a developing economy, socialist countries such as Cuba have equal or better health care outcomes as compared to the United States. [36]
The 2010 U.S. 'Affordable Care Act' claims to address these problems, but it continues the for-profit, patchwork system that is at the root of the problem. The ACA will cover about half of the uninsured, mainly through the expansion of the Federal Medicaid program for the poor. However, it will exclude millions of undocumented immigrants, and millions more will continue to slip through the cracks. Only a national government health insurance, often referred to as a "single-payer" insurance, can cover everyone. In addition, by doing away the large profit margins and bureaucratic waste of private, for-profit health insuance companies, a national government health insurance plan would also help to lower the high costs of health care. Canada, which has a capitalist economy and largely private doctors and hospitals, spends more than 25% less than United States by using a single-payer government health insurance plan.
The ACA does have some positive reforms such as banning health insurance companies from using one's health to deny health insurance. At the same time it is likely to raise insurance costs for some of those who buy individual policies. Companies trying to evade the law are cutting back on full-time workers, while others are raising their costs to their workers. [37]
Despite the near disastrous opening of the Federal private health insurance exchange, the ACA seems to be meeting or exceeding most of its projected targests by the end of March, 2014. While millions of low-income people have been able to get health insurance through the expansion of Medicaid, millions more have been left out as Republican state governments have blocked the Medicaid expansion in almost half of all states. Surprisingly, the number of workers covered by employer health insurance went up during the roll-out of the ACA, instead of down as many predicted, possibly because many small businesses were able to get health insurance for their workers through the small business exchanges set up by the ACA. [38]
Uneven Development and the Rise and Decline of U.S. Economic Power
Imperialism also leads to the uneven development among countries. The growing gap between rich and poor countries was first and foremost due to the growing wealth of the imperial countries in Western Europe, the United States, and later Japan, and the impoverishment of the colonial and semi-colonial countries of the Third World. This gap continued after the end of European and American colonial rule through neo-colonial relationships that keep Third World countries as sources of cheap labor and natural resources. [39]
There are also differences among the imperial countries. During the 19th century Britain was the leading imperialist country with a leading economy, the largest empire, and greatest ability to project military power through its navy. However World Wars I and II weakened Britain and the United States became the leading imperial country after World War II. The U.S. economy was dominant with the other major capitalist countries (Britain, France, Germany, Japan, and Italy) heavily damaged by the war. The U.S. had the largest military, which was armed with nuclear weapons. As the struggles of colonial people forced the European powers to shed their colonies, the United States moved in with neocolonial relationships that it had long practiced in Latin America.
The 1970s was a turning point for U.S. economic hegemony. At that time China pointed out that "Countries want independence, Nations want Liberation, and the People want Revolution." The U.S. empire was battered as national liberation struggles, in particular the heroic struggle of the Vietnamese people showed the limits of U.S. military power. The rise of OPEC (Organization of Petroleum Exporting Countries) meant an end to cheap oil that had helped to fuel the post-World War II economy through construction of suburbs, a growing auto industry, and related travel industries such as tourism. The struggle of African Americans for equality and power inspired other oppressed nationalities and the working class to greater struggle. In addition, the recovery of Japan and Western Europe from World War II meant more competition for the U.S. economy.
The relative decline of the United States was reflected in the high rates of inflation and the decline of the U.S. dollar. After World War II the U.S. dollar became the international reserve currency, meaning that it was as "good as gold" in backing other countries' money. But in 1973 this so-called Bretton Woods arrangement came to an end, and the U.S. dollar sank in terms of the Japanese Yen and the German Mark, among other currencies. [40]
The United States was able to slow its relative economic decline in two ways. One was through "Reaganomics" in the 1980s, which included union busting, deregulation of banking and industry, breaking down protective tariffs. The end result was to lower the value of labor power and increase the profits of the monopoly capitalists. The other was the demise of the Soviet Union and eastern European socialism in the early 1990s. This opened up new markets for the monopoly capitalists, removed a major obstacle to U.S. military intervention in the world, and dealt a blow to socialism and the workers' movements.
The Most Recent Crisis of Monopoly Capitalism
One of the features of capitalism noted by Marx was that each resolution of a crisis laid the groundwork for an even greater crisis. After the dot-com bust following the internet boom, speculative capital flowed into the mortgage market, fed by historically low interest rates set by the Federal Reserve. The boom and then bust in the housing market led to both a recession, and then a financial crisis, the scale of which had not been seen since the Great Depression of the 1930s.
The main features of the recent economic crisis were first, the increased exploitation of the working class, cuts in government services, and schools, and generally lower standards of living as the capitalist try to shift the burden of the crisis on to the working class and oppressed nationalities. A vicious cycle developed where jobless workers fall behind on their debt payments, and then are denied jobs because of their bad credit! More and more people were losing health insurance as businesses cut benefits and individual plans become too expensive. Homelessness grew and mothers and children were thrown off of TANF and into the streets due to 5-year limits.
One of the functions of economic crisis is that it is an opportunity for the capitalists to restructure the economy to increase their profits over the long term. The most recent crisis sped up the loss of unionized, middle-strata working class jobs. At the same time there are more and more part-time and temporary jobs. More and more businesses do not even give their workers regular schedules, but change them week to week and even day to day, to reduce their labor costs and increase profits, and at the same time playing havoc with their workers lives.
The crisis also increased economic inequality along national lines. The income of a typical Black household was only 59% of white households in 2011. While the income gap is large, the wealth gap is huge. In 2009 the typical white household's wealth was TWENTY times as large as the typical Black household and EIGHTEEN times larger than the typical Latino household. During the crisis the wealth gap between whites and oppressed nationalities, which was very wide to start with, became even greater, as the typical white household lost 16% of their wealth, the typical Black household 53%, the typical Asian household 54%, and the typical Latino household lost 66% of their wealth! [41]
Secondly, the crisis destroyed means of production. Plants closed down, never to reopen. Stores and even entire shopping malls were boarded up. Some banks went as far as tearing down foreclosed homes to try to prop up prices for remaining houses. The Obama administration's "rescue" of U.S. auto makers actually led to more and faster closings of plants and dealers than GM and Chrysler had been doing on their own. The crisis of unemployment worsened, with the official unemployment rate rising to more than 25% in the hardest hit city of Detroit. [42]
Third, the concentration and centralization of capital accelerated as smaller and weaker firms folded and the bigger and strong ones snapped them up or even preyed on each other. This can be seen in the U.S. banking industry, where four giant banks (Bank of America, Citigroup, J.P. Morgan Chase, and Wells Fargo) have emerged with over half the bank assets in the United States. [43]
The recent crisis also sped up the relative economic decline of the United States. There is growing criticism of the free-market economics pushed by the United States to further its own economic interests. Other countries are beginning to questioning the large debt of the United States to the rest of the world, and the role of the U.S. dollar as the international reserve currency. [44]
The Current Economic Expansion
In June of 2009 the worst economic downturn in the United States since the Great Depression of the 1930s officially ended. For the last five years the U.S. economy grew, albeit at a very slow pace. But the current economic expansion is a recovery for the capitalists, not for the working class. Stock prices, as measured by the S&P 500, are up 225%, while corporate profits are up 75% from their lows during the crisis. On the other hand, the median income of U.S. households went down 4% since the recession ended, and there were still about 800,000 fewer jobs in March, 2014 than when the recession began in December of 2007.
The widening gap between the capitalists on one hand and workers on the other is not just a phenomenon of the last few years, but has been going on for decades. One measure of income inequality called the Gini coefficient, rose from .351 in 1968 to .463 in 2011, a 32% increase. From a low of 11.1% in 1973, the official poverty rate rose to 15.0% by 2011, even though economic production per person had almost doubled (up 86%). And despite a large increase in government provided health insurance through Medicare and Medicaid, the percentage of Americans without any health insurance rose from 12.9% in 1987 to 15.0% in 2011 as more and more businesses eliminated health insurance for their workers. While corporate profits are the largest since 1950 as a percent of national income, wages are the lowest since 1966. [45]
There was a continuing drumroll of corporate mergers in the last three years. American Airlines and U.S. Airways are to join forces, giving them along with the other three big U.S. airlines (United, Delta, and Southwest) over 85% of the U.S. market. Comcast and General Electric are buying NBC, continuing the consolidation of the media industry into fewer and bigger firms. The four biggest U.S. banks (Bank of America, Citigroup, J.P. Morgan Chase, and Wells Fargo), continued to grow and now have over half of all banking deposits and almost three-quarters of total bank assets in the United States.
The growing economic exploitation and economic inequality has been aided by the monopoly capitalists control of the government. Over the last thirty years, deregulation of industry, free trade agreements, government backed attacks on workers' unions, and cuts to social benefits for the poor helped the 1% wage a class war on the working class. This is a bipartisan policy, with Republicans focusing on tax cuts for the rich and attacks on unions from Reagan to Bush Junior, while Democrats joined Republicans to pass NAFTA and work-fare under Clinton, and now free trade agreement with Colombia and a "pivot" to cutting spending under Obama. [46]
After a burst of Keynesian tax cuts and spending increases in the 2009 American Recovery and Reinvestment Act, the U.S. government swung to austerity with $900 billion in spending cuts in the 2011 Budget Control Act, $600 billion in tax increases in the 2012 Taxpayer Relief Act, and another $1.2 trillion in spending cuts starting this year under the "sequestration" mandated by the 2011 BCA. Each of these moves towards austerity was preceded by politician-made "crisis" over the debt ceiling (2011) and the so-called "fiscal cliff" at the end of 2012. Just this year (2014) extended Federal Unemployment Insurance benefits have been dropped and food stamp benefits have been cut. [47]
At the state and local level, attacks on government workers have intensified, led by Republicans who want to break the power of public-sector workers' unions, but also joined by Democrats who are intent on cutting the pensions for government workers. These attacks and cuts are part of ongoing national oppression and gender inequality, as they fall the hardest on women and oppressed nationalities, who are much more likely to be public sector workers, especially those with lower and middle incomes (excluding police, fire, and professional workers).
This austerity is not only hurting working people, but will also slow down even more the already slow economic expansion. Today we can see the economies of all three centers of global capitalism: the United States, Europe, and Japan; showing signs of stagnation, where years of slow economic growth and high unemployment are in stark contrast to the relatively rapid growth of capitalist economies after World War II. What began in Europe in the 1980s, and spread to Japan in the 1990s, has now hit the United States.
While the boom and bust in the U.S. housing market triggered the last downturn, the current crisis is centered in Europe, where the economic downturn is growing and spreading as more and more countries adopt policies of austerity. The worst hit were Spain and Greece, but Portugal, Ireland, and Cyprus are raising taxes, cutting government services, and slashing wages to try to maintain the Euro-zone, much like the policies of U.S. President Hoover who did the same to try to maintain the Gold Standard. The unemployment rates in Greece and Spain are over 25%, while Portugal's unemployment rate is nearing 20%. The Euro-zone taken as a whole has been in a five year slump, the longest since the Great Depression of the 1930s.
But even these depression conditions for the working class do not stop the massive accumulation of wealth by a tiny handful of monopoly capitalists – while the Spanish people suffer rising unemployment, topping 26% in 2012, the Spanish textile billionaire Amancio Ortega, moved up to the number three spot of the world's wealthiest men, passing U.S. billionaire Warren Buffet. The total number of billionaires in the world rose to 1,426, two hundred more than in 2012, while their total wealth reached a record $5.4 trillion. [48]
Even though the economic expansion in the United States continues for now, it is only a matter of time before another economic crisis overtakes the United States. This crisis could emerge within the U.S. economy, where the big banks are bigger than ever and more and more risky debt is accumulating. Tax increases and job cuts are eroding the income of most working people, so more and more of the spending depends a smaller number of wealthy people.
Or the economy in Europe could burst into crisis again. Even though the European Central Bank (ECB) purchases of government bonds in 2012 eased the financial crisis, the economic crisis continues and unemployment continues to rise. New flash points for the crisis, such as the recent Italian election where anti-austerity parties won a majority of the vote, and the banking crisis in Cyprus, have emerged, showing that the respite from the ECB action was only temporary.
The Peoples' Struggle and Socialism
The economic crisis brought about an increase in struggle among workers and oppressed nationalities. Some of the biggest are against plant closings and business takeaways of health benefits, home foreclosures, and cuts in education. So far (again, as of August 2013) these struggles remain generally localized and defensive, but there remains great potential for expanding and linking these struggles. [Note: more analysis of the peoples' economic struggles are in the domestic section of the this MPR]
At the same time, the monopoly capitalists are also regrouping and laying the groundwork for new assaults on the working class and oppressed nationalities to shift the burden of the economic crisis on to their backs. There is growing clamor about the weakness of the U.S. dollar and the growing Federal government budget deficit from bankers and the Right-wing. They want to start raising interest rates and institute a new period of austerity by further assaults on reforms won in the 1930s and 1960s (social security and Medicare).
But no matter what the monopoly capitalist do and say, the current economic crisis shook confidence in the capitalist system. Opportunities for educating people about the true nature of monopoly capitalism are growing. At the same time this also is a good time to point to the need for socialism, a system based not on the profit of privately owned corporations, but one based on serving the needs of the working people through government and collective ownership and control of businesses and natural resources.
Endnotes:
[1] China's economy, with large government owned enterprises and banks, government control of foreign capital flows, and a large domestic market was able to continue growing, However, China does have a very large export sector linked to the world capitalist economy, which took a big hit and caused economic growth to slow substantially. Cuba's economy was hit even harder by the fall in trade combined with massive damage from three major hurricanes that year. [Note: According to the United Nations Conference on Trade and Development (online here), China in 2012 had about $833 billion in Foreign Direct Investment, or about $605 per person. According to The New Cuban Economy, by RichardFeinberg,(Online here), Cuba had about $3.5 billion in FDI in 2009, which came to about $312 per person. In contrast, the United States has about $3.2 trillion in FDI or about $10,000 per person. Despite both countries' links to the world capitalist economy, the U.S. press generally portrays Cuba as "socialist" and China as "capitalist." What this is based on is the fact that China has more trade and investment ties with the United States, while Cuba has more trade and investment ties with Europe, Canada, and Latin American countries, because of the U.S. embargo on Cuba. One should not decide on how "socialist" a country is based on U.S. foreign policy.]
[2] The U.S. Federal Government fiscal year used for budgeting purposes runs from October 1 of the previous year to September 30. For example the 2014 Federal fiscal year runs from October 1, 2013 to September 30, 2014.
[3] Named after economist John Maynard Keynes, whose 1936 book The General Theory of Employment, Money, and Interest, pointed out the possibility of economic crisis and the need for government spending to get capitalism going again.
[4] Top Heavy: A Study of the Increasing Inequality of Wealth in America, by Edward N. Wolff, Twentieth Century Fund Press, New York, 1995.
[5] The monetary value of wages, benefits, and government benefits are the price of labor power, while the value of labor power is the socially average labor time needed to produce the goods and services needed to sustain the worker. For Marx's explanation of labor power, see Value, Price, and Profit, by Karl Marx (1865).
[6] For example, the wages of workers in the United States has historically been higher than other capitalist countries. The origins of the United States as a European settler state has meant that the relatively large amount of land taken from indigenous people has provided a (relatively) high standard of living for white farmers, and the reserve army of labor has had to come largely from immigrants and African Americans. The victories of mass struggle during the Great Depression increased workers' wages, benefits, and government benefits. The high level of education required for more and more jobs increases the value of labor power to support a longer period in school.
[7] In 2000, right before the 2001 recession, the median household income in the United States was $52,500. In 2007 the median household income was $52,163 (adjusted for inflation). Income, Poverty, and Health Insurance Coverage in the United States: 2008, table A-1, page 29. From 2000 to the peak in 2006, corporate net operating surplus (the broadest measure of corporate profits, before interest expenses and taxes) rose from 9.2% to 11.4% of GDP, a 25% increase. When other forms of income from property (proprietors' income and rent) are included, it came to almost 21% of GDP in 2006. Note that the total share of income from property and exploitation is even higher, since this figure does not include high salaries and benefits' going to top managers and administrators whose pay comes from the surplus extracted from exploitation.
[8] Under monopoly capitalism a large part of surplus value ends up in financial speculation. See Lenin, Imperialism, the Highest Stage of Capitalism, (1917) chapter III: "Finance Capital and the Financial Oligarchy."
[9] The dates for recessions are set by the Business Cycle Dating Committee of the National Bureau for Economic Research (NBER). The historical dates can be found here. Note that "The NBER does not define a recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. For more information, see the latest announcement from the NBER's Business Cycle Dating Committee, dated 12/01/08." (Quoted from the website cited above).
[10] "In the last week of June 1863, all the London daily papers published … 'Death from simple over-work'. It dealt with the death of the milliner, Mary Anne Walkley, 20 years old, employed in a highly respectable dressmaking establishment, … These girls work, on an average, 16 1/2 hours without a break, during the season often 30 hours, and the flow of their failing 'labour-power' is maintained by occasional supplies of sherry, port or coffee. … Mary Anne Walkley had worked uninterruptedly for 26 1/2 hours, with sixty other girls, thirty in each room." from Capital (volume I), Chapter 10: The Working Day, section 3: Branches of the English industry without legal limits to exploitation, page 364, by Karl Marx, Random House, New York, 1976.
[11] Percentages based on Current Population Survey (2012), table PINC-03: "Educational Attainment – People 25 years old and over, by total money earnings in 2012, work experience, age, race, Hispanic origin, and sex, by U.S. Bureau of the Census. This only includes women with up to a master's degree, women who have professional degrees and PhDs do slightly better, making 73.1% to 74.6% of what men make. Note that the so-called 'gender gap' in income, is widely cited as 19%, as opposed to the actual 30-35% stated here. This is because the 'gender gap' percentage is based on Full Time, Year Round Workers, which excludes part-time and many temporary workers who are more likely to be women. One of the functions of mainstream bourgeois economics is to explain away class exploitation, national oppression, and gender inequality.
[12] Income, Poverty, and Health Insurance Coverage in the United States: 2012, U.S. Census Bureau, 2013. The government poverty line of $18,480 for a family with one adult and two women is far too low, being based on a 1960 formula using 1950 data. This is even recognized by the government, which uses 130% or more of the official poverty line to measure whether people qualify for government aid such as food stamps or Medicaid. While the official poverty line is adjusted for increases in the cost of food, it is not adjusted for the cost of housing, medical care, or transportation which are going up faster, nor is it adjusted for differences in the local. The Census Bureau has developed a "Supplemental Poverty Measure" or SPM that does include these adjustments.
[13] Official government statistics also exclude whole groups of oppressed peoples. There are no monthly or even yearly statistics on the economic status of indigenous people; at most the decennial (10 year) official U.S. census has some figures. While there is a growing amount of economic statistics on LGBTQ people, it is still very limited. While the U.S. Census started to collect data on same-sex households in 1990, they have not published any economic statistics on these households. Another problem is that relying on same-sex couples as the basis to analyze LGBTQ individuals lead to selection problems, where it is possible that more educated people are more likely to declare themselves as a same-sex couple, which is still a source of social stigma.
Homeless statistic from San Jose Mercury News, June 22, 20130. Wage discrimination is from Lopez, "A rundown of LGBT workplace discrimination statistics," Los Angeles Times, November 21, 2013. Other sources of economic data on LGBTQ people are Burwick, Oddo, Durso, Friend, and Gates, "Identifying and Serving LGBTQ Youth," February 14, 2014; Kastanis and Wilson, "Race/Ethnicity, Gender, and Socioeconomic Wellbeing of Individuals in Same-sex Couples, February 2014; Badgett. Durso, and Schneebaum, "New Pattterns of Poverty in the Lesbian, Gay, and Bisexual Community," June, 2013; Gates, "Same-sex and Different-sex Couples in the American Community Survey: 2005-2011, February, 2013.
[14] The recent merger of American Airlines and U.S. Airways means that the big four airlines (American, Delta, United, and Southwest) now control 85% of the passenger seats, after many mergers (Delta and Northwest, United and Continental, and the growth of Southwest airlines). This concentration in the industry has led to higher fares and fees (such as on baggage) and less leg room as the big airlines literally squeeze the consumer to raise their revenues and fees. In another example of how the government serves the 1% of monopoly capitalists, the Justice Department issued a report saying that the American-U.S. Airways merger was "a major victory for American consumers" (Wall Street Journal, March 10, 2014).
[15] Imperialism, the Highest Stage of Capitalism, by V. I. Lenin, 1917.
[16] Foster and Magdoff, The Great Financial Crisis, page 54.
[17] See "Imperialist Globalization and the United States," by Steff Yorek and Mick Kelly for the National Executive Committee, Freedom Road Socialist Organization, 2001.
[18] Note that mainstream economics defines monopoly as a single large firm dominating and industry, and an oligopoly as a few large firms. The Marxist term monopoly capital would include both, as in both cases the capitalists make extra profits from reducing output and raising prices due to their control of the market.
[19] For example, the Wall Street investment bank Lehman Brothers whose failure sparked the financial crisis began as a "cotton factor," that is a banker who lent to southern plantation owners using their slaves' cotton crop as collateral. "The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the indigenous population of that continent, the beginnings of the conquest and plunder of India, and the conversion of Africa into a preserve for the commercial hunting of black skins, are all things which characterize the dawn of the era of capitalist production. These idyllic proceedings are the chief moments of primitive accumulation." Karl Marx, Capital, volume 1, chapter 31: "The Genesis of Industrial Capital" (1867).
[20] Imperialism, the Highest Stage of Capitalism, by V. I. Lenin, International Publishers, New York (1939), page 106.
[21] See FRSO: National Oppression, National Liberation, and Socialist Revolution, 2004.
[22] Dale Wimberley, Sociation(??) Today, "Mortality Patterns in the Southern Black Belt: Regional and Racial Disparities", Volume 6, Number 2, fall 2008. In another article, professor Wimberley, states that poverty is lower for whites in the Black Belt than southern whites outside of the Black Belt (Journal of Rural Social Sciences, "QUALITY OF LIFE TRENDS IN THE SOUTHERN BLACK BELT, 1980-2005: A RESEARCH NOTE," 2010, http://bit.ly/Nxiz98). But the Census Bureau that provides statistics on poverty counts "Hispanics" as white. When one looks at "non-Hispanic" whites, their poverty rate is lower outside the Black Belt than in the Black Belt. Professor Masao in his comment in "Nations Want Liberation: the Black Belt Nation in the 21st Century" (Return to the Source).
[23] Marx had noted the tendency for capitalism to "proletarianize" workers. In other words, to change work done by skilled artisans such as weaving cloth into manual labor in factories. This tendency towards deskilling workers continues under monopoly capitalism, as former professionals such as clerks, nurses, and teachers are transformed into workers who have to sell their labor power. They have joined skilled trade workers in an upper stratum of the working class.
Lenin referred skilled trade workers in the upper stratum of the working class of his time as an "aristocracy of labor." But the upper stratum of workers in the United States today now includes semi-professional workers, as well as some unionized industrial workers such as longshoreman. These newer sectors have a history of militancy to the point where it is no longer accurate to refer to the upper stratum of the working class as "labor aristocrats" that the social basis for opportunism in the labor movement. See FRSO: Class in the U.S. and Our Strategy for Revolution.
[24] In May 2013, the official unemployment rate was 13.5% for African Americans, 9.1% for Latinos, and 6.7% for whites.
[25] Many of these environmental disasters under capitalism are long forgotten as the corporate media focuses its attention on environmental problems in socialist countries.
[26] Statement by the U.S. Department of Energy (DOE), in "Half Life-The Lethal Legacy of America's Nuclear Waste" by Michael E. Long, link, National Geographic magazine.
[27] The capitalist system also promotes the view of "individual responsibility" to cover over the systematic destruction of the environment in the search of profit and empire. This leads to campaigns for household recycling, low-flow showerheads, and so-called "green jobs". While this can lead to more awareness of environmental problems, they can also divert attention aware from the facts that the biggest waste problem is from nuclear reactors and atomic weapons production, that the biggest users of water is corporate agriculture, etc.
[28] See National Income and Product Table 1.1.6. Real Gross Domestic Product, Chained Dollars (Billions of chained (2005) dollars] seasonally adjusted at annual rates. Bureau of Economic Analysis, Department of Commerce.
[29] The 1970s were another period of economic stagnation, with four recession between 1969 and 1982, and high rates of inflation. The United States could well be entering another decade of stagnation.
[30] The Federal Reserve Bank or Fed is the U.S. central bank. Its main function is to stabilize the economy by raising short-term interest rates to slow the economy and limit inflation, and lower them during recessions to try to limit rising unemployment. During this last crisis, the Fed also played the role of "Lender of Last Resort" in bailing out large financial institutions such as the AIG insurance company. However, almost all of the Fed's interest rate hikes to fight inflation have contributed to a recession, while recently the low interest rates to fight recession have resulted in asset price bubbles, such as the late 1990s Internet Stock Market boom and bust, and then the 2003-2006 Housing Market boom and bust.
[31] Stagflation refers to the higher rates of inflation and unemployment in the 1970s as compared to the 1950s and 1960s. One cause of the stagflation was the growing strength of other imperialist countries in Europe and Japan, leading to the end of the U.S. Dollar-centered international currency exchange agreement known as "Bretton Woods." The other cause was the growing strength of the peoples, nations, and countries of the Third World, which led to the oil embargo on the United States by OPEC (Organization of Petroleum Exporting Countries) in 1973-1974.
While the 1970s were bad for the monopoly capitalists, who not only suffered economic setbacks but also lost wealth as stocks and bonds did poorly. For workers, the 1970s were better than the 1980s when the working class and oppressed nationalities suffered the free market attack known as "Reaganomics." In the 1970s wages for non-supervisory workers rose faster than inflation, so their purchasing power went up, but in the 1980s inflation rose faster than wages, cutting their purchasing power. Source: Federal Reserve Economic Data (FRED), series for Average Hourly Earnings of Production and Nonsupervisory Employees: Total Private, and Consumer Price Index for All Urban Consumers: All Items, 1970 to 1990.
[32] The Bursting of the Housing Bubble and the Coming Recession, By Dean Baker. Truthout, 17 August 2006.
[33] Foster and Magdoff, The Great Financial Explosion.
[34] Many campuses are also increasing auxiliary infrastructure such as top of line sports facilities even as classes are being cut. There is now about one trillion dollars of U.S. government backed student loan debt and another 200 billion dollars of private bank loans for college education. The other major types of consumer debt (loans that do not use homes as collateral, which is mortgage debt) are credit cards and auto loans.
[35] Organization for Economic Cooperation and Development (OECD), 2008 and 2009
[36] Ibid.
[37] The process of replacing full-time workers with part-timers has sped up since the recession of 2001 and gone into high gear during the 2007-2009 recession as businesses seek to lower wages and benefits in order to increase profitability. Companies are now trying to blame the ACA and use it as an excuse to cut health care benefits even more.
[38] Rand Corporation, link
[39] The term "Third World" began in the 1950s to describe the colonial and semi-colonial countries of Africa, Asia, and Latin America as opposed to the "First World" of the imperial countries and the "Second World" of the European socialist countries. In the 1960s and 1970s the term was also used to describe oppressed nationalities in the United States.
[40] The Bretton Woods conference in 1944 planned out the post-World War II international monetary as a more flexible version of the 19th century gold standard where currency values were measured in gold. This was one of the last contributions of the economist Keynes to the capitalist system.
[41] "Wealth Gaps Rise to Record Highs between Whites, Blacks, Hispanics," by Rakesh Kochnhar, Richard Fry, and Paul Taylor, Pew Research Center: July 26, 2011. Online here
[42] The official unemployment rate for Detroit in January 2010 was 25.3%, more than twice times the national unemployment rate of 10.6% (both rates are NOT seasonally adjusted). The official unemployment rate understates the economic pain to workers by not counting people without jobs who want to work but did not look in the previous month (discouraged and marginally attached workers), and those who are working part-time but cannot find full-time work due to the economy. In January 2010 the alternative unemployment rate including these other workers was 18% (not seasonally adjusted). Bureau of Labor Statistics.
[43] "Breaking up the Financial Industrial Complex," by David Weidner, Wall Street Journal, April 1, 2010.
[44] The United States is net debtor nation, that is, foreign-owned U.S. assets are greater than U.S.-owned foreign asset to the tune of $4.9 trillion. One advantage that the U.S. has in borrowing from abroad is that the U.S. dollar is the reserve currency used to do international trade in, so that other countries need to hold dollars to finance trade. Federal Reserve Flow of Funds Accounts of the United States, Flows and Outstandings, First Quarter, 2013, Table L.106, page 70.
[44] See Income, Poverty, and Health Insurance Coverage in the United States: 2011, U.S. Census Bureau, 2012.
[46] This continues with Obama's second term, as he pursues a "Trans-Pacific Partnership" or TPP which would be a huge free trade area being negotiated by Australia, Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.
[47] The U.S. Federal government debt held by the public was about $11.9 trillion, or 74% of GDP (Gross Domestic Product, which is the total output of final goods and services in the economy, the standard measure of national production). With the annual Federal budget deficit running at about $600 billion, or 4% of GDP, while GDP is increasing about 2% per year, the debt to GDP ratio will continue to rise, albeit much more slowly than during the last recession, where the budget deficit exceeded 10% of GDP. Economists generally use the debt held by public, net of bonds owned by Federal agencies such as Social Security, as the standard measure of government debt. The total or gross U.S. government debt is $16.7 trillion, or more than 104% of GDP. US debt from the U.S. Treasury here and GDP is from here.
[48] "Inside the 2013 Billionaires List: Facts and Figures," Forbes Magazine, March 25, 2013.
