One economy, two realities

Capitalists on the rise and workers on the edge

Gordon Frazier / FS
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Este artículo en español

As the U.S. economy opens back up, hope is growing that conditions will become less desperate. It seems that “blue skies are returning,” and normality can resume.

But not so fast. What is “normal,” and for whom? Pre-Covid, conditions for the rich were spectacular, and during the pandemic their fortunes only soared higher. Meanwhile, many poor and working-class people were barely hanging on before the crisis. The shuttering of whole sectors of the economy sent millions into freefall, with women and people of color falling the fastest and farthest.

What, exactly, is the situation now — and what lies ahead?

A gap becomes an abyss. The criminal divide between the elite and everyone else grew dramatically during the depression.

Less than 1% of the world’s population controls a staggering 43% of its wealth. On the other side of the chasm, 70% of the planet’s people share a mere 2.7%. As Covid ravaged the globe, titans like Elon Musk and Jeff Bezos experienced eye-popping, headline-grabbing gains, while the working-class majority suffered equally epic declines.

In the U.S., the 1% increased their coffers by $4 trillion, while workers lost over $1 trillion in wages, with an estimated 42 million losing their jobs. Hardest hit were people in low-paying occupations and those already underemployed, like the women, people of color, and immigrants disproportionately employed in restaurants, the rest of the leisure and hospitality sector, education, and healthcare.

Meanwhile, inflation rose to rates not seen in 13 years, especially for necessities like food and housing.

Collapse in the making. Regardless of the hype, the Biden administration did not push through the $1.9 trillion “American Rescue Plan” in March out of deep sympathy for the downtrodden. Rather, just as Roosevelt’s New Deal rescued capitalism from implosion in the 1930s, Biden is trying save it again in 2021. Bottom line, it is simply unsustainable for the capitalist economy to be carried by a tiny group of hyper-wealthy families.

The U.S. has spent over $4 trillion in stimulus funds since March 2020 and is $25 trillion in debt and counting. Massive government and private-sector debt exists today in an “easy money” environment of low interest rates. These two things combine to create debt-fueled booms in asset prices (for stocks, bonds, real estate, etc.) that can quickly collapse. Stimulus helps in the short term, but this only “kicks the can down the road.” The very solution that fixes the immediate problem sets up the next crisis and increases the fragility of the global capitalist system.

On top of this, global warming threatens a level of economic shock that would be unparalleled.

The Swiss Re Group is a large global reinsurer, which covers other insurance companies for catastrophes like hurricanes or international financial meltdowns. Alongside a growing host of other analysts, the Swiss Re Group warns that climate change poses the biggest long-term risk to the world economy by lowering productivity and wreaking havoc with record-breaking storms, flooding, fires and other disasters.

A changing work landscape. During the pandemic, about 25% of U.S. employees worked from home, often very effectively. Many were in higher-paid professions like information technology, and many will happily continue to operate from home at least part of the time.

Others were not so lucky. Teachers and other education staffers had the most challenging, exhausting time trying to work from home — and then school districts across the country pushed hard for them to return to the classroom before it was safe! It’s no wonder that about 25% of teachers are deciding to leave the profession, which will create grave problems in the coming years. Boosting educators’ pay and improving their conditions would be an excellent way to avert a crisis!

There’s talk of a labor shortage, but many workers saw their jobs disappear permanently and lack the requirements to switch occupations. And teachers are not the only ones reluctant to return to demanding but poorly compensated employment. Many workers are biding their time to see if they can find something better than unrewarding previous jobs.

But the Centers for Disease Control and Prevention (CDC) eviction moratorium ends on July 31, and federally increased unemployment benefits end on Sept. 6., with about half the states choosing to cut the additional assistance early. People will soon have little choice but to take any job that will hire them, if they can find anything at all.

But beyond these individual decisions, workers across the country are choosing to fight collectively. Nurses are one of the most active groups pushing back. They are organizing unions at hospitals in North Carolina and Maine and striking in states from New York to Minnesota and Massachusetts to Hawaii, where they are fighting for improved patient care, pay and working conditions, including — still — sufficient personal protective equipment.

Amazon warehouse workers in Bessemer, Alabama, staged a heroic fight to unionize this spring. They didn’t succeed. However, the Teamsters union passed a resolution in June to support Amazon employees in organizing the company. Amazon, which reaped huge gains during the pandemic, employs 950,000 workers in the U.S., with over 90% of them working in warehousing and package delivery. It’s now the dominant face of the capitalist economy.

In crisis after crisis, the leaders of major industries and financial institutions, and their supporters in government, have been able to squeeze out recoveries, however feeble or short-term. The next few years in the wake of the worst of the pandemic will reveal just how resilient the profit system can be in coping with its own contradictions and instability.

The coming years will also show something else as well: the determination of workers as they resist the profound inequality and exploitation embedded in the system. The ruling class may well discover that debt-fueled asset price bubbles are the least of its troubles!

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