Market Spasms/Capitalist Crisis/WW Via NY Transfer News Collective * All the News that Doesn't Fit ------------------------- Via Workers World News Service Reprinted from the November 6, 1997 issue of Workers World newspaper ------------------------- MARKET SPASMS FORECAST TURMOIL IN ECONOMY Capitalist Crisis Drags Down Asian "Tigers" First By Gary Wilson To give an idea of how far Wall Street fell Oct. 27, Microsoft CEO Bill Gates lost $1.76 billion that one day. Total losses on the New York Stock Exchange in three days- -Oct. 23, 24 and 27--added up to nearly a trillion dollars, CNN's Money Line reported Oct. 27. The market's value dropped almost 13 percent. The media immediately put on talking heads who authoritatively declared this was just a "correction." There is no reason for further panic, they said. The economy is as sound today as it was last week. The day after the crash, big corporations like IBM poured billions into the market to stabilize their own shares. Most world exchanges then rebounded as New York stocks began to climb again. Brokers cheered--they had made a fortune in commissions on the huge volume of stocks that changed hands. Does this mean nothing happened? Was it all a bad dream? No, it was very real. Whatever the market does next, Wall Street suffered its worst crash since 1987. And a stock market crash is as clear a warning as you can get of capitalist economic instability. The Oct. 26 New York Times called it "The Return of Fear." But not just on Wall Street. The precipitous fall had begun in Hong Kong, where the stock market fell over 10 percent. Financial markets in Asia, Latin America and Europe all tumbled. But Wall Street is the central banker, so to speak, of world finance capital. It is the headquarters of the world's biggest capitalists. So what does the earthquake on Wall Street mean? There is no predicting what the immediate effect will be or whether stocks will go up or down. The stock market is ruled by a kind of capitalist anarchy. That is why it can be so deadly without warning. It can also be temporarily affected by the intervention of the capitalist state in the form of eased credit from the Federal Reserve Bank--as happened in 1987. But what none of the high-paid analysts is saying is that what happens on the stock exchange is really a reflection of what is happening in capitalist production. It's not the other way around. Not every stock market plunge results in an immediate capitalist economic crisis, just as not every corporate bankruptcy leads to a general industrial collapse. But a stock market failure is often an expression or anticipation of a crisis in production that is still in its early stages. Stock exchanges are very sensitive to all the fluctuations and changes taking place in industry. But they do not cause the crisis; the fall of the stock market is merely a "symptom of the periodic changes in the industrial cycle," as Karl Marx put it. Today there is, for example, a classic capitalist crisis of overproduction sweeping the high-technology industries. The Oct. 27 New York Times, in fact, reported in its business section that "some analysts are nervous that a weakening technology sector might precipitate a steep fall in the broad market here." The overproduction crisis is in computer chips. This could be seen by Intel's recent announcement that it won't open a computer-chip-production plant in Texas that it just spent $1.3 billion constructing. The company cited "weakening demand" for its chips. About 40 percent of the computer-chip market is in Asia. PENSION FUNDS LOST BILLIONS But it's not just Bill Gates and other rich capitalists who lost money on Wall Street. At least 40 percent of the population of the United States owns stock shares--most through mutual funds, pensions, insurance policies or savings accounts. Some estimates are as high as 75 percent of the population. Many workers have no idea where their pension money is invested. "Worker pension funds now own 30 percent of all financial assets in our country and 25 percent of the shares of stock in U.S. corporations," AFL-CIO President John Sweeney said at the union federation's convention in September. This amounts to more than $2 trillion. These funds lost billions in the crash. Even when the market goes up again, it doesn't mean that the winners are the same people as the losers. Much of the pension fund losses may never be recovered. The stock market is notorious for being a disguised form of capitalist expropriation of small savers. It is another way for the capitalists to take away savings and pensions of the workers and middle-class people. The stock market fall is thus another form of cutback. The idea that almost everyone in the United States could be called a capitalist is often put forward. But owning stock does not make anyone a capitalist. A shareholder does not own the assets of a company; she or he only has a right to part of the profits made by the company. The yearly dividend incomes of working class and middle- class investors rarely amount to the monthly wage of an average industrial worker. The real capitalists are those who own controlling interests in the big corporations. And when the system is in crisis, they are in the best position to push the burden onto the shoulders of the workers and small investors at home, or onto oppressed countries under their financial domination. That's what is happening right now in Asia. The International Monetary Fund and World Bank are demanding structural changes there in return for new loans. These changes will lower the standard of living and put an end to many development projects that might have made the countries involved more independent. Ultimately, it is the big banks that control the stock market. They control the credit needed to speculate. In his study of modern capitalism, "Imperialism, the Highest Stage of Capitalism," V.I. Lenin wrote: "The old capitalism, the capitalism of free competition with its indispensable regulator, the stock exchange, is passing away. A new capitalism has come to take its place, bearing the obvious features of something transient, a mixture of free competition and monopoly." Monopoly capitalism is characterized, Lenin wrote, by the domination of the stock exchange by the big banks. This has not changed. - END - (Copyright Workers World Service: Permission to reprint granted if source is cited. For more information contact Workers World, 55 W. 17 St., NY, NY 10011; via e-mail: ww@workers.org. 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