It's the economy, stupid

Jose G. Perez jg_perez at
Sun Aug 3 21:16:36 MDT 2003

The employment report released Friday indicates a truly catastrophic
situation for working people. The number of people actually employed
--on a seasonally adjusted basis-- declined for the 29th consecutive
time since the Bushites seized power in the wake of the last election. 

The stuff the newspapers said about "payrolls declining for the sixth
month in a row is simply Bush Junta spin from the BLS regurgitated by
the hacks working for the bourgeois press. That is based on UNADJUSTED
figures that don't take into account the yearly rhythm which includes a
significant "uptick" in October-November, mostly in retail.

The decline in the unemployment *rate* is in reality more bad news, when
looked at from our class's perspective, and not that of the rulers. The
economic contraction is so severe more than half a million people simply
gave up beating their heads against the wall looking for work last
month. The rate of labor force participation, the percent of the
"non-institutional" civilian population either working or actively
looking for work is at record lows in recent history.

Every day brings more layoffs, often unheralded, even in the workplaces
where they are carried out. One TV company I'm familiar with, for
example, just bought new graphic equipment -- and cut the "headcount" of
the graphics department from 18 to 13. Since three of those are managers
the actual cut in people who work in production was 1/3rd, from 15 to
10. People in the divisions that have been affected haven't even been
told the actual extent of the cutback.

Looked at on a macro scale, you get a very similar picture. Employment
peaked in Feb., 2001, at 132,560,000; it is now 129,870,000. That's a
net *loss* of 2,690,000 jobs over 2-1/2 years.

However, economists say that simply to stay even with population growth,
the U.S. economy needs to generate 2 million plus jobs a year (the 16+
non-institutional civilian population grew by 3.4 million between 2001
and 2002; at a labor force participation rate of 67%, that works out
2,278,000 new jobs just to stay even). So we're actually looking at an
8-1/2 million job black hole. (5.7 million missing NEW jobs over 2-1/2
years + almost 2.7 million disappeared OLD jobs that existed as Bush was
settling into the White House and don't exist today).

This job deficit isn't spread evenly throughout the economy. What the
government calls the "goods-producing" sector peaked in July, 2000, at
24,709,000. Today it stands at 21,982,000, a loss of 2,727,000, i.e.,
just a hair greater than the job loss of the economy as a whole.

However, within the goods-producing sector, the drop is entirely in
manufacturing, which peaked (in recent years) at 17,621,000 in January
of 1998, MORE THAN five years ago, stood at 17,318,000 in July of 2000,
and now is 14,612,000. That loss of 3 million jobs equals a 17% decline
in the sector.

One cannot, of course, assume a one-to-one correspondence between the
Marxist category of value-producing labor and the BLS category of "goods
producing." Even so, there clearly is a big overlap, and a change that
isn't just ongoing, but accelerating.

Fifty years ago, the goods-producing employment was 19,910,000, nearly
40% of the non-farm payrolls which were 50,522,000. Twenty five years
later, in July 1978, 87,205,000 people were on non-farm payrolls of
which 24,300,000 were goods-producing, about 28%. Today the
goods-producing sector is 11% of the economy, and dropping every day.
The economy as a whole lost 44,000 jobs net last month, but
manufacturing lost 71,000. To find lower numbers of workers employed in
manufacturing, you have to go back 45 years to the economic downturn of
1958, which was unusually severe. To round out the picture, at that time
(1950's) there were 8 million people who worked on farms (both family
members and hired laborers). Today there are 3 million.

Meanwhile, completely parasitic sectors, such as finance, have boomed,
from 2,004,000 at the beginning of 1953 to a hair short of 8 million
today. Moreover, you have to remember that probably many or most of
those 2 million workers in 1953 dedicated much or most of their time to
bookkeeping, which arguably was a socially necessary function; today all
that is automated, and the sector is dominated by Willy Lomans, on the
one hand, and the three card monte artists who design the "products" the
Lomans push, on the other.

It would be interesting if someone sufficiently conversant with the
matter studied the GDP figures to see whether the recent runup is part
of the solution or in reality part of the problem, i.e., the expression
in GDP of a still expanding mass of fictitious capital, like the $100
million U.S. banks made in fees from the last argentine debt swap.

"Product" like that is a curse; sure, you've just looted Argentina but
it winds up turning the third world country into an economic basket case
which is less and less able to produce surplus value; domestically it
simply adds to the growing mass of fictitious capital circulating in the
financial markets which demands the average rate of profit thereby
spreading the available surplus value (now minus a huge part of what
used to be Argentina's contribution) ever thinner and making it
*unprofitable* to *produce.*

My suspicion is close examination will reveal a growing GDP contribution
from absolutely parasitic activity that is pumping up an ever-growing
bubble of paper values.

A much more ambitious undertaking is to try to determine, at least in a
gross, first approximation sort of way, whether the decline of Third
World economies over the past 20 years or so has been such as to call
into question the ability of imperialism to continue drawing ever-larger
subsidies from these countries (through debt service, unequal exchange,
and similar mechanisms as well as just straight repatriation of

We constantly get presented with the idea that the "bubble" was in the
Internet "new economy" and now it has been thoroughly deflated. My own
hunches is that the bubble was more generalized to the financial
markets, and it is still expanding.


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