En Passant

Is the recession over for the bosses?

Looking at Wall Street and its baby brother, the Australian Stock Exchange, you’d think so.

The value of shares listed on the ASX has grown by over 50 percent in the last six months. 

And the bosses are celebrating.

Marius Kloppers, the head of BHP, has just given himself a 50 percent pay increase because his company did less badly than its competitors!

As one union leader aptly put, he is the Stephen Bradbury of business. You win gold because all of your competitors have fallen over.

The gains of the stock market (the institution Keynes once called a casino) are not built on any substantial change in the fundamentals of the world or Australian economy.

Profit rates – the engine room of capitalism – remain low across the developed world.  

The productive economy, rather than the casino, has had no major structural change in the last two years – like driving wages down rapidly –  to address this its latest crisis.

In fact, the stimulus packages spewing forth from Washington, London and other major capitals may have only postponed and, coupled with expanding credit, may only make worse, the inevitable cleaning out of the Aegean stables of capital.

As Marx identified, the destruction of capital  (what Schumpterians and the like call creative destruction) is one factor that offsets the tendency of the rate of profit to fall.

Stopping that occurring may save jobs and the economy in the short term but only lays the groundwork for a worse recession to come.

In saying that I am not for creative destruction.  There is nothing creative about mass unemployment. Or war.

I am for a radical restructuring of society where production is determined democratically to satisfy human need. That is socialism. 

These stimulus packages are massive wealth transfers from ordinary working class taxpayers to big business, especially finance capital. 

All that these transfers has done is revive the stupefied bankers for another bout of boozing and binging.

Now that the risk taking, arrogance and bonuses are back, how long before they pass out again?

Even worse for them, the grog could run out soon.

But the bosses won’t suffer. We will get the hangover from their party.

The Organisation for Economic Cooperation and Development is  the rich countries’ club.  It is not known for outlandish analysis or scaremongering.

It predicts that average unemployment in the 30 top developed countries will hit 10 percent late next year, up from the current 8.3 percent.

This means 57 million workers in 2010 will be without work, an increase of 25 million since the beginning of 2008.

Australia’s unemployment rate at 5.8% is the second lowest of all OECD countries.

However if we factor in underemployment (ie people working short hours) and the increase in the number of people not even bothering to look for work,  and the effective unemployment rate in Australia is approaching 15 percent.

It may be that this massive increase in part-time work is a precursor to large increases in unemployment as the bosses move from part time to no time jobs. 

While we face increasing unemployment and less working hours, the bosses party.  What a  sick society. What a rotten system.

Readers might also be interested in looking at A W-shaped recession.