Overproduction crisis

Underlying the crisis in the capitalist financial system is a 

long-term overproduction crisis in what is misleadingly

called the "real economy" — the production for profit of

goods and services. Markets for most goods and

services are simply too saturated to provide opportunities

for high profits to be made through further big investments

in their production. As a result, the super-rich families that

own the big industrial corporations, banks and other

financial businesses in the US and other developed

capitalist countries have put more and more of their

capital into financial markets, to reap higher speculative

paper profits from these markets.

The crisis in the overproduction of goods and services is

well illustrated by the huge levels of productive

overcapacity in the automotive industry. A March 8, 2003,

article in the Washington National Journal reported:

"Vehicle sales are at near-record levels in the United

States — 16.9 million in 2002 — but that is an illusory

image of success. A rising portion of those sales comes

from imports, which create no high-paying U.S.

manufacturing jobs. Moreover, automakers'

unprecedented and unsustainable low-rate financing

deals, which amount to a subsidy for every car sold, have

been artificially sustaining new-car sales. A slowdown in

sales would pose problems for the industry, because

production overcapacity haunts both US and foreign

producers."

The article pointed out that automobile manufacturers

"around the world have added about 19 million units in

production capacity since 1990 and can now build about

77 million cars and light trucks per year, according to

Autofacts, a PricewaterhouseCoopers subsidiary in

Bloomfield Hills, Mich. But consumption of new vehicles

this year is expected to total only about 56 million units.

As a result, overcapacity in the auto industry is now about

27 percent worldwide. 'At some point, something has to

give,' said David Snyder, director of business

development for Ford."

Indeed, beginning in 2005, "something" did give — the

profitability and potential survival of the three major US

automobile manufacturers. In 2005, General Motors, at

that time the world's biggest auto maker, recorded a loss

of $10.6 billion. Ford lost $1 billion that same year. In

2006, GM lost $2 billion, Ford lost $12.7 billion and

Chrysler lost $1.47 billion. Last year, GM lost a record 

$38.7 billion. Ford lost $2.57 billion and Chrysler lost $3

billion.

In the first nine months of this year, GM lost $21.2 billion,

while Ford lost $8.7 billion. GM has announced that it

would run out of cash before the end of the year. GM,

Ford and Chrysler have sought a government loan of $25

billion simply, they claim, to be able to stay in business in

2009. Without it, they warn, 2.5-3 million US jobs in the

automotive and related industries will be lost.

Union officials back CEOs

The Bush administration and a host of other US federal

politicians have argued against granting such a loan.

However, this is simply a ploy to give the executives of

the Big Three US automakers and the pro-company

officials of the United Auto Workers (UAW) union a

weapon to blackmail auto workers into accepting plant

closings, wage cuts and the slashing of health care and

other benefits.

The November 21 Detroit Free Press reported that the

UAW bureaucrats were secretly negotiating with the Big

Three to revise current labour contracts in accordance

with demands from both Democratic and Republican

congressional leaders. Testifying alongside CEOs of the

Big Three before the Senate banking committee on

November 18, UAW president Ron Gettelfinger said:

"Between 2005 and 2008 we have lost 47,000 workers at

GM and we have virtually eliminated our jobs banks

[which provide for laid-off auto workers to receive 95% of

their weekly wages] at all three companies. We had to

take the political heat for these kinds of decisions, but as

a union leadership we are proud to work with these

companies."

We may not experience an economic crisis as

devastating as the Great Depression of the 1930s, when

unemployment in the developed capitalist countries

reached 25-30%. But the capitalists and their politicians

will use the current global economic recession to deepen

their neoliberal attacks on the livelihoods and social

conditions of working people across the world. The only

way for working people ultimately to defend themselves

from this is to organise into a mass movement to take

political power out of the hands of the capitalist financial

oligarchy, establish a working people's government and

use it to reorganise the economy along socialist lines.

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(請參考本城市《金融危機面面觀之1 -- 紓困救市還是劫貧濟富？》一文。)

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