While most of the world’s media yesterday focused on the US plan for tighter regulations for the disintegrating financial sector and Gordon Brown’s grand tour aimed at talking up next week’s G20 summit, the real, productive economy was going to hell in a handcart.
Here, the exercise of people’s ability to work generates real value, including profit – at least it did when things were going well for the capitalist class. Not any longer. Now it’s shutdown time, and the actual destruction of productive capacity – including the jobs and prospects of many millions of workers.
The world's second-largest economy, Japan, suffered an almost 50% collapse in exports in February, compared with one year ago. The accelerating global slump drove exports to the rest of Asia down by 46% and to EU countries by 55%. This was the fourth successive month of record export declines, and the sharpest decline in at least 30 years.
Just as in the US and the UK, over-production of cars has intersected with a near-collapse in demand and the industry is grinding to a complete halt. Shipments of motor vehicles were down 64% , with those to the US tumbling 71%. Total exports to America fell by 58%.
The slump has meant that Japan's total industrial production fell by a record 10% in January. Japanese car manufacturers, in the UK and elsewhere, have reacted rapidly to the downturn, attempting to slash their overstocks by cutting output using short-time and no-time working. Union leaders have negotiated wage cuts in a futile bid to save jobs.
The production shutdown isn’t restricted to the oil-burning, climate-wrecking past-its sell-by-date car industry. In the US, electronics giant Agilent Technologies is sacking 2,700 workers – 14% of its staff. The company expects revenue from its electronic measurement and semiconductor businesses to fall between 30% and 50% from 2008 to the lowest in its 10-year history and sees "no prospects for a meaningful recovery in the foreseeable future."
The rate of growth - now decline - of industrial production is the key measure of the health of capitalist production. Without growth, profits decline, investment falls off and jobs are shed. While Timothy Geithner, the US secretary, was talking tough about regulation yesterday, figures released showed that US corporate profits fell at the sharpest pace for 55 years. Meanwhile the number of people continuing to claim unemployment benefits rose by 122,000 to 5.56m, the highest total since tracking began in 1967.
The impact of the global capitalist crisis is being felt everywhere. French president Sarkozy has been in the Democratic Republic of Congo with a raiding party of business leaders. The country’s only industry is copper mining. Exports, especially to the companies producing for the global corporations in China, soared during the explosion of commodity production. Now that it’s all over, tens of millions of Chinese workers have been sent home, whole towns shut down. In the Congo, mining production has been cut in half and 300,000 are without work, or income.
The descent into global slump is fast and furious and suggestions that it will bottom out this year and growth resume in 2010 are clearly off the wall. People without jobs don’t buy things and banks without capital don’t lend, sending demand ever lower. Governments that have over-borrowed (i.e. Britain’s) can’t launch the very “fiscal stimulus” that Brown is urging all other countries to adopt.
Solutions won’t come from telling the G20 to “put people first”, the official slogan of tomorrow's TUC-sponsored demonstration in London. Capitalism can’t change course. The financial and productive sectors are locked in a deadly embrace where the victims are ordinary working people in every country. We must plan for an ecologically-sustainable future, based on co-operation not competition, co-ownership not private ownership, and for meeting social need not the demands of bankers and shareholders. Ending the rule of capital is long overdue.