I do most of my organizing work in Silicon Valley, the land of the super-rich. The top 150 companies of Silicon Valley are doing splendidly in this economic crisis, doubling their profits over last year and scoring the second highest annual profits in the past twenty-five years.
It's enough to make you sick:
Even companies with yearly sales declines ended the year with plenty of cash. For example, Intel, hit by a 7 percent drop in sales, ended the year with 18 percent more cash on hand. That's because it cut costs, reducing its workforce 5 percent and slashing capital expenditures by 13 percent. Even Intel's research and development took a hit, reduced by 1 percent.
The valley's top companies have accumulated $213.5 billion in cash and other near-liquid investments — up 25 percent from 2008 — that they could use to acquire smaller companies, observers say. Six large companies — Cisco Systems, Apple, Intel, Hewlett-Packard, Oracle and Google — are sitting on a combined $134 billion in cash or near-cash assets. (Read the rest of the article here)
Meanwhile, the excellent nonprofit Working Partnerhsips USA has put out a report of what the same economy looks like for the working-class. 'Cutting costs' turns out to be 84,5000 jobs lost, and city staff recently recommended cutting the living wage for airport workers to 11.60, to make the airport 'more competitive'. That recommendation lost, thankfully.
What to do with all that money? Giovanni Arrighi wrote, in his book The Long Twentieth Century, that capitalism has cycles. In the first part of the cycle, a rising economic power expands its trade and commerce. At a certain point, however, markets grow saturated and competition intensifies; profits can no longer be invested in the existing lines of trade and production without dragging future earnings down. Money then flows into the financial sector, where states can compete for currency -- usually to finance wars, as geopolitical struggles develop alongside economic ones.
Robert Brenner has argued in The Boom and The Bubble that the world economy had, in fact, reached a state of over-production and over-capacity in the manufacturing sectors, and that the stock market bubble and then the housing bubble were attempts to generate growth while avoiding the fundamental problems of US industry. The demand for green jobs was an attempt to break out of this cycle, as its promise was that of new, unconquered markets (the imperialist metaphor is appropriate, I think) -- which would restore dynamism to US manufacturing while addressing the ecological crisis.
I'll let you know when that one happens.
Currently, though, the soon-to-be tax cut extension for the wealthiest means that corporations can funnel its enormous profits to shareholders as dividends, boosting share prices and, presumably, the value of CEO stock options. Or, they may be used to expand economic empires as corporate mergers and acquisitions absorb small or struggling companies into larger conglomerates. Presumably, these enlarged corporations can then begin another round of profit-boosting bloodletting. How any of this would benefit anybody outside the uber-rich is beyond my grasp.
Business has figured out that it can grow its profits without economic growth. The system, it appears, is eating itself. In this context, Obama's attempt to position the Democrats as the more reasonable, pro-business alternative to the tea party is likely to lead nowhere good.
The views expressed here are those of the author and do not necessarily represent those of the entire War Times project
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