by J. Steelman

As the Covid-19 shut downs are slowly being lifted around the US and the rest of the world, we are beginning to see the economic toll the virus has taken. The unemployment numbers are still influx due to the reopening of the economy and as shuttered businesses begin to bring back their workers. However, the future looks grim for the working class. Millions of people will likely remain jobless even after the economy opens completely. The Wall Street Journal reported that US retail chains have already announced 5,300 permanent closures and are on track to close as many as 25,000 stores this year (WSJ 7/17/20). Early into the US lock down Hertz car rental company, announced it was filing for bankruptcy. American Airlines Group and United Airlines Group both expect cuts to staff in October when the Federal Assistance is set to expire. The Marriott hotel chain has announced that it is closing a number of locations around the world and expect to layoff tens of thousands of employees. Top officials at the Federal Reserve predict that the US faces a long, slow recovery and that they are concerned about the possibility of a double-dip in economic activity (WSJ 7/15/20). The Federal Reserve Bank of Dallas President Robert Kaplan expects the unemployment rate to fall to between 9% and 10% by the end of the year, a far cry from the 3.6% official (U-3) unemployment rate in the US at the beginning of the year. What does this all mean? Crises are inherent to capitalism. The drive for profit inevitably leads to overproduction and crisis. The crisis today, while triggered by the pandemic, is no different. The outcome of economic crises is the mass destitution of the working class. Today, in order to understand how to fight the bosses attempts to shift the burden of the crisis on the the backs of the working class, we must ask: What is unemployment? How does it arise? And What can we do to fight it?

Before getting into the causes of unemployment we have to establish some definitions. The US government, as well as other governments, though for the time being we will stick to the US, tracks what is called “official unemployment” figures. These numbers, formally known as the U-3 Unemployment Statistics, are the ones used in official government statements, as well as in popular media. To be by definition “unemployed”, an individual must be out of work, currently available for work, and actively looking for a job (BLS.gov). In contrast, the unofficial unemployment rate, formally known as the U-6 Unemployment Statistics, accounts not only for those “officially unemployed” but also those who have stopped looking for work, as well as those who are underemployed (wanting full time hours but only working part time). There are two broad categories of unemployment, voluntary and involuntary. Voluntary unemployment occurs when a person voluntarily quits their job to find another job. Involuntary unemployment occurs when a person is terminated from work against their will ie fired or laid off. Further, there are four subcategories of unemployment that economists look at:

• Frictional Unemployment – occurs when people are moving between jobs and are searching for work.
• Seasonal Unemployment – occurs when the demand for workers varies over the course of the year
• Structural Unemployment – occurs when there is a skills mismatch in the labor market or technological changes allow production to remain at current level with less workers
• Cyclical Unemployment – occurs with the business cycle.

For now, we are going to focus on cyclical and structural unemployment because these categories of unemployment relate directly to the current crisis. While the immediate cause of the crisis was the pandemic, the underlying contradictions in the economy have been exacerbated and we are now in a full fledged capitalist crisis. However, the crisis isn’t the only driver of unemployment. The technological advancements made by capitalism allow fewer workers to produce the same or an even greater number of goods and services thus creating a permanent reserve army of labor, that is a permanent surplus population. Though, in the short term the cause of the increased unemployed population is due to the economic crisis, the crisis itself can lead to a situation where capitalists rely on greater constant capital, or technology, to cheapen the cost of goods and undersell their competition, thereby relegating more workers to the permanent reserve army of labor. This reserve army of labor as Marx and Engels (See The Housing Question by Engels or Wage Labor and Capital by Marx for a more in-depth discussion of the “reserve army of labor”) called it, provides a ready work force for Capital during an economic boom, when production is at its peak, only to be thrown back on the street once their labor power ceases to be profitable. But this reserve army of labor also provides a valuable asset to Capital in the class struggle with Labor. The increased competition between the unemployed and the employed workers for jobs drives down wages. At the same time, the unemployed workers are recruited as scabs to break strikes.

As touched on above, cyclical unemployment is due to the boom-bust cycle of capitalist production. As the economy booms, production is carried on at a higher rate, in order for capitalists to realize greater profit. Capitalist production is carried on for the express purpose of exchange, that is items are produced to sell. Workers, having no product to sell, can only sell their labor power. Wages, the price of the commodity of labor power, are directly related, though not always equal to, the cost to reproduce the worker, that is keep them alive and in working condition, as well as the physical reproduction of the working class in general, the raising of children. Worker’s wages are determined by the market before they even begin work. In the course of production, they produce good worth far more than their wages. This additional value Marx called surplus value. This value is can only be realized through exchange. As all capitalists are attempting to sell the most items and to realize the highest amount of profit, production outstrips demand and the prices drop. This is the mechanism by which capitalist crises occur and the reason why they are inherent to capitalism. In 2019, the US economy was finally shaking off the last of the Great Recession, unemployment (U-3 numbers) was around 3.5% and wages were beginning to move upward, all signs of a booming economy. It was only a matter of time until in the pursuit of profit, production outstripped demand leading to a crisis. In this case, the course of events was accelerated by the pandemic. In either case, the workers who had be brought back into the production process, their labor no longer profitable, find themselves thrown back out on to the street, once again superfluous. In time the market will clear, commodity prices begin to rise, the economy begins to pick up, faster and faster until once it again it is moving at a breakneck pace only to be wrecked again by an internal logic. And so it goes.

The crisis facing capitalism today is two fold. First, the health crisis that capitalism was woefully inadequate at addressing, and secondly an economic crisis, created in part due to the Coronavirus lock downs. Currently (as of July 2) 17.8 million people (approximately 11% are unemployed according to official numbers (BLS.gov). The U-6 Unemployment rate (broadest definition of unemployed) was approximately 18% in June. We are only now getting a glimpse at the true extent of the crisis as the economy is beginning to open back up. We have already seen millions of jobs return but we can be sure that millions more will remain unemployed. Further, the re-opening of the economy both in the US and around the world will not be without complications. The US is already seeing new spikes in Covid-19 infections which could prompt another round of lock downs. Even if the lock downs don’t return, declining consumer confidence that the virus is being addressed adequately will further derail an already vulnerable economy. But even as potential treatments and vaccines are currently in the works, the end of Coronavirus is not the end of unemployment in the short term, nor the long term. The economic crisis will roll on, in time the market will clear, and production will ramp up again, only to crash once more.

Of course the economic crisis doesn’t just effect those workers who have lost their jobs. Increases in unemployment allow capitalists to demand workers still employed take pay cuts. Workers who fight back against loss in wages or benefits may find themselves unemployed and another worker taking their place. Further, in order to lower production costs and recoup lost profits, workers may find themselves doing the work of two, three, or more workers. In this way, the bosses, who are ultimately responsible for the economic crisis, seek to shift the burden of the crisis on to the backs of the workers. So far, nearly all workers displaced by Covid-19 have been able to receive Unemployment Insurance plus the Federal Government added $600/week on top of State UI. However, even UI, as helpful as it can be, is partially carried by the workers themselves. That is, the bosses have been able to force the working class to pay for its own involuntary unemployment insurance. By the end of July, the $600/week federal addition to State unemployment will end and workers will go back to receiving only a portion of their wages in Unemployment Insurance.

What recourse to workers have in the face of the current crisis? Are we destined to just ride the waves of economic turmoil until the market clears and production ramps up again? Historically, workers have formed labor unions to fight against wage and benefit cuts as well as job losses in some cases. Unemployed councils were formed in the 1930s to organize those who had been thrown out of work to fight for Unemployment Insurance and to help provide some relief for those in need. Today, Labor Unions are weak but over the last few years victorious strikes by Teachers Union have sparked interest in labor unions. In the midst of the lock down Amazon Warehouse workers, as well as other essential workers, were staging walk-outs and pickets demanding safe work conditions and PPE. These struggles can be expanded to all sections of the working class. Struggles against wage and benefit cuts, hour cuts, speed up, and layoffs all require participation of the whole workforce in a given workplace. This crisis contains the potential for the re-emergence of a fighting labor movement. On the other hand, there is talk of re-forming Unemployed Councils to organize the Unemployed and fight for demands that benefit the unemployed workers. In the past, these councils helped workers navigate the benefits system, providing food and material support, fighting evictions, and fighting for real relief from the government. Today, these councils while fighting for the rights of the unemployed, must also seek to unite the employed and unemployed. As discussed above, the unemployed are used by the capitalists against the employed, and the employed are forced to work longer hours, or to do the work previously done by a number of workers while millions of people are idle. By organizing both the unemployed and the employed workers together, the Unemployed Councils can undercut the bosses offensive on the working class. The primary demands of the working class movement, whether organized in unions or in workers councils, or both, must be 1. Unemployment Insurance covering full wages for all workers regardless of citizenship status, paid for by the bosses and the state, and the abolition of the regressive payroll taxes, and 2. 5-hour work day/5 day work week with no loss in pay. The first demand undermines the need for workers to take scab jobs and relieves the tension between the employed and unemployed. The second demand, relieves the the employed workers from working forced overtime or taking on additional responsibilities while millions of others are out of work. Further, shortening the work day with no loss in pay creates job openings that can bring many unemployed workers back into the work force.

We fully believe these demands can be won under capitalism as they do not directly threaten the rule of capital, but only seek to limit its oppression and exploitation of the working class. They cannot, however, be won simply by appealing to the State. The State, as the organized ruling class, will seek to resolve the crisis in ways that are beneficial to Capital at the expense of the workers. In the 1930’s, the Unemployed Councils and the Communist Party USA supported a demand for UI covering full wages for all unemployed workers, including black workers and agricultural workers, paid for by the state and administered through a committee of workers which was included in the Worker’s Bill submitted by Farmer-Labor Party congressional delegates. Instead, we got the unemployment bill that we have today, which shifts the responsibility on to the workers shoulders. Worker’s must fight against every relief bill that seeks to burden them with resolving the crisis and instead raise the above demands. Only a sustained struggle by the working class will bring victory. In order to wage this struggle, it is necessary that the workers organize themselves into unions and unemployed councils, and that we strive for the closest unity between the employed and unemployed workers.

These demands, as necessary as they are, are ultimately insufficient for solving the problem of unemployment, which, as we have attempted to demonstrate above, is inherent in the capitalist mode of production. Capitalism in turn rests firmly on private property in the means of production (factories, machines, retail stores, etc) and means of subsistence (housing, food, etc). Worker’s having no commodities themselves to sell, must sell their labor-power to the capitalists in exchange for the means of subsistence, and they can only find employment so long as their labor produces profit (See Communist Manifesto by Marx and Engels). Only the expropriation of private property in the means of production and subsistence in the name of all of society, by the working class organized as the ruling class and the abolition of the wage system can unemployment also be abolished. The overthrow of the capitalist mode of production is the historical task of the working class, the only revolutionary class by virtue of its position the production process, namely as a class with out property to protect. This task requires the conscious activity of the working class, and that class-consciousness can only be built in the struggle against the capitalists and the State. The struggle for Unemployment Insurance and the 5-hour Day/5-day Work Week is a part of the class struggle, a struggle that must find its logical conclusion in the overthrow of the capitalist mode of production.