Banking Crisis Exposes Capitalist Social Relations here ♦ China-US Imperialist Competition and the Banking Crisis here ♦ Even Highly Skilled Immigrant Workers Under Attack here ♦
Banking Crisis Exposes Capitalist Social Relations. How Communism Will Serve Workers’ Needs Without Money
March 25—Forbes Magazine celebrated Silicon Valley Bank (SVB) on March 6th as “one of America’s Best Banks for the 5th straight year.” SVB collapsed four days later, as other banks teetered towards financial oblivion.
What triggered the SVB crisis? The US Federal Reserve Board raised interest rates to fight inflation. That made the bonds that SVB held less valuable, and they had to be sold at a loss.
A shock wave from Israel, Singapore, India, and Frankfurt fueled capitalist investors’ panic. A mounting crisis in Credit Suisse added to the uncertainties. The Federal Deposit Insurance Corporation (FDIC) moved quickly to take over SVB on March 14th. It will fully fund all depositors even above its stated limit. However, this exposes many other weak banks when they face similar runs on money.
And SVB’s problems are complicated by US-Chinese imperialist competition in high-tech.
Money: Not Just a Medium of Exchange
We often think of money just as a way to exchange things. And sometimes it is. Workers exchange the money we earn from wages for commodities such as rent, medicine, food, clothes, transport, entertainment, services, and to reduce mortgage and other debt.
But for capitalists, money is a social relationship of extracting surplus value from workers. They are organized with one and only one goal: invest money to make more money.
Industrial capitalists use money to organize factories and employ workers. They pay workers only a portion of the value of the labor they contribute to production. The remaining unpaid portion is the surplus value that capitalists steal from every worker. When the goods embodying this surplus value are sold, the capitalists make more money: profit.
This social relationship of exploitation pits the working class against the capitalist bosses. Our interests are directly opposed. The less they pay us, the more they profit and the more we suffer.
But where do industrial capitalists (whether in high-tech or low-tech industries) get the money (capital) to invest in starting and expanding their businesses? To tide them over until they can realize their profits in the market?
From banks and other financial institutions. Finance capital dominates the world today.
Banks attract money (deposits) by paying interest. In effect they are renting the money. Then they turn around and rent out that money to workers (mortgages and other loans) and to other capitalists. Of course they charge higher interest rates for that, pocketing the profit.
Financial institutions also provide capital to businesses by buying a stake in them. Since their only purpose is for their money to make more money, they try to invest in the most profitable businesses they can find.
That forces all capitalists to compete in a frenzy to maximize their profits. And that leads directly to intensifying exploitation, misery, catastrophic climate change, imperialist wars for profit, starvation, preventable disease, and much more.
This competition is international. Silicon Valley Bank’s problem started when high-tech industries faced stiff competition from Chinese capitalists. They produced cheaper goods by more intensively exploiting the workers. US high-tech had to employ fewer workers and exploit them more. In just three months, over 150,000 workers (many of them immigrants) lost their jobs.
Privately-owned banks hide their complicated investments from other banks and the public. “It is too complicated to understand,” said the Wall Street Journal. That is, capitalists are afraid to admit that SVB was just the start.
Not Complicated for the Working Class
We don’t need a system that decides the fate of millions of workers based on the interest rate. We need to end this system based on wage slavery, on capitalist social relations. We need communism.
In communism, the masses (organized by ICWP) will figure out how to distribute everything we produce according to needs, without banks or money in any form . We won’t “exchange” things – we’ll share them. Instead of working for wages, we’ll work to contribute to the common good, knowing that we won’t need money to get what we need.
To create this society, we need to join ICWP collectives and try to convince everyone we know to join and be active too. These conversations require mutual respect while we show how every problem we face has a communist solution. The social relations we build today are the foundation of the society to come.
As our collectives grow and become more diverse, and as collectives arise in more places around the world, we will be moving closer to our aim of communist revolution to win a society without the capitalists. This is the message we will bring to co-workers, friends, family, and the masses in the streets on May Day.
China-US Imperialist Competition and the Banking Crisis
It’s not just about Tik-Tok. Sharpening rivalry between the US and China is spreading quickly in high-tech industries.
The US is banning some advanced microchips from entering the Chinese market. These microchips are produced in the US, Europe, and Taiwan. Microchips are essential in the next generation of automation, artificial intelligence (AI), gaming, and biotech.
Most of the technological innovations are based in California. The collapse of Silicon Valley Bank and its subsequent bail-out are crucial for the supremacy of US high-tech industries. The quick fix enabled by FDIC will likely unravel into a much bigger financial crisis. As the Covid pandemic takes its toll, as the US gets bogged down by the war in Ukraine, as rising European energy costs strain NATO ties, the US imperialists are losing their edge over China.
Even Highly Skilled Immigrant Workers Under Attack
Sunil and Deepika (not real names) lived in Fremont near San Jose. They were among thousands of immigrants who moved to Silicon Valley to work in high-tech. Then Sunil got laid off from Google and his visa restrictions do not allow him to work for another company. Deepika became the sole source of family income. Three weeks later, she was laid off from Intel. They are not eligible for green cards.
They are among thousands of recently laid-off tech workers, mainly Indian, who must leave the US within 30 days. The panic-stricken family was forced to sell their house at a huge loss. They must sell their cars, their furniture, their household appliances, and leave behind the life they built over decades. Their teenagers, natural-born US citizens who only speak English, will now have to live in India or be separated from their parents by oceans.
Sunil and Deepika are caught up in Fremont’s tsunami of layoffs. The Cato Institute estimated that it would take Indian immigrants at different stages of the approval process 151 years to get a green card.
Capitalism brings misery to the working class everywhere. Its sharpening crisis attacks immigrants (especially undocumented workers) and, actually, all workers. As a friend said, “Capitalism = Getting Away With Great Train Robberies.”
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