Orthodox capitalism died in the Great Depression. We are living in the age of capitalist decline. However, as Lenin noted, “There are no absolutely hopeless situations” which capitalism cannot recover from, since the transition to socialism is not automatic, but must be fiercely fought for by the working class.

Capitalism is declining in that free competition and private enterprises are failing and being superseded by monopoly and state contracting. It is no exaggeration to say that without state interventionism, every serious recession would grow into so many Great Depressions.

For a capitalist economy to recover, two contradicting criteria must be met: a rising rate of profit and expanding markets. The rate of profit is given by p' = s/(v+c), where “s” stands for surplus-value (profit), “v” stands for variable capital (wages,) and “c” stands for constant capital (raw materials plus machinery).

C’s value continually increases as machines constantly replace human labor, requiring wages to decrease by a greater value than c’s increase in order for s to rise faster than v+c.

Reducing aggregate wages makes it all the more difficult to expand markets. The way around this contradiction is to increase wages but increase profit more, through a massive increase in work consignment.

For instance, the massive expansion of the housing and automobile industries was responsible for 40 percent of the booming post-war economy, jump-started by the permanent arms economy.

The broadening of the middle class and the significant rise in the American standard of living were ironically the result of the massive defeats that the international working class suffered at the hands of fascism and war.

All capitalist countries were brought out of the Great Depression by World War Two, which was the legacy of World War One, the product of predatory imperialism, the logical result of monopolies desperately expanding markets and the predictable outcome of ever-increasing concentration of wealth, fostered by the profit-motive.

The decline of the capitalist mode of production has now caught up with the middle class. Importantly, the middle class no longer receives raises, considering the cost of health insurance. Family premiums have risen 78 percent since 2001, while wages have risen only 19 percent against 17 percent inflation. The cost of college is increasing at twice the rate of inflation.

Between 1979 and 2004, American workers’ productivity rose 64 percent, but median hourly recompense only rose 12 percent, with capitalists pocketing the balance. Average wages for production workers only increased 2 percent in that time. Nearly 40 percent of Americans work over 50-hour weeks, 69 years following the Fair Labor Standards Act that protects the 40-hour work week.

Wealth disparity has increased over 21 percent in the last 39 years. In 1954, the richest bracket’s income was taxed 87 percent, but that eroded to 50 percent under Reagan, and it will sink to 33 percent thanks to Bush.

As the situation of the working class continues to deteriorate, the conflict between the wealthy and lower classes stands out in stronger and stronger relief. As the American standard of living declines, the working class’ crude and misguided support for the ruling elite will break down.

The beginnings of this decay can be seen in the mass dissatisfaction of President Bush and congress with approval ratings of 35 percent and 24 percent respectively.

As Lenin wrote, “A revolution is impossible without a revolutionary situation; furthermore, it is not every revolutionary situation that leads to revolution.” He then wrote that there are three signs of a revolutionary situation: the ruling class is in crisis, the lower classes suffer more than usual, and the masses work to overthrow the system. It doesn’t take Captain Obvious to see that the ruling class is indeed in crisis if it has to risk its stake in power by waging adventures in Iraq and Afghanistan to keep the economy on track and satisfy the demands of the permanent arms economy.

It is hard to foresee any radical market expansion in consumer goods – comparable to the enormous post-war housing and automobile industries – coming to the rescue any time soon to revive the middle class. The unchecked decline of the middle class will only result in more acute suffering. This will either result in American fascism, or incite a period of revolution greater than the Civil Rights movement, which will at the least aim to launch the American working class to the more civilized status of Western Europe, complete with universal health care, a more progressive income tax, stronger unions, a workers’ vanguard political party and a more accountable democracy.

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