By James Foster
The Dow Jones Industrial Average experienced a significant downturn following the latest employment report, released Aug. 2, which revealed a modest addition of 114,000 jobs and an uptick in the unemployment rate to 4.3%. The news on the U.S. economy prompted similar drops in stock market indexes across Asia and Europe.
Unemployed workers march during the 1930s Great Depression.
The Bureau of Labor Statistics July jobs report was a shock to many, as bourgeois economists had anticipated a much stronger performance. Predictions had ranged from between 150,000 and 200,000 new jobs, but the actual figure fell short, suggesting a deceleration in job creation. Adding to the unease was the increase in the unemployment rate from 4.1% to 4.3%, the first noticeable rise in several months.
The “broader” S&P 500 (1.8%), as well as the tech-heavy NASDAQ composite (2.4%) – all benchmarks for U.S. stock market performance – reacted swiftly to the news with steep declines on Aug. 2 and even steeper again on Aug. 5. Amazon, Tesla and Intel all had meager earnings this quarter. The drop reflects a broad apprehension among capitalists concerned about the potential implications of slower job growth combined with a rising unemployment rate. It underscores their growing worries about the health of the U.S. economy.
The creation of only 114,000 jobs, far below the projected number, indicates a failure of the capitalist economy to generate sufficient employment opportunities to keep pace with growth in the labor force. The increase in unemployment to 4.3%, combined with the persistent problem of underemployment, underscores the fact that there is a surplus labor force that capitalism cannot absorb.
The Dow’s decline is not merely a “market reaction,” but a reflection of the underlying contradictions of capitalist production. The stock market, driven by the profit motives of capitalists, reacts to perceived threats to profitability. As job creation slows and unemployment rises, it signals to investment capitalists that the economy might not be able to sustain high profit margins, prompting a sell-off in stocks.
The stock market reaction makes crystal clear the dependency of capitalist markets on continuous growth and the precariousness of an economic system that cannot effectively address labor surplus and economic inequality.
Intensify the class struggle!
The rise in unemployment and stagnation in job creation highlight the broader issue of capitalist production being oriented towards private profit rather than meeting social needs. While the capitalist class benefits from economic growth and stock market gains, the working class bears the brunt of job insecurity and economic instability. The capitalist system inherently prioritizes private capital accumulation over collective welfare, leading to periodic crises that manifest as unemployment and underemployment.
As Marxists, we hold that neither presidential candidate, from either capitalist party, is able to fix the problem. This is because the crisis is a result of the functioning of capitalism itself and not of the politicians that the capitalists choose to support. Workers are experiencing this current crisis under a Democratic administration and have seen the same under previous Republican administrations.
A real threat posed currently is that the most far-right candidates represent the most reactionary and chauvinist elements of finance capital, who are dead-set on breaking unions and possibly even overturning bourgeois democracy entirely.
The answer for the masses lies in their ability to wage an independent political struggle based on the unity of all working-class formations. Unions such as the United Auto Workers and the American Federation of Teachers have lined up the expiration dates of their collective agreements for May Day 2028, and they are calling on all unions to do the same.
This strategy could lead to a united front of labor organizations and offers the potential for mass strikes. But what is truly needed to counter rising unemployment, inflation, stagnant wages, racism, xenophobia, misogyny, anti-LGBTQIA2S+ bigotry, ableism and all the suffering caused by capitalism? It is the global classwide unity of all workers, organized and unorganized, from the U.S. to Latin America to Palestine.
We mustn’t succumb to the vile fascist propaganda that seeks to fragment the working class. Whether in the workplaces or in the streets, workers and oppressed people can bring about the greatest amount of change by intensifying the class struggle.