Farmers' plight reveals crisis of overproduction

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SOCIALIST ACTION SEPTEMBER 1986 3 "In these crises, a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity the epidemic of overpro -duction.

Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence, too much industry, too much commerce."-The Communist Manifesto These words written over 138 years ago by Karl Marx and Frederick Engels aptly capture the bizarre plight of most U.S. farmers today. Storage facilities are nearly filled to capacity with unsold wheat and corn left over from last year's bumper crop. There is no room left to hold this year's surplus.

Despite a long buildup in storage capacity on farms as well as at grain dealers' terminals, farmers will be forced to dump much of this year's crop on the glutted market at prices below their cost. Or else they will have to put their surplus produce either in makeshift shelters or in unprotected heaps on the ground.

Either way, farmers face heavy losses and bankruptcy because they did their jobs too well. Foreclosures are on the rise, with the total farm debt soaring to over $200 billion. The current supply of food grains is more than enough to feed the 5 billion people on earth. Meanwhile, despite the overflowing grain storage bins, millions of the world's poor continue to go hungry.

Genesis of the farm crisis After the Great Depression had devastated farmers in the 1930s, the U.S. capitalist rulers instituted a series of measures intended to avoid a repetition of such a catastrophe.

To reduce food production, the U.S. government paid farmers for each acre allowed to lie fallow. Also, to prevent gluts and the consequent collapse of agricultural prices that periodically ruin farmers and destabilize the economy as a whole, the government arranged to buy grain when the price fell below a government-set mini -mum. These surpluses were kept in storage for future salewhen and if the market permitted.

One might have hoped that the surplus grain would be given to feed the hungry. But only a small proportion of the unsold government-purchased surplus food is distributed to the poor.

The capitalist government prefers to let enormous quantities of food rot in storage caves and warehouses rather than feed it to hungry people. Were the poor to be given free food, the capitalists reason, they would buy less and thus aggravate the basic capitalist problem of overproduction.

The original farm price-support the 1930s have been superficially modified in recent years. Cash payments for unused acres have been replaced by payments in grain from government stockpiles for land taken out of production. And outright government purchase of produce that falls below set prices has been replaced by "loans" on unsold crops.

If prices are higher the following year, the farmer can repay the loan and sell the crops. If not, the grain "collateral" is forfeited (that is, the loan is in effect transformed into a government purchase).

These countercyclical agricultural measures had limited success. But in the long run, despite the aim of the post1929 farm policy, agricultural productivity was intensified—laying the basis for today's more serious crisis.

Paid to reduce the land under cultivation, farmers naturally looked for ways to get more bushels of grain per acre. Scientific agricultural techniques were introduced—more intensive use of tractors, irrigation, seed-selection and hybridization, along with chemical fertilizers—leading to ever more abundant harvests on less acreage and with fewer farmers.

Capitalist overproduction

This crisis in agriculture, however, is only symp -tomatic of deeper economic trouble threatening to wreak havoc in every sphere of the world capitalist economy.

In industry, just as in agriculture, measures put in effect to avoid another 1929 have only postponed it. And more important, the postponement has the effect of building up the potential explosive power of the inevit -able economic collapse.

Periodic collapse of the economy is an iron law of capitalism. It is the unavoidable consequence of a system in which a portion of the product of every worker's labor is not paid for. Unpaid labor expropriated by the capitalists—profits—means that a portion of total production cannot be purchased.

Capitalist economy must go through a phase of expanding production until the market is saturated with unsold commodities. When this occurs, the most ineffi -cient enterprises are bankrupted. The more successful capitalists gobble-up their fallen competitors and capture their share of the market.

After a period of reduced production, in which time the oversupply of goods is eventually sold or destroyed, the upturn of production is resumed, to culminate later in another bust.

The 1929 crisis was more devastating in its effect than previous boom-bust cycles because of the unprecedented expansion of credit, which artificially prolonged the boom-phase of the economic cycle.

Because productive capacity was allowed to grow, and the oversupply was concealed by all kinds of paper transactions, the collapse of production was all the more destructive. When the speculative boom could no longer Slide Friday, 3435 Army workers, of course, not capitalists. Taxing capitalists would have the effect of lowering their profits and discouraging production.

But raising workers' taxes too much is also dangerous. Besides the discontent this helps generate, it takes money out of the economy, defeating the purpose of government countercyclical spending.

When the government is unable to pay its debts, it takes out another loan. If tax income doesn't rise to pay these loans, the government must eventually print the dollars to pay the interest owed to creditors. All dollars are then proportionately reduced in value. The resulting inflation is the cruelest of taxes, hitting the poorest the hardest.

Most of the world's capitalist nations are facing a similar dilemma. The debt owed to U.S. bankers by Latin America, for example, is over $400 billion. These semicolonial vassals of American imperialism are not only unable to repay the principal—but are increasingly unable to pay the interest.

A definitive default by Latin American debtors—so far staved off-could ruin U.S. banks, which have large amounts of their capital invested in these loans. The bailout cost to government agencies could bring the U.S. and world capitalist financial structure tumbling down.

Whatever triggers the coming economic convulsion, it will no doubt be the most serious in U.S. history.

"Restructuring" the workforce

It is in this broad context that the current plight of farmers must be seen. Many will be permanently re -moved from their land, just as many fired industrial workers will never get their jobs back.

This "restructuring" of the workforce, as the apologists for capitalism like to phrase it, will intensify. A steadily increasing pauperization of workers and farmers is in the cards. And even if the rulers are able to prolong a rickety stability a few more years, the creeping impoverishment of America's toilers is sowing the seeds of rebellion.

The Great Depression of the 1930s proved that capital -ism had outlived its usefulness. It took World War II, with all its horrors, to extricate world capitalism from that crisis. Today, millions of toilers are being retaught those lessons. Capitalism will again convince millions that it has outlived its usefulness and can now bring only economic misery and more Vietnams and Nicaraguas.

SOCIALIST ACTION FORUM 'BIG MOUNTAIN' - American Indians Struggle Against Relocation Speakers:

lepresentative from Internationa Treaty Council;

Adam Wood, member, Socialist Action. presentation Sept. 12, 1986 St., Suite 308,