The Democrats’ Economy Delusion

Editorial Board

Last Friday, President Joe Biden released a statement taking credit for having “created over 16.6 million jobs over the course of my administration” and bringing unemployment down from 6% to 4.1%. The statement comes following the release of the U.S. Bureau of Labor Statistics (BLS) monthly report on employment statistics that shows an increase of 256,000 jobs in the US in December 2024, around 100,000 more than anticipated by bourgeois economists. What’s behind this latest increase and Biden’s claims about the economy?

“Cooling” vs “Heating” Labor Market

The increase in jobs in the aftermath of a crisis is the natural cycle of capitalist economics. Capitalists are driven to maximize their profits. Profits are extracted through the exploitation of labor and realized in the sale of the commodity they produce. Capitalists are constantly seeking to decrease the costs of production—for example, decreasing the real wages of workers or increasing the number of hours worked or intensity of work for the same pay—while selling their commodities at the highest price they can get away with. When the galloping pace of the economy crashes into crisis, they seek to offload the burden of recovery onto the backs of workers through investing in new technology, rendering obsolete still-valuable machinery while forcing workers into unemployment, driving up work tempo, and depressing wages.

Naturally, every capitalist seeks to get the largest share of the market in order to realize the most profits. This leads to speculation—because the economy is not planned, among the capitalists production develops anarchically and on the basis of what will be the most profitable. So, at the same time that capitalists are trying to maximize their production, they are simultaneously decreasing the purchasing power of the masses—whether it be through inflation, which is essentially a cut in wages, layoffs and unemployment, or bringing ruin to other sections of society such as small businesses through competition. In the present stage of imperialism, or monopoly capitalism, the monopolists swallow up the smaller businesses and monopolize further, especially in the capitalist crisis where many small firms meet ruin. This leads to a crisis of overproduction. The capitalists have produced more than can be consumed, mainly the means of production themselves, and because of how interrelated the various capitalists are, one large monopoly going bankrupt can lead to a ripple effect, knocking down more in the process.

This leads to what capitalists call a “cooling labor market”. A previous editorial on The Worker puts it like this:

“The capitalist is a bloodsucker compelled to increase profits for themselves constantly to avoid becoming like their victims and getting eaten by a larger bloodsucker. This is intrinsic in the capitalist mode of production. To combat the fall in profitability and to halt the modest increase in wages, even wages which are really worth less than they were before, the capitalist is compelled to do away with the overproduced machinery and equipment that tends to collect dust and drain away profitability. Added to the overproduced means of production is also infrastructure and the commodities which cost money to store and distribute.

“As the capitalist comes to destroy the overproduced items the prices do not immediately go down, but wages do, and the worker is again forced to maintain jobs they are unhappy with, losing the ability to quickly find better jobs—scarcity of job options is what is meant by a ‘cooling labor market.’ Wages are driven down by more workers competing for the same jobs, combined with the current increases in unemployment, and what follows is a fall in prices as the profit rate stabilizes. This means hardship for those who work and more decadence for those who do nothing but make money through the exploitation of work.”

Layoffs are eventually followed by a hiring frenzy, or a “heating labor market”, in which the capitalists aim to recoup their losses. This is then followed by a cooling period, when the hiring slows down, and the economy chugs toward another crisis. For example, employment rose by 2.2 million in 2024 compared to an increase of 3 million in 2023. Monthly hires have stayed around the lowest point since 2016, with LinkedIn reporting an average of 2.5 applicants per job—a sharp increase from 1.5 applicants per job in 2022. Even if there were more job openings than expected in December, it is still part of an overall downward trend in job openings and does not speak to the living conditions of the masses, who are forced to work more for less.

The chart below produced by Axios based on data from the BLS shows that jobs added under the Biden administration is not indicative of the superiority of Democratic economic policies but rather the continuation of this usual economic cycle.

This chart also indicates how increasingly frenzied the imperialists have become, how their crises are more and more unstable and quickly leap from one extreme to another, yet each time unable to fully recover before it is thrown back into the next crisis. The entire economic system is speculative, and with increasingly grotesque amounts of money at play among the imperialists, mass layoffs follow hiring frenzies and vice versa, jumping from one extreme to another as the whole system drowns deeper in its death throes. This is offset to an extent in the US as its imperialists are the most able to insulate themselves from the earthquakes caused by their own system by bribing sections of the working class with crumbs from the plundering of the third world, institutional and ideological indoctrination, and so on. However, this ability declines over time, including in the US, as the imperialist death-grip on the third world weakens through mass rebellion and revolution.

Politically, this manifests in increasingly intense electoral crises—something that has gripped virtually all western imperialist countries lately and is seen across the Third World, lately in South Korea and Brazil—as well as an increase in the number of global conflicts, which serve the dual role of destroying/using up productive forces and commodities as well as expanding markets and resources for the winning imperialist. The Third World is the spoils over which the imperialists fight. The number of armed conflicts is currently at an historic high, something that tends to increase around periods of crisis, and is also indicative of the increasingly revolutionary situation internationally.

This is the stage of the strategic offensive of the world proletarian revolution, where the masses increasingly resort to arms to settle class conflicts amid intensifying economic crises that plunge working people and the poor into deeper agony with only one way out—revolution. The recent victory of the Palestinian counteroffensive al-Aqsa Flood and the broader involvement of anti-imperialist forces in the region not only embodies this trend, but points to the fact that the armed masses are in fact increasingly winning against the imperialists and their lackeys.

The Rich Blame Their Crises on the Poor

Some bourgeois economists have suggested that the substantial increase in jobs added last month means that the labor market is heating up and that things are on the upswing for workers. This rosy prediction is typical for the delusional thinking still endorsed by Democrats and their mouthpieces, which maintain the lie that the economy is in fact fine for workers. NBC News reported last week that the problem is not the economy, but rather “consumers feeling psychologically worse off”. In other words, the rich believe the poor are just not grateful for how good they have it. A look at various economic indicators shows otherwise.

For example, unemployment in December remained at roughly the highest point in the year, which peaked over summer as the hiring frenzy gave way to layoffs. At 4.1%, or nearly 7 million workers, its about half a million more than a year earlier. Of these, more than one-fifth have been unemployed for six months or longer, the largest share since March 2022. Unemployment data also hides millions more behind it, such as those working part-time but are seeking full-time work, and those who are unemployed but no longer looking for work. BLS data from November shows that around 4.5 million workers in the US were working part-time but wanted full-time hours, also an increase of half a million from a year earlier.

More layoffs are in the works particularly for those working remotely, as many CEOs have indicated they will enforce return to office (RTO) policies at the end of 2024 and over the next few years. Strict RTO policies act as what bourgeois economists call “soft layoffs” to avoid legal or financial consequences—or, in the words of one “workplace expert”: “restructuring reporting responsibilities to make workers less comfortable, or subtly increasing workload or duties for people exempt from overtime.” Mass layoffs extend to every sector of the economy, including professionals, and threaten to throw them into the swelling ranks of the working class.

Top finance capitalists like JP Morgan’s Jamie Dimon and Goldman Sachs CEO David Solomon have been pushing for RTO across the government and corporations. Amazon is leading the way in the tech industry by instituting a strict, full RTO policy at the beginning of January for its 350,000 corporate employees. Forbes reports that 73% of them are considering quitting in response.

Another trend is the relationship between part-time and full-time jobs. Leading up to the 2008 economic crisis, there had been a steady increase in full-time jobs along with a steady decrease in part-time jobs. With the onset of the crisis, full-time jobs fell steeply to 80% and part-time jobs peaked at roughly 20%. As the economy began to recover, full-time work again began to steadily climb and part-time work steadily dropped until 2022, when the trends again reversed, similar to the trends prior to the 2008 crisis.

Inflation has also continued to rise. The BLS reports the Consumer Price Index, the primary measure of inflation, increased by 0.4% in December, mainly for energy, food, and shelter, and a total of 2.9% over the last year. Since Biden took office in 2021, inflation has increased by over 20%—in other words, a one-fifth decrease in wages. On the other hand, corporate profits have increased by 36%.

This is reflected in the fact that food banks report more demand than ever, something to be further exacerbated by the Trump administration’s plans to limit federal food aid. NPR reports that food insecurity has increased since the pandemic, undercutting the claims of economic recovery and job growth. After all, what good are Biden’s jobs if they can’t pay the bills? If, for example, a full-time manufacturing job is cut for part-time jobs at Wal-Mart and Amazon? A survey by a food bank in Washington D.C. showed most of those who struggled with food insecurity are employed—often at more than one job—and increasingly included households making over $100,000, showing that the crisis is engulfing more sections of society.

Biden and the Democrats use headline-grabbing statistics to hide behind while continuing the same path as their predecessors, blaming their rivals when the crisis hits and taking credit when it rebounds. Only now the system has grown increasingly sicker, it shakes violently in its death throes and the politicians and economists in pay of this dying beast confuses its spasmic shudders for signs of life. Biden—and ruling class politicians more broadly—are unable to provide a solution for their epic failures, they can only attempt to spin the situation and try to cover their tracks.

What’s really around the corner? The bellicosity of the masses will increase, whether the Democrat or Republican mafia is at the helm, because they cannot solve the crisis they create. The rumblings are felt here while the earthquakes are in the Third World.

Photo: A chart from the International Monetary Fund (IMF) shows a sharp jump in inflation in the first year of Biden’s presidency.

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