The following article is adapted from the speech given at the Spark Public Meeting in Los Angeles, October 19, 2025. "Spark" is an American Trotskyist group with whom Workers' Fight has fraternal relations. What they have written about the economic crisis in the US and the consequences for the working class - as regards the increasing poverty and homelessness - could just as well have been written about the situation in Britain... However this article also exposes the capitalist economy's current trajectory towards another crash - which will not be confined to the USA, of course.
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Everybody talks about all the horrible things that the Trump administration is doing. This tends to divert attention from the worsening crisis of the profit-driven capitalist economy and its decades-long destruction of the living standards of the working population.
The top-heavy economy
Economic inequality has grown to such an extent that the mainstream news media has taken notice. The Wall Street Journal (September 16) proclaimed, "There are two economies in the US right now, and they are moving in different directions.... High-earning Americans are faring better than ever, while fortunes are sliding again for low-wage and young workers". In an article entitled, "Wealthy Americans Are Spending. People with Less Are Struggling", the New York Times stated, "The divide between rich and poor is hardly new. ... But it has become more pronounced in recent months".
The US had 1,135 billionaires as of 2024, up from 924 in 2020. And as of 2024, they had a collective net worth of about six trillion dollars, or about 20% of the entire US economy. Tesla CEO Elon Musk, already the richest man in the world, was recently awarded a trillion-dollar compensation package over the next ten years, making him the first trillionaire, but almost certainly not the last.
The extravagance of these billionaires knows no bounds. Only recently, former Google head Eric Schmidt purchased a 123-room, $110 million LA mansion, not to live in, but simply to host events.
Just below the hyper-rich, millions more households are spending like there is no tomorrow. Thus, high-end real estate brokerages report a scarcity of the super high-end, that is, homes going for $7m, $10m or $15m, or even higher.
The flip-side of this unbelievable wealth is a sea of mounting despair. Big banks and financial institutions estimate that up to 70% of all families live pay-check to pay-check, with no savings to fall back on in case of an emergency. What's worse, the prices that are rising the fastest are for the very things households cannot do without, including shelter, food, electricity and health care. People have to live somewhere. They have to heat their homes. They need lights.
Every price increase puts working-class households under more economic pressure. Increasing numbers of working-class households are relying on credit cards and other forms of borrowing to pay their bills, and more are falling behind on car loans and credit card payments.
This has led to a sharp reduction in spending by the working class. Big companies that represent major brands, retailers and quick-service restaurant chains, including Target, PepsiCo, Kimberly-Clark, Procter & Gamble, McDonald's, Chipotle, IHOP, Applebee's, and Sweetgreen's, report double digit drops in sales to lower income consumers. Increasingly, all these companies rely on the spending of a minority of households making $250,000 (£186,648!) per year to buttress their sales and profits.
So, with only 10% of the population accounting for almost half of all retail sales, more and more of the economy is devoted to satisfying the wants and desires of the most privileged parts of the population. The production of luxuries for the tiny minority overtakes the production of vital necessities for the vast majority.
This has had a big impact on the travel industry. There has been a big drop in the number of ordinary people travelling; only super luxury hotels have seen sales increases, while the rest of the hotel and motel chains have seen a drop in traffic. Airline companies also report that well-to-do fliers are snapping up pricey seats in first and business class, while the companies struggle to fill the cheaper seats at the back of the plane. Credit card companies are competing to offer ever-more-expensive cards to high earners who are happy to pay the annual fees in return for exclusive perks - while lower-income households are struggling to make minimum payments on their debts.
Describing a similar situation in Great Britain in the 1860s, Karl Marx commented: "If you consider that two-thirds of the national produce are consumed by one-fifth of the population... you will understand what an immense proportion of the national produce must be produced in the shape of luxuries, or be exchanged for luxuries, and what an immense amount of the necessaries themselves must be wasted upon flunkeys, horses, cats, and so forth, a waste we know from experience to become always much limited with the rising prices of necessaries". (From an address by Marx to the First International that was later turned into a pamphlet called, "Value, Price and Profit").
Today, the inequality is just as glaring.
Cut, cut, cut
How did we get to this point? Is it Trump's fault, or Biden's fault, as we are often told? In fact, the very workings of the capitalist economy brings on crises all on its own. It doesn't need any help from two-bit politicians and their sycophants, although their policies can often make things ultimately worse.
Let's look at the present situation. Up until recently, the news has broadcast how great the stock market was doing. The stock market kept going up. It hit 30 new record highs in six months. This is supposed to be great news for the economy. But it's not.
Record high stock prices are based on record high profits. Profits have doubled, after taxes, in about a decade, to about $3.4 or $3.5 trillion. What companies do with these profits also drives up the stock market. Over the last decade, companies have doubled the money paid out in dividends to their stockholders. Companies have also been buying back their own stock, which is a way to drive up the price of the stock. Over a trillion dollars are expected to be spent on these buybacks this year. Between dividends and stock buybacks, that adds to all of their profits. Thus, all the profits that companies have made after taxes, they turn back over to their largest stockholders.
So, companies make record profits. But, with rare exceptions, they don't reinvest those profits in anything productive. They don't expand economic activity. And they don't hire more workers and employees. They just make themselves richer. That's what they do with what the working class produces with its sweat and blood.
The business press recognises this. Here is a headline from the Wall Street Journal in early September: "Behind This Season's Bumper Earnings: Job Cuts, Price Hikes, Glum Workers".
Actually, workers have every reason not just to be glum, but angry. Companies are increasing their profits by making fewer people do more work. As a corporate executive told the Wall Street Journal, "The processes are human-light now".
At the same time, companies are raising prices so fast, they are making life unaffordable in every way possible for the vast majority of the population. Thus, the very process by which companies make their profits destroys consumption for a majority of the population and creates an increasingly top-heavy economy that can topple into a much worse crisis at any moment. As business economist Mark Zandi told Bloomberg News, "The economy's prospects are tethered to the fortunes and spending of the well-to-do. If they turn more cautious in their spending, for whatever reason, the economy will suffer a recession".
But the reality is that most of the working population is already in a recession, not to speak of a real depression. Not only can they not afford to go out to eat or travel, but they are less and less able to afford even the basics.
The housing crisis
In this day and age, there should be no such thing as the high cost of living. Society should have overcome that a long time ago, given the huge advances in science and technology that are achieved from one generation to the next. It should mean that every single year, products and services should become more affordable and easier to access.
Instead, the exact opposite is happening all throughout the economy. Nowhere is this truer than what has been happening to the cost of housing, which is, by far, the biggest cost that households face.
Today, the housing crisis represents the inflation crisis and the cost-of-living crisis on steroids. Since 1985, average rents in the US have increased four times as fast as wages, and that's just on average. Rents are rising even faster in cities along the coasts, such as Los Angeles, San Francisco and New York.
These increases are first of all driven by the lack of affordable housing. Capitalists have all kinds of money for all kinds of things. Today, for example, high tech companies are throwing hundreds of billions of dollars into building data centres, in the hopes of reaping vast riches in the near future. But the last thing capitalists ever build is affordable housing, because it's not profitable enough.
Today, there are just 34 affordable and available rental homes for every 100 extremely low-income households who need them. This amounts to a shortage of 7.3 million low-rent apartments - a colossal deficit. And that is just for the poorest parts of the population. In reality, the US is lacking tens of millions of affordable housing units, and it gets worse every year.
Some of the biggest and most powerful financial institutions actively exacerbate and exploit this crisis. Giant private equity firms, institutional investors, and corporate landlords have been buying up properties en masse and then jacking up rents beyond the rate of inflation, while they neglect basic maintenance because they know that if one household moves out, another will quickly take its place.
These companies make up a kind of eviction industrial complex that has automated evictions, often employing the latest algorithms, to use a fancy term. Last year, these companies carried out close to four million evictions. That comes to eight evictions that are filed every minute, every day of the week.
Is it any wonder that there's a terrible homelessness crisis that grows worse every year? According to HUD's Annual Homelessness Assessment Report, homelessness increased by 18% from 2023 to 2024, bringing the number of homeless up to approximately 770,000 people in 2024. But the actual number of those experiencing homelessness in the United States is at least six times larger than the official figure. A growing number of the homeless are people working full time for wages too low for them to cover the rent. Increasing numbers of elderly low-wage workers who can no longer work are forced to retire onto the streets. And finally, the US government considers 1.6 million students as being homeless - which is also just the tip of the iceberg.
We are told that homelessness is caused by mental illness, drug addiction and alcohol abuse. But the opposite is true. It is homelessness that causes mental illness, drug addiction and alcohol abuse. And this homelessness is very much a giant attack on the entire working population. It's also a threat that hangs over all of us.
The Death Gap
The same forces are at work, driving up the cost of health care to spectacular heights. From a logical point of view, public health care should be the basic priority. Broad public health measures are largely responsible for the declines over the last centuries in infant mortality and increases in life expectancy. It is easier and cheaper to prevent a disease than to have to treat it when someone gets sick.
Yet less than five percent of spending goes to public health. The rest, 95% of all the money devoted to health care, goes to supposedly treating disease. It's an enormous amount of money, close to 20% of US GDP. Yet, all that money is bringing much less access to medical care, with ever more restrictions on hospital, physician and pharmacy networks as well as prescription drug coverage, while insurance companies raise premiums, deductibles and out-of-pocket cost-sharing at rates that are three or four times higher than the rate of inflation.
Where does all that money go? It is swallowed up by the capitalist class. Since 2014, when the Affordable Care Act went into effect, the seven largest health insurance companies have collected more than 10 trillion dollars in premiums and taxpayer dollars! Out of those premiums, the companies pocketed more than half a trillion dollars in profits. That's money collected from individuals, employers and taxpayers for health coverage-dollars that didn't go to medical care but instead flowed to corporate shareholders and executive bonuses. Over the same period, these seven companies spent $146 billion buying back their own stock or, in other words, using premium dollars from patients and employers to boost share prices and executive compensation (the CEOs and many other top executives of big insurers are compensated primarily through stock grants and options).
Given the vital nature of medical treatment, that it is often a question of life and death, the insurance industry uses that as leverage to extort ever more money. At the same time, they use technicalities, tricks and scams to keep patients from getting medical care.
So, today, despite big advances in science and technology, life expectancy in this country is dropping. Driving this decrease have been big increases in premature deaths among adults in the prime of life. One shocking finding published in early November by the Journal of the American Medical Association found that between 2012 and 2022, premature deaths among 18-to-64 year-olds rose 27%. Among black adults, the study found the increase was about 10 percentage points higher compared to white adults.
These premature deaths were driven by preventable conditions such as heart disease, substance-related deaths and chronic respiratory illness, that is, chronic diseases that often went untreated. Of course, other studies have shown just how much wealth confers health and longevity, with the richest Americans having about a 40% lower risk of death than the poorest.
Rising inequality is not just a question of income, but life itself. As inequality grows, the death gap - the difference in life expectancy between workers and capitalists, the impoverished and the affluent - has been widening many times faster.
Toward a financial and economic collapse
The news media, business leaders and economists have been openly talking about the possibility that the entire capitalist system could come crashing down, bringing on another Great Depression or even worse.
The canary in the coal mine is the record build-up of debt throughout the economy. Total US debt is now pegged at 99 trillion dollars. That is more than three times the size of the entire US economy. It includes federal government debt, US corporate debt and household debt. All these components are at record-high levels. One or more of these debt bubbles could collapse and bring down the whole house of cards.
The possibility of a corporate debt crisis was raised last month when the bankruptcies of automotive-related companies First Brands and Tricolor, along with big potential losses at several banks and investment funds, set off alarm bells over very risky debt, or subprime corporate loans that are made by big private equity companies and hedge funds. It is estimated that there are at least two trillion dollars of these subprime corporate loans. But no one knows for sure, because it is not reported anywhere. When the bankruptcies were announced, JPMorgan Chase CEO Jamie Dimon said that, "when you see one cockroach, there are probably more". Some economists commented that they hoped Dimon was right, that it was only cockroaches and not termites - an admission that no one knows how close to a collapse this credit market is.
AI bubble
What is being talked about most is Artificial Intelligence, or AI. Never before has so much money been spent so rapidly on a technology that, for all its potential, remains unproven. And there is reason to be sceptical. According to a report from MIT, Harvard and Stanford, AI is being used to create "workslop", or work that is riddled with mistakes, which the researchers say could cost larger organisations millions of dollars a year in lost productivity. Also, taxpayers are footing some of this bill. Thirty-seven states have passed legislation granting hundreds of millions of dollars of tax exemptions for the building of data centres.
The AI bubble is following an old, well-worn pattern. A company or a speculative investment generates excitement because its value starts rising - mainly because other speculators are also becoming excited and investing in it. Speculators borrow piles of money to get in on the action. Then, to keep it going, more enormous amounts of money are borrowed.
Eventually, the bubble bursts. Some speculators read the tea leaves correctly and cash out first. Everyone else is left holding the bag with worthless pieces of paper. Borrowers go broke.
And the losses reverberate throughout the economy, given all the interconnections between borrowers. Most often, those connections are hidden, like giant time bombs, that only reveal themselves when the bubble bursts. When that happens, millions of working families lose their incomes, their homes and their savings.
Many are comparing the AI bubble to the dot-com bubble of the late 1990s, the housing bubble of 2006, not to speak of the tulip-mania bubble of the 1630s and the South Sea Bubble of 1720. If anything, the difference is in scale: the AI bubble is 17 times the size of the dot-com frenzy, and four times the subprime bubble!
But one thing is clear: the flood of money into AI has made America's billionaire capitalists far richer. By Forbes' count, by early October, 20 of the most notable billionaires tied to the explosive growth in AI infrastructure had already added more than $450 billion to their fortunes since January 1. Oracle co-founder and chief technology officer Larry Ellison's wealth increased by $140 billion in that time period, as Oracle's shares jumped 73%. This made Larry Ellison the second-richest person in America (just behind Elon Musk). The Ellison family is pouring some of this wealth into an enormous media empire aligned with Trump. The wealth of Nvidia co-founder and CEO Jensen Huang also increased $47 billion this year as shares of his chipmaking giant have risen 40%.
...and crypto expands it a bit more
Another classic bubble is crypto. Since early 2023, Bitcoin's price has skyrocketed from $16,700 to $118,000 in early October 2025. Since then, it has fallen to $93,000 - a real bargain! Crypto has become popular because speculators believe other speculators will keep buying it. And like AI, crypto's meteoric growth has also been powered largely by the ultra-wealthy. Trump and his family are said to have made five billion dollars from it so far.
Like AI, crypto uses up massive amounts of energy, creating huge amounts of pollution, and pushes up the price of electricity for everyone. But it doesn't actually create anything. And bad news for those with pensions and retirement accounts: pension funds have been pouring money into crypto, as well as AI. Even 401(k) plans have joined the flood.
Over the last few months, many economic commentators and journalists have been warning of a looming crisis. For example, financial journalist Andrew Ross Sorkin, whose book called "1929", about the stock market crash and the Great Depression, was just published in October. In an interview on "60 Minutes", Sorkin warns that today's financial markets echo the crisis of 1929, when record highs preceded a massive slump, leading to the Great Depression. "I just can't tell you when, and I can't tell you how deep", Sorkin said, "but I can assure you - unfortunately, I wish I wasn't saying this, we will have a crash".
Eventually the crash will come. Prices on the stock markets and other speculative markets cannot go up indefinitely. The big build-up of debt, which miraculously pushed up market prices to untold heights, can set off a chain reaction of bankruptcies, once prices begin to come down. And this chain reaction can quickly spread to the rest of the economy, causing widespread ruin and suffering. It is the logical consequence of the mad growth of speculation and debt. And this serves as a warning of what kind of cliff the capitalists are taking all of humanity over.
Crises are not a mistake or the product of failed government policies. Crises are part of the very functioning of capitalism. They are the only way capitalism has of regulating itself. They are the expression of enormous contradictions inside the capitalist system, the fact that ownership of productive forces remains in private hands for the profit of a tiny minority. Society will not get rid of crises until capitalism itself is done away with. A system of private ownership will have to be replaced by a more advanced system of collective ownership and control of the economy by the whole working population. And that can only be brought about by a social revolution led by an organised and conscious working class.
It may seem that we are far from that right now. But history is not written in advance. What is absolutely clear is that the working class can organise itself independently in the workplace, in the community, in the schools, on the streets. And when it fights, those fights can grow into a more general fight against the cause of these attacks: a system which is run for the sole profit of a tiny class of exploiters and oppressors, who are aided and supported by the government and especially its military and police.
But whether that fight succeeds depends on whether there are enough militants in the working class advocating for this perspective. That is, it depends on whether a working-class party based on this perspective is built. And that's what we propose today.
October 19, 2025