Retail bankruptcies - when this irrational system feeds its own crisis

1 December 2008

Last week, two other big names in retail went bust. Woolworths went into administration and furniture retail chain MFI collapsed. Almost a thousand stores and 22,000 jobs are now under threat.

But is this only due to the credit crunch as the media tell us? Not really, in fact. What caused these bankruptcies is not so much a shortage of credit, although this certainly played a role, than falling consumer expenditure.

And predictably so. Hasn't the explosion of food prices and fuel bills reduced significantly the purchasing power of the working population? But isn't this explosion primarily due to the capitalists' frantic speculation on commodity markets, which drove prices through the roof?

And now, this mad profit system is fuelling its own demise by depriving tens of thousands of workers of their wages completely, through massive redundancy plans. As a result, consumer expenditure will be cut even further. And job cuts in retail, which account for a large share of employment, will only add to this vicious cycle.

As if the prime engine of the economy, including from the capitalists' own point of view, was not the labour of the working class, on the one hand, and the money it spends in the economy, on the other - that is, as long as it has money to spend!

But this system is so irrational that, when faced with a crisis like the present one, it can only manage to undermine itself - by destroying the very resources which sustain its existence! The capitalist system's urge to protect private profits at any cost only feeds its own crisis, and makes it deeper and more costly for the whole of society.

This is why the profit system is unaffordable and unviable and why it cannot be tolerated any longer!