US corporations raked in $3.6 trillion in after-tax profits last year—an all-time record, and an 80% increase since the start of 2020. Yet, while mountains of corporate cash pile up, the amount spent on “job creation” and improving productive output is at record lows.
The first few months of Trump 2.0 have produced an atmosphere of uncertainty for the ruling class. Stock markets whipsawed after Trump imposed “reciprocal” tariffs on “Liberation Day” then rolled them back in yet another “pause,” leaving the average US tariff at 30%. $6.6 trillion was wiped from corporate stock holdings, 401(k)s, and pension funds in just two days, the largest plunge since 2020.
Limping toward recession
Beyond stock-market mood swings, the real economy continues limping closer to a serious economic downturn. The American working class has seen stagnant wages for decades and is increasingly burdened with the albatross of debt in order to make ends meet. Instead of reinvesting in production, the capitalists are pulling their money out of the real economy—gambling with it on the stock market or simply saving it. The amount of corporate cash sitting idle in money market funds reached an all-time high of $7.4 trillion in early April.
The ruling class has always siphoned the unpaid wages of the working class—the only source of their profits—into their own pockets for personal consumption and luxuries. But during capitalism’s ascendency, the bourgeoisie tended to plow back most of this surplus value into production. Expanding their wealth depended on raising the productivity of labor, outcompeting their rivals, and dominating markets by flooding them with cheaper, more efficiently produced commodities. To do this, they would invest in new technologies, new productive capacity, employ more workers, etc.
Everything eventually turns into its opposite. When the market was expanding, capitalists could realize ever-greater profits by producing more commodities. When they ran out of new markets to conquer, they fought each other to redivide the world and relied on cheap credit to keep the system afloat. Now there are more goods on the world market than the world can afford to buy, and American capitalists think the safest investment is no investment at all.
An article published in 2021 studied the percentage of major US companies that were reinvesting enough of their profits to maintain their existing means of production, compared with those who didn’t and instead allowed their fixed capital to erode. Between 1971 and 1985, those that “sustained” their capital made up 82% of the market and the “eroders” made up only 6%. By 2017, “sustainers” were only 40% of the market and those “eroding” made up 49%.
Forbes noted that reinvestment in the means of production for nonfinancial firms made up just 10% of GDP at the end of 2023. They explain that big business is “not leading an investment boom across the economy, even as the country faces massive challenges in the areas of climate change, artificial intelligence, and population aging.”
Stock market speculation
Trump dreams of capitalists reinvesting in basic industry, but they can find far greater profits in stock market speculation. That’s why so many companies are buying back their own stock to artificially inflate their market price. In 2024, S&P 500 companies spent $942.5 billion on stock buybacks, a new record, up from $795.2 billion in 2023.
Companies are also paying big dividends to entice investors to buy more shares. One study published last year gathered data on the percentage of corporate profits spent on shareholder dividends. From 1960 to 1980, the average was 26%. Between 1980 and 2008 it rose to 41%. Between 2008 and 2023 it reached 53%, with a record high of 63% during the 2020 crisis. Last year it hit 57%.
Capitalism has long since exhausted its historical ability to advance society. The capitalists are no longer fit to rule. Tariffs will not reindustrialize America. Only a workers’ government can do that by expropriating the capitalists’ wealth and running the economy rationally and democratically to ensure stability and prosperity for all.