The US Marxists analyse the situation that is developing in the USA, dealing with the deepening economic crisis, the impact of the ongoing war in Iraq, the upcoming elections and the future that awaits the US workers and youth.
[This perspectives document was adopted by the National Congress of the Workers International League on May 17, 2008, having been drafted some weeks before. It is intended as a supplement to the International Marxist Tendency's World Perspectives draft document.]
"From our standpoint world economy is viewed as an organic unity on whose ground the world proletarian revolution evolves; and the Communist International takes its orientation from the entire world economic complex, analyzing it by means of the scientific methods of Marxism and utilizing all the experiences of past struggles. This does not, of course, exclude but rather pre-supposes that the development of each country has its own peculiar features, that specific situations have their peculiarities, and so on. But in order to correctly evaluate these peculiarities, it is necessary to approach them in their international context."
(On the Policy of the KAPD, Trotsky, speech at ECCI November 24, 1920)
The world situation is characterized by extreme economic, social, political and military instability. We have entered a period of wars, revolutions and counter-revolutions. The capitalist system is in crisis and no matter what the capitalists and imperialists do in order to reestablish equilibrium, they can only succeed in destabilizing things further. However, there will be no automatic collapse of the system. Until the working class succeeds in overthrowing capitalism through its conscious, united revolutionary action, the sickly system will continue, bringing ever more hunger, misery, war, and degradation to the majority of humanity.
In recent years, one shock after another has shaken the consciousness of the U.S. working class. On the basis of events, events, events, it will be shaken even further. Under these conditions, the ideas of revolutionary Marxism will get an increasing echo. As we patiently and energetically build up our forces, we must regularly discuss our perspectives for the coming period, outlining the most likely course of events, in order to effectively intervene in them. From a small but growing handful of committed Marxists scattered around this vast continent of a country, we will succeed in building a large, powerful, and disciplined organization capable of intervening decisively in the most important struggles of the working class.
The struggle for socialism is a global struggle, and we always begin from the standpoint of the interests of the world working class. This brief outline on the U.S. situation should be read in conjunction with last year's full U.S. Perspectives document and this year's IMT World Perspectives document. As the world's dominant economic and military power, what happens in the U.S. affects the entire planet. Likewise, events internationally have an important effect on what happens in the U.S.
This document is by no means intended to be comprehensive. Many important and interesting topics are taken up only in passing or not at all. The aim of this supplement to the World Perspectives is to deal briefly with the main points that will most define the situation in the U.S. and the work of building the organization in the coming period, namely, the economy, the Iraq War and the anti-war movement, the political situation, and above all the effects all of this is having on workers' consciousness. The current state of the labor movement is dealt with in the Work in the Trade Unions document.
The Economic Situation
The U.S. economy is in crisis. GDP growth slowed to a weak 0.6 percent in the fourth quarter of 2007, compared to 4.9 percent in the third quarter. Economic growth was up just 2.2 percent for the entire year, the slowest rate since 2002. U.S. corporate profits fell 3.3 percent in the fourth quarter of 2007. Profits rose by just 2.6 percent for all of 2007, compared to 12.2 percent in 2006. Orders for durable goods – big ticket items expected to last more than three years, such as cars and aircraft – have also fallen precipitously in recent months, by 4.7 percent in January and 1.7 percent in February. Unemployment rose sharply in December 2007 to 5.0 percent, up from the cyclical low of 4.4 percent in March of that year. Never in the last 60 years has such a sharp rise in unemployment, combined with such low growth, not led to a recession.
As Marxists we have always understood that the artificial bonanza of the last few years could not last indefinitely. We have patiently explained that the economy would inevitably enter a slump at a certain stage. That perspective is now a reality. After months of denials and wishful thinking, the consensus among economists is that the country is most likely already in a recession. The only question is how deep and how long it will be. While it is impossible to predict precisely how severe the downturn will be, all the conditions are there for it to be potentially quite deep and difficult to pull out of.
The last economic recession of 2001 was quite mild because, although profits fell, the huge boost of fictitious capital into the housing market kept up consumer spending. During the housing boom, homeowners could borrow against the rising value of their property and continue living beyond their means. But now we are entering an economic recession when housing markets everywhere are heading downwards and credit has dried up. It will be particularly painful for workers and the poor, who have already gone through a “joyless boom” with little or nothing to show for it.
The sub-prime mortgage and housing crisis has now definitely spread to other sectors of the economy. Spending on new homes plunged 25.2 percent in the fourth quarter, the biggest drop since 1981. Over the same period, sales of new U.S. single-family homes fell to the slowest pace in 13 years. Home prices have collapsed by as much as 30 percent in many markets, and many borrowers now owe more than their houses are worth. Hundreds of thousands of households are defaulting on their mortgage loans even before the sub-prime rates reset to a higher level, with twice as many defaults in 2007 than in 2006. The media has even reported cases of people resorting to arson to avoid foreclosure and bankruptcy.
The stock market has taken a beating, as investors realize that the trillions of dollars in fictitious money they have been trading back and forth has little of substance behind it. The fictitious capital flying around the world has reached astronomical levels. The world's annual output was worth about $53 trillion in 2007. However, bank loans reached $40 trillion, the stock markets of the world reached $50 trillion, the bond and mortgage markets reached $70 trillion and most astounding of all, the derivative markets (contracts to buy or sell bonds, stocks or loans by a certain date) reached $500 trillion, or ten times world GDP.
Bear Stearns, once a top-five U.S. investment bank, collapsed in a single day, surviving only due to an emergency buyout by rival JP Morgan Chase for just $2 per share. Less than a year ago Bear Stearns stock was worth over $158 per share. The buyout was all backed and guaranteed by the Federal Reserve, which has resorted to its greatest expansion of lending authority since the 1930s. Big securities firms will now be allowed to go to the Fed directly for loans, which were formerly available only to commercial banks. Billions of dollars in tax dollars have been pumped into the banking system to prop it up and avoid a generalized collapse.
This is now having an effect on the real economy. The Philadelphia Fed index on manufacturing fell to -24.0 in February, from -20.9 in January, a further contraction of the sector. The reading for New York was similarly grim, registering its steepest drop on record. There is a very real danger of stagflation: rising inflation combined with rising unemployment and slow growth or contraction.
The Federal Reserve has responded irresponsibly to the crisis by cutting interest rates further, by 3 percentage points since September 2006, which will only drive up inflation. Nonetheless, credit markets remain virtually frozen, as banks refuse to lend to each other or to individual borrowers. The government has passed a $168 billion stimulus package of tax rebates for people and tax breaks for businesses to try to put off the inevitable. To add insult to injury, the plan includes $300 million for poor children in the inner cities: little more than what is spent in a single day on the wars in Iraq and Afghanistan. If you do the math – $300 million divided by 15 million American children living in poverty – that’s a whopping $20 per child.
The dollar has sunk to new lows against the Yen and the Euro, oil and gold have risen to new highs (over $100 a barrel and $1,000 an ounce respectively). The personal consumption expenditures price index increased 2.5 percent in fourth quarter of 2007. But this index conveniently excludes food and energy, both of which are rising fast. When inflation rises faster than wage increases, which is the case today for the vast majority of workers, it is the equivalent of a pay cut, since you can now buy less with your money than before. Millions of workers and poor people literally have to choose between buying food, gasoline, heating, medicine, education and keeping a roof over their heads. Merrill Lynch has reported that by the end of 2007, 36 percent of Americans’ “disposable income” went to cover food, energy, medicine and health care, the highest proportion since records began in 1960.
To make ends meet, many workers have had to resort to “pay day” loans at exorbitant rates as high as 800 percent. The Center for Responsible Lending (CRL) recently reported that the average borrower has to pay a total of $793 for a $325 loan. Far from helping people, these predatory lenders succeed only in digging a deeper hole for workers already on the brink of financial disaster.
The loss of millions of quality unionized jobs over the last 30 years means that those with less education are more vulnerable to the effects of a recession than ever. In the past, even many people who didn’t finish high school could make a decent enough life for themselves and their families by learning a trade or working at a factory. These days, even college graduates with specialized training are more and more likely to find themselves working at a low wage, dead-end service job.
A “good job” is defined by the Center for Economic and Policy Research (CEPR) as one that provides health insurance, a retirement plan and earnings of at least $17 per hour, or about $34,000 per year. In 1979 there were 19.6 million such jobs in the manufacturing sector, the peak of U.S. manufacturing. Since then, nearly 6 million such jobs have been lost, with another 52,000 down the drain in February alone. 30 years ago, one in five high school graduates had a “good job”, by 2005 it was one in seven. According to the CEPR, in 1979, 41 percent of those who didn’t finish high school had “bad jobs”, that is, jobs without health or retirement plans paying less than $16.50 an hour. By 2005, that figure had reached 61 percent.
As the economic crisis worsens, those who lose their jobs will find it even harder to find new employment, and without savings, unable to keep up with mortgage payments, and a gutted social safety net, millions of people will be “out of luck”. Those that do find work will likely have to take major pay and benefits cuts. The official unemployment rate is artificially low, as millions are no longer even considered to be looking for work. Underemployment is also a problem. Many young people and even some not so young people have been compelled to move back to their parents’ homes to try and regroup financially and avoid homelessness.
The crisis has already led to decreasing government revenues, and still Bush proposes a budget that tops $3 trillion for the first time in U.S. history. By the government's own estimates, it will lead to deficits of $410 billion in 2008 and $407 billion in 2009, bringing the overall Federal deficit to $5.9 trillion, up from $3.3 trillion when he took office. $2.3 trillion of this debt is held by foreign banks and investors.
The proposed budget would dramatically increase spending on the military and military aid to “key allies” around the world, in other words, countries that are actively repressing their own people to defend U.S. corporate interests. The budget allocates $515 billion to the Defense Department, not including a separate request for billions more for the wars in Iraq and Afghanistan. Adjusted for inflation, this will be the largest military budget since World War II. To pay for all of this, the government will have to further cut already depleted domestic programs such as Medicare and abolishing dozens of other social services programs. This is a true “guns before butter” budget, an open declaration of increased militarism abroad and a further relentless attack on workers here at home. The American ruling class will expect more of the same ruthless cuts from the next Republican or Democrat to sit in the Oval Office.
Not surprisingly, one sector of the economy that remains highly profitable is the so-called “defense” industry. The CEO of Lockheed Martin made nearly $25 million last year. Compare that with the average wage earned by a private in the Army: $25,000. Unable to find work or educational opportunities in the private sector, thousands of working class youth are sucked into the military in an “economic draft”.
The economic boom was based on extracting record productivity and profits from working people, while attacking wages, benefits, conditions and social services. For millions of workers, it has felt like a recession for months if not years. But there was always the hope that things would get better if they could hang on just a little longer. A full-blown recession will have a profound and lasting effect on workers' consciousness, even if it doesn't immediately result in a rise in militancy. Many workers will have their heads down as they struggle just to survive. But at a certain point, there will be a revival of the labor movement and big clashes of the class struggle will be on the order of the day. The trade unions will be shaken from top to bottom in the coming period, as the leadership's policy of “partnership with the bosses” is exposed as a total fraud and failure. In the meantime, there may be defensive struggles and even surprising examples of militancy by some workers.
The bottom line is that the economy is in trouble, and working people will be made to pay. Added to this is the colossal drain of blood and gold of the Iraq war and occupation.
The War in Iraq and the Anti-War Movement
It has now been over five years since the U.S. invasion of Iraq. The cost in lives, human suffering, and economic resources boggles the imagination. By the Pentagon’s estimate, it has killed 37,500 civilians in Iraq. An independent polling agency puts the figure 32 times higher at over one million. Over 4,000 U.S. soldiers have been killed and another 30,000 wounded, many with permanent brain injury or amputations. This is just the tip of the iceberg and does not take into account the long-term effects of depleted uranium, post-traumatic stress, depression, suicides, etc.
In economic terms, the wars in Iraq and Afghanistan now cost $275 million each and every day. Nearly half a trillion dollars has been spent so far. That’s $4,100 for every household in America. According to a recent Congressional Research Service (CRS) report, the average monthly cost reached $10.3 billion in 2007, up from $4.4 billion in 2004. By the end of 2009, the cost of these wars could reach $1 trillion.
Even a country as wealthy as the United States cannot endure this drain forever. Every dollar spent on the war is a dollar not spent here at home on health care, education, affordable housing, jobs, or repairing the country’s decaying infrastructure. The effects of the war are directly felt here at home.
Recent polls reveal deep and widespread disapproval of the war in Iraq. A Washington Post-ABC News poll, conducted in January 2008, showed that 61 percent are opposed to Bush’s “surge”. A more general CNN poll carried out in February, which asked, “Do you favor or oppose the U.S. war in Iraq?” found that 64 percent of those polled oppose the war. Despite this sentiment, there is a glaring vacuum when it comes to organized opposition to the war. March 19, 2008 marked the fifth anniversary of the Iraq invasion, yet there was no unified national mobilization to protest the war, as demanded by tens of thousands of activists across the country. Such a unified action could have potentially drawn hundreds of thousands of protesters, and raised not only anti-war consciousness, but confidence in the movement's ability to actually end the war through mass, united action.
Part of the reason for this situation is the log jam in the movement. The main national formations, United for Peace and Justice (UFPJ), and Act Now to Stop War and End Racism (ANSWER), have been divided for a number of years. At the outset of the war, in the absence of any mass grassroots anti-war organization, groups like ANSWER and UFPJ played an important and necessary role, rising to the leadership of the movement. But the political and organizational differences between these two coalitions rapidly became apparent, and in 2005 we had the spectacle of two different demonstrations being called for the same day in Washington, DC. Under pressure from the rank and file of the movement, a unified demonstration was called in the end, but soon thereafter, the split re-emerged, this time even more bitterly.
Again, under pressure from the rank and file, ANSWER sought to redress the split, and in May of 2007 issued a statement calling for a massive unified action. Unfortunately, the call was not taken up at that time by UFPJ, and the split continues. However, the rank and file cannot simply sit on the sidelines waiting for the divisions to be overcome. The overwhelming sentiment among anti-war activists is that an important opportunity was lost on the five-year anniversary. But instead of merely lamenting this situation, hundreds of organizations and individuals are moving forward to unite the movement around a few basic demands.
Those who organized a series of local actions in October 2007 provided the groundwork for a new effort to unite the movement nationally, beginning with a call for a National Antiwar Conference , to be held in Cleveland, Ohio on June 28 and 29 of this year. The conference call focuses on the need for mass, united action, political independence for the movement, democratic decision-making through open national conferences, and the basic demand “Out Now!”
By reaching out to all the main national anti-war coalitions including ANSWER, UFPJ, the Troops Out Now Coalition, Iraq Veterans Against the War, Veterans for Peace, U.S. Labor Against the War, and the dozens of local and regional activists, the aim is to bring about the unity of the movement through democratic discussion and concrete, united action. The current split at the national level may or may not be resolved in the short term, especially in an election year. But the potential for organizing a broad-based and democratic national antiwar network is tremendous, and can only strengthen the movement as a whole.
In the final analysis, the war is a class question. We all suffer from the economic impact of the war here at home. We are engaged in a colossal struggle against the war on workers at home and abroad. The antiwar movement must also link up with the struggle of immigrant workers and the labor movement generally. Stopping the war will be possible only if the working class places itself at the head of the movement.
In an election year, millions of people looking for an electoral solution to the problems they face. While the Iraq War is still high on voters’ lists of concerns, the economy is now number one for voters of both major parties. Many youth in particular are looking to the Democrats, and especially to Barack Obama. The Republican candidate John McCain has staked his entire political future on continuing the war in Iraq. But do the Democrats’ candidates offer anything even closely approximating the majority of Americans’ demand to bring the troops home now?
Despite all the nice-sounding election year promises, the experience of the last five years clearly shows that we cannot depend on either the Republicans or Democrats to end the war. As of March 2008, Bush’s approval rating has sunk to a new low of just 31 percent, forty points lower than it was five years ago when he launched the invasion of Iraq. This is a decline similar to Lyndon Johnson’s in the late 1960s during the Vietnam War. And still the occupation of Iraq continues, a year and a half after the Democrats were swept into congressional power with a mandate to end the war. Not one of the Republican or Democratic presidential candidates has a plan to immediately pull out all the troops.
It is in this situation that workers are being asked to vote for either Barack Obama or Hillary Clinton to bring about “change”. There is even talk of a “Dream Ticket” with both candidates on the ballot. This is more than enough proof that there are no fundamental differences between them. At root, they both defend the status quo, albeit with this or that cosmetic change. This is why working people need a party of our own. The main task confronting the working class in the next historical period is to build a political alternative to the duopoly of the Democrats and Republicans: a mass party of labor.
As compared to the neo-cons of the Bush White House, John McCain is a more calculating Republican of the “old school” type, a military veteran and ex-prisoner of war, seen as too “liberal” by some social conservatives in his party. But above all, he is a staunch defender of U.S. capitalism and imperialism. He therefore appeals both to the capitalist class as it enters a period of increased domestic and international instability, and also to those conservative voters who have had enough of the likes of Bush and Cheney.
Nonetheless, Republicans are far from united around McCain. His biggest base of support is among so-called “moderate” or “liberal” Republicans. Conservative radio icon Rush Limbaugh recently proclaimed that “McCain will kill conservatism as a dominant force in the Republican Party.” And conservative commentator Ann Coulter, in a frank admission that there is little difference between the major party candidates, had this to say: “If he’s our candidate, then Hillary is going to be our girl, because she’s more conservative than he is. I think she would be stronger on the war on terrorism.” Coulter then said she is even prepared to campaign for Clinton should McCain win the Republican nomination.
Despite alienating some layers of the socially conservative / religious base of his party for his allegedly “liberal” views on torture, immigration and other issues, his “maverick” persona appeals to conservative independents. Polls show he could even take votes from Clinton and Obama supporters, depending on which of them gets the nomination. Of all the possible candidates the Republicans fielded, McCain represents the best chance they have in what will be a difficult election for the incumbent party. In a hypothetical contest between McCain and either Clinton or Obama, McCain has polled quite well.
As for the Democrats, both Clinton and Obama poll well against McCain, although Obama’s momentum in the primaries gives him the edge. Clinton is seen as the experienced “insider,” a corporate Democrat who knows the ins and outs of domestic and international policy. She has traditionally had a slight advantage among women and white voters, as well as with Latinos. Obama is perceived as young and inspiring and “breath of fresh air”. He has won the overwhelming majority of votes cast by Blacks. He has also done particularly well with college students, and has in general done well in the South.
The growing economic crisis is leading to the increased polarization of U.S. society, both to the left and to the right, and without any real alternative, workers are searching for solutions to their problems within the familiar limits of the two party system. After nearly eight years of Republican rule, it is natural that “the other party” stands to benefit, especially given the legacy Bush and co. are leaving behind. There has been a surge of support among Democratic voters for these candidates, especially among young people and minorities, who yearn for a solution to the increasingly difficult situation facing millions of American workers and young people. But the Democrats’ track record in recent presidential elections and while in control of Congress has left many people disillusioned, and their victory is by no means assured. A lot can and will happen in the next few months. The choice of vice-presidential running mate will also play a certain role. There is also plenty of time for Clinton and Obama to beat each other up before the nomination and to sour the electorate on them both. Nonetheless, it is likely that the Democrats will inherit the mess left behind by Bush.
Not surprisingly, there is a lot of talk about “hope” and the need for “change.” Indeed, the record numbers that turned out for many primaries and caucuses, and for Democrats in particular, is an indication that voters want to believe that this really isn’t “as good as it gets.” McCain the “maverick” promises to change “business as usual” in Washington. And the fact that Clinton, who is a woman, and Obama, who is Black, are not only the candidates of choice for the Democrats, but also have a better than average chance of winning the general election, is another indication of the thirst for a change.
However, none of the candidates have any concrete proposals to address the pressing needs of the majority of Americans. None of them have any intention of providing genuine universal health care and education, to create jobs and rebuild the country’s infrastructure through a mass program of public works, to ensure access to safe and affordable housing for all, to grant immediate and unconditional legalization for undocumented immigrants and their families, to end tax cuts for the rich and instead tax them heavily to pay for social needs, etc. In other words, there are no fundamental differences between Clinton, Obama, or McCain. All of them have bent over backwards to prove to the ruling class that they are best suited to guide the system through the rocky times ahead, that they can be trusted with this responsibility, that they can contain the simmering discontent within limits that do not threaten the system.
The next President of the United States of America will not get to pick and choose his or her agenda. The agenda will be set by the crisis facing the capitalist system both at home and abroad. Bush ran on an “America First” domestic agenda, but was forced by events to become most aggressive imperialist in U.S. history. The next occupant of the White House will inherit an increasingly unstable world and an economic downturn of unknown depth or duration. In an epoch of growing polarization and inequality, the next president will inevitably appeal for national and bi-partisan “unity”. In other words, he or she will call on American workers to subordinate their interests to the interests of the rich, to tighten their belts further in the interest of preserving the system that profits off of their labor. But as the “American Dream” is transformed into an “American Nightmare”, more and more people will begin to question the very system that leads to such instability.
The large turnout in the primaries for the Democrats in particular reflects a shift to the left within the narrow limits of the current U.S. electoral setup, a healthy rejection of status quo. There are many sincere illusions in the Democrats, and in the idea that a woman or a black man will somehow be better able to reflect the interests of working people. But what matters most is the class interests these politicians represent, and it is clear that they are both firmly on the side of big business. We must be clear: there is no solution to the problems faced by the working class majority within these limits.
The vast majority of Americans will have to learn this the hard way, through their own bitter experience. If the Democrats succeed in gaining control of both houses of Congress and the White House, there will be no more excuses for not ending the war in Iraq, providing health care, education and housing for all, repealing anti-labor legislation and rebuilding the country’s infrastructure. They will show their true colors as defenders of the status quo. And in an era of economic and social crisis, they will not be able to offer even the tiniest concessions. After a few years in the “school” of the Democratic party, the real questioning and search for a mass alternative that truly represents working people will begin in earnest.
The potential for such a party is enormous. The power and money of big business and their politicians can be combated and defeated. A mass party of labor based on the unions, with all the organizing and financial power the unions have at their disposal, fighting for a program that truly represents workers’ interests, could rapidly break the stranglehold of the Democrats and Republicans.
In an important and interesting development, activists in New Orleans and in several other cities have begun exploring the setting up of the Reconstruction Party (RP), fighting to rebuild the Gulf Coast and inner cities, for jobs, education, workers' rights, health care, etc. The RP is still in an embryonic stage, but it is an indication of things to come, showing that growing layers of the electorate have had enough of the Democrats and Republicans and want to build an alternative.
Despite the tremendous illusions in the Democrats, which for lack of an alternative will inevitably attract many “progressive” voters, there will be several candidates running this year who do represent a break with the two party duopoly and who will gain interest from a layer of radicalized workers and youth. For example, if Cynthia McKinney hopes to win the Green Party nomination and gain ballot access through that party for her “Power to the People” campaign, running a campaign along the lines of the Reconstruction Party's draft manifesto. Ralph Nader is also running a campaign as an Independent. Other parties such as the Socialist Party or the Socialist Workers Party will also be running candidates.
Regardless of who, if anyone, we decide to endorse, our main task must be to continually emphasize the need for the unions to break with the Democrats and to build a mass party of, by and for working people. We understand that an anti-worker candidate will win this year and that even a protest vote against those candidates will not make a tremendous difference. However, we are not abstentionists. We are fighting for a mass political alternative for the working class, and participation in electoral politics is one tactic we use to raise our ideas within the movement. An election year provides us with an important opportunity to discuss our program and recruit new members to the WIL.
During the economic expansion of the last few years, a smaller share than ever went to workers’ wages, as compared to corporate profits. Long-term unemployment is at record levels and millions are no longer even considered part of the workforce. Already, over one million families have lost or will lose their homes, and it is estimated that millions will lose their jobs in the recession that in many analysts’ view is already upon us. If during the economic expansion workers were left out in the cold, it will be even worse during a recession. This will have a profound effect on the consciousness of American workers, which has already been shaken by the events and experience of the last few years.
This will be a complex and contradictory process. There will be increasing polarization both to the right and to the left, and racism and xenophobia will be used by the ruling class to divide workers. But the pendulum of history cannot swing in one direction forever. Sooner rather than later, there will be a colossal and perhaps surprisingly rapid shift to the left. We can see the early symptoms of this already in the labor movement, among black and immigrant workers, the anti-war movement and among the youth.
We must continually discuss and sharpen our political perspectives in order to more effectively intervene in the movement. Our organizational needs and targets, outlined in a separate resolution, flow from our these perspectives. Our primary task in the coming period is to continue to build and strengthen our own organization, preparing the forces of revolutionary Marxism for the historic events that will come more quickly than even we anticipate. We must not be caught by events unprepared. The successful socialist revolution and the overthrow of capitalism in the United States will not only mean the liberation of the U.S. working class, but of the entire world.