Friday, September 30, 2011

Trade unions and class consciousness

Below is an excerpt from Teamster Bureaucracy by Farrell Dobbs (1907-83), a central leader of the Teamster strikes of the 1930s and of the Socialist Workers Party. The title is one of Pathfinder's Books of the Month for October. This last in a four-part series recounts the strikes and campaigns by truck drivers that, in the 1930s, built the industrial union movement in Minneapolis and the Upper Midwest and helped pave the way for the CIO. Teamster Bureaucracy describes how this leadership organized to oppose World War II, racism, and government efforts to gag class-struggle-minded workers. The last chapter draws crucial lessons of the Teamster struggle for today's working-class fighters. Copyright 1977 © by Pathfinder Press. Reprinted by permission.

If, during the course of their experiences in struggle, the labor militants are helped to analyze the causes of the social and economic ills facing them; if they are aided in perceiving the essence of an outlived capitalism—they will learn that the existing problems are not incidental and episodic at all, but the consequence of a deep structural crisis of the system. They will then see why governmental control must be taken away from the capitalists by labor and its allies.

Basic to such a rise in the workers' class consciousness is understanding that a fundamental change must take place in the role of the trade unions, which constitute the existing form of mass organization among the workers in this country. These broad instruments of struggle must be turned away from reliance upon so-called friends among the capitalist politicians. They must break off the self-defeating collaboration with the bosses' government, that has been imposed by bureaucratic misleaders. The unions must be transformed into mechanisms for independent and militant action by the workers all along the line. Restrictions on the right to strike must be vigorously opposed and freedom to exercise that right firmly asserted. Internal union democracy must be established so that all questions can be decided on the basis of majority rule. Then, and only then, will organized labor manage to bring its full weight to bear in confrontations with the employers at the industrial level.

Whenever conflicts of significant magnitude erupt within industry today, the government intervenes on the employers' side; and this interference is bound to intensify as capitalist decay gets worse. From this it follows that trade union action alone will prove less and less capable of resolving the workers' problems, even on a limited basis. Objectively, industrial conflicts will assume more and more a political character, and even the most powerfully organized workers will be faced with an increasingly urgent need to act on the new and higher plane of politics… .

In the process of creating their own mass party, based upon and controlled by the trade unions, the organized workers can draw unorganized, unemployed, and undocumented sections of their class into a broad political alliance. Labor will then be in a position to act both in a more unified manner and through advanced forms of struggle.

The workers will learn to generalize their needs, as a class, and to address their demands on a political basis to the capitalists, as a class. Political confrontation of that kind—for example, the nationalization of a given industry under workers' control—will raise labor action as a whole to a higher plane and at the same time impart new vigor to the continuing trade union struggles. Increased militancy within industry will serve, in turn, to reinforce activity in the political sphere. In that way interacting processes will develop through which the workers will attain greater class consciousness, more complete solidarity, and, hence, mounting ability to outfight the bosses.

Before unity of the exploited masses can be attained, however, still another of organized labor's existing policies must be thoroughly reversed. The labor movement must champion and give unqualified support to the demands of the Blacks, Chicanos, Puerto Ricans, Indians, and other oppressed national minorities, and of women and youth.

As Leon Trotsky1 insisted in discussions during the 1930s, the American workers must learn to act politically and to think socially if they are to attain the class consciousness and solidarity needed to defeat the exploiters. This is the opposite of the narrow class-collaborationist course pursued by the labor bureaucracy and the privileged layers they reflect. Thus, as a matter of principle, the trade union movement must use its power to actively fight for such progressive demands as affirmative action programs against racial and sexual discrimination on the job, in the union, in hiring, housing, health care, and education; the right to abortion and childcare; busing and bilingual, bicultural education: the right to a free college education for all youth.

If unconditional backing of that kind is given, the labor movement will be helping itself in a double sense. The strengthening of anticapitalist struggles on other fronts will make it harder for the employing class to concentrate its fire on the trade unions. The greater the scope of mass confrontations with the bosses' government, the more effectively will labor be able to involve its natural allies in the development of independent political action on a massive scale….

If trade unionists aid the victims of U.S. imperialism in other countries—and at the same time back all progressive causes within the United States—they will earn extensive support for their own struggles. An anticapitalist united front can thus be built, both nationally and internationally, and, as it grows in strength, the relationship of class forces will be changed to the decisive advantage of the workers and their allies.

1. Leon Trotsky (1879-1940) was a central leader of the 1917 revolution in Russia and, from the mid-1920s, the principal leader in the Soviet Union and then internationally of the fight to continue the revolution's communist course against its reversal by the privileged caste headed by Joseph Stalin.

There will be blood, indeed



An oil boom in western North Dakota, attracting thousands of workers, has been a profit bonanza for the oil barons. For workers, pressed to maximize "productivity," it has brought jobs along with death and injury.

An oil well explosion September 14 near Williston, N.D., left two workers dead from burn injuries—Brendan Wegner, 21, of Montello, Wisc., and Ray Hardy of Mohall, N.D. Two others—Doug Hysjulien and Michael Twinn—remain hospitalized in critical condition in St. Paul, Minn.

The well, owned by Oasis Petroleum of Texas, is one of 100 the company operates in North Dakota, reported the Bismarck Tribune. Production began there about a month ago. In July a Cyclone Drilling rig exploded near Beach, N.D., critically burning two workers.

Oil rig fatalities in North Dakota for 2011 are now five, up from three last year. The number of injuries so far this year is nearly 1,900, more than a 150 percent increase over all of 2010, Bryan Klipfel, director of North Dakota Workforce Safety & Insurance, told the media.

The state is experiencing "what many are calling the largest oil boom in recent North American history," noted the Associated Press. Some oil companies project increasing the number of wells there from 5,000 to 48,000 over the next 20 years, reported the New York Times.

"There's oil companies coming from all over the country now," Williston Mayor Ward Koeser told National Public Radio. Unemployment there is less than 2 percent and the town has grown from 12,000 to 20,000 in the last four years. There's "probably between 2,000 and 3,000 job openings in Williston right now," he said.

On the "character and role of the police"

The current editorial in the new issue of The Militant deserves every reader's attention:
The September 21 police assault on members of the International Longshore and Warehouse Union Ladies' Auxiliary in Longview, Wash., highlights what the cops "protect and serve"—the property, profits and prerogatives of the capitalist class. Working people should condemn this attack on longshore workers, their supporters and their union, and demand charges against those defending the union be dropped.

In January 2000 hundreds of police attacked members of the International Longshoremen's Association in Charleston, S.C., when they picketed a shipping company using nonunion labor. Leaders of the union were then framed up on "riot" charges. But through a determined struggle—which included joining with thousands of others to demand removal of the Confederate flag from the state capitol—the shipping company was compelled to hire union workers and charges against the union leaders were dropped.

As Farrell Dobbs, a central leader of the Teamster strikes of the 1930s and of the Socialist Workers Party, explains in this week's Books of the Month selection: "Whenever conflicts of significant magnitude erupt within industry today, the government intervenes on the employers' side; and this interference is bound to intensify as capitalist decay gets worse." It's the bosses' government. The job of their cops and "justice" system is to keep working people "in line."

That's what's behind their death penalty, a weapon of terror aimed at working people, under which Troy Davis, framed up by cops, was executed in Georgia September 21. The same penalty is meted out to workers in the streets, as recently happened to John Collado in New York when he tried to help his neighbor who appeared to be under assault by what turned out to be an undercover cop.

A fuller picture of the brutal reality of capitalist rule for working people comes through when you consider the thousands killed and maimed each year in the coal mines, oil fields, factories, construction sites and other workplaces under the bosses' relentless drive for profit—a different form of violence reproduced by the same exploitive system.

As workers are increasingly forced to organize resistance to employer attacks, the bosses' government will seek to push them back with scabs, stool pigeons, legal red tape and an array of court tactics from injunctions against picketing to "conspiracy" charges to secret "evidence," and violence by armed bodies under the direction of the capitalists' state power.

As working people resist the employers' drive to foist the burden of the capitalist crisis on their backs, they increasingly gain firsthand experience that shines light on the character and role of the police. It also becomes easier to see that capitalism cannot be reformed. That the working class must wrest political power from the capitalist class, dismantling their state, their army and their cops. Replacing the dictatorship of capital with workers power will then lay the basis for the construction of a socialist world free of exploitation and class violence.

Related articles:
1,300 fight 2-month lockout in Midwest


A leaflet from the UK: "Fight ALL the cuts"

- Labour, Tory, same old story; fight ALL capitalist cuts! -

Leaflet issued by CPGB-ML, 2 September 2011

 In the year since Chancellor Osborne's landmark spending review was announced, the imposition of austerity measures has crept ahead like a car crash in slow motion. This concerted attack on the living standards of the majority, so necessary for the tiny minority whose wealth, power and status depend on exploiting the labour of others, threatens to heap ever more intolerable burdens onto the backs of working people.

Everything is coming under the hammer: jobs, pensions, benefits, the NHS. Yet most unions - organisations that are supposed to defend the rights of workers against capitalist exploitation - have stood by as if mesmerised. Whilst the TUC talked of coordinating a fight-back, the only concrete action has been a demo - six months after the cuts were announced!

Fight ALL the cuts

When the National Shop Stewards' Network organised a militant demo outside the 2010 TUC congress, the political tone was marked by the readiness of many grass-roots activists to put not only the new coalition government, but also the Labour party and the capitalist system itself in the dock. But this healthier approach, reflecting a mood of disgust with Labour in the most militant ranks of the working class, has not proved to the taste of those on the 'left' who prefer to forget the last 13 years, join a nostalgic chorus of "Tories out", and set their sights on the 'next Labour victory'.

The decision of the NSSN's January conference to establish a national anti-cuts campaign aimed at opposing ALL cuts, emphatically including those being implemented by Labour councils all over the country, was a small step forward. But in order to build on this progress, and shift the focus to that of real class struggle, the unions need to break the shackles that keep them bound to the Labour party and social democracy.

When the promised 26 March demo finally rolled around, the TUC was as disturbed as the government by its scale, realising that the head of steam building up in favour of a real fight against the cuts could not much longer be vented harmlessly in once-in-a-blue-moon symbolic parades. TUC nerves were further jangled on 30 June, when its failure to organise coordinated strikes was shown up by the huge nationwide response to a one-day strike in defence of public-service pensions.

It was no accident that the unions leading this action (PCS and NUT) are not hobbled by affiliation to Labour - a fact that was surely noted by the many members of Unison, Unite and other Labour-led unions whom nobody had seen fit to ballot but who doggedly turned up with their branch banners anyway.

Meanwhile, in the absence of a serious lead from the supposed general staff of the labour movement, other forms of resistance have carved their own way, including the revolt over student funding and the picketing and occupation tactics of UK Uncut and others.

Yet these semi-spontaneous movements, whilst possessed of a resourcefulness and courage that put to shame the do-nothing TUC, can make little progress in isolation from the working class. Conversely, the working class will be immeasurably strengthened when 'organised labour' no longer means just the small minority of employed workers currently organised in trade unions but ALL workers, be they employed or unemployed, active or retired, 'indigenous' or migrant, in or out of the TUC.

TUC lobby

The NSSN has called on workers to lobby the TUC in London on 11 September. We support this call, but it should be clear that no amount of well-intentioned rank-and-file democratic pressure from below is in itself going to uproot the opportunism that infests the trade-union movement, debilitating unions and preventing them from serving the real interests of the working class.

Opportunism does not pop up from nowhere: it is founded in the bribes paid to the layer of relatively privileged workers who Lenin called the "labour aristocracy". These better-off workers, whose pay and conditions depend upon the continued flow of imperialist loot from abroad, infect our whole movement with a spirit of class collaboration. It is only through a root-and-branch ideological struggle against social democracy, and especially against its main outlet in the Labour party ('New' and 'Old' alike), that a new leadership can be built behind which the working class can take on capitalism and win.

Nobody should doubt the scale of the crisis we are entering, or believe that it is just being 'talked up' by the Tories to scare us. Behind the debt crisis that is undermining the US economy and tearing Europe apart lies a deep-seated overproduction crisis that has been brewing for over three decades. More commodities have been produced globally than can be sold at a profit on the market - not because the world's needs have been met, but because people just cannot afford to buy them.

The problem is further aggravated when capitalists, desperate to beat the competition, slash wages and reduce the workforce, thereby further reducing the masses' spending power and adding another twist to the spiralling crisis.

Break the link

The good news is that the same capitalist crisis is also chipping away at the material basis for opportunism, since the ruling class can no longer afford to spend so much on buying off its opponents. The time is ripe for the working class to move from cynical mistrust of the Labour traitors to a confident assault upon their stranglehold over organised labour.

While our unions are tied to the imperialist-affiliated Labour party, we will not be able even to fight the cuts, never mind organising to overthrow the whole rotten system that brings poverty and war in its train. Therefore, there is one abiding slogan that should be embraced by every class-conscious worker:

Break the link with Labour!


See also:
The crisis of overproduction deepens (Lalkar, September 2011)
Youth uprising: rage against capitalism (Proletarian, August 2011)
Cuts and lay-offs as the crisis rolls on (Proletarian, August 2011)
Combat Labour influence in the union movement and follow the Greek example (Proletarian, August 2011)
Worsening economic crisis sees violent repression escalate (Proletarian, June 2011)
Fuel poverty on the rise as poverty bites (Proletarian, February 2011)
Students lead the way with Millbank occupation (Proletarian, December 2010)

Orient mottos: a personal response to Alain Badiou's "The courage of the present"

Alain Badiou's 2010 essay "The Courage of the Present/Contemporary Obscurantism" [Le Monde, February 15/2010] arrived in English translation in my inbox a few months ago, courtesy of For those in need of a concise exposition of the great philosopher's political thinking, there is no better place to start.

Comrades politely wonder at my interest in Badiou and other "communist hypothesis" philosophers. The petty bourgeois intellectual is an extremely sensitive instrument. Deep changes within the political economy of capital, and in the social relations flowing therefrom, often manifest themselves first in this layer. Such intellectuals in the period 1929-1932 in the United States began turning toward Marxism just a year or two before the first big strikes of 1934, which inaugurated several years of labor militancy and the rise of the CIO. Similarly, in the late 1950s US intellectuals like C. Wright Mills were harbingers of bigger radicalizations to come.

Working class defeats and retreats are also frequently heralded by capitulations of radicalized intellectuals. In the United States on the eve of Wold War Two, well-before the most militant elements in the working class itself were demobilized, a long march rightward by previously radicalized intellectuals was in full swing. In the 1970s a similar social transformation took place; in France the 'new philosophers' broke with their strident and uncompromising Maoist in order to become strident and uncompromising rationalizers of capitalism. In the United States we have seen this happen repeatedly as working class radicalizations have waxed and waned. The names Sidney Hook, Edmund Wilson, James Burnham, David Horowitz, and Susan Sontag U.S. representatives of this trend.

And so when Badiou and several other primarily European intellectuals began talking about a renewal of their own interest in communism in the context of renewed imperialist wars and economic crises, I thought I detected the "chimes at midnight."


I find little congenial content in Badiou's political writings. [His philosophical and mathematical texts I am not qualified to comment on at all.] My own political autobiography began and, aside from a recent few vicissitudes, has never travelled far from the continuity of the [U.S.] Socialist Workers Party. The diamond clarity of its intellectuals' [Joseph Hansen, Evelyn Reed, George Novack] writing and speaking styles, their respect for the pedagogical role they played within the vanguard of the working class, has always been a touchstone.

Alain Badiou's political writings, whether one accepts or rejects their style and manner of organization, must be judged ultimately on content alone. And here the happy shock of the new quickly gives way to a nasty shock at the return of the old.

When Badiou writes

Let us note that our critics try to discard the term "communism" under the pretext that an experience of State communism, which lasted seventy years, tragically failed. What a joke! When it comes to upturning the domination by the rich and the hereditary nature of power, which have lasted for millennia, we are reproached for seventy years of groping, of violence and dead ends! Truth be said, the communist idea has only had a minuscule time for its verification, its implementation.

What is this hypothesis? It consists of three axioms.

Firstly, the egalitarian idea. The common pessimistic idea, which once more dominates these times, is that human nature is doomed to inequality, that it is a shame, but after shedding a few tears over this, it is essential to persuade oneself of its truth and accept it. To this, the communist idea replies not exactly by means of the proposition of equality as a program – let us bring about the fundamental equality that is immanent to human nature – but by declaring that the egalitarian principle makes it possible to distinguish, in any collective action, what is homogeneous to the communist hypothesis, and thus to a real value, and that which contradicts it, and thus brings us back to an animal view of mankind.

I can certainly agree, and acknowledge his obvious passion for an uncompromising defense of communism is one I share. That communism begins with a hypothesis, and in fact an egalitarian hypothetical principle, is too idiosyncratic a point to accept or reject without seeing what actions such a stance demands of cadre.

The problem, for me and perhaps for Badiou's communism, begins here:

Next comes the conviction that the existence of a coercive, detached State is not necessary. This is the thesis, common to anarchists and communists, of the decline of the State. There have been Stateless societies, and it is rational to posit that there can be other ones. But above all, popular political action can be organized without its being subject to the idea of power, of representation in the State, of elections, etc.

The liberating constraint of organized action can be exerted from outside the State. There are many examples of this, including some recent ones: the unexpected power of the December 1995 movement delayed by several years the unpopular measures concerning pensions. Militant action on behalf of illegal workers did not prevent a number of villainous laws, but it made it possible for them to be largely acknowledged as an element of our collective and political life.

Final axiom: the organization of labor does not involve its division, the specialization of tasks, and particularly the oppressive distinction between intellectual and manual labor. We must and can envisage an essential polymorph nature of human labor. This is the material basis for the disappearance of classes and social hierarchies.

These three principles do not constitute a program, but rather orient mottos, which anyone can invest as an operator in order to assess what he is saying and doing, personally or collectively, in his relation to the communist hypothesis.

This smacks, in its rhetorical flourishes, of a pre-Marxist view of the state, combined and telescoped with a hope that the state can be superseded and human labor transformed outside the line of march of the working class toward power, i.e. a state power of its own: the dictatorship of the proletariat. Badiou does not reject a Marxist definition of the state, but at the same time I do not think he takes its role, and the relation of working class mobilization in relation to it, seriously. The reason for this becomes clear as we read on:

The communist hypothesis has had two main stages, and I would like to state that we are entering the third stage of its existence.

The communist hypothesis was installed on a grand scale between the 1848 revolution and the 1871 Paris Commune. Its dominant themes are those of the workers' movement and insurrection. There followed a long interval of almost forty years (between 1871 and 1905), which corresponds to the apogee of European imperialism and the distribution of many regions of the world. The period between 1905 and 1976 (Cultural Revolution in China) is the second period in the effecting of the communist hypothesis.

Its dominant theme is the theme of the Party and its main (and unquestionable) slogan: discipline is the only weapon of those who have nothing. In 1976 starts a second period of reactive stabilization which lasts until our day – a period in which we still find ourselves, during which we have witnessed the collapse of the single-party Socialist dictatorships created in the second period.

My belief is that a third historical period of the communist hypothesis will inevitably take place – a period different from the two previous ones, but paradoxically closer to the former than to the latter. This period shared with the prevailing period in the 19th century the fact that what was at stake was the very existence of the communist hypothesis, which is nowadays massively denied. We can define what I, together with others, am trying to do, as a preliminary work towards the reinstallation of this hypothesis and the unfolding of its third period.

We are in need, in this new start of the third period in the existence of the communist hypothesis, of a provisional morality for a disoriented time. The point is to minimally maintain a consistent subjective figure, without thereby having the support of the communist hypothesis which has not yet been reinstalled on a large scale. What is important is to find a real point on which to stand -whatever the cost may be – an "impossible" point which cannot be inscribed within the law of the situation. We must have a real point of this kind and organize its consequences.

The key witness to the fact that our societies are obviously in-humane is nowadays the illegal proletarian alien: he is the mark, immanent to our situation, of the fact that there is only one world. Treating the proletarian alien as if he came from another world is the specific task of the "Ministry for the National Identity", which has its own police force (the "Border Police"). Stating, against such a State device, that any illegal worker comes from the same world as me, and drawing the practical, egalitarian and militant consequences of this, is an example of provisional morality, a local orientation which is homogeneous to the communist hypothesis, within the global disorientation which only its reinstallation can ward off.

The main virtue which we are in need of is courage. This is not the case universally: in other circumstances, other virtues may be required as a priority. Thus, at the time of the revolutionary war in China, Mao promoted patience as a cardinal virtue. But nowadays it is courage. Courage is the virtue that manifests itself, regardless of the laws of the world, through the endurance of the impossible. The thing to do is to maintain the impossible point without accounting for the situation as a whole: courage, inasmuch as it is a question of treating the point as such, is a local virtue. It arises from a local morality, and its horizon is the slow reinstallation of the communist hypothesis.

Courage, patience, and other subjective factors cannot be weighed or applied outside a Marxist understanding of the period: i.e. an understanding of social relations between and among all classes, their tendency and direction. To say that communists must retrace their steps and begin again by acknowledging the period 1905-1976 as roadblock or dead end would leave any current or future social struggle to the tender mercies of spontaneity at best, or to the class enemy's state power at worst. For communists themselves, such an "'impossible' point which cannot be inscribed within the law of the situation" would reduce all work to moral witnessing, second-guessing, and chasing the will-o'-the-wisp.

2011 has seen events which are a remarkable confirmation of [if not the "communist hypothesis"] then certainly the hypotheses of communists. All the great forwarding looking mass rebellions in Tunisia, Egypt, Yemen, and Bahrain, as well as social explosions like those witnessed during the UK "riots", and even today's Occupy Wall Street sit-ins, have exhibited the courage, self confidence, and fighting capacity of proletarian and petty bourgeois youth opposed to the injustices and inhuman consequences of capitalism. They express Badiou's concepts very clearly. But they also express in action the extreme retardation in political consciousness our class and its oppressed allies are saddled with today, which is also fundamentally expressed in Badiou's political writings. This retardation does signify that the "communist hypothesis.... has not yet been reinstalled on a large scale." And it will not be if the only content of said hypothesis is a return to the swamp-like organizational existence of the First International.

Revolutionary leadership flowing from 2011's struggles has not had time to develop, test its forces and capabilities, and win a majority to its course. Decades of austerity, union-busting, and retreat by workers around the world; decades of renewed expropriation and accumulation by war, outright theft, and monopoly fiat; and a decade's-long erosion of the communist movement itself have created an unprecedented gap between current necessities for action and the capabilities of the international working class vanguard. What Badiou calls "eradicating power" will have to acknowledge these limitations before throwing out the Bolshevik baby with the 20th century bathwater.

Jay Rothermel


Obama Kills Civil Liberties Movement?

Tariq Ali on OWS

Against the Extreme Centre

Selling Education - Doni Faber and Greg Lucero

Looking at OWS [Occupy Wall Street]

The Nuts and Bolts of Occupy Wall Street
Published on Dissident Voice | shared via feedly

On day 12 of Occupy Wall Street (OWS), I helped moderate a meeting of the "open source" OWS working group by keeping a list of speakers and co-chairing. I am not sure what the open source group is supposed to do exactly, but I decided to attend this meeting after watching a middle-aged man call in the General Assembly for developing demands and goals on the OWS live feed and people in the crowd telling him the open source working group was tasked with this.

After the daily 1 p.m. General Assembly meeting ended, OWS divided into its working groups, including media, labor, outreach, and a number of others. I walked over and sat down next to the point person (or " leader") of the working group, a young white guy in his twenties who looked like a 60s throwback with his long, straight hippy-style hair, rainbow tights, fatigue shirt, and Ziploc bag of rolling papers. Of course, you can never judge a book by its cover — he is also a student of behavioral economics and mentioned that academic studies have shown that the OWS's decentralized, highly participatory, and lengthy process of dialogue is the best way to organize.

The open source meeting swelled very quickly to 20 or 30 people, an indication that a lot of people want to figure out what OWS's demands should be. The group moderator remarked that the group was so big it was practically a "second General Assembly." His brief introduction to the process whereby OWS would define its vision (he repeatedly used the phrase "visioning") was interrupted as many hands went up, asking to be called on; at least 10 people wanted to speak and each was allowed a minute and a half.

What emerged from the discussion was that there is no consensus that demands are even necessary. Quite a few protesters argued along the lines that this is movement or process of dialogue is the demand/goal and that therefore demands are not necessary; one said our demand to the world should that they "join us." Two older people, one in his sixties, the other in his thirties, spoke out for having clear, specific demands as being a very necessary step to creating a sustainable protest, much less a movement.

I argued that a few concrete, achievable demands were important, citing the "Day of Wrath" protest on January 25, 2011 that began the revolution in Egypt that demanded raising the minimum wage, an end to the dictatorship's "emergency laws," the firing of the interior minister, and a two term presidency. I explained that Mubarak's ouster was not one of their original demands, but it became a demand once millions of people became involved in the movement, and therefore demands can and should change depending on circumstances. My suggested demand was to raise taxes on the 1%, something the New York state legislature and the city council could vote to do immediately.

One woman argued against having demands on the grounds that the media wanted us to do exactly that, that it would be a way for them to put us in a nice neat little confining box the better to ignore us; instead, she proposed we copy the model used to write grant proposals and draw up a mission statement, goals, and objectives. The moderator took to this and we dispersed into six groups of five or so to discuss what motivated us to protest and what our "visions" (or goals, long and short term) were; after the break out, we would reconvene to sum up and share what each of our groups had come up with in the hopes of finding some type of consensus that would inform some sort of statement to the world.

The OWS political process is very participatory, cumbersome, and time-consuming. One strength of their process is that it avoids the top-down control that Wisconsin's union leaders exercised to scuttle the protests and developing strike wave that shook the state in favor of harmless (and ultimately fruitless) recall efforts.

To participate and help shape OWS politically requires dedicating many, many waking hours every day to ongoing, continuous debates and discussions. This is not necessarily a bad thing but in practice ends up favoring the participation of those who can afford to skip work and/or school for a week or more. With unemployment over 9% (a figure even higher for the 18-25 age group), it should be no surprise that these are the people taking the fight to the enemy's lair.

It may be that OWS never develops a clear set of demands. OWS seems to be headed toward issuing a general statement akin to the Port Huron Statement by Students for a Democratic Society (SDS) in 1962, although it will probably be less wordy and much darker. Port Huron spoke moralistically of the highly privileged lives led by America's post-World War Two college students that stood in start contrast to the conditions facing black and brown people in the Jim Crow south, America's urban ghettos, and the Third World. Today, students face the prospect of lifelong debt, serial dead-end jobs, and holding two or even three part-time jobs just to keep up with the bills and rent, just like the non-college educated working class.

Whatever OWS decides with regards to demands, they deserve credit for putting their finger on the real enemy and being brave enough to defy the police and break the law to make the voices of their generation heard.

Everyone who can should go and help occupy Wall Street.

Thursday, September 29, 2011

"A long-term deflationary crisis"

What drives capitalism’s long-term economic crisis?

Below we reprint an excerpt from Capitalism’s World Disorder by Jack Barnes. The item is from the chapter, “So Far From God, So Close to Orange County: The Deflationary Drag of Finance Capital.”

On Dec. 6, 1994, Orange County, California, filed for bankruptcy. The managers of the county’s investment fund had borrowed heavily and purchased highly leveraged securities called derivatives that simply bet on a continuing drop in interest rates. The county lost almost $2 billion when the gamble failed, as short-term interest rates began rising in early 1994.

The report printed below is based on a talk at a regional socialist educational conference held in Los Angeles over the 1994-95 New Year’s weekend. The report was subsequently adopted by the Socialist Workers Party 38th constitutional convention, held in July 1995. Copyright © 1999 Pathfinder Press. Reprinted by permission.


The world capitalist economy has entered a long-term deflationary crisis, a contraction that cannot be fundamentally reversed by the ups and downs of the business cycle. With their profit rates under long-term pressure, the capitalists are in their “lean and mean” period, their “just-on-time” period, their “downsizing,” “computerizing,” and “de-layering” period. They are laying off workers and other employees, speeding up production, and raking in short-term cash in the bargain.

But the one thing the capitalists are not doing, and are incapable of doing, is expanding productive capacity to anywhere near the degree they need to fuel another gigantic boom, set industrial profit rates on a long-term upward course, and accelerate capital accumulation. Even as capitalists temporarily boost their returns by cutting costs and taking a bigger slice of market share away from their rivals, the long-run profit expectations of capital are such that they are still not investing in new plant and equipment that draws more and more workers into expanded production.

The money that is going into new equipment goes largely into ways to make us work faster to produce more with fewer coworkers. That does not expand productive capacity, however. It intensifies speedup and extends the workweek. But that alone does not create the basis for the rising profit rates and capital accumulation that marked the post-World War II capitalist boom until it began running out of steam by the early 1970s.

In fact, instead of issuing stock to finance expansion—the classic source of “capital formation” extolled in standard economics textbooks—U.S. corporations for most of the 1980s and 1990s have actually bought more previously offered stock from each other than they have issued in new shares. Capitalists have also issued large quantities of high-interest corporate bonds—gone deep into debt, in other words—to finance takeovers and buyouts.

So, the world’s propertied families have been fighting among themselves more and more to use credit to corner a bigger cut of the surplus value they collectively squeeze from working people. They have been blowing up great balloons of debt. But ever since the 1987 stock market panic, and at an accelerated pace since the onset of world depression conditions at the opening of the 1990s, the capitalists have been plagued by the problem that first one balloon, then another, and then yet another begins to deflate. And they have no way of knowing which balloon will go next until they start hearing the “whoosh,” and by then it is often too late.

All of us were children once and have blown up balloons. They can expand very slowly, very gradually. But then try to let the air out. That is harder to control. Remember? The balloons can get away and ricochet all over the room.

With returns on investments in capacity-expanding plant and equipment under pressure since the mid-1970s, owners of capital have not only been cost cutting; the holders of paper have been borrowing larger and larger amounts to buy and sell various forms of paper securities at a profit. They blew up a giant balloon of debt in Orange County over a period of years; the bondholders thought they had died and gone to heaven. Then the balloon began to deflate, as they learned the hard way that interest rates go up as well as down. When the balloon international bankers had inflated in Mexico in the 1980s began to collapse, the bondholders stepped in and blew it back up for a while. But in Orange County, the more local officials borrowed to make a killing using public funds to gamble with bond merchants, the greater their vulnerability became. Earlier this year, when rates started rising and low-interest bond issues were suddenly no longer available, the moment of truth arrived.

Now the capitalists and their public representatives—and not just in Mexico or Orange County—have been given another warning of the long-run possibilities of an uncontrollable deflation.

Over the past couple of decades, upturns in the business cycle have relied on floating large amounts of fictitious capital—ballooning debt and other paper values. The capitalists are now paying the piper for the lack of sufficient economic growth during that period to keep rolling over the loans.

The financial press has a term for this explosive process; they call it “de-leveraging.” Among other things, this means we will be seeing more breakdowns like the bankruptcy in public “trust funds” in Orange County. Now I will admit, if you had asked me which of the thousands of local and state administrations was most likely to go belly up, I would have been hard put to guess Orange County. The spiritual home of Ronald Reagan and site of John Wayne Airport, Orange County has a median income in the top 2 percent of households in the United States.

Remember those pieces of paper with the cute names we mentioned in “What the 1987 Stock Market Crash Foretold”1—the Fannie Maes, Ginnie Maes, Farmer Macs? They are interest-bearing securities supposedly guaranteed by quasi-government agencies that buy up mortgages and second mortgages on homes and farmland. It was these bits of paper—cut apart, repackaged, and jazzed up as roulette chips labeled “derivatives”—whose declining prices imploded on Orange County and got it in such a jam.

Wall Street has already offered up Orange County’s treasurer as a scapegoat. But their bottom line is going to be that it is working people like us who are really to blame. If we would accept fewer schools and hospitals, if we would agree to pay higher tuition, if we would demand less public transportation, if “illegals” could be kept off the public rolls, then there would not be so much pressure on poor fund managers to pour billions into high-risk investments. And public workers are already the first to suffer layoffs in Orange County.

Municipal bonds, together with U.S. Treasury bills, are the prerogative of the very rich. Ross Perot, for instance, is one of the biggest individual holders of municipal bonds in the United States. And written on each and every one of these pieces of paper are the words “Full faith and credit.” That means the only collateral they are ultimately backed up by is the “full faith and credit” of the government or agency that issued them. The “faith” derives from the guarantee to the wealthy bondholders that they are always at the head of the line to be paid out of taxes and other revenues. First comes the interest—then, if there is anything left, the schools, roads, hospitals, and payroll. It is never the other way around.

No cuts! That is the bondholders’ slogan too!

And since governments produce no wealth, we are the ones the debtors come to in order to demonstrate their “full faith and credit.” The blood money is squeezed from us.

1. This resolution, adopted by the 1988 convention of the Socialist Workers Party, is available in issue no. 10 (1994) of New International, a magazine of Marxist politics and theory.

Ignoring the state