Statement of the League for the Revolutionary Party
July 2009
Obama: Capitalist Champion
With the election of a Black man as president of the United States, the world looked like it had been turned upside down. The inauguration of Barack Obama was greeted with an unprecedented display of mass enthusiasm. Millions celebrated the end of the Bush years, and Black people especially saw Obama’s ascendance as an immense achievement in a nation built on racial oppression. Around the world, because of Obama’s lavish promises of “change,” hundreds of millions also looked to his presidency for relief from years of war and worsening poverty.
We warned from the start of Obama’s rise that the change he offers means one thing for the masses of people who support him, and quite another for the slew of capitalists and politicians who swarmed onto his bandwagon once his popular appeal became clear. For the ruling class, he provides a fresh image for salvaging the prestige and profits of American imperialism after the disastrous Bush years.
And his promises are already unraveling. The administration has continued the U.S.’s occupation of Iraq and Afghanistan and extended its bloody military attacks into Pakistan. At home it has launched a multi-trillion-dollar bailout of Wall Street that it plans to make the working class pay for with inflation and slashed government spending. Barack Obama has already effectively become the temporary CEO of Chrysler and General Motors, and the massive layoffs, cuts to wages, healthcare and pension benefits that resulted make clear his administration’s prescription for the whole working class.
Obama is still by far the most popular public figure in this country. Nevertheless, this charismatic man, with his multinational heritage, his stylish wife and adorable children, is just as much an enemy of our class as the arrogant and intellectually challenged rich white brat who preceded him. The sobering truth is that Obama will not simply preside over hard times; he will be the enforcer of hard times.
In Obama, the ruling class hopes that it has found a solution to the crisis of leadership that came to a head under George W. Bush – a crisis which reached desperate levels when the U.S. financial apparatus collapsed and engulfed the world economy. The working class desperately needs to create its own decisive and class-conscious leadership to defend itself in an intensifying class war. In the U.S. today, where only a relative few understand the need for a revolutionary solution, the most advanced workers and youth must join together to build the foundation for the revolutionary party our class needs.
Obama’s First Months
Since his inauguration, the new president has followed through on some promises of change, those which are relatively painless for the capitalist class and which reverse some of the worst excesses of the discredited Bush team. These include undoing the bans on funding stem-cell research and abortion counseling, and signing legislation to make it easier for workers to sue for redress from wage discrimination.
But the bulk of what Obama & Co. have already done illustrates that his “change” is aimed at rescuing the U.S. ruling class, not the masses. Much that distinguished the Bush presidency ended up being widely unpopular: his wars and “intelligence” programs – torture, kidnappings and illegal wiretapping. The new administration has moved to eliminate the most hated symbols while maintaining the underlying policies.
For example, it announced the closing of the notorious military prison at Guantanamo Bay in Cuba – but worse prisons in Iraq and Afghanistan remain and will be expanded. Obama denounced the Bushites’ not-so-secret torture policies but made clear that he would not prosecute the agents involved. The phrase “war on terror” will be expunged, but Obama signed an executive order in February approving the CIA’s continued use of “extraordinary renditions,” the secret abductions of alleged terrorism suspects to other countries so that their torture is outsourced, not stopped. And in April the Justice Department defended the Bush policy of warrantless wiretapping, arguing that under the Patriot Act the government can ignore all laws regulating surveillance. Such measures indicate more continuity than change between the Bush and Obama administrations.
A telling instance of Obama speaking out of both sides of his mouth came to fruition on Election Day itself. As a candidate, Obama nominally opposed California’s Proposition 8 banning gay marriage. But he also lent backhanded support to the measure by making public his “personal” opposition to same-sex marriage on religious grounds. This was a signal for many of his supporters to vote for the anti-gay proposition; right-wingers used a video of his anti-gay marriage position to aid this campaign.
Saving the Empire
When ruling-class figures first began rallying to Obama’s presidential campaign, they were driven mostly by concerns that the Bush White House had gone too far in its aggressive assertion of U.S. imperialist aims in the Middle East. In particular, they saw that Bush’s disastrous invasion of Iraq and his uncritical backing of Israel’s murderous oppression of the Palestinians had come to threaten the stability of the U.S.’s global profiteering. As we wrote in Proletarian Revolution 81:
The big capitalists and their agents openly express fear that more of the naked imperialism that defined the Bush years will trigger greater struggles of the oppressed abroad, threatening their investments from the Middle East to South America. ... They want to see America’s image restored by a president who will cover the iron fist of its military power in the velvet glove of a little more diplomacy. (Election ’08 Won’t Win Real Change)
Obama had won support among primary voters by claiming that he had opposed the Iraq war from the beginning. However, his position on the war was not something he fought hard for. After his initial speech against the then-imminent invasion of Iraq in October 2002 (in which he explained: “I don’t oppose all wars. .. What I am opposed to is a dumb war”), he did not speak against the war until it started to become unpopular. Indeed, two years later Obama told the Chicago Tribune that when it came to the occupation of Iraq “there’s not that much difference between my position and George Bush’s position at this stage.”(July 27, 2004.)
Five years later, this contention holds true. The U.S.’s failure to quell resistance to its occupation in Iraq, and the toll the insurgency was exacting on the U.S. military, had already forced the Bush White House to agree to deadlines for the withdrawal of troops at the same time that it scrambled for a way to maintain its control of the country. As president, Obama has succeeded in delaying those troop withdrawals while announcing a plan to keep a “residual force” of 50,000 combat troops (plus tens of thousands more labeled “non-combatants”) – which in itself amounts to an occupation army. Many thousands more will remain in Kuwait and other Gulf states, along with over 100,000 private mercenaries.
The upshot is that the U.S. will not withdraw from Iraq in the foreseeable future, for the same reasons that Bush went there in the first place: to demonstrate American military power and to seize control of Iraq’s oil resources. Both were necessary for the U.S. to assert itself as the world’s dominant imperialist power ready to counter any challenges from upstart vassals or potential rivals. (See PR 66 and PR 67.)
While his position on Iraq is shifting to accommodate imperialist needs, Obama has been consistent in prosecuting the war in Afghanistan. His aggressive policy of adding 17,000 troops to the Afghan occupation force has won him the support not just of liberals but of prominent neo-conservatives. Between Iraq and Afghanistan, the Obama administration is funneling over $800 billion to fight the wars it inherited from Bush. Indeed, Obama’s overall military budget for the 2009-2010 fiscal year surpasses Bush’s by 4 to 5 percent, and the number of military personnel will increase by hundreds of thousands.
And at the rate Obama is expanding the U.S.’s warmaking, he will need those forces. Within days of taking office, Obama’s Pentagon sent a rain of missiles on villages in Pakistan near the Afghan border where Taliban and Al Qaeda figures were claimed to be hiding. By the White House’s own admission, these attacks resulted in the slaughter of scores of women and children. The barrage continues in the “AfPak” theater of operations. According to officials in Pakistan, by early April there had been 60 such cross-border strikes, of which 10 hit their targets, killing 14 “terrorists” and no less than 687 civilians.
Hypocrisy in the Service of Imperialism
With all this blood on his hands, the president delivered his June 4 speech in Cairo, Egypt, calling for a “new beginning between the United States and Muslims around the world.” Addressing an audience accustomed to Western imperialist leaders not showing the slightest respect for their culture or concerns, Obama surprised many with his respectful tone and approving quotations from the Koran. Citing his family connections and positive personal experience of Islam, Obama claimed that although he was a Christian, he considered it his “responsibility as President of the United States to fight against negative stereotypes of Islam wherever they appear.”
But this was just sweet talk. His point was to demand accommodation to U.S. interests by Muslims: “That same principle must apply to Muslim perceptions of America. Just as Muslims do not fit a crude stereotype, America is not the crude stereotype of a self-interested empire.”
While thus rejecting the worldwide understanding that the U.S. is imperialist, Obama – with breathtaking hypocrisy – condemned the use of violence by “extremists.” He declared: “The Holy Koran teaches that whoever kills an innocent is as if he has killed all mankind.” This preaching was aimed solely at the “extremists” who resist occupation, not the Israeli butchers of Gaza and Lebanon or the U.S. militarists.
Obama feigned sympathy for the plight of the Palestinian Arabs, and he has clashed with Israeli Prime Minister Netanyahu over the expansion – but of course, not the removal – of the West Bank settlements that make Palestinian life miserable. Whatever their differences, the liberal president and the reactionary prime minister agree that the only Palestinian state that can be allowed to exist is one which is tiny, divided, and powerless.
Early proof of Obama’s contempt for the human rights he supposedly upholds came even before he took office, when Israel launched its murderous offensive against the unarmed civilian population of the Gaza Strip in Palestine. As the toll of the dead mounted to over 1000 under heavy-weapon bombardment, Obama maintained a shameful silence, thereby giving his effective approval for Israel’s continuing ethnic cleansing of the Palestinian people. (See our statements Defeat Israeli and U.S. Imperialism – Stop the Slaughter in Gaza! and After the Massacre – The Future of Palestine.)
Taking Over the Economy
The financial crisis had been visibly simmering for over a year, and when it exploded in the summer of 2008, the need for a new decisive leadership became more acute in ruling-class minds. Candidate Obama made clear his conviction that saving Wall Street was the key to rescuing capitalism, and in the September bailout battle during the presidential campaign he proved his value to the financiers.
The Bush administration had already forked over trillion-dollar guarantees to bail out the mortgage giants “Fannie Mae” and “Freddie Mac.” In September it came up with its “Troubled Assets Relief Program” (TARP). Promoted urgently by Bush’s Treasury Secretary Henry Paulson, it granted $700 billion to banks that were in effect insolvent or on the edge in a desperate effort to bolster the financial markets and grease the flow of funds to credit-starved companies.
This huge bailout immediately ran into popular anger at the idea of paying off the fat cats whose greed was seen as the cause of the crisis. In this atmosphere, Obama wielded his popularity to push the bailout bill through Congress. With Bush sidelined as the lamest of ducks and Republican nominee John McCain vacillating aimlessly, Obama in effect served as acting president. He did the talking at Bush’s White House meeting with Congressional leaders; his was the voice of calm in the face of the public outrage reflected in the House of Representatives’ initial vote rejecting the plan. (In particular, he cajoled Congressional Black Caucus members to reverse their opposition.) He helped keep a lid on the class resentments just beginning to smolder.
After the election, Obama assembled an economic team heavily weighted with conservative Democrats and toward continuity with the Clinton and Bush II administrations. His top economic appointments, National Economic Council head Lawrence Summers and Treasury Secretary Timothy Geithner, have shuttled between federal jobs and lucrative posts on Wall Street. Geithner was a principle author of Paulson’s bailouts.
Once in office, the economic team produced a series of measures heavily favoring Wall Street. Along with the highly publicized $787 billion stimulus package aimed at resurrecting the non-financial sectors of the economy and allegedly creating millions of jobs, there was an expanded federal budget and a barrage of proposals to funnel trillions of dollars to the financial apparatus.
In this way Obama has followed through on his pledge for “action bold and swift” to deal with the crisis. His program has the appearance of being decisive and far-reaching, especially in comparison with the perennial tax-cuts-for-the-rich program of the Republicans. But it will not save the capitalist system from the crisis it has produced.
“Stimulus” Spending
The most immediate issue facing the working class is the need for jobs. The U.S. economy has lost over 6.5 million jobs since the “recession” officially began in December 2007, and since the fall of 2008 unemployment has been leaping ahead at the rate of roughly half a million per month. By the end of May, the real jobless rate – counting “discouraged” workers no longer actively seeking jobs and part-timers who want full-time jobs – was over 15 percent. (The official rate was 9.5 percent, meaning about 15 million unemployed workers.) At a time when something like 23 million people in the U.S. lack full-time jobs, the stimulus program is barely even a stop-gap.
Obama’s supporters often liken him to Franklin Roosevelt, the president whose New Deal public works programs reputedly pulled the U.S. out of the Great Depression of the 1930’s. In fact, it was World War II, with its massive arms spending and resulting world domination that ended depression levels of unemployment.
A central claim for Obama’s “stimulus” is that it will aid the unemployed. The package includes increases in unemployment compensation, food stamps and other aids to those hit by the crisis. But its claim to “create or save” hundreds of thousands of jobs falls far short of meeting the mounting jobless crisis. This demands a massive program of public works that would provide jobs for all who need them.
One big sector of job losses is in state and local governments, whose tax revenues are falling and debts to the banks are mounting. The total public-sector shortfall is of the order of $400 or $500 billion, but the stimulus bill offers only $140 billion. So public employment service is declining around the country, with critical cutbacks in health care, education and other needed services. So far three-quarters of a million state workers have been forced to take job furloughs.
Boondoggling Health Care
Health care is a major concern for working people. But like the Clintons in the 1990’s, Obama is dedicated to preserving the private insurance and pharmaceutical companies whose extraordinary level of parasitic profiteering is why the U.S. has the most expensive and least effective health care system of all economically advanced countries.
Obama proposes adding a national public health care option to compete with the existing private options. However, as his Health and Human Services Secretary, Kathleen Sebelius, testified before Congress in May, this option “should not undercut the private market.” Despite his promise to make health care more available and affordable, Obama’s plan will still require that the public pay for the $700-$800 billion per year in profits and overhead costs of the insurance companies. And it envisions lowering costs by decreasing payments to doctors, computerizing medical records and making cuts in insurance reimbursements.
Obama’s plan has drawn fire from both left and right. Conservatives claim that Obama’s plan means “rationed” health care – but under capitalism health care for the masses is always rationed by high costs and government budgets. On the other hand, liberals complain that the president and the Congressional leaders have ignored proponents of “single-payer” governmental insurance, the scheme that would limit profiteering and has the highest support in public opinion polls.
Both sides, however, are debating within the limits that capitalism decrees. For example, Medicare, the single-payer model for the elderly that most liberal advocates refer to, requires costly supplemental private insurance to fill in the gaps in its coverage. Any capitalist insurance plan will be governed by the demands of the profit system and so will fall far short of what the working class needs – nationalized quality health care for all.
Bailing Out the Bankers
The big money in Obama’s economic program is devoted to the series of financial bailouts. In contrast to the limited amounts for job creation, the flow of cash to the banks and other financial institutions under Obama has been rapid and massive.
According to a Bloomberg.com report on March 31, the Fed and the Treasury have so far committed $12.8 trillion, up from just $7.4 trillion as of November 2008 – of which about $4 trillion has already been spent. Under Obama, the authorizations include $1 trillion for a Public-Private Investment Program (PPIP) for buying up near-worthless mortgages. A second trillion goes to the Term Asset-Backed Securities Lending Facility (TALF) to save the system of hedge funds and other private equity firms that specialize in runaway speculation – massively unsecured borrowing that exemplified the excesses of the collapsed financial system.
Several hundred billion more were designated for the falsely titled Homeowner Affordability and Stability Plan (HASP), which in fact will go mainly to subsidize mortgage lenders and those who bought their sub-prime insecure “securitized” packages. There has been a $200 billion injection for Fannie Mae and Freddie Mac beyond the $200 billion they got last summer, another $60 billion for the AIG insurance giant added to the $150 billion last year – plus hundreds of billions for effectively insolvent banks like Citibank and the Bank of America, money market brokers and credit card companies like American Express.
This alphabet soup of bailouts includes not a penny for the mortgage holders blindsided by their stepped-up interest rates and the collapsing housing market. There is no aid for the millions of homeowners hit by foreclosures, or for those whose retirement funds have evaporated.
A significant incident occurred in March, when it emerged in March that AIG was using a chunk of its $170 billion in bailout money to hand out multi-million dollar bonuses to executives who had run the company into the ground. A groundswell of opposition arose and drew fake outrage from a host of opportunist politicians, Republican and Democratic – including Wall Street’s favorite senator, Charles Schumer of New York. The politicians’ false concern for “the taxpayers” was a diversion to hide the depth of the capitalists’ looting. The AIG bonuses came to less than $200 million, a tiny fraction of the $32 billion Wall Street gave itself in bonuses the year before, when no major politician complained, and are small potatoes compared to the trillions the government is shoveling to the banks.
At a private dinner for bank executives in late March, the president warned them to be wary of mass anger and to be discreet in justifying their astronomical salaries and bonuses:
Be careful how you make those statements, gentlemen. The public isn’t buying that. ...My administration is the only thing between you and the pitchforks. (politico.com, April 3.)
The ruling class is right to worry about the potential for rebellious opposition as popular discontent mounts. In the 1930’s, Roosevelt campaigned against the “economic royalists” of Wall Street in order to divert mass discontent away from capitalism as a whole. Obama has the luxury of not yet having to confront a mass movement. So he has not hesitated to – quietly – offer Wall Street what it wants. In this spirit, the Washington Post reported:
The Obama administration is engineering its new bailout initiatives in a way that it believes will allow firms benefiting from the programs to avoid restrictions imposed by Congress, including limits on lavish executive pay, according to government officials. (April 4.)
That is, despite the president’s public objections to the noxious bonuses the bailed-out banks are passing out, the government is allowing the financiers to be royally compensated.
Blowing Another Bubble
By late March, the big banks had persuaded Geithner to sweeten the PPIP with promises of even more funds. These would come directly from the Federal Reserve, so that the administration could bypass asking for more trillions from Congress. In fact, Congress has been asked to approve only $1.5 trillion of the nearly $13 trillion being authorized.
Critics have complained that Geithner and Federal Reserve head Bernanke have agreed to buy up the toxic assets at the prices the banks are keeping on their books, approximately 90 percent of their initial face value. That is, the government is artificially propping up the price of an estimated $1 trillion of practically worthless mortgages. Of course, if the banks were forced to sell these “assets” for what they could actually get on the open market, most of the banks would be exposed to the world as insolvent. So the government’s rescue plan amounts to blowing up another bubble of fictitious capital, thus making inevitable a new explosion of the financial crisis.
Borrowing the huge amounts needed for these purchases means monster repayments of principle and interest to those who buy the Treasury’s bonds, mainly wealthy investors and foreign sources like the Chinese and Gulf state governments. The administration projects a federal budget deficit of $1.6 trillion over the coming year, and it is clear that it will grow. Printing all these dollars will eventually mean price rises that will predominantly affect the working class: inflation is a disguised way to reduce wages and benefits. And there are already signs that the huge deficit is being used as a justification for slashing working-class benefits.
Stepping Up Attacks on Workers
Auto is just one sector, although a big one. A potentially devastating line of attack on the working class as a whole is being prepared in the form of “entitlement reform” – cutting back Medicare and Social Security. Whereas right-wing think tanks did the intellectual groundwork for the Middle East wars, on this issue the liberal Brookings Institution teamed up with the conservative Heritage Foundation to devise a plan, “Taking Back Our Fiscal Future,” that would put budget caps on Social Security spending, thereby forcing benefit cuts in the future.
For years, Wall Street has been slavering to get its hands on public money. Bush tried to hand over part of the Social Security fund at the start of his second term but got shot down by an outpouring of public outrage. Now Obama’s economic team is warning that the huge deficit hole caused by the bailout and stimulus packages (along with the enormous war spending and previous tax cuts for the rich) demands retrenchment.
Obama convened a bi-partisan “Fiscal Responsibility Summit” in February, at which he promised to halve the federal deficit in four years, specifically pointing to Social Security. According to Newsweek magazine, a leading role was played by Summers:
Summers’ greatest test will be persuading Congress to vote for “entitlement reforms”– i.e., cutbacks and/or higher taxes on Social Security and health benefits for the poor and elderly. ... Summers made clear that he will urge the president and Congress to venture in an area where politicians have long feared to tread, the so-called third rail of politics (touch it and you’re dead). (Feb. 21.)
As already seen in the auto crisis, Democratic politicians often get away with attacks on the working class with minimal resistance. The pro-Democratic leaders of the trade unions and other organizations of the working class and oppressed people let their “friends” take actions that they would denounce if pushed by Republicans. (Clinton’s gutting of federal welfare aid was another example; see PR 51.)
Obama’s first months show once again that the Democrats and Republicans play the “good cops/bad cops” game of American capitalism. Ungraciously, the Republicans are acting out their oppositional role with relish. Republican legislators refused almost unanimously to support the stimulus bill, and have been steadily raising their voices against bailouts, especially for the Big Three auto companies, a favorite target of Republicans in Deep South states that have foreign transplants. They have raised shrill cries about the new “socialism” in Washington, but have presented no alternative but their tired refrain of cutting taxes for the rich. Their opposition stems from a variety of reasons: ideological opposition to state intervention, an attempt to parlay posturing against bailouts and federal pork barrels into political advantage, a desire for more direct assaults on the unions and masses, partisan spitefulness and stupidity. Whatever their motives, the fact that these open enemies of the working class despise it does not mean that Obama’s plan is worker-friendly. In the end, the “good cops” and “bad cops” play for the same team.
The Failures of Obamanomics
The Obama economic program is in no way meant to alter the relationship of class forces that has for so long worked against the interests of the workers and oppressed masses. A capitalist offensive has been going on for decades, and although it has been relatively gradual, its cumulative effects are real and major: despite the profit and productivity booms of the 1990’s and 2000’s, wages are still below the levels of 1973 (accounting for price inflation). And with the current crisis, the drop in living and working standards that took years before is now taking place in months.
The stimulus and bailout programs so far have failed to stabilize the staggering economy. As we have explained in our theoretical analyses in the past, the system needs a massive destruction of capital – through both depression and war – to lay the basis for a serious economic upturn. The Obama program reflects the fear in capitalist circles that a plunge into outright depression is dangerous: many individual capitalist enterprises could be wiped out, and mass unrest could threaten the whole system. However, whether it can even succeed in staving off an all-out depression for any length of time is a very open question
In addition, Obama does not address the massive underfunding of the country’s existing infrastructure. It is notable that his plan earmarks $30 billion for highway construction but only $10 billion for mass transit. This allocation not only fails to deal with the deterioration of the existing system; it also reflects a clear preference for established patterns of transport rather than the overhaul that is needed.
Further, the plan barely deals with the critical issues associated with the need for alternative energy. While the technical solution for declining or polluting energy sources has not emerged in detail, the outlines are certainly there: a wholesale conversion to “green” sources like wind and solar, and the development of an electrical grid capable of maximizing and distributing their output. This requires hundreds of billions if not trillions of dollars and a mobilization of resources on a scale never seen except for world wars. The stimulus falls woefully short: the output of “clean” electricity is expected only to double, even though at present it provides a minuscule percentage of electrical capacity.
On the world scene, printing trillions of dollars to finance the bank bailouts threatens to put enormous pressure on the U.S. dollar, the central international currency. So far the dollar has been gaining value in the crisis relative to other currencies, for two reasons. One is that Europe, Japan and China have seen their economies deteriorate as rapidly as the U.S.’s, since their banking is thoroughly tied to the financial scams that brought Wall Street down, and their production sectors depend heavily on U.S. markets. The second is that the imperialist powers and China all fear that a decline in U.S. leadership would undermine the last props preventing a world economic collapse. So even though China reacted immediately to the revised Geithner plan by suggesting that the dollar be replaced by a new international currency arrangement, there is no serious alternative to the hegemony of the dollar.
Considering the acute need of the capitalist class for a profound shift of course on the economy, the Obama program is strikingly cautious. It touches some bases on a variety of needs of American capitalism – managing the economic crisis, containing environmental destruction, attaining energy “independence,” building a modern infrastructure, keeping the class struggle under control – but it avoids any bold endeavors on any of them. At best the state’s massive spending may have bought some time. The prime goal, as we have seen, is to prepare to make the working class pay for the crisis. Another aim is to gain further advantages internationally, hoping that the U.S. economy’s remaining relative strength will mean that others collapse first and allow American corporations to intervene profitably.
Fear of Nationalization
Despite the vast sums of government money being spent, the stimulus, budget and bailouts reflect the desires of their creators to limit state intervention and above all state control. In past crises some capitalist countries have nationalized their banks, and liberal bourgeois experts like Nobel Memorial prize winners Paul Krugman and Joseph Stiglitz are advocating such a step for the U.S. temporarily, in order to force-feed credit into the sickly economy.
Nationalizations may yet happen if a collapse leaves the capitalists no alternative. But even as a means of saving their system, nationalization is anathema to the all wings of the U.S. bourgeoisie, and the government is reluctant to even mention the word. The government has already bought a big share in key banks, but it refrains from actually providing direction and control.
Why the strong bias in the American ruling class against a strong state role in the economy? In the most immediate sense, capitalists see government as an annoying interference into business. They also feel threatened, justifiably from their point of view, by the fact that the working class generally supports state intervention. The more the government intervenes, even to aid capitalists, the more workers will not only come to expect more concessions but will also demand that the state act in their interests. Actual nationalization would show many that private property is not sacrosanct and is even a clear drag on the economy.
Another consideration is that American capitalists don’t want to set a precedent that encourages other countries to nationalize their own companies. Since the crisis is world-wide, and the U.S. is still the strongest power economically as well as militarily, they expect that American firms will be able to buy up foreign industries, as they did a decade ago in even relatively wealthy South Korea when the previous financial crisis devastated much of East Asia. The “open door” for U.S. capital has always been a top priority for American imperialism.
The Revolutionary Alternative
The only real answer to capitalist crisis is socialist revolution. A working-class socialist revolution would replace the capitalist state with a workers’ state, the capitalist government with a workers’ government. The workers’ state would get rid of the profit-based economy over time, and, with the aid of revolutions in other countries, create an international socialist society of abundance and freedom.
Revolutionaries, however, cannot confine our political perspectives to calling for socialist revolution. The overwhelming majority of workers do not believe that such a dramatic change is either possible or necessary, and in the wake of the financial collapse they are even more fearful.
But along with the fear there is growing anger. It is not just that misery is growing; people also plainly see that capitalists are taking advantage of the situation. Workers have largely seen no real alternative to the unfairness and inequality built into the capitalists’ system. But they have a hard time figuring out why people who have ruined enterprises – the banks, AIG, the Big Three auto companies – should be rewarded for it. They don’t accept that they – but not the capitalists – have to suffer during hard times. Such feelings can aid the most advanced workers in convincing others that the system itself needs to be overthrown.
Coupled with popular resentment is a growing perception that the government has to step up and play a far more active role in providing aid and solutions. This is in part because the government has already moved massively to attempt to shore up the tottering economy. What it has done is hardly “socialism” as right-wingers proclaim, but it is an indication of the failures of the free market and the renewed if grudging role of the state in economic affairs.
So we can expect to see demands on the government by the working class. The worsening objective situation will stimulate such demands, which will inevitably also reflect the hopes people have in the Obama presidency. Revolutionists can participate effectively in the emerging struggles and advocate real answers to the burning questions of the day, answers that point the way to the socialist solution we need.
Mass Action and the Struggles Ahead
As we have noted, the decades-long period of low level of class struggle in the U.S. is not over. But there has already been an important shift in working-class attitudes. The terrifying prospect of job loss means that the desire for secure and decent jobs – and the notion that there should be central solutions coming from the government – is overwhelmingly popular. But Obama is also still popular: the illusion abounds that he can be pressured to resolve the crisis in a way that benefits workers and various social movements.
In the light of these sentiments, revolutionaries argue for political mass action by the working class. In articles like this one, and in a range of struggles where we can participate, we make clear that only independent action by the working class can build a significant defense. Wherever victories are won, workers will see that our class, when united, has enormous social power. And it is certain that any notion that the working class can win any of its needs without a fight is a bigger lie today than ever.
The LRP has often advanced the idea of a general strike as the best way to mobilize the power of the whole working class and to move struggle in a consciously political direction. Today such action matches the depth of the capitalist crisis. Only a united response of workers and youth mobilized around demands that provide big answers can win substantial gains at this point. A general strike would unite the working class as a class – across the board, union and non-union, employed and unemployed, Black, Latino and white.
In such a climate, the intervention of even a small revolutionary workers’ organization can attract more advancing workers and youth to socialist conclusions. The League for the Revolutionary Party (LRP) is an organization of workers who have joined together to advance propaganda for an internationalist revolutionary party to make the socialist revolution. We argue for a workers’ state to nationalize all major industries as a prerequisite for a centralized planned economy. We emphasize putting forward this revolutionary perspective to the most receptive audience of politically advanced workers and youth. And despite our modest resources, we also look to tap into the mass expectation of decisive action by the government and address the key issues that broader layers of the working class are focused on right now. In such a manner we aim to communicate the relevance of the revolutionary strategy as effectively as possible to our fellow workers.
Jobs for All!
For example, in protests against budget cuts in our campaign in the Transit Workers Union in New York and in the immigrant rights protests, we have raised slogans like “Nationalize the Banks and Failing Industries Without Compensation!” (See Workers and Youth, Unite to Stop the Cuts!.)
A government takeover of the banks without compensation is the only way to stop the bleeding of government funds and the propping up of a toxic financial system that triggered the crisis. The crisis shows that private banks cannot serve the role that the economy requires of them – providing cheap credit to keep small businesses functioning, protect the savings of depositors and enable people to buy and keep their homes, etc. Calling for nationalization jibes with mass hostility to the bailouts, and many workers accept this idea.
The banks are not the only problem; nationalization of industries is the only way to defend jobs in this crisis. Government takeovers of the auto companies and other failing industries – where necessary, converting them to sustainable technology and useful production – would save the jobs of the workers affected and help maintain a level of production of needed goods.
Preserving existing jobs is not enough in a climate of skyrocketing unemployment rates. So we have raised the slogan “Jobs for All” and concretized it by calling for a massive public works program. Despite its boasts of spending hundreds of billions on economic stimulus, the Obama government is doling out monies on an astoundingly inadequate basis. And the union bureaucrats and other misleaders of the workers and oppressed have dutifully fallen into line – they accept that major cuts in public services and entitlements must occur, so they fight only for crumbs of the shrinking pie or to avoid cuts for their own sector.
There is an immense amount of work that needs to be done – building decent houses, schools, hospitals; reconstructing bridges, railroads and urban mass transit; creating a new electrical transmission grid and new energy sources – and beginning to lay the foundations for modern, “green” versions of these systems. All this work is needed for society, and the human and material resources exist to accomplish all these tasks, but capitalism stands in the way.
We see these particular demands as the necessary starting point today. But while we can get a hearing among some workers and working-class youth now, in the near future we expect larger numbers of workers to be ready to fight for such measures. Revolutionaries will then be able to join struggles which will make such demands on Obama. Our aim is to do everything possible to increase the fighting power and the consciousness of our class in order to win workers to see the real alternative.
Trotsky’s Method
The type of demands we have discussed here, and the political method behind them, were advocated by Leon Trotsky in his Transitional Program. This guide to class struggle summarized the method of advancing revolutionary consciousness through tactics developed during the Bolshevik revolution.
While not disdaining the struggle for partial reforms, the Transitional Program reflects the understanding that there are really no substantive solutions under capitalism in the epoch of imperialist decay. Transitional demands are a tool for proposing joint struggles with workers who are not yet revolutionary – in order to find a way to convince them of the need for revolution. Transitional demands focus workers’ attention on class-wide solutions and point the struggle in the direction of political power and state control of the economy by the working class.
When appropriate, revolutionists propose transitional demands as the basis for a united front, through unions and other mass organizations. In such a mass united front, many workers would start out believing that measures like nationalization or public works were simply big reforms, winnable under capitalism. But the inevitable resistance of the capitalists, their politicians and the union bureaucrats will help prove that working-class needs cannot be met within the profit system. The gap between workers’ objective interests and their subjective consciousness can be bridged only if revolutionaries are honest with our fellow workers from the start, arguing openly that desirable measures like nationalization or public works can only be truly accomplished under the workers’ own state.
The shared experience of mass struggle provides the best opportunities for an ongoing dialogue with greater numbers of workers, who would be able to test out their current leaders as well as alternatives, including revolutionaries. It is both the experience of class struggle and the consistent intervention of revolutionists within the struggle that makes it possible to convince workers over time of the need for working-class power.
The demands we have raised here are only a partial exposition of the interrelated measures that will prove necessary to answer today’s crisis. Certainly the issue of health care is rapidly coming to a head, and a specific demand for a nationalized health care system is necessary. Once the class goes into motion and as the crisis unfolds, questions of workers’ control and management of industry, the need for workers’ self defense guards and committees of action, and many other demands stemming from the Transitional Program will have to be advanced systematically, in accordance with the direction of the struggle. New demands and types of organizations will also have to be proposed to fit the ups and downs and different shifts of the class struggle that cannot be pre-ordained.
What Is To Be Done?
In advocating our revolutionary socialist analysis and policies and in building the revolutionary vanguard party, we point to the power of the working class, in alliance with oppressed people, to halt profit-making and compel real change. One example was the enormous May Day rallies of immigrant workers in Los Angeles, Chicago and other cities a few years back. These struggles had an electrifying effect on broad numbers of workers but were betrayed by pro-capitalist union and political leaders. The pro-capitalist leaders diverted the energy into electoralism, squandering the workers’ potential power in the futile hope that Democratic Party politicians would favor unions, immigrants’ rights and the overall needs of the working class. Even under the “progressive” Obama administration, this strategy is proving to be the dead-end it always was.
History shows that there have been countless inspiring struggles that have not led to successful revolutionary conclusions. A revolution cannot succeed without a revolutionary party leadership that is trained and committed to the science and art of leading the masses to the overthrow of capitalism. Vladimir Lenin, the leader of the Bolshevik revolution in Russia in 1917, was the leading advocate of building a vanguard party.
Lenin saw that in the age of imperialism the working class was not homogeneous in either its conditions or its consciousness. He identified the labor aristocracy as a section of better-off workers that could play a reactionary role within our class. Labor-aristocratic workers are most directly tied to a pro-imperialist view. There are also middle-class and lumpen layers that interpenetrate with the working class. As well, different layers of workers change and advance their views in different rhythms.
To build the revolutionary party it is necessary to start with workers and youth already coming toward revolutionary consciousness. It is possible to convince many workers over time of the need for communist revolution, especially as the situation worsens. But revolutionary workers and youth must join together first in order to cohere a force to fight for leadership.
The League for the Revolutionary Party appeals to those who agree with this analysis to join with us. The bloody anti-human imperialist system needs to be buried once and for all. Today with Obama, imperialism has donned a benevolent mask. Obama is an enemy of the workers and oppressed of the world. The working class needs a decisive and dedicated leadership, an internationalist and revolutionary party.
The crisis in the American auto industry is the key example of the economic turmoil facing the working class. It also reveals how Obama (or any competent capitalist leader in his place) must make an attack on workers central to any “solution” they concoct to address the economic crisis.
A crisis of overproduction plagues the auto industry worldwide, but the problems of the American companies have been compounded by managerial reliance on gas-guzzlers even as oil prices went sky-high, along with a competitive disadvantage in overall costs. Like the financial collapse, the auto crisis was inherited from the Bush years yet was given its own stamp by the Obama administration.
Last fall, when the Bush administration stipulated that a bailout of General Motors and Chrysler would require massive cuts against UAW workers and a no-strike pledge, the Democrats could have voiced the standard liberal arguments: 1) universal health insurance is needed to replace the health care costs that burden the “Big Three” car companies: 2) the allegedly “gold-plated” wages and benefits of active workers constitute a relatively small proportion of the American companies’ overhead. But pro-union liberals are a minority among Democratic politicians, and the liberals themselves change their tune when faced with practical and political realities. Thus the Democrats pressed for their own souped-up version of a bailout and government intervention – including more severe attacks on auto workers.
This March, Obama’s Auto Task Force began rolling out its plan for the auto industry. A big show was made of the government’s forcing the retirement of GM chairman Rick Wagoner. Wagoner was treated more harshly than Wall Street executives whose firms have failed more spectacularly than GM (even though he walked away with a $23 million settlement which was not labeled as unsustainable) because the financiers do not have tens of thousands of unionized industrial workers on their payroll. These workers were being set up for savaging, and Wagoner was sent packing in part because the punishments had to be made to seem fair and balanced.
The UAW Folds
When the government’s plans for GM and Chrysler more fully emerged in late April, the UAW was given a stake in ownership – in the case of Chrysler, a majority. That is, the UAW was handed responsibility for the loss of jobs, wages, pensions and other benefits for its members – and it accepted without a hint of a fight. Obama’s plan is to “rapidly achieve full competitiveness with foreign transplants” – meaning that Big Three workers will have to accept the lesser benefits of non-union foreign-owned firms.
The Chrysler deal means that the union-run Voluntary Employee Beneficiary Association (VEBA), created in 2007 to take over management of the workers’ health care fund (with company funding greatly reduced), will now be paid for not by cash but by largely worthless company stock. As we wrote in opposing the VEBA deal, “the fund will be subject to the mercies of a stock market that is grossly over-valued and primed for a meltdown.” (PR 81.)
Further, health benefits for retirees will be slashed, vacation and overtime pay reduced – and many more jobs placed in the second-tier category averaging $14 an hour rather than the previous average of $28. Despite some protest, the UAW, once the trend-setter in wages and benefits for U.S. industrial workers, is now collaborating in getting rid of sixty years of hard-fought gains.
New York Times business columnist Floyd Norris effectively dispelled arguments that the auto workers were getting off easy:
It is said that the United Automobile Workers, which supported Mr. Obama in the election last year, is effectively being paid off by treating the bondholders worse than the retirees. I disagree. The retirees may have a little better chance of getting benefits they were promised [than they would under outright bankruptcy], but the current workers are getting little more than being allowed to keep some of their jobs. Walter Reuther, the man who built the U.A.W., must be spinning in his grave at the concessions his successors are making. (May 2, 2009.)
The White House press office observed in its June 1 Fact Sheet on the administration’s Auto Restructuring Initiative: “In virtually every respect, the concessions that the UAW agreed to are more aggressive than what the Bush Administration originally demanded.” As so often happens, the Democrats face less opposition to their attacks than do the Republicans, because of the workers’ official leaders’ ties to their party. Indeed, Norris added in his Times column:
This may come to be seen as Mr. Obama’s “Nixon in China” moment. Just as it took a conservative Republican to open relations with the largest Communist country in the world, it took a liberal Democrat to break the U.A.W.
We assume that Obama & Co., unlike leading Republicans, were not simply making use of the economic crisis to destroy the auto workers’ union. The administration was also motivated by a desire to salvage as much of the domestic auto industry as possible, with fewer workers and greater profits. Nevertheless, it is still a matter of raising the rate of exploitation, which is a central component of regaining competitive advantage, particularly at a time of acute crisis. So it is the workers who bear the brunt in any case. And the UAW rolled over obediently.
About the only thing that some union leaders have gotten worked up about is GM and Chrysler’s plans to import more vehicles from its foreign plants, even though factories are being closed in the U.S. UAW leaders joined other union tops in an unholy bloc with the Alliance for American Manufacturing to protest the offshoring of production previously based in this country. (The Alliance includes US Steel, which has laid off thousands of workers in the U.S. and Canada in the past year but which prefers to see auto production done at home so that its steel has a better chance of being used.)
In May this bloc held a series of rallies at plants scheduled for shuttering under the slogan “Keep it Made in America.” Such protectionist campaigns are reactionary alternatives to what the union should be doing, namely demanding that the government take over factories to convert them to useful production and to ensure the jobs of the workers who make them run.
An alternative method of fighting back would have been to follow the example of the militant factory occupations that helped build the UAW in the 1930’s – or the recent sit-in at the Republic Windows and Doors factory in Chicago. (See Lessons of the Republic Windows Factory Occupation). But even though there are quite a few nominal socialists in the local and lower-level leadership of the UAW, no proposal to occupy the plants was heard. Of course, seizing a factory scheduled for shut-down isn’t as powerful a tactic as taking over a profitable firm. But such a protest would have had great symbolic effect in stimulating the whole working class to resist the bosses’ one-sided class war.