“The world is fundamentally changing. Wealth and power are rapidly becoming concentrated at the top and the big global corporations are making massive amounts of money. Meanwhile, the American middle class is being systematically wiped out of existence as U.S. workers are slowly being merged into the new ‘global’ labor pool.” Michael Snyder, The Business Insider
The mass media and politicians from both parties continually talk about returning to a time of U.S. strength and prosperity. They refer to the present situation as ‘temporary’ and in some way exceptional.
But this is all backwards. It was the period from 1945 to 1975 that was exceptional, based on the heyday of U.S. capitalism and its position as the dominant world power. The ability of both Democrats and Republicans to grant reforms in the post-war period was due to the ability of U.S. capitalism to extract massive profits during the huge upswing of world capitalism from 1950 to 1975.
But that has ended. We are now in a period of a prolonged and deep structural crisis of capitalism, not only in the U.S. but on a global scale. This underlying crisis of the economy, combined with neo-liberal policies, is responsible for the falling living standards of workers in the U.S. over the last 30 years.
The growth of the 1990s and 2000s was unhealthy, based mainly on pilling up massive debts and feverish speculation. The consequences of this were seen in the implosion of the housing boom and the financial meltdown in 2008, marking the end of that period of slow growth.
The motor that kept U.S. capitalism growing during this last century is broken. That motor was already flawed, since during the 1980s and 1990s it was based on a steady accumulation of debt and the creation of fictitious bubbles. This was a policy that would always end in collapse.
Decline in Manufacturing Industry
The whole reason for capitalism’s success as a system has been its ability to create a powerful productive system that creates goods. When production was done in the U.S. and unions were strong, this led to higher wages and the emergence of the much-described middle class.
But starting in the 1970s and accelerating in recent years, big business gave up investing in new manufacturing facilities in the U.S. and went in search of higher profits overseas. Profits extracted from the labor of workers here were reinvested in new competitive industries built overseas. This also led to a massive wave of speculation in financial markets, leading to the loss of living-wage jobs here and the creation of ever more speculative bubbles.
The result has been the deindustrialization of the U.S. Well-paid industrial jobs have been replaced by low-paying service jobs. In 1965, manufacturing accounted for 53% of the economy. Manufacturing now accounts for only 12% of U.S. jobs (Financial Times, 7/31/2010).
As the crisis has deepened, big business has demanded that its political parties adopt a neo-liberal agenda. The aim of this neo-liberal agenda is to reverse reforms won from the 1930s to the 1970s. This agenda includes efforts to deregulate key industries, cut federal spending on middle- and working-class programs, freeze the minimum wage, cut government regulation, cut wages, safety rules, and benefits at work, weaken labor unions, cut taxes on the rich and big business, and build up the U.S. military.
Neo-Liberalism and the Democratic Party
Under the leadership of Bill Clinton, the Democrats created the Democratic Leadership Council to craft a clear neo-liberal doctrine for the Democratic Party that became enshrined as their main policy. Promising to adopt these policies, Bill Clinton won widespread corporate endorsement as the candidate for the Democratic Party in 1992.
The same policies of neo-liberalism are now at the heart of both political parties. Both are committed to profit maximization for the tiny elite that owns the major companies and the places we work. In the present crisis, this capitalist elite is not reinvesting to rebuild the U.S. economy. At present, big business is sitting on $1.5 trillion. It refuses to invest in productive jobs, yet it demands massive cutbacks in Medicaid and other social services.
This takes us to the main problem of our time. Capitalism can’t continue to grow the economy. It has choked on the massive debt bubble it has created. It is now turning inward to take back the gains won in the past by workers. In order to become profitable, it demands we reduce the share of wealth we as workers get, increasing the divide between the 1% and the 99%.
The Financial Times of London documented three main trends that are devastating the living standards of working people in the U.S. First is a longer-term decline of U.S. capitalism since 1973. In that time, the annual income growth of the bottom 90% has been flat while the income of the richest 1% has tripled. Second is the fact that this decline has sped up in the last decade. Even during the boom from January 2002 to December 2007, the median U.S. household income fell by $2,000.
It states: “Combine those two deep-seated trends with a third – steeply rising inequality – and you get the slow-burning crisis of American capitalism. It is one thing to suffer grinding income stagnation. It is another to realize that you have a diminishing likelihood of escaping it – particularly when the fortunate few living across the proverbial tracks seem more pampered each time you catch a glimpse.” (Financial Times, 7/31/2010)
But leaders of the labor unions and other social movements have failed to recognize the nature of this new period. It is not a question of the Republicans being “mean-spirited” in promoting their corporate agenda, as many on the left would argue, and electing “better” Democrats. There is a bipartisan agenda on neo-liberalism. While the speeches and tone of the two parties may differ, the underlying content will be of a very similar nature.
The key issue facing working people, the poor, and youth is not whether Democrats or Republicans are elected in 2012 or 2014. It is whether we, the working class, i.e. the vast majority whose main source of income is working, can organize and defeat this coming attack by the rich elite to take back the gains we won in the past.
The agenda of the Democrats is not based on our needs, but on those of Corporate America. That’s why we need to take off the rose-colored glasses and look at the real substance of the Democrats, not their flowery rhetoric and comforting promises. Until we grasp this, we will be incapable of mounting any serious defense of our interests.
Eroding the Base of the Two-Party System
At a time when we are told to prop up the Democrats, there is growing support for breaking from the two-party system. Most people vote against the other party rather than showing genuine enthusiasm for “their” party. The number of voters registering as “independent” has been shown to be a majority in many major polls.
According to an Associated Press/GfK Poll on May 7, 2012, 78% of Americans disapproved of the job Congress was doing. From a Washington Post/ABC News poll on January 20, 2012: “More than two-thirds of Americans would consider voting for a third-party presidential candidate, while nearly half of all voters think a third-party is needed.”
This demonstrates the enormous anger at the establishment political parties, and the huge potential for a big political movement outside the two-party system in the coming period.
Serious journals of capitalism, such as the Financial Times of London, see the size of the crisis and the threat it poses for this system. “When the next crisis hits, and it will, [the] frustrated public is likely to turn, not just on politicians who have been negligently lavish with public funds, or on bankers, but on the market system. What is at stake now may not just be the future of finance, but the future of capitalism.” (John Kay, “‘Too Big to Fail’ Is Too Dumb an Idea to Keep”, Financial Times, 10/27/2009)
The shattering of middle-class living standards has removed the main force that has stabilized the two-party political system in the U.S. The gulf between the haves and the have-nots is undermining support for the two corporate parties. It is this inequality and anger that first found a distorted reflection in the Tea Party, and then found a more accurate expression in the Occupy movement.
The Need to Challenge Capitalism
Occupy is the first, but essential, generalized response to the crisis from the left. Many more powerful movements will erupt in the next period as workers and young people are forced into struggle on a whole range of issues. This will include at some point a drive to organize fighting unions in the workplace.
But the ruling elites are determined not to give concessions. This explains the repression handed out to Occupy and longshore workers in Longview, WA. Their system is in crisis, and they cannot afford to give reforms unless faced with massive pressure from below. This is also shown in the increased militarization of the police on a global scale and the refusal of political leaders in Greece, Spain, Quebec, and other countries to grant any substantial concessions. Instead, they have relied on repression to achieve their aims. In this period, any serous demands to improve our lives come up against the limits of capitalism.
In the U.S., poverty has risen every year since 2008. Evidence of severe social decay is now present not only in African American and Latino communities, but also in sizeable sections of white neighborhoods, as long-term unemployment has returned. The ramping up of vicious rhetoric against the poor by the right wing is further evidence of what kind of future capitalism holds for workers and young people in the U.S. and internationally. It is not surprising that a strong anti-capitalist mood is developing among some youth and workers.
Almost every aspect of life is now under strain as a result of the 30-year, deepening crisis of the capitalism system. It is not only the economic decay but the consequences of the social decay that has spread through society. This explains the rise of the right-wing ideology of finding scapegoats, whether they be immigrants, the growing number of poor, the unemployed, African Americans, women, or the LGBT community. Racism, homophobia, sexism, and targeting of immigrants are also deliberately ramped up by the ruling elite internationally in order to redirect blame from their own wealth and their failing system.
The environmental crisis has also now arrived in force. Scientists increasingly describe the climate changes with terms like “dust-bowlification,” where increasingly violent weather changes start eroding land and increased floods and drought result in famines. The accelerating melting of arctic ice threatens to speed up the carbon buildup in the atmosphere.
This poses the pressing need for a fundamental transformation of human activity on earth. Yet one cannot conceive of the kind of transformation we need to achieve while our economy is driven by the interests of Wall Street, oil companies, and the politics of the 1%. Driving all this are the disastrous out-of-control market forces of capitalism, which has no regard for the social consequences of carbon-driven industrialization and disastrous mineral extraction processes.
This poses very sharply the need for this generation to take decision-making out of the hands of Wall Street and the owners of the huge corporations that control our society. Instead, we need to create a new society where decisions affecting our economy and the direction of our society are democratically made by the majority.
Only radical and sustained mass struggle will be able to hold back further attacks on our living standards and our rights. Even then, the best we can expect under this system is sustained struggle to avoid going backwards. It is only by ending this capitalist system that we can create a society where human beings are treated with respect, and where the human species can live in an environmentally sustainable manner. In a later part of this pamphlet, we will go into detail on how we believe a democratic socialist society, despite the distortions thrown at it by the corporate media, is a viable alternative.