“The differences between the Republican and Democratic Parties involves no issue, no principle in which the working class has any interest… every workingman who has intelligence enough to understand the interest of his class and the nature of the struggle in which it is involved will once and for all sever his relations with both.” — Eugene Debs, former leader of the American Railroad Union and Socialist Party Presidential candidate.
Everyday, in the press, workers are told that one or the other party, whether the liberals or conservatives, are responsible for this decline in conditions. But the reality is that all these policies are passed by both parties.
Between 1976 and 1980 the Democrats controlled the White House, the Senate and the House of Representatives. From 1980 to 1986 the Republicans controlled the White House and the Senate, while the Democrats controlled the House of Representatives.
Between 1986 and 1992 the Republicans controlled the White House while the Democrats controlled the Senate and the House of Representatives. From 1992 to 1994, the Democrats controlled the White House, the Senate and the House of representatives. During this whole time both parties have also controlled the state and local governments across the country.
For a bill to be passed in Washington, it has to be passed through the White House, the Senate and the House of Representatives. This means that both parties are responsible for the assault on the living standards of workers over the last twenty years.
During this period, each party has argued that they had a different policy to the other. What really happens is that one party, for example, the Republicans, announces a cut off $5 million, while the Democrats instead propose a cut of only $4.9 million! Each party then campaigns about how outrageous the other party’s policy is. Then they both suddenly find that they can reach an agreement, and they pass the bill into law.
Through this mechanism, each political party has argued that it represents a different philosophy and policy to the other. But their actions have proved otherwise. Both parties have shown that they agree with one main idea: that it is the working class, not the rich, that must be made to pay for the crisis.
The agenda for these two parties is set by corporate America. Corporate America created the parties, and controls their purse strings. The major newspapers and other media are owned by these large corporations. Thus, big business is able to set the political tone and make its views heard loud and clear.
When the postwar economic upswing came to an end in 1975, big business prepared its policies to deal with the developing period of economic crisis. To do this it formed the Business Roundtable. Like similar bodies in previous periods of history, this body was made up exclusively of the Chief Executive Officers (CEOs) of the top corporations. No politicians, members of the press, or other individuals could attend these meetings. They laid down clear plans on how they were to deal with this coming crisis. In a word, their plan was to put the pain of the crisis onto the backs of the working class and the middle class.
Every administration since then, starting with President Carter, has followed out the details of this plan. It was to deregulate key industries, to cut federal spending on middle and working class programs, to freeze the minimum wage, to cut government regulation, to cut wages, work-rules and benefits at work, to weaken the unions, to cut taxes on the rich and business, and to build up the US military.
In a December 1977 meeting of another influential business groups, the Business Council, President Carter promised these leaders that if they encountered government action “that unnecessarily encroaches on your effectiveness, I hope you’ll let either my Cabinet officers or me know, and I’ll do the best I can to correct it … If you let me have those recommendations, I’ll do the best I can to comply with your request.” (The structure of Power in America, page 107.)
The Democratic administration of Carter began to implement this program during the late 1970s. It deregulated trucking and allowed the increase in inflation to erode the value of wages. It also began to cut social programs and increase spending on the military. During the years Carter was in office, prices rose 41% and profits rose 54.6%, while wages only rose 31%. During his term in office an offensive began on union activists, with 15,000 workers being illegally fired for union activity in 1980. The concessionary movement in labor contracts also began at this time. Not one of labor’s priority legislation was passed under Jimmy Carter.
Reagan and Bush
Under the Reagan and Bush Administrations these policies escalated. In a warning shot fired at labor, Reagan fired the air-traffic controllers who went on strike in 1981. This attack was a green light for the employers to mount an offensive on the working class and the poor. Demands for concessions escalated, social programs were cut, and the minimum wage was frozen. There were large increases in military spending and new expeditions of US military force abroad. On a whole number of different fronts, a savage assault was launched on the living standards of working people. As a part of this, taxes were cut on the rich and increased on working people. At the same time services were cut back at all levels of government.
Now under Clinton, despite attempts to present the Democrats as “friends of labor and working people,” these policies have continued. In 1993, over 600,000 jobs were lost – more jobs than in the recession year of 1991. Major corporations have continued to downsize with lay-offs of workers, and most of the jobs created have been low-paid and often part-time or temporary. At the same time Clinton, with the passing of NAFTA and GATT, is forcing US workers to compete with the low wages paid by corporations in Mexico, leading to a new downward pressure on wages and the further loss of an estimated 500,000 jobs. At the same time Clinton’s budget included laying off 250,000 federal workers.
The main aim of the Clinton administration is to allow US corporations to better compete with their rivals overseas. This means lowering wages at home. The way to achieve this has been by demanding “flexibility.” Under this banner, workers are being forced to give up work-rules, the eight-hour day, to accept lay-offs and to do more work. By cloaking this attack on workers in the language of the “Team Concept” big business seeks to get the union leaders to support its goals. Labor Secretary Reich states that he wands to make unions “high productivity organizations.” This is just a code work for intensifying the pace of workers to boost the profits of the corporations.
The Wall Street Journal summed up the attitude of big business in a lead article on November 22, 1993. It stated: “Even though President Clinton has railed against rich people, special interest lobbyists, overpaid executives and insurance and drug companies, he is now aggressively wooing big business, inviting small groups of top executives – 80 in the past 10 months – to lunch. On issue after issue, Mr. Clinton and his administration come down on the same side as corporate America.” Leading CEOs also see Clinton as friendly to them. “Take issue by issue,” says Curtis Barnette, Chairman of Bethlehem Steel Corp., “Is Clinton good for American business on trade issues? Yes. On health care? Yes.”
The Rich Get Richer
The result is that the rich have had a bonanza. The money created by the explosion in price of stocks, the increase in property prices, the increase in profits and the increase in interest rates have ended up in the pockets of the top 1% of society.
The wealthiest 1% of the population, about one million families, received roughly 60% of the after-tax income gains realized by all US families from 1977 to 1989. At the same time demographers reported in 1991 that Americans aged 35 to 45, moving into middle age were only one-half as wealthy, on an inflation-adjusted basis, as their parents had been at the same age. Claudia Goldin, a Harvard economic historian found “inequality at its highest since the great leveling of wages during the New deal and World War Two.”
Between 1980 and 1988 the top tax rate on unearned income dropped from 70% to 28%. Just between 1984 and 1988, the net wealth of Forbes 400 richest Americans roughly doubled. Also the percentage of the total tax revenues to federal spending coming from corporate income tax fell from 26.9% to 7.7%. At the same time the amount workers paid in payroll taxes increased from 11.5% to 29.2%.
Big Business – A Tiny Privileged Elite
Kevin Philips, a former Republican political analyst, and a former member of the Wall Street Journal‘s five-person panel of political experts spells out the nature of this top 1% of US society in his book, Boiling Point. He says, they own “about one-half of the individually owned corporate stock, two-thirds of the bonds, an even higher percentage of the municipal bonds, and roughly 45 percent of the nonresidential real estate!” The top layer of this 1% effectively constitute the owners of the big corporations, i.e. the capitalist class.
When the huge concentration of corporate ownership is taken into account, the picture becomes even clearer. 2% of all companies in the US account for nearly 75% of the business in the country. The top 500 industrial corporations, which represent only one-tenth of one percent of this elite 2%, control over two-thirds of the business resources, employ two-thirds of the business resources, employ two-thirds of the industrial workers, account for 60% of the sales, and collect 70% of the profits. The majority of these corporations are under the sway of a tiny number of huge financial corporations. In the 1930s, it was estimated that 60 families, through their interlocking shareholdings controlled the commanding heights of the economy. It can be seen that a similar situation still exists today.
How Big Business Sells its Policies
The policies of the last 20 years have been directed by the interests of big business. However, if they had announced their plans in advance, it would have sparked a revolution similar to the Boston Tea-party of 1773. Instead they have had to camouflage the nature of the policies they introduced.
Business Week in 1974 clearly spelled out the process: “It will be a hard pill for many Americans to swallow – the idea of doing with less so that big business can have more … Nothing that this nation, or any other nation, has done in modern economic history compares with the selling job that must be done to make people accept this reality. (October 12, 1974 p. 120)
This ‘selling job’ was done by the mass media. In a recent book The Media Monopoly, it was calculated that although there are 1,700 newspapers, 11,000 magazines, 9,000 radio and 1,000 television stations, 2,500 book publishers and 7 movie studios in the US. Most of these are owned by a mere 50 corporations. Almost half of these corporations are among the top 500 corporations in the country. The owners of these corporations could fit in one room. With the present avalanche of media, cable and phone company mergers, including the merger of Viacom and Paramount, these 50 companies will be reduced to a handful in the coming years. It is these huge media corporations that have presented the false images and “selling job” for this brutal attack on the living standards of the American workers.
At the same time, sitting on the boards of the Universities and Foundations are the directors of the top 500 corporations. In this way they can ensure that the dominant ideas that emanate from these institutions do not expose or question their own role as an elite in US society. Since they are also the major funders for these institutions, they can use this lever to ensure that their views are represented.
These institutions have helped to argue for the philosophy of the last 15 years. The universities glorify the profit motive and praised the accumulation of great wealth as business schools have flourished. Also, the idea of government playing a constructive role in the economy has been increasingly questioned. Junk bond traders like Michael Milken and Ivan Boesky were held up as great heroes, while the history of struggles of working people and the idea that there could be an alternative economic system were dropped or relegated to fringe classes; In particular, there has been a vehement assault on the ideas of socialism and Marxism.
Big Business Attacks
It is with these levers of power that big business pushed through its agenda in the last 20 years. These policies were backed up by a shift to the right by the courts and by the National Labor Relation Board. An open offensive was called on union organizing. Big business consistently broke the law by illegally firing workers who looked to organize. One in 20 workers who looked to organize a union through NLRB elections was fired. At the same time, injunctions were issued against any successful picketing. In this way big business looked to weaken the unions through the use of the judges, the courts, the local police force and when necessary the national guard.
An All-sided assault began on wages, health benefits, work rules, safety standards, pensions and the sanctity of the eight-hour day. To back up these policies, social programs were cut and spending on public housing was reduced. The increase in the unemployed and the homeless was then used as a warning to those workers who were considering going out on strike or standing up to this offensive of big business. Big business revived the policy of immediately hiring scabs to break strikes, and employers, using legislation already on the books, began to permanently replace workers who went out on strike. This was accompanied by a systematic attack on gains made by African-Americans and other oppressed minorities, and the use of the press to whip up racist propaganda to create divisions among workers.
The programs that benefit the rich and big business have not been cut. The largest growing item in the budget is the increased interest on the national debt, which costs taxpayers close to $200 billion a year. This spending goes into the pockets of the top corporations and the richest 1% of society. At the same time the bailout of the savings and loans was a massive transfer of wealth from ordinary taxpayers to the top 1% who owned the majority of shares in these institutions. Fortune magazine has calculated that this bailout in the end will cost the American taxpayer $502 billion! Also, there have been no serious cuts in spending on weapons programs, which help to support the huge military-industrial complex corporations.
The Role of the Democratic Party
As these attacks were unleashed, the labor leaders and civil rights leaders have continually attempted to present the Democrats as friends of labor and the specially oppressed minorities. In fact, despite the fact that both political parties have represented the interests of big business, over the last century, a certain division of labor has developed between the parties. This is not because of any fundamental difference between the Democrats and Republicans.
It was to a great extent an accident as to which party would play this role, especially considering that the Democrats were the party of the slave-owners. However, at important periods of time, when conditions deteriorated leading to a mass movement of workers, youth, small farmers or the civil rights movement, it was the Republicans who were in power. The anger swept out the party in power, and put the Democrats into power, who were often then able to gain some credit in the eyes of workers.
Roosevelt and the Democrats in the 1930s
At the turn of the century, the Democrats were able to capture the growing movement of populism. This process was even more developed in the 1930s. Republican President Herbert Hoover was in power when the 1929-33 depression struck. As a result, he was swept from power and replaced by Democrat Franklin D. Roosevelt in the 1932 elections. It should be noted that Roosevelt did not present his New Deal policies before he was elected. However, once he was elected, he was immediately faced with a collapse of the banking system, and an economy stuck in depression.
In this situation, and facing a rising and increasingly radicalized working class, the more strategic and more farsighted sections of big business realized that certain refinements of the old methods of rule were needed. Through Roosevelt and the Democrats, the policies of the New Deal were initiated. The role Roosevelt played was to appease the movement of the working class – thus saving capitalism from a challenge to the system itself. This was done by creating public work schemes and aiming some conciliatory comments and statements towards the working class.
On occasion, the Roosevelt administration spoke of the right of workers to organize and included a vague statement to this effect in legislation. But these minor concessions were accompanied by repression. The National Guard was used against the labor movement more times under Roosevelt than under any other president. The first engagement of US troops in the 1940s was against union members in California – not against Japanese or German troops. Workers were shot on picket lines from coast to coast.
The labor leaders, terrified by the radicalized, fighting working class movement below them, seized on Roosevelt’s minor concessions and insisted that he was a “friend of labor.” With the help of these leaders, the movement towards an independent political party of labor was averted. The American working class was kept within the boundaries of the two parties of big business. The leaders of the Democratic Party reached out to the labor leaders and gave them secondary and minor positions of consultation in their administration. In return, at election time, labor activists were exhorted by their leaders to turn out and work for the Democratic Party.
Democrats in the 1950s and 1960s
In the 1950s the civil rights movement exploded. Republican president Eisenhower was in the White House. The initial response of big business and both parties was to use the police and National Guard to put down the civil rights demonstrations and protests that spread across the South. Democratic administrations in the South launched vicious attacks using water hoses and dogs. However, as the 1950s gave way to the 1960s, it became clear that the streets could not be cleared this way. The heroism of the black working class and youth propelled the movement forward. As J. F. Kennedy, the Democrat, replaced Eisenhower as president in 1960, big business became convinced that some reforms had to be made. Once again, it happened to be the Democrats who were in the White House when big business was forced to give reforms by a mass movement.
The Voting Rights Act and Civil Rights Act were passed and the social programs of the so-called Great Society of Johnson were put in place. As Roosevelt had done with the labor leaders in the 1930s, Kennedy and Johnson, using the bait of reforms, reached out to pull in clack leaders inside the Democratic Party. These leaders who would not be contained were repressed or murdered. A section of the black leadership began to be elevated above the conditions of the mass of the black workers and youth by gaining professional positions or by benefiting from small enterprises or businesses. They developed a separate outlook, and they saw the Democratic Party as the instrument through which their interests could be represented. The Democratic Party, which had been the party of the former slave-owners and which contained the most racist and anti-labor big business representatives from the South, was now presented as a friend to blacks as well as a friend to labor.
In this manner, with the help of the reformist labor leaders and a layer of the black leaders, big business managed through a combination of repression and concession, and the use of its two parties, to ride out the challenge of the working class offensive of the 1930s and 1940s and the black revolt of the 1950s and 1960s. However, in the process, one of its political parties, the Democrats, became a target for the demands of labor leaders and a layer of black professional and small business leaders. In this way the pressure of the working class and black population would at times curtail the room to maneuver and flexibility of the Democratic Party in defending big business’s interests. This is not to say that the interests of the working class or especially oppressed minorities can ever be represented by the Democrats. Instead, the Democratic Party has certain particular secondary features different from the Republicans, due to the division of labor between these two parties in the past to defend and represent the interests of big business. Henry Ford II put the process very clearly: “We must support the Democrats so we can continue to live like Republicans.”
The Republican Party
The Republican Party, also has had to make demagogic appeals to the working class to come to power. The Republicans under Nixon in 1969 were forced to give verbal support for civil rights, a family assistance plan for the poor, federal food stamps and a national health insurance program. Nixon in his campaign stressed his own rags to riches life and attempted to present himself as a spokesman for “forgotten middle class Americans.” Nixon, in fact, introduced the federal food stamp program and indexed social security payments to inflation, and was blocked by Congress in his attempt to pass a health care bill.
Anger of Voters in 1990s
After two decades of attacks on living standards and a continual erosion of well-paid full-time jobs with benefits, increased pressure on the job and a crisis enveloping all aspects of life, a mood of anger developed among workers. This anger swept Bush away while Ross Perot, as an independent, captured 19% of the cote in 1992. In 1994, it was the turn of the Democrats to be removed from office. Further, both in 1992 and 1994, polls showed that a majority of eligible voters would support a new political party.
Opinion polls document that the majority of Americans are angrier than any previous generation since the 1930s. In 1964, a mere 29% has said that government was run for the benefit of a few big interests. Following Watergate that surged to 66%, and 70% after disenchantment with the Carter presidency. By 1992 it had reached 80%.
Opinion polls also document a strong feeling that something is seriously wrong with the country, and that voters are looking for fundamental change. An unprecedented number, 65% of the population, believe that “quite a dew” of the people running the government are crooked. In a poll in Fortune magazine, one in three people said that the US would be better off without any millionaires at all!
Crisis of the Political System
Both political parties of big business have been weakened under the impact of the crisis. This has caused increased divisions in the parties. In the Democratic Party, this is reflected in a struggle between the wing of the party that attempts to draw in union leaders and civil rights leaders by promising them some reforms, and the wing that has coalesced around Clinton, the dominant wing at present, which is concerned with proving to big business they are the best party to represent them. In the Republicans, when they needed foot soldiers to get Reagan elected, they encouraged the Moral Majority and evangelical right into the party. Now, this wing has become very string, as shown by their influence in the 1994 elections. The scene is now set for a struggle between the more traditional big business foundations of the party, and the Christian right for control of the presidential candidate and the future direction of the party.
Regardless of which wings dominate these parties at different times, they cannot represent the interests of workers. What these internal divisions do show is the pressure put on them by the growing anger of the voters, as they continue to push through the unpopular policies demanded by their sponsors, big business, while at the same time they try to get re-elected by the public again.
What is being prepared is conditions to build a new political party to represent workers. If such a party had existed before the last elections, the anger of workers would have had a vehicle to represent it. If leaders of organized labor committed to fight to reverse the attacks on the working class and to make the rich and big business pay for the crisis, then the election results would have been very different. A Labor Party could well have been built, and elected into power.
Faced with the failure of the Democrats to deliver any goods in this new economic climate, increased class polarization is developing across the country. The NAFTA debate was a rude awakening for millions of workers about the role of Clinton and the Democrats. The American public faced a barrage of propaganda unseen in recent years and saw big business pull in the Democrats to push through their policies over the opposition of the majority of the population. In this process, with Clinton promising to protect Republicans from the wrath of the electorate, especially from labor, if they voted for NAFTA, the special role that the Democrats play in defending the interests of corporate America was exposed to millions of workers. The working class had been given a very sharp lesson in the nature of politics and mass media in the US, and how important their concerns are when they go up against those of the top corporations.