US Perspectives 2010 : The crisis at the heart of Capitalism

This document was drafted in the Spring of 2010, and discussed,
amended, and approved at the May 2010 National Congress of the Workers
International League. A new phase is opening up in U.S. politics and the
Labor Movement as American workers find their backs against the wall
and have no option but to fight back.

“The vast practical importance of a correct theoretical
orientation is most strikingly manifested in a period of acute social
conflict of rapid political shifts, of abrupt changes in the situation.
In such periods, political conceptions and generalizations are rapidly
used up and require either a complete replacement (which is easier) or
their concretization, precision or partial rectification (which is
harder). It is in just such periods that all sorts of transitional,
intermediate situations and combinations arise, as a matter of
necessity, which upset the customary patterns and doubly require a
sustained theoretical attention. In a word, if in the pacific and
‘organic’ period (before the war) one could still live on the revenue
from a few ready made abstractions, in our time each new event
forcefully brings home the most important law of the dialectic: The
truth is always concrete.”

(Leon Trotsky, Bonapartism and Fascism, July 1934)

“A whole series of offensives followed by retreats, of
uprisings followed by defeats; transitions from attack to defence, and
throughout: critical self-analysis, self-purification, splits,
re-evaluations of leaders and of methods, new splits and new
unifications. In this crucible of struggle, and on the anvil of
revolutionary experiences never before equalled, a genuine Communist
Party is being forged. A contemptuous attitude toward this process as if
it were a tussle among ‘leaders’ or a family squabble among
opportunists, etc. – such an attitude is proof of extreme
nearsightedness, not to say blindness.”

(Leon Trotsky, On the Policy of the KAPD, November 24,
1920)

Introduction

The elaboration and discussion of our U.S. Perspectives document is
an important part of our work and development as an organization. As we
have no crystal ball, our perspectives are by their very nature
conditional, a set of hypotheses that must be checked against dynamic
reality at every stage. However, through a series of successive
approximations, adjusting our perspectives as necessary to the changing
circumstances, we can continually refine our understanding of the
world around us. Our aim is to determine as best we can the political,
economic, and social stage we are passing through, in order to
intervene in the movement, establish roots in the working class, and
build our organization more effectively. This document should be read
in conjunction with the IMT’s 2010 World Perspectives.

As we have explained in previous IMT World Perspectives documents,
our starting point is the following: We have entered a period of
extreme turbulence on a world scale; a period of crisis, wars,
revolutions and counter-revolutions. A period in which the economic,
social, and political crises all condition one another. A period in
which anything the capitalists do to re-establish equilibrium in one
area will inevitably lead to instability in another. To re-establish
economic equilibrium, the ruling class will have to attack wages and
conditions and cut social services, education, etc. This will only lead
to further social and political disequilibrium. It is a period in
which the tensions between the nations and the classes will be
exacerbated, a period in which aggressive diplomacy, proxy wars, and
trade wars will intensify. This is the starting point of our analysis.
However, this does not exhaust the question. Our general
characterization of the epoch must not be transformed into a mechanical
and one-sided interpretation of reality and what is to come.

It is not enough to say that someone is pregnant. The first month is
very different from the ninth. We must keep our finger on the pulse of
the changing consciousness of masses, determine to the best of our
ability what stage we are at and where we are most likely headed, and
on that basis, determine which slogans, demands, and general methods of
work are most appropriate, in order to make the best use of our
limited numbers and resources and connect with and recruit the ones and
twos.

It is said that perspectives is a science, and that party building
is an art. But developing our perspectives is not a precise science. We
must pay special attention to the infinitely complex question of the
rhythm of events, both in terms of over and underestimating the
potential for explosions of the class struggle. Sharp, sudden changes
are on the order of the day, and we must not be taken by surprise.
Revolutionary events are not as far off as we think, even here in the
United States. But neither can we be impatient and miseducate comrades
with the idea that “the revolution is right around the corner.” We must
patiently explain that this will be a relatively protracted process.
We must follow events and the struggles of the working class as they
unfold, with all their inherent contradictions.

In such an intensely complex period, we will inevitably make some
mistakes. However, we must have a sense of proportion when it comes to
understanding and analyzing our mistakes. The only people who make no
mistakes are those who do nothing. But if mistakes have been made, we
must collectively and openly recognize them, discuss, learn from, and
correct them, in order to take the work forward on a higher level.

Crisis and Consciousness

We are confronted
with the worst economic crisis in several generations. We are not
dealing with the “normal” boom-slump cycle, but with a transition
between entire periods of capitalist development. We have entered an
epoch in which the overall development of the capitalist system curves
downward. In other words, the slumps destroy the productive forces more
quickly than the booms can develop them. However, there is no automatic
relationship, no neat and tidy “start” and “stop” between one period
and another. It is a complex, contradictory, dialectical process. As
Trotsky explained in The Capitalist Curve of Development
(1923): “Still more, a transition from one epoch of this kind to a
different one must naturally produce the greatest convulsions in the
relationships between classes and between states.”

These pressures also come to bear on our own organization and
members. It is not an accident that it is precisely at this stage that
we have seen various disagreements and splits. Differences that seemed
minor during the previous period assumed greater prominence on the
basis of changing conditions. Small mistakes in methods and tactics,
and even symptoms of ultra-leftism or opportunism, which under “normal”
circumstances may have been corrected over time on the basis of events
and discussion, have developed into more serious problems.

Impatience with the pace of development of events, despite the
confirmation of our political and economic perspectives, is affecting
an entire layer of activists, and inevitably, some of our own comrades
as well. Many of those on our periphery are demoralized and dejected.
Many had their sincere hopes in Obama dashed, yet there is no viable
political alternative available. Another layer had no illusions in
Obama, but expected that once he showed his true colors, there would be
a massive reaction and mobilizations on the streets and a rapid
revival of the labor movement. In effect, these activists had
“illusions in the illusions” in Obama. As they are not armed with a
long-term Marxist perspective, they cannot understand why the masses
seem to be more or less passively accepting the hammer blows of the
capitalists. Some continue to organize small and ineffective actions
because “we have to do something, even if it won’t do any good.” Others
tend to withdraw from activity or look for someone or something to
blame for this situation.

Many blame the masses, and fall into even greater pessimism. Others
write off the traditional workers’ organizations – the mass workers’
parties and trade unions – as unsalvageable, and embark on adventurous
and doomed efforts to found new parties and multi-issue “movements.”
Many blame the ideas of Marxism or even the struggle for socialism
itself, and set off on quixotic quests for “new ideas and methods,” in
reality, nothing but a rehash of pre-Marxist ideas. Some blame the
leadership of our organization. It is a complicated equation, and part
of the answer may very well involve mistakes made by the leadership.
But above all, it is due to the crisis of the leadership of the working
class as a whole, who do everything possible to avoid doing what they
are supposed to do: lead. In the case of the U.S., it is compounded by
the fact that as yet that there is no genuine mass political
alternative for the working class. Added to this is the infinitely
complex and contradictory nature of the overall period we are passing
through.

It is not enough to make generalizations about the economic cycle
and the stage we are at. This alone cannot resolve the challenges we
confront in building the organization. However, we must keep in mind
that in the final analysis, economics do play a determining
role in setting the backdrop for the complex superstructure of domestic
and foreign policy. In Engels’ extremely rich letter to Bloch, he
explains the following:

“According to the materialist conception of history, the ultimately
determining element in history is the production and reproduction of
real life. Other than this neither Marx nor I have ever asserted. Hence
if somebody twists this into saying that the economic element is the only
determining one, he transforms that proposition into a meaningless,
abstract, senseless phrase. The economic situation is the basis, but the
various elements of the superstructure — political forms of the class
struggle and its results, to wit: constitutions established by the
victorious class after a successful battle, etc., juridical forms, and
even the reflexes of all these actual struggles in the brains of the
participants, political, juristic, philosophical theories, religious
views and their further development into systems of dogmas — also
exercise their influence upon the course of the historical struggles and
in many cases preponderate in determining their form. There
is an interaction of all these elements in which, amid all the endless
host of accidents (that is, of things and events whose inner
interconnection is so remote or so impossible of proof that we can
regard it as non-existent, as negligible), the economic movement finally
asserts itself as necessary. Otherwise the application of the theory
to any period of history would be easier than the solution of a simple
equation of the first degree.

“We make our history ourselves, but, in the first place, under very
definite assumptions and conditions. Among these the economic ones are
ultimately decisive. But the political ones, etc., and indeed even the
traditions which haunt human minds also play a part, although not the
decisive one…

“…In the second place, however, history is made in such a way that
the final result always arises from conflicts between many individual
wills, of which each in turn has been made what it is by a host of
particular conditions of life. Thus there are innumerable intersecting
forces, an infinite series of parallelograms of forces which give rise
to one resultant — the historical event. This may again itself be
viewed as the product of a power which works as a whole unconsciously
and without volition. For what each individual wills is obstructed by
everyone else, and what emerges is something that no one willed. Thus
history has proceeded hitherto in the manner of a natural process and is
essentially subject to the same laws of motion.”

And as Trotsky explained in The Curve of Capitalist Development
(1923):

“It is a very difficult task, impossible to solve in its
full scope, to determine those subterranean impulses which economics
transmits to the politics of today; and yet the explanation of
political phenomena cannot be postponed, because the struggle cannot
wait. From this flows the necessity of resorting in daily political
activity to explanations which are so general that through long usage
they become transformed into truisms.

“As long as politics keeps flowing in the same forms,
within the same banks, and at about the same speed, i.e. as long as the
accumulation of economic quantity has not passed into a change of
political quality, this type of clarifying abstraction ("the interests
of the bourgeoisie", "imperialism", "fascism") still more or less
serves its task: not to interpret a political fact in all its
concreteness, but to reduce it to a familiar social type, which is, of
course, intrinsically of inestimable importance.

“But when a serious change occurs in the situation, all the
more so a sharp turn, such general explanations reveal their complete
inadequacy, and become wholly transformed into empty truisms. In such
cases it is invariably necessary to probe analytically much more deeply
in order to determine the qualitative aspect, and if possible also to
measure quantitatively the impulses of economics upon politics. These
‘impulses" represent the dialectical form of the "tasks" that originate
in the dynamic foundation and are submitted for solution in the sphere
of the superstructure.

“Oscillations of the economic conjuncture
(boom-depression-crisis) already signify in and of themselves periodic
impulses that give rise now to quantitative, now to qualitative changes,
and to new formations in the field of politics. The revenues of
possessing classes, the state budget, wages, unemployment, proportions
of foreign trade, etc., are intimately bound up with the economic
conjuncture, and in their turn exert the most direct influence on
politics. This alone is enough to make one understand how important and
fruitful it is to follow step by step the history of political parties,
state institutions, etc., in relation to the cycles of capitalist
development.

“By this we do not at all mean to say that these cycles
explain everything: this is excluded, if only for the reason that
cycles themselves are not fundamental but derivative economic phenomena.
They unfold on the basis of the development of productive forces
through the medium of market relations. But cycles explain a great deal,
forming as they do through automatic pulsation an indispensable
dialectical spring in the mechanism of capitalist society. The breaking
point of the trade-industrial conjuncture bring us into a greater
proximity with the critical knots in the web of the development of
political tendencies, legislation, and all forms of ideology.”

The above quotes are provided not as an “answer” from a “recipe
book,” but as an example of the application of the Marxist method
when it comes to analyzing economics, politics and society in general.
Marxist theory and political perspectives are not elective, optional
supplements to our work. They are the very basis for our practical work
in the real world. They are our guide to action. Trotsky pointed out
that generalizations that were perfectly adequate in the past, can
dialectically turn into their opposite, can become empty truisms with no
practical significance, and even be transformed into impediments to
our growth and development. This is why we must continually develop and
discuss our perspectives, in order to keep one step ahead of the
consciousness of those on our periphery, in order to help them draw
increasingly advanced political conclusions, and ultimately, politically
convince them that they should join the WIL.

U.S. Perspectives 2008

In order to put our perspectives for the coming period into context,
we reproduce below a few excerpts from our 2008 U.S. Perspectives
document, written before Barack Obama was even nominated as the
Democratic candidate:

“The next President of the United States of America will not
get to pick and choose his or her agenda. The agenda will be set by
the crisis facing the capitalist system both at home and abroad. Bush
ran on an “America First” domestic agenda, but was forced by events to
become most [the] aggressive imperialist in U.S. history. The next
occupant of the White House will inherit an increasingly unstable world
and an economic downturn of unknown depth or duration. In an epoch of
growing polarization and inequality, the next president will inevitably
appeal for national and bi-partisan “unity”. In other words, he or she
will call on American workers to subordinate their interests to the
interests of the rich, to tighten their belts further in the interest
of preserving the system that profits off of their labor. But as the
“American Dream” is transformed into an “American Nightmare”, more and
more people will begin to question the very system that leads to such
instability.

“The large turnout in the primaries for the Democrats in particular
reflects a shift to the left within the narrow limits of the current
U.S. electoral setup, a healthy rejection of status quo. There are many
sincere illusions in the Democrats, and in the idea that a woman or a
black man will somehow be better able to reflect the interests of
working people. But what matters most is the class interests these
politicians represent, and it is clear that they are both firmly on the
side of big business. We must be clear: there is no solution to the
problems faced by the working class majority within these limits.

“The vast majority of Americans will have to learn this the hard
way, through their own bitter experience. If the Democrats succeed in
gaining control of both houses of Congress and the White House, there
will be no more excuses for not ending the war in Iraq, providing
health care, education and housing for all, repealing anti-labor
legislation and rebuilding the country’s infrastructure. They will show
their true colors as defenders of the status quo. And in an era of
economic and social crisis, they will not be able to offer even the
tiniest concessions. After a few years in the ‘school’ of the
Democratic party, the real questioning and search for a mass alternative
that truly represents working people will begin in earnest.

“The potential for such a party is enormous. The power and money of
big business and their politicians can be combated and defeated. A mass
party of labor based on the unions, with all the organizing and
financial power the unions have at their disposal, fighting for a
program that truly represents workers’ interests, could rapidly break
the stranglehold of the Democrats and Republicans.

“During the economic expansion of the last few years, a smaller
share than ever went to workers’ wages, as compared to corporate
profits. Long-term unemployment is at record levels and millions are no
longer even considered part of the workforce. Already, over one
million families have lost or will lose their homes, and it is
estimated that millions will lose their jobs in the recession that in
many analysts’ view is already upon us. If during the economic expansion
workers were left out in the cold, it will be even worse during a
recession. This will have a profound effect on the consciousness of
American workers, which has already been shaken by the events and
experience of the last few years.

“This will be a complex and contradictory process. There will be
increasing polarization both to the right and to the left, and racism
and xenophobia will be used by the ruling class to divide workers. But
the pendulum of history cannot swing in one direction forever. Sooner
rather than later, there will be a colossal and perhaps surprisingly
rapid shift to the left. We can see the early symptoms of this already
in the labor movement, among black and immigrant workers, the anti-war
movement and among the youth.”

Broadly speaking, our perspectives have been confirmed. The
accumulation of profound changes in workers’ consciousness on the basis
of events continues. The Republic Windows and Doors factory occupation
in Chicago and the thousands-strong marches against the crisis and
cuts around the country are symptomatic examples of what is to come.
Obama was eventually nominated and the election was held in the midst of
the greatest economic meltdown since the Great Depression. Millions of
Americans, many of whom had never voted before, came out against eight
years of G.W. Bush and the Republicans and for Barack Obama, energized
by his message of hope and change.

His victory marked a turning point in U.S. politics, a clear
rejection of Bush’s blatantly anti-worker and imperialist policies, and
a rejection by the majority of racism, although institutional racism
remains as strong as ever. The streets overflowed with joy and the
promise of a new era. Around the U.S. and indeed around the world,
cries of “yes we can!” could be heard as a collective sigh of relief
swept the planet. But real change was not to be. In just a few months,
the “School of the Democrats” has already taught many hard lessons to
those with sincere illusions in this capitalist party and the system it
defends.

The Economic Situation

The root cause of the crisis is the inability of world capitalism to
develop the colossal productive forces unleashed by the creativity and
labor of the working class. The narrow constraints of the nation state
and the chaos of the market economy, both intrinsic parts of the
capitalist system, inevitably lead to periodic crises. For years we
were told by the defenders of the system that such crises were a thing
of the past, that capitalism had solved its problems. The Marxists
explained that crisis was inherent and inevitable and would eventually
arrive. However, it was impossible to predict the timing with any sort
of precision.

The delay in the unfolding of the crisis has had an effect on the
consciousness of the masses, and above all, on that of the workers’
leaders, who have shifted much further to the right than anyone could
have foreseen. After all, it seemed for a time that capitalism had
indeed solved its problems. The Soviet Union had collapsed, and the
“Pax Americana” – although imperfect and still rife with war, poverty,
misery and exploitation – was “as good as it gets.” Now those illusions
have been shattered. A new generation now knows what it is to live
through a period of war, revolution, counter-revolution, crisis and
unemployment. This has revolutionary implications for the future. And
nonetheless, it is precisely now that the reformists are desperately
attempting to sow more illusions in the system than ever.

Although the situation has stabilized somewhat in the last few
months, the fact of the matter is that for workers, things are actually
worse now than they were under Bush. The American economy
lost jobs every month for 24 months in a row, a steeper fall than
during the Great Depression. The U.S. unemployment rate has now
surpassed 10 percent for the first time since 1983, and will probably
hover around that level for some time. In some states in the so-called
“rust belt,” for example, Ohio and Michigan, it is substantially
higher. One in five American men of working age are unemployed. For
immigrants and blacks it is even worse. 34.5 percent of young African
American men are unemployed. The youth are also severely affected.

2009 ended with total job losses of 4.2 million and an average
unemployment rate of 9.3%, compared to an average of 4.6% in 2007. Some
8 million jobs have evaporated since the recession began in December
2007, three times the number lost during the 1980-82 recession. When
the “underemployment rate” is figured in, taking into account those
workers hired part-time but wanting full-time work, as well as those
who are too discouraged to actively seek work, the rate goes as high as
17.5%. 1,000,000 Americans saw their unemployment benefits run out in
January of this year alone.

New York Times columnist Bob Herbert reported that “the
Center for Labor Market Studies at Northeastern University in Boston
divided American households into 10 groups based on annual household
income. Then it analyzed labor conditions in each of the groups during
the fourth quarter of 2009.” The results confirmed that the average
unemployment rate hides the true depth of the crisis. The study found
that households with incomes of more than $150,000 are unemployed at a
rate of 3.2%, with those making between $100,000 at $149,999 slightly
higher at 4%. Compare that to those earning $12,500 to $20,000, who
suffer from unemployment at a rate of 19.1%. But that’s still nothing
when compared to the poorest of the poor; households earning $12,499 or
less are out of work at an astonishing rate of 30.8%, five points
higher than the overall jobless rate at the peak of the Great
Depression. And as for underemployment, the rate for the lowest earners
was 20.6%, compared with just 1.6% for the richest. In other words,
the pain is not being shared equally by all, no matter how much Obama
appeals to “national unity” to ride out the crisis.

At the end of 2009, those unable to find work for six months or
longer rose to a new record of 5.6 million, or 35.6%. For workers, a
“jobless recovery” is no recovery at all. There are six workers looking
for every job available. Over 5.2% of all jobs have been cut
since the recession began. Given that the American economy needs to add
around 125,000 jobs each month just to keep up with population growth,
there is in reality a net deficit of some 10 million jobs. Heidi
Shierholz, an economist at Economic Policy Institute in Washington, has
said that the U.S. suffers from a “jobs gap” of nearly 10 million. To
close that gap and get back to pre-recession levels in two years would
require the creation of more than 500,000 new jobs per month, a pace of
job creation not seen since 1950-51.

The recent contraction in production was the sharpest in a hundred
years. In May, 2009, the rate of capacity utilization for industry in
the United States declined to 68.3%, 12.6% below the average for
1972-2008. The national debt has risen to unprecedented and
unsustainable levels and the currency has lost much of its value as the
capitalists attempt to boost exports by cheapening them in relation to
other currencies. As a result, the foundations of a sustained recovery
are being further undermined.

And yet, technically speaking, the recession is “over.” After four
consecutive quarters of contraction, U.S. GDP grew by 3.5% in the third
quarter of 2009, and an estimated 5.9% in the fourth quarter.
Nonetheless, the economic picture remains grim and concerns that there
could be a “double dip” recession remain. Overall, the U.S. economy
declined 2.4%, the largest drop since 1946. A slowdown in growth is
projected for the first quarter of 2010, as 60% of the late-year growth
in 2009 was the result of companies rebuilding stockpiles depleted by
the recession, which has a positive knock-on effect throughout the
economy. However, this kind of growth has its limits. With consumer
spending projected to remain muted, eventually the rebuilding of
inventories will come to an end.

How is it that GDP can rebound when there are millions fewer jobs
than there were two years ago? The answer is simple: the capitalists
are making fewer workers do more work for less pay. According to the
Department of Labor, productivity – the amount produced per worker per
hour – rose by 9.5% in the 3rd quarter of 2009, after rising 6.9% in
the 2nd. And yet wages and benefits were up just 1.5% in 2009, the
weakest showing on records that go back to 1982. But less purchasing
power means fewer goods can be bought. In an economy 70% reliant on
consumer spending, this cannot be sustained indefinitely.

Public borrowing is spiraling out of control. Sooner or later this
will lead to higher interest rates and inflation, which will further
strangle any recovery. Under these conditions, even when the recession
ends, the economies of the USA and other key capitalist countries will
remain feeble and unemployment will remain at high levels. The crisis
is being used by the capitalists to force the workers in the advanced
capitalist countries to accept a new, lower standard of living. This is
the new “norm” for U.S. workers, many of whom have long been
accustomed to a considerably higher quality of life than most of their
class brothers and sisters around the world. On the agenda is a
relentless driving down of wages and conditions across the board. This
is a finished recipe for tremendous explosions of the class struggle in
the years ahead.

The capitalists will find a way out of even the deepest crisis,
unless and until the system is overthrown by the conscious action of
the working class. Due to the lack of the subjective factor, the
revolutionary leadership, they will eventually get out of the crisis on
the backs of the workers, on the basis of their blood, sweat, and
shattered nerves. But they will not have not solved any of the
fundamental contradictions, and will even exacerbate them further, thus
laying the basis for even more profound crises in the future.

Workers want to believe that the worst is indeed over, that they
have made it through the storm to relative shelter. Many are still
willing to “wait and see,” and hope for real change from Obama. But
this has its limits; the worst is far from over. The immediate shock of
the crisis may have subsided, but now the reality is gradually
creeping in: American workers are going to be forced to accept a lower
quality of life, and there will be no rapid bounce back of jobs.
Millions of the jobs lost are gone forever, to be replaced by fewer
jobs offering lower wages, no benefits, and no union protections.

The bottom line is that U.S. workers are paid “too much” by global
standards. The capitalists have scoured the planet for cheap labor,
forcing down wages and conditions in the U.S. in a relentless “race to
the bottom.” Even taking into account its more productive and educated
workforce, economists estimate U.S. manufacturing workers would need to
take at least another 20% pay cut before coming into some sort of
equilibrium with world standards. Now all workers, including the
so-called “middle class,” will be compelled to accept even less than
before . “Less is more” is the new virtue, after decades of driving
workers to unrestrained consumerism and indebtedness. Long gone is the
more or less steady increase in quality of life that laid the basis for
relative class peace in the post-war period. The increase in wages,
benefits and living standards during the post-war period was the
material basis for the workers supporting the pro-capitalist labor
leaders. This material basis is now being undermined. As Trotsky
explained, it is not the absolute levels of poverty, but the sharp
swings between periods of stability and periods of instability that
most affect consciousness.

The U.S. government has pumped in vast sums of money and this is
reflected in some growth of employment in education, health services,
and government jobs. However, savage cuts in state and local budgets
are now beginning to drag on the economy and cut further into standards
of living. The economic relief bill passed by the Democrats in late
2009 had a $24 billion price tag. However, just 10%, or $2.4 million,
went to unemployment benefits. The bulk of it went to further bailout
businesses for their losses by giving them massive tax refunds. The
“bi-partisan” jobs creation bill passed this spring is also an
incentive program for private businesses that create jobs. In other
words, they get public money but we have no public control over the
quality of the jobs created, or even whether jobs are created at all.
This is far from the massive federal government program of useful public
works and unionized job creation we demand. It is more of Reagan’s
“trickle down economics” under a new guise.

Polling figures can rise and fall from week to week, but the overall
trend in recent months indicates a lack of confidence in the future.
After all, what kind of recovery is it when 16 million people can’t
find work? Again, it is the effect of this situation on workers’
consciousness that most interests us. In general, consciousness is
conservative and tends to lag behind events. But when it catches up, it
can do so with a bang. We must not be caught unawares and unprepared.

The Political Situation

Just one year after the elation that followed his victory, the
general consensus is that Barack Obama hasn’t actually done very much,
other than continue his predecessor’s policies in one form or another.
He has certainly not delivered on the “hope and change” he promised.
For many, “hope and change” meant, quite simply, “jobs.” We have seen
where things stand on that count; in December 2009, unemployment rose
in 43 states. In April, an incredible 2.7 million jobless Americans are
set to lose their paltry unemployment benefits, doomed to become part
of the “new poor,” a permanent underclass of the long-term unemployed.
In fact, what is really surprising is just how little Obama has done.
Even his Nobel Peace Prize was based on expectations for the future,
not the reality of his policies.

We thought he might do at least a few things, if only cosmetically,
to differentiate himself from the Bush years. But the fact is, he has
very little room to maneuver and is compelled to defend the interests
of U.S. capitalism and imperialism with similar methods. Nonetheless,
for lack of a genuine alternative, many illusions remain among a
significant layer of the population. But that will not last forever.
Already, many of the biggest advocates of a “lesser evil” electoral
policy have been forced to recognize that there is no fundamental
difference between the Democrats and Republicans.

We must maintain a patient and friendly attitude to those with
honest illusions in Obama. But for our purposes, there is no question of
waiting around for the honeymoon to end; there are already more than
enough people who have broken with the Democrats and Obama himself, who
agree with our program, ideas, methods and orientation to the mass
organizations, and whom we can recruit if we take the time to discuss
with them. This is our target audience at present, not yet the broader
masses.

We must keep the big picture in mind, and not get too caught up in
the economic figures for any given week, month, or quarter. It is the
overall trend of continued unemployment, lack of quality jobs, and
lower wages that is having an effect on the workers’ consciousness. As
we have explained above, we are not just experiencing a change in the
“normal” business cycle, but of the overall character of the booms and
slumps. For example, Michael Moore’s Capitalism a Love Story was an
important symptom of a growing questioning of the system itself,
despite continued illusions that it can somehow be reformed.

The off-year elections in late 2009 were another indication of what
is to come. Most incumbents were thrown out and those who remained did
so at tremendous financial expense. There can be dramatic swings in
public sentiment in the 2010 midterm elections as American voters
reject the “status quo” in their own distorted way and look for a way
out. This is what happened in January during the special election to
fill Edward Kennedy’s seat in Massachusetts.

After controlling that Senate seat for 47 years, the Democrats
assumed they would be a shoe-in to win it again. In many parts of
Massachusetts registered Democrats outnumber registered Republicans by a
margin of three to one. The Democrats have control of the White House
and Congress and they control the governor and state legislature in
Massachusetts. The Massachusetts congressional delegation was made up
entirely of Democrats until this election. However, far from using
these positions of power to improve the lives of the majority, it was
the Democrats in Boston that were putting forward cuts in education and
public services, while raising taxes on working people. After a year
of the “School of the Democrats,” many workers and youth were so
discouraged they did not even bother to vote. In frustration, some of
them even voted Republican to send a message. Hart Research Associates
conducted a poll of 810 AFL-CIO voters on election night and found
that, although voters without a college degree favored Obama by 21
percentage points in 2008, Democratic candidate Martha Coakley lost
that same group by a 20-point margin just one year later.

The frustration can clearly be seen on the question of health care.
Many want to see a genuine universal health care system put in place in
this country. A poll conducted by Research 2000 on election day in
Massachusetts showed that 82% of those who voted for Obama in 2008, but
who either abstained or voted Republican, favor “the national
government offering everyone the choice of a government administered
health insurance plan – something like the Medicare coverage that people
65 and older get – that would compete with private health insurance
plans.” However, Obama and the Democrats in Congress proposed a scheme
which took any so-called “public option” off the table, specifically
excluded undocumented workers, was nowhere near universal even for U.S.
citizens, would make insurance companies richer, and would tax many
union members’ health plans. This proposed tax on so-called “Cadillac
health care plans” – in reality benefits won by union members through
past struggles against the bosses – even pushed some union workers to
vote Republican.

The corporate media and pundits blamed Obama’s alleged “socialism”
and “radicalism” for the defeat in Massachusetts. They claim that this
represents a fundamental shift to the right among American workers.
Nothing could be further from the truth. According to the Hart Research
Associates poll, 47%of voters said they felt the Democrats had not
brought about enough change, compared to 32% who thought they had
changed too much. Even 50% of voters for Republican Scott Brown were
concerned about a lack of change. In the same poll, 79% of voters said
that the most important issue was jobs and the economy, followed by
controlling soaring health care costs.

At the same time as the right seemed to gain ground in
Massachusetts, voters in a special election in Oregon approved a
measure taxing corporations and the rich. There are deep contradictions
and political confusion in the working class. This is caused in part
by the fact the rich own and control all the political, media and
educational institutions, which they use to shape public opinion to
conform to their needs and interests. It is the duty of the labor
movement to fight against the huge capitalist propaganda machine and
offer a class based analysis of events instead.

The so-called Tea Party movement must be seen in the above context.
This movement arose at least partially out of Ron Paul’s “rebellious
libertarian” presidential campaign in 2008. Their emergence, and the
244% increase in “Patriot” militia groups since Obama’s election, is a
reflection of the growing polarization in society and a preparation by
the ruling class to use racism and xenophobia to divide the class in
the open struggles of the future. However, it is extremely unlikely
that they would ever allow them to actually come to power, at least not
at any time in the immediate future. A recent New York Times/CBS
poll found that 18% of respondents said they considered themselves
supporters of the Tea Party while 55% said they had heard little or
nothing about it. Only 4% have actually attended rallies, donated
money, etc. which is hardly the "grass roots rising tide" that has been
presented in the media.

If the Tea Party were ever to get in power, they would immediately
set off a ferocious movement against them as they would seek to slash
education, Social Security, Medicare and other public programs, and
launch attacks on public sector workers, which, contradictorily, are
programs that many older Tea Party supporters benefit from and expect
to receive upon retirement. The recent Tea Party convention exposed the
fact that while there are many confused rank and file members
searching for a solution to the problems faced by the majority in
America, it is far from a genuine “grass roots” movement with mass
support. In fact, the NYT/CBS poll found that the movement is
disproportionately upper middle-class in its composition, which hardly
conforms to the "disgruntled working man" image that the movement and
te media have tried to portray. It is egged on by media outlets such as
Fox News and is heavily funded and sponsored by the same corporations
that back both corporate parties, the Republicans in particular. For
example, the poll found that a substantial proportion of their members
are not only Republican, but strongly so, and therefore will in all
likelihood be absorbed directly into that party.

The media hysteria about an alleged “populist backlash” against
Obama’s policies is being whipped up to justify even further cuts. But
the reality is that the system has run out of steam. Long gone are the
days when the capitalists could concede a few concessions to the
workers. On the contrary, steep cuts and austerity are on the order of
the day. The federal deficit is projected to reach nearly 11% of the
country’s entire economic output. This is unprecedented during peace
time. According to the White House’s own projections, the deficit will
not return to sustainable levels for at least 10 years. Obama has now
announced that he will freeze or cut all discretionary spending for the
next three years, with the exception of “national security” spending,
which continues to skyrocket. His proposal has been
enthusiastically endorsed by Republicans like John McCain, proving yet
again that the Republicans and Democrats are two sides of the same
capitalist political coin. Or as author and political commentator Gore
Vidal aptly put it, “We only have one political party in the U.S., and
that is the property party, which essentially is corporate America,
which has two right wings, one called Republican and one called
Democrat.”

In practice, Obama’s budget means an across the board cut in all
social services and the public sector. Far from providing for “homeland
security,” this budget is a sure recipe for tremendous insecurity when
it comes to jobs, health care, housing and education. This is a true
“guns before butter” budget. The meaning of this is clear: unless
miraculous economic growth can be pulled out of a hat, there is no room
for any serious domestic reforms, no matter how modest.

After the Massachusetts election, Obama himself moved in a somewhat
populist direction, at least in words, calling on Congress to pass
legislation to create jobs and threatening to regulate the big banks
and tax their profits. He mentioned “jobs” 29 times in his State of the
Union address. But in practice, very little has changed. The jobs bill
they eventually passed is a drop in the bucket compared to what has
been lost.

As an excuse for not actually doing anything, the Democrats
cynically use the “filibuster” provision in the Senate rules. When Bush
was in power and the Democrats had a majority in Congress, they
rarely, if ever, used the filibuster. Instead, they approved his tax
cuts and bailout for the rich and billions upon billions in war
spending. According to the U.S. Constitution, the current Democratic
majority in the Senate could get rid of the filibuster option with a
simple majority vote. But they are deathly afraid to actually use their
position to improve the lot of ordinary Americans. As the saying goes,
appetite comes with eating, and the last thing they want to do is give
a few crumbs that could set in motion a mass movement that could get
out of their control. Obama is far too wedded to the corporations that
put him in power to actually challenge them in any significant way.

The fact that reality conflicts with the capitalist propaganda will
eventually lead to an even more widespread questioning of the system by
workers and the youth, but this will take time. It will not happen in a
straight line. The frustration can be expressed in contradictory ways.
Republicans will likely make some gains against the incumbent
Democrats. It is also possible that there could be an increase in votes
for left-wing candidates running independently of the two Big Business
parties, if the result is compared to the 2006 mid-term elections.
Despite “Obamamania” and the intense pressure to vote for the “lesser
evil,” left-leaning presidential candidates increased their vote
substantially in 2008 as compared to 2004. The Socialist Party claims
that their 2009 candidate for governor of New Jersey gained more votes
compared with the 2005 gubernatorial election.

Frustration with the gridlock of the two main parties in Washington
will eventually find a left expression. Unless and until a decisive
sector of the unions breaks with the Democrats and puts forward a mass
labor party in some form or another, all kinds of temporary and
peculiar formations are possible. It is possible that at a certain
stage, a layer of the Democrats, around figures like Ohio’s Dennis
Kucinich or Marcy Kaptur, could shift more substantially to the left,
or even split off to form a new party. In another important symptomatic
development, the U.S. Steel Workers union has announced they will be
running an independent steelworker candidate in Western Pennsylvania
against the Democratic incumbent for voting against Obama’s health care
bill.

We might decide to lend critical support to specific individuals and
orient tactically to such campaigns, as we did with the Cynthia
McKinney campaign in 2008, in order to put forward our demand for a
mass labor party and win the ones and twos to our organization. We will
have to take up each case individually. But we must always explain
that until a substantial section of the labor movement breaks from the
Democrats and puts its resources toward running labor candidates and
building a labor party, the results will continue to be extremely
modest and fleeting.

The contradictory mood underlying American society is indicated by
several recent polls, which give a snapshot of how Americans are
feeling at the moment. A poll conducted in March 2010 by Opinion
Dynamics Corp found that an incredible 72% of Democrats, 84% of
Republicans and 80% of Independents think the economy could collapse. A
Research 2000 poll taken after the Massachusetts election found that
57% think Obama has not delivered the change he promised. 53% would be
more likely to vote for the Democrats in the midterm elections if they
took stronger action against Wall Street and cut the bonuses received
by company executives. 47% think the Democrats are more on the side of
corporate lobbyists than on the side of ordinary Americans, while just
23% believe the Democrats are on the side of the “little guy.”
Self-identified independent voters had nearly the same views as those
who identified themselves as Democrats, proving that the so-called
“middle” is far more to the left than outlets like Fox News would have
us think.

A poll conducted in the spring of 2009 by Rasmussen found that among
Americans under 30 years of age, 37% prefer capitalism, 33% socialism,
and 30% are undecided. In other words, more than half of the first
generation since the Great Depression to face lower living standards
than their parents is in favor of, or at least open to the idea, that
socialism may be a better alternative, although they may not understand
fully what that even means.

Heading into the midterm elections, both the Democrats and
Republicans are repugnant to voters. A February New York Times/CBS
News poll found that 75 percent of respondents disapprove of the job
Congress is doing; just 8 percent said members of Congress deserved
re-election. A majority don’t think Obama has any real plan to create
jobs. The passage of his extremely limited health care package may
reignite the illusions of some for a time, but barring some
spectacular, unexpected development, the overall trend will be a
continued grinding down of illusions in Obama and his policies, leading
many to question their continued loyalty to Democrats.

This is why our demand for a mass party of labor based on the unions
is a key and defining demand. Why do we repeat it so often? Because
this demand flows from the objective situation. The working class has
no mass political representation. This is one of the most glaring
contradictions in the situation in the U.S. No one else is raising this
demand in a serious and consistent way. It is a clear point of
differentiation between ourselves and the sects.

Those who limit themselves to a critique of capitalism and then
advocate either a “lesser evil” vote for the Democrats, or present themselves
as the party of revolution, are in practice impotent or worse. We must
be clear that only mass forces – not an organization of 60 or
even of 6,000 – but of millions of workers, with all the
resources and capabilities of organized labor, can offer a serious
challenge to the two parties of Capital. This is why this demand, in
the tradition of the International’s orientation to the traditional
mass organizations and parties, is so important. We even changed the
banner of Socialist Appeal to reflect this general orientation
– even when such a party does not yet exist.

Of course, the formation of such a party will not be a panacea to
the problems of the working class or of our own development. While
creating tremendous opportunities for us to coordinate the work on a
national scale and discuss our ideas with much wider layers of worker
activists, it will also bring additional dangers and pressures.
Nonetheless, the demands we raise flow from the objective needs of the
situation, and this is a most pressing need. We must make it a key
focus of our activity, continually discussing it and orienting our
comrades and periphery to this perspective. In preparation, we must
discuss the work in the mass organizations in detail, even before we
are able to conduct it ourselves, drawing on the rich experience of the
International. At some point in the future, we may consider launching a
campaign advocating the formation of such a party.

For nearly the entire existence of the WIL, the Republicans were in
the White House, and for most of that time, controlled Congress as
well. As a result, for an entire period, our political perspectives did
not change dramatically from year to year. The pressure of “lesser
evil” politics was intense. We patiently and consistently explained
that the Republicans are anti-worker and imperialist, but that the
Democrats are fundamentally no different, that what we need is a mass
party of labor based on the unions. From the standpoint of our general
analysis of the political situation, there is no fundamental change now
that Obama is in power. We must nonetheless understand that for the
masses his election does mark a dramatic change.

It is one thing to have illusions in a future Democratic
administration; it is another to live through such an administration. It
is one thing to make demands on George W. Bush and have them come to
naught; it is another to make these demands on the Democrats in power,
only to be let down. The turbulence of the economic crisis is also an
important change in the situation. It is impossible to predict as far
ahead as 2012 with any accuracy, as any number of events can take place
between now and then. It is possible Obama will win again for lack of
an alternative; it is also possible that he will be so unpopular that
the “greater evil” will get back into power. But we can be sure of one
thing: the illusion of the “American Dream” is being violently shaken
out of the heads of millions of workers and young people

The Labor Movement

Trotsky explained that there is no automatic, linear relationship
between economic crises and the militancy of the working class. A
crisis does not automatically mean an increase in the class struggle.
Especially in a deep crisis, workers can sometimes be cowed for time.
Often, it is on the basis of a recovery that the workers regain their
confidence and move on the offensive. But this is not a mechanical
process either. Defensive struggles during a downturn can be
transformed into offensive struggles, and major strike waves can take
place in the middle of an economic boom. We must follow the awakening
of the workers to class consciousness through all its contradictory
twists and turns.

The lack of a clear alternative and bold lead by the workers’
leaders is a major factor in the situation. The role of the labor
bureaucracy has become not only a subjective factor, but an objective
factor in the blocking of the workers’ struggle. Although no major
defeat of the class has taken place in decades, the slow attrition of
the unions and the leaders’ inaction or outright betrayal feels like a
defeat, without a struggle having even taken place. Obama is the “left”
boot of the capitalist class, carrying out attacks on the workers that
even Bush couldn’t get away with. In much the same way, Clinton did
more to dismantle the “welfare state” and attack workers’ rights and
conditions of life, for example, with the passage of NAFTA, than Reagan
and Bush Sr. combined. With no clear alternative to the Democrats and
Republicans, and big illusions in Obama shattered, this can feel like a
defeat as well.

But one thing is crystal clear: the crisis is having a profound
effect on workers’ consciousness. How could it not? Former industrial
powerhouses with tens of thousands of good union jobs have become
virtual ghost towns. In Cleveland, for example, the poverty rate is
more than 30% and the population has collapsed from 900,000 to less
than 450,000 since 1950. Major work stoppages involving 1,000 or more
workers hit an all-time low of just 5 in 2009. These strikes involved
just 13,000 workers and led to just 124,000 lost workdays, also a
record low. Workers have their heads down as they desperately hold on
to what little they have, feeling that in the midst of such a
generalized crisis, they cannot demand much more than to maintain what
they already have. They can plainly see that the exorbitant corporate
bonuses and the bonanza on Wall Street continue, while their own
conditions worsen or stagnate. Nonetheless, they grudgingly accept the
ruling class mantra that “we’re all in this together” and tighten their
belts. But this situation cannot last forever.

For nearly 30 years, U.S. workers have suffered a decline in real
wages and conditions. To counter this situation, every possible
individual solution has been tried: an extra job or two, overtime, a
smaller house, a cheaper car, both spouses working, children working to
supplement family income, no family vacations, the taking on of
colossal amounts of debt, giving up health care coverage, giving up
sending the kids to college, etc. In order to save their jobs, they
have even granted concessions such as unpaid furlough days, and in some
cases, even literally working for free several days a year. But it is
not enough to satisfy the appetite of the bosses. As a result, sooner
or later, workers will be forced to act collectively through the unions
to fight back against these attacks. If a lead is given, the movement
could really take off. There are already important symptoms of a
stirring in the rank and file in the unions and among the unorganized.

Unionization rates have fallen steadily since at least 1983, when
the rate was 20.1%. Despite the crisis and the haemorrhaging of union
jobs in the last year, overall unionization rates fell by just 0.1% to
12.3% in 2009, an indication that more workers are joining unions as a
way to fight back. Public sector workers are now more heavily unionized
than their private sector co-workers, even though there are five times
as many workers in the private sector. Local government workers are
unionized at the highest rate, 43.3%. Black workers are more likely to
be unionized than white, Asian or Hispanic workers, and New York had
the highest unionization rate (25.2%), while North Carolina had the
lowest (3.1%).

History shows again and again that when the workers are blocked on
the industrial front, they will look for a political solution, and vice
versa. In a distorted way, American workers have tried to find a
solution to their problems through the election of Obama. But Obama
represents the capitalists, not the workers, and he has quickly revealed
his true colors. Frustration with the lack of a genuine alternative on
the political plane will eventually lead to workers expressing
themselves through the only traditional mass organizations they have in
the U.S. – the unions.

The Republic Windows and Doors factory occupation of December 2008
was of important symptomatic significance. While the first “sit down”
strike since the 1930s did not unleash a wave of similar occupations
around the country, it did send a clear message that will not be lost
on the many labor activists who followed this struggle: militant mass
action, despite the efforts of the labor leadership to keep things
within safe channels, does work. There were also important
mobilizations against the economic crisis in cities around the country,
including the St. Louis suburb of Granite City, Illinois, where
thousands of workers marched against planned layoffs at a local steel
mill. Even on Wall Street, thousands demonstrated and responded
favorably to leaflets declaring that “capitalism has failed.”

The recent change in leadership of the AFL-CIO can only be
characterized as a shift to the left, no matter how modestly or how
reluctantly. At least in words, if not yet in deeds, Richard Trumka’s
election is a reflection of the growing pressure from the rank and file,
which is tired of cuts and concessions. At the labor federation’s
September conference, the new leadership slate pledged to fight for
jobs, universal single payer health care, new laws such as the Employee
Free Choice Act to open the road to organizing the unorganized, and for
an economic recovery plan in the interests of working people. Of
course, words are one thing, and action is another. But for the largest
labor federation in the U.S., representing over 9 million workers in
57 different national and international labor unions, this is clearly a
more proactive and militant face for Labor, compared to the days of
George Meany and John Sweeney.

Trumka comes out of the United Mine Workers of America, is a third
generation miner, and has long been seen in the labor movement as a
“militant” and someone “left-of-center” within the leadership. The UMWA
has a militant tradition of strike battles, and Trumka himself led the
successful 9-month Pittston coal strike in 1979, and also helped build
solidarity between U.S. and South African mine workers in the struggle
against Apartheid during the 1980s.

After the Massachusetts election, he called the result a “working
class revolt,” and stated that “voters showed they don’t think
Democrats have overreached – they think that the Democrats
underreached.” He also stated that “It’s time to organize and mobilize
as never before to make every elected or aspiring