US Perspectives 2002


Last year we produced a document which focused on George Bush’s foreign policy. In it we explained that in spite of his purported desire to be an isolationist, he would be forced by events to conduct a highly aggressive military and economic policy on a world scale. We explained that the period of relative calm and dampened class struggle which followed the end of the Cold War was finished. We have clearly entered a period of wars, revolutions, and counter-revolutions. Our perspective that there would be one social, military, economic, or political crisis after another has been entirely confirmed by events. We predicted big events, and that is precisely what we saw within months.

From the revolutionary processes in Argentina to the coup and counter-coup of Chavez in Venezuela; from the revolt of the workers of Voronezh in Russia, to the deepening crisis between the Israelis and Palestinians and the entire Middle East, capitalism is in crisis on a world scale. For Americans, nothing has had a bigger impact in recent decades than the September 11 attacks on the World Trade Center and Pentagon.

These terrorist acts shocked the entire world, but especially the American people, long accustomed to a feeling of security and having in general a parochial outlook on international affairs. Suddenly millions of average American workers, who had been more concerned with making ends meet than with world events, were forced to wake up to the fact that it is a dangerous, unstable world, rife with resentment towards the foreign policy of the US ruling class. No longer could they imagine that they were immune from the problems of the world. Overnight, countless Americans began to think about things other than living from paycheck to paycheck and Monday Night Football. The shocking problems of the world were placed dramatically at the US doorstep. President Bush whipped up a nationalist, patriotic frenzy unlike any seen since the Gulf War – or perhaps not since World War II – and promised that he would root out terrorists at home and abroad. His approval ratings were sky-high, and he declared an open-ended “war on terrorism”, beginning with the War in Afghanistan, heartily supported by Democrats and Republicans alike.

The Afghan campaign has not gone as smoothly as he would like. Although the Taliban was routed with the help of a discontented population and the so-called Northern Alliance, the real war has only just begun – a guerrilla war of constant harassment of US and allied forces and assets internationally. The Taliban has not been destroyed, and the US presence has only inflamed the delicate balance of power in the region. India and Pakistan are at each other’s throats, and there is no stability in Afghanistan.

The entire Middle East is hanging by a thread with the Palestinian / Israeli conflict sharpening daily and not a single stable regime in the Arab world. The whole of Latin America is in crisis; the US-backed and financed Colombian military is once again engaged in open and bloody conflict and the FARC and ELN guerrillas; in Venezuela, Chavez is making moves that could threaten the very basis of capitalism, which sparked a lightning coup and counter-coup with the contending classes in open opposition on the streets; the powerhouse economies of Mexico and Brazil are grinding to a halt; and Argentina, once a pillar of the region, is economically ruined and in the throes of a revolutionary movement.

The US stock market has collapsed since the Information Technology bubble popped, and the broader US economy has stagnated, resulting in millions of jobs lost. Enron imploded and is dragging down accounting giant Andersen, and perennial retailer Kmart has filed for bankruptcy. Bush has now initiated an open trade war with the approval of tariffs on steel imports. This will be met with retaliatory measures that threaten to undermine the entire capitalist globalization process. Massive debt and continued over-borrowing will most likely be too much of a burden for the economy, and a double-dip recession is entirely possible. The mid-term elections will be another disaster for working people no matter who ends up controlling the House and Senate.

Now, with the formal founding of the WIL, we focus specifically on the situation in the United States, including the economy, the trade unions, the anti-globalization movement, Election 2002, the Labor Party and the Greens.

The Economy

The economic boom of the 1990s was the longest peacetime expansion in US history. The Information Technology sector was touted as the savior of capitalism – a new era had dawned – the “new economic paradigm”. Stocks would go up and up forever, and everyone would get rich and retire early if only they invested in the market and worked plenty of overtime. But the reality of the situation was different. It was a classic “bubble” – over investment and overproduction which led inevitably to the collapse of thousands of companies and billions of dollars in stock.

The general economic upswing of the post-WWII period was due to a wide variety of factors. The intensified exploitation of the colonial countries, the need to reconstruct Europe after the destruction of war (which is one function of wars under capitalism – to demolish the means of production in order to later re-build them at a profit), and the relative balance of terror between the Soviet bloc and Western imperialism (mainly the US), were the main factors which allowed for this general increase in wealth in the West.

This period of relative stability resulted also in the softening of relations between the classes. Despite tension between East and West during the Cold War, the threat of another world war was off the agenda, due to the class balance of forces (the working class grew stronger in virtually all countries), and the threat of mutual destruction. The economic upswing allowed the capitalist class for a time to partially overcome its fundamental contradiction: the development of the productive forces hemmed in by the nation state and private ownership. They did this through the expansion of world trade, under the hegemony of US imperialism, which imposed the dollar in the Bretton Woods agreement, and established the World Bank and IMF. Yet they could not overcome these contradictions indefinitely – this period of opulent wealth and prosperity ended with the recession of the early 1970s. In spite of all the hype about the present economic boom in the US, the figures are really quite feeble in comparison to the growth seen from 1945 – 1975, which was on average about 3 times as great as the growth from 1975 to the present.

We had initially predicted that the economic slump would come sooner than it did, but after the crisis which began in the Asian “tiger” economies in 1997, capitalism was able to stabilize itself, based largely on the inflated stock market and continued spending and borrowing by companies and consumers in the US. From 1997 to 2000 GDP growth was consistently above 4 percent, higher than in the years 1992-96. But if we look at net exports of goods and services, we see that from 1994-97, export growth was quite high, averaging about 10 percent per year. But by 1998-99 export growth is drastically curtailed, to about 2 or 3 percent. From 1997-2000, growth of imports goes up significantly. The USA, instead of massively exporting its way out of crisis, was doing the opposite. The crash of 1997 in SE Asia reduced export markets for the USA. Thus exports were going down, relatively, and imports shooting up. Also, the dollar was overvalued as it was becoming a refuge for foreign capital. With an overvalued dollar, the USA was having problems with exports, whereas foreign goods were cheaper. America’s seemingly insatiable appetite for imports was the main factor in avoiding a world-wide recession in 1998.

The economy finally did officially enter a recession in March of 2001, and world trade declined for the first time in 20 years. World trade volume last year dropped by one percent, and by four percent in U.S. dollar value to $6.0 trillion following the “golden year” of 2000 when global exchanges of goods and services soared by 12 percent to $6.2 trillion. The US suffered a 7 percent decline in exports and other countries fared far worse. This represents a serious collapse in world trade. The September 11 attacks and terrorism in general were naturally scapegoated as part of the reason behind the prolonged economic slowdown, but the real reason is the inherent instability of the capitalist system.

Now it appears on the surface that the US economy is stabilizing once again, and many analysts predict a recovery. With a 5.8 percent growth rate in the first quarter of 2002, things look good on the surface. But this surge in growth is likely due to companies finally re-stocking inventories after months of selling off over-stock, and could well be a one quarter phenomenon. The recovery is in fact very weak so far, and it is most likely that we will see a period of stagnation and then a “double” dip – a brief recovery followed by another fall. While the bourgeois economists talk about recovery, whatever happens in the short term, (and the economy may well stabilize for a time), the overall perspective for the coming period is one of downturn and stagnation

There are massive levels of indebtedness carried over from the boom, and borrowing continues to be heavy. From 1995-2000 US business net fixed capital investment edged up $321 billion but indebtedness ballooned by $2,472 billion. For each dollar added to net new fixed investment, there were 7.7 dollars added to indebtedness. By this stage of the recession, the corporate sector has normally cleaned up its deficit spending and is well into saving for investment – but not this time around. Corporate borrowing reached a record of $4.93 trillion by the end of September 2001. The cost of carrying this debt is a big burden and it is growing. Although wholesale prices (prices at the factory gate) are falling at an annual rate of 2.6%, average real interest rates are over 10%, one of the most painful rates for debt service in history. This greatly weighs the economy down, making it extremely difficult to turn things around.

The expansion of world trade, investment in new information technology, cheaper production costs due in part to the lowest raw material prices in 150 years, the fact that wages were for the most part held down in real terms, low interest rates, and the merciless squeezing of every ounce of productivity out of the working class all contributed to the continuation of the boom. Unprecedented consumer and corporate spending also prolonged the upswing and delayed the recession. Throughout the past year, consumers continued to spend like there was no tomorrow. In fact, consumer spending currently props up two-thirds of the US economy. “Never before have consumers spent with such abandon during a recession,” comments Stephen Roach, chief economist at Morgan Stanley. “In the 28 quarters of the past six recessions, consumer demand rose, on average, at just a 0.5% annual rate. In the 4th quarter of 2001, consumption spending rocketed at a 6% annual rate.” Eventually these debts have to be paid back – if you still have a job to pay them back with. A smaller consumer base due to slashed payrolls combined with a heavy debt load will eventually cut into purchases of new goods, further exacerbating the crisis.

While we may not see the catastrophic collapse of the early 1930s, a look at Japan’s 10 year recession / stagnation may well show the US economy its future. Over a trillion dollars has been pumped into the Japanese economy to no avail. The Fed cut its key federal-funds rate 11 times during 2001, lowering it to a 40-year-low of 1.75%. But given the colossal levels of corporate and private debt, it will take more than low interest rates to save the US economy from a similar fate.

The stock market continues its chaotic yo-yoing, with market watchers and investors euphoric one day and depressed the next. In late April the market closed with its longest losing streak in 19 months. Many briefly exuberant analysts are already predicting a halt to the recovery and a return to “negative territory”. “Pessimism still pervades the market,” said Weston Boone, a stock trader for Legg Mason Wood Walker Inc. “Some players are going to disappear and you’re not going to see buyers in the stock of any firm that doesn’t have a proven track record.”

The massive increase in Information Technology investment during the last boom did not translate into massive profits. That presents a serious danger to the recovery. Capitalists only invest today in order to reap higher profits tomorrow. Yet after a 10-year investment spree, corporate profits remain sluggish and new capital investment has collapsed. This means no re-hiring of fired workers, no re-opening of closed factories, no major investment in new technology, and in fact will lead to more layoffs and company closures. According to Stephen Massocca, head of trading for investment bank Pacific Growth Equities, “people are shell-shocked after last week. We’ve seen some negative issues, one of which is that corporate earnings are disappointing, especially compared with the brisk economic recovery. We are getting a profitless recovery.”

Instability in the Middle East as well as in Venezuela has led to instability in the price of oil. Retail gasoline prices in the US have jumped by more than 25 percent since January 2002 – the fastest rise in the past 50 years – even faster than during the “oil crisis” of the early 1970s. An increase in gasoline prices affects all aspects of the economy – from transportation and shipping to the final cost of goods which must be shipped. It also cuts into already poor corporate profits, and cuts deeply into the buying power of the majority of Americans. Higher prices can only lead to a prolongation of the slump and / or impede recovery.

Gold prices are rising, and the dollar is weakening against the Euro. A weaker dollar could help US exports, but moves by the Bush administration towards protectionism in the form of steel tariffs will result in a series of retaliatory measures by major trade partners such as the European Union and Japan. There is a threat that the entire opening of world trade through the process of globalization could be violently stopped and hurled backwards.

The Enron debacle, in which the 7th largest US corporation, with close links to the Bush administration, collapsed overnight like a house of cards, leaving thousands unemployed and penniless, was a warning to investors and workers alike. All is not well with the US economy – even the “leaders” at the top. The uncertain fate of Enron’s accounting firm, Andersen, has investors and workers less than confident about corporations’ reported earnings and financial stability. Other companies have since followed Enron into difficulties, particularly in the telecommunications sector. WorldCom, the No. 2 U.S. long-distance telephone and data services company, saw its stock at all time lows with concerns over its huge debt load of some $30 billion, including several billion due in 2003 and 2004. Tyco International Ltd., a diversified manufacturing and service conglomerate has seen its stocks tumble to 1997 lows.

For all the talk by the Republicans about “small government” and the “tax and spend” Democrats, the Federal government is spending money like there’s no tomorrow. Federal spending for everything except automatic benefits such as Social Security is on track to grow this year by an extraordinary 11 percent. Both parties have completely united in the “war against terrorism”, so any and all proposals by Bush to pursue this expensive war are enthusiastically supported. In fact the House Republicans and Democrats have proposed a $30 billion defense and counter-terrorism package that is $3 billion larger than Bush himself wanted. He has proposed an overall military budget of $379 billion, but will likely be even higher. The Federal government’s budget surplus has turned into a deepening deficit, with U.S. Treasury Department is issuing $33 billion in government securities to close a budget gap largely triggered by higher defense spending. Once relatively secure programs like Medicare are in danger. With Bush’s $1.3 trillion tax cut going mostly to the rich, it is obvious that money for all these programs will have to come from already struggling social programs and education.

Even if the economy is able to recover in the near term, what kind of recovery would it be? The boom of the 1990s was an example of the best that capitalism can offer. The market produced thousands of millionaires (at least on paper), but for working people it was hardly a boom. Real wages barely rose, the workweek was extended mercilessly and personal debt accumulated at unheard of rates. We now have high levels of unemployment and continued mass layoffs – even during the so-called recovery. recently laid off 1,300 workers, Chrysler Corporation laid off 26,000, IBM plans to cut up to 9,500, retail giants Montgomery Ward and JC Penny are closing, energy giant Enron collapsed, Kmart is in bankruptcy, and others are sure to follow.

The unemployment rate climbed to 6 percent in April – the highest since a matching 6 percent in August 1994 – up from 5.7 percent in March. Although there was some new job creation in spite of the overall rise in unemployment, the biggest new-job growth sector was among the temporary services agencies. These jobs come with no stability or security, no benefits, no union representation, and generally poor wages. Most new jobs created were also in managerial positions, while losses in manufacturing continue. Some economists predict the jobless rate will peak at from just over 6 percent to around 6.5 percent by June, reflecting their belief that companies will be reluctant to quickly hire back laid-off workers until profits recover and executives are convinced the recovery is here to stay.

But if the recovery doesn’t show its face, the situation could be far worse. With the Clinton-era slashing of the welfare roles, the real figure is certainly much higher. And these official figures do not take into account the millions of underemployed working poor, or those who have simply given up all hope of finding employment. With a minimum wage of just $5.15, it is nearly impossible to make any sort of living. Until 1977 the US Congress tied the federal minimum wage to the consumer price index, increasing the minimum wage at the same rate as consumer prices. Increases in the Federal minimum wage did not keep up with increases in the CPI from 1977 to 1980. Since then, increases in the federal minimum wage have been few and far between. It was last raised in 1997, and the so-called Fair Labor Standards Act allows employers to pay a sub-minimum wage at times.

If we look at previous capitalist recessions since 1945, it’s quite common that after an initial contraction in GDP, a recovery follows for a quarter or two before the economy slumps once again. In every previous downturn, economists, investors, and especially politicians remained very optimistic. They all continued to forecast an imminent economic recovery in the 1957, 1960, 1969-1970, 1973-1974, and 1980-1982 recessions. But in all these recessions GDP contracted, then expanded after the initial phase of contraction, but again fell thereafter.

Whether the economy suffers a double dip or is somehow able to turn towards an immediate recovery, the recovery will be nothing like the last boom which only really took off in 1995. The general curve of capitalist development at this time is downward. It will be a stagnant, “joyless boom” or “jobless recovery”, with rising unemployment in spite of “official” indications of a recovery. This was the case after the recession which ended in March of 1991, when the unemployment rate was at 6.8 percent. But the rate took 15 more months to hit its eventual high of 7.8 percent.

Although no date has been officially set, many economists say this latest recession technically ended in December, 2001. If so, the unemployment rate is up two-tenths of a percentage point four months after the end of the economic downturn. A boom such as this is no boom at all, and will in no way alleviate the pressure put on the working class, whose long hours and sacrifices were the real fuel for the economic expansion of the late 1990s. But even if a sustained recovery is possible, it would not be a bad thing from our point of view. It would mean the strengthening of at least some layers of the working class, and could lead to more aggressive activity on the trade union front in particular.

The economic situation is a process which will develop over time. Booms do not go straight up, and slumps do not go straight down. We will have to keep a close watch on how the US economy develops in the coming period. We should keep in mind that it is not so much the absolute lows or highs of the economy which molds people’s consciousness, but the sudden changes between the two. Absolute poverty does not lead directly to revolution, as the situation on the Indian Subcontinent shows. The constant instability of life under capitalism, even during a boom, will force people to rethink the way things are run.

There is already a “crisis in confidence” in the market and in big corporations, as the Enron / Andersen scandal highlights. A recent survey by Business Week showed that 74 percent of Americans thought that big business had too much power over their lives. If casualization of labor, loss of benefits and job security, barriers to unionization, declining real wages, and mass layoffs alongside fat CEO bonuses are all present during a boom, we can only imagine what it would be like during a slump, minor or otherwise. We do not want an economic crisis with millions of unemployed, but that is in fact what the capitalist system offers the world working class even during the best of times.

Productivity reached its highest level in 19 years in the first quarter of 2001; the Labor Department reported that productivity grew at an annual rate of 8.4 percent in the January – March period. This means that companies produced more with fewer workers. The economy appears to be stabilizing for the moment, and profits may begin to improve due to higher productivity and steady wages. But the underpinning reason for the recovery remains the continued squeezing of the working class, and the artificial expansion of buying power through credit at a faster rate than their income rises. There are limits to how much the workers can be squeezed, and how far credit can be extended before it needs to be paid back.

American workers have worked hard these past years for a piece of the pie, and now even crumbs will be hard to get. The economic situation is complex and contradictory. There are many factors which suggest a double dip is imminent; others which indicate a shaky recovery has begun. We will have to keep a close watch on the economy, and in particular the mood of the working class, continually adjusting our perspectives as needed. Regardless of what happens in the short-term, the general perspective for capitalism is one of stagnation and decreasing quality of life for workers in the US and globally. World capitalism has entirely lost its progressive character for the vast majority of humanity, and must be replaced with a system of democratic socialism with a nationalized, planned economy.

The Trade Unions and the Labor Movement

With two bourgeois parties dominating the political scene, and alternative parties not yet strong enough to make a difference in national politics, the trade unions are in many ways the traditional mass organizations of the US working class. If a mass party of labor is to arise in the US, it must have the support of at least the major unions – a major and debilitating deficiency of the current Labor Party. The trade union movement in the United States has an extremely militant history, with the formative years of the CIO and the Teamsters an example to workers everywhere. In the absence of a established mass party of labor, many workers rely on their unions to defend their economic interests, and often turn to them for political guidance as well. Yet in recent years, the unions have on the whole been passive in the face of attacks on the working class generally.

There have been a number of contractual gains in the airline industry, but most of these have been resolved without the need for strike action and a public showdown between the unions and companies. But despite a handful of heroic struggles among some unionized workers (UPS and Overnite for example), organized workers in traditional industries have been largely inactive. Much of the new militancy has come from newly unionized workers in the service sector, especially among immigrant workers, many of them who are in the US illegally.

The labor bureaucracy acts as a colossal barrier to the forward movement of organized workers, tied as it is to the bourgeois parties and corporate interests. As Jim Smith of L.A. Labor News explains, “it is characterized by a “top-down” decision-making structure, relatively high salaries for those on the top and low salaries at the bottom, an ever expanding staff at the top levels, a reduction in autonomy at lower levels (think trusteeship), an exclusionary structure, a broad agreement with corporate political goals and an intolerance for democratic dissent at all levels.”

Inevitably, due to pressure from below, and in order to keep their lucrative positions, these bureaucrats are forced to fight for the membership. They are sometimes forced to talk and even act tough. Many may eventually adopt more and more aggressive and anti-boss rhetoric. But ultimately, the present leaders of the trade unions cannot solve the problems of the working class. They are wedded to the capitalist class and offer no alternative to the working class except to support the Democrats as a “lesser evil”. These union bosses are doing well for themselves by maintaining harmony between the capitalists and the workers, and are in no rush to change the status quo. In the recent period there have been some outright betrayals by the leadership, with little being done to stop the massive layoffs we have seen over the past years, especially among higher-paid unionized workers. Ultimately, this reflects their deep-seated lack of confidence in the working class’ ability to change society.

The restructuring of industry over the last twenty years or so has not been a revolution. It was a response to the present stage of general stagnation of world capitalism. The markets have not been growing at the same pace as during the post-war upswing, and the capitalists, in order to keep up their profit margins, along with the help of new technology, have been cutting everything there is to cut – the workforce, wages, breaks, warehouse stocks – with speed-ups, longer hours, etc.

Many rank and file union members have already begun to move to the left of the leadership, and it is inevitable that at some point they will come into open conflict, including on the issue of support for the Democratic Party. Many have already begun to mobilize in various TU democracy movements, and are beginning to assert their dissatisfaction by removing some of the more reactionary leaders from the ground up, and are working to expand the unions and organize new layers. But it is still early days in this process, and it is not all smooth sailing.

The defeat of Tom Leedham’s campaign to replace Teamsters boss Jimmy Hoffa Jr. is an example of the tenacity of the bosses, but also of the resolve of many workers to fight back. As Eric Robertson a UPS shop steward and member of the Teamsters for a Democratic Union explains, “in the last international election, 108,389(35.13%) of the Teamsters voted for Tom Leedham and the rank and file power slate’s program of aggressive organizing, rank and file mobilization and rejection of business unionism. While he lost, the campaign put out a powerful conception of how our union should be run and got a significant show of support from the rank and file. TDU serves as a model for several other reform movements in various unions that have been successful in some like ATU (the transit union) in winning local elections and shaking up things, like in New York in particular.” We can expect this general process to continue over the coming period, and must participate and report on it when possible.

The capitalist class will not stand still and allow workers to organize without a struggle. They use the most dishonest and misleading tactics in trying to discourage unionization, even at the expense of their own immediate profits. They would rather close down a new workplace than allow a union to develop and sink in its roots, especially among large-scale national employers like WalMart which is second only to the federal government as in terms of workers employed. They use the same “national unity” rhetoric of President Bush in order to get workers to believe they have shared interests with the bosses. They also have the backing of reactionary anti-worker laws like Taft-Hartley, and “right to work” legislation in many states to hamper efforts at unionization. During the 2000 election the union bosses forced workers to rally in support of Gore, and even to attack Nader supporters, threatening their jobs if they didn’t actively support the Democrats.

According to the U.S. Department of Labor’s Bureau of Labor Statistics, union membership in 2001 was at 13.5 percent, the same level as in 2000, and down from it’s high of 20.1 percent in 1983, the first year for which comparable union data is available. This translates into16.3 million unionized wage and salary workers. Nearly 4 in 10 government workers were union members as compared to less than 1 in 10 in the private sector. Protective service workers, a group that includes police officers and firefighters, had the highest unionization rate among all occupations, at 38 percent.

Although absolute numbers of unionized workers are stagnant, due largely to the huge slashing of payrolls in recent years, interest in unionization is high. Numerous polls show that workers favor having a union by a large majority. A recent poll by the Associated Press demonstrated approval for unions runs by a nearly 3-1 ratio, roughly the same as in recent years but higher than 20 years ago, when it was at a ratio of 2-1. Along with better job security and collective bargaining, unions offer pecuniary proof of their value for members. In 2001, full-time wage and salary union members had median usual weekly earnings of $718, compared with a median of $575 for wage and salary workers who were not represented by unions.

Although is appears that not many workers are actually organized in unions, they do represent an extremely powerful organized force for the working class generally. We must also pay attention to the situation of those who are not yet unionized. Companies purposely avoid hiring full time workers so as to avoid the costs of benefits. During the last boom, the temp agencies were the fastest growing employers in the country. In many service-sector companies, there are huge concentrations of workers in one workplace whose conditions of life are now very much like those of traditional factory workers. And for the tens of thousands working in fast food the conditions are often far worse. The pressure of these jobs, most of them non-union and with few benefits, will result inevitably in an explosion. It is important that strong links be built between the established unions and those seeking to form them.

Other important initiatives with union support such as the various Living Wage Campaigns, Jobs With Justice, the Farm Labor Organizing Committee, etc. are important in mobilizing non-union workers and involving local communities. These campaigns could eventually create openings for our tendency, especially since the bureaucracy does not directly control them. We should also note the development of “extra-union” workers’ movements. For example, the proliferation of “Workers Centers” particularly among communities of workers who have difficulty unionizing, such as undocumented workers and day laborers.

As the economic position of millions of workers continues to worsen or stagnate, things on the trade union front will heat up. Workers and even their pro-capitalist leaders will be forced to fight back to defend the small gains they have made or at the very least maintained over the past 20 years. One example of the simmering discontent and willingness to fight among organized workers is the Teamsters of UPS. Their last strike in 1997 was militant, energetic, generally supported by the wider population and above all successful in securing better wages and conditions. Their contract ends soon and some 90 percent have voted to go out on strike if an agreement is not reached by the deadline. A major action like this would serve as an inspiration to many other workers, both organized and unorganized. The workers want a share of the wealth they created during the boom, yet with profits at dismal levels, big business will not be willing or able to grant many concessions. This will lead eventually to sharp struggles.

It is vital that we follow the development of the rank and file resistance to the pro-boss leadership, and that we join and participate in unions, extra-union movements, unionization campaigns and their struggles whenever possible. A mass political alternative to the dominant bourgeois parties is essential, but unions remain the front line of defense for many workers, and will be an essential source of support for a mass political party genuinely fighting in the interests of the working class.

The Political Situation in America – Background

Despite being the most powerful capitalist country, with the most powerful working class on earth, in the US we have the contradictory situation in which the workers have not yet established a mass party of labor through which to politically defend their class interests. The largest layer of organized workers, the trade unions, invariably supports the Democratic Party, with few notable exceptions. But disillusionment with the two bourgeois parties is evidenced by the dismal voter turnout and the nearly identical poll results of the last national election, when neither party was able to distinguish itself enough to gain the vote of a clear majority of the population.

Had Al Gore simply promised to raise the minimum wage, repeal anti-worker legislation, implement a nationalized health care system, massively fund public education, etc. he would have won the overwhelming support of workers across America. But he was unable to do any of this, tied as he is to the capitalist class. Instead he parroted the positions of George W. Bush, and ended up losing the election through a combination of stupidity and less than democratic ballot counting and behind the scenes maneuvers, losing even in states where he should have won hands down. The ensuing comedy of errors awakened millions of Americans to political consciousness, as they tried to make sense of what was going on. They were faced with the reality that the “free and democratic” electoral process in the US – held up as sacred and inviolable by bourgeois politicians – is rife with deceit, corruption, dishonesty, racism, and favors inevitably the rich and powerful.

Popular support for an alternative third party is strong. As humorist Michael Moore says ironically, the “Non-Voting Party” is the biggest party in the country. According to the Associated Press, in a poll taken during the last presidential election, nearly half of all those polled said they want a third-party candidate to run as an alternative to the Republican and Democratic candidates, and only 23 percent agreed “the two party system works fairly well.” In the election between Gore and Bush, 45 percent said they wanted a third-party alternative. This shows the massive potential of a genuine third-party alternative based on the working class and trade unions. Several alternative third-party movements have been formed in recent years, with the US Labor Party and the Green Party the most important possible alternatives currently on the political scene.

The tremendous rise in trade union organization and militancy which followed the 1929 crash failed to consolidate itself into a cohesive working class political movement. The formation of the CIO was a giant step forward, but the move towards political advocacy for the working class was cut short by the US’ involvement in World War II. From the end of the Second World War until 1970, give or take a few years, it was possible for the bourgeoisie in the US and other advanced capitalist countries to make concessions to workers on bread and butter issues, because of changes in the global political economy which produced a long economic boom. The disintegration of several European empires and the emergence of the US as an economic and military ‘superpower’ produced this upward curve of capitalist development.

The “middle class” consciousness of higher paid blue collar workers in early 1970s was a product of the long post-war boom, which made it possible, to a certain degree, to harmonize the opposing interests of workers and capitalists. For a time, it appeared on the surface that the conflict between labor and capital had subsided. Union leaders helped preserve industrial peace. In return, union members got cost of living increases, etc. This was the end of an era of an unwritten social contract and “win-win” labor contracts. But a “one-sided class war” beginning in the early 1970s laid the basis for a labor party movement. Workers began to consciously recognize class antagonisms, and increasingly identified themselves as members of the working class. At the same time the AFL-CIO leadership pursued a strategy of reliance on politicians in the Democratic and Republican parties while giving invaluable assistance to the government in carrying out its austerity measures.

Capitalism in its imperialist phase involves the opening of markets, the export of capital, the growing predominance of finance capital, monopolization of markets, division of the world into spheres of influence among the main capitalist powers, and war against opposing imperialist powers, and on the working class at home and abroad. Beginning with the Reagan years, the bourgeois moved again towards open implementation of imperialist policies on a world scale.

No longer able to provide concessions to the working class as they could during the post-war upswing, they revived much of the ideology and program of 19th century liberal capitalism. With the important difference that capitalism in the 1800s was still a relatively progressive force on a world scale. These so-called “neo-liberal” policies, which include the deregulation of industry, free trade, privatization, and eliminating much of the social safety net have been the target of anti-globalization protests and were a factor in the formation of the Labor Party (US) and the growth of the US Green Party (which is, at least in part, a regroupment of Liberals and ultra-Liberals from the Democratic Party). However, there is no “left” alternative to capitalist “neo-liberalism” that would be acceptable to the American bourgeoisie.

During the 1960s and 1970s, the Democrats, although still a bourgeois party, were able to court the workers’ movement with scraps from the economic expansion. Programs like Lyndon B. Johnson’s “War on Poverty” and the “Great Society” made it seem that gradually, progress would be made in improving the lives of all Americans. During this period, enormous amounts of money poured into federal aid for education, especially to provide remedial services for poorer districts. The Department of Housing and Urban Development was created, in order to expand and improve public housing. Medicare provided federal funding of many healthcare expenses for senior citizens. The “medically indigent” of any age who could not afford access to healthcare would be covered under a related “Medicaid” program funded in part by the national government and run by states under their welfare programs. There were environmental protection laws, a bill establishing a National Endowment of the Arts, a Highway Safety Act, and a bill to provide consumers with some protection against shoddy goods.

But all of this changed with the economic decline of the 1970s and the ebb of the revolutionary tide of that period. The Reagan and Bush years meant a return to openly reactionary politics. The Democrats were quick to adapt to the new situation, showing their true nature and allegiance to the capitalists. Except on a handful of secondary social issues, the Democrats are indistinguishable from the Republicans. Dissatisfaction with the Democratic Party increased after Clinton and the “neo-liberals” took it over, especially during the early years of the post-1991 economic recovery in the US, also known as “the jobless recovery.” Using his “nice guy” and “pro-working families” image, Clinton and co. were able to pass many of the most anti-working class laws which even Reagan and Bush were unable to.

Anyone who still harbors illusions in the Democrats should take a careful look at Clinton’s record. He forced open markets for American corporate interests under NAFTA and other trade agreements, costing thousands of US jobs and steam rolling over labor rights and the environment across North America and the world. He largely dismantled the welfare system – 10 million out of 14 million recipients were kicked off. He passed more anti-abortion and anti-worker laws, and reduced more regulatory standards on a host of environmental issues than Reagan and Bush combined. He expanded the death penalty, oversaw the largest privatization deal in US history with the sale of a California oilfield, and opened the National Petroleum Reserve in Alaska. And that is just the tip of the iceberg. The Democrats never were, and never will be able to represent the interests of the majority – the working class. It is clear that the workers of the United States need their own political representation.

Formation of the Labor Party

Union officials who, in 1992, founded Labor Party Advocates polled the members of a variety of unions to determine if there was a significant level of support for the idea of creating a labor party. These polls consistently showed that a majority of rank-and-file union members supported the idea of creating a labor party, but in most cases a large majority of union officers and staff preferred to stick with the Democrats and / or Republicans. The LPA only had active support from the leadership of a few small international unions: The UE (United Electrical, Radio and Machine Workers of America (UE), OCAW (Oil, Chemical & Atomic Workers) CNA (California Nurses Association), and the International Longshore and Warehouse Union on the West Coast.

Labor Party Advocates began to lose ground after a few years. By the fall of 1995 a majority of the LPA leadership had concluded that it was necessary to take the next step or the LPA would wither on the vine. About 1,500 LP members attended the founding convention, most as delegates from union organizing committees. In California, many of the city and county labor councils affiliated with the LP.

The main factions at the LP founding convention were split over whether to establish the Labor Party as a chapter-based electoral formation, or as a party based on the trade unions. As a chapter-based electoral formation, the working class base of the LP would be diluted by a largely liberal-radical chapter constituency. A union-based Labor Party would be controlled by unions that currently support the Democrats in the electoral arena. Advocates of a party controlled by trade unions won out at the founding convention. However, the majority of the trade union leadership opposed an immediate break with Democrats in the electoral arena.

A strategy of non-electoral political action adopted at the founding convention led to clashes with the Democratic Party and pro-Democratic Party union leaders in some areas. For example, the New York metro chapter not only supported strikes and union organizing drives, but also engaged in direct action on a number of issues, such as housing, education, police brutality.

As the economic recovery of the 1990s began to significantly cut unemployment rates and produce labor shortages in some fields, it is likely that most unionized workers figured they were in a good position to fight for significantly higher wages and better working conditions. However, union officers generally seemed to be unwilling and / or unable to provide effective leadership. That might explain why the officers of a large number of international and local unions were voted out of office during 1997. In addition, many workers were also dissatisfied with the Democratic Party and receptive to the idea that workers need their own party. The response of the Labor Party leadership to this situation was to restrict the activity of LP chapters – is appears the leadership wanted a mass labor party before breaking from the Democratic party in and out of the electoral arena.

In mid-1997, the LP leadership steered the Party away from political action outside of the electoral arena with a campaign to amend the US Constitution, the 28th Amendment campaign (the right to a job at a living wage) The 28th Amendment campaign was recommended as the exclusive focus of chapter activity. The 28th Amendment campaign, and the more recent “Just Health Care” campaign, could not be used effectively as a wedge to split the unions away from the Democratic Party without a direct challenge to the Democrats in the electoral arena by running LP candidates. Many chapters collapsed in the process of making the 28th Amendment campaign their exclusive focus of activity.

The prospects of a growing and active independent workers party soon turned to disappointment. At their 1998 Convention the LP correctly voted not to support candidates from any other party, and thereby avoided becoming just a pressure group on “progressive” Democrats. But they tied their hands and missed a great opportunity in 2000 by narrowly voting not to run candidates until they have built up more grass-roots support. During the 2000 election campaign, the two millions or so workers of the affiliating unions and locals were left to the noxious influence of the pro-Democrats.

However, under the pressure of events and the grass-roots campaign of the Greens, many LP activists formed local “Labor for Nader” groups and worked on an independent basis to support Nader’s campaign and push it further into working class issues. The Green Party’s campaign showed that the workers and youth are looking for a political alternative. In the midst of the 2000 elections, several LP chapters stated that they would run local candidates in 2002, whether LP President Tony Mazzochi & Co. like it or not.

However, the setbacks that followed the 1998 convention left the Labor Party weaker than it was originally. With the LP’s national convention coming up this summer, it remains to be seen whether or not it will wither on the vine or take on new life. There is still a layer of militant activists within the LP who will be pushing for a much more aggressive policy, including the running of candidates, which is vital if the LP is to achieve national recognition as a political force. But the decisive question for any labor party that can effectively represent the working class will be gaining the support of the major trade unions. The AFL-CIO must break with the Democrats!

The Anti-Globalization Movement

One of the most important developments in recent years is the emergence of the international anti-globalization movement. This heterogeneous movement is symptomatic of the great unrest simmering just beneath the apparently calm surface of society. The “Battle in Seattle” announced to the world that even in the “belly of the beast”, there is outright opposition to the policies of the world’s capitalists.

Prior to Sept. 11, 2001, meetings of the World Trade Organization, the International Monetary Fund, and similar organizations drew massive crowds internationally. In the US these rallies typically involved upwards of 20,000, mobilized by local “peace and justice” coalitions and radical groups (anarchists, socialists, left Greens). The largest North American protests, Seattle 1999 and Quebec 2001 had about 50,000 participants. The protests in Seattle, Quebec, and Nice had significant backing from the trade unions. But the attacks of September 11th cast a shadow over the movement – anyone voicing opposition to the policies of imperialism was considered unpatriotic and even a terrorist – “you’re either with us or against us!” This forced the cancellation of the anti-IMF protests planned in Washington DC for late September, 2001.

Last summer’s protests against the G8 in Genoa, Italy marked a turning point in the anti-globalization movement internationally. Police brutality reached levels not seen in decades, with some 300 detained, dozens brutally beaten and one protestor killed – the first to be killed in Italy on a demonstration since 1977, and the first direct casualty of the current movement at the hands of the bourgeois state. Many of those arrested were tortured and forced to pledge allegiance to Benito Mussolini. This is the real face of the “peace-loving” bourgeoisie. The right-wing Berlusconi government declared open war on the working class and youth in Genoa, and the rest of the ruling class is preparing to do the same in their own countries. The resurgent arms race internationally is a clear symptom of this process. It is a sharp expression of the growing political and social polarization which has accompanied the unprecedented economic polarization between rich and poor on a world scale over the past decade. The period of relative political and social calm which accompanied the economic boom in the advanced capitalist countries is over.

But even more significant during the Genoa protests was the massive and conscious participation of the working class. Tens of thousands of metal workers and other trade-unionists were on the streets both during the G8 meeting and in the wave of strikes which swept across Europe in the aftermath of the Genoa repression. Since the 1960s there has been a protest movement – against nuclear proliferation, against war, against the degradation of the environment, against the policies of Reagan, Bush, etc. For the past 20 years, this movement was limited in size and scope, and was made up largely of older layers of activists from the 1960s, not connected in any significant way with the masses of workers and youth. Now things are qualitatively different. The radicalization of a fresh new layer of youth and the renewed participation of working class marks a new stage in the situation. There was an important trade union presence at the Seattle demonstrations, but generally the participation of the labor movement in these protests has been sporadic and un-focused. Yet more and more, especially in Nice and Genoa, they are making their power felt. The working class is just re-learning to flex its muscles after a long period of general hibernation.

This opposition has largely been directed at “globalization” and “neo-liberalism”. Among most activists, a clear conception of the class nature of capitalist globalization has not been attained. Many of them, such as the neo-anarchists are openly opposed to a class-based, Marxist conception, and prefer to rely on “leaderless” “direct action” and confrontation with the state apparatus. In many ways, the term “globalization” is a smokescreen to disguise the real nature of the capitalist system. The term which best defines today’s capitalism, characterized by the export of capital from the advanced countries and the accompanying international exploitation of the working class and the peoples of the world by a few superpowers and multinational companies, is imperialism. This process is vividly explained in Lenin’s Imperialism: the Highest Stage of Capitalism. We are not opposed to the dramatic increase in world communications, trade, knowledge, technology, etc., as this provides the basis for the real liberation of humanity in the form of world socialism. What we are opposed to is the way in which this process develops under the capitalist system. For the vast majority of humanity, globalization under capitalism brings not improvement but impoverishment.

After a period of inactivity, the movement was revived during the April 20, 2002 protests in Washington DC. Although the focus of those protests turned more towards the conflict in Israel / Palestine, the large mobilization was a reminder that there is still a large number of dissenters in spite of all the patriotic flag-waving and “national unity” since September 11. With the world situation even more precarious than it was when the movement took off in 1999, the movement should once again pick up steam in the coming period. The importance and sweep of this movement in the US and internationally in the coming years will depend on how effectively the labor movement and Marxists are in participating in and leading it.

We cannot over-emphasize the need for broad working class participation and leadership. Contrary to the lies of the bourgeois media, the working class has not decreased on a world scale. Over the past twenty-five years it has grown dramatically, and with its growth, its power. In the advanced capitalist countries there were 112 million industrial workers in 1973; now there are 113 million. In the developing world, there were 280 million industrial workers in 1980; now there are 400 million – that is over 500 million industrial workers globally. When you add to that figure the hundreds of millions of millions of service sector and white collar workers and their families, the number of proletarians is even more imposing. The fact is, the working class is the most powerful force on the planet, and once it moves decisively there is nothing that can stop it.

We should keep in mind that these events are just the beginning of a process which will continue to grow in energy and scope over the coming period. At present, the anti-globalization movement is a very heterogeneous in composition, aims, methods, program, etc. It is largely made up of middle-class youth with a handful of advanced workers. The youth and intelligentsia are a sensitive barometer of the restlessness and desire for change which is simmering below the surface of society. They are often the first to express the pent-up frustration and rage which has accumulated over the previous period. But on their own, in spite of their energy and good intentions, the youth and student movement cannot successfully and decisively fight against capitalist globalization. It is therefore indispensable that they unite with the broader labor movement. If the energy of the anti-globalization movement is to be harnessed to abolish the capitalist system as a whole, the working class must take the lead, guided by clear perspectives and a program for the socialist transformation of society. If not, all this energy could dissipate like steam without a piston-box – with disastrous consequences for the working class.

Nader, the Green Party, and Election 2002

Many of the participants in the anti-globalization movement also came out in large numbers to support the candidacy of Ralph Nader for president in 2000. Although Nader received only about 2.5 percent of the votes, his campaign was seen by many as a step in the right direction. He would have surely received more votes had it not been for the frantic “lesser evil” scare and attacks against the damage his campaign was doing by the Democrats. Although the Greens are traditionally made up of environmentalists, “radical Democrats”, and college activists, Nader’s support was heavily concentrated in working class neighborhoods and the trade unions. Something on the order of 5 to 7 percent of all the votes of trade union members went to Nader. Nader also received a large share of his votes from people under 30 years of age.

Green Parties in several states with a high concentration of union members acquired major party status as a result of the Nader campaign. This was accompanied by explosive growth in the membership of some state Green Parties. For example, in Minnesota, the number of Green Party locals (usually citywide or countywide chapters) increased from 2 to 10 between May and November 2000. The Minnesota Green Party had 22 locals plus several Campus Greens chapters at the beginning of March 2002.

The mass appeal of Nader’s presidential campaign “super rallies”, with attendance averaging 10,000-plus participants shows the radicalization of new and old layers of activists. Another example of the growing appeal of the Greens among newly politicized youth can be seen in the participation at party caucus meetings in Minnesota. In March 2002, the Minnesota GP organized caucus meetings in 48 of 67 State Senate Districts, with one meeting per SSD. According to the MN Secretary of State, 1117 attended GP caucus meetings, including 104 at 2 meetings in St. Paul and 297 at 5 meetings in Minneapolis. In Minneapolis there were about 400 at the Republican Party caucuses and 800 to 1200 (rough estimate) at the Democratic Party caucuses. A large majority of Green Party caucus-goers were under 30 years of age. It was reported that no one under 30 showed up at this or that Democratic Party caucus meeting.

But the Green Party movement is rooted in a non-class / multi-class ideology. They do not approach issues from any class perspective, let alone a working class perspective. The Green movement is built on “4 pillars” and “10 Key values” which supposedly can transcend and harmonize the class interests of the bourgeoisie and the proletariat. There are many honest young people active in the Green Party who see it as a radical departure from the parties of big business. We must approach these elements openly as Marxists, finding points of agreement, and offering friendly criticism of the limitations of the Green ideology, in particular the lack of a class analysis of the problems facing the US and world working class.

It is also possible that a strong working class tendency could emerge in some Green parties due to a large infusion of “non-Green” workers who want the GP to identify more closely with the working class and union movement. We must keep an eye out for this, and work with local Greens where possible, but we must always be clear on the need for a working class-based program and orientation. As they are now, if the Greens are able to achieve some measure of political respectability and influence, they could be used by the bourgeois to channel the millions of restless youth and labor activists out of direct confrontation with the capitalist class as a whole It is instructive to look at the example of the German Green Party which is active in the bourgeois government, going so far as to support the bombing of Kosovo and the War in Afghanistan. We must consistently emphasize that only a party rooted firmly in the working class and fighting for a socialist program can end the rule of capital and address all the honest concerns of supporters of the Green Party.

The results of the 2002 mid-term election will not be of great importance one way or another. The Republicans may ride Bush’s popularity wave to gain some seats and regain complete control over Congress. On the other hand, the Democrats may come out in cautious but vocal opposition on secondary social concerns and the economy and make some gains. Either way, one of the capitalist parties will continue to dominate the political life and institutions of the US. The Democrats showed their true colors after Bush’s election, approving every one of his cabinet appointees, and putting up little resistance to his anti-worker policies. After September 11, when 99 percent of them rallied to the calls for national unity and supported the open-ended war on terrorism and the invasion of Afghanistan, it was nearly impossible to tell Republicans and Democrats apart. While the Green Party and other small coalitions may make some gains in local elections, there will be little national attention for the smaller parties.

It will not be until the 2004 Presidential election that the political climate in the US really heats up, with revived memories of the 2000 debacle. A lot can happen in two years, but we can be sure that events globally and domestically will continue to be unstable and convulsive. In a situation like this, people’s moods can change very quickly. It bears mentioning that in spite of the victorious Gulf War, President Bush’s father lost the presidential election only months later during the last “jobless recovery”.

President Bush’s approval rating is at 75%, down from the 90% approval rating he received after the terrorist attacks in September. It will surely fall even more rapidly as the “war on terror” loses focus and workers begin worrying about domestic issues – especially in a mid-term election year. Another interesting figure is that before September 11, 75% of young men polled said they’d be willing to fight to defend the country. Recent polls put that figure at just 50%. The nationalistic mood of young people has changed quickly, as evidenced by the successful anti-war protests on April 20 in Washington, DC.


Our perspectives for the US cannot be taken out of context from international situation. After a period of mild reaction, the working class of the world is once again raising its head and entering the path of struggle. In a period of great convulsions around the world, it is inevitable that the US will also be affected. The September 11 attacks were a direct symptom of the instability and disorder which characterizes the present period. These attacks and the “war on terrorism” have had an effect on all aspects of political, economic, and social life in the United States, cutting across the anti-globalization movement, dampening the economy, and increasing the paranoia and feeling of unease among Americans.

We should also keep in mind that another terrorist attack on US soil, now considered “inevitable” by top government officials, could quickly derail the economic situation, buoyed as it is by consumer confidence and borrowing. It would also mean a greater questioning of the ability of the government to protect Americans at home and abroad. Moods can change very quickly, and we must be prepared to explain events and intervene as effectively as possible.

The organizational tasks before the WIL are clear and flow from our perspectives for the US and the world – a general perspective of volatility and crisis. We must keep a close eye on and explain international events such as the ongoing revolution in Argentina and the crisis in the Middle East, as well as domestic issues and the economy. With capitalist globalization comes globalized crisis and ever-closer connections between all nations, workers, and events.

We must continue to educate ourselves in the fundamentals of Marxism. Theory is the bedrock of our organization, so we must ensure that all comrades are properly educated and that they read the classics of Marxism as well as our own material. As Trotsky advised the early members of the Left Opposition in Britain, “while persistently striving to widen our influence among the workers, we must at the same time concentrate on the theoretical and political education of our own ranks. We have a long and laborious road ahead of us. For this we need first-class cadres.”

The building of a revolutionary organization is not a simple task. We are still in the formative stages of the WIL, but if we work patiently, consistently, and above all energetically, we can and will achieve our goals. We have on our side the most powerful ideas in the world – the ideas of revolutionary Marxism. We invite all workers and young people in the US to join us in building a revolutionary alternative to capitalism. We are a relatively new force in the United States, but our ideas and traditions can be traced to the Left Opposition of Trotsky and even further back to Marx’s First International.

The formation of the Workers International League and the launching of Socialist Appeal in the United States at this point in history is not an accident. The need for Marxist ideas and a Bolshevik organization with roots sunk in the working class has never been greater. This process has just been begun by the comrades who have decided to form the WIL. In the coming months and years we must redouble our efforts to extend our influence and points of support. Internationally, the forces of Marxism are reassembling around the ideas of In Defence of Marxism. In the United States, this process has begun under the banner of the WIL. Forward to the United Socialist States of America and the World Socialist Federation!

July, 2002

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