The Proletarian Situation As U.S. Imperialism Declines (Part 3)
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A convergence of inflection points as the terminal crisis of capitalism unfolds.
War in its different forms and scales between the reigning and rising imperialist powers dominates this period. Climate catastrophe, environmental collapse, and the Tendency of the Rate of Profit to Fall (TRPF) imploding the mountains of fictitious capitals loom as Europe falls into recession and the U.S. teeters on the edge. Teetering now as the Chinese banks move away from treasuries (U.S. government issued debt securities) and interest rates remain elevated, supposedly to fight inflation.
Real consumer prices go right on inflating. Moody’s, a major credit rating service, reported on 8/12/2023 that the cost of living for the average American family has increased $700 a month over 2 years ago, and that the major driver of this rise is housing costs (!) For the worker majority that means rents, and this is not at all the fairytale shoveled by the administration or its lapdog media. Propagandists for “Bidenomics” ignore the inflating rents, instead bragging about some reduced prescription drug costs.
You would think the very real elevated energy and food costs were the drivers of the inflated cost of living, and for this Saudis and Russians get the blame. But in reality they are not special sources of gasoline or wheat for the U.S. market. You are supposed to get distracted by entertainment extravaganzas while you are price gouged and packages contain less, while you raid your savings to pay basic bills and gag on forest fire smoke! California burned, Quebec burned, New Mexico burned and Maui burned. Astonishing heat waves are forecast to remain until doused by hurricanes.
It should go without saying, but we will say it anyway, the aforementioned TRPF, as identified by Marx, has counter tendencies which the ‘pragmatic, common sense, rational’ capitalist class (individual or institutional) must employ. Over accumulated capitals must be destroyed (in war or by depression) if they cannot find a profitable, productive or speculative home. Wages are held back by design; widening the gap between wages, prices and productivity in an endless cycle of parasitism. In graphical descriptions when wages stagnate they decline relative to both rising rates of productivity and prices of goods; the gap is bread out of the workers’ mouths. This is then shared out, as profit, among the capitalist class in a complex exchange of credits, debits, and derivative contracts. Even the Fed’s own study confirms that in the wage/price relationships “…periods of high inflation are, in general, periods of low real wage growth.” This is contrary to their dogma, where wage growth is the cause of inflation.
The Fed has two options, increase interest rates and printing money; inflate or devalorize. Now with long term high interest rates replacing the ‘printing press’, the systemic crisis of collapsing profits is unloaded on the masses. That is, in the form of stagnated wages which do not keep up with inflation. Workers do not share the gains from advances in the productivity of labor; rather these come back to haunt the workers and the economy. Mountains of fictitious capital, which cannot find a profitable home, evaporate by inflation.
The role of the U.S. capitalist state in the imperialist world order comes with a cost borne by the workers of the world and the working class and oppressed masses in the United States. Foremost the U.S. capitalist state must restrain the masses of the semi-colonial world where the tasks of the national democratic revolution could not and never can be completed by any of the myriad bourgeois comprador regimes. When IMF and World Bank-imposed austerities drive social uprisings the U.S. military and/or its allies always intervene. The price of empire has its costs which increase as the Ukraine war drags on with no end in sight, even as the U.S. has quietly set in motion state investment in the largest military supplies production plan since the Korean war. This military spending piles atop the $14 TRILLION spent since the year 2000 and the national debt is now 103% of the Gross Domestic Product, a debt ratio of a lesser developed country in the accepted understanding of years past.
This rearmament plan requires massive state deficit borrowing, which the Trumpster white nationalists oppose, some pretending theirs is a usual ‘conservative’ fiscal responsibility. Trump’s massive tax cuts for the ultra rich and COVID spending added $7 trillion to the deficit. Even with this borrowing, the biggest banks are in recession, even if the consumer economy and manufacturing sectors are not yet. In the spring of 2023 the 2nd, 3rd and 4th largest bank failures in U.S. history took place, caused by cryptocurrency and secret hedge fund counterparty obligations. Deposits in the biggest banks are down, as are their money-making homeowners’ and auto loans, and so are the stock prices of these banks. Counterparty risk in collateralized obligations to the tune of $40 Trillion (NOT counting Financial Exchange obligations!!!) keeps the entire global economy teetering on the edge of the next global financial crisis.
China saved the international capitalist order, the world market of the exploiters’ mode of production, from a world depression in the aftermath of the 2008 general collapse of investor confidence and credit. Whether or not China can any longer carry off such a rescue or want to is unlikely. Given their relative rise vs. the U.S. while they themselves are beset by capitalism’s basic profitability problem, a peaceful outcome or a China-financed soft landing are unlikely this time. Trump sought unsuccessfully to split the China/Russia bloc to get Russia on-side with the U.S. in a Duginite white power front. Today Russia and China are cementing their bloc as the Ukraine war funding is testing the EU/NATO resolve and neither the Trump fake isolationists nor the Biden globalists can navigate a solution for the decline of the empire.
The working class and the war industry
The third rail of U.S. politics is said to be Social Security which always seems to be on the defensive, but military allocations are more than sacrosanct. The politician’s shoot at each other across the aisles taunting each other with each next best reason to up the war budget.
The U.S. Department of Defense (DOD) war budget year on year spending graph for this century reports a cumulative outlay of $14.032 Trillion. The pacifist War Resisters League makes an annual presentation of the U.S. budget exposing the prominence of war expenditure. As this annual spending escalates it racks up debt as U.S. imperialism’s untouchable contributor to the federal deficit. The ticking debt clock shows this century’s military spending is nearly 40% of the total debt accumulated since 2000. The federal debt periodically bumps up against a so-called debt ceiling which Republicans regularly weaponize in order to hold the nation hostage. Not lifting the debt ceiling in a timely manner threatens fulfillment of financial obligations. Unable to destroy Social Security and other social obligations completely, prolonged stand-offs over debt give Republicans opportunity to punish recipients and force Democrats to give a ‘haircut’ to the poor (but not the military) in the inevitable “continuing resolution,” and they usually do. This is not contradicted by the MAGA drive to defund arming Ukraine; the dollars will be spent arming Israel.
Economists identify the military industrial complex (MIC) as universally beneficial for providing jobs and technological innovation. Yet despite providing jobs, the real effect is that the MIC drains the forces of production, wasting labor and resources transforming our labor power into forces of destruction. For their part the trade union leaderships are tied by a thousand threads to the military industrial complex.
The business unionism of the labor federations tolerates no internationalism which may interfere with the military gravy train. Left trade unionist leaders take the stage at occasional anti-war rallies and possibly even lead processions in the heat of an anti-war movement. But even during the massive anti-Vietnam war and anti-Iraq war demonstrations, when a left contingent of labor did arrive there were never more than token/exemplary attempts to down tools against the military industrial complex. Even the militant ILWU Local 10, which shut down all the ports on the west coast on May Day 2008 for one day in opposition to the Iraq war, can always be counted on to support the capitalist Democratic Party. No surprise a faded Obama poster was on prominent display at the Local 10 office on North Point in San Francisco for years. Each election cycle the ranks of labor are mobilized to canvas in the elections for capitalist Democratic politicians who promise to ‘bring home the bacon’ often in the guise of military related industrial jobs, deemed ‘good union jobs.’
A large sector, and we do not mean to say all, of the U.S. labor aristocracy feathers its bed on the military budget. To ensure there is no working class political independence, an entire propaganda machine builds the mythology that American national/personal freedom and democracy at home is what we promote abroad. Though the loyalty tests of the 1950’s are mostly gone, open class struggle fighters are quickly sorted out of defense employment by bosses’ spies. The cognitive dissonance one would expect to hear when the masses learn how the toast is actually buttered is maintained by a media tsunami of nationalist, chauvinist rancor on one side and social chauvinist adulation of NATO and bi-partisan norms of bourgeois etiquette on the other.
Anti-communist labor organizations such as the Free Trade Union Committee, the American Institute for Free Labor Development, the National Endowment for Democracy and the Solidarity Center, have been organized, from the 1940’s to the present, and reorganized to hide their nefarious work in the international labor movement to root out, isolate and murder class struggle union militants and communists in support of the imperialist project.
Over 600,000 workers are employed by ‘defense contractors’ such as Boeing, Lockheed Martin, Northrop Grumman, Raytheon and General Dynamics. Spillover across the broader economy generates millions more jobs generating billions in revenue. The short list of the unions directly in the defense industry includes but is not limited to: International Association of Machinists and Aerospace Workers (IAM), United Auto Workers (UAW), International Brotherhood of Electrical Workers (IBEW), Sheet Metal Workers’ International Association (SMWIA), International Brotherhood of Teamsters (IBT), United Steelworkers (USW), United Electrical, Radio and Machine Workers of America (UE), Communications Workers of America (CWA), Service Employees International Union (SEIU) and American Federation of Government Employees (AFGE). Unlike the ILWU which regularly uses negotiated safety days to make political statements which some leftists over promote as strikes, none of these unions conducted anti-war protests or strikes against the imperialist wars for oil or the geo-strategic goals of the pentagon.
This is the material basis of the class collaboration constructed between Labor and Capital by the labor bureaucracy, the front line capitalist politicians in the congress and senate and the involved corporations. This class collaboration has its material base in the labor aristocracy sustained on a share of the military industrial complex. This is how the labor aristocracy fortifies the bosses wall against working class independence.
While at the same time the war industry provides relatively better jobs and conditions for a sector of labor, the downward effect on the entire economy is hidden in an elaborate process. Capital, technology, engineering and science are brought together as State Monopoly Capital in action alongside private capital, driving great advances in rates of labor productivity. The great advances in the productivity of labor are not matched by increases in purchasing power for the average worker.
See the Economic Policy Institute Graph:
Technological gains brought to the broader economy expand the rate of productivity while wages lag. But this gap [See Graph] between rates of productivity and increasing real wages also expresses the increasing rate of exploitation. The ratio of organic capital (machines and technology) to variable capital (labor) increases and the cycle of the TRPF proceeds to squeeze.
Contrasting this “free market” to the alternative of Chinese authoritarian state monopoly capitalist rule under the guidance of the “progressive” Chinese Communist Party, dressed up on the global stage as equality of sovereignty and win-win market socialism, the American imperialist forecast looks as bleak as it is.
However, China is already caught by the same market forces and is pouring billions into Africa and South America in search of long term profits and short-term obligated client states. Such is their growth rate that they can “eat” their enormous losses in a speculative housing construction boom, i.e., of high rise ghost towns. But historical materialism applies to every capitalist state. The Yuan/Renminbi seeks to replace the dollar in trade, the flag follows the Yuan and the troops follow the flag. Thus we can forecast Africa and Latin America as military theaters of operations in smaller and larger inter-imperialist and proxy wars in the coming years. Our international tendency is among the very few revolutionary forces who are theoretically armed for this prospect.
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