These ideologues cling to delusions that capitalism is the “best of all possible worlds,” blindness expressed as recently as two weeks ago by John McCain when he asserted that the “fundamentals of the economy are strong.”
But just the other day, economist David Macke surveyed the financial collapse spreading like a thermonuclear chain reaction. Asked what was needed to stop the destruction he replied, “At the end of the day, if you socialize enough of the financial system, it has to work.” Suddenly “socialism” is needed to stave off catastrophe! And who is Macke? An economist for JPMorgan Chase, one of the world’s biggest transnational banks.
But Macke’s “socialism” bears no resemblance to Marx’s version, in which working people own the means of production, including banks, and operate them in working people’s interests. Macke would “socialize” bad debt, forcing working people to bear the burden of rescuing Wall Street. Profits would continue to flow into the coffers of the rich. Left behind would be millions who have lost their homes, their jobs and health care as well as their 401(k) retirement accounts.
We should demand that any bailout work for us.
A coalition led by leaders of major unions has laid out just that approach in “A Call for Common Sense.” Use the federal government’s bank equity, paid for with our tax dollars, to force Morgan Chase, CitiGroup, etc., to agree to a moratorium on foreclosures and evictions. Require the banks to invest in a “green” jobs program to jumpstart the economy and retool our nation’s factories, farms and infrastructure to sharply reduce greenhouse gases. Make the banks invest in rebuilding the Gulf Coast, especially New Orleans. Such a program is not socialism, but it is a step toward socialism’s democratic principle, “From each according to his ability, to each according to his work.”
Friday, October 17, 2008
Marx was right
Friday, October 10, 2008
Michigan: McCain on the run
WARREN, Mich. — When Malcolm Wright moved here 23 years ago, this predominantly white, Catholic, working-class Detroit suburb was known as a home of “Reagan Democrats” — traditionally Democratic voters who voted en masse for Republican Ronald Reagan in 1980. Now this suburb may switch again and vote Democratic for Barack Obama and Joe Biden. What a difference decades of far-right policies make, some would say.Wright, 87, a retired teacher and former executive vice president of the American Federation of Teachers in Michigan, predicts Obama will take Warren and all of Macomb County.
Warren is changing and people’s attitudes are changing, says Wright, a lifelong Democrat. The community is 90 percent white, he said, but new people are moving in and you can find can African American, Asian American and Arab American families on every block.
Judging by the response he is getting from people when he goes door-to-door, he sees many supporting Obama as he does.
“The prospect of Obama becoming president is the prospect of hope,” he said. “And the prospect of McCain is more of the same.”
Wright, formerly president of his AFT local, served as a pilot in World War II and worked for Chrysler for 10 years before getting laid off and becoming a teacher.
For older people like him, Wright said, it’s important that Obama would preserve Social Security while McCain wants to privatize it, “just like Bush.” And if Obama is elected the prospects are much better for universal health care, another key issue, he noted. Also important, he said, is Obama’s opposition to the Iraq war and his pledge to get our troops out of Iraq, where there was no reason to go to begin with.
Despite various ailments, Wright has been out canvassing his precinct for Obama and getting to know his neighbors as voters.
Recently, he said, he proudly wore his Obama button at a monthly social event for seniors in his community where people eat, drink, mingle and dance. Wright said he was proud to wear his Obama button there.
Just south of Warren is Detroit, long known as the home of the auto industry and well-paid union jobs. Today the city and its residents are experiencing tough times.
Walking through downtown, one could argue it looks abandoned. A city whose population once approached 2 million now has fallen to about 800,000 residents. Eighty-five percent are African American. Unemployment is nearly 10 percent and one-third of the population lives below the poverty line.
“My biggest concern is the economics of this country,” said Ike Ayler, 64, an African American store manager who sells African artifacts, jewelry, clothing and Obama T-shirts in the student center at the Wayne State University campus in Detroit. “The Republican regime has slowed the economy down and people are losing their homes, mortgages, cars and their jobs and it’s affecting everybody,” he added. “And the jobs that we do have are not quality jobs to sustain a family. The auto industry here is imploding. We can’t afford to buy a car and we can’t keep making them.”
Ayler said he supports Obama because he is the best qualified and “genuine.”
“Eight years of Republican control is enough. It’s time for a change and Obama is the change we need,” Ayler sai.
Tim Boraaly, 20, a history major at Wayne State, said gay rights and women’s reproductive rights are morally important to him and he is supporting Obama because of his positive positions on those issues.
Boraaly, who is white, lives about 15 minutes outside of Detroit and works at Meijer, a big box store. The poor economy is affecting Michigan badly, he said. Many people he knows are unemployed, or forced to take jobs that pay much less than the ones they lost. “I know a few people who recently lost their jobs in the auto industry and are coming to Meijer to work to get their feet off the ground,” Boraaly said. “One of them is a guy is in his 40s and he is working there so he can support his family.”
Another Wayne student, 19-year-old Richard Diggs, an African American who lives on Detroit’s East Side, said, “I believe every American should have health insurance.” He asked, “When will our voices be heard? Who is going to speak for us? I believe Obama understands our problems and our issues.”
Late last week McCain pulled his campaign out of Michigan. Recent polls show Obama leading McCain in the state by 7 to 10 points.
plozano @pww.org
Finances and the current crisis: How did we get here and what is the way out? Part 2
(To read Part 1, click here.)
The turmoil in financial markets and the bailout to the tune of $700 billion has turned the public eye and wrath on Wall Street and Washington. While millions are aware of the triggering causes, ranging from predatory lending to deregulation to insatiable greed, what isn’t so obvious is the longer-term process that brought our financial system and economy to the edge of the abyss.
I call this process financialization. According to economist Gerald Epstein, financialization is a process in which “financial motives, financial markets, financial actors, and financial institutions come to play an increasing role in the operation of domestic and international economies.” (“Financialization and the World Economy,” 2005, introduction)
It started in the 1970s
In its present form, financialization goes back to the mid-1970s. At that time U.S. capitalism was beset by seemingly intractable and contradictory problems — high inflation and unemployment, declining confidence in the dollar, faltering competitiveness, slow growth, and a falling profit rate.
Faced with this unraveling of the economy and weakening of the position of U.S. imperialism on a global level, then-chairman of the Federal Reserve Paul Volcker stepped into the breech and pushed up interest rates to record levels. This wrung inflation out of the economy, but it also sent unemployment rates to the highest level since the Great Depression, forced the closing of scores of manufacturing plants and many more family farms, brought incredible hardship to the working class and especially the African American, Latino and other communities, and negatively impacted the global economy, particularly the developing countries in Asia, Africa and Latin America.
At the same time, the spike in interest rates to record levels redirected domestic and foreign capital abruptly and massively into financial channels where returns to capital were now extremely high. Volcker, as an experienced banker, knew that the capitalists’ problem wasn’t too little money capital, but rather too few opportunities to profitably invest a surplus of capital — a crisis of over-accumulation of capital.
Moreover, once in financial channels, money capital remained there, but not idly. Driven by its own nature to constantly expand and reinforced by competitive pressures of competing capitals (grow or die) in a permissive regulatory environment, the financial agents of capital (banks, investment houses, hedge funds, private equity firms and so on) raced at breakneck speed into a massive buying and selling and borrowing and spending spree for the next three decades — all of which led to an explosion of the financial sector in terms of employment, transactions, instruments, players and profits. In other words, financialization proceeded at a feverish pace and with a broad sweep.
Capital that produces little, destroys much
Unlike productive capital that reproduces and expands itself by extracting surplus value and profits from labor power in the production process, money capital is much more footloose and impatient. Its time frame is short term. It travels the globe in an instant thanks to computerization and the web. Sinking itself into longer-term investments in plants, equipment and new technologies that create jobs and grow the economy is something that financial capital does, but this is not its favorite cup of tea, especially in recent years. In fact, money capital is as likely to destroy plants and equipment as invest in them — witness our Rust Belt and the structural adjustment policies imposed on developing and former socialist countries.
Where possible, money capital hides in the shadows beyond the eyes of weakened regulatory authorities. Like a good entrepreneur, it invents new “products” (options, swaps, futures, derivatives), but highly risky ones, and then sells, buys and profits from them. When turmoil seizes the financial markets as is happening now, money capital cashes out and runs to safety until the storm blows over. In the event that it doesn’t reach a safe haven and absorbs huge losses, it is relieved in the knowledge that the federal government and Federal Reserve stand ready to bail out massive failures of big financial institutions, as we are seeing.
The lubricant of financialization is the production and reproduction of staggering amounts of debt — corporate, consumer and government. Debt is as old as capitalism, but what is different in this era of financialization is that the production of debt, speculative excesses and bubbles are now essential to the functioning of U.S. capitalism.
A two-edged sword
As it gained strength and scope in the late 1980s and ’90s, financialization grew to the point where it became the main determinant shaping the contours, structure, interrelations and evolution of the national and world economy. While financialization was an outgrowth of the systemic weaknesses and contradictions of U.S. capitalism, it was also the leading edge of a neoliberal model of capital accumulation and governance, designed to restore U.S. capitalism’s momentum, profitability and dominant position in domestic and world affairs.
But as we are painfully learning, financialization is a two-edged sword, not all peaches and cream. Indeed, its very successes opened up new fault lines in the U.S. and global economy, making it, as we so graphically see, unsustainable.
While it stimulated the domestic and global economy, it also left our nation with an astronomical pileup of household, government and corporate debt which can’t be unwound overnight.
While it gave an impulse to economic growth, it also introduced enormous instability into the arteries of the U.S. and world economy, evidenced by the frequent financial contagions at home and globally over the past two decades.
While it prolonged the upward cyclical movements of capitalism, it has also set the stage for a hard economic landing and a much deeper crisis eventually, which is what we are experiencing now.
While it created wealth on a substantial scale, it also successfully engineered the biggest transfer of wealth in our nation’s history from wealth creators — the world’s working people — to wealth appropriators, the upper crust of U.S. finance capital.
While attracting mobile capital to our financial markets, it also has made us dependent on the willingness of foreign investors to absorb massive amounts of debt, something that they are increasingly less inclined to do, as the dollar drops in value on international currency markets and our markets collapse.
While the debt-driven purchasing power of American consumers bolstered global demand, it also tied the world’s economy to our heavily financialized, indebted, and unstable economy.
New model of economic governance needed
And yet, despite this incredible wreckage, this almost incomprehensible corruption, this reckless speculation, these merchants of plunder, debt and hardship are still attempting to resolve this financial crisis in a way that continues to leave them in charge of the main levers of power and their wealth intact.
This is not “socialism,” as we hear from the extreme right. It is parasitic state monopoly-finance capitalism. Or, in more colorful language, out-of-control cowboy/casino capitalism.
The American people and their friends in Congress are faced with a first-class challenge. In the near term, some immediate measures must be taken to restore the orderly functioning of financial markets, to recharge the economy, and, above all, to improve living conditions for the American people.
In the longer term, what is required is a new model of economic governance at the state and corporate level. By that I mean a reconfiguring of the role and functions of government and corporations so that they favor working people, the racially and nationally oppressed, women, youth and other social groupings. This will not only require the election of Democratic Party nominee Barack Obama, but also a sustained struggle by a labor-led people’s coalition in concert with its allies in the nation’s capital on what will be new political terrain.
Recent events have undermined the legitimacy of the neoliberal model of governance and accumulation so eagerly embraced by the Bush administration and Republicans in Congress. (No wonder they say they don’t want to play the “blame game.”)
But a substitute is not in place. Instead, we have a political vacuum into which various contending forces will try to impose their model of governance as we go forward.
In my view, such a model should draw from the New Deal experience, but in the end it has to be shaped in the first place by today’s conditions and requirements for political and economic advance for our nation’s working people and oppressed people, broadly defined. It won’t be socialist, but it would challenge the power and practices of the agents of capitalism, insist on peace and equality, consider public takeover of our energy and financial complex, and de-militarize and green our economy and society.
Depression conditions prompted Franklin Delano Roosevelt and his advisers — albeit with a mighty assist from a powerful all-people’s coalition led by the industrial unions and the multiracial working class — to reconfigure the role and functions of the state to the advantage of the ordinary people. We should draw inspiration and energy from this and set a similar course.
Sam Webb is chairperson of the Communist Party USA.
Finances and the Current Crisis: How did we get here and what is the way out?
Part 1
If there were such a thing as a perfect economic storm, I would say we are close to it.
The housing crisis continues and shows no sign of ending; credit and money markets are either churning or freezing up; the stock market is gyrating; unemployment is leaping upward (sharply so in the communities of the nationally and racially oppressed); poverty is up and wages are down; oil and food prices are climbing; the value of the dollar is falling sharply compared to other currencies; the level of indebtedness is astronomical and will be difficult to unwind in the near term. And we sit on the edge of a financial collapse with all the accompanying dislocation and hardship that it would bring.
Falls on working people’s backs
While we are for the stabilization and the restoration of the orderly functioning of financial markets, we advocate a plan that not only restores market liquidity, but also addresses the pressing crisis on Main St. and revives the overall economy.
Unfortunately, I don’t think that such a plan is in the offing. A bargain appears to have been struck between Bush and Paulson and leaders of both parties. It is better than what was initially proposed, but does little to stimulate the economy or attend to the crisis of everyday living experienced by millions of ordinary Americans – who, it should be said, played by the rules. In fact, the plan goes in the opposite direction – its asks the American people to pony up to the tune of $700,000,000,000, even though they had no hand in causing this crisis.
The main opposition at this point is from conservative Republican House members and John McCain who, quiet as it is kept, propose in their plan to give billions to Wall St. in the form of tax breaks and are allergic to stiff regulatory measures. Few Democrats and, especially progressive Democrats, including Barack Obama, are happy with the outcome, but don’t see any alternative at this point.
Whether Democrats should have held out for a better deal will certainly be debated. I believe they should have, but from their viewpoint – a gun was at their head; the elections, which they are likely to win, are in a few weeks; and the possibility of a complete meltdown of our financial markets can’t be simply ruled out.
Despite the opposition, I expect that a final settlement will be reached soon. In the meantime, the labor led people’s movement should press its views and organize protest actions. It is obvious that McCain, standing on the grounds of “putting the country first,” will try to exploit the understandable anger of millions of Americans in hopes that this anger will propel him into the White House. Thus the larger movement must continue to expose his demagogy, as we struggle for a far better settlement.
In any event, the struggle continues. One line of action is to contain the housing crisis. As long as it continues, the overall economy will continue its slide downward and markets will continue to churn. The easiest thing is for the government to announce and enforce a moratorium on forecloses, debt forgiveness, and a renegotiation of mortgage terms going forward. Another is to pass a stimulus bill of a half trillion dollars, paid for by repealing the Bush tax cuts and a special tax on financial transactions and institutions. Still another is to impose a new regulatory environment on financial markets, including making illegal certain kinds of financial instruments and financial players, like hedge funds. A fourth is to rapidly end the Iraq war and to initiate a peace process in Afghanistan. After all, the Afghan people are exhausted by endless war and the American people are learning again that occupations don’t work and are very costly.
Finally, a debate over the merits of public takeover of our financial and energy complex is in order. Can our country, given the challenges we face now and into the 21st century, afford to allow these industries to remain in hands of profiteers? Wouldn’t our country be better served if they were in the public trust and operating in the interest of the public welfare?
Only a single skirmish
We should see this struggle over the bailout package as a skirmish, albeit an eventful and seismic one, but a skirmish nonetheless in a protracted struggle that labor and its allies can win. We should also appreciate the new ideological and practical opportunities obtained at this juncture of the class and democratic struggle.
Indeed, it is fair to say that the prevailing ideologies and practices that have driven US capitalism for the past three decades have run up against their own contradictions and conjured up new and old oppositional forces both domestically and internationally. Viewed broadly, what we are seeing is a massive ideological, political and economic defeat for US capitalism.
Financialization, financial led globalization, and neo-liberalism are not yet corpses. But their future is very problematic, although I would add that history tells us that discredited ideologies and practices never exit from the stage voluntarily. They have to be pushed, and pushed by a new political coalition that commands broad based support, is united in action, and possesses the skills to construct a people’s alternative. But isn’t such a coalition, of which we are a part, forming before our very eyes?
Moreover, it is ready to strike the first and absolutely necessary blow in a few weeks, that is, to elect Barack Obama and bigger majorities in the House and Senate by a landslide.
If people haven’t enough reasons to join this effort, the current implosion on Wall St. and the new constraints it will place on the federal budget should give them reason to roll up their sleeves and get the job done on election day. Let’s be clear – the importance of this election has exponentially grown because of events of recent weeks.
From another angle (and I am not going to develop this point), the implosion of US financial markets has delivered a debilitating body blow to the hopes of US imperialism for unrivaled hegemony in the 21st century. When combined with the Iraq disaster, the worldwide anger over global neo-liberalism and structural adjustment policies, and the emergence of new global powers in nearly every region of the world – China in the first place, it signals a new stage in the hegemonic crisis of US imperialism and the final chapter of a unipolar world.
Giovanni Arrighi, a world systems theorist, says that at the end of, what he calls, a systemic cycle of capitalist accumulation, leading hegemonic states invariably pursue a path of financial expansion and its aim is to reflate its declining powers. The Dutch pursued this path in the 17th century to be followed by the British in the 19th and early 20th century – successfully for a while, but in the end to no avail. Both eventually lost their leading position in the world capitalist economy and were replaced by another hegemonic state that established the rules, conditions, and institutional framework for capital accumulation and system wide governance.
Much the same fate, according to Arrighi, now awaits US imperialism. The only question that Arrighi doesn’t answer is: will US imperialism adapt peacefully to new world realities or will it engage in, to use his words, a policy of “exploitative domination” to maintain its standing in the world? Bush tried the latter, but failed and will leave the White House in January completely discredited.
Interwoven with longer term processes
While the present turbulence was triggered by mountains of borrowing on thin capital reserves, predatory lending, dubious and risky financial products, like credit default swaps and collateralized debt obligations, de-regulation, a shadow financial market, and bubble economics, it is also the outgrowth of longer term processes that account for the new dynamics of financial markets and go back to the mid-seventies.
At that time, the US economy was stumbling along, battered by the combination of inflation, high unemployment, slow economic growth and a declining rate of profit across US industries. The confluence of these conditions prompted Paul Volcker, then chairman of the Federal Reserve Bank, to drive up interest rates (the Volcker shock) to nearly 20 per cent (the Russians were not the first to experience shock therapy). Not surprisingly, this spike in interests rates reined in inflation, restored confidence in the dollar (investors are adverse to holding dollars when inflationary pressures are eroding its value), and attracted mobile capital around the globe to U.S. financial and real estate markets.
It also generated an unprecedented shift of wealth in favor of the very wealthiest families and financial institutions and set off an explosion in the financial sector in terms of its size, scope of activities, debt obligations, and players.
At the same time, rising interest rates slowed down the economy, big swathes of industry shut their doors permanently, union jobs were lost, wages stagnated, the social safety net was hollowed out, entire communities nearly collapsed, non-financial corporations were weakened, and the working class and labor movement were thrown on the defensive and have remained there since. Not since the Great Depression has productive capital been destroyed, living standards driven down, and the relative strengths of competing financial and non-financial corporations been reshuffled so fast and so broadly.
Much the same was occurring in the newly industrializing countries and the global south. In these countries finance-led globalization was responsible for massive drops in living standards, astronomical indebtedness to US banks, the privatization of industries and services, currency devaluations, and unconscionable poverty. It was the convergence of these conditions that set into motion the eruption of political movements in Latin America that are either winning or contesting for state power.
Of course, it took more than shock therapy in the form of high interests rates to effect changes of this magnitude. If Volcker struck the first blow, it was the Reagan administration entering the White House less than a year later that was the main political agent of this upheaval in ideology, politics, and economics.
The Reagan counterrevolution
At the ideological level, the Reaganites said that government is best that governs least, that markets are self-correcting, efficient, and a fair distributor of wealth, that income inequality is a good and natural thing; that de-regulation and privatization are the best fix for what ails the private and public sector, that we lived in a post Civil Rights era where affirmative action had no place, and that tax cuts for the rich and wealthy trickle down to working people, thereby lifting all boats.
At the political level, the Reaganites framed the agenda of struggle and employed state power in its varied forms with a ruthlessness seldom seen. Remember PATCO – the air traffic controllers union that Reagan crushed early in his first term.
Finally, at the economic level, the Reaganites dismantled much of the old Keynesian model of capital accumulation and economic governance at the state and corporate level – a model that had its origins in the New Deal and was sustained and expanded by successive administrations in the next three decades. It rested on a measure of class compromise, societal obligations, formal equality, and expansive macro economic policies that favored broadly shared prosperity.
In its place, they constructed a new model of accumulation and economic governance, popularly called neo-liberalism. In contrast to the preceding model, its main features included flexible production networks on a global scale, union busting, de-regulation, low-wage labor, low inflation, the free flow of goods, services, and capital, the shrinkage and privatization of the public sector, the re-embedding of racist and sexist practices into the economy and state, the restructuring of the state’s role and functions (not withdrawal from the state, as some incorrectly suggest), and, not least, the reassertion of finance.
It is against this backdrop that I will discuss financialization tomorrow.
Sam Webb is chairperson of the Communist Party
Ramming through the bailout
Bush, Paulson make Dellinger look like a Boy Scout
As the Bush administration attempts to ram a bailout package of nearly one trillion dollars through Congress, it begins to feel like Colonel Sanders asking the public to trust him to take care of the chickens.
If it weren’t so damn serious, there would be something almost comical about it. Here we have the White House, which has squandered trillions of dollars over eight years, and its point man, Hank Paulson, fresh from 38 years of gaming the financial system while working at Goldman Sachs, insisting that Congressional leaders hand over a trillion dollars to them with no debate and no strings attached.
In this real life drama, Bush and Paulson make John Dillinger, the legendary bank robber of the Depression years, look like a Boy Scout.
Nothing to do with socialism
This is not “socialism for the rich,” as some have suggested. Socialist measures would thoroughly clean up and stabilize the financial system to be sure, but a socialist-led government would also place the good as well as the bad assets of the responsible parties (commercial and investment banks, private equity firms, and hedge funds) into the hands of a public democratically run authority. It would turn the Federal Reserve Bank, which during the Greenspan era was one of the main architects and cheerleaders of bubble economics (hi-tech, stock market and, its latest version, housing) into a publicly controlled institution. And it would bring those responsible to trial and penalize them appropriately, if convicted.
At the same time, a socialist-led government and its congressional allies would funnel money to homeowners and working people and enact special measures to assist communities of the racially oppressed, not to mention our rural towns. It would rebuild our nation’s deteriorating infrastructure, invest in renewable energy and green jobs, and bring the Iraq war to a quick end. It would also propose the people’s takeover of the energy complex, which has also turned into a cash cow of the wealthiest corporations.
Use common sense
Does it make any sense to give control of our financial and economic system for the indefinite future to the same individuals, who while gaming the system, got us into this mess in the first place? I can’t think of anything that is less democratic or goes against the grain of common sense.
In the money and banking textbooks that I read years ago, our financial institutions and system supposedly channeled idle money to productive uses – to new technologies and business startups, to build homes and create jobs, to invest in new plant and equipment, and to construct and renew our nation’s infrastructure, while extracting handsome profits all the while.
Looking back, it is fair to say that banks and investment houses did perform this function for a period in capitalism’s development, but that period has largely passed.
Finance capital’s rise and ultra-right rule
Indeed, with the rise to dominance of the extreme right and the reassertion of power by finance capital three decades ago, our financial system has operated more or less independently of other sectors of the economy, functioned largely free of any regulatory body, and grown exponentially.
Finance capital – in its quest to maximize its rate of profit – has drained dollars from the private economy (especially the manufacturing sector) and the public treasury into incredibly risky and speculative financial schemes; it has spawned a series of complex financial instruments and paper transactions which few understand, but fabulously enrich the buyers and borrowers of these exotic instruments, most of which have nothing to do with the real economy.
Finance capital has facilitated megamergers, takeovers and corporate flight to off shore locations; it has wreaked havoc on sovereign states and their economies, particularly in the developing world; it has without as much as a thought introduced enormous instability into the arteries of the U.S. and world economy, evidenced by the frequent financial contagions at home and globally.
And, it has been one of the main class agents to successfully engineer the biggest transfer of wealth in our nation’s history from wealth creators -- the world’s working people -- to wealth appropriators, the upper crust of U.S. finance capital, while leaving at the same time our nation with an astronomical pile up of household, government and corporate debt that cannot be unwound overnight.
In short, the reassertion of finance capital to a dominant position in the political economy of our country, which was only possible because of the right wing dominance of our nation’s political levers of power, has come at a heavy price for the American people and people worldwide.
Clinging onto power
And yet, despite this incredible wreckage, this almost incomprehensible corruption, this reckless speculation, these merchants of plunder, debt and hardship are still attempting to resolve this financial crisis in a way that continues to leave them in charge of the main levers of power and their wealth intact.
As I said earlier, this is not socialism. A more apt description is parasitic state monopoly-finance capitalism. According to marxism, the main mission of the state is to reproduce the conditions for the reproduction of the class structure and economic relations of capitalism. If I am not mistaken, isn’t this precisely what Bush, Paulson and team are doing now?
Arena of struggle
Of course, marxism also says that state is an arena of struggle. While the ruling class employs the state apparatus, including violence when necessary, to impose its interests on society, a united working class and people can successfully resist these measures from within as well as outside state structures. This was done in the 1930s and in so doing, secured important victories for the nation’s working class and its allies. It was also done in the 1960s and in doing so brought down the system of legal segregation. And we see it again today in the incredible efforts of millions of working people of all races and nationalities and their allies to elect Barack Obama and larger Democratic Party Congressional majorities in November. Indeed, it is a task that takes on even greater significance given the financial storm that is shaking our country.
For the moment however, the American people and their friends in Congress are faced with a first class challenge – to impose their own imprint on the way in which this financial crisis is resolved. Let’s have no doubt that our financial system can be stabilized and restored to its orderly functioning in a way that meets the needs of the American people and our country. But will take a fight!
Sam Webb is Chairperson of the Communist Party.
Barney Smith, not Smith Barney
The shockwaves from the financial crisis have left working class families in every part of the country in a state of great worry and fear.
Over $100 billion of public money has been spent to bail out huge financial corporations while millions of people are losing their homes, losing their health care, losing their pensions, losing their jobs and losing college loans. Those who have been paid the least, African American, Latino and women workers, are losing the most.
The line that brought down the house at the Democratic convention says it all: “The president should be worrying about Barney Smith, not Smith Barney.”
The question could be asked: who do you want in the White House as this economic crisis continues to unfold?
The economic policies of George W. Bush, supported by John McCain, including deregulation, privatization and tax gifts to the wealthy along with the $3-trillion-dollar war, are major contributors to this crisis. They have created the biggest wealth gap in the history of our country, similar to 1929.
John McCain showed that he represents four more years of the same when he declared that the fundamentals of the economy are sound. He’s been backtracking from that ever since, in an effort to maintain his campaign image of a maverick for change.
McCain’s cynical use of populist rhetoric has to be unmasked. His hypocrisy was revealed when he reversed his position and came out in support of regulation. Not only has McCain opposed regulation in the past, but his campaign staff is riddled with 83 top Wall Street corporate lobbyists. The regulation he supports now is likely to stabilize Wall Street at the expense of working people.
When it comes to Main Street, McCain voted with Bush against raising the minimum wage, voted against aid to the victims of Hurricane Katrina, voted against increasing veterans’ and children’s health care, home heating assistance and Pell grants for college. Barack Obama voted in favor of all of these measures.
John McCain, like Bush, supports privatizing Social Security and gambling the small incomes of senior citizens on the stock market. Millions would have been devastated when the financial crisis hit if this basic survival income was mixed up in the market. Barack Obama opposes privatization of Social Security.
John McCain says health care should rely on unregulated private plans, “as we have done over the last decade in banking.” If health insurance providers fail like the finance institutions, the ranks of the uninsured will be swelled far beyond the current 45 million to include just about everyone else. Barack Obama supports universal health care coverage.
AFL-CIO President John Sweeney emphasizes the importance of a candidate who addresses the needs of working people in the midst of the financial crisis: “Permanent solutions can be found in the economic program of Barack Obama — re-regulation of the financial markets, a government focused on creating good jobs by investing in infrastructure and solutions to our energy crisis, health care for all Americans, a government that will protect and improve Americans’ retirement security, and a guarantee that American workers can bargain for their fair share of the wealth they create.”
The financial crisis raises the stakes of this election even higher. The wealth gap can be narrowed, or it can continue to escalate, plunging millions more into poverty.
The McCain campaign is spending big money on vicious ads filled with distortions and personal attacks against Obama, to create distractions and cloud the issues.
In the battlegrounds of Ohio and western Pennsylvania, union members have been knocking on the doors of fellow workers to talk things through. They are taking on the McCain “Swift boat” attack machine by comparing the candidates on issues of concern.
Those battlegrounds are beginning to turn from red to blue. Undecided workers and their families are coming to the conclusion that “enough is enough.” They want someone in the White House who voted with labor 98 percent of the time, not someone who voted with Bush all of the time last year.
Millions of similar one-on-one conversations among working people, young people and retirees all across this country can determine the outcome of the election.
Economic crises are basic to a system that allocates critical resources for short-term profit instead of for the social good. It will take a huge mass movement to achieve fundamental changes, just as it took a huge mass movement in the 1930s to win the New Deal.
An uprising of voters on Nov. 4 can change the political balance of power, thereby opening the way for new struggles and demands that the economic crisis be solved on behalf of working people instead of on the backs of working people.
That’s what this history-making election is all about.
Save Main Street Not Wall Street!
The Bush Administration has proposed a massive bailout plan of at least $700 billion (maybe as much as $1.7 trillion) to stabilize the financial system amid the biggest economic crisis since the Great Depression. Treasury Secretary Henry Paulson, a Bush appointee, and the President are pushing for the U.S. Congress to rapidly pass the plan this week with little debate and no amendments. The rightwing and the banks want a plan that gives a blank check to Wall Street with no oversight.
We join with others who call on Congress to slow down the process to ensure there is no bailout of Wall Street without a bailout of Main Street. The process should include full debate and transparency.
While the full extent of the current crisis and its impact on working people cannot now be fully known, we do know that the crisis is deep and not easily resolved. Furthermore, we must insist that the criteria for any plan to solve the crisis must be what's good for the working people of this county and the world, not what's good for the mega-rich and massive monopolies that got us into this mess.
The situation is so dire that some type of dramatic action is needed to avoid disaster for U.S. workers. Organized labor, community groups and others are increasingly angry at the bailout currently on the table. Any plan before Congress must:
1) Protect homeowners faced with foreclosure by restructuring mortgage rates to be in line with family income.
2) Create economic stimulus for working people and small business
3) Provide $100 billion in emergency relief to state and local governments wracked with budget cuts and diminished tax revenue
4) Bar CEO severance packages and cap the pay of executives receiving a bailout
5) Regulate banking and finance with transparent public oversight
6) Maintain public control over monopolies like Fannie Mae and Freddie Mac that have a decisive role in the economy
7) Control speculation and increase revenues by taxing large financial transactions
8) Ban predatory lending and cap interest rates on all types of debts
9) End the war in Iraq, which is draining $700 million a day from public coffers
Developments are moving quickly and their full impact has yet to be felt, but let's make sure that American workers—those who made this country rich—do not further suffer at the expense of the financial elites, those who have created this crisis.
Call Congress today! Tell them no blank check for Wall Street!
National Board
Communist Party USA
