The recent drama over the federal debt limit, with politicians in gridlock amid scare stories that the U.S. government might default on its bills, marks a significant move toward fascism by an embattled capitalist ruling class.
A default was averted when Democrats and Republicans agreed to at least $2.1 trillion spending cut over the next decade to counter a hike in the debt “ceiling,” the legal cap set by Congress on government borrowing. But the rulers’ internal crisis remains. The debt ceiling battle reveals their two essential needs in the current period:
To wring extreme profits from the working class with cuts in critical social services in a period of perpetual and massive racist unemployment.
To discipline their own ranks to help fund imperialist wars abroad and repair a crumbling infrastructure at home.
These imperatives are the hallmarks of fascism, the phase of capitalism that forces the ruling class to discard its mask of liberal democracy. President Obama recently took the lead on both fronts with his “Grand Bargain.” This ploy for “shared sacrifice” called for a devastating $3 trillion in spending cuts over the next ten years, alongside just $1 trillion in tax increases for corporations and the wealthiest Americans.
The Republicans’ “no-new-taxes” (on the rich) pledge, pushed hardest by the elements coalescing around the Tea Party, gives Obama cover to maintain his liberal credentials even as he ruthlessly targets the most vulnerable workers: the old, the sick, the poor. And as the first black president, he is the bosses’ perfect tool to impose racist cutbacks that fall most heavily on black and Latino workers, the same people who were hardest hit by the latest economic crisis (see box on page 5).
Capitalists Divided
Liberal analysts misrepresented Washington’s debt standoff as a battle between crazed GOP ideologues and sane if ineffectual Democrats, like Obama, who are striving to protect a fragile economy.
In fact, both sides are acting rationally, against the working class, in selfish pursuit of profits. They represent two camps of capitalists with conflicting interests. As Lenin noted in Imperialism, the Highest Stage of Capitalism, there is a yawning gulf between entrepreneurs, who profit by managing capital in productive businesses, and financiers, who profit purely from “money capital” and seek to extend their domination over finance capitalists in other countries. The biggest financiers’ massive overseas investments require “the intensification of antagonisms between imperialist nations for the division of the world.” By that, Lenin meant world war.
In the U.S. today, both capitalist factions demand the racist looting of Social Security, Medicare, and Medicaid. Their clash stems from how they get their respective wealth. The entrepreneurs (such as Koch Industries; see box) have a short-term, domestic focus that favors younger, rising firms. The financiers, represented by Obama and the banker-backed liberal wing led by the Rockefeller interests, have a longer-term, imperialist outlook to defend their worldwide empire, from Iraq to Afghanistan to Pakistan to Somalia and beyond. The financial capitalists still dominate U.S. policy — although, as the debt flap reveals, not absolutely.
On July 28, the nation’s biggest imperialist bankers sent a letter to Obama to plead for a resolution to the recent Congressional impasse. The consequences of a default, they wrote, would be “very grave” for “America’s global economic leadership” — a code phrase for imperialism. The signers included the chiefs of JPMorgan Chase, Citigroup, Bank of New York Mellon, and Boston’s State Street, which hold a combined $71 trillion in global assets under custody. By contrast, Forbes magazine estimates the Kochs’ wealth at $44 billion.
Going Where the Money Is
Obama’s cut and tax strategy has been shelved for now. But the president and his cheerleaders at the New York Times, both representing the main wing of the ruling class, will soon be back to demand that bosses big and small pony up — and $1 trillion will be just a down payment.
For the bosses, it’s less a matter of “fairness” than of narrowing options. They are willing and eager to drain the working class, but they’re running into objective limits. The global financial meltdown obliterated millions of jobs in the U.S., along with the tax revenues they generate. (In June, according to the Bureau of Labor Statistics, the “real” unemployment rate — including unemployed, under-employed, and people “marginally attached to the workforce” — stood at 16.2 %, or more than 25 million people suffering for lack of work in the third year of Obama’s dead-on-arrival “recovery.” And for black and Latino workers, those jobless rates are double.)
Workers are being sucked dry. Thinning the social safety net will not be enough to keep the war machine humming. Both Obama and Republican House Speaker John Boehner, who signed off on the Grand Bargain before buckling to anti-tax Tea Party pressure, know that they’ll eventually have to go to where the money is: to the rich.
In 2008, the median income of the U.S. capitalist elite — the top 0.1% — was $6 million, versus $50,000 for American households as a whole. In 2007, the top 1% of the population controlled 43% of the nation’s financial wealth (total net worth minus the value of one’s home), or 1½ times the bottom 95 percent. The federal government has locked in these gross inequalities by slashing capital gains and estate taxes and by failing to enforce anti-trust laws (Vanity Fair, May 2011).
But even as the biggest U.S. capitalists rake in more and more, they are contributing less and less to the government that is dedicated to protect their interests. Corporate income taxes now account for only 7% of federal revenues, as compared to 23% in 1960. The jobless rate tells us that corporations aren’t using this extra cash to hire more workers. Instead, they’re hoarding. The bloodsucking banks aside, non-financial companies are sitting on close to $2 trillion in liquid assets.
The outrageous greed of the super-wealthy fits neatly with the small-government creed of the Tea Party caucus. It works less well, however, with the overriding needs of U.S. imperialism. The debt ceiling fracas was the public face of the rulers’ fight over how to divide their wealth and rule their weakening empire. The bitter struggle over the fallback measure, with no boost in needed revenues, is a mere prelude to the struggle to come. The battle should escalate in the fall, when Obama pitches his “balanced approach” (more taxes) to the new Congressional “supercommittee” charged with fleshing out the deficit reduction deal.
Bosses’ Rx: War and Fascism
In the end, the rulers’ Rockefeller-led main wing must prevail for U.S. imperialism to fend off its competition. The regional wars of today foreshadow the world war to come, as new imperialist rivals (China, India, Brazil) and old ones (France, Germany, Russia) challenge U.S. dominance. Both now and later, huge infusions of cash will be required to expand the military. Meanwhile, Obama’s backers will continue to exploit debt concerns as they build a fascist mass movement — including a military draft and even more extreme worker “sacrifice” — all for the greater good of U.S imperialism.
Fascism represents the ultimate exploitation of workers. The income losses of millions of unemployed and the slashes in wages of tens of millions of those still employed are intensifying the exploitation of workers worldwide. It should be remembered that Germany’s Nazis supplemented their extermination camps with thousands of forced labor camps. Millions of Jews, communists, and others were commonly worked to death at mines, quarries, farms, factories, and construction sites. The free labor both shored up the German bosses’ profits and sustained their war effort.
Under capitalism, economic crises aren’t caused by debts or deficits. They reflect the contradictions of a profit-driven system that can never meet workers’ needs. That’s why we must fight for a world run by workers for the working class, not for the bankrolls of a few parasites on the top. Fight for a communist society for the working class led by PLP! Join us!J
Kochs Challenge Rockefellers; Workers Must Throw Them All Out
The Koch brothers, who finance the Tea Party and bash Obama, buy oil and manufactured products in many countries. They are heavily invested in industrialist accumulation in the U.S. but do not own a major bank nor do they profit from the huge U.S. war machine. However, they are also trying to establish a niche in their own special form of “imperialism on the cheap.”
The Kochs bankroll the Cato Foundation think-tank. Its Mid-East expert Leon Hadar thinks that the “ballooning deficit and an overstretched military leave Americans no choice but to make major cuts in defense spending by shrinking [the] U.S. role in the Middle East.” (Huffington Post, 7/5/11)
Hadar, no doubt smelling a potential supplier to Koch Oil, sees a deal with Teheran in the offing: “The United States should take part in any negotiations leading to regional agreements on Afghanistan and Iraq, a process that could also become an opportunity to improve the relationship with Iran.” (Cato Institute, 7/1/11) This, of course, runs counter to the interests of the Rockefeller-led, imperialist wing of the U.S. ruling class which controls the largest chunk of Mid-East oil supplies.
Obama Fronts for Dominant Rockefeller Wing; Kochs Want Piece of the Action
The Koch brothers dream of catching up to the Rockefellers but the closest they’ve come to wielding state power is Tea Party obstructionism in Congress. They have a long way to go to match the Rockefellers’ long history of transforming their Standard Oil monopoly into a banking empire. Having trumped the J.P. Morgan clan by the 1930s, World War II left the Rockfellers heading up the biggest U.S. banks and therefore with the resources to supply the controlling capital in the U.S. war industry, putting them in position to shape U.S. foreign policy to protect their imperialist interests abroad.
During the Vietnam genocide of the 1960s and 1970s, James and David Rockefeller personally headed the ancestors of Citigroup and JP Morgan Chase. Nelson Rockefeller was governor of New York and later became U.S. vice-president. David Rockefeller ran U.S. imperialism’s most influential policy foundry as president of the Council on Foreign Relations; its most influential university as president of Harvard’s overseers; and its most influential “philanthropies,” the various Rockefeller foundations.
The Koch brothers’ challenge to this mammoth empire puts them into a fierce dogfight with the world’s most powerful capitalists, a battle over who can exploit the most workers. The Rockefellers have been reaping super-profits from workers on five continents. The Koch brothers were behind the attack on Wisconsin’s state workers and teachers that cut their wages, benefits and bargaining rights. The only interest the working class has in this fight is to overthrow both sides with communist revolution.
Depression Intensifies Racism As Basis of Capitalist Super-profits
A Pew Research analysis (7/26/11) “shows the racial and ethnic impact of the economic meltdown, which ravaged housing values and sent unemployment soaring.” (AP, 7/26)
The net worth of black households in 2009 at $5,677 was one-twentieth of that of white households. For Latino households at $6,325 it was one-eighteenth.
From 2005 to 2009, Latino household net worth declined by 66%. Black household net worth shrank by 56% over that period. Much of this was due to their home equity losses, both from home foreclosures and plummeting home values, as well as double unemployment rates.
The Pew Research report also found that 35% of black households had zero or negative net worth. For Latino households it was 31%.
Said Roderick Harrison, former chief of racial statistics at the Census Bureau, “Typically in recessions, minorities suffer from being last hired and first fired. They are likely to lose jobs more rapidly at the beginning of a recession, and are far slower to gain jobs as the economy recovers.”
Across all groups, “the wealth gap between rich and poor widened. The share of wealth held by the top 10% of U.S. households increased from 49% in 2005 to 56% in 2009.”