Thinking strategically between now and 2012

economy2

By official measure the Great Recession is over, which only goes to prove that the economics profession is as delusionary as it is dismal.

Three out of four Americans, however, aren't drinking the Kool-Aid that the crisis is no more, according to a recent CNN poll.

No wonder!

Official unemployment is stuck at 10 percent. Unofficial unemployment is far higher. Wages are either stagnating or falling, while productivity grows at a fast clip. Households are still cutting corners and remain up to their ears in debt. The attack against the "overindulged," "privileged" and "overpaid" public worker (and as a consequence against public services from education to homeless shelters) is in full-court-press mode.

To make matters worse, the stimulus monies are drying up for all practical purposes.

Meanwhile, in our nation's capital the mean season has begun, as Republican lawmakers (somehow that word seems too polite for these folks) are demanding drastic cuts in the social safety net that is already in tatters, a rollback of Social Security and Medicare, and authorization for states to go bankrupt, which then turns into a Trojan Horse to renege on pension obligations to state workers.

The Republicans, who are no more than the water-carriers for the wealthiest corporations and families, won't even make a rhetorical concession to the notion of "shared sacrifice," choosing to demand sacrifice solely from the very people who had no hand in creating the economic crisis in the first place - our country's working and middle classes and communities.

So for most Americans, no end to hard times is in sight.

I say "most," because in the headquarters of U.S. corporations and finest country clubs it is "high fives" all around. The good times are back for them.

In the last two years, corporate profits climbed at the fastest pace on record - and not only on Wall Street. Non-financial companies are reporting the highest cash flow (profits after dividends and capital expenditures are subtracted) in a half-century.

Profit margins at the biggest corporations are reportedly around 9 percent and unofficially far higher, as corporations find ways to legally and illegally hide their real take (what Marxists call surplus value, of which reported profits is only a part).

What we have, then, is a "recovery" for working people that is L-shaped (in other words, flat - no recovery at all), and a profit recovery for U.S. corporations and the wealthiest families that is V-shaped (soaring upward).

And it's not because business investment and consumer spending are strongly rebounding. I wish that were so, but it is not the case. Both remain low. What then explains this phenomenon?

Simply put, capital and labor are locked into a deadly, unequal embrace - with capital feeding off labor - while the economy barely limps along.

How long can this polarization of income continue, with tens of millions of working people at one pole and the top tier of the rich at the other, without throwing the economy into a double dip? I'm not able to give a precise answer to this, and I'm not sure if anybody can, but it is safe to say that stagnating wages and capital's refusal to invest its trillions of dollars of idle money make the danger of a new downturn real and palpable.

Corporate executives and the wealthy seem unfazed about this danger. I guess they figure that even if the economy goes into another nosedive, they will make the have-nots pay for it much as they have over the past two years. Why stop and reroute the train, they must think, when they are doing so well?

So what are working people to do in these circumstances? Where can they turn for help? My answer is: to one another. People's multi-racial, multi-ethnic unity and action at a higher level is of critical importance if the assault under way at local, state and federal levels is to be slowed down and then reversed.

While this assault has bipartisan elements, right-wing extremism is leading the charge and one has to be careful not to lump everybody together.

Each legislative fight has to be examined concretely with an eye to drawing to the side of working people every possible ally in this unprecedented struggle, including sections of the Democratic Party and the Obama administration.

Out of frustration it is easy to put both parties in one boat regardless of circumstances, but that is a strategic and tactical mistake. Struggles that could be won will be lost if this strategy and tactic is pursued, and defeats that could be mitigated will turn into momentous setbacks.

Working people fight on an unfavorable terrain at this moment and are unable to dictate the agenda and terms of struggle. In these conditions, broad unity and reach is essential.

This situation probably won't change until 2012, and then it depends on that election's outcome. In the meantime, it will take practical mass initiatives, a sound strategy, tactical flexibility, and common sense to turn things around!

Photo: Neil Parekh / SEIU Healthcare 775NW CC 2.0 

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  • At this point one of the major activities we must must, put more into is education education education. We must get this information out to as many people as we can; and keep it updated as fast as we can. This publication has become increasingly important. Max

    Posted by Max Rader, 01/29/2011 2:36pm (4 years ago)

  • Really given the weakness of the left, alliance building is absolutely necessary and as the author says we can't afford to put all Democrats in the same boat as the extreme right Republicans. In unity is strength. Unfortunately, the right is frequently more united than the left, and we can't afford divisions now.

    This crisis is deep and is not going away on its own. Even the members of the Federal Reserve are disappointed at how slow and how weak the "recovery" has been. They have very few tools left at their disposal to solve the problem. Interest rates have been reduced to zero to stimulate borrowing. The Fed is buying Treasury Bills (Where does the Fed get the money to buy the treasury bills? Foreign countries think they are printing money). Future fiscal stimulus programs are in doubt as the Federal Government approaches the $14.3 trillion debt ceiling and the Republican controlled Congress has vowed to cut the deficit and stimulus spending - the crisis is projected to come in April this year. The Fed and the President have very few cards left to play. The short-term tactical situation is so desperate that the Tea Party will probably have to compromise and negotiate.

    From the strategic point of view, the capitalist parties can't solve the problem because they haven't correctly identified they don't even know its causes.

    1) We have heard a lot about financial derivatives (which I understand are investments without an underlying asset - much like making a bet in a horse race one invests in the horse without receiving any legal claim to own the horse). Subsidizing the too big to fail banks only made the crisis worse as the government has thrown good money after bad.

    2) We have heard about the housing crisis. I recently read that about 20% of the homes in Florida and Arizona don't have occupants and in many other states it is over 10%. The banks are holding a large number of forclosures off the market. Housing prices have fallen around 40% in some states. Under normal circumstances housing construction and new household formation are important driving forces in a market economy because when people buy houses they buy furniture, etc. There is no short-term solution on this front.

    3) The free trade agreements are a capitalist sacred cow. The capitalist press has not said anything serious about the outsourcing of jobs. Many of the multinational corporations that are demanding protection (for example demanding China increase the value of its currency) are also outsourcing jobs. This is one of capitalism's fundamental contradictions: they want the US consumers but they don't want the US workers. They all want everyone else to have US factories while they outsource.

    4) The capitalist press never talks about the huge budget deficits from the Bush league years. All of those foreign wars were very expensive and pumping all of that money outside the US to maintain expeditionary forces in other countries has weakened the US government and the US dollar. This is another sacred cow and it is considered to be unpatriotic to mention it. The fact that the capitalist brain trusts are blind on this issue is indicated by the fact that they are still beating war drums near Iran and North Korea. There were grave economic problems after the Vietnam war (20% inflation) and it appears that the imperialists have learned nothing from history. (Gee those smart bombs sure are expensive.)

    5) The capitalist press is in denial about the approaching end of the cheap natural resource extraction based economy. They still imagine all of the revenue and profit charts going off the upper right hand corner of the charts (presumably off to infinity). Of course the charts are not going to grow to infinity - this is really a big capitalist sacred cow. All the capitalists want their chart to grow to infinity and their competitors and other capitalists to be "small is beautiful." The costs of natural resources have risen and are going to continue to rise as they become more scarce. I've read that the Pentagon is expecting "tribal wars" about 2020 as the growing world population fights for control of limited natural resources - including water. Of course, primitive capitalist accumulation (piracy) is not really a solution to the problem.
    6) I once read that the USA is (was) the world's leading capitalist power because it has (had) a growing economy based on a growing population, vast spaces and unused resources. European economies matured earlier and the populations and economies stopped growing earlier. This situation may be changing - maybe the US is becoming like Europe. While the US has been in the great recession, many third world economies have been booming. For example, in Latin America, China has replaced the USA as the leading foreign trade partner during the recent recession. While the USA has been concerned because it's GDP has been growing too slowly, China has been concerned because it's economy has been growing too fast. Of course, it is sacrilege to suggest anything along this line.

    7) Another serious crisis beyond the crisis with unemployment insurance is the approaching crisis in social security as the postwar baby boom approaches retirement in the next 10 years. In many cases they don't have sufficient funds in their personal IRA accounts and social security doesn't have sufficient funding to help them.

    Surely I have missed some major problems (capitalist sacred cows/black swans), and together we need to develop a more complete understanding of reality to base our strategy on. Capitalist idealogues are blind to many aspects of the future because they have been blinded by their narrow worldview. We can't make the same mistakes. It appears that this crisis isn't going to disappear on its own account. "If wishes were horses, capitalists could fly."

    I really liked the article and support the call for broad unity. I only wrote about the above points because I like to write and think about strategic questions.

    Posted by Gary Semenchuk, 01/26/2011 9:27pm (4 years ago)

  • The Republican party's actions, in my opinion, are a disgrace and come close to being actionable and illegal. They are certainly no friend of the ordinary citizen. Those conservatives who continue to support Republican party ideas are deluded. They can't see where the policies are leading.

    The mantra is "less government" not realizing the implications to the ordinary person. Much of what the people claiming support of Republican "principles" borders on a desire for self-destruction.

    Posted by Ronald Humphrey, 01/25/2011 7:05am (4 years ago)

  • Again,friends,it seems the present writer's comments have been lost in cyberspace.
    Let me summarize them: it is hoped that the"...common sense to turn things around!",includes the democracy,peace and anti-fascist legacy of William Edward Burghardt Du Bois,Elizabeth Flynn,Paul Leroy Robeson,Benjamin Jefferson Davis Junior,Pete Cachionne,Claudia Jones, Henry Winston and Martin Luther King Junior,to name a several.
    Because if it does not,it will not contain"...practical mass initiatives,sound strategy,tactical flexibility..."-things which we sorely need-especially to fight the attack on public resources,equality,democracy and peace-the essence of the right and extreme right "Tea Party"movement.

    Posted by E.E.W. Clay, 01/24/2011 3:45pm (4 years ago)

  • Saludos Companero, We had a good tribute to Lucius Walker at our Jan. 17 th MLK event in Detroit. Also some pro and con regarding the call to revolution by one speaker. The divisions in the movement are still legion and many kinds of resistance and calls to resistance are happening.
    The situation of poor people is increasingly desperate and we are seeing in Detroit an increase in crime among the people and individual violence. Someone walked into the 6th Police Precinct and opened fire, wounding 5 police before he was killed. None of this is surprising.
    As events unfold I think the electoral arena will play a key but lesser role as the system may implode faster than we can vote on it.
    You are right to say rely on each other and I hope the community gardening, permaculture and biodynamic movements develop the ethic of feeding all the people and working together to achieve this.
    Remember Pastors for Peace and the full scolarship to the Latin American School of Medicine in Cuba.
    Love/Struggle,Ken

    Posted by Ken Parks, 01/24/2011 3:24pm (4 years ago)

  • What we need is an action plan. It is easy to point out and enumerate the problems but that does not bring people together other than the recognition of the obvious. An umbrella organization has to be created that appeals to those who are victims of the economic oppression with specific points of action for them to take. We need grass roots organizers who understand how to work at a community level. The common specific needs and wants of the oppressed are a powerful source of human energy, and if mobilized will be an effective source of change.

    Posted by Charles Hartik, 01/24/2011 1:11pm (4 years ago)

  • It's hard... it's hard to maintain clear thinking when the working families of this country are experiencing such setbacks. Just today, I talked with an old friend... been out of work for over a year. Thinking about relocating south so he can find affordable living space and perhaps a job. He knows if he actually finds one, it will not pay commensurate with his skills.
    This is where we are at at this stage of capitalism. People scrambling, breaking ties with family to survive.

    I agree with and the article and the constant driving home of the point.... building the movement.... turning to one another.... yes!

    Posted by Gabe Falsetta, 01/22/2011 11:27pm (4 years ago)

  • I appreciate comrade Sam's comments. The challenge to lay out a strategy for struggle in all dimensions of social life, not just the electoral, is before us. I strongly agree with comrade Sam that "people's multi-racial, multi-ethnic unity and action at a higher level is of critical importance...." The basis of this unity must be to meet the needs of working people, the great mass of people in the United States (and the world).

    While working people are fighting on an unfavorable terrain, we don't need, in my view, to relinquish the agenda to our class enemy, capitalists. There are efforts currently underway to build for more effective health care reform (HR676), for peace (a necessity), to strengthen labor's ability to organize, to protect and expand social security and other social programs, and most importantly for jobs. (Not a complete list.) The necessary tasks facing our class are clear and urgent.

    In building alliances with other sectors of our society, we can work to build momentum to meet working families needs, movements which can in turn help to mobilize the independents, progressives, first time and young voters, and to practically influence the outcome of the 2012 elections.

    What we do today and in the coming year will determine the outcome in 2012. We may decide to work for one of the major parties rather than another but that decision should be based on what electoral position will support our broader strategic goals, and support the non-electoral movements that we are helping to create and which can over time extract concessions from capitalists of both parties on behalf of working family's needs, while building toward being strong enough to impose working class power, and socialism.

    Comrade Sam is absolutely correct when he says "it will take practical mass initiatives, a sound strategy, tactical flexibility, and common sense to turn things around!" Our Party has a special role to play in organizing these mass initiatives while keeping our eye on the prize of developing working class power.

    In unity and struggle,
    Eric


    Posted by Eric Brooks, 01/22/2011 10:44pm (4 years ago)

  • Brother Webb, et al;
    It is not out of "frustration" that many workers put both parties in the same boat. It is reality. The polls speak for themselves; between 30 and 35% of the eligible electorate voted in last November's election. Why? Maybe they see no visible difference in the DP from the RP. Such an observation while not 100% accurate is accurate enough to turn the voters off and worse, go to the Tea Baggers!

    Only when labor, the environmental movement, civil rights, gay and lesbian, radicals, and the disenfranchised from the "left" wing of the democratic party unite and form an viable alternative to Tweedle Dee and Tweedle Dum will working people have a real political voice! Albert Einstein once stated; "doing the same thing over and over expecting a different outcome is the definition of insanity!"

    I for one quit believing in Santa Claus more than 50 years ago. If we want real social justice in the U.S. then WE HAVE TO MAKE IT HAPPEN! Waiting for the DP to do it is futile as current events have proven! Depending on the DP to save us from the right wing horde is even worse. The DP has shown time and time again that it has no stomach for a fight!

    Posted by Pancho Valdez, 01/22/2011 2:17pm (4 years ago)

  • Well Dearest Comrade,
    Things are pretty hairy now, even more so on the streets. I am conscious that every chip we lay down in the mass movements of the working class, is critical. For a long time now, I have not expected hugh gains, because I believe that a large sector of US the working class still don't get it. Still don't understand that the corporations got us by the balls and that we need to solidly stand against their avarious appetites and to take them head on! No tax cuts to the rich! Racism is the big boogey man in the room and unfortunately there are way to many white folks who are too willing to assume the worst from a Black led administration. The ultra right wing has to be taken on full force. I am not even worrried about the liberals. They will fall in line, if millions upon millions of Americans firmly oppose the right wing attack on our people- folks who work for a wage-that's us. Last but not least, for the naysayers, I love my President, Barack Obama! Yes, he is our President, even if some of us refuse to recognize it. He is in the Lions Den, and they are having a feasting party. But he is strong and more resolute than what folks think. If the American working people pick up our pace in the fight for racial,social and economic justice, he will be our biggest asset. This I know, this I understand! Anyway, I am back to organizing another event in the heart of 'Da Town'. Much love and respect always, your sistah in the struggle, Mama Cassie

    Posted by Mama Cassie from Oakland, Cali, 01/22/2011 2:10pm (4 years ago)

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