The Economic Crisis and Talk of Recovery

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by Will

The US has been in the most severe recession since the Great Depression from late 2007 till now.  Ben Bernake and a host of other economists have declared that the economy has entered the process of recovery.  This is a remarkable statement considering the actual conditions of working people in the U.S.  Michigan has an unemployment rate above 15% and California, the eighth largest economy in the world is at around 12%.  Meanwhile, the national average is at 9.8%, clearly on track to break the psychologically devastating double-digit marker.  Radical economists argue national unemployment is closer to the 17-20% range and that in places like Detroit it is hovering somewhere in the 30% percent area.

I have thrown a lot of numbers at people in one paragraph and at times these numbers can hide the human dimensions of how devastating unemployment can be for a person and their family.  This takes on psychological, emotional, racial, and gendered aspects which alter peoples lives.  Marriages are broken; people lose faith in themselves and throw their life away to drugs and crime, neighborhoods are destroyed, and dreams are vanquished. This is made worse by the pronouncements of Bernake that a recovery is here.  What does it mean for a person who cannot get a job during a recovery?

While the media has discussed extensively the toxic assets, sub-prime loans, collaterized debt obligations and other financial gimmicks which have given the capitalists nice profits for the past 4 to 6 years, there is also an immense shallowness underlying the narrow focus of this crisis as presented by them.  This crisis is rooted in the continued falling rate of profit in the United States reflecting a deeper crisis in the success or viability of capitalism.  To look at it another way, if capitalism was successful, why would capitalists need to embark on such risky financial speculation? Why not play it safe and make tons of money?  The reality is that profit rates have a tendency to fall and the neo-liberal offensive has been the capitalist response to that.

Neo-liberalism has been the axe which with the American and world’s working class have been put under for over three decades.  Since the start of the economic crisis, the capitalists have launched a spectacular offensive against working people in the United States.  This graph puts it in perspective: productivity is another way of saying how much workers produce in a fixed amount of time and we can see that productivity has gone up drastically while wages have stagnated.  This means people’s lives at work are under pressure from the bosses, every working moment they are expected to produce, which means less breaks, increased work speeds, and longer hours.  People come home more tired, less able to engage with their kids, less able to engage in serious reading or conversations, etc.

graph

This trend has continued in since the breakout of the crisis as seen in this WSWS article. Working people are literally saving the capitalist system from collapse by working harder while their wages are stuck and at the same time corporations are returning to profitability!  This reality coupled with the giveaways to banks and to AIG; the attack on the workers at GM and Chrysler; and the collapse of state budgets fostering severe cuts at the local/ regional level begin to complete some of the most fundamental dimensions of the capitalist offensive.  The attempt to re-haul healthcare can only be understood in such a light as well.  Obama and sections of the capitalist class realize that the healthcare industry as it is will bankrupt the country.  The fact that they have demonstrated a lack of political will shows how sectional and powerful interests of the healthcare industry have shaped the policy in the interests of giant insurance and pharmaceutical companies.

This has been not only a crisis in the financial sector of the economy, but States across the country are facing all sorts of problems.  They are experiencing massive unemployment with Michigan, California, Nevada, and Rhode Island in horrible shape.  Then you have state deficits which prompted massive cuts in lower and higher education, public programs for the elderly, healthcare, and in the state’s workforce.  Here is a taste: tuition for all public universities in Florida are increasing by 15%;  Rhode Island cut healthcare coverage for 1,000 low-income parents; and Massachusetts is slashing funding for early care programs.  These programs might not have been cut if the Republicans had not opposed more state aid when the stimulus bill was written.  These deficits are not going away in many states, which means more cuts are on the way.

Regardless of the problems of the stimulus, it was key in stopping the free falling economy at the beginning of the year.  The major input of government dollars helped create a floor from which the economy would not go beneath—they were successful in doing that.  However the question remains, what will happen once the stimulus money runs out and the safety net or floor is taken away? The private sector remains weak and its surge was based on the government stimulus.  Also, a major question is what will keep the economy growing at a fast enough pace to keep up with the growing labor market?

Then we have the stock market.  It is probably one of the most confusing aspects of capitalist economics.  How the stock market could be going up when the rest of the economy and particularly working peole are feeling the pinch. Perhaps this excerpt from the Wall Street Journal gets at it, “”Investors have moved from a flight to safety to a flight to risk,” said Rick Lake, portfolio manager of the Aston/Lake Partners LASSO Alternatives Fund. “The investing crowd feels compelled to participate in up moves and buy anything with a higher yield than cash, setting up a climate where investors will react to any positive news and leave a prudent consideration of economic realities to another time.” Ignoring “prudent considerations of economic realities” is probably the most amazing statement one would expect to hear considering it was that same attitude which brought the world to such a crisis.  Most importantly, it shows that to a large extent the stock market is going up based on expectations that a recovery is around the corner.  This appears to be a case of delusional thinking and behavior.  It is not that a recovery is not possible, but the rise of the stock market does not relate to the economic activity and recovery in the country.

There are a litany of problems which remain. It is not clear which one of them will cause the next panic, the next shockwave, or crisis.  These are the growing small bank defaults, credit card defaults, commercial real estate defaults, defaults in mortgages of homeowners who have good credit, toxic assets which remain on the books, trade imbalances,  consumer spending, credit markets, state deficits, the decline of the dollar to name some of the most critical.

Here are some more specific examples: unemployment is beginning to affect homeowners who had solid credit but since they do not have a job, they cannot make payments on their mortgates so the default rates of these are starting to rise.  Unlike the subprime loans which were predatory loans, these defaults are form the “outstanding” good citizen/ consumer types.

Commercial real-estate is showing real signs of problems. Small business are having trouble paying their montly rent and loan payments.  Apartments and office buildings are vacant which means owners have no source of income.  This should not be a surprise as real-estate speculation has become a major feature of investment in the United States. It is not clear which banks hold large chunks of this type of loans and if they are concentrated the way sub-prime loans and securities related to them were.

The FDIC has had to bail out almost a hundred banks this year.  While these banks hold a minuscule amount of assests compared to giants like Citi, JP Morgan, or Bank of America  their failure will be the hallmark of continued mergers and consolidation of the banking industry.

Consumer spending is more than 2/3 of the US economy. The economy in the last decade was fueled by consumers who borrowed money even while their wages declined.  How will the economy jump start if easy money is gone and wages are not rising? The capitalists are trapped.  There are real signs that Americans are saving more which naturally puts a break on spending.  If consumers have shut their wallets, then what will start the economy?

This recession alone has wiped out 2 million manufacturing jobs.  Coinciding with this is the reality that the length of unemployment for many workers is breaking the 27 weeks which many economists take as an indicator that there are structural changes in the economy happening.  This means that people will not be able to get the same job they had before, because it has disappeared or moved to another country.  What Americans do for work is changing once again. The loss of so many manufacturing jobs should be shocking to Obama, but it does not appear that it has taken on a parituclar importance for the President.  This is a deeper reflection of how the current configuration of U.S. rulers see where value and profit come from.  They do not understand the importance of working-class jobs and the importance of producing goods for society.  This is certainly one of the explanations for how the auto-workers got the iron fist from Obama while the financial sector get the padded gloves.

Probably the scariest part of the economic crisis is that the toxic assests are still held by the big banks.  The government dumped hundreds of billions of dollars of cash into the banks and guaranteed the value of bank holdings, but this was a temporary feature. What is supposed to happen to these toxic assets? Furthermore, the basic mechanism which banks securitized loans and sold them to investors, therefore keeping loans off their books, which allowed them to make more loans is not functioning.

One of the big questions is what if this uptick in economic activity is real or are we facing another plunge into a deeper recession.  It is hard to say what will happen in the upcoming months or years. We can only look at the current facts, study history, and make educated guesses, and most importantly take action in a time where people are beginning to fight the capitalist offensive.

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0 thoughts on “The Economic Crisis and Talk of Recovery”

  1. i know nothing about how the economy, the healthcare system, or the stock market works. So, i have a little list of questions relating to this post that maybe people can help me with.

    1) On the healthcare point:
    Will said, ” The attempt to re-haul healthcare can only be understood in such a light as well. Obama and sections of the capitalist class realize that the healthcare industry as it is will bankrupt the country. The fact that they have demonstrated a lack of political will shows how sectional and powerful interests of the healthcare industry have shaped the policy in the interests of giant insurance and pharmaceutical companies.”

    When you say bankrupt the country, do you mean the government, the insurance and pharmaceutical companies, and/or the working class? If the bankruptcy includes the companies, then why do they insist on continuing a system that is going to run them into the ground?

    2) On the issue of jobs:
    Will said, ” What Americans do for work is changing once again. The loss of so many manufacturing jobs should be shocking to Obama, but it does not appear that it has taken on a parituclar importance for the President. This is a deeper reflection of how the current configuration of U.S. rulers see where value and profit come from. They do not understand the importance of working-class jobs and the importance of producing goods for society.”

    Does this mean that the rulers are sending the capitalist system towards destruction through their own stubbornness and ignorance about the importance of workers? If so, is this not a positive in the long run? Are workers not more likely to engage in mass revolt if the conditions are unbearable, rather than if they gain some social reforms that brings a small bit of stability to the system and their lives?

    Another way to ask this is what are the pitfalls of fighting for social reforms like more access to jobs or more funding for social services? In the past, reform victories have often had a demobilizing effect on mass movements. i can think of a recent example that occurred in a campaign i’ve been involved in. A group of workers were faced with a forced shift transfer of a large portion of the workforce. This transfer was going to be devastating for many of the workers and their families. In fact, some anticipated losing housing and being forced out onto the streets with their children. With little more than a couple weeks of organizing, over 75-80% of the workforce came out in militant rallies to demand the shift transfers not take effect. Once management caved and offered to keep about 60% of the positions that were going to be transferred, the workers agreed. We definitely won a small victory, but poor conditions, managerial harassment, and work speedups are only getting worse. However, ever since the victory against the shift transfers, no more than 30 workers have participated in rallies and pickets. This is still a good turnout based on the small workforce, but it is over 150 people short of the number that came out to the rallies against the transfers. Why is this? Conditions are still bad, but i guess not as drastic as the proposed shift transfers. So, do things have to be life-threateningly bad for folks before they will revolt in mass against the capitalists? If yes, do we risk losing potential revolutionary energy by fighting for and winning reforms?

    i know this post is not about queer liberation, but the same basic question i pose above could be applied to the gay marriage issue. The primary focus of the dominant gay rights movement has been gaining equality in economic benefits afforded to married couples. Rarely do you hear anything about how it is necessary to fight for queer liberation b/c queer families threaten the very idea of the nuclear family, upon which capitalism relies. Because of the limited scope of these demands, the logical end of this movement, at least within the more liberal, middle class, white segment of the movement, is the right of gay couples to marry. What will happen if this comes? Will the masses of people that we saw take part in rallies and marches across the country this past weekend say, “Ok. We won. What do we do now? Conditions still suck for queer folks. But we achieved our goal, so i guess we go home.” We can certainly count on the politicians encouraging people to go home. My point is that winning gay marriage (a legislative reform) could potentially demobilize a lot of people.

    By no means am i saying that i firmly stand against fighting for reforms, but these are just questions that i have been grappling with, and i was hoping others may be able to offer some insight on.

    3rd question) What are toxic assets?

    Thanks for anything anyone can offer.

  2. I want to add to Gila’s questions about demobilization, to argue that aside from occurring because people “feel that they have won”, certain reforms, particularly when in the form of “access” to state resource (such as marriage, military service, social security), is often the result of material oppression disguised as progressive reform, either for the folks “winning” the demands, or for others in their broader community. So gay marriage, for example, further entrenches rights to health benefits, children and child-care, and others of the 1,138 “rights and benefits” within marriage. If and where gay marriage is won, this makes it materially harder for folks who are not in partnerships that are recognized by the state to basic rights; if we fight for queer liberation as a fight for rights outside of an institutionally sanctioned partnership, with disabled folks, poor folks, folks living in communities with non-normative single families and individuals, this also then means at the very least re-creating marriage to de-link it from rights (for the record, I am not in anyway against marriage or partnership ceremonies as a way of community recognition of partnership and family, just to the link of this to tiered rights and benefits).

    I am still learning about the dirty details of the economic crisis (and this is helpful, Will); but one question, related to those above is, what is the relationship with other revolutionary demands and home-ownership? The economic crisis has clearly fallen hard on working folks who owned homes, who have lost them due to predatory lending and force exile in the form of foreclosure. The loss of these homes, as well as small businesses and apartments, as Will points to, is part and parcel with gentrification and the large scale loss of community, not just for previous home-owners, but for folks in apartments, public housing, etc, in gentrifying neighborhoods. I guess my question is, when the only current options in US society are to rent, often from an either explicitly exploitative and abuse landlord, or from one who, like those Will mentioned, is also at risk of losing their ownership (or both), or to own our own homes…what do we do? And not just as individuals, but what do we push for in terms of democratic control over housing?

  3. Important questions.

    1. I wish I could post the graphs directly, but I cant. Either way, check this report by the Congressional Budget Office

    http://www.cbo.gov/ftpdocs/87xx/doc8758/11-13-LT-Health.pdf

    and look at Figure 2 on p. 7 and Figure 4 on p. 13. Lets break the meaning of Figure 2 down. According to the CBO over 43 million elderly people are insured through Medicare. This is done through tax dollars which you and I contribute to. Employers also make a contribution to this fund. According to the CBO report Medicaid covered over 61 million low-income people at various times in the year. I was not able to find anything on how Medicaid is funded, but my guess is that it is through taxes as well. “All Other Health Care” in Figure 2 is private insurance that working people and employers buy. A good chunk of that “All Other Health Care” is also something called out of pocket paymets and spending which means an additional chunk of money that working people fork over such as deductibles, copayments, payments not covered by the insurance companies etc. This was a whopping 310ish billion Dollars in 2005! So the fight for co-pays at the workplace which can seem minor at times, in the broader picture is a massive amount of cash.

    So from Figure 2, we should see three components: Medicare, Medicaid, and Private insurance/”All Other Health Care.” In each case we see a general trend that they are rising. What the graph is showing is the percentage each take up in relationship to how much money the entire U.S. economy makes in that year. So for example in 1970, the entire health care industry cost the country about 6% of what it made. In 2005, it looked like around 14-15%. Imagine if every week you took that percentage out of your paycheck! Now if we fast forward to Figure 4, this is a forecast. So we can see how worried the capitalists are over the projections of health care costs.

    Now to the question of what will go bankrupt. There are several things which will go bankrupt: the continued increase of costs in Medicare and Medicaid will continue to force the U.S. Government into deficit spending which is a fancy way of saying it will have to borrow money to pay for healthcare. That is not viable in the long-term, because no one—not even the U.S. Government—can borrow forever. Eventually your credit will look pretty crappy and your lenders take many uncomfy actions. Then there are the consequences to the employers. Employers, especially big ones like GM and Chrysler do not want to participate in private healthcare plans because they have to pay part of the costs. This eats into their profits. If the US capitalists want their own corporations to be profitable, then there is an argument that say free the corporations of healthcare responsibilities. Last, there is the question of workers and people who are not covered by Medicaid and Medicare. These folks try to get private insurance either on their own or through an employer supported plan. In either case, the costs are getting so high that workers cannot afford them. So we see the potential for bankruptcy in all three cases. Although with the Obama healthcare plan shaping up it looks like it will be bankruptcy for working class folks and a slashing of Medicare and Medicaid. And as mlove’s post,

    http://gatheringforces.org/2009/09/18/obama-and-health-care-reform/

    on healthcare pointed out, the insurance and drug companies are going to make out like bandits because of their immense political and financial clout in the U.S. economy. Most corporations will also benefit as well as healthcare will not be a given right, but a responsibility for individuals. Meaning, if working people do not purchase insurance, they will be fined, letting the fat cats off the hook. Meanwhile, Medicaid and Medicare will be attacked, helping to lower government costs.

    2. Gila asks two core questions: a) the role of reforms and b) can greater suffering actually increase the revolutionary actions of oppressed people? For now, I will take up only point a.

    Some basic points on winning reforms. The victory of reforms can lead to liberal-conservative reformism or it can lead to greater confidence of working people, which opens up doors to more militant possibilities. This victory can lead to layers of the working class being bought off or it can lead to workers understanding everything has to be fought for by social means in this society. The game changer in my understanding are the arguments, the ideological justifications, the mass mobilizations used or not used which creates a bridge to more radical means.

    I will pose some historical examples for us to think about when thinking about how the victory of reforms can actually be confidence builders. I think using the civil rights movements is a great way to understand the relationship of reform, increased militancy, and possible revolution. What role did the Montgomery Bus Boycott have on the nation, on young Black students? After all it was only a reform to be able to sit in the bus anywhere you wanted? We can certainly draw a set of connections from that event, to the Freedom Rides, to the sit-ins and so on. Perhaps someone could say that winning the fight to sit anywhere you want on a bus, would demobilize Black people. Perhaps it did immediately after the victory, but the long-term effects of it changed the course of American and arguably world history.

    Regarding the campaign you mention, the demobilization of the workers in my mind is tied up with the behavior of the union. They were willing to accept 60%, while they should have mobilized everyone to keep everyone’s job. The union did not do the latter, which lead to finger pointing and painful divisions at the workplace where people have still not recovered. There is nothing worse then working people figuring out who among them will receive the bosses’ boot—not exactly a solidarity building activity! While I am not claiming it was not a victory, it was a partial victory, which meant there were plenty of bad consequences.

    3. Toxic Assets: This is a term used to refer to collaterized debt obligations and credit default swaps. Banks around the world held these by the tens of billions. I won’t go into exactly what they are, but their paper worth collapsed during the financial crisis.

    Hope other folks jump in.

  4. It’s incredible to me that the capitalists can live in such denial. Will points out that they seem to use the stock market as a bellweather of how the economy is doing in real terms, and it just cant serve that purpose. I was blown away when i first learned that the stock market has little to nothing to do with the real productive value of companies, but rather what someone is willing to throw down for a piece of paper at that time. It’s like Vegas.

    Will brings up the point of the falling rate of profit. It’s a complicated concept and I’m not sure I can do it justice here, but it does lead to the dynamic that we are seeing. It becomes more and more difficult for capitalists to turn higher profits. In capitalism, companies have to constantly expand, or risk being eaten up or failing. Since the beginning of capitalism, bosses have tried to increase profits by slashing workers’ compensation, increasing our hours, making us work faster, or they have tried to invest in tech to increase productivity. With the falling rate of profit, these things stop working as much and so we see the massive turn to the financial sector and away from investments that actually create jobs and material goods, and from there, risky investments.

    Gila and CG raise a lot of important points, too. The economy is heavily intertwined with workers’ struggles of course, and housing and healthcare and student struggles as we have seen, but also queer liberation, struggles against patriarchy…what happens to queer folks who lose their jobs and dont have family structures to turn to? What happens to young women or mothers who in less depressed economic times would have cut off ties with abusive families or partners?

    I have heard the question of what kinds of objective, either economic or social conditions, lead people to rise up, but I myself have not heard any answers or hypotheses offered by the revolutionary left (i’m sure they’re out there, tho.) To take a stab at it, I’m not sure its a one to one relationship between the worse things get for working people and the amount of organizing against repression that happens. However, i do think that it is related to the remarks WIll made about how foolish, arrogant, and ignorant the capitalists seem right now. Working people, students, folks all over the country are seeing more and more that this crisis is the direct result of the greed of the politicians and capitalists. I think it will become more and more clear as they run around trying to “fix” the economy that there is no benevolent capitalism, and the people running the show dont really know what they are doing. At that point, I hope that the struggles that people are engaging in will inspire others to know that they can take leadership and direction in their own workplaces and communities, that they know best how to run things along with their families, friends, and coworkers.

    I think the civil rights movement was a great example to respond to gila’s question about the impact of reform victories on movements, and I also think the civil rights movement is relevant to this question. It had been obvious to black folks and other people for years that the social stewardship of the country by the white ruling classes was getting us nowhere. That sentiment had taken the form of workers’ struggles especially before and after the great depression. But it seemed to be the crisis in society, that the rulers did not know how to deal with the social, racist mess they had created alongside with the examples of successful organizing against racism that made important, fundamental changes in society.

  5. A few things worth meditating on that puts your own unemployment/under-employment or that of friends and family in perspective:

    http://www.nytimes.com/2009/10/14/business/economy/14income.html?_r=1&hp

    http://www.wsws.org/articles/2009/oct2009/kent-o10.shtml

    Meanwhile, stock market hits 10,000, Goldman Sachs has record profits and payouts on Wall Street salaries and bonuses were at 140 billion.

    Think about the political impact. Along with the beginning of some kind of economic transition, there is gonna be some kind political transition, the character of which, like that of the economy is, at this point, one of possibilities that need to be discussed.

  6. I won’t be able to do it the justice it deserves, but I wanted to weigh in on the relationship between hard times and working folks rising up. There are a couple of things to consider in this equation.

    First is the relationship between reforms and ideas. I think at any given time, recession and the offensive that employers launch during those times can be politicized in a way that people can fight back. Is that what we are seeing right now? Not necessarily. I think people are definitely getting fed up with the cuts, but it still seems pretty defensive.

    In general, I would say that the relationship between working folks rising up and economic “hard times” is actually the reverse of the conventional wisdom that as times get worse, people rise up. I think one reason for this is that employers can simply exploit the excess labor lying around at times of recession to drive down wages and keep people complacent at the workplace. During a recession, you are utterly replaceable by, as the WSWS article shows, tens of thousands of other people, especially considering how many jobs are, through technology, simpler and simpler, requiring less training. I would say that in general, this keeps folks pretty quiet, though as we are seeing, people are rebelling in ones and twos.

    I would say if we look at least at US history, some of the biggest rebellions have come at the end of recessions, as times are getting better and the government *needs* our work more. The CIO came at a time after a vicious depression as the economy was actually ticking up slightly before taking a nosedive in 1937 again.

    World War II and the twenty-five or so years afterward were a time of an expanding economy that required a lot of workers in order to sustain its expansion, and those years saw some of the most important working class struggles the country has seen. Part of this was simply due to the speed-up at the workplace, but an important part of it was highly politicized. As we see in Detroit, the young workers like Marty Glaberman that went into the factories at the behest of the Workers’ Party in the forties were some of the same people that advised and mentored the League of Revolutionary Black Workers as it took up that legacy of struggle toward the end of this period, in the early ’70s.

    Anyway, I don’t think you determine a one to one relationship one way or the other when it comes to the economy and people’s rebellions, but I just wanted to put out some arguments for it being not hard but good times that contribute to militant working class organization.

  7. Good discussion!

    Here’s what a toxic asset is, found from googling “what is a toxic asset?”

    Let’s say that Bob had a loan with Mellon Bank. The Loan is for $200,000 for a house and Bob pays 6% interest. The house is collateral, meaning Mellon gets the house if Bob defaults. But this house was valued at $275,000, so what is the worry?

    So now Mellon Bank has “mortgage paper”, which is an asset. They can sell the mortgage to anyone they wish. Bob will then be required to pay the purchaser, who will get the benefit of the 6% interest. It’s an investment which may (or may not) make more money in the future. A good idea if Mellon needs money immediately.

    But ol’ Bob doesn’t have the money to pay this mortgage. At the same time, the house value has greatly reduced to $150,000. Bob still owes $199,000.

    If Bob defaults on this, Mellon will only be able to recover a portion of their money back. The mortgage paper has now become illiquid (the house can’t pay the mortgage). Mellon is now unable to sell it. Why would somebody pay for an asset that guarantees you will lose money?

    That mortgage has become a “toxic asset”.

  8. Gila, I particularly appreciate some of your questions in regards to the question of reforms and,”How bad does it have to get?”

    In regards to the possibility that if,”things just get worse,” we may see movement, I agree that it IS likely that a worsening of conditions may create the openings or likelihood for an increase in working class self activity. I think its worth noting, however, that the history of working class self-activity in the United States is a muddied one, where the contradictory aspects of militancy and class struggle have continually too often been fouled by the poison bait of white supremacy fed to white workers. I actually wonder if its not possible that we are likely to be witnessing a greater shift in the consciousness of a large body of formerly priviledged and now increasingly de-classed white workers(from the ravaged trade union and related sectors) who, although materially not as impoverished as different communities of color, carry a magnified perception of injustice and loss of,”entitlements.” As US history shows, this seems to be a road with at least two potentials out of it—and points towards the importance and significance of revolutionary organization and its actions(as debated in the very useful discussions on Hamerquist and Lenin). My greatest fear is that the left assumes that any militancy by the working class is progress, without recognizing that the various chauvinisms(race, nation, gender) which have so often undermined the potentials of the working class struggling as a class(as opposed to fragmented sectors) could lead towards dystopian but truly revolutionary neo-fascist movements in the current moment.

    With that in mind, I appreciate hearing how folks are wrestling with the question of reform/revolution and when do,”progressive reforms,” become our defeats.

    I believe someone else referenced a good point in the comments above by noting how the trade union Gila brought up ended negotiating who would lose their jobs, as opposed to saving everyone’s jobs.
    I’ve come to believe that the question we should be asking is,”Does this victory (or progressive reform) come to the benefit of one sector of the class at the cost of another-or does it being a new level of equality which the class has the potential to unify around?”

    Im curious if this seem like a useful approach to the question?

    Definitely enjoying the quality of the discussion here.

  9. Peter,
    I think your approach to the question is generally useful. I agree with the basic premise put forward by Hammerquist and developed by 3 Way Fight that fascism is a revolutionary response to crisis in the capitalist system. I agree that immiseration can lead to right wing rebellion, not just left wing rebellion. I also agree in a broad sense that white supremacy has been a key way to buy off the white working class, and that this method of cooptation is showing some cracks because the system can’t always afford to offer patronage and “reforms” that selectively benefit a white aristocracy of labor. The capitalists don’t seem too keen on giving reforms to anyone right now, on the left or the right, and probably won’t be compelled to do so unless there is serious mass mobilization in the streets to force them to do so (Will has written about this elsewhere on Gathering Forces).

    This is a situation in which white workers could make sudden leaps, either toward anti-racist solidarity with people of color (or even a break with white identity itself), or towards a reactionary movement to restore lost privileges at the expense of people of color.

    A few caveats though. I admit I’m not familiar with the historical and contemporary details of fascist movements but I’ve read in several places that the class basis for fascist movements is not so much the white working class as the suddenly unemployed white petit bourgeoisie who end up leading shock troops of white lumpen proletariat folks against people of color and the multiracial working class. I know that the unemployed middle class played a damaging role in unemployed organizing in the US in the 30s, either pulling leftist-lead unemployed mass organizations toward reformism or providing the basis for nationalistic and right wing unemployed organizing. In Germany didn’t the unemployed middle class provide the spine of the Nazi movement as it rose to power?
    In other words, don’t fascist movements attack white workers too? It seems that fascism would not necessarily build off of the long history of white supremacy in the “progressive” or reformist labor movement…. instead it would smash the unions, even the racist ones. I might be wrong about this though and I’m open to counter-evidence.
    Partly because of this, and partly because of what seems to be the sorry organizational state of a lot of the fascist parties in the US, I think there is more danger from a broader white supremacist populist movement, a kind of united front of resurgent Patriot militias, the folks coming out to attack the health care town halls, nativist groups like the Minutemen, and neo-Klan type organizations. All of these seem to use the rhetoric of restoring and saving the White Man’s “Democracy” of the American Republic (what some might call the Herrenvolk democracy). I’ve heard the argument that the presence of this racist “democracy” in the US is one of the reasons why fascism never gained a base here, because it’s potential cadre were busy maintaining the segregated, settler-state republic through armed vigillantism…. in Europe this republic was not there, so folks formed revolutionary fascist militas instead.
    Certainly today I think it’s a different situation in Europe then the US. There is more polarization over there. In Greece the “center” of bourgeois politics dropped out and you have anarchists fighting fascists in the streets. Without drawing American exceptionalist conclusions, it does seem like the US is on a different trajectory right now, though this kind of polarization could always happen in the future and it’s certainly something we need to consider and prepare for.
    How to prepare for it is the key question underlying the discussions of Hamerquist’s piece on Lenin. I will post more on that shortly over on that thread.
    I’m glad you’re enjoying the discussion – thanks for contributing.

  10. a couple of points for us to mull over,

    i think that we got to have an understanding of class as layered with classes and privileges within those classes. someone may very well consider themselves bluecolloar may have had a decent paying job with benefits, two cars, and be putting their kids through school. this person isnt a capitalist or even a member of the upper ranks of the bureaucracy or petit bourgeoisie, but just someone who works the line.

    now, because of their job they are a hell of a better off than folk in Highlandpark, or Gary, or Altgeld Gardens, or west Seattle, you all get the point.

    now, folks who are from the most impoverished sections of US society, despit the crap conditions their faced with, may still be better off than in regards then folks in slums of Mumbai, Durban South Africa, favela’s in Rio, and the like.

    so my point about whether someone is working class or petit bourgeois is kinda relative in advance capitalist society and is perceived differently by different sections of the classes. i think we all agree on this, but i just wanted to stress that as an opening to following comments.

    i agree with Mamos here,
    “Partly because of this, and partly because of what seems to be the sorry organizational state of a lot of the fascist parties in the US, I think there is more danger from a broader white supremacist populist movement, a kind of united front of resurgent Patriot militias, the folks coming out to attack the health care town halls, nativist groups like the Minutemen, and neo-Klan type organizations. All of these seem to use the rhetoric of restoring and saving the White Man’s “Democracy” of the American Republic (what some might call the Herrenvolk democracy)”. i think THIS will be the main reaction where the smarter more strategic Euro-descent fascists will try to relate.

    already we can scan the forums of Stormfront and see National Alliance cadre talking about both limits of and potentials for the Teabaggers and Right anti-Obama/Dems forces. they are shitting themselves with glee at this outpourig of white anger.

    but the NA is not a working class revolutionary fascist group, it is a cross class cadre organization. because of its philosophy it see’s the Nation – blood and soil – as the main issue and emphasis on class as a Left concept. the NA wants to create a hierarchical white society. but it needs its white workers in the future as well as shock troops today and wants to deepen the reactionary populism not to overturn class society but change the form of class society, thats where they take thier cue from the Hitlers of the past.

    but the White fascist movement isnt just groups like the NA, you got Metzgers, Klan, Randy Weaver types, and nazi low rider/aryan brotherhood ex cons and White lumpens. its a big mix and cuts across class while sometimes having a class anger, usually in the form of poor whites having disdain for White middle class and would be intellectuals who are seen as being uppity and soft. Many working class and lumpen fascists dont think intellectuals and middle class activists have what it takes to actually carry out a revolution where you get your hands really dirty.

    so this Teabagger crap is gonna be ebbing and flowing for sometime. this past summer is just the start and while i think the reactionary movement will stay wedded to an electoral strategy, although were gonna see an increase in extra-parliamentary and legal action, too. the situation will continue to polarize and we will see more militia or Minutemen type formations, more angry “street protests” from Teabaggers, more returning vets pissed off and confused about what they just killed or nearly died for and reactionaries trying to suck them in. i dont think revolution is around the corner in this country, but as has been said on this site in other areas, the american people are full of surprises and we should never underestimate the possibilities – and i think that applies to Right action as well as the Left action.

    so what do we got to do. we have to have examples of multi-racial/internationalist organizing. we have to build formations that can intervene, offer alternatives to, and challenge both the System as a whole and its reactionary opponents like fascists and Teabaggers. i’m not talking about building big unitary organizations or movements but united fronts of different working class radicals committed to some common programmatic points.

    what are some of these examples. well they could be small like having a multiracial group doing anti-nazi work and community defense of people arrested for fighting back, or doing anti-gentrification or jobs for all demands, or students doing solidarity work with custodial staff, or building community support for strikers and people occupying workplaces, all the while emphasisng 1) demands on the sysyetm or the System fails us 2) anti-reform and anti-electoralism 3) participatory politics and direct democracy 4) that the System has no monolpy on force or action.

    there is no guarantee that these actions will have immediate effects but we can learn from them and hopefully deepen our relationships with layers of the working and poor classes, while bring on board declassed folks or students or even people who have come to the conclusion of doing that “class suicide” stuff and turning away from what class privileges they may have had before.

  11. oh yeah and to stay on point with the point of the article by Will i would say in answer to your question,

    “One of the big questions is what if this uptick in economic activity is real or are we facing another plunge into a deeper recession.”

    i think the “recovery” is mixed. the bailout put a temporary floor on the crisis but Wall Street profits have soared because of a combination of trading bonds created by bailout funds and austerity measures enforced -layoffs, plant closures, cuts in benefits, etc – using the crisis as justification. despite Bidden proclaiming thousabds of jobs saved or made by the bailout, the previous weeks unemployment report citied a 26 year high with no prospect for mass job growth.

    at the hospital i work in in Detroit the CEO had a mass meeting to say “dont expect raises, and do expect changes in your benefits” citing the economy as the reason. meanwhile they eliminate staff and we all work till we near drop, and were now just starting to get hit with H1N1 paranoia and people flocking to the ER. its gonna get rough…

    so the floor is temporary and i think and many economists say, we may be in for a double dip recession and that the bailout was insufficient – Paul Krugman’s line.

    Hamerquist says the crisis is secular as opposed to cyclical. i’m in agreement. so lets be thinking about more hard times coming and whats may rise up in response.

  12. C.Alexander,
    I agree with your points about how to understand class and various teirs or layers within each class. Your comments about possible Nazi cadre influence within broader mass right wing formations is also helpful…. I think that complicates the distinction I made between fascism and white populism.

    Especially if the economy takes a double dip into deeper resecsion,- as you and Hammerquist argue it very well could – we might see further polarization on the right and we need to prepare for that.
    I agree in terms of anti-fascist strategy that it’s not enough to simply confront the Nazis. We need to build multiracial groups in working class and poor communities and workplaces that can fight both the Right and the system itself at the same time. We need to compete with the Right to present concrete fighting alternatives to the system. I generally agree with the guidelines you lay out for what we need to focus on in this mass work. We discussed some of this on Gathering Forces earlier this fall in terms of how to intervene in the Health Care debate.

    Certainly a key front in that struggle needs to be in the hospitals to deal with the kind of situation you describe in your workplace. We are seeing similar situations here where attacks on the custodians and tradespeople are leading to a deterioration of the public infrastructure (including the university hospital and Health Sciences research complex) right at the same time as the panic about H1N1. It is getting pretty ugly even in this bastion of the supposed “new economy.”

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