Labor must prepare for class battles

U.S. monopoly capitalism is sinking into a quagmire. An economic slowdown is being aggravated by inflation and stagnation, described by some Wall Street pundits as stagflation. The crisis is compounded by sinkholes faced by U.S. imperialism in Iraq, Afghanistan and now the U.S/Israeli war in Lebanon.

In a recent survey, Federal Reserve Board economist Jonathan Wright explained that inflation is already surging and stagflation risks are mounting, presenting a serious problem for the U.S. Wright blames the growing crisis on rising interest rates, higher oil prices, a housing slump, higher core inflation—which doesn’t count soaring energy and food prices—and a consumer downturn.

Alarmed by the lack of savings among workers who are beset by falling wages and benefits, and also by rising government debt and debt service, Wright included geopolitical factors that add to the crisis—Washington’s tensions with North Korea and Iran, the struggle in Palestine, and the U.S/Israeli Lebanon war. He calculated that the odds of a recession in the next year are now at 36 percent, up from 14 percent six months ago. Other economists put the risk as high as 50 percent. (Wall Street Journal, July 25)

Wall Street’s mood is turning to pessimism. Uncertainty and volatility are reflected in the stock, commodity and currency markets, the heartbeat of finance capital.

A July 21 New York Times article headlined, “As Oil Rises Will Economy Finally Fail?” expressed this pessimism. The article was concerned not only about oil prices but that housing is “sinking.” It says new home starts are down 45 percent this year, according to the National Association of Home Builders, and are at their “lowest level since 1991.”

The downturn in housing along with higher interest rates has cut into the ability of consumers/owners to use their homes as a source of cash. Many can no longer buy furnishings and other products that have been the biggest generator of jobs and income for a wide range of workers in other industries, such as the construction trades and the service-oriented centers in finance and retail.

Fueling the stagnation of the economy is the slowdown in auto. The Big Three—General Motors, Ford and Daimler Chrysler—are ruthlessly restructuring: trimming payrolls, laying off thousands of workers and closing down or selling off plants. The auto industry has “multiplier effects,” meaning a downturn in auto ripples to a host of supplier industries like steel, glass, plastics and rubber. Delphi, the largest auto supplier in the country, is in bankruptcy.

An article headlined “Workers on the Slag Heap of History” describes the devastation enveloping U.S. cities and towns. “The gates of many towns welcome visitors with abandoned factories. And the communities these factories flank tell you more about what is really destroying America than any Wall Street analyst or Washington policy wonk ever could.” (Philadelphia Daily News, March 24)

Even last December, according to the Bureau of Labor Statistics, there were “7.4 million unemployed people seeking work ... not to mention the roughly 10 million others who say they would look for work if they thought that their hunt would be successful.” (New York Times, Feb. 12) For African American and Latin@ workers, the unemployment rate is at least double that of white workers.

The overall monthly jobs available fall far short of the number of workers entering the job market. Some 340,000 new workers a week are filing unemployment claims.

Recently, Federal Reserve chairperson Ben S. Bernanke addressed both House and Senate committees. In a most cynical expression of contempt for the workers and the oppressed nationalities, he stated that a slowing economy might enable inflation to cool without more tightening of interest rates. That day the stock market jumped over 200 points.

Bernanke’s remarks encouraging an economic slowdown to solve the inflation crisis were interpreted by Wall Street as meaning the Federal Reserve Board will not raise interest rates when it meets on Aug. 8. The board’s policies represent the banks and other organs of high finance. Bernanke formerly headed the global investment and banking firm of Goldman Sachs.

A slowing economy will only further intensify the exploitation of the multinational workers.

Some economists disagree with the idea that a slowing economy will curb inflation. A Wall Street Journal July 19 article headlined “Bernanke Sees Inflation Pressures Declining as Growth Moderates” wrote: “The combination of higher inflation and slowing growth led some economists to invoke the stagflation of the 1970s,” though not as severe.

The truth is inflation can’t be controlled by the manipulations of the Federal Reserve Board. The skyrocketing cost of oil is not the cause of inflation, though Wall Street would like the public to believe it is, in order to blame the oil-producing countries.

Inflation is a product of monopoly capitalism. The growing mega-mergers of giant corporations lead to the rigging of prices of goods and services to maximize profits.

Military domination of economy

Military expenditures, which have reached gargantuan dimensions in the last decades, are another cause of inflation. The military does not buy in the open market with competitive bidding. Prices are continually rigged upward as the capitalist government caters to corporations like Halliburton, Lockheed Martin, Bechtel and Boeing. Military spending is all-consuming and permeates and disrupts all levels of civilian production.

Dollars are now floating all over Asia, primarily China and Japan, and Europe. But they’re really IOUs. U.S. debt is bankrolling the humongous growth in the military, further heightening inflation and accelerating the tendency toward capitalist stagnation.

The military-industrial empire is fed by huge government appropriations for “defense.” A Wall Street Journal article on March 10 reflected on the financial appetite this generates. This year’s defense budget includes “$560 billion [plus] Mr. Bush’s latest emergency war-spending request for $67.6 billion ... up nearly 70 percent from $334.8 billion for defense when he took office.”

“Last month he requested $513 billion for 2007—a sum that will need many more requests for emergency war spending in the coming fiscal year.”

According to the article, “The administration [keeps] separate books for the regular defense budget and for war expenditures, which increasingly include new planes and helicopters to replace ones lost in the Mideast.”

Class struggle, not conciliation

As new conditions of capitalist production bring on economic downturn and plant shutdowns become widespread, it is incumbent upon trade union leaders to plan a broad-based strategy that can change the relationship of class forces to one more favorable for the workers.

The current labor bureaucracy has failed to do this. Bureaucratic tensions, organized from the top down, have split the labor movement into two federations: the AFL-CIO and Change to Win. Yet they have no differences when it comes to wasting millions of dollars and other resources mustering the rank and file to lobby for the Democratic Party.

However, rank and file opposition to these priorities is developing within many local unions. Workers are demanding that the unions focus on building roots in the communities, establishing ties with the disenfranchised, the poor and unemployed. A splendid example would be to rally around the immigrant workers and the Katrina survivors who are fighting racism and government criminal negligence.

Every economic struggle is a political struggle, and the relationship of class forces can be changed. It will come from below as all history of class struggle has confirmed. The multinational U.S. working class must forge broad-based unity and prepare to build a classwide independent movement to turn back the relentless assault and seize the high ground.