Aspects of the economic crisis and the Obama administration

The following is excerpted from a document submitted by Workers World Party secretariat member Fred Goldstein in preparation for the Nov. 14-15 WWP national conference in New York City.

WWP founder Sam Marcy, second from right, in front of the U.N. in 1960.

As a starting point to approach the present economic crisis, I would like to begin with the theoretical framework of Marxism in order to stimulate discussion of an assessment of the period we are entering. In this regard, it is appropriate to go back to Karl Marx.

In 1857 Karl Marx, in the Preface to “A Contribution to the Critique of Political Economy,” wrote a short summary of the evolution of his thought and then concluded:

“The general result at which I arrived and which, once won, served as the guiding thread for my studies can be briefly formulated as follows: In the social production of their life, men enter into definite relations that are indispensable and independent of their will, relations of production which correspond to a definite stage of development of their material productive forces. The sum total of these relations of production constitutes the economic structure of society, the real foundation, on which rises a legal and political superstructure and to which correspond definite forms of social consciousness. The mode of production of material life conditions the social, political and intellectual life process in general. It is not the consciousness of men that determines their being, but, on the contrary, their social being that determines their consciousness. At a certain stage of their development, the material productive forces of society come in conflict with existing relations of production, or—what is but a legal expression for the same thing—with the property relations within which they have been at work hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an epoch of social revolution. With the change in the economic foundation the entire immense superstructure is more or less rapidly transformed.”

Marxists have always included the study of this paragraph as part of learning the fundamentals of the Marxist historical outlook on revolution. But it is at rare moments in history that it can be studied, not only as the forward-looking, long-range world view, but as a matter of imminent possibility.

The last time the realization of Marx’s prognosis was on the immediate agenda with respect to the U.S. was in the 1930s during the Great Depression.

Marx’s prognosis and the present crisis

After three decades of ruthless restructuring of the global capitalist economy, of using the scientific-technological revolution to intensify exploitation to unheard-of degrees, the economic foundation of capitalism has indeed undergone a transformation. What is new is that this crisis raises the question of whether quantity has been turned into quality.

Has the extraordinary degree of the development of the productivity of labor, the monumental scale of the expulsion of workers from the workplace because of technology, the de-skilling of jobs across all types of employment, the creation of the regime of low-wage capitalism—all in order to sweat the last ounce of profit from the hides of the workers—have these developments brought capitalist overproduction to a point where the system can no longer recover from the present downturn?

The tension between socialized production on a world scale and the narrow confines of private property—in which a tiny handful of billionaires dispose of vast industrial, commercial and technological empires according to their profit interests—inevitably leads toward an absolute brake on the development of society, posing a grave danger to the material existence of the proletariat and oppressed people as a whole, and to the very planet itself.

Ford’s profits up, workforce down

To go from the general to the particular, one only has to read the glowing headlines in the bourgeois press about the Ford Motor Company registering a $997 billion profit in the third quarter of this year.

How did Ford bring itself to this turnaround from billion-dollar losses to a billion-dollar profit? The fact is that Ford’s revenue declined compared to a year ago.What made it possible to have declining revenue—declining sales—and increasing profits at the same time?

Ford laid off 53,000 workers and shut down 15 plants since 2006! It also raised prices on its higher-end cars, which were bestsellers during the cash-for-clunkers program. Layoffs and state capitalist intervention made it possible.

It is not only Ford but the entire auto industry that is contracting. And it is not only the U.S. auto industry that has to contract its capacity. In 2008 the world auto industry had a capacity to produce 90 million cars and could only sell 65 million.

What does this mean for the working class and the capitalist system as a whole? It means that capitalism cannot revive itself by normal economic means. But capitalism is also facing a situation in which the artificial ways that it has found to revive itself since World War II—through imperialist war and corporate expansion, military spending, government funding of the banks and corporations, lowering wages and increasing surplus value—have run out of steam.

The ruling class cannot look forward to any of these methods of plunder to sustain profitability and at the same time keep the system going in an upward, expansionary direction. The two things—profitability, which is the lifeblood of capital, and economic growth, which is the way the proletariat survives under capitalism—are becoming irreconcilably opposed to one another.

Obama administration and the period

Because of the long delay in the working class and the oppressed entering the arena of struggle, the relationship of class forces is highly favorable to the ruling class.

Because of this, the bourgeoisie takes advantage of every political struggle to gain further advantage over the working class. Every debate that affects the workers is decided for the moment by the unfavorable relationship of class forces.

The top bankers who presided over the economic collapse have used the crisis they profited from to enhance their economic power in the capitalist state and the concentration of ownership.

The health care insurance companies and the pharmaceutical companies have manipulated the struggle for health care reform, which was supposed to aid the working masses and the middle class, to enrich themselves even further and gain millions of forced customers.

The environmental polluters are using the debate over environmental legislation to further undermine any international agreements to limit their profits by imposing carbon-reduction goals.

The military has used its own crisis in Afghanistan to extend its influence and to push toward a greater adventure. The torturers in the Pentagon and the CIA have been protected, and the advocates of arbitrary and indefinite imprisonment have won the day.

Why is this? It is because the working class and the political movement have yet to awaken.

This is the root cause of the course that the Obama administration has pursued of compromising and conciliating with reaction on so many issues.

The state and the national question

Our party has conducted itself commendably in relation to the Obama presidential run and to his administration. We have used the theory and politics taught us by the founders of the party—we have used their analysis of the state, the national question and parliamentarism.

We have dealt with Obama with extreme sensitivity to the African-American community, on the one hand. But we knew from day one that once he became the head of the capitalist state, he would be surrounded by the Pentagon generals, the CIA cutthroats, the FBI and the entire capitalist state apparatus—the armed bodies that exist for the suppression of the working class and the oppressed.

And we knew that he would be surrounded and engulfed by the bosses and bankers and all their thousands of lobbyists, influence peddlers and organizations. While we knew that the masses would have illusions, we had none.

But we are now living through the period of his presidency. The great contradiction is now playing out. Great expectations were understandably raised by the exhilarating and historically progressive achievement of the election of the first African-American president.

Now there is the beginning of the inevitable disillusionment based upon the equally inevitable failure of the Obama administration to live up to those expectations.

Some will attribute this to Obama’s tendency toward centrism and compromise. And there may be much to that. But of far greater weight than his natural political inclinations is the present unfavorable relationship of class forces alluded to above.

To this is added the major factor that he is an African American, with no base whatsoever in the ruling class, and highly vulnerable to racist attack at any given moment, should he choose to step out of line. The case of his mild defense of Harvard Professor Henry Louis Gates Jr. against racial profiling, for which he was soundly castigated by the capitalist media machine, is a case in point. It is ironic that Obama is the chief executive of a racist state and himself subject to racist attack.

Obama was chosen as a candidate during the period of capitalist boom. The expectations of reform were based on expanding profits and revenues. By the time he took office, the financial system had collapsed on a global scale. All his calculations, and the calculations of his bourgeois backers, about reform had to be readjusted based on the crisis. The money for the down payment meant for health care reform went to bail out the banks.

From the point of view purely of the rhythm of economics and politics, Obama’s position is highly unfavorable—and this is a situation that the party has to continue to navigate with care, while commencing the struggle.