Prologue

American capitalism has reached a fork in the perilous road it has been traveling since the end of the Second World War. Its leaders must now decide whether to adjust themselves to the realities of the world situation or to make a new attempt to regain the predominant military and diplomatic position they had at the close of the Second World War.

The latter is a recurring thought that seems never to have left the strategists of U.S. foreign policy, especially the military. Although the U.S. military machine has been growing steadily, with increasing infusions of capital from year to year, a strong and ever-growing tendency in the military and in the summits of U.S. finance capital in general has, ever since its defeat in Viet Nam, continually harkened back to the theme that the U.S. can and must regain its world position.

There has rarely if ever been a declining empire built on exploitation and conquest which has not dreamed of restoring the old glory and splendor of its golden age of robbery and oppression with just one more try.

The U.S. financial and industrial oligarchs are not alone in the modern world in their thinking. Such thoughts undoubtedly still prevail, though they rarely surface, among the British colonialists, the French, the Dutch, the Belgians, the Germans, and also the Japanese. For the present, however, it is the U.S. which is in the much-vaunted position of "world leader."

The Carter administration, which did so much to heighten jingoistic hysteria during the early days of the Iranian crisis, taking the opportunity to enormously increase war expenditures and even ram through the registration of youths for the draft has been accused by its right-wing opponents of vacillation and indecisiveness in foreign affairs Now the accusers are in the saddle. The problems which the incoming Reagan administration faces are of such dimensions that they can only be resolved partially, if at all, by either a pullback from the previous course of militarist adventurism with its enormous economic and human toll, or by taking a plunge into darkness and terror.

If the Reagan administration were merely a conservative group of big-business-oriented politicians on the style of the Conservative Party of Britain, it would not hold anywhere near the danger to the world that it presently poses. The conservatism of the Republican Right differs fundamentally from its British variant in that it comes from an intractable, utterly implacable, and well-nigh uncontrollable combination of giant oil and the military, the very infrastructure of the U.S. military-industrial complex.

It is big oil and the military, which have fueled the Moral Majority, the National Conservative Political Action Committee, and the other more right-wing, neo-fascist, and fascist groupings which constitute the long tail that is an integral part of the Reaganite coalition.

Of course, the Conservative Party of Britain also has had its more rightist elements, especially in the earlier days with the Mosley crew of outright fascists or the current National Front of racist and jingoist riffraff.

The New Right in the U.S. is not just an elemental outgrowth of the decline of U.S. military prowess. It is being sustained and cultivated, as we said, by big oil and the military. And it is their strategy, their historical perspective on the destiny of U.S. capitalism which is really involved in the current change of administrations in Washington.

Regardless of how the Reagan administration intends to conduct itself in the coming period it must face up to one imponderable objective element, which the ruling class in the U.S. has up to now not had to deal with. This is the state of its technological and industrial apparatus in relation to its world objectives. On Nov. 22, 1980, Time, Inc, announced that all of its publications, including Time, Life, and Sports Illustrated, will commence a series on the revitalization of American industry and related problems.

The announcement has more than journalistic interest. The Luce interests control a vast and far-flung publishing empire which includes not only the three magazines already mentioned but other publications with millions of readers throughout the U.S. and abroad, especially in the English-speaking parts of the world.

The Luce interests have always been associated with the so-called rock-ribbed reactionary Republicanism of the Right and are close friends and supporters of the incoming President-elect Ronald Reagan.

The announcement that the revitalization series will begin in January indicates a close collaboration with the incoming administration. The series will foreshadow the inclinations of the Reagan administration on some of the crucial problems which it faces, not the least of which is the reindustrialization or revitalization issue.

Time, Inc.'s, announcement of its forthcoming series has all the earmarks of launching a veritable crusade on this issue. The reindustrialization campaign, which began as a debate in bourgeois academic circles and then generated considerable heat in the financial pages of the leading capitalist dailies, later became part and parcel of the campaign rhetoric of both the Republican and Democratic politicians. But it became somewhat muted as soon as the election was over.

Time's announcement indicates that something is in the works with respect to the overall economic and international perspective of the Reagan administration. First of all, one must ask: If reindustrialization or the retooling of American industry is essential, why is it necessary to launch a broad crusade to mobilize the people for it? Merely to launch such a campaign is an admission that the industrial apparatus of the U.S. is either inadequate or obsolescent. Is this really true?

The U.S. has been the world leader in atomic energy, electronics, computerization, and, if the latest reports are true, it leads in the new bio-sciences.

The mere launching of the Voyager cosmic exploration project from which scientists learned more in one week about Saturn than in all previous history attests to the considerable technological prowess of the U.S. By all accounts it was a demonstration of technological excellence and a feat of scientific ingenuity and skill.

But the larger question is: Since when have the industrialists ever needed popular campaigns to influence them to retool their industrial equipment?

Hasn't it always been the stimulus of the profit incentive which has motivated them, not merely to construct, but to reconstruct their industrial apparatus?

Was the Industrial Revolution a product of a public relations campaign among the masses to stimulate development? Did Eli Whitney need a public crusade on increasing cotton production to invent the cotton gin? Did Thomas Edison invent the electric light bulb or build the phonograph as a result of a giant exhortation campaign conducted by the press to build the communications industry?

Is not the launching of this campaign an admission that something has gone awry with the profit incentive as a motive force in the continuous upward development of industry or, to put it in more scientific sociological terms the upward development of the productive forces?

The truth is that from being a powerful catalyst of progressive social development the profit motive has turned into a reactionary obstruction which threatens to throttle the development of all of society.

Indeed, it must be affirmed that it is this transformation which is the cause of the deep and profound malady which has afflicted the heretofore thriving capitalist mode of production in the U.S. That it now needs a public campaign to stimulate the reindustrialization or revitalization of U.S. industry only confirms this.

The answer to each one of the succeeding capitalist crises in the U.S. has always been a more rapid industrial tempo, a considerable increase in the forces and capacity of U.S. industry on the basis of new and improved technological devices inventions and discoveries. It has never required popular campaigns exhorting the people to participate and help in the process. These were always really secret matters among the industrialists and financiers themselves Where necessary and appropriate, they succeeded in enlisting and harnessing the capitalist government to carry out their needs.

If the present need for reindustrialization is of such dimensions as to enlist and obtain the close collaboration of the capitalist government, it shouldn't be necessary for the publishing empire conglomerates to shout it from the rooftops. The new administration is thoroughly reactionary and all too willing to do whatever big business wants.

The truth of the matter is that the capitalist system in the U.S. is subject to a very grave and acute triple crisis from which it cannot free itself.

First of all, there is the prevailing cyclical economic crisis. In past decades, prior to the great economic crash of 1929, this had always been regarded as "one of those things" which occurs more or less regularly over a period of time, creates now and then considerable havoc and a modicum of suffering among some people, but is soon followed by a speedy recovery. The momentum of industrial progress then reaches a new and higher peak raising the development of the productive forces and general economic conditions to a higher level.

Of late, however, and particularly since the Second World War, these crises have been of a more malignant character. They have been overcome not on the basis of normal capitalist development but on the basis of artificial growth -- resulting from war, monetary manipulation on the international arena, and domestic inflation.

And notwithstanding such tremendous technological feats as the development of the space sciences, electronics, and computerization, the periods of boom following economic crisis and depression have been small and of a short duration and have inevitably been assisted by huge infusions of government aid based on deficit financing.

Thus the normal capitalist cycle of development has been grossly distorted and its functional element, that of raising the productive forces and creating a wider area of capitalist expansion has not worked out.

What has happened is that alongside the development of the productive forces, that is, alongside technological and scientific progress, there has also been a shrinking of the room necessary for capitalist expansion. A capitalist crisis in the year 1979-1980 is unlike the ones which took place approximately a century ago. Those paved the way for tempestuous capitalist expansion and development. Today there is no hope in any of the serious circles of capitalist high finance and industry for such a development, except in the false polemics of the rival capitalist politicians and the self-serving apologetics of academic bourgeois economists.

In addition to the cyclical capitalist crisis, which may be of long or short duration, there is the more serious crisis of capitalist industry, one regarded as of principal importance among the giants of capitalist industry and finance. The so-called competitive crisis is significant not so much for the havoc it has wrought up until now but for what it portends for the future: the loss by significant elements of U.S. industry of their competitive edge in the world market in the struggle with their capitalist rivals.

The crisis in auto and steel, as well as in textile and other industries, has made it all too plain that the U.S. is slowly being undermined by some of its principal imperialist rivals, witness the competition with Japan and with West Germany and other European allies.

The very fact that since last spring U.S. government assistance to the unemployed due solely to competition from imports has risen from $500 million to $2.5 billion, and is likely to continue to rise, is the most eloquent testimony to the fact that the U.S. is subject to the inroads made by its capitalist rivals abroad and also at home.

Nevertheless a task force of the U.S. House of Representatives Trade Subcommittee which had always in the past been critical of Japanese imports and of Japan's protectionist position at home recently had this judgment to make:

"It has become increasingly clear to us after many business dealings with Japan that our trade problems result less and less from Japan's import barriers [and also exports to the U.S.-- SM] but more and more from domestic American structural problems of competitiveness and quality." So said the task force head, Rep. James R. Jones, as quoted in the Washington Post of Nov. 23, 1980.

What the task force report is saying is that it is not some so-called unfair or underhanded method that the Japanese are using that gives them the competitive edge over the U.S. but a structural problem, one of the obsolescence of American plant and equipment, as well as a lag in technological innovation and scientific development.

The obsolescence of plant and equipment is the result of the U.S. having enjoyed a monopoly of the fundamental trade and commercial arteries of the capitalist world since the Second World War due to its preeminent military and political domination.

Monopoly not only stifles competition, it retards technological development, discourages inventiveness and innovation, and prevents the normal renewal, retooling, and reequipment of the basic industrial apparatus of the country. If profits can be made at home as well as abroad by jacking up prices as a result of monopoly rather than by plant renewal retooling or modernization then it becomes plain that the ruling class as a whole will opt for industrial production on the basis of obsolete plant and equipment, so long as profits can be maintained at a high level.

Now that the U.S. has been slowly but surely losing its preponderant position in world trade and commerce as a result of the inroads made by its imperialist rivals, it has awakened to the need to retool and reequip its industrial apparatus. The dimensions that this entails are of such proportions as to be beyond any one industrial giant or industry. They involve a vast outlay by the capitalist government and a huge intensification of the rate of exploitation of the working class on a scale unparalleled in U.S. history.

To embark upon such a path will put them on a collision course with the working class, upon whose back the retooling expenses will ultimately fall. Were that to be the sole factor involved it would be hazardous enough for the capitalist establishment.

However, the capitalist class faces a still more serious crisis. It is what the militarist element calls the decline of the U.S. geopolitical position. By this is meant the curtailed role that the U.S. is now playing in world affairs. Its answer is to try once again to control events as well as the mass of people abroad on the basis of a renewed effort to become the predominant military and diplomatic power on a world scale.

How could this be done in a period of general capitalist decline everywhere in the imperialist world? To retool U.S. industry with government assistance on a scale needed to overcome its imperialist rivals requires the most stupendous infusion of capital-first of all from government sources.

The U.S. federal budget for 1980 is $650 billion and constitutes one-fifth of the national economy Any significant changes in the budget up or down are immediately reflected in the national economy precisely because of the budget's vastness. The capitalist government and industry and finance are intimately and virtually fused together, regardless of which administration is in office. Nevertheless, the federal budget is one thing and the national economy is still another.

The incoming Reagan administration reckons that a mere cut of 2% of the national budget will amount to about $13 billion. Since these cuts are basically in social services and will leave hundreds of thousands if not millions unemployed, it is estimated even by moderate bourgeois economists that they will impose a severe strain on the civilian economy, not to speak of the hardship caused to the unemployed and others affected by the cuts.

In addition to this cut in the federal budget, they are talking about adding tens of billions in military expenditures. This will not compensate for the civilian cuts but will increase the pressure on the national economy even more. Military spending adds nothing of any real value to the economy. But spending more on the military creates fictitious money and adds to the inflation rate. This in turn does havoc not only to the living standards of the masses but to the national economy as a whole.

The federal budget for the incoming Reagan administration is therefore a living example of an internal social contradiction which cannot be resolved on the basis of false economic growth which the Reagan administration projects as part of its program It is impossible to reconcile the expenditure of vast sums for military purposes which generate inflation with the cutting of vital social services that the civilian economy depends on. First the military weakens the civilian economy by draining it of capital and of resources for research and development. Then, in their effort to seek orders for their idle plants, the civilian element of the capitalist economy is forced to gravitate toward the Pentagon to fill the vacuum. It's a vicious circle from which there is no exit.

It is an irreconcilable contradiction which cannot be resolved on a peaceable basis. The Reagan administration will be forced to turn its back on reindustrialization if it continues on the reckless course of huge military expenditures and on cuts in the federal budget involving social services like Social Security, the minimum wage, help for the disabled, and so on, all of which inevitably entails a cultivation by the government of racism and a struggle against the working class.

In the articles in this pamphlet we discussed some of these questions in detail as they evolved in the last year of the Carter administration We shall now see how the Reagan administration will deal with these very crucial issues. It will not take long before they reveal their hand.

Sam Marcy
November 24, 1980

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