Report on the National Situation in the US

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Printer-friendly versionSend by email In order to intervene effectively towards the political milieu and the class struggle, it is necessary for revolutionary organizations to closely follow and analyze the development of the economic crisis, imperialist tensions and the class struggle internationally and in the particular country in which organization or the section of the organization is located. This is especially important in the US because of the dominant role of American imperialism. We publish here the text of the Report on the National Situation in the US prepared for a recent national conference of Internationalism, the US section of the International Communist Current. This report surveys:
  • the economic, social, and political impact of the wars in Iraq and Afghanistan
  • the worsening of the economic crisis and the escalation of the ruling class’ austerity attacks
  • the difficulties of the proletariat’s response and potential to respond in the coming period.

— Internationalism

The Impact of the War against “Terrorism”

Imperialist intervention has continued to be the dominant factor in the national situation. As we have previously demonstrated this intervention is the result of a conscious imperialist strategy adopted in 1992 a unified by basis by all major factions of the American bourgeoisie as a response to the change historical circumstances following the end of the cold war. This strategy is designed to maintain US imperialist hegemony as the world’s only remaining super power and block the rise of a potential rival in Europe or Asia in a world in which decomposition has unleashed a tendency for each imperialist power to play its own card in the international arena. The wars in Afghanistan and Iraq are only the latest and most ambitious military initiatives by the American bourgeoisie pursuant to this strategy. The impact of the Iraq war in particular on the US national situation is a complete confirmation of what we said in the last congress, where we insisted that the war would exacerbate global instability, accelerate the challenges to American imperialist hegemony, and wreak havoc on the American economy.

On the imperialist level, this intervention has steadily accelerated instability in the Middle East, with the spread of terrorist violence to Saudi Arabia and most recently Lebanon, and eroded US political authority on a global level. Now the US is sounding the war drums against Syria, and Iran. Elsewhere in the world, confrontations against American hegemony abound, as major and secondary, and even tertiary powers, play their own cards on the imperialist terrain, emboldened by American preoccupations in Iraq and Afghanistan. This ranges from imperialist inroads by European and Japanese rivals in Latin America, U.S. imperialism’s own backyard, to tensions with Russian imperialism over Ukraine and American inroads in the former republics of the Soviet Union, to North Korea’s nuclear gambit. Also it has had tremendous impact on the economic and political situation in the US.

Political Impact of the War

On the political level on the domestic front, the war in Iraq has revealed that any illusions the bourgeoisie had surmounted what they referred to as the “Vietnam Syndrome” – a term they used to refer to the unwillingness of the working class, and the population at large to permit itself to be mobilized for war and to accept the death and mutilation of working class youth in the service of the imperialist appetites of American capital – were completely groundless. As we have noted previously, on the historical level, the proletariat, internationally and in the US, remains undefeated, and the bourgeoisie cannot mobilize the population to accept on a prolonged basis the economic, political, and physical (in terms of lives), sacrifice that long scale imperialist war requires. Furthermore, the ideological justification for imperialist war in this period manufactured after the 9/11 attacks and clumsily manipulated by the Bush administration, has been totally discredited, and consequently presents the bourgeoisie with grave problems in its efforts to mobilize the population to accept future wars. Despite Bush’s claims that his re-election constitutes a popular ratification of his Iraq policies, it is abundantly clear that Bush’s electoral triumph is a pyrrhic victory. All the bourgeoisie’s own data demonstrates that the majority of the population thinks that the war in Iraq is not worth the cost to fight it, in terms of the lives lost or the money expended. The various explanations for the war in Iraq – the purported link between Iraq and the 9/11 attacks, between Saddam Hussein and al Qaeda, or the imminent threat posed by alleged weapons of mass destruction in the hands of Iraq – were all revealed as lies. As of March, the official statistics quoted in the mass media indicated that 8,000 soldiers had deserted from the military rather than face deployment in the war zone. Bush was re-elected president in spite of the unpopularity and discrediting of his Iraq policy, not because of it.

Decomposition has so seriously eroded the bourgeoisie’s ability to manipulate its own electoral circus that it has been unsuccessful in assuring the desired electoral outcome for the past two presidential elections. This has politically weakened the bourgeoisie by failing to readjust the political division of labor in order to make possible a shoring up of the ideological underpinnings for its imperialist interventions abroad, and by failing to reestablish the credibility of the electoral mystification. (For a full analysis of the election results, see Internationalism 132 and 133.) As we noted in Internationalism 133, a striking characteristic of the current period is the total absence of any post-election political euphoria. The dominant bourgeois media campaigns had emphasized that the Bush administration had misled the nation into war, did not have a strategy to win the peace, was riddled with lying, cronyism and corruption, and an unprecedented effort was undertaken to mobilize “the people” to help rectify the wrong that had been done by a “stolen” election in 2000. But instead of a much needed revitalization of the democratic myth, the election’s outcome was widespread political demoralization and shock.

The dominant fractions of the bourgeoisie are well aware of their problems and are not entirely powerless in the face of their inability to achieve the appropriate political division of labor at the polls. There are clearly efforts underway to rectify the damage done by the electoral outcome. Considerable political pressure has been exerted on the administration to modify its more extreme positions, especially on Iraq policy, and to actually move towards the very policies advocated by Kerry in the election campaign. At the same time there is a concerted effort to restore a certain discipline to the state capitalist apparatus, a good portion of which worked behind the scenes to defeat Bush’s re-election. This effort at political rectification within the bourgeoisie is reflected by:


  • the shake up in the cabinet, with the resignation of nearly half its members
  • the shake up at the CIA, where five top directorate members were forced to resign in retribution for leaking embarrassing information to the press during the final weeks of the presidential campaign
  • sharp criticism on Rumsfeld’s handling of the war, including attacks from prominent Republican party leaders like Sens. John McCain and Chuck Nagel, retired General Norman Schwarzkopf, former national security adviser Brent Scowcroft, and Newt Gingrich
  • Rumsfeld’s decision to bow to this pressure by appointing retired General Gary E. Luck to conduct an independent review of Iraq policy as a prelude to a policy shift
  • the removal of Defense Department Undersecretary Wolfowitz, the primary neo-conservative architect of the administrations war policy from the Pentagon and his being “kicked upstairs” to the World Bank
  • temporarily increasing the number of troops in Iraq (as suggested by Kerry) in the period leading up to the January elections and the recent announcement that troop levels would start to be reduced within the next year (again as suggested by Kerry)

The Political Weight of Decomposition

In the pages of Internationalism we have developed an analysis of the impact of decomposition on the bourgeoisie’s inability to manipulate successfully the electoral circus to achieve a change in administration. We will not repeat this analysis here, but simply assert that nothing since November has refuted this analysis. More recently we have demonstrated in the press how the bourgeoisie is moving to mitigate the negative impacts of its botched election by pressuring the Bush administration to modify its imperialist policy, especially in Iraq, and actually implement policy orientations advocated by the Kerry campaign. It is necessary here, however, to consider a theory that has become quite fashionable in the liberal-leftist milieu and the mainstream bourgeois media, as an explanation for the 2004 election results. Various versions of this theory describe the existence of “two Americas” or refer to the “Great Divide” in American society. In one highly publicized variant, John Sperling talks about the supposed existence of two Americas, epitomized by the division between the Red states or “Retro states” and the Blue states, or “Metro states.” According to Sperling, the Retro states represent “Old America” and its “commonalities are religiosity; social conservatism; an economic base of extraction industries, agriculture, nondurable goods manufacturing, military installations; and a commitment to the Republican Party.” This Retro America encompasses the South, the Prairie states and the Rocky Mountain states.

By contrast, the Metro states represent the “New America” and the “New Economy, and “are loosely held together by common interests in promoting economic modernity and by shared cultural values marked by religious moderation; vibrant popular cultures; a tolerance of differences of class, ethnicity, tastes, and sexual orientation; and a tendency to vote Democratic.” Metro states include New England, Middle Atlantic, Great Lakes states, and the West Coast, plus Colorado and Arizona. Their economies are “productive” rather than extractive, based on manufacturing and services. With 65% of the US population, they pay the bulk of tax revenues to the federal government, “but some $200 billion a year of Metro taxes flow to Retro states and support the economic life of its small cities, towns, and rural areas.”

This fashionable theory totally obfuscates current political realities by attributing the political difficulties of the bourgeoisie to a clash between two rival factions of the capitalist class – the extractive, old, reactionary bourgeoisie versus the productive, modern, progressive bourgeoisie, and clearly supports the modern, progressive wing of the ruling class. It reinforces the bourgeois democratic myth by insisting that the election is the means by which the ruling class determines policy orientation, in a contest between rival economic interests within the ruling class who seek to gain control of the state apparatus in order to implement policies that favor their parochial economic interests. This is an historically outmoded view of how the bourgeoisie uses elections. In the ascendant phase of capitalism in the 19th century, different factions of the bourgeoisie would indeed vie for power in elections, seeking to gain control of the state apparatus to wield it to benefit the development of certain economic interests. But in the decadent phase of capitalism, which began in the early 20th century, with the completion and saturation of the world market and the resulting exacerbation of the tendential fall in the rate of profit, the rise of state capitalism has given quite a different character to the way state policy is determined and in the role that elections play in the political life of society. The real policy orientations of the state are decided behind closed doors, in the permanent state bureaucracy and the think tanks of the bourgeoisie, from the perspective of the global interests of the national capital. The parochial interests of this or that sector of the ruling class in this framework are subordinated to the interests of the state and the national capital as a whole.

The social decomposition of capitalism has given rise to the bourgeoisie’s difficulties in controlling the electoral process. This has been demonstrated by the difficulty and delay in the major factions of the bourgeoisie settling on an electoral strategy in the last presidential campaign until what proved to be too late to effectively pull it off, and in the rise of religious fundamentalism as a political phenomenon not easily controlled by the bourgeoisie’s traditional means of manipulating the electoral process. While used by Reagan in the early 1980s as an element in putting together his electoral base, Christian fundamentalism has increased dramatically in the US , to the point in which it played a critical role in the 2004 election, providing Bush with 20 million votes, considerably more than the 3 million vote victory margin in the popular vote. More significantly is the fact that these votes were largely influenced and controlled by the Christian fundamentalist clergy, largely on the basis of tertiary social issues like gay marriage and abortion, rendering this segment of the electorate impervious to the main ideological campaigns of the electoral circus.

The alarming rise of religious fundamentalism, whether in Christian, Islamic, or Jewish variants, is a consequence of social decomposition, representing a false response to a society without hope, a world characterized without a perspective for the future, by increasing despair, and fear.

The Devastating Economic Impact of the War in Iraq

The economic impact of the war in Iraq and Afghanistan has been devastating, perhaps even more than we predicted. The wars in Afghanistan and Iraq have cost so far around 300 billion dollars and there is no end in sight. It was just two years ago that the Bush administration predicted that Iraqi occupation and reconstruction would be largely self-sustainable, financed by the sale of Iraqi oil on the open market. However, 10 years of economic sanctions, American bombing, and Iraqi corruption, combined with damage inflicted during the war, and sabotage by the anti-US insurgency have totally exposed the futility of such illusions of self-sustainability. On the economic level, Iraq is a bottomless pit for the US. Reports of corruption and the disappearance of billions of dollars worth of American taxpayer financed equipment in Iraq are essentially accepted as routine at this point. The waste and corruption has meant that American military forces are poorly supplied with vital security equipment and mundane daily supplies. The scandal over the lack of armor plated humvees is well known. Family and friends of American military personnel take up collections to raise money to send bullet proof vests and even toilet paper to combat forces stationed in Iraq.

When the Bush administration took office in 2001, it inherited a budget surplus from the Clinton administration. Today the budget deficit has not only returned, but it has hit record highs. Ten years ago the Newt Gingrich-led conservative “revolution” in Congress promised the end of big government. Today conservative Republicans complain that the end of the end of big government has arrived and that it is the supposedly conservative Bush administration that has unleashed the return to a policy of big government. Today expenses are running totally out of control. Whether the economy is officially in recession or recovery, the ruling class can no longer bring about any improvements to the general economic and especially the social conditions of the working class. On the contrary, every new cycle of recession-recovery, brings about a new level of deterioration in the proletariat’s living and working conditions, as the bourgeoisie tries to make workers bear the brunt of each new fall into the abyss of the chronic crisis of its system.

The recession of 2001 put millions of workers on the street, as companies went bust or simply tried to squeeze more profits from fewer employees. Today while the bourgeoisie celebrates a supposed record-setting 2.2 million jobs created during last year, two remarkable facts relativize the significance of these new jobs: first, the new jobs are significantly less than the three million jobs lost earlier in President Bush’s’ first term in office. In fact there has not been any growth in the total of workers with a job in the last four years –132.4 million when Bush took office in 2001 and 132.3 last December. Taking into account the 10 million growth in population since 2001, this means that total unemployment has surely increased, despite the statistical tricks the Labor Department has had to pull to establish the rate of unemployment at 5.4%, significantly lower than the 6.3 % that existed at the height of the “recession.” Second, manufacturing companies, which shed more than two million jobs from 2000 to the end of 2003, added back only 96,000 jobs in 2004, which is said to be the weakest rebound in factory employment of any economic recovery on record in the United States. Service industries accounted for almost all the new jobs created in 2004, which speaks volumes about the depths reached by the economic crisis. More particularly this fact reflects the tendency of the most powerful economy of world capitalism to become a service economy, with more than 4/5 of the labor force employed in services (110.2 million in services; 22.0 million in manufacturing; and 2.2 million in agriculture).

Still another indicator of the economic deterioration of the living conditions of the proletariat can be seen in the wage level of the jobs created in the last four years—43% less than those created from 1996 to 2000. Besides, these new jobs are in many cases part-time, contract work or what they now call “seasonal work,” lacking benefits, such as pensions, paid vacations or health care. Moreover the despite the record number of new jobs being created, for the unemployed worker it is increasingly more difficult to find a new job. As of November, about 1.8 million, or one in five, unemployed workers were jobless for more than six months, compared with 1.1 million when the recession officially ended in November 2001. By other accounts, since the start of the recession in March 2001, the average length of unemployment has risen from 13 weeks to 20 weeks, or in other words the longer the “recovery” progresses the longer unemployed workers are going without a job – truly a “robust” recovery

There is among the dominant class a consciousness that the cheap money policy is unsustainable. It has re-ignited inflation – 3.3% last year. Thus the Federal Reserve has reversed its policy of near zero interest rates and has begun to move them upwards.

At the international level, the gigantic American debt is a very heavy weight on the world economy and a very dangerous time bomb. The aggressive cheap dollar pursued by the US is intended to jump-start American exports, but is endangering in particular the countries of the euro zone –against which the dollar value is at record lows. By making it more difficult to export European goods, it is exacerbating the economic woes faced by those countries.

Social Security Reform: a Frontal Attack on the Working Class

The current media blitz in the US about social security “reform” is the latest installment in a quarter century of austerity attacks against the American working class. American capitalism has been implementing austerity measures since President Carter first began talking about the “economic malaise” during the period of double digit inflation in the late 1970s. The continuing economic crisis has pushed the bourgeoisie towards the brink of a qualitative breakthrough in the ferocity of austerity. Up to now, one of the strengths of American state capitalism was its ability to use the relative size of the private sector economy in the US and the lack of direct state ownership to impose austerity in a diffused manner.

For example, the lack of a state-run, centralized health care system meant that cuts in medical care were not announced and implemented nationally on a centralized basis but were introduced through thousands of employer-based medical benefit programs at different companies and economic institutions at different times, in different places, in different forms and guises. Likewise, instead of announcing a generalized reduction in wages across the economy, or even across an industry, wages were attacked at the level of individual enterprises and corporations, making it more difficult for the proletariat to respond in a unified and simultaneous manner. Today the bourgeoisie is finding it impossible to continue its avoidance of a frontal assault on the social wage. It is in this context that the current social security “reform” proposed by the Bush administration must be viewed.

The current proposed fiscal budget put forth by the Bush administration calls for the abolition or scaling back of a 150 programs that the government claims “don’t work”. The cuts include programs that are near and dear to core constituencies of the Bush administration, such as the abolition of the farm subsidy program, vital to the prosperity of the agribusiness sector. However, even if they cut these programs – and there is no guarantee about this, as the last time the Bush administration proposed cutting 100 programs, only 4 wound up falling under the axe – they would have a virtually insignificant impact on the budget deficit. These programs are small potatoes compared with the rest of the “social programs.” Most of the expenses of the state are on two issues, one the so called “entitlement” programs, such as social security, medicare and Medicaid, and the other, the military. In the face of the imperialist imperatives facing the US government in this period, it is inconceivable that military expenses are susceptible to cuts. In fact the Bush administration considers the homeland security and military expenses as “off budget” items, which are not included in the official budget proposals. This means that the bourgeoisie must move towards directly attacking the social wage head on, which is something they have carefully tried to avoid in the past.

The Economic and Social Function of Social Security in the US

While social security is part of the social wage – that part of the wages paid to the working class by the state in order to assure the social reproduction of the working class, in this instance to support the standard of living the disabled, elderly, retired workers, and the survivors of workers who have died, it would be inaccurate to assume that this is money that comes from the state; it is actually money confiscated from the workers’ own wages, collected, administered and distributed to the workers as part of state capitalism’s mechanism of centralizing economic life and tying the proletariat to the state apparatus. Historically workers always had the responsibility to support not only themselves (those on the job), but also their dependents – their children, their elders (who were too infirm to continue working) or their relatives who were disabled. They used part of their wages received from their employers to do so. However, in the Great Depression in the 1930’s unemployment in the US reached 30 percent and millions of workers were unable to support themselves or their dependents. Private charities were totally incapable of handling this social crisis, and state capitalist measures were introduced through the New Deal to stabilize the social situation and prevent potential future disasters. This was not some great reform, as the bourgeoisie likes to claim, but merely a restructuring of the way the working class had always supported its elderly and disabled in a manner that benefited the state. Social Security is actually paid for by the working class itself, not the state. Fifty percent of social security funds are raised by taxes on the wages paid in each pay period to the workers. The other 50% comes from a matching tax levied on their employers. As far as the employers are concerned, economically their tax contribution to Social Security is actually calculated as part of the wages, or labor costs, they pay for their workforce, part of their wage bill. Whereas the workers used to support their seniors by personally setting aside part of their earnings, under Social Security the state itself literally confiscates a part of the workers wages determined by law and distributes this money to the retired workers in the name of the state. While this guarantees that the senior citizens will be supported even in times of high unemployment, more importantly the state’s distribution of Social Security checks serves to tie the working class to the state – even if it is only to have access to part of their own wages that has been set aside.

The Manufactured Financial Crisis of Social Security

The money paid into the social security system has never gone into individual retirement accounts, even if the government annually sends workers nearing retirement age a financial record of the amount of money they have paid into the system over the years. The social security checks of current retirees is paid from the taxes levied on the first $90,000 of wages of current workers and exempts the bourgeoisie from having to contribute significantly to the system. Most of the taxes collected goes into the Federal Old-Age and Survivors Insurance Trust Fund (commonly called the Social Security trust fund). A much smaller amount goes into the Federal Disability Insurance Trust Fund. The social security checks distributed to the retired and the disabled each year are drawn from these funds. At the end of the year any money left over is required by law to be lent to the federal government; it is not allowed to accumulate in the trust fund. According to the New York Times, “The government issues interest bearing bonds to the trust fund and immediately spends the money for other purposes” March 8, 2005. These bonds are supposed to be redeemed when and if the social security trust fund does not have enough money to pay social security checks. In other words, the social security trust fund is actually comprised of current-year social security tax funds and a bunch of IOUs from the federal government.

Until the 1980s, social security taxes were low and generally very little money was left over at the end of the year.

To solve an alleged social security financial crisis during the Reagan administration, a special blue ribbon panel, headed by Alan Greenspan, who would convert his success on this panel into his nomination as head of the Federal Reserve, proposed to “save” social security by cutting benefits and raising taxes. This led to the accumulation of incredibly large surpluses in the trust fund, reaching into the hundreds of billions of dollars each year, as baby boomers paid vastly more money into the program than was necessary to support their elders. These surpluses were each year turned over to the federal government and were used by the Reagan, and the first Bush administration to begin reducing budget deficits and by the Clinton administration to actually achieve a budget surplus. This money helped Reagan to fund the acceleration of the arms race in the 1980s that helped to bankrupt Russian imperialism, to fund wars and military adventures over the past two decades, and to compensate for tax cuts for the rich. Today it is estimated that there is approximately $1.7 trillion dollars in IOUs in the trust fund, and that this sum will rise to $5.3 trillion by 2018, when the trust fund will have to pay out more than it gets from tax revenues. However, despite Bush’s alarmist propaganda about 2018, “the interest earned on the fund will more than cover the shortfall and keep the fund growing until it reaches $6.6 trillion by 2028” (Denver Post, 3/9/05).

In other words, while the bourgeoisie is ranting and raving about the impending bankruptcy of social security as members of the baby boom generation near retirement age, the system is actually awash with incredible surpluses – except that these surpluses are being diverted to finance imperialist war and military expenditures. The Bush administration predicts the system will become insolvent by 2042, but the less politically motivated prediction by the Congressional Budget Office is that insolvency would occur 10 years later, in 2052 – when the oldest of the baby boomers would be 106 years old, and the youngest 88, i.e. when most of them would have already died and it would be their children who would be receiving their pensions. It is estimated that the shortfall in 2052 could be easily compensated for by an adjustment in federal spending of around 3 percent.

The Real Purpose of Social Security “Reform”

The debate in the bourgeois media over social security “reforms” proposed by the Bush administration focuses on the brouhaha over the diversion of a portion of workers’ tax contributions into private investment accounts, tied to the stock market. There is a lot of talk about fantastically high conversion costs to set up these accounts (estimated as ranging from $2 trillion to $6 trillion) and the supposed windfall profits to Wall Street investment brokers. But this debate obscures what is really at stake. The heart of the Bush plan is to alter the formula used to calculate benefits for future baby boom generation retirees who are 55 or younger today, which would slash guaranteed benefits by 25% to 45% over the coming decades. The real goal of the Bush administration is to avoid paying back those $6 trillion that will have been pilfered from the trust fund by 2028. In 1983, the American ruling class used the ruse of an impending social security crisis to raise the taxes on the working class and used that money not to pay pensions to retirees or to set it aside to pay the pensions of future retirees but to fund its aggressive imperialist policies. Now it wants to complete this massive social swindle by maneuvering to avoid repaying $6 trillion dollars confiscated from the working class back into the social security trust fund.

Whether the Bush investment accounts are ever implemented, the bourgeoisie is united in its view that social security can only be fixed by cutting benefits and raising taxes, as the New York Times, which is opposed to the investment accounts, has openly said in its editorial columns. Despite the bourgeoisie’s attempts to throw up a smoke screen around social security “reform” with talk of private investment accounts, the fundamental reason for social security reform is to cut the social wage of the proletariat. This frontal attack, while necessary for the bourgeoisie, is fraught with the risk of triggering a proletarian response, which is why they have delayed this type of attack for so long. When added to the accumulation of serious inroads on the proletarian standard of living, the potential for a proletarian response increases exponentially. Clearly there is unity within the bourgeoisie on the need to “reform social security, but the danger of provoking a working class explosion is one reason why there is so much hesitation within the ruling class on exactly how and how quickly to proceed. But there is also a concern that any clumsily orchestrated reneging on repaying the Treasury bonds to the social security trust fund, which are supposed to be backed by the “full faith and credit of the United States,” might jeopardize the confidence in and value of other Treasury bonds, much of which are held by foreign investors, like the Japanese and Chinese, who might transfer their funds to investments in Euros. This would create an economic calamity for the US. Even within the Republican party there is a hesitation to rush headlong into the investment accounts proposals, including Greenspan’s call for a go slow approach that would phase in the private accounts over a protracted period of time. However it is an open question for the ruling class as to whether they actually have the option to delay for too long.

State Capitalism Exists for the Preparation for War

The movement towards a service economy, which is a general phenomenon in the industrial countries, as the bourgeoisie looks to take full advantage of lower labor costs in underdeveloped countries, must be situated within the context of the war economy, which is at the very heart of the reason for the existence of state capitalism in the period of decadence. The emergence of US imperialism as the dominant world power in World War II was based essentially on its strength as an industrial powerhouse, one that was benefited from its geographical isolation from the major theatres of war and the protection that isolation afforded its manufacturing industries from attack. The entire American industrial apparatus was mobilized for war production, producing the steel, vehicles, munitions, food, clothing, etc. to support the war effort and destroy its imperialist rivals. On the surface, it might seem that the transition to a service economy, away from a manufacturing economy would jeopardize American military superiority. However, it is clear that American state capitalism is very conscious of its need to not only protect but to more fully develop its war economy. What remains of the manufacturing sector in the US is increasingly enmeshed in the war economy – in the production of weapons and other material for war and destruction.

In 1995, this policy was clearly laid out in a White Paper entitled “Technology Leadership to Strengthen Economic and National Security,” prepared for the White Hose Forum on the Role of Science and Technology in Promoting National Security and Global Stability. That report acknowledged that “since World War II, US military superiority has been based on our technological advantage,” and that there had been changes in American manufacturing industries. “Thirty yeas ago the US economy accounted for well over a third of the world’s total and was the leader in most manufacturing industries. By 1994, this figure had fallen to about a fifth of the world economy, with industries in Europe and Asia now fierce competitors.” The report went on to argue, “the technology base that propels the economy is in turn increasingly critical for national defense,” and proposed a strategy that would exploit “the technology base for both economic and defense needs.”

At the heart of this new strategy was a “dual-use technology policy” which reflected “the recognition that as a nation, we can no longer afford to maintain two distinct industrial bases. We must move toward a single, cutting-edge national technology and industrial base that will serve military as well as commercial needs. This ‘dual-use technology strategy’ will allow the Pentagon to exploit the rapid rate of innovation and market-driven efficiencies of commercial industry to meet defense needs.” There were three “pillars” to support this dual-use strategy: first, Defense Department support for research and development of computers and software, electronics, sensors and simulators; second, the “integration of defense and commercial production to enable industry to ‘dual produce’”; and third, initiatives to encourage “insertion” of “commercial technologies and products in the development, production and support of military systems.” What we have seen in the past ten years is not a weakening of American state capitalism, but a policy reorientation to better mobilize the productive capacities of the economy for the preparation for and the waging of modern warfare.

Proletarian Response to Imperialist War and the Worsening Economic Crisis

In discussing the impact of imperialist policy and the economic crisis, it is crucial to avoid the error of simply confining the analysis to the divisions within the bourgeoisie without focusing on the difficulties of the proletariat in the US to respond to the demands of the situation and the potential for the future. In part the difficulty of American workers to respond on their terrain is an expression of an historic weakness of the American proletariat, isolated geographically from its class brothers in Europe, characterized by a weaker Marxist theoretical history, all of which is accentuated by being trapped in the bowels of the worlds strongest and most sophisticated state capitalism. Since the onset of the open crisis at the end of the 1960’s, this historic weakness has not meant that the American proletariat has been absent from the class struggle, but rather a tendency for it to lag behind the development of class consciousness and class struggle elsewhere, particularly in Europe. Therefore, it is only a matter of time and circumstance for the same tendency towards the return to class confrontation that has been characterized by various struggles in Europe, no matter how tentative, to be echoed here in the US.

In this sense, it is clear that the bourgeoisie has taken full advantage of the disorientation ensuing from the collapse of Stalinism and the cold war, and the attendant reflux in class consciousness and class struggle to give prime attention to its imperialist interests for over a decade now. It was particularly successful in using the 9/11 attacks to develop a war psychosis campaign to obtain temporary acquiescence in its imperialist wars in Afghanistan and Iraq and to divert attention from the continued existence and steadily worsening of the economic crisis. While the working class has not suffered an historic defeat making it susceptible to permanent mobilization for imperialist war, the disorientation that followed the collapse of the Stalinist bloc and the end of the cold war, has made it very difficult for the proletariat to find its own terrain. For example, though the working class is clearly disenchanted with the war in Iraq and experiences the seriousness of the economic crisis in its daily life, there has not been a significant breakthrough on the level of class struggle. Working class opposition to the bourgeoisie’s imperialist war found no independent proletarian expression. Many workers participate in the massive mobilizations organized by the so-called “antiwar” movement, but these demonstrations were not on the class terrain of the proletariat. The antiwar demonstrations were massive one-shot deals, and not even part of an ongoing movement. They served the interests of the bourgeoisie by serving as safety valves for widespread discontent with the war, tied the demonstrators to the Democratic party, and actually hindered the development of any autonomous action within the proletariat. This movement assisted the bourgeoisie in sweeping the economic crisis and the attacks against the working class under the rug. The working class would have done more to undermine the bourgeoisie’s murderous policies by demonstrating its rejection of the ideology of sacrifice by accelerating its defense of its immediate economic interests. The fact that the Kerry campaign was largely successful in the industrial states in November is yet another demonstration of the degree to which the bourgeoisie was able to derail proletarian discontent with the war away from a working class terrain.

The bourgeoisie has waged a relentless ideological campaign to emphasize that there is one party, the Democratic Party, that cares about the workers and another, the Reupublican, which is the enemy of the workers. This ideological nonsense of course obscures the division of labor between the two major political parties which is designed to disarm the proletariat and help the bourgeoisie implement its austerity programs and defend its imperialist interests on the international level.

Thus far the bourgeoisie has been able to attack the standard of living of the proletariat and wage imperialist war with relative impunity. But the worsening of the economic crisis and the continuing challenges to American imperialist hegemony are combining to decrease the room for maneuver that the bourgeoisie has. The only way for the state to finance its imperialist interventions is to make the working class pay for it. We have already documented the steadily deteriorating condition of the working class, which more and more pushes it towards class struggle to defend itself.

We must be alert to developments within the class struggle in the US in the period ahead. We have a proletariat that has been disoriented and has allowed the bourgeoisie to attack it with impunity for too long, but a proletariat at the same time that is not historically defeated and is increasingly seething with discontent over the war in Iraq and the attacks on its standard of living. In this sense, the proletariat in the US is actually in the forefront of the world proletariat, as in no other industrial country does the proletariat openly confront the question of imperialist war and the deepening economic crisis simultaneously. The bourgeoisie increasingly risks the danger of provoking a social explosion, an explosion that holds great potential for the deepening of class consciousness and revolutionary intervention.

Internationalism, March 2005