America in Crisis, Part I: Class Conflict

by Susan Rosenthal

America is deeply divided. For one thing, most Americans want an end to the war against Iraq and some form of universal health care, while the ruling class is committed to the war and to sacrificing social services to pay for it.

This conflict between the rulers and the ruled reflects a deeper, structural rift. In a series of three articles (Z Magazine, February, April, May, 2007), Jack Rasmus documents how,

"From the early 1980s on, income inequality widened, deepened, and accelerated until today well over $1 trillion in income is being transferred every year from the roughly 90 million working class families in the U.S. to corporations and the wealthiest non-working class households."

Thirty-five years of pro-business social policies have hurtled class inequality back to the level of the 1920s. One percent of Americans now owns half the nation's wealth. In 2005, the total wealth of all U.S. millionaires was $30 trillion, more than the annual wealth produced in China, Japan, Brazil, Russia and the European Union combined!

The extent of inequality has angered the working class and alarmed sections of the establishment. Inequality in "the land of opportunity" is usually blamed on the victim for lacking the skills and determination to succeed. Now that the majority has been left behind, this excuse has lost credibility. Consider this editorial comment from the New York Times (August 29, 2007),

"The median household income last year was still about $1,000 less than in 2000, before the onset of the last recession... [W]hen household incomes rose, it was because more members of the household went to work, not because anybody got a bigger paycheck...The earnings of men and women working full time actually fell more than 1 percent last year...[T]he spoils of the nation’s economic growth have flowed almost exclusively to the wealthy and the extremely wealthy, leaving little for everybody else."

Americas are seething with discontent over falling living standards, the environmental crisis, the war and the abysmal state of the medical system. In the spring of 2006, this anger exploded in the largest demonstrations in the nation’s history. Protesting anti-immigrant policies and chanting "We are America," the working class rose up and punched the capitalist class in the face. That fall, the Republican majority was swept from office by voters who were sick of government lies, incompetence and corruption.

Reform or revolution

The powers-that-be are concerned that popular discontent could coalesce into a generalized rebellion against the system. This happened after World War I, during the 1930s, and in the 1960s.

There are only two solutions to such crises: reform from above to restore confidence in the system or revolution from below to replace it. Let’s examine the first option.

Both the Democratic and Republican Parties are committed to victory in Iraq. To counter widespread anti-war sentiment, Washington has repackaged the war as military support for the Iraqi government, with Iraqi incompetence being blamed for "delaying" troop withdrawal. Regular announcements of "signs of progress" imply that the war is winding down when it is actually escalating. This stalling tactic seems to be working, for now.

Reducing class inequality presents a greater challenge. The New York Times concludes, "What are needed are policies to help spread benefits broadly — be it more progressive taxation, or policies to strengthen public education and increase access to affordable health care."

The elite immediately cry "socialism!" at the suggestion that any portion of the social pie should be returned to the working class. Capitalists want a State that enacts policies just for them and rescues only them. And that’s what they get. In countless ways, capitalism functions as a kind of socialism for the rich.

America’s tax laws free the largest corporations from paying any tax whatsoever. Federal judges have allowed ailing industries to abandon billions of dollars in "burdensome" pension obligations. The multi-billion-dollar federal bailout of mortgage lenders has not been matched by any money for working-class home owners facing foreclosure. And while the Bush administration has allowed Medicare-funded insurance companies to keep millions of dollars that should have been returned to beneficiaries, it vigorously pursues beneficiaries to recover money that it says is owed to insurance companies.

The New York Times doesn’t actually want socialism. It wants a lesser-evil capitalism directed by the Democratic Party.

Liberals and liberal institutions condemn the worst aspects of capitalism in order to preserve the system as a whole.

Most Americans want more investment in the nation’s infrastructure. They want universal healthcare and more funding for schools. They want New Orleans rebuilt and their bridges secure. Liberals know that, unless the system can deliver on some level, the majority will eventually reject that system.

Wiser capitalists remember the French Revolution. Those who take too much can lose their heads. Billionaires like Bill Gates and Warren Buffett prefer to return a small piece of the pie than forfeit the entire bakery.

Gates criticizes the "inequality gap" and devotes a tiny portion of his fortune to charity. Buffett says it’s unfair that he pays less than 18 per cent of his income in taxes, when his secretary pays 30 per cent of hers. Gates and Buffett aren’t socialists. Like the robber-baron philanthropists of the last century, they understand that their class must appear generous to preserve its system of organized thievery.

President Roosevelt faced a similar choice when he fought for the New Deal despite opposition from business interests. In A People’s History of the United States, Howard Zinn explains,

"The Roosevelt reforms…had to meet two pressing needs: to reorganize capitalism in such a way as to overcome the crisis and stabilize the system; also to head off the alarming growth of spontaneous rebellion...— organization of tenants and the unemployed, movements of self-help and general strikes in several cities."

Reining in a 35-year wealth-grabbing binge won’t be easy. Despite liberal demands that Democrats in Congress develop a spine, the Democratic Party serves the business class. Returning any wealth to the working class would undermine Corporate America’s ability to dominate the global economy.

Unless it is forced to use the carrot to quell discontent, the ruling class prefers to use the stick.

The war on terror, with its attack on civil liberties, is the capitalists’ response to inequality and injustice. They seize the wealth; they do not share it. They crush their victims; they do not rescue them. And they don’t feel threatened by a labor movement that is currently too weak to mount a sustained rebellion. At the same time, their confidence has been shaken by their failures to win the war, create a workable immigration policy and resolve the health-care crisis.

Coming next week: America in Crisis, Part II: The Liberal Challenge and the Prospects for Socialism