NetNews Usenet Archive 1993 #3/NN_1993_3.iso/spool/misc/activism/progress/10321

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Subject: Bohmer - Continued Stagnation (Z-Mag)
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CONTINUED STAGNATION, GROWING INEQUITY
by Peter Bohmer (Z Magazine, Sept. 1992)

     The economic and political collapse of the Soviet Union and
Eastern Europe has its economic counterpart in the stagnation and
instability of the U.S. and the wealthier capitalist economies, and
the economic crisis of Africa, Latin America, and South Asia that is
killing millions of people and increasing the suffering of many more.
Although poverty and the inequality of income and wealth are
growing in the U.S. as are despair, dissatisfaction, and anger, there
is little organized movement towards a more equal and humane
system.  Instead capitalism as a superior system and the end of
history are proclaimed, and the free market is put forward as the
solution to all problems.  There are few bold, alternate analyses and
visions, and they do not get a public hearing.
     The current economic recession, as officially defined, which
began in the United States in July 1990 is possibly over as
production and consumption have been rising slowly in 1992.  The
so-called recovery, if it has begun, is weak and is unlikely to
substantially raise employment or wages.  More importantly, the
longer run and more significant structural crisis as revealed in the
high rates of unemployment and underemployment, the stagnation
of productive investment and productivity, and financial instability
of the banks and the high levels of corporate and consumer debt
continues as does the possibility of a depression.  The continuing
depression of /South-Central Los Angeles, Gary, Indiana and
Youngstown, Ohio and many parts of the rural U.S. will not end
with the projected recovery.  The economic depression of the
African-American, Latina/Latino, and Native American
communities has persisted for the entire history of the U.S.  So
have the poverty level earnings of the majority of women.

The American Century
     To understand the current economy, let me sketch the expansion
and stagnation of U.S. capitalism over the last 50 years.  A Social
Structure of Accumulation (or environment in which profit-making
takes place) conducive to high profitability and the accumulation of
capital was consolidated in the years immediately after World War
II.  It was based on the United States being the dominant world
power:  economically, politically, and militarily; together with the
institutional arrangements that various political economists have
called the Accord, the non-formal deal between corporate capital,
the state, and organized labor as junior partner.  Key to its
functioning was the system of fixed-exchange rates based on the
dollar known as Bretton-Woods, the warfare-welfare state, anti-
Communist ideology and foreign policy, and a business unionism
that accepted corporate domination in return for slowly rising
wages and benefits for its members who were predominantly male.
The Accord provided a stable environment for capital expansion.
Output, productivity and investment grew, profit rates were
substantially higher that the present.
     The so-called American Century was however short lived.  By
the late 1960s, profits became squeezed by international and
domestic forces.  The heroic struggle of the Vietnamese people
weakened U.S. economic dominance.  While the U.S. was fighting
Vietnam, productivity in Western Europe an Japan grew rapidly
and they made increasing inroads into domestic U.S. and U.S.
export markets.  Also spurred by high U.S. demand, third world
industrial production grew rapidly in a number of countries
including South Korea, Taiwan, Brazil, and Mexico.  Profits were
also reduced by the temporary increase of the prices of many raw
materials exported from the third world.  At home, the struggles
waged by the Civil Rights and Black Liberation movements and the
Chicano, anti-Vietnam war, Women's and Environmental and other
movements, and the interrelated reduction in the unemployment
rate led to growing worker militancy and higher wages, and
increased social spending.  The existing social structure of
accumulation no longer yielded the profit rates corporations were
accustomed to.  The Accord was forced open to include more
African Americans and women, and overall income became
somewhat more equally distributed.  Profits and capitalist control
over society was also reduced by some restrictions being placed on
corporate capital's power to pillage the environment.  Legislation
was also passed in support of worker demands for better safety and
health conditions at the workplace.

The Silent Depression
     Since the mid-1970s, corporations have changed the rules of the
game.  The Accord was terminated by corporate America.  There
has been a planned corporate offensive against labor with organized
labor still playing by the old rules.  Even the tame business unionism
of the AFL-CIO is no longer accepted by most of corporate
America, union membership has fallen from one-third of the labor
force in 1955 to one-half of that today and is still declining.
Multinational corporations increasingly contract out production to
non-union low wage firms outside the U.S., or to those inside the
U.S. that provide few or no benefits to workforces that are
disproportionately immigrants, people of color, and women, give
backs in wages and benefits are demanded even if firms are making
good profits.  There is increased use of part-time and temporary
workers who are paid lower wages than the permanent workers.
Social spending has been slashed.  An economic, ideological, and
even military war has been declared on the poor, particularly young
Black and Latino/a men and women.  Corporate taxes have become
minimal, public employees are laid of or their wages cut,
regulations limiting the social irresponsibility of corporations are
weakened through reduced enforcement or by being rewritten more
favorably for the corporations.  Racism and sexism, e.g., slander of
Black women on welfare, and attacks on affirmative action, are
openly used to gain white support for this reactionary agenda.
     Nevertheless, corporate profitability has not been restored to the
levels of the 1950s and 1960s nor has productivity growth.  The
new austerity has not even worked on its own terms.  No new and
successful social structure of accumulation has replaced the
Accord.  The U.S. economy is situated in a global economy marked
by excess capacity given the limited effective demand, thereby
reducing profitability and investment.  Although labor costs in the
United States have been rising more slowly than prices and have
fallen in relation to major U.S. international competitors, corporate
profitability is below its historical average.
     Of course, a small minority has grown even wealthier, the top
one-half of 1 percent of the population increased their share o total
U.S. wealth in the 1980s from 23 to 29 percent.  Through buying
and selling of corporations, speculation in currencies, commodities,
real estate, and the stock and bond markets, billions have been
made by a few.  The doubling of military spending and huge
expansion of government and consumer debt fueled the expansion
of output and employment from 1983 to 1990.  Income inequality
grew as the number of decent paying jobs in manufacturing and
social services declined.  By 1990, 1 percent of the population or
2.5 million people earned more income than the poorest 40 percent
or 100 million people.  Since the early 1970s in come has grown
more unequal among whites, it has grown even more unequal
among African-Americans.
     What persists today, whether or not the recession has ended, is
what economist Wallace Peterson calls the silent depression, the
decline in the quality of life and earnings of the majority of the
population even in periods of expansion such as the late 1970s and
1983-1990 (as reported by John Miller, "Silent Depression" in
*Dollars and Sense*, April 1992).  Median earnings after adjusting
for inflation fell by almost 20 percent from 1973-1991 after rising
by 30 percent from 1955-1973.  Economic growth no longer means
a higher standard of living as it did prior to 1973.  Thus even if the
recession is over, the silent depression continues.

New World Order
     Let me now mover to recent and ongoing efforts by the U.S.
elites to restore world economic and political dominance and
profitability, what President Bush and Secretary of State Baker call
"The New World Order."  When we strip away the rhetoric, the
military aspect of the New World Order is the principle that the
U.S. has the right to and the means to organize joint military
interventions under U.S. leadership, e.g., Iraq; or unilaterally, if
need be.  The aim of this aggression is to protect U.S. interests and
maintain stability as defined by the U.S., and secondly, to further
global capitalism.  The war against Iraq was in part a demonstration
of the willingness to use that power, the continued blockade is the
continued application of that power, the ongoing death and
suffering of the Iraqi people is necessary or irrelevant to these
policy makers.
     The U.S. rulers won the Gulf war, but this does little to restore
economic dominance or even global competitiveness for U.S.
corporations.  U.S. arms makers will sell more weapons in the
Middle East, Bechtel will get billions of dollars of new contracts in
Kuwait, and the U.S. will have more control over the price of oil
and its supply.  However, neither the war nor the continued
emphasis and spending for military superiority will repair the
physical infrastructure of this country--the transportation system,
schools, water systems--much less improve the health and
education of the labor force, nor stop the capital flight of industry
from major cities and the interrelated devastation of African-
American, Latino and low income urban communities.  Will it lead
to more research and development on improving the quality of
product for civilian use or developing new products?  Will the U.S.
being global cop make Dupont or IBM more able to sell their
products at home or abroad or for Chrysler to produce better cars
at lower cost?  The answer is no.  Military aggression does not lead
in the current global economy to economic development (For an
excellent elaboration of this position see Arthur MacEwan, "Still
Out of Order," *Dollars and Sense*, May 1991).
     Another aim of U.S. strategy is to create a regional economic
bloc in the Americas dominated by U.S. multinational corporations
that will out compete the German and Japanese dominated blocs of
Europe and Asia.  The reason why the U.S. elites are promoting the
North American Free Trade Agreement (NAFTA) between Canada,
Mexico, and the United States and the 1990 proposed "Initiative of
the Americas," is to institutionalize and consolidate this U.S.
dominated regional bloc.
     Meeting in secret and with limited public awareness, negotiators
of Mexico, Canada, and the U.S. are putting the finishing touches
on NAFTA.  In the U.S., it will then be presented to Congress
which will not have the right to amend it, only to accept or reject it.
NAFTA is likely to be passed as the leadership and presidential
candidates of the Democrats and Republican parties both support it.
     NAFTA will facilitate the ability of U.S. dominated
multinational corporations to gain full access to the resources,
including the labor, of all of the Americas from Canada in the North
to Argentina in the South to produce goods made by U.S.
dominated corporations to sell in the Americas and on the world
global market.  These agreements will also further enrich U.S.
financial institutions by giving them advantages over those from
Europe and Japan in organizing and profiting from the increased
financial flows.  It will also provide increased opportunities for the
giant advertising and accounting firms and other business services
to profit from their operations throughout the continent.
     NAFTA is about far more than reducing trade barriers between
countries.  Its objective is to further the unrestricted, unregulated
movement of U.S. capital from Canada to Mexico and eventually all
of the Americas.  It gives multinational capital the right to produce
wherever costs are the lowest, to make and keep the highest profits,
to pay the least taxes and lowest wages with minimal environmental
restrictions.
     Given the high rates of underemployment and unemployment in
Mexico, the increased movement of manufacturing to Mexico is
unlikely to significantly raise wages there.  Moreover, if as seems
likely its neo-liberal President Salinas is successful in destroying the
ejido system which gave some protection to the peasant population
and, in addition, the U.S. through NAFTA can export corn to
Mexico with no restrictions, which will reduce Mexican corn
production and employment, the flow of this dispossessed rural
population to the cities of Mexico will increase.  Thus
unemployment may actually increase and wages will not rise
although output may grow and the profits of the MNC's definitely
will.  Moreover, increasing the power of the multinationals and
decreasing the probability of big employment growth in Mexico is
the likelihood that most other countries in Latin America will want
to join the free trade agreement.  They will fear being excluded
from the trade and investment flows among the member countries.
This will spread foreign investment over more countries and will
encourage capital flight from any country where wages are growing
significantly.  It will further reduce the bargaining power and wage
increasing impact on the Latin American members of the
agreement.
     The free trade agreement will further diminish the economic,
political, and cultural sovereignty of nations.  Restrictions on U.S.
capital in other member countries, such as limiting U.S. corporate
ownership of foreign resources or limiting their sending back of
profits to the U.S., will be considered a violation of the agreement,
a discrimination against foreign capital.  NAFTA will benefit the
rich and powerful within each nation and shift resources from the
poorer nations of the Americas towards the wealth and profits of
the multinationals.  This economic integration of the Americas and
the related treaties are the new Monroe doctrine, the late 20th
century recolonization of the Americas.
     The ongoing process of significant amounts of manufacturing
that had been located in the United States relocating to Mexico, the
Caribbean and other parts of Latin America and other parts of Latin
America will be speeded up by NAFTA and similar agreements.
Banking and other business services will move more of their
operations to Mexico and other parts of the Americas.  The
hemorrhaging of manufacturing jobs out of urban centers in the
U.S. such as Detroit and Los Angeles will further increase poverty
and unemployment, disproportionately affecting African-Americans
and Latinos.  NAFTA will reduce the ability of workers and social
movements in the U.S. to fight the power of capital at the point of
production.  It will make more difficulty getting legislation passed
and enforced which curbs environmental and worker abuse.  The
threat of capital flight will loom even larger.  Democracy will be
further undermined as political power will be even more blatantly
beyond citizen control, at guarded corporate headquarters.
     The economic interests of most people in the United States will
diverge even more from those of the managers and consultants of
the global corporations with their bloated salaries.  What is good
for General Motors is not good for us.  NAFTA will increase the
profitability of U.S. corporations, make them more globally
competitive, and may raise the Gross National Product (GNP) but
more importantly it will further the trend towards fewer and fewer
jobs paying a livable wage.
     An opportunity that arises from the increased globalization of
capital is that it provides an opening for solidarity and cooperation
among working people against capital that crosses national borders.
Internationalism is necessary in order to fight for a leveling up to a
livable wage and to a healthy environment for working people in all
countries rather than a leveling down to the lowest wages.
Communication and forging networks of solidarity has begun
among rank and file workers in Mexico, Canada, and the U.S. who
are working together against NAFTA.
     Two possible futures for the U.S. economy and their
implications for social justice have been discussed by many people
in their comments immediately following the rebellion in Los
Angeles after the acquittal of the police for the torture of Rodney
King.
     The first, the fascist alternative, is a future where a small number
of people have most of the wealth supported by a scared and
shrinking middle class backed by a police state and militarized
society which maintains more and more prisons, order, gross
inequality, and white supremacy, at home and abroad.
     The second alternative begins with an analysis that the racism
and poverty revealed so starkly in Los Angeles is an integral part of
an economic and social system that needs fundamental change.  The
lesser of two evil politics, which some of us acquiesce to, will not
stop the deeper and reactionary trends.  Beyond analyzing and
critiquing the existing injustices, we need to project a vision of a
society that is equal and inclusionary, that respects the dignity of all
people, and is environmentally sustainable, that is based on meeting
human needs not greed, that is participatory economically and
politically.  This requires building grass roots movements and bold
organizations which fight the exploitation of working people and
against the oppression of women and people of color, and act in
solidarity with those struggling for self-determination and social
justice in the U.S. and in other countries.  It means working for a
radically different society in the U.S.  This is our responsibility and
challenge.