Capitalism’s Long Hot Winter Has Begun

By Jack Barnes

A mass revolutionary party is forged in the heat of great social crises, political upheavals, and wars. Such turmoil unfolds unevenly and extends, with ebbs and flows, over substantial time. But the core of a proletarian party—seasoned in mass work, knowledgeable and disciplined in working-class politics, with cadres spread across several generations—is built before such giant class battles and revolutionary explosions erupt. Such a party cannot be built from scratch once decisive class confrontations posing which class shall rule have begun. That is the lesson Lenin and the Bolsheviks taught us in practice. In the affirmative. Lenin also generalized from the history of the revolutionary activity of the toilers under capitalism to explain that lesson in numerous speeches and writings. And over the course of the last century, our class has learned that lesson in the negative as well—in more costly ways than anyone could have foreseen.

Our organizations strive to act today in such a manner that when revolutionary mass struggles begin, we can build on our already existing internationalist program, proletarian habits, and organizational norms. Only by acting in that manner can parties be built that are capable of leading the toilers to the revolutionary conquest of power, to the establishment of a workers and farmers government.

To remain true to this historic charge, the delegates to this convention face one challenge above all. We must prepare the Socialist Workers Party, Young Socialists, and supporters of the communist movement to understand the unfolding depression and intensified drive toward imperialist wars, and to reorient our activity in face of these realities. Every other political responsibility and opportunity needs to be understood and acted on in this light. In doing so, we will collaborate with communists and young socialists worldwide, as well as with revolutionists in Latin America, Africa, the Middle East, and Asia engaged in uncompromising national struggles against the domestic and international beneficiaries of the imperialist system.

Communists are not prognosticators. No one can make accurate predictions both about what will happen in society as well as when. Those with a materialist understanding of the laws of the class struggle, including the place of chance in human affairs, know better than to try. But communists can and do have a responsibility to follow the course of capitalist development that is unfolding and to absorb and explain its implications for the class struggle and the twisting line of march of the proletariat toward power. When enough evidence has accumulated about the logic of these developments, there is no other responsible course but to act on it. If we do not do so, regardless of what we have accomplished beforehand, it will be too late. At that moment, we are not from Missouri; we are from Petrograd.

Many members of the communist movement today have never lived through a ground war launched by the imperialist rulers, one involving large numbers of soldiers from the ranks of the American working class and resulting in many thousands of deaths on all sides. We are going to see wars of that kind not just in the decades ahead, but in the years, possibly even months ahead.

Only a couple of participants at this convention, those close to eighty years old, have lived, as political people, through a world depression. Some of us have experienced two or three deep-going slumps since the mid-1970s. In one or another of these downturns stock prices dropped sharply over a number of years, unemployment shot into double digits in several imperialist countries, and there were sudden bursts of inflation. That’s different, however, from a deflation of such magnitude that the financial backbone of world capitalism—its debt structure and dominant financial institutions—buckles, production plummets, long-term joblessness spreads worldwide, and the great mass of humanity is hit by economic contraction or bouts of ruinous price explosions—sometimes both together. Masses of people lose faith in capitalism, but at first they just lose hope. Conditions of that kind, which have stalked the most vulnerable parts of the colonial world over the past decades, will become widespread and devastating. We’re not predicting such a world depression; we’re living through its very opening stages today.

To function effectively as communists in the world situation that is developing, we have to internalize an understanding of imperialism—the stage of world capitalism reached early in the last century. Until the contradictions of that exploitative and oppressive social system are resolved—and that can be achieved only by the proletariat taking power from the capitalists and landlords in the imperialist countries and joining in the worldwide struggle for socialism—humanity has no sure future.

As Lenin helped us learn, for the imperialist rulers “there is no such thing as an absolutely hopeless situation,” even when capitalism is in profound crisis.[1] There is no hopeless situation for the bourgeoisie so long as state power is not wrested from it by the proletariat, led by a revolutionary movement that will not, at the decisive moment, fear the awesome responsibility of assuming power and shrink from taking it. And holding it.

Without such a revolution—without the insurrection that opens the road to workers power—the capitalist state and the employers will wreak devastating enough defeats on the working class through fascist terror, and will destroy enough agricultural and industrial productive capacity through wars as well as economic means that are “natural” (to capitalism) to restart a miserable but real revival of production and trade. They will continue dominating the earth, exploiting and oppressing the great majority of humanity, and threatening the very survival of civilization. So long as they don’t lose state power, the law of value guarantees that their system will start back up. They must only endure; we must conquer.
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No fear of the rulers

The ruling class in this country, while the wealthiest and most militarily powerful in history, is a bloated giant that is in fact past its zenith. We don’t fear the propertied rulers; we have contempt for them. We look forward to doing battle with them. Because we know that before the exploiters can impose their ultimate horrors, the working class and its allies among farmers and other toilers will have the opportunity to resolve the crises of imperialism in humanity’s favor. We say, speed the day. And act as if we mean it.

Communist workers in the United States enjoy political work. That is, the politics, and the work together that makes the politics possible, interest us. Our confidence in the working class flows from long experience, and is based on facts unfolding in front of our faces. It’s not a matter of faith. It’s not an “idea” in an individual’s head. It’s not a “goal” we’re “shooting for.” And we have a special political obligation to demonstrate this confidence in the way we conduct ourselves.

Around the world today, including among revolutionists, U.S. imperialism is generally portrayed as a virtually omnipotent, “hegemonic” power in a “unipolar” world. We have a duty to make clear that while we never give an inch to adventurism that disregards the U.S. rulers’ brutality and monopoly of state power, we also never cower before them. We never ask them for the right to be communists. We present a realistic appreciation of who they are and what they are capable of. We explain that they operate pragmatically, with no idea of the laws of motion of modern society. They don’t have to win; they only have to not lose. There are no limits to their self-delusion, and for the same reason there are no limits to the suddenness and extent of the violence and brutality they will lash out with when it becomes stunningly clear that they are wrong.

Above all, we point out how the capitalist rulers keep creating and concentrating within their own borders a larger and larger world proletariat, and how working people—how we—can make a revolution to overturn them.

We have a special obligation to help revolutionary-minded toilers around the world understand that there is not “a” United States; there is not some socially and politically homogeneous population in North America with that name. “We Americans” is a fabrication of the rulers. There are the tens and tens and tens of millions of workers and farmers in the United States; we are part of a “we” with our class brothers and sisters throughout the world. There is a “they”: the tiny handful of propertied families in whose interests the imperialist United States government acts at home and abroad. It is “they,” their state, that “we” must overthrow in order to end imperialism’s inexorable advance toward deepening crisis, violence, brutality, and devastation—toward fascism and world war.
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Proletarian response to September 11

Our movement acquitted itself well last September in face of the attacks on the World Trade Center and Pentagon, and the rulers’ subsequent accelerated militarization drive and preparations to push back workers’ rights. We spoke out forcefully on September 11 itself, in a statement issued by the party leadership in the name of the Socialist Workers candidate for mayor of New York City, Martín Koppel. We simultaneously began campaigning with that statement across the United States, offered it for posting on the Web sites of the Militant and Perspectiva Mundial, and for publication in the next issue of those periodicals. We explained the stakes and clarified the political issues for members, supporters, and contacts of our movement, as well as for anyone interested in hearing what communists had to say.

The party’s statement got both the content and the tone just right—and tone can be decisive in working-class politics, especially at moments such as September 11, 2001. The attacks in New York and Washington, we said, were carried out in reaction to and emulation of what the United States government had been countenancing for decades in advancing “its ‘right’ to launch military assaults on other countries.” Now the U.S. rulers would “become even more brazen” in this course.

We called special attention to the fact that during its closing months in the White House, “the Clinton administration established, for the first time in U.S. history, a North American command—that is, the command structure for deployment of U.S. armed forces at home, aimed first and foremost at working people in this country.” We noted that these “homeland” units of the armed forces, together with various federal police agencies, were being deployed by the Bush administration “in their first domestic military operations.”

“The U.S. government and its allies for more than a century have carried out systematic terror to defend their class privilege and interests at home and abroad”—from the slaughter in the Philippines and in the Caribbean and Central America at the turn of the twentieth century and its opening decades, to the firebombing of German and Japanese cities and the atomic annihilation of more than one hundred thousand at Hiroshima and Nagasaki; from the murderous leveling of Korea at the opening of the 1950s, to the ten-year-long slaughter in Indochina, devastation of Central America, and support to murderous tyrannies across South America in the 1960s and 1970s; from the war against the Iraqi people in 1990–91, to the incineration of eighty people in Waco, Texas, on its own soil, and the murders of many more both at home and abroad.

The party statement echoed a 1940 warning by communist leader Leon Trotsky. As the interimperialist conflict that became World War II was inexorably expanding, Trotsky responded to the mounting efforts of the Zionist movement and its imperialist backers to dispossess the Palestinian people and establish what eight years later would become the colonial-settler state of Israel. What these reactionary forces were doing, Trotsky said, was transforming Palestine into “a bloody trap” for the Jews. “Never was it so clear as it is today,” he wrote, “that the salvation of the Jewish people is bound up inseparably with the overthrow of the capitalist system.”[2]

More than sixty years later, Trotsky’s prognosis has not only been confirmed, but the dangers are even greater, as rightist demagogues once again do as they always will under crisis conditions—whether Israel exists or not—so long as the capitalist system remains. They spew the poison of anti-Semitism and Jew-hatred as an antidote to capitalism’s ills. The party’s response to September 11 emphasized that “U.S. imperialism is turning North America into a death trap for working people and all who live here.” It is doing so “by its systematic superexploitation of the peoples of Asia, Africa, and Latin America; by its never-ending insults to their national and cultural dignity”; by its ceaseless collaboration in murderous violence in countless forms. By the very workings of capitalism in its imperialist stage.

The U.S. rulers are adding to the armature of their mailed fist, we pointed out. They are strengthening their hand at home and abroad for the battles they know are coming.

We followed up the campaign using this statement less than three weeks later with the mobilization of a large public meeting in New York City. At that meeting, we called attention, above all, to the inability of the U.S. rulers to whip up the kind of patriotic response that could, for a period of time, cow working people into recoiling from fights by appealing for “Americans” to “all pull together.” The day after we met, tens of thousands of state workers in Minnesota went on strike against employer efforts to slash their wages and medical benefits. Labor resistance was not halted by patriotic rallying cries. The aftermath of September 11 did not become the occasion and rationalization for an attempt to impose no-strike pledges.

The battle by workers for union recognition against the Point Blank company in South Florida is proving to be another example. The fact that workers there produce armored vests for the police and military hasn’t stopped them from organizing and fighting for better wages and conditions on the job. At least one delegate who would otherwise be at the convention here today is in Miami taking his responsibilities in the union organizing drive there.

The post–September 11 realities of the class struggle in the United States were delightfully illustrated at the gathering in New York by an experience we pointed to in opening the meeting. I told the story of how several days earlier, together with another leader of the Socialist Workers Party, I had been on my way to a meeting in mid-Manhattan on what happened to be Mexican Independence Day. Shortly after we came up from the subway, we walked past a young Latina on the street selling American flags. She wasn’t saying anything; just holding up the flags, hoping someone would buy one for a buck. Patriotic zeal was not the main motivation of most of those selling flags and colored ribbons on the streets those days (or any other day).

Just at that moment, a big truck rounded the corner, decked out by the boss with two huge American flags, one on the side panel and another flying from the cab. The young driver spotted the woman, shot his fist out the window, and shouted: “Viva Zapata!” as a big smile broke out on both their faces.

I’m glad I was with another comrade at the time who can confirm it really happened! Once you got beyond the professional and middle classes, the patina of petty-bourgeois hysteria and panic in New York City was not even skin deep.

Workers and farmers in the United States were abruptly and violently dragged into the world by the events of September 2001. Before then the rulers had largely convinced working people that at least on U.S. soil, since the “victory” in the Cold War, “we” would never—never—face any direct consequences for the murderous violence and misery experienced by toilers worldwide as a result of capitalism’s inherent drive toward imperialist domination, superexploitation, and wars of conquest. That illusion began to crack on September 11.

The events in New York and Washington gave the U.S. rulers a pretext to accelerate the course they have been on for some fifteen years—since the deepening crisis of the world capitalist order signaled by the 1987 stock market crash and the collapse a few years later of Stalinist regimes across Central and Eastern Europe and in the Soviet Union.

But the acceleration, if maintained, brings its own changes. Controlled actions set uncontrolled forces into motion, and thus bring unexpected consequences. The political and military evolution of the world’s imperialist powers has become more tightly related to their economic evolution—with the destabilizing shocks of a more and more violently competitive world finance capital.

These conclusions, to my knowledge shared by no other current in the workers movement, are important for the delegates here to discuss and decide. Because everything the National Committee—which is responsible to act for the party between conventions—has done over the past year has been based on these judgments, and will continue to be based on them if this course is reaffirmed.
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U.S. imperialism’s march toward war

The big-business press has given a lot of attention over the past two months to Bush’s June 1 [2002] address to the graduating class at West Point. That speech marked another step in Washington’s drive toward war, toward the aggressive use of its military might, but not for the reasons babbled by the bobbing heads on TV.

The self-styled pundits, parroted by many on “the left,” proclaim that Bush said something dangerously new at the military academy when he spoke of being “ready for preemptive action when necessary to defend our liberty and to defend our lives.” But the fact is, all military assaults by Washington and other imperialist powers have been “preemptive.”

The U.S. armed forces weren’t under attack by Korea in 1945 when Washington ordered the troops to occupy the southern half of the peninsula, divide it across the middle, and when the inevitable result occurred five years later, launch a murderous war aimed, unsuccessfully, at conquering the entire country. Cuba did not threaten or invade the United States in 1961, nor in 1962. Neither the assault by U.S.-backed mercenaries at the Bay of Pigs in April 1961, nor the U.S.-provoked “missile crisis” of October 1962 was an act of “self-defense.” Vietnam did not hurl weapons against American cities or territories, provoking a massive escalation of U.S. bombing and troop deployments in the mid- and late 1960s. These actions that defined the “American Century” were all “preemptive” bipartisan assaults by the U.S. rulers.

So, too, were the bloody twentieth century wars among the imperialist powers—World War I and World War II. In the years leading up to both of these slaughters, the rival powers instigated incidents and provocations they knew would inevitably hand them a pretext to declare war and advance their national interests.

At least as early as President Franklin D. Roosevelt’s “Quarantine the Aggressor” speech in October 1937, for example, the Democratic administration had set a course toward building up U.S. military power in order to take on Japan in the Pacific, establish itself as a dominant imperial power in Europe, and hopefully preside over the subordination if not the destruction of the Soviet workers state in the process. According to the history we’re taught in school and see in the big-business dailies and on TV, it was Tokyo’s “preemptive” bombardment of Pearl Harbor on December 7, 1941, that drew the United States into World War II. Since that “unprovoked and dastardly attack by Japan,” Roosevelt told Congress the very next day, “a state of war has existed between the United States and the Japanese empire.”

What usually goes conveniently unmentioned by apologists for the allied powers is the Roosevelt administration’s “preemptive” act against Japan six months earlier imposing a total embargo on Japanese oil imports (as well as an embargo on scrap metal imports and the freezing of all Japanese assets in the United States). Washington knew that act of economic war, designed to starve Japan and stop the wheels of industry from turning, would force Tokyo to respond militarily. The only surprises were the unexpected audacity of the Pearl Harbor attack, the reach of Japan’s naval fleet, and the skill and boldness of “the little yellow” pilots from Asia.

In reality, what was noteworthy for class-conscious workers about Bush’s West Point talk was not his comment about “preemptive action” but the ease with which he slid back and forth between proposals for strikes against “enemies” at home and “enemies” abroad. “Our security,” Bush said, “will require the best intelligence to reveal threats hidden in caves and growing in laboratories. Our security will require modernizing domestic agencies such as the FBI, so they’re prepared to act, and act quickly, against danger.”

More important than the West Point talk was Bush’s “axis of evil” speech to Congress four months earlier—his State of the Union address in late January 2002. We take seriously the threats issued in that talk. The White House did not simply pick Iraq, Iran, and the Democratic People’s Republic of Korea out of a hat as a representative sample of Clinton’s many “rogue states.” And the “axis of evil” is not simply three oppressed countries whose governments the U.S. rulers would like to overturn. They are three such governments that have the economic, engineering, and technical capacities to someday soon place weapons—including nuclear warheads—on ballistic missiles whose range could at least prevent Washington from attacking those countries with impunity. In fact, the most immediate aim of the U.S. rulers’ drive for an Anti-Ballistic Missile System, reinitiated during the Reagan administration, resumed during the later Clinton years, and now being pressed forward by Bush, is to restore Washington’s ability to use its massive nuclear arsenal to blackmail governments such as these in the colonial world, as well as their “friends,” the fickleness of one or two of whom might be revealed in an ever-changing future.[3]

We must act on the assumption that the Pentagon plans for a multifront invasion and war against Iraq “leaked” earlier this month are the initial steps to prepare a massive U.S.-organized military assault. Within days [British prime minister Anthony] Blair weighed in, pledging complete support and participation. “Leaked” documents detailed the use of depots for war matériel in Uzbekistan and plans for air, sea, and land operations staged from bases in Kuwait, Qatar, Bahrain, Turkey, Diego Garcia, and elsewhere. There are great hopes among sections of the Turkish bourgeoisie that in return for their cooperation imperialism will offer some relief from the growing debt burden and economic crisis gripping that country. And the U.S. rulers will make sure their royal highnesses in Saudi Arabia and Jordan also come around before the shooting starts.

Washington is determined to accomplish what it could not try to do as part of the “Free Kuwait” alliance during the 1990–91 war. The U.S. rulers aim to fight a major war to the finish—and are gathering a coalition accordingly. With one foot in Tel Aviv and another in Baghdad—and new military bases to the north, east, and south of Iran—they believe, U.S. imperialism will then be able to recoup some of what it lost with the revolutionary overthrow of the U.S.-backed shah of Iran in 1979. Above all, Washington is confident it can redivide military and political influence over the region at the expense of its rivals in Europe and Japan and assert its domination over oil and other resources. Some 65 percent of the world’s oil reserves are in that region—more than 10 percent in Iraq, and a quarter in Saudi Arabia alone.

The United States is bolstering its military presence elsewhere as well. It used the war in Afghanistan to establish bases not only there but across former Soviet Central Asia, in Uzbekistan, Tajikistan, and Kyrgyzstan. Last December Congress approved the so-called Andean Initiative, which builds on the existing “Plan Colombia” to expand the presence of U.S. armed forces across Latin America in the guise of “fighting drug trafficking.” The 1,200 U.S. military “trainers” in the Philippines, scheduled to complete their mission there in a few days, may prove to have been just a foot in the door, as indicated by talks already under way between Washington and Manila about reestablishing permanent U.S. military storage facilities there. At least it will be the opening wedge in stepped-up Filipino-American cooperation in the war against “terrorism” and “Islamic extremism” in the Pacific region.

Two processes are taking place unevenly but in tandem: U.S. imperialism’s war preparations abroad together with its ongoing militarization on the home front, anticipating increased resistance by workers and farmers down the road. The Bush administration and Congress are advancing along the bipartisan trail blazed by the Clinton administration and Congress during the previous eight years. Reinforcement of the so-called homeland defense command structure; centralization of intelligence operations; use of “secret evidence,” “preventive detentions,” and curtailment of review and appeal rights, targeting noncitizens and prisoners first and foremost; bolstering of commando and SWAT-style squads on the federal, state, and local levels—none of this began in the closing months of 2001.

The Northern Command will formally stand up later this year. The prototype for this homeland command was established in October 1999, tagged with the Clintonian Pentagonese euphemism “Joint Task Force Civil Support.” It is undergoing a slight metamorphosis, to emerge as the (more Rumsfeldian) Northern Command on October 1. Under the banner of combating “terrorism,” this new military command will be charged with maintaining “law and order” as needed within the boundaries of the United States when there is a threat of civil disorder.

Currently, the U.S. military command structure consists of nine Unified Combat Commands—the European Command, Pacific Command, Southern Command, Central Command, and so on. The chain of command goes directly to each of them from the president of the United States, through the secretary of defense. The new Northern Command will be headquartered at Peterson Air Force Base in Colorado and will be headed by Air Force Gen. Ralph Eberhart, currently commander of the U.S. Space Command. NORTHCOM, as it will be called for short, will encompass NORAD—the North American Aerospace Defense Command—whose U.S. commander has the ultimate power by treaty, without prior consultation, to put the Royal Canadian Air Force under his command. When NORTHCOM stands up a few months from now, Mexico, in the eyes of Washington, will for the first time fall under the responsibility of a U.S. combat command.

If you simply add up figures on economic output, arms budgets, and conventional and strategic weaponry, then U.S. imperialism is the strongest power in world history, towering above its closest rivals on every front. But that’s a snapshot lifted out of time as well as political and economic context and direction of development. The course we’ve been describing here is that of an imperialist power that is weakening vis-à-vis its ability to stabilize a world in which the lives of hundreds of millions of restive toilers in semicolonial countries are marked by the increasing turmoil, want, and disease produced by the world capitalist system itself. An imperialist power less and less able to handle the political challenges it cannot but create, because it is a power that cannot stabilize the global capitalist economy, the effects of which keep coming down on workers and farmers worldwide. A power that must bear a disproportionate load in policing the planet for imperialism in one crisis of its own making after another, from the Balkans to every corner of the semicolonial world. One that has not achieved its goals in a single major war since 1945. One that now, after supposedly winning the Cold War “without firing a shot,” is no longer exempt from attacks on its home soil.

An imperialist power in its heyday is able to bend regimes to its will. To order “allies” to turn to. To crush resistance by toilers in the colonial world. It has the economic reserves to stabilize its international currency and state finances. That is not the situation of U.S. imperialism today, however, and has been less and less so since the mid-1970s. Instead, the moves we are witnessing are part of the decline of the world’s final empire, which today faces the political and military consequences of its imperialist course at the same time it is entering its greatest economic crisis since the 1930s.
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The highest stage of capitalism

Our movement will be better armed to respond to these political developments if we organize a winter school to read and study Lenin’s Imperialism, the Highest Stage of Capitalism. We can do this in the organized, intensive way we’ve studied Their Trotsky and Ours, The History of American Trotskyism, and The Changing Face of U.S. Politics during the socialist summer schools over the past several months. We structure these schools into the weekly rhythm of political work by party members, young socialists, and those around us who are seriously considering joining the movement, so we can share and conquer the same material together.

Lenin’s description and explanation of imperialism are a foundation stone for everything the communist movement has done for close to a century. And that continues to be the case.

Lenin focused on clarifying two questions:

First, he presented a concrete and detailed explanation of the more and more parasitic character of capital’s operations in the imperialist epoch.

Second, drawing out the practical implications of that analysis, he rejected the possibility of any form of “super-imperialism,” or “ultra-imperialism,” that could reduce the sharpening contradictions of capitalism, buffer conflicts among rival national ruling classes, soften class struggle, let alone foster world peace. Instead, Lenin insisted, imperialism opened an epoch of recurring crises, of imperialist wars, of civil wars, of wars for colonial domination, of struggles for national liberation, and of proletarian revolutions.

The imperialist stage of capitalism is marked by the increasing domination around the world of giant monopolies in industry, commerce, and banking. Drawing on what Marx had already explained in Capital, Lenin demonstrated that far from reducing competition, increasing monopolization makes the blind operations of rival private capitals more violent. And in the face of crises, the violence increasingly involves forces that are not purely economic—from private goon squads and local cops and sheriffs to, above all, the capitalist state and its cops, courts, and armed forces.

The merging of banking capital and industrial capital—“the creation, on the basis of this ‘finance capital,’ of a financial oligarchy,” as Lenin puts it—increases the parasitism of the bourgeoisie. Above all it increases their reliance on multiplying forms of debt in their ruthless competition among themselves to capture the largest shares of surplus value created the world over by the labor of workers and farmers, of miners and fishermen. The debtor-creditor relationship becomes increasingly central to the functioning of international capitalism, outstripping the earlier centrality of the relationship of buyer and seller. “This is the essence of imperialism and imperialist parasitism,” he writes.[4] Lenin would not have been surprised by the explosion over the past couple of decades of more and more forms of debt, more and more flavors of fictitious capital: not just traditional bank loans and bonds, but so-called derivatives, options, bundled mortgages and consumer debt, swaps, repos, the bond and gold carry trades, and others too numerous to list. He would not have been surprised by the increasing—and usually camouflaged and denied—state manipulation of the prices of currencies, debt, precious metals, commodities, and insurance, as well as the continuing deployment of various and more open trade barriers. All the above are manifestations of violent interimperialist and intercapitalist competition, as well as semicolonial exploitation, in the form of state conflict.

Finance capital divides, and redivides, the world in new ways. It reorganizes the colonial system—the super-exploitation of peasants and workers in “independent” countries across Asia, Africa, and Latin America—in new, “neocolonial” ways. It transforms the banking system and patterns of world trade and finance. It increases the enormity of debt and the leverage of worldwide speculation almost beyond imagination—and beyond control.

The division of the world described by Lenin between a handful of oppressor nations and the great majority of oppressed nations—between the imperialist powers and the colonial and semicolonial countries—will be fundamentally the same when Washington embarks on its next military adventure as it was in 1898 during the so-called Spanish-American War, when the U.S. rulers conquered Puerto Rico and the Philippines and put their boot on the neck of the Cuban people. And it will remain so as long as capitalism dominates the world.

If, as part of a study group, you read, discuss, and absorb Lenin’s Imperialism, you are better equipped to understand the problem with using the term “emerging,” as in, “emerging market countries.” You’re better equipped to understand why not one of these countries has ever “emerged” as an advanced capitalist power, or ever will. If what the crisis of 1997–98 revealed about the “Asian tigers”—South Korea, Taiwan, and a few others—wasn’t proof enough, then what’s been happening in Argentina over the past year and is unfolding in Brazil right now certainly should be.[5] With the exception of China, Brazil has the largest economy of any country in the colonial world, measured by gross domestic product. But with $264 billion in debt owed to U.S. and other banks such as Citigroup, J.P. Morgan Chase, and Fleet-Boston, Brazil remains as firmly lodged among the oppressed nations as it was twenty-five, fifty, or a hundred years ago. So is Argentina, which is also among the largest economies in the colonial world—and on a per capita basis, actually much wealthier than Brazil—and owes some $132 billion to banks and bondholders, largely in imperialist Europe, as well as Japan and the United States. The workers and peasants of Brazil and Argentina are not only directly exploited by domestic and foreign capitalists but also—through the agency of the national bourgeoisies in those countries—are held in debt bondage to international finance capital.

It is in rebellion against the social consequences of the highest stage of capitalism, of imperialism, Lenin pointed out, that resistance grows among workers and rural toilers both in the centers of finance capital themselves and in the oppressed nations. What’s more, as he described four years later at the Second Congress of the Communist International, capital’s penetration into more and more parts of the globe for the first time makes it possible for the workers movement to become truly international in its composition and its reach.[6] This is true even in the economically least developed parts of the world, Lenin noted. As fighters for national liberation recognized their common interests with the workers and peasants who had conquered power in Soviet Russia—as well as their common class enemies—prospects would grow for the development of leaderships that would fight for a popular revolutionary dictatorship, for governments based on soviets of the oppressed and exploited toilers. That had become a realistic world perspective. In recognizing this, the Comintern anticipated by more than half a century a Thomas Sankara of Burkina Faso, a Maurice Bishop of Grenada. In its own way, it anticipated a Malcolm X emerging toward revolutionary socialism from the proletarian ranks of the fighting Black nationality in the United States. And emerging as a leader of world stature and caliber.
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Ultra-imperialism?

We also need to discuss and absorb the second major aspect of Lenin’s Imperialism: the polemic against the assertion by German centrist leader Karl Kautsky of a trend toward the consolidation of what Kautsky called ultra-imperialism. This was not a “theory” or an “idea.” It was a rationalization for the political course that had led Kautsky and many other leaders of the Second International away from Marxism, in fact, and toward reconciliation with “their own” bourgeoisies—concretized as a horrible reality during the interimperialist slaughter of World War I and its aftermath. It was, and remains, a matter not just of the head but the gut, a matter of political backbone—that is, of class orientation.

Kautsky and other centrist leaders did not challenge the basic facts presented by Lenin about the growing domination of monopolies, of finance capital. Rather, they denied that these tendencies increased the violence of capitalism on a world scale and created the conditions for its overthrow by the toilers led by a proletarian vanguard. In fact, the centrists said, these trends fostered the conditions for the development of a stable order, based on a convergence of interests of the largest capitalist powers, that would transcend contradictions and conflicts and could lay the basis, over time, for peace on earth.

It’s only a short distance from such an “analysis,” Lenin said, to beginning to worship at the altar of finance capital and its seeming omnipotence. Centrists can be very critical of what they call “ultra-imperialism” and its greedy and downright mean actions. They can speak very harshly about it. They nonetheless ascribe powers to the capitalist world order that it does not have—embellish it with fetishes that make it appear more and more impregnable. Much of the talk we have heard the last few years about “globalization,” and about “transnational” institutions replacing national states, is simply a retread of the Kautskyist rationalizations Lenin ripped apart in Imperialism and elsewhere.

One or another variety of this notion became the banner under which the petty-bourgeois opposition in the Socialist Workers Party, on the eve of World War II, retreated from the working class and from proletarian internationalism under the pressures of the impending imperialist slaughter. Pick up In Defense of Marxism by Leon Trotsky, and The Struggle for a Proletarian Party by James P. Cannon, and read what these communist leaders had to say about the “theory” of bureaucratic collectivism during the 193940 fight with the opposition led by James Burnham and Max Shachtman. Together with Lenin’s Imperialism, these polemics by Trotsky and Cannon remain our historical benchmarks on these questions. As these renegades from Marxism recoiled from proletarian struggle, they often continued for quite some time writing about, complaining about, and pointing to shortcomings and moral evils of capitalism, its industry, and its agriculture—all the while building up the case that it was pointless for the working class to try to do anything about it—anything revolutionary, that is. Anything that can lead to a workers and farmers government, to the dictatorship of the proletariat.

Today, the self-avowed anarchist, Noam Chomsky, does the same thing. It’s why his radicalism is no threat to the powers that be. And why there is an anti-working-class toxin in his radical medicine, especially anti-working-class in the United States.

Every tendency toward the supposed dissolution of state boundaries of the great imperialist powers in our epoch has been, and remains, an illusion. The trade battles among these powers—which manifest themselves, among other forms, as credit and currency conflicts—cannot and will not be overcome. Each seeming success in stemming a crisis postpones and increases the magnitude next time around, sharpening the contradictions.
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Compete or die

Driven inexorably by the necessity to compete or die, capitalists, without exception, act pragmatically—on the basis that what has been happening will continue to happen. They seek to maximize profits by moving in directions that currently bring the highest returns. The more they inflate credit to shorten the turnaround time of capital in order to reap massive gains, the more successful any individual capitalist seems to be—the more they guarantee disaster when the inverted pyramid becomes shakier and shakier and the trends begin to play themselves out, and then to reverse. That’s when all the talk about “new economies,” the “end of cycles,” even “the end of history” turns to ashes in their mouths. It’s always “different this time.” Indeed. And always the same.

Today the propertied families of finance capital, and their hired circles of managers, politicians, technicians, academics, and professionals—the “cognitive elite”—are incapable of believing what’s happening to the mountains of paper values they’ve piled up over the past two decades. What worked so wonderfully well over those years for the well-heeled, what seemed like free money, has today inflated bubbles of debt that—as they overlap and reinforce one another, and before the contraction in stock prices has come anywhere close to running its long, full course—will bring down major banks, brokerage firms, insurance companies, pension and health trusts, and industrial and commercial corporations.

For the first time since the opening of the depression-ridden, war-ridden 1930s, all the evidence in the advanced capitalist countries points to the onset of something more than a deep, international recession such as those in 197475, 198081, or 199091. We’re seeing the symptoms of a debt-deflation deadness that only sluggishly responds to the monetary or fiscal prodding that accelerates an upturn in a normal trade cycle. In short, we’re in the opening stages of what will come to be recognized as a world depression.

Whenever overall profit rates are under pressure in these ways, each capitalist intensifies competition to corner the greatest possible share of the wealth, the surplus value, produced by the labor of workers and farmers. And it’s the biggest banks—Citibank, J.P. Morgan Chase, Bank of America, and a few others—that make the biggest loans. On bank ledgers these giant loans are listed as assets, since they guarantee a steady stream of interest payments, so long as the debtors are able to pay. But when bankruptcies and loan defaults begin piling up, then it’s also the biggest banks, insurance companies, and brokerages that will take the biggest hit. And when these institutions begin to crack—the ones rated by Wall Street agencies as the most “solid” and “reliable”—that’s when a financial catastrophe starts looming.

Let’s say, for example, that you or some other worker were allowed by a big company to lease a car for less than 1 percent interest. Not only that, the company also let you sell the car and use the money—so long as you agreed to return a car of comparable value when the lender calls in the loan. What’s more, if the price of cars started going up—and the lender became worried you couldn’t afford to buy one back to return—the leasing outfit would actually step in behind the scenes to hold down car prices on the market! So you could buy a car back for less than you sold a comparable one, return it to the leasing company, and walk off with a handsome profit. And the leasing company would get their car back, undriven, plus the 1 percent interest.

Quite a deal, isn’t it? But workers don’t have that option, of course. We’re members of the wrong class.

Giant banks do have such an option, however. And that’s how it has worked over the past decade, until it started not working so well a year or so ago. How is it done?

Central banks, which hold large quantities of gold, lend it to a handful of the largest commercial and investment banks and insurance companies for a nominal interest rate—usually around 1 percent. These financial institutions then turn around and either sell that gold and invest the cash in bonds, or lend it to someone else for a small fee. The world’s biggest banks then create a market in what are called gold derivatives—a highfalutin term for bets on the future direction of gold prices (their bet always is that prices will stagnate at worst)—and manipulate that market to help keep the price down. So, when it comes time to give back the gold to the lender, the borrowing institution buys it back at a lower price, pockets the difference, and returns the gold.

That’s wonderful for the “bullion bankers,” as they are called—so long as capitalism is in an upswing, stock prices are soaring, real interest rates are relatively high, and not too many well-endowed institutions or wealthy individuals around the world are interested in buying gold. But when all that begins to go into reverse, the demand for gold starts increasing and its price begins edging up. All those outstanding bets on a declining future price of gold—amounting to tens of billions of dollars—don’t look so good anymore. The derivatives become time bombs. The banks face a tightening squeeze. And they will fight to avoid the destabilizing consequences of violent swings not only in gold prices but also in all major commodities and the prices of major currencies in the imperialist world.

What’s more, those wagers on the price of gold are themselves only a small fraction of the overall outstanding bets—on the direction of interest rates, of the value of the dollar and other currencies, of the prices of stocks and commodities, and of many others. Worldwide, the nominal value of those bets—those derivatives—more than doubled between 1995 and 2001, to a total of about $120 trillion. And in the United States, 60 percent of derivatives are held by only five financial institutions, with J.P. Morgan Chase holding the largest share—some $25 trillion—followed by Bank of America and Citigroup.[7] So, as the direction of interest rates, the dollar, stocks, gold, and other commodities began rapidly shifting over the past two years, those long-term bets started getting shaky. It’s a bit as if the undisputed favorite had broken his leg halfway through the Kentucky Derby, when the bets are already down. So much for another “sure thing.”

It’s worth remembering that we know a certain amount about the credit risk of banks such as J.P. Morgan Chase and Citibank, since they are by law “commercial banks” that must file a substantial amount of information with the federal government for the public record. With large “investment banks” such as Goldman Sachs, Merrill Lynch, Deutsche Bank, or Credit Suisse First Boston, however, the debt load may well be much the same, even while public knowledge is much less.

In 1933, as part of the U.S. rulers’ efforts to stabilize and salvage the capitalist system during the Great depression, the U.S. Congress adopted a law called the Glass-Steagall Act. Under this reform, banks were supposed to separate out “commercial” banking—that is, holding checking and savings deposits, as well as issuing mortgages and business loans—from “investment” banking—that is, serving as a middleman for big corporations in peddling their stocks and bonds. Commercial banks are supposed to derive most of their profits from interest payments on business, home, and personal loans, backed up by the banks’ highly leveraged deposits. Investment banks, on the other hand, grow wealthy off the fees they make from brokering deals for big business, including their own participation in these deals. Under Glass-Steagall no institution was supposed to engage in both kinds of activity, which involve contradictory obligations and conflicts of interest. That was supposed to forestall bankers’ temptation to pour all the money at the bank’s disposal—including the checking accounts of workers and the middle class—into unsound loans to corporations they had a stake in (for example, Enron or WorldCom today), or into highly risky “financial products” (of which there are many, many more varieties at the opening of the twenty-first century than were dreamt of in 1933).

Over the years, banks found more and more ways to get around the Glass-Steagall restrictions. And in 1995—at the initiative of the Clinton administration and its Treasury Department head, the liberal Democrat bleeding-heart Wall Street bond-trader Robert Rubin—the act was repealed altogether. So the sluice gates were opened even wider.
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Debt pyramid begins wobbling

When the giant debt pyramid finally begins to tumble, some of the world’s largest financial institutions—banks, mutual funds, insurance companies, pension funds—will be on the losing end. The collapse and writing down of debt eventually fells those who are owed the money. The rolling collapse of a number of these massive entities can paralyze the functioning of international finance. And the “wisest” central bank in the world will stand helpless—at best—or else, in a panic, make the global crisis worse and more widespread.

It’s not complicated: whenever any of us hears about the gigantic derivative deals we’ve been discussing, we should always remember that there are two sides to such agreements, and when one side makes money, the other side loses—and sometimes a much bigger amount.

The “long” side—those betting on rising prices of a security or commodity, who’ve paid for the option to buy a certain amount for a certain price on a certain date—can lose everything they’ve “invested” if prices fall, but only that much; there’s a known limit beforehand.

Derivatives held by U.S. commerical banks

The risks are much greater, however, for those on the “short” side, who borrow massively from banks (“margin,” as it’s called on Wall Street) to cover their commitments to the other party in the transaction. If the bet starts going sour—if stock prices, interest rates, currencies, or commodities prices start moving in a direction opposite of that anticipated—then their losses can for all practical purposes be unlimited, as the banks begin calling in their loans (a “margin call”).

That type of “naked” or “uncovered” bet is part of the psychology of capital during a boom, when confidence becomes nearly absolute that it’s “a sure thing” the prices of most securities can only keep going up or that interest rates and the prices of most commodities (including gold and oil) can only keep going down. But when those rates and prices “unexpectedly” reverse direction, that leveraged pyramid of speculative debt—the piling up of loans at an ever-growing ratio to the underlying capital—begins to wobble. While they can, the banks extend massive lines of credit to help insurance companies, brokerage houses, hedge funds, pension schemes, mutual funds, heavily hedged gold producers, and other financial entities “trade their way out” of the crisis. At some point, however, these massive institutions begin defaulting on their loans, and in the worst-case scenario—one that has occurred more than once in history—they catastrophically start bringing down the banks themselves.

Household debt in the U.S.

When the stock market began declining in 2000, many of the financial publications and commentators initially tried to pass it off as nothing more than a volatile patch for technology stocks. “Don’t worry,” we were told. “Things will never get as rocky here as in Japan. Japan has a massive bubble in real estate and banking. In the United States it’s only in computers, dot-coms and their ilk.”

But that’s worse than wishful thinking. It’s true, of course, that the stock prices of many so-called hi-tech companies—the internet dot-coms, telecommunications outfits like WorldCom and Global Crossing, and many others—skyrocketed in the late 1990s to levels wildly out of whack with their assets, revenues, profits, or prospects. Many more computers and computer-related commodities were produced than were needed by businesses or could be sold at prices individuals and corporations could afford or were willing to pay. There was massive overcapacity that will take years and years of economic growth to unwind, as factories are shut down, equipment is scrapped, capital goods deteriorate, inventories are devalued—and prices keep going down. Less than 3 percent of the 39 million miles of fiber-optic cable laid in the United States over the past decade, for example, is currently even in use![8]

But it’s not the hi-tech mania, multiple bankruptcies, or massive accounting frauds such as WorldCom or Enron that lie at the root of the current capitalist crisis. These are merely diversionary symptoms of the giant debt bubble built up by finance capital over nearly two decades to counteract growing global overproduction and downward pressure on profit rates. World capitalism’s greatest vulnerability doesn’t have to do with what WorldCom or Enron is worth today. The debt bubble is centered in “old money” institutions and respectability. The real question is: What is Goldman Sachs worth? Or J.P. Morgan Chase? Or Citibank? What is the viability of the banks and financial institutions that issued the debt, even “capitalizing”—what Wall Street calls “securitizing”—all of your credit card debt? (Believe it, brothers and sisters! For them, your credit card debts are listed as an asset!) How sound are the institutions that stood behind all the forms of fictitious capital that allowed the owners of many companies to rake in profits from all over the world totally out of proportion to any lasting expansion of socially necessary productive capacity?

At the risk of oversimplifying, we could put it this way: When Microsoft stock goes down, some people in Washington State are sad. When Apple stock goes down, a different set of people in California are sad. When IBM stock goes down, some people in New York are sad. When Enron goes under, a lot of people in Texas are sad. And Ole Miss weeps for WorldCom. But when J.P. Morgan Chase stock heads south, it will be the leading families of U.S. finance capital who shudder.

That’s why world capitalism was shaken by the financial crisis in Asia and the debt-payment default in Russia in 199798. That’s why finance capital is worried right now about trying to make sure that Argentina and Brazil pay up on their giant debts to banks such as J.P. Morgan and Citibank. Morgan had to write off $350 million in bad loans in Argentina in 2001, and has more than $2 billion at risk in Brazil today.

The most misnamed institution in the world must have been “Long-Term Capital Management.” It was a giant U.S. hedge fund—sort of an exclusive unregulated mutual fund for the very rich. In 1998 LTCM went with a begging bowl to Federal Reserve Bank officials, saying it faced massive losses on its “investments”—actually derivatives gambles. (Try going yourself to knock on the Fed’s door and say you finally put everything you could beg, borrow, or steal on one too many sure things, and are in big trouble. See if they bail you out—or whether your nearest and dearest have to post bond.) LTCM had been dealing in bets on minute-by-minute moves of interest rates, currency rates, and perhaps gold—derivatives, once again—that had mounted up to some $1.25 trillion and turned sharply sour. So it couldn’t meet loan payments to many of the world’s largest banks. (That was the real rub, of course. Officials at the Fed couldn’t have cared less about LTCM.)

Just the previous year, by the way, two of the principal founders of “Long-Term Capital Management,” which quickly became Short-Term Speculative Plunging, had won the Nobel Prize in economics for developing a mathematical formula demonstrating how to minimize risk in derivatives markets! Looking back on the fund’s collapse, one of those prizewinners later remarked, “In a strict sense, there wasn’t any risk—if the world had behaved as it did in the past.” Brilliant! So much for mathematical “certainties”—and Nobel Prize winners! Dumber than a rock. And greedier than Scrooge McDuck.

The head of the Federal Reserve Bank of New York stepped in during September 1998 and organized some fifteen major banks and brokerage houses—mostly from Wall Street, but also from London and Paris—to put up $3.5 billion to bail out LTCM. Federal Reserve chairman Alan Greenspan later said he didn’t think it had been prudent for a branch of the U.S. central bank to have intervened quite so openly, but his own take on the situation could hardly have been too comforting to the capitalist class he serves. Greenspan said he thought the “probability that LTCM’s collapse would unravel the entire world financial system was significantly less than 50 per cent.” The entire world financial system! Just a few days ago, Greenspan told Congress that “an infectious greed seemed to grip much of our business community.” Hard to disagree with that, except for the qualifier “much,” and the past tense for “seems.” Contrary to Greenspan’s unctuous scolding, however, greed under capitalism is not a character flaw, much less an attitude alien to business. As a decades-long acolyte to Ayn Rand, the Federal Reserve chairman knows better. Greed is inherent to capitalist competition. Capitalism truly is a dog-eat-dog system, as Cuban president Fidel Castro often says. That is the engine of market relations. It is the foundation of the bourgeoisie’s values and the contempt for human solidarity they so blithely display. Their “family values” stop with America’s Sixty Families.

The bubble that hasn’t yet been touched in the United States is the housing bubble; it too will burst. It may not start with a collapse in real estate like that in Japan, where commercial property prices have dropped by more than 80 percent over the past decade and the cost of homes has fallen too, if less. But those of you who follow the local papers where you live know how home prices have shot up over the past half-decade or more. Part of the ballooning in paper values has involved home mortgages taken on by workers and the middle class—not so much to buy houses as to secure refinancing to go deeper into debt to meet other expenses. Since 1995 home prices have risen much faster—30 percent faster—than the rate of inflation, while equity in these homes—the percentage of its current market value that has actually been paid off to the bank or finance company—is at its lowest point since World War II.[9] Even a 10 percent drop in housing prices would wipe out well over a trillion dollars in assets corresponding to paper values of homes. There’s already a rise in bank foreclosures on families that can’t keep up with the payments.

What’s more, when home equity plummets, all the other debts facing workers and the middle class become all that more ruinous, since the ability to borrow against that home drops as well. Average personal household debt is already at record levels.[10]

The pricking of the housing bubble will have substantial consequences for the entire capitalist financial system. Banks and other lenders slice up mortgages they’ve issued, package them according to risk, and then sell them to big, government-backed financial institutions such as the Federal National Mortgage Association and Federal Home Loan Mortgage Corporation—popularly known by their “NASCAR names” Fannie Mae and Freddie Mac. Between them, they control about 40 percent of the home mortgage market—some $3 trillion in mortgages—so a collapse of the housing bubble is an additional threat hanging over the U.S. banking system.[11]

Fannie Mae and Freddie Mac are themselves big holders of risky interest-rate derivatives. And no one can say how risky! That’s not due to a lack of information, but due to the “short” character of so much of their derivative holdings—with potential losses, as noted earlier, that have no preestablished cap.[12]

The acceleration of the world capitalist crisis today is also bringing an intensification of economic conflict among the rival imperialist powers. These can result over time in catastrophic trade and currency wars, not just protectionist skirmishes of the kinds we’ve become increasingly accustomed to over the past quarter century. And just as it did at the very opening of the Great Depression in 1930, global trade could plummet rapidly, accelerating the devastation of production, employment, productivity, and wages not only in the United States but also worldwide.

Posturing as the champion of “free trade,” the U.S. imperialist government ravages the toilers of Africa, Latin America, and Asia by slapping both tariff and nontariff barriers of all kinds on textiles, shoes, and agricultural commodities such as sugar, cotton, fruits, vegetables, and others. Washington’s 2002 Farm Bill—a gigantic giveaway to capitalist farmers—is the latest dagger in the stomach of billions worldwide who barely get by on less than $2 a day. That comes on top of the tariffs on steel and timber imports also imposed by the U.S. government this year.

To the U.S. rulers, starvation across Africa is a small price to pay to boost the profits of a handful of bullion banks such as J.P. Morgan Chase and wealthy farmers and agricultural trading monopolies such as Cargill and Archer Daniels Midland. Certainly one of the most gratuitous acts of cruelty in recent memory has to have been the tour in May by U.S. treasury secretary Paul O’Neill and rock star Bono across sub-Saharan Africa. In a region whose already meager share in world trade has been slashed by two-thirds over the past twenty years by the workings of the laws of capital—to 2 percent—one of the top spokespersons for finance capital in the wealthiest country on earth traipsed across the continent saying how upset he was by the deaths from hunger, poisoned water, AIDS, and other infectious diseases, wagging his finger at the “corruption” and “mismanagement” of African governments. But O’Neill’s class is the architect of this devastation! It’s the architect of what is, in fact, mass murder!
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Imperialism is not a ‘policy’

Lenin said that one of Kautsky’s central illusions was that imperialism was “a policy, a definite policy ‘preferred’ by finance capital,”[13] rather than an inevitable product of the development at an initial stage of monopolization of the economic system that will be with us until capitalism is overthrown on a world scale. To this day, this pretense still serves to rationalize the course of centrist and other middle-class currents within the workers movement. They act as if a different administration—Wellstone or Gore, instead of Bush, a “third party,” a social-democratic-“valued” party—or even a different Senate, a different defense or treasury secretary, a different head of the Federal Reserve Bank would fundamentally alter the course of the imperialist state.

But neither the class structure nor the instability of the economic structure of imperialism, nor what drives it toward fascism and war, are policy matters. These are a product of the laws of motion of capital working along a constantly shifting historic curve of capitalist development. They are molded in concrete ways by the accelerating unevenness of the development of capitalist social relations in different parts of the world.

The development of giant monopolies at the end of the nineteenth century and opening of the twentieth didn’t diminish let alone eliminate competition, but instead raised it to a more violent level. All its consequences became more severe, including the world reach and depth of financial panics, economic depressions, and wars.

Lenin’s “theoretical” contribution to “economics” is one no bourgeois economist will admit to and that petty-bourgeois radicals recoil from. Lenin’s main point, more true today than when he wrote it eighty-five years ago, is that this monopoly stage of capitalism is one in which state-organized violence, imperialist wars, national rebellions, civil wars, and proletarian revolutions are just as much an inevitable, lawful consequence of that mode of production as business cycles, inflation, and depressions. All these social and political phenomena are built into the laws of capital in the imperialist epoch.

On the “purely” economic level, a big expansion of loans or bond issues by major banks and corporations, a temporary lowering of nominal interest rates, a big increase in government deficit spending, legislation of various sorts, even giant war spending—such policies may be able to postpone a crisis, but they cannot and will not prevent a crisis.

All the newly packaged and ever more leveraged forms of debt have made credit relations today even more explosive. New forms of insurance (that’s what derivatives were supposed to be when they were “invented”) are turned into new forms of gambling. The underlying relationship between the credit system and capitalist production explained by Marx in Capital has not changed. While credit greases the wheels during prosperity, Marx wrote, in a “period of overproduction and swindle, it strains the productive forces to the utmost, even beyond the capitalistic limits of the production process…. In a system of production, where the entire continuity of the reproduction process rests upon credit, a crisis must obviously occur—a tremendous rush for means of payment—when credit suddenly ceases and only cash payments”—that is, payments redeemable in gold—“have validity.”

And while “ignorant and mistaken” legislation and government policy “can intensify [such a] money crisis,” Marx adds, none of it “can eliminate a crisis.”

In a footnote to this passage in Capital, written a decade after Marx’s death, Frederick Engels, Marx’s closest collaborator, added a point that anticipates the evolution of capitalism in the 1980s and 1990s. “Thus every factor, which works against a repetition of the old crises,” Engels wrote, “carries within itself the germ of a far more powerful future crisis.”

Last year, in 2001, the Federal Reserve Bank lowered the short-term interest rate eleven times—from 6.5 percent, down to its current level of 1.75 percent, and they will drop it further. But the U.S. economy continues to weaken, and Greenspan and Co. know they can only take it down a little bit further. Most importantly, they are acutely aware that the central bank of Japan lowered short-term interest rates on the cost of funds to industry to virtually zero without sparking an economic turnaround. Already in the U.S. today, real short-term rates—once we account for inflation, that is—are not just low, they are negative!

Never forget, capitalists don’t borrow money because banks are offering low interest rates. Nor do banks offer low interest rates to encourage borrowers to put the funds to use. Businesses borrow money because they’re convinced they can do something with it to turn a profit. And bankers lend at a particular interest rate because they think that’s the best they can do and still cover the risk of not getting paid back. When the odds on defaults start rising, banks begin making fewer and fewer loans regardless of their liquidity, that is, regardless of the reserves they command. And when capitalists become convinced there’s no money to be made, they won’t take out a loan no matter how low the rates go. There comes a point, as bourgeois economists sometimes put it, when it’s like pushing on a string. The economy becomes a giant “liquidity trap” into which the central bank can keep pouring more and more money at lower rates, but the commercial bankers won’t lend it and corporations won’t borrow it.

There will be ups and downs in the long-term bear market the stock exchanges entered in mid-2000. At some point, however, there will be a panic, with massive selling that liquidates share prices to lows we find impossible today to imagine. Enormous quantities of paper values will be destroyed, with no seeming link to anything happening to actual facts of production and trade. Marx wrote in Capital that to the capitalist, “The production process appears simply as an unavoidable middle term, a necessary evil for the purpose of money-making.” That’s why, Engels explained in a note to this passage by Marx, “all nations characterized by the capitalist mode of production are periodically seized by fits of giddiness in which they try to accomplish the money-making without the mediation of the production process.”[14]

Such giddiness—which led to the stock and credit bubbles of the past two decades that are now contracting—is a manifestation of what Marx called commodity fetishism, the illusion that commodities and capital somehow have a social meaning in their own right, independent of the social labor that went into creating them, a life of their own, independent of the character of the social relations that determine their use. “In interest-bearing capital, the capital relationship reaches its most superficial and fetishized form,” Marx writes in Capital. Even in the case of giant trading companies, he says, profit “presents itself as the product of a social relation”—buying and selling—“not the product of a mere thing.” But in banking and finance, profit seems to appear “unmediated by the production and circulation processes…. The social relation is consummated in the relationship of a thing, of money, to itself.”[15]

Credit, paper money, stock prices—all these can lift off from underlying real values. Nobody knows the limits—except that they always become greater than we guess possible—until the “giddiness” turns to panic, as the entire structure starts crashing. When everyone rushes to the exit at the same time, no one gets out.

More than one hundred and fifty years ago, a book was published called Extraordinary Popular Delusions and the Madness of Crowds. It describes various manias and panics in the early history of capitalism—when tulips, for example, began selling for more than gold in the early 1600s—and the social and political chaos that ensued when those fictitious values collapsed. Marxists don’t deny “the madness of crowds” under capitalism. To the contrary, it is a necessary by-product of commodity fetishism. We simply insist that the “madness” we already have on Wall Street, and will see much more of, is not that of the average person, even the “average” investor. The majority of shares on stock markets in the United States are owned by so-called institutional investors—insurance companies, mutual funds, investment houses, pension and health funds, hedge funds, banks, and so on. What’s more, fully 90 percent of the transactions on stock and bond markets today are made by these institutions (up from just 10 percent as recently as the early 1970s); half of all such transactions are made by the fifty largest institutional investors.[16] In times like today, more of these outfits start going belly up. And more and more, the prices are held hostage to loans, futures, options, and other astronomically leveraged, sliced and diced, bets on the direction of motion of different aspects of the stock itself! In a real stock market panic, in fact, many thousands of mutual funds will go bankrupt, as will tens of thousands of pensions and medical funds.

Many smaller investors in the middle class, and even some better-off workers, hold on to their stock when it begins going down in the belief they can weather the storm and, if not, they can sell before things really start going bad. But that assumes someone wants to buy their stock at that point. When everyone panics, however, including those giant capitalist institutions, small investors can wake up one morning and find that there are days—many days—when there are no buyers at any price. That is when fear finally trumps the greed of the greediest, and the final collapse occurs.
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Sea change in working-class resistance

We’re in the very opening stages of what will be decades of economic, financial, and social convulsions and class battles. Insecurity will mount. At some stage, confidence in the capitalist order will begin to be shaken. And openness to radical solutions will grow—including “anti-imperialist” and “anticapitalist” solutions of the radical right, which will be attractive to layers of the ruined, bitter, or threatened middle classes. We’ll see the rotten fruit of the bourgeois politics of resentment and its pornographication. We’ll see the bloody fruit of the increasing political factionalization not only of the cops but of the officer corps and “intelligence professionals.”

Like most other workers, communists participating in this convention must internalize the fact that this world—the likes of which none of us have known before in our political lives—is not only the world that must be faced today, but the one we will be living and fighting in for some time. By acting on this reality today, we will not be caught short politically as wars erupt, deeper social crises explode, pogroms are organized and attempted, and union conflicts become life-and-death battles. The proletarian party that exists tomorrow can only grow out of the proletarian party we put together today.

The evidence before us is that the communist movement can strengthen itself politically if we stay the course that is described under the title “A Sea Change in Working-Class Politics,” the opening chapter of Capitalism’s World Disorder. Our progress in advancing along that road lays the basis for the cadres of our branches, organizing committees, and union fractions to reconquer the proletarian norms we hammered out during the opening years of our turn to the industrial working class and unions. It’s the course that we drew together as a handbook and published under the title The Changing Face of U.S. Politics. As the Socialist Workers Party has done throughout its history, we capture this kind of disciplined functioning in the term worker-bolshevik, “a political designation that originated in admiration among the fighting toilers of the October 1917 Russian Revolution and was used not infrequently by Lenin,” as the preface by Mary-Alice Waters to the 2002 edition of The Changing Face of U.S. Politics explains. When we talk about worker-bolsheviks, we’re talking about forging “a communist cadre whose integrity and discipline, organizational functioning, class training, milieu, and political habits are proletarian to the core.”

The kind of shift in resistance among working people such as we’ve been living through over the past half decade can initially be difficult to see. It’s impossible to see from outside the vanguard of the working class and labor movement. But we are not outside, and our movement did recognize it. Even more important, we responded, starting with the lines of labor resistance as they were given to us and with the communist parties we had. We adjusted our organizational forms to meet the new conditions. We began following those lines of resistance among workers and farmers. Instead of hunkering down in larger branch units in a few cities, we’ve extended our geographical spread and our political reach, deepening our integration among vanguard layers of labor who are resisting the brunt of the mounting assaults by the employing class. The comrades shouldering responsibility for this effort in party units across the United States have increasing weight in the leadership of the Socialist Workers Party.

The collective and cumulative political work of our branches and organizing committees is decisive to party building and recruitment. They are the basic units of a communist party. Their activity is combined with the trade union activity of our union fractions—among garment workers in UNITE, the United Food and Commercial Workers (UFCW), and the United Mine Workers (UMWA)—which function in a narrower arena of working-class politics than the branches and organizing committees. Together these are the instruments through which we are deepening our integration into what will be decades-long class battles from within a developing vanguard of workers who are using the space they have carved out on the job, in the labor movement, and through other forms of proletarian social resistance. We are transforming ourselves and our institutions in the process. We are attracting young people who not only are repelled by the evils of imperialism but much more importantly are drawn to the battles of workers and farmers. And, whether they initially understand it or not, attracted away from a radical, fighting right wing in the only way possible—through involvement in the working-class struggle. In this way, we are strengthening our collaboration with revolutionary-minded youth and others around the world.

In hawking our papers, periodicals, and books, communists are always testing the wide seas of the working class. That is, we are permanent practitioners of reaching out as broadly as possible to working people with our literature. That is the only way to carry out consistent, proletarian propaganda activity—to learn as well as to sell. A small revolutionary party is always ignorant of slowly changing trends in broad layers of the working class. It couldn’t be otherwise. When we’re systematically reaching out in our propaganda work, we sense these shifts a little earlier and have a better feel for them.

“Pissing in the wind” was the epithet applied to this political activity in the opening years of the 1950s by the Cochran faction that was preparing to split from the party, blaming the working class for their own decline. Some of you will remember the Cochranites from reading Jim Cannon’s Speeches to the Party. We took their epithet as a tribute rather than a smear. The working class is our milieu, not “the left,” not “radicals.” That is where we concentrate sales of the Militant, Perspectiva Mundial, and our books and pamphlets that orient readers toward the revolutionary course of the proletariat. We’re always working to extend our reach, to learn more, and to find fellow working people who are interested in arming themselves with a concrete analysis of the unfolding class struggle, as well as the lessons from a century and a half of struggles by the modern working-class movement.

This convention, and the meetings here yesterday of our union fractions, registered steps forward for the party in carrying out what we have called the third campaign for the turn. Since we launched that campaign four years ago at a conference in Pittsburgh, we have established fractions where we need to be—in sewing jobs in garment and in textile factories to build a UNITE fraction; in cut-and-kill operations of UFCW-organized packinghouses; and in UMWA-organized coal mines. We’ll continue helping comrades conquer—and improve—skills we need to get and hold such jobs. We’ll confront layoffs. We’ll transfer comrades. We’ll work to get into garment shops, meatpacking plants, and mines that haven’t hired us so far, mines that are ripe for organizing, and find others in new regions where we want to build fractions. Above all, however, we can now reap the fruits of this ongoing effort by using our fractions to engage in communist trade union work and carry out propaganda activity on the job and in the labor movement. We can concentrate on building politically strong units of the party in areas where we’ve established organizing committees, as well as in workers districts in many places where we have existing branches. We can continue working with comrades in Communist Leagues in other countries to deepen the convergence in this regard that has accelerated over the past year.

We can act more effectively as a nucleus of worker-bolsheviks who are cadres and leaders of a communist political organization. Branches and organizing committees are beginning to carry out systematic plant-gate sales again, boldly acting to involve comrades working in those plants so we can reach larger numbers of coworkers with our press, our candidates and socialist campaign literature, and our books and pamphlets. We’re making progress toward our norm that every fraction member takes part in a plant-gate sale at another factory or mine where comrades are working.
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Leveraging our political arsenal

These advances provide a foundation upon which we are restructuring the work of comrades assigned full time to editorial responsibilities preparing the books and pamphlets that make up our political arsenal and organizing to keep them in print. We’re simplifying the structure of our publishing operation, bringing it in line with the character of the party units we’ve been building, in order to place ourselves on the best possible footing to maintain the worldwide political leverage that our books give the communist movement. There are no more important weapons produced by the working class than the written record of the political lessons earned in sweat and blood and generalized from the struggles by labor and our allies over the past century and a half. The lessons contained in that record are the foundation of effective proletarian politics and a precondition to advances in strategic understanding and in Marxist theory. Without accurate and truthful history there is neither Marxist strategy nor theory. Both will wither away, supplanted by abstract counterfeits to rationalize the lives—and thus the political course—of the radical petty bourgeoisie and opportunist misleaders of the workers movement. The political curiosity and then hunger for these historic lessons of the working class will grow among workers and farmers, as well as among youth attracted to their struggles in this country and around the world. And no one other than the communist movement is either willing to do the work to keep making these lessons available or, more accurately, even interested in doing so—that is, feel they are necessary to its very existence.

Our movement not only keeps this basic communist arsenal in print but we keep adding to it. We publish the political analysis and orientation working people need today to build an effective revolutionary movement—books, pamphlets, and magazines such as The Changing Face of U.S. Politics, Capitalism’s World Disorder, Cuba and the Coming American Revolution, The Working Class and the Transformation of Learning, the issues of New International, and more. And we root our politics, piece by piece, in one hundred and fifty years of battles and lessons drawn from the toilers’ class-struggle and revolutionary resistance. In doing so, we are meeting an obligation, one that all of us—members and supporters alike—gain political satisfaction from working to accomplish. We will be able to sustain this effort, however, only if we can organize it in line with our movement’s current size, resources, and needs. That’s the precondition for the auxiliary organization of supporters we are building to gain the confidence to keep raising the bar and taking on new challenges in the production—and now increasingly the distribution—of these books and pamphlets.

It’s important to absorb the political leverage the communist movement gains from the effort we put into the prefaces and introductions we prepare for new books and new editions. One of the displays at the back of this conference hall, I believe, features a copy of a letter Mary-Alice [Waters] received about a week ago from Ramón Labañino Salazar, one of the five Cuban revolutionists being held under long sentences in federal prison here in the United States. He was convicted on frame-up charges of conspiring to act as an unregistered agent of a foreign power and carry out espionage, and sentenced to life imprisonment.

Ramón had received a package of books Mary-Alice sent him, including Playa Girón/Bay of Pigs: Washington’s First Military Defeat in the Americas by Fidel Castro and José Ramón Fernández. He wrote Mary-Alice saying how much he had enjoyed reading it, and called special attention to what he described as “a great virtue of the book” that he—as a Cuban revolutionist who already knew quite a bit about the defeat of the U.S. mercenary invasion at Playa Girón—“had never read in any other book on this subject.” The foreword we had prepared, Ramón said, gave him a feel for the first time of “the direct influence of the Cuban Revolution, its example and impact, on the people of the U.S., and on the education of the revolutionary left movement and the movement in solidarity with our country.” The foreword, he noted, recounted the impact among youth and others in the United States “first of the battle, then of the defeat of the mercenary force at Playa Girón.” In doing so, he concluded, it “shows us, once again, that our peoples are fraternal and invincible.”

That’s precisely one of the goals we’ve had in writing prefaces and introductions to translations of books by leaders of the Cuban Revolution and about the political lessons and example of that revolution. We add something that communists in this country know a great deal about—the U.S. class struggle, its real history, and how it is intertwined with revolutionary political developments around the world. We can explain what revolutionary-minded workers and young people in this country were doing at the time, what they were responding to, and the political consequences of their actions. The accurate political picture we draw of the contending class forces in the United States is always quite different—much richer, more complete and contradictory—from that others, including revolutionaries, have heard before.

These prefaces and introductions are even more necessary here—for workers, farmers, and youth in the United States. They underline the class reality that there is no “we” in the United States that includes both working people, and the propertied rulers and their government and political parties. Whether the reader is living here or abroad, it’s always a wonderful thing when they discover the truth that the U.S. rulers work hard to keep secret from workers here—that there is no such thing as a homogeneous, classless “United States.”

The cadres of the Socialist Workers Party live, work, and carry out politics among fellow workers. We understand the radical political divisions and deep social stratifications within our class. We know both the militancy and solidarity among workers in this country, as well as the low political level and absence of any living heritage of mass revolutionary class combat. We’re becoming more integrated into the stepped-up resistance by vanguard workers and farmers, and we know the openness we find among them to writings that offer a revolutionary perspective. We understand the attraction of radicalizing youth to this working-class resistance, and the ways it can lead them to the communist movement, to the Young Socialists, and toward the party—and open the door to winning them away from petty-bourgeois radicalism. For all these reasons, it’s too easy for us to take for granted the production, reproduction, and worldwide circulation of the written record of the fighting vanguard of our class and its anti-imperialist allies.

But we mustn’t do so, either in our political work here in the United States, or in our relations with revolutionists in other countries. Because these realities can be seen accurately, in all their richness, only through participation in the militant resistance of the working class, and even then can be understood and explained in clear class terms only by communists. Rectifying the false or distorted picture that is so often painted by various groupings on “the left” is a precondition for rebuilding a genuinely world communist movement. Workers, farmers, and youth around the world need to recognize the U.S. working class not as potential helpers of other people’s revolutions (at best), but as the social force that can and will lead a successful revolutionary struggle for workers power—state power—in the United States. That is the vantage point from which vanguard workers and farmers in this country draw political strength from the class struggle on a world scale, including that engaged in by the communist vanguard in Cuba.

This is not the starting point for most “friends” of the Cuban Revolution in the United States, to say the least. If ever they once gave lip service to such a perspective, it has been many moons since they were willing to act in a way that was consistent with it. They may “admire” the resoluteness of the Cubans they know. But they have no interest whatsoever in sharing a common condition with those who—as Enrique Carreras explains in Making History—get up each morning, kiss their loved ones good-bye, and then do what needs to be done, never knowing for sure whether or not they’ll get home again that night, or ever.

It is a tremendous conquest that today the substantial majority of the new books we publish come out, often almost simultaneously, in English and Spanish, and sometimes, soon, in French as well. Plus we’ve improved our use of the “universal language,” working-class Esperanto we might call it—the photo section. The pictures tell fellow workers a great deal about the book, whatever language they might speak, whatever political experience they may have had. They can see themselves and others like them in those photographs.

Many of the delegates and observers at this convention have read the reports in the Militant and Perspectiva Mundial about recent trips comrades have taken to Paraguay, Argentina, and Venezuela to report for our press and collaborate with militant workers, women, and youth in those countries. We don’t just bring with us newspapers, magazines, and books that provide a communist view of the world class struggle. This literature is produced and distributed by us, by cadres of a workers party, often in the midst of action, not literary repose. That combination makes a political impact.

When the reporting team visited an occupied garment factory in Argentina a few weeks ago, for example, the workers there were, of course, happy to receive some solidarity and coverage from supporters of an English-language newspaper and Spanish-language monthly based in New York. And they were pleased to get hold of some books, pamphlets, and papers that could help them situate their fight in a broader world political context. But they were also surprised, very pleasantly so, that one of those bringing them this solidarity and these valuable written materials was a garment worker from the United States who operated a sewing machine exactly like the one they used and could explain things about wages, the pace of speed-up, and other conditions on the job that were utterly familiar to these Argentine workers. This is the process of workers everywhere beginning to see ourselves as part of a world working class—one that doesn’t recognize just the “familiars” of our common exploitation, but also the possibility of a class politically fighting for itself and for a future for humanity.
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Boldness and simplification

Later in the convention we will discuss and vote on a report presented by Mary-Alice that we called “Boldness and Simplification.” Those twin challenges—both boldness and simplification—are decisive right now. Because we must continue advancing in the production and sales of books and pamphlets increasingly demanded by workers and youth, while we simultaneously lead a retreat from aspects of our publishing operations that are outsized, that are outmoded technologically and in relation to our size and skill possibilities, and thus have become an obstacle to accomplishing our political goals. Thanks to the “digital revolution” in printing and publishing, we can now radically simplify our apparatuses, including our publishing apparatus, at the same time we organize to use our books and pamphlets with greater political boldness.

At the same conference in Pittsburgh four years ago where we launched the third campaign for the turn, Peggy Brundy, a member of the steering committee of the newly constituted Reprint Project, made the first public presentation of the international effort by supporters of the communist movement to organize the scanning, formatting, and reconstruction of the graphics, photographs, and covers for each of our then-existing 350-some titles. By the fall of 2000 party supporters had already taken on not only the initial digital preparation of all those titles, but the work of correcting and updating the electronic files for each subsequent reprint, as well. They also began formatting and proofreading all new books, as well as organizing quality control on graphics, covers, and photographs of both reprints and new books. This international effort made it possible for us to establish a labor-saving digital workflow and to substantially reduce the size of the shop where the books and pamphlets are printed.

At this party convention, we are registering a number of new steps forward along this course:

The first week in September, party supporters in Atlanta will be taking on the day-to-day organizing of warehousing and maintaining our book inventory, doing credit checks and filling orders, maintaining our Web site, convincing customers to order online, packing and shipping the books, billing and collecting on those bills, and helping customers with glitches.

Beginning this month, the steering committee that oversees what has become known, because of its history, as the Reprint Project—even though it already involves much more than that name denotes—will start supervising the work of supporters in upgrading the promotion of books and organizing the systematic and sustained work necessary to expand accounts with bookstores and libraries that carry our titles in the United States and around the world.

The party branches in New York City have taken on the weekly effort to mail the bundles and the subscriptions of the Militant, as well as the monthly Perspectiva Mundial. This is another step in the simplification of our publishing efforts that has made it possible to reduce to eight the number of party members volunteering full time in the printshop, down from some forty-five prior to the Pittsburgh conference in mid-1998.[17]

In a letter to a supporter that we published for our entire movement in 2000, I pointed to the longer-term significance of what they and the cadres assigned to the party’s publishing operation are accomplishing:

In addition to meeting the goals of putting in digital form every book, pamphlet, and education bulletin produced by our movement, a much bigger accomplishment is being prepared. Together with the shop, the supporters are helping put in place, for the first time in history, an irreplaceable, Web-based infrastructure of digital propaganda production, decentralized so that no matter what financial, security, or other conditions may confront the communist party in the decades ahead, the program and legacy of the modern revolutionary workers movement can be prepared outside any physical “brick and mortar” apparatus and then printed on presses wherever they can be found and whenever they can be paid for. What the Bolsheviks would have given for that!

As we’ve explained many times, the supporters movement is an auxiliary organization not of any particular local branch but of the Socialist Workers Party (or of one of our sister communist leagues in other countries). The relationship of supporters to the party is a political one, based on their agreement with and attraction to our international program, our strategy and course of conduct in the class struggle, and the activity of party cadres in advancing that proletarian orientation. As John Benson put it, succinctly and accurately, a couple of years ago, “A supporter is someone who sees their political activity through the eyes of the party, not as an independent political activist. A supporter sees the party as essential—as their vehicle for carrying out politics.”

The advances we’re registering at this convention now make possible the next step in the simplification of our structure and the transformation of the organization of our work: to move the party full-timers on the periodicals staff and national office to a central Manhattan location that they can share with a workers district branch in New York City. We can begin organizing the party’s national center and the editorial offices of the Militant and Perspectiva Mundial into a headquarters of the size and character we need. It will be a center whose physical layout is built around a workers’ hall featuring a weekly Militant Labor Forum, a hall that the New York Headquarters branch of the party can afford, maintain, and use to advance the party. Having the cadres assigned to these national responsibilities operating out of a common headquarters with a workers district branch that most of them are members of and are helping to lead will mark an advance both in building a proletarian organization in New York and in meeting the party’s national and international responsibilities. We will start looking like who we are. What you see is what you get.[18]

We are closing in on a historic accomplishment that every party member, Young Socialist, and supporter of the communist movement, here and around the world, has had a hand in realizing over the four years since we set out on this course, together with the third campaign for the turn, at the Pittsburgh conference.
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A cadre of worker-bolsheviks

At the close of this convention, the delegates will elect the National Committee, the most authoritative component of the party leadership. Equipped with this picture of the world we’ve entered and our movement’s tasks, it’s useful to say a few words about what we’re looking for in electing a leadership of the party, since this is also what we’re looking for in the cadre of the party as a whole.

I was asked to speak at a meeting in St. Paul, Minnesota, a little over a week ago to celebrate the sixty-five years of communist political activity of Charlie Scheer, a friend and a charter member of the Socialist Workers Party who died last month. At that meeting, we discussed what it is that makes somebody a communist. How do we explain what leads a person to make this lifelong decision?

There is no such thing as a “communist type.” If we recognize that fact, it makes recruitment a lot easier. There is a glorious variety of “types,” alas all manufactured in the bourgeois world, who find their way to the communist movement. Those who can and do become deeply political people are not shaped by a cookie cutter, let alone a common cookie cutter. What communists share is not our personalities, our genetic backgrounds, our range of interests, and so on. In fact, communists are more uneasy than anybody with “social engineers” who try to homogenize, “improve,” and channel working people—whether of the Hillary Clinton bourgeois liberal flavor, the Swedish social-democratic variety, the Stalinist thug-love type, or the Ashcroftian “do-it-the-Jesus-way” cops. We’re deadly enemies of the concept of the perfectibility of humanity. We know the reactionary consequences of such notions, from Hitler’s Germany, to Mao Zedong’s Cultural Revolution, to Pol Pot’s Kampuchea, to Gerry Healy’s Workers Revolutionary Party. These are the notions of middle-class intellectuals and bureaucrats and their goons, not revolutionary-minded workers. We don’t trust people who peddle such notions, whether bureaucrats, saviors, or saviors on their way to becoming savior-bureaucrats.

What we do trust is the power of political people working together, as an organized part of the proletarian vanguard, with neither capital nor coercion to bind us. Proletarian revolutionists work together by conviction, not by force. We do so as we discover that is the only way possible for workers to put together a combat party—a political instrument able to withstand the most difficult pressures, embrace new challenges, and carry out its revolutionary tasks. We operate together on the basis of politics and mutual respect, not authority, and that’s a very different thing. We are confident in our class. Our confidence is born of experience—becoming citizens of time, of the world, of history. “We are heirs of the world’s revolutions,” as Thomas Sankara so eloquently explained it.[19]

We don’t have “faith” in socialism. We have no revelations. We impose no bright ideas. We don’t create a new world out of our heads. In practice, we advance the line of march of the working class as it unfolds through complex and permanent class struggle toward the dictatorship of the proletariat. In practice, we transform the conditions that shape our lives, and are in turn transformed by that struggle. And we do it all voluntarily.

As we gain more experience in the communist movement, we don’t change our personalities, our “type.” We do, however, strive to develop proletarian habits. We come to understand better the centrality of human solidarity to the line of march of the working class. How alien solidarity is to the social relations of capitalist society—to all the norms, values, attitudes, and fetishes it creates. Above all, the employers depend on a workforce that lacks confidence in the working class itself and in each other.

Communists are not “determinists,” contrary to what most of us are told before joining the movement. “Men make their own history,” Marx taught us in The Eighteenth Brumaire of Louis Bonaparte, “but they do not make it just as they please; they do not make it under circumstances chosen by themselves.”[20] We’re believers in the reality of chance, in the interplay of causality and accident, even in luck (although we try to affect the odds). What is luck? Luck is being ready. That’s what the communist movement organizes to do. We build a disciplined proletarian party, so we’re politically prepared to respond to openings for intensified class combat and revolutionary activity when they rapidly or unexpectedly occur. Jim Cannon was fond of saying: if you live right, you get some breaks.[21] Be ready.

We don’t pretend to predict the twists and turns through which the working class will march. No one can chart both direction and timing; both what and when. We carefully and honestly analyze the logic of the class struggle, as well as the concrete channels through which the current course of capitalist development is flowing and the lines of resistance among workers and farmers to stepped-up assaults by the exploiters. We organize and act in a centralized way on the basis of those judgments, weighing those facts, discussing them together with those militants.

Charlie Scheer and Helen Scheer, also a longtime party cadre who died a few years before Charlie, were companions for fifty years. Each of them was quite a different “type.” At the same time, each was a communist, each was a worker, and each was a very political person. When Charlie or Helen wrote you a letter about one or another thing, their letters would be very different in tone and style. But almost without exception, somewhere toward the end of the note each of them would throw in the sentence: “What are you reading?” And they expected an answer. Each would have been an active participant in the socialist summer schools we just completed, and an enthusiastic partisan of organizing a school to dig into Lenin’s Imperialism in the same serious and systematic way.

Communists live in the present, not in the future. We do so in practice, as well as “in our heads.” To us, nothing is more alien than the notion of a utopia. Real utopians are dangerous, ultimately antihuman people. They have a “plan,” a “vision,” a “blueprint” for the society of the future, and they move toward imposing it on others. See the light? Whack! Now see the light? The modern revolutionary workers movement was in fact born in breaking with all the early petty-bourgeois utopian socialist movements.

Communists, by contrast, understand the present; we understand it not as a clump of episodes but as part of history. The Minneapolis Star-Tribune ran an obituary article about Charlie that said he “was convinced that in the long-haul his views would prevail.” But if you knew Charlie, you know that he—like every communist, like every revolutionary—didn’t do what he did with his life out of faith that his “views” would someday prevail. To the contrary, Charlie knew that our program prevails every day. It guides us to effective communist action, action that maximizes the fruits of our joint efforts. Communists weave a web of class-struggle experience over generations, so that everything that happens in the present, and everything we do about it, is informed by the sweep of history.

Another newspaper article about Charlie commented on the big library, the many filled bookshelves he had had, calling him a “worker intellectual.” But that writer got Charlie wrong, too. (A little projection can be a dangerous thing.) Communists like Charlie know that worker-bolsheviks are better informed, and better equipped to make political judgments and decisions, than so-called “worker-intellectuals.” Worker-bolsheviks internalize what they’ve read, along with what they’ve learned with others in class-struggle experience. They enjoy reading and studying together with others fighting for common goals. They read more, not less, as the pace of the class struggle and political activity picks up. They are convinced that centralized revolutionary activity, as cadres of a revolutionary party to whose discipline they gladly submit, opens the road to a fulfilling life’s work. That’s what it means to be political.
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Setting a revolutionary example

In the months and years ahead, communist workers and youth will come to appreciate more and more the benefits of the fact that an upturn in resistance among our class and its allies—both here and in many other parts of the world—began before the harshest initial shocks of the period of depression and wars we’ve now entered. We’ll understand more concretely the importance of the political space workers carve out in struggle, and the stakes involved in using that space if it’s not to be lost. We’ll see more examples of how experience gained from any single battle—even battles that end in a stalemate with the class enemy, or a temporary setback—doesn’t just dissipate; how individual workers absorb lessons and a little later turn up again, either on that same battlefront or another one. How they don’t forget militants, organizations, or newspapers they learn through experience can be trusted for their proletarian integrity and for being in the front ranks of a just battle.

One of the most important political contributions our movement makes through our propaganda work today—in the Militant, in Perspectiva Mundial, in the books and pamphlets we choose to print—is pointing to the magnificent examples of toilers who stand tall and fight without fear, who display contempt for the rulers and are confident of victory. We shine a spotlight on the more than forty-year record of Cuba’s working people and their revolutionary leadership being ready for whatever comes along that threatens their sovereignty and their socialist revolution. That intransigent revolutionary attitude is captured in the words of Fidel Castro and Osvaldo Dorticós in a statement that closes Pathfinder’s forthcoming book, October 1962: The ‘Missile’ Crisis as Seen from Cuba. Responding to renewed provocations by the new Democratic administration toward the end of that crisis in late November 1962, the two Cuban leaders spoke for the big majority of Cuban toilers in saying: “We have as little faith in President Kennedy’s words as we have fear of his veiled threats.”

We glory in the combativity and resilience of the Palestinians. On the cover of one of its booklets, Pathfinder proudly displays a photograph of determined young Palestinians against the background of the slogan emblazoned on a wall: “We fight Israel because it occupies our land!”

This determination to fight, this absence of cowering fear, this class hatred for the oppressors and exploiters, is the necessary stuff that precedes any renewed international revolutionary movement. As we integrate ourselves in the fight of militants imbued with this spirit both here in the United States and the world over, our movement has the capacity to simultaneously discuss a communist political perspective rooted in the experience and lessons of more than one hundred and fifty years of revolutionary struggle.

With the irreversible disintegration of the world Stalinist movement, the obstacles within the workers movement to talking with revolutionary-minded workers, farmers, and youth—and getting communist literature into their hands—are smaller than at any time since the closing years of the 1920s. They’ll be attracted to the revolutionary political fiber of worker-bolsheviks like Charlie Scheer.

Charlie was already living in a nursing home when the September 11 attacks took place, and his health had declined to the point that he sometimes had a difficult time following things. His son Bill sat down with Charlie that day and began telling him about the attack on the World Trade Center in New York. Charlie seemed to be listening, to understand, but he didn’t respond. Then Bill added that another plane had smashed into the Pentagon.

At that point, Charlie turned his head, looked straight at Bill, smiled, and said in a very loud voice, so he could be heard by all his fellow patients, “That’s good, isn’t it!”
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Convention summary

It is important to be concrete about where we find ourselves today along the long-term curve of capitalist development worldwide, as well as in class politics in the United States. Otherwise, we will speak in formulas, instead of presenting a sharp, clear analysis, a communist program. We won’t be able to accurately explain what we need to do now to build a proletarian party in this country. This dialectic between the international program and national terrain of communists’ march toward state power applies to party building everywhere in the world. But nowhere are the consequences of failing to act on that class reality more damaging to revolutionary prospects and proletarian integrity than in the strongest bastion of world imperialism, the U.S.A.

In the closing paragraphs of the draft political report before this convention, we address this question directly. Thinking and acting along proletarian internationalist lines, we say, is and will remain not only a special responsibility but a special challenge for revolutionists who live and work in the United States:

[We] carry out our political activity not only in the wealthiest country on earth, but in one that has not experienced war on its own soil since 1865. It is a country in which there have been bloody class battles and proletarian social movements, but there has never been a revolutionary situation or workers’ insurrection. It is a country that has seen genocidal treatment of native populations and organized murderous violence over decades by reactionary outfits such as the Ku Klux Klan, as well as systematic brutality by cops, National Guardsmen, and employer goons—but has experienced only limited combat in the streets and on the picket lines between fascist gangs and defense guards of labor and the oppressed.[22]

Along the road to a revolutionary situation, the working class in the United States, together with its broad political vanguard, will go through all these combat experiences. Each of them will take concrete forms, not identical to what has happened anywhere else or ever before in history. There will be unique combinations. Certain stages of class politics will be truncated and combined, others extended. Some will be accelerated, “with a truly American speed,” to use Trotsky’s phrase.[23] But communist workers in the United States will experience all these forms of political struggle before the revolutionary battle for power is posed.

The working class in this country will face efforts by the capitalist rulers, their government, and ultrarightist forces to smash the labor movement. Bonapartist regimes, whether installed with electoral cover or through open military coups, will use the power of the imperialist state and heightened levels of demagogy against organizations of workers and farmers. In order to maintain capitalist rule, the propertied families of the bourgeoisie will accept methods they themselves fear and seek to avoid in more tranquil times. They will promote the rise of fascist demagogues and movements, including their most virulent form: national socialist organizations that seek a mass base among the insecure middle classes and layers of demoralized workers by combining radical, anticapitalist verbiage with appeals to the most reactionary—and deadly—nationalist, racist, anti-Semitic, and antiwoman prejudices and superstitions.

In Capitalism’s World Disorder we deal quite a bit with what the working class has learned over the past century about fascism and how to fight it, including the various forms we’ve just noted, as well as the ways they can and will manifest themselves in the class struggle in the United States. We note what veteran SWP leader Farrell Dobbs often said: if anybody thinks that as class battles heat up in the United States we are not going to see all these forms of reaction, “then they are dead wrong and will never build a revolutionary workers party in this country. We will see every one of those [ruling-class] alternatives tried”—from a repressive state, to military regimes, to efforts by radical anticapitalist, fascist mass movements to save capitalist rule.[24]

This underlines why it’s so important that communist workers gauge concretely and accurately where we are in the development of the class struggle. I raise this because during the convention discussion yesterday a delegate proposed that, together with Imperialism, The Highest Stage of Capitalism, we put at the center of the winter school a number of Lenin’s other political works from the same period. But that would get us off track politically. Our reason for choosing this topic has nothing to do with any similarity between the political conditions we currently face, and those Lenin was preparing the cadres of the Bolshevik Party to confront when he wrote Imperialism in the first half of 1916, in the midst of World War I.

At roughly the same time Lenin was completing Imperialism, he wrote that “[r]evolution was on the order of the day in the 1914–16 period”—not just in Russia but in Germany and elsewhere in Europe. It was “hidden in the depths of the war, was emerging out of the war. This should have been ‘proclaimed’ in the name of the revolutionary class, and its programme should have been fearlessly and fully announced; socialism is impossible in time of war without civil war against the arch-reactionary, criminal bourgeoisie, which condemns the people to untold disaster.”[25] The Bolsheviks placed front and center the perspective of turning the war the imperialists were dragooning the workers and peasants to fight into a civil war to overthrow the propertied classes.

It’s important to read and discuss these political writings, of course. We did so during the intensive study of Lenin our movement organized in the early 1980s, for example, and we’ll do so in times to come. But Lenin did not derive the analysis of the highest stage of capitalism he presented in Imperialism from the conjuncture the toilers were living through, as important as he considered those political questions—and he considered nothing more important at the time, since those were the questions of revolution versus counterrevolution.

What Lenin presented in Imperialism was based on an objective analysis of the structure and evolution of the world capitalist economy over several decades. “I trust that this pamphlet will help the reader to understand the fundamental economic question, that of the economic essence of imperialism,” he wrote in April 1917 at the conclusion of his preface to the first edition, “for unless this is studied, it will be impossible to understand and appraise modern war and modern politics.”[26]

What members of the Socialist Workers Party, the Young Socialists, and our contacts need to study right now is not the period during which Lenin wrote Imperialism—a period when the party he was leading already had somewhere over twenty thousand members and was within a little more than a year of taking power. Those are nothing like the political conditions we are functioning in today, either in the United States or anywhere else.

Instead, we need to challenge ourselves to read and study Imperialism in order to understand and explain to others why Lenin’s presentation of the tendencies inherent in the world system of capitalist exploitation and oppression still holds in its fundamentals today—regardless of the very different conditions, the different stage, prevailing in world politics in 191617 from those in the opening years of the twenty-first century. The enormous international expansion and spread of the market system since Imperialism was first written; the ongoing transformations in techniques of production and circulation; the Stalinist counterrevolution that betrayed the Soviet workers state and destroyed the Communist International as a revolutionary instrument; the rise of fascism and a second world war; the victories for national liberation movements across the Caribbean, Africa, the Middle East, Asia, and the Pacific; the revolutionary overturn of capitalist property relations in Yugoslavia, China, Korea, Vietnam, and Cuba; the worldwide flood of American fiat money as the first international reserve currency redeemable in neither gold nor silver; and countless other momentous developments. All these are concrete manifestations of the stage of capitalism explained in Imperialism; all exacerbate the tensions that Lenin’s analysis underscores.

We will read Imperialism today for the same reasons Lenin explained in April 1917: “for unless this is studied, it will be impossible to understand and appraise modern war and modern politics.” The central contradictions of imperialism will not be outgrown. That system will either be overthrown, or it will create a hell on earth. Don’t get used to it. Get used to facing and fighting it.
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Rulers not ‘running with 9/11’

A couple of delegates made remarks to the effect that the U.S. rulers, as they press forward their war drive and assaults on workers’ rights, are still “running with September 11.” That they’re still fighting with “9/11” inscribed on their banners.

That’s not the case; the assessment we’re placing before the convention is a different one. Since the opening months of 2002, the events of last September 11 have had less to do with the rulers’ pretexts for their policies and stated goals. The rulers are not rationalizing these policies—whether ditching the Anti-Ballistic Missile Treaty, preparing an assault against Iraq, setting up the Northern (“homeland defense”) Command, rejecting the International Criminal Court, or chipping away at habeas corpus rights—primarily, or sometimes even at all, by harking back to the World Trade Center attacks. That’s less and less the focus of their “global war on terrorism.” It’s more of a periodic patriotic rallying yelp—one part sentiment, two parts imperialist nationalism, all parts demagogy.

Instead, they say that “we”—a “we” that encompasses British prime minister Tony Blair and other imperialist allies of Washington—must go after the “axis of evil” and stop “them” while “we” still can. Bush’s assertion in his State of the Union address to Congress at the end of January 2002 that Iraq, Iran, and north Korea constitute three points along an “axis of evil” was not a continuation of the 9/11 demagogy from last fall. In fact, the “axis of evil” speech marked a break from using “9/11” to rationalize Washington’s imperialist course. Why has Osama Bin Laden faded in the U.S. rulers’ propaganda? Why the downgrading of attention to Afghanistan?

First, as we said in the report, Washington has shifted to naming and preparing to go after the countries that have demonstrated they can build the defensive military capacity to deal devastating blows in response to assaults by U.S. imperialism: Iraq, Iran, and north Korea. That’s independent of whether they do in fact possess that capacity today. Washington is not limiting the rationalizations for its current preparations for a war against Iraq to the necessity of stopping further terrorist acts. It is organizing a classical imperialist war to tighten its domination over that region—and its oil—and to strengthen its military force posture vis-à-vis its imperialist rivals.

The rulers recognize that they can’t wait for “another 9/11,” which they have no way of predicting. It could be a long wait. And we don’t need any conspiracy theories that they’re planning one themselves. The U.S. rulers very much need what they failed to get during their assault on Afghanistan: a self-feeding surge of patriotism in response to the blood of U.S. soldiers shed on the battlefield of war. They need that to put the initiative in their hands. To put the patriotic mobilizations under their control. That’s what they’re after. And they have the illusion they can fire an initial, quick salvo in the Middle East in order to better prepare a long struggle on a world scale.

Simultaneously, the U.S. government is moving to institutionalize the option of using federal forces at home, under a centralized military command, sometime in the future. This goes hand in hand with stepped-up probes today to legitimize the option of using “preventive” detentions with no charges (and even without the right to see a lawyer), secret courts, and increased wiretapping and other forms of spying and harassment. While there are divisions within the ruling class over how far and how fast to go, and while they will have to retreat on one or another aspect of their course, there is backing on both sides of the aisle in Congress for laying the groundwork to allow any administration to move in this direction, at its discretion.

The Homeland Security Act is getting coverage in the bourgeois press right now. And what will anchor even Homeland Security, as we noted in the opening report, is the Pentagon’s Northern Command that will stand up in October, aimed at further legitimizing, in extremis, the use of U.S. military forces against working people in the United States—in all of North America!—with the U.S. military as the force of last resort when it’s decided that rapidly putting down civil disorder is needed to prevent “terrorists” from taking advantage of “openings.”
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Curve of capitalist development

The underlying contradictions of world capitalism pushing toward depression and war did not begin on September 11, 2001. Some were accelerated by those events, but all have their roots in the downward turn in the curve of capitalist development a quarter century ago, followed by the interrelated weakening and then collapse of the Stalinist apparatuses in the Soviet Union and across Eastern and Central Europe at the opening of the 1990s. We have followed these trends over that entire period: in The Changing Face of U.S. Politics, in feature articles in several issues of New International magazine—“What the 1987 Stock Market Crash Foretold,” “The Opening Guns of World War III,” “Imperialism’s March toward Fascism and War,” and “U.S. Imperialism Has Lost the Cold War”—in Capitalism’s World Disorder, and in Cuba and the Coming American Revolution.

It’s useful now to go back to Capitalism’s World Disorder and reread “So Far From God, So Close to Orange County: The Deflationary Drag of Finance Capital,” a talk given to a regional socialist conference in Los Angeles at the opening of 1995. The rudiments of the unexpected and violent credit contraction we are threatened with once again today could be seen in late 1994 in the collapse of the Mexican peso and in the bond default—chosen in preference to raising taxes—by the government of a wealthy county in southern California. We said at the time:

With returns on investments in capacity-expanding plant and equipment under pressure since the mid-1970s, owners of capital have not only been cost cutting; the holders of paper have been borrowing larger and larger amounts to buy and sell various forms of paper securities at a profit. They blew up a giant balloon of debt in Orange County over a period of years [betting that interest rates would surely continue to go down in the early ’90s. This was a nearly metaphysical “insight” only greedy county administrators and Merrill Lynch bond salesmen were given by God; going massively short and uncovered was protected by the alignment of the stars!] The bondholders thought they had died and gone to heaven…. When the balloon international bankers had inflated in Mexico in the 1980s began to collapse, the bondholders stepped in and blew it back up for a while. But in Orange County, the more local officials borrowed to make a killing using public funds to gamble [in collusion with] bond merchants, the greater their vulnerability became….

Now the capitalists and their public representatives —and not just in Mexico or Orange County—have been given another warning of the long-run possibilities of an uncontrollable deflation. Over the past couple of decades, upturns in the business cycle have relied on floating large amounts of fictitious capital—ballooning debt and other paper values. The capitalists are now paying the piper for the lack of sufficient economic growth during that period to keep rolling over the loans.[27]

The capitalists pushed off the crisis for another half decade after the mid-1990s by inventing and inflating more credit instruments and paper assets. The stock market, as measured by the Dow Jones Industrial Average and the S&P 500, more than tripled. Corporate borrowing more than quadrupled in the United States over that five-year period—not to expand productive capacity, but often to buy back their own bloated shares, bloat them further, and sit on what more and more becomes a cash hoard.[28] Between 1995 and 2000 in the United States, corporations were the biggest net buyers of shares—often the bloated stocks of the very same corporations that had issued them. And we’ve already discussed the explosion in Wall Street leveraging of casino chips called derivatives.

That’s why, at this early stage in the onset of a world depression, we need to keep our eyes on the unfolding financial crisis of the bourgeoisie. We need to keep our eyes on the growing imbalances in state finances, incipient currency runs, the threat of capital controls, the deflationary ogre lurking behind every rise in interest rates, the increasing monetization of precious metals and the additional pressures this brings to bear on the relative strength of rival “international reserve currencies.” In the history of modern capitalism, and in the imperialist epoch above all, the first giant shocks that begin shattering the confidence of sections of the rulers themselves are centered in financial institutions—in the banks and markets for currencies, debt, and equity—not in factories, mines, and mills. The devastation of production and employment follows afterwards, and with a lag.

During the great depression the stock market crashed in October 1929 and continued downward—with numerous large and sharp upward rallies—until it had lost more than 85 percent of its value by mid-1932. (More money was almost certainly lost by individuals acting on an almost religious belief during the 1930 “suckers’ rally”—greed still trumping fear—than had been lost in the 1929 crash itself.) The first banking panic and rash of bank failures hit in late 1930, with ten thousand institutions closed by 1932—40 percent of the 1929 total. Unemployment climbed more slowly, with government figures rising to 8.7 percent in 1930, 16 percent in 1931, to fully one-quarter of the labor force by 1933. By then a widespread, quasi-mass despair had begun to take hold, reflected in the assumption that the economy—and capitalist America itself—could never recover.

Sometime in the mid-1970s we entered a downward segment in the curve of capitalist development, and that’s the period we’re still living through today. Lenin and Trotsky provided us with the necessary political tools to analyze these long-range trends in the history of capitalism and their consequences for communist strategy and party building. Some of the most useful were their reports and writings around the time of the third and fourth congresses of the Communist International in 192122.[29] Trotsky summarized these conclusions in a brief 1923 letter that we published in New International magazine under the title, “The Curve of Capitalist Development.”[30]

Unlike capitalist business cycles of recession and recovery with their chartable, and recurring, patterns, Trotsky said, there is no “rigidly lawful rhythm” to the long-term development of world capitalism. In the 1923 letter, Trotsky contrasted this conclusion to that of a Soviet academic named Nikolai Kondratiev. Pretending to formalize what could not be formalized—the materialist dialectic of modern history—Kondratiev bourgeoisified the work Lenin and Trotsky had presented at the third and fourth Comintern congresses. He argued that in addition to shorter trade and inventory cycles, there were also regular cycles of roughly fifty years that could be charted over the history of capitalism since at least the opening of the industrial revolution in the latter half of the 1700s.

Kondratiev’s empirical chart itself was a roughly accurate sketch of trends that had occurred in capitalist development over the previous century and a half, Trotsky said. But if you looked carefully at its turning points—and at the duration and steepness of its various upward, downward, and flatter segments—it was clear that these corresponded to major events in politics and the class struggle, not solely “economic” factors as normally understood. There was nothing “automatic” or “cyclical” about an upturn in this longer curve, as there is at a certain point in the destruction of value and drawing down of inventories during a capitalist recession.

“As regards the large segments of the capitalist curve of development,” Trotsky wrote, “their character and duration are determined not by the internal interplay of capitalist forces but by those external conditions through whose channel capitalist development flows. The acquisition by capitalism of new countries and continents, the discovery of new natural resources, and, in the wake of these, such major facts of ‘superstructural’ order as wars and revolutions, determine the character and the replacement of ascending, stagnating, or declining epochs of capitalist development.”[31]

Kondratiev did employ a useful metaphor in describing this long-term curve, whose character and dynamics he did not understand. He, and his rediscoverers and vulgarizers today, speak of the slow beginnings of recovery as “spring”; sharply rising segments as “summer”; the stagnant opening of a downward segment as “autumn”; and the more sharply downward segment as “winter.” We’ve been in autumn since the mid-1970s; now one of capitalism’s infrequent long winters has begun. With no seeming limits on the Federal Reserve and Treasury Department’s blowing up every balloon they can find, and now the accompanying acceleration of imperialism’s drive toward war, it’s going to be a long, hot winter. Even more important, slowly but surely and explosively, it will be one that breeds a scope and depth of resistance not previously seen by revolutionary-minded militants throughout today’s world.

During world capitalism’s quarter-century-long “autumn,” the business cycle continued oscillating, including two long capitalist upswings: one for nearly eight years after 1982 in virtually all imperialist countries except New Zealand; the second stretching an entire decade from 1991 to 2001—the longest cyclical upturn in U.S. history, with relatively steady growth throughout that period in most other imperialist countries with the important exception of Japan. Both upturns, however, were limited to the majority of imperialist countries and a minority of the relatively economically developed semicolonial countries. Both were fueled by a massive inflation of debt and paper values, adding little to productive capacity in comparison to the postWorld War II expansions in the United States and later in Europe and Japan. In seeking to boost their profit margins, more and more employers have been unable to count on anything other than pressing to drive down wages and benefits, lengthening hours, and intensifying labor. This stretch-out and speedup is the “secret” to the productivity growth that Greenspan exaggerates and brags about in order to reassure the capitalist class that something more is happening than a further expansion of the massive government debt and its private counterpart in corporate paper, mortgages, and credit cards. By the U.S. government’s own figures, however, including those of the Federal Reserve, neither economic output nor labor productivity during these two most recent booms came anywhere close to increasing at the rates logged from the late 1940s through the early 1970s.

At the same time, it’s worth repeating what a delegate from Washington, D.C., Sam Manuel, reminded us of during the discussion. It’s never enough just to look at government statistics, or even at how the average or median sector of the working class might be faring for a few years. We have to keep our eyes on various layers of the working class, and the differential social consequences of “booms” such as these. Over the past quarter century, not only did wage inequality increase within the working class, but above all the income gap widened explosively between all workers and better-off middle-class and professional layers, not to mention the wealthiest propertied families (whose astronomical annual incomes, let alone their accumulated wealth, are not even counted in government statistics). Real wages, medical and pension coverage, the value and duration of jobless benefits, the availability and real worth of workers’ comp, the affordability of housing, food, and college education—all these declined, often sharply, for the majority of workers and working farmers. If, during the late 1990s, take-home pay rose for certain layers for several years, even that relief has reversed engines once again today.[32]

As long as the capitalist economy is heading up, as long as real interest rates are stable or coming down, as long as the dollar remains strong relative to the currencies of Washington’s imperialist rivals, this debt-ridden house of cards keeps standing—and standing taller (in dollar terms!). But as all this begins to change, as it has since sometime late in 2000, the entire structure becomes increasingly unstable. Marx’s observation that “interest-bearing capital always [is] the mother of every insane form” of capital is once again being demonstrated in spades.[33]

Neither we nor anybody else has any way of predicting exactly how long it will take for these gigantic balloons—stock prices, consumer debt, real estate costs, the relative “value” of the dollar—to deflate. But since everyone can see it coming, it can seem natural to say: “Surely the capitalists will do something to stop it!”

But that’s not how the law of value works. That’s not how a market system driven by the competition of capitals—and, in the imperialist epoch, on the more and more violent competition of bigger and bigger capitals, and more and more leveraged speculation—operates. Finance capital since the mid-1970s has postponed the crisis and moderated the frequency and volatility of the swings of the trade cycle. But it did so only at the expense of inflating the debt balloons more and more, increasing their variety as they debase the purchasing power of the currency, thus making the eventual bursting of the bubble even more destructive to imperialist stability, self-confidence, and alliances.
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Middle classes shaken first

Class-conscious workers recognize that history teaches that the most direct impact of a capitalist financial crisis at the opening of a depression period can be on the middle classes, more so initially than on the working class.

It took a long time in the United States to develop what Marx and Engels called a “hereditary proletariat,” a class whose members in their great majority remain, from one generation to the next, propertyless proletarians. No land, no tools, no capital. Those of us who survive only by selling for a wage our ability to use muscle and mind to labor for another—our laboring power. Marx and Engels followed this development closely over the second half of the nineteenth century and wrote about it extensively. Until chattel slavery was abolished, they pointed out, and until the free land to be had as U.S. capitalism expanded westward was exhausted, there could be no hereditary working class nationwide in the United States. And until this hereditary proletariat came into being, there were limited possibilities to organize either working-class resistance to the rising industrial bourgeoisie or a mass class-conscious party that could speak and act decisively in the interests of workers, other exploited producers, and brothers and sisters subjected to bonded labor of any kind.

For much of the nineteenth century, what became the United States remained a huge, largely undeveloped landmass, stretching from the Atlantic to the Pacific. On behalf of wealthy landowners, traders, canal developers, and later big railroad and mining interests, the U.S. government carried out brutal mass population transfers and genocidal assaults against Native Americans.

But working people migrated, too, in growing numbers. When living and working conditions in eastern cities became too onerous, workers could and did “go west, young man,” to a new life. Workers escaped workshops and factories to become dirt farmers. Following the U.S. Civil War, hundreds of thousands took advantage of the Homestead Act to get a little plot of land. Even now the dream persists among many American workers of saving up a little money and starting their own business. Even more, they dream of doing something so their children can rise into the middle class. Reality for the vast majority of workers, however, long ago became a proletarian condition that is hereditary.

Workers accumulate no net wealth over the course of a lifetime. You often see reference to the “fact” that a majority of Americans are stockholders. But such assertions simply camouflage the harsh class reality that a growing number of companies are dumping employer-financed defined benefit pension funds—themselves anything but “guaranteed,” as millions of workers with such “vested” pensions are now learning—and replacing them with defined contribution “retirement plans” entirely dependent on the fortunes of stocks, bonds, and mutual funds. Although workers have no control over such plans, the fact that we may “have” a so-called 401k supposedly makes us players in the stock market. In fact, these plans make us victims of the stock market. The truth is that individuals in only one-third of households in the United States hold even a single stock outside a retirement plan, and that figure has dropped, not increased, in the last half decade. Some 85 percent of the value of stocks is held by those in the top 10 percent income bracket in the United States. Ownership of government and corporate bonds is even more highly concentrated in the hands of the propertied ruling families and very well compensated professionals, who put much more of their wealth into bonds than into stocks. The ruling families of the final empire consider ownership of a piece of the returns on worldwide debt-slavery to be their parasitic birthright.

Whatever small savings, including equity in their homes, most workers manage to scrape together by middle age, are usually more than offset by mounting indebtedness and by the ruinous expenses of advancing age. So when stock and bond markets plunge, most workers experience little or no direct, immediate impact on their living standards.

Less so for millions in the middle classes—at first. So long as the capitalist crisis continues to unfold more sharply in banking and finance than in production and employment, it will not be the working class that first begins to radicalize in response to these developments. It will be the growing numbers whose families had escaped the proletarian condition over the last generation or so—they hoped forever—only to see their illusions of security and stability begin to shatter.

During the opening few years of the millennium, many in the middle classes feel they are being nibbled to death by ducks, with no relief in sight. As stock prices started going down in 2000, they were “advised” to just sit tight and wait for the market to rebound, as it had done in 1987 and again in 1991. Most of them did so—watching a substantial portion of their holdings melt away, until it dawned on them that nobody knows how long it may be before stock indexes regain past levels, or if they or their heirs will be solvent by then, or even alive! So, what do they do now? Sell at a big loss, or wait for a brighter day? The market goes down. Then it rallies for a few days, or a few weeks, or a few months, or a year. Hope! More than simple greed, hope, fueled by desperation and transforming fear, springs anew. The sheep buy as it goes up, and are mercilessly sheared when it drops still further. Each new high is lower than the previous high; each new low is lower than the previous low. But it’s still a long way down—years and years down—to “the bottom.”

Among growing middle-class layers, as well as layers of better-off workers who’ve bought into the myth that they’ve made it into the middle class, the fear accompanying the anticipation of further drops is palpable. In the absence of any independent working-class voice that can polarize and attract sections of the petty bourgeoisie, those most panicked by what’s happening will become more open to the radicalism and violence of radical rightist appeals. Propaganda promoting conspiracy theories will win a wider hearing. Crank notions will proliferate, preaching the exact opposite of class realities explained by Lenin in Imperialism. So-called populist “theories” will spread, seeking to distinguish the “productive” working and entrepreneurial classes from the “usurers” and “speculators” (the simpler and quieter terms soon to be replaced by “the Jews”). And these nostrums will often come dressed up in anti-imperialist, antiwar, and even anticapitalist rhetoric. More and more often we’ll run into echoes of such views among farmers fighting to hold off foreclosures, as well as among some coworkers, their friends and families—working people who have no explanation for what is beginning to happen to them and all around them. They just see it collapsing like something in a slow-motion movie.

Communist workers need to be politically prepared to answer the radical demagogy of ultrarightist and incipient fascist forces. We will explain to the toilers: No! There need be no conspiracy. For at least a century, the monopolized banking, industrial, and commercial capitals have been fused in the United States and other imperialist countries under the ownership and control of a handful of parasitic propertied ruling families, the families of finance capital. The names of America’s ruling families are no secret. They are the owners of these monopolies: the banks, brokerages, insurance businesses, industrial corporations, wholesale and retail distributors, real estate trusts, the largest newspapers, magazines, radio and TV stations, and entertainment companies. They are the bondholders. They dominate the market in stocks, commodities, and every form of debt under the sun. They own the professional sports franchises, and finance the opera houses, largest museums, libraries, foundations, and think tanks of all persuasions. They finance and control the Democratic and Republican parties. They run the capitalist government at the federal, state, and local levels. They are served and protected by the courts, cops, and armed forces. We can name the clubs they belong to, the boards they serve on, the universities they attend and endow, and the schools their children go to. The task is to lead the vanguard of the working class to overthrow the rulers and bring to power a government of the workers and farmers, thus establishing solidarity at the center of society.
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A communist program

As the capitalist depression deepens, a downturn in production will lead to growing unemployment, sharply declining wages, more and more brutal conditions on the job, and ruinous bursts of inflation as the capitalists churn out money to try to get their engines running again.

Vanguard workers will start becoming more receptive to a communist program. As they go through more and more intense struggle, they will look for ways to fight effectively and win. They will be drawn to the ideas explained by fellow militants who are communists about how to strengthen the solidarity and combat capacity of the working class and our allies and, above all, our unions. We will win a broad hearing for the need to transform social security to encompass universal health care, universal lifetime education, universal workers’ compensation, and universal guaranteed retirement pensions. These, we explain, are not benefits “given” to the working class by the employers and their government; the new wealth produced by the labor of working people must be used to guarantee the conditions of a productive life—throughout life—for the working classes. We will find more success in countering efforts by the employing class to pit generations of working people against each other, or to divide and conquer on the basis of job status, skin color, sex, language, resident status, or national origin.

Much of our program makes sense to many working people when we explain it, but it doesn’t seem to flow out of a struggle they are engaged in that is central to their lives. It hasn’t seemed urgent or practical. And it won’t, so long as illusions persist about the long-term stability of the capitalist system, or, even more important, about the political incapacities and permanent acquiescence of toilers worldwide, of us. Many initially see our program as just a set of ideas, even a utopian projection, not a line of march through class combat toward the organized fight for the dictatorship of the proletariat. They haven’t gone through enough political combat under a proletarian leadership to develop confidence in their own and their class’s ability to organize and manage the economy and “guide the ship of state.”

We’ve all heard the same kinds of things for many years from many fellow workers and family members: “I’ll be taken care of by the VA.” “I’ve got a railroad pension, and it’s even ‘vested’ by a federal agency.” “I’ve been here twenty years. This is my retirement job.” Over the past decade or so, these old saws have been joined by: “I couldn’t live off my social security and company pension, but now we’ve made the company set us up a 401k and I’m putting aside a little more each month.” All these comfortable—and temporary—myths are encouraged by the class-collaborationist union officialdom, a petty-bourgeois layer with bourgeois values and aspirations, and ultimately thuggish self-centeredness.

Today, it’s not just the workweek and the work year that are being extended for the working class (paid vacation time and holidays are dwindling for millions of workers)—it’s the work life.[34] The number of years the average worker in the United States spends as part of the labor force, which had been declining until the mid-1980s, has begun rising again over the past fifteen years.[35] The official retirement age to receive full benefits under Social Security will be upped in stages starting in 2003, going from 65 to 67. And this is just for starters, as the rulers in coming years press their assaults against the social wage. This has nothing to do with bridging the generations and ensuring a lifetime of education and productive social labor for every human being, as we discuss in The Working Class and the Transformation of Learning. It has to do, instead, with a longer lifetime of exploitation to swell the profits of a boss. And with it come increased job-related injuries and workplace deaths. This would be the case even without speedup. And, as everyone here knows and feels, there is speedup, brutal speedup.

We presented central aspects of our program last year in a popular way in Cuba and the Coming American Revolution. We can use that book effectively as we talk socialism with young people and workers. Some of our clearest and more extensive presentations are to be found in the pioneering documents from the party’s turn to industry in the late 1970s and early 1980s, contained in The Changing Face of U.S. Politics, as well as throughout Capitalism’s World Disorder. In “Leading the Party into Industry,” for example—the February 1978 report that launched the turn—we explained how far the employing class, with help from the union officialdom, had gone during the postWorld War II “summer,” a long upward segment in the curve of capitalist development, toward gutting the very foundations of working-class solidarity.

More and more “so-called general fringe benefits—pensions, health-care plans, supplemental unemployment benefits—all [became] contingent on the continuing profits of the boss you work for,” the 1978 report said. “We see this growing in industries like coal, steel, and auto. These benefits are not won for the class as a whole, or even a section of the class.” The report continued:

These fringes are good in good times—for workers who have them—because they’re a substantial addition to everything else industrial workers can count on. But when the squeeze comes, this all begins to fall apart. Your pension funds are threatened. Your health-care plans are dismantled. The supplemental unemployment benefits run out….

This is the payoff when the debt of business unionism comes due. This is the price paid for the class-collaborationist policy of refusing to fight for the real needs of the class—the social security of the class, national health care, for national unemployment insurance that’s real and high enough, for a shorter workweek at no cut in pay, for protection against inflation, and for independent working-class political action. This is the price paid for a bureaucracy that says independent social and political struggles are secondary, and says the employers’ promises in the contract are decisive.

This is the payoff for the refusal of the bureaucracy to lead the labor movement to fight for the broad social needs of the working class and to build a political instrument to fight for them.[36]
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Learning to speak concretely

When we speak of the depression conditions we are entering, that very word itself—depression—can easily become an empty abstraction if we’re not careful, if we are not concrete. Trotsky warned of such dangers in the 1923 letter on the curve of capitalist development we quoted from earlier. During a long period of capitalist stability, Trotsky said, it’s natural to reduce various political phenomena and economic trends “to a familiar social type,” since doing so makes it possible to communicate and act. “But when a serious change occurs in the situation,” he said, “such general explanations reveal their complete inadequacy, and become wholly transformed into empty truisms.”[37]

If you go back and take a look at the Teamsters series, for example, you’ll notice that Farrell [Dobbs] always talks about discrete, concrete periods within the depression and their political consequences, not simply about the “Great Depression.”

Farrell describes the four years following 1929, when production dropped by one-third and joblessness eventually rose to 25 percent. “At first the workers accepted these blows in a more or less passive manner,” he says. “They had been stunned by the economic debacle and it took time to recover from the shock effect.”[38]

Then Farrell points out what started happening in the working class and labor movement in 1933, when production began a four-year climb, regaining more than a third and unemployment fell almost by half to about 14 percent. During that year, he says, “strikes broke out here and there in industry,” and continued through 1934—when labor struggles of a new kind erupted in Minneapolis, San Francisco, and Toledo—and continued through the sit-down strikes and other battles of 1935–37 in auto, steel, and other industries: strikes and organizing drives that built the industrial unions, the CIO. “These walkouts,” Farrell writes, “resulted from the interaction of two basic factors: the workers’ determination to regain ground they had lost in the depression and their rising confidence—stimulated by partial economic recovery under the New Deal—that their objectives could be obtained.”

Finally, Farrell recounts the impact of the renewed capitalist downturn in 193738, including a slowing of the CIO battles and the beginning of the Democratic administration’s accelerating drive toward the second world imperialist war. “When the national economy again began to slump in mid-1937,” Farrell writes, “the employers sought to use the changed situation as the basis for an offensive against organized labor…. They felt emboldened in that course because the downturn in production tended to blunt somewhat the combativity of the trade-union ranks.”[39] During this period, the very real political momentum to advance toward an independent labor party—which had gained ground among vanguard workers engaged in battles to build the industrial union movement—was pushed back. Instead, the Stalinist misleadership of the Communist Party won an increasing hearing among workers for its popular front course of hitching the labor movement ever more tightly to the Democratic Party, and to the course of the big majority of the CIO and a substantial number of the AFL tops.

We’d never see revolutionary developments anywhere in the world if economic activity, political life, and the class struggle all moved in a straight line. If production just kept going down during a depression, the working class would finally be so devastated that effective class combat, let alone revolutionary struggle, would founder. It’s the sharp ups and downs, the increasing violence of the fluctuations, the promises and dashed expectations that transform workers’ consciousness. That is what allows the determination to fight to build up among many. And that’s what leads many others to look to those fighters, until or unless it’s shown they can’t match words with deeds.
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Our five Cuban comrades

This convention should not close without reminding ourselves that our movement has new obligations to work politically with five communists from Cuba who are serving time in federal prisons across the United States. These compañeros, of course, look to Cuba for the fundamental strategic lines of their work and their worldview, as they should. But they are now engaged, for however long, in an arena of the class struggle where the leadership of the Cuban Revolution has little direct or even indirect experience. That is inside the United States itself. Although their engagement on this front is involuntary, while they are so deployed they are determined to deepen their scientific understanding of class politics here and carry out a disciplined course of action. And we welcome them as a reinforcement brigade of the revolutionary workers movement in this country.

Incarcerated in the dehumanizing U.S. prison system, among their many experiences, these five comrades are running up against the ways in which rightist and fascist ideas gain a toehold among layers of toilers in the United States.[40] They’re actually learning why it’s not accurate to say that because of this country’s democratic traditions substantial numbers in the United States can never be won to a fascist movement. Those traditions are bourgeois-democratic traditions, we should always remember. And they will be shredded like scraps of paper if the working class in this country fails to forge a leadership capable of organizing workers, farmers, and our allies in a successful revolution when sharply accelerating class combat poses the question of which class shall rule.

Our Cuban compañeros are not only observing but also learning in practice the place and weight of workers who are Black in forging a social and political vanguard of the working class in the United States. They are learning why reading and absorbing the speeches of Malcolm X from his last year opens a road to revolutionary politics and organization. They’re learning about the usefulness of the Militant, Perspectiva Mundial, and Pathfinder literature—including books and pamphlets on the Cuban Revolution—in the class struggle in this country.
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A deeply political cadre

For the back cover of Their Trotsky and Ours, we prepared a brief description of what that book is about. “History shows that small revolutionary organizations will face not only the stern test of wars and repression,” it begins, “but also the potentially shattering opportunities that emerge unexpectedly when strikes and social struggles explode.”

That’s where not only chance but the preparedness that can help turn the unexpected into good luck become decisive.

“As that happens,” the text continues, “communist parties not only recruit many new members.” And they do recruit under those conditions, more rapidly and in larger numbers than almost anybody in this room can imagine from our own experience in the revolutionary workers movement. In addition to direct individual recruitment, we say, communist parties under those conditions also converge politically with other fighting forces. They “politically fuse with other workers organizations moving in the same direction and grow into mass proletarian parties contesting to lead workers and farmers to power.”

Then we come to the part that’s of the greatest practical importance for communist workers right now.

This assumes, first of all, “that well beforehand” the cadres of such parties “have absorbed and grown comfortable with a world communist program.” That an international communist perspective has become a political habit; has been internalized; has become a matter of seeming reflex.

Second, it assumes that the revolutionary political orientation of such parties is built on the daily activity of cadres who “are proletarian in life and work.” Both are equally important—in life, and in work. That’s what our turn to industry and the industrial trade unions a quarter century ago, and our ongoing efforts to strengthen that course ever since, is about. That’s what makes revolutionary centralism possible. It is not an organizational caricature of proletarian habits. It’s about being where we need to be, among a vanguard of our class, and being there in a structured, disciplined manner.

Third, the nuclei of communist parties need to be made up of those who “derive deep satisfaction from doing politics.” That might seem to be a stretch. But it’s not. Yes, revolutionists can and will have a bad month, a bad three-month period, even a bad year. That’s part of the human condition under capitalism. Anyone who claims they haven’t ever had a bad patch is scary; they must never blink. None of us would want an angel on our flank. But if over the medium and long haul, a party cadre does not derive deep satisfaction from engaging in communist political work, then they can’t live up to the founding rules of the Communist League drafted by Marx and Engels in 1847. One of the “conditions of membership” stated in those rules was “revolutionary energy and zeal in propaganda.”[41] Those were the words Marx and Engels chose for a document placed for vote before delegates to the same congress that assigned them to draft the Communist Manifesto. To be a member meant to conduct propaganda work with “revolutionary energy and zeal.”

And fourth, we say that well before a rise in revolutionary struggles, a communist party needs to have forged a “leadership with an acute sense of what to do next.” What to do now. Today. Not the day after tomorrow. And always concrete.

That’s what we expect of leadership in the communist movement.

I thought about that summary of what kind of movement we are building as we were preparing the meeting to celebrate the political life and work of Charlie Scheer. I’ve spoken at more than one memorial meeting over the past year or so, and many others before that, to honor the lives and contributions of comrades who have died. What struck me most as I was thinking about Charlie, and discussing his life with others, was that what all these comrades—each of them gloriously different from the others in many ways—had in common was the fact that they were deeply political people. Not just people who were interested in politics. But people who organized their lives within the proletarian movement, and for whom politics provided the practical axis of their lives—the foundation of the enjoyment and satisfaction they derived from living. It was the wellspring of their accomplishments.

Their Trotsky and Ours is about the lifetime work of such cadres.
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Stay the course

Over the past several days of this convention, we have come to a common understanding of the political importance of the example communists in the United States can and do set for fellow working people and revolutionists. The class politics we have conquered, and the steps we are taking through our branches, organizing committees, and union fractions, make up the foundation on which we pledge to the world never to show fear in face of a single deed by American imperialism. The might of the U.S. rulers is matched only by their pretense. The uncontrolled, the unintended consequences of their economic and military power undo the very conditions they seek to use to stabilize, to buttress their crises-ridden system of exploitation and oppression.

The Socialist Workers Party’s response to the events of September 11 and to the reaction of the U.S. rulers was not bravado. Nor is our determination to stand firm in face of U.S. imperialism’s drive toward war and in face of the hard rain that’s begun to fall across the length and breadth of the world market system. What worker-bolsheviks do in the United States gives added confidence to every worker, farmer, or young person anywhere in the world who refuses to bend their knee. It gives added confidence to militants who discover from an issue of the Militant or Perspectiva Mundial, from a Pathfinder book or pamphlet—or from watching vanguard workers in a plant, in a neighborhood, in the course of a common struggle—that there are others like them doing the same thing.

We have no pumped-up view of ourselves, or of what the working people of the United States can and will accomplish. It simply happens to be the fact that while the world’s final empire will never fall of its own dead weight, it will be brought down by a revolutionary struggle of workers and farmers in this country, fighting shoulder to shoulder with internationalist toilers the world over.

The deep satisfaction we derive from doing politics stems from the knowledge born of history and the concrete experiences of the working classes that such a goal is palpable and real. And when the deed is done, the revolutionary energy and zeal that will spring from toilers worldwide is something we can barely begin to imagine.

Here we have taken one more step along that road.
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NOTES

1. V.I. Lenin, “Report on the World Political Situation and the Basic Tasks of the Communist International,” in Workers of the World and Oppressed Peoples, Unite!: Proceedings and Documents of the Second Congress, 1920 (New York: Pathfinder, 1991), vol. 1, p. 139. Also in Lenin, Collected Works, (Moscow: Progress Publishers, 1966), vol. 31, p. 227. return to text

2. Leon Trotsky, On the Jewish Question (New York: Pathfinder, 1970), p. 16. return to text

3. In July 2004 the U.S. government loaded the first ground-based Anti-Ballistic Missile interceptor into a silo in Alaska, a project begun during the Clinton administration. President Bush hailed the installation as “the beginning of a missile-defense system that was envisioned by Ronald Reagan.” return to text

4. Lenin, Imperialism, the Highest Stage of Capitalism (New York: Pathfinder, 2002), p. 38. return to text

5. In December 2001 the Argentine government defaulted on $100 billion of government bonds, owned largely by capitalists in Western Europe. The peso, which had been pegged to the dollar, was cut loose and its value plummeted by 75 percent, with devastating consequences for working people and broad layers of the middle classes in Argentina. Over the next year, as economic growth fell by 12 percent, joblessness shot up to nearly 25 percent and inflation reached 40 percent. The Argentine crisis sent shockwaves throughout the entire region. return to text

6. Lenin, in his opening report to the Second Congress of the Communist International, said that the gathering “merits the title of a World Congress” because “we have here quite a number of representatives of the revolutionary movement in the colonial and backward countries. This is only a small beginning, but the important thing is that a beginning has been made.” Lenin, “Report on the World Political Situation and the Basic Tasks of the Communist International,” in Workers of the World and Oppressed Peoples, Unite!, vol. 1, p. 144. Also in Lenin, Collected Works, vol. 31, p. 232. return to text

7. By the end of 2003 the nominal value of derivatives worldwide had reached nearly $200 trillion, with more than a third held by U.S. banks. By the end of the first quarter of 2004, the top five holders among U.S. banks accounted for 94 percent of all U.S. derivatives, with J.P. Morgan Chase alone holding just over 50 percent (almost $40 trillion). return to text

8. According to telegeography.com, publisher of International Bandwidth 2004, “overcapacity continue[s] to plague the industry.” At the end of 2003, they say, “just 3–5 percent of upgradeable capacity” of installed undersea and underground fiber optic cable was in use in Europe and the United States. return to text

9. In mid-2004, even with interest rates rising, the housing bubble was still inflating. Home prices rose 40 percent faster than the overall rate of inflation over the previous eight years. As of May 2004, home equity loans doubled to $326 billion in just over three years. Homeowners’ equity in their houses was at an all-time low, having fallen to 55 percent of the market value of the home in mid-2004 from a high of 84 percent in 1945; the average over those six decades was 67 percent. return to text

10. As of the end of 2003, household debt had risen to 83 percent of the U.S. gross domestic product (GDP) from 70 percent in 1999. More than 13 percent of household income went toward paying interest and principal on those debts. Under the combined pressures of mortgage and other personal debt, 1.6 million individuals in the United States filed for bankruptcy in 2003, nearly twice the number ten years earlier. return to text

11. By early 2004, the two agencies’ share of all U.S. residential mortgages outstanding ($7.8 trillion) had risen to 50 percent. return to text

12. In 2003 it was revealed that Fannie Mae had covered up $7 billion in derivatives losses in 2003 and $12.1 billion in 2002. That same year Freddie Mac was exposed as having used derivatives between 2000 and 2002 to cook its books. No one in their management went to jail. Don’t try to emulate them! By September 2004 the federal agency charged with “overseeing” Fannie Mae had little choice but to issue a report confirming growing evidence that management was manipulating financial records to make its earnings look good, make its derivative holdings look less risky, and—naturally—justify massive executive bonuses. Two weeks later a House of Representatives subcommittee began public hearings. Stay tuned. return to text

13. Lenin, Imperialism, The Highest Stage of Capitalism, p. 34. return to text

14. Karl Marx, Capital (London: Penguin, 1978), vol. 2, p. 137. return to text

15. Marx, Capital (London: Penguin, 1981), vol. 3, pp. 515–16. return to text

16. The figures are from Winning the Loser’s Game by Charles D. Ellis (New York: McGraw Hill, 1998). Ellis, a Wall Street investment manager, is a director of the Vanguard Group and chairs the Yale University investment committee. return to text

17. Based on this experience, another step in streamlining the production of books and pamphlets was taken in early 2003. With the advances in digital printing, what could only have become a more and more inefficient offset printshop dedicated to producing books and pamphlets could no longer be anything but an unnecessary drain on cadres and financial resources. Since that time volunteers in the project have organized the production not only of reprints, but new editions, and editorially completed new titles from start to finish, working with several businesses in the United States and elsewhere that do digital printing. Volunteers have accordingly renamed themselves the Printing Project. return to text

18. In March 2004 the communist movement celebrated the opening of a new combined headquarters of this kind at 306 W. 37th Street, 10th floor, a building filled with garment shops located in the middle of New York City’s Garment District. return to text

19. See Sankara’s October 1984 talk before the United Nations General Assembly, in Thomas Sankara Speaks: The Burkina Faso Revolution 1983–87 (New York: Pathfinder, 1988), p. 124; and in We Are Heirs of the World’s Revolutions (New York: Pathfinder, 2002), p. 45. return to text

20. Karl Marx, The Eighteenth Brumaire of Louis Bonaparte, in Marx and Engels, Collected Works, vol. 11 (Moscow: Progress Publishers, 1979), p. 103. return to text

21. “If you live right and conduct yourself properly, you get a lucky break now and then,” Cannon said in one of the twelve public talks he gave in 1942 on the effort to build a communist party in the United States. “And when an accident comes your way—a good one—you should grab it and make the most of it.” James P. Cannon, The History of American Trotskyism, 1928–38: Report of a Participant (New York: Pathfinder, 1944, 2002), p. 178. return to text

22. Jack Barnes, “Our Politics Start with the World,” in New International no. 13 (New York, 2005). return to text

23. Trotsky, Europe and America (New York: Pathfinder, 1971), p. 82. return to text

24. Jack Barnes, Capitalism’s World Disorder: Working-Class Politics at the Millennium (New York: Pathfinder, 1999), p. 296. return to text

25. Lenin, “The Junius Pamphlet,” in Lenin’s Struggle for a Revolutionary International (New York: Pathfinder, 1986), p. 589, and in Rosa Luxemburg Speaks (New York: Pathfinder, 1970), p. 578. return to text

26. Lenin, Imperialism, The Highest Stage of Capitalism, p. 3. return to text

27. Barnes, Capitalism’s World Disorder, pp. 60–61. return to text

28. Government figures showed declining capital investment throughout 2001 and 2002. Even the modest upswing beginning in mid-2003 focused on replacing worn-out equipment, driving labor costs down by intensifying the pace of work and lengthening the workday, not by expanding capacity and output. An article in the July 19, 2004, Business Week magazine, headlined “Corporate Coffers Are Stuffed With Dough,” pointed out that “so far at least, instead of putting all this firepower to work—by pumping up capital budgets, upping the pace of hiring, restocking inventories, or passing out bigger dividends—companies are keeping much of their powder dry.” Companies, Business Week said, are putting their cash into money market funds and stock buybacks of their own shares. return to text

29. These reports can be found in the two-volume collection of Leon Trotsky’s writings entitled The First Five Years of the Communist International (New York: Pathfinder, 1972) and in Lenin, Collected Works, vols. 32 and 33. Major portions of two of those reports are reprinted in this issue on pp. 211–294. return to text

30. Trotsky, “The Curve of Capitalist Development,” in New International no. 10 (New York, 1994), pp. 209–10. return to text

31. Ibid., p. 210. return to text

32. In late 2003, according to the Wall Street investment bank Goldman Sachs, the annual growth rate of hourly earnings in the United States fell to “the slowest pace ever recorded.” Through the middle of 2004, real weekly earnings actually fell. return to text

33. Marx, Capital, vol. 3, 596. return to text

34. The average work year in the United States was longer in 2003 than half a century earlier. The average workweek in mining and manufacturing is above forty hours, and both average hours and overtime have increased sharply since 1955. Production workers putting in overtime have an average workweek of more than fifty hours—nearly sixty hours for miners. According to U.S. government figures, the percentage of workers with no paid vacation time jumped from 3 percent in the early 1990s to 13 percent in 2003 in medium- or large-sized workplaces (more than 100 employees), and from 12 percent to 27 percent in small workplaces. return to text

35. According to the U.S. Bureau of Labor Statistics, the percentage of workers between the ages of 65 and 74 still in the labor force rose from 16.7 percent in 1990 to 19.1 percent in 2000, and is projected to grow to 22.1 percent by 2010. The percentage of men in that age group in the labor force grew from 21.4 percent in 1990 to 24.4 percent in 2000, and is projected to reach 27.7 percent by 2010. return to text

36. Barnes, The Changing Face of U.S. Politics: Working-Class Politics and the Trade Unions (New York: Pathfinder, 2002), p. 147. return to text

37. Trotsky, “The Curve of Capitalist Development,” in New International no. 10, p. 207. return to text

38. Farrell Dobbs, Teamster Politics (New York: Pathfinder, 1975), p. 56. return to text

39. Ibid., p. 141. return to text

40. Ramón Labañino, in a letter to Mary-Alice Waters, had expressed his interest in getting a copy of the book Behold a Pale Horse, by William Cooper, which had been recommended to him by fellow inmates. The book is an ultrarightist presentation of conspiracy theories about everything from UFOs to the assassination of President John F. Kennedy. It includes the full text of the notorious Russian tsarist anti-Semitic forgery, The Protocols of the Elders of Zion. Cooper was shot and killed by a sheriff’s deputy in Arizona in November 2002. return to text

41. “Rules of the Communist League,” in Marx and Engels, Collected Works, vol. 6, p. 633. return to text

Copyright © 2005 by New International