The U.S. Elections and the Decline of Empire

I showed in the series of posts on Germany that extreme class contradictions brought that country close to a workers’ revolution. The failure to achieve this revolution led to the dictatorship of Adolf Hitler and his Nazi Party. Hitler, backed by German monopoly capital, then attempted through war to transform Germany into a second version of the United States. For example, Poland and the nations of the Soviet Union were to be transformed into Germany’s version of the “American West.”

The fuhrer and the German imperialists he represented also attempted to destroy the class consciousness of the German working class. Their attempt to transform Germany into a second version of the United States failed, however, and after the war (West) Germany was absorbed into the U.S. world empire. With the help of “the Empire,” Germany finally gained the markets and access to cheap raw materials it so desperately needed.

So German imperialism got something out of World War II after all, finally emerging from the intolerable conditions that its imperialist rivals had imposed on it after World War I. (1) As a result, the prolonged social crisis gripping German capitalism was overcome. (2)

While German capitalist politics became increasingly “Americanized” (3) after World War II, U.S. politics are showing signs of becoming “Germanized.” We should not, of course, exaggerate the “Germanization” of U.S. politics. It is neither 1918, 1923 nor 1933 in the United States. But the surprising response to “socialist” Bernie Sanders in the Democratic Party, combined with the gains made by far-right demagogue Donald Trump in the Republican Party—a man who some have compared to Adolf Hitler—represents something new in American politics.

Sanders and socialism

Let’s first examine the Sanders campaign. For the first time in U.S. history, I believe, polls show that perhaps a majority of young people desire a “socialist” alternative—however hazy this socialism may be—to the current U.S. economic and political order. Socialism, as I explained in my series on the economic thought of Che Guevara, is a term with many meanings. Let’s briefly review some of the ways in which the word “socialism” has been used since it was coined in the early 19th century.

Two definitions of socialism have been widely used within the Communist wing of the workers’ movement. Lenin in “State Revolution” used the term socialism as a synonym for what Marx called the “lower stage of communism.” In this sense, “socialism” refers to a future stage of society, foreseen by Marx in his famous “Critique of the Gotha Program,” where private ownership of the means of production and the division of society into classes has ended.

In this meaning, society is already communist, but the productive forces of society are not yet developed enough to provide for all the material needs of every person. Work at this stage—at least to a certain extent—is still felt by the individual members of society as something of a burden. In plain language, not everybody likes his or her job.

Therefore, individual material incentives to a certain extent remain necessary at this stage of development, and people are paid not according to need but rather, with certain modifications, according to work. Marx and Lenin called this mode of payment “bourgeois right.” After Lenin’s death, others in the Communist movement called this the socialist mode of distribution. But because members of society are equal as regards to the means of production, economic classes no longer exist.

In the post-Lenin period, the term socialist society has often been used to refer to the era transitional between capitalism and the (lower) stage of communism. During this transition, as foreseen by Marx and Lenin, both classes and the state continue to exist. The state takes the form of what Marx called the dictatorship of the proletariat—a workers’ state. Since in this transitional phase classes still exist, the working class needs the state to repress its class enemies who are striving, whether consciously or unconsciously, to restore capitalism.

Unlike the case under the lower stage of communism, whether society continues to advance in the direction of communism or regresses back to capitalism, such as happened in the former Soviet Union and eastern Europe, depends on the concrete course of the class struggle. If the state of the dictatorship of the proletariat—the workers’ state—is overthrown, society will inevitably return to capitalism.

The term socialism has also been used in many other ways than these two. When Marx and Engels wrote the “Communist Manifesto” in 1848, socialism, then a relatively new term, was widely used for any proposed solution to the problems created by industrial capitalism. At this time, the word communism referred to the schools of socialism that saw the elimination of the private ownership of the means of production as the solution to the evils of capitalism. But there were other schools of socialism that proposed other solutions as well.

Other uses of the word socialism

After World War II, the vast majority of the governments that came to power after formal colonialism was abolished stated that they were socialist, even if they rejected Marxist socialism. Perhaps the best-known examples were the Congress government headed by Jawaharlal Nehru (1889-1964) in India, the Egyptian government headed by Gamal Abdel Nasser (1918-1970), and the Indonesian government headed by President Sukarno (1901-1967). Even some kings proclaimed their rule as “socialist”

And to complete the list, we can’t forget that the fascist dictatorship of Adolf Hitler also described itself as “socialist.” Hitler claimed that he and his “National Socialism” combined the “best elements” of both the right and the left. For example, nationalism, which in Europe at that time was associated with the right, was combined with socialism, associated with the left.

During World War II, Nazi propaganda denounced the United States and Great Britain as plutocracies—which was true, of course—while describing the fascist Third Reich as socialist. The Nazi government claimed that the dictatorship of Hitler and the Nazis had overcome the rule of a single plutocratic capitalist class—which was false, of course. In reality, the Third Reich was a particularly vicious plutocratic capitalist dictatorship.

Bernie Sanders is not a socialist in any of the above senses. Instead, he uses the term in a way closer to that used in Western Europe since the end of World War II. Socialism in this sense is a series of reforms that aim to improve the position of the working class within capitalist society. But the essence of capitalism, the exploitation by owners of the means of production of a class of wage workers who must sell their labor to the owners of the means of production is preserved.

For example, Sanders proposes that “Obamacare,” where people are forced by law to buy private health care insurance, be replaced. Under Obamacare, the government provides skimpy subsidies for those with insufficient income to buy pricey, often inadequate, private insurance plans. If people refuse to buy private medical insurance, they are forced under Obamacare to pay heavy fines.

Sanders proposes instead that the U.S. Medicare program, now restricted to people over 65, be made universal. This would establish a form of “single-payer” health insurance. Doctors, who would remain in private practice, and hospitals, which would still for the most part be run as private for-profit businesses, would then be paid by the federal “single payer” instead of by private insurance companies.

This would be an improvement over Obamacare, which Sanders’ “non-socialist” opponent Hillary Clinton wants to retain with perhaps a few “reforms.” However, Medicare benefits for people over 65 are so inadequate that most people eligible for Medicare are forced to buy so-called supplementary plans from private insurers. Therefore, Sanders’ proposed reforms would not get private insurance companies out of the health insurance business.

Moreover, Sanders foresees a role for the states in administrating his proposed expanded Medicare program. This would enable state governments to obstruct the expanded Medicare, much as many state governments have refused to provide funds for the expanded Medicaid system for the poor that is part of Obamacare.

A U.S. version of the kind of “single-payer” system that exists in many other capitalist countries would require the elimination of any role for either private insurance companies or state governments in the single-payer system. But even if a decent form of single-payer health insurance were established in the U.S., the U.S. would remain in the Marxist sense very much a capitalist society ruled by an exploiting capitalist class. None of the basic contradictions of capitalism that lead to periodic economic crises, mass unemployment, racism and chauvinism, the growth of monopoly and war would be eliminated.

Other proposals of Sanders are actually backward looking. For example, his proposal to “break up the banks,” popular among many liberals, may sound radical. But it actually looks backward toward a past young, decentralized capitalism based on “free competition” rather than forward toward a communist future where production would be planned for human need and not profit.

Sanders also proposes to revive the New Deal-era Glass-Steagall Act, separating commercial and investment banking, which was repealed under the Bill Clinton administration. Glass-Steagall was long eroding because it stood in opposition to the basic trend of capitalism to evolve into a system where wealth is ever more centralized in a handful of corporations and banks. Even under Glass-Steagall, large U.S. commercial banks often engaged in investment banking by the simple device of locating their investment banking offices in London.

In foreign policy, Sanders has made perfectly clear that he backs continued U.S. support to Israel—he is in favor of the “two-state solution,” just like Barack Obama and, for that matter, George W. Bush and Bill Clinton before him. Sanders called the late Venezuela President Hugo Chavez a dead “communist dictator,” which is very far from the truth.

In other words, Sanders has already indicated that his administration would continue the same basic foreign policy of defending and further expanding the U.S. world empire that has been followed by every U.S. administration since the days of Franklin D. Roosevelt.

Is Sanders a European-style social democrat?

Sander’s socialism is often compared to the socialism of the modern German Social Democratic Party, the French Socialist Party, and similar labor-based parties that exist in virtually every European country. Sanders’ socialism, of course, has far more in common with the socialism of these parties than it has with the socialism of Lenin, or at the other extreme, the “socialism” of Hitler. Like European Social Democracy, it is a socialism very much embedded in bourgeois democracy. However, there remains an important difference between Sanders’ socialism and the socialism of today’s European Social Democratic and Labor parties.

Unlike the European Social Democratic parties, which originated in the workers’ movement, the Democratic Party originated as a party of the slaveholders. Thomas
Jefferson (1743-1826) and Andrew Jackson (1767-1845), who are considered the founders of the Democratic Party, not only were personally slaveholders, they were the leaders of the slaveholder class politically. In addition, Andrew Jackson is infamous for his genocidal wars against Native Americans. I will return to this subject later this year.

Sanders, a U.S. senator from the U.S. state of Vermont, until recently described himself as an independent and not a Democrat. However, since he emerged as a major electoral politician, he has not used his position to build a labor-based party in the U.S. even along the lines of the pro-capitalist socialist and labor parties found in virtually every European country. Instead, in the U.S. Senate he has operated as a Democrat for all practical purposes and has recently formally registered as a Democrat. He has also indicated that he would support any Democrat in the general presidential election, including the darling of Wall Street Hillary Clinton.

Trump the ‘socialist’

On the Republican side, the Trump candidacy differs in some important ways from other far-right-wing Republican presidential candidates we have seen since World War II. From Barry Goldwater in 1964 to Ronald Reagan in the 1980s, the Republican right has emphasized what is now called “neoliberalism”—in U.S. terms, “conservatism”—in economics. Trump breaks with this pattern.

NBC reporter Chuck Todd tweeted: “Trump’s method of winning the Palmetto State this week defied logic or historical comparison. Trump won this week despite coming out for [a] health care mandate, defending planned parenthood, blaming Bush for 9/11. …”

Trump has indicated that he will “tell” U.S. corporations to move their production back to the United States, for example. That is a major violation of neo-liberal “free market” policies that hold that corporations should be able to do anything they want to in the pursuit of maximum profit. The traditional Republican leadership complains that Trump is no “conservative.”

Trump combines his “socialism”—though, unlike Sanders, he doesn’t use the term—with extreme nationalism and racism. He has targeted “illegal immigrants” from Latin America as well as Muslims. He even indicated he would prevent Muslims from ever visiting the United States. Even Hitler didn’t ban foreign Jews from visiting Nazi Germany in the 1930s.

But like Hitler and other European fascists of old, Trump is willing to borrow elements from the left, such as vague promises that seem to indicate that he is for universal health care, defense of planned parenthood, and opposition to the Iraq war, with the extreme racism and nationalism of the right. It is proving a winning combination among the Republican base.

Therefore, we have the hazy socialism of Sanders while Trump’s campaign seems to invoke elements of Hitler’s “National Socialism.” In the New Hampshire primary, Trump handily defeated Jeb Bush, son of former President George H.W. Bush and brother of former President George W. Bush, and other Wall Street darlings in the Republican primary. Despite renewed claims in the media that Trump was at last “fading” in the polls, he handily won the South Carolina primary, forcing Jeb Bush to drop out of the race. Bush may have made a fatal error when in a desperate move he had his hated brother campaign for him in South Carolina. This played right into Trump’s hands.

On the Democrat side, Sanders not only beat Wall Street favorite Hillary Clinton in New Hampshire but came within a hair of defeating Clinton in the Iowa caucuses (4). Iowa, like New Hampshire, is an overwhelmingly white and politically conservative state. Sanders even gave Clinton a scare in the highly conservative state of Nevada, best known as home of Las Vegas, though in the end Clinton won a narrow victory that she—and the media—treated as a major victory. However, polls show that Sanders won the younger and more working-class vote in Nevada.

A major problem for the Sanders campaign remains his weakness among the African American population, though African Americans are more friendly to socialism and hostile to capitalism than the white population. The next wave of primaries is in the U.S. South, a factor considered highly positive for the Clinton campaign in light of Sanders’ weakness among African American voters.

In the U.S. South, politics have been highly polarized along racial lines since the defeat of Reconstruction after the U.S. Civil War. In that region, whites, once solidly Democratic—in those days, the Democrats were far more racist than the Republicans, who were virtually absent from the South—are now solidly Republican. African American voters, enfranchised as a result of the Civil Rights movement of the 1950s and 1960s, vote solidly Democrat.

If Sanders cannot overcome his weakness among African Americans in these primaries, the pro-Wall Street Hillary Clinton will be well on her way to clinching the Democratic nomination. However, a future socialist politician with an appeal to African Americans that Sanders lacks would be formidable indeed. And if the racial voting patterns of the southern whites can be overcome, electoral socialism will have a bright future indeed in the U.S. More on this later this year.

Is Donald Trump a fascist?

Is Donald Trump a true fascist? Fascism has no ideology of its own. Instead, it borrows from the right—racism and chauvinism—and the left—”socialism.” In this sense, Trump shows a resemblance to classic fascism that other recent extreme right-wing political leaders—like Ronald Reagan, for example—have lacked. If he actually wins the Republican nomination, which now seems like a real possibility, and if he then goes on to win the November election, could Trump establish a fascist dictatorship in the U.S. along the lines of Mussolini in Italy and Hitler in Germany?

While Trump does show some similarities to European fascist leaders of the 1920s and 1930s in his willingness to borrow from the left as well as the right, there remain important differences. Unlike Hitler in the early 1930s, Trump is not in command of a huge militia made of millions of young men loyal to his person that is carrying out a civil war on the streets of the U.S against unions and popular organizations. The Trump “movement,” unlike Hitler’s “National Socialist” party, is still very much an electoral effort.

Another difference is that the young Hitler was not wealthy—he became a billionaire only after he came to power. In his youth, Hitler was even forced to live in a shelter for the homeless for a time. Mussolini was actually a socialist leader before World War I. Both Mussolini and Hitler depended on their ability to build organizations of millions that, though they participated in elections, operated primarily in the streets.

Trump, a billionaire real-estate magnate, has been able to build an electoral effort independent of Wall Street because he has his own money. Needless to say, unlike the young Hitler, he was never homeless. If Trump were not so wealthy—if he was a mere “millionaire” rather than a billionaire, he would be a political nobody. However, Trump is widely supported by the U.S. militia movement and other right-wing activists including outright neo-nazis whose aim is to build a real fascist movement in the United States.

Another difference between Hitler’s “National Socialism” or Mussolini’s original fascist movement and Trump’s movement is that Trump’s supporters tend to be considerably older than Sanders’ supporters. (5) Hitler and other European fascists of his time above all appealed to the youth. A Trump administration would face massive opposition both in the U.S., above all among young people and especially young people of color, and throughout the world.

This would make it extremely unlikely that a President Donald Trump could overturn the U.S.’s long traditions of constitutional continuity that survived even the U.S. Civil War. Though that war was the greatest crisis the U.S. has ever experienced, regular elections continued to be held, including the presidential elections in 1864, when President Abraham Lincoln faced a very real chance of defeat at the hands of the pro-slavery Democrat General George B. McClellan (1826-1885).

A major barrier to revolutionary change in the U.S. is exactly this constitutional continuity. Most Americans cannot imagine a form of government fundamentally
different than what exists today. The U.S. Constitution, which has been in effect since 1789, with its state’s rights, powerful upper house (Senate), Supreme Court, and cumbersome amendment process, combined with the powerful autocratic military-police machine that is the presidency of the United States, makes even liberal reforms difficult to win. For example, a proposed amendment to the U.S. Constitution to guarantee equal rights for women has repeatedly failed.

People in the U.S. are told from childhood on that this political system, which makes even reforms within the capitalist system difficult—not to speak of abolishing capitalism—is the bedrock of democracy that can never be changed. While Americans are taught in elementary and high school that other countries have had dictatorships of the right and the left, the U.S. was, is and always will be a “democracy” under the Constitution that the genius of the “founding fathers” created way back in the 18th century. The U.S. ruling class will not light-mindedly exchange this political system, which has served it so well, for the makeshift structure of a fascist dictatorship such as existed in Hitler’s Germany.

Indeed, the great danger of a Trump administration from the viewpoint of U.S. finance capital is not that it would establish a Hitler-style dictatorship but that it would be a very weak government. From the very beginning, it would provoke great opposition abroad, especially but not only from the Spanish-speaking and Islamic worlds. Even Pope Francis was obliged to imply that Trump is not a “Christian.”

Trump would have a particularly hard time rallying the U.S. people in general and young people in particular for war. To have Trump as “commander and chief” could be disastrous for the U.S. military whose rank and file consists increasingly of soldiers of Hispanic origin. There are also a growing number of Muslims in the U.S. army, and Trump with his obvious racism would hardly be popular among African American soldiers, who also make up a disproportionately large percentage of the military, subject as they are to the “economic draft.”

A “socialist” Sanders administration would be in a far better position to lure the younger generation into war. Many young people would be willing to give the socialist “Bernie” a chance and would be far more reluctant to hit the streets to oppose a war in fear of strengthening the “socialist” president’s reactionary opponents, than they would if Trump were president or even Hillary Clinton. While Wall Street would prefer a more reliable and seasoned agent such as Hillary Clinton in the White House, Sanders, unlike Trump, would not necessarily be a disaster for Wall Street. Under certain conditions—assuming the now 74-year-old Sanders’ health holds up—he might be the best possible president that Wall Street could have in the coming period.

Therefore, we shouldn’t exaggerate the tendencies for U.S. politics to be “Germanized.” Sanders is no August Bebel, Karl Liebneckt or Rosa Luxemburg, and Trump, whatever his personal ambitions might be, is far from being a new Adolf Hitler on the verge of establishing a personal dictatorship. The U.S. is not a defeated imperialist power like Germany was in November 1918 or 1923, not to speak of Russia in October 1917. Unlike Germany in 1933, the U.S. remains very much the center of a powerful and dangerous world empire. Unlike post-World War I Germany, the U.S. communist movement on one side and the real U.S. fascists on the other remain very much on the margins of U.S. politics.

What we do see is a growing section of the U.S. population—even the white population—moving toward the left with many—generally young white people—moving toward Sanders’ hazy socialism, while another section of the population—virtually all white and generally older—is attracted to Trump’s mixture of chauvinism, immigrant bashing, Islamophobia, and general racism but also his apparent opposition to the traditional economic liberalism—called conservatism in the U.S.—that has long dominated the Republican Party.

Economic roots of the change in U.S. politics

We know as historical materialists that political changes reflect, sometimes with a considerable lag, changes in economics. What are the economic changes driving the changes in U.S. politics behind the success of the Sanders and Trump campaigns? Are they simply the aftermath of the last cyclical crisis, the Great Recession of 2007-2009, or are they more deeply rooted?

In his State of Union address, President Obama ridiculed the notion that the U.S. economy is in decline. This argument made by pro-Democratic Party forces in the U.S media comes to nothing more than pointing out that the U.S. and indeed the world economy has experienced a cyclical recovery since the last low point of the global industrial cycle, which occurred in mid-2009, just after Obama assumed office.

This argument is like a global warming denier who happens to live in the northern hemisphere claiming that global warming is not occurring. After all, temperatures were lower in the northern hemisphere in January than they were six months earlier in July. The fact that the weather in the northern hemisphere is much colder now than six months ago due to the cyclical changes in the seasons has absolutely nothing to do with whether the Earth as a whole is warming. What counts here is that global temperatures in January in the northern hemisphere—and the planet as a whole—were warmer than in any other January in recorded history.

Similarly, the long-term decline of the U.S. economy does not mean that the U.S. does not continue to experience the successive phases of the industrial cycle with its recurrent up and down phases. Merely pointing out that employment, industrial production, the GDP and national income were higher in January 2016 than they were in July 2009 tells us absolutely nothing about the long-term evolution of the U.S. economy.

The real state of the U.S. economy

What does the present state of the U.S. economy tell us about both the long-term evolution of the U.S. economy and the current stage of the industrial cycle?

According to Pat Ottensmeyer of the Kansas City Southern railroad,  paraphrasing another railroad executive, “we’re in an energy-market depression, an industrial and manufacturing recession, but somehow the consumer is doing OK.” Ottensmeyer’s observations are interesting because the volumes of commodities shipped on railroads have for more than a century been recognized as a good indication of the current stage of industrial activity. With the price of oil dropping below $30 a barrel at times—it wasn’t so long ago that it was well above $100—it is not surprising that the U.S.—and world—energy industry is in a very deep recession, or in a “depression” in Ottensmeyer’s terminology.

The situation in U.S. industry is contradictory, because the automobile industry has been booming, with U.S. auto sales hitting a new record in 2015. The strength in auto sales is due to a combination of the lowest gasoline prices in years and low long-term interest rates combined with the need to replace the aging U.S. auto fleet.

What are the chances that the U.S. economy enters a full-scale recession by the November election? Experience shows that this would present major problems for the Democratic nominee, especially if the Republican nominee is somebody other than Donald Trump. Akin Oyedele of Business Insider argues that the argument for a near-term recession “keeps losing credibility.”

Oyedele builds his case for optimism on consumption. “Consumer spending,” he writes, “is the driving force of economic growth, as consumption makes up two-thirds of gross domestic product (GDP).” Notice Oydele’s emphasis on consumption as opposed to production. He writes: “Retail sales rose 0.4% compared to December, and 0.1% excluding the volatile costs of autos and gas. Both increases were more than forecast. The retail-sales control group, which is what matters for GDP calculations, jumped by an unexpected 0.6%.”

In essence, Oyedele’s observations confirm what Ottensmeyer, the railroad president, reports. Business remains good for retailers, auto dealers and the residential housing industry and seems to be continuing its recovery from the collapse of 2007-2009. Oyedele says that since retail sales—the “consumer”—is still going strong, that is all that really counts. The GDP, as it is currently defined, will keep on rising as long as “consumption” remains strong. So there is little chance, according to Oyedele, of a recession, at least as defined by a shrinking GDP, in the near future. If Oyedele is right, this is good news for the Democrats, especially if Wall Street favorite Hillary Clinton is the candidate.

But how can consumption be so strong in the U.S. while manufacturing and mining—material production—is stagnant, if not in an actual, if so far mild, recession. (6) Far from showing the “strength” of the U.S. economy, the combination of strong consumption and weak production is precisely what points to the long-term decline of the U.S. economy. Increasingly, the “U.S. consumer” buys and consumes commodities that are produced outside of the United States and its imperialist satellites.

The Marxist economist Michael Roberts writes in his “The Next Recession” blog: “While the industrial workforce in the mature capitalist economies has shrunk to under 150m, as unproductive labour has risen sharply; in the so-called emerging economies the industrial workforce now stands at 500m, having surpassed the industrial work force in the imperialist countries by the early 1980s.” Increasingly, the great bulk of both material production and surplus value—unpaid labor contained in commodities—is being produced in the oppressed countries, including China but not only China, but is being disproportionately consumed in a handful of imperialist countries headed by the U.S.

The rise and fall of empire

As time goes on, the U.S. and the other imperialist countries are becoming increasingly dependent on the production of other countries. This situation is characteristic of all empires since the rise of class society. The general law of empire is that what will eventually become the core country at the center of an empire first experiences by the standards of the given epoch an extraordinary development of its productive forces. This enables the core country to conquer other countries, build its empire and then exploit their production.

As a result, the internal production of the empire core country decays. Just like the ruling class within a country is dependent upon the production of the oppressed class for the production of goods that ensure the “good life,” a growing strata within the core country of the empire extending well beyond the ruling class becomes dependent on the producers of other countries to ensure its standard of living. This enables the ruling class of the core country to prop up its rule by sharing some of the fruits of the exploitation of other countries with the oppressed classes of the core country and thus consolidate its rule.

However, since the military power necessary to maintain the subordination of the exploited countries in the long run is a function of production, the point is inevitably reached when the production of the core country can no longer support the military power necessary to maintain the empire. The collapse of the empire leaves behind a devastated economy in the core country.

Ancient Rome followed exactly this path. In the early days of the ancient Roman Republic, Italian agriculture based on a large class of small farmers was by the standards of the time highly productive. This enabled the city state of Rome to conquer a huge empire. The population of Rome reached an estimated million people in the imperial epoch, a population closer to the size of a modern city than the cities of a few thousand that were typical of the ancient world.

However, the rulers of Rome were only able to keep the million-headed “Roman mob” under control through the distribution of free bread and circuses. But they could not have achieved this without the grain of Egypt and the many other nations that the Roman Empire oppressed. As Rome became dependent on Egyptian grain, Italy’s once highly productive agriculture went to seed.

This undercut the foundations of Roman military strength founded on its ability to feed and thus maintain large armies made up of citizen farmers in the field. When the empire finally collapsed, the population of Rome shrank to only a few thousand people living under miserable conditions. Wild wolf packs roamed through what had been the streets of the “eternal city.”

Closer to our own time, Spain built a huge empire that controlled much of Europe
and the Americas during the 16th and 17th centuries. Spain exchanged gold and silver plundered from the “New World” for commodities produced by the Dutch and the English, who were pioneering the capitalist mode of production with its tremendous potential to develop production beyond anything ever previously imagined. As a result, imperial Spain failed to developed its own industries. Spain has not fully recovered to this day from the resulting economic devastation.

The same process, reflected through all the laws that regulate a highly developed monopolistic capitalist economy, can be seen in 20th-century Britain, which commanded an empire where the “sun never set.” Britain was the home of the Industrial Revolution, and from the late 18th century through the 19th had the most productive economy in the world. This enabled it to build the largest and most powerful empire the world had ever known. However, by the 1980s British industry was reduced to a shadow of its former self. Ruins of abandoned factories and mines dot Britain much like the ruins of the ancient civilization of Greece and Rome can be found in modern Greece and Italy.

Britain has so far avoided a social crisis on the scale that Germany experienced after World War I only because it has been absorbed into the U.S. world empire. (7) However, when the U.S. empire falls, what empire will Britain or the U.S. itself be absorbed into?

We see the same pattern unfolding with the U.S. empire, which is following the well-beaten path of economic decline that all empires before it have followed. The class hardest hit by imperial America’s growing economic rot has been the U.S. industrial working class. A half century ago, this class operated the most powerful productive machine the world had seen up to that time. It seemed that the U.S. working class was very much the beneficiaries of the U.S. world empire that had emerged form the bloodbath of World War II.

Though the U.S. working class in politics, with few exceptions, didn’t go beyond New Deal liberalism, it was highly organized in powerful industrial unions—most of which had been created during the rise of the Congress of Industrial Organization in the 1930s. This enabled U.S. industrial workers to win a “middle-class” life style that was the envy of the rest of the world. This lifestyle played the same role for the U.S. ruling class that “bread and circuses” played for the rulers of ancient Rome. It formed the material basis for the separation of the U.S. working class from the class-conscious workers of the world. While U.S. industrial workers were often highly trade-union conscious, in politics they identified with the United States of America and not the global proletariat and its allies among the oppressed toilers—mostly peasants—of the world.

Today, a working-class youth is lucky indeed if he or she can get a good unionized factory job such as were available to his or her parents and grandparents. For the most part, working-class youth have to settle for low-paid jobs in the so-called service sector such as in retail trade or fast food, assuming they can find work at all.

The factories that do remain in the United States tend to be highly automated—in Marxist terminology have a high organic composition of capital. This is history’s way of punishing the U.S. working class for accepting the “bread and circuses” of the middle-class standard of living during the “golden years” of the 1950s and 1960s rather than joining the global movement to build a socialist society. What goes for the U.S. working class is true to varying degrees of the working classes of the U.S. imperialist satellites.

Inevitably, the growing economic decay of U.S. capitalism is reflected in U.S. politics. Without the “bread and circuses” of good union jobs with high wages and generous private health care plans, working-class and even middle-class people are looking for anti-establishment alternatives that, for now, Sanders and Trump seem to represent. Inevitably, as the U.S. empire is shaken by new wars and economic crises, the trends visible in this year’s election cycle will take on forms far more radical than any we see today. While Sanders is not really a socialist and Trump is not really a fascist, sooner or later the real things will makes their appearance.

In recent weeks, we have seen massive swings in the stock and other markets—mostly downward. The rise of the U.S. dollar that has dominated global currency and gold markets since 2011, has halted over the past two months, and there has been a modest rise in the dollar price of gold as the new year began. Against this, China, which has built up a huge hoard of dollars, is now obliged to liquidate some of this hoard in order to defend the value of its currency, leading to speculation that China is headed for a major financial crisis of its own.

We saw in the series on Germany, that changes in the phase of the industrial cycle can exercise a considerable influence on the course of the class struggle and the development of the political situation. For example, without the super-crisis of 1929-1932, which hit indebted Germany especially hard, Adolf Hitler and the Nazi Party would not be remembered today.

More recently, the collapse of Lehman Brothers and the resulting financial panic
in the fall of 2008 played a decisive role in making the historic election of Barack Obama as the first African American president of the U.S. possible. Without the “panic of ’08,” Republican John McCain would probably have won the election and Obama would have been merely the first African American candidate nominated by a major political party. It might have taken many years before an African American was elected to the presidency.

However, as a result of Obama’s election, nobody thinks that the election of a woman such as Hillary Clinton or an Hispanic candidate is anything startling. While the panic of ’08 didn’t cause these changes, it greatly accelerated them.

Could the current financial turmoil end in a new financial panic this year that
could make possible another surprise outcome in the U.S. presidential election cycle, a cycle already full of surprises? Could a “panic of ’16” result in the election of an “anti-Wall Street candidate” like Sanders at one end or Trump at the other to the U.S. presidency? And even if a new panic is staved off this year, what about the years ahead? New “panics”—or financial crises, as they are called now—will leave their marks in the voting booths but far more importantly in the factories, mines and streets.

The current global financial turmoil will be our subject next month.


1 If the U.S. had attempted to use state power to destroy German industry like it seemed set to do right after World War II, it would have run into the massive resistance of the German people. The course of the class struggle between the German capitalists and workers would have determined whether the resistance was led by the working class, in which case it would have led to a struggle for a unified socialist Germany, or whether there would have been a resurgence of right-wing German nationalism in some form.

The U.S. having used the Soviet Union to crush Nazi Germany was now determined to crush the Soviet Union before it could become a more serious threat to U.S. capitalism. In order to do this, the U.S. launched the “Cold War,” which was really a global class war aimed at both the destruction of the Soviet Union as a workers’ state building socialism and the total submission of the entire planet to U.S. imperialism.

As part of this global class war, U.S. imperialism made a deal with the German capitalists. Unlike after World War I, the German capitalists got greatly expanded access to the U.S. home market and to other world markets and supplies of raw materials that were controlled by the U.S. military. In exchange for these concessions, the German capitalists accepted an indefinite U.S. occupation of their country and agreed never to challenge the U.S. either politically or militarily. These policies, still in effect today, form the foundation of the U.S. empire. (back)

2 After World War II, the U.S., followed by the other imperialist “allies,” made no attempt to cripple (West) Germany economically. Indeed, the U.S. needed an economically strong West Germany as a buttress against the Soviet Union as well to defeat the attempt to build a socialist society in the German Democratic Republic, which to the extent it was successful would set a dangerous example for the workers of West Germany.

As a result, West German corporations that had been pillars of the Third Reich not so many years earlier were making more profits than they ever had before. This enabled the real wages of the West German workers to rise as well while maintaining and extending Germany’s traditionally strong “welfare state.” In this way, the social crisis that had gripped German capitalism as a result of its defeat in World War I was overcome, not forever but for a whole historical period.

From the viewpoint of the German capitalists, therefore, Hitler and World War II were not a dead loss. While Hitler and the Nazis’ attempt to transform Germany into a second U.S. failed, the results of Hitler and World War II played a vital role in forcing the U.S. to grant the major economic concessions to the German capitalists they had refused to grant after World War I. (back)

3 The German Social Democratic Party after World War II moved further to the right and in 1959 dropped its historical program of ending private ownership of the means of production, even in words. It had already done this in its deeds beginning August 4, 1914. The Communist Party was very weak in West Germany and often illegal. Twelve years of murderous Nazi repression that was always much more severe against the Communist Party than the Social Democrats had left its mark. The weakness of Communism in West Germany was further aggravated by the fact that many German Communists moved to the GDR to join the effort to build socialism there.

In the background was the fact that the Communist Party had not been able to defeat the Nazis. Parties do not quickly recover from such historic defeats. The effect of 12 years of Nazi propaganda about the “evils of Marxism” and class struggle among the German people also left its mark on the generation of Germans whose outlook had been formed under the Third Reich. These workers were far less class conscious than their parents had been whose outlook was formed by the struggles of the Social Democratic Party—when it was a Marxist party in the days of the Kaiserreich—and the Communist Party in the days of the Wiemar Republic. Here, too, Hitler’s attempt to “Americanize” the German working class bore some fruit.

All these factors, combined with (West) Germany’s capitalist prosperity, created a political climate that was more conservative and “American” than any that existed in Germany between its unification under Bismarck and the rise of Adolf Hitler to power in 1933. In turn, the creation of a prosperous stable conservative (West) Germany played no small role in the U.S. victory in its Cold War against the Soviet Union. (back)

4 On the Republican side, Trump had been leading in the Iowa caucuses, but a massive effort by Ted Cruz allied with far-right-wing protestant clerics—so-called Evangelical Christians—succeeded in ensuring a victory for Cruz. Backed by the Koch Brothers, a family of extremely aggressive and right-wing industrial capitalists,Cruz competed with Trump’s racist and xenophobic demagoguery. Unlike Trump, however, Cruz like his Koch brother sponsors put forward an extreme neo-liberal program, and this limited his ability to win support beyond so-called Evangelical Christians. And Trump ran surprising well among Evangelical Christians in South Carolina, who tend to vote the way their religious leaders tell them to.

In any event, Cruz as a protégé of the Koch brothers is unpopular among “mainstream”—pro-Wall Street—Republicans. The “establishment” Republicans are still desperately searching for a Wall Street-certified candidate who can be sold to the angry Republican rank and file. As of this writing, they seem further than ever from finding one, and the time is rapidly running out.

If Trump is the nominee, the Republican Party will experience a major split, with many establishment Republicans giving open or backhanded support to the Democratic nominee, especially if that nominee is the pro-Wall Street Hillary Clinton. Whether and how the Republican coalition would be put back together after the election—if it can be—remains to be seen. (back)

5 Sanders himself is 74, which would make him by far the oldest person ever elected president. If Sanders were to serve two terms, he would be well over 80 when he left office, considerably older than Ronald Reagan. This is bound to raise concerns among the ruling circles whether Sanders is physically up to the demands of the U.S. presidency.

In addition, compared to Hillary Clinton, Sanders has limited training to serve as leader of the “free world.” Clinton served at the side of her husband Bill Clinton, and some say she was a kind of unofficial co-president. She also served in the U.S. Senate and in the powerful position of secretary of state, where she proved herself to be quite hawkish, making President Obama appear as a moderate by comparison.

Leaving aside his Senate seat, Sanders’ only experience in government was as mayor of Burlington, Vermont, a city with a population of less than 43,000 people. However, despite his age and skimpy administrative experience, Sanders appeals to the young in a way the “seasoned” Hillary Clinton cannot. (back)

6 The U.S. industrial and mining economy was indeed in a mild recession during the last quarter of 2015, though, at least as conventionally defined, the broader economy was not, with overall employment rising at around 200,000 net additional jobs a month. The quality of these jobs is another question.

The Federal Reserve Board claims, however, that manufacturing output grew at a 0.5% rate in January and overall industrial production increased at a rate of 0.9% per month. However, much of the increase in industrial production reflected an increase in utility output, which resulted not from an improvement in economic conditions but the end of the extremely mild December weather.

It is possible that the increase in manufacturing reported by the Federal Reserve could also reflect an increase in the use of electricity to heat factories as weather returned to more normal conditions in January compared to the abnormally warm weather in December, rather than any genuine rise in manufacturing output. Various private reports claim that the rate of decline in industrial production slowed in January, but the trend was still downward. Next month, when we have another month’s data, we will take a closer look at this. As 2016 began, U.S. manufacturing is stagnant at best or in an actual still mild recession at worst, while consumer demand remained well outside of recession territory. (back)

7 Something similar happened during the decline of the Roman Empire. By the fourth century, political power within the empire had shifted from Rome to Constantinople, today’s Istanbul. In some ways, the U.S. empire is a continuation of the British Empire with power shifting from London and “the City of London” to Washington and Wall Street. By the fourth century, Rome had lost political power to the rulers of Constantinople.

However, the masters of the new ruling city went to considerable effort to maintain the continuation of “bread and circuses” in Rome in the interest of the overall stability of the empire. In the fifth century, however, Constantinople lost control of Rome and other parts of what had been the Western Empire. Conditions rapidly deteriorated within the city of Rome bringing the ancient metropolis, which had had a population of a million people at its height, to an end. Will Britain face an analogous fate as the U.S. empire declines and finally falls? (back)