Note: Article originally published in Claridad (July 29- August 4, 2010)
Ian Seda (IS): Many economists are claiming that the “Great Recession” is finally over given a rebound in GDP growth in the US. What is your take on these types of analyzes?
Rick Wolff (RW): GDP numbers tell us nothing about the distribution of income and wealth, the profitability of enterprises, the prospects for growth, and much else of importance. Politicians often use GDP numbers if and when convenient to applaud policies they support or denounce those they oppose. In the US today, politicians interpret GDP growth since mid-2009 as a sign that capitalism is now “in recovery.” Yet extreme unevenness characterizes US capitalist development since mid-2009. Because of massive injection of money, lowering interest rates to near zero, and guaranteeing private bank obligations by the Federal Reserve (the US central bank), and simultaneous massive deficit spending by the US federal government, banks’ profitability recovered. Low interest rates also fueled a partial “recovery” of stock market prices. Huge government spending likewise slowed (but never reversed) rising unemployment and bankruptcies. Thus, while US GDP rose since mid-2009, unemployment and bankruptcies also rose, the housing crisis deepened (severe excess supply of housing alongside rapidly rising homelessness), and state and local governments slashed services (especially public education, welfare, support for the elderly, etc.).
For the present and the future of the US economy, what matters most since mid-2009 is the severity of rising unemployment and its negative consequences. Current living conditions of most Americans have deteriorated; that plus cutbacks in education seriously compromise the economic future for the US. Multinational corporate capitalists are relocating production, targeting future market growth, and making profits increasingly outside the US. They use their wealth and power to reduce their US taxes and to support US politicians who best manage this long-term decline of the US.
Since the mid-1970s, real wages in the US stagnated. Households maintained rising standards of living only because US workers (especially women) did more hours of paid labor and borrowed huge sums. Today, exhausted from that labor and anxious over unsustainable household debt, US workers confront the historic decline of their standard of living and its future prospects. Only a mass class response can change these historic developments. GDP numbers stressed in public discussions mostly distract attention from the social implications of the crisis and working class decline.
(IS): In what ways is this crisis and the responses to it different from the one of the 1930's?
(RW): President Roosevelt's response to the deepening US depression after 1932 was shaped by three key factors: (1) the severity of unemployment, bankruptcy, profit and output declines, etc. (2) the powerful working class response in an historically unprecedented unionization drive organized by the Congress of Industrial Organizations (CIO), and in rising electoral support and social influence of the Socialist and Communist Parties, and (3) the existence of an increasingly influential anti-capitalist alternative in the USSR. Thus Roosevelt's New Deal not only used massive Keynesian monetary and fiscal policies and regulations of businesses and markets; it also undertook massive programs of direct employment (hiring 11 million workers as federal employees between 1933 and 1942) while also established the social security system, unemployment insurance, etc.
In contrast, the Bush and Obama administrations faced only the first of the three key factors listed above: a massive collapse of the capitalist economy. The AFL-CIO has been declining without interruption for 50 years and now represents under 8 per cent of privaste employees. The socialist and communist parties have all but disappeared and nothing comparable has yet replaced them. Thus we have, quite predictably, Keynesianism without any major, direct, or massive social welfare system. Without political pressure from below, the US will continue to be ruled by a right-wing Keynesianism.
(IS): People like Noam Chomsky are worried that the current situation in the US has brought back the ghost of fascism given the lack of an organized labor movement and the role that nationalism acquires as a discourse of unity under situations of crisis. What are your thoughts on this?
(RW): Capitalism always provokes angers and resentments, especially among workers who get jobs in cyclical upswings and then get fired when crises hit. In sustained capitalist crises, the numbers of such workers rise. Their demands for relief, for jobs, etc. can quickly mature into criticisms of the capitalist system itself for so regularly revisiting crises and mass suffering on people. Then socialist and/or communist movements can become more socially powerful. Capitalism’s survival may require something that distracts angry workers and the unemployed away from socialist and communist movements. Fascism is often the solution for capitalism if and when its organizers use nationalism, religion, racism, anti-immigration sentiments or other such means to generate mass movements that do NOT attack capitalism and do attack socialism and/or communism. The ghost of fascism – like economic crisis - always haunts capitalism. The current crisis in the US only brings that ghost closer. As in the past, extended crises can produce a kind of state capitalism (e.g. Nazism) to ward off socialism and communism.
(IS): How do you view the announcement of the USW-Mondragón alliance and its proposal to develop manufacturing jobs around the green economy initiative in light of the intense debates within leftist groupsa bout the role of cooperatives within capitalism?
(RW): Cooperative productive enterprises have long been another way for workers to vote with their lives and work against the capitalist organization of production. Instead of a tiny minority of shareholders selecting boards of directors to decide what, where, and how to produce and what to do with the profits, producer coops take all such powers into the hands of the workers themselves. The USW-Mondragon alliance is an important step of recognition by a major US trade union that its basic strategy of organizing capitalist employees to bargain collectively with capitalist employers needs to be broadened to include an alliance with workers interested in producer coops. The alliance of the USW and Mondragon can transform a still-largely implicit critique of capitalism that they share into a powerful new twenty-first century movement toward the goal of realizing much more democratic, post-capitalist forms of organizing production.
(IS): What is your impression of the dynamics that are taking place in Latin America regarding the 21st Century Socialism alternative to the neo-liberalism?
(RW): What is most impressive about Latin America’s leadership in challenging global neoliberalism is the broad political support for that challenge, the leadership’s sophisticated respect for and attention to mass organization of that support, and its refusal to date to sell out to or knuckle under to US counter-pressures. These dimensions of 21st century Latin American socialism are inspiring for much of the rest of the world. At the same time, what is important to stress is that the problem for socialists is not neo-liberalism – one form of capitalism – but rather capitalism per se in all its forms. Even on those rare occasions when capitalism can be given a human face, that face is never secure. The underlying contradictions of capitalism can – and usually do – quickly reverse the human face and impose again the ugly dictatorship of capital. Thus we see today, across so much of the industrialized capitalist world, the destruction of welfare states in favor of new “austerity” regimes. Capitalism demands them as the necessary response to its crisis. What we all need from the Latin American movements for socialism is (1) a strong, clear refusal not only of austerities but also the capitalism that demands them to repair the crises it creates, and (2) a program for an alternative, non-capitalist organization of production.