Report by the League for the Revolutionary Party
on “The Economic Crisis and Left Responses” conference

New York City, November 6, 2010

The conference on “The Economic Crisis and Left Responses” was organized by the Marxist-Humanist Initiative, a political descendant of Raya Dunayevskaya’s News & Letters group. In addition to two of their own speakers, the MHI invited other specialists in Marxist economic theory to be speakers, including Walter Daum of the League for the Revolutionary Party. The conference program, plus links to the speakers’ biographies and outlines of their presentations, can be found at the MHI website, www.marxisthumanistinitiative.org/. The MHI announced that videos of all sessions would be posted there soon.

The conference, held at Pace University in downtown Manhattan, drew close to 100 people at its height. The ten speakers were divided among three sessions, running consecutively so everyone could hear everything, and it is to the MHI’s credit as conference organizers that the debate among speakers and attendees was conducted democratically.

This report does not claim to be a complete or unbiased survey of the talks and discussions. Rather, it focuses on the topics that we in the LRP consider most important.

Debates over Economic Theory

A centrally important issue, which both Andrew Kliman of the MHI and we in the LRP argue, is that the capitalist system’s falling rate of profit, a tendency first explained by Karl Marx, underlies the current economic crisis. (Put simply, Marx observed that capitalism’s drive to raise the productivity of labor by increasing the level of technology would, over time, drive the system’s rate of profit down.[1]) We had hoped that Kliman would focus his presentation on this perspective and challenge other panel members on this – notably Rick Wolff, who has claimed that the capitalists’ “surplus” has increased at an unprecedented rate since the 1970’s.

This debate is of great importance, since the falling rate of profit tendency shows that the current “Great Recession” is no mere cyclical downturn that will be more or less automatically followed by a significant upturn; it is rather a warning of the system’s inevitable collapse into another Great Depression. The crisis is an expression of the fundamental contradiction of capitalism in its epoch of decay: the productive economic forces that the system has built up have the potential to produce an abundance for all, yet they remain strangled by the capitalist system’s drive for profits rather than human use. The increasingly heated competition among corporations and nations and the relentless assault on working-class living standards ultimately threaten humanity with another dark age of fascism and war – unless capitalist rule is overthrown by the working class through socialist revolutions.

In his talk at the first session, Kliman did raise the rate of profit issue, but his (and the MHI’s) main theoretical concern at the conference turned out to be his claim that U.S. workers’ share of the national product has increased, not decreased, since 1970. He says this follows from including government health, social security and welfare payments as part of labor’s compensation. This claim is highly dubious. One reason is that the costs of health benefits in the U.S. include heavily overpriced payments to pharmaceutical and insurance companies, so some of this compensation goes to these capitalist sectors. Another is that the top layer of those counted as wage and salary earners (in the government data that Kliman uses) are in reality managers and professionals, and it is they whose compensation has been rising notably – this reflects the growing income inequality that many studies have demonstrated.

In any case, as a result of this misguided emphasis, Wolff and others were only peripherally confronted on theories that lead to their reformist conclusions: namely, that a solution to the crisis is the redistribution of wealth, not the revolutionary elimination of capitalist relations of production.

On the topic of “left responses,” speakers pushed their favorite panaceas: a Congressional full employment bill (Roslyn Bologh), taxing the rich (Fred Moseley and Barry Finger), and letting workers in each workplace control the surplus-value they produce (Wolff). On the other side, the “left communists” (Mac Intosh of Internationalist Perspectives, and Paul Mattick) advocated calling for socialism while opposing calls for reforms because they create illusions and strengthen capitalism. The strategy of fighting for reforms in order to unite and empower the working class through mass struggle – and use the experience of that struggle to prove the need for socialist revolution – was foreign to both wings.

Bologh at least proposed a fight for jobs for all as a way to unite the working class and disarm the drive of right-wing populists. The problem was that she focused her argument not on the need for mass working-class struggle but on support for John Conyers’ full employment resolution in Congress. That bill, which not even a Democratic-run Congress would take seriously, serves to advance the cause of full employment as much as Conyers’ “Medicare for All” bill advanced the cause of free, quality health care for all – it was a diversion from the need for mass struggle by the unions and community organizations for the health care people really need. As Walter Daum pointed out later in the conference, the suggestion that the Democratic Party is in any way friendly to the working class undercuts the necessity for the working class to organize itself independently of all bourgeois parties, and is a major disservice to working-class consciousness.

Wolff proposes that enterprises be “internally reorganized such that the workers themselves functioned collectively as their own boards of directors (replacing shareholder-selected boards of directors).” He labels this “eliminating the capitalist class structure” because it would be the workers and not the bosses who control the surplus value they produce. This perspective is hopelessly reformist. Socialism in isolated enterprises amid a sea of unemployment and want is as impossible as building socialism in one country amid a world of imperialist states. Workers’ controlling their economic surplus on an enterprise level would only lead to competition among enterprises to maximize the surplus value each controls; the inequalities and exploitation of capitalism would continue. Moreover, the capitalists will send their cops and soldiers against struggles for far more modest reforms than this. For workers to enjoy any kind of lasting control of their workplaces, workers’ revolutions will be needed to smash the capitalist state and put the working class in power. Then, a government of workers’ representatives will be able to centralize control of the surplus produced by enterprises in order to implement a plan of production and distribution in the masses’ general interests. In this way it will be able to direct the production of an abundance of the masses’ needs and thus lay the basis for the withering away of society’s class divisions and for the building of socialism.

The LRP’s Presentation

In his talk at the second session (see below), Daum summarized the LRP’s theory of the crisis. Like others we have argued that this system has been heading toward a major crisis, so we were not surprised by the near-meltdown of 2-3 years ago. Indeed, thanks to our theory, we were alone in foreseeing that the developing crisis of world capitalism would break out into acute crisis in the Stalinist-ruled societies before later breaking out in the strongest imperialist powers in the West. We saw that Stalinism was the extreme example of a capitalist system in decay – one that, for example, maintained obsolescent industries well beyond their sell-by date for fear of the consequences of letting them fail. This led to growing mountains of fictitious value, and in the end the result was very low and even negative real rates of profit.[2]

Addressing the “left responses,” Daum argued that the question for revolutionaries is how to raise the political consciousness of our class, the working class, so that it sees through reformism and can “fit itself to rule.” It needs to oust the capitalist ruling class and become the ruling class in a workers’ state. Specifically, he challenged Kliman’s assertion in the first discussion period that “we don’t have to raise consciousness; people just need information.” He cited the Communist Manifesto’s description of the need to provide working-class leadership: “The Communists are practically, the most advanced and resolute section of the working-class parties of every country, that section which pushes forward all others.”

Daum gave examples: first, this fall’s French strike movement against austerity, where it was crucial for revolutionaries to press for a widespread general strike to hold out until the government’s attacks on retirement benefits were defeated; second, the Republic Windows and Doors occupation in Chicago in December 2008 – a small action that won the workers’ their back pay and benefits but did not save their jobs.

“Whereas the French movement has been inherently political – directed at the government – the Chicago struggle was not, but it needed to be. The crisis in this country was already widespread – many plants were shutting down, and public services were being cut back. At the time of a profit crisis for the capitalists, there is no serious solution in one factory or enterprise or industry. When companies are bankrupt, their productive capacity and jobs can only be saved by state policies or direct state intervention. That’s why we must demand the nationalization of failing industries, along with a national program of public works to provide jobs for all. Had the workers’ union allowed the struggle to advance in this way, for jobs, it would have been a tremendous inspiration to workers everywhere.”

The MHI did not respond at this session to the challenge on the question of consciousness. In the final session, however, Jaclard – in the conference’s final summary, when no one could respond – distorted the issue by decrying “the view expressed that workers are backward until we raise their consciousness.” As to nationalization, Mac Intosh responded by cataloguing examples of nationalizations by European capitalist governments after World War II that were designed to co-opt and restrain powerful working-class movements.

In his summary, Daum replied that even capitalist nationalizations generally mean gains for the workers and should be defended. (For example, they can inhibit the competition that capitalists use to whipsaw groups of workers and thereby intensify exploitation.) Most importantly, by placing industry in the hands of the government, nationalization raises the question of which class the government serves; revolutionaries can take the opportunity to argue for workers taking state power into their own hands. Daum pointed to mass struggles in several Latin American countries against the privatization of water and energy resources as examples that should be supported. This issue was not taken up further, but we would challenge the “left communist” milieu: when, say, Bolivian workers battle against the privatization of their national resources, which side are you on? Do you stay neutral, on the grounds that state property is just as capitalistic as individual private property? Or do you join in the anti-privatization struggle, pointing out that only a workers’ state can genuinely defend the workers’ and peasants’ interests against the capitalists?

Mattick also responded, deriding the LRP’s efforts to build revolutionary leadership in the working class. An LRPer speaking from the floor replied that Mattick was really blaming the workers for their leaders’ betrayals. He noted that, at the same time as this conference was taking place, Transport Workers’ Local 100 was holding a mass membership meeting. The LRP’s comrades among transit workers were there, advocating the need for mass action against layoffs and service cuts despite opposition from the union’s supposedly left-wing leaders. Workers have time and again looked to fight against the capitalist attacks, only to have their efforts held back and sabotaged by leaders who see no alternative to capitalism. If such leaders are not challenged, the result will be to leave the workers under the leadership of reformists who inevitably capitulate to the needs of the capitalists.

Mattick later sent everyone’s heads shaking in disbelief by saying that fighting for jobs was futile: everything is automated and the capitalists don’t need more workers. There are no jobs, but there’s plenty of stuff, he claimed – people should just go and take it. Of course, there are many countries in the world where there is not “plenty of stuff.” And in any case, no capitalist state will just look on benignly as people take what they need. It’s one thing to deny the necessity of a workers’ state – that makes you useless for the socialist revolution. But it’s another thing to deny the reality of the capitalist state, especially coming from a supposed Marxist.

The LRP feels that its participation in the conference was useful, since its ideas on at least some of the key questions were discussed with a new audience. But the conference did not seriously debate the issues of how capitalism’s laws of motion determined this crisis, and what a revolutionary response should be.

Notes

1. For a full explanation of this theory and our analysis of the economic crisis, see Marxist Analysis of the Economic Crisis: Bankrupt System Drives Toward Depression PDF in Proletarian Revolution No. 82, Winter 2010.

2. This is spelled out in our book The Life and Death of Stalinism.


Marx’s Revolutionary Economic Theory and Program

Presentation by Walter Daum
to the Conference on The Economic Crisis and Left Responses,
New York City, November 6, 2010

[This is my prepared text for my talk at the conference on 11/6/10, plus passages in squiggly brackets based on notes I added during the previous talks and discussions. My recollection of what I added may not be entirely accurate, although the gist certainly is - WD.]

I. Marx observed that capitalism has created the material potential for a genuinely human society. But capitalism in its decay instead spreads misery, austerity and poverty – and must do so, in order to defend the profit system vital for its survival.

What makes an alternative possible is the mass struggle of the working class. The French strike wave in recent months once again showed the power of the working class to halt profit-making, defend itself and to potentially transform itself. But its present leadership – in the unions and nominally socialist and communist parties – seeks reforms to benefit the workers – but only to the extent that reforms are compatible with the health of the capitalist system – that is, of profits. So when the profit system is in crisis, these leaderships are worse than useless for the workers’ struggle – they lead the struggle to defeat.

The title of this conference includes “left responses”. That is far too vague. The question is, what strategy for revolutionaries? How to raise the political consciousness of our class, the working class, so that it sees through reform-ism and can “fit itself to rule” – to oust the capitalist ruling class and become the ruling class in a workers’ state.

{And in mentioning consciousness. I have to say that while I share Andrew [Kliman]’s conclusion this morning that the workers’ gains are bad for capitalists, I disagree strongly with the disdain he expressed for raising working-class consciousness. (More on this later.)}

We are all familiar with Marx’s dictum that the philosophers have merely interpreted the world – but that the point is to change the world. Marx could hardly be charged with denigrating the importance of theory. He understood the [dialectical] relationship between theory and practice, emphasizing the necessity of developing a scientific theory for conducting revolutionary action, and also for practical involvement in the struggles of workers, in order to develop revolutionary theory. To be true to Marx, in discussing the revolutionary response to the economic crisis today, we must therefore address questions of both theory and practice.

The socialist group of which I’m a member, the League for the Revolutionary Party, has worked for decades both as militants in union and community struggles, and also in international class struggles – as well as in the difficult labor of developing our Marxist theoretical understanding of capitalism. Like some others, looking at the capitalist world as a whole, we have argued that this system has been heading toward a major crisis – the long-term falling rate of profit tendency is key. So we were not surprised by the near-meltdown of 2-3 years ago.

Also like some others, we identified the Stalinist societies like the USSR, well before their collapse, as state-run capitalist societies. But we were unique, I believe, in using our theory to foresee that the developing crisis of world capitalism would break out into acute crisis in those societies, before later breaking out in the strongest imperialist powers in the West. We saw that Stalinism was the extreme example of a capitalist system in decay. For example, it maintained obsolescent industries well beyond their sell-by date. This led to growing mountains of fictitious value, and in the end, the result was very low and even negative real rates of profit.

That is, the collapse of Stalinism was the collapse of the system’s weakest link, a foretaste of the systemic crisis we see today. But for much of the left, up to almost the end, that system remained “progressive” or at least solid and stable. {Stalinism destroyed the Soviet workers’ state and much of the revolutionary left – a major contribution to the “absence of the left” that Paul [Mattick] referred to – in fact its defeat.}

II. In looking at the near-meltdown and consequent “Great Recession,” it is striking that perceptions were again often the opposite of reality. For up to that point the capitalists seemed to be doing really well:

a) they had succeeded largely cutting wages while raising productivity;

b) they had opened up China and other countries to imperialist super-exploitation;

c) their profits had benefited from the information revolution: computers and the internet

For all that, their system came close to collapse. The cause was not just the deregulation and malfeasance that liberals speak of, or the financialization that some leftists blame. Fundamentally, it was that profit rates remained well below their post-World War II heights. The system plunged into a grave crisis DESPITE its superficial successes, because it never escaped its long period of stagnation after the post-WW2 boom. And so the current recession, which is obviously not ended from the standpoint of working-class people, is far deeper than an ordinary cyclical recession.

So let’s look at the basic components of Marxist theory that are essential for analyzing this reality.

A. Cycles of boom and bust, which have occurred throughout the history of capitalism. Capitalism’s crises are the bitter medicine, the destructive means by which profits are revived. The collapse of unprofitable firms helps purge weaker capitals and drive down workers’ wages, thus laying the basis for an upturn.

B. But in the age of imperialism, the domination of the economy by monopolies and state interests restrains the outbreak of cyclical crises, allowing the system’s inefficiencies to build up.

For over a century capitalism has been a decadent system that can no longer advance the productive forces in one sphere without destroying them in others. This imperialist epoch, foreseen by Marx, came to a head in the cataclysm of the First World War. And in this epoch, the law of the falling tendency of the rate of profit comes into full play and leads to major catastrophes like the Depression of the 1930’s.

{And since the falling rate of profit was much discussed this morning without a real explanation, let me just say that for Marx the value of a commodity is based on the human labor it embodies. But capitalism also over time makes dead labor – embodied in machinery, buildings, materials, etc – grow much faster than living labor. And since surplus value and profit come only from living labor, the ratio of surplus value compared to capital invested in dead labor tends to fall.}

C. The third element is the proliferation of fictitious value. Credit and banking are necessary components of capitalist production. But debts and other paper claims to ownership can acquire a nominal value that differs, sometimes vastly, from the real value of the commodities they represent. Bubbles of fictitious capital in the past would be largely wiped out in the periodic crises, but in this epoch they can become so huge that their bursting can signal the collapse of the whole economy into permanent crisis. We saw that dramatically when the Great Recession hit.

And we see it again today: the bailouts of the banks drove some governments to the edge of bankruptcy, and now all the ruling classes cry austerity – for the rest of us.

These factors point to the inevitability of another devastating depression. The Great Depression of the 1930’s was resolved only by means of fascism and world war. These consequences can be prevented only through working-class socialist revolution. So back to where I started: it is the task of revolutionaries to build a revolutionary layer in the working class that can prove to wider and wider layers of our class, in the course of struggle, the necessity for socialist revolution.

Why revolution? Because workers’ states will be needed to seize control of the economy from the capitalists and redirect its production toward the interests of all humanity – with the aim of producing an abundance of all they need. Scarcity is the basis for society’s division into classes, so the creation of an abundance of human needs will provide the basis for the withering away of classes and the building of socialism.

III. Again, as Marx said, the point is not just to understand the world. Genuine Marxists are distinguished both from reformists, or minimalists, those who offer reforms within the realm of capitalism, and perhaps even think that such reforms are a concrete step towards socialism. In any case, they do not act on the conviction that as long as the capitalist class rules society, any reform will only be partial and temporary.

Revolutionaries are also distinguished from maximalists, who proclaim the necessity of socialism but disdain from taking a lead in advancing the class struggles of today which inevitably fight for reforms.

At this point, I want to thank the Marxist-Humanist Initiative for initiating this conference. But I have to respectfully disagree with the lead point in their statement of purpose:

We are not a political party. Nor are we trying to lead the masses, who will form their own organizations, and whose emancipation must be their own act. But we have seen that spontaneous actions alone are insufficient to usher in a new society. We seek a new unity of philosophy and organization in which mass movements striving for freedom lay hold of Marx’s philosophy of revolution and recreate society on its basis.

I was a bit astonished at seeing that, since I remembered Marx and Engels’ Communist Manifesto. So I laid hold of my copy:

“The Communists, [therefore,] are on the one hand, practically, the most advanced and resolute section of the working-class parties of every country, that section which pushes forward” – that is, seeks to lead “all others; on the other hand, theoretically, they have over the great mass of the proletariat the advantage of clearly understanding the line of march, the conditions, and the ultimate general results of the proletarian movement.”

For Marx, it is not just that communists have a revolutionary theory, but also that they seek to lead the working class – they are “that section which pushes forward all others.” To use a controversial word, they are the vanguard of the working class.

The Marxist-Humanist Initiative are not the only ones who recoil at the idea of such leadership. Another commentator says that revolutionaries “can only offer the hope that in their resistance, the working class will transform itself into a class for itself, and thereby free humankind.”

Communists, however, must offer more then hope – we are obliged to offer leadership, to fight for leadership against the misleaders of our class. That means joining the struggles alongside our brothers and sisters in the working class, taking every opportunity, making use of every possible tactic, to patiently explain the “line of march” and the ultimate aim of the workers’ movement.

We learned the general method from such thinkers as Marx, Lenin and Trotsky. Now the question is how to do it today. Again, it is a question not only of theory but also of practice.

IV. Let us consider some examples from recent events.

In the French strike wave, there have now been seven “days of action” (and there is another today), which brought several millions into the streets, and won the support of 2/3 of the population – because people understood that the government’s tightening of conditions for getting state pensions was just the leading edge of an all-out austerity program. The refinery and port workers who were on an all-out strike almost brought the capitalists to their knees. But the socialist/communist party and union bureaucrats kept the strikes isolated, kept the actions dispersed – and refused to declare an all-out general strike to continue until the pension bill was withdrawn, as so many of the protesters wanted.

It was the responsibility of communist revolutionaries to find ways to fight for such a general strike, and to point to the international implications of the struggle (all Europe is under much the same austerity attack). As well as pointing to the revolutionary implications. That means, to offer and fight for leadership.

In the U.S. we have not had such opportunities in recent times. But one small example two years ago was the sit-down by the workers at Republic Windows and Doors in Chicago, a factory employing a few hundred workers, largely Latino and Black. That radical action won the workers the back pay and benefits owed them. But it did not save their jobs. Whereas the French movement has been inherently political – directed at the government – the Chicago struggle was not, but it needed to be. The crisis in this country was already widespread – many plants were shutting down, and public services were being cut back. At the time of a profit crisis for the capitalists, there is no serious solution in one factory or enterprise or industry. When companies are bankrupt, their productive capacity and jobs can only be saved by state policies or direct state intervention. That’s why we must demand the nationalization of failing industries, along with a national program of public works to provide jobs for all. {Had the workers’ union allowed the struggle to advance in this way, for jobs, it would have been a tremendous inspiration to workers everywhere.}

To many workers without revolutionary consciousness, this makes sense in a reformist way – the government speaks in our name; it should act in our interest. Revolutionaries, on the other hand, must raise no illusions in the capitalist state. We believe that the experience of fighting for such transitional demands will prove our revolutionary perspective, whether the government nationalizes an industry or not. If the government refuses, for fear of undermining capitalist rights and encouraging further workers struggles, that confirms our arguments on the need for the working class to rule. Thus we always make clear that for as long as the government is in the hands of the capitalists, any industries controlled by the government will be used in the capitalists’ interests.

Our job is to patiently explain why a capitalist government will not do what seems so sensible and logical – save useful industries and people’s jobs. That allows us to raise the need for a workers’ state, leading to a communist society, and socialist revolution. It’s not easy, but revolutionaries have to seize every chance to advance class consciousness.

There will be no revolutionary transformation to abolish the evils of capitalism without a revolution that does away with capitalist state power. It is the job of revolutionaries to prove this – at first to the most politically advanced layers of workers, over time to more and more. And thereby to show the need for joining together to build that genuine communist party that Marx called for.

Having a minute extra at the end, I added: {One speaker this morning [Roslyn Bologh] denounced Democratic Governor-elect Andrew Cuomo [of New York] for threatening to slash public services. But then she hailed the jobs bill of Democratic Congressman Conyers, which not even a Democratic-run Congress would ever take seriously. Any suggestion that the Democratic Party is in any way friendly to the working class undercuts the necessity for the working class to organize itself independently of all bourgeois parties. It is a major disservice to working-class consciousness.}