The Crisis (Pt 7)

An unprecedented crisis

The current economic crisis has many unprecedented features. Most importantly, it was triggered by a pandemic and the resulting business shutdowns and stay-at-home orders. This led to a sharp decline in the sale of commodities. The result has been a collapse of industrial production, world trade, and employment over a period of a few weeks that is unparalleled in the history of capitalism. Because nothing like this had ever happened before, it is extremely difficult to predict what will happen next.

For example, we don’t know the future course of the pandemic as capitalist governments move, even as the pandemic continues, to lift the shutdowns of nonessential businesses and stay-at-home orders. Will these moves to “reopen the economy for business” cause the pandemic to accelerate? Or will the pandemic decline in the Northern Hemisphere, where the largest capitalist economies are located, as summer conditions set in? Many virus-caused diseases decline in the summer months and accelerate in the fall and winter. Will COVID-19 follow a similar pattern?

Even if we assume the pandemic peters out over the (Northern Hemisphere) summer and doesn’t come back this fall/winter, an extremely optimistic and experts say unwarranted assumption, will the U.S. and world economy revive rapidly in a so-called V-shaped recovery? Or will the recovery be slow and torturous, with Depression levels of unemployment lingering on for years? Or will it be something in between?

The Crisis (Pt 6)

U.S. unemployment hits Depression levels

In April, the U.S. Labor Department U-3 measure of unemployment hit 14.7 percent. The U-3 rate had been used over the last year or so to claim that unemployment was the lowest since 1969. In fact, it is designed to greatly underestimate the real level of unemployment. Even some Federal Reserve Board officials admit that the real rate of unemployment is over 20 percent and fast approaching the all-time quasi-official estimate of 24.9 percent that occurred at the very bottom of the Depression in March 1933. Nobody denies that the number of unemployed in the U.S. is in the tens of millions — around 50 million if you believe AFL-CIO President Richard Trumka.

However, it is claimed by Trump and most economists that the current unemployment crisis is the result of the deliberate shutting down of the economy made necessary by the COVID-19 pandemic. What is occurring, according to this logic, is not the long-feared Depression II but the “Great Suppression.” Though unemployment generally declined after March 1933 — except for the sharp but short-lived Roosevelt recession of 1937-38 — “full employment” did not return until the U.S. had entered World War II in 1941. This time, it is claimed by Trump and many economists, in contrast to 1933 there is no underlying economic crisis. Therefore, “full employment” will return much more quickly. The pandemic will have run its course within months, as Trump claims, or at most within several years, as claimed by more cautious economists.

Therefore, the argument goes, while still a terrible situation it is not quite Depression II. Though unemployment may be as bad as during the Depression, it won’t last nearly as long. Anyway, Depression-level unemployment is the necessary price we have to pay to stave off the much greater evil of millions of deaths in the U.S. alone from COVID-19. Not surprisingly, Donald Trump, who had been planning on running on “prosperity and full employment” as shown by the Labor Department’s U-3 unemployment rate, is leading the charge to “open America for business.”

The Crisis (Pt 5)

U.S. infection rates rise as states move to reopen

More and more U.S. states are moving to reopen non-essential businesses though there is no sign the COVID-19 epidemic is dying down. “Take the New York metropolitan area’s progress against the coronavirus out of the equation, Nicky Forster, Carla K. Johnson, and Mike Stobbe wrote May 4 in an Associated Press article, “and the numbers show the rest of the U.S. is moving in the wrong direction, with the known infection rate rising even as states move to lift their lockdowns. … ”

According to a leaked CDC document that appeared in The New York Times and Washington Post, the government projects that new COVID-19 cases will increase 225,000 a day by June, with deaths climbing to 3,000 per day. In early May, when this is being written, new cases are only 25,000 with deaths a mere 2,000. This despite all the social distancing and stay-at-home orders.

With President Trump leading the charge to reopen America for business, state and local governments are competing with one another for which one can lift the social distancing and stay-in-place orders the fastest. So far, these are the only policies that have slowed the pandemic in some areas.

In reality, the pandemic is still gaining momentum nationwide. Thanks to Trump and various state and local governments, the spread of COVID-19 in the U.S. could very well accelerate further in the coming months. A similar pattern is emerging in other capitalist countries. Of course, the growth of the pandemic in one country, particularly one as large as the U.S., is a threat to people of all other countries, since the virus does not respect national boundaries.

The Crisis (Pt 4)

May Day strikes

On May 1, International Workers’ Day, a wave of worker and renter strikes swept the United States. Workers protested the dangerous conditions in which they are forced to work during the COVID-19 pandemic. Among the companies struck were Amazon, Walmart, FedEx, Target, Instacart, Shipt, and Whole Foods. The May Day strikes show the increasing influence the internationalist traditions of the world workers’ movement is having on the U.S. working class, especially among the lowest paid and most exploited workers. The current medical-biological-economic-employment crisis has only deepened this tendency.

Also, and this should be noted, the internationalist implications of the global May Day holiday stand in complete opposition to the traditional AFL-CIO union leaders, Bernie Sanders, and many progressives and newly minted “democratic socialists” going down the disastrous road of economic nationalism and China bashing. Trump and the other economic nationalists, both Democrats and Republicans, are trying to divert attention from the disastrous mishandling of the pandemic by the U.S. government — both federal and state — to China. More on this in the coming weeks.

‘Party of Order’ versus Sanders

As we saw last week, Bernie Sanders has for many years operated well within the limits of capitalist, or — to use traditional Marxist language — bourgeois, politics. He has done nothing to organize an independent workers’ party or an independent workers’ media, either print, radio-TV or Internet. Nor is he internationalist like the working-class leaders of the past, such as Sanders’ personal hero Eugene Debs. Rather, Sanders is an economic nationalist and an imperialist dove.

Why then is the Party of Order so hostile to Sanders? As its leaders know full well, capitalism has in many countries survived presidents and prime ministers far more radical than Bernie Sanders. No knowledgeable person believes that U.S. capitalism would be in danger of being abolished under a Sanders administration.

Political and Economic Crises (Pt 15)

Trump orders assassination of top Iranian general

On Jan. 2, 2020, Donald Trump ordered a drone strike that the next day assassinated among others General Qassem Soleimani, considered Iran’s leading general and one of the most powerful and popular leaders of the Islamic Republic. Soleimani was killed at the Baghdad airport while on a diplomatic mission aimed at improving relations among Iran on one side and Saudi Arabia and the United States on the other. The murder of such an important military and political leader while on a peaceful diplomatic mission has few if any precedents in the history of diplomatic relations stretching back over thousands of years. Rather, Trump’s action is straight out of the history of the 20th-century New York mob.

This has brought the U.S. to the brink of full-scale military war with Iran, and frankly, as I write these lines it is hard to see how this war can be avoided. The U.S. is already at war with Iran in the economic and political sense. Iraq’s Parliament has now demanded that the U.S. withdraw its 5,000 troops in the country, which are supposedly there to fight ISIS, though the U.S. has announced it has now “suspended” its war with ISIS.

Trump responded by saying he will refuse this demand unless Iraq repays the U.S. for the “aid” it has given Iraq and threatened Iraq with vicious sanctions if it does not withdraw the demand. For its part, Iran has announced it is finally pulling out of the nuclear accord it signed under Obama that exchanged intrusive inspections for promises by the U.S. and its imperialist satellites to relax economic sanctions — dial back economic warfare. These events have raised the chilling possibility that the year 2020 could be for this century what 1914 was to the last.

Trump’s action should remove the illusions shared apparently by the government of Russia and even a few progressives that, however racist and reactionary he is, in other ways Trump is part of some right-wing “isolationist” anti-war tradition that opposes the “Wilsonian” imperialism that has long dominated the Democratic Party, and since at least 1940 the Republican Party as well. In reality, Trump’s economic and political nationalism has always pointed in the direction of war, not peace, whether Trump personally wants war or not. History shows that the beginning of a major war brings with it a “rallying around the commander in chief.” Such an effect could considerably increase Trump’s chances of reelection. True, as the experience of many countries shows, as wars drag on public support for the war and the government turns into its opposite. But by then, Trump may be thinking, the election of 2020 will be far behind him.

In general, there seems to be an unofficial rule that U.S. presidents don’t start major military campaigns in election years. Otherwise, every president facing dubious reelection prospects would be tempted to start a war. But Trump’s Bonapartist and autocratic tendencies mean that he does not feel bound by such a rule, any more than he feels bound by the rule that the president should not criticize the Federal Reserve System.

However, while Trump’s unstable personality and autocratic tendencies are extremely dangerous factors in the current crisis, it is not the main factor behind the current war danger. The roots of the current war crisis can be traced back to George W. Bush’s decision to invade Iraq — supported by Democratic Senators Hillary Clinton and Joseph Biden — on March 19, 2003. The Bush administration intended to create a new Iraqi puppet government that would provide a thin veneer over what would amount to U.S. colonial control of Iraq.

Political and Economic Crises (Pt 14)

The Democrats’ impeachment of Donald Trump

The public impeachment inquiry hearings held in November by the Democratic majority in the U.S. House of Representatives brought into the open the increasingly bitter rift between Donald Trump on one side and the professional apparatus of U.S. imperialism on the other. Left in the lurch was the Republican faction of the “Party of Order.”

Witnesses called by the Democrats were members of the imperialist apparatus — called the “deep state” by some. These include diplomats such as former U.S. Ambassador to Ukraine Marie Yovanovitch, Russian “expert” Fiona Hill, military officer and White House National Security advisor lieutenant-colonel Alexander Vindman, among others. These people have all made careers advancing the interest of U.S. imperialism and its world empire.

The impeachment inquiry finally allowed these men and women in the “trenches” of the U.S. world empire to unveil their bitterness and even hatred of Trump and his aides such as his personal attorney and former Republican Mayor of New York Rudy Guiliani. For these “professionals,” Trump, Guiliani and the others are corrupt blundering amateurs who are in well over their depth when it comes to defending the interests of U.S. imperialism.

Political and Economic Crises (Pt 13)

Trump faces impeachment

On Oct. 31, 2019, the U.S. House of Representatives passed a resolution by a vote of 232 to 196 that established procedures for the ongoing impeachment inquiry into President Donald Trump. No articles of impeachment — equivalent to counts in a criminal case — have been passed or even drawn up against Trump. The resolution only establishes the technical procedures under which the impeachment probe in the House will proceed.

The vote was almost entirely along party lines. Two Democrats who come from districts that went for Trump in 2016 voted against the proposed procedures. One congressman, who was until recently a right-wing Republican but is now strongly anti-Trump and calls himself an independent, voted for the resolution.

The vote indicates that Trump will probably be impeached in the House. It is possible that new revelations about Trump’s conduct in office could cause — or provide a pretext for — the Republicans to turn on Trump, forcing him to resign or be removed by a vote of two-thirds of the Senate. This is what happened in August 1974 during the Nixon impeachment crisis. But at this time it appears a long shot. Assuming that Trump is acquitted as expected in a Senate trial, he will be in office until Jan. 20, 2020 — or until Jan. 20, 2024, if he wins a second term.

Political and Economic Crises (Pt 12)

Political crisis engulfs the U.S. and Britain

On Sept. 24, 2019, Democratic Speaker of the U.S. House Nancy Pelosi announced the opening of an impeachment inquiry directed against Donald Trump. This is not yet an actual impeachment of the U.S. president, still less his removal from office. But it is considered a major step toward impeachment, which had appeared to be a dead letter after the Mueller report failed to produce any evidence that the 2016 Trump campaign had collaborated illegally with the Russian government.

A CIA whistle-blower reported that he or she had heard from other government officials that President Trump had withheld military aid to Ukraine to pressure the Ukrainian government to investigate Hunter and Joseph Biden. Joseph Biden is considered a front-runner in the race to be the Democratic presidential nominee for the 2020 election. Since the 2014 Euromaidan coup spearheaded by fascist and openly pro-Nazi elements, Ukraine has been reduced to the status of a virtual U.S. colony. The Democrats consider this colonization of Ukraine a great achievement of the Obama-Biden administration.

In the wake of the Euromaidan coup, the younger Biden was appointed to the Board of Directors of Burisma, Ukraine’s leading producer of natural gas, in an obvious move to please Ukraine’s new masters. If Trump demanded in a meeting he held with Ukrainian President Volodymyr Zelensky that Zelensky investigate the Bidens or else the U.S. would withhold military aid, Trump would violate U.S. laws that prohibit seeking the aid of a foreign government in a U.S. election. The Democrats failed to prove that Trump received such aid from the Russian government in the 2016 election. Now they believe they are on the verge of proving it concerning Ukraine’s government.

Political and Economic Crises (Pt 11)

Trump versus the Fed

On Sept. 3, the U.S. Institute of Supply Management reported that its widely watched index, based on a survey of industrial purchasing managers, had dropped to 49.1 percent. Any number below 50 indicates a declining trend in U.S. industrial production. The index has not been so low since September 2009, when the U.S. industrial economy was near the trough of the Great Recession.

The ISM reports: “Falling orders among foreign clients dragged on overall new business growth and producer confidence. The degree of optimism about the year ahead hit a fresh seven-year series low amid growing business uncertainty. As such, employment was broadly unchanged and spare capacity was used to clear backlogs of work.”

This is just the latest in a series of reports indicating that the U.S. and world capitalist economies are on the brink of recession. The Trump White House and the electoral wing of the Republican Party fear that Trump will face the reelection in November 2020 amidst full-scale recession conditions, dramatically reducing Trump’s chances of winning a second term.

Trump has responded by stepping up his public attacks on Jerome Powell, the conservative Republican banker Trump himself nominated to head the Federal Reserve System. In the wake of the annual August meeting of bankers at Jackson Hole, Wyoming, Trump declared Jerome Powell to be worse for the U.S. economy than even Chinese President Xi Jinping.

Trump is pursuing two aims here. First, he hopes that the Federal Reserve and its Open Market Committee will lower its target for federal funds and flood the banking system with newly created U.S. dollar reserves that will at least postpone the arrival of a full recession and mass cyclical unemployment until after November 2020. If this happens, Trump will be able to run as a “prosperity president.” Experience shows that U.S. presidents have a tough time winning second terms when they have to run for reelection near the low point of the industrial cycle.

Secondly, if a recession does arrive by election day, Trump wants to be able to point to a scapegoat — in this case, the Federal Reserve Board and the “international financial elites” out to destroy his nationalist “Make American Great Again” policies.

Jerome Powell, for his part, has promised that he will act “as appropriate” to keep the expansion going. The key words here are “as appropriate.” Powell is indicating to the markets that he will not jeopardize the dollar and the dollar system in an attempt to “keep the expansion going” like Trump is demanding. Somewhat reassured, investors caused the dollar price of gold to fall after Powell’s remarks, while interest rates on government bonds have rebounded.

Political and Economic Crises (Pt 10)

On the evening of July 28 (2019) in Gilroy, California, a 19-year-old white gunman, Santino William Legan, fired into a crowd of people attending the annual Garlic Festival. Legan was the racist grandson of a former county supervisor. He succeeded in killing three people, two of them children, before he himself went down in a hail of police gunfire — or, in another version, shot himself in the mouth after being wounded by police gunfire.

The following Saturday in El Paso, Texas, another young white male racist, 21-year-old Patrick Crusius, fired into a crowd at a local Walmart. Crusius killed 22 people and wounded dozens more before he was captured by police. Only a few hours later, a 29-year-old white gunman, Connor Betts, opened fire outside a bar in Dayton, Ohio. Before he was killed by police gunfire, Betts killed nine people, mostly African-American but also his own sister. In high school, Betts had expressed vicious misogynistic views.

Of the three white gunmen, the most “articulate” — and the only one to survive — is Patrick Crusius. He is the author of a racist manifesto that, echoing Donald Trump and other right-wing politicians, blamed white unemployment on — in addition to automation and corporations — the “Hispanic invasion” of Texas.

In his manifesto, Crusius hailed the March 15 massacre earlier this year by white racist gunmen of 51 Muslims at two mosques in Christchurch, New Zealand.