The Donald Trump administration celebrated the birthday of what those in the Christian faith call the Prince of Peace, Jesus Christ, on December 25 by bombing two African countries, Nigeria and Somalia. That Christmas day horror was only the beginning of its crimes as 2025 ended. As 2026 began, on January 3, the U.S. bombed Caracas, the first time in history a South American country was subjected to air bombardment, and kidnapped Venezuelan president, Nicholas Maduro, and his wife Cilia Adela Flores. In a world of nation-states, the government of one country has no right to seize the citizens (let alone the head of state) of any other nation-state.
On January 7 in Minneapolis, an ICE agent shot and killed 37-year-old Renee Nicole Good, a native-born U.S. citizen who was a poet, a Christian, white, and a mother of three now-orphaned children. While the administration attempted to frame Ms. Good as a “domestic terrorist” who was attempting to run over the agent, Jonathan Ross, bystander videos show she was actually trying to avoid him while he circled her car with a cell phone in one hand and his service weapon in the other.
This horror followed weeks of a coordinated racist drive against the Somali community, which serves as a textbook example of economic scapegoating. Reactionary demagogues first claimed Somali immigrants had been capturing and eating domestic pets; more recently, they have weaponized allegations of “daycare fraud” to charge that Somali businesspeople are funneling federal dollars to international terrorist groups. By criminalizing the Somali community’s economic activity, the federal government has created the pretext for a permanent federal occupation of the city.
More than 2,000 ICE agents have flooded Minneapolis, and Trump wants to send more. This massive deployment represents a domestic application of the “Department of War” philosophy, turning a major U.S. city into a garrisoned territory.
Watching various videos made just before the murder of Ms. Good occurred, I got the impression that Good and her friends felt far too safe in the presence of these dangerous ICE police thugs. After all, they were white and born in the USA. (U.S. citizens by birthright.) ICE had no legal authority over them, and they were Christian (so they believed themselves beyond the reach of Muslim-baiting), and they were women. Shooting young men, especially if African American, is one thing, but shooting white women is another!
The lesson: if we let the cops get away with shooting young African men, it will be only a matter of time before everyone is a target, regardless of age, gender, religion or other “differences.” In the face of systemic economic decay, the repressive arm of the state eventually turns inward against the entire working class to maintain order. As the old labor slogan says, an injury to one is an injury to all!
The bombing of Venezuela and the kidnapping of President Maduro
In the past, when the U.S. government engaged in acts of brazen foreign aggression, the excuse ranged from the need to defend “democracy,” protect human rights, overthrow a “dictator,” and other similar rhetoric. However, the January 3 strikes on Caracas mark a departure where the thin veil of humanitarianism has been largely discarded in favor of a raw, “Department of War” seizure and extraction.
Leading up to the kidnapping, this type of traditional language was not absent in the imperialist media. Maduro was described as a “dictator,” while the right-wing pro-imperialist opposition has been operating freely and is represented in the country’s parliament. Since its last presidential election, U.S. politicians from left to right have insisted that the pro-imperialist opposition actually won and that Maduro and the Chavistas rigged the vote count. Even if true, this would not justify the Trump regime’s actions. If an election is rigged in a sovereign nation (and there’s a long history of this in many places), it’s a matter for the people of that nation to deal with and them alone.
We must also take into account that the U.S. has worked systemically in recent years to destroy the Venezuelan economy through a regime of “economic violence.” In the last few days of surfing the internet, I have heard that these measures led to devastating the Venezuelan economy by 80% to 90%. While the IMF and other bodies estimated a 75-80% contraction between 2012 and 2020, the cumulative effect of the blockade and the recent 2025 revocation of licenses has pushed this figure even higher.
For perspective, U.S. GDP declined during the super-crisis of 1929-1933 by about 33%. The Venezuelan collapse, engineered by Washington, is thus nearly three times as severe as the Great Depression. During recent Venezuelan elections, the U.S. government told Venezuelan voters: vote for Washington’s endorsed candidates or face financial and economic strangulation. Under these conditions, how can there be truly “free elections”?
Perhaps you can criticize the Chavistas for allowing candidates who stand for U.S. domination to even run for office. Our job is not to criticize another government’s policies or speculate about the presence of traitors within it that allowed President Maduro to be captured. Our job is different: it’s to fight and expose our own criminal government that rules in our name.
It’s easy to insist Venezuela make no concessions to the U.S. imperialists who are armed to the teeth in New York, Los Angeles, San Francisco, and London, but not so easy in Caracas. Especially for those of us who live in the U.S. but also for those who live in U.S. imperialist satellites, we have to remember that the chief criminals are not traitors, real or alleged, in Caracas but right here at home!
Keeping these things in mind, we can’t help but note that though Trump lies on many small things, he can be brutally honest on the big ones. One example is the administration’s policy of referring to the Pentagon war machine as the Department of War, as it was called before 1949, rather than the Department of Defense. By discarding “Defense” in favor of “War,” and with Secretary Pete Hegseth explicitly adopting the title “Secretary of War,” the administration has signaled a rejection of “tepid legality” in favor of “maximum lethality.” Trump has announced that the U.S. will take control of Venezuela’s vast oil reserves to sell to other nations. Here, we are not in a sphere of neocolonialism but in old-fashioned colonialism.
Let’s examine how the U.S. imperialist media described the Maduro kidnapping.
The Associated Press wrote, “Hours after an audacious military operation that plucked leader Nicolás Maduro from power and removed him from the country, President Donald Trump said Saturday that the United States would run Venezuela at least temporarily and tap its vast oil reserves to sell to other nations.”
So the move to kidnap a man by the military of the most militarily powerful nation in the world is described as an “audacious plucking.”
AP continues, “Speaking to reporters hours after Maduro’s capture, Trump revealed his plans to exploit the leadership void to ‘fix’ the country’s oil infrastructure and sell ‘large amounts’ of oil to other countries.”
What gives Trump the right to sell any other nation’s oil or any other commodity, for that matter?
To put this in perspective, Donald Trump was convicted of felonies in 2024 and was elected, winning just under 50% of the popular vote. (1)
The court announced that it would not impose a fine or prison sentence on the grounds that this would interfere with his duties as president for the January 20, 2025, to January 20, 2029, term. For now, Trump remains convicted by a jury on 34 felony charges dealing with the falsification of business records to cover up his May 30, 2024, affair with Stormy Daniels. Frankly, the felony charges are minor compared to the crime of kidnapping — of a foreign president, no less! — of which Trump is obviously guilty.
To put this in perspective, imagine that at some time, many decades from now, Venezuela or perhaps a future United States of South America is more militarily powerful than the United States. What if the president of that state decided that it was perfectly proper to bomb Washington, D.C., and other cities to “pluck” the U.S. president and fly them to a South American city, throw them into jail and try them as a common criminal? Of course, today this is not possible.
A brief history of imperialism
Without denying that Trump’s personality plays a role, I believe more is involved: we are entering a new stage of imperialism.
In the first phase of modern imperialism — the monopoly stage of capitalism that developed around the turn of the century — separate imperialist countries competed for colonies, semi-colonies, markets, and raw materials. Inter-imperialist wars were the norm.
In contrast, from 1945 onward, there was now one “boss”: the United States of America. A series of institutions were created to manage this new order: the World Bank, initially used to rebuild Europe; the International Monetary Fund, to manage the dollar-dominated monetary system; GATT (later the World Trade Organization), to manage trade; and the United Nations, to act as a toothless international parliament and provide cover for U.S. wars of aggression, such as the Korean War.
In this second phase, the destructive force of nuclear weapons — and, more importantly, overwhelming U.S. military power — prevented further inter-imperialist wars, confining rivalry to the economic sphere. This military supremacy served as the ultimate guarantee for the global reach of U.S. industrial and financial capital. Instead of conflict between imperialist powers, world politics revolved around a global class war between the socialist bloc led by the Soviet Union and the imperialist bloc dominated by the United States. While the Soviet-led bloc was crushed after the counterrevolutions of 1985–1991, the U.S. continued to lead an even more powerful imperialist camp.
What stage are we exiting?
During the first half of the 20th century, the U.S. found itself in a colossal struggle with European imperialism, notably that of Germany. After the U.S., Germany was the world’s most powerful industrial country. Germany was the U.S.’s most dangerous competitor — especially in the chemical industry — and in science, it rivaled the United States. The U.S. allied itself with a declining but still powerful British Empire against Germany.
After the end of the world war that Marx called the anti-Jacobian war — the Napoleonic wars in 1815 — Britain dominated global industrial production and championed free trade. Britain had colonized India during the 18th century, but in this era didn’t feel obliged to extend its formal colonial empire further, as British industry could produce commodities at a lower cost price and, more profoundly, with less labor.
By the time of the 1873 crisis, Britain was losing its industrial monopoly. Britain and France began to carve up Africa and parts of Asia into colonies and semi-colonies. China, though still formally independent, was reduced to the status of a semi-colony. Its markets were divided into zones of influence, with a British zone, a French zone, a Japanese zone, and so on.
The colonies and semi-colonies represented parts of the world market that Britain, France, and Japan used state power to monopolize for finished product commodities produced in the “home country.” They provided cheap raw materials to industries in the colonizing countries, which processed them in the “mother country.”
Sections of the surplus populations of Britain and France (to a lesser extent, Germany) were encouraged to move to Africa or Asia and form white European colonies whose basic function was to hold down the native population in the interests of their home country. In later decades, this policy led Britain to colonize Palestine, located in West Asia, with mostly Eastern European Jews who were part of the European surplus population. The colony formed was originally British, but after World War II, though formally independent, became, for all practical purposes, a U.S. colony. This colony that specializes in holding down the Arab peoples of West Asia and North Africa is called the State of Israel. (2)
The U.S. as a whole stood aside from the process as it already possessed a large geographical empire on the North American continent. U.S. industry, not least because of its relatively high wage levels, was rapidly emerging as the country with the highest labor productivity. While the U.S. did build a colonial empire as a result of the “Spanish-American” war of 1898 (when the U.S. essentially stole Spain’s colonial empire in the Caribbean and the eastern Pacific, including the Philippines). But relative to its size and industrial and agricultural power, the U.S. colonial empire was limited.
The relatively small size of the U.S. colonial empire enabled Washington to present itself as a force for “democracy” relative to Britain and France, whose vast colonial possessions — especially in Africa — were impossible to conceal, as well as Japan, whose empire sought to dominate East Asia. Germany, by comparison, had held a more limited colonial empire in Africa and elsewhere, which it lost after its defeat in World War I at the hands of rival imperialist powers. In the 1930s, the rise of Adolf Hitler and his fascist “National Socialist” party to power in Germany allowed U.S. imperialism to posture as a defender of democracy in opposition to German fascism.
After World War II, the U.S. was able to pose as the champion of independence for former colonial nations in Africa and Asia as long as they were not led by communist parties. As a result, the U.S. gained access to markets and sources of raw materials previously reserved for Europeans, and U.S.-dominated neocolonialism replaced old-fashioned colonialism. To a certain extent, this reproduced the situation that prevailed after an earlier world war, the anti-Jacobin war that followed the French Revolution. But the law of uneven development of capitalism meant this situation wouldn’t last forever.
As U.S. industry has become ever less competitive against China and other Asian countries, its economic position is increasingly looking like that of late 19th-century Britain and, to some extent, France. No wonder Trump is using not the traditional neocolonialist rhetoric of decades gone by but rather brazenly colonialist rhetoric. In the last few months, Trump appointed himself colonial governor of Gaza, renewed his demands that the Kingdom of Denmark sell its colony of Greenland to the U.S., and appointed himself Venezuela’s ruler after kidnapping its president.
What does U.S. imperialism have to gain by seizing Venezuela?
Whatever the limitations of Trump’s intelligence, he understands the need to save the U.S. world empire: The dollar system that dominates the international monetary system must be strengthened and expanded. If the dollar loses its role as the world reserve currency, U.S. imperialism will lose its ability to dominate the world, pay its debts in its own currency, and borrow money. It will have to run trade surpluses to continue its military power on the scale it has maintained since 1945. But unless U.S. industry regains its competitive power of old, only a depression worse than 2009 will allow trade surpluses.
Keeping all this in mind, the Trump administration (or any Democratic replacement) will do everything possible to prop up the dollar’s central role in the international monetary system. Back in August 1971, the Nixon administration “temporarily” suspended the convertibility of the U.S. dollar at a rate of one ounce of gold for every $35 it was presented with for payment by foreign central banks.
Temporary quickly turned into permanent, raising an interesting question. The U.S. dollar was no longer a form of credit money under the dollar-gold exchange standard but a form of token money. For centuries, token currencies have circulated internally because the state that issues them is willing to accept them as a means of payment for taxes. The government can go even further and declare its token currency legal tender for all public and private debts. You can find this statement — “this note is legal tender for all debts public and private” — on every U.S. paper dollar, the green Federal Reserve Note.
Traditionally, this worked only within a nation-state or within the territory militarily controlled by the nation-state that issued the currency. In contrast, gold money doesn’t have this limitation, as the value of gold represents the quantity of abstract value-creating human labor that’s socially necessary to produce it under the existing conditions of production at any given time.
Gold is backed not by a state power but by the total quantity of commodities in circulation. Starting in August 1971, the dollar is no longer backed by gold in the sense of being redeemable at a fixed rate of exchange by the Treasury. If the U.S. did not dominate the world militarily, the dollar, once it lost its convertibility into gold at a fixed rate at the U.S. Treasury, would not have been able to act as a global currency.
Since 1945, the U.S. has militarily dominated most (except for the socialist bloc) of the rest of the world. This was seen when the Saudi oil monarchy in the early 1970s announced it would continue to denominate the price of the oil it produced in dollars and would accept it as payment for its oil in U.S. dollars at the quoted price. Saudi Arabia deposited the dollars earned in Wall Street banks, nicknamed petrodollars. (3)
Since everyone in the world needed dollars to purchase oil, though it was produced outside of the legal boundaries of the United States, the dollar continued to function as the primary international means of payment despite no longer being convertible into gold at a fixed rate.
The attempt by both Republican and Democratic governments during the 1970s to demonetize gold inevitably failed, because only a commodity (like gold) can, in terms of its own use value, measure the value of commodities. Due to the military domination of the U.S., the dollar continued its role as a world currency representing gold in circulation. For this to continue, the U.S. must maintain its military dominance. As the competitive power of its industry wanes at home and abroad, the dollar’s position as the world currency is undermined.
These are the general economic laws governing the role of the dollar as the main international currency.
How does Venezuela fit in? Before the recent bombing and kidnapping of its president, Venezuela and many other countries in South America and worldwide were developing trade relations with the People’s Republic of China, now the world’s biggest industrial power. Increasingly, the Chinese yuan or gold, rather than dollars, were being used to purchase Venezuelan oil. By the second half of 2025, an estimated 80% of Venezuelan crude exports were flowing to China, largely as debt repayment settled outside the dollar-controlled SWIFT system. If this continues, it will only be a matter of time before the dollar’s role as an international currency comes to an end. The U.S. then loses its ability to run decades-long trade deficits and service its debts in its own currency.
However, the U.S. proceeds against Venezuela, the outcome it demands is the same: oil and other exports paid for in dollars, not yuan or gold. Immediately following the January 3 operation, the Trump administration confirmed its first $500 million sale of seized Venezuelan oil, with President Trump brokering a deal to redirect up to $2 billion worth of Venezuelan exports to U.S. Gulf Coast refineries. This ensures that this vital industrial commodity remains tied to the greenback, effectively halting the “leakage” of money into the Chinese financial architecture. By forcing Venezuelan oil back into the dollar circuit, the U.S. isn’t just seizing energy; it is re-establishing the dollar’s role as the exclusive representative of gold in the international oil trade.
In addition to creating the potential of U.S. oil monopolies appropriating monopoly profits from Venezuela’s oil for the executives and their stockholders, it would also bolster the dollar’s function as international currency. This will allow the U.S. to continue terrorizing Venezuela’s people (and the whole world) for a while longer.
Second year of second term
On January 20, we enter the second year of the second Trump administration. Let’s look at Trump’s impact on health care in the U.S. Before the 2024 election, the arch-reactionary Heritage Foundation released what became the program of a Republican administration on January 20, 2025. One key point was to prop up the employer-centered health care system. After World War II, most developed countries recognized health care as a human right as opposed to a commodity. However, this was not the case in the most important capitalist country, the United States.
Under capitalism, originally, there was no such thing as health care as a human right; it was a commodity like any other. If you had enough money, you could purchase care from the doctor. Or you could buy health insurance from a for-profit insurance company, but again, only if you had the money.
The first step away from this happened in Germany under Bismarck’s Bonapartist regime in the late 1800s. With the rise of the German Social Democratic Party, the first mass Marxist party based on the rapidly growing German industrial working class.
Frightened by the rise of a mass Marxist party, Bismarck’s reaction took two forms. One was anti-socialist laws that banned the German Social Democratic Party and sought to crush it through state power — a policy that ultimately failed. The second was the beginning of a kind of state-supported medical insurance. This was the “state socialism” as it was sometimes called, compared to the radical reconstruction of society by the working class that the early Social Democratic Party stood for.
In the United States, during the New Deal in the 1930s, the Roosevelt administration promised to establish a government-backed medical insurance program. The American Medical Association denounced it as socialized medicine.
The Roosevelt administration failed to press the issue, though it remained part of the Democratic Party program. During World War II, fascism was defeated largely through struggles led by the Soviet Union and the international communist movement. European capitalists, fearful of socialist revolution after fascism’s downfall, were forced to grant state-supported medical insurance to save their political rule. Once capitalist class rule was stabilized in Western Europe, it was judged too dangerous to the stability of class rule to try to take it away. This has remained true even after the counterrevolution of 1985-91.
Britain is a typical example. In Britain’s first post-war parliamentary election in 1945, it was widely assumed that the Winston Churchill-led Tories, considering the myths surrounding Churchill’s reputation as Britain’s greatest wartime leader, would easily beat the Labor Party. How could they possibly lose? Instead, it was the Labor Party under Clement Attlee that emerged victorious.
Before 1945, the only Labor government had been that of Ramsay MacDonald, and it had done almost nothing for workers. The capitalists were worried that if the Attlee government didn’t grant more concessions to the working class than MacDonald’s government had, workers would move further to the left, endangering the British capitalist system.
Under Attlee, the National Health Service was set up. Anybody can go into a health clinic or hospital and receive needed medical care without worrying about paying for it. Doctors were made employees of the state. Even the arch-reactionary Margaret Thatcher didn’t dare to take the National Health Service away.
Let’s contrast this with what took place in the United States. During the 1930s, despite widespread speculation that the Congress of Industrial Organizations (CIO) might form a labor-based political party, it did not do so. Instead, CIO leaders tied the labor movement to the capitalist Democratic Party and the Roosevelt administration. With the onset of the Cold War, these same CIO leaders — under direct pressure from the capitalist class and the state — moved to purge communists from the trade unions.
Those targeted included members of the Communist Party of the United States as well as the Trotskyists of the Socialist Workers Party. By the 1948 presidential election, President Harry Truman faced challenges on both flanks: to his left, Henry Wallace’s Progressive Party, which was strongly supported by the Communist Party, and to his right, the racist segregationist States’ Rights Democrats, or Dixiecrats. Most political commentators at the time expected Republican Thomas Dewey to win. Instead, Truman prevailed—backed by the official leaderships of both the AFL and the CIO.
During the election, sections of the capitalist class feared that Henry Wallace — who refused to speak before segregated audiences in the South — could draw significant support from African American voters in the North. In the South, African Americans were largely disfranchised under the Jim Crow system and could not vote in meaningful numbers. In this context, Truman issued executive orders ending racial discrimination in federal employment and desegregating the U.S. armed forces.
These measures reversed policies put in place under the arch-racist, KKK-supporting Democratic administration of Woodrow Wilson. While Truman’s actions left the Jim Crow system in the South intact, they nonetheless represented a greater concession than anything offered by his Democratic predecessor, Franklin D. Roosevelt. The result was political: Truman secured the African American vote in the North, while the anti-communist leaderships of the CIO and the AFL delivered the labor union vote.
Republicans and racist Southern Democrats opposed any move toward a government-supported health as a right system. Republicans, in particular, promoted an employer-centered health insurance system in which access to health care was tied to employment — provided, that is, at the discretion of employers. Their message was simple: to get health insurance, “get a job.”
Unlike Britain and other Western European countries, this arrangement placed workers’ access to health care at the mercy of the bosses. Had the Democrats been willing to genuinely support government-funded health insurance, they might have been able to defeat the Republicans on this issue. But since both parties are parties of capitalists, neither had any interest in establishing a universal, government-supported health care system.
During the 1960s, under Lyndon Johnson, the Democrats did pass legislation creating Medicaid for the poor. Access, however, was tightly restricted through “means testing,” requiring applicants to prove to government officials that they were sufficiently impoverished to qualify. Administration of the program was also largely turned over to the states. This allowed Southern states, still dominated by segregationist Democrats — many of whom were in the process of shifting to the Republican Party in the post–Jim Crow period — to keep Medicaid access as limited as possible.
The other government health care program established during the 1960s was Medicare. Its biggest limitation is that it applies only to people over 65, most of whom have already reached retirement age. This restriction is what later gave rise to Bernie Sanders’ slogan, “Medicare for All.”
During the right-wing Reagan presidency of the 1980s, the Democrats responded by formally abandoning even the pretense of establishing some form of government health insurance for the entire population. From that point on, both parties became openly committed to the employer-centered health insurance system, which grants the bosses enormous power over the labor market.
In Europe, workers built their own political organizations in the form of communist or social-democratic parties. In the United States, by contrast, labor union leaders tied the working class to the capitalist Democratic Party. In different ways, both Democrats and Republicans opposed treating health care as a human right. In the 2020 presidential election, Democratic candidate Joseph Biden, despite claiming to support it, pledged to veto a Medicare for All bill if Congress passed one, arguing that the country could not afford it. No such bill was passed — by a Congress controlled by the Democrats, with the cooperation of their Republican counterparts.
Replace and repeal Obamacare
During the 2016 election cycle, Republicans in general — and Trump in particular — ran on the slogan “Repeal and Replace Obamacare.” What neither ever explained was what would replace it. Obamacare itself is essentially a system designed to subsidize the purchase of private health insurance for those who cannot otherwise afford it. The law also expanded the Medicaid program, but allowed individual states to opt out. Former slave states and Jim Crow states in the South, dominated by racist Republicans, chose not to expand their already skimpy Medicaid programs.
At its core, Obamacare preserves the employer-centered health care system, while no longer requiring employers to actually provide health insurance. If your boss does not offer coverage — and many do not — you are forced to find a private plan and pay for it out of your wages, assuming you can afford it. If you cannot, you are either left uninsured or pushed into the Medicaid system.
Obamacare also established a system of subsidies for workers whose wages were too low to purchase insurance on the private market — that is, the boss paid wages less than the value of their labor power. These subsidies were tied to so-called means testing: if the government later determined that you could afford insurance after all, you were required to repay the assistance that had already been granted.
State governments provided some assistance in helping people locate private insurance plans. Even if you found a plan you could afford with the help of subsidies, your access to care was limited to providers approved by the insurance company.
Obamacare was an awful system and widely unpopular. When Republicans promised to repeal and replace it in 2016, many “low-information” voters assumed they were proposing something better. In reality, Republicans aimed to eliminate the subsidies altogether and roll back the Medicaid expansions. This would have thrown millions off health insurance. The result would have been to force millions of workers back onto the labor market, driving down wages — in other words, increasing the ratio of unpaid to paid labor and raising the rate of surplus value.
One of the more positive provisions of Obamacare was the expansion of Medicaid, the health insurance program for the poor. As noted above, however, this expansion was uneven, since individual states were allowed to opt out. For all its shortcomings, Obamacare did provide some assistance, particularly for those living in more urban or coastal states not dominated by Republicans. Medicaid itself, however, comes with strict “means testing.” If local authorities determine that your income is too high or that you are otherwise ineligible, you are removed from the program. This, in turn, pressures working people to compete with one another for jobs — seeking out bosses willing to pay wages high enough to purchase medical insurance or offer even minimal health insurance in exchange for the production of surplus value.
Trump and the Republicans sought to exploit the unpopularity of Obamacare to turn back the clock. Once Trump took office, however, it became clear to many of his own supporters what repeal would actually mean, and only then did Obamacare become relatively popular by comparison. By 2017, enough Republicans defected to prevent its repeal, and the law survived. In the 2018 midterm elections, Republicans suffered heavy losses, including their majority in the House of Representatives. In the November 2020 election, Trump and the Republican Party were decisively defeated, losing control of the Senate and giving Democrats control of both houses of Congress.
Trump responded by falsely claiming that the 2020 election had been stolen and, after losing to Democratic candidate Joseph Biden, attempted a putsch in a last-ditch effort to remain in power on January 6, 2021 (see “The abortive 18th Brumaire of Donald John Trump”). One of the central reasons for the Republicans’ defeat was their repeated attacks on Obamacare.
After their loss, Republicans briefly gave the impression that they had abandoned their effort to dismantle Obamacare. They had not. As the share of U.S.-produced commodities in world trade continued to decline, the capitalist class faced mounting pressure to sharply increase the rate of surplus value at home. Republicans, therefore, dropped the “repeal and replace” rhetoric and regrouped around a new strategy, later formalized as Project 2025 and advanced legislatively through what Trump called the “Big Beautiful Bill.”
Obamacare decimated by the Big Beautiful Bill
The “Big Beautiful Bill” for the first time introduces work requirements for Medicaid recipients, while doing nothing to provide jobs for those who are ready and willing to work but unable to find employment. Under the bill, recipients are required either to work or to enroll in job training. This creates two problems — not from the standpoint of the capitalists, but from that of the workers. First, training for a skill often requires money, and money is precisely what the unemployed do not have. And second, once trained, what happens if there are no jobs available?
For years, capitalists claimed that growing demand for computer programmers would offset the loss of traditional blue-collar jobs caused by automation and de-industrialization. While demand for programmers did grow, it was never the case that the millions of unemployed workers in the old industrial districts of the Rust Belt or the mining regions could simply become programmers.
That was before the recent surge in artificial intelligence. Now, AI is reducing demand for programmers as well as for many other white-collar occupations. The so-called “new service economy” is itself being hollowed out by AI. As for the remaining industrial jobs, they too face growing threats as intelligent machines take over tasks that had previously resisted automation.
As Republicans moved to strip away another key pillar of Obamacare — government subsidies that allow workers to buy health insurance when their wages are too low — Democrats pretended to put up a fight during the government shutdown in the fourth quarter of 2025. When Republicans refused to restore the subsidies, a central provision of Obamacare, the government remained shut down through the final months of the year.
Eight Democratic senators then announced that they would vote to reopen the government without any guarantee that the subsidies would be reinstated. Democratic Senate Minority Leader Charles Schumer publicly opposed the move, though it is widely believed that he helped shape the deal behind the scenes. The eight senators who supported reopening the government either were not facing reelection for several years — since only one-third of the Senate is elected every two years under the Constitution — or planned to retire.
In this way, dismantling Obamacare became a bipartisan project. Though Democrats and Republicans use different rhetoric and appeal to different layers of the working and middle classes, they represent the same class — the capitalist class — and have done so since the end of Southern chattel slavery. Before that, Democrats generally represented the slaveholders, while Republicans and their predecessors — the Federalists and Whigs — represented the rising capitalist class based on the exploitation of free wage labor. With the removal of Obamacare’s subsidies and the expansion of Medicaid now tied to work requirements, Obamacare is effectively repealed, and Medicaid is left in worse condition than before.
In the current assault on medical care, Republicans claim that the economy will thrive if the government pursues a hard-line policy of raising the rate of surplus value — what they call “pro-business” policies. Though they do not use these terms, what they are arguing is that if the rate of surplus value is increased, a larger mass of surplus value will be available for transformation into new productive capital — both constant and variable capital — even after subtracting the enormous share squandered on the extravagant living of the capitalist class.
The Epstein files offer a glimpse of what this “high living” looks like. While the surplus value that is transformed into new productive capital would be converted into constant capital, some would take the form of additional variable capital — that is, more jobs.
The Republican Big Beautiful Bill is therefore supposed to produce a boom in job creation. As people get jobs, the employer-centered medical insurance system is supposed to come into its own, and more people will have insurance. There will be no need for government-supported health care because it will be provided by the private sector. Democrats are less brazen about it, but in the end, they support the same approach because they represent the same capitalist class.
If in the coming years the capitalist economy booms and more jobs become available, Republicans will claim that Project 2025 is working and that the employer-centered health insurance system is worth retaining. From the standpoint of the capitalist class, this is true. But if employment shrinks and unemployment grows, Republicans and the capitalist ruling class behind them fear that Democrats may be unable to contain the resulting anger.
U.S. politics could finally break out of the two-party trap it has been locked into since the defeat of the slaveholders’ rebellion in 1865 — a system that has served the capitalist class remarkably well. The authors of Project 2025 are betting heavily on an economic boom in the period immediately ahead. If such a boom materializes, they will claim that their extreme anti-labor, pro-boss policies — including the virtual repeal of Obamacare — are responsible for it, much as the Reagan Republicans did in the 1980s.
In the 1980s, Ronald Reagan in the United States and Margaret Thatcher in Britain both claimed that the similar policies they adopted — later labeled neoliberalism — would end the “stagflation” associated with the Carter administration.
The Reagan administration, however, did not get off to a strong start. When Reagan assumed office on Jan. 20, 1981, the economy appeared to be in an upturn, rebounding from the recession of early 1980. Interest rates briefly fell following the initial stage of the Volcker shock, producing a short-lived expansion that the National Bureau of Economic Research hastily declared the start of a new business cycle.
As the dollar price of gold rose again and interest rates climbed, the expansion collapsed almost as soon as it began [link]. The electorate sensed this, even if many economists did not, and Carter was defeated by Reagan in November 1980. While most capitalist commentators and historians blame the Iranian hostage crisis for Carter’s defeat, the deteriorating economy was likely the more decisive factor.
While U.S. elections are often of limited importance, this one set the direction for the rest of the 20th century, both domestically and internationally. The political pendulum swung sharply to the right throughout the world. Its most disastrous expression was the counterrevolutions that later unfolded in the Soviet Union and Eastern Europe.
A shift to the right was also taking place in China in reaction to the Cultural Revolution and the death of Mao Zedong (1893–1976). Unlike in the USSR and Eastern Europe, however, the Chinese Revolution was not overthrown. Its radical political and social revolution had run its course, but the economic revolution — so important to the world today — was only beginning.
At first, things did not go well for the Reagan administration. By the end of 1980, interest rates had rebounded, and while the dollar price of gold did not hit a new record high, it remained elevated. Had the Volcker Fed attempted to force interest rates down by “printing money” to sustain the 1980 upturn, the dollar price of gold would almost certainly have reached new highs, and the remainder of the 20th century might have unfolded quite differently — whether for better or worse is another matter.
By the end of 1981, it was clear that the economy had slipped back into recession, which continued through 1981 and 1982. Reagan’s popularity collapsed, despite efforts by the media of the time to prop it up. It appeared that his would be yet another failed presidency for the ruling class, following Carter, Ford, and Nixon before him.
Beginning in 1983, the economic situation changed. Low commodity prices in gold terms stimulated gold production, which had been stagnant or declining since the late 1960s (see “Reagan Reaction and the ‘Great Moderation’”)
This indicated that many commodity prices had fallen below their prices of production and values. The result was a rising trend in global production that put downward pressure on dollar gold prices and interest rates. The dollar began to recover some of its gold value, a process that continued through the rest of the 20th century.
Unlike the 1970s, however, this period, while marked by fluctuations in the rate of growth, a general recession at the end of the decade, and another at the turn of the century, did not see either resurgent inflation or a really deep recession. The recessions of that period were less severe than those of the 1970s and early 1980s. Beginning in 1983, the high rate of inflation in dollar commodity prices subsided, while unemployment trended downward. The era of stagflation was over, and Reagan and Thatcher claimed their reactionary policies were responsible.
The Reagan administration in the United States took credit for the improved economic conditions, arguing that its policies of union-busting, restricting labor rights, and attacking social programs were the cause. Thatcher and the Tories in Britain made similar claims. This narrative strengthened political reaction not only in the United States and Britain, but across the world.
Though more extreme, Trump’s Project 2025 and the Republican Big Beautiful Bill are inspired by the same philosophy that dominated the Reagan administration in the 1980s, then known as supply-side economics. Translated into Marxist terms, the claim is this: if the rate of surplus value is increased, the rate of capital accumulation accelerates as well. This leads to an acceleration in the accumulation of variable capital — though less rapidly than constant capital — which means more jobs.
Today, Republican defenders of the employer-centered health care system argue that a rising rate of surplus value — that is, increased exploitation of U.S. workers — will increase the number of jobs. With more jobs available, they claim, finding one will be easy, and anyone who wants to work will be able to do so.
Some jobs offered by bosses will include health insurance, while others will pay wages high enough for workers to buy insurance directly from private companies. If Republicans are to be believed, there will be no need for the government to play any role in providing health care for working-age people. If you want coverage, hit the pavement, fill out your résumé, and find a job that offers insurance or pays enough for you to buy it yourself — and everyone will be insured. That is the Republican line.
It is true that profit is the driving force of capitalist production. An adequate — for profit — rate of surplus value, however, does not by itself guarantee high profits. Surplus value must not only be produced; it must also be realized in the use value of gold, and there must be a sufficient quantity of gold available for this realization to occur. This is not a matter of chance, but of the laws governing the capitalist mode of production. Over time, these laws ensure that commodity prices, measured in terms of the use value of the money commodity, tend to correspond to the values of commodities — their direct prices and prices of production — measured in terms of gold. (See “Value, Price and Crisis.”)
In the long run, enough gold is produced to realize the value of commodities in terms of theuse value measured in units of weight of gold — but only over time. In the short run, gold is periodically overproduced or underproduced relative to the needs of the capitalist system to realize the value of non-money commodities, alongside gold’s own monetary use values.
When gold is overproduced, large quantities of idle money accumulate in the banking system, interest rates are low, and easy money prevails. This is the mirror image of the underproduction of non-money commodities that accompanies periods of capitalist prosperity and lower unemployment. It is therefore not surprising that political leaders of the capitalist class hope — against hope — that the U.S. economy can experience a period of prosperity in the coming years similar to that of the Reagan era. The question is: what are the chances?
According to the World Gold Council, global gold production reached an all-time high in 2018. Production had been rising steadily since 2008, but since 2018 it has remained essentially flat. For the realization of surplus value to proceed under conditions of expanded capitalist production, annual gold production must increase in order to realize the ever-growing mass of surplus value produced by capitalists. At present, the level of gold production is insufficient for this. The World Gold Council projects that production will reach a new high around 2027 and then begin to decline.
If this projection proves correct, a major economic crisis will follow. That is what the current high dollar price of gold is signaling. A substantial increase in gold production is required for the economic, financial, and political stabilization of the world capitalist system. If the past is any guide, this pressure will eventually stimulate a renewed rise in gold production, pushing output to new records and enabling a fresh expansion of the world market — made possible by several decades of renewed capitalist prosperity.
If, for geological reasons, such an increase proves impossible, capitalism will not be able to last much longer. In either case, it appears more likely than not that the coming years will see a substantial rise in unemployment. No increase in the rate of surplus value will be able to prevent this, because for production to be profitable surplus value must first be produced, and then the value of the commodities containing that surplus value must be realized in the use value of the money commodity — gold. (See “Capitalist Economists Debate ‘Secular Stagnation’ (Pt 4).”)
Under capitalism, production is carried out for profit, and for profit alone. Raising the rate of surplus value increases the mass of surplus value and thus creates the possibility of greater profit. But, as we have emphasized throughout this blog, surplus value is not yet profit. It must be realized — or, more precisely, realized in terms of the use value of the money commodity.
The production of an expanding mass of surplus value is the aim of the Republicans’ Project 2025 and, though by somewhat different means, of the Democratic program as well. Marx pointed out that if production were organized for need rather than for profit, there would be no overproduction. From the standpoint of the working class, capitalism is characterized not by overproduction, but by a chronic underproduction of use values.
Underconsumption
This gives rise to the view that capitalist crises are caused by the underconsumption of the working class. The working class can never consume the total product it produces. If underconsumption in this sense were the cause of crises, why would we not have overproduction all the time? Why would capitalism be possible at all? If the direct producers had to consume all the use values they produced, the entire history of class society would be marked by overproduction.
Yet in reality, crises of overproduction are unique to capitalism — and to advanced capitalism in particular. Under capitalism, workers are not expected to consume the full product of their labor. What underconsumption theorists overlook is that the capitalist class itself consumes an enormous quantity of commodities designed for personal consumption.
Capitalist consumption does not stop there. Capitalists are also compelled to engage in productive consumption as part of expanded capitalist reproduction. Productive consumption includes not only the consumption of means of production, but also the consumption of labor power. Capitalist production is not production for consumption; it is production for profit. To make profits, surplus value must first be produced: no surplus value, no profit. But producing surplus value is not enough. It must also be realized in money — that is, in the use value of the money commodity. Without the realization of surplus value in the money commodity, there is no profit.
Economic prospects for 2026
When Wall Street money managers issue their end-of-year predictions, there is no shortage of predictions about the prospects for the economy in the coming year — especially forecasts for stock market prices. One such figure is Louis Navellier. Navellier is highly optimistic about the economic outlook and, more importantly from his standpoint, about the prospects for rising stock prices. His firm manages more than a billion dollars in capital. He has been active since the 1980s, though he does not date back to the stagflation of the 1970s.
Navellier’s views are of interest because they closely align with those of the Trump administration. His predictions were presented in an article by Todd Campbell published in the online edition of TheStreet on Dec. 20, 2025. Navellier forecasts that U.S. GDP — the total value of commodities sold in the economy, adjusted for inflation — will grow by more than 5 percent in 2026. Such a rate of growth would be unusually high for the modern US capitalist economy. If his forecast were to materialize, unemployment — currently estimated at 4.4 percent by the Labor Department — would decline.
If this forecast pans out, it would almost certainly give Trump a much-needed boost in popularity and significantly improve GOP prospects in the November 2026 congressional elections. Navellier is counting on continued on-shoring of industrial production into the United States, a shrinking budget deficit, and, not least, further interest-rate cuts by the Federal Reserve. All of this is combined, in his view, with the higher rate of surplus value built into the Big Beautiful Bill, which is intended to increase the amount of surplus value squeezed out of the U.S. working class. If this surplus value can be realized, economic growth would accelerate over the next few years, and unemployment would fall.
One factor Navellier ignores is the soaring dollar price of gold — that is, the conditions for the realization of surplus value. On Friday, Dec. 26, 2025, the dollar price of gold hit a historic peak of $4,556.30, while silver shattered all records at $76.27. Early in the new year, gold and silver dollar prices rose even higher. Navellier assumes that simply raising the rate of surplus value will be enough to accelerate economic growth, but he ignores the problem of realizing surplus value in money form. No realization of surplus value, no profit.
On this point, the CME Group — the financial firm that, among other things, controls markets such as the Chicago Board of Trade and sets margin requirements, determining how much cash must be put down versus how much can be bought on credit — threw a monkey wrench into the gold and silver markets.
The CME attempted to rein in what had become an increasingly out-of-control market in gold and silver, driven by the flight from the dollar. In market terms, margin requirements were raised. This sudden tightening of credit by the CME monopoly pushed the dollar price of gold down to $4,355. The decline did not last long, however, and prices rebounded within a day. Whether the CME acted entirely on its own, or in coordination with the Trump administration, the Federal Reserve, and the major Wall Street banks, remains unknown. What is clear is that the move to raise margin requirements for gold and silver trading underscores how dangerous and unstable the current situation has become.
The relationship between silver and gold
As rapid as the rise in the dollar price of gold has been, the price of silver has risen even faster. For thousands of years, silver served as money alongside gold. Beginning in the late 1800s, however, silver’s value began to decline relative to gold. The quantity of human labor required to produce an ounce of silver fell relative to that required to produce an ounce of gold. This sharp decline in silver’s value undermined its role as a money commodity. Governments increasingly based their currencies exclusively on gold, leading to the emergence of the international gold standard.
Today, an interesting relationship exists between the dollar prices of gold and silver. Silver remains a convenient object for hoarding. As its value declined relative to gold and other commodities, its industrial uses expanded. Under the present fiat monetary system, when overproduction develops to the point that a crisis is approaching but has not yet broken out, a flight away from paper currency begins.
Silver remains a favored vehicle for speculation because it is still a convenient means of speculating against paper currencies, particularly the dollar. When the dollar price of gold rises, the price of silver tends to rise as well. Silver, because it is far cheaper, has many more use values than gold. i. Since the crisis has not yet broken out but is only approaching, speculative demand for gold develops alongside rising industrial demand for silver. Under a fiat currency system, at the stage of the industrial cycle immediately preceding a crisis, the paper-currency price of silver tends to rise faster than that of gold.
When a crisis arrives, industrial demand for silver — like that for non-money commodities — falls. As the crisis breaks out, paper currencies temporarily recover their role as a “store of value,” as economists put it, because demand for dollars and other paper currencies rises as a means of payment. (See “Money as a Means of Payment.”)
At this point, paper currencies recover some of their lost gold value due to this increased demand, especially in the case of the dollar. This is how the dollar-dominated international monetary system operates. As a result, the paper-dollar price of silver falls far faster than that of gold.
Because gold’s role as an industrial commodity is far more limited, it is less affected by the collapse in industrial demand. Consequently, the dollar price of gold does not fall as sharply as that of silver. In this way, the exchange rate between gold and silver — both governed by labor value but temporarily distorted by the depreciation of paper currency under the fiat monetary system prior to the crisis — reasserts itself as the crisis unfolds.
While the CME’s decision to raise margin requirements for trading gold and silver is not a crisis in its own right, it offers a glimpse of what a real crisis looks like. On Dec. 26, the dollar price of gold fell about 4 percent, while silver dropped roughly 9 percent, producing a kind of one-day mini-crisis that anticipates the dynamics of a full-scale breakdown. Whether the dollar price of gold is near its peak or will rise much further before the crisis erupts remains to be seen. When the crisis does arrive, however, we expect the dollar price of gold to fall, alongside collapsing stock and commodity markets and rising unemployment. The price of silver will then fall more sharply than that of gold.
One person unhappy with the surge in silver prices is Elon Musk. Musk, the world’s largest industrial capitalist, wrote on his X (formerly Twitter) platform, “This is not good. Silver is needed in many industrial processes.” In other words, if the rise in the dollar price of gold is not checked, the resulting increase in the prices of industrial metals such as silver will feed inflation and push interest rates higher. This is what both the history of the 1970s and economic theory teach us.
So far, the one factor holding inflation in check has been the weak oil market. In 1973–74, during the Arab oil boycott in response to the October 1973 Arab-Israeli war [link], and again in 1979 following the Iranian Revolution, oil prices surged. (See “The Volcker Shock and Start of the Neoliberal Era.”)
That has not yet happened this time. The oil monarchies have continued to pump oil at high levels, creating overproduction. As a result, oil’s dollar price has not yet responded to the sharp depreciation of the dollar against gold and has, in fact, been falling. If gold prices continue to rise in 2026 as they did in 2025 — or if the rate of increase accelerates, which remains to be seen — it will only be a matter of time before oil prices follow.
There is no doubt that the Federal Reserve has the power to halt the rise in the dollar price of gold. All it would need to do this is to reverse the recent cuts in its federal funds rate target. Such a move would quickly trigger a deep recession, a stock market crash, and possibly a major banking and financial crisis.
Dangers for 2026 and beyond
If the price of gold continues to rise, inflation will accelerate regardless of what happens to tariffs. It will then be only a matter of time — perhaps not much time — before the Federal Reserve is forced to reverse course and raise its federal funds rate targets. Already, there has been an unusual amount of opposition within the Federal Open Market Committee to the most recent rate cuts. This suggests that many Federal Reserve officials are aware that the situation may be getting out of hand.
Jerome Powell is under intense pressure from the White House to ignore the signal that the gold market is sending regarding interest rates. That signal is simple: if demand for gold is rising, interest rates should be raised, not lowered. Ignoring this is not “sound” central banking. The lower the rate of interest, the higher the demand for gold.
Against this backdrop, Mohammed bin Salman (MBS), the crown prince and de facto ruler of Saudi Arabia, was photographed in the White House — much to the outrage of the liberal media — sitting beside Donald Trump. The oil monarchies have gone along with Trump’s so-called peace plan for Gaza, including Trump’s self-appointment as Gaza’s colonial governor.
Is the maintenance of high oil production part of a broader understanding between the oil monarchies and the Trump administration? Unless the surge in the price of gold is reversed soon — with gold already topping $4,630 by mid-January — it will become increasingly difficult to keep oil prices suppressed. If oil prices were to rise sharply, gasoline prices at the pump would follow, and whatever remaining support Trump enjoys would take a serious hit. This is something to watch closely if the price of gold continues to climb.
The greatest danger confronting U.S. imperialism is a loss of what confidence still remains in the dollar. This could be triggered by one interest-rate cut too many by the Federal Reserve, or it could be political in origin — and recent years have seen political and military shocks erupt across the world, with the potential for that instability to spread. The chaos of the Trump administration itself could provoke a panic, prompting investors to accelerate their flight from dollars into gold in what would amount to a massive run on the bank—the bank, in this case, being the dollar-dominated monetary system.
If the dollar domination of the international monetary system should collapse, the financial foundation of the U.S.-NATO world empire will come to an end.
NOTES
(1) In most countries, a candidate for office who fails to win 50% of the vote must face a runoff election. This is not how things work in the U.S. Because Trump carried the Electoral College, not the popular vote, it was enough for him to be sworn in as president on January 20, 2025. (back)
(2) Such “white” colonies can develop a will of their own. As long as these entities remain colonies controlled by a “mother country,” they remain politically, financially, and economically subordinated to it. Historically, some white colonies have taken the road to independence. The classic example is that of the thirteen British colonies in North America in the late 18th century, when they waged a war of independence and evolved into the present-day United States of (north) America.
The U.S. colony, formally called the State of Israel and also known as the Zionist entity, has a will of its own. Unlike the thirteen British colonies of the 1700s, it has little prospect of gaining independence. This so-called “state of the Jewish people” has a population of only six or seven million Jewish residents. It is hated by the people of all its neighbors and its own second-class Arab “citizens.” The Arab population of the West Bank and Gaza is not even considered formal citizens.
Other nations, for example China or Russia, are constrained from becoming overly close with the Zionist entity because such relations tend to undermine those with Arab and other predominantly Muslim countries. This rules out any independent development of the Zionist entity into a real country capable of independent policies. Instead, Israel is largely limited to attempting to influence the internal politics of the U.S., giving rise to the dangerous illusion that Israel somehow dominates and even runs the U.S. This merges with ancient anti-Semitic claims that “the Jews dominate the world.” This shifts the focus from U.S. imperialism to the “all powerful” Jews. In reality, U.S. imperialism is headquartered in Washington, D.C., and Wall Street, not Tel Aviv or Jerusalem. (back)
(3) The term petrodollar has led to the notion that oil replaced gold as the money commodity, a misunderstanding of its nature. Oil embodies energy, and some form of energy is necessary for all production and is perhaps the most important of all use values. At the beginning of the monetary relationship of production, it was natural for the most important commodity in terms of use value to become the most important form of wealth. This commodity measured the value of all other commodities. For example, cattle were used this way. But cattle are inconvenient as money because they are perishable; they can’t be carried around in a purse or divided and subdivided. Half a cow is a dead cow.
Thus, cattle were replaced, as commodity production developed, by precious metals that could last indefinitely, could be carried around in purses or bags, and could be subdivided without losing their use value. The fact that precious metals played a limited role in production had the further advantage of maximizing the supply available for money. Oil in no sense has replaced gold as the commodity that measures in terms of its own use value the value of other commodities. Like other non-money commodities, oil backs up the value of currencies only to the extent that it is exchangeable for gold. (back)
A Critique of Crisis Theory 