In mid-September 2026, the Federal Reserve Open Market Committee held one of its meetings, which take place about every six weeks. This was not, however, an ordinary meeting. The week before was a rough one for U.S. imperialism in West Asia. Militias based in Iraq attacked the oil pipeline that runs east to west across the Arabian Peninsula ruled by the Saudi Arabian oil monarchy. Saudi Arabia, named after its ruling family, is the largest of the oil monarchies. To maintain the flow toward the Mediterranean and the world market, the oil must be pumped by stations located along the pipeline. In September, Iraqi militias using drones destroyed these pumping stations, halting the flow. It will take several months to rebuild them, and there’s a possibility they’ll be attacked again.
At the same time, Yemen’s government, pushing back U.S. puppets, established control of the Bab el-Mandeb strait, which controls passage into and out of the Red Sea. At this time, Yemen is the only Arab country openly at war with U.S. domination. It is allied with Iran and is thus considered part of the Axis of Resistance. As the Trump administration, through military force, tries to erode Iran’s control of the Persian Gulf, U.S. imperialism’s ability to control the flow of oil across the Arabian desert and the Red Sea is being cut off. To meet the new threats, the U.S. will have to deploy increased military forces to Yemen, Saudi Arabia, and the Red Sea. The war on Iran is increasingly turning into the West Asian war, or we could call it the U.S.-Israeli-West Asian war. Beyond lurks East Asia, whose largest country is the People’s Republic of China, the world’s leading industrial country — a title formerly held by the United States of America, but no more.
At the start of 2026, the U.S. seized Venezuela’s oil. The emboldened Trump administration then set its sights on Iran as the next target. Iran is a major oil supplier to industrial China, which the U.S. considers its chief and most dangerous commercial competitor. After its success in seizing control of Venezuela’s oil, Trump now wants Iran’s. The next logical target is Russia. If U.S. imperialism can gain control of Russian oil, it will be well on its way toward gaining dominance over oil-hungry China.
Drunk from its success in Venezuela, the Trump administration thought it could crush Iranian resistance in weeks, if not days, by killing the leadership and terrorizing its population with a bombing campaign. When Trump opened the military assault on February 28, he aped Roosevelt and Churchill during World War II by demanding “unconditional surrender.” (1) On the evening of February 27, just before I went to bed on the West Coast, there were reports that negotiations between Iran and the U.S. were going well and a diplomatic breakthrough seemed at hand. When I got up the next morning, I decided to boot up the computer and check the progress of the negotiations. Would war begin this morning, February 28? That is Trump’s style, after all. And sure enough, the war had started.
As we now know, Iran did not fold. The people mobilized behind their government in the streets in the millions and are clearly far from demanding peace with the U.S., as the Trump administration assumed. They instead demanded that the war be fought to the end.
In addition to the military difficulties Trump has run into, there are major financial problems that could have been avoided if Iran had folded as expected. To understand these problems, we must look beneath the surface and examine how the global capitalist economy has evolved since 2008, the last universal crisis of relative commodity overproduction.
In 2008, the global capitalist economy faced a crisis perhaps greater than that of the early 1930s. The world’s leading banks seemed on the verge of disaster. Terrified by the scope of the crisis they faced, capitalist governments did everything they could to prevent it from coming to a climax like that of 1929-33. Allowing this to happen would have involved the collapse of most of the banks and the creation of new larger ones on their ruins, and the stabilization of the global currency system around a revived gold-exchange system. A new upsurge of capitalist prosperity and development would follow, similar to the recovery that followed the Great Depression of the 1930s.
This was the indicated course — but there was a catch. This would be an industrial and agricultural depression greater than that of the 1930s, with countless hundreds of millions unemployed across the planet while most of the world’s remaining peasants would be driven off their land. The world’s capitalist governments were determined to do everything they could to avoid this. What capitalist government would survive a Depression like this? And would the capitalist system itself survive? (2) While there was no way to avoid it completely — far from it — they avoided the worst. But the recovery that followed was painfully slow. There was no new upsurge of the global capitalist system comparable to what followed the 1930s Depression. Most importantly, the threat of a “super-Depression” beyond that of the 1930s was only postponed, not avoided.
In 2020, the capitalist world faced another great danger, this time from the biological world. The COVID-19 pandemic risked radically shrinking the size of the working class. Unlike a normal crisis that affects the realization of surplus value, this endangered the production of surplus value. Surplus value not produced cannot be realized, and there can be no profits. In a panic, governments ordered economies to be largely shut down, hoping to quickly stamp out the virus. The worst was avoided, though unemployment hit levels exceeding even those that followed the 2008 crisis. Millions of people around the world died. A side effect was the temporary halt of overproduction. Fearing that the sudden halt in the normal production of commodities would lead to massive bankruptcies, the Federal Reserve Open Market Committee lowered its target range for the federal funds rate to between 0% and 0.25%.
This short-term underproduction was followed by a sudden boom that gradually absorbed the pool of unemployed workers that was created by the shutdown. It then threatened to turn into a runaway overproduction boom followed by economic collapse. The Federal Reserve reacted through a series of rate hikes, driving the federal funds rate to a range of 5.25% to 5.50% by July 2023. Economic growth began to moderate. The slow growth that characterized the post-2008 economy was back.
Slow growth has its own problems: The struggle for markets between capitalist individuals and countries intensifies. The competition between countries is easier to manage when growth is rapid, as it was after 1945. So governments and central banks decided to run the economy hot, using large deficits to pump demand into the economy — classic Keynesianism — while central banks created money, allowing for more government borrowing.
For this to succeed, there must be adequate quantities of money material, gold, to support it. The 1930s Great Depression created the ideal conditions to produce this material in the course of the decade. Years of unparalleled economic stagnation and low prices in terms of the use value of gold created vast amounts of money that piled up mostly in the U.S. banking system. The economic crises of 1968-82 and 2007-2009 created a lot of idle money as well through the same mechanism, but not on the scale of the 1930s.
It’s now been eighteen years since the last major crisis of general overproduction. Slow growth combined with the 2020 COVID shutdown made this possible. But time is running out, particularly in the face of Trump’s financially reckless policies. The federal government’s debt, now exceeding $40 trillion, what increasingly looks like an open-ended war in West Asia, and the still-raging and dangerous Russo-Ukrainian war threatening to merge with it are all sharpening the competition between the government and the rest of the economy for money and credit.
Polls indicate the Republican Party will lose many seats in Congress in the upcoming Nov. 3, 2026, midterm elections. Democrats are also unpopular but have the advantage of not carrying the Trump name. Trump has recently promised to mail all citizens $5,000 checks — but only if the Republicans win. He fears that the Democrats will control the House, which current polls show is close to a foregone conclusion, and possibly even the Senate, though that is less likely since only one-third of Senate seats are in play. In addition, the electoral map is favorable to Senate Republicans this year, with relatively more Democratic seats up for election.
Modern Monetary Theory predicts that the answer to imperialism’s economic and financial problems is for the Federal Reserve to create vast amounts of new dollars to allow businesses as well as consumers to keep borrowing alongside increased central government borrowing made necessary by war spending, producing so much money that interest rates fall. This would finance both consumer and business spending as well as the West Asian war and the other U.S.-supported wars raging across the globe.
The reality is that money is in short supply. This is not the same thing as saying that wealth is in short supply. Wealth and money, contrary to what economists might imagine, are two different things.
What is necessary to stabilize the situation from the perspective of the capitalist class and government (not, of course, the interests of the working-class majority) is that there’ll be higher taxes, whether individual capitalists like it or not, as well as higher interest rates and, in the near future, a major recession. That recession will allow, through the mechanisms we’ve examined throughout this blog, the money lying idle in the banks to be rebuilt, allowing the U.S. government to finance wars in the years ahead that are increasingly necessary to try to maintain its world empire while leaving enough money and credit to circulate the commodities produced by the industrial capitalists.
This is the brutal logic imposed not by the needs of the people of planet Earth, and certainly not the needs of the working class, but by the needs of the capitalist system. Ultimately, the Federal Reserve must serve capitalism’s needs and not the wishful thinking of a Donald Trump or, for that matter, the theorists of Modern Monetary Theory or of liberals and progressives.
This is why the Open Market Committee decided unanimously (in contrast to recent split votes) to raise the federal funds target by 25 basis points on September 16, 2026, to between 3.75% and 4%. The projections released with the meeting indicated a further increase later this year, with the median year-end federal funds rate projected at 4.1%. The cutting cycle initiated under Warsh’s predecessor, Jerome Powell, also appointed by Trump, is now officially over and a tightening cycle is underway. The Powell Fed’s policy of bringing the economy to the brink of recession, then easing off at the last moment to stave off recession, has failed.
A surge in the dollar price of gold, measuring how much gold (real money) a dollar represents, occurred just before the outbreak of the war on Iran on Feb. 28, 2026. It brought gold’s dollar price briefly over $5,500. This indicated, even before the war, that a rise in the fed funds rate could not be avoided. Nothing like this has occurred since 1979, when a similar crisis ended with the fed funds rate well into double digits, in what became known as the Volcker shock. In recent weeks, the dollar price was rising again toward $5,000, though as recently as a week before the Open Market Committee met, there were hopes from some analysts that the Fed could hold down the fed funds rate at current levels for a while longer. Markets reacted to the decision in the textbook way. Gold’s dollar price fell, but so did government bond prices — meaning that their interest rates rose, and all kinds of interest rates are linked to the 10-year bond interest rate, from mortgages to auto loans. This points to a near-term recession. The rise in bond interest rates caused Trump to complain that rates should be lower. But even the puffed-up president is powerless before the laws governing capitalism, the chief one being the law of the value of commodities.
The effects of the war on the Fed
Perhaps the Fed could still have held off for another few meetings if Trump hadn’t started the war on Iran. The war caused major disruptions in the production and flow of oil, as we have seen. Some of the damage might take years to repair after peace is restored. From imperialism’s perspective, in light of current economic and financial conditions, making peace might be the correct move. Imperialism started a shooting war with Iran on February 28. Now that it’s started, any abrupt pause carries its own risks. Imperialism’s problem is that this teaches the lesson to the masses of the people in Iran, Yemen, Palestine, and the rest of the world that if you struggle, you win victories, even if at great cost in lives. Retreating only emboldens imperialism to ask for more, and there’s no limit on those asks. This is not just because of evil leaders like Trump; it’s due to the operations of the laws of capitalism. Once these wars are started, it’s not easy to stop them.
The increase in government war spending in the short term tends to accelerate economic activity, while government bond interest rate rises threaten to neutralize it. If the Fed tries to create more money to finance higher prices, gold’s dollar price surges. The Treasury could sell from its reserves, but it only has so much gold to sell. Rising oil prices drive up the prices of all commodities. If the Open Market Committee counters by creating more dollars to finance it, as it did in the 1970s, this leads to the dollar plunging against gold, higher inflation, and eventually higher interest rates. (Remember, at the end of the 1970s, government bond interest rates rose into the double digits.)
What is really behind the Iran-U.S. war?
Liberals and progressives insist there are no conflicts of interest between the U.S. and Iran. They don’t think in class terms; they make no distinction between the interests of the capitalist class and the working class within society. Instead, many blame the war on the influence of the Zionist lobby, painting the U.S. as an innocent victim of Zionism. Not all that long ago, liberals and progressives supported the right of Israel to exist. The genocide that followed October 7 has changed things. Now most bitterly denounce Israel, and “Zionism” has become a dirty word. Better late than never! The Zionist entity is hostile to all its neighbors and is in permanent conflict with Iran as well as with its Arab neighbors. Since the Baathist government of Bashar al-Assad was overthrown in 2024 and replaced by a pro-U.S., pro-Israeli government with the help of Turkey, the threat of a war between Turkey and Israel fought in Syria has grown.
It is clear why the Zionist entity fears a strong Iran, and why it wants to crush it. With the exception of the “pro-Western opposition,” public opinion in Iran is hostile to Zionist Israel. How does Israel, with a Jewish population of less than seven million people and vastly fewer financial and economic resources than the U.S., manage to control the U.S. against the interests and will of its own ruling class? Leaving aside the ancient legends of the Jews killing Jesus Christ (killing God himself with their Satanic powers), there are no real answers.
There are other explanations for the war. One is the horrible personality of Donald J. Trump. What this ignores is the decades of hostility between the U.S. and Iran that began with the 1979 Iranian Revolution, long before Trump became president. It has persisted from one administration to another, Democratic and Republican alike. Nor did the bad relations between the two start in 1979. The U.S. government and CIA, along with Britain, organized the overthrow of Iran’s Prime Minister Mohammad Mossadegh in 1953, imposing the tyrannical rule of the Shah. Why did they do it? Because Mossadegh’s government had nationalized Iran’s oil resources. In 1979, the Shah’s regime was overthrown by a massive popular revolution, and the U.S. has waged economic and political warfare against the country ever since.
It isn’t just Iran. The U.S. has been in conflict with countries trying to build socialist economies. But countries like Iran are only trying to encourage the development of capitalism in their countries independently of U.S. imperialism. Why is this? Do the interests of different capitalist countries conflict with one another, or are they basically the same? Capitalist political economy has long answered this question by claiming that capitalist nations engaged in world trade, developed and underdeveloped alike, have an equal interest in free trade. If this is true, while the U.S. might be expected to be hostile to socialist economies, it should have good relations with capitalist ones.
Modern economics, as it calls itself (that is, economics dominated by the neoclassical school), claims that the interests of capitalist nations engaged in world trade are harmonious. The claim is based on what is called comparative advantage (rather than absolute advantage), which is said to rule world trade. This is a somewhat complex idea that takes some effort to get your head around.
The theory of comparative advantage
Today, the theory of comparative advantage is considered a pillar of neoclassical marginalist economics but actually originates with the great classical economist David Ricardo. For simplicity’s sake, let’s imagine that the whole world consists of two capitalist countries. One, country A, produces all types of commodities of a given quality and use value with less labor than country B. Assume the commodity “labor,” as Ricardo would have put it (we would say labor power), has the same value in both, so wages are the same. Country B doesn’t lag behind country A in all branches of production to the same degree. In some branches, labor productivity in country B is 75% of that of country A, while in other branches of production it is only 25% of what prevails in country A.
If we apply Ricardo’s theory of labor value, it would seem that country B will see its economy totally destroyed unless it imposes high protective tariffs and other trade restrictions. (3) Ricardo argued that it is in the interests of both country A and country B to follow free-trade policies. His conclusion seems to contradict his own theory of (labor) value. But Ricardo believed in two other economic doctrines that today form the foundation of neoclassical marginalist economics, the economics taught in universities. He drew his conclusions on comparative advantage from these two doctrines: the quantity theory of money and Say’s law.
Say’s law claims there cannot be a general overproduction of commodities. At most, some commodities can be overproduced, but this is countered by the underproduction of others because all commodities are purchased by other commodities. Double the quantity of commodities, Say’s law teaches, and you double the demand for them. The capitalist economy has a built-in tendency to operate at full employment. This theory overlooks the fact that it is possible for all non-money commodities to be overproduced relative to the money commodity. Commodities are purchased not by just any commodity, but only by a special money commodity. What Ricardo overlooked was that the split between commodities in general and the money commodity makes a general crisis of overproduction perfectly possible.
The quantity theory of money claims that if the quantity of money within a given country falls while the total level of production remains unchanged, commodity prices will fall in proportion to the decline in the quantity of money. If the quantity of money increases, commodity prices will rise in proportion to the increase.
Now, as economists like to say, let’s assume trade begins between countries A and B. Country A starts winning the battle of competition with B. As a result, money flows out of country B to A. B will face economic disaster, but as the process unfolds, the quantity of money falls in country B while it increases in A. Applying the quantity theory of money, this means that prices in country B will fall and rise in A. This continues until the industries in country B that are least behind start to sell in A at lower prices than those of the same commodities produced in A. This continues until trade balances between the two countries. At this point, countries A and B run neither a deficit nor a surplus in their trade with one another. According to our assumptions, industries in A will have an absolute advantage in all branches of industry over B. Some industries in country B are less behind in productivity than average. These industries have a comparative advantage over the same industries in country A. For more on the theory of comparative advantage, see Ricardo’s Theory of International Trade and World Trade and the False Theory of Comparative Advantage.
Ricardo believed that free trade is equally in the interests of countries A and B. Though, unlike other economists, he did not simply tailor his theories to coincide with the interests of the capitalists of his country, those of his theories that did coincide with the interests of the British capitalist class enjoyed great popularity, at least among the economists who were able to understand them.
Among Ricardo’s theories rejected by economists shortly after his death in 1823 was his theory of value: that the labor time necessary to produce a commodity under average conditions of production at a given time determines its value. His theory already implied that surplus value — profit, interest, and rent — is based on unpaid labor. Any further development of the theory would have brought out the conflict of interests between the growing class of wage laborers who produced commodities and surplus value and the capitalists and landowners. With clashes between wage workers and capitalists becoming ever more common, the interests of the ruling class demanded that any form of the labor theory of value, as it is called, be buried by post-Ricardian economists.
Post-Ricardian capitalist political economy did just that, using the contradictions within the Ricardian theory of value to blow it up rather than perfect it. Perfecting the theory through its contradictions was the course followed by Marx. [For more on the contradictions of Ricardo’s theory of value.] On the other side, champions of the working class began to develop a critique of capitalism based on the Ricardian theory of value, though they did this rather naively. These people are called Ricardian socialists. Then came Marx, who also, basing himself to a great extent on Ricardian economics, developed his critique of political economy. On the other side, the Austrian and neoclassical schools of modern economics ditched any concept of value based on human labor altogether, burying the real nature of surplus value in order to defend the capitalist system.
The labor theory of value is considered unacceptable in any form because it leads to the theory of surplus value being nothing but the unpaid labor performed by the working class. Things are quite different with the Ricardian theory of comparative advantage. Actually, looked at globally, capitalists have different attitudes toward the theory of comparative advantage, and this is reflected in the history of post-Ricardian political economy. British capitalists and the economists who worked for them, even before the development of neoclassical theory, supported the theory of comparative advantage.
In Ricardo’s day, Britain’s industry was beyond doubt the most productive in the world. This was not necessarily true when it came to the production of agricultural commodities. The British climate is far too cold to grow the cotton plant that provided the most important raw material necessary for the production of textiles, Britain’s leading industry. In Ricardo’s time, cotton was grown most cheaply in the southern United States with slave labor. Wheat, the most important foodstuff, could be grown far more cheaply in the northern United States by free small farmers or in Russia with serf labor than it could be grown in Britain. Ricardo wanted to see the tariffs that protected both British landlords and capitalist farmers repealed, bringing him into conflict with agricultural interests.
Ricardo’s policies were popular among British textile manufacturers and other non-agricultural industrial capitalists who championed “free trade.” Free trade had to be backed up by naval domination to make sure Britain could not be blockaded by a rival capitalist country. A necessary corollary to free trade was that “Britannia rule the waves.” In the then-developing capitalist countries like the United States and Germany, Ricardo’s free-trade doctrines were largely rejected by economists who favored protection to encourage the development of native industries.
Marx considered Ricardo’s theory of comparative advantage mistaken, and he intended to write a book on world trade and crises but died at the age of sixty-four in 1883 before he could. Marx’s own theory of world trade exists only in fragmentary form. Perhaps his most fundamental finding, presented in Volume 3 of “Capital,” published after his death by co-worker Frederick Engels, was that interest rates are sensitive to fluctuations in the quantity of money relative to that of commodities. Commodity prices are not sensitive to fluctuations in the quantity of money. [See “The Rate of Interest and the Profit of Enterprise.”]
Both space and time prevent a thoroughgoing exploration of this topic at this time, though I’ve discussed it throughout the blog. The chief finding is that the Ricardian theory of world trade, which migrated from his theories into neoclassical economics, paints the relationship between capitalist countries engaged in world trade as equally beneficial to all, in contrast to the earlier mercantilist theories, which frankly presented these relationships as antagonistic.
Generally speaking, if we examine the most powerful capitalist countries, we see that they pass through three stages, a pattern true of both Britain and the United States. Stage one represents the rising phase, where the country gets control of its home market with the help of protective tariffs and other trade barriers. During the second phase, our country captures more of the world market and strives for world domination, with more of its industries gaining mastery due to superior productivity of labor. At this point, our capitalist country reaches its economic zenith, defined as the point at which the gap between the productivity of its industries and that of its chief competitors has reached its greatest extent.
Then the gulf between our country’s labor productivity and that of its chief competitors begins to erode. To avoid losing more of its share of the world market, our country resorts to military force. Eventually, declining relative productivity leads to declines in military and political power. The increased costs of empire, especially the share of the budget that must be devoted to military spending, reduce the share that subsidizes and carries out the research that leads to new industries. This brings closer the point where the productivity advantage not only narrows but reverses. Eventually, the burden of the empire becomes overwhelming, the wars necessary to defend it become too costly, and the empire falls.
Britain reached its industrial peak around the middle of the 19th century, its zenith. By the last third of the century, facing increasingly powerful competition from Germany and the United States, it built a huge colonial empire in Africa and Asia in addition to its Indian colony. Britain continued to expand this empire, reaching its greatest extent right after World War I, when it grabbed Palestine and Iraq from the expiring Ottoman Empire. By then, the British pound was under increasing pressure from the U.S. dollar, which eventually replaced it as the chief global reserve currency.
After World War II, an economically bankrupt Britain had to be bailed out by the $3.76 billion Anglo-American loan. Remember, $3.76 billion represented far more money than it does today. The British Empire began to collapse. The 1956 Suez crisis was pretty much the last attempt by the British Empire to play a role independent of the United States. It suffered balance-of-payments crisis after crisis that finally ended the reserve status of the British pound, completely reducing a “post-industrial” Britain to the sorry state it finds itself in today. The United States began to replace Britain as the world’s leading industrial power in the late 19th century, though the British pound continued to reign as the world’s leading currency.
A struggle for succession broke out as the end of the British-dominated world order came into sight. It was only a question of which country was going to replace Britain as the world’s dominant power — that role was clearly going to be played by the United States, already the world’s leading industrial power. That left open the role the other big capitalist powers, like Germany, Japan, and France, would play in a U.S.-dominated world. Germany’s two attempts to become the dominant power in Europe and Japan’s attempt to become the dominant power in Asia were defeated as a result of the outcomes of World Wars I and II.
By the end of World War II, the U.S. had reached its zenith in terms of relative industrial, agricultural, and financial power. The dollar emerged unchallenged as the world’s chief reserve currency, with the British pound holding on only as the reserve currency of its dying empire. Since then, the United States, as an industrial power, has suffered a decline. As a result, the U.S. under Trump flirts with a more open colonial role, though similar tendencies were already visible under George W. Bush.
Despite claims that Israel somehow dominates the United States, the reverse is true. While during its early years, the Zionist entity was sometimes able to play Britain and France off against the United States, today the so-called “Jewish state” is reduced to acting as a colony (not a neocolony) of the United States. Trump’s threats to annex Canada, Greenland, Iceland, Cuba, Mexico, and Venezuela fit into the trend of U.S. imperialism trying to directly colonize other nations. While some of Trump’s rhetoric reflects his personal style, it would be a big mistake to reduce it to that.
The fact that the dollar is under increasing pressure as the world’s chief reserve currency shows the decline of the U.S.’s relative economic and, more recently, military and political power. While no currency is anywhere close to challenging the dollar’s role as the world’s reserve currency of last resort, gold is reemerging in its traditional role as the chief reserve asset held by central banks other than the Federal Reserve System. (4) The decline — but not yet the fall — of the dollar system is a further indication that the decline of capitalism is accelerating.
The huge military machine that Washington maintains to manage its global empire is leaving fewer financial resources for the federal government to finance research into the development of new industries and to support science whose discoveries lead to the rise of new industries. Instead, federal money is poured directly into the Pentagon to fight wars against “upstart” capitalist states like Iran. While a few years ago satellite imperialist countries such as Germany were allowed to buy natural gas from Russia, the U.S. no longer allows this. Germany has been forced to stop buying Russian gas and instead depends on liquefied natural gas from the United States, though this goes directly against the economic interests of Germany’s ruling capitalist class. It’s increasingly obvious that Germany, eighty-one years after the end of Hitler’s Third Reich, is still far from a truly sovereign state.
The U.S. is now well into the third phase in its life cycle as a dominant capitalist power, where it has to support a world empire increasingly through brute military force while the relative competitive power of its industries declines, with more of these industries collapsing altogether. As of now, the dollar still maintains its role as the main reserve currency, and its world empire has yet to fall. It’s in a position comparable to Britain’s just before World War I, though such analogies with the past are not exact. What we can say is that today U.S. capitalism is past its zenith. It’s well into the phase where its drive to build a world empire has transformed the country that in the past represented capitalist progress more than any other country into the most reactionary force in the world.
The U.S. from the war of the Slaveholders’ Rebellion to its capitalist zenith
The great wave of bourgeois-democratic revolutions in Europe found its purest expression in the Great French Revolution of 1789-1794. The bourgeois revolutions aimed at establishing the equality of all commodity owners before the law. The bourgeois revolutions of the 18th century were still largely limited (with the exception of the Haitian Revolution) to the equality of all white male European commodity owners before the law. (5)
Nowhere were the contradictions and limitations of the initial waves of bourgeois revolution more obvious than in the United States of America. At the dawn of the 19th century, with post-revolutionary France sinking into the Napoleonic Empire, the U.S. had the most advanced political system in the world. There was no king or emperor. There was an elected president — elected by the Electoral College, not the people as a whole. The president’s term was limited to four years, though according to the written Constitution, the president could run for reelection. Following George Washington’s example, the U.S. president by tradition served at most two terms.
This was in sharp contrast with the situation in other countries as different as Britain, post-revolutionary France, Russia, and China, where the ruling monarch served for life. Members of the House of Representatives, broadly inspired by Britain’s House of Commons, were elected by a white male propertied electorate for two-year terms. There were no, and still are no, limits to the number of terms they can serve. There was a less democratic Senate — inspired by Britain’s House of Lords — whose members served six-year terms and were chosen by state legislatures. It was not until 1914 that all Senate elections were held by popular vote.
The great mass of the population were so-called family farmers who largely depended on their own labor. This smallholding system was the most democratic feature of early 19th-century U.S. society. The democracy represented by that system was built on the foundations of genocide against the Native people and the destruction of their agricultural systems. Suffrage was gradually expanded to small property owners as this system expanded westward at the expense of the Native population. The social structure of early 19th-century America was not identical throughout the country. In the North, the system of small land ownership was crowned by growing industrial capitalist sectors based on wage labor — sometimes called the free labor system. The Southern states were dominated by the system of modern slavery based on chattel slavery. Unlike the ancient version, this chattel slavery was largely limited to people of African descent. To this day, the system of modern slavery of people of African descent continues to cast a shadow across subsequent U.S. history. The U.S. shares with Canada and Australia a history of genocide against the Native population. But those countries were not shaped by modern slavery and the racism it produced — nor by the struggle against racism and the traditions these struggles created.
When it came to modern slavery, the U.S. was the negation of bourgeois-democratic ideology. That was due to the dominant role of chattel slavery in the economy of the U.S. South. The ideologists of capitalism were — and still are — proud that in their system the capitalist and the worker freely enter into a “voluntary contract.” In this contract, both parties face each other as commodity owners. The capitalist owns the instruments of labor, while the worker owns their labor power. The worker has the right to choose not to work.
This, of course, ignores the little fact that if the worker chooses not to work for the capitalist, the worker faces starvation. But African slaves did not have the right to withhold their labor power. The African slave did not own any commodities, including labor power. Unlike the wage worker, the slave did not sell their labor power but was instead bought and sold as a commodity in their entire person. This entire person includes labor power. In this sense, the United States of America, especially in the Southern states, was the negation of bourgeois democracy.
These contradictions pointed to the need to extend the ideas of bourgeois democracy beyond white men of European descent to the enslaved, to end the Native genocide, and to extend the rights of bourgeois democracy to the female sex before the bourgeois-democratic revolution could be considered complete. In the next historical epoch — the period after the war of the Slaveholders’ Rebellion — advocates of the right of women to vote worked with leaders of now-free Africans to safeguard the bourgeois-democratic rights that had been won through the defeat of the Slaveholders’ Rebellion and to extend them to the female sex.
What did the victory over the slaveholding rebels accomplish?
During the first phase of U.S. history, between 1783 and 1860, the northern statesmen represented rising industrial capitalism, and southern plantation owners made a series of compromises to keep the United States — based on two different modes of production and exploitation — together. The interests of the capitalist class in pushing aside the southern slaveholders coincided with the desire of the enslaved to escape chattel slavery. Looking at things from a narrow economic perspective, to the extent that slavery was preserved, slaves were kept off the labor market. Compared to white workers, slaves were accustomed to a low standard of living. By keeping them off the labor market, slavery made it more difficult for capitalists to increase the rate of surplus value because it reduced the number of people competing for available jobs. Slaveholders used this to appeal to white (male) workers, claiming that the abolition of slavery would be a disaster for white workers because they would face increased competition from former slaves who would be willing to work for far lower wages. Working through the Democratic Party, slaveholders were able to maintain the political upper hand within the federal system, more often than not getting their way on issues of national policy.
Despite this, the wealthy capitalists, the people who really ran things in the Northern states, felt far more in common with the slaveholding planters than they did with the slaves. Members of both classes were men of property and wealth. The Northern capitalists made attempt after attempt to strike deals with the Southern slaveholders, but the deals kept breaking down. Eventually, in 1860, the candidate of the new Republican Party, Abraham Lincoln, who didn’t even appear on the ballot in many Southern states, won the election for president.
Lincoln was a moderate Republican who was opposed to the forcible abolition of slavery. A lawyer, he saw the investment in slaves, no matter how distasteful, as a form of private property sanctioned by the Constitution. He believed slavery would gradually die out as a result of the natural evolution of capitalist society. But on one issue he was not willing to compromise: He was determined that there would be no further geographical extension of slavery and that no more slave states should be created. With the expansion of territorial control came increased economic and political power for the slaveholders. Without the possibility of further expansion, no more deals with the slaveholders were possible.
With the election of Lincoln in November 1860, the die was cast. Beginning with South Carolina, one Southern state after another rebelled. Lincoln maneuvered so that South Carolina fired the first shot at Fort Sumter on April 12, 1861. On January 1, 1863, Lincoln finally signed the Emancipation Proclamation, declaring that all slaves in areas of rebellion against the United States “shall be then, thenceforward, and forever free.” Here we see a phenomenon common in revolutionary times: moderate politicians are forced to carry out measures championed by far more radical forces that the moderates themselves long opposed. Lincoln was forced by circumstances to carry out the abolitionists’ program.
The cautious, racist Lincoln had been far from an abolitionist. For him to be an abolitionist was something like being a communist today. The Emancipation Proclamation did not free all slaves. It did not immediately free anyone. Still enslaved were those in the border states that had not joined the rebellion but had retained the institution. These states were too far north to grow cotton profitably but could raise slaves like cattle, who were then sold to planters further south. The Proclamation declared free only slaves in territories that were in active rebellion against the United States. As the Union army conquered areas in active rebellion, more slaves were freed, and they now had the strongest motives to accelerate the defeat of the rebellion. They acted accordingly.
After the Emancipation Proclamation, events proceeded with increasing speed. On April 9, 1865, General Robert E. Lee, the chief rebel general, and his Army of Northern Virginia surrendered to the top Union general, Ulysses S. Grant. Residual rebel resistance collapsed. When the 13th Amendment to the United States Constitution went into effect on December 6, 1865, slavery and involuntary servitude were abolished, except as punishment for a crime following conviction — prison labor.
This meant that, prison labor aside, people either owned their own tools of labor (largely small family farmers) or “voluntarily” agreed to sell their labor power to another person or institution and worked for somebody else. No one was forced by law to work for another person under any other conditions. Of course, people needed money to live. They were forced to sell their labor power to a capitalist on a “voluntary” basis. It was either sell your labor power or find a way to live without the money needed to purchase the means of subsistence. While people were free — assuming, of course, they had the money — to purchase the labor power of another person, it became easier to find people willing to sell it. Unlike under modern slavery, no one could legally purchase a person as a commodity.
While we are on the topic, let’s look at the difference between the kind of slave labor that people of African descent were forced to do before 1865 and the wage labor most people are forced by economic conditions to perform today. The capitalist claims that under slavery people were forced to work for no pay at all, while under capitalism they are paid the full value of the labor they perform and nobody is forced to perform unpaid labor.
Under modern slavery, a person could be purchased by someone who had the money, as was the case with any other commodity. The person who made the purchase now owned the whole person, including their ability to work — their labor power. The slaveholder did not have to purchase the slave’s labor power because they already owned it. This didn’t mean the slaveholder could force them to work for nothing, at least not for long. If a slaveholder did try this, the slave would rapidly lose the ability to work and would die, destroying their economic value.
The slaveholder had a powerful incentive to keep the slave alive under pain of losing their investment. They had paid “good money” to become the legally recognized owner. If they let the slave die of starvation, they would lose the value of an important piece of fixed capital.
To make use of the slave and their labor power, the private property of the slaveholder, they had to feed them and provide the rudiments of clothing and shelter, no matter how wretched. The way slaves were “paid” under this system took various forms. The owner might simply provide food, a few clothes, and a crude cabin. The slave would be allowed to consume these items, so some of their labor was “paid.” During part of the working day, slaves worked for themselves, as the value that the slaveholder provided was replaced by the slaves’ labor. The rest of the working day was unpaid labor, as is true of the wage laborer.
The slaveholder might allow slaves to tend a separate plot or garden to grow some food, with the right to consume it. This labor was paid in the sense that the slave consumed the food — not itself a commodity, as it wasn’t sold but was raised for personal consumption by the slave and their family. Sometimes the slaveholder might even pay a small amount of money to purchase necessities. This still differs from wage labor because, while the wage laborer can quit at any time, quitting is not an option for slaves.
This is akin to forms of prison labor. Prisoners often work for private capitalists and are paid little for doing so. The prisoner is provided shelter of a sort (a cell), items of clothing, and other necessities. Prisoners cannot simply walk away — they can be “shot while trying to escape.” No person can be reduced, legally, to such a sorry state of affairs without being convicted by a judge or jury of a crime that carries such a sentence. If a private individual attempts, privately — not through the state — to force anybody to work for them, it’s considered a crime. Occasionally, you read media reports of persons accused and convicted of keeping people in slavery.
People in countries with prison labor are in constant danger of being accused and convicted of a crime and forced to do labor even if they are, in fact, innocent. Such an outcome is not generally expected if you’re a law-abiding citizen, though, as the expression goes, there are no guarantees. This is especially true for African Americans. If you were a person of African descent born into modern slavery in the old South, there would be no question that you would have to live and work under these conditions. All of it was perfectly legal and guaranteed by the Constitution.
This isn’t an unimportant difference: free wage labor can — though not always, and legally this has had to be fought for — organize a union with fellow workers to limit the degree of exploitation by the capitalist. To the extent that the rules of bourgeois democracy are respected, it is even legal to organize political parties with the aim of abolishing the wage system altogether. Under slavery, workers had no legal right to organize — and it was almost impossible to organize them illegally. During the time when modern slavery existed in the U.S., it was legal in the Northern states to organize political parties opposed to slavery, but slaves themselves had no such right.
From the workers’ perspective, the biggest difference is that under the wage system, you can walk away if the boss demands that you do a life-endangering job or something you consider deeply immoral. Under the slave system, you face punishment from the slaveholder as well as the state. Sometimes it’s claimed that the end of chattel slavery was a concession granted to workers by the slaveholder-turned-capitalist boss. There are real advantages of free wage labor to capitalists as well as to workers.
Slave systems of all types have various mixtures of commodity production and natural economy. In a natural economy, products have use value but don’t take the form of value. A capitalist economy is defined as one of generalized commodity production, where labor power itself is a commodity. The system of modern slavery that grew up side by side with capitalist society following the geographical discoveries by Europeans in the 16th century was also based on commodity production. In slave economies, labor power was not a commodity.
The modern slavery system and the capitalist wage labor system had a common origin in the 16th century. Central to the geographical discoveries was the discovery of rich new sources of gold and silver — money material. In the language of modern capitalist macroeconomics, this was a massive economic stimulus. The result was an explosion of effective monetary demand for commodities.
The old modes of production in Europe and elsewhere were no longer able to meet the expanded demand. These modes, whether guild or individual craft production, were adequate to meet the demands of the markets of the Middle Ages but couldn’t meet the increased demand. Two modes of production emerged to meet the demand. One was the capitalist mode based on wage labor. Under this socioeconomic system, production is carried out by masses of wage workers working together in large enterprises. Labor is social in production terms, but appropriation of the product remains private. Over time, these enterprises grew larger. The mega-productive forces created cannot be operated by individual workers as in earlier modes. Instead, large numbers of workers with an advanced division of labor are needed to set them in motion. The explosion of demand for commodities produced by the great expansion of the money material beginning in the 16th century is called by historians the Commercial Revolution.
In the mode of production based on wage labor, unlike under chattel slavery or the feudal type of legal subordination of some individuals to others that dominated earlier modes after the breakup of pre-class communist societies, all individual commodity owners are equal before the law. The most important freedom is the freedom to buy and sell commodities. While some individuals own the means of production, others have only their labor power to sell. Smaller commodity producers, then small-scale capitalists, and finally larger capitalists are slowly squeezed out as capitalist production advances and production becomes concentrated in the hands of mega-capitalists.
The other mode of production that emerged was modern slavery. To a greater extent than ancient slavery, modern slavery was based on large-scale commodity production. The slave’s labor power was the private property of the slave’s owner. This is the crucial difference between capitalism and modern slavery.
Ideology of capitalism and modern slavery
Capitalist ideology is based on the equality of all commodity owners before the law. All people own commodities, including members of the working class, whose commodity is their ability to work. Commodities are sold for money; labor power is sold for a wage. There is no need for privileged groups in which some individuals have titles giving them access to the social surplus product (produced by those who perform unpaid labor) that others do not have. This doesn’t mean there aren’t great differences in wealth between individuals under capitalism. Indeed, the differences in their access to wealth reach levels impossible in former societies. Some individuals own great factories, while others have only their labor power to sell. Equality of all commodity producers before the law does not mean that all individuals have the same quantity of commodities. Far from it!
Commodity ownership presupposes universal competition between different commodity owners. There are some winners and some losers. The equality of all commodity owners does not exclude the division of society into a capitalist ruling class that owns the means of production and a working class, the proletariat, that sells its labor power to the ruling capitalist class. Equality and democracy form the foundation of capitalist ideology in general and U.S. ideology in particular. The U.S. has built a cruel and unprecedentedly exploitative world empire in the name of democracy and equality.
Modern slavery stands in opposition to this. In a legal slave system, slaves and their owners are not equal before the law. Thomas Jefferson, the third president of the United States, was the political leader and chief ideologist of the Southern slaveholders during the late 18th and early 19th centuries. He spent a lot of ink attempting to reconcile the irreconcilable. According to the emerging and revolutionary ideology of the capitalist class, there was no room for slavery. Southern slaveholders like Jefferson claimed that African slavery was a temporary evil that would gradually disappear. He also defended the argument of white superiority over Africans.
Modern slavery arose because of the lack of available wage workers. Though it’s sometimes hard for those of us who have grown up in capitalist society to grasp, people do not naturally sell their labor power to other people. Before this can happen, a large number of people must be deprived of ownership of the means of production and left with only their labor power to sell. In what the emerging European capitalist class called the “new world,” conditions that “naturally” force people to sell their labor power to other persons did not exist. Large-scale chattel labor was needed to carry out the large-scale production necessary to meet the massive expansion of the market that occurred due to the discovery of gold and silver in what the Europeans called the “Americas.” Wage laborers were not available in sufficient quantities to produce enough commodities to satisfy market demand.
The birth of modern racism
To return to ideology, in the Americas the idea of capitalist equality had to be amended. Modern slavery could be accommodated by replacing the equality of all commodity owners with that of all white commodity owners. It was claimed that “Negroes” occupied an intermediate position between chimps and gorillas on one side and white European humans on the other. While the enslavement of whites was not allowed, it was okay to keep “Negroes” as private property to be used on plantations, just as it was okay to use cattle and sheep on farms. It was claimed that “Negroes” were lazy by nature and could not be allowed to own their own labor power because they would never work voluntarily. This amendment to capitalist equality became deeply rooted in the Southern states and spread north. Eventually, modern slavery led to modern racism.
In the 1850s, it became clear there could not be a peaceful solution to the problem of the domination of modern slavery economically and politically in the Southern states. In this climate, the slaveholders’ political leaders began to shift their ideological arguments in defense of slavery.
Instead of admitting that slavery was evil, even if only a temporary evil, they began to defend it as a positive good that should last forever. Under the system, slaveholders lost their investment if the slave died. They had a material interest in keeping them alive and healthy enough to work, as explained above. They argued the system was good due to the natural “laziness of Negroes” and might even be good for white workers as well, who, after all, were also naturally “lazy.”
From the viewpoint of the purely capitalist purchaser of labor power, slavery was not so great. First, under modern slavery the slave was a form of fixed and therefore constant capital. The greater the constant capital, the greater the total capital by which the mass of surplus value must be divided to calculate the rate of profit, lowering the rate of profit. Therefore, if the worker himself or herself is not fixed capital and the capitalist advances only variable capital to purchase labor power, the rate of profit is higher.
In addition, if it’s profitable for capitalists to employ the worker under a particular market situation, they do so. As soon as it stops being profitable, capitalists just don’t buy the labor power. I may buy an orange this week but next week choose an apple. Depending on the ever-fluctuating demand for labor power that performs different types of concrete labor, I may, as a capitalist, buy the labor power of particular workers with particular skills today because I can make a profit. Tomorrow, it might be more profitable for me to hire workers with different skills.
What happens to those whose labor power is not in demand? That is not the boss’s concern. The worker can return to the family farm (if there is still one) or appeal to a church or a soup kitchen — or simply starve. It’s all the same as far as the boss is concerned. This is the advantage capitalists enjoy by replacing slave labor with wage labor. The boss has no fixed capital invested in the person of the wage worker. The capital advanced to purchase labor power is circulating variable capital and need only be advanced as long as the worker is employed. If the wage worker perishes, the capitalist loses nothing. From the capitalists’ viewpoint, this is the great advantage of capitalism over chattel labor. This is why they oppose slavery, not as a concession to workers, but out of their own narrow material self-interest that happens to coincide with “freedom and democracy.”
The slaveholder ideologists insisted that slavery wasn’t that cruel. They argued that chattel slavery was better for the worker than the wage system because the interests of the slaveholder and the slave were united to the extent that they both had a common interest in maintaining the slave’s life, which alone could preserve the slave’s ability to work. They hinted that the ‘benefits’ of slavery should be extended to white workers as well. They didn’t find many takers among white workers, nor did African workers, who knew all too well what the ‘benefits’ of slavery were and had no desire to continue enjoying them.”
After chattel slavery
There was naturally a transition period between modern slavery and the system of wage labor that dominates the regions where slavery had ruled before 1865. In the years right after the defeat of the Slaveholders’ Rebellion, the victorious statesmen who represented the capitalists were divided into two great camps. Radical Republicans, representing the left wing of the capitalist class, wanted to carry the democratic transformation of the South further than the more conservative wing.
The most radical transformation of the South, supported by virtually no capitalists, though still within capitalist limits, would have involved the nationalization of the land, with its use divided between the former slaves and poor whites who had owned no slaves. The former slave states would have been abolished and new states, some with African American majorities, would have been created. Voting rights would have been extended to all those previously disenfranchised.
This would have meant extending suffrage to women, still considered far too radical for the time anywhere in the world, as was nationalization of the land. Just before his assassination, Lincoln was wary of extending suffrage to freed slaves but was eager to restore political control of the former slave states to the former slaveholders. After his death in April 1865, more radical forces gained the upper hand within the Republican Party. In contrast, President Andrew Johnson of Tennessee wanted to limit the transformation to the formal constitutional abolition of slavery, keeping as much of the system as possible.
Radical Republicans, though they didn’t, as a rule, support democratic measures such as nationalizing the land and granting the right to farm to former slaves and non-slave-owning white farmers, did support the extension of the right to vote to all voting-age male former slaves. This led to the election of African Americans to Congress, state legislatures and statewide office in the South to an extent that would have been unthinkable before and has not been repeated to the same extent since. Southern reaction organized the terrorist Ku Klux Klan (which foreshadowed 20th-century fascism) to oppose the unfolding democratic (with a small “d”) revolution. The misnamed Democratic Party emerged as the party of racist reaction in the South and North, while all progressive forces, including the first pioneering American Marxists who had emigrated to the U.S. after the defeat of the German Revolution of 1848, supported the Republicans.
Much can be and has been written about the era of Radical Reconstruction in the South, and I can hardly do justice to this fascinating and important chapter in U.S. history. For a while, when there was still some fear that die-hard pro-slavery Southern reactionaries might try to revive the rebellion, Northern capitalists flirted with or at least tolerated Radical Reconstruction to foreclose this possibility. As the danger of a renewed pro-slavery rebellion faded, Northern capitalists turned more and more against Radical Reconstruction.
In 1868, Republican General Ulysses S. Grant, who represented the interests of victorious Northern capital, won the presidency. He was reelected in 1872 and served out a second four-year term. The Grant administration has gone down as one of the most corrupt administrations in U.S. history, though racist Democratic Party reactionaries and later their apologists had every interest in discrediting his administration to the degree that it at least tolerated the continuation of Radical Reconstruction. What damaged the administration at least as much as corruption was the economic crash that hit Wall Street in September 1873. This crash began in the Northern Hemisphere spring with the collapse of the Vienna, Austria, stock exchange and spread to the United States later the same year. The crash was followed by five years of high unemployment in industrial regions and low agricultural prices. As is usually the case when the economy is “bad,” the party in power, in this case the Republican Party, was blamed.
This allowed the revival of the racist Democratic Party that had been discredited by its association with the Slaveholders’ Rebellion. Many voters, under the depression conditions that still prevailed in 1876, voted for Democrats to protest the capitalist depression and the failure of the Republican administration to help its victims, and voted for the Democrat Tilden in the presidential election. This resulted in a dead heat between the racist Democrat Samuel Tilden and Republican Rutherford Hayes. The election’s outcome depended on the disputed electoral votes of Florida, Louisiana, South Carolina, and Oregon. Democrats claimed Tilden had won, while Republicans pointed to the large-scale suppression of the African American vote in the South and argued that Hayes had won once this was taken into account. (6) For a while, there was talk about renewed civil war.
It ended in a compromise. The Democrats conceded the election, reactionary racist Tilden was kept out of the White House, and Hayes became president. But federal troops were withdrawn from the South, leading to the overthrow of the remaining Reconstruction governments, while the apartheid-like Jim Crow system replaced Radical Reconstruction. The Republican Party betrayed Reconstruction, ending all hope for genuine (bourgeois) democracy in the South for generations to come. The South, which could have been a stronghold for democracy if Reconstruction had been carried through to its conclusion, was turned into a bastion of reaction that persists to the present day.
The reason is that while the capitalist class had vital interests in defeating the Slaveholders’ Rebellion, it had no interest in the victory of Radical Reconstruction. On the contrary, its victory, though it would not itself have transcended bourgeois democracy, would still have been in the interests of the working class. Let’s see why this is the case, as we have to understand it to understand how U.S. politics has evolved since then.
The capitalist class needed to defeat the rebellion because it wanted to make sure the giant home market was not divided by tariff barriers. Northern capitalists also wanted a unified banknote currency, not just a metallic one; central government financial support for canals and railways, called internal improvements, which was necessary if the home market was to be fully exploited by the industrial capitalists; and a tariff policy designed to protect industrial enterprises from the competition of mostly British cheap commodities. These measures had long been blocked by the slaveholder-dominated South.
There was no central bank that could increase the quantity of banknotes in crises. This made the industrial cycle more violent than in capitalist countries with such central banks. The U.S. was still a largely agricultural country, and during periods of mass unemployment many workers could return to their families until the storm passed. In addition, unlike the London money market, the New York market was not at the center of the world money market. At this stage, a U.S. central banking system, though it would have been highly desirable, was not yet a necessity.
Despite the electoral setback suffered by the Republican Party in the 1876 election, it was able to safeguard its leading role until the Depression-ridden 1930s. With the rule of the slaveholding planters now beyond the possibility of revival, Republican policies predominated. The Democratic Party functioned as a racist safety valve against Republican excesses. Capitalism now entered its zenith. We will examine this in next month’s post.
To be continued
NOTES
(1) At the Casablanca Conference in January 1943, President Franklin Roosevelt and British Prime Minister Winston Churchill, the two imperialist leaders fighting the Axis, demanded that the Axis countries — Germany, Italy, and Japan — surrender unconditionally. (back)
(2) We have to remember that even such a Depression would not lead to capitalism’s automatic end. To bring capitalism to an end without completely destroying civilization, the working class must be organized to replace the capitalists as the ruling class. This is anything but an automatic process; it requires conscious revolutionary leadership. (back)
(3) In reality, most countries, even the most underdeveloped, have a superior productivity of labor in some branch of production, generally in agricultural or extractive industries. For example, you can’t grow cotton in England or Scotland, you can’t grow sugarcane in Minnesota, nor coconuts in Maine, nor bananas in New York State, etc. And no matter how industrially advanced a country may be, you can’t mine copper where there are no copper deposits. The law of absolute advantage, as Anwar Shaikh has shown, leads to a situation in which industrially underdeveloped countries specialize in primary commodities, while advanced countries end up monopolizing the production of manufactured commodities. (back)
(4) Technically speaking, the Federal Reserve hasn’t owned any gold since the early days of the New Deal. The U.S. government gold reserve is held by the Treasury. (back)
(5) The exception to this rule was the Haitian Revolution of 1791-1804. It was the only successful rebellion of chattel slaves in human history. Not only that, but the Haitian Revolution was an early indication that the struggle of people for the equality of all commodity owners before the law, the aim of bourgeois revolutions, could not be confined forever to white men of European descent. The ruling capitalist class to this day has not forgiven Haiti for this. (back)
(6) The same thing happened in the 2000 election (though in a different historical context), when both the supporters of Republican George W. Bush and Democrat Al Gore claimed victory. As happened in 1876, the 2000 election came down to Florida. Whoever carried Florida carried the Electoral College and hence the election. It was already clear that Bush’s alleged razor-thin victory in Florida depended on racist suppression of African American votes.
This brought back memories of 1876, though this time it was the “modern” Republican Party of George W. Bush that depended on racist suppression of the vote. The Constitution, as it’s written and amended, does not guarantee the right to vote to all U.S. adults, allowing voter suppression that in the past was associated with the Democratic Party but today is practiced by the modern racist Republican Party of Bush and Trump. If the Reconstruction of a century and a half ago had been carried out to its logical conclusion and all U.S. adults had the right, not only legally but in practice, to vote, Gore would have won the Florida popular vote and thus the Electoral College. Whether this would have altered history in any meaningful way is another question. (back)