On March 17, the Gaza genocide resumed, first the blockade and then the bombing. It appears we are back where we were under Genocide Joe Biden. Up until then, Trump was better for the Palestinian people in one sense. After his election, negotiations paused the genocide. The pause began on January 19, the day before he became president.
Now the only difference is that, in theory, the Biden administration supported the so-called two-state solution that had been Washington’s official policy since 1993, with the Oslo Accords. The West Bank and the Gaza Strip would form a separate Palestinian state, while the rest of historic Palestine would belong to the Zionist entity, the Jewish State of Israel. Biden insisted that Gaza’s Hamas administration be replaced by the rule of the notorious collaborationist Palestinian Authority, under Mahmoud Abbas, who has acted as a Zionist agent. The Biden administration, like its predecessors, opposed anything like (bourgeois) democratic rule in Gaza.
Though he supported this approach in his first administration, Trump has now junked it. He’s made it clear that all Palestinians will have to leave Gaza, promising they will enjoy a wonderful life somewhere outside Palestine. In addition, the U.S. would own Gaza, transforming it into some kind of hotel casino resort, owned by U.S. capitalists that would include the Trump Organization itself. (1)
Regarding the official political and legal status, in what sense would Gaza be owned? Would it be a U.S. territory? Would it be combined with other regions to form a new state, like Trump foresees for Greenland and Canada? Would it become part of Israel, but with the land and buildings owned by U.S. capitalists? Whatever the details, if Trump’s nightmare vision of the future were ever to become reality, the Palestinian Gazans would be out of the picture. It hardly matters what the legal details are for Palestinian Arabs because they will be physically excluded from Gaza and will have no political rights whatsoever in any part of Palestine. This won’t be the first time: many Gazans are descendants of those driven out in the 1948 Nakba.
Trump is trying to expand the size of the USA by annexing Greenland and Canada, despite polls that show that few of their citizens want to become part of the United States. He also wants to resume formal ownership of the Panama Canal, making the strip of land around the canal a legal part of the U.S.
In March, the Trump administration arrested Mahmoud Khalil in the middle of the night and has him in jail in Louisiana, a Southern state with a long history of slavery and Jim Crow. Khalil, a green card holder, is a leader of the student protest movement against the genocide in Gaza at Columbia University. As a green card holder, he has the same rights as U.S. citizens to free speech and political activity, except the right to vote or be elected to office, under the First Amendment of the U.S. Constitution.
CBS News reported, “According to a Department of Homeland Security notice obtained by CBS News, the Department of Homeland Security wrote that Secretary of State Marco Rubio has ‘determined’ that Khalil’s ‘presence or activities in the United States would have serious adverse foreign policy consequences for the United States.’” Rubio’s determination that Khalil’s opposition to U.S. foreign policy of supporting Israeli genocide in Gaza damaged the U.S. and his order that he be deported is a complete violation of Khalil’s democratic rights as well as those of U.S. citizens as well as non-citizen U.S. residents and visitors who might want to hear what Khalil has to say. The courts have prohibited Trump from deporting Khalil but have yet to order his release.
War against Yemen
The Yemen government responded to the Gaza genocide by launching attacks on ships doing business with Israel. According to international law and the anti-Genocide Convention, countries are supposed to take military action if necessary and possible to halt genocide. Yemen announced that as soon as the genocide, the blockade, and bombing of Gaza ended, it would cease its attacks. It was as good as its word when the blockade was partially lifted and the bombing was suspended.
If the Trump administration wants to safeguard the safety of international shipping, there is an easy solution. It must exercise control over Israel and order the halt of the blockade and carpet bombing of Gaza. The administration of Genocide Joe Biden refused; their refusal perhaps played the decisive role in Trump’s return to the White House. Instead, the Biden administration launched an air war against Yemen.
Even before Trump formally assumed office, the president-elect saw to it that Israel stopped its bombing and backed off its blockade of Gaza. In response, Yemen kept its promise and halted operations against ships doing business with Israel. The ceasefire agreement was never a solution to the problem of the Zionist colonization of Palestine and the resulting homelessness of millions of native Palestinians, far from it. But Yemen did not make that demand. It only demanded the end of the genocide. That is all. It appeared that, as Trump assumed office, a significant step away from genocide and war had been taken in West Asia.
This proved to be an illusion. First, Trump made clear that his solution to the crisis was not the removal of many Arab Palestinians from Gaza. Nor was it the removal of the great majority. The Trump administration demanded the removal of 100% of the native Palestinians, and the transfer of Gaza to U.S. ownership.
Gazans have no desire to leave except for those who seek to return to other parts of Palestine from which they or their immediate ancestors were driven out in 1948. Under Trump’s new policy of an Arab-free Gaza, Israel was allowed on March 17, 2025, to resume its attacks on Gaza. Faced with this reality, to remain true to their principles, Yemen’s leaders were forced to resume their attacks on ships headed to Israel. In turn, the Trump administration resumed the devastating air war against the people of Yemen.
Administrations come and go. Democratic administrations succeed Republican administrations, and vice versa. However, the rule of finance capital and the monopolies, aka imperialism, remains. However, there are quantitative changes that foreshadow the qualitative ones to occur in the not-so-distant future. Over the last few decades, Silicon Valley, as the capitalists who own the computer industry are called, have presented themselves as visionary technocrats fixated on the glorious future that science and engineering hold for the human race.
They are not at all, they imply, like the conservative capitalists who uphold, or claim to uphold, the literal truth of the Christian Bible. No, they are men of science, their eyes fixated on the future. But over the last few years, Silicon Valley has dropped its image of visionary technocrats and turned against the ideology of enlightenment and democracy itself, the ideology that the rising capitalist class used to ride to power against the decaying feudal aristocracy.
Curtis Yarvin (1973-), a blogger and entrepreneur closely connected with the billionaire financier Peter Thiel and a major influence on the thinking of Trump’s vice president JD Vance, has emerged as a major ideologue of Silicon Valley. Interestingly, Yarvin’s grandparents were long-time members of the Communist Party. Given the time that has elapsed and Yarvin’s age, I assume they are no longer alive. This is a good thing because they would hardly be proud of their grandson if they were. But perhaps his grandparents gave Yarvin a deeper understanding of history and political theory than you usually find among reactionaries.
I have spent part of the last weeks listening to videos in which Yarvin clowns around, but here and there, parts of his monstrous ideas are revealed. First of all, Yarvin is a racist. Not a “seat of your pants” racist like Donald Trump, but a “scientific” racist.
Recent genetic research has revealed that over the past several hundred thousand years, Homo Sapiens interbred with other so-called archaic human species, such as Neanderthals (Homo Neanderthalensis) and Denisovans, who shared close evolutionary ties with modern humans but exhibited distinct physical characteristics. (2)
Yarvin thinks that whatever non-Homo Sapiens our ancestors bred with gives each particular present-day human “race” different abilities. According to Yarvin, “light-skinned” races like white Europeans and East Asians have a high intellectual ability. Darker-skinned races are ideal for manual labor or entertainment. In Yarvin’s view, you wouldn’t expect a dark-skinned person to thrive in Silicon Valley or Wall Street. To do so requires a high IQ they don’t have because of the non-Homo Sapiens part of their ancestry. Only light-skinned people can thrive in such environments. (3)
According to Yarvin, after the victory of the American War of Independence in 1783, the Articles of Confederation lacked the autocratic powers necessary to get capitalism off the ground. When the Constitution replaced the Articles of Confederation, George Washington and Secretary of the Treasury Alexander Hamilton, especially the latter, ran the show as dictators. Later, the crisis that led to the Civil War again created the need for a dictatorship, with Abraham Lincoln as the dictator-president. The next great crisis to confront the U.S. was the Great Depression. The only solution to this was to establish the U.S. as a world empire, with another dictator required, this time played by President Franklin D. Roosevelt.
Yarvin believes that after the death of Roosevelt on April 12, 1945, his final vice president and successor, Harry Truman, lacked the ability to act as a dictator. The presidency degenerated into a vast bureaucratic machine dominated by an oligarchy. Agreeing with ancient Greek philosophers, Yarvin believes there are three types of government. Democracy, or the rule by the many, is the worst type, according to both the Greek philosophers and Yarvin. Oligarchy, the rule by a few, is better than democracy, but today it is too weak to deal with the problems we face. The third is a dictator or a monarch, the rule by one, and that is what is needed today. Yarvin provocatively calls himself a monarchist.
Today’s oligarchy, by which Yarvin doesn’t mean his billionaire friends (who are the real oligarchy), but in the sense of the managers of James Burnham’s 1941 book “The Managerial Revolution,” has made a complete mess of things. Yarvin believes the U.S. needs a monarch or a dictator who will take control of the executive branch and rule like a CEO rules a Silicon Valley start-up. The independent power of Congress should be abolished, and judges should carry out the will of the monarch. The monarch must take autocratic control over the executive branch and indeed the entire state apparatus.
A kind of board of directors would appoint the dictator-president (monarch). They would represent the wealthy white people since whites are the only race capable of ruling the U.S. There is no need for a legislative branch. Until 2024, Yarvin didn’t think Trump was able to make the necessary transition from a weak oligarchy to a dictatorial monarchy. Trump seems determined to prove Yarvin wrong by stripping the Congress and courts of their independent powers. Trump, Musk, and Vance are moving to purge the federal state apparatus; federal employees should be hired hands of the White House, subject to being fired for any cause, for example criticizing the president (or should we say monarch).
If the mass firings in the Social Security administration result in people missing the checks they depend on, this is a good thing — from the viewpoint of the billionaires, that is. Capitalists think that if people over sixty-five years of age want to keep on living, they should go back to producing surplus value for the capitalists, or if physically unable to do so, should just die. If younger workers insist on keeping grandma or grandpa alive after they are no longer capable of producing surplus value, they should put in extra hours themselves, producing surplus value — or live without grandpa or grandma.
As for workers, their lives should revolve around work — producing surplus value for rich, light-skinned people — and religion. Yarvin himself is an atheist, so he doesn’t care what the religion is (one religion is just as false as any other from his point of view). But he believes it plays a useful role as it keeps the workers docile as they fulfill their only real role in life — producing surplus value.
We can agree with Curtis Yarvin on one point. U.S. (bourgeois) democracy developed and thrived, but then, in our own days, it declined along with the capitalism that nourished it. What its successor will be is yet to be determined. The current system of imperialist democracy is undermined because the economic conditions that made it possible — U.S. industrial and agricultural domination — no longer exist. From this flowed the financial domination of the U.S., crowned by the supremacy of the dollar as gold’s representative in the global circulation of commodities.
So far, no replacement for the dollar has emerged, but its domination has been undermined. Will the successor to the dying imperialist democracy be the working class in power on the road to becoming the self-rule of associated producers over things not people, free at last — after ten thousand years — of class rule? Or will it become a fascist nightmare? Or worse, will it be the burnt-out ruins of our civilization? This will be determined by the class battles that are now beginning.
Fascism cannot win without a civil war between the two major classes that represent modern society. Both will recruit soldiers among the numerous people whose economic position is intermediate between the two main classes. The growing multi-front struggle against Trumpian reaction involves many members of this intermediate stratum. Which class will they support? The current Trump government is becoming intolerable for the majority of people in the U.S.
Let’s look at the example of Robert F. Kennedy Jr, Trump’s appointment for Secretary of Health. Kennedy is a scion of the Kennedy capitalist family whose most famous member is President John F. Kennedy. Robert is the son of John F. Kennedy’s brother Robert F. Kennedy.
It’s only been five years since the worldwide COVID-19 pandemic. Robert Kennedy is an opponent of vaccines and a quack not taken seriously by the medical community. Now in a position to influence public health policy, he is a public health hazard. It is hard to imagine a person more unqualified than Robert F. Kennedy Jr to be the Secretary of Health.
Millions of people are outraged by the Kennedy choice, and more by the attempt by Republicans to cut Medicaid, along with Medicare and Social Security. Many members of Trump’s base are dependent on Medicaid. This situation provides a wonderful opportunity for class-conscious workers to win poor white working-class people away not only from MAGA (the right-wing Make America Great Again movement) but from Democratic/Republican politics in general. If we don’t do this, then a fascist movement might.
China has emerged as a major competitor to the U.S., first in consumer products, then in heavy industry such as steel, and most recently, in high-tech. A key part of the U.S. economic war against China was the Trump administration’s decision to block Chinese smartphone manufacturer Huawei from using the Android operating system and AMD and Intel chips in an attempt to ruin the company. The company was accused of violating U.S. criminal sanctions on Iran. Up to that point, Huawei used U.S.-made chips and Google’s Android phone operating system.
By cutting it off from U.S. technology, Huawei has been forced to develop its own technology. It and other Chinese companies are working on their own chip technology and operating system as an alternative to Windows, Apple’s iOS, and Android, called the Harmony operating system.
At first, it appeared that Harmony was a simple phone operating system that replaced Android. But now Huawei is bringing out its own line of laptops and making its own chips, with Harmony designed to run on desktops, laptops, phones, IoT (Internet of Things), automobiles, watches, etc. Harmony’s micro-kernel chooses the kernel most appropriate for the device. In other words, Harmony is designed to run everything. For example, it might choose the Linux kernel to run a laptop but choose a smaller kernel to run a watch. Instead of working with U.S. monopolies like Intel, AMD, Apple, and Microsoft, in a world division of labor, U.S. imperialism has forced Huawei to compete with the U.S. hardware and software monopolies across the board.
Trump’s solution to Chinese and other international competition is to rely on tariffs, seize Greenland, annex Canada, and resume direct ownership of the Panama Canal, while also “owning” a new Palestinian-free Gaza. And yes, abolish the U.S. Department of Education!
No wonder that in March, U.S. scientists protested against a government that is defunding science while encouraging ignorance. As a way of competing against economic rivals, this is a losing strategy. The personal traits of individuals (such as Donald Trump, Elon Musk, or JD Vance) often turn out to be superficial and transitory considering the limits of a human lifetime. More important are the increasingly explosive economic contradictions driving U.S. imperialism onto what would appear to be an increasingly irrational strategy that can only end in its defeat. (4)
This brings us to the current economic situation.
The current economic situation
For many months before Trump’s electoral victory, U.S. media and the Federal Reserve had claimed they had reached a “soft landing” for the economy. After years of sluggish growth following the economic crash of 2008, by 2019, signs appeared that a new crisis of overproduction was approaching. Though it couldn’t have been foreseen by looking at economic and financial indicators, the world economy was about to take a radically new turn.
The COVID-19 global pandemic appeared in 2019. By March 2020, the situation turned grave. Capitalists panicked and ordered large sectors of the economy to be shut down by government edict, something that had never before occurred in the history of capitalism. The shutdowns caused a drop in production, employment and world trade. In the U.S., the official labor department unemployment numbers soared into the double digits for only the third time since the 1930s Depression. The other two instances were in 1982-1983 at the end of the prolonged stagflation crisis that began with the collapse of the Gold Pool in March 1968 and again in the wake of the 2008 panic in early 2009. The COVID shutdowns had violently disrupted the development of the normal course of the industrial cycle by causing sharp contractions of commodity capital — inventories.
The government cannot shut down the capitalist economy for long. As the shutdowns were lifted and terrified consumers began to return to their normal spending habits, capitalists fell over one another to rebuild shrunken inventories in the face of rebounding demand. Help wanted signs were everywhere, and a strike movement developed on a scale not seen for decades. The panicky moves to rebuild inventories were the capitalist response to a sharp but short-lived period of underproduction.
During the COVID shutdown, the period of underproduction, the Federal Reserve slashed its target for the federal funds rate toward zero in order to stave off a credit crisis. Credit crises snowball when expected sales fail to materialize. This is usually caused by a failure of sales caused by overproduction. But it can also occur when there is an interruption in commodity production for reasons other than an overproduction. Commodities not produced cannot be sold.
The COVID shutdowns of 2020 were the largest such interruption in the history of capitalism not associated with an overproduction crisis. As it does during an overproduction crisis, the Fed, along with other central banks, flooded the banking system with newly created dollars and other paper currencies. Interest rates fell.
The plunge in interest rates during the shutdowns reflected the interruption of the circulation of commodities. As commodity production contracted, a great amount of money fell out of circulation and piled up idle in the banks. As the shutdowns were lifted, a new threat appeared.
As capitalists scrambled to rebuild inventories, a new wave of overproduction developed. If this were not quickly slowed down, it would get out of hand and end in a crash. Many capitalist experts complained that the Federal Reserve, under the leadership of Jerome Powell, waited too long to raise its fed funds target aimed at tightening the money market, which was necessary to slow the development of overproduction in time to prevent an early crash.
There was another problem. With its inflationary price rises and soaring production, the COVID-19 aftermath boom meant an unusual rise in the demand for the commodity labor power. A new generation of workers used this situation to organize new unions or regenerate old ones. If the Fed’s move to slow the boom ended in a crash, what would prevent workers, radicalized by the new crisis, from turning against capitalism itself? The Fed wanted to slow the boom but not crash the economy — a soft landing.
To achieve this, the Fed would have to halt the rise in its fed funds target and then lower the target before a major recession took hold. It could work only if overproduction — the excessive production of non-money commodities relative to the money commodity — had not progressed to where a new recession could no longer be postponed. This refers to overproduction on a global world-market scale, not just the U.S. domestic market.
In March 2023, the Bank of Silicon Valley went under, followed by others over the following weeks. This was a sign that the fed funds rate could not be pushed up any more without triggering a deep recession. A recession could slow or stop a new wave of strikes, but could also lead to the political radicalization of a new generation of workers.
However, a recession would have brought some real advantages for capital. First, in addition to delivering a blow to the revived labor union movement, assuming it didn’t lead to a new political radicalization of the workers, it would lower interest rates and stabilize the dollar and the international monetary system for a number of years.
The Powell Federal Reserve — backed by the Biden administration, which was facing a tough reelection campaign that it ultimately lost — rejected this course. In June 2023, the Fed announced a halt to any further rise in the fed funds target, and in September 2024, it launched a cutting cycle by lowering its target for federal funds by 0.50% when 0.25% was expected. The test would come in the gold market, which measures how much gold — the material money — a dollar represents. When the Federal Reserve paused the target increase, the dollar price of gold was $1970.70. By September 2024, the dollar price had risen above $2,600, so the Fed went ahead with its outsized cut in rates when the gold market indicated they should have resumed increasing the rates, or at least stopped the cuts until there were signs of recession.
Despite the thumbs-down sign from the gold market, Wall Street bulls were delighted and declared the soft landing had been achieved. They, including most financial press writers, were misled by a decline in the inflation rate of dollar prices. As the boom cooled, the powerful demand-pull inflation stimulated by commodity shortages from shutdowns receded. But, the economy was not stabilized — far from it. The inflation decline reflected the new wave of global overproduction. The new surge in dollar gold prices has stubbornly continued.
Inflation trap
On March 28, the dollar price of gold closed at an all-time high of $3,118. The Federal Reserve and other central banks are now in danger of falling into a 1970s-style inflation trap. What do I mean by this? The dollar price of gold is of special importance under the dollar-dominated international monetary system because it measures how much gold the U.S. dollar (the chief international means of payment and circulation under the dollar system) represents on the open market at any particular moment. For the world capitalist system to function smoothly, the dollar price of gold has to show stability, avoiding sharp surges or drops.
What happens in a gold surge? Or to rephrase, what happens when the quantity of gold the dollar represents falls over a short time at a rate exceeding the rate of increase of the dollars the Federal Reserve is creating? Commodity dollar prices begin to climb independently of any increase in the quantity of dollars. This causes the money market to tighten and sends interest rates higher. The higher interest causes the dollar gold prices to fall again, and the inflation of commodity dollar prices starts to cool. This is why, without a sustained rapid growth of the quantity of paper dollars, a high rate of inflation cannot be sustained.
What happens when the Federal Reserve decides to maintain the federal funds rate at a certain level or is expected to cut it? In recent years, the federal funds rate has become politicized. The Fed is under constant attack across the political system for not lowering interest rates fast enough. If it finds itself in a position where it feels it is not politically practical to raise the fed funds rate and if the federal funds rate is too low to maintain the gold value of the dollar, the Fed finds itself in a position where it must keep increasing the rate of the growth in the number of dollars to keep the rate from rising above the target. Inflation accelerates, interest rates rise, the Fed keeps accelerating the rate of growth of the quantity of dollars it creates, and the dollar price of gold rises at accelerating rates. This is what I call an “inflation trap.” (5)
How far can this process go on? Until the dollar (or whatever currency we are dealing with) loses its nature as money. As the point approaches, commodities are hidden from those who refuse to sell them for paper money. Commodities come out of hiding when gold is offered for them. This did not happen with the U.S. dollar, but it occurred in Germany in 1923, at times in Latin America, China on the eve of the victory of its revolution in 1949, some African countries, and Syria in the final days of Assad. Under these conditions, nothing can be bought with the official currency, but commodities become available as soon as dollars, the world currency, are offered, though the dollar is not even legal tender in the country.
So far, the latest inflation trap the Federal Reserve has landed itself in is still in its early stages. Inflation can get much worse.
Technically, the way out of the inflation trap is simple. The Federal Reserve just has to allow the federal funds rate to rise until a recession hits. At that point, interest rates will fall without triggering a further rise in the dollar price of gold. Dollar gold prices then drop, and the Fed is out of the inflation trap. But that solution involves a deep recession. Under capitalism, there is no other way out.
This brings us to the root cause of the antagonism between the main classes.
Root of Contradiction Between Capitalist Class and Working Class: the Rate of Exploitation
Theory of surplus value
Let’s begin by reviewing Marx’s theory of surplus value, his greatest single contribution to economic theory. For the first time in the history of economics, surplus value is treated as a category in its own right with its own name.
Marx develops his surplus value theory in Chapter 4, Volume I of “Capital.” He assumes all commodities sell at their value, or to use Anwar Shaikh’s terminology, direct price. This means the value of the quantity of gold (the socially necessary amount of labor to produce it) that makes up the price of a commodity is equal to the value of the commodity whose value is being measured in terms of the quantity of the use value of the money commodity, that makes up the price..
Marx makes this assumption not because he believed that it is strictly true, but because you cannot understand surplus value without making this assumption. He also assumes that the value of commodities, including the money commodity, is stable, though this is far from the case in the real world. Marx also abstracts all the wheeling, dealing, and cheating that is inseparable from real-world capitalist competition.
Marx assumes the workers sell the only commodity they have to sell, their labor power, at its value. The value of labor power is determined by the value of the commodities necessary to (re)produce labor power. If the worker cannot consume the commodities that (re)produce their labor power, the worker will die and their labor power disappears.
It’s easy to confuse labor power as a commodity and labor as the substance of value, but labor as opposed to labor power is not a commodity and has no value. The confusion arises because both labor and labor power are measured in some unit of time. Let’s assume that the value of eight hours of labor power — an hour is a unit used to measure time — is four hours of labor. During the first four hours of the working day, the worker reproduces the value of their labor power. During the second half of the working day, the worker works for the capitalists for free. This surplus labor produces surplus value.
Under slavery, workers appear to work the entire day for the master. In feudalism, the division is explicit: part of the day is spent working for oneself and family, and another part for the lord. Under capitalism, however, the worker appears to work the entire workday for themself. Yet in reality, across all three systems — slavery, feudalism, and capitalism — workers spend a portion of their day working without compensation for the master, the lord, or the capitalist boss.
The rate of surplus value
We can calculate the rate of surplus value by dividing the portion of the working day the worker works for free for the bosses by the portion of the day the worker works for themself. Marx calls this faction the rate of surplus value or the rate of exploitation. In this example, the rate of surplus value is 100%. Assuming the productivity of labor remains unchanged, if the labor day is shortened to six hours of labor, the rate of surplus value falls to two hours of unpaid labor over six hours of paid labor. Or two hours divided by six hours, which results in a rate of surplus value of 33.33%. Or let’s say things move the other way. The bosses succeed in extending the working day from 8 hours to 10 hours. The worker works 4 hours for themselves as before, but now works six hours for the bosses. Six divided by 4 hours of labor comes to a rate of surplus value of 150%. Marx calls this the absolute rate of surplus value.
There is relative surplus value in addition to absolute surplus value. To explain the latter, we have to drop the assumption that the value of commodities remains unchanged. Suppose the commodities making up those that provide the workers’ means of subsistence drop in value. In real use-value terms, assume the daily wage remains unchanged. Due to a rise in labor productivity, the commodity values of commodities that make up real wages remain unchanged. Now it takes less labor time to produce them. Also, assuming the work day remains unchanged, workers will spend less time reproducing the value of their labor power, but work a larger portion for the capitalist.
So instead of working four hours for themselves, they work only two hours, and now work six hours for the bosses, for an eight-hour workday. If, before the rise in labor productivity, the workers put in four hours for themselves and four for the capitalists, now they put in two hours for themselves and six hours for the bosses.
The labor union struggle
Assuming labor unionism is conducted on a non-revolutionary basis, the labor unions’ job is to prevent a rise in the surplus value rate, absolute or relative. If successful, real wages remain stable as long as labor productivity remains unchanged. If labor productivity rises, real wages rise. If labor productivity in the wage goods industry rises, the union’s job is to make sure the working class participates in the rise of productivity. To the extent the labor unions achieve this, they prevent the surplus value rate from rising.
As long as workers remain at a purely labor union level of consciousness, this establishes an economic basis for the antagonism between the capitalist and working classes. This is summed up in the popular slogan: a fair day’s wage for a fair day’s work. There is nothing revolutionary about this slogan; the assumption of capitalist exploitation of the working class remains a given. It is only the degree of exploitation that is at stake. The slogan is a conservative one.
There is a deeper root to the antagonism between the classes. Marx explained that the conflict arises because capitalists aim to preserve the means of production as capital, while the working class strives to abolish this system. What does Marx mean by “capital”? Bourgeois economists consider the means of production to be capital by definition. They correctly point out that every human society has to refrain from immediately consuming a portion of its total output.
Following this logic, an Australopithecine ancestor of humans that lived three or more million years ago, who chipped a rock to make a cutting edge was a prehuman tool maker and also a prehuman capitalist (like today’s Mr Musk) because they refrained from immediate consumption by producing an object that cannot be eaten but only used to procure more food that will be consumed later. Our prehuman ancestor was already producing interest to have more food in the future, like Mr. Musk, when he doesn’t spend all his vast income from dividends and interest on consumer goods but instead reinvests a portion of it so he can consume even more in the future.
Following that kind of logic, interest and capitalism are as old as production itself.
Marx explicitly rejected this conflation of capital with the means of production. The means of production becomes capital only under specific historical circumstances that only occur during a particular period in the history of production.
For the means of production to become capital, there must be a separation between the means of production and the direct producers. In addition, another separation must have already occurred: the separation of commodities and the special commodity that functions as money. This second separation does not mean we have capitalist production, but capitalist production is unthinkable without it. Capitalists are not interested in the expansion of the means of production to improve the conditions for the masses of people — far from it. Instead, they want to expand the value of their capital, which must take the form of exchange value. What is the difference between value and exchange value? Classical economists distinguished between use value and exchange value, but Marx went further. He distinguished between the value of the commodity and the form of that value, that is, exchange value. This distinction does not play with words and logic. It is absolutely necessary to understand the nature of the means of production as capital.
A commodity’s value is the quantity of abstract human labor necessary to produce it, measured in some unit of time. Its exchange value is measured in terms appropriate to the use value of another commodity of a different use value in which the value of the first commodity is measured. Marx calls the commodity whose value is being measured the relative form of value, while the commodity whose use value forms the measuring unit, he calls the equivalent form of value.
The unit of measure of the commodity that represents the equivalent form of value must be appropriate to the use value of the commodity whose use value functions as the equivalent form. For example, let’s assume gold is the commodity that functions as the equivalent form.
Under barter, all commodities simultaneously serve as both the relative and equivalent form. In the course of further development, a few and eventually a single commodity becomes a general or universal equivalent while other commodities represent the relative form. The commodity representing the universal equivalent is money. Under the capitalist mode of production, the value of commodities is measured in money. Money must be a commodity and, like others, must have a definite use value measured in some unit appropriate for its particular use value. In practice, this means some unit of weight of a precious metal, such as gold. These units of weight of precious metal become prices. Capitalists have no idea about the value of commodities measured in some quantity of labor, but are very much aware of their prices.
Under capitalist production, the capitalists, under the pressure of competition, must quickly increase the exchange value of their capital. Or put another way, the increased value of their capital must increase their capital’s money value. Assuming gold as the money commodity, capitalists must increase the value of their capital in the use value measured in some unit weight of gold. Merely increasing the value of their capital by absorbing more value-creating surplus labor — surplus value — while necessary, is not enough. If it were, capitalists would have no way of knowing what commodity use values have to be produced or the proportions necessary to reproduce capitalist society.
They must increase the value of their capital by absorbing surplus value (a process sometimes called the valorization of capital), but this must then be realized in money form. Surplus value must be realized in money form — profit. Surplus value not realized in the form of money is not profit. Only by making profits can the capitalist know that the use values they produce are contributing to the reproduction of capitalist society. Finally, the money commodity must be produced in the proper proportions with non-money commodities for the realization of commodities to proceed normally.
This is why — though it varies with the changing phases of the industrial cycle — much of the (potential) real capital of the capitalist lies idle. At the same time, a large portion of the working class — whose labor power represents potential variable capital — also lies idle. There is always a surplus population — potential workers — considerably more than the short-term unemployment the “unemployment figures” purport to measure. If the idle (constant) capital were combined with the idle workers, more surplus value would be produced, and the value of the capital would increase much faster. But — again, depending on the stage of the industrial cycle — if this were done, the result would not be a further increase in their capital’s exchange value but a contraction of it as markets would be flooded with unsalable commodities, as occurs in every crisis of relative overproduction.
For this reason, capital cannot produce at full capacity, though how much below varies with the stages of the industrial cycle. When capital produces “too much,” the fall in commodity prices causes the exchange value to contract. If it did produce all out and were not stopped by falling prices and vanishing profits, capital would run out of workers, bringing about the dreaded absolute overproduction of capital.
The rise in competition for labor power combined with the fall in competition for jobs among the sellers of labor power would cause the production of surplus value to become impossible. Then the means of production could no longer function as capital. Rather, there’s an absolute overproduction of capital as soon as additional investment causes a fall in profits instead of an increase due to a lack of workers. Profit is nothing but realized surplus value measured in the use value of the money commodity.
Now we get to the root of the class war between the capitalists and the workers. Idle means of production and, even more importantly, idle potential workers living in poverty are a necessary consequence of treating the means of production as capital. Despite the problems associated with treating the means of production as capital that falls so heavily on the working class, the capitalist class insists on maintaining the character of capital as the means of production..
Capitalists maintain their wealth and privilege by owning productive resources (capital). Capitalists can only accumulate wealth without contributing labor by keeping the means of production as privately owned capital. The working class, in contrast, seeks (either consciously or unconsciously) to end the character of capital as the means of production. (6)
The economists attempt to obscure the fundamental conflict between the capitalist class and the working class by asserting that the means of production have always functioned as capital and will continue to do so forever.
Labor unions play a vital role in limiting the rate of exploitation by negotiating better wages and working conditions. However, these efforts operate within the capitalist system and do not challenge the core structure that defines productive assets (factories, technology, infrastructure) as capital.
True systemic change requires a political struggle aimed at dismantling private ownership of large-scale productive resources — assets already operated collectively through modern labor and supply chains. This distinction explains why class struggle extends beyond workplace disputes: it’s a fight to redefine who controls production and who benefits from its output.
From Herbert Hoover, Heinrich Brüning, to Franklin Roosevelt and Adolf Hitler
In contrast to the years of World War I, the 1920s were relatively peaceful. There was a cyclical upswing in the global capitalist economy after 1921 and more after 1923-24, when the German mark was stabilized with the help of U.S. loans. The stabilization of the mark caused money capital to flow into money-poor Germany in search of higher interest rates. Most came from the U.S., so German local governments and capitalist enterprises became increasingly indebted to U.S. capitalists.
The central German government borrowed money from U.S. banks to pay reparations to Britain and France. This worked fine as long as the global credit system was in working order. The problem was that the foundations of the world credit system were shaky.
The pre-World War I inflation, combined with the wartime and post-war inflation, up to 1920, drove commodity prices calculated in gold terms above production prices. The deflationary recession of 1920-21 caused commodity prices to fall toward their production prices, though their market prices were still above production prices. The war years had not been marked by overproduction — except for that of the means of destruction. To resume normal expanded capitalist reproduction, it was necessary to reduce the production of the means of destruction after the war ended in November 1918.
In a normal industrial cycle, a crisis occurs when commodities measured in their price tags (quantities of imaginary gold measured in some unit of weight) increase faster than the quantity of actual gold measured in some unit of weight. In a normal cycle, this is achieved by a combination of rising commodity prices — measured in gold terms — and a faster increase in non-money commodities.
The unit of measure is the measure appropriate to those particular use values. This might be some unit of weight (metric tons), individual units of the commodity, or some unit of length such as meters of linen. In a typical industrial cycle, the increase in the quantity of commodities measured in their use values is more important than the increase in their prices. This is why cyclical crises are described as crises of overproduction.
However, conditions during and immediately after World War I were anything but typical. While there was relatively little, if any, increase in the production of the quantity of commodities measured in their use values, there was a great increase in their prices. The rising commodity prices in terms of gold led to a fall in gold production during and after the war ended in November 1918.
This didn’t mean the quantity of gold fell, since, unlike most commodities, gold is immortal. It simply meant that the quantity of real gold rose slowly compared to the imaginary gold represented by commodity prices. As normal peace-time production resumed after November 1918, while the commodity prices in gold terms continued rising, the ratio between the quantity of imaginary gold represented by commodity prices and the amount of actual gold in the world increased rapidly. This was reflected by a rise in interest rates, resulting in the crisis of 1920-21.
In 1920, the central banks of the relatively strong capitalist countries of the United States and Britain increased the rediscount rate. This led to a recession marked by a fall in prices as well as rising unemployment. In weaker or defeated capitalist countries, especially Germany, the fall in prices in gold terms was achieved through a fall in their currencies’ exchange rate against the dollar, whose exchange rate against gold was fixed. This fall in prices was sharper than the rise in prices when calculated in terms of their depreciating currencies. This went the furthest in Germany in 1923.
After the German mark was stabilized at the end of 1923, the world economy seemed to return to normal. Britain suffered from unemployment higher than before the war, and it was also higher in Germany. France suffered a currency crisis that drove currency depreciation inflation after the war, though not to the same degree as in central and eastern Europe. In 1926, the franc stabilized at a relatively low exchange rate against the dominant U.S. dollar and gold. That is, the prices of French commodities in gold terms were low relative to those of other countries. After the franc was stabilized, France enjoyed a positive balance of trade and payments and accumulated a large gold reserve. This provided a buffer during the first phase of the super-crisis of 1929-32 that ushered in the Great Depression.
Looking at the world economy as a whole, the financial situation was unstable. Commodity prices measured in gold terms were still above 1914 levels, and gold production, though up from 1920-21 levels, was still below those of 1914. Global production and world trade were higher than in 1914. In search of higher interest rates, money flowed from New York to Germany.
How the crisis of 1929-32(3) began
After a slight recession, the U.S. economy entered a period of accelerated economic growth in 1928. This, combined with soaring interest rates, led to a flow of money out of Germany and back to the United States, putting pressure on the German economy. As the boom continued into 1929, a credit squeeze developed in the U.S. The squeeze did not reflect a flow of money out of the U.S., but rather a rise in the production and circulation of commodities combined with a stagnant quantity of money within the U.S.
By the second half of 1929, tightening credit within the U.S. led to recession, and in October-November came the famous stock crash. This caused a reversal in the rise in interest rates as money fell out of circulation both for circulating commodities as well as stocks on the stock exchange. By the end of 1929, with the New York money market easing and interest rates falling in the U.S., money began to flow from New York to Germany. With the world money market easing, conditions seemed to point to an economic recovery in the world later in 1930 or 1931. If that had happened, the recession of 1929-30 would have been a more or less normal capitalist cyclical recession.
In June 1930, President Herbert Hoover signed into law the Smoot-Hawley Tariff. Germany was expected to pay its debts by running trade surpluses on commodities, though in the 1920s Germany was able to run a trade deficit due to the influx of money capital from the United States, itself a function of the difference in interest rates between the two countries. (7)
After the passage of Smoot-Hawley, the chances of Germany paying off its debts through exports to the United States disappeared. Since it did not have the money to pay the debts and couldn’t raise the necessary cash through exports, thanks to the depression combined with high tariffs, the debt could only be paid by bankruptcy. This helped trigger the world banking crisis of 1931. It was not the only or even a main factor that marked the transformation from what seemed at first to be an ordinary cyclical recession of 1929-30 into the Great Depression, but it certainly didn’t make the situation any better.
Once the Depression was underway, large amounts of money fell out of circulation, and once the bank runs had stopped, they accumulated in the banks, especially those in the U.S. The fall of world commodity prices dropped from levels above production prices to those well below. This, combined with the collapse of profits in the production of non-money commodities, led to a rise in global gold production. This huge quantity of idle money burned a hole in the collective profits of the capitalist class, leading to a reduction in competition for loan money between the state and the rest of the economy. The ability of governments to spend money on the military was constrained by a monetary squeeze during the 1920s. However, this situation was completely reversed in the course of the 1930s.
This made it possible for Japan and then Nazi Germany to increase military spending during the 1930s, and a few years later easier still for the United States. As a result, for all the contending capitalist countries, it was far easier to finance World War II than it was for World War I.
At the cost of tens of millions of lives, World War II resolved the relationship between the United States and lesser capitalist powers. Especially after the Nazi takeover in 1933, Germany reached out for European domination. If it had been successful, the power of German science and technology would have joined the vast natural resources of Russia, Ukraine, Belarus, and the Caspian region, then united under the Soviet Union.
Though all the imperialist countries wanted to see the destruction of the Soviet Union and its planned economy, the U.S. feared that if Germany succeeded in occupying and colonizing Ukraine and Russia and other parts of the Soviet Union, this would lead to more serious competition with the U.S. than a declining Britain could ever provide. The Roosevelt administration wanted to use the Soviet Union as a battering ram to smash Nazi Germany. However many U.S. capitalists — for example Henry Ford, the richest industrial capitalist of the time — favored an alliance with the Nazis to smash the Soviet Union.
The British ruling class, still the most powerful after the U.S., was similarly divided. Since the time of Napoleon, it has been a keystone of British policy to prevent any single nation from dominating the European continent. Britain was to keep Europe divided among many relatively weak nations; it could play them off one another. Under the changed world that emerged from World War I, many members of the British ruling class believed an alliance with Nazi Germany was necessary to destroy the Soviet Union.
If this view had won out, this would have meant German domination of the continent. Britain would cling to its vast overseas empire, with continued domination of the seas. Under the changed circumstances of the post-World War I world and the end of British industrial supremacy, this was the best the pro-German wing of the British ruling class thought possible.
Another wing of the British ruling class, represented by Winston Churchill, believed the British empire could live only in the form of a new Anglo-American Empire. Though the relative competitive power of British industry was fading, British capitalists were the biggest foreign investors in U.S. industry. British capital was the most important junior stockholder in U.S. industry, and it was by far the most dynamic and powerful in the world.
In addition, who wants to learn German when you can keep on speaking English? By the close of World War I, the Federal Reserve was already replacing the Bank of England as the world’s most powerful central bank. London was destined to remain an important center of world finance capital — or, as it is called in polite circles, the financial services industry — a role it retains to the present day. In effect, capital of the mega empire of the “English speaking peoples,” as Churchill liked to put it, was shifting from London to Washington and Wall Street.
In the end, the Roosevelt and Churchill factions won. They used the Soviet Union to crush Nazi Germany as well as its less powerful ally in East Asia, Japan. After World War II, (West) Germany and Japan were allowed access to U.S. markets, which allowed them to recover economically. However, neither were allowed to challenge the U.S. politically or militarily.
It was commonly said that the two were economic giants but political dwarfs. In the 1980s, the competition from Japan threatened to sink the U.S. auto industry. Washington forced Japan to accept limits on how much of the U.S. market they could take. Japan’s capitulation to these demands — inevitable because of its lack of any real economic sovereignty — marked the end of its extraordinary economic advance that began in the 1950s and 1960s and came to an end at the end of the 1980s.
Germany has not had real sovereignty since it surrendered unconditionally in May 1945. While after World War I the capitalist world suffered from a shortage of money capital, after World War II the capitalist world was awash with money, with most of it in U.S. bank vaults.
This glut of idle money capital was the result of the Great Depression, when huge quantities of money had fallen out of circulation while the quantity of world money — gold — expanded rapidly. This provided the money necessary to finance World War II and then the post-World War II economic expansion. It led to the post-1945 world order being dominated by the U.S., with Britain being the most important junior stockholder, hence the special relationship between the U.S. and Britain.
A similar, if less dramatic, cycle unfolded with the stagflation crisis of the 1970s. As I have explained throughout this blog the growth rate of the world money supply — gold — slowed down after World War II. However, the Depression and then World War II represented a prolonged period of mass underproduction between 1929-1945 that lasted far longer than the brief underproduction of the recent COVID shutdowns.
This process led to a new period of overproduction. Though it could proceed for quite a while due to the extreme and prolonged underproduction that preceded it, it eventually led to the stagflation crisis of 1968-1982. This crisis divides the post-1945 economy into two. The first was between 1945 and 1968, and the second began in 1983.
During the first period, the U.S. enjoyed unchallenged economic domination of the world capitalist economy. It ran a positive balance of trade — the export of commodities balanced out on the capital account by U.S. export of capital. This was kicked off by the Marshall Plan, but it was mainly driven by the gap between the low U.S interest rates and higher interest rates abroad. For a while, money remained abundant in the U.S. despite the outflow of money from the Marshall Plan and the flow of money capital to Europe and the “Third World” in search of higher interest and profit rates. For a while, money remained abundant in the U.S. despite the outflow of money from the U.S. Enough money was left over to finance military expenditures on U.S. military bases as well as the Korean and Vietnamese wars. There was also growth in direct investment in the Third World in search of higher profit rates as well as securing raw materials such as oil from West Asia.
As industry revived and flourished in Western Europe and then Japan, the U.S. positive trade balance eroded. Though neither Germany nor Japan represented political or military competition, they represented economic competition. The U.S. gold hoard reached its peak in the late 1950s, and thereafter the U.S. had to liquidate its gold hoard to finance its growing balance of payments deficits on the capital account that its shrinking surplus on current account could no longer cover. This was the heart of the U.S. balance of payment crisis of the 1960s.
By the beginning of the 1970s, the U.S. trade surplus disappeared altogether, and it could only finance its capital account balance of payments deficit through the devaluation and depreciation of the dollar against foreign currency — particularly the German mark and the Japanese yen — and against gold — the rising dollar price of gold.
The 1970s stagflation crisis marks the end of the first period of the post-World War II world capitalist economy. Starting in the early 1980s, the world capitalist economy entered its second post-World War II period.
With the stabilization of the dollar as a result of the 1979-82 Volcker shock, the U.S. began to run deficits for the first time since before World War I in its balance of trade.
How has this been financed? The chronic balance of trade deficit has been financed through the accumulation of an ever-growing stockpile of U.S. dollars, primarily in the form of short-term U.S. Treasury bills, by foreign central banks and private investors. Dollars are then often used to purchase other dollar-denominated assets, such as U.S. real estate and financial securities.
In the early 1980s, similar to what happened during the Depression, money began to fall out of circulation and accumulate in the banks. Interest rates on government bonds began to fall. Falling interest rates on the bonds (or, if you prefer, rising government bond prices) made it possible for the Reagan administration and Britain’s Thatcher government to increase military spending, financing it through government borrowing.
While the Lyndon Johnson policy of financing the Vietnam War by cutting taxes and borrowing money proved disastrous in the 1960s, in the 1980s and 1990s, government bond prices kept rising even as federal budget deficits kept growing and the national debt with them. Unlike in the 1970s, this later period saw no massive depreciation of currencies against gold. Instead, the dollar price of gold fell from $875 at its peak at the beginning of the 1980s to under $300 at the end of the 1990s.
This enabled Reagan and Thatcher to launch an increase in military spending. The aim was to force the USSR to increase its own level of military spending, thus increasing its economic problems and also strengthening what could be called the capitulationist (to imperialism) wing of the Soviet Communist Party, just as the party was making a generational transition of leadership.
This played a crucial role in Mikhail Gorbachev’s rise to power in March 1985. The 1980s surge in U.S. and British military spending would have been impossible without the dollar’s stabilization. From the viewpoint of imperialism, Gorbachev’s rise was its biggest success by far since the 1917 Russian Revolution.
Today, with the dollar price of gold now around $3,000 an ounce, we have the opposite situation. The wobbly state of all world currencies puts pressure on capitalist governments to limit the money they are spending on ongoing wars and preparations for more. This situation will not last forever any more than the financial situation of the 1920s or 1970s did. A new massive global recession is only a matter of time. Then military Keynesianism will likely come back into style, and with it the threat of war will only grow.
Faced by the approaching cyclical economic crisis and the decline of U.S. capitalism relative to the economies of other countries, particularly those of Asia, the Trump administration has embarked on a strong protectionist policy. The tariffs announced by Trump on April 2 have shocked the world and caused the stock markets to crash. Trump wants to push the burden of the crisis onto other countries. This threatens to sweep away what is left of the political and economic order that was established in 1945. We will examine Trump’s tariff war on the world next month.
(1) According to Zionist doctrine, Gaza is part of the territory God promised the children of Israel in the Holy Bible. This notwithstanding, Gaza was assigned to Egypt after the Zionist entity was officially established in 1948. After the 1967 Six-Day War, Gaza was captured by the Zionist entity. Ignoring God’s promise in the Bible, U.S. imperialism refused to allow Israel to formally annex it. However, the U.S. also failed to exercise control over Israel by ordering Israel to withdraw from Gaza. In 2005, under the George W. Bush administration, Israel withdrew its ground troops from Gaza, and the Israeli settlements were dismantled. This was seen as a major step toward setting up a Palestinian state in Gaza and the West Bank.
Though there were no longer Israeli troops or settlers on the ground, the Zionist entity simply sealed Gaza off as a huge concentration camp. I have never been to any part of Palestine, but I watch videos, some of them produced by Zionist forces. I saw one of these taken before the current genocide. It showed what looked like an entrance into a prison. Gaza indeed was the world’s largest open-air prison, or if you prefer concentration camp. All this was fine with Israel’s bosses in Washington.
Now Trump has made it clear that U.S. policy means that not only will Gaza not be part of any Palestinian state, however fake it might be, but instead will be a Palestinian free zone. (back)
(2) According to one definition, a species consists of individuals who are capable of breeding and producing offspring that can also breed and produce fertile offspring. By definition, all human beings can produce offspring. Some scientists use another, more subjective definition. They say that if members of two populations look too different or behave differently, they are separate species. For example, the large wild dogs living in parts of North America and elsewhere are considered members of the species Canis lupus, or wolf. Smaller wild dogs commonly called coyotes are classified in the species Canis latrans.
Members of these two species actually interbreed easily. Since the European immigrants came to North America, Canis lupus and Canis latrans in many areas are now thoroughly intermixed. Perhaps the biggest difference between the wolf and the coyote is that the wolf sometimes sees humans as prey while the coyote almost never does (the possible exception being small children). Today it would be hard to find a coyote without a few wolf genes or a wolf without a few coyote genes. Despite the fact that different species of humans other than homo sapiens no longer exist, it would be hard to find a human being alive today who doesn’t have a some genes from these now extinct human species. There are differences between coyotes and wolves, of course, but the fact that the wolf can prey on human adults while the smaller coyote does not is an important difference for adult humans. So it is natural for us to classify them as members of different species even if they can and do easily interbreed.
Today it is becoming clear that members of different human species, like the wild dogs of North America, frequently interbreed. We have no idea how the mental abilities of the recent human species differed — if they differed at all — that are now known to have contributed to the genes of living people. There is no evidence that genes we all have from the different recent human species affect the mental abilities of any living human. This doesn’t prevent Yarvin from expressing himself on the subject to bolster his racist views. (back)
(3) Skin pigmentation depends on geographic location. Neanderthals and Homo Sapiens had many shades of color from dark to light, with those in Europe and East Asia having lighter skin to adapt to lower UV levels, aiding vitamin D synthesis. (back)
(4) Hitler made a desperate attempt to get out of the contradictions that German imperialism found itself in. In the name of driving Jews out, Germany made a free gift to the U.S. of some of the world’s greatest physicists. Though German physics was well ahead of the U.S., as the 1930s began, U.S. imperialism took full advantage of the delusions of Germany’s ruler about Jews to develop the atomic bomb and soon after the hydrogen bomb. Though unlike Nazi Germany, fascism has not yet been victorious in the U.S., by cutting back on support for science and education while encouraging fundamentalist religion, U.S. imperialism is accelerating the digging of its own grave. (back)
(5) This shows that the Federal Reserve’s announcement of targets for the federal funds rate is not really a good idea. It’s probably better for the Fed to keep the market guessing about the day-to-day movements of the rates to keep its options open. However, it is not the job of this blog to give advice to the capitalists on how they should run their system. (back)
(6) Many polls indicate that nearly all workers in the U.S. believe two key principles: everyone who wants to work should have access to a job, and everyone capable of working should work. However, what most workers fail to recognize is that the capitalist system — by maintaining the private ownership of the means of production (capital) — makes these ideals unattainable.
This system creates a paradox. The capitalists’ insistence on maintaining the private ownership of the means of production (or as capital) means that a significant portion of the population cannot find jobs, while another segment enjoys luxury without working. While labor unions fight for better wages and conditions, their efforts alone cannot fundamentally change this. This is why the class struggle extends far beyond traditional labor union issues. (back)
(7) Germany, like the U.S., was a major automobile producer. However, Germany produced only luxury cars since German workers could not afford to purchase automobiles. The Hitler government, through the so-called Nazi Labor Front, promised that the workers would be able to purchase the “Volkswagen” — the people’s car. The famous Volkswagen Beetle was designed and eventually entered mass production, but that was not until after the war. Ford, therefore, faced little competition from German capitalists in the “low end” of the auto market, which he dominated. He was very concerned about the United Auto Workers union, where Communists played an important role as organizers. The Ford boss believed that if the United States allied itself with Nazi Germany, the defeat of the Soviet Union would help him solve his UAW problem. At the same time, he would have many years to prepare for eventual competition with Germany at the low end of the auto market he dominated. (back)
A Critique of Crisis Theory 