US Perspectives for 2003 / 2004

July 2003 Introduction

In the few months since this document was written, events have proceeded rapidly. Although many of the specific facts and figures have changed, the overall perspectives retain their relevance and should serve as a guide to orienting the activities of the American Marxists for the coming period. The capitalist class is carrying out an unprecedented attack on the living conditions of millions of youth, elderly, and working Americans. With health care already in crisis, Bush is cutting Medicare and Social Security at the same time he hands out billions to the ultra-rich in the form of tax cuts. The stock market continues its up and down see-sawing, while the threat of deflation, high unemployment, stagnant demand, a weak dollar, and skittish consumer confidence threaten to burst the housing bubble. Surplus has turned into deficit, international trade into protectionism, and optimism for the future into pessimism.

The Economy

As explained in the pages below, the root of all the political, social, and military instability is the weakness of the overall world economy. Once the motor-force of the global economy, the US continues to sputter along with the threat of deflation and a double dip recession as likely now as it was over a year ago. Unemployment has jumped from 6.1 to 6.4 percent with the number of Americans receiving unemployment benefits at its highest point in more than 20 years. Nearly a million workers have been laid off in the past 3 months alone.

The key to any recovery remains increased capital spending, but this is nowhere to be seen. On the contrary, companies continue to layoff thousands of workers in an effort to raise profits through “cost-cutting” instead of investing in new equipment and technology. Manufacturing remains weak, and construction spending recently posted its biggest drop in a year (1.7 percent). In May, the Chicago Federal Reserve’s monthly manufacturing gauge for the Midwest fell for the fourth month in a row, showing no improvement in production even after the end of the Iraq War. The Institute for Supply Management’s national factory gauge remains below 50 – which indicates contraction as opposed to growth. As Owen Fitzpatrick of Deutsche Bank Private Banking explains: “There's a combination of concerns over earnings ... and the economic news coming out was not as strong as expected. People are hoping to see some signs of a recovery, but we've yet to see one on the corporate side. The ISM has been hovering around 50 for quite some time, and people are getting concerned it's not improving. Given the length of time we had interest rate cuts, it's unusual to see a delay in recovery for such a prolonged period of time.”

The US trade deficit widened slightly to $41.84 billion in May from a revised $41.65 billion in April, the third biggest trade gap on record. In the words of one economist, “it reflects the fact the global economy is weak, especially global capital spending.”

The Produce Price Index rose 0.5 percent in June – almost entirely due to a 3.4 percent rise in energy costs and a 0.4 percent rise in food costs. The producer price report showed a steep 7.6 percent rise in the cost of gasoline and a 9 percent increase in home heating oil. Residential natural gas costs rose 3.6 percent. Residential electricity costs rose 1.1 percent. These higher energy costs cut into consumer spending on other goods and services, as well as into corporate profits. The core PPI (stripped of energy and food costs) fell 0.1 percent in June, underlining the continued threat of deflation (over the past 12 months, the core PPI has fallen 0.3 percent). Good for consumers, but bad for producers were the falls in the cost of cars and light trucks. Car prices slid 0.7 percent, while the cost of light trucks fell 1.5 percent. Sales incentives from automakers have led to price volatility - auto prices are down 1.3 percent over the past year and the cost of small trucks is down 3.2 percent. Communication equipment prices also tumbled, sliding 0.7 percent, their biggest drop since October of last year. As one analyst explained: “The PPI report is of some concern because it points toward a squeezing of profit margins by rising energy costs amid a lack of pricing power. This confirms that businesses continue to lack pricing power and suggests that the Fed's skewed assessment of risk with respect to disinflation will remain in place for some time.”

Interest rates are already at a 45-year low of just 1 percent, and the Federal Reserve Board has made clear it will further reduce them if necessary. In the words of Alan Greenspan: “Indeed, there is an especially pernicious, albeit remote, scenario in which inflation turns negative against a backdrop of weak aggregate demand, engendering a corrosive deflationary spiral.” It is clear however, that they are running out of room to maneuver - they cannot reduce rates below 0 percent.

With the war on Iraq, spending on the Homeland Security Department, tax cuts for the rich, and a stagnant economy, the federal budget deficit has exploded to a record $455 billion this fiscal year. While the Bush administration claims it will reduce it by half by 2006, it doesn’t explain how it will pull this off. We can say with certainty that it will attempt to do so with further cuts in social spending, attacks on the unions, and by increasingly slashing healthcare and education spending. With military operations in Afghanistan and Iraq alone costing $4.8 billion per month ($58 billion per year), it is truly monstrous that the capitalist class claims it has no money for domestic spending.

The US capitalists are deliberately causing a fiscal crisis in order to justify their plans to wipe out all the gains that working people fought for over the decades. As the Financial Times pointed out, “the lunatics are now in charge of the asylum”. Overtime pay, the 8-hour work week, health care and retirement benefits - you name it - Bush and his partners in crime want to take it from us. This is a finished recipe for a massive resurgence in the class struggle around the world - including here in the US. It is the urgent task of the labor movement and the working class as a whole to stand up against this war on working people at home and abroad.

War and the Anti-War Movement

Written before the actual invasion of Iraq, the section of the US Perspectives document on the war and the anti-war movement could of necessity have only a general, conditional character. However, the overall lessons to be drawn from the movement, and the perspectives and tasks of the working class in relation to the rising discontent against the horrors of capitalism remain largely the same. The relatively short war cut across the anti-war movement and prevented it from becoming more generalized at that point in time. But the truly mass character of the protests (larger than even at the height of the Vietnam War), which took place even before the war started is significant. For millions, this was the first time they had taken to the streets to make their views known. IN a significant development, it was not just the “usual suspects” – the activists and “rrradicals” who participated in these demonstrations, but people from literally all walks of life. In the coming years of increasing instability, this experience will serve as the starting point for millions of Americans in their struggle to fight back against the depredations of capitalism.

The wave of patriotism and calls to “support the troops” dampened the protests when the war formally began, but discontent with the situation in Iraq has in fact increased dramatically since the war officially “ended” on May 1st. A USA Today/CNN/Gallup poll found 56 percent of respondents said things were going well for US forces in Iraq, a drop from 70 percent a month ago and 86 percent during the week of May 7th. Bush’s approval rating is now at 60 percent – a healthy number overall, but a dramatic drop from the 90 percent he had after September 11th, and a significant drop since his 74 percent rating on April 9th during the fall of Baghdad.

Millions of Americans, many of who formerly supported the war wholeheartedly, have now begun to doubt the validity of the war’s proclaimed aims and the progress of the war itself. The White House has been forced to admit what we explained all along – that “evidence” of Iraq’s alleged attempts to buy weapons grade uranium from Niger was forged. This, combined with the complete absence of the “imminently threatening” weapons of mass destruction has cast much doubt on the sincerity of Bush’s war aims. Only 45 percent of the public now believes the United States is in control of events in Iraq; just 23 percent believe the war is going well, down from 61 percent in mid-April; just over half feel that the mounting casualties are becoming uncomfortably high when weighed against the goals of the war; 56 percent say Bush administration officials were hiding important elements of what they knew or were lying outright. Even before US officials hinted that more troops might be needed (a reversal of earlier claims to the contrary), eight out of ten in the Post-ABC poll said they were very or somewhat concerned that the United States “will get bogged down in a long and costly peacekeeping mission.”

Not only are Americans at home questioning the progress of the occupation, the tens of thousands of military personnel stationed in Iraq (who are, after all, workers in uniform) are rapidly losing confidence in their mission. Far from open-armed parades and flowers, US troops face a hostile population, and increasingly coordinated guerrilla attacks. 147 troops have now been killed in combat – equal to the number killed in the 1991 campaign. Some 10-25 attacks per day have left the troops in Iraq spread dangerously thin. All of this, combined with their long-term deployment, heat, and even lack of food, has led to widespread discontent and a collapsing morale among the troops stationed there. Female service members are becoming pregnant on purpose in order to hasten their return home. Reserve infantryman Eric Holt says: “We didn't win this war, not at all. I don’t know what I'm doing here and I don’t like what's happening in this city. It ain’t right for the folks here”. Statements to this effect can be reproduced by the thousands.

Reuters recently reported:

“Told several times they would be going home only to have their hopes dashed this week, a small group of soldiers from the 3rd Infantry Division in Iraq, spoke of poor morale and disillusionment with Defense Secretary Donald Rumsfeld. ‘If Donald Rumsfeld were here, I’d ask him for his resignation,’ one disgruntled soldier told ABC's ‘Good Morning America’ show. Asked by a reporter what his message would be for Rumsfeld, one said: ‘I would ask him why we are still here. I don’t have any clue as to why we are still in Iraq.’”

Military families are also increasingly frustrated as their loved ones continue to die while Bush urges the “non-existent” guerrillas to “bring it on”. The wives of two of the soldiers also appeared on “Good Morning America”. “‘Just send my husband home - send all the soldiers home. They have done the job they were supposed to do,’ said Rhonda Vega from Hinesville, Georgia. Stacey Gilmore said U.S. troops were ill-prepared for the post-war phase. ‘They were told after the fighting ended they were coming home. All I know is that morale is low and they are just hanging in there, sticking through it.’”

Military officials now admit that they are in a “classical guerrilla war”, and that “it’s war however you describe it”, making a mockery of Bush’s macho (and expensive) flight onto the deck of an aircraft carrier. Many blame Bush personally for the deaths of their friends and relatives, and at a recent meeting with military wives, the government’s representative had to literally flee the women’s aggressive demands that their husbands be brought back home. Dan and Emma Withers, whose son is stationed in Iraq explain: “’I gave [Bush] the benefit of the doubt because I felt they might have intelligence information that was not available to me. I guess I hoped if they were going to make the leap, they would base it on something I didn't have knowledge of. I'm not sure of that anymore. You just don't want to think you're being led down the garden path by the president and Colin Powell. ... I think I'm tired of being lied to.’ It’s hard for her to admit, because she’s a registered Republican. Dan Withers voted for Bush in 2000.” (Quoted in the St. Petersburg Times of Florida)

Long-term deployment and war have a devastating effect on families, jobs, economic stability, and psychology. Those lucky enough to have jobs waiting for them on their return will have a multitude of other problems to deal with. With 17 million tons of depleted uranium scattered around Iraq, it is certain that we will see a repeat of “Gulf War Syndrome” – perhaps on an even larger scale. Ironically, while Bush “supports the troops” when they are fighting his wars overseas, he shows his true colors when he cuts veterans’ benefits (to the tune of $14.6 billion over the next 10 years) and healthcare here at home.

With the war “officially” over, attention has returned to domestic issues, and things are not looking so good for Bush and co. In June 62 percent of Americans are unhappy with his efforts to revive the economy, up from 53 percent in May. CBS reported that jobs and the economy dwarfed every other issue in terms of people’s greatest concerns, cited by almost four times as many people as cited Iraq or the war on terrorism as their chief concern. According to that report: “And the most troubling pictures on any of the three broadcasts were those of a line of cars, stretching out of sight down a flat two-lane road in Logan, Ohio - jobless and struggling families waiting for the twice-a-month distribution of free food by the local office of America’s Second Harvest. The head of the agency said, ‘We are seeing a new phenomenon: Last year’s food bank donors are now this year’s food bank clients.’ Said CBS reporter Cynthia Bowers, ‘You could call it a line of the times, because in a growing number of American communities these days, making ends meet means waiting for a handout.’”

The millions of people who flooded the streets in protest against the war are still out there. Our numbers are surely even greater today, despite our public profile since the war began and ended. This movement must embrace even broader layers of society; it must link the militarism abroad with the attacks on our conditions of life here at home, and must be given a working class orientation and leadership. The war on Iraq was just a continuation of the ongoing war on working people here in the US. In this one-sided class war, the ruling class has mercilessly rolled back the gains fought for by working Americans over the past hundred years. It is time for the labor movement and working class as a whole to say enough is enough! The American working class should take to heart the words of an Iraqi civilian whose son had been shot when he proclaimed: “Damn Saddam and damn Bush! What have I got from either of them?” But what is the alternative to Bush?

Election 2004 – The Democrats Are Our Main Enemy

In the perspectives document, we give a broad outline of the upcoming presidential elections. We lend special emphasis to the fact that the Democrats are not capable of providing a solution to the problems of working people. Bush and his pals have already been discredited in the eyes of millions of workers. But in a two-corporate-party system, the so-called “opposition” usually benefits from the bad fortunes of the party in power. In this case, this means the Democrats. In the coming months, there will be a lot of pressure from those on the left who want to defeat Bush at all costs. The logic behind this sentiment is understandable - for millions of Americans, GW Bush represents all that is evil, decrepit, and dangerous in the world (a capitalist world). But is this a real solution? Can voting for a “lesser evil” candidate lead to genuine, lasting prosperity, peace, jobs, stability, universal health care and education?

The answer is clearly “No!” So long as the capitalist system continues its quest for profits for the few at the expense of billions of other humans, this is simply not possible. While the Democrats may bend over backwards to give the impression that they are “worker-friendly”, a capitalist-backed party cannot serve two masters. Despite their being the “opposition” party at present, the Democrats are unable to inspire confidence and enthusiasm among working people, who instinctively distrust them after decades of betrayals. The abandonment of Gore and the Democrats in the 2000 and 2002 elections are an example of this. In a recent poll on the crisis of healthcare in this country, only 38 percent of Americans felt that the Democrats could do better than the Republicans - this on an issue they have traditionally been very strong on (though they have delivered next to nothing in the past 20 years).

Only a mass party of labor, based on the trade unions and armed with a program of socialist demands can fight back in the interests of the hundreds of millions of workers in the US. Only with such a party can the process of falling wages, dropping living standards, and shrinking rights be halted. The Democrats will never be capable of this. We must start now in our work to break the labor movement from the Democrats, and to break millions of workers’ illusions in the Democrats (who they support for lack of an alternative). Given a genuine alterative, millions would rejoin the ranks of voting Americans. This will not be an easy task - but there is no other alternative. The Democrats are our real enemies at this point in time; they have had their chance to work in the interests of working people and have betrayed us time and time again. They have always been, and always will be, a party of big business. We, the working class, the vast majority of American society, must build a party that will fight in our interests - a working class party of and for working class. Armed with a socialist program, such a party would play an important role in the revolutionary transformation of society.

Next year we will expand on these perspectives, and continue to develop them as new information is available. See also our perspectives documents from previous years. We encourage our readers to read and discuss this document, contact us with their comments, questions, and criticisms, and above all to join the Workers International League in building an alternative to the decrepit capitalist system.

US Perspectives for 2003 / 2004

February 2003 Introduction

In the year since our last perspectives document, events have accelerated to an astonishing degree. The reason for writing a perspectives document is to help us chart out the most likely course of events in the coming period. We do not have a crystal ball, but by applying the method of dialectical materialism we are able, through a series of successive approximations, to come ever closer to an understanding of the events unfolding around us. This will help us explain our ideas, orient our forces, and above all, build the organization more effectively. The perspectives we had last year for increasing economic, social, political, and military instability have come true with a vengeance. We have clearly entered a new period in world history – one characterized by war, revolution, and counter-revolution – on a scale never before seen. The process of capitalist globalization has laid the foundations for a globalized crisis of the system, and above all for world revolution. The tasks before us in the coming period are historic; but armed with the correct program, methods, orientation, strategy and tactics, we will succeed in building a mass revolutionary force in the US and internationally.

Our analysis two years ago of GW Bush's Foreign Policy has been absolutely confirmed by events (all comrades should read it again at: http://www.newyouth.com/archives/usa/bush_foreign_policy_2001.asp). We predicted the Middle East and Latin America would be the key regions of great instability and conflict, and this has proved to be the case. We must remember that during the 2000 election campaign he promised to be an "America first" president – not to stick his nose in other countries' business – not to be the world's policeman. He also campaigned for "free trade" and open markets. Yet from the moment he took office, Bush has exercised what may be the most aggressive foreign policy in history. US troops roam the globe in the, the "war on terror" on anyone and everyone was declared, Afghanistan was invaded, military spending skyrocketed, and now Iraq is in the gun sights of America's oilmen. He has also begun a dangerous trade war with Europe, and imposed protectionist measures and tariffs on agriculture and steel.

The outcome of a war with Iraq is impossible to predict. It will lead to tremendous instability across the Middle East, and could even lead to the collapse of many regimes. The likelihood of terrorist attacks on the US will increase, and the government will be unable to stop it. The situation with North Korea remains volatile. However, what is important to keep in mind is that even in the best-case scenario of a swift, relatively painless victory over Iraq, what next? Bush has initiated a perpetual war, but as with everything, this has its limits. The US is not Sparta – its population is not prepared to be in an indefinite state of siege and war - and the fate of that Greek city-state is a warning to those who would attempt to wage endless wars. Sooner or later this must reach a limit, either through military catastrophe or because of the already rapidly developing anti-war and increasingly militant labor movements. Despite its crushing military preeminence on paper, US imperialism cannot rampage at will across the entire globe forever. At a certain stage it will be confronted by the might of the world working class, and in fact, this has already begun. The analogy with the collapsing Roman Empire cannot be avoided.

Our economic perspectives have also been confirmed. A year ago, the US entered and then quickly emerged (technically) from a recession. We put forward the possibility of a double-dip recession and a weak, jobless recovery”. While the economy has not yet slipped back formally into recession, the so-called "recovery" is extremely weak, and characterized by mass layoffs, weakening consumer spending and confidence, massive debt, low profits, and even lower business investment. Even productivity has fallen in spite of all the cuts, speed-ups and pressure. The economy is like a drowning man clutching at a straw in a desperate attempt to stay afloat. A dip back into recession could come as soon as the first quarter of 2003, and any recovery thereafter would be a long way off.

Along with the economic crisis come intensifying attacks on the working and living conditions of the working class. Bush’s “solution” is further tax cuts for the rich and calls for “fiscal responsibility” - when he is the one who has pushed government spending through the roof. While billions are spent on war, jobs are slashed, benefits are reduced, corners are cut, and the budget deficit is skyrocketing. This will be "resolved" through further attacks on welfare, education, healthcare, etc.

This is having and will continue to have an extremely volatile effect on the consciousness of the masses. Combine this with the blatant greed and corruption of the rich (Enron and WorldCom for example), the intensifying attacks on wages, conditions, and jobs, and the war mongering of Bush and his cronies, and the stage is set for huge movements of the working class. The connection between foreign and domestic policy is becoming more and more clear to millions of Americans, and one of our primary tasks is to further clarify and heighten this awareness. The slogans of "no to the war on workers at home and abroad" and “no war but the class war” are class slogans and effective transitional demands which we must put to full use.

The class war is sharpening more and more – for the last two decades it has been a one-sided war with the working class on the retreat. The capitalist class’ offensive has been met with only sporadic resistance up until now, and this has made them arrogant. However, the limits of this are now being reached, with the working class showing signs of revival. It will take some time for them to learn to flex their muscles again after laying dormant for so long. It will also take them some time to find their ideological direction – the ideas of socialism. But once they start to move along the path of the revolutionary change of society, nothing will be able to stop them.

From the point of view of our orientation and tactics, the most important development over the past year is the growth and intensity of the anti-war movement. The anti-globalization movement has been subsumed by the broader anti-war movement, and has the potential to develop into a mass workers' and youth movement against the capitalist system itself. Above all, the participation of the working class as a class, with class perspectives and slogans will be essential. Our energetic intervention in this movement from the outset will be vital in terms of building the WIL’s numbers, quality, and influence.

No perspectives document can include everything. Each year we re-visit those topics which most require an updated analysis, and examine new topics which we have not looked at in the past. Last year we focused on the economy, the anti-globalization movement, Election 2002, the Labor Party, the Greens, and the Trade Unions. This year we will focus on the international situation, the economy, the political situation and the upcoming elections, the war on terror, and the anti-war movement. These perspectives are meant to clarify our ideas and focus our activities, and to serve as a discussion document over the coming year.

The International Situation

[Note: Last year we had an extensive document on World Perspectives, so this year we are only summarizing a few main points.]

The world situation can only be characterized as wrought with instability – even more so than just a year ago. On a world scale we have witnessed crisis after crisis - economic, military, political, and social. Each of these events on its own would be serious, and in the past the attention of the entire world would have been focused on it. However, we are witnessing a generalized crisis of capitalism on a world scale. There is no precedent for this since the 1930s. The consciousness of millions of people of all classes is being radically transformed - beginning with the ruling class itself which is no longer confident that it can continue to rule in the way it has in the past. This explains the astonishing irrationality and arrogance of the Bush clique – for better or worse, they have decided upon a course of action, and have jumped in with both boots. However, they will not get the results they hope for – they are preparing the stage for what may be the greatest ever upheavals of the masses on a world scale. We will continue to witness sharp, sudden changes which can transform the situation overnight. Marxism gives us the benefit of foresight over astonishment - nothing should surprise us!

At the root of all of this is the crisis of the world economy. World markets in 2002 suffered their worst year on year losses since 1929-31 – down for the third year in a row. London’s FTSE World Index was down 43 percent for the year. The FTSE index was down 25 percent. Japan’s Nikkei was down 19 percent. Germany’s markets were down nearly 35 percent. Investors are shell shocked, and the only hope they have that 2003 won’t be the same is to pray that the law of averages will work in their favor – “it can’t possibly go down another year in a row!” Of course, this is what they said at the beginning of 2002, with the above results. Since 1974, there have been five months characterized by deflation - four of these occurred in the second half of 2002. The threat of deflation and a world-wide depression is more acute than ever.

The recession was sparked by the boom and bust of the Information Technology sector - and a major bust in housing is not far off. Above all, this is a classical crisis of capitalist overproduction – too many investors piled into then-profitable sectors of the economy, only to find that profits rapidly dwindled. Added to this, this boom was in large part fueled by speculation and over-borrowing, and was rife with fraud and “creative accounting” encouraged by financial deregulation. Alan Greenspan’s monetary policies have set the stage for the very real possibility of an economic meltdown. The promise of a “new economic paradigm” has gone up in smoke. All that technological investment has not resulted in the super-profits companies expected.

While some companies have been able to keep some semblance of profitability through cuts and “restructuring”, many massive corporations, once considered “sure bets” have seen astonishing losses. Media giant AOL Time Warner lost $99 billion in 2002. With results like these, corporate investment is not going to revive any time soon. US industrial capacity use is at 75 percent - a decisive figure - as it shows that production can be increased without any new investment - the key to a recovery. Significant investment in the economy cannot recover until profits do, and yet prices are falling. Even the booming car industry (based on zero percent financing and deep discounting) is seizing up, falling for a second straight month in February. Only US consumer confidence has kept the world economy afloat this long, and this is reaching its limits.

U.S. retail sales suffered a deep slide in February, their largest drop since November 2001, as spending sank across a wide range of sectors. Retail sales fell 1.6 percent in February, the first drop since September of last year when the economy was showing signs of flagging. The decline was far worse than the 0.4 percent dip analysts had expected. Sales of building materials and garden equipment fell 7.5 percent, the biggest drop on record. Purchases of clothing and accessories slid 3.6 percent while sales at furniture stores dropped 1.6 percent. Charles Payne, market analyst at Wall Street Strategies explains: “there's some fear, outside of the geopolitical sphere, that there are still some fundamental problems within the economy. Businesses really aren't spending or investing, and that creates a serious problem as it appears the consumer finally is running out of steam.”

The trade deficit has reached astounding levels – it jumped 10.6 percent in December to a record $44.2 billion, and increased a total of 21.5 percent in 2002, propelled by record high imports from China and Western Europe. Bilateral trade deficits with China, Western Europe, Mexico, and South and Central America set records in 2002. Imports from China surged to $125.2 billion, surpassing Japan as the United States' largest import partner behind Canada and Mexico. Exports fell 2.5 percent in 2002 to $973 billion. Exports to Western Europe slipped to the lowest level since 1997 while U.S. exports to Japan were the lowest since 1993. The deficit has now risen for the first time above an annualized rate of $500 billion in real terms, or a record 4.3 percent of GDP. This was the result of both declining exports and faster import growth: export growth fell to -1.7 percent in the fourth quarter from 4.6 percent in the third quarter, while import growth accelerated slightly to 3.7 percent from 3.3 percent. This requires increased borrowing from overseas, and along with this rise in overall debt owed to foreign banks comes a growing debt service obligation.

This threatens the very stability of the dollar. Since February 2002, the dollar fell by 3.4 percent against a broad index of U.S. trading partners' currencies. Against just major currencies, such as the euro and yen, the dollar fell by 9.1 percent. If any other country were in the situation the US is in, there would be a run on the dollar, and the IMF would be jumping down its throat, forcing it to impose austerity measures and the like - but of course this is not just any country - it is the most powerful nation on earth! The world economy survived the collapse of the Asian “tigers” on 1997 because of the boom in the US and Europe. Once the world’s chief motor sputters, there is no one to pull the world economy out of the mire. And yet, the other major powers are forced to try and shore up their own economies at the US’s expense. As the UK Guardian recently reported:

“There are several means of contesting the unilateral power of the US, but perhaps the most immediate and effective one is to accelerate its economic crisis. Already, strategists in China are suggesting that the yuan should replace the dollar as East Asia's reserve currency. Over the past year, as the Observer revealed on Sunday, the euro has started to challenge the dollar's position as the international means of payment for oil. The dollar's dominance of world trade, particularly the oil market, is all that permits the US Treasury to sustain the nation's massive deficit, as it can print inflation-free money for global circulation. If the global demand for dollars falls, the value of the currency will fall with it, and speculators will shift their assets into euros or yen or even yuan, with the result that the US economy will begin to totter.”

The last major economic crisis is mis-named the “oil crisis” of the 1970s - but in reality the rise in the price of oil was only a catalyst which accelerated the process. The capitalist economy was already on the verge of a cyclical downturn, and all it took was a little push over the edge. Even during the boom of the 1990s, capitalism never achieved the robust levels of growth seen in the post-war period. In the extremely volatile situation we now find ourselves in, anything can provoke a slump. The price of oil has reached two-year highs, and with the uncertainty in Venezuela, Iraq, and Saudi Arabia, this rise in energy prices will likely continue. As we write this in late February 2003, crude oil prices have jumped 35 percent to $35.60 a barrel since early December 2002. At one point they were at ten-year highs of $40 per barrel. Gasoline prices have surged 20 cents in a month to an average of $1.66 a gallon, within a nickel of all-time highs, as prices in some major cities breach the $2 mark with extremely negative effects. This cuts into consumers’ already shrinking disposable income, and into the declining profit margins of businesses, making them less willing to invest in productive capacity, technology, or workers.

The past year and a half have seen the biggest economic collapses in history. Following on Enron’s ignominious crash, WorldCom, Global Crossing, and others followed suit with billions of dollars wiped out in days. Global Crossing laid of 20,700 workers last year alone, with another 5,000 on the chopping block. Theirs was the largest bankruptcy in history, after overstating profits by $9 billion. The greed and corruption of these companies, many of them with ties to the Bush administration, has enraged working Americans. However, it is not just fraudulent companies that are imploding – entire national economies are as well. Just over a year ago we saw the collapse of the Argentine economy over a period of 24 hours. It was the biggest default in history, and there were 4 presidents within 2 weeks. The revolutionary process which the collapse sparked continues, and although there is a lull in the mass movement for the moment, even bigger clashes of the class struggle are still to come. This is the future for one country after another in the coming period. Alan Greenspan himself warned recently “that there is no such concept of [a bank that is] too big to fail”.

The entire Asian region is fraught with instability and uncertainty. Japan continues its decade-long recession with no end in sight. Again, it is worth noting that the Japanese experience following the burst of their economic bubble could well be the path the US takes in the near future – years of recession interspersed with weak, “joyless” recoveries. The situation in North Korea is extremely unstable. It faces a collapse which would lead to intense instability in the entire region. A situation similar to the Romanian revolution of 1989 is entirely possible. South Korea is also in a severe economic and political crisis, and could be on the verge of social revolution in the near future. China’s march to capitalist restoration depends largely on strong global capitalism, and with rising unemployment and social unrest, the future of the Stalinists and their plans is not secure by any means.

The US is now sending 1,700 troops to the Philippines in order to engage in direct combat with Abu Sayaff Islamic guerrillas. In a country where the US troop presence is already unpopular, this is a Pandora’s box about to be opened. Tensions between India and Pakistan continue unabated, and the war in Afghanistan has only served to further destabilize the entire region. Iran, at the crossroads of the Middle East, Central Asia, and the Indian Subcontinent, is in the middle of a life or death struggle between the ultra-reactionary mullahs and the pro-Western “reformers”. Underlying that, however, are serious class contradictions and a seething population fed up with tyranny and poverty.

Europe also faces recession, unemployment, and instability not seen since the 1970s. 4 million are unemployed in Germany, the key engine of the Euro zone, and 2001 saw record bankruptcies there, followed by 33 percent more in 2002. France, Britain, Italy, Spain, and the rest of Western and Eastern Europe also have their share of problems. The general strikes in the recent period are just a hint of what is to come. All across Europe, open class struggle is back on the agenda. The open tensions between Europe and the US are a reflection of the intensified struggle for markets and spheres of influence in a shrinking global economy. Far from “free trade”, protectionism has reared its head, threatening to reverse the trend of globalization of the past decade. All the capitalist powers are attempting to export unemployment, thereby lessening the effects of the crisis at home. Yet all efforts to achieve economic equilibrium can only be effected by causing further political and social instability. This crisis of capitalism has led to a crisis in all the reformist parties who imagined that there was a "third way" somewhere between capitalism and socialism. Russia is also a country we must keep an eye on. Putin’s own “war on terror” on the Chechen people is losing popularity, and the recent relative economic recovery has given renewed confidence to the working class, thus preparing the stage for big confrontations of the classes there as well.

The entire Middle East is on the verge of an unprecedented explosion. The crisis in Israel / Palestine continues, with the brutality of the Sharon government and the suffering of the Palestinian masses increasing daily. There is not a single stable regime in the whole of the Middle East. In the event of war in Iraq, there will be massive convulsions throughout the Middle East – it is like a drought-stricken prairie and any spark can set the entire region aflame. With the question of the Kurds, the Shiia Muslims, Turkey, Iran, etc. the whole thing could quickly turn into a nightmare for the ruling class. Bush would like a quick, clean war before the 2004 elections, but he may get more than he bargained for – Iraq is not Afghanistan – and in any case, the results there are nothing to cheer about. The current wave of terrorism sweeping the world is also a symptom of the deep crisis of capitalism, and the desperation of millions. Al Qaeda are in essence petty-bourgeois fanatical counter-revolutionaries who are taking advantage of the justified rage of the oppressed. Their emergence reflects a growing polarization of society – not only to the left, but also to the extreme right. We must also remember that the threat of another terror attack on the US cannot be ruled out. A year and a half after September and the “war on terror” was initiated, we are told by Homeland Security chief Tom Ridge that the next attack “could happen to any community at any time.” So much for all the hype to the effect that we are “winning the war on terror”! This time around, the masses will not rally as blindly to Bush – they will begin to question why he and all the massive arms and intelligence spending, anti-rights legislation, and increased government bureaucracy cannot protect them.

With the situation in Venezuela not going US imperialism’s way, they need to ensure they control Iraq’s oil. But Saudi Arabia is extremely unstable, and could collapse at any time – it is really just a matter of when. Once in Iraq the US could then take the oil fields of Saudi Arabia which are almost entirely on a narrow coastal strip, and generously leave the sand to the inhabitants. This is good old-fashioned imperialism. This is a huge gamble however, for as we know, the US ruling class cannot fully take into account the infinitely complex equation of war, and above all the role of the world working class. We must remember that war is often the handmaiden of revolution. The American ruling class is acutely aware of the instability a war on Iraq can have in key countries such as Turkey and Saudi Arabia. Ironically, they have no choice – they must try and stabilize the region and access the oil even if it means increasing instability considerably.

Egypt, Jordan, and Syria are also balancing on a knife’s edge, not to mention the whole of North Africa. Central Africa is a nightmare of ethnic violence brought on by imperialist proxy wars and atrocious poverty. Nigeria, the world’s 6th largest oil exporter, is in the throes of a deep crisis, reflected on the one hand by brutal ethnic violence, and valiant struggles of the class on the other, especially in the vital oil industry (80 percent of government revenues depend on it). Nearly ten years after the end of apartheid, the condition of the masses in South Africa has only gotten worse. The promise of a bright future has been replaced by a living horror of poverty, disease, unemployment, and unofficial racism. The betrayals of the ANC are creating the conditions for a massive upsurge – this time along class, not racial lines. In Zimbabwe, the crisis between Mugabe and the white farmers could blow up at any time. The entire continent of Africa is a powder keg waiting to detonate at the slightest spark.

The reactionary role of the UN has also been brought out sharply in the recent crisis over the war on Iraq. The UN is above all an instrument of the great powers – small countries simply do not have an equal voice. It is absurd to think that a country with an annual GDP less than the cost of a B-2 bomber can have a real influence in such an institution! Any “representative” body where any one of 5 members can veto anything they wish is not representative. The bills of the UN are ultimately paid by the US and its allies. The only reason countries like Germany and France raise any opposition is because they want to get a share of the Iraqi oil contracts after the war, and they fear the reaction of their population at home. At the end of the day, the UN does what it is told by the big powers. It has no real power to enforce its resolutions. Israel has been flouting UN resolutions for decades and actually has nuclear weapons. It is led by a war criminal who is responsible for the murder of thousands of Palestinian men, women and children in the Lebanon. Yet no action is taken against him, and the issue of the UN’s “honor” is never mentioned. It was the UN that imposed the crippling sanctions for the past decade that resulted in hundreds of thousands of dead and millions of malnourished Iraqis. It is of vital importance that we explain this clearly.

Latin America is also a continent in ferment – with ominous consequences for the US ruling class. From Argentina to Venezuela, Bolivia to Colombia, Peru to Ecuador, Brazil to Uruguay, revolutionary and pre-revolutionary movements are emerging with astonishing rapidity. Decades of degradation and misery have left the masses no alternative but to struggle. The collapse of Argentina has already begun to spread across the region, and the social reaction will be similar. Regional GDP is down 1.1 percent. Income per capita is down 1.9 percent and has fallen annually since 1998. This is a total catastrophe when we consider the dire condition of the masses which already existed. 44 percent are poor, with 20 percent living in the most extreme poverty.

Right across the border, the relative recovery of the Mexican economy is coming to a screeching halt. 90 percent of all Mexican exports go to the United States, and the economic crisis in the US will be felt even more sharply there. Last year, foreign investment in Mexico collapsed by 55 percent. In 2000, the Mexican economy grew 0 percent, in 2001, 1 percent. Prospects for 2003 are even worse - this is a finished recipe for the most extreme turbulence. We are speaking here of revolution on a continental scale, and right in the US’s backyard. The millions of legal and illegal Latino immigrants in the US will play a tremendous role in the coming American revolution.

It is clear from this brief overview, that the world situation is rife with contradictions and perils to the capitalist system. Even more massive crises, collapses, revolutionary and counter-revolutionary movements, and wars will quickly overshadow the momentous events we have witnessed in the past year. Above all, the world and US economies are on the verge of a long, dark night, with the most explosive social, military, and political consequences to follow. In the epoch of capitalist globalization, comes globalized crisis. What we are discussing here is not just a revolution in this or that country but the world socialist revolution. In the coming period, we will see more Paris Communes, more 1905s, and more Octobers. Just one victory in any country will change the entire world, and shake the foundations of even the most mighty capitalist power in history – the United States.

The US Economy

Central as it is to the world economy, many of the key figures for the US are given above. However, a closer look at the US economy and the effects its deteriorating condition will have on the consciousness of the working class is important. Whereas GDP growth in 2002 for Europe was just 0.7 percent, and 0.5 percent for Japan, the US economy grew an estimated 2.4 percent. On the surface this seems respectable, and was a vast improvement over the 0.3 percent growth of 2001, but the average figure doesn’t tell the whole story. After growing 3.8 percent in 2000, the US economy entered a recession in March of 2001. However, recovery came quickly, as the economy surged forward 5.8 percent in the first quarter of 2002, leading many to predict robust, sustained growth. But by the 4th quarter, this had come to a screeching halt with growth of just 0.7 percent, down sharply from 4 percent in the 3rd quarter. So although the US economy is technically in a recovery, it is extremely uneven, and a double-dip back into recession could occur before this document is completed.

This is well below the 3 percent rate most economists say is needed to keep unemployment from rising. The Institute for Supply Management's index of employment slumped to 42.8 from 47.6, its lowest reading in a year. “No one is hiring; all the leading indicators of employment are weak and I would not be surprised at all to see another fall in payrolls,” said Ram Bhagavatula, chief economist at Royal Bank of Scotland Financial Markets. The labor market is in its longest slump since World War II. Business hiring intentions for the second quarter, as measured by temp service Manpower Inc.’s latest quarterly Employment Outlook Survey, fell for the first time in a year. The number of long-term unemployed is at its highest level since 1992.

Since its peak in March 2000, the Wilshire 5000 - the broadest measure of U.S. stock performance - has lost $7.9 trillion, or 46 percent of its market capitalization. 2002 saw a drop in the value of US stock markets for the third year in a row - the worst performance since the Great Depression. The US Dow Jones was down 17 percent - the worst result in 28 years. The tech-heavy NASDAQ was down 22 percent, and the S&P 500 was down 20 percent. Affected by military and financial instability, markets are already in negative territory for 2003. Many people who had a “wait and see” approach to the economic recession are now realizing that this “recovery” is nothing of the sort. The average US household has lost nearly 25 of its paper wealth in stocks and shares.

Unemployment is hovering around 6 percent, but the real figure is much higher. As reported on CNN / Money: “Private-sector unemployment is at 7 percent - far worse than 2002’s average rate of 6.2 percent - and the 12-month net change in private payrolls has been negative ever since July 2001 and will likely stay negative in February, adding to the longest such stretch of pain since 1944-46. The number of people who are either unemployed, or have given up looking for work, or who are working part-time because there's nothing better available rose to 11 percent of the labor force in January, the highest level since January 1995.” Apart from the over 8 million who are officially unemployed, millions of others have fallen off the unemployment roles and are no longer considered to be “looking for work”.

Alan Greenspan blames “transitory jitters” over the war for the weakness of the economy, and claims it will recover once (if) the shadow of war is removed. However, the real problems run much deeper than “geopolitical stress”. In any case, with the current world crisis of capitalism and the accompanying wars, revolutions, and counter-revolutions, these stresses are not about to leave anytime soon. With interest rates already at 40-year lows of just 1.25 percent, Greenspan and the Federal Reserve don’t have much room to maneuver. With rumors of yet another drop (this time to the lowest level since 1958), and the trade deficit at record levels, the “wiggling room” for the bourgeois economists could be tighter than ever.

The Institute for Supply Management said the main index in its monthly survey of manufacturing dipped to 50.5 in February from 53.9 in January, well below market forecasts of 52.4 and only just above the 50.0 barrier that separates growth from contraction. As reported by Reuters, “much of the deterioration in the overall ISM survey was due to a relatively large 7-point slide in new orders to 52.3, a jarring development since orders are considered a leading indicator of production. ‘It was pretty much across every industry,’ noted Norbert J. Ore, chairman of the ISM manufacturing business survey committee, pointing to Iraq as a major factor. ‘The threat of war is dampening demand and that applies to every industry.’” In other words, the only really productive sector of the economy is only half a percentage point from dipping back into recession.

The promise of a bright future and ever-increasing wealth and prosperity has always been an illusion for the vast majority of Americans, but now wider layers than ever are feeling the effects of the crisis. Median household income fell 2.2 percent between 2000 and 2001 in real terms (after adjusting for inflation). After falling for four consecutive years, the poverty rate rose, from 11.3 percent in 2000 to 11.7 percent in 2001. It is highest in the south, where it stands at 13.5 percent. The number of poor increased also, by 1.3 million, to 32.9 million poor in 2001. Child poverty, the highest of any age group, is at 16.3 percent. Of course, these official figures do not tell the whole story.

The gap between rich and poor has also accelerated. Earnings for the poorest 20 percent of American families rose less than 1 percent during the 10-year period but jumped 15 percent for the richest fifth. Earnings for the poorest 20 percent of American families rose less than 1 percent during the 10-year period but jumped 15 percent for the richest fifth. Income for the poorest families rose $110 to $12,990. For the richest families it increased by $17,870, to $137,480, more than 10 times that of the poorest sector. In real terms, adjusted for inflation, this represents a fall in wages. Not only that, but according to Deborah Reed of the Public Policy Institute of California, “in the 1970s and 1960s we were talking about more one-earner families. Now, we're talking about two-earner families having the same income level that one-earner families used to have.”

Mass layoffs are at record levels, and the government has decided to stop reporting these figures in order to “save money”! Headlines such as “Delta to cut 8,000”, “WorldCom cuts 5,000”, “Alcoa to Layoff 8,000”, “Dow Chemical to cut 4,000”, “Micron Lays Off 1,800”, and so on are increasingly common. Far from beginning to hire new workers and increase investment, companies are cutting thousands and tightening belts even further. The US has entered the worst hiring slump in 20 years. As a result of all these cuts in jobs and benefits, speed ups, and even forced overtime, productivity - the amount of output per hour of work - for all of 2002 grew by a stellar 4.7 percent, the strongest showing since 1950, and a marked improvement over the 1.1 percent increased posted in 2001. Yet as with other indicators, towards the end of 2002, there was a dramatic slowdown here as well. The productivity of U.S. companies dipped at an annual rate of 0.2 percent in the final quarter of 2002 - the biggest decline in productivity since the first quarter of 2001, when the economy was heading into its first recession in a decade. The decline came after productivity went up by a strong 5.5 percent annual rate in the third quarter. Combined with continued weak profit forecasts and the threat of war and terrorist attacks, this is bad news for those assuming a turn around in 2003.

Decades-low mortgage rates took home sales to record highs last year. Increased wealth from this real estate bubble and cash from mortgage refinancings (as consumers swap higher-interest rate loans for lower ones) have cushioned some Americans somewhat, but this is not enough to keep them spending as they have in the past. Even Alan Greenspan is predicting a “cool down”. As we have explained in the past, sustained consumer spending and confidence have virtually been the only thing keeping the world economy from taking a nosedive. But this is now changing dramatically as working people feel the squeeze of lower purchasing power, fewer jobs, record debt, and uncertainty about the future. Consumer spending, which accounts for about two-thirds of total GDP, increased at only a 1 percent rate in the fourth quarter of 2002 - the weakest growth in nearly a decade - after surging ahead at 4.2 percent in the third quarter.

Already in January of 2003, consumer spending has dropped by 0.1 percent, after a meager rise of 0.1 percent in December 2002. Real consumption, adjusted for inflation, fell a steeper 0.3 percent, largely due to a slump in demand for autos. Spending on durable goods - items meant to last a minimum of three years - fell 5.7 percent, their biggest decline since a 6.0 percent drop in February 1990, after a rise of 6.8 percent in December (due mostly to financial incentives in auto sales). Retailers’ sales over the 2002 holiday season were the worst in 30 years. Businesses increased inventories at a $3.3-billion rate in the closing quarter of last year, a fraction of the $18.8-billion rate of stocking in the third quarter.

In February, consumer confidence posted an unexpectedly steep drop to 64.0 in February from a downwardly revised 78.8 in January – it’s lowest level in 10 years. Another index, the IBD/TIPP Economic Optimism Index fell 2.4 points to 50.0 - its lowest level in 25 months. The index is now below its level of 53.9 in March 2001, when the recession began. Since June of 2002, the index has fallen 7 out of 9 months. Based on these indices, Bush’s approval ratings have also fallen – the IBD/TIPP Presidential Leadership Index dropped to 60.6 in February from 63.0 in January. The share of those giving Bush an "A" or "B" on "handling the economy" fell to 39 percent in February from 40 percent in January. The University of Michigan's preliminary February consumer sentiment index fell to 79.2 from 82.4 in January, its lowest since September 1993.

The burden of consumer debt is higher than any point in history. Continued expansion of credit over the past decade has helped capitalism artificially extend its limits. Yet even this has its limits. For 2002, the rise in credit card and other revolving debt was the smallest increase since the Fed began keeping records in 1968. Consumer borrowing rose by just 3.3 percent in 2002, a big slowdown from the 6.9 percent increase registered in 2001. This was due to a dramatic slowdown in debt extension towards the end of the year. Borrowing fell at a 2.8 percent annual rate in December from the previous month, the largest monthly decline since April 1992. December's decline was led by a drop in revolving credit, which plunged at a 14 percent annual rate, the biggest monthly drop since December 1975. This will cut into returns on asset-backed securities, or bonds backed by consumer loans like credit cards, car loans and home equity loans, analysts said. Late loan payments and defaults have been climbing. In December, credit card companies wrote off 7.5 percent of credit card receivables that they bundled into asset-backed bonds - the second highest ever tracked by Standard & Poor’s. Personal bankruptcy filings are expected to surpass last year's record.

Added to this, the budgets of the federal government and 48 states are facing their worst budget deficits in decades, with several large states near bankruptcy. California alone, with a population of 34 million, has a deficit covering more than 32 percent of its total budget. Texas and New York are not very far behind. The Federal government, which only two years ago was actually turning a profit, is once again running at a massive deficit. This is the fruit of Bush’s tax cuts for the wealthy and corporations and can only have dire consequences for the millions of the poor and elderly who depend upon welfare and Medicare/Medicaid. Tuition at state colleges is rising quickly, and several states have already warned that entire education programs and grants will be eliminated. Federal and state workers will once again face layoffs. This will destabilize one of the few stable sectors of the economy. Once again the working people and the youth are being forced to foot the bill for the recession, while the wealthiest Americans and the top corporations are paying the least amount of taxes in history. Enron, for example, paid zero taxes between 1999 and 2002. In 1945, revenue from taxes on corporations as a percentage of GDP was at 7.2 percent. By 1969 this had fallen to 3.9 percent. In 1979 it was at just 2.6 percent, and today it is half that at 1.3 percent. The myth that the poor do not pay their “fair share” of taxes is also a sham as can be seen in this chart of taxes as percentage of total income:

And yet, every state of the union except New Mexico and Wyoming is currently in fiscal crisis. The Democratic and Republican Governors and Legislatures alike have targeted welfare and educational programs for elimination. Many states have also warned of layoffs, while others are either already laying many workers off or forcing furloughs on others. California Governor Grey Davis has proposed to cut more than $5 billion over a period of 18 months. $10.2 billion has also been slated for "adjustment" over a longer period, and was announced in December. Public transportation, education, local government and state employees’ pensions will absorb the largest reductions. In addition to cuts, the state is shifting a large part of the debt onto local governments. Between December and June over 60,000 welfare recipients are due to be thrown off assistance under the "Time Out" policy, a number which may very well be swelled if the Democrat Davis decides to slash the state’s welfare programs even further.

Virginia is also undergoing a deep financial crisis, and has laid off 1,800 workers as well as giving out furloughs. Massachusetts is expected to have a $300 million gap, and has slashed 50,000 people off of the welfare rolls. In Oregon and Kentucky, minor felons are being released from the city and county jails to trim costs. Iowa has already furloughed 3,400 state employees. Illinois faces a $4.8 billion deficit, and has frozen hiring as well as all infrastructure projects. However, nearly every state has made the same decision – that police, prisons and the National Guard will come before education, welfare and state employees’ pensions and paychecks when it comes time to make cuts. Even so, one in four cities have had to cut their police forces at a time when crime is rising and hysteria over terrorist attacks is rampant. Despite the fact that tens of thousands of working poor were already eliminated from welfare under the Clinton Administration, and in a country with the highest percentage of its population in prison, this budget crisis can mean nothing other than even wider cuts to the millions who depend on public assistance to survive.

The Federal government projects record deficits of $304 billion this year and $307 billion next year. This is a disaster waiting to happen, especially in light of the looming retirement of the Baby Boom generation (Americans born between 1946 and 1964), which will place unprecedented demands on the nation's Social Security system. Instead of shoring up and expanding social programs like education and Medicare, Bush proposes tax cuts to the tune of $1.46 trillion, and massive increases in military spending. The latest round of proposed tax cuts have been attacked from all quarters, and even Alan Greenspan and 10 Nobel Prize winners in economics oppose it. Above all it is the working poor and the working class generally which shoulders the burden of taxes – big business simply does not pay very much, and in some cases, they pay nothing at all. On top of this, he has raised the military budget this year by $40 billion to $379 billion, with total military spending of $1.6 trillion over the next 5 years.

All of this adds up to an intensely unstable economic future. This will have and is already having a traumatizing effect on millions of working people who are not used to such uncertainty. Economically, politically, and socially, the stage is set for massive confrontations between the classes. The priorities of the ruling class are clear, and they will do everything in their power to crush the resistance of the working class. The recent confrontations between the ILWU and the PMA, the United Airlines unions and the bosses, the MTA and the government of New York make crystal clear whose side the government is on. The jackboots are on in an effort to smash all remaining power of the unions and to prevent the growth of workers’ solidarity. The only reason they have not been able to make even more vicious attacks is the fear of opening a new war front here at home when they are planning attacks around the world. However, the resistance of the masses and of organized labor has already begun. Although they have had their heads down for decades, the class is fresh and undefeated. The plans of Bush and co will come into a head on collision with the most powerful force on earth – the American working class.

War and the Anti-War Movement

After the relatively quick and easy victory over backwards, semi-feudal Afghanistan (with a little help from the local warlords who were given millions of our tax dollars in cash), the Bush administration has charged into a war on Iraq without seriously thinking through the possible consequences. Iraq vast oil reserves were in oil man-Bush’s sights long before September 11, however, but the terror attacks provided him with a flimsy cover for his predatory war. The US now reserves the right to pre-emptive strikes – in other words, they reserve the right to attack if they even suspect someone is a threat. Ironically, the biggest threat to world peace and the country with the largest reserves of weapons of mass destruction is the United Stated. The US has 4 percent of the world's population, yet more than 25 percent of the world's wealth. We spend 37 percent of the world's total arms expenditure, and produce more than 40 percent of the arms. This is in comparison with Britain, Germany and France with 5 percent each, and Russia with 6 percent. The US has 22,827 nuclear warheads.

The war on Iraq is in effect a message to the world asserting the US's right to invade any country. Since the 17th century there has been a general understanding that one country does not interfere with the internal affairs of any other. In the last ten years, and especially since September 11, the US has thrown these standards of international relations out the window. Brute force is the method of “diplomacy” now used by the US and all imperialists to a greater or lesser degree. But unlike the more far-sighted bourgeois of the past, the arrogant and myopic US ruling class forgets to take into consideration the real class balance of forces. There is an old saying – “let sleeping dogs lie” – in other words if they aren’t bothering you, don’t give them a kick. Bush has done the very opposite - his “Axis of Evil” rhetoric and bellicose posturing has done nothing to increase the peace and stability he promised. Yet the logic of the situation has forced him along this path. As we explained two years ago:

“Bush’s attitude towards the whole of the colonial world is summed up in the recent bombings of Iraq. The entire Middle East is on the verge of revolutionary movement, and US imperialism must make an example of any country which even hints at pursuing its own policies. The degrading and hopeless conditions of life across the Middle East have left the masses with only one option – struggle. Already the Palestinians have begun a magnificent second Intifada, and the ruling classes of Israel, all the Arab nations, and the US are extremely frightened. This explains the extreme brutality used by the Israeli ruling class, and the US’s concern that the violence may spread. The oil in the Middle East is a vital resource for continuing the economic growth of the US, and Bush and his cronies are long-time oil magnates. This will force the US to defend these interests at all costs – up to and including the use of ground troops – regardless of the risk or cost. But as we have already explained, the overwhelming military superiority and public support during the Gulf War will not be easily repeated.

“The coalition of nations enforcing the sanctions on Iraq has begun to break down. Many countries, and in particular Russia and France, whose interests in the region are directly opposed to those of the US have already begun commercial flights and increased oil and other exports to and from Iraq. This will greatly increase tension in the region, and will make a replay of the Gulf War extremely difficult. Even the Arab nations who backed the US during the 1991 conflict are feeling pressure from below not to bow before the interests of imperialism. The Arab masses see the hypocrisy in US foreign policy and their UN fig leaf. Why is it that the barbarous response of the Israeli ruling class and its heavily armed modern army against the unarmed youth of Palestine is ignored? Why is it that Iraq is bombed for allegedly having ‘weapons of mass destruction’, yet Israeli imperialism is allowed to possess over 200 nuclear warheads? There is not one stable regime in the Middle East, yet the US ruling class needs to maintain stability at all costs.

“Over the next four years, the region will be a huge sore spot for Bush’s foreign policy team, and it is no accident that he has selected veterans of the Gulf War for his cabinet.” This has been proven correct almost to the letter.

The emergence of a strong, international anti-war movement even before the war on Iraq begins is of vital significance and importance. It is no exaggeration to say that this war is the most unpopular in modern history. Before the war has begun
there have been more people protesting it in the United States alone than was the case at the height of the anti- Vietnam War demonstrations during the 1960s and 70s. We should also remember that it took years for that movement to achieve mass proportions. It reflects a deep-seated discontent with the status quo, and a profound distrust of the representatives of the ruling class – the representatives of world capitalism. Our task is to sharpen and clarify the class issues in the movement, and to involve greater numbers and wider layers of the population in active participation against imperialist war and the capitalist system itself. Under capitalism wars are waged for markets, raw materials and spheres of interest. The Bush regime is simply an extreme expression of the inevitable logic of capitalism.

So where did the anti-war movement come from? The anti-globalization movement which emerged at the 1999 Seattle demonstrations movement has been largely subsumed into the broader anti-war movement. The anti-globalization forces were fairly heterogeneous in nature, but still were made up mostly of middle class youth and other activists. The increasing involvement of the working class and the unions was a positive development, and one which we encouraged. However, after the shock of September 11, the movement had its head down for a time. A period of national mourning and calls for “unity” - in reality a call for the calling off of the class struggle for the duration of the perpetual “war on terror” - dampened the movement. Attacks on the trade unions increased, most notably with the ILWU lockout, and extremely racist and anti-democratic legislation was passed with hardly a murmur from the masses - the Patriot Act and the Homeland Security Department are a terrible threat to the democratic rights we have come to take for granted. Many feared that the movement was dead and that Bush would succeed in forcing through his ultra-reactionary agenda. Yet we predicted that this situation would not last, and were absolutely correct. The anti-war movement which has emerged is far broader than ever before, and has been embraced by all segments of the population.

The capitalist system offers the working class only war, instability, decreasing quality of life, and terror. It is inevitable that at a certain stage they fight back. Already the masses have begun to realize that the situation here at home is worsening by the day, with no way out in sight. The threat of war with Iraq has served as a catalyst to bring to the surface a mood of intense dissatisfaction that has been simmering beneath the surface for years. Tens of millions have taken to the streets in a call for peace. This marks the beginning of a sea change in the mood of American society. And within this process many are very open to the genuine ideas of socialism. There is a logic in this. To challenge the capitalists in their war plans is to challenge them on a key issue relating to the very nature of the system.

We must explain that capitalism means war – a world of peace and plenty is simply impossible on the basis of this economic system. As Lenin said, “whoever wants a lasting and democratic peace must be in favor of civil war against the governments and the bourgeoisie.” However, to state this ABC of Marxism is not enough. Our transitional demands and slogans must connect with the real situation of the masses. They must reflect and accelerate the growing class-consciousness and internationalism of the working class. This is what the sects do not understand, and what we must continue to pay close attention to.

The recent demonstrations were not made up of just the activists of the anti-globalization movement – literally every segment in American society was represented - from immigrant rights groups to artists and musicians, housewives to nuns, trade union locals to veterans of the Gulf War. Even many representatives of big business, retired military officers, and other conservatives oppose the folly of this war – out of fear of the consequences. For hundreds of thousands of people, this was the first time they had marched on a demonstration. These protests signify the beginnings of the awakening of the masses to political life. And in the beginning there is always an element of naivety. Although there was a layer that was open to socialist ideas, it was also true that hundreds of thousands of people were there to say no to the war, without having drawn all the necessary conclusions about the nature of society we live in. The full seriousness of the situation has not yet dawned on them. The mass demonstrations must therefore not be the end but the beginning of a mass movement against the war. The Marxists will be in the front ranks of this movement, but will strive to fill it with an anti-imperialist and anti-capitalist content and link it firmly with the labor movement. There is a mood of growing anger. But it is not enough to simply “send a message” to GW Bush in a demonstration that the day after tomorrow can be forgotten. We must carry this struggle into our workplaces, schools, universities, and discuss it with our friends and neighbors, family and co-workers.

The very broad sweep of the movement in its early stages is itself both a strength and a weakness. Honest illusions in the UN and “peace” in the abstract are inevitable at this stage. We must patiently explain the class interests involved in this war to these people. As Lenin explained, “the sentiments of the masses in favor of peace often express incipient protest, anger and consciousness of the reactionary character of the war. It is the duty of all [Marxists] to utilize these sentiments.”

We need to build off of this point of agreement, and raise the political level of the protests. Yes, we agree that we want peace and are against this war of conquest and oppression. However, more concretely, we must ask the following types of questions: how can we achieve a genuine, lasting peace? Can the billionaire Democrats and Republicans, both representatives of the capitalist class, who armed and financed Saddam and Bin Laden in the first place be trusted to “liberate” Iraq or any other country? Do the big business-backed politicians who are currently attacking our standards of living really represent the American people? It is necessary to explain that this war, like every other modern war, is a direct consequence of capitalism, and that therefore the struggle against war can only succeed if it becomes transformed into a struggle against capitalism on a world scale.

Bush and his administration have openly scorned the anti-war demonstrations, and insist they will not affect their decision to attack Iraq. They ignore the lessons of Vietnam at their own peril. They are so filled with arrogant confidence in their ability to dictate their terms and conditions to anyone and everyone that they are forgetting about the most powerful force on earth - the working class. Even the New York Times is nervous about the already growing dissent:

“Mr. Bush and his war cabinet would be wise to see the demonstrators as a clear sign that noticeable numbers of Americans no longer feel obliged to salute the administration's plans because of the shock of Sept. 11 and that many harbor serious doubts about his march toward war. The protesters are raising some nuanced questions in the name of patriotism about the premises, cost and aftermath of the war the president is contemplating. Millions of Americans who did not march share the concerns and have yet to hear Mr. Bush make a persuasive case that combat operations are the only way to respond to Saddam Hussein.”

Mass action is important but in itself insufficient. To leave the mass movement at the level of spontaneity, to confine ourselves to general appeals for peace, to accept the lowest common denominator in the name of false “unity” would be to condemn it to sterility. It is necessary to set out from the present level and the immediate demands, but to take the movement forward. We must prepare new demonstrations, mass meetings, days of action, and wherever possible, protest strikes. But above all we must organize a serious campaign of explanation. Our task is on the one hand to broaden and deepen the movement, but also to raise the political level and raise socialist and class demands.

The participation at this early stage of the working class generally, and the trade unions in particularly is very encouraging. In the words of Jerry Zero, President of Teamsters Local 705 in Chicago, “it’s early, it’s very early, no military action has started yet, and people are really organizing against this thing. People don’t trust politicians as much as they used to. We’ve been saying we know they have this stuff – weapons of mass destruction – yet we don’t direct the inspectors to it…. And we have supported Iraq in the past against Iran. It’s hard to explain to a factory worker how that is.”

The US Labor Against the War conference was called and hosted by the 20,500 member Local 705 of the Teamsters Union in Chicago. This union voted 402-1 in favor of a resolution declaring its opposition to the war. This is the second largest local of the Teamsters. Their resolution adopted a strong class position. To quote the resolution, “we value the lives of our sons and daughters, brothers and sisters, more than Bush’s control of Middle East oil profits”, and “we have no quarrel with the ordinary working class men, women and children of Iraq who will suffer the most in any war.”

Members of the union, which include truck drivers and UPS workers, have posted copies of their resolution at every workplace and garage of their local, as well as around the Chicago area. On opening the conference, Jerry Zero commented “our membership is split 50/50. Fifty-percent don’t believe a thing President Bush says, and fifty percent think he’s a liar.” This is a big event - the Teamsters Union is widely seen as one of the most conservative unions and its national leadership has actively supported the Bush Administration for the last three years. During the Persian Gulf War of 1991, then AFL-CIO President Lane Kirkland publicly expressed his support to President Bush (the First) not once, but twice. What a difference twelve years makes! From the public enthusiasm and total support of Labor for war just a decade ago, we are now seeing broad opposition and a wide lack of support from Labor for a war that hasn’t even begun yet!

San Francisco, one of the main points of attack by the bosses and Bush on the ILWU longshoremen, has seen big developments in terms of working class involvement in the anti-war movement. January 25th saw fifty Bay Area unions participating in another huge anti-war march, effectively drawing the 558,000 strong San Francisco-Bay Area AFL-CIO into the movement. They marched under several banners, one of which said “Stop Bush’s War on Working People Here and Abroad.” On February 16, there was also a demonstration of some 150,000 people, with a solid trade union presence. After three years of recession and two years of the “War on Terror,” working people are beginning to make the connection between the domestic and foreign policies of the ruling class – they are one and the same.

The Los Angeles County Federation of Labor has adopted a strong anti-war resolution, this time with zero opposing votes. The resolution cited the redirection of funds from education and social welfare to war expenses; the denial of the right to join a union for the 50,000 plus workers in the Homeland Security Department; the shrinking economy; and the curtailment of the rights of foreign-born citizens and legal aliens (non-citizens) under the USA Patriot Act. This large trade union body also resolved to fully commit itself to joining with other trade union bodies and community groups in publicly demonstrating against Mr. Bush’s drive for war. In Texas, the Department of Labor has censored the AFSCME newsletter of the National Council of Field Labor Locals for what was relatively mild criticism and for including items covering the decision of the administration to privatize over 125,000 federal jobs.

Local, state, and national organizations representing 13 million workers around the country have recently adopted resolutions criticizing military intervention in the Middle East. Never before has Labor become so involved in the anti-war movement, let alone before a war has actually begun! After 30 years of relative dormancy, the US Labor Movement is heating up to an extent that has never been seen before on a national scale. The heavy battalions of the US working class are entering into conflict, not for Bush’s war but against it. The example of the Motherwell train drivers in Scotland, who refused to move ammunition between Glasgow and the Glen Douglas weapons dump should be held up high as an example. If the working class refuses to prepare for the war, the war cannot go on! Were all the longshoremen in the US (there are only a few thousand nationally) to refuse to load ships with munitions, equipment, and supplies, the war machine would grind to a standstill. The massive CGIL union in Italy, and several major British trade unions have threatened a general strike in the event of war. These are the sorts of decisive actions that are required! Only the class war can stop the imperialist war!

The best-case scenario for Bush would be a swift, relatively painless victory over Iraq. This is the variable he most desires, for it would bolster his chances in the 2004 presidential election – but in the complex equation of war, it is impossible to know for sure how things will pan out. Donald Rumsfeld now claims that the US could easily defeat both Iraq and North Korea. This is highly doubtful, but what is important to keep in mind is that even if this were possible, what comes next? Bush has initiated a perpetual war on anyone and everyone – but this can only go so far. The US is not Sparta – its population is not prepared to be in an indefinite state of siege and war - and the fate of that Greek city-state is a warning to those who would attempt to wage endless wars. Sooner or later this must reach a limit, either through military catastrophe or because of the already rapidly developing anti-war and increasingly militant labor movements.

Combine this with the economy, the constant warnings, paranoia, and uncertainty over possible terror attacks, and the American psyche is in no condition to be on a constant war footing. After all, we were promised peace and prosperity, and for a generation it seemed to many that it was possible. The American dream and the promise of a “Pax Americana” have been reduced to dust. Even many representatives of big business and the military are warning against the consequences of a war on Iraq. Norman Schwarzkopf and other generals who oversaw the first Gulf War are opposed. Warning that the war will stymie investment and put a damper on the economy and stock markets, a number of high-profile CEOs and business groups have warned against the war. Of course, these more far-sighted and calculating representatives of capital are no pacifists or humanitarians, but they can sense danger and recklessness when they see it. Even the papacy has come out strongly against the war (although they were happy to turn a blind eye to fascism in and World War II).

Despite its crushing military preeminence on paper, the “world’s policeman” cannot rampage at will across the entire globe forever. At a certain stage it will be confronted by the might of the US and world working class, and in fact, this has already begun. The analogy with the over-extended, collapsing Roman Empire cannot be avoided. In a period of globalized instability, this will not be the only crisis to confront the US ruling class. The masses must use this instability to overthrow the capitalist system once and for all. As we explained two years ago:

“George Bush is severely under-qualified to deal with the events unfolding on a world scale. Conflict after conflict will develop so rapidly in the coming period that he will be like the little Dutch boy trying desperately to plug the holes in the dam with his fingers, in order to stop the torrential floodwaters on the other side from breaking through. Economic considerations within the US will also play a large role in Bush’s foreign policy. Already the US economy is showing signs of weakening, and the Federal Reserve has drastically reduced interest rates in an effort to avoid a slowdown – but this will only cause further problems down the line. The danger of inflation is still very real in the short-term, and Alan Greenspan may have acted too rashly in lowering interest rates so drastically. But he had no other choice – once consumer and investor confidence drops, it will be over for the boom. Already consumer confidence is at its lowest level in years, and the stock market has lost a lot of ground in spite of the recent, temporary recovery. The massive foreign trade deficit will eventually affect policy decisions as well as the protectionists and free-trade advocates battle for supremacy within the US ruling class.

“Economic rivalry with Europe and Japan will also continue to intensify as the world economy slides deeper into slump and the scramble for markets intensifies. So how can we in the United States fight against the aggression of US imperialism abroad? Only the US working class allied with its brothers and sisters around the world can put an end to the arrogant policies of the imperialists. Foreign policy is an extension of domestic policy, and the attacks on the workers of the world are just an extension of the attacks on the American working class. The fight against imperialism abroad starts right here with the working class, who have no interest in oppressing the workers of any other nation. As Marx explained, the “workers have no country”. Building up the forces of genuine Marxism with roots in the labor movement is the only way forward for the workers of the US and the world.”

The mass demonstrations show that there are already the beginnings of a worldwide movement against imperialism. This fact should fill us with optimism. But the key to ultimate victory is the international unity of the revolutionary proletarian vanguard. The anti-war movement must be armed with the ideas, program and policies of Marxism! It is this, and this alone, that can guarantee victory. Our task is to unite all the forces of genuine Marxism and build a worldwide movement on the unshakable foundations of socialist internationalism!

The US Political Situation – Election 2002 / 2004

Following the post-election debacle in 2000, and the surprising (to some) Republican advances in 2002, the presidential election of 2004 promises to be more complex and interesting than any US election in decades. Underlying this is the deteriorating economy and the uncertainty of war and terrorism as explained above. Bush and his camarilla hope to retain the presidency for their pals in the ruling class, and the Democrats seek to obtain that office for their pals in the ruling class. At this stage it is really impossible to say what the outcome will be, but what we can do is examine the class interests and political parties involved. As we explained last year, from a class perspective, nothing much would change during the 2002 mid-term elections:

“The Republicans may ride Bush’s popularity wave to gain some seats and regain complete control over Congress. On the other hand, the Democrats may come out in cautious but vocal opposition on secondary social concerns and the economy and make some gains. Either way, one of the capitalist parties will continue to dominate the political life and institutions of the US. The Democrats showed their true colors after Bush’s election, approving every one of his cabinet appointees, and putting up little resistance to his anti-worker policies. After September 11, when 99 percent of them rallied to the calls for national unity and supported the open-ended war on terrorism and the invasion of Afghanistan, it was nearly impossible to tell Republicans and Democrats apart. While the Green Party and other small coalitions may make some gains in local elections, there will be little national attention for the smaller parties.

“It will not be until the 2004 Presidential election that the political climate in the US really heats up, with revived memories of the 2000 debacle. A lot can happen in two years, but we can be sure that events globally and domestically will continue to be unstable and convulsive. In a situation like this, people’s moods can change very quickly. It bears mentioning that in spite of the victorious Gulf War, President Bush’s father lost the presidential election only months later during the last ‘jobless recovery’.”

The result was a sweeping victory by Bush’s party. In many ways, the 2002 election was a referendum on Bush's government so far. It was a vote “for” or “against” his policies at home and abroad. Bush was able to maintain the post-September 11 momentum to make some gains. However, these advances do not in any way mean that he was given a popular mandate. There are many reasons which contributed to this outcome, but the fundamental blame lies on the Democratic Party and trade union bureaucracy for not offering a genuine alternative. Many people underestimated just how degenerate and craven the Democratic Party has become. Yet in the short months since the election, the mood has already shifted dramatically. On the issue of the war and the economy, opposition is rapidly increasing.

It often appears that in our “two party system”, the pendulum swings endlessly back and forth between the “right” Republicans, and the “left” Democrats. On the surface this seems true – without any real alternatives, many votes are often votes "against" one party to the benefit of the other party who actually has a chance to win. But this is not a simple, mechanical process. This process does not proceed linearly, but is affected by all sorts of factors – the economy, the media, the world situation, etc. The fortunes and leadership of the capitalist parties are in the final analysis a reflection of the conditions of the capitalist system itself. When capitalism in the US was still a mighty force for the development of the means of production, the Republicans gave us Abraham Lincoln. When after WWII the US was the master of the capitalist world, riding the greatest economic boom in history, the Democrats produced John F. Kennedy and Lyndon B. Johnson. True, these men were defenders of capitalism just as their counterparts are today, but these were men of a certain resolve, vision, and character (at least from their class point of view), who could at least run their own system. A far cry from the semi-literate Bush and the incompetent Gore! The quality of the political leadership of the ruling class is a reflection of the quality of their declining system – corrupt, ignorant, lazy, and lackluster.

As we explained in US Perspectives 2002: “Disillusionment with the two bourgeois parties is evidenced by the dismal voter turnout and the nearly identical poll results of the last presidential election, when neither party was able to distinguish itself enough to gain the vote of a clear majority of the population… Had Al Gore simply promised to raise the minimum wage, repeal anti-worker legislation, implement a nationalized health care system, massively fund public education, etc. he would have won the overwhelming support of workers across America. But he was unable to do any of this, tied as he is to the capitalist class. Instead he parroted the positions of George W. Bush, and ended up losing the election through a combination of stupidity and less than democratic ballot counting and behind the scenes maneuvers, losing even in states where he should have won hands down.”

Millions of people have literally ceased to be seriously counted as potential voters, as the hue and cry about third-party candidates like Nader “stealing votes” shows. When Democrats and Republicans lose elections, they often blame third-party candidates for "taking away votes from them". No matter that there are millions of other eligible voters from which to gain support - they see the election as an effort to win a majority out of just 40-50 percent of the population. This shows that the vast majority of the population does not see a real alternative, and that when the media talks about “the issues which concern voters”, they are speaking only of a small segment of society – generally the better-off layers who have the time and money to worry about this sort of thing.

Along with the homogenization of the two main capitalist parties, which on all fundamental issues are in agreement, there is an increasing polarization in society generally between those who believe in the system, and feel that the traditional parties can make a difference in their lives, and those who increasingly feel disenfranchised, marginalized, and disillusioned with the entire system. It is just a fraction of the 40-50 percent of the eligible electorate who vote which is deciding who will control the government.

As Marxists we have no illusions whatsoever in the Democratic Party which presents itself as the “kinder gentler” face of US capitalism. They are tied hand and foot to the capitalist class, and will never represent the interests of working people. They may put up resistance on various issues of minor importance, but they will never in a million years side against capital in favor of the working class. They operate entirely within the boundaries of bourgeois democracy – that is, democracy for the rich and powerful. This so-called "center of the road" is in fact a toll road controlled by the capitalist class. Ultimately they wholeheartedly endorse the capitalist system, and serve only to deceive the masses with the illusion that things can improve under this economic system. The Democrats have moved so far to the “center” (not that they were ever very far to the left), that they are indistinguishable from their supposed ideological opponents. Even ultra-Democrat James Carvel maintains that during the 2002 campaign, they did not differentiate themselves from the Republicans in any way. If you are one of the few people who actually voted, why bother voting for the “opposition” when their politics are virtually the same as those already in power? As the saying goes, why change horses in midstream? Both are for the “war on terror” and Iraq, are marionettes of the capitalist class and support corporate welfare with no mention of universal healthcare, etc. Bush is doing a fine job at pursuing the war (a lot of bellicose talk with few casualties as of yet), so why not let him and his party get on with it and see how things go?

However, despite their current ineptitude, and the fact that the masses in effect rejected them this election, the Democrats remain a powerful tool for the ruling class. In the absence of a traditional party of labor, the ruling class will try to use the Democrats and their historic connection with the AFL-CIO to derail any movement of the workers. At the present time, however, it appears that the ruling class prefers to use the much more overtly aggressive policies of Bush and his clique. But this will not last for very long. What the ruling class fails to take into consideration at this point is the fact that the American working class is still fresh and undefeated – they will move at a certain stage. There is tremendous discontent beneath the surface. This is what they did with Bill Clinton, when dissatisfaction with the Reagan years was growing. It is true that historically, due to pressure from the masses and on the basis of the post-war economic boom the Democrats were forced to grant some concessions to the working class. They lived off this reputation for decades, but their true face has now been shown, with Clinton passing some of the most anti-working class legislation in decades. He did the dirty work for the capitalist class - albeit with a charming smile on his face. Although their reputation is now in a shambles, their fortunes will be revived for a time at a certain stage when the capitalists can no longer rule openly through Bush and co.

In what is essentially a one party system with two different faces, it is inevitable that there will be a swing back to the Democrats in the future. But that won't last long either. Lenin was fond of saying that “life teaches”. Most people do not learn from books or theory, but from the school of hard knocks. And there are plenty of hard knocks in store for the working class as long as capitalism is allowed to continue. In the convulsive period which we have entered on a world scale, there are massive shocks and changes being prepared, especially in the heart of world capitalism. The monotonous swinging back and forth between the two parties is coming to an end. Sudden, sharp changes are on the order of the day.

Most working people do not like Bush and the Republicans, but they don't like what the Democrats have to offer either. Millions do not really believe the old “worker friendly” lie any longer, and expressed their discontent by staying away from the polls in 2002. But all the same, Democrats ended with half the governorships, including those in the large industrial states of Illinois, Michigan and Pennsylvania. They also held onto the governorship in California, the nation’s most populous state, despite polls showing Gov. Gray Davis was highly unpopular. This shows that in many urban areas, despite the continued betrayals of the Democrats, the masses are still not about to let the Bush clique gain more power. It is interesting also to recall the example of Jesse Ventura's gubernatorial victory in Minnesota in 1998. When presented with what at least on the surface appeared to be a real change from the run of the mill “Republicrat” candidates, voter turnout was over 60 percent, and he won in what was then an astonishing upset. So the question we must ask ourselves is, what kind of alternative are the masses looking for?

Clearly, the working class is looking for a class solution to their problems. But the media does everything in its power to avoid the issue of jobs, healthcare, education, etc. When they do mention healthcare, it is in the context of helping seniors buy their prescription drugs more cheaply – never is there any serious mention of a universal health plan. When they discuss jobs, they skirt the issue that over 2,000,000 have been lost since Bush took over. They relentlessly focus on the war on terror and Iraq, tax cuts, and “Joe Millionaire”.

What is needed then is a clear lead – a class analysis of the problems facing working people, and a concrete plan of action. The trade union leadership does not help the situation at all by clinging to their traditional support of the Democrats, and some unions have even supported the Republicans! In the struggle between the PMA and the ILWU dockworkers, the only political guidance the workers were given by their “leaders” was to vote Democrat! Never mind that California Democrat Diane Feinstein was actually encouraging Bush to invoke the anti-worker Taft-Hartley Act against the locked out workers (note – they were not even on strike but had been locked out by the bosses). Why? Because her husband is in the shipping business. What working people need is a clear class alternative which unambiguously poses the question of workers' control over the running of society – let those who produce the wealth, democratically decide what to do with that wealth. What is needed is a mass party of labor armed with a program for the socialist transformation of society.

So why is there no such alternative at this point in time? Last year we discussed the perspectives for a Labor Party, the Green Party, and the trade union movement. Everyone should re-read this document for the background to this issue; this year we will look at how third-parties fared in the mid term elections and their prospects for 2004. Election 2002 was a harsh reminder to the aspiring 3rd parties that in American politics, “money talks”. Libertarians, Greens, Independence and other third party candidates were on the ballot across the nation. In the state legislatures, third party and independent candidates are seeking about a fifth of the seats up for election - the largest number since the 1930s, according to Ballot Access News, which tracks third party candidates. The Green Party alone fielded 160 legislative candidates, more than double from past years. But the result was disheartening for all. As we predicted, some very minor gains were made at the local level, but overall, it was a disappointment. In some states the Greens lost the major-party status they worked so hard for during the Nader campaign in 2000.

Aside from lacking funding and resources, the lack of a clear class program damages the efforts of even the most well-intentioned and energetic Greens. Most people in this country are workers, and it is above all to the workers that a successful third party needs to speak. As for the current Labor Party, it has not yet run candidates, and is quickly withering on the vine due to inactivity. Only in the course of bitter class struggle will a mass third party emerge. And to succeed, it must be made up of the only force which can shake loose the stranglehold of the capitalist parties - the working class generally and the trade unions in particular. Workers do not seek political change on a whim – they need to feel that their political involvement will make a real and lasting change. They will only endorse a third party on a mass scale when they are presented with a program which truly addresses their needs and aspirations, and when they feel their existing options have been exhausted.

This feeling of a lack of options is more and more becoming the case, as the mid-term election results showed – the Democrats were largely abandoned, and third parties did not get much of an echo either. Most people do not want to simply “make a statement” by voting for a minor third party. The third-party alternatives in their present form will simply never be able to march gradually towards greater and greater political clout. Big shocks and changes will be needed for change – revolutionary change – and the masses are not yet sure what political path to take. But events will force them to make a choice, and in the prolonged process which will be the American socialist revolution, we must work energetically to provide a genuinely revolutionary alternative.

President Bush had a job approval of 67 percent headed into the midterm elections, which was good news for those associated with him. He may have been riding a wave of popularity a few months ago, but it has steadily declined since then, and now that he has consolidated his power in the Congress, people are looking for concrete improvements in their lives under his governance. So far this has not happened. Al Qaeda and Bin Laden pose as big a threat as before September 11, the economy is on the verge of a dip back into recession, and tensions over war with Iraq have rattled everyone’s nerves as friends and family are shipped off to an uncertain future. People's consciousness will change very quickly in the years ahead. Let's not forget the example of the pioneering American Trotskyist Farrell Dobbs who went from voting Republican one year, straight to revolutionary Marxism! Or the ignominious defeat handed to GW Bush's father just months after the presiding over the generally popular Gulf War. The anti-war movement is an indication of the beginnings of a mass awakening to political consciousness – an ominous portent for the future rule of US capitalism.

Next year there will be a presidential election. Already the Democrats are lining up to oppose GW Bush who will undoubtedly be the Republican candidate unless the war on Iraq or some other unforeseeable event goes incredibly awry. Immediately after the 2002 elections, we predicted that: “The Democrats will now try and pose more to the “left” – to try and differentiate themselves from their Republican counterparts. We must work to dispel all illusions people may have in them! We must never forget that these parties are just two sides of the same capitalist coin. It is the duty of the trade union leaders to break with them and provide a real alternative. It will be easier for the Democrats to pretend to be in opposition now that they have less control over government. By the same token, in 2004 Bush will be held fully responsible for all that happens between now and then. The fruits of victory are his for now, but those fruits may be rotted and infested with maggots in two years' time. The one constant in life and politics is that things change all the time – it is guaranteed that things in 2004 will be completely different.”

Although in the immediate aftermath of their political rout, they blamed themselves for not being conservative enough, signs are emerging that many Democrats are doing precisely what we predicted. Conditions determine consciousness, and the world crisis of capitalism affects the ruling class first of all. Some of them are inevitably looking back to the “progressive” Democrats of old - FDR, LBJ, and JFK. Although much of this is pure demagogy, some of them may even be sincere in their desire to improve the state of the economy and the conditions of working people. Much of this is a result of pressure and discontent from below – the working class is demanding that the so-called “friends of labor” deliver on their endless speeches. But the bottom line is that their class interests are directly opposed to those of the working class. They would like a “nicer” capitalism – not the end of this exploitative and oppressive system once and for all. Should one of the Democratic demagogues win the presidency (and in the current conditions it is almost inevitable they will at some point), they will be unable to deliver even a tenth of what they promise. The only real alternative for working people is to build up a genuine class-based opposition to the capitalist parties.

Those seeking the Democratic nomination in 2004 include some of the usual suspects: from the ultra-right “I wish I could be a Republican” Senator Joe Lieberman from Connecticut, to the perennial “moderate” Representative Richard Gephardt of Missouri. Also running are Senators John Edwards of North Carolina, John Kerry of Massachusetts. Along with Gephardt who hopes to create “I’m a working class kinda guy” image for himself, there are also a number of candidates who are making a serious attempt to sound and appear more “left” – though of course none of them will ever transcend the narrow boundaries of capitalism. They hope to play a role similar to that of FDR in the 1930s. Let us be clear – although FDR’s New Deal is hailed by many as a giant step forward for the working class, the fact of the matter is that FDR saved US capitalism which was seriously threatened with overthrow. Instead of propping it up with limited reforms and militarily-oriented partial nationalizations, all the energy of the working class and its political and trade union organizations should have been focused on ending the system altogether.

Former Vermont governor Howard Dean, who claims he would have voted against authorizing the use of force in Iraq had he been in office, is considered “progressive” and is supported at this early stage by the quickly-shifting-towards-the-“center” Michael Moore. Dean’s opposition to the war, like that of most anti-Iraq war Democrats, is not a genuine opposition, but an opportunistic one based on the desire to focus rather on the “war on terror”. In his own words, “what happened to the war against al-Qaida? Why has this administration taken us so far off track?” He believes it is his “patriotic duty to urge a different path to protecting America's security.” He has said he would be prepared to fight Iraq, even unilaterally, if it posed an imminent threat. Dean criticized Bush for “go-it-alone” policies that he said are reckless and have damaged relationships with long-standing allies. In other words, a war on Iraq is wholly justified if the UN supports it, and if we first “win” the war on terror – which in practice means more assassinations, more bombing of civilians in Afghanistan, and more surveillance of Americans. The root causes of terrorism – poverty, ignorance, oppression, and desperation are never targeted for the simple fact that there is absolutely no solution to these problems under capitalism. The billions of dollars spent so far on the “war on terror” would have gone very far towards feeding, clothing, educating, and providing a real future for millions of people in the US and around the world.

Civil rights activist Al Sharpton of New York is also making a run. His platform will surely include demagogy meant to attract black voters, and he is also criticizing Bush’s war hysteria. However, like Dean, he also focuses on the fact that the US has yet to capture the top leaders of Al Qaeda. At a recent speech he said: “In his State of the Union speech after Sept. 11 the president said we've got to get bin Laden. So where is he? At least you'd think he'd tell us by February 2003 why we don't have bin Laden. How can the CIA and all the intelligence agencies not find one man hiding in a cave in Afghanistan?” Instead of focusing on real class issues affecting blacks and all workers, he makes jokes, saying that Bush wants to go after Saddam because he “offended [Bush's] daddy 20 years ago.” This may elicit a lot of laughs, but it isn’t much of a program to improve the conditions of life of millions of workers of all races!

Candidate Carol Moseley-Braun, the first black woman elected to the Senate, said she would emphasize her opposition to war with Iraq and campaign on domestic issues, including the struggling U.S. economy. According to her, her campaign could be summarized as one promising “peace, prosperity and progress.” However, he real class interests are clear. Not only is she running as a member of the big-business Democratic Party, but while she was in office, she went once to Nigeria to meet with that great friend of black workers the world over, Sani Abacha, the late military dictator. She and Sharpton are expected to help “energize” black voters – something they need badly after the results of the mid-term election.

Sen. Bob Graham of Florida, the former chairman of the Senate Intelligence Committee and past governor of Florida, who also voted against the Iraq resolution (for reasons similar to Dean and the rest), has entered the race as well.

Representative Dennis Kucinich of Ohio has made a name for himself as a “liberal hero” for his opposition to the wars on Afghanistan and Iraq, and in defense of civil liberties under attack since September 11 (he correctly considers that the Patriot Act, meant to fight terrorism at home, effectively cancels half the Bill of Rights). He is the chairman of the Congressional Progressive Caucus and a longtime advocate of a “Department of Peace”. According to him, “Someone has to get into this race and say, “Hold it, things are out of control. We must have a fundamental shift in direction.’ This isn't about trimming issues at the edges. I'm looking to present a dramatic choice for Democrats, one that reconnects us with the soul and passion of our party.” Despite his lack of money and experience, many political analysts think he could lightning rod to mobilize anti-war, social-justice liberals. Kucinich says he is “running like FDR in 1932.” His platform includes full employment, national health insurance, canceling international free-trade agreements that he says hurt labor and restoring America “as a beneficent force in the world.” Stressing a populist economic agenda that includes universal health care, repeal of the North American Free Trade Agreement and elimination of Bush’s tax cuts, Kucinich says he would be a “people's president.”

The danger posed by such “left” candidates is clear. These bourgeois candidates can and will blur class lines by posing as “the African-Americans’ candidate”, the “women’s candidate”, and the “people’s candidate”. They can foster illusions that capitalism can be reformed gradually into a “kinder, gentler” system, when in reality, the entire history of the capitalist system proves precisely the opposite. To offer universal healthcare, jobs, and increased labor rights and protection is all well and good, but the fact is that under the present system, and especially in view of the current world economic crisis it is an absolute impossibility. As we have explained, most of those who oppose the attack on Iraq do so because the “war on terror” isn’t over yet – in other words, they want to spend billions on that and on the farcical department of “Homeland Security” instead. They shift anti-war sentiment from real issues of imperialism and the class struggle and foment illusions in the UN. They can serve to siphon off steam from the growing movement of opposition (which in the final analysis is opposition to the capitalist system), and are trying to appeal to the labor movement which they have betrayed continually.

Unlike the post-WWII period of relative prosperity and economic stability, the Democratic Party is no longer able to fulfill its liberal promises to protect social welfare, job security or Social Security. There are simply no more “Great Society” or “New Deal” programs on the horizon, no matter what they say. So why does the leadership of the US’s trade unions still insist on doggedly standing by a party that for the past 20 years has stabbed American workers in the back at every opportunity? Part of the answer is obvious - they are getting along very well in life by balancing between the workers they are supposed to represent, and the bosses whose real interests they often serve. Despite having the political and financial backing of the AFL-CIO with its millions of union members, the Democrat’s real constituency reside in the corporate boardrooms of the USA. (See US Perspectives 2002 for more historical background on this)

In the mid-term election cycle the AFL-CIO contributed over $35 million towards Democratic candidates, not counting the money donated by individual unions. The AFSCME (State and Federal employees) alone gave $16 million. In addition to financial backing, the AFL-CIO as well as union locals provided thousands of volunteers for canvassing and in phone banks, TV commercials and mass mailings to members. Yet not only did the Democrats suffer a defeat, they did not even campaign on labor-friendly issues. Once again, for the millionth time, the trade unions (the leadership at least) gave their wholehearted support to the Democratic Party only to have these rats swindle them - again. Now some Democrats have changed their tune, and we must explain to the workers that this is an opportunistic turn of heart.

Gerald McEntee, the President of AFSCME and also director of the AFL-CIO’s political efforts since 1995, said in an interview with the St. Louis Post-Dispatch “I think the Democrats sell themselves short on those issues [economic issues], and they should be consistently and almost constantly trying to force the administration to discuss those issues. They stayed back too long.” Well, either Mr. McEntee is extremely naïve or he has a reward in store for him from the Democratic National Committee upon his retirement! The problem is not that the Democrats “sell themselves short” on the issues dear to the working people - they simply don’t share the same class interests. Just because the Democratic coffers are filled with the COPE contributions of the working class doesn’t change the fact that the people who run the Democratic Party are pro-business ex-corporate lawyers and big business people. These are people who will always serve their corporate sponsors before they will even consider the pleas of the AFL-CIO’s political committee, let alone the average worker.

The backing of the Democratic Party by the leading bureaucracy of the AFL-CIO is not only counter-productive, more importantly it is a complete betrayal of the rank and file. The energy and finances of the only mass working class organization in the United States are being sold out to the so-called “liberal” representatives of the capitalist class. This is a situation which is completely in contradiction with the class interests of the American workers. The members of the trade unions are expected to not only hand over most of their lifetime in work to the bosses, but through the actions of their own leadership must give up their political independence as well. The Democrats have already proven in hundreds of incidents that they cannot be trusted to look out for the workers. They refuse to even fulfill one tenth of the meager promises they make. This leaves the Labor Movement only one alternative – a complete declaration of political independence. And what better opportunity exists for such a move than now? The Democratic Party has proved its utter worthlessness as far as the working class is concerned - it cannot oppose Bush on a class basis. Even AFL-CIO President John Sweeney, nominally their best supporter, has been forced to come out in mild criticism of them.

The only political alternative for the US working class and its trade unions is class independence. Signing over our fate to the representatives of the capitalists is a sure recipe for disaster. Only a mass party of labor, based on the trade unions and armed with a program of socialist demands can fight back in the interests of the hundreds of millions of workers in the USA. Only with such a party can the process of falling wages, dropping living standards and shrinking rights be halted. The Democrats will never be capable of this – even in Mr. Sweeney’s wildest dreams. The working class has to become aware of not only its economic power, but its political power as well. It has to be a class by itself and for itself. The only force the working class can trust is itself – its leaders must arise out of the struggle against the bosses, the government, and the labor bureaucracy itself.

As for the Green Party, so far there is no word yet on whether they will run a major presidential campaign, but with Nader praising Kucinich as a “progressive candidate”, it is unlikely he will run again. The potential the Greens had to build the beginnings of a mass alternative to the two bourgeois parties is rapidly dwindling. The Labor Party is also in limbo, and appears to be withering on the vine. Only the involvement of the mass of the working class and the unions can shake up the stranglehold of the two-party system. As explained above, this will require big events – but if the recent past is any indication, big events are on the order of the day.

In 2000 we gave critical support to Nader and the Greens insofar as he represented a step in the right direction – he mobilized large layers of radicalized youth and even received support from some sectors of the labor movement. His campaign was seen by many as the beginning of an attack on the monopoly of political power of the two capitalist parties. By giving critical support we were able to connect with the thousands of people whom he awakened to political activity for the first time, and who had illusions in Nader’s ability to wage a serious struggle against the two party system. However, we reserved the right to criticize him and the Greens for their lack of a genuine class perspective and program, their lack of internationalism, their reformist mentality, and so on. In this way, we could begin our discussions with them around certain points of agreement, and then transitionally move on to discuss the fundamental problem facing humanity - the capitalist system. In the end, due in part to the demonization by the Democrats and the “lesser evil” argument, Nader did not do as well as many had hoped, and was even blamed for “losing” the election for Gore. He has now left the political spotlight, and as we see above, has taken to supporting a “lesser evil” himself!

In view of our critical support for Nader, many people will ask, why don’t we give critical support to someone “progressive” like Kucinich? The answer is clear – Kucinich is seeking the Presidency as the candidate of a capitalist party. There is no such thing as a “progressive bourgeoisie” in the age of imperialism – even less so in the world’s most powerful capitalist country. The progressive historical role of the capitalist class is long finished – they can bring nothing but instability, war, oppression and misery to the people of the world. The only reason they have held on to power so long is due to the crisis of leadership of the working class and the outright betrayal of their “socialist” and “communist” leadership. Due to the absence of experienced and theoretically trained revolutionary parties with a clear class and Marxist perspective, all revolutions since October 1917 have failed. What is needed now is to break the masses and the labor movement from the degenerate Democratic Party – not to foment illusions in them, no matter how “progressive” a candidate may seem.

Any support whatsoever for a candidate of the capitalist Democratic Party would blur the class interests involved, and would be the worst sort of class collaboration. The interests of the capitalist class and the working class are 100 percent opposed, and our task is to increase class-consciousness and unity, not confuse the issue by allowing the possibility that “some” capitalists are “OK”. While we would be more than happy if all the promises of universal healthcare, job creation, cuts in the military budget, repeal of anti-labor laws, and so on came to pass, we must explain that no matter how sincere these candidates are, they are acting only to save the capitalist system. The capitalists have had their chance; on the agenda in the coming period is the overthrow of the capitalist system. We must fight against all illusions in the system and its representatives. In our discussions with the many honest supporters of the Democrats, who in our two-party system gravitate towards the “left”, we must explain the need for class independence and a mass party of working people – there is no solution on a capitalist basis.

However, in the tumultuous years ahead, it is not ruled out that someone like Kucinich could break with the Democrats and run as an independent. In this case, we would have to examine the situation concretely. If this candidate brought with him or her a significant layer of the radicalized youth, attracted the most militant labor activists and unions, and served as a point of reference in breaking the stranglehold of the two capitalist parties, we would have to seriously consider very critical support. Even outside the Democrats, such a candidate could serve to channel discontent along harmless lines, so we would have to continually expose their weaknesses and call on them to break with their class, explaining to their supporters the need for class independence the involvement of the unions, a socialist program, etc. In any case, that is the music of the future – at the present time we must be extremely clear and firm: we can only trust our own class and our own power – no faith in the representatives and parties of the opposing class!

Making predictions in the complex world of electoral politics is difficult, but we can say without any doubt that regardless of who wins in 2004, the interests of the working class will not be served. The campaign