From: Hank Roth <odin@world.std.com>
Subject: Bohmer - Continued Stagnation (Z-Mag)
Followup-To: alt.activism.d
Originator: rich@pencil.cs.missouri.edu
Organization: ?
Date: Mon, 25 Jan 1993 06:58:20 GMT

Typed by: Philip Feeley <pfeeley@unixg.ubc.ca>
<<<  via P_news/p.news >>>

CONTINUED STAGNATION, GROWING INEQUITY
by Peter Bohmer (Z Magazine, Sept. 1992)

     The economic and political collapse of the Soviet Union and 
Eastern Europe has its economic counterpart in the stagnation and 
instability of the U.S. and the wealthier capitalist economies, and 
the economic crisis of Africa, Latin America, and South Asia that is 
killing millions of people and increasing the suffering of many more.  
Although poverty and the inequality of income and wealth are 
growing in the U.S. as are despair, dissatisfaction, and anger, there 
is little organized movement towards a more equal and humane 
system.  Instead capitalism as a superior system and the end of 
history are proclaimed, and the free market is put forward as the 
solution to all problems.  There are few bold, alternate analyses and 
visions, and they do not get a public hearing.
     The current economic recession, as officially defined, which 
began in the United States in July 1990 is possibly over as 
production and consumption have been rising slowly in 1992.  The 
so-called recovery, if it has begun, is weak and is unlikely to 
substantially raise employment or wages.  More importantly, the 
longer run and more significant structural crisis as revealed in the 
high rates of unemployment and underemployment, the stagnation 
of productive investment and productivity, and financial instability 
of the banks and the high levels of corporate and consumer debt 
continues as does the possibility of a depression.  The continuing 
depression of /South-Central Los Angeles, Gary, Indiana and 
Youngstown, Ohio and many parts of the rural U.S. will not end 
with the projected recovery.  The economic depression of the 
African-American, Latina/Latino, and Native American 
communities has persisted for the entire history of the U.S.  So 
have the poverty level earnings of the majority of women.

The American Century
     To understand the current economy, let me sketch the expansion 
and stagnation of U.S. capitalism over the last 50 years.  A Social 
Structure of Accumulation (or environment in which profit-making 
takes place) conducive to high profitability and the accumulation of 
capital was consolidated in the years immediately after World War 
II.  It was based on the United States being the dominant world 
power:  economically, politically, and militarily; together with the 
institutional arrangements that various political economists have 
called the Accord, the non-formal deal between corporate capital, 
the state, and organized labor as junior partner.  Key to its 
functioning was the system of fixed-exchange rates based on the 
dollar known as Bretton-Woods, the warfare-welfare state, anti-
Communist ideology and foreign policy, and a business unionism 
that accepted corporate domination in return for slowly rising 
wages and benefits for its members who were predominantly male.  
The Accord provided a stable environment for capital expansion. 
Output, productivity and investment grew, profit rates were 
substantially higher that the present.
     The so-called American Century was however short lived.  By 
the late 1960s, profits became squeezed by international and 
domestic forces.  The heroic struggle of the Vietnamese people 
weakened U.S. economic dominance.  While the U.S. was fighting 
Vietnam, productivity in Western Europe an Japan grew rapidly 
and they made increasing inroads into domestic U.S. and U.S. 
export markets.  Also spurred by high U.S. demand, third world 
industrial production grew rapidly in a number of countries 
including South Korea, Taiwan, Brazil, and Mexico.  Profits were 
also reduced by the temporary increase of the prices of many raw 
materials exported from the third world.  At home, the struggles 
waged by the Civil Rights and Black Liberation movements and the 
Chicano, anti-Vietnam war, Women's and Environmental and other 
movements, and the interrelated reduction in the unemployment 
rate led to growing worker militancy and higher wages, and 
increased social spending.  The existing social structure of 
accumulation no longer yielded the profit rates corporations were 
accustomed to.  The Accord was forced open to include more 
African Americans and women, and overall income became 
somewhat more equally distributed.  Profits and capitalist control 
over society was also reduced by some restrictions being placed on 
corporate capital's power to pillage the environment.  Legislation 
was also passed in support of worker demands for better safety and 
health conditions at the workplace.

The Silent Depression
     Since the mid-1970s, corporations have changed the rules of the 
game.  The Accord was terminated by corporate America.  There 
has been a planned corporate offensive against labor with organized 
labor still playing by the old rules.  Even the tame business unionism 
of the AFL-CIO is no longer accepted by most of corporate 
America, union membership has fallen from one-third of the labor 
force in 1955 to one-half of that today and is still declining.  
Multinational corporations increasingly contract out production to 
non-union low wage firms outside the U.S., or to those inside the 
U.S. that provide few or no benefits to workforces that are 
disproportionately immigrants, people of color, and women, give 
backs in wages and benefits are demanded even if firms are making 
good profits.  There is increased use of part-time and temporary 
workers who are paid lower wages than the permanent workers.  
Social spending has been slashed.  An economic, ideological, and 
even military war has been declared on the poor, particularly young 
Black and Latino/a men and women.  Corporate taxes have become 
minimal, public employees are laid of or their wages cut, 
regulations limiting the social irresponsibility of corporations are 
weakened through reduced enforcement or by being rewritten more 
favorably for the corporations.  Racism and sexism, e.g., slander of 
Black women on welfare, and attacks on affirmative action, are 
openly used to gain white support for this reactionary agenda.
     Nevertheless, corporate profitability has not been restored to the 
levels of the 1950s and 1960s nor has productivity growth.  The 
new austerity has not even worked on its own terms.  No new and 
successful social structure of accumulation has replaced the 
Accord.  The U.S. economy is situated in a global economy marked 
by excess capacity given the limited effective demand, thereby 
reducing profitability and investment.  Although labor costs in the 
United States have been rising more slowly than prices and have 
fallen in relation to major U.S. international competitors, corporate 
profitability is below its historical average.
     Of course, a small minority has grown even wealthier, the top 
one-half of 1 percent of the population increased their share o total 
U.S. wealth in the 1980s from 23 to 29 percent.  Through buying 
and selling of corporations, speculation in currencies, commodities, 
real estate, and the stock and bond markets, billions have been 
made by a few.  The doubling of military spending and huge 
expansion of government and consumer debt fueled the expansion 
of output and employment from 1983 to 1990.  Income inequality 
grew as the number of decent paying jobs in manufacturing and 
social services declined.  By 1990, 1 percent of the population or 
2.5 million people earned more income than the poorest 40 percent 
or 100 million people.  Since the early 1970s in come has grown 
more unequal among whites, it has grown even more unequal 
among African-Americans.
     What persists today, whether or not the recession has ended, is 
what economist Wallace Peterson calls the silent depression, the 
decline in the quality of life and earnings of the majority of the 
population even in periods of expansion such as the late 1970s and 
1983-1990 (as reported by John Miller, "Silent Depression" in 
*Dollars and Sense*, April 1992).  Median earnings after adjusting 
for inflation fell by almost 20 percent from 1973-1991 after rising 
by 30 percent from 1955-1973.  Economic growth no longer means 
a higher standard of living as it did prior to 1973.  Thus even if the 
recession is over, the silent depression continues.

New World Order
     Let me now mover to recent and ongoing efforts by the U.S. 
elites to restore world economic and political dominance and 
profitability, what President Bush and Secretary of State Baker call 
"The New World Order."  When we strip away the rhetoric, the 
military aspect of the New World Order is the principle that the 
U.S. has the right to and the means to organize joint military 
interventions under U.S. leadership, e.g., Iraq; or unilaterally, if 
need be.  The aim of this aggression is to protect U.S. interests and 
maintain stability as defined by the U.S., and secondly, to further 
global capitalism.  The war against Iraq was in part a demonstration 
of the willingness to use that power, the continued blockade is the 
continued application of that power, the ongoing death and 
suffering of the Iraqi people is necessary or irrelevant to these 
policy makers.
     The U.S. rulers won the Gulf war, but this does little to restore 
economic dominance or even global competitiveness for U.S. 
corporations.  U.S. arms makers will sell more weapons in the 
Middle East, Bechtel will get billions of dollars of new contracts in 
Kuwait, and the U.S. will have more control over the price of oil 
and its supply.  However, neither the war nor the continued 
emphasis and spending for military superiority will repair the 
physical infrastructure of this country--the transportation system, 
schools, water systems--much less improve the health and 
education of the labor force, nor stop the capital flight of industry 
from major cities and the interrelated devastation of African-
American, Latino and low income urban communities.  Will it lead 
to more research and development on improving the quality of 
product for civilian use or developing new products?  Will the U.S. 
being global cop make Dupont or IBM more able to sell their 
products at home or abroad or for Chrysler to produce better cars 
at lower cost?  The answer is no.  Military aggression does not lead 
in the current global economy to economic development (For an 
excellent elaboration of this position see Arthur MacEwan, "Still 
Out of Order," *Dollars and Sense*, May 1991).
     Another aim of U.S. strategy is to create a regional economic 
bloc in the Americas dominated by U.S. multinational corporations 
that will out compete the German and Japanese dominated blocs of 
Europe and Asia.  The reason why the U.S. elites are promoting the 
North American Free Trade Agreement (NAFTA) between Canada, 
Mexico, and the United States and the 1990 proposed "Initiative of 
the Americas," is to institutionalize and consolidate this U.S. 
dominated regional bloc.
     Meeting in secret and with limited public awareness, negotiators 
of Mexico, Canada, and the U.S. are putting the finishing touches 
on NAFTA.  In the U.S., it will then be presented to Congress 
which will not have the right to amend it, only to accept or reject it.  
NAFTA is likely to be passed as the leadership and presidential 
candidates of the Democrats and Republican parties both support it.
     NAFTA will facilitate the ability of U.S. dominated 
multinational corporations to gain full access to the resources, 
including the labor, of all of the Americas from Canada in the North 
to Argentina in the South to produce goods made by U.S. 
dominated corporations to sell in the Americas and on the world 
global market.  These agreements will also further enrich U.S. 
financial institutions by giving them advantages over those from 
Europe and Japan in organizing and profiting from the increased 
financial flows.  It will also provide increased opportunities for the 
giant advertising and accounting firms and other business services 
to profit from their operations throughout the continent.
     NAFTA is about far more than reducing trade barriers between 
countries.  Its objective is to further the unrestricted, unregulated 
movement of U.S. capital from Canada to Mexico and eventually all 
of the Americas.  It gives multinational capital the right to produce 
wherever costs are the lowest, to make and keep the highest profits, 
to pay the least taxes and lowest wages with minimal environmental 
restrictions.
     Given the high rates of underemployment and unemployment in 
Mexico, the increased movement of manufacturing to Mexico is 
unlikely to significantly raise wages there.  Moreover, if as seems 
likely its neo-liberal President Salinas is successful in destroying the 
ejido system which gave some protection to the peasant population 
and, in addition, the U.S. through NAFTA can export corn to 
Mexico with no restrictions, which will reduce Mexican corn 
production and employment, the flow of this dispossessed rural 
population to the cities of Mexico will increase.  Thus 
unemployment may actually increase and wages will not rise 
although output may grow and the profits of the MNC's definitely 
will.  Moreover, increasing the power of the multinationals and 
decreasing the probability of big employment growth in Mexico is 
the likelihood that most other countries in Latin America will want 
to join the free trade agreement.  They will fear being excluded 
from the trade and investment flows among the member countries.  
This will spread foreign investment over more countries and will 
encourage capital flight from any country where wages are growing 
significantly.  It will further reduce the bargaining power and wage 
increasing impact on the Latin American members of the 
agreement.
     The free trade agreement will further diminish the economic, 
political, and cultural sovereignty of nations.  Restrictions on U.S. 
capital in other member countries, such as limiting U.S. corporate 
ownership of foreign resources or limiting their sending back of 
profits to the U.S., will be considered a violation of the agreement, 
a discrimination against foreign capital.  NAFTA will benefit the 
rich and powerful within each nation and shift resources from the 
poorer nations of the Americas towards the wealth and profits of 
the multinationals.  This economic integration of the Americas and 
the related treaties are the new Monroe doctrine, the late 20th 
century recolonization of the Americas.
     The ongoing process of significant amounts of manufacturing 
that had been located in the United States relocating to Mexico, the 
Caribbean and other parts of Latin America and other parts of Latin 
America will be speeded up by NAFTA and similar agreements.  
Banking and other business services will move more of their 
operations to Mexico and other parts of the Americas.  The 
hemorrhaging of manufacturing jobs out of urban centers in the 
U.S. such as Detroit and Los Angeles will further increase poverty 
and unemployment, disproportionately affecting African-Americans 
and Latinos.  NAFTA will reduce the ability of workers and social 
movements in the U.S. to fight the power of capital at the point of 
production.  It will make more difficulty getting legislation passed 
and enforced which curbs environmental and worker abuse.  The 
threat of capital flight will loom even larger.  Democracy will be 
further undermined as political power will be even more blatantly 
beyond citizen control, at guarded corporate headquarters.
     The economic interests of most people in the United States will 
diverge even more from those of the managers and consultants of 
the global corporations with their bloated salaries.  What is good 
for General Motors is not good for us.  NAFTA will increase the 
profitability of U.S. corporations, make them more globally 
competitive, and may raise the Gross National Product (GNP) but 
more importantly it will further the trend towards fewer and fewer 
jobs paying a livable wage.
     An opportunity that arises from the increased globalization of 
capital is that it provides an opening for solidarity and cooperation 
among working people against capital that crosses national borders.  
Internationalism is necessary in order to fight for a leveling up to a 
livable wage and to a healthy environment for working people in all 
countries rather than a leveling down to the lowest wages.  
Communication and forging networks of solidarity has begun 
among rank and file workers in Mexico, Canada, and the U.S. who 
are working together against NAFTA.
     Two possible futures for the U.S. economy and their 
implications for social justice have been discussed by many people 
in their comments immediately following the rebellion in Los 
Angeles after the acquittal of the police for the torture of Rodney 
King.
     The first, the fascist alternative, is a future where a small number 
of people have most of the wealth supported by a scared and 
shrinking middle class backed by a police state and militarized 
society which maintains more and more prisons, order, gross 
inequality, and white supremacy, at home and abroad.
     The second alternative begins with an analysis that the racism 
and poverty revealed so starkly in Los Angeles is an integral part of 
an economic and social system that needs fundamental change.  The 
lesser of two evil politics, which some of us acquiesce to, will not 
stop the deeper and reactionary trends.  Beyond analyzing and 
critiquing the existing injustices, we need to project a vision of a 
society that is equal and inclusionary, that respects the dignity of all 
people, and is environmentally sustainable, that is based on meeting 
human needs not greed, that is participatory economically and 
politically.  This requires building grass roots movements and bold 
organizations which fight the exploitation of working people and 
against the oppression of women and people of color, and act in 
solidarity with those struggling for self-determination and social 
justice in the U.S. and in other countries.  It means working for a 
radically different society in the U.S.  This is our responsibility and 
challenge.



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