Marxist Studies

Exchange Rate Depreciation and Real Wages

By Prabhat Patnaik

Republished from People’s Democracy.

MOST people, including even trained economists, fail to appreciate the fact that an exchange rate depreciation, if it is to work in reducing the trade deficit in a capitalist economy, must necessarily hurt the working class by lowering the real wage rate. A capitalist economy, looking at it differently, improves its trade balance, for which it must improve its competitiveness, by lowering the real wage rate; and an exchange rate depreciation is one way of doing so.

Most textbooks in economics do not mention this fact. They are written from the point of view not only of bourgeois economics in general, but of a bourgeois economics that invokes a model of a capitalist economy that is far removed from reality. They see this economy as consisting of a set of markets in each of which a price-rise is supposed to lower excess demand. The foreign exchange market is one such; and the text books simply say that as long as the demand and supply curves have the right shape in this market (so that excess demand is lowered through a price-rise), an exchange rate depreciation, which is the same as a rise in the price of foreign exchange, lowers the excess demand for foreign exchange, namely lowers the trade deficit. This is where their analysis of an exchange rate depreciation usually ends; and then they move on to discussing under what conditions the curves have the right shape.

This entire mode of analysis however is flawed. Most economies need imported inputs, usually oil and natural gas; the oil-producing economies on the other hand need a range of non-oil raw materials which they cannot grow themselves but cannot do without. The imported inputs,together with labour and domestically-produced current inputs, constitute the list of current inputs. And in all capitalist economies, the prices of commodities are determined as a mark-up over the costs of current inputs per unit of output. This is of course true under monopoly capitalism. This is how oligopolists operate; they fix prices in this manner and let the level of demand at this price determine what is produced. Some argue that capitalism even in the earlier period was characterised by such price-fixing, and that the classical political economists’ conception of free competition (which Marx took over) where the producers accepted a price impersonally determined by the market, was not a realistic picture. But this discussion is not germane to the present issue; the basic point here is that in any modern economy, prices are fixed by oligopolists as a mark-up over the unit prime cost.

Now, suppose a currency depreciates by 10 per cent; then the local currency prices of all imported inputs go up by 10 per cent, and therefore the part of unit cost arising from imported inputs in the production of any final good goes up by 10 per cent. If real wages were to remain unchanged, then money wages will have to keep going up proportionately as prices rise; and in such a case prices will ultimately rise by 10 per cent in local currency, with money wages also rising by 10 per cent and hence unit labour cost too also rising by 10 per cent. (The unit prime cost arising from domestically-produced inputs rises in the same ratio as the final produced goods price and therefore will also rise, automatically, by 10 per cent). But if local currency prices rise by 10 per cent following an exchange rate depreciation of 10 per cent, then this means there has been no real effective depreciation whatsoever; and hence not an iota of difference will be made to the trade deficit.

If domestic prices rise by 10 per cent following an exchange rate depreciation of 10 per cent, then the prices of export goods in terms of foreign currency would remain unchanged; and hence there is no question of any increase in the quantity of exports owing to their becoming cheaper. Likewise, if domestic prices rise by 10 per cent following an exchange rate depreciation of 10 per cent, then the local currency price of imported goods would rise by 10 per cent, the same as domestically produced goods, in which case there is no question of any reduction in the quantity of imports. It follows therefore that with no increase in the quantity of exports and no decrease in the quantity of imports, the trade deficit measured in foreign currency remains unchanged.

An absolutely essential condition for an exchange rate depreciation to work therefore (and this is only a necessary condition with no guarantee that its fulfilment will actually improve the trade balance) is that domestic prices must not rise at the same rate as the price of foreign exchange owing to an exchange rate depreciation. And this can happen only if money wages do not rise by the same proportion as the final goods prices; that is, if there is a fall in the real wage rate.

This can be seen as follows. If, say, a 10 per cent exchange rate depreciation is to make any difference to the trade balance, then the domestic prices must rise by less than 10 per cent, say, by 7 per cent, for only then would there be some real effective depreciation. For this to happen, the unit prime cost must rise by 7 per cent, as the mark-up by the capitalists is a given ratio. Now, the unit prime cost has two relevant components: the unit labour cost and the unit imported-input cost (unit home-produced input cost rises in the same ratio as the final goods price and therefore need not be considered separately here). Therefore, for the unit prime cost to rise by 7 per cent, since the unit imported-input cost rises by 10 per cent, the unit labour input cost must rise by less than 7 per cent, say by 5 per cent. With given labour coefficients in production this can happen only if money wages rise by 5 per cent, when prices rise by 7 per cent; that is, when real wages fall.

Of course, there can be real effective exchange rate depreciation, with domestic prices rising by less than the 10 per cent rise in the price of foreign exchange, even with real wages remaining unchanged, if the profit margins of the capitalists could be lowered. But this is precisely what is not possible in a capitalist economy. This can happen in a socialist economy where the enterprises, mostly State-owned, can be directed to charge lower profit margins, so that a real effective exchange rate depreciation can be brought about with no fall in the real wage rate; but in a capitalist economy, the profit-margin is not amenable to any reduction. A real effective exchange rate depreciation therefore necessarily imposes a squeeze on the real wage.

But even assuming that the workers are not strong enough to resist such a reduction in their real wage rate, there is no reason to expect the trade balance to improve: if the trade balance is to improve then domestic employment and output will increase, but this would mean a reduction in output and employment in some other countries at whose expense this economy would be increasing its market-share. If those countries retaliate by depreciating their exchange rates in the same proportion, then there would be no change in market shares and no change in trade balances either.

When the competing countries depreciate their exchange rates in retaliation, the real wages go down in those countries as well. This mode of reducing trade deficit therefore, when no country is making any independent effort to raise the level of demand through income redistribution in favour of the workers or through larger government expenditure, simply results in each squeezing its workers to no avail.

The attempt to raise domestic employment at the expense of rivals, through an exchange rate depreciation (that is supposed to work through reducing the trade deficit) is called a “beggar-my-neighbour” policy. The pursuit of “beggar-my-neighbour” policies by several capitalist economies raises employment nowhere while reducing the real wage rate everywhere.

But that is not all. The reduction in real wages can, under certain circumstances, even lead to a reduction in employment everywhere because of the associated reduction in aggregate demand. It is a symptom of the irrationality of capitalism that a group of countries vying with one another to improve their positions by pursuing “beggar-my-neighbour” policies, may ultimately end up with each country becoming worse off than before.

It is a sign of the hopelessness induced by the current capitalist crisis, that, notwithstanding the experience of the 1930s, voices are audible in the US today which seek a revival of the US economy through a depreciation of the dollar.

Petro/Márquez and the Question of Democratic Socialism in Latin America

By Juan Gonzalez Valdivieso

On September 11th, 1973, a US-backed military coup overthrew the democratically elected government of Chile led by Socialist Party leader Salvador Allende. Given his own success, Allende believed that electoral means could bring about socialist ends. Despite this optimism, the coup took his life after he responded to the attack by staying inside the presidential palace to defend it at all costs. Following the tragedy, Cuban revolutionary and then-Prime Minister Fidel Castro said the following:

“The Chilean example teaches us the lesson that it is impossible to make the revolution with the people alone. Arms are also necessary! And that arms alone aren’t enough to make a revolution. People are also necessary!”

“Chilean revolutionaries know that now there’s no alternative other than revolutionary armed struggle. They tried the electoral way — the peaceful way — and the imperialists and reactionaries changed the rules of the game. The reactionaries trampled the Constitution, the laws, the Parliament — everything.”

Twenty-five years after Castro uttered these words, Latin America experienced a phenomenon now known as the “Pink Tide.” This refers to a wave of elections that saw many socialist executives take power democratically across the region. It began with the 1998 landslide victory of Hugo Chávez in Venezuela. Chávez was followed by Luiz Inácio Lula da Silva of Brazil, Evo Morales of Bolivia, and Cristina Fernández de Kirchner of Argentina. Many of the region’s more robust electorates soon rejected this trend, however — namely those of Brazil, Uruguay, Ecuador, and Argentina -- electing conservative leaders soon after. It wasn’t until the late 2010s that a second Pink Tide took hold — this time, featuring the likes of Andres Manuel López Obrador in Mexico, Pedro Castillo in Peru, Gabriel Boric in Chile, and, most recently, Gustavo Petro in Colombia. Petro’s election last year rocked the status quo, as decades of pendular motion between liberals and conservatives had cast aside the prospects for socialist leadership.

Petro is a product of the leftist guerrilla movements that emerged in Colombia during the mid-1960s, a development in political militancy largely born out of the 1959 Cuban Revolution. From 1974 to 1987, he was a member of the 19th of April Movement — colloquially referred to as M-19 — an urban guerrilla effort with the goal of expanding electoral democracy in the country via armed struggle. The future premier would go on to pursue a prolific political career, serving in the Colombia House of Representatives from 1991 to 2006, the Senate from 2006 to 2012, and as mayor of the capital Bogotá from 2012 to 2015.

Petro’s chosen vice president, Francia Márquez, is an equally momentous figure. A native of Yolombó — a small mountain town located in the Cauca region — she began working as an environmental activist at 13, participating in the Ovejas River defense from 1994 to 1997, an effort to prevent the development of dams in an important water source for her community. In 2014, Márquez led a direct action of 80 Afro-Colombian women. The demonstrators marched from the Cauca to Bogotá, demanding an end to illegal mining in the region.

Their efforts were successful. By the end of 2016, the Colombian government had disassembled and removed all illegal mining machinery. This victory earned Márquez the 2018 Goldman Prize for excellence in environmental protection. She is also the first Afro-Colombiana vice president in the nation’s history.

During their presidential run, Petro and Márquez outlined a platform of five reform agendas:

  1. Labor: shorten the workday, increase access to overtime pay, and regulate short-term contract work.

  2. Pensions: provide a guaranteed 223,000 Colombian pesos per month — roughly $155 adjusted for purchasing power — to the 75% of Colombians whose incomes currently do not qualify for a pension.

  3. Taxation: raise $5.6 billion in revenue by raising wealth taxes, eliminating corporate exemptions, and raising export tariffs on oil and gas.

  4. Political System: prohibit private funding of political campaigns and lower the age requirement for congresspeople.

  5. Healthcare: transfer the responsibility of selecting private health providers from individuals to municipal and provincial governments.

Since the inauguration of Petro and Márquez in August of last year, only tax reform has found legislative success, having passed in November of 2022 with a revised fundraising goal of $4.2 billion. The labor and pension reforms remain in congressional limbo while the political reform has already died, having been canceled by Petro in March of this year after legislative changes severely transformed the proposal from its initial iteration. As for healthcare, the reform has prompted notable scrutiny and opposition by all parties, including President of Congress and Petro ally Roy Barreras. This backlash caused Education Minister Alejandro Gaviria to resign. Revised language has since softened the proposed healthcare reform considerably.

Beyond the minutiae of legalese, however, the ambitious aims of the administration’s reform agenda have placed a legitimate target on the backs of Petro and Márquez. At best, they’ve become the subjects of inflammatory rhetoric and baseless criticism. At worst, they’ve become victims of attempted acts of violence.

While campaigning, Petro had to cancel a visit to the nation’s coffee-growing region after learning of a credible death threat against him. The threat came from La Cordillera, a paramilitary organization with ties to the drug trade, law enforcement, the Colombian military, and far-right politicians. Márquez has faced similar challenges.

She narrowly survived two assassination attempts this year alone. The first happened in January when seven kilograms of explosives were found near her home in the Cauca. The second took place in March, when explosives were found near an airport Márquez was passing through in the Choco region.

Since then, right-wing demonstrations against Petro and Márquez have become commonplace. The most notable of which took place on May 5th. The event was held at Bogotá’s Plaza de Bolívar, and featured thousands of retired military personnel as well as law enforcement officials. The occupational character of the crowd triggers bitter déjà vu for anyone familiar with democratic socialist history in Latin America at large. After all, the successor to Allende in post-coup Chile was none other than Augusto Pinochet, the commander-in-chief of the Chilean Army during Allende’s short-lived presidency.

Luckily, this correlation has not gone unnoticed, as Petro himself took active steps to counteract the trend’s more worrying manifestations late last month. On April 26th, he announced the resignation of seven ministers in his cabinet in hopes of removing the internal dissonance and gridlock the cohort had been struggling with, particularly with regard to his proposed health reforms. In early May, Petro also tweeted out, saying, “Why are they conspiring for a coup? Because they are terrified that we will end impunity. The truth intimidates them so much that they despair.”

Cautionary measures and public denouncements notwithstanding, Petro and Márquez should brace for what is to come. They must embrace the optimism of Allende alongside the cynicism of Castro. For the belief in electorally derived socialism cannot mean the dismissal of its most glaring shortcomings. Only by taking heed — pushing their agenda onward while remaining wary of undemocratic attacks — will this administration entrench a legacy of democratic socialism in Colombia and serve as a success story for prospective socialist nations across the region.

Juan Gonzalez Valdivieso is a Colombian Marxist. In his writing, he seeks to interrogate the nuances of socialist thought and praxis.

Housing is Determined By Class Power and Profit, Not "Supply and Demand"

By Shi Sanyazi

There is a widely accepted belief among the journalists, think tanks, and politicians who animate the housing discourse that a lack of housing supply is the source of tenants’ present conditions (ever-rising rents, primarily). It follows that these thinkers advocate for a variety of policies which will, in their eyes, allow the market to “self-correct.” Once the supply of housing has met the demand, they argue that rents should go down (just like in the graphs we drew in high-school economics class!).

We shouldn’t deny that the idea has a comforting appeal. It offers a neat, ostensibly “common-sense” solution that all sides — developers, landlords, tenants — can theoretically get behind. It’s very easy to say: “match supply and demand and rents will go down — that’s just how markets work.” It’s more difficult to admit the inconvenient truth. 

The truth is that — especially in the era of algorithmic price-setting and increasingly financialized, corporate ownership of rental housing — our conditions as tenants are determined by the balance of class power, not the balance of supply and demand. 

Landlords, developers and their financiers are classes with class interests — namely, making the fattest profits possible. They are highly organized and have historically been willing to wage war on anyone who challenges their bottom line. Real estate capital’s return-on-investment depends on their capacity to out-organize and overpower tenants. 

Tenants' class interests — community control over our housing and the basic need for shelter — are, by definition, the opposite of real estate capital’s class interests.

The “supply crisis” narrative is deficient because it makes no attempt to reckon with the class relationships which define the housing market. The assumptions this narrative makes about the behavior of the housing market hinge on ignoring the structural imbalance of power between tenants and landlords, developers and their financiers. 

Landlord’s profit margins are determined by their level of organization (aided nowadays by political corruption, algorithmic financialization and consolidation of the rental housing stock) and the state’s ability to enable their exploitation with neglect, violence, and the threat of violence. Developers similarly ensure their profits by working in tandem with local governments and the police to forcibly remake neighborhoods to their liking, displacing working-class Black and brown communities. Lurking in the shadows, backing the landlords and developers, is the ruthlessly efficient and sophisticated arm of finance capital.

If we understand real estate capital as an organized class pursuing its class interests, and if we take the “pro-housing” argument at face value (i.e; increased supply will decrease rents), then we would expect real-estate interests (whose profits would be cut into if rents decreased) to oppose their policy prescriptions.

It’s quite curious then that the real-estate lobby and their political bedfellows openly support “pro-housing” non-profits and propagate their political lines. Powerful lobbying groups like the Real Estate Board of New York (REBNY) and the National Multifamily Housing Council revel in parroting “pro-housing” talking points. From REBNY’s 2022 testimony on Mayor Adams’ housing plan: 

New York is facing a housing crisis. A key driver of this crisis is the lack of housing production and inadequate supply to meet the needs of our growing and diverse city.

They go on to — shocker! — recommend the city and state remove regulatory barriers to development and continue to subsidize their lucrative construction projects. It shouldn’t come as a surprise that NYC Mayor, Eric Adams, agrees: he’s pledged to administrate a “city of yes,” arguing bluntly in The Economist that “although many factors contribute to the problem, at its core we have a housing crisis because we are not building enough housing.” NY Governor Kathy Hochul’s housing proposals echo the same logic. For what it's worth, Adams and Hochul have both been consistently showered with real-estate donations.

So, despite the promise that building more housing will bring down rents, the real-estate lobby embraces the prospect of building more housing! Why? Because the “supply crisis” narrative is an idea working in defense of their class interests.

Do we really believe that landlords and developers will actively support a reduction in their profits? Do we think they’re going to resign themselves with a deep sigh and a “well, that’s just the way the cookie crumbles?” How naïve can we possibly be? As James Baldwin once wrote of capitalism, to imagine these leeches ceding power and profits willingly demands “yet more faith and infinitely more in schizophrenia than the concept of the Virgin Birth.” 

Landlords and developers have no interest in solving the housing crisis because the permanence of that crisis is the condition of their wealth and power. This understanding has serious practical implications. 

In other words, if we understand our conditions to be a result of class struggle (rather than a market imbalance), it becomes quite clear that our conditions will be determined by our level of organization as tenants and our ability to wage struggle against the force that commodifies our need for shelter: real-estate capital.

The magic lies in our hands and our hands alone

This conclusion is the same as that at the core of all consciousness-raising movements, indeed at the core of all anti-capitalist, anti-colonial, anti-racist, anti-patriarchal movements (see, for example, the Black Consciousness movement in South Africa; the Combahee River Collective; or the Landless Workers Movement in Brazil). It's the same conclusion which the legendary anti-colonial thinker Frantz Fanon came to:

[Political education] means driving home to the masses that everything depends on them, that if we stagnate the fault is theirs, and that if we progress, they too are responsible, that there is no demiurge, no illustrious man taking responsibility for everything, but that the demiurge is the people and the magic lies in their hands and their hands alone.

The magic lies in our hands and our hands alone.

When we get organized, we have the capacity to transform our conditions. Will we win collective control over our cities? Will the threadbare protections we have left be rolled back? Will we stagnate? It’s up to us! 

Through militant organization, tenants wield — and historically have wielded! — a tremendous amount of power. Every concession from the landowning class; thus, every victory for tenants, has been won through this organization. 

The first rent control laws in New York City were passed due to pressure created by waves and waves of militant rent strikes (not to mention the fears of a Bolshevik-style revolution that these strikes helped inspire). Great Depression-era tenant activism — which included the successful efforts by the Communist Party to reverse evictions of working class tenants — was the impetus for New York City’s first public housing projects (FDR himself said that the concessions of the New Deal were driven by a desire to “save our system, the capitalist system…”). Mass agitation by Black organizers led to the passage of Fair Housing laws (while the real estate lobby was organizing against them). The COVID-19 eviction moratorium in New York was fought for and repeatedly extended due to pressure from organized tenant unions.

These are all tenuous and often contradictory reforms (public housing in the US, for instance, often deepened racial segregation), class truces which politicians negotiated in exchange for relative peace and quiet. The goal is not to aspire to reform, but to highlight that these reforms were not enacted because of our participation at the ballot box, nor passed by a benevolent state, nor advocated for by benevolent landlords and developers — they were fought for, collectively, in the streets and hallways and lobbies of our neighborhoods. 

Tenants are and always have been the protagonists of the struggle for control over our buildings, neighborhoods, and cities. 

OK. With that in mind, we can move on to addressing the core claim — that the “housing crisis” is caused by a supply deficit — in detail. Through this, we can highlight that the “housing crisis” is not “fixable” with “policy.” Our conditions as tenants are determined by our level of organization and effectiveness at waging class struggle.

The “supply crisis”

An imbalance between supply and demand is not the source of tenants’ present conditions. The real source — as has been the case since capitalism violently imposed its will on the world four centuries ago — are the private property relations which enable the exploitation of working people by the landowning class. Present-day gentrification is just one chapter in the centuries-long story of displacement, enclosure and imperialism which has marked the penetration of capital into indigenous and working class communities. So long as these relations remain intact, our struggle will persist. 

This is not to say that we should never build housing. There’s no doubt that under the collective governance of the working class (god-willing), the supply of housing would be responsive to migration and other fluctuations in demand. The disagreement stems from a core question: who is building housing and for whom are they building housing?

The alternative to the current arrangement, wherein tenants have next to zero democratic control over their communities, is to organize towards a world where tenants themselves collectively control and direct the development of safe, beautiful, ecological housing. 

That’s the polemic response — let’s dive a little deeper. As we work through the details, let’s keep the argument in mind:

Tenants’ conditions are determined by the balance of class power, not “supply and demand.”

This section is divided into a few parts to make it a bit more digestible. 

Mind the rent gap!

We can start by exploring the process of gentrification, where we can very clearly observe how real estate capital wields its class power to mold cities to its liking. Notably, its class organization has become increasingly sophisticated in recent years, as the rental housing stock has been consolidated in fewer and fewer hands. It can be quite challenging nowadays to figure out who your landlord actually is, as they usually hide behind a maze of shell companies, LLCs and Real Estate Investment Trusts (REITs). An army of supers and management companies further distance landlords from tenants, acting as convenient buffers for the corporate owners and private equity firms pulling the strings.

As a result of this consolidation, private equity firms, mega-developers and corporate landlords execute rent hikes, serve evictions, illegally (and legally) deregulate apartments and in sum, cause displacement, in an increasingly coordinated manner. 

In our organizing, more often than not, we work with tenants in buildings owned by a landlord with hundreds to thousands of units in their portfolio. (The average apartment in New York City is part of an 893 unit portfolio.) When we visit other buildings in that portfolio, we’ll usually find the same issues, whether disrepair, harassment, skyrocketing rents, and (illegal and legal) deregulation. 

(If you are interested in researching the owner of your building in NYC and kick-starting a tenants association in your building, JustFix is an incredible asset.)

To streamline gentrification, mega-developers, corporate landlords, and private equity firms utilize sophisticated algorithms to identify “rent gaps.” A rent gap is the difference between the rent currently being paid by tenants and the rent that could be potentially charged in the same location if the current tenants were evicted through legal or illegal means. PropTech companies like Skyline AI and RealPage are accomplices in this plunder. Their business is that of identifying apartments which are “‘inefficient’ in the rental market in relation to their total cost, before teaming up with the largest property investment companies to make an offer.” 

These advanced techniques (enabled by troves of data collected by big tech firms) allow investors to target optimal neighborhoods for gentrification with pinpoint accuracy. It shouldn’t surprise us that at a neighborhood level, there is a direct correlation between concentrated corporate ownership and gentrification. 

Naturally, real estate capital’s drive to extract as much profit out of our cities as possible does not care much for pesky renter protections like rent-stabilization and public housing. In fact, the relatively low rents in rent-stabilized apartments and public housing (as compared to market-rate) make them even more appealing, in the sense that they present even larger rent gaps to “close.” 

From a private equity firm’s perspective: Imagine a rent-stabilized building which rents for an average of $800/mo per unit, in a neighborhood where rents are averaging $1500/mo per unit (and climbing!), or are where rents are primed to increase to that price (in accordance to the precise calculations of algorithms from RealPage and Skyline AI). To a private equity firm, the building represents an opportunity for superprofits. To the building’s working class, usually Black and brown tenants, the building is not an investment opportunity — it’s home, a small pocket of resistance to the waves of real estate capital engulfing their communities. But if the private equity firm can evict the current residents, destabilize the building, and slap on a gentrification mask — then they can charge many times as much in rent and make a fat profit. All in a day's work for the vampires sucking our cities dry. 

Real estate capital also pushes this class agenda through legal action. For instance, New York City landlords are currently suing to wipe out rent regulations which protect around 1 million tenants from naked exposure to the “free market.” This case will go to the revanchist Supreme Court, who will likely rule in favor of the landlords. Once again, we can plainly observe that our class enemies are organized and aggressive!

It’s not an accident that in our organizing we encounter and experience consistent patterns of harassment, disrepair, and neglect in rent-regulated buildings. In New York City, deregulation is most commonly allowed upon vacancy, so it follows that landlords and speculators doggedly pursue vacancy via eviction. Some of their choice strategies include: buyouts, fake eviction notices, illegal refusal to renew leases, intimidation, neglect, intentional disrepair, cutting off heat, electricity and water, calling the police on tenants, and direct harassment. There are technically legal protections against strong-arming tenants out of regulated apartments, but they’re rarely enforced. Like other tenant’s rights (or, for that matter, any right “granted” by the state), protection from harassment is generally only realized when enforced by organized tenants. 

It’s also not an accident that the real-estate lobby and their politician friends have intentionally neglected to fund the upkeep of New York City’s remaining public housing stock. After all, NYCHA’s repair backlog (many tens of billions dollars) makes for a very convenient political device. When it came time to justify the “Preservation Trust” — nothing more than a scheme to privatize and commodify that remaining bastion of working class affordability — NYCHA’s repair backlog was cynically presented as evidence that public funding is no longer feasible. When challenged by outraged NYCHA tenants, conservative and “socialist” politicians alike argued that we have no option but to turn to the private sector to save NYCHA. As Holden Taylor writes

The line of reasoning put forth by the policy wonks and “socialists” advocating for the trust is, as usual, one of pragmatism and practicality. The Trust is the only way to get money for repairs, they say. This boils down, to butcher Rosa Luxemburg’s aphorism, a framework of “Privatization or Barbarism,” as these experts claim that the only alternative to the Trust is the status quo and the ever more crumbling infrastructure and dire quality of life that define it. Again, this is a failure of imagination. It is the socialist’s responsibility to push past the status quo, to fight for socialism, not merely a different form of marketization.

These observations about de-regulation and the privatization of public housing also help us to understand why the minority of left YIMBYs — who argue we should pair market solutions with an increase in social housing and tenant protections — are so woefully misguided. There is no way to guarantee that any housing we build will stay affordable when landlords, developers and finance capital have demonstrated they will wield their class power to commodify every inch of the city they can get their grubby hands on. Even our supposedly “socialist” elected officials are liable to bend to the will of real-estate capital without an organized mass movement to back them. The sober reality is: the remaining sources of off-market housing are being eroded because we are not sufficiently organized to protect them. The only way to protect those apartments and reverse the trend is through organized struggle. 

For instance, in 2020, organized community groups resisted the illegal eviction of tenants at 1214 Dean St. in Crown Heights. By occupying the stoop and physically resisting the eviction, the tenants eventually forced the city to buy the apartments and convert them into publicly-funded, affordable housing.

Build, baby, build! What could go wrong?

It doesn’t matter how “market optimistic” you are (as one reporter recently described the “pro-housing” non-profit Open New York) — when we let developers build freely, they will always be incentivized to build market-rate housing because those are the developments with the juiciest profit margins (and often the juiciest subsidies). This is not a neutral outcome. Building housing which people in surrounding neighborhoods cannot afford is the one of the first steps in the process of gentrification. 

In response to residents’ concerns about displacement, politicians will often promise that developments will meet the needs of communities because they contain 10% or 20% affordable units. This logic is premised on the idea that flooding a working class neighborhood which desperately needs cheap housing with, for instance, 900 market-rate units and 100 “affordable” units (which, due to the way affordability is measured, are often not actually affordable to those who most desperately need them), will produce anything but an influx of wealthier people who will displace the current residents. Just the announcement of permits for new market-rate developments can set off a frenzy of speculation, as investors look to sink their grimy fingernails into the imminently gentrifying neighborhood. 

The rise in the median income of an area (which inevitably accompanies market-rate development in working class neighborhoods) is often the impetus for steep hikes in the median rent. Which is to say: when people have more money, landlords generally raise rents (and rents usually rise faster than income — a few studies to reference: here, here and here.) Income inequality ensures that rising median rents disproportionately displaces working class tenants, as Francesca Manning explains:

While some people’s income is increasing at a rate to keep pace with rising rents, a large group of people’s wages are stagnating, falling, or rising far too slow to keep them housed … households that live in high-income [areas], whether or not they are themselves high income, end up paying a higher and higher percentage of their wages in rents.

In locales where market-rate development is not profitable, developers will not develop unless subsidized. This is a prominent form of “organized abandonment,” the movement of capital and social services away from populations and geographies deemed surplus and/or no longer profitable. Working class Black and brown communities are the first victims of this abandonment. These communities are faced with either: investment and gentrification; or disinvestment and abandonment. It’s russian roulette, except all of the chambers are loaded. Flint’s working-class Black population is one such example of a community which has been systematically abandoned by capital and the state.

Even with an understanding that developers will always build for profit, some will maintain that new housing supply at the top-end creates downward pressure on the market and “filters” units down to working class tenants. This is not an effective strategy, especially with the urgency that present conditions demand. Even when a filtering effect can be observed over decades, it is usually outweighed by the more immediate effects — sharply increased rent burdens and displacement  — that market-rate development set in motion. It’s important to understand that the “housing market” is not a single, unified market, but rather a series of income-level based sub-markets. Increased supply at the top end of the market can simultaneously stabilize rents for high-income tenants and increase rents for low-income tenants.

The “filtering” theory makes more than a few dubious presumptions. Three more are:

  1. that new apartments will be occupied by warm-blooded humans;

  2. that tenants are able to move constantly to and from apartments in the name of market equilibrium; 

  3. that landlords who were recently collecting rent from a wealthier tenant will suddenly have a change of heart and lower their rent to accommodate the new, lower-income tenant who is moving into the “filtered” apartments.

1) ignores the reality, which is that many of these apartments are destined to be bought for investment purposes. At least a hundred thousand units in New York City are investment properties and second homes for the ultra-rich. As Raquel Rolnik writes, luxury real estate in places like New York City has increasingly become a “safe-deposit box for the transnational wealthy elite,” rendering many new apartments un-filterable.

2) and 3) are even further divorced from reality. I’m not quite sure where the filtering theory nerds are finding landlords willing to grant day-to-day leases to allow for this kind of flexibility — nor where they find landlords willing to sacrifice their bottom line for the sake of market equilibrium. 

To this point (that supply and rents are not necessarily, or even likely to be correlated), we can briefly look at two of the metropolitan areas which produced the most housing in the last decade (2010-2019): Raleigh, NC and Austin, TX. Both of these cities maintained a ratio of 1-2 jobs per new housing unit, which mainstream economists consider to be “healthy.”

In Raleigh, housing construction kept pace with population growth from 2010-2019. Did rents stabilize or go down in accordance with the magic supply and demand graph? No! They rose 53%, miraculously spurning the ironclad economic law of supply and demand.

In Austin, between 2010 and 2020, new housing production actually outpaced population growth (25.5% to 21.7%). According to the “supply crisis” narrative, rents should have gone down or at least stabilized, right? You’ll be shocked to learn that between 2010 and 2020, rents in Austin increased by 93%. Historically Black enclaves like East Austin have rapidly gentrified in spite of the growth in housing construction. The supposedly common sense relationship between housing supply and median rents is, uh, not so apparent to the average tenant in Austin.

The shock troops of real-estate capital

Class power requires enforcers, and real-estate capital’s war on working-class tenants is no different. The police are intimately involved in the process of displacement. 

The police are, after all, the most visible manifestation of the violence which undergirds private property relations. When you don’t (or can’t) pay your rent, you come face to face with the enforcers of the private-property relation: the court sending a Marshall to serve you with an eviction notice, and the police forcefully and violently executing that eviction if you resist. Landlords rely on the police to backstop evictions, which is the most fundamental mechanism for the reproduction of privately-owned housing. Without the threat of eviction, the landlord's power would evaporate, as we experienced during the COVID-19 eviction moratoriums. The state’s power is also felt implicitly: even if a tenant association is interested in taking a radical action like resisting a fellow tenant’s eviction, they understand that the state will almost certainly intervene on the side of the landlord, and can therefore be discouraged from acting. 

The process of eviction is nothing less than the state using their monopoly on legal violence to privilege the landlord’s right to exploit us over our human need to have a roof over your head. 

Gentrification relies on the same violence to function. In its infancy, gentrification is marked by the violent projections of private property relations onto working class communities, which solidify in physical form as the police. Cops consistently step up broken windows policing in neighborhoods which are gentrifying, further exposing working class Black and brown communities to the carceral state. Broken windows policing is the proverbial stick to the carrot of tax abatements, rezoning and developer incentives which open the floodgates for real estate capital. 

In the process of gentrification, homeless tenants (homeless people are tenants in that they do not control their housing; the struggles of housed tenants and homeless tenants exist along the same spectrum of precarity) are brutalized and disappeared. Eric Adams’ assault on homeless tenants which we have resisted over the past year is inseparably part of this same project. He is not uniquely evil either; his predecessors De Blasio and Bloomberg similarly utilized the NYPD to terrorize homeless tenants and remake the city to the real estate lobby’s liking. Connecting the struggles of homeless tenants to housed tenants — not just in solidarity, but as a movement united in opposition to the same forces of real estate capital — is a crucial task.

As many have compellingly argued, including her own family, Breonna Taylor was, at least in part, a victim of state-sanctioned gentrification. Breonna was murdered in the Russell neighborhood, which was being explicitly targeted for gentrification by the city of Louisville. Before and after her murder at the hands of the state, there was an observable “sharp increase in public nuisance cases, with 84% of those cases occurring in Louisville’s predominantly Black western half, which includes the Russell neighborhood.” As the Root Causes Research Center explains:

… the forces of property and police converged in Russell to acquire the remaining property for the redevelopment of Elliott Ave through the collaboration of the Louisville Metro Develop Louisville Office and the Louisville Metro Police Department’s Placed Based Investigations Squad (PBI). Increased pressure from the Louisville Mayor's Office to acquire these properties led directly to the rapid employment of PBI. The PBI Squad, then, employed a concept they were barely familiar with, to create the false evidence needed for the "No-Knock Warrant" that led to the murder of Breonna Taylor.

Gentrification is a process which travels along the existing contours of racial capitalism. Working-class Black communities (including homeless tenants) are the first to encounter — and the first to resist — the rusty knife edge of displacement. 

In sum: Gentrification is initiated by speculative, algorithmically-backed, financialized development and landlord harassment; enabled by racist police violence, tax abatements, developer incentives and capitalist urban planning; and resulting in displacement and harm (sometimes death) for the working class Black and brown communities who stand in its way. Gentrification is, in other words, not a natural phenomenon, not an unavoidable but necessary process, but rather one front in real estate capital’s organized class war on working class tenants.

Does this evidence point to a solution which gives more freedom to developers and landlords? No. Gentrification can only be stopped by collective control of our buildings, neighborhoods and cities. After all, it's highly unlikely that communities would displace themselves if and when they win control over their space.

One glimmer of hope we can look to for inspiration: In Los Angeles, after being confronted with rent increases of up to 200%, the tenants of Hillside Villa organized, militantly — in Spanish, Cantonese and English, no less. In 2022, their organizing paid off: they successfully pressured the city to buy their building on their behalf, thwarting their landlord's attempt to fatten his profit margins and placing their housing under some level of community control.

Ransom, manipulation, collusion

Organized real-estate capital demonstrates every day that it will protect its profits by any means necessary — regardless of “market equilibrium.” Outside of the strategies we’ve already covered, some of their choice tactics include market manipulation, legal action and collusion.

For instance: CHIP — a New York landlord advocacy group — is currently keeping 20,000 rent-stabilized units vacant (an act that is particularly malicious considering that over a hundred thousand New Yorkers are homeless, including thirty thousand children). In total, over 60,000 rent stabilized units are currently vacant across the city. Why? As a threat! A show of force! An act of organized class war! CHIP has openly stated that they won’t put these apartments back on the market until the state legislature repeals the 2019 Housing Stability and Tenant Protections Act, which limits their ability to jack up rents after making necessary renovations. It’s a “ransom!”

As Karl Marx himself pointed out (and others have more recently argued), the tendency of the landowning class to withhold their land from the market, and to threaten to withhold land from the market, is intrinsic to capitalism. Holding land off the market is not an irrational action for landlords — it is a rational, profit-maximizing strategy that is employed everyday by landowners across the world. This tendency is why, seemingly paradoxically, increases in vacancy rates do not always correspond with reduced rents.

This tendency explains why property owners will always fight vigorously against any regulation which would restrict their ability to keep units vacant. For example, in response to a newly passed vacancy tax which would fine landlords for failing to rent empty apartments, organized San Francisco landlords (through lobbying groups representing thousands of property owners) are suing the city, arguing they have “constitutional and statutory rights to keep their units vacant if they so choose.” Constitutionally speaking, they’re correct — the Supreme Court will always protect property owners “right to exclude” — but that’s only because the Supreme Court is designed to codify and protect private property relations.

According to the most recent statistics (from 2021), there are around 250,000 (officially) vacant units in New York City. Importantly, the vacancy rate does not include the hotel rooms which sit empty while homeless tenants beg for change just outside their doors, nor unreported warehoused market-rate apartments, nor the hundred thousand or so units which are kept as investment properties and second homes for the ultra-rich.

While in any context, there will be some vacancies, to really understand this number we have to understand which apartments are vacant. Low-cost apartments are at near-zero vacancy levels while the vacancy rates  in high-cost apartments remain extraordinarily high. Tracy Rosenthal of the LA Tenants Union sums up this disparity bluntly: “There is no shortage of housing except for poor and working people, which the market has never and will never provide.” 

In their 2022 report, the Community Service Society of New York echoes Rosenthal, writing that many of New York’s vacancies can be attributed to “long-term overproduction of luxury condos/co-ops as investment vehicles.” They sum up their findings neatly:

There is very little available housing at low rents, but a lot available at rents most New Yorkers couldn’t possibly pay. At the same time, more and more apartments are going unused, not because nobody wants them – clearly there’s plenty of demand for housing – but because their owners are keeping them as pieds-a-terre, Airbnbs, investment properties, or warehoused rentals.

One example of this phenomenon, from Madden and Marcuse:

On January 16, 2015, a limited liability corporation named P89-90 bought a single penthouse apartment in Midtown Manhattan for $100,471,452.77 … the luxury tower that it tops, branded as One57, is not likely to be a particularly sociable environment. Chances are that none of the building’s ninety-two condominium units will be their owner’s sole residence. In fact, many of the apartments in One57 will remain empty. They will be held as investments or as vanity homes for people who do not lack for places to live. One57 is not high-rise housing so much as global wealth congealed into tower form.”

In recent years, the rental housing stock has become increasingly concentrated in larger and larger portfolios controlled by private equity firms and corporate landlords. In New York City, around 9 in 10 apartments are owned by corporate landlords. 

One important implication of this trend: the more organized and concentrated ownership is, the easier it is for landlords to collude and fix prices — a task made significantly easier due to the rise of algorithmically-informed price-setting. Services like the now infamous RealPage — which uses advanced data to help landlords charge the highest possible rents for their units — openly boast about their role in driving the staggering rent hikes of recent years. A ProPublica investigation revealed RealPage has “recommended that landlords in some cases accept a lower occupancy rate in order to raise rents and make more money.” RealPage and other similar services are a potent tool for cartel style market collusion, a fact which has not escaped the ire of the Department of Justice's antitrust lawyers. 

A common “pro-housing” argument is that increased supply gives renters more options, thus allowing us to play landlords off of eachother and secure lower rents. Again, this line of thinking ignores the sordid reality, which is that landlords will flex their class muscle to keep rents high — and that without organization, tenants have no power to contest their ever-worsening conditions. What good is a market equilibrium if the landlords are almost certain to collude, warehouse apartments and keep rents high regardless?

Landlord’s profit-maximizing behavior plainly highlights the irrationality endemic to capitalism. Well, let's amend that: it's quite rational for those who own the property. For the rest of us (the vast majority) — not so much. A system which distributes (and chooses not to distribute!) housing based on the profits that will accrue to its owners is a system which is incapable of ending the precarity which defines our lives as tenants. 

The “housing crisis” is not so much a crisis as a permanent feature of urban capitalism, an unavoidable consequence of developing and distributing housing as a commodity to line the pockets of the few, rather than organizing housing around the social need for shelter. Framing our experience as a “crisis” insinuates that it is an aberration from the norm, an aberration which can be “solved” with policy fixes, new legal protections and, most insidiously, the market. The system is not in crisis; the crisis is the system!

It's all about class power? Always has been.

What we’re observing here is the all too familiar dissonance between capitalism’s economic theories and its economic realities. Despite what free-market proselytizers and “market optimists” alike want us to believe (as if there’s any functional difference between the two), capitalism is a system whose outcomes are ultimately determined by the balance of class power. Landlords, developers and financiers, who are single-mindedly driven by a desire to extract as much profit as possible out of tenants, do not submit meekly to the “laws” of supply and demand. 

To imagine that rent prices hinge on supply and demand rather than class power is completely ahistorical. Time and time again, capitalism has demonstrated an inherent tendency towards monopoly, cynical market manipulation and organized class warfare. 

Understanding the balance of class power as the condition of our exploitation is simultaneously key to grasping that our exploitation can only be limited and abolished through the exercise of our own class power as tenants. We’re engaged in a class war which only one side is consciously fighting. Our choice as tenants is whether or not we want to fight back.

If the future came on a platter…

The common sense which commands our collective reflexes does not permit us to think of revolution. After all, “it is easier to imagine the end of the world than the end of capitalism.”

So it’s natural that we’re derided as unrealistic for striving towards the abolition of the landlord class, and by extension the abolition of capitalism — but are we the unrealistic ones?

Our critics (liberals!) — on all issues, not just housing; think climate change, for instance — position themselves as “realistic” for arguing that handing the reins to organized capital will alleviate the conditions of the working class. Don’t we have hundreds of years of experience telling us that the exact opposite will happen? We can look to our cities as they are right now to understand that control of our buildings and neighborhoods by profit-motivated landlords, financiers and developers is a disastrous arrangement.

There’s nothing realistic about giving capital the freedom to roam where it wants and praying that it will magically change course and defy its five hundred year history of ravaging indigenous and working class communities for profit.

It's nonsense. Don’t listen to these people — they are the ones being unrealistic. 

And yes, to organize towards community control of our buildings and neighborhoods is a tremendous, daunting task. But let’s remember that we don’t organize simply because we believe in a political program. To struggle, to think — to really think! — to learn, is nothing less than the process of being alive. To not be in the struggle is a much more demoralizing proposition.

So let's get to it! Landlords and developers, and the financiers that back them, are tremendously well organized. To beat them, we have to turn to the only method by which we have historically won: that is, through our militant organization. If history has taught us anything, it's that we can only win by out-organizing our class enemies. 

Check out the Autonomous Tenants Union Network to see if there’s an existing organization in your area. In New York City: the Crown Heights Tenant Union, the Ridgewood Tenants Union, Brooklyn Eviction Defense and Tenant Union Flatbush; nationwide, the aforementioned Los Angeles Tenants Union; Tenants and Neighborhood Council (TANC) in the Bay Area; Stomp Out Slumlords in DC; and many more are doing incredible, principled work. 

You can find some resources and thoughtful reflections on tenant organizing here, here, here, here, here and here.

I like to think of this essay as a small contribution to uncovering the shape of the conjuncture, as Stuart Hall would call it. There is, of course, much more to be uncovered (and much more that has already been uncovered!), such as: the relation of tenants in the imperial core to the global anti-imperialist movement; how the tenant movement can resist settler-colonialism and aid the struggle for indigenous sovereignty; feminism and the tenant movement; the homeless industrial complex; and the ideology of homeownership, to name a few.

None of this work is easy. But, as Eduardo Galeano reminds us: “If the future came on a platter, it would not be of this world.”

More than Mercenaries: Police as the Crucible of Fascism in the U.S.

By Comrade Dremel

Republished from The Red Clarion.

Fascism is ascendant in the imperial core. The U.S. and its junior partners are waging an increasingly bloody war on all fronts, in an attempt to bolster the decaying husk of capital. The foot soldiers in this war are the police. Armed to the teeth and trained to kill, police are positioned as an occupying force in every locale across the empire. The violence perpetrated by police increases in magnitude with each passing year, with the targets of this violence being overwhelmingly the poor, Black, Indigenous, immigrant, queer, and disabled populations most despised by the empire. Even a cursory glance through the history of law enforcement in the U.S. exposes its role as the assault engine of white supremacy and capitalist hegemony.

Even before the settler-republic declared independence, slave patrols were organized to deal with the ever-growing population of enslaved African labor and the threat of rebellion. Hired guns would patrol the property, investigating and brutally punishing dissent, the possession of weapons, and attempted escapes. As far back as 1643, the English colonies were organizing themselves into confederations, pledging to enforce each others’ “right” to the return of fugitive slaves and indentured servants:

It is also agreed that if any servant run away from his master into any other of these confederated Jurisdictions, that in such case, upon the certificate of one magistrate in the Jurisdiction out of which the said servant fled, or upon other due proof; the said servant shall be delivered, either to his master, or any other that pursues and brings such certificate or proof.

Following the establishment of the United States, plantation owners quickly began entreating state legislatures to form standing patrols, as well as laws that explicitly targeted all Black people — regardless of their legal status. These fugitive slave laws and the patrollers enforcing them curtailed Black freedom of movement and assembly, subjected them to constant questioning, and inflicted unspeakably violent punishments. These practices spread throughout the colonies, and the institution of policing as a means of oppressing Black and Indigenous populations went from ad hoc posses to state machinery.

Following the U.S. civil war, despite the legal end of slavery, slave patrols prowled the countryside. Anti-Black violence, once perpetrated by pre-war slave-catching squads, took on the same form as anti-Indigenous violence: it shifted to the domain of terror groups such as the Ku Klux Klan. These vigilante terror organizations were, in many cases, composed of the elite of Southern and Western U.S. society: plantation owners, former Confederate officers, and ex-slave-catchers. Not only were these men enlisted by the secretive, semi-legal terror societies, but they also joined the rush of explicitly authorized “Indian fighters” – U.S. soldiers and cavalrymen, hired guns, and bounty hunters that poured into the Indigenous lands still left west of the Appalachian chain that the young settler-republic had determined must belong to white men.

To support this new drive, laws were carefully rewritten to empower police to enforce the political and economic repression of non-white people. This fundamental principle of U.S. settler law laid the foundation for the white-supremacist laws of today. The disproportionate impact of law enforcement on racialized populations has been thoroughly examined and excoriated for decades. The verdict is clear: law enforcement is systematically constructed to perpetuate white supremacy.

Since the creation of municipal and regional police in the 19th century, they have not only targeted Black and Indigenous persons. The police were not merely the enforcement arm of the theft of Native land and the suppression of Black labor; they have been the armed fist of capital, serving to break strikes, attack unions, and halt the labor movement in its tracks. Capitalists have consistently called upon police, private security, and the military to break strikes, often with deadly force. Under the guise of “peacekeeping,” cops respond to mass demonstrations by cracking skulls. Since the cold war, the intelligence wing of law enforcement has used the specter of communism to harry and infiltrate militant labor movements. With the blood of thousands of workers on their hands, the presence of police “unions” in labor federations like AFL-CIO is a grotesque mockery. The police are not workers: they are our most violent oppressors.

Cops are not simply hapless mercenaries, selling their labor as cogs in a repressive machine. They are not blameless workers caught up in a Kafkaesque machinery beyond their capacity to change. They are active participants in murder, genocide, labor suppression, and all the heinous acts for which they were created. They are the active agents of colonial and imperialist oppression. Indeed, the nature of policing as a tool of enforcing white supremacy and capital hegemony makes it especially appealing to a particular class of ideological actors. Police forces are staffed by the most motivated white supremacists. Fascist militias are largely populated by cops (active and retired), military veterans, and small business owners, as well as those with aspirations to law enforcement. They dedicate huge amounts of time, money, and labor to organizations designed to enforce white supremacy – all while comfortably employed in service of an empire built on those ideals. Many such groups paint themselves as “anti-government,” because they believe the U.S. government is holding them back from their fascist aims. That is, they resent the fact that the state has itself attempted to regulate white supremacist violence into a form it can control; they long for the early settler-republic, when any white man could wreak his will with a riding crop, a fist, or a Colt and no one would gainsay him.

State-sanctioned violence and extrajudicial fascist terrorism cannot be so identified as pointing out a badge.  In a recent database leak, exposing membership lists of the fascist Oathkeepers, numerous high ranking officers and sheriffs were identified among the hundreds of law enforcement officers on the books. One such lieutenant — who signed up for the Oathkeepers with the promise to use his position to recruit for the organization — was transferred to administrative duties upon knowledge of his involvement. Months later, he was back to his normal duties, as if nothing had happened. The police are police whether they wear their badges or not.

Law enforcement often dedicates some labor toward monitoring white supremacist extremism, although this is vastly overshadowed by its investment in tracking and attempting to entrap leftist organizations. Undercover agents and confidential informants insinuated into fascist groups often fail to report vital information, use their position to testify in defense of these groups, or are simply ignored by their handlers. The FBI, generally tasked with handling these investigations, are simply uninterested in the incrimination of fascists, instead instructing their informants to gather intelligence on the opponents of fascism. Law enforcement is deeply invested in the project of maintaining a white supremacist status quo. It has a long history of surveilling and violently repressing those who seek liberation, while giving unending leeway to those who attempt to heighten that oppression.

The overlap between fascist groups and law enforcement is sporadically reported on by bourgeois institutions, including media exposes, academic reviews, and even intelligence reports. Like all liberal exposes, however, these serve a dual purpose; by presenting the information, they defang it. The framework of these reports usually presents the presence of “bad apples” and promises that the issue merely needs some pressing reform. Thus, these liberal bourgeois reports disguise the fundamental nature of the white supremacist violence that pervades settler society. Through the lens of liberal “analysis,” all social ills are the result of scoundrels sullying otherwise valorous institutions. However, this misunderstands not just the material base out of which these very institutions were crafted in the first place, but also the insidious ways in which they get continuously reproduced, refined, and made more suitable to their primary purpose: maintaining the particular property relations of capitalism.

Policing presents its semi-legitimate face as “protecting the people,” originally with an explicitly racialized definition of “the people,” then retreating into implications and dog whistles. To bolster the white supremacist mythos that paints racialized populations as the source of civil strife, the ruling class has spent centuries pumping money into bad studies and employing racist professors to espouse the theory that certain populations are inherently “criminal.” Every new measure passed to empower the police has come with corresponding narratives stoking the fascist flames: “superpredators,” “crack epidemic,” “migrant caravans”. This has served to simultaneously drive recruitment and political support for the police from among the beneficiaries of white supremacy. The attractiveness of law enforcement to today’s fascists is unsurprising, given this historical context.

Law enforcement itself serves as a crucible of fascism, concentrating the most destructive aspects of the ideology into a superheated core. Its role as the violent arm of the state provides fertile soil for recruiting, training, and organizing nascent white supremacists into capable, radicalized cadres, indoctrinated with fascist ideology and inoculated against empathy. Combined with the tendencies of groups toward polarization (a meta-analysis of which can be found here), the overtly oppressive role of law enforcement creates an environment that drags its members toward fascist radicalization. This radicalization happens in much the same way that all institutions (fascist or not) mature into hegemonic forms, through the mutually-reinforcing processes of selection and intensification.

Selection is the process of sorting masses of individuals based on their demonstrated values and selecting the “best” — i.e. most well-suited to the group’s aims — for promotion, deeper into the institution. Although this can be a rigidly-defined process, as in the case of deliberately constructed organizations (such as workplaces), selection also takes place constantly throughout social life. Friend groups, community associations, activist circles, and more are constantly going through a loose process of selection; those who best fit in with the group and its purpose tend to find themselves more deeply involved in it, encouraged by those already integrated within it. The values being selected for vary from group to group, and can cover an immense range of criteria: specific skillsets, existing social ties, resources, even fashion sense or humor. The most common value being heuristically screened for, across all social structures, is how well an individual “clicks” with the existing group: like selects like. “Promotion,” of course, can also be a spectrum: anywhere from simply spending more time with like-minded individuals to actively being given more responsibilities and privileges within an organized structure. As specific traits get selected for, the individuals exhibiting those traits become better positioned to do the selecting, bringing in other individuals who share those same traits that brought them through the process themselves.

Intensification is the deepening of existing values, making individuals that move through an institution become more suited to the institution’s purpose. Again, this process can be explicit or informal, depending on the specific context. Individuals can be formally trained in specific skills, subjected to exercises designed to impart values and lessons through experience, go through rituals to promote group cohesion, or simply be subtly influenced by existing members of the group in a passive process of socialization. The more formally-organized a group is, the more explicit the programs of intensification that tend to be employed, but the social aspect is always present, and is often of the most relevance. As social creatures, humans are primed to modify our own behaviors and ideals to best integrate into our particular social environments. Over time, whether through passive or active means, groups tend to engender in their members deeper commitment and competence. Whether as education, radicalization, or collegiality, intensification works to define the character of both a group and the individuals within it.

These two processes act in concert, at all levels of institutions, playing into each other to best adapt a group to its niche. Selection elevates those individuals best adapted to modulate the intensification of others: the most charismatic speakers, the most skilled leaders, the most committed to the cause, inevitably find themselves brought up into a position to bring up their like-minded compatriots. Intensification serves as an indicator for selection, with those for whom the process yields the most favorable results increasingly demonstrating their fitness. Those who fail or refuse are seen as poorly-suited to the group and become ever-more estranged, if not outright ejected from the group. As an institution takes shape, these processes can cause it to calcify and regiment its process. Selection becomes increasingly based on set criteria, with explicitly delineated measures of promotion. Intensification practices become standardized trainings and rituals aimed at achieving specific results. But even in the absence of formal protocols, the social structure itself continues to set the pace of its own development, through the placement and shaping of its members.

Nowhere is this more typified than in the crucible of fascism. A new recruit on the force has already gone through several steps of selection and intensification that are adapted to the niche fascism aims to occupy. To even want to join, an individual must already believe in the myth of police as “peacekeepers.” They must ignore the blatant violent excesses of the institution. They already have an instinct toward protecting capitalist, white supremacy hegemony — whether they fully realize it or not. In other words, the police recruitment process itself has already selected for people who tend toward violence, chauvinism, ego, and myopia in service of capital (even if these traits are not always fully-formed in the novice). These traits are intensified during training, where recruits are taught laws, practice with firearms and other weapons, learn interrogation tactics, go through drills on handling “hostiles,” and more. Every step of the training serves to viscerally engrain in these recruits that they are the last line of defense for society against a violent, degenerate, implacable enemy, that their fellow brethren are comrades-in-arms, that the mission of the police is pure and righteous, worth laying down their very lives. They are taught that violent confrontation is not only inevitable, but righteous. In short, by the time they even become a full member of the force, people who were already filtered for traits suitable to fascism have already begun being radicalized into an ideological resentment toward the communities they police.

And then the process really gets started.

When that recruit walks into headquarters, he is entering a building absolutely packed with people who were just like him when they were recruits. Some were simply idealistic and justice-minded, without much regard for the obvious systemic horrors of the institution. Some were white supremacists from the beginning, and saw those horrors as noble. All of them went through a refinement process, and all have been modified by it in some way. They may have nervously laughed off bigoted comments, or they may have made some themselves to fit in. They may have seen squadmates commit acts of brutality, and thought to submit an official complaint — provoking the ire of their compatriots — or they may have eagerly joined in. They have spent every working day being exposed to propaganda, both informal and officially-sanctioned, about crime rates and the dangers of their profession and the fundamental threat posed by “certain communities.” They are promoted officially based on their arrests, tickets, experience, and the approval of higher ranking officers. They are promoted socially based on their cohesiveness within a group that has gone through these same radicalizing processes.

Those who couldn’t cut it — those who were too turned off by the systemic abuse, casual chauvinism, and blatant lies — are not in the room when that recruit walks in. Those who have best embraced that regressive atmosphere are introduced to him as mentors. In a radicalizing environment, the least radical have the least influence and the most radical dominate. In the case of police specifically, fascists find themselves easily making friends, enforcing “law and order,” and rising through the ranks, both institutionally and socially. They find themselves in positions of influence, and continue to shape the process that helped shape them. This attracts more of their ilk to the force, further impacting its development — and theirs. The state gains ever-more violent and rabid enforcers, while the fascists gain ever-more combat experience, fresh recruits, and institutional backing.

Whatever the particular proclivities of that recruit, he will find himself either becoming more immersed in the fascist milieu, more aligned with their ideals, tactics, and even extrajudicial organizations — or he will find himself ostracized, friendless, demoted, fired. The more the members of fascist militias integrate themselves into the (already fascistic) institution, the less common that latter outcome occurs. The initial selection process becomes implicitly more discerning, with potential recruits needing to meet a higher and higher threshold for what level of brutality they think is justified. The training and propaganda become more intense, directed as they are by those already selected for fascist allegiance. The distinction between state-sanctioned violence and paramilitary formations becomes more and more irrelevant.

This is the real reason all cops are bastards: all cops are subjected to a potent, omnipresent bastardization apparatus. They are recruited by fascists, trained by fascists, mentored by fascists, promoted by fascists. If they happen to join another fascist organization, that’s simply them branching out. And when they do, they bring with them tactical training, weapons proficiency, social prestige, state support, and an intensified clarity of purpose. The enemy of the working class is an active army: well-armed, well-resourced, well-organized, and highly motivated. They can be met with nothing less.

Comrade Dremel is a member of the Unity-Struggle-Unity Staff, an experienced educator, organizer, and scientist based in Maryland. Their organizing work has largely centered around labor agitation and fostering scientific literacy, with an emphasis on climate change and pandemic preparedness.

The “Powell Memo” and the Supreme Court: A Counteroffensive Against the Many

By Derek Ford

Republished from Liberation School.

Introduction: The domestic right-wing counteroffensive

By the early 1970s, the global revolutionary tide of socialist and national liberation struggles was at its apex, and the tide was washing over the U.S., with expanding and increasingly militant social movements and political organizations. The beginning of “neoliberalism” was a domestic aspect of the coming global counterrevolution, which devastated the world for decades.

This article tells the story of how the right wing of the capitalist class came to drive a new set of reactionary Supreme Court rulings, government policies, and ideological battles against democracy and the basic democratic rights our class won and that the right wing soon started rolling back. A key figure in this anti-democratic turn was Lewis F. Powell Jr., a tobacco company executive turned Supreme Court Justice. In the transition between the two roles, he wrote his infamous “Powell Memo.”

In hindsight, the private memorandum Lewis F. Powell Jr. sent to the U.S. Chamber of Commerce on August 23, 1971—known as the “Powell Memo”—in many ways represents the inaugural moment in this counteroffensive. Titled, “Attack on American Free Enterprise System,” the Memo clearly expressed the sharpness of the class struggle at that time and encapsulated the capitalist class’ fear that they were losing the battles of ideas and the world. It undoubtedly laid the groundwork for some key components of U.S. imperialism’s new offensive against the global revolutionary upsurge that characterized the immediate post-World War II environment, an offensive that is still with us today.

Understanding the background, context, and content of the Memo helps us get a sense of the right-wing counteroffensive against domestic people’s movements. Powell eventually entered the Supreme Court and helped usher in a wave of reactionary rulings against the people and for corporate profits. Thus, while the exact impacts of the Memo are hard to ascertain, they eventually made their way into the law books, attacking affirmative action and establishing a theory of corporate speech and “personhood.” More immediately, after the Memo’s circulation, the Chamber of Commerce “expanded its base from around 60,000 firms in 1972 to over a quarter of a million ten years later,” spending almost $1 billion annually to promote their interests [1].

The ideological stakes at play in the Powell Memo

Powell wrote and sent the confidential memo at the request of one of his colleagues, Eugene B. Sydnor, Jr., who chaired the education committee of the U.S. Chamber of Commerce, for a high-level discussion with the Chamber’s Vice President Arch Booth the next day. The Chamber of Commerce is not, as the name might imply, a government agency, but is the largest private pro-business lobbying group in the country. Because the Memo was written for the capitalist class by one of their most fervent ideologues, it displays the fears and ambitions of the imperialists in the most blatant manner, revealing exactly how they speak to each other when they don’t have to feign decorum or decency, providing a glimpse into how much they feared progressive movements.

“No thoughtful person can question that the American economic system is under broad attack,” the Memo begins [2]. The problem is not so much with the usual suspects like “the Communists, New Leftists and other revolutionaries who would destroy the entire system, both political and economic.” Although such “extremists of the left” are growing in numbers, support, and legitimacy in unprecedented fashion, Powell continues, they are still relatively minor players on their own.

Powell’s primary fear was that revolutionaries, the usual suspects, were now influencing “perfectly respectable elements of society” such as “the college campus, the pulpit, the media, the intellectual and literary journals, the arts and sciences, and from politicians.” In essence, Powell expresses how the global tide of revolutionary and progressive struggles sweeping the world during that period were normalizing and popularizing radical political change and demands [3]. As he puts it, the issue is that respectable institutions like the campus were hijacked “by minorities” who “are the most articulate, the most vocal, the most prolific in their writing and speaking.”

Powell’s insistence on the influence of vocal minorities—a prelude of sorts to the “silent majority”—was more than just a rhetorical flourish. Although the “Marxist doctrine that the ‘capitalist’ countries are controlled by big business” had widespread currency at the time, for Powell, nothing could be further from the truth. Simply put, Powell’s memo claimed that in capitalist countries capitalists had no influence or control over the government or society. This ridiculous claim is phrased frankly:

“…as every business executive knows, few elements of American society today have as little influence in government as the American businessman, the corporation, or even the millions of corporate stockholders. If one doubts this, let him undertake the role of ‘lobbyist’ for the business point of view before Congressional committees. The same situation obtains in the legislative halls of most states and major cities.”

Powell goes further still, in a sentence that constructs the corporation not only as a person, but as a minority person in need of protection: “One does not exaggerate to say that, in terms of political influence with respect to the course of legislation and government action, the American business executive is truly the ‘forgotten man.’”

This dire situation, in which the very existence of capitalism and imperialism are at stake—claims that are, to say the least, exaggerated—calls for drastic and wide-ranging responses. To address the supposed exclusion of corporations in the U.S. government and the attack on the capitalist system, Powell included a vast list of recommendations for pursuing their ideological agenda, in which the Chamber of Commerce would play a central and organizing role. Powell’s upbringing and professional career account for his deep concern for the position of the corporation in U.S. society and politics.

Powell: A fighter for “oppressed” tobacco companies

With a family lineage traced back to “one of the original Jamestown settlers,” Powell graduated from an elite prep school, McGuire’s University School in Richmond, Virginia in 1925 [4]. From there, he ascended the ranks of the political elite, earning a Master of Laws degree from Harvard Law School in 1932 before returning to Virginia and starting a long career with a Richmond law firm. After a brief stint as an intelligence officer in the Army, Powell integrated himself into Virginia’s political scene and rose through the ranks of the American Bar Association, becoming the ABA’s president in 1965.

Powell served on over a dozen boards, including the Colonial Williamsburg Museum and, most pertinently, the tobacco giant Philip Morris. Powell joined Philip Morris’ Board of Directors in 1964 at a time when, historian Jeffrey Clements notes, “the corporation sought to mitigate the US Surgeon General’s report about the grave dangers of smoking” [5].

When he penned his infamous memo, Powell was in the trenches defending Philip Morris and other tobacco corporations through their lobbying group, the now-discredited Tobacco Institute. He was also busy defending big tobacco when Richard Nixon asked him to serve on the Supreme Court in 1971 (although his appointment went into effect in 1972).

During his tenure at the Tobacco Institute, he fought against the “radicals” and liberals in public health and education who were increasingly sounding the alarm on the dangers of tobacco and nicotine addiction. In their 1967 annual report, issued on behalf of Powell and the rest of the Philip Morris board, they deplored how “unfortunately the positive benefits of smoking which are so widely acknowledged are largely ignored by many reports linking cigarettes and health, and little attention is paid to the scientific reports which are favorable to smoking” [6].

Powell was nothing if not a champion of free-enterprise, facts be damned.

The ideological counteroffensive

It’s not hard to draw the line between Powell’s defense of big tobacco and the broader capitalist system, on the one hand, and his derision of public health, education, and the public interest, on the other. For Powell, it was a small and logical step to move from attacking health researchers to attacking other “revolutionaries” and those they influenced in “respectable” places like universities.

In addressing “what can be done about the campus,” Powell outlines an array of tactics and strategies to beat back the insurgent student tide and revert educational institutions away from  critical inquiry. He called for the Chamber of Commerce to establish a cadre of “highly qualified” pro-capitalist scholars, a full-time paid staff of speakers, and a Speaker’s Bureau that would advocate for capitalists.

The Chamber’s “faculty of scholars” should be given “incentives” to publish prolifically in scholarly journals because “one of the keys to the success of the liberal and leftist faculty members has been their passion for ‘publication’ and ‘lecturing.’” Powell wasn’t concerned with the number of leftist faculty per se, and his memo only cited one by name: Herbert Marcuse, one of the few remaining critical theorists who remained committed to organizing and who supervised, among other important revolutionaries (and against the advice of his colleagues), the doctoral work of Angela Davis [7].

Those like Marcuse “need not be in a majority” because “they are stimulating teachers… prolific writers and lecturers,” according to Powell [8]. In fact, “as his attention to charismatic teaching, textbooks, and other writings shows, Powell based his strategy for ideological warfare on the intellectual productivity that he observed among progressive thinkers” [9].

The historical context for Powell’s ire is instructive, as it was during this time that oppressed nationalities were forcing changes in hiring practices, curricular content, and even creating physical spaces dedicated to the study of radical politics and oppressed nationalities and successfully fighting for open admissions.

The militant organized movements of students, workers, Black people, Chicano people, women, the LGBTQ community, and others—many of whom were openly Marxists—forced open some space within universities and society, legitimizing their grievances, proposals, and knowledge [10]. Importantly, the demands of the student movements “were organized around the redistribution of outcomes in the university and in US society generally” [11]. They helped, in part, to fundamentally restructure what and whose knowledge counted by positioning oppressed groups as central knowledge producers.

Unable to captivate audiences with their ideas or teaching, Powell urged the Chamber to ensure capitalist ideologues would gain audiences on campus. He called on the Chamber to “insist upon equal time on the college speaking circuit” between critics and proponents of capitalist exploitation and oppression. Importantly, they must be “attractive, articulate and well-informed speakers” who “exert whatever degree of pressure—publicly and privately” to ensure equal speaking opportunities” [12].

Powell’s focus on “equal speaking opportunities” denies the larger political and historical context of the times, as if socialists and capitalists get equal time and space in the mainstream news outlets or corporate papers. At the same time, within the universities, they’re still mobilized to promote right-wing ideologues. Today, it’s clear to growing numbers of people in the U.S. that “freedom of speech” policies are intended to limit the dissemination of and engagement with revolutionary ideas.

The Supreme Court: Defending white supremacy and corporate speech

Powell’s disdain for revolutionaries wasn’t personal (or wasn’t primarily personal); it was political. Take, for example, his role in the 1978 Supreme Court case Regents of the University of California v. Bakke, a ruling that was a significant step on the way to undoing affirmative action. Although the ruling sustained affirmative action, it declared racial quotas for university admissions to be unconstitutional and, specifically, in violation of the Equal Protection Clause of the Fourteenth Amendment.

In his majority opinion, Powell claimed that “the United States had become a Nation of minorities” and the U.S. Constitution was meant “to overcome the prejudices not of a monolithic majority, but of a ‘majority’ composed of various minority groups” [13]. White people were, according to his ruling opinion and his own beliefs, minorities deserving protection [14].

In 1982, he issued the majority opinion in Central Hudson Gas & Electric Corporation v. Public Service Corporation of New York, declaring that private utility and energy corporations could, with the protection of the right-wing activist court, dominate the imaginary “marketplace of ideas.” The case revolved around the prohibition of energy corporations from promoting their services during and after the 1973 oil crisis. Powell’s opinion affirmed that corporate “expression not only serves the economic interest of the speaker, but also assists consumers and furthers the societal interest in the fullest possible dissemination of information.” The opinion “rejected the ‘highly paternalistic’ view that government has complete power to suppress or regulate commercial speech” [15].

With the backing of a new barrage of pro-capitalist think tanks and institutes, Powell led the Supreme Court on a pro-corporate rampage that was based on an illegitimate precedent. As discussed in the Liberation School article on Santa Clara County v. Southern Pacific Railroad Company, the 1886 Supreme Court case has been falsely interpreted as setting the “precedent” for corporate personhood [16]. The case did not rule on the question of corporate personhood. Rather, a statement on corporate personhood was included in a headnote added to the case. Headnotes are not legally binding and therefore do not impact the establishment of legal precedent.

Nevertheless, the same year that Powell led the court to undo affirmative action in the Regents of the University of California, he also established “corporate speech” as protected under the First Amendment. That case, First National Bank of Boston v. Bellotti, for the first time held that corporations are protected by the First Amendment and therefore are entitled to “free speech.” Powell delivered the majority opinion in the case, stating “the Court has not identified a separate source for the right when it has been asserted by corporations.” In the footnote accompanying the statement, he claims that “it has been settled for almost a century that corporations are persons within the meaning of the Fourteenth Amendment,” incorrectly citing Santa Clara as legal precedent [17].

With Powell’s new theory of corporate speech, “the Court struck down law after law in which the states and Congress sought to balance corporate power with the public interest” [18].

Conclusion: The struggle for socialism and liberation today

Powell’s Memo and interventions in the Supreme Court were part of an overall strategy to defeat or at least de-radicalize the revolutionary movements of the time, especially the radical transformations they achieved in education. A central element in the capitalist state, education always plays an important role in the class struggle, as it is a primary place where we form our ideology or worldview, whether we know it or not.

The struggle wasn’t—and isn’t—confined to the university, and in fact, its radical edge comes from its ability to link the university to broader social struggles, from anti-imperialism and socialism to anti-racism and sexism, then and now. As the Powell Memo shows, for the ruling class at the time, the balance of forces tipped too far toward the exploited and oppressed. In response, the capitalists launched a virulent counteroffensive in all areas of society, and Powell, his role on the Supreme Court, and his Memo were integral parts of this reactionary wave we need to, and will, push back.

References

[1] David Harvey,A Brief History of Neoliberalism(New York: Oxford University Press, 2005), 43.
[2] Lewis Powell, “Attack on American Free Enterprise System,”PBS. Availablehere.
[3] See Brian Becker, “From Inter-Imperialist War to Global Class War: Understanding Distinct Stages of Imperialism,”Liberation School, 28 July 2018. Availablehere.
[4] Tinsley E. Yarbrough, “Powell, Lewis F., Jr. (1907-1998), Supreme Court Justice,”American National Biography, 01 January 2001.
[5] Jeffrey D. Clements,Corporations are Not People: Reclaiming Democracy from Big Money and Global Corporations(San Francisco: Berrett-Koehler Publishers, 2014), 21.
[6] Cited in Ibid., 22-23.
[7] Gabriel Rockhill, “Critical and Revolutionary Theory: For the Reinvention of Critique in the Age of Ideological Realignment,” inDomination and Emancipation: Remaking Critique, ed. D. Benson (Lanham: Rowman & Littlefield, 2021).
[8] Powell, “Attack on American Free Enterprise System.”
[9] Roderick A. Ferguson,We Demand: The University and Student Protests(Oakland: University of California Press, 2017), 44.
[10] See Stephen Ferguson II,Philosophy of African American Studies: Nothing Left of Blackness(New York: Palgrave Macmillan, 2015), 16.
[11] Ferguson,We Demand, 40.
[12] Powell, “Attack on American Free Enterprise System.”
[13] Regents of the University of California v. Bakke, 438 U.S., 265 (1978), 292. Availablehere.
[14] Ibid., 295.
[15] Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S., 557 (1980), 561, 562. Availablehere.
[16] Curry Malott, “Corporate Personhood, Monopoly Capital, and the Precedent that Wasn’t: The 1886 ‘Santa Clara’ Case,”Liberation School, 09 February 2023. Availablehere.
[17] First National Bank of Boston v. Bellotti, 435 U.S. 765 (1978), footnote 15. Availablehere.
[18] Clements,Corporations are Not People, 25.

The "Manifesto of the Communist Party" 175 Years Later

By Derek Ford

Republished from Peace, Land, and Bread

There’s perhaps no better crystallization of the revolutionary origins of Marxism than the 1848 publication of the Manifesto of the Communist Party (later referred to simply as the Communist Manifesto to please the censors). There’s perhaps no better reason to re-read the text than today, on the 175th anniversary of its publication, on what we now celebrate, thanks to LeftWord Books, as Red Books Day.

The Communist League, a small underground group, tasked Marx and Engels to draft a manifesto that would not only serve as a program of the “party” or political organization but would also potentially intervene in the battles they anticipated coming. As the economic crisis intensified, those clashes did come out into the open, in fact just days after the Manifesto’s publication.

The plan to immediately translate the text into several languages, as indicated in the introduction, went unrealized, and the Manifesto didn’t have an impact on the 1848-49 revolutions (although perhaps it had some influence in Germany). After its initial run in February 1848, it was reprinted a few times by May; but, by then, the initial victories disintegrated. The revolutionary hopes of the bourgeois-democratic struggles were met with fierce counterrevolutionary violence against the workers and the general democratic forces of other exploited classes. Everywhere reaction set in, from France and Prussia (Germany) to Italy and Switzerland, a sequence that pushed developments in communist theory and organizing, affirmed the central tenets of the Manifesto (including the international nature of the class struggle), called for a refined approach to the tactics and strategies of struggle and the national question, and decidedly shifted the center of European revolutionary potential to England. [1]

With the counterrevolution cemented, the League’s leadership suspended its activities, some of which it resumed before officially disbanding in 1852. The text was read by a handful of revolutionaries at the time, most of whom were not in agreement with Marx and Engels, and was written for an even smaller grouping. It wasn’t until the early 1870s that the Manifesto appeared in Europe for widespread distribution. This is partly because of Marx’s prominent role in the First International, beginning in 1864, and his widely acclaimed analysis of the Paris Commune. The main reason, however, was more ironic. The German government put several leaders of the German Social Democratic Party on trial in 1872, and to make their case the prosecution ended up entering the Manifesto into court records. Doing so allowed radical publishers to “evade the censorship laws and embark upon the Manifesto’s republication.” [2] With the Social Democratic Party’s leadership fighting charges of treason, the conditions weren’t favorable to an open call for a communist party to achieve the objectives set out in Marx and Engels’ pamphlet. The new circumstances compelled publishers to change its title to Communist Manifesto. It wasn’t until the Soviet Union’s republication in the early 20th century that the original title came back.

The Manifesto eventually spread across the globe rapidly, from China and Japan to Latin America and the U.S., but only after the specter of communism materialized with the 1917 Bolshevik Revolution. With state power, a dedication to worldwide liberation and socialism, concentration on theoretical study, and general education, among other duties, the Soviets translated it into numerous languages and sold it on the cheap. Since the Bolshevik Revolution, every revolutionary movement has adopted the text for its unique conjuncture, in keeping with the overall ethos of the Manifesto’s content.

Any expression of historical materialism–the method and guide of communists–is, it unfortunately needs to be stated, historical. Nothing holds for all time everywhere. Marx and Engels say as much when they close their preface to the 1872 reissue by listing what they wanted to update 25 years later, a list that is quite extensive especially given its brevity. They didn’t edit the text because it had, by then, “become a historical document which we have no longer any right to alter.” This presents a problem for some readers insofar as it is a very early text, written before Marx’s real study of political economy, and thus one from which the key theoretical developments of Marx are absent. However, in the same preface Marx and Engels also make it clear that “the general principles laid down in this Manifesto are, on the whole, as correct today as ever.” [3] Despite any deficiencies in political clarity or theoretical coherence, its precise, energizing, and careful formulations still exert force today.

Like any work, the Manifesto was determined by its particular context of production. The fact that its distribution and reception have only increased over time (and in ways favorable to our class) testifies to its ongoing relevance. It remains a foundational pillar in the development of Marxism—or revolutionary socialism, a mission we continue to realize on the global scale. The Manifesto comes to life whenever the class struggle intensifies or wherever rapid shifts in political consciousness occur, like in the radical transformation we’re undergoing in the U.S., where the fog of anti-communism is lifting—that’s why Red Books Day has, every year, expanded and flourished. Prompted by this opportunity to revisit the text afresh, this short article doesn’t summarize the content as a whole but rather contextualizes some of the Manifesto’s main principles within some of the later works of Marxism and the Marxist movement more generally, providing clarity and correcting some common misinterpretations of the work that oftentimes falsely justify premature dismissals of Marxism, socialism, and communism. [4] In conclusion, I place the key tasks we inherit from the Manifesto and how later developments in the radical Black and communist theory are absolutely pivotal to pursuing this project today in that they help us understand the links between anti-communism and white supremacy and aid our project in uniting all working and oppressed people for the common liberation of the many.

The Pedagogy and Form of the Manifesto

Marx and Engels met in 1842 on Engels’ way to Manchester, reuniting two years later after Engels returned to the city. Both were fellow travelers of the Young Hegelians. Marx edited a radical paper, Rheinische Zeitung, to which Engels contributed an article on political economy. The next few years of their collaboration were remarkably transformative: by 1846 they had decisively broken with the Young Hegelians and initiated their development of historical materialism and the origins of a more mature revolutionary theory, informed as it was by decades of ongoing practical struggle and study. While Marx and Engels broke with their younger Hegelian selves in 1845-46 to articulate the historical-materialist method of communism, the Manifesto links that method with its objective and organizational form.

The pamphlet was penned primarily by Marx in January 1848 in Brussels, although it was a collaborative project. Notwithstanding the debates about to what extent Engels’ initial drafts contributed to the final project—and in particular his “Draft of a Communist Confession of Faith” for the Communist League’s First Congress in 1847—it was Engels’ overall writing, theorizing, and organizing that provided Marx with the requisite knowledge about modern industry and also that helped both formulate the historical materialist method, and it was largely Engels’ interventions that enabled him and Marx to join the League. [5]

Marx and Engels formally joined the Communist League after the spring 1847 conference agreed to the main points they advocated, which were formally adopted at another congress later that year. These points included the principle that members of the League act “in the interest of the Communist Party, the overthrow of the bourgeoisie.” Along with this, they agreed to change the name from the League of the Just—formed in 1837—to the Communist League. In an internal document on the congress, the change of name is granted significance insofar as communists “are not distinguished by wanting justice in general—anyone can claim that for himself—but by our attack on the existing social order and on private property, by wanting community of property, by being Communists.” [6] The Manifesto marked the first real distinction between communists, on the one hand, and utopian socialists (and social democrats), on the other, a distinction hinging on a systematic understanding of the capitalist class struggle, the need to overthrow our class enemy, and the seizure of power.

The Pedagogy and Conjuncture of the Manifesto

Attending to the Manifesto’s style and pedagogical form is important politically and educationally. By doing so, we prevent or inhibit misreading it ourselves, especially given the dominant and enduring role anti-communism plays in the modern U.S. state. Over the last few years, a multiplicity of differing factors and forces in the U.S. have no doubt radically advanced socialism in the battle of ideas. The popularity and acceptance of—or non-antagonism to—socialism is an incredible, promising, and progressive development. I can definitely divide my own life thus far along the lines of this shift, as it has radically impacted essentially all aspects of it. The waters are open for the word, idea, and even the movement of socialism, but that comes with an unavoidable muddying of those waters. Such conditions are openings for the necessary task of clarifying Marxism, giving definition to socialism, ideologically and organizationally reuniting us with the centuries-long class struggles against oppression and, for a much shorter time, against capitalist exploitation, of which we are a part.

Anti-communism’s role in the U.S. is too expansive to locate in one place; too broad to be reproduced in one form or by way of some other political orientation. Many well-meaning but ultimately insufficient, reformist, or ill-conceived “radical” theories today are premised on a rejection of Marxism and the historical project of socialism and liberation, the twists and turns and the heroism and tragedy of such class struggles. This rejection is reproduced by way of the repetition of incorrect critiques and caricatures, such that when Marx is read it comes through the glasses of an anti-communist orientation. In addition to contextualizing it within some aspects of Marxist theory and the movement, I’ve found that attending to the document’s pedagogical form helps me get what’s happening in these relatively few pages.

The work is, first of all, a manifesto, rather than a fleshed-out and fully developed systematic analysis, a comprehensive program of action, etc. As a specific literary genre, manifestos are “always addressed to the masses, in order to organize them into a revolutionary force.” [7] They are written for the yet-to-be subjects of history with no pretension as to what actual people and groups will occupy that subjecthood or what the outcome of the struggle will be. They are orientations and frameworks, not prescriptions or fixed formulas.

The Manifesto was a specific intervention in a concrete time and in a specific place and moment in history. For the Communist League, the pamphlet served as a preliminary program to organize revolutionaries of different stripes around a set of political aims and objectives—potentially into a party. Because we are part of the legacy it inaugurated, because our primary task is to continue the project to overthrow exploitation and eliminate oppression at the national and global levels, it is a pillar in maintaining our legacy and memory. It can also be a short and accessible introduction to Marxism we can read with others and those new to the struggle.

Manifestos, and this one in particular, embody a specific pedagogical form that utilizes several different tactics, all of which are important to acknowledge. The text is addressed to us: the masses of working and oppressed peoples of the world.

One main tactic employed is the didactical method, which for manifestos must be condensed, a kind of schematic and necessarily reductive account of centuries of history, time, and social formations. The didactic method appears as a quick narrative providing the lay of the land, a portrait that, while not exhaustive, is honestly more in alignment with capital today than in 1848.

For this reason, our enemies cite the Manifesto as evidence of Marxist “stageism”—or the accusation that Marx and communists adhere to a fixed, linear, developmental, and chronological conception of history that runs from lower to higher levels, that goes from the past to the future—that is often clumsily equated with “Eurocentrism.”

Stageism was often present before Marx and Engels severed ties with the Hegelians, a break that required creating an alternative conception of history and temporality, one without any destiny, predetermination, causality, or final conclusion. Thus, when Marx and Engels write about “pre-history” they don’t refer to a past and finished state of a society or the world. They employ it as a conceptual tool used to differentiate capital from previous modes of production, and the same goes with Marx’s later critique of “so-called primitive accumulation.” Differentiating theoretical containers from empirical declarations lets us stay true to the Marxist method and prevents us from reading their concepts—like formal and real subjection—as actual processes happening.

That in the 1840s they broke with the dominant Enlightenment frame of history is quite remarkable, and their response was spelled out most potently in the 1857 “Introduction” to the Grundrisse. Marx criticized bourgeois political economy for following the “rule, on the fact that the latest form regards the previous ones as steps leading up to itself” because, in particular, in capitalist societies contradictions are the rule rather than the exception, which means it is a development that is founded on “relations derived from earlier forms” that are still “found within it only in an entirely student form, or even travestied.” [8] Another way to think about it is that Marx acknowledged that the “present” isn’t an interregnum between a “past” and a “future,” but a time, place, and social location where various temporalities and histories play out in complex ways. The principle of unevenness is a primary element of Marxism, and it applies to development, production, struggle, and our sense of time. Capital, not Marx, tries to homogenize and synchronize time by presenting it as abstract and ahistorical, naturalizing capital and its structures. In the 1883 preface to the Russian translation of the Manifesto, Marx and Engels argue that the Russian Revolution, based on communes or the common ownership of land and resources, doesn’t need to go through a “stage” of capitalist development because “the present Russian common ownership of land may serve as the starting point for a communist development.” [9]

Another pedagogical tactic is the call-and-response. In the second section, Marx and Engels clarify the relationship between communists and the proletarians and address criticisms directed toward the former. They announce the charges against them and their defense, which sometimes validates the accusation through clarification. For example, the capitalists charge the communists with wanting to abolish private property, but under capitalism the vast majority don’t have any private property; “in one word, you reproach us with intending to do away with your property. Precisely so; that is just what we intend.” [10] The reader is engaged in a conversation that is still happening today (including through Red Books Day), but with different coordinates.

The third section takes the form of a literature review, a comradely yet critical survey of different strands of socialist thought by which Marx and Engels can differentiate communism. By placing each in their historical context, we learn some of threads woven throughout the long history of the communist project, some of the different eras and forces that articulated the desire for emancipation and equality, and why their historical and material conditions of thought couldn’t set up the foundations for their fuller elaboration.

Another pedagogical tactic deployed is the rallying call to arms. Section four, the last and shortest part of the text, embodies a pedagogy of mobilization, providing immediate tactical decisions that entail engaging with non-communist forces to serve serve the pressing issues of the working and oppressed so that “in the movement of the present, they [the communists] also represent and take care of the future of that movement.” The Manifesto, addressed to us, the masses that make history, closes out by opening up a new horizon: “Let the ruling class tremble at a Communistic revolution. The proletarians have nothing to lose but their chains. They have a world to win. Working men of all countries, unite!” [11]

A Clear Call for Global Emancipation and Liberation

Marx and Engels open the Manifesto with a sweeping declaration: “The history of all hitherto existing society is the history of class struggles.” Struggles between the classes of the slavers and enslaved, lords and serfs, or “in a word, oppressor and oppressed” are generally latent but erupt into visible confrontations that lead to either “a revolutionary reconstitution of society at large, or in the common ruin of the contending classes.” [12]

As Marx openly acknowledged, he wasn’t the first to discover or theorize the existence of classes or the class struggle [13]; that the goal of the class struggle was the political supremacy of the proletarians, however, was a main point of contention between various socialist forces, particularly between the utopians and the communists, as the latter insisted that only through open struggle and the achievement of political power could we achieve equality.

The character of the class struggle changes under capitalism, as do its avenues of struggle. The capitalist epoch is distinct insofar as it generally simplifies class antagonisms. “Society as a whole is more and more splitting up into two great hostile camps, into two great classes directly facing each other: Bourgeoisie and Proletariat.” [14] In this conjuncture of the class struggle, the latter class is revolutionary—or potentially revolutionary.

As a text written for the imminent European crises, its immediate horizon was the workers and militants across Europe. They were writing largely and somewhat schematically about Europe because it was the place, stake, and audience of the battles; but it is clear that the development of European capital wasn’t confined to the continent, that it included the colonization of the Americas and the opening up of the Indian and Chinese markets, as the overall development of production and distribution propelled new developments in communication and transportation, new railways, and created new markets for their commodities and new sources of raw materials and labor, etc. To power such production required new energy sources and inputs, and former ‘middle-class’ independent workers and middle-class operatives of capital were replaced by the modern capitalist class. Each technological revolution within the capitalist revolution cohered a capitalist class that, with its quickly increasing power and reach, captured “the modern representative State,” which “is but a committee for managing the common affairs of the whole bourgeoisie.” [15] The state, that is, serves as a mechanism for the capitalist class to manage its internal and external contradictions.

Marx and Engels survey the revolutionary role played by the bourgeoisie in the struggle against feudalism in Europe, although this is sometimes more sarcastic than serious. The capitalist class overthrew feudal rule, abolishing small-scale patriarchal relations that could be explained away by the Church and replaced them with “naked self-interest” and “substituted naked, shameless, direct, brutal exploitation” for previous labor relations clouded in personal relations and ideological mysticism or immediate dependency. [16] While capital cannot hide its exploitation, it can provide cover for it through abstract legal notions like equality and freedom.

Capital’s growing power also catalyzed the extent of crises of overproduction “because there is too much civilization, too much means of subsistence, too much industry, too much commerce.” [17] The capitalist’s only solution to their own crises is to lay the foundations for more intensive and protracted ones. Because of the competitive laws of capitalism, the bourgeoisie always looks upon the current productive and social relations as transitory and in need of constant change:

Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions are swept away… All that is solid melts into air, all that is holy is profaned. [18]

Capitalism is dynamic; in order to expand—which is its modus operandi—it has to continually reinvest in changes to technologies, transportation, and communication, overcoming the isolation of feudal life and concentrating large numbers of workers in cities and factories, facilitating communication, and organizing. In 1848, this was still a minor and ascendant tendency, although today it is fully realized. The League couldn’t send a pamphlet across the globe in a manner of seconds.

The incessant revolutions in the forces, means, and relations of production “chases the bourgeoisie over the whole surface of the globe,” a phenomenon bourgeois commentators only realized about 130 years later. As capital nestles everywhere, it brings “under the feet of industry the national ground… All old-established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones.” [19]

Capital is a colonizing world power, and Marx and Engels recognized this as a contradictory and also forthcoming development:

The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilization. The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilization into their midst, i.e., to become bourgeois themselves. [20]

This is not a welcoming reception but a warning signal, because “civilization” for Marx and Engels is British or European civilization, one founded on colonialism and slavery, theft and dispossession. The reference to the Chinese Wall is, similarly, not literal in terms of the actual wall nor how capital breaches it, as capital deploys both the “free market” and the coercive and repressive military power that backs that market up.

Marx and Engels certainly appreciate how the generation of productive forces provides the material basis for providing for all of the world, although they were referring to Western Europe in the text. The elimination of scarcity as an inescapable reality and the means to provide not only the basic necessities for the present but additional wants and even stocks of goods for the future is a historic accomplishment. They also celebrated the mixing of lives and cultures owed to urbanization and the dominance of the city over the country, as it “rescued a considerable part of the population from the idiocy of rural life.” [21] The English translation “idiocy” refers to a lack of communication and brevity of social relations, rather than any “intelligence” status. In fact, the increasing comingling of people in cities and countrysides produced a broader and more sophisticated intellectual arena for all.

Moreover, Marx and Engels are responding to the utopian socialists’ critique of bourgeois society by demonstrating the structural reasons for the suffering of such “advanced civilizations” to which the utopians attributed the ills of society. The utopian socialists’ intentions were good but their understanding was guided by morality and their methods were limited to the construction of communes that would, by reason and rational argumentation, win the ruling class over to their side.

Capital’s Production of Our World

The accumulation of capital is the accumulation not only of production and property but of political power, producing a “national” being or a state entity by which the oppressed must conquer—and have conquered—to acquire political supremacy.

In this way, the Manifesto’s assertion that capital “creates a world after its own image” continues to explain much of our global situation today. [22] This is not because capital reproduces itself everywhere and in the same manner, but rather because capital is an inherently uneven system. Consider the absolute general law of capitalist accumulation that creates “accumulation of wealth at one pole” and “accumulation of misery, agony of toil, slavery,” and so on, at the other pole. [23] The accumulation of capital is simultaneously “increasing concentration of the means of production, and of the command over labour” and the “repulsion of many individual capitals one from another.” This, in turn, is offset by the centralization of capital, whereby many smaller capitals are combined into larger capitals. [24] The limit here is, of course, capital’s, insofar as capital can’t accept the complete centralization into a single entity.

The state is key to this and other processes of capital accumulation, which is evident with an example Marx gives of the productive capacity of capital’s centralization: “The world would still be without railways” so long as their production was in the hands of a large number of smaller capitalists, but centralization “accomplished this in the twinkling of an eye.” [25] Railways are forms of immobile and fixed capital, which “assigns it a peculiar role in the economy of nations.” Fixed capital is national capital because it “cannot be sent abroad, cannot circulate as commodities in the world-market.” [26] In order for capital to circulate, it must also be fixed in space; in order for capital to accumulate in one place, it must diminish somewhere else. Hence, the important economic function of war: it literally destroys capital to allow for renewed accumulation.

Marx and Engels articulate some of their knowledge at the time on the dynamics of capital, which never map onto history. The reason the world isn’t a complete image of capital is, additionally, due to the historic resistance of working and oppressed peoples who have achieved political supremacy, although in a different manner than the Manifesto and, later, Marx and Engels, held.

Proletarianization

About halfway through the first section, after discussing the developments of capital, Marx and Engels switch to how the bourgeoisie produced the class who can abolish it and class society: the proletarian class, one continually changing and faced with the task of political consciousness and organization. As capital increases, so too do the ranks of the proletariat, as even smaller independent capitalists can’t compete with modern industry while any unique skills are rendered redundant by technological transformations.

Returning to the opening lines, where they assert that class struggle is the motive force of history, and that capitalism increasingly polarizes society into two antagonistic classes or camps, can better clarify some of the central but often overlooked or misunderstood elements of this formulation.

The first is that the splitting up into two classes is a process rather than a finalized or even finalizable state. In other words, proletarians aren’t produced once and for all; capitalism divides society into two antagonistic groupings. The second is that they refer to both as classes and “camps.” Despite the absence of a fully worked-out definition of classes in the text or in Marx’s work overall, they perhaps called them camps to account for their non-exclusionary character. Indeed, what is remarkably notable in the opening lines are the reduction of various class struggles to that between the oppressor and the oppressed. Even as they acknowledge several classes, some of which include more complicated hierarchies and layers or levels, they recognize a continuity that is more than a repetition of the same and, perhaps, by equating the capitalist class struggle with the struggle between the oppressor and oppressed.

No more do special places in the social division of labor exist—they mention priests and lawyers, scientists and doctors—as a revered and privileged position; they too are reduced to proletarians. [27] Today, 175 years on, my colleagues at DePauw University, facing yet another invented “crisis” and another round of cuts and layoffs, realize that we are workers, not “professors” or “teachers.” Such surprise is explained by the withering away of any material basis for middle-class status and the increasing deskilling of our labor-power. Engels’ similarly accounted for any awe in his 1845 work, The Condition of the Working Class in England, where he recounts how capitalist development in colonial Britain deprived even workers of the illusion they could attain a decent standard of living, thereby collecting “together those vast masses of working men who now fill the whole British Empire.” [28]

The technological dynamism propelled by the need to increase the social productivity of labor through machinery, similarly, swells the ranks of the unemployed and “dangerous classes” and make all proletarians’ “livelihood[s] more and more precarious.” [29] Again, 175 years ago Marx and Engels located precarity as a primary condition we, as workers, are forced to grapple with—well before the “gig economy.”

Oppressor and Oppressed

In the first section, the discussion of the proletarian class comes immediately after Marx and Engels mention how capital tries to solve its contradictions through “the conquest of new markets.” This demonstrates that, even this early on, communists centered the colonial question, even if it wasn’t refined at this time. As Lucia Pradella, among others, has forcefully demonstrated, Marx gave increasing attention and weight to the anti-colonial revolutions happening in the mid-late 19th century. Colonization, for Marx, was not a ‘North-South’ or ‘East-West’ issue; it was, and is, an issue of domination and exploitation.

Neither Marx nor Engels only attended to Europe, nor did they abstract Britain or Europe away as self-enclosed entities. In the Grundrisse, for example, Marx addresses the concentration of labor-power into collective labor, which explains “the violent rounding-up of the people in Egypt, Etruria, India etc. for forced construction and compulsory public works.” [30] Over time, Pradella shows, they extended their position on national liberation and class struggle—both struggles between the proletariat and the bourgeoisie—to other colonial territories, including China and India. During the Taiping Revolution, “Marx changed his previous unidirectional view of international revolution, tracing a relation between proletarian struggle in the metropolis and anti-colonial movements in the colonies.” He welcomed the revolution and the detrimental impacts it would have on British colonialism, the same reason for which he supported—and “was probably the first major European intellectual and political activist to support the national liberation struggle in India.” [31] In a direct rebuttal to allegations of Eurocentrism and a privileging of the ‘working-class’ as the revolutionary subject, Marx argued that the anti-colonial rebellions would come before and would ignite the socialist revolutions in the colonizing countries. [32]

One could argue that the equation of the class struggle with the struggle between the oppressor and oppressed anticipated their forthcoming incorporation of the colonial question and the centrality of national liberation, something featured in the Manifesto itself.

The closing section of the pamphlet addresses how communists in different nations relate to other opposition parties. “In Poland,” they write, communists “support the party that insists on an agrarian revolution as the prime condition for national emancipation.” [33] Just a few lines up from the closing clarion call for “working men of all countries, unite!” we read that, wherever they are, communists “support every revolutionary movement against the existing social and political order of things.” [34] Certainly, they didn’t have a fully fleshed out theory of national liberation and socialism, although later on they did. [35]

Same Objectives, Different Conjuncture: Anti-Racism and the Socialist Struggle

Marx and Engels open the Manifesto not with a preordained future but an indeterminate future that will be produced through struggle: if the proletarians don’t overthrow the bourgeoisie there is “the common ruin of the contending classes.” [36] These options are translated in various ways (e.g., barbarism or socialism; humanity or capitalism), but they are still the base options available to us today. The central question, then, is how do we ensure the victory of our class?

The Manifesto offers no prescriptions and, indeed, the League lacked the depth and breadth of experience from which to draw on to even reflect on their previous organizational forms. Yet it is clear that the proletarians can’t fight it out alone or even on the scale of the workplace, industry, community, or state.

Capitalism, as a system of oppression, requires a collective and organized revolutionary struggle to overthrow it by foreclosing any individualistic or particularistic forms of resistance. As capital grows, so too does its class enemy: “a class of labourers, who live only so long as they find work, and who find work only so long as their labour increases capital.” [37] Independent artisans, shop-owners, peasants, and small producers are thrown into this lot through the production of machinery, which ultimately incorporates the workers’ skill and knowledge into a form of fixed capital. However we rebel and develop, we have to recognize that “every class struggle is a political struggle,” and whenever we fight the bosses and oppressors we’re engaged in the class struggle and in a political project. [38]

The key task, then as now, is to organize the working and oppressed peoples “into a class, and consequently into a political party” that, “organized as the ruling class” will implement a program for the oppressed. [39] This task is, to be sure, complex, sensitive, and contingent on time, place, and society. In the U.S., no communist party or communist movement can unite working and oppressed people into a class unless it represents the diverse characteristics of our class and fights tooth-and-nail for the national and racial liberation projects against white supremacy, settler-colonialism, and the emancipation of all oppressed identities.

By doing so, we confront head-on the ties between anti-communism and white supremacy that Gerald Horne makes clear. Racism to this day is linked with the emancipation of the formerly enslaved because Reconstruction–even after its counterrevolutionary overthrow—was “one of the largest uncompensated expropriations” until, that is, the Bolshevik Revolution in 1917. As such, Horne asserts that “African Americans are living reminders of lost fortunes,” and so “the reaction to socialism–which has also involved expropriations of property—is difficult to separate from race and racism.” [40] For this reason, the primary obstacles to overcome are the long and ongoing legacies of racial slavery and white chauvinism. If we don’t understand their links with what Charisse Burden-Stelly calls “modern U.S. racial capitalism,” we can neither understand contemporary capitalism nor overthrow the capitalists class. [41]

The Communist Manifesto announced the need for the proletariat to win political supremacy and rule over their former oppressors without, however, saying how to pursue this task or what role the state played in it. It was precisely “the defeats of the revolutions in 1848 that allowed Marx to go beyond the Manifesto’s general formula and sum up that experience with greater clarity” rather than “an abstract formula.” [42] Marx and Engels admit as much in the 1872 Manifesto preface, as the Paris Commune made it clear that workers can’t use the existing state for our project but must smash that state and construct a new one in our interest. We can’t rely on the contemporary U.S. state, founded and maintained as it is by white supremacy, capitalist exploitation, imperialist plunder to provide either the avenue to socialism or the apparatus by which to achieve it.

Let’s read the Manifesto of the Communist Party today, and tomorrow, for our history, present, and our future common and universal emancipation and freedom.

Endnotes

[1] One of Marx’s main disputes with other members of the League was his assertion that, because the German bourgeoisie was so inactive and powerless, that country could undergo a bourgeois and subsequent proletarian revolution in 1848 (a “permanent revolution”).

[2] Jones, Gareth Stedman. “Introduction.” p. 17.

[3] Marx, Karl, and Engels, Friedrich. The Communist Manifesto. pp. 198, 197.

[4] For more background and context, see The Peoples Forum. “History of The Communist Manifesto with Brian Becker.” Available here.

[5] Ireland, David. The Communist Manifesto in the Revolutionary Politics of 1848. pp. 37-68.

[6] Wolff, Wilhelm, and Schapper, Karl. “A Circular of the First Congress of the Communist League to the League Members. June 9,1847.” pp. 599, 595.

[7] Althusser, Louis. Machiavelli and Us. p. 17.

[8] Marx, Karl. Grundrisse. pp. 105, 106.

[9] Marx, Karl, and Engels, Friedrich. The Communist Manifesto. p. 196.

[10] Ibid., p. 237.

[11] Ibid., p. 258.

[12] Ibid., p. 219.

[13] Marx, Karl. “Marx to Joseph Weydemeyer.” pp. 2-65.

[14] Marx, Karl, and Engels, Friedrich. The Communist Manifesto. p. 220.

[15] Ibid., p. 221.

[16] Ibid., p. 223.

[17] Ibid., p. 226.

[18] Ibid., p. 222.

[19] Ibid., p. 223.

[20] Ibid., p. 225.

[21] Ibid., p. 224.

[22] Ibid.

[23] Marx, Karl. Capital (Vol. 1). p. 604.

[24] Ibid., pp. 586, 575.

[25] Ibid., p. 588.

[26] Marx, Karl. Capital (Vol. 3). p. 162.

[27] Marx, Karl, and Engels, Friedrich. The Communist Manifesto. p. 228.

[28] Engels, Friedrich. The Condition of the Working Class in England. p. 30.

[29] Marx, Karl, and Engels, Friedrich. The Communist Manifesto. p. 229.

[30] Marx, Karl. Grundrisse. p. 528.

[31] Pradella, Lucia. Globalisation and the Critique of Political Economy. pp. 120, 122.

[32] Marx, Karl. “Revolution in China and Europe.” p. 93.

[33] Marx, Karl, and Engels, Friedrich. The Communist Manifesto. p. 257.

[34] Ibid., 258.

[35] La Riva, Gloria. “Lenin and the Right of Nations to Self-Determination.”

[36] Marx, Karl, and Engels, Friedrich. The Communist Manifesto. p. 219.

[37] Ibid., p. 227.

[38] Ibid., p. 230.

[39] Ibid., p. 230, 242.

[40] Horne, Gerald. “White Supremacy and Anti-Communism.” pp. 282-283.

[41] Burden-Stelly, Charisse. “Modern U.S. Racial Capitalism Some Theoretical Insights.”

[42] Becker, Brian. “How the Ideas of ‘The State and Revolution’ Changed History.” p. 11.

Bibliography

Althusser, Louis. Machiavelli and Us. Trans. F. Matheron. Verso, 2000.

Becker, Brian. “How the Ideas of ‘The State and Revolution’ Changed History.” In B. Becker (Ed.), Revolution Manifesto: Understanding Marx and Lenin’s Theory of Revolution. Liberation Media, 2015.

Burden-Stelly, Charisse. “Modern U.S. Racial Capitalism Some Theoretical Insights.” Monthly Review, Vol. 72, No. 3, pp. 8-20.

Engels, Friedrich. The Condition of the Working Class in England. Oxford University Press, 2009.

​​Horne, Gerald. “White Supremacy and Anticommunism.” Science & Society, Vol. 62, No. 2, 1998, pp. 282-283.

Ireland, David. The Communist Manifesto in the Revolutionary Politics of 1848: A Critical Evaluation. Palgrave Macmillan, 2022.

Jones, Gareth Stedman. “Introduction.” In Karl Marx and Friedrich Engels, The Communist Manifesto. Penguin Books, 1967.

La Riva, Gloria. “Lenin and the Right of Nations to Self-Determination.” In J. Cutter (Ed.), Storming the Gates: How the Russian Revolution Changed the World. Liberation Media, 2017.

Marx, Karl. Capital: A Critique of Political Economy (Vol. 1): The Process of Capitalist Production. Trans. S. Moore and E. Aveling. International Publishers, 1967.

Marx, Karl. Capital: A Critique of Political Economy (Vol. 2): The Process of Circulation of Capital. International Publishers, 1967.

Marx, Karl. Grundrisse: Foundations of the Critique of Political Economy (Rough Draft). Trans. M. Nicolaus. Penguin Books, 1993.

Marx, Karl. “Marx to Joseph Weydemeyer.” In Marx and Engels Collected Works (Vol. 39): Letters 1852-1855, Lawrence & Wisehart, 2010.

Marx, Karl. “Revolution in China and Europe.” In Marx-Engels Collected Works (Vol. 12): Marx and Engels 1853-1854. Lawrence & Wisehart, 2010.

Karl Marx and Friedrich Engels, The Communist Manifesto, trans. S. Moore (New York: Penguin Books, 1967).

Pradella, Lucia. Globalisation and the Critique of Political Economy: New Insights from Marx’s Writings. Routledge, 2015.

Wolff, Wilhelm, and Schapper, Karl. “A Circular of the First Congress of the Communist League to the League Members. June 9,1847.” In Marx-Engels Collected Works (Vol. 6): Marx and Engels: 1845-1848. Lawrence & Wishart, 2010.

Corporate Personhood, Monopoly Capital, and the Precedent That Wasn't: The 1886 "Santa Clara" Case

By Curry Malott

Republished from Liberation School.

Editor’s note: Beginning with overturning Roe v. Wade, the ultra right-wing Supreme Court continues to attack hard-won and elementary democratic rights in the United States, from affirmative action to the Indian Child Welfare Act. The following article is the third in our series “Crimes of the Supreme Court,” which demonstrates the fundamentally reactionary and anti-democratic nature of the Supreme Court. By examining key decisions in the Court’s history, we explain their historical and political context, the legal concepts and frameworks used to justify their decisions, and lay out their implications for later cases. This entry focuses on an 1886 Supreme Court ruling that is often cited as the precedent guaranteeing corporations the same protections as “natural persons,” although it did no such thing. Nonetheless, this case and several preceding ones demonstrated how the struggle for corporate personhood—particularly under the “Equal Protection Clause” of the 14th Amendment—was intimately bound up in the transition to U.S. monopoly capitalism.

How do the actual people in charge of corporations manage to remain protected from the consequences of the countless crimes they commit year after year? How is it that when CEOs make clear and obvious decisions that habitually violate every existing worker-won regulation, from the Clean Air Act to the Civil Rights Act, with very few exceptions, they charge the corporation—the “artificial” or “unnatural” person—instead of the CEO—the actual, “natural person” who made those decisions?

The legal grounds that corporations have the same protections and rights as “natural persons” is commonly justified by the 1886 Supreme Court ruling in Santa Clara County v. Southern Pacific Railroad Company. As we’ll see, the Court’s decision in the case didn’t establish any precedent for corporate personhood, nor did the Court make any ruling on it. To the extent that the Supreme Court even debated “artificial,” “corporate,” and other kinds of personhood, they did so to facilitate the transition from “free competition” to monopoly capitalism in the country.

In this article, we explore the Santa Clara case before turning to debates within the institutions of power in the U.S. over the Equal Protection Clause of the 14th Amendment. These debates can only be understood if situated within their historical, political, and economic context: the transition to monopoly capital in the U.S. To conclude, we explore the case’s destructive legacy, or the way it was illegitimately used to set precedent for the growth of monopoly capital.

The facts and outcome of the case

During the 1878-79 California Constitutional Convention, the state enacted a new tax code that, in part, prevented railroad corporations from factoring existing debts and mortgages into their total taxable value. The Southern Pacific Railroad Company, along with the Central Pacific Railroad Company, refused to follow the new code. They did not pay the additional tax, nor did they pay the back taxes they subsequently owed.

The first point of contention were back taxes—including the interest on them—that railroad companies refused to pay in California, specifically the taxes being levied on the fencing along the railroads’ right-of-way. Among the handful of complaints brought forth, lawyers representing the railroads argued that it was the county and not the state that should have assessed the value of the fencing. As Thom Hartmann points out, “the railroad was refusing to pay taxes of about $30,000,” which is “like having a $10,000 car and refusing to pay a $10 tax on it—and taking the case to the Supreme Court” [1].

Faced with the loss of revenue, a number of counties in California, including San Mateo County, filed suit against the railroad companies in an attempt to collect the taxes that the railroads refused to pay. According to Southern Pacific’s executives, they were being treated unfairly relative to “legal” or “natural” persons who could deduct debts and mortgages from their taxable income or value. The cases were consolidated before reaching the California Supreme Court, which ruled mostly in favor of the counties and against the railroad companies. The one exception concerned the fences constructed around the railroads. The Court affirmed that the fences “were improperly included by the State Board in its assessments” and, as a result, there was no legal basis for the counties to collect additional taxes [2].

The origins of corporate personhood?

Interestingly, however, the Santa Clara decision is rarely remembered for the issue of taxation and, more specifically, the role of railroad monopolies, and is instead mostly cited as the first instance of the Supreme Court upholding “corporate personhood.”

One of the railroad’s defenses at the Supreme Court hearing included arguing that the “Equal Protection Clause” of the 14th Amendment applied to corporations, so therefore the state couldn’t tax them differently from other citizens. Yet this was only a minor point among the six arguments presented by the railroads.

Moreover, it seems Chief Justice Morrison Waite quickly dismissed the argument in the case by stating that it is a general, agreed upon principle that the clause applies to corporations.  According to the ruling’s “headnote,” Waite stated the Court would not even consider “whether the provision in the 14th Amendment to the Constitution, which forbids a State to deny any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does” [3].

Did the Supreme Court, then, establish a legal precedent that corporations have the same legal protections as natural persons? Despite the Supreme Court citing it as precedent for a century, and despite that it was routinely taught to law students as precedent, the ruling did no such thing.

Waite’s comment above was not part of the official ruling. Instead, it was included in a headnote written by the Court’s Reporter of Decisions, journalist J.C. Bancroft Davis, former president of the Newburgh and New York Railway Company. Headnotes are introductory summaries of cases added to Court rulings to make it easier for legal professionals and others to sift through cases.

Headnotes, therefore, are not legally-binding and hold no legal authority. It wasn’t until the 1906 ruling in United States v. Detroit Lumber Co. that the Supreme Court officially ruled in its majority opinion that headnotes aren’t part of the Court’s rulings or findings. As then-Chief Justice David Brewer wrote, “the headnote is not the work of the court, nor does it state its decision… it is simply the work of the reporter, gives his understanding of the decision, and is prepared for the convenience of the profession in the examination of the reports” [4]. This, however, hasn’t prevented the U.S. courts in general, and the Supreme Court in particular, from citing the headnote as precedent.

The headnote is significant in a few ways. First, the report of Waite’s comments didn’t include any legal or constitutional justification; it was a mere assertion. As a result, since 1886 the status of corporations as “people” protected under the Constitution has been a source of controversy. Moreover, “the concept of the corporate person lacks a principled definition and, therefore, seems to expand, or contract, depending on the circumstances and on the personal predilections of the speaker” [5].

The headnote is especially significant because of Waite’s sweeping acceptance that corporations are protected by the Equal Protection Clause of the 14th Amendment. This differs from a previous Court ruling in the 1873 Slaughterhouse Cases that made their way to the U.S. Supreme Court after an 1869 Louisiana legislature decision to issue a charter confining slaughterhouse operations in New Orleans to a single corporate entity, the Crescent City Live-Stock Landing and Slaughter-House Company.

Crescent City’s charter required the company to run its waste downstream, ordered other slaughterhouses, most of which were much smaller, to close, and forbid the establishment of any new slaughterhouses in the area for the next 25 years. In effect, the legislature produced a monopoly on slaughterhouses for the time period. This meant that all workers, including butchers, had to work for Crescent or find work elsewhere. As a result, hundreds of members of the Butchers’ Benevolent Association, which represented smaller or independent slaughterhouses, filed suit in the Louisiana Supreme Court on the basis that the monopoly violated the 13th and 14th Amendments by forcing butchers into “involuntary servitude” and taking away their property without compensation or due process.

When the U.S. Supreme Court took up the cases, the majority opinion explicitly stated that the Amendments did not apply in this instance. The dissenting opinion by Justice Stephen Field proposed a broad definition of the Amendments at stake, one that would become more expansive as the overthrow of Reconstruction solidified. The crucial issue, he stated, was “whether the recent amendments to the Federal Constitution protect the citizens of the United States against the deprivation of their common rights by State legislation.” Field closed the dissenting opinion by asserting that the 14th Amendment applies to corporations and monopolies. He wrote that the Amendment “does afford such protection, and was so intended by the Congress which framed and the States which adopted it” [6].

Between his time on California’s Ninth Circuit Court and the Supreme Court, “Field worked tirelessly to expand the 14th Amendment to include the rights of corporations.” He was driven by careerism and a desire to reach the country’s highest court and maybe even the presidency “with the support of railroad money” [7].

In his dissenting opinion in a related railroad case, Fields expressed his outrage that the Court was neglecting the crucial question, which was if “an unlawful and unjust discrimination was made . . . and to that extent depriving it of the equal protection of the laws” [8].

Whether or not the original drafters of the post-Civil War amendments explicitly considered if and how the 14th Amendment—or the 13th— could apply to corporations or any group other than Black people is unclear. Based on available records, some argue that Congress may indeed have considered or intended for corporations to be included in the 14th Amendment, as the original drafters “were inundated with petitions from insurance companies and railroads complaining about protectionist state measures” [9]. That the 14th Amendment makes a distinction between “persons” and “citizens” is also significant, as the former “are entitled to due process and equal protection” while the latter are only “guaranteed the privileges and immunities of national citizenship” [10].

What is certainly true, however, is that almost none of the 14th Amendment cases heard by the Supreme Court concerned the rights of Black people. The Supreme Court itself affirmed this in 1938. In his dissenting opinion on Connecticut Gen Life Ins C. v. Johnson, Justice Hugo Black cited Miller’s majority opinion in the 1873 Slaughterhouse cases, doubting that the 13th and 14th Amendments would include anyone except Black people. “Yet,” he continued, “of the cases in this Court in which the 14th Amendment was applied during the first fifty years after its adoption, less than one-half of 1 per cent. invoked it in protection of the negro race, and more than 50 per cent. asked that its benefits be extended to corporations” [11].

Further, recent history affirms that the U.S. ruling class considers and treats corporate entities much more humanely than they treat Black people.

Corporate personhood and a new phase of U.S. capitalism

The period leading up to the 1886 case was characterized by monumental shifts in the political, social, economic, and racial order of the U.S. This included the heroic Reconstruction era as well as its tragic defeat and the rapid growth of monopoly capital in the country.

In the decade leading up to Santa Clara case, railroad barons emerged as a new faction of the capitalist class that provided the model for monopoly capital. This is why, just before the 1878-79 California Convention, California allowed the Southern Pacific Railroad Company to absorb several other corporations. Prior to that, Congress granted 11 million acres of land to Southern Pacific, although for their expansion the company acquired additional debts through a mortgage on its construction, equipment, railcars, and so on. Southern Pacific was also granted the legal authority to construct a line connecting San Francisco to Texas.

The trend toward monopoly predated the Civil War and coincided with the ongoing conquest of the continent. Large corporations, with state funding, facilitated the expanding interstate commerce through railways and canals, which in turn led to a larger and more integrated national economy. Federal and state legislatures promoted this centralization of capital insofar as it took the economic burden off the state while still allowing the state to use the new networks for postal and military purposes.

The pressing question for the U.S. ruling class was whether or not the government-backed monopolists would ultimately represent a unique and temporary phenomenon or provide a model for capital as a whole.

There was a clear struggle between the ideologues of small enterprises that formerly dominated the economic landscape and operated similarly to the idealistic “free competition” phase of capitalism and those of monopoly capital, where the various enterprises dispersed throughout different entities were consolidated into large ones.

As Morton J. Horowitz details in his account of how legal structures raced to keep up with the latest changes in capital, in the 1880s there wasn’t any precedent about “natural” or “corporate” persons because these categories threatened individualism and free-market competition. By the turn of the century, however, the struggles over “political economy between small entrepreneurs and emergent big business over the legitimacy of large scale enterprise” erupted [12].

The debates taking place within the ruling class had to do with whether or not there was an inherent tendency for capital to centralize. At the time, most political economists didn’t give credence to the inevitability of monopolization, seeing the railroads as exceptional. It didn’t take long until politicians, bourgeois economists, and others rightly interpreted the railroad’s economic trajectory as a precursor to a coming phase of industrial monopolization.

There was a shift in power and influence within the capitalist class from the old “free enterprise” capitalists to the new monopolists:

“By the late nineteenth century in America, fundamental changes had already taken place in the legal treatment of the corporation. First, and by far the most important, was the erosion of the so-called ‘grant’ or ‘concession’ theory of the corporation, which treated the act of incorporation as a special privilege conferred by the state for the pursuit of public purposes. Under the grant theory, the business corporation was regarded as an ‘artificial being’ created by the state with powers strictly limited by its charter of incorporation. As we shall see, a number of more specific legal doctrines were also derived from the grant theory in order to enforce the state’s interest in limiting and confining corporate power” [13].

From this point of view, the rise of monopoly capitalism, or the centralization of larger and larger sectors of the means of production into fewer and fewer hands, is driven by the self-expansive and competitive nature of capitalist production. The Supreme Court provided the legal grounds for facilitating this transformation.

Legacy of the case

In the immediate aftermath of Santa Clara, “the Court did away with 230 state laws that had been passed to regulate corporations” [14]. It was clear evidence monopoly capital was in control of politics. Supreme Court decisions in the years between 1908 and 1914, often citing corporate personhood, struck down minimum-wage laws, workers’ compensation laws, utility regulation, and child labor laws—every kind of law that a people might institute to protect its citizenry from abuses” [15].

For over a century now, the state has continued to take power and rights away from working and oppressed people and transferred it to capital. They have even perverted the hard-won gains won by people’s movements into justifications for increasing corporate power, perhaps none more disgusting than the misuse of the 14th Amendment.

While even to this day there is no clear legal basis for corporate personhood, that hasn’t stopped the Supreme Court from waging class war against the people on behalf of corporations. Because the nine unelected judges determine the law, they can legally justify whatever tactics they deploy against us.

The misuse of Santa Clara’s headnote has not only severely inhibited the ability to regulate corporations, but it has created a space for CEOs and shareholders to operate with near impunity. For example, Joel Bakan notes that “corporate illegalities are rife throughout the economy…By design, the corporate form generally protects the human beings who run corporations from legal liability, leaving the corporation, a ‘person’…the main target of criminal prosecution” [16].

The Supreme Court was created to serve the interests of the capitalist class. Its very existence stands as a barrier to the working and oppressed peoples’ desire for a true democracy. As the Supreme Court unleashes its most current wave of attacks on our basic democratic rights, we will continue to fight for a new system.

References

[1] Thom Hartmann,Unequal Protection: How Corporations Became People–and How You can Fight Back(San Francisco: ‎ Berrett-Koehler Publishers, 2010), 18.
[2] Santa Clara County. v. South Pacific Railroad, 118 U.S. 394 (1886), 411. Availablehere.
[3] Ibid., 396.
[4] United States v. Detroit Lumber Co., 200 U.S. 321 (1906). Availablehere.
[5] Malcolm J. Harkins III, “The Uneasy Relationship of Hobby Lobby, Conestoga Wood, the Affordable Care Act, and the Corporate Person: How a Historical Myth Continues to Bedevil the Legal System,”Saint Louis University Journal of Health Law & Policy7, no. 2 (2014): 204.
[6] Ibid.
[7] Nicholas S. Paliewicz, “How Trains Became People: Southern Pacific Railroad Co.’s Networked Rhetorical Culture and the Dawn of Corporate Personhood,”Journal of Communication Inquiry43, no. 2 (2019): 204-205.
[8] Cited in Ibid.
[9] Matthew J. Zinn and Steven Reed, “Equal Protection and State Taxation of Interstate Business,”The Tax Lawyer41, no. 1 (1987): 89-90.
[10] Ibid., 90.
[11] Connecticut General Life Ins. Co v. Johnson, 303 U.S. 77 (1938). Availablehere.
[12] Morton J. Horowitz, “Santa Clara Revisited: The Development of Corporate Theory,”West Virginia Law Review88, no. 2 (1986): 187.
[13] Ibid., 181.
[14] Howard Zinn,A People’s History of the United States(New York: Perennial Classics, 1980/1999), 261.
[15] Hartmann,Unequal Protection, 24.
[16] Joel Bakan,The Corporation: The Pathological Pursuit of Profit and Power(New York: The Free Press, 2004), 75-79.

Currency Crisis In The West (1965)

By Hsiang Chung

Republished from Black Agenda Report.

Editor’s Note from BAR: This 1965 essay appeared in Kwame Nkrumah’s journal, The Spark. If it were around today, The Spark would probably carry a warning in the US that it was “state-affiliated media.” Its editors probably wouldn’t care. The Spark was published by Kwame Nkrumah’s Bureau of African Affairs and its explicit mission was to build socialism in Ghana and to aid in fomenting working-class revolution throughout Africa.

The Spark’s content reflected this mission. The weekly paper ran essays articulating the theory of Nkrumaism and published detailed analysis of neocolonialism and imperialism, and of socialism and development. It considered the class struggle in Africa and examined anti-colonial struggles across the continent. In its pages appeared statements of solidarity with Cuba, Algeria, and Black America, and contributions from Amilcar Cabral, Fidel Castro, and Che Guevera. When W.E.B. Du Bois passed away in 1963, an issue appeared in his honor.

For the US State Department, The Spark represented a dangerous tendency within Nkrumah’s Ghana.  In January, 1964 the US Central Intelligence Agency issued a classified report titled “The Leftward Trend in Ghana .” The report noted that the US Embassy in Ghana had characterized a recent speech of Nkrumah’s “as perhaps his most extreme anticapitalist and revolutionary performance.” The speech, according to the CIA, “included [Nkrumah’s] first known specific use of such phrases as ‘class interests’ and ‘class politics,’” it criticized the US “as the citadel of reactionary opposition to progressive forces everywhere,” and it aligned Ghana with “the international ‘socialist’ fraternity.” “Subsequently,” the report continued, “[Nkrumah]  has increasingly tended to mouth the Communist-derived jargon appearing continually in The Spark.”

In their summary of the situation in Ghana, the CIA concluded that, “Barring a successful coup against his regime, it will probably be increasingly difficult for the West to maintain an effective presence in Ghana.”

Nkrumah was overthrown by a CIA-backed military on February 24, 1966.

Below we reprint an article from The Spark titled “Currency Crisis in the West.” Its author is Hsiang Chung, a Chinese economist of whom, we admit, we know little more than his name. Even so, the essay has a crystalline analysis of how monetary policy has been used as a tool of imperial and neocolonial rule. Moreover, in charting the historical reasons for the rise of the dollar’s global supremacy in the twentieth century, it establishes the historical conditions precipitating the dollar’s imminent twenty-first century fall. This is being republished for both historical perspective and relative analysis to the current state of the US dollar. It is important to note that much has changed since this was written in 1965, most notably the varying methods of imperialism/colonialism that have developed by the US and West, the fall of the USSR, and the abandoning the gold standard in 1971.

***

Hsiang Chung, “Currency Crisis in the West,” The Spark: A Socialist Weekly of the African Revolution, January 29, 1965.

The imperialist scramble for world domination is usually marked by a struggle for financial supremacy, for monetary policy is one of the heavy weapons of the imperialist countries in their drive, for expansion--a weapon they use to strangle their rivals and extend their spheres of influence.

In the struggle for monetary supremacy, an imperialist country invariably uses its political and economic power to establish a monetary bloc in which its own currency is made to take a leading position while the currencies of its colonies and dependencies as well as other states associated with it are reduced to a subordinate status.

It has to link to currencies of the monetary bloc members with its own, and at the same time to make them keep their gold and foreign exchange reserves in its central bank to be used by them for “unlimited buying and selling” on foreign exchange market at fixed rates. Consequently, its commodity in capital exports will not have to suffer from the fluctuation of the currency of the monetary bloc members and it will not have to pay more for raw material imports because of the devaluation of its own currency.

Moreover, since the gold and foreign exchange reserves of its monetary bloc members are deposited in its own central exploitation, and this leads to the formation of a financial centre within its own sphere of influence over which it is able to establish its financial supremacy. That is why currency warfare in capitalist international finance is an important means in the imperialist scramble for markets, outlets, for investment and sources for raw materials, as well as an indispensable factor in their constant redivision of the capital of this world.

The Monetary System Crisis Sharpened

The deepening of the general crisis of capitalism, especially the emergence of the crisis in the capitalist monetary system, has intensified the monetary warfare among the imperialist powers. As a result of the world economic crisis of 1929–33, normal financial relations among the capitalist countries were disrupted as never before; the gold standard completely collapsed, and the monetary system of the capitalist countries became chronically unstable.

From that time onwards, in their efforts to maintain currency stability, and to ward off the crisis in the monetary system, monopoly capitalist groups in the imperialist countries were compelled to resort to government intervention on a larger scale than before and adopt such measures in the field of international finance as  moratoria on foreign debts currency depreciation, foreign exchange  restrictions and control etc., in order to consolidate their position in the better struggle for markets and spheres of influence. However, all the steps, which were designed to shift the crisis onto others failed to extricate the imperialists from their plight, but instead made the struggle still sharper and more complicated.

Following the end of World War II, as a result of the formation of the socialist camp and the upsurge of the national liberation movement the areas dominated or exploited by the imperialist countries have become smaller and smaller. In this predicament, the inter-imperialist struggle for markets and spheres of influence has become more acute and currency has been used on a still larger scale as an instrument in defeating their adversaries. Not only have they subjected the currencies of their colonies and dependencies to their own as in the past; they have also exerted great efforts to make their own currency the dominant one within the shrinking imperialist camp. At the same time, the deepening of the general crisis of capitalism has been accomplished by an intensified crisis in the monetary system, and the imperialist countries have been forced to take further steps to intervene in various forms in the field of international finance. However, whenever they are taken by the strong to bully the weak or the weak to counteract an adversary’s pressure, the steps are bound to aggravate the imperialist monetary struggle, and make it more severe than was the case before World War II.

Domination vs Independence

The characteristic of postwar inter-imperialist relations is that US imperialism has increasingly endeavored to consolidate and extend its dominant position while the other imperialist powers refused to reconcile themselves to US control from which they have done all they can to free themselves. This rivalry between US imperialism and the other imperialist powers struggle between domination and independence— is also reflected in capitalist, world finance.

During World War II, US imperialism amassed enormous wealth and greatly expanded  its productive capacity and export trade. In the early post-war years, Washington took advantage of the temporary disappearances of three fascist countries, Germany, Italy, and Japan from the capitalist world arena of competition and of the heavy destruction suffered by the two old imperialist powers, Britain and France; it went all out for economic expansion abroad and consequently had a huge surplus in its balance of international payments and piled up vast gold reserves. In 1938 the US gold reserves amounted to $14,594 million or 56.1 per cent of the gold reserves of the capitalist world. In 1948, they jumped to $24,399 million, or 70.3 per cent of the capitalist world’s total. During this period, the other capitalist countries incurred huge deficits in their international accounts with the United States, resulting in a serious “dollar shortage” and massive gold outflows to the United States.

In the decade between 1938 and 1948, the gold reserves of Britain, the sterling area and the West European countries dropped from $9,511 million to $5,707 million, and their share of the capitalist world's gold reserves fell from 36.6 per cent to 16.4 per cent. At that time the disruption of domestic production, the heavy increases in budgetary deficits, and the impact of deficits in the payment of international payments brought about serious currency depreciation in most of the capitalist countries except the United States. Under the circumstances, the governments of these countries were constrained to their foreign exchange restrictions and controls to achieve, and to stabilize the value of their currencies by artificial means. The result was that they’re currencies became “soft”, i.e., could not be freely converted into other foreign currencies, they were in no position to compete with the dollar, a hard currency which was freely convertible.

Shift in Economic Power

This shift in economic power was much to the advantage of US imperialism in its greedy bid for world leadership. It has made every effort to form a big dollar bloc to dovetail plans to build an unprecedentedly big empire in the world. In addition to adopting political, military, economic and other measures, US imperialism, in order to fulfill this grandiose plan, must take the following steps in the monetary field. On the one hand, it needs to consolidate the external value of the dollar and maintain its “free convertibility” so that fixed exchange rate between the dollar and other currencies can be preserved, and the dollar can have the same status as gold in the capitalist world's current reserves.

This would provide favourable conditions for New York to become the capitalist world’s sole international financial centre.

On the other measures both at home, and in the currency blocs, they control in order to check economic penetration by their competitors. US imperialism therefore found it necessary to do the utmost to intervene in their international financial policies and foreign exchange systems, thus enabling it to maintain normal trade relations with them, and paying the way for its further economic expansion.

In effect, this US imperialist rapid plan is nothing but a refurnished version of the currency blocs established by Britain, France, and other old imperialist powers in their colonies and spheres of influence. But in order to ward off the strong opposition of other imperialists, the United States had to resort to more covert and slyer tactics in pushing forward this plan in the capitalist world.

Price of Gold Kept Down

In the first place, relying on its substantial gold reserves, US imperialism artificially kept down the price of gold in its dealings with other governments or their central banks. It is common knowledge that as early as 1934 the US government prescribed the external value of the dollar, i.e., the parity between the dollar and gold, at $35 an ounce. But since the latter part of the 1930s and particularly since World War II, the value of the dollar has been frequently devalued internally because of inflation. In 1948 the purchasing power of the dollar was only 57.8 per cent of what it was in 1939. In 1963 it further dropped to 44 per cent. In order to stabilize the external value of the dollar by artificial means, the U.S. government, irrespective of the frequent devaluation of the dollar internally, has always exchanged it for gold at the official rate of $35 percent ounce in its dealings with other countries. And so the external value of the dollar has long been out of tune with the extent of its internal devaluation while the price of gold has been greatly kept down.

Other capitalist countries were then suffering from a widespread “dollar shortage” and they virtually had very little or no dollars with which to buy US gold. Therefore, keeping the price of gold down actually meant compelling other capitalist countries to sell gold cheaply to the United States in order to make good their dollar deficits. This increased the surplus in the US balance of international payments, and gave it the opportunity to rake in gold at a low price made it difficult for the latter to relieve their “dollar shortage”. And this also became a pressure under which they had to accept the Marshall plan and other types of “aid,” and thus subject themselves to enslavement by US imperialism.

Another major aim of US imperialism in keeping down the price of gold is to irrigate the same role as gold to the dollar, whose external value was artificially stabilized, and serving as a world currency. Since the currencies of most other capitalist countries were unstable and their foreign exchange reserves, along with, and in preference to pound sterling. This facilitated US imperialism control of their currencies in one way or another, and it’s becoming the biggest International exploiter in capitalist world finance.

Washington’s Building Tactics

In the second place, in the early post-war years, Washington spread such false ideas as “the elimination of foreign exchange control,” “the stabilization of exchange rates,” and “avoidance of competitive currency depreciation.” These were designed to compel other countries to abandon their foreign exchange restrictions and controls, and relatively stabilize their exchange rates in a way advantageous to the United States. It pushed this policy in order to ensure that the proceeds of America commodity exports and the remittance to the United States of profits from overseas investment may be protected from other countries’ foreign exchange restrictions.

It is true that US imperialism, at least on the surface, has not imposed downright control over the currencies of its “allies.” In reality, however, it did all it could to achieve this purpose by bullying tactics and cajolement. As mentioned above, Washington compelled the recipients of its “aid“ to accept such terms as the introduction of free convertibility within a certain period of time and the scrapping of their foreign exchange controls and restrictions.

A notable example of this took place when Britain received a big US loan amounting to $3,750 million in 1945 and two years later was compelled to introduce free convertibility for the pound sterling, which lasted for only five weeks. Of great importance is the fact that the International Monetary Fund set up in the early postwar years— a major instrument of US imperialism in the international monetary field— dangled the bait of short term loans before member states in order to induce them to accept conditions involving the loss of national sovereignty. These included the abolition of foreign exchange, controls and restrictions, the definition of the foreign exchange value of a currency in terms of the dollar containing a specific weight of gold and the obligation to obtain the funds agreement to specific changes in foreign exchange rates.

Struggle Between Dollar and Pound

All these measures were naturally resented by other imperialist powers. However, West Germany and Japan were then dominated by Washington, and it was on the basis of formulas prepared by the US government that the exchange rates for the West German mark and the Japanese yen were established. Inflation of considerably serious proportions and a rapid deterioration in the balance of international payments overtook France and Italy; the franc and the lira were frequently devalued; it was difficult for them to compete with the dollar. Only the pound sterling could initiate limited counter- offensives against it. Although Britain’s power has declined since World War II, it still has the backing of the sterling area in international finance, the pound remains the reserve currency of sterling area countries and a number of other capitalist countries in the world network of overseas banks, which was set up by Britain in the last century, retains considerable influence. In these circumstances, the struggle between the dollar and the pound was naturally the most prominent one in the imperialist currency warfare.

The comprehensive system of foreign exchange restrictions and control set up by Britain in the sterling area was a powerful fulcrum strengthening British imperialist exploitation of the commonwealth countries and checking US economic penetration. And it was a serious handicap to US imperialist expansion in the capitalist world.

In the first few years since World War II, by means of loans, “aid” and pressure by different US controlled international organizations, Washington devised every possible means to compel Britain to open the door to the sterling area, and restore the free convertibility of the pound so as to pave the way for the control of the whole sterling area, including Britain itself. For a time British imperialism refused to take orders from Washington and adopted delaying tactics. But in 1949 a pound was devalued by 30.5 per cent against the dollar, followed by a corresponding currency to valuation by 35 other capitalist countries–to a large extent the result of pressure from Washington.

Nevertheless, Britain and other imperialist powers, wherever possible, dealt Washington’s high-handed policy, a rebuff. The sterling area and the currency blocs of other imperialist countries—such as the franc bloc—clung stubbornly to their spheres of influence. Moreover, on the question of the price of gold, because gold produced in the sterling area makes up more than 70 per cent of the total annual production of the capitalist world, Britain and South Africa have more than once battled for a rise in the gold price as a countermeasure to US control. They eventually succeeded in wrestling some concessions from Washington and were permitted to sell their gold for industrial purposes on the free market at a higher price than the official US price of $35 per ounce. The International Monetary Fund's demand for the abolition of foreign exchange controls, and for the institution of a fixed parity between the dollar and other currencies were ignored by many countries. France and Italy, for instance, did not institute fixed exchange rates until the mid-1950s. This shows that, despite Washington’s desperate efforts to put the capitalist world's monetary system under its control, other imperialist powers have been unwilling to accept permanent subordination, they have exerted every effort to free themselves from the claws of the dollar. With the shift in the balance of forces between the United States and other imperialist powers, both Washington’s efforts at domination in the monetary field, and the other imperialist’s resistance are growing more intense.

No More Dollar Dominance

With the advent of the 1950s and the aggravation of the uneven development of capitalism, new changes have taken place in the balance of forces among the imperialist countries. Propped up by the United States, West Germany, Italy, and Japan, have recovered from their position as defeated countries. The power of France has steadily increased, enabling it gradually to speak on equal terms with the United States. Although it keeps getting weaker, Britain too has no desire to be at the mercy of Washington. US dominance, which was attained during and immediately after World War II, has begun to falter.  

This shift in the balance of forces which is unfavorable to US imperialism is also reflected in international finance. After the war of aggression against Korea broke out in 1950, deficits began to appear in the US balance of payments and outflow of gold started, because its policies of war and aggression made it increasingly difficult for its trade surplus and proceeds from overseas investment to meet its huge military expenditures, foreign “aid” commitments and private capital export.

A similar situation recurred during US economic crisis of 1953–54. After 1956, taking advantage of the Anglo-French aggression against Egypt, the United States sold a large amount of oil and cotton to Western Europe, and this helped to bring about a turn for the better in the US balance of payments. However, from 1950 to 1957, the US gold flow to other countries amounted to $1,700 million. Added to this were mounting short term debts, and the annual rate of deficit in its balance of payments averaged about $1,200 million. During the same period the gold reserves of other capitalist countries increased by $3,700 million and their dollar reserves by $6,400 million. By the 1950s, the widespread “dollar shortage” of the early posts were years had virtually become a thing of the past.

A New State

After 1958, a new state was reached in the struggle between the United States and other imperialist powers to strengthen their respective positions in world finance. On the one hand, as a result of its intensified policies of war and aggression, US imperialism had to spend on an average more than $10,000 million a year for its overseas military expenditures, foreign “aid” and private capital export. This led to an increase in the serious dollar crisis, which was manifested in the form of balance of payment deficits, and of gold outflows. The dollar crisis and the recurrent economic crisis erupted either simultaneously or alternately.

Whatever methods it uses, it is impossible for US imperialism to prevent a continual deterioration in the position of the dollar. On the other hand, with the rapid growth in their political and economic power, the tremendous improvement in the balance of payment, and the big increase in their gold reserves, other major capitalist countries, and particularly several of the Common Market Six with France and West Germany as their nucleus, were able greatly to strengthen their currencies on the international finance market. From 1958 to 1962 the gold flowing from the United States to other countries totaled $6,800 million. These rises in the short term debts owed to other countries made for an average annual rate of deficits of about $3,000 million from 1950 to 1957. At the same time, the increase in the gold reserves of other capitalist countries amounted to $8,700 million. If increases in foreign exchange holdings are added to this the total increase in their gold and foreign exchange reserves during the period was $14,500 million. Most of these increases went to West European countries. France’s increases amounted to $3,400 million, Italy’s $2,200 million, and West Germany’s $1700 million. Next came Britain, the Netherlands and Belgium.

Dollar Crisis— Incurable Disease

By 1963, the incurable disease of the dollar crisis remained serious. The deficit in the US balance of payments in that year still stood at $3,000 million. At the end of December, its gold and foreign exchange reserves totaled $32,179 million, of which gold accounted for $19,790.million, or 47% of the capitalist world's total. Thus US gold reserves are far below their pre-war level while those of the West European countries are far above it.

A Fraternal Hand: The American Tradition of Socialist Democracy and Chinese Socialism

By Carlos Garrido

Republished from the Midwestern Marx Institute.

​There is a glaring paradox at the core of the American project. On the one hand, it proclaims its national self-determination with the values of life, liberty, pursuit of happiness, right to revolution, and to a government of, by, and for the people. On the other hand, the rights to life, liberty, and pursuit of happiness have never been guaranteed for anyone but the white, male, capitalist class (which is slowly being racially and sexually diversified). The leading thinkers of the American project, from Jefferson to Martin Luther King Jr., have warned about the corrupting influence the interests of capital can play in preventing the concretization of these rights.

Thomas Jefferson, for instance, understood that the ‘enormous inequality’ in property relations was the cause of the ‘misery [of] the bulk of mankind,’ and that, as Herbert Aptheker notes, this concentration of capital was ‘the central threat to democratic rights.’[1] In noticing how the interest of capital can turn a government of, by, and for the people into a government of, by, and for big business, Jefferson would go on to draw a distinction between the democratic man and the aristocratic man. The former, he argued, trusts the people’s will, the latter distrusts it and turns towards big business elitism. Jefferson believed the aristocratic man, if he came to dominate the American government, would undermine the ideals of the 1776 anti-colonial revolution. The first generation of home-grown socialists, flowering in the 1820s and 1830s, saw Jefferson’s prediction actualize itself in the embryonic industrialization period of the US. In the face of growing inequalities and disparities, thinkers like Langdon Byllesby, Cornelius Blatchley, William Maclure, Thomas Skidmore and others, developed the ideals of the declaration of independence into socialism, what they considered to be its practical and logical conclusion.

Throughout the ages, generations of American socialists have appealed to the declaration of independence to argue for socialism in a way that connects with the American people’s common sense. Leading historians and theoreticians of the American socialist tradition, thinkers like Staughton Lynd, Herbert Aptheker, W.E.B. Dubois, Eugene Debs, William Z. Foster and others, have elaborated on the subject, noting that regardless of the limitations encountered in the founding of the American experiment, it was a historically progressive event, whose spirit should be carried forth today by socialists and communists.

As the US is increasing tensions against China, leading to what many consider a ‘new cold war,’ it is important to look back at the values the American people accept, to the thinkers the American people consider their own, and to consider how different China’s practices – which our ruling class and its media constantly estrange to the American public – are from the ideals which founded our country. What we will find, I believe, is the values prioritized by the leading thinkers of the American experiment, from Jefferson to Dewey to Martin Luther King Jr., are best embodied today in Chinese socialism. This truth, in my view, should be brought forth to the American people. No longer should their consent continue to be manufactured to fight against peoples whose practices align with our ideals more than those we encounter in our own country.

John Dewey (1859-1952), known as ‘America’s philosopher of democracy,’ wrote that we must stop thinking about democracy as something ‘institutional and external;’ instead, we should treat democracy as a ‘way of life,’ one governed by the ‘belief in the common man.’[2] For Dewey, genuine democracy is a consistent practice; it has less to do with showing up to a poll every two to four years and more to do with the ability of common people – what in Spanish we call el pueblo – to steadily exert their collective power over the affairs of everyday life. Dewey understood that this genuine form of democracy was largely inexistent in the US, where the democratic spirit is reduced to voting every four years in political elections which, as he argued, function more as a ‘shadow cast on society by big business.’[3]

In line with the long tradition of home-grown American socialists, Dewey would conclude that the ideals of the founders – especially the radical flank commonly known as the ‘dissenters’ – would be realized ‘only as control of the means of production and distribution is taken out of the hands of individuals who exercise powers created socially for narrow individual interests.’[4] In the context of the US, Dewey held that this required ‘a radical change in economic institutions and the political arrangements based on them.’ ‘These changes,’ said Dewey, ‘are necessary in order that social control of forces and agencies socially created may accrue to the liberation of all individuals associated together in the great undertaking of building a life that expresses and promotes human liberty.’[5] For Dewey, in short, only socialism could make actual the radical, and for its time, deeply democratic, spirit of the declaration of independence.

A similar sentiment can be found in Martin Luther King Jr., the only American to have his own holiday (every third Monday of January). In one of his last sermons, whilst reflecting on the rights upheld in the declaration of independence, King would note that ‘if a man doesn’t have a job or an income, he has neither life, nor liberty, nor the possibility for the pursuit of happiness. He merely exists.’ America, for King, had desperately failed to fulfill its promise, not just for the black souls it kept enchained for more than two centuries, but for all poor and working people who continued to ‘perish on a lonely island of poverty in the midst of a vast ocean of material prosperity.’[6] This division was representative of what King called the ‘two Americas,’ the America of the poor working majority and the America of the few owners of big capital.[7]

Like Dives in the parable of the rich man and Lazarus, King held that ‘if America does not use her vast resources of wealth to end poverty and make it possible for all of God’s children to have the basic necessities of life, she, too, will go to hell.’[8] The stranglehold monopoly capital has over the American state turned the American dream – that is, the individual’s quest for life, liberty, and pursuit of happiness in harmony with the human community – into the American nightmare. No number of victories in the sphere of civil rights could change, in King’s view, the fundamentally polarizing character of the system. As King would argue years after the victories of the civil rights movement: ‘I have found out that all that I have been doing in trying to correct this system in America has been in vain… I am trying to get at the roots of it to see just what ought to be done… The whole thing will have to be done away with.’[9] For all its claims of being a beacon of democracy, for King, as Cornel West argues, ‘America’s two main political parties, each beholden to big money, offer merely alternative visions of oligarchic rule.’[10] Like Dewey and many others within the tradition of American socialism, King considered the values of the declaration of independence to only be universally applicable if America is able to move beyond the capitalist mode of life.

The American ruling class ignores and/or sanitizes this tradition of home-grown socialism which permeates even through the most universally admired of American figures. It wishes to hide the working class’s and oppressed people’s history of struggle in our country, for only in doing so can it perpetuate the McCarthyite lie that socialism and the values the American people accept are wholly incompatible. The truth is that, on the contrary, it is on the basis of the values the American people already accept that American socialism has developed. By showing the American people the positive role socialism has played in their national past – and how these struggles have seen themselves as continuations of the revolutionary tradition of 1776 –  the similarities in Chinese socialist construction and this unique tradition of American socialism become apparent. 

Martin Luther King Jr., for instance, found it condemnable to sustain poverty amidst material abundance; the rights to life, liberty, and pursuit of happiness require the abolition of poverty for their genuine fulfillment. In just 40 years, Chinese socialism has been able to lift more than 800 million people out of poverty, abolishing that horrendous condition the capitalist mode of life makes necessary for the vast majority of people. While building a poverty-free world with common prosperity, China has been able to realize a condition for its people which looks a lot more like what the leading American minds (like Dr. King) stood for than what can be found in America itself.

As we approach the 55th anniversary of King’s assassination (which the FBI helped orchestrate), we should ask: has America – which celebrates King once a year – heeded to King’s concern for poverty and the condition of the working class? The answer is a resolute No! In no state of the US, for instance, is the federal minimum wage ($7.25) enough to survive; even if it is raised to $15 – as the democratic socialists and other progressives have called for – the minimum wage would still not be enough for a working class family to survive anywhere in the country. With stagnant wages and inflation at a 40 year high, almost 60% of Americans are currently living paycheck to paycheck. Many of these people are on the brinks of joining the 600,000 homeless people wandering around in a country with more than 17 million empty homes. It is not surprising, in a country where there are 33 times more empty homes than homeless people, that 34 million people, including one in eight children, experience hunger while 30-40% of the U.S.’s food supply (40 million tons of food) is wasted every year. For all the tokenization of King we find in America’s political circus, we can say that after 55 years since his state-sanctioned death, America has still not listened, and much less realized, the demands of Dr. King. However, China has!

Likewise, Dewey, perhaps the most prominent philosopher America has produced, felt that to carry forth today the democratic creed of the declaration of independence, we must deepen our understanding and practice of democracy. A mode of life where the same small group of monopolists owns most of the property, controls most of the media, and decides who gets elected and what they do when elected, can hardly be called democratic. For Dewey, we are not living up to the democratic creed if ‘democracy’ only matters every two to four years when elections come about and working people are bombarded with reasons why they should vote for one puppet of the ruling class over another. Dewey would wholeheartedly agree with Xi Jinping in asserting that ‘democracy is not an ornament to be used for decoration; it is to be used to solve the problems that the people want to solve.’ As Xi has noted,​

If the people are awakened only at the time of voting and go into dormancy afterward; if the people only listen to smashing slogans during election campaigns but have no say afterward; if the people are only favored during canvassing but are left out after the election, such a democracy is not a true democracy.

​One could see words like these coming out of the mouths of a John Dewey or a Martin Luther King Jr. These ideas governing China’s socialist whole-process people’s democracy should seem anything but foreign to Americans – it is what our leading democratic theorists hoped the US system would develop into. If Americans are faithful to the democratic creed of the declaration of independence, and to the leading theorists of our country who’ve developed these into notions of socialist democracy with American characteristics, then we should be praising China for how incredibly comprehensive their socialist democracy (which is still humbly considered a work-in-progress) is. Far from thinking about democracy in the reductive, election-only sense, China’s system of socialist democracy is embedded in ‘seven integrated structures or institutional forms (体制tizhi): electoral democracy; consultative democracy; grassroots democracy; minority nationalities policy; rule of law; human rights; and leadership of the Communist Party.’ A comprehensive study of this whole-process people’s democracy would lead any unbiased researcher to the conclusion Roland Boer has (along with a plethora of Chinese scholars) arrived at: namely, that ‘China’s socialist democratic system is already quite mature and superior to any other democratic system.’

Not only does the US lack this seven-tiered democratic system, but even in the one realm it does have, namely, electoral democracy, the results it produces could hardly be called ‘democratic.’ For more than a decade studies from bourgeois institutions have themselves confirmed what Marxists have known since the middle of the 19th century, namely, that the essence of capitalist ‘democracy’ is ‘democracy for an insignificant minority –  democracy for the rich.’[11] The U.S., which spreads its blood soaked hands around the world plundering in the name of democracy, has been outed as a place where the dēmos (common people) do anything but rule (kratos). As a Princeton study headed by Martin Gilens and Benjamin I. Page shows,

In the United States, our findings indicate, the majority does not rule—at least not in the causal sense of actually determining policy outcomes. When a majority of citizens disagree with economic elites or with organized interests, they generally lose. Moreover, because of the strong status quo bias built into the U.S. political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.[12]

​In societies divided by class antagonisms we can never talk about ‘pure democracy,’ or abstract democracy in general; we must always ask - as Lenin did - ‘democracy for which class’?[13] The ‘democracy’ and ‘democratic freedoms’ of capitalist to exploit and oppress will always be detrimental to working and oppressed peoples. Only an all-people’s democracy (a working and popular classes democratic-dictatorship) can be genuinely democratic, for it is the only time ‘power’ (kratos) is actually in the hands of ‘common people’ (demos).

To claim – as American capitalists, their puppet politicians, and their lapdog media does – that the US is a ‘beacon of democracy,’ and China an ‘authoritarian one-party system,’ is to hold on to a delusional topsy turvy view of reality. Only by holding explicitly the idea of democracy as democracy for the rich – an oxymoronic truth which they must continue to conceal from the American public – would any part of their assessment contain truth. If democracy is considered from the standpoint of the capitalist’s ability to arbitrarily exert their will on society at the expense of working people and the planet, then, of course, the US is a beacon of this form of so-called ‘democracy,’ and China an ‘authoritarian’ regime. If instead, democracy is considered from the standpoint of common people’s ability to exert their power successfully over everyday affairs, that is, if democracy is understood in the people-centered form it etymologically stands for, and in the way leading American thinkers like Jefferson, Dewey, and Dr. King understood it, then it would be indubitable that China is far more democratic than the US (and any other liberal-bourgeois ‘democracy’).

As the US increases its anti-China rhetoric and actions – a symptom of its empire’s moribund stage – it becomes an imperative for all sane people to counter the propaganda setting the stage for, at best, a new cold war, and at worst, a third world-war. As Julian Assange – whose treatment reminds us everyday of how much the West cherishes its so called ‘individual rights’ to speech and press – once eloquently stated: ‘if wars can be started by lies, peace can be started by truth.’

It is the duty of American communists, socialists, and progressives, to show the American people the truth; to show them that China is not the enemy of the American people, that the real enemy of the American people are those who would like us to see China as an enemy. It is not China who has our country surrounded by military bases. It is not China who is funding and inciting separatist movements in our autonomous regions. It is not China who is slandering us with baseless accusations of the most heinous crimes of genocide humanity can imagine. It is not China who is creating international military alliances a la global NATO to militarily threaten us. It is the US empire who is doing this to China. The only interests which China threatens are those of our finance capitalists, who have spent the last century impoverishing both our people at home and our brothers and sisters in the global south. China is a friend of the American working men and women; just like it is a friend of the African peoples, and the peoples in the Middle East and in Latin America, whose win-win, mutually beneficial relations in international trade with China have afforded them the ability to turn away from predatory neoliberal debt-trapping loans which have been systematically forced on them for half a century by the capitalist West.

In sum – to be faithful to the democratic creed of the declaration of independence and of the greatest minds our country has produced, we must realize today that China is not our enemy; instead, it is the place wherein the ideals which guide this democratic creed are best embodied. Instead of buying into the easily confuted lies of Western pundits, who hope we are foolish enough to accept them and dance to the drums of a war to sustain Western capitalist-imperialist hegemony, we must learn from China and work together to build a peaceful, cooperative, and ecological shared future for mankind.

References

[1] Herbert Aptheker, The American Revolution: 1763-1783 (New York: International Publishers, 1960), 105.

[2] John Dewey, The Collected Works of John Dewey, 1882-1953, ed. by Jo Ann Boydston (Carbondale and Edwardsville: Southern Illinois University Press, 1967-1990), LW 14:228.

[3] Dewey, LW 6:163.

[4] Dewey, LW 11:28.

[5] Dewey, LW 11:28.

[6] Martin Luther King Jr, The Radical King, ed. and introduced by Cornel West (Boston: Beacon Press, 2015), 246- 247. 248.

[7] King Jr, The Radical King, 236.

[8] King Jr, The Radical King, 248.

[9] King Jr, The Radical King, xi.

[10] King Jr, The Radical King, xiii.

[11] V. I. Lenin, Collected Works Vol. 26 (Moscow: Progress Publishers, 1977) 465. 

[12] Gilens, M., & Page, B. (2014). Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens. Perspectives on Politics, 12(3), 564-581. doi:10.1017/S1537592714001595

[13] V. I. Lenin, Collected Works Vol. 28 (Moscow: Progress Publishers,1974), 249.

Carlos L. Garrido is a Cuban American PhD student and instructor in philosophy at Southern Illinois University, Carbondale (with an M.A. in philosophy from the same institution). His research focuses include Marxism, Hegel, early 19th century American socialism, and socialism with Chinese characteristics. He is an editor in Midwestern Marx Institute for Marxist Theory and Political Analysis and in the Journal of American Socialist Studies. Carlos edited and introduced Marxism and the Dialectical Materialist Worldview: An Anthology of Classical Marxist Texts on Dialectical Materialism (Midwestern Marx Publishing Press, 2022). 

On Income and Wealth Inequality in Capitalism's Neoliberal Stage

By Prabhat Patnaik

The fact that income and wealth inequalities have increased quite dramatically under the neo-liberal regime is beyond dispute. The empirical work by Piketty’s team bears out the increase in income inequality. They use income tax data to infer about the share of the top 1 per cent of the population of a country in its national income. One may raise objections to this method of estimation, but the conclusions are so overwhelming that one can scarcely quarrel with them. In India’s case for instance Piketty and Chancel find that the top 1 per cent which accounted for just 6 per cent of national income in 1982 increased its share to over 22 per cent in 2013 and a similar figure in 2014, the latest year for which they have estimates. In fact the share in 2013 was the highest it has ever been since income tax was introduced in India in 1922.

Piketty’s theoretical explanation for such increases in income inequality however is totally untenable, as it is based on the presumption that a capitalist economy always operates at full employment, which is not only empirically false but also logically flawed, for in such a case the system would lack any disciplining device without which production cannot occur under it. One does not have to go far however to find a proper theoretical explanation for the increase in income inequality: the removal of all constraints on technological-cum-structural change under a neo-liberal economy increases the rate of growth of labour productivity to a level where, notwithstanding whatever increase occurs in GDP growth, the rate of growth of employment falls compared to earlier and also falls below the natural rate of growth of the work-force, so that the relative size of the labour reserves in the work-force increases; this keeps the real wage rate tied to a subsistence level even as the rise in labour productivity growth increases the share of surplus in total output, and hence the level of income inequality. Piketty’s findings about an increase in personal income inequality are rooted in this increase in class income inequality that neo-liberalism entails (see also Economic Notes in People’s Democracy December 8).

Likewise there has been a dramatic increase in wealth inequality under neo-liberalism at least in the countries of the global south. Between 2000 and 2021, according to Credit Suisse data, wealth inequality increased even in the United States; but this increase was less pronounced than the increase in countries like India and Brazil. True, wealth inequality estimates are always somewhat dicey, since they are influenced by stock market fluctuations. In a period of stock market boom not only does the estimate of total wealth gets artificially inflated even when there has been no change in the physical stock of assets; but, since the rich are much more active in the stock market, their share in wealth also goes up, showing an increase in wealth inequality which gets reversed in a period of stock market collapse. Even so however when India shows an increase in the share of the top 1 per cent in total wealth from around 32 per cent in 2000 to 40.6 per cent in 2021, and when Brazil shows an increase from around 43 per cent in 2000 to 49.3 per cent in 2021, this increase cannot be explained by any evanescent accrual of capital gains to the top 1 per cent of the population. There are clearly more fundamental factors at work.

One such fundamental factor is the rise in income inequality itself that is rooted in the rise in the share of economic surplus in output. If we leave aside the accrual of transitory capital gains, any rise in wealth occurs through savings. This may at first sight appear odd: it may be thought that the rise in wealth would occur only through investment in physical assets; but saving may occur, and hence a rise in wealth, even when there is no investment in a country during a particular period, if it lends these savings abroad, that is, increase its wealth in the form of claims on another country. When the share of the rich in national income rises, since the rich save a higher proportion of the income accruing to them than the poor, their share in the total savings of the country rises even faster. This means that the share of the rich at the margin in the increase in a country’s wealth rises compared to what it had originally been, which means that their share in a country’s total wealth increases. A rise in income inequality in other words ipso facto entails a rise in wealth inequality.

A second factor works in the same direction, and that is what Marx had called “centralisation of capital”. Because of technological-cum-structural change, business shifts over time from small capital to big capital. This happens because new processes and products become available over time which require a growing minimum size of capital for their introduction and which therefore can only be introduced by big capital and not small capital, leading over time to a shift of business from the latter to the former. This shift has exactly the same effect as the rise in the share of economic surplus in total output discussed above: with the shift of business there is also a shift in the distribution of profits from small to big capital (that is, if small capital at all remains in business and is not totally eliminated in which case its entire profits are captured by big capital); since the proportion of savings out of profits is higher for big capital than for small capital, this raises the share of savings in output and also the share of the top 1 per cent within total savings and hence at the margin in total wealth. Wealth concentration therefore is simply implicit in the process of centralisation of capital.

So far we have been talking of changes in wealth concentration at the margin through changes in the distribution of savings. It may be asked: what if investment falls short of savings at the base level of capacity utilisation so that there is a realisation problem? But if there is a realisation problem, i.e., if there is insufficient demand when output is produced at the base level of capacity utilisation, then the realised savings will be lower than the savings that would have been generated from output at the base level of capacity utilisation; but its distribution across classes, i.e., between petty producers and the big capitalists, or between small capitalistsand big capitalists, will remain the same as if all of it was being realised. The tendency towards wealth concentration therefore would remain unaffected by whether or not there is a realisation problem.

A third factor works towards making wealth distribution more unequal, in addition to the two we have mentioned till now. And that is what Marx had called primitive accumulation of capital, which covers not only cases where land is acquired from peasants gratis or at throwaway prices by big capital, but also cases where any land acquired at the then prevailing market price increases in value when industrial units are set up on them or townships are built upon them. This case of an increase in the price of land may at first sight be thought of as being identical with capital gains made on the stock market; but there is a basic difference: while stock market booms may collapse reversing the capital gains, land prices have generally only an upward movement. The acquisition of land even in such cases therefore has to be seen as primitive accumulation, since the peasants are paid a price way below the now-prevailing market price of land (that enters into the calculation of wealth).

The numerous ways that public resources are transferred gratis into the pockets of big capitalists are these days an important source of primitive accumulation of capital. This is done in the name of providing incentives for promoting growth, which is supposed to benefit everyone. But quite apart from such open ways of effecting increasing wealth inequality, big capital also engages in various forms of skulduggery for this purpose. There are instances of communal riots being engineered so as to evict people from their land that is then acquired at a throwaway price by big capital not necessarily directly but at some remove.

All these ways of deliberately effecting an increase in wealth inequality get a fillip in the period of neo-liberalism. All objections to them are brushed aside by the neo-liberal apotheosis of private expropriation as benefitting everyone, while simultaneously vilifying public enterprise.

Prabhat Patnaik is an Indian political economist and political commentator. His books include Accumulation and Stability Under Capitalism (1997), The Value of Money (2009), and Re-envisioning Socialism (2011).