#Occupy Wall Street and the Great Awakening

In previous entries, I have expressed my deep concerns of the increasing inequality in American society, the corporate takeover of federal and state governments, and the legalization of graft. I also noted that nothing is going to happen until we have a social movement that addresses the de-democratization of American society. As of September 17, 2011, that movement has emerged. I have visited the Wall Street encampment and have interviewed several people. I talked to a young black man from Brooklyn who complained about the relative lack of a black contingency. He was on the sanitation crew; after I interviewed him, he got his broom and dust pan and started sweeping the area, as did many others. I talked to two female high school students from Chatham, New York who decided to join ranks when school was out. I talked to a guy who graduated from Syracuse University who was unemployed and was manning the information desk on the Northwest corner of Zuccotti Park. I observed the drummers on the southwest corner of the park. I interviewed a young woman who came to the encampment from London, England, who came to New York to participate in the movement. I observed the food distribution center in the middle of the park, where people were handing out beans and salad and other people were washing down the area and cleaning up. I listened to the human public address system where people would shout out a sentence; those closest to them would repeat the sentence and then people beyond would again repeat the sentence, after which the speaker would issue a new sentence. How do you know when the speaker stops? Easy! All announcements end with, "Thank you!" Below are pictures that I took from the park in mid October. Please note how Wall Street has been barricaded by the police. The place looks like a garrison.

At the Occupy Wall Street encampment, civility to all, including the police, is a strongly enforced norm. For example, I was watching Fox News interview one of the elders of the encampment, who was explaining the movement to them. I chimed in with, "You are being interviewed by an arm of the Republican Party." He turned to me and said that I should learn social graces. Meanwhile, I looked for his interview on Fox News. I couldn't find it. Instead, the lead on Fox News the following day was accusations that the Occupy Wall Street Movement was being led by, of all organizations, the now defunct ACORN. ACORN was a community organizing agency that was vilified and destroyed by the political right as a consequence of heavily doctored videotapes aired on Fox News by conservative activist James O'Keefe. They gave the impression the organization was engaged in providing advice on how to avoid taxes and detection for human smuggling and child prostitution. By the time the raw videos were subpoenaed and reviewed in the judicial system and found that no laws of been broken, ACORN had been destroyed because Congress defunded it and it lost many of its private contributors. As it turned out, the doctored videotapes often gave the impression that ACORN members were abetting crime, when they were gathering information on O'Keefe and his sidekick to report to the police.

In my previous blogs, I have pointed out several issues that relate to the Occupy Wall Street Movement: first, the growing inequality between rich and poor; second, the taking over of our government by corporate interests; third, how tax policy has resulted in a shift of tax burdens from the rich to the rest of us; and fourth, how the wealthy benefit from recessions that usually increase inequality. I pointed out that federal policies concerning taxes, trade, and deregulation have led to stagnation of wages while increasing the wealth of the rich. On occasion, I have stated that the only way in which these inequities can be righted is through a social movement. It looks like we have one now. Not only that, the occupy movement has become global! According to news reports, more than 1000 cities worldwide have had occupations of public spaces by protesters in solidarity with Occupy Wall Street; approximately 200 American cities have experienced encampments. There actually was an "Occupy Poughkeepsie" encampment!

As a student of social movements, I must say that I am surprised by the rapidity by which the movement has spread. It has expanded dramatically in just a few weeks. If we look at the history of the labor movements and analyze the movements of the 1960s, we find that they took years to build to a critical mass. For example, if we date the beginning of the Civil Rights Movement with Rosa Parks and the Montgomery bus boycott in 1955, it is not until five years later that the first sit in occurs in Orangeburg, South Carolina in 1960. Freedom rides occurred the following year, and the apogee of the movement occurred in 1963, with Martin Luther King delivering his "I Have a Dream" speech in front of the Lincoln Monument. Mississippi freedom summer was the following year, at which time the civil rights movement metastasized into its black power phase and moved into the ghettos of northern cities: Newark, Watts, Detroit, Harlem. The Student Nonviolent Coordinating Committee (SNCC), in the wake of the Mississippi summer, expelled its white members telling them that the problem of racism was in the white community and to organize against racism in their own communities. This lead directly to the Free Speech Movement at the University of California, Berkeley. Students who participated in the Mississippi freedom summer tried to recruit UC students to fight racial injustice were arrested for handing out literature.

Poll after poll has shown that underlying the conservative consensus and gridlock in Washington, DC, Americans have been saying that the country is going in the wrong direction. Because the pollsters have not asked cogent questions about which direction the country should be going, both political parties have blamed the other for the malaise. #OWS has given a potent new voice to that disquiet: the fruits of American laborers have increasingly been appropriated by those at the top of the socioeconomic pyramid. Governments, especially at the state and federal levels, operate on a pay-to-play system in which those with money purchase influence to the detriment of the public interest.

The #OWS critique of American society is radical and conservative at the same time. It is conservative because it is an appeal to the American values of democracy, equality, and the government "of the people." It is radical because it identifies the fundamental contradiction in the social structure. The issue transcends politics and focuses on social privilege and inequality. Here's a quote from that we are the 99% website:

We are the 99 percent. We are getting kicked out of our homes. We are forced to choose between groceries and rent. We are denied quality medical care. We are suffering from environmental pollution. We are working long hours for little pay and no rights, if we're working at all. We are getting nothing while the other 1 percent is getting everything. We are the 99 percent

Some people have criticized #OWS for not having a platform. From my perspective, that is part of their genius. They should not have a platform; they are engaged in a much-needed education program for Americans. They are pointing to the inequality and identifying the institutions that are responsible for the decisions that led us to this sad place of economic instability, unfunded and unpopular wars, degradation of our environment, and so forth. It will be up to others to formulate specific initiatives for social change. As some commentators have pointed out, what #OWS seems to want was contained in the 2008 platform of the Democratic Party.

We can expect that the #OWS movement will transform itself as the context changes. Already, we are seeing #OWS encampments on college campuses. We are witnessing behavior of local police departments reminiscent of police departments in the South during the civil rights movement: instead of dogs and fire hoses, they use tear gas, rubber bullets, and pepper spray. Meanwhile, the political right, caught aback, doesn't know what to make of the phenomenon. Therefore, they denigrate #OWS protesters as unwashed, politically naïve, lazy, un-American, and so forth. The Republican nominees for president are acting as if there has been no change in the sensibility of Americans, even though a large majority sympathizes with the issues raised by #OWS. Foolishly, Bill O'Reilly, after Mayor Bloomberg temporarily evicted them from Zuccotti Park, declared the movement over. Talk about wishful thinking. But the message of #OWS has resonated worldwide to:

·         The boomerang generation of students who got baccalaureate degrees and are unemployed or underemployed

·         Students whose education is going to indebt them for decades

·         Union workers under attack for their pensions and bargaining rights

·         Workers whose pay cannot support their families

·         Unemployed workers who can't find a job

·         People whose mortgages are underwater and see that the banks got a bailout but they didn't

·         Military veterans who served their country and come home to an indifferent world

·         People who see that the American dream is no longer achievable

·         People who think that the government no longer works for them but only the rich and corporations

·         People who want to live in an open society in which the rich and powerful are not cordoned off from the rest of us in gated communities, limousines with dark tinted glass, and sophisticated security details

·         People who equate democracy with equitable sharing of material wealth

·         People who feel that it is the government's function to provide for the public good by eliminating poverty, providing quality education, making sure that everyone has the basic necessities of life, including access to affordable healthcare; that the government takes responsibility for protecting the most vulnerable among us, including children, the infirm, and the elderly

I'm sure that more constituencies could be added to this list. But here we go! History has come back from its coffee break! We live in interesting times!

Why Republicans love recessions

We Americans have recently witnessed the ability of the tea party Republicans to throw the American economy into a possible double dip recession. Considering that the first recession, now called the "Great Recession," was the consequence of the profligacy of the Bush Administration, directly attributable not only to irresponsible fiscal policy, such as conducting two wars using borrowed money, tax cuts that primarily benefited the wealthy (VP Cheney's justification: we deserve it because we won), and that great sinecure to big Pharma, Medicare Part D, but also its defunding of the SEC and its proclivity to prosecute criminal acts by Wall Street and the banking establishment using civil cases and modest fines. The Bush Administration also put pressure on Fannie Mae and Freddie Mac to provide loans to low income people for homes in what Bush referred to as "the ownership society." Deregulation of the banking industry and lack of oversight on criminal banking activities encouraged gigantic fraud on the part of lenders, especially directed at lower income people who were offered “Ninja” (no income, no job, no assets) loans with adjustable mortgage rates that ballooned after the first three years. We could go into the process by which these toxic loans were sliced and diced and sold to unsuspecting buyers, but hey, that's not the point of this blog.

Tea Party Protest

What is important is that Republicans love recessions. Every recession since 1950 including the last one, occurred during a Republican Administration. Given that there were nine recessions over the past 61 years and that there were Republican administrations in 38 and Democratic administrations in 23 of those years, this is hardly a random phenomenon. The figure below shows recessions by Administration in the postwar years up to about 1997. The first recession on the chart, a consequence of World War II demobilization, occurred during the Truman Administration. The Eisenhower Administration presided over three recessions, Nixon/Ford had two recessions, Reagan/Bush oversaw three recessions, and of course, Bush II initiated the Great Recession, from which we are still trying to recover, despite obstructionism by the Republican Party.

From Kerbo: Social Stratification and Inequality

One of the interesting phenomena depicted in the figure, is what happens to the Gini coefficient – the index of income inequality – during times of recession. With the exception of the recession in the early 1970s, which was brought about by the oil crisis, the Gini coefficient rose. Sometimes, as in the case of 1951-52, 1960, and 1982-1983, the Gini coefficient rose precipitously. That is, during seven of the last eight recessions, inequality increased. A recession is a time when the economic pie shrinks. For the most part, when it shrinks, it tends to shrink from the bottom up, with those people at the bottom of the income pyramid suffering more than those people at the top. Although the calculations are not in, it seems that one of the major consequences of the Great Recession is another precipitous rise in the Gini coefficient. Luxury car dealers are experiencing a boom; another boom is in the consumption of food stamps.

If we look at the progression of the Gini coefficient from the end of World War II to about recession of 1968-1969, we see that as the economy grew, inequality decreased. Beginning with Nixon-Ford, inequality starts increasing during good times and bad. However, inequality really jumped in the early years of the Reagan Administration and continued to rise throughout his and the Bush I Administration, leveling off and declining a bit during the Clinton Administration. The jump with dotted lines during the Clinton Administration is not a real increase, but a change in the calculation formula for the Gini coefficient.

The critical years were 1981-1982, at that time, the worst recession since the Great Depression. At this point, the Reagan Administration disposed of Keynesian theory for supply-side economics: a peacetime military buildup, destruction of the social safety net, and a deep recession designed to stop "stagflation," in which the economy was not growing and the value of the dollar was declining. Being that the Reagan Administration was populated by "free traders," that is, people who believed that capital should be able to flow across international boundaries without impediment, there was, in the inimitable words of H Ross Perot, "that giant sucking sound" of capital exiting the United States in search of cheaper labor forces in such worker paradises as China, Singapore, Mexico, and Saipan. The recession generated an internal migration of formerly employed unionized workers from the Midwest to nonunion employment in the South at about two thirds their former salaries. Of course, the capital that was sucked out of the US economy was from the bottom 90% of the income pyramid; it was repatriated in the form of increased profits to corporate shareholders of those companies that moved their productive facilities to cheaper labor markets.

Whether intended or not, the recession of 1981-1982 devastated unions, increased the rate of profit, and created a raft of new millionaires who were buying up formerly profitable companies, splitting them up, and selling the parts, much like a butcher would take a side of beef, cut it up, and market the separate pieces. Along with the Kemp-Roth tax cuts and the cutting back of the social safety net, inequality increased as the rich got richer and the rest of America became poorer. Because they no longer had unions, workers in the private sector became increasingly vulnerable to the vicissitudes of the business cycle.

The recession of 1981-1982, unlike other recessions, was generated in Washington. Paul Volcker, then head of the Fed, jumped interest rates by about 20% over fewer than 18 months. This action stopped the economy dead in its tracks and threw it into recession. Not only did the fiscal crisis increase inequality, but it conservatized the labor force. Workers were fearful; unions were on the defensive. From that point on, there became a disparity between what was occurring in the financial markets and the well-being of the mass of Americans. The economy improved throughout most of the rest of the Reagan Administration, but American incomes had stagnated, and in some cases declined.

Paul Volcker

The Republicans have learned a new lesson. Hard times do not necessarily generate effective resistance. A fiscal crisis of the state can be used to implement changes that are highly unpopular. Naomi Klein, in her book, Disaster Capitalism, noted that acolytes of the Milton Friedman neoliberalist school of economics found that economic changes could be implemented by the state against the will of the people if there was a political or economic disaster. The first experiment occurred in Chile in 1973 when the CIA helped Gen. Pinochet overthrow the Allende government. Within days of the establishment of the military dictatorship, University of Chicago economists were in Santiago advising him on an austerity program that would devastate the Chilean middle class.

So disaster capitalism was successfully implemented by the Reagan Administration in 1991. Klein describes disaster capitalism as a strategy to institute political and economic changes against the will of the majority. The Great Recession and the fiscal crisis of the state that accompanies it is a consequence of the political and economic policies of the Bush II Administration that have been enumerated elsewhere. The Republicans, depending on the very short memories of the American electorate are now using recession as a justification for impoverishing more Americans and increasing social and economic inequality.

Naomi Klein

Actually, what we have here is the assertion of the political over the economic. That is, the Republicans, although they say otherwise, are creating an economic disaster to enhance their own political power. The vast majority of them have signed onto Grover Norquist's pledge to never raise taxes under any conditions. The alternative is to drastically reduce federal expenditures; their targets are Medicare, Social Security, and Medicaid. Find me a Republican other than Ron Paul who wants to reduce military expenditures.

As I have insisted on from the beginning of this blog, the ultimate battle is over the appropriation and redistribution of the material surplus, or what in more common parlance is called "wealth." The Republican hard right has decided that the federal government appropriates and redistributes too much of the surplus, especially that sector of the surplus that goes to services for poor and middle-class people. Therefore, they have bought into Grover Norquist's ideal of shrinking the federal government to the size that it can fit into a bathtub and then drown it. The hard right loves "democracy," but somehow hates democratic government. They want all governmental functions privatized, which means served by organizations that has as their first priority rewarding stockholders. Given the fact that most government functions are inherently monopolistic, such provision promises guaranteed profits.

The New Right had decided that the federal government is a giant evil monster that steals their money and wastes it. They want that money returned to them so that they can spend it in more "productive" ways. Thus we have recently heard the Republicans refer to the rich and the superrich as "job producers." Of course, the only jobs they produce with their private income is perhaps construction workers building their third (or fourth or fifth or sixth) home, sales people at providers of luxury goods (you can now buy a designer purse from the Row for $39,000, approximately the average income of an American family of four), and service personnel. One of the things that drove Karl Marx crazy when he was in the bowels of the British Museum studying labor reports in the 1870s was the fact that private service personnel actually outnumbered members of the British working class. Hmm. Maybe we can all be hired to serve the needs of the accumulating class.

Handbags costing a year's salary

The characterization of the federal government as a huge behemoth that wastes money has a kernel of truth in it, but not in the way the hard right characterizes it. Because of the popularity of entitlement programs, they dare not mention that what they consider "waste” are those very programs: Social Security and Medicare, two prime factors in the alleviation of poverty among the elderly, and Medicaid, which not only helps the poor, but helps hospitals that would have to take care for uninsured people showing up in the emergency room needing care. They also consider investments in science, education, and the arts waste as well, leaving that to either local governments or to the private sector. What they do not consider waste is corporate welfare, which is primarily actualized in the Defense Department budget, or worse yet, unbudgeted costs of war that are awarded on a cost plus basis to highly connected corporations, such as Halliburton, KBR, Xi (formerly Blackwater), Triple Canopy, Dynacorp, Bechtel Corporation, and so forth.

This next election essentially pits the interests of the accumulating class, which is certainly less than 10% of the total population against the rest of us. It will be a test of the power of hidden and unaccountable wealth to generate enough votes for corporate friendly candidates. Currently, two of the three leading candidates in the Republican Party, Mitt Romney and Rick Perry are actively promoting a pro-corporation agenda. It is likely that one of these men will receive the Republican nomination, probably Rick Perry, because not only does he have the corporations lined up behind him, he also is a member of the religious right. Obama will also get plenty of corporate money, but he will also run a campaign that will be (mildly) pro union, pro-workers, pro-choice, and pro-jobs (whatever that means). Popular dissatisfaction with the president cuts two ways: those on the right who are racist, antigovernment, anti-women's health issues, anti-welfare state, and are acolytes for neoliberal economics, and those on the left who have felt betrayed by Obama over such issues as a public option for health care, ending the wars, failure to defend unions against the Republican onslaught, lack of environmental legislation, obsequious responses to hard-line Republican resistance, and so forth.

The 21st century has not been kind to America: each subsequent election seems to loom larger in terms of its importance for the future. The elections of Bush in 2000 and 2004 were an unmitigated disaster for this country. Foreign-policy was a catastrophe: we were caught asleep at 9/11. While Osama bin Laden was plotting his attacks, the Bush administration was ignoring warnings, instead trying to reward its friends with the resurrection of Star Wars. Economic policy was similarly wrongheaded, with the administration generating a huge deficit and deregulating oversight of the financial sector so that the economy would eventually collapse. The highest officials of the land were engaged in unconstitutional behaviors that remain unpunished to this day: leading us into war under false circumstances, condoning violations of the Geneva Convention on kidnapping and torture, wiretapping American citizens whithout warrants, and unconstitutionally appropriating power to the executive branch. The election of Obama in 2008 was supposed to be a return to an America that was no longer a rogue state, end its involvement in foreign wars, solve its healthcare problems, rescue us from a depression, and invest in its future. It rescued us from a depression. In the next election, America faces more of the same, or worse. If the Republicans win the White House, they will seek a pro-corporate agenda by reducing corporate taxes, destroying the modest gains we have made in healthcare, deregulating the financial sector so that the economy could collapse yet again, cutting social welfare, slashing environmental regulations, and further exempting the rich from paying their fair share. If the Democrats win, these processes will probably continue at a slower rate or be stalemated. Don't look for much progressive legislation. If the Republicans have their way, we will have another recession.

The limitations of capitalist development

Hippies

Black Panther Party Leaders

Women's Liberation Movement

Baader and Meinhof

Mao

By all historical accounts, 1968 was the apex of social movements across the world. They attacked existing political and economic establishments: the USA experienced mounting opposition to the Vietnam War, assassinations of Martin Luther King Jr. and Bobby Kennedy, riots in African-American urban ghettos, riots at the Democratic national convention in Chicago, the occupation of administration offices at Columbia University, youth activism all over America, the emergence of a women's movement and the protesting of the Miss America contest in Atlantic City. Elsewhere in the world, social movements generated Prague Spring; the insurrections of May-June in Paris, France; Germany witnessed the rise of a violent left led by the Baader-Meinhof gang; student protests and building occupations occurred in Mexico City; and Mao Tse Tung sponsored the Cultural Revolution in China against the middle class.

Central to the movements of the 1960s was the middle class youth movement, which by the time 1968 rolled around, had cascaded down the social structure and had infected working-class youth as well. Also well documented was the emergence of the Women's Liberation Movement out of the sexism of the middle class youth movement. Each of the movements in America had a radical anti-capitalist sector. When the African-American civil rights movement moved north in 1964, the Student Nonviolent Coordinating Committee (SNCC) expunged its white members and adopted a black nationalist ideology, the Black Panther Party, founded in Oakland in 1966, was a Marxist-Leninist organization. The early days of the Women's Liberation Movement sprouted a variety of Marxists-feminist/feminist-Marxist critiques of capitalist society. Among Latino populations, the Chicano movement of Mexican-Americans and the Young Lords of the Puerto Ricans adopted radical critiques of American society.

However, most anomalous of all the social movements was the middle class youth movement. The oppression of women and ethnic minorities was easily visible. Sexism and racism could be seen in every social structure in American society. So why were young people from America's wealthy suburbs and elite colleges, whom Daniel Foss referred to as "candidate members of the bourgeoisie," in rebellion? This issue has never been sufficiently answered, although Foss came up with an adequate explanation in several of his writings, including some I co-authored with him. His most comprehensive explanation was in his doctoral dissertation, which was boiled down to a book entitled Freak Culture. This is my gloss on Foss's thesis:

So what was it in the reproduction of capitalist social structure that led to the rebellion of the most privileged sector of youth: young, mostly male, white, affluent, and privileged? Marx characterized capitalism as "a system of production for production's sake." Foss noted that in today's bureaucratized world that not only was capitalism a system of production for production’s sake, it also had become a system of social discipline for discipline's sake. The generation of youth in the 1960s was the first "post-scarcity" generation. They had grown up in a time of expanding surplus; not only had the surplus expanded, but it was relatively equitably distributed, leaving such theorists as John Kenneth Galbraith identifying America as "the affluent society." In 1968, coincidentally, the Gini coefficient, the index of inequality, reached its lowest point at 38.6 in the USA.

Foss claimed, and I think rightly, that capitalism reached a limitation caused by the generation of a culture that espoused freedom, self-determination, and self-actualization in a labor system that required discipline, sacrifice, and subordination to authority in which the latter made no apparent sense other than to provide the means to consume. Young people from upper-middle-class backgrounds looked at the sterile lives their suburban-dwelling parents were living, employed as sales personnel, professionals, and managers in what the parents themselves identified as "the rat race," and what members of the youth culture identified as "a death trap." In post-scarcity mentality, life had to have some transcendent meaning beyond the mere accumulation of things. Middle-class occupations, for the most part, didn't produce anything. They were part of the service economy; many, especially those employed in sales, public relations, advertising, and so forth, were essentially hired to get people to buy things they didn't need. Their purpose was to create desire so that consumers would buy more stuff. Capitalism had evolved as a system of waste production for waste consumption. It is not an accident that the ecology movement grew out of the middle class youth movement of the 1960s.

Of the movements of the 60s, blacks, Latinos, women, and gays (which didn't really start until the 1970s) could be ameliorated in a straightforward fashion. For blacks, the striking down of Jim Crow laws, affirmative action, community development programs, integration of the public service workforce, and compensatory education turned the race issue into a class issue, opening up opportunities for an African-American middle-class. Similarly, but less so, opportunity structures were opened up for Latinos. The radical edge of the women's movement was blunted when the so-called "business community" advanced the notion of corporate feminism. They realized that jobs that didn't require upper body strength could be opened to bright and talented women who would be grateful for the opportunity and work harder than men. And why not? With the talent pool nearly doubled, increased competition would reduce labor costs. The gay community was already affluent; all they wanted was not to have their culture suppressed and not be discriminated against.

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Abbie Hoffman

What of the demands of the middle class youth movemenNumerous were numerous specific issues, such as in loco parentis regulations on college campuses, alcohol and drug use, and the Vietnam War, in which they were drafted to fight. However, the counterculture, which was certainly an artifact of the youth movement, was definitely anti-capitalist. Proponents were advised to "turn on, tune in, and drop out." In the subjectivist mentality of the new left/counterculture, Foss noted that the emergent social type, the Freak Radical, advocated "attack the rule because it exists, the policy because it is planned, decision because it is made, the process because it goes on, the power because it is there, and the system because it feels bad. Enjoy yourself. Apocalypse now…" This was the message of Abbie Hoffman in his book,  Revolution for the Hell of It.

Although it is true that the Freak Radical existed for a short period of time between 1967 and 1969, it signaled a sea change in American culture in which the body politic was no longer apathetic and could be controlled within the institutional frameworks of the American political/economic system. As a matter of fact, polls showed that in the wake of the 1960s, American institutions were suffering from a crisis of legitimacy, even though the movements had subsided. Worse, from the perspective of the accumulating class was that the rate of profit was continuing to decline, which was a three decade trend. Something had to be done.

Although Jimmy Carter decried the malaise of America in his famous "Crisis of Confidence" speech in 1979, declaiming the loss of institutional legitimacy and the "me decade" of the 1970s where people focused upon private consumption to the neglect of the collective. However, his exhortations to collectively solve our energy problems fell flat.

http://www.youtube.com/watch?v=KCOd-qWZB_g

Out of the West galloped Ronald Reagan, the spokesperson for corporate America, especially his southern rim supporters of real estate, gas and oil industries, Western ranchers, and the military-industrial establishment, claiming to put America back on the right track and restore the "City on the Hill." In order to stop stagflation, Paul Volcker, then chairman of the Fed, jumped interest rates by 10% within a year, stopping the American economy in its tracks, leading to the worst recession since the Great Depression. The only way capitalism makes sense is to establish scarcity, or at least the illusion thereof.

The generation of the recession, the destruction of the social safety net, the Kemp-Roth tax cuts, and the increase in defense spending all had the same effect: to move wealth up the system. Wages stagnated or declined, the manufacturing sector of the American was devastated, especially in what became called "rust belt" industries located primarily in the Midwest that employed a unionized workforce.

From 1980 to the present, 80% of the surplus increase has gone to 1% of the population. The only time in the last 30 years that wages showed an actual increase was in the last year of the Clinton administration. The policies of the Bush II Administration mimicked those of Reagan, only more radical. The purpose was, as was with Reagan, to create a fiscal crisis of the state, thereby providing legitimation for the destruction of social welfare programs. The major sources of the current deficit was the conduct of two wars off the books, Medicare part D, which is a giveaway to big Pharma, and tax cuts that favored the rich over the rest of us. Another source of the deficit is the over $700 billion paid to the banks that were too big to fail because of the fraud allowed by the Bush Administration in its failure to regulate bank systems. However, not all the fault can be attributed to the Bush Administration. The banks have been chipping away at regulation and regulatory agencies since at least the beginning of the Reagan Administration. It was during the Clinton Administration that the Glass-Steagall Act, which separated commercial banking from investment banking, was repealed.

Every time politicians mention the social, political, and economic inequalities that have emerged over the past 30 years, Republicans scream "the Democrats are engaging in class war." (Which seems to temper voices within the Democratic Party.) However, it has been the accumulating class, with its associates in both parties that have been waging class war most successfully. Now that the United States is becoming economically as unequal as a state such as Mexico, the accumulating classes have effective control over the state. Any time there is a progressive effort, it is substantially negated. The last three Democratic presidents, Carter, Clinton, and Obama, were much more progressive personally than their administrations' accomplishments. As a matter of fact, the most salient achievements of the Clinton Administration have been in the interests of the accumulating class: the Telecommunications Act of 1996, which allowed for the increasing centralization of media empires, the Personal Responsibility and Work Opportunity Act that ended welfare as we know it, and (of course) the Gramm Leach Bliley Act that deregulated the banking industry.

A number of social theorists, such as Tony Judt, have noted that societies in which there is great inequality become unstable. Those below understand that the game is rigged against them. Trust of social institutions declines. Legal but immoral activity from above stimulates illegal activity below, which requires increased policing. The police are increasingly viewed as enforcing a corrupt system.

All ruling classes pursue their narrow interests until such time as they are stopped by popular resistance. At present, that resistance is mounting, but has not attained a level of a critical mass. The greatest resistance is coming from organized publicly employed unionized workers. Although they are working toward a united front, their efforts are primarily at the state level where right-wing legislators are busy taking away their rights to organize and engage in collective bargaining, reducing salaries and pensions, and defunding social programs, all in the name of austerity due to a crisis that they themselves created. Paul Ryan, the man who fashioned the Republican anti-deficit campaign voted for the invasions of Iraq and Afghanistan, the Bush tax cuts, and Medicare part D. He has no sense of irony.

The longer the accumulating classes allowed to accumulate greater portions of the surplus, control more of the government at the local, state, and federal levels, the more difficult it will be to counter their actions. For the good of the entire country, we must resist their predations.

So capitalist social relations become destabilized at the point at which the surplus increases to a point where it's redistribution generates rebellions of two sorts: those who have been discriminated against in the redistribution and who want a greater portion of the pie, and those of privilege from whose perspective labor discipline makes no sense and is, in the terms of Herbert Marcuse, "surplus repression." Capitalism is the only political economic system to run up against this limitation because it's the only economic system that has generated sufficient surplus to end material scarcity in a given social formation. The limitation at the other end is the destabilization generated by gross economic and political inequalities in which the accumulating class increasingly viewed as predatory and parasitic. This particular limitation has been the downfall of ruling classes since time immemorial and is certainly fundamental to the Arab spring revolts across the Middle East.

Death to the American Middle Class

The core of the Republican Party is accumulators, would-be accumulators, those who fantasize that with a little luck, they could also become accumulators, non-accumulators who worship the accumulation process (e.g., fundamentalist Christians who think that if they pray hard enough they will become rich), and "values voters" who are swayed by right-wing positions on wedge issues, such as abortion, gay rights, and immigration. It also contains members of the military and protective services (police, firemen, corrections, security personnel), managers, its own operatives and employees, and entrepreneurs small-business people. Many of these categories overlap. In my introduction, I saw the class struggle between the accumulating class and the rest of us as over the appropriation and redistribution of the surplus. I also mentioned that the particular sector of the accumulating class that took over in the Reagan Revolution depended on the federal government to allocate capital in its interests.

http://youtu.be/mn4daYJzyls

George Bush on elites, “You are my base.”

No longer do Republicans believe, as did Calvin Coolidge, that the prime function of government is the "night watchman." When Southern rim capitalists took over the Republican Party and subsequently the federal government, they realized that they could use the instrumentalities of the government to increase their access to the material surplus. Researchers have talked about corporate welfare and military Keynesianism (e.g., Seymour Melman) in the Defense Department budget, which seems to expand whether we are at peace or war. However, with Reagan, they learned that a fiscal crisis of the state was extremely beneficial to them because that gave them legitimacy to cut entitlement programs, such as welfare and Medicaid. However, those programs with middle-class support such as Social Security and Medicare had too much popular support to cut. There have been several attempts to privatize Social Security that have failed miserably. At present, the Republicans have plans to destroy Medicare. After the debacle of George W. Bush attempting to privatize Social Security, they have stepped away from that issue, although in the budget offered by Rep. Paul Ryan includes a means test.

Means testing, that is, excluding more affluent recipients from the service is the first step in destroying a program. Means tested programs lose powerful advocates in the upper class, making it easier to identify them as "welfare," which delegitimizes them and makes them easier to defund. The most successful social welfare programs, such as Social Security and Medicare have no means tests. All one has to do is look what is happening to the Medicaid program – which is means tested – in the most recent budget.

The Republicans have found new ways to access government largesse. President George W. Bush applied the Reagan recipe with steroids, conducting two wars off the books while simultaneously granting tax breaks that overwhelmingly benefited the wealthy, creating a ballooning federal debt (more about the Bush Administration in a subsequent blog.) When the wheels came off the economy in 2008, the accumulating class literally raided federal coffers to the tune of $720 billion in bailouts to Wall Street and major banks. Then they turned around and used some of that money to hire hordes of lobbyists to make sure that consequent regulatory efforts were toothless. Meanwhile, they fought every effort to expend funds in ways that did not directly help them. Workers were thrown out of jobs, mortgage holders were foreclosed upon, and what little help they received was begrudged by the Republican Party, which sometimes obstructed such help, such as Sen. Jim Bunning's delaying of the expansion of unemployment benefits to 99 weeks.

Of course, the bailout, the wars, and the tax breaks have ballooned the federal debt. The stimulus package temporarily helped state governments to maintain services. But that only postponed the disaster for them. Using what Naomi Klein has referred to as "the shock doctrine," the accumulating classes have decided to destroy public unions, which make up an important and organized base of the Democratic Party. Given that privately employed workers have faced stagnating wages, declines in benefits, and the shouldering of their own retirement systems, the talking heads at Fox News, the official voice of the Republican Party, have attempted to capitalize on their misery by vilifying public employees as fat cats with high wages, generous benefits, and obscene retirement programs that are bleeding state governments dry.

Especially in the Midwest, Tea Party Republicans have decided that the fiscal crisis of the state is a glorious opportunity to defang public unions. If they could reduce union workers in the private sector by half over 30 years, then why can't they take on public unions as well? If public employee unions are destroyed, states can run lower budgets. Taxes, which are the second most powerful claim on the surplus, will remain low. This will allow more capital to flow into the coffers of an already bloated accumulating class.

With the globalization of capital and the rise of the multinational corporation, the accumulating class no longer needs an expanding American middle class, which after all, is not materially productive. It consumes on the job and in the private sphere. What does a teacher produce? A cop? A fireman? Public employees are paid out of the accumulated surplus. Although the American middle-class exists at the material level of social reproduction as surplus absorbers – that is, as excuses for capital to produce more goods and services in the search for profit, there is no reason why they can't get surplus absorbers that are cheaper in places like India and China. The American middle class is now viewed as an impediment to the accumulation process by the accumulating class. Therefore, they have every incentive to disinvest in the main mechanism by which upward mobility into the middle class is achieved – education.

Increasing sections of America look like a postindustrial nightmare. The great industrial cities of the Midwest are hollow shells of themselves, with blocks of abandoned buildings, empty factories with broken windows, and sad, shrunken communities that consist of people who could not or would not move out: Flint, Detroit, Cleveland, Buffalo, Rochester. I'm sure you could add your own to the list. If capital abandons the American middle class, will urban rot invade the surrounding suburbs as middle-class Americans are squeezed with declining work conditions, lower salaries, and smaller pensions?

Roots of the Current Fiscal Crisis of the State: New Class Wars: 1980-1992

The overthrow of the Eastern Establishment by capitalists from the Southern rim was called by my friend Danny Foss, "The Revolt of the Needy Rich." As I noted in my previous blog, this particular sector of capital became wealthy through the largess of the federal government. Take, for example, Southern California; on the surface, we think of Hollywood, real estate, and all those wonderful prepared environments that tourists like to visit, such as the San Diego Zoo and Safari Preserve, Disneyland, Universal Studios, Knotts Berry Farm, and so forth. In actuality, these economic activities sit upon an infrastructure of oil and natural gas exploration and military expenditures. There are several large oil companies based in California including Union Oil, Standard Oil of California (Chevron), and Occidental Petroleum. Los Angeles is ringed with military installations, from Vandenberg Air Force Base, Point Arguello Naval Base, Point Hueneme Naval Base, and Edwards Air Force Base to the north, the Marine Air Force combat Center in 29 Palms and March Air Force Base in Riverside to the east, the Naval Air Facility in El Centro to the southeast, and San Diego is the home port of the Pacific Fleet. Moving north along the coastline, we see the Marine Corps Air Station at Miramar, El Toro Marine Base (now decommissioned), and Camp Pendleton. And these are only the larger ones. There are literally thousands of military-related industries in Southern California, from small arms and ammunition manufacturers to producers of major weapons systems. Major Southern California military-based industries are or have been Boeing Aircraft, Lockheed-Martin Marietta Aircraft, McDonnell Douglas Corporation, Northrop Aviation, and TRW. Those used-car salesman who fly giant American flags on their car lots next to Interstate 405 could not have become rich if there had never been a California oil boom or the Defense Department hadn't set up shop in Southern California.



Historical Tax Rates



The other key state in the southern rim is Texas, another state with an oil and Defense Department infrastructure. The Reagan-Bush ticket was one that was made in accumulating class heaven. Not only did Ronald Reagan represent his California right wing/oil magnate/leisure industry/military constituency, but George HW Bush was the perfect vice presidential candidate with a foot in both the Eastern establishment and the Southern Rim. The scion of a wealthy Connecticut family whose wealth originally came from steel, he decided to strike out on his own as a Texas oilman. His presence on the national ticket provided a semblance of unity between both sectors of the accumulating class.

Once in power, Ronald Reagan pursued four policies that enhanced the power of the accumulating class overall and his personal constituency in particular. Practically his first act as president was the decertification of the striking air traffic controllers union, PATCO. This was a signal to corporate America that the social contract established between big labor and the Eastern establishment would no longer be enforced. Second, he ramped up the Cold War by falsely claiming that the Soviet Union was expanding its military when in actuality it was experiencing its own fiscal crisis. This was an excuse to funnel more federal dollars to the military contractors who backed his candidacy. Third, Paul Volcker pulled the plug on the economy by dramatically raising interest rates to 21%! This was an absolute boon to big capital, that could shut down marginally profitable industries that had unionized workers and move productive enterprises to the antiunion South, or better yet, to countries that had little or no labor protection whatsoever and who paid their workers a fraction of what American workers cost. Fourth, the Reagan Administration passed the Kemp Roth tax cuts, which benefited high income earners over low and generated a shift of wealth up the system. Not only did it decrease marginal rates by 23%, it cut corporate taxes by $150 billion, and reduced estate taxes. In 1986, the top tax rate was reduced again from 50% to 28% and the bottom tax rates were raised from 11% to 15%. This is an incredible transfer of wealth up the system. The current top tax rate is 35%, exactly half of what it was in 1980.

Simultaneously, the Reagan Administration was tearing away the social safety net and removing support for poor people. All people on Social Security disability were thrown off the rolls and had to reapply, confirming their disability. Federal-aid to welfare was cut, the war on drugs was ramped up, and federal support public housing was ended.

So, how could this newly emerging elite that it taken over the state so successfully implement its program of enriching the rich to the detriment of the rest of society? We have all heard of the term "Reagan Democrats" which refers to an older white working-class predominantly male constituency that shared Ronald Reagan's antipathy toward privileged youth in the counterculture and black Americans. Richard Nixon, in an earlier phase, referred to them as the "silent majority." By using cultural appeals to this constituency, the Republican Party found that it could gain conservative white males on wedge issues of drugs, women's rights, abortion, and "family values." As Thomas Frank pointed out in his enlightening book, What's the Matter with Kansas?, that cultural appeals could actually get white working-class males to vote for candidates who would work against the material interests of the working class.

The tax cuts can be viewed as a sacking of the public treasury by the rich. The tax cuts plus the increase in the military budget in peace time and the war on drugs created a deficit that lasted through the Bush I Administration. Tax breaks for the rich, welfare for corporations in the form of military expenditures, and shoving it to the poor created greater inequality. During the 1970s, the Gini coefficient, and index of economic inequality averaged around 36. In the 1980s, it jumped to around 40. Wages stagnated and the rich got richer. Hmm, sounds like a strategy. And Reagan is one of the most popular of recent presidents!

Introduction to Class Analysis

The purpose of this blog is to attempt to provide an in-depth analysis of current events by trying to provide an understanding of how they reflect relationships between the upper class and the rest of us. Before I can do this, however, I need to explicate what I mean by "social class." The issue of social class is complex and has been long debated. It bedeviled Karl Marx, who's credited with the most penetrating analysis of economic and social classes in capitalist society. However, Chapter 52 in the third volume of Capital, entitled, "Classes," contains four paragraphs in which he attempts delineate social classes on the basis of the source of income. It abruptly ends with a notation from Frederick Engels, "Here the manuscript breaks off."

Sociologists and social theorists have been debating the structure of capitalist societies for nearly 200 years. European scholars, especially the British, acknowledge the class basis of capitalism. However, in America, the existence of social classes is been subject to debate, with some, such as Dennis Wrong, claiming that America may have inequality, but does not have distinct social classes. Studies on social class identification of Americans indicate that practically everybody, including members of the upper and working classes consider themselves middle class. I believe that not only does America have social classes, but that the upper class has been increasing its power over American society over the past 30 years to the point of oligarchy.

Pantheon of the Left

So what do I mean when I use the term "social class"? The most fundamental characteristic of a social class is its relationship to the material surplus. Another, more prosaic term for the material surplus is "wealth." The material surplus consists of those commodities and products that are not consumed on the spot in support of life, but which have an exchange value in a market, which can appreciate or depreciate depending on demand. The usual sources of wealth are money, property, ownership of productive enterprises, stocks, and bonds. Given the complexity of contemporary investment forms, let's just say that these forms of wealth provide income that is based upon the labor of others. This would include everything from interest on bank accounts to profits from hedge funds.

The upper (or accumulating) class by definition consists of members of the social category that have first claim to the surplus. In capitalist society, the first claim to the surplus is profit. That is, that portion of the surplus that can be defined as profit is expropriated by people defined as owners or investors. I indicate that this group is a social category, suggesting that it is defined from the outside rather than from the inside. That is, members of the accumulating class may or may not be aware of their own class interests.

At this point, I must add that there are other claims to the surplus that compete with profit. The second claim to the surplus is that income that accrues to workers in excess of that which is expended on the necessities of life, such as housing, food, healthcare, transportation to work, and, in today's world, access to the means of communication. Given the impetus of capital, labor is always too expensive. For Marx, this was the fundamental contradiction in capitalist society. The third claim to the surplus is that made by the state in the form of taxes. The accumulating class always seeks to lower taxes, because taxes remove that portion of the surplus from their direct control. They must contend with other constituencies, such as unions and nonprofit organizations over the distribution of the surplus that is appropriated by the state.

Social class has most fundamentally a material dimension; however, it also has political, cultural, and historical dimensions. Let me describe these as briefly as I can. The political dimension is most commonly associated with the state. Not surprisingly, the upper class has much more power relative to the state than other classes. However, there are other institutions that maintain the interests of the upper class that are much more to their liking, such as the corporation. Corporations, by their very nature, are controlled at the top by upper class members and institutions (e.g., CEOs, CFOs, banks, large investors). Although in some corporations, such as General Motors, there may be a seat at the table for organized labor, in most cases, the boards of directors are dominated by members of the upper class who usually sit on boards of directors of several interlocking corporations. Almost all major corporations have representatives from banks and investment houses on their boards. The upper class tends to have an ambivalent relationship with the state, especially in democratic societies where that is the one area in which their power can be contested by organized masses. They much prefer power to be vested in non-state entities such as corporations, in which they have much more control as owners, investors, and managers.

Thus, the right-wing mania for privatization of government functions reflects a class interest in upper-class control of government functions. As a matter fact, this provides a double boon for the upper class, because not only do they gain control over government functions, but government expenditures then provide additional sources of profit for the accumulating class. For example, in the Iraq and Afghan wars, there were actually more employees of private security corporations in those countries than American troops. These corporations provided a variety of services to the military, such as transportation, food services, security for State Department officials, and so forth that cost the military much more than if such services have been provided by government employees. Instead of paying a Pfc. to drive a truck, such services were provided by private firms who were paying truck drivers in the neighborhood of $100,000 a year, not to mention the additional costs of administration and profit. In many cases, corporations, such as Halliburton and its former subsidiary, KBR, provided either shoddy work, double billed the government, took a cut and subcontracted services to local providers, or performed no services whatsoever.

The cultural dimension refers to the nonmaterial basis of society. At one time, social theorists tended to distinguish between high culture and folk culture, with one emanating from the upper classes and the other emerging from the experiences of the masses. More recently, the revolution in telecommunications created a cultural sphere in which privately controlled media empires are able to heavily influence ideas proliferating in a society. It is not surprising that Robert Putnam, a political scientist and the author of Bowling Alone, found that the deterioration of civil society in America began with the advent of television. What was happening was that time formerly spent talking with family, friends, neighbors, Lodge members, union buddies, sports teammates,  and attending meetings of civic associations, unions, PTAs, fraternal orders, and the such, people were staying home and watching TV. The TV was telling them what the ideal life was in capitalist society, who the enemy was, and showing them what they needed to buy to actualize the American dream and become acceptable to the alienated other. It was communication down the system from elites to masses. Tastes could be shaped, new problems could be invented, such as halitosis, restless leg syndrome, or status panic, for which a product was available to solve. Political discourse has deteriorated to sound bites and political candidates are sold like any other commodity.

The historical dimension refers to the ongoing linear history of the American accumulating class, beginning perhaps, in the North with the Boston elite, and large slave-holding landowners of Virginia. The American Civil War can be viewed as a consequence of the split between Southern, landholding elites and northern industrial capitalists. Certainly one of the economic consequences of the Civil War was the destruction of the Southern agrarian economy. The slave economy had to be rebuilt by breaking up large landholdings into smaller sharecropping parcels and rented to tenant farmers. The subordination of capitalist elites in the South and West to the industrialized North lasted for about 120 years.

With the election of Ronald Reagan in 1980, a coalition of Texas oilmen, California real estate developers, defense contractors, and operators of the leisure industry were able to assume control over the Republican Party. Since World War II, the industrialization of the West and the South was able to take place partially because of the largess of the state, especially in terms of tax breaks for the oil industry, the placement of military reservations in those states, and the funding of military contractors based in those regions, such as the Lockheed Corporation, McDonnell Douglas, and TRW. The northeastern sector of the class of capital, which included the Midwest, was essentially comfortable with the social contract between labor and capital in which unionized laborers would engage in collective bargaining with big capital; labor peace was exchanged for a living wage and good benefits. However, because of international competition, American capital was suffering from a declining rate of profit.

The northeastern sector of American capitalism was referred to as "the Eastern establishment." It was the corporate liberal faction of the Republican Party. It was probably best represented by Nelson Rockefeller: socially liberal, fiscally conservative, believed in Keynesian economics, and accepted the welfare state. The right-wing of the Republican Party, whose vanguard were the supporters of Ronald Reagan, wanted to destroy the welfare state, were anti-Keynesian, championed neoliberal economics of Milton Friedman and Fredrick von Hayek, socially conservative, and fiscally profligate, so long as government expenditures ended up in corporate coffers rather than public entitlement programs.

The recent history of the United States has been a struggle between this faction of the accumulating class and the rest of America, with the policies of the hard right being implemented: military adventurism primarily in the defense of the oil industry, increases in military expenditures even in peace time, destruction of the social safety net, the privatization of public services, including military, education, prisons, and police. They have been extremely successful in destroying those organizations that constitute the traditional base of the Democratic Party, including unions and nonprofit organizing groups such as Acorn. Because of these depredations, the Democratic Party has had to cater to the more liberal sector of the accumulating class, at least on social issues, such as Wall Street. Bill Clinton, supposedly one of the most astute political thinkers of his time, realized that if the Democratic Party was going to be viable, they had to become more "business friendly." Thus the Democratic Leadership Council was founded in an effort to appeal to that sector of the "business community" to which the policies of the hard right were anathema. Thus, the Democratic Party tends to look more like the Republican Party in the post-World War II years prior to 1980.

Now that the material, political, cultural, and historical dimensions of the accumulating class have been delineated, I conclude this essay with a discussion of class consciousness. That is, when is a class of itself for itself? This was another issue that created problems for Marx. Within any hierarchy, some portion of the relations of domination and subordination are hidden. It is in the interest of the dominators to hide or cover up those aspects of control that are inimical to the interests of the dominated. Within the accumulating class there are a number of institutions that maintain class cohesion, including prep and boarding schools, elite universities, financial elite clubs, country clubs, churches, and the Republican Party. This does not mean that there are not fractionations within the accumulating class. For example, there are tremendous ideological and cultural differences between Jews in the upper echelons of Goldman Sachs and Texas oil billionaires. They may differ over such issues as church/state relationships, abortion rights, gay marriage, and even such economic issues as effective tax rates; however, they all believe in the self-regulation of their own industries and the use of American political power to protect markets.

What unites the accumulating class is their common interest in maintaining their wealth and accumulating more. Because of their crosscutting institutions that create similar outlooks and reinforce their economic and political interests, it is the one true class in American society. It is a class of and for itself.

For the rest of Americans, nearly all of whom view themselves as middle-class, class consciousness has not existed since before World War II. The movements of the 1960s involved biological categories: race/ethnicity, age (youth), gender, and sexual identity. At their most radical phrases, they placed their resistances in the form of class consciousness. This was true of the Black Panther Party, Students for a Democratic Society, and early organizations of the Women's Movement, such as the Redstockings. The right-wing movement of dispossessed white males of the early 1990s was decidedly non-class oriented, attacking the state, women, and minorities. It never evolved the notion of corporate involvement or class conflict, even though they were victims of right-wing initiated government policies that favored corporations over individuals, restricted opportunities for social mobility, and favored the accumulating class interests over those of their own. They were never able to develop a comprehensive view of the enemy. Instead, with the exception of Jewish bankers (not the banking establishment itself) and federal enforcement officers, their hatred was directed at those who had less power than themselves, railing against welfare and entitlement programs.

It is ironic that as of the writing of this blog, we are seeing the possible emergence of a labor movement that has identified its opponent as big capital and the Republican henchmen. As the workers in the Midwest, especially Wisconsin, resist the predations of Republicans against public employees, stripping them of bargaining rights, the talking heads at Fox News are screaming that workers are engaging in "class warfare" even though the war was started by Ronald Reagan almost exactly 30 years ago with the decertification of the air traffic controllers union, which, along with the Teamsters, supported his run for presidency.