"Work With Capitalism, Not Against It". Why the Labor Leadership Surrenders to the Bosses

Heroic 1985-86 P 9 Struggle defeated by a combination of the bosses and the UFCW and AFL-CIO leadership

We would like to thank the many people and organizations that have read and shared the statement on our blog, The DSA, Labor Notes and the Trade Unions. This statement has been among the most widely read and shared of the many articles and statements on this Blog. In the course of the exchange of views both around this recent article and also in the past, it has been expressed by some people, mainly members from left organizations, that the authors of this article have a "principle of attacking the trade union leadership.". This is not the case. There are different approaches as to how trade union work should be carried out and the authors of this article believe that none of these approaches should be off limits when it comes to discussion.

This especially applies to the policies of the union leadership that control the trade union movement with its 14 million members. Having said this it may be the case that some activists, while agreeing with the article's position that the union leaders will not fight, may wish for some more information. To this end we would like to call a witness to support our case.  

Our witness is the main public voice of US capitalism - the Wall Street Journal. In other words, testimony from the horse's mouth. As the last century drew to a close, the Wall Street Journal produced a centennial edition. This included a segment titled - "Events that Helped Shape the Country". It explained that in 1893 there was an economic slump that left half the membership of what was then the main union federation, the American Federation of Labor (AFL), unemployed. The AFL was composed overwhelmingly of craft unions (skilled trades).  Samuel Gompers was the leader of that federation. Under his leadership, and against the background of that economic slump, the AFL made a decision as to what its general policy should be towards U.S. capitalism.

Here is how the wall street journal reported this decision. "The AFL led by Samuel Gompers votes against adopting socialist reform programs....Gompers believes that U.S. labor should work with capitalism, not against it, and that the AFL’s  proper concerns are wages and hours and better working conditions".

 

Take note, this is the statement from the main public voice of US capitalism, of the employers, as it looked back over the previous century at what were the "events that helped shape the country". This is no small deal. This public voice of US capitalism saw that the decision of the trade union leaders over 100 years ago, "helped shape the country", that is, the United States we all live in today.  The bosses, the employers, U.S. capitalism, speaking here through their most important public journal, recognize the importance of the decision taken by the trade union leaders of the time to "work with capitalism, not against it".

This decision by the AFL leaders helped shape the role US capitalism, US imperialism, would play in the coming century and up to this day. And the role it would play not only in the U.S. but also internationally. With no serious threat to its system at home from the leadership of the existing trade union federation, U.S. capitalism was allowed to stride out onto the world and put its stamp on the new century. This policy of the AFL also allowed and still allows US corporations, that is US capitalism, to dominate the ideas of its working class and the society in which its working class lives more than is the case in any other advanced capitalist country.  

Any force within today’s US labor movement that does not recognize the importance of this decision by the leadership of the trade unions at that time and recognize that this continues to be the policy of the union leadership today------and refuses to openly discuss this reality------will not be able to offer an alternative to the union membership and to the working class that can defeat the present offensive of the employers, the offensive of the capitalist class, and offer a way to a secure future for working class people.    

So the policy to “work with capitalism, not against it” remains the policy of the leaders of the U.S trade unions to this day. This policy was not changed with the rise of the Congress of Industrial Organizations (CIO) in the 1930's and the merging of the AFL and the CIO into the AFL-CIO in the 1950’s. Only by recognizing this, is it possible to understand why the program and strategy of the trade union leaders is one of capitulation and surrender. It is why they oppose and seek to crush or co-opt any movement from within their ranks that seeks to oppose the policies of capitalism.  In this period, such a movement would mean opposing the present offensive of capitalism against the working class and against the environment. The trade union leadership of today does and will continue to move to crush any movement from within their ranks and the working class as a whole that threatens their policy of labor peace with the bosses, of "working with capitalism, not against it".

When your opponent is at war and on the offensive against you, and the leadership on your side is only prepared to seek peace then it is not hard to see which side is going to win. This is why the US working class has been driven back over the past decades. A classic example of this class collaboration is the recent strike in Western Washington State involving crane operators and other construction workers. We urge the reader to read this report of the strike and be sure to read the union leadership's rules about picket line behavior. It is proof positive that they have no intention of hurting the economic interests of our enemies.

Look at events in the US as the 1980's unfolded. U.S capitalism/imperialism was increasingly unable to pay for its huge military and political presence on the world stage and keep the US working class at the standard of living it had achieved in the post World War 2 decades. Faced with this situation, and increasingly going into debt, U.S capitalism moved on to the offensive against its own working class to reduce its living standards. This offensive was launched by U.S. capitalism in 1980 through its representative in the White House at the time - Ronald Reagan.  The 11,000 air traffic controllers organized in the Professional Air Traffic Controllers Organization (PATCO) went on strike for better wages, conditions and shorter hours. Reagan, on behalf of the employers and U.S. capitalism, fired all 11,000 air traffic controllers and banned them from working in the industry for life. This came not long after the Democrat Carter had used the anti union Taft-Hartley Act against the miners in 1978.

The gauntlet was thrown down to the U.S. working class. Once again we turn to the Wall Street Journal - the horses' mouth - to see the importance of what was going on. 

It wrote at the time: ”The PATCO strike has to be defeated for all sorts of reasons that have absolutely nothing to do with relations between the federal aviation administration and PATCO. The defeat of PATCO is related to the more important issues, commitments to rebuild military strength, to restore the dollar to soundness, to cut taxes and regulations, to resist soviet imperialism and to curb the wild ascent of federal spending.” This was making it clear that the crushing of PATCO was necessary so U.S. capitalism could move to reassert its dominance at home and on the world stage. Smashing PATCO was an opening salvo making it clear U.S. capitalism had to move decisively against its own working class. 

As John Throne, one of the writers for this Blog writes in his Manifesto and Memoirs, “this was no beating about the bush. After the defeat in Vietnam, after the economic crisis of the 1970’s and with the rising U.S debt, U.S imperialism was moving to rebuild its economic and military strength at home and internationally. it was moving decisively to get back in the saddle.  The reader can purchase this book here.

Back again to the policies and role of the trade union leaders, the leadership of the AFL-CIO and non-affiliated unions. What did this leadership do when capitalism with the firing of all PATCO members threw down the gauntlet to the U.S. trade union movement and working class? Did they pick up this gauntlet?  Did they explain what was going on to the membership and reach out to explain this to the working class both organized and unorganized?  Were meetings organized in every local, and in workplaces to explain what was going on? Did this leadership respond to this assault on organized labor by organizing strikes in transport, communication and other industries where the unions were then strong?  Did the leadership respond with a call to mobilize and prepare for a General Strike to support PATCO and halt the offensive of the employers and U.S. capitalism before it even got started. It did not. 

Instead it instructed its membership to cross the PATCO picket lines and deliberately allowed the PATCO strike to go down to defeat. As a result, the employers offensive took off. This surrender, this refusal of the AFL-CIO leadership to back PATCO flowed from their policy of  "working with capitalism, not against it". This surrender gave the green light to the bosses who then felt confident their offensive against organized labor could proceed and without opposition from the national federation, the AFL-CIO. Numerous heroic attempts by individual unions throughout the eighties were isolated, were cut off from the rest of the movement and working class in general by the trade union leadership and as a result were defeated. Organized labor and the U.S. working class has been on a downward spiral of falling wages and worsening conditions ever since. 

This is the reality. This is what has to be explained and understood. It is the refusal to explain this and to build against this an organized offensive opposition in the working class that this blog is addressing when we write articles such as our recent one about DSA, Labor Notes and the trade unions. 

We wish to seek to point out that in our opinion it is a mistake for the sisters and brothers in organizations such as DSA and Labor Notes not to openly explain the reason the trade union leaders play the role they do. That is because they have the same world-view as the bosses. They have chosen a policy of "working with capitalism, not against it".  They see no alternative to capitalism. They do not believe that the working class can build a different society. And of course there is also the well paid and secure jobs and many perks these leaders have in their positions in the leadership of the trade unions.  

Labor Notes has been successful at regularly bringing together a lot of rank and file union activists to share their experiences. For this they deserve credit. However they do so within a limited context. That is without explaining the root cause of the policies of the trade union leadership.  Look at what could be possible. Every Labor Notes conference could open with a session that would explain and discuss the policies of the AFL-CIO leadership which are to "work with capitalism, not against it". It could be explained that this policy is called the Team Concept, the view that bosses and workers have the same economic interests and it is this worldview that explains the determination of the trade union leadership not to confront the present offensive of the employers, of U.S. capitalism, against the working class and the environment. 

All discussion about DSA’s trade union work should include this issue of the Team Concept, of their being two alternatives, of working with or against capitalism and how the present leadership of organized labor is firmly committed to the former. Those of us in DSA and DSA’s leadership in particular, should seek to convince the organizers of Labor Notes and the many activists who attend events organized by Labor Notes and the many members that are now joining DSA that it is necessary for the trade union movement to break from the present policy of its leadership if a new aggressive, offensive working class movement is to be organized.

The teachers and educators strikes and how they organized them, show that a new movement is taking shape. The teachers/educators movement and the gains they have made were successful through actions that were taken against the policies and wishes of the trade union leadership as a whole. It is the responsibility of experienced activists in such groups as Labor Notes and members of such socialist groups as DSA to explain that these policies of the AFL-CIO leadership of supporting capitalism lie at the root of their refusal to fight and why any major victories are so frightening to them. Major victories would empower union members and all workers and the movement would spread across the working class and show that the leadership’s policy of surrender to the bosses’ offensive was and is incorrect and that there exists an alternative. It would also threaten the control of this leadership over the trade union movement and apparatus and threaten their own positions.    

DSA rank and file trade unionists and all forces in US society that want to fight and defeat the capitalist offensive against the working class and the environment, have to have an understanding of history and the role of the trade union leadership in that history and its role to the present day. Many of the leaders of Labor Notes know this history but have adopted policies of seeking a relationship with the less right wing of the trade union leadership and full time apparatus. So to avoid conflict with these forces they do not explain this history. This is a mistake. 

Also, there are people who enter the labor movement from academia, many from a left, liberal academic background, even socialist background, and most with the best intentions of helping the labor movement.  But many of these bring with them a lack of confidence in the working class, an incorrect tendency to cooperate with the least right wing sections of the labor leadership and full time apparatus by keeping discussion of the real issues off the table. And as part of this keep quiet about the real role of the union leadership and the real reason it plays the role it does. This leads to these people holding back the activist and working class movement from drawing the full conclusions as to what is necessary to build the kind of working class offensive that is necessary in this period.

Part of what flows from this mistaken approach is that these forces give the labor leadership, especially the more liberal wing of the labor leadership, a credibility that they do not deserve. When this issue is raised, in most cases these forces defend, or at the least give cover to, this wing of the trade union leadership and full time apparatus. The working class and the trade union membership should welcome allies including those from academia who place their skills at the service of the working class. Many heroic fighters have come from this background. The working class should welcome and accept the assistance these people can give. But these people must see that their experience, like all experiences, has positive and negative features.

Those coming from an academic background tend to be overconfident and have a tendency to think it is their job to teach the working class. This is one of the negative tendencies that tends to develop in university backgrounds. It is important to recognize as Marx pointed out that the task of liberating the working class is the task of the working class itself. People from such backgrounds have to see that they have much to learn from the working class and especially the working class activists.  

One final note on the role of the various left groups from a left-sectarian background. One of the most important attempts of the U.S. working class to take on the employer’s offensive of the past decades was the UFCW P9 strike in Minnesota in the mid 1980's. This was a heroic struggle by these workers that was defeated when the national UFCW leadership moved in and replaced the P9 leadership who would not give in to the employer’s demands with a compliant leadership that would follow orders and the AFL-CIO’s policy of surrender.

Out of this struggle came an attempt to build a national rank and file movement against the policies of the union leaders that called for surrender. It was known as the "The National Rank And File Against Concessions". 

This body held a conference. It had the potential to begin the building of a serious opposition movement. However this conference was not able to do so mainly because of the role of left sectarianism. One small sect which while calling itself communist sought as a priority to use this conference to get its people into positions in the union movement rather than to work in a non sectarian manner to build a fighting united front, a fighting coalition, against concessions. Another left sect intervened in the p9 struggle and the effort to build "the national rank and file against concessions", but did so also in a sectarian manner and so damaged this effort. For example it would not share its large contact list with the p9 strikers but it wanted the contact list of the tens of thousands of people who were in contact with and supported the p9 strike. Another sect also calling itself communist paid lip service to supporting the strike but behind the scenes complained that the p9 fighters were too militant and were splitting the union movement, by that they meant were coming into opposition to the union leadership.  

The founders of this Blog have an intimate experience with this type of left sectarian activity and how it can damage the efforts of the working class to build and fight. Richard Mellor the main person who started this Blog was for thirty years an active member of the union the American Federation of State and County and Municipal Employees, Local 444, and the a prominent activist in that union at that time. He was also a member of a socialist group, the group that now goes by the name of Socialist Alternative. 

He took the initiative through his local and started a rank and file opposition magazine in that union - known as AFSCME ACTIVIST. He would later be brought up on charges by the leadership of the union for using the name although the charges were dropped. AFSCME ACTIVIST was not a socialist magazine. Its platform was opposition to concessions, no support for the team concept, no support for the Democratic Party and for the building of a Labor Party. That is, it was a united front type magazine and opposition grouping based on and fighting for these agreed demands. 

Richard Mellor's local, Afscme 444, supported this magazine and gave resources to this initiative to build an opposition in the union. With help from activists in Wisconsin, the AFSCME ACTIVIST went on to be subscribed to by locals in ten states (usually fifty copies were distributed to each of these locals for each of their meetings). It developed a base from Arizona to Wisconsin, to New York to Illinois. It was also sold at meetings and union gatherings and conventions such as the California State Labor Federation and District Councils. Labor Notes would not support this magazine and developing opposition presumably because it too clearly explained its different position to the union leadership and its opposition to its policies. However that is not what brought about the end of AFSCME ACTIVIST. 

At that time in the group that was to go on to become Socialist Alternative today, a debate was taking place. Both Richard Mellor and Sean O’Torain and others in that group believed that the majority of the leadership of that group were not putting forward an alternative to the then union leadership of the Labor Party Advocates, a group which worked for a Labor Party and which had been started after a successful meeting was held by Richard Mellor’s local, Afscme Local 444 with Tony Mazzocchi, the leader of the Oil and Chemical Workers Union speaking.

The majority of this group (Now Socialist Alternative) then moved to expel Richard Mellor and the others. This is par for the course with the left groups which adhere to the false undemocratic method of organizing which is known as Democratic Centralism. To destroy the different point of view in their organization the majority of Socialist Alternative expelled those who held this different point of view. But not content with that, and much more damaging to the working class, the leadership of what is now Socialist Alternative went on to destroy AFSCME ACTIVIST. They were not prepared to allow Richard Mellor to be a central figure in an opposition magazine in a major union. So they wrecked the developing opposition group AFSCME ACTIVIST. This is the method of all left sectarian groups, all so-called democratic centralist groups, they put their own immediate and petty interests above the interests of the working class movement.  

In order to formerly establish AFSCME ACTIVIST Richard Mellor proposed to a meeting of AFSCME ACTIVIST supporters at a conference of AFSCME in Chicago an editorial board be elected to guide the work and build the alternative in AFSCME. This board was to be comprised of people who agreed with the magazines demands, opposition to concessions, against the so-called Team Concept, no support for the Democratic Party instead for the building of a Labor Party. The majority of the Afscme Activist supporters at that meeting were all rank and file union members and mostly women,

The majority of the left group that is now Socialist Alternative opposed the election of this editorial board. They demanded that their organization have control over this rank and file magazine and demanded the addresses and information of the subscribers.  Richard Mellor correctly opposed this sectarian approach as a decision of this nature was not his to make but the supporters of Afscme Activist. As as a result what is today Socialist Alternative expelled Mellor, withdrew its support from AFSCME ACTIVIST, and sabotaged it. Further reading on the Afscme Activist here.

So those who support this Blog understand through personal experience the danger that left sectarian groups pose to the building of a fighting opposition in the unions and the working class, understand how groups that claim to be Democratic Centralist put their own interests in front of the interests of the working class and do damage. 

As a result we recognize how in the case of DSA we are correct to stand against organizations which base themselves on such methods as so-called democratic centralism being part of our organization. However while defending ourselves against such organizations, DSA is now welcoming into our organization to run the policy of its union work, the group known as Labor Notes, which is an organization with clearly defined policies which are determined in closed internal meetings, and part of which is not to discuss the role of the trade union leadership. And along with this, it would appear the leadership of DSA is going along with this, they seek to prevent any open discussion in the union and working class movement of the trade union leadership's policy of "working with capitalism, not against it".          

The task of building a fighting democratic movement in the trade union rank and file and in the working class as a whole is an urgent necessity. It will not be easy. But it can succeed. To do so one essential element is a non sectarian open democratic discussion about the history of the trade union movement, of the trade union leadership, and the various policies and approaches that are carried out by the various forces within the trade union movement. This blog stands for such a discussion. Let the new movements that are just beginning to take shape, such as the teachers and educators discuss the full history of the movement, let all hear the various polices of the various opinions in the trade union movement those that brought success and those that bring failure. Let these new movements and the tens and tens of millions of workers who will organize into trade unions in the coming period make a democratic decision concerning what policies are necessary to defeat the employers, to defeat the capitalist offensive.

Specifically is the policy of the trade union leaders to “work with capitalism, not against it” correct. Or is it, as this Blog believes, incorrect. 

Greg Bartik

Les Evenchick

Richard Mellor

Sean O' Torain

Charles Blow Explains Why Blasey Ford Never Told the World About Sexual Abuse

This NY Times columnist makes sense as we are in the middle of the Trump nightmare. And think of the women that Trump raped. Yes, I believe if you intimidate, threaten, manipulate threaten a persons employment, career etc if they won't yield to your sexual advances that's rape.

Trade Unionist Runs For Office. AFL-CIO Leadership Backs the Democrat.

Facts For Working People supports Cliff Willmeng in his run for Boulder County Commisioner. Below is a letter brother Willmeng sent to the leadership of the Colorado AFL-CIO. This state body has chosen to support a Democrat over a union member with a strong track record of fighting for trade union and workers' rights. Cliff has also been a leading figure in the efforts against fracking in that state and throughout the country.

Brother Willmeng is absolutely correct in his scathing criticism of the role of the leadership of the Colorado State AFL-CIO. The trade union leadership's disastrous dance of death with the Democratic Party is a major factor in the destruction of living standards not only of union members but the working class as a whole. It is this partnership that is a major factor in the rise of Trump. Had the union officialdom offered an alternative to the two capitalist parties the balance of class forces in the US would have shifted dramatically in our favor.

Facts For Working People has been making these same arguments with regards to the union leadership, stressing that a conflict with them over policy is inevitable if we want to reverse the present concessionary climate and elimination of gains made through a hundred years or more of heroic sacrifice.  A recent article on the left as well as Labor Notes approach in the unions is here and another on the recent strike of Crane Operators and other IUOE members is here. Check out the picket line rules the IUOE leadership demanded the strikers abide by - a recipe for defeat if there ever was one.

The recent teachers/educators strikes, led to a great extent by women, have changed the game as far as organized labor is concerned. Direct action, challenging the official leadership and violating anti-union/worker laws is what can win. Brother Willmeng's stand and calling for independent political party of the working class follows in this tradition.  Here are three short videos of three of the leading figures, from West Virginia, Kentucky and Arizona sharing their experiences in the strikes.

Kentucky Teachers Stress the Need For Union and Community Links   

West Virginia Teacher Describes Events Leading up to the Strike   

Arizona Teacher Talks About Education and the Recent Strike.

We congratulate Brother Willmeng for his willingness to openly call out the disgraceful role that the leadership of the AFL-CIO plays and offering the rank and file union member and the working class in general a genuine alternative. The leadership's actions in the present climate are criminal and a complete betrayal of the members who pay the dues and the (often obscene) salaries of the leadership. The leadership's actions are also a complete betrayal of the entire working class.   

Campaign Blog

An Open Letter to the Colorado AFL-CIO on Independent Rank and File Candidates

The following was sent to leaders of the Colorado AFL-CIO on September, 17th, 2018. The email responds to the body's rejection of myself as the only union member running for office in Boulder County in favor of the Democratic Party candidate, a professional politician with no union history whatsoever.  The maneuver demonstrates the political crisis in the union leadership today, and compelled UFCW Local 7 to withdraw form the body on the principled ground that unions are required to support union members as an immediate political priority

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After six months and many recent events in the Colorado labor movement, I wish to address a few issues related to the state of the AFL-CIO and my candidacy for Boulder County Commissioner as a rank and file union member. I will say upfront that the views expressed here are my own and not the official position of UFCW Local 7, although I am a job steward and an officer on the Local’s executive board. Thank you in advance for your time and for you efforts to build power and strength for working people everywhere.

I will start by saying that it’s quite clear that the working class of the United States and its leadership through organized labor are in an existential crisis and have been for the last 50 years. We can discuss the nature of the crisis, how industry and government have exploited it, how union leadership has responded to it, or any other details, but its existence is thoroughly documented. This prolonged retreat has severely affected the living conditions, ambitions, influence, and general consciousness of working class people, both nationally and internationally. We union members can’t underestimate its profound repercussions.

As a rank and file union member originally in the United Brotherhood of Carpenters and Joiners Local 1 of Chicago, Illinois, and now in UFCW Local 7 as a registered nurse, I’ve done what I can to help end the unions’ retreat, including workplace organizing, unionization campaigns, actions, mobilizations, and ongoing outreach to the rank and file of all unions to strengthen our efforts collectively. Most recently this effort compelled me to run for local office as a rank and file union member.

I decided to run for Boulder County Commissioner to address the multiple issues facing working people from the perspective of a politically independent campaign. Like many other parts of the country, Boulder County is run by a political class of wealthy, connected individuals who exploit their positions for careers and influence to advance their own aims and those of their affiliates. The result: increased power and wealth for the few and increased economic hardship, racial disparity, and disenfranchisement for working class people. Community members across Boulder County asked that I run for Commissioner to address these issues, issues unaddressed by our current political leadership.

Because of the nature of Boulder County politics and the dominance of the Democratic Party, I chose to run as a Green Party candidate. This was a simple decision for me based on my personal and political experiences with the deeply compromised nature of the Democratic Party both in Chicago and Colorado. In my 30 years of community and workplace activism, I’ve seen that any genuine advances for working people require a fight against the Democratic Party. I can elaborate, but for brevity I will simply say that here in Boulder County, it is abundantly clear that the Democratic Party not only offers no answers to the multiple crises of the working class, it, along with the Republicans, the second Wall Street Party, is in fact the origin of those crises. Overcoming the negotiated surrender of workers, communities and the environment will have to come through independent political actions of everyday people. My campaign is one effort to build that power, develop ideas, and confront the escalating challenges everyday people now face.

As a lifelong union member and advocate, I intended to bring the wider union movement into this pivotal effort. Because of my years of community organizing, my campaign allows the banner of union labor to be hoisted into county political life, opening the door to a new fight for working people.

The current AFL-CIO leadership thwarted my efforts immediately. Weeks after I submitted the AFL-CIO questionnaire, Geof Cahoon, President of the Boulder Area Labor Council (BALC), advised me not to proceed with an endorsement interview. When I questioned him, he told me that, although he personally wished me to win the race because of his familiarity with my union activism, the other two members of the committee would take deep issue with my not running as a Democrat, thereby making the interview predetermined and unnecessary as the results were already mathematically concluded. I rejected this advice as a matter of principle and proceeded to schedule the interview.

The endorsement process lasted six months and was punctuated by ongoing maneuvering from brother Cahoon. He originally claimed he supported my candidacy only to abstain from voting because he “had to remain neutral” as a result of his being President of the Boulder Area Labor Council and also an officer of the Democratic Party. When I informed him that his position as a union leader leaves no question about his role as a promoter of working people, he evaded further discussion. The original vote was 3 in favor of endorsement and 2 opposed, which fell short of the 2/3 majority. Only after questioning did I learn that Geof Cahoon abstained from voting altogether, ensuring the 2/3 majority could not be met.

The whole process was embarrassingly confused and evasive. When confronted about the vote by UFCW Local 7 President Kim Cordova, the executive board then informed us that it hadn’t been an official vote but rather a “straw poll” requiring a new vote. Then a phone vote was supposed to take place but never happened because of apparent bylaw issues. A final vote took place in July; Cahoon did apparently vote that time. The result was 5 – 2 in favor of endorsing State Senator Matt Jones, a professional politician, over a union member and activist with one of the strongest labor platforms and histories in the state of Colorado.

The entire process was clearly bent on producing just one outcome. Now, absurdly, the Boulder Area Labor Council is campaigning against the only union member in the county race. This demonstrates the deep crisis and rudderless leadership union membership suffers under today, not only in Boulder County but throughout Colorado and nationwide. The Democratic Party’s politicized use of our union bodies created 50 years of decline in union power.

My position hasn’t changed. After eight months of campaigning, it’s even more clear to me that major shifts in the current union political patterns are desperately needed. Every day that we reject or evade the hard work of building independent political power for our members and the working class is another day that Wall Street strengthens its hold on the country. We’re in a permanent state of retreat only punctuated by some audacious strike actions by rank and file teachers. Nothing has changed at the top at all.

This pattern has to be broken, and it will take real leadership to do so. People are demanding change like no time in history. Labor can and should lead the charge. We have the power to build a new political party for the 99%, to lead waves of strikes and mass mobilizations, and to turn from the current passive and ingratiating forms of political strategy to build an actual labor movement prepared to defeat the offensive of Wall Street.

I would advise the following three steps to be implemented immediately following the midterm elections of 2018:

1. An ending of union funding and aid to both the Republican and Democratic Parties and moving these funds aside for eventual use in community and political organizing.

2. A convening of a national conference of workers and union leaders for the purpose of building an independent political party of the working class as a whole.

3. Statewide committees formed to build local political organizational structure for strike support, electoral campaigns for rank and file workers, legislative actions, and assistance to community struggles of working class and repressed communities

4. Resolutions advanced in union locals nationally to support the process of building a mass organization of the working class to coordinate all these efforts.

These are the ideas that form the basis of my campaign and which I hope will assist more independent worker candidates to run for office. I hope these developments can find the leadership and support necessary to break free of our current downward spiral, and I hope we can come together on that basis as soon as possible.

Thank you again for your time and know that I am available for any amount of discussion and conversation as necessary to honor the ideas and developments described here. Please feel encouraged to contact me as often and in whatever manner necessary.

In Solidarity,

Cliff Willmeng, RN

303 478 6613 

WillmengForGrassrootsPower.com

Capitalist Economic Crises. It's Just a Frasier Moment.

It’s greed and fear

by Michael Roberts

Larry Summers is one of the world’s leading Keynesian economists, a former Treasury Secretary under President Clinton, a candidate previously for the Chair of the US Fed, and a regular speaker at the massive ASSA annual conference of the American Economics Association, where he promotes the old neo-Keynesian view that the global economy tends to a form of ‘secular stagnation’.

Summers has in the past attacked (correctly in my view) the decline of Keynesian economics into just doing sterile Dynamic Stochastic General Equilibrium models (DSGE), where it is assumed that the economy is stable and growing, but then is subject to some ‘shock’ like a change in consumer or investor behaviour.  The model then supposedly tells us any changes in outcomes.  Summers particularly objects to the demand by neoclassical and other Keynesian economists that any DSGE model must start from ‘microeconomic foundations’ ie the initial assumptions must be logical, according to marginalist neoclassical supply and demand theory, and the individual agents must act ‘rationally’ according to those ‘foundations’.

As Summers puts it: “the principle of building macroeconomics on microeconomic foundations, as applied by economists, contributed next to nothing to predicting, explaining or resolving the Great Recession.”  Instead, says Summers, we should think in terms of “broad aggregates”, ie empirical evidence of what is happening in the economy, not what the logic of neoclassical economic theory might claim ought to happen.

Not all Keynesians agree with Summers on this.  Simon Wren-Lewis, the leading British Keynesian economist claims that the best DSGE models did try to incorporate money and imperfections in an economy: “respected macroeconomists (would) argue that because of these problematic microfoundations, it is best to ignore something like sticky prices (wages) (a key Keynesian argument for an economy stuck in a recession – MR) when doing policy work: an argument that would be laughed out of court in any other science. In no other discipline could you have a debate about whether it was better to model what you can microfound rather than model what you can see. Other economists understand this, but many macroeconomists still think this is all quite normal.” In other words, you cannot just do empirical work without some theory or model to analyse it; or in Marxist terms, you need the connection between the concrete and the abstract.

There is confusion here in mainstream economics – one side want to condemn ‘models’ for being unrealistic and not recognising the power of the aggregate.  The other side condemns statistics without a theory of behaviour or laws of motion.

Summers reckons that the reason mainstream economics failed to predict the Great Recession is that it does not want to recognise ‘irrationality’ on the part of consumers and investors.  You see, crises are probably the result of ‘irrational’ or bad decisions arising from herd-like behaviour.  Markets are first gripped by ‘greed’ and then suddenly ‘animal spirits’ disappear and markets are engulfed by ‘fear’.  This is a psychological explanation of crises.

Summers recommends a new book by behavioural economists Andrei Shleifer’s and Nicola Gennaioli, “A Crisis of Beliefs: Investor Psychology and Financial Fragility.”  Summers proclaims that “the book puts expectations at the center of thinking about economic fluctuations and financial crises — but these expectations are not rational. In fact, as all the evidence suggests, they are subject to systematic errors of extrapolation. The book suggests that these errors in expectations are best understood as arising out of cognitive biases to which humans are prone.” Using the latest research in psychology and behavioural economics, they present a new theory of belief formation.  So it’s all down to irrational behaviour, not even a sudden ‘lack of demand’ (the usual Keynesian reason) or banking excesses.  The ‘shocks’ to the general equilibrium models are to be found in wrong decisions, greed and fear by investors.

Behavioural economics always seems to me ‘desperate macroeconomics’.  We don’t know why slumps occur in production, investment and employment at regular and recurring intervals.  We don’t have a convincing theoretical model that can be tested with empirical evidence; just saying slumps occur because there is a ‘lack of demand’ sounds inadequate.  So let’s turn to psychology to save economics.

Actually, the great behavourial economists that Summers refers to also have no idea what causes crises.  Robert Thaler reckons that stock market prices are so volatile that there is no rational explanation of their movements.  Thaler argues that there are ‘bubbles’, which he considers are ‘irrational’ movements in prices not related to fundamentals like profits or interest rates.  Top neoclassical economist Eugene Fama criticised Thaler.  Fama argued that a ‘bubble’ in stock market prices may merely express a change in view of investors about prospective investment returns; it’s not ‘irrational’.  On this point, Fama is right and Thaler is wrong.

The other behaviourist cited by Summers is Daniel Kahneman.  He has developed what he called ‘prospect theory’. Kahneman’s research has shown that people do not behave as mainstream marginal utility theory suggests. Instead Kahneman argues that there is “pervasive optimistic bias” in individuals.  They have irrational or unwarranted optimism.  This leads people to take on risky projects without considering the ultimate costs – against rational choice assumed by mainstream theory.

Kahneman’s work certainly exposes the unrealistic assumptions of marginal utility theory, the bedrock of mainstream economics.  But it offers as an alternative, a theory of chaos, that we can know nothing and predict nothing.  You see, the inherent flaw in a modern economy is uncertainty and psychology.  It’s not the drive for profit versus social need, but the psychological perceptions of individuals. Thus the US home price collapse and the global financial crash came about because consumers have irrational swings from greed to fear.  This leaves mainstream (including Keynesian) economics in a psychological purgatory, with no scientific analysis and predictive power. 

Also, it leads to a utopian view of how to fix crises.  The answer is to change people’s behaviour; in particular, big multinational companies and banks need to have ‘social purpose’ and not be greedy!
Turning to psychology is not necessary for economics. 

At the level of aggregate, the macro, we can draw out the patterns of motion in capitalism that can be tested and could deliver predictive power.  For example, Marx made the key observation that what drives stock market prices is the difference between interest rates and the overall rate of profit. What has kept stock market prices rising now has been the very low level of long-term interest rates, deliberately engendered by central banks like the Federal Reserve around the world.



Of course, every day, investors make ‘irrational’ decisions but, over time and, in the aggregate, investor decisions to buy or to sell stocks or bonds will be based on the return they have received (in interest or dividends) and the prices of bonds and stocks will move accordingly. And those returns ultimately depend on the difference between the profitability of capital invested in the economy and the costs of providing finance.  The change in objective conditions will alter the behaviour of ‘economic agents’.

Right now, interest rates are rising globally while profits are stagnating.


The scissor is closing between the return on capital and the cost of borrowing.  When it closes, greed will turn into fear.

Another billionaire abandons the Trump Nightmare. Obama Made Him Do It.

The Source of Les Wexner's billions

Richard Mellor

Afscme Local 444, retired

The Huffington Post reported yesterday that Les Wexner, the Ohio billionaire who owns what Forbes describes as a “global real estate empire that includes Victoria's Secret and Bath and Body Works” and is worth some $4.7 billion, is done with the Republican Party.

In 2015, Wexner handed over $500,000 to the Jeb Bush campaign for president but like most of the top bourgeois in the US, having two parties to choose from, they often donate to both to ensure one of their candidates gets in. Wexner also donated $2.8 million to “With Honor” a super PAC that doles out cash to candidates from both capitalist parties. What a deal, you can’t lose----until now. The title of the super PAC is confirmation that the old adage that there is honor among thieves is spot on.

As this blog has pointed out many times, the US is in a severe political crisis as the two parties that have dominated US society for a hundred and fifty years or so are in turmoil and in danger of splitting.  Putting it bluntly, the era of the domination or dictatorship of the two parties of capital is coming to an ignominious end.

“I’m no longer a Republican”, Wexner announces to the legislators of both parties that are supposed to represent his interests, and that he “won’t support this nonsense in the Republican Party” anymore.  The nonsense he’s referring to is the Predator in Chief Donald Trump and his administration as well as the right wing evangelicals who have infiltrated the party.

The more strategic sections of the US capitalist class are extremely worried that Trump is undermining the institutions of capitalism to the point where civil unrest will emerge sooner than later. The problem with Trump is that he does not abide by the “Honor Among Thieves” rule. He is a traitor to his class in that sense and threatens the relative equilibrium and social cohesion necessary for profit taking to continue unabated.

The capitalist class uses racism as a useful divide and rule strategy and need to keep a healthy tension around that issue in society. They need it to prevent working people from banding together against them, after all, most workers recognize that we all have very much the same interests and when our interests are threatened there is a natural tendency for us to seek class allies, to unite. They do not want racism to break out in to open race warfare, history has taught them that this can be very expensive, destructive and unprofitable. They are forced to use racism to defend themselves against the more populous working class but they need to control it.

Trump’s trade war and his international behavior is also a threat. The US bourgeois are very well aware of what the Smoot Hawley tariffs did. It is likely Trump’s recent threats to China will be met with retaliation and this could really hurt sections of the US capitalist class as we have seen with Harley Davidson, the auto industry and certainly the US apparel market. US workers are also going to be feeling the pinch further as other countries retaliate and this worries Wexner. The Wall Street journal recently attacked Trump for daring to suggest Harley Davidson should lose money (profits) by bringing production on shore. This is second only to communism as far as sacrilege goes----suggesting such a thing to capitalists.

Wexner’s decision is what I want to emphasize here. The motive for his decision was Barack Obama’s visit to the state. “I was struck by the genuineness of the man; his candor, humility and empathy for others,”, Wexner says. They’ve got no shame these people, saying anything about anyone that ensures their interests, social power and lifestyles are protected and Obama has proven to the US ruling class that he is a solid guardian at the gate. In addition, he is educated, intelligent, cultured; as is Michelle Obama. They have class. Obama is the consummate bourgeois politician.

Wexner  owns a 30-room, mansion on a $47 million 336 acre estate, according to Wikipedia. He has one of the largest private yachts in the world. He is a Zionist and Jewish. As a much more strategic and thoughtful member of the US elite and as a Jewish American he is rightly concerned about Trump's Nazi and Fascist base. There were Nazi fliers dumped at the Jewish Synagogue just around the corner from where I live. This has not happened all the years I’ve lived here. As the only electoral option these days Wexner turns to the Democrats and Barack Obama who served the US capitalist class well for 8 years and proved himself a reliable ally as he rose among the ranks as head of the Harvard Law Review and a Senator before becoming president.

So I ask my working class friends that praise the Democratic Party as the way forward, that put all the “I love Obama memes” on Facebook do you really believe politicians like him and his party are capable of solving the horror of urban and rural poverty, homelessness, declining living standards and the never-ending crises we find ourselves in today?  Do you  actually believe people like Wexner and his pal Obama actually have our, (workers) interests at heart?

It is inconceivable that Wexner hasn’t talked to Obama like his class colleagues have and are urging him to step forward and help end this nightmare that is Trump and co. Help the other capitalist party in to power. Wexner’s praise of Obama has nothing to do with Obama possessing humility or empathy. And humility, empathy and a love for the poor are not the qualities necessary for one human being to accumulate $4 billion. In fact, they would be a hindrance. Obama hasn’t shown too much empathy for Iraqi’s, Yemeni’s Afghani’s and the poor of this country. The elite in this country are in crisis and some of them are becoming desperate and fearful of civil unrest due to Trump’s brutal approach as that capitalist strategist and free market guru pointed out in an article we published here. Fear, that’s what’s drawn Wexner to Obama. He’s gone to one person they know works for their collective well being.

I will end with this. If someone tells me they are not hopeful but we have to stop Trump elect Democrats and then turn to our problems, in other words the lesser of two evil argument, I respect and sympathize with the argument, but I believe it is a flawed one. There is no way out along this road.

Also, that such an historic event as the US with its brutal racist history electing a black president is so overwhelmingly emotional for some black folks I can understand and sympathize with that. I had a good friend of mine admit they didn’t think he would bring much change but having a respectable powerful black man and black family in the White House, was so important for her son to witness, that’s why she voted for him. A successful person that looks like him.

These are just some thoughts that I had after reading this news.

I have written enough about racism, political alternatives and how being political is not simply putting a piece of paper in a ballot box every four years that I don’t need to repeat it here. The reader if they care to do so, can read the archives on this blog.

Campaign to Open AIFLD Archives Makes Major Progress

Thank you to all those who helped in this campaign. 

Followers/readers of Facts For Working People will recall that this blog participated in efforts to help brother Rob McKenzie former president of a UAW local, gain access to the AFL-CIO’s AIFLD archives. Brother Mckenzie worked at a Ford plant in the US that built links with a Ford factory in Mexico City where the union and its leadership faced violent attacks. He has had some success as his report below explains.

Brother McKenzie initially wrote a resolution that was passed at the Duluth Central Labor Body. (above) You can access the original resolution here.  Frank Hammer, another retired UAW official, whose brother was assassinated in El Salvador in 1981 also took an interest in the issue as it is well known that AIFLD was used by the CIA to suppress independent and particularly militant, trade unions abroad. There is more information about this here.  Other posts about this issue can be found searching under the Labor and Union labels to the right.

Facts For Working People appealed to other trade unionists and union Locals to follow Duluth’s lead and urge the AFL-CIO to release the AIFLD archives as a discussion on this aspect of US labor history and government and CIA involvement in it is crucial for the labor movement today. FFWP would like to thank the individuals and locals that responded to our call for resolutions and messages supporting Brother McKenzie’s efforts. Afscme’s Local 444 and 2428 in Oakland California sent similar resolutions. Afscme District Council 57’s Executive Board in Northern California discussed the issue and I believe it was tabled. The SUP, Seamen’s Union of the Pacific also supported the resolution as did the Ontario Coalition Against Poverty based in Toronto and DSA Labor Chicago. Individuals also associated with this blog approached Richard Trumka at conferences and urged him to act on the Duluth resolution and open the files. There was a major discussion on the issue at the St.Paul Labor Council where it was initially tabled then defeated. Those that have contributed to Brother McKenzie's efforts should not underestimate the importance of their actions.

Letter pt 1 Download Pdf

Attempts were made to get the resolution entered at the San Francisco Labor Council but were not successful. It is worth noting that here in the San Francisco Bay Area where there are thousands of people that consider themselves socialists or who are members of the self styled revolutionary organizations and often union members or officers, never responded at all to the appeal. This is a serious weakness of the so-called socialist organizations. The effects of having this discussed in the labor movement and in locals should not be understated. Just forcing a debate on issues like this matters.

Lastly we include a 1985 letter signed by trade unionists opposed to US military intervention in Central America directed at a labor body that had invited the head of AIFLD to speak (AIFLD received most of its money from the US State Dept.) and urged that the other side be heard.

Letter pt2 Download pdf

Facts For Working People thanks brother McKenzie for his efforts on behalf of trade unionists and the working class as a whole. Richard Mellor, Afscme Local 444, retired for FFWP.

 Report on the AIFLD Files

By Rob McKenzie
UAW Retired

I spent the last week at the Hornblake Library in College Park, Maryland viewing 18 boxes of American Institute for Free Labor Development files from the 1980s.  It has been 2 ½ years since I first submitted my request to the National AFL-CIO to see these files.  Over 20 years ago while an officer for a UAW local I was told that AIFLD had been involved in an attack on workers at a Ford plant in Mexico.  When I retired I determined to research this. Since many of you helped make this happen I wanted to send an account of the experience.  I attached pictures of the library and a statue of Fredrick Douglass in front of the building. The staff at the library was friendly and helpful.

The bulk of the documents concerned finances. A lot of money was changing hands and especially when the National Endowment for Democracy (NED) became involved they tried to account for spending.  For some of the grants in the 1980s the NED was unable to close them out 10 years later as they had not received the proper paper work.  AIFLD was disbanded before these problems were resolved.

The NED was proposed by President Reagan and supported by his CIA Director William Casey and created by an act of Congress in the fall of 1983 to promote "democracy building" overseas.  A few months later the Free Trade Union Institute (FTUI) was established to receive money from it.  The first directors included Irving Brown and William Doherty for which I can provide convincing documentation now were CIA agents for much of their lives.  The FTUI would then give grants to AIFLD.  AIFLD would then pay its approximate $19M annual expenses and also fund International Trade Secretariats and ORIT (a regional labor organization in Latin America).

The legislation that created the NED specifically prohibited lobbying and political activity in the U.S. It also prohibited hiring any individuals involved in intelligence gathering. I found a booklet prepared by AIFLD for its country directors on the NED funding and procedures. The booklet contained the prohibitions on lobbying and political activity but omitted any reference to intelligence activity.  I don’t know what happened with this for sure but suspect malfeasance.

While money was budgeted for Mexico, AIFLD appears to have reached an agreement with the CTM (Mexican government union) not to fund its normal activities there.  AIFLD spent most of its money in countries which had communist, socialist and leftist led unions. They obviously believed the CTM was sufficiently anti-communist and strong enough and that AIFLD involvement could compromise it.  The checks in Mexico used during this time had "NED/AIFLD Mexico" printed on them and they maintained an office and staff there. I remain convinced that the CIA was involved in covert activities in Mexico during the 1980s and was involved in Cuautitlán events.

I also found interesting correspondence between Doherty (Executive Director) and others.  He sent one letter to Elliot Abrams, Asst. Secretary of State, complaining about cuts to the NED.  He began "Dear Elliot".  He went on to say that security costs had risen for AIFLD and pointed out one armored car cost $51,000.  Democracy building in Latin America apparently required armored cars. (Our added emphasis FFWP)

I also found interesting info about the murders of Michael Hammer and Pearlman, AIFLD employees (perhaps CIA) who were gunned down in a Sheraton Hotel in El Salvador in 1981 by a right-wing death squad.  This initiated a big debate in the AFL over its foreign policy.  Opposition in labor to military aid to El Salvador and aid to the Contras, who were at war with the Sandinista government, escalated in part due to the attention that the Hammer/Pearlman killings drew.  I have attached a letter from an opposition labor group that was in the AIFLD files.  Union activists made a difference in what happened in Central America.

I have accumulated a large amount of research now and plan on spending the next several months writing and hope to be able to tell the story of the struggle that took place at Ford Mexico in the 1980s.

Senator Paul Wellstone at the Ford Factory in Mexico City

Chicago's Hotel Strike

I have been a little busy and am not familiar with the details and the demands of the restaurant workers strike in Chicago. But for those that follow and read the reports on this blog you may have read the recent piece we put up about the positive developments with the rise of DSA that now has some 50,000 members. The focus of our commentary on this is the latest issue of DSA's national magazine which has articles in it by some former labor officials and writers from associated with Labor Notes.  We point out the dangers of the DSA adopting the approach of these writers with regards to the labor movement and more importantly its leadership and that the DSA Magazine's coverage should have had the recent teachers victories and in particular the methods they used front and center as their approach defied decades of conservative and concessionary policies on the part of the present heads of organized labor. In this short clip sent to us from the picket lines in Chicago the narrator hits the nail on the head and gives the attention the huge victories the teachers movement achieved the attention it deserves.DSA, Labor Notes and the Trade Union. Here is the piece I am referring to. DSA, Labor Notes and the Trade Unions
Here's a little more information.

The state of capitalism at IIPPE

by Michael Roberts

This year’s conference of the International Initiative for the Promotion of Political Economy (IIPPE) in Pula, Croatia had the theme of The State of Capitalism and the State of Political Economy.  Most submissions concentrated on the first theme although the plenary presentations aimed at both.

I was struck by the number of papers (IIPPE 2018 – Abstracts) on the situation in Brazil, China and Turkey – a sign of the times – but also by the relative youth of the attendees, particularly from Asia and the ‘global south’.  The familiar faces of the ‘baby boomer’ generation of Marxist and heterodox economists (my own demographic) were less in evidence.

Obviously I could not attend all simultaneous sessions so I concentrated on the macroeconomics of advanced capitalist economies.  Actually my own session was among the first of the conference. 

Under the title of The limits to economic policy management in the era of financialisation, I presented a paper on The limits of fiscal policy (my PP presentation is here (The limits to fiscal policy).

I argued that, during the Great Depression of the 1930s, Keynes had recognised that monetary policy would not work in getting depressed economies out of a slump, whether monetary policy was ‘conventional’ (changing the interest rate for borrowing) or ‘unconventional’ (central banks buying financial assets by ‘printing’ money).  In the end, Keynes opted for fiscal stimulus as the only way for governments to get the capitalist economy going.

In the current Long Depression, now ten years old, both conventional (zero interest rates)and unconventional (quantitative easing) monetary policy has again proved to be ineffective.  Monetary easing had instead only restored bank liquidity (saved the banks) and fuelled a stock and bond market bonanza. The ‘real’ or productive economy had languished with low real GDP growth, investment and wage incomes.

Maria Ivanova of Goldsmiths University of London also presented in my session (Ivanova_Quantitative Easing_IJPE_forthcoming) and she showed clearly that both conventional and unconventional monetary policies adopted by the US Fed had done little to help growth or investment and had only led to a new boom in financial assets and a sharp rise in corporate debt, now likely to be the weak link in the circulation of capital in the next slump.

Keynesian-style fiscal stimulus was hardly tried in the last ten years (instead ‘austerity’ in government spending and budgets was generally the order of the day).  Keynesians thus continue to claim that fiscal spending could have turned things around.  Indeed, Paul Krugman argued just that in the New York Times as the IIPPE conference took place.

But in my paper, I refer to Krugman’s evidence for this and show that in the past government spending and/or running budget deficits have had little effect in boosting growth or investment.  That’s because, under a capitalist economy, where 80-90% of all productive investment is by private corporations producing for profit, it is the level of profitability of capital that is the decisive factor for growth, not government spending boosting ‘aggregate demand’.  In the last ten years since the Great Recession, while profits have risen for some large corporations, average profitability on capital employed has remained low and below pre-crash levels (see profitability table below based on AMECO data).  At the same time, corporate debt has jumped up as large corporations borrow at near zero rates to buy their own share (to boost prices) and/or increased payouts to shareholders.



Government spending on welfare benefits and public services along with tax cuts to boost ‘consumer demand’ is what most modern Keynesians assume is the right policy.  But it would not solve the problem (and Keynes thought so too in the 1940s).  Indeed, what is required is a massive shift to the ‘socialisation of investment’, to use Keynes’ term, i.e. the government should resume responsibility for the bulk of investment and its direction.  During the 1940s, Keynes actually advocated that up to 75% of all investment in an economy should be state investment, reducing the role of the capitalist sector to the minimum (see Kregel, J. A. (1985), “Budget Deficits, Stabilization Policy and Liquidity Preference: Keynes’s Post-War Policy Proposals”, in F. Vicarelli (ed.), Keynes’s Relevance Today, London, Macmillan, pp. 28-50).

Of course, such a policy has only happened in a war economy.  It would be quickly opposed and was dropped in ‘peace time’.  That’s because it would threaten the very existence of capitalist accumulation, as Michal Kalecki pointed out in his 1943 paper.

Now in 2018, the UK Labour Party wants to set up a ‘Keynesian-style’ National Investment Bank which would invest in infrastructure etc, alongside the big five UK banks which will continue to conduct ‘business as usual ‘ i.e. mortgages and financial speculation.  Under these Labour proposals, government investment (even if implemented in full) would rise to only 3.5% of GDP, less than 20% of total investment in the economy – hardly ‘socialisation’ a la Keynes at his most radical.

But perhaps President Trump’s version of Keynesian fiscal stimulus (huge tax cuts for the rich and corporations , driving up the budget deficit) will do the trick.  It is an irony that it is Trump that has adopted Keynesian policy.  He certainly thinks it is working – with the US economy growing at a 4% annual rate right now and official unemployment rates at near record lows.  But an excellent presentation by Trevor Evans of the Berlin School of Economics poured cold water on that optimism.  With a barrage of data, he showed that corporate profits are actually stagnating, corporate debt is rising and wage incomes are flat, all alongside highly inflated stock and bond markets.  The Trump boom is likely to fizzle out and turn into its opposite.

Also, Arturo Guillen of the Metropolitan University of Mexico City,( IIPPE 2018 inglés) reminded us that the medium term trajectory of US economic growth was very weak with productivity growth very low and productive investment crawling.  In that sense, the US was suffering from ‘secular stagnation’, but not for the reasons cited by Keynesians like Larry Summers (lack of demand) or by neoclassical critiques like Robert Gordon (ineffective innovation) but because of the low profitability for capital.

In another session, Joseph Choonara, took this further. Choonara saw the current crisis rooted in a long decline in profitability in the period from the late 1940s to the early 1980s. The subsequent neoliberal period developed new mechanisms to defer crises, notably financialisation and credit expansion. In the Long Depression since 2009, driven largely by the central bank response, debt continues to mount. The result is a financially fragile and uncertain recovery, which is creating the conditions for a new crisis

There were also some sessions on Marxist economic theory at IIPPE, including a view on why Marx sent so much time on learning differential calculus (Andrea Ricci) and on why Marx’s transformation of value into prices of production is dialectical in its solution (Cecilia Escobar).  Also Paul Zarembka from the University of Buffalo, US presented a paper arguing that the organic composition of capital in the US did not rise in the post-war period and so cannot be the cause of any fall in the rate of profit.

His concepts and evidence do not hold water in my view.  Zarembka argues that there is a major problem concerns using variable capital v in the denominator in the commonly-expressed organic composition of capital, C/v. That is because v can change without any change in the technical composition. Using, instead, what he calls the ‘materialized composition of capital’, C/(v+s), movement in C/v can be separated between the technical factor and the distributional factor since C/v = (1 + s/v).  With this approach, Zarembka reckons, using US data, he can show no rise in the organic composition of capital in the US and no connection between Marx’s basic category for laws of motion under capitalism and the rate of profitability.

But I think his category C/(v+s) conflates the Marx’s view of the basic ‘tendency’ (c/v) in capital accumulation with the lesser ‘counter-tendency’ (s/v) and thus confuses the causal process.  This makes Marx’s law of profitability ‘indeterminate’ in the same way that Sweezy and Heinrich etc claim.  As for the empirical consequences of rejecting Zarembka’s argument, I refer you to an excellent paper by Lefteris Tsoulfidis.

As I said previously, there were a host of sessions on Brazil, Southern Africa and China, most of which I was unable to attend.  On China, what I did seem to notice was that nearly all presenters accepted that China was ‘capitalist’ in just the same way as the US or at least as Japan or Korea, if less advanced.  And yet they all recognised that the state played a massive role in the economy compared to others – so is there a difference between state capitalism and capitalism?  I cannot say anything about the papers on Brazil except for you to look at IIPPE 2018 – Abstracts.  Brazil has an election within a month and I shall cover that then – and these are my past posts on Brazil.

There were other interesting papers on automation and AI (Martin Upchurch) and on bitcoin and a cashless economy (Philip Mader), as well as on the big issue of imperialism and dependency theory (which is back in mode).

The main plenary on the state of capitalism was addressed by Fiona Tregena from the University of Johannesburg.  Her primary area of research is on structural change, with a particular focus on deindustrialisation. Prof Tregena has promoted the concept of premature deindustrialisation. 

Premature deindustrialisation can be defined as deindustrialisation that begins at a lower level of GDP per capita and/or at a lower level of manufacturing as a share of total employment and GDP, than is typically the case internationally. Many of the cases of premature deindustrialisation are in sub‐Saharan Africa, in some instances taking the form of ‘pre‐industrialisation deindustrialisation’. She has argued that premature deindustrialisation is likely to have especially negative effects on growth.

As for the state of political economy, Andrew Brown of Leeds University has explained some of the failures of mainstream economics, particularly marginal utility theory. Marginal utility theory has not to this day been developed in a concrete and realistic direction not because it is just vulgar apologetics for capitalism, but because it is theoretically nonsense. Marginal utility theory can provide no comprehension of the macroeconomic aggregates that drive the reproduction and development of the economic system.

‘Financialisation’ is the word/concept that dominates IIPPE conferences.  It is a concept that has some value when it describes the change in the structure of the financial sector from pure banks to a range of non-deposit financial institutions and the financial activities of non-financial corporations in the last 40 years.

But I am not happy with the concept when it used to suggest that the financial crash and the Great Recession were the result of some new ‘stage’ in capitalism.  From this, it is argued that crises now occur not because of the fall in productive sectors but because of the speculative role of ‘’financialisation.’  Such an approach , in my view, is not only wrong theoretically but does not fit the facts as well as Marx’s laws of motion: the law of value, the law of accumulation and the law of profitability.

For me, financialisation is not a new stage in capitalism that forces us to reject Marx’s laws of motion in Capital and neoliberal economics is not in some way the new economics of financialisation and a different theory of crises from Marx’s.  Finance does not drive capitalism, profit does.  Finance does not create new value or surplus value but instead finds new ways to circulate and distribute it.  The kernel of crises thus remains with the production of value.  Neoliberalism is merely a word invented to describe the last 40 years or so of policies designed to restore the profitability of capital that fell to new lows in the 1970s.  It is not the economics of a new stage in capitalism.

Sure, each crisis has its own particular features and the Great Recession had that with its ‘shadow banking’, special investment vehicles, credit derivatives and the rest.  But the underlying cause remained the profit nature of the production system. If financialisation means the finance sector has divorced itself from the wider capitalist system, in my view, that is clearly wrong.