On the verge of war - The situation in the United States

The world is only days, or even hours away from war. As explained by Alan Woods in "'É finita la commedia' (The show's over)", the farcical charade over UN inspections is over. This whole exercise was simply an effort to win more public support in the US and around the world. But all fundamental questions between the nations and the classes are ultimately decided by force, and George Bush's shenanigans are merely a barefaced expression of this reality. The bottom line is this: Bush was willing to play along with the UN in an effort to gain some support, especially to prop up allies like Blair so long as it didn't affect the plans for war. But the troops are in place (and are already complaining of loneliness and homesickness), the desert is getting hotter by the day, sandstorms are kicking up and damaging equipment, and it's time to go. The UN has been exposed as an impotent body - the only way for the members of Security Council to really stop the war would be to go to war with the US themselves, and that would never happen. The only reason Bush has not forced a vote on the issue, which would even further discredit the dis-United Nations, is that they hope to get some more use out of the UN in the future. They have openly said that "after military action", they will go back to the UN for the purpose of rebuilding Iraq. In other words, after wreaking untold havoc and misery on the people of Iraq, they expect the "world community" to foot the bill for rebuilding it.

It is common knowledge that this is a war for oil. Not so much for ownership of the oil, but for control over access to and the profits from the world second largest reserves. US companies have already gotten the most important contracts for this and other post-war projects (incidentally, one of the main reasons for France and Russia's opposition was due to their already having substantial oil contracts which will undoubtedly be torn up once the US gets into Baghdad). But there is a lot more to it than just Iraqi oil. Regional influence and power are equally important - not to mention the rest of the oil in Central Asia and the Middle East. Ever since World War II, the American ruling class has had a clear policy of dominating the one resource which all industrialized nations rely upon - oil. As explained in "The war aims of the Great Powers in the Middle East and the consequences of the coming invasion of Iraq", having a base in the region from which to "stabilize" countries like Saudi Arabia which happen to have a lot of oil is also of the utmost importance. From their class perspective, there is a degree of reason behind the apparently mad policies of the capitalists.

The origins of this policy predate September 11. Many people forget that even before that tragic date, there was talk of regime change in Iraq. September 11 merely provided the necessary cover and support for such an operation although there are no proven links between Al Qaeda and Saddam. In 1997, a group calling itself the Project for a New American Century was formed which advocates among other things the complete domination of the Middle East through military force (www.newamericancentury.org). Their doctrine is to massively increase US military power and its presence around the world so as to be able to bully every other country under a "Pax Americana". The war on Iraq is just the first step towards this aim. Not surprisingly, signatories to their founding statement include the likes of Jeb Bush (GW's brother), Dick Cheney (the Vice-President), Steve Forbes (billionaire and former presidential candidate), Francis Fukuyama (he predicted the "end of history" when the USSR collapsed), Dan Quayle (former Vice-President), Donald Rumsfeld (Secretary of Defense), and Paul Wolfowitz (Deputy Secretary of Defence), and Zalmay Khalilzad (envoy to the so-called Iraqi government in exile). It is a huge gamble - but the American ruling class really has no alternative. They can see the crumbling situation around them, and have been driven by necessity (and perhaps a touch of psychosis) to try and assert their domination before things get out of hand - i.e. before the world proletarian revolution.

The degree to which government and big business (in particular the oil and defense industries) have fused is astonishing (as predicted by Lenin in Imperialism: the Highest Stage of Capitalism). From Enron to Halliburton, the Bush administration is a virtual who's who of the energy industry - not to mention of corporate criminals. William Rivers Pitt, a regular contributor to the New York Times explains some of the economic and political interests involved:

"It is well known by now that Dick Cheney, before becoming Vice President, served as chairman and chief executive of the Dallas-based petroleum corporation Halliburton. During his tenure, according to oil industry executives and United Nations records, Halliburton did a brisk $73 million in business with Saddam Hussein's Iraq. While working face-to-face with Hussein, Cheney and Halliburton were also moving into position to capitalize upon Hussein's removal from power. In October of 1995, the same month Cheney was made CEO of Halliburton, that company announced a deal that would put it first in line should war break out in Iraq. Their job: To take control of burning oil wells, put out the fires, and prepare them for service."

"Another corporation that stands to do well by a war in Iraq is Brown & Root, a subsidiary of Halliburton. Ostensibly, Brown & Root is in the construction business, and thus has won a share of the $900 million government contract for the rebuilding of post-war Iraqi bridges, roads and other basic infrastructure. This is but the tip of the financial iceberg, as the oil wells will also have to be repaired after parent-company Halliburton puts out the fires.

"More ominously is Brown & Root's stock in trade: the building of permanent American military bases. There are twelve permanent U.S. bases in Kosovo today, all built and maintained by Brown & Root for a multi-billion dollar profit. If anyone should wonder why the administration has not offered an exit strategy to the Iraq war plans, the presence of Brown & Root should answer them succinctly. We do not plan on exiting. In all likelihood, Brown & Root is in Iraq to build permanent bases there, from which attacks upon other Middle Eastern nations can be staged and managed.

"Being at the center of the action is nothing new for Halliburton and Brown & Root. The two companies have worked closely with governments in Algeria, Angola, Bosnia, Burma, Croatia, Haiti, Nigeria, Rwanda, and Somalia during the worst chapters in those nation's histories. Many environmental and human rights groups claim that Cheney, Halliburton and Brown & Root were, in fact, centrally involved in these fiascos. More recently, Brown & Root was contracted by the Defense Department to build cells for detainees in Guantanamo Bay, Cuba. The bill for that one project came to $300 million.

"Another company with a vested interest in both war on Iraq and massively increased defense spending is the Carlyle Group. Carlyle, a private global investment firm with more than $12.5 billion in capital under management, was formed in 1987. Its interests are spread across 164 companies, including telecommunications firms and defense contractors. It is staffed at the highest levels by former members of the Reagan and Bush Sr. administrations. Former President George H. W. Bush is himself employed by Carlyle as a senior advisor, as is long-time Bush family advisor and former Secretary of State James Baker III.

"One company acquired by Carlyle is United Defense, a weapons manufacturer based in Arlington, VA. United Defense provides the Defense Department with combat vehicle systems, fire support, combat support vehicle systems, weapons delivery systems, amphibious assault vehicles, combat support services and naval armaments. Specifically, United Defense manufactures the Bradley Fighting Vehicle, the M113 armored personnel carrier, the M88A2 Recovery Vehicle, the Grizzly, the M9 ACE, the Composite Armored Vehicle, the M6 Linebacker, the M7 BFIST, the Armored Gun System, the M4 Command and Control Vehicle, the Battle Command Vehicle, the Paladin, the Crusader, and Electric Gun/Pulse Power weapons technology."

This is not a conspiracy theory, it is simply the reality of the situation - the American ruling class imagines it can achieve world domination through military force. But Bush disregards the anti-war and labor movement at his own peril. Here in the belly of the beast, the mood is very definitely split. Polls put those in favor of war at roughly 55 percent - which means that 45 percent are opposed - a significant number. The truly massive anti-war mood which has emerged even before the war begins is a sign of things to come. The demonstrations have already eclipsed the peak of the movement during the Vietnam War. The lack of a UN mandate has reduced some of the legitimacy from Bush's efforts, but the rallying call is sure to be "support our troops now that they have been sent into battle!" For many, this will dampen their anti-war fervor. Others will feel dejected at not having stopped the war before it began. But sooner rather than later, the anti-war movement must gather force, with the working class at the forefront. Events internationally will be extremely important in helping the American workers move against the war.

France has been demonized and mocked (French Fries are now by law called "Freedom Fries" in the Congressional cafeterias!), but no one here can question the commitment of the leaders of Britain and Spain to Bush's war aims. Blair and Aznar went out of their way to back Bush, and are held up as brave and committed allies. Yet the masses in Britain and Spain are overwhelmingly against the war. The collapse of either government due to the pressure of the working class would be a tremendous beacon to the American workers, who do look to "international opinion" for guidance and inspiration. Were they not sensitive to this, Bush would not have attempted to achieve a second UN resolution. As explained in "Opposition to War growing in the US Labor Movement", the American working class and even the conservative leadership of the AFL-CIO have come out against the war in an unprecedented way.

Literally millions of people have taken to the streets to protest this state of affairs, and millions of others are part of the "silent majority". At the bottom of much of the opposition here at home is the truly feeble state of the US economy. Since its peak in March 2000, the Wilshire 5000 - the broadest measure of U.S. stock performance - has lost $7.9 trillion, or 46 percent of its market capitalization. 2002 saw a drop in the value of US stock markets for the third year in a row - the worst performance since the Great Depression. The US Dow Jones was down 17 percent - the worst result in 28 years. The tech-heavy NASDAQ was down 22 percent, and the S&P 500 was down 20 percent. Affected by military and financial instability, markets are already in negative territory for 2003. Many people who had a "wait and see" approach to the economic recession are now realizing that this "recovery" is nothing of the sort. The average US household has lost nearly 25 of its paper wealth in stocks and shares. While billions are spent on a perpetual military campaign to kill thousands of innocents, the problems here at home are compounded daily. All the money spent on war could easily be spent on healthcare, education, and jobs. The Republicans only offer tax cuts for the rich and further cuts in social spending, while the Democrats offer only demagogic opposition on certain issues, and cower cravenly before King Bush on everything else.

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

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

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

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

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

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

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

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

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

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

Added to this, the budgets of the federal government and 48 states are facing their worst budget deficits in decades, with several large states near bankruptcy. California alone, with a population of 34 million, has a deficit covering more than 32 percent of its total budget. Texas and New York are not very far behind. The Federal government, which only two years ago was actually turning a profit, is once again running at a massive deficit. This is the fruit of Bush's tax cuts for the wealthy and corporations and can only have dire consequences for the millions of the poor and elderly who depend upon welfare and Medicare/Medicaid. Tuition at state colleges is rising quickly, and several states have already warned that entire education programs and grants will be eliminated. Federal and state workers will once again face layoffs. This will destabilize one of the few stable sectors of the economy. Once again the working people and the youth are being forced to foot the bill for the recession, while the wealthiest Americans and the top corporations are paying the least amount of taxes in history.

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

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

The outcome of a war with Iraq is impossible to predict. The US will certainly succeed in destroying many weapons of mass destruction - thousands of them, worth billions of dollars and paid for by American workers will be blown up over the Iraqi people's heads!
It will lead to tremendous instability across the Middle East, and could even lead to the collapse of many regimes (which may actually be what the American capitalists want, so they have an excuse to step in and "restore peace"). The likelihood of terrorist attacks on the US will increase, and the government will be unable to stop it - they will use it in an attempt to whip up further hysteria and confusion. However, it is important to keep in mind is that even in the best-case scenario of a swift, relatively painless victory over Iraq, what next? Bush has initiated a perpetual war, but as with everything, this has its limits. The US is not Sparta - its population is not prepared to be in an indefinite state of siege and war - and the fate of that Greek city-state is a warning to those who would attempt to wage endless wars. Sooner or later this must reach a limit, either through military catastrophe or because of the already rapidly developing anti-war and increasingly militant labor movements. Despite its crushing military preeminence on paper, US imperialism cannot rampage at will across the entire globe forever. At a certain stage it will be confronted by the might of the world working class, and in fact, this has already begun. The analogy with the collapsing Roman Empire cannot be avoided.

We must continually emphasize the connection between domestic and foreign policy. The war which will start at any time now is merely an extension of the ongoing war against working people here in the US. The class war is raging with one-sided violence as the ruling class attempts to take back all the modest gains won through struggle in the past. There is only one solution - for the working class to organize as a class and fight back. Even the New York Times has gone so far as to say that "two superpowers in the world: the United States and global public opinion." Although it glosses over the existence of classes in society, this is in effect an acknowledgement of the divide which has opened up between the classes on a world scale in the recent period. "Americans" is too broad a term. We must clearly differentiate between American workers and the American ruling class.

The American working class has no interest in oppressing the peoples of the world. It is our un-elected government which is stomping around the world like a bull in a china shop. We can trust only our own class forces and our own class methods to fight back around the world. These include work stoppages and strikes, walkouts, refusal to handle war materiel, general strikes and ultimately, the revolutionary transformation of society. It is too early to speak seriously of general strikes in the US, but even here, the time will come when revolutionary events are on the order of the day. United with the workers of the world, we can and will end this exploitative system which gives rise to all the problems facing working and oppressed people around the world. Capitalism means war! Join us in building a genuine alternative to the capitalist system!

No to the war on working people at home and abroad!
No war but the class war!