Introduction to Sam Marcy's High tech low pay: a Marxist analysis of the changing character of the working class

By Fred Goldstein

July 2009

Sam Marcy, the author of High-Tech, Low Pay: A Marxist Analysis of the Changing Character of the Working Class, was a Marxist theoretician and working-class strategist.i He wrote this book in 1986, more than halfway through the Reagan administration, when the working class and oppressed people in the United States were under siege from all directions. The book had a very practical goal at the time: to give advanced workers and trade unionists strategic and tactical ammunition with which to resist the developing assaults on the labor movement and the entire working class.

The presentation is characterized by a seamless transition from Marxist theory and sociological analysis to working-class strategy and tactics. Several dominant themes are reiterated throughout the book.

These themes and prescriptions discussed by Marcy were an attempt to provide the legal, practical and ideological bases to fight back against the attacks of the Reagan period.

The anti-labor offensive had actually begun during the Carter administration and was in full force at the time Marcy was writing this book. In the summer of 1981 a strike of the Professional Air Traffic Controllers Organization had been brutally crushed by Reagan. He summarily fired 18,000 controllers within 48 hours of their having walked out to demand relief from extremely stressful working conditions. Reagan then brought in strikebreakers—who had been secretly mobilized in advance—and barred the air traffic controllers from federal employment for life.

This was a signal to capital that Washington would not only support but was encouraging the use of permanent strikebreakers. The bosses got the message. Union after union, confronted with demands for concessions, was forced out on strike. Once out of the workplace, the workers were then faced with invasions of permanent strikebreakers escorted by police or National Guard troops—with the full support of the courts.

The attacks were leveled at the strongholds of industrial unionism. Autoworkers, steelworkers, rubber workers, copper miners, electrical workers, meatpackers and others came under fierce assault. The National Labor Relations Board closed its eyes to this wholesale violation of the right to collective bargaining. A dangerous shift to the right in labor relations was underway.

It soon became clear that the bosses were aiming to reverse the historic gains of the working class that dated back to the tempestuous class struggles of the Roosevelt New Deal era and the advances made in the period soon after World War II.

But the strength of organized labor was being sapped by more than just union busting and concessions bargaining. The greatest leverage capital enjoyed in its struggle to reverse the historic gains of the working class was the scientific-technological revolution percolating in corporate and university laboratories, often supported by the Pentagon.

The anti-labor campaign was launched simultaneously and in conjunction with a technological assault on jobs and wages. The industrial working class and a growing number of service workers were living under the constant and expanding threat of seeing their jobs destroyed by robots, computers, communications satellites and the like. In fact, millions of high-wage union jobs were being destroyed and replaced by lower-paying service jobs, almost always non-union.

Giant transnational corporations were “downsizing.” General Motors was becoming the largest consumer of robots in the world. The steel industry was abandoning large, integrated factories for mini-mills and replacing blast furnaces with basic oxygen and electric arc furnaces. AT&T was spinning off local phone companies to free up capital so it could enter into the realm of space-age satellite communications. General Electric and RCA merged to combine technologies. Auto barons were visiting Toyota City in Japan to study “just-in-time” production methods and rapid advances in die changeovers.

All these developments were accompanied by massive layoffs—at first tens of thousands and eventually millions of workers were “downsized.” Marcy showed that between 1979 and 1985 some 11.5 million U.S. workers lost their jobs.

Marcy brought to light the salient facts summarizing this development and illustrated the dire situation with the latest statistics and numerous concrete examples. As such, the book is of great historical interest.

However, since 1986, when the book was first published, technology and the organization of production, commerce and finance have been transformed on a global scale. Production has been broken up into segments and parceled out across the globe by the giant transnational corporations.

Trillions of dollars in financial transactions fly around the world at the speed of light. In place of capitalist recovery, there is capitalist crisis. When Marcy wrote, union membership was somewhat less than 19 percent of the workforce, compared to 12.4 percent today. Tens of millions of workers have lost what once were long-term jobs. Millions of homes have been lost to foreclosure and millions more are destined for the auction block. On the surface, the world is a far cry from what it was some 25 years ago.

Lessons for today

The reader may well ask: Is High-Tech, Low Pay, written about a bygone period, of contemporary value? Does this book about the past inform the present?

The answer is a resounding yes. Although written a generation ago, the analysis, strategies and tactical approaches developed by Marcy are needed even more urgently today.

The problems of the workers and the unions that Marcy addressed in 1986 have not diminished. On the contrary, they have grown to crisis proportions during the present world economic downturn—the worst since the Great Depression. Stopping plant closings, layoffs, downsizing and concessions are among the most urgent tasks facing the workers.

Considering the present-day role of the banks, the auto companies, and the entire galaxy of corporations, large and small, that are laying off millions of workers and extracting concessions from those still working, Marcy’s theme of opening up a class-wide offensive to defend the working class is more relevant today than ever.

The strategies and tactics he designed to combat the Reagan-era restructuring were not taken up by the labor movement in the U.S. Such bold, aggressive assertions of the rights of workers as against the rights of capital are now even more urgently needed.

Marcy’s words sound completely current. Writing in Chapter 1 (The Crisis in the Trade Unions) about the destructive social impact that revolutions in technology have had under capitalism, he warned that the scientific-technological revolution was having as significant an effect on the labor movement as the Industrial Revolution had on the earliest labor organizations.

In Chapter 2 (The Scientific-Technological Revolution) in a section about the merger of General Electric and RCA, he said of the transnational giants: “By virtue of their vast facilities, often in other countries and not unionized, these corporate monsters have gained broad social, political and diplomatic leverage against single unions. These concentrations of capital are class-wide organizations to which the workers in the unions have to develop a class-wide perspective, nationally as well as internationally, in order to be able to get a firm handle on how to fight the companies.”

Marcy considered the labor unions potentially the most formidable organizations of the working class in capitalist society. Yet, because of their class-collaborationist leadership, they stood in danger of being absorbed into the capitalist system and turned into a cog in the wheel of big business.

He urged the labor movement and the leaders of the workers in general to think out of the box so that they could fight their way out of the stranglehold that capitalism placed them in, especially during an economic crisis.

In Chapter 3 (The Ups and Downs of the Capitalist Economy), in a section on how capitalist recessions had lengthened, he argued that this imposed on the workers and the trade unions the need to develop a defensive strategy, but one that could be transformed into an offensive if the leaders made the effort to break out of the “accepted bourgeois conception of the capital-labor relationship.”

He picked up on the same theme again in Chapter 8 (Defensive Trade Union Strategies). Marcy wrote, “Once the workers are frozen into the capital-labor relationship, once that is dogmatically accepted as the permanent condition of the workers … it inevitably follows that the workers must make concessions regardless of whether the union is strong or weak. The issue becomes saving the company or industry."

These words are eerily prophetic of what has happened, especially since the current economic crisis began.

The leaders of the once mighty United Auto Workers are collaborating with the auto makers and the capitalist government, through the bankruptcy process, to impose unprecedented, draconian sacrifices on the workers. They argue this is necessary in order to save the companies and the industry.

The UAW leaders accept the fundamental proposition that the only basis on which the auto industry can run is for profit and exploiting labor; that the workers and the union must be slaves to the capitalist market. In a word, they have already agreed that there is no alternative to abject surrender.

As of June 2009, two dozen plants are slated to be shut down, 3,000 auto dealerships are to be closed, untold thousands of direct layoffs of autoworkers are to take place and ten times that number or more will be indirectly hurt through the ripple effect. A six-year no-strike pledge and wage freeze has been conceded to both GM and Chrysler. The union has accepted stock ownership (non-voting) in both companies in place of cash for its retirement fund. This places the union in the contradictory position of having to keep the stock price up, which inevitably means intensifying the exploitation of the workers.

The mindset of the UAW leadership is to bring so-called “leaner” auto companies back to profitability—i.e., to remain locked in the traditional capital-labor relationship. Profit and exploitation is the only basis on which this form of production can take place. If the company cannot find profits in the markets, the workers must pay the price.

In this regard, the outlook of the UAW leadership is not fundamentally different from that which has characterized most of the rest of the top labor leadership in the United States over the last three decades of concession bargaining. The only difference is that the UAW leaders have been thrust into the spotlight because of the centrality of the auto industry to U.S. capitalism and the magnitude of the crisis of GM and Chrysler. Industry after industry has been downsized and suffered drastic layoffs in the latest crisis.

A job is a right

Marcy based his analysis on the proposition that workers, as the creators of the wealth upon which the workplaces were constructed, have a right to their jobs. Furthermore, he drew the radical conclusion in Chapter 9 (Offensive Strategies: Workers’ Control) that from this flowed the right to take over the workplaces. This was the principal method proposed by Marcy for breaking out of the capital-labor relationship.

Marcy was dealing with a period in which workers were losing strike after strike. He stressed the need “to recognize that the conventional, traditional weapons—including the indispensable strike weapon—have to be refined and supplemented by new methods which include the right to seize, occupy, take over and operate plants, equipment and industry.”

As a prime example of breaking out of the capital-labor relationship, he cited the great sit-down strikes of the 1930s, in which the right to occupy the plants was won on the ground. Such a right was crucial to the victory of the CIO and industrial unionism.

While not putting it forward as a blueprint, Marcy stated that workers must “extend their rights to seize and occupy the plants. It is a logical outcome and inevitable phase in the struggle of the labor movement, as imperative a necessity and as vital to the existence of the trade union movement as any of the preceding phases in its history.” To seize the plants would not solve the problem, but it would put the workers on more favorable ground in the struggle and “force a new and different type of crisis on the ruling class.”

In the present crisis, it is clear that restricting the workers to basic bargaining—where the capitalists retain the advantage of being able to shut down the plants or wait out a strike—is a losing strategy. Only by asserting their right to occupy plants—before they can be dismantled and expensive machinery removed—can the workers protect their interests and put themselves in a much stronger bargaining position.

Furthermore, with the capitalist government having just handed over trillions of dollars to the banks and tens of billions to the auto industry, it is a totally justified and practical demand that these funds be diverted in order to keep workplaces open under the operation of the workers.

Using the strike weapon during a period of depression and mass unemployment is highly risky. Clearly only bold and dramatic measures that put workers’ rights ahead of the rights of capital can reverse the steadily declining situation of the workers.

Marcy offered a number of other tactics. He promoted the legal concept of the workers intervening in bankruptcy proceedings and pressing their claim as the primary creditors of the company. He was an early advocate of the concept that a labor-community alliance could use the right of eminent domain to take over plants already closed and get government appropriations to open them up again.

The changing social character of the working class

During the 1980s many economists, representing both business and labor, took note of the effect technology was having in destroying manufacturing jobs and expanding the service sector. They noted that the transformation from manufacturing to services was also creating a shift from high-wage to low-wage jobs.

Marcy examined this trend and drew sociological and political conclusions from it. He saw the increasing social weight of the low-paid as against the higher-paid in the workforce. This included a growing proportion of Black, Latina/o, Asian, Native, women and undocumented workers. (These are, of course, overlapping categories. Some of the most militant workers in the recent period have been women of color.) While this could be interpreted as a mere numerical change, it “goes beyond that,” he wrote. “It involves a relative reduction in the percentage of skilled workers and a tremendous increase in the number of semi-skilled. Also, on an overall scale, it means the creation of lower-paying jobs as against higher-paying ones. It means the decline of the traditionally more privileged workers and industries with higher wages and the creation of a vast pool of lower-paid workers. This trend is still surfacing and has yet to be given any kind of independent political expression,” he wrote. “From a class point of view, it is truly one of the most profound, socially significant trends to emerge. The number of lower-paid workers is bound to increase at the expense of the more privileged workers.”

Marcy showed that while the technological revolution was ravaging the living standards of the workers, it also laid the objective basis for their politicization, for moving in a more leftward direction and for organization on a broad scale, but that this would lag behind the changed material conditions.

The continued decline in the standard of living of the workers since the book was written has confirmed the trend highlighted by Marcy. In fact, there is no such thing in the U.S. any more as a secure job. More than 30 million workers lost “safe” jobs between 1984 and 2004.ii Out of every 100 workers who had been laid off during this period, 73 percent were either making less money or were not working at all.iii Workers have been pushed out of higher-paying manufacturing jobs en masse into lower-paying service jobs.

The political expression of this new trend has been long delayed—because of historical conditions discussed later in this introduction.

Marcy’s work includes brilliant and very important sections on national oppression and technology in which he applies historical materialism in a penetrating way. For example, he shows the connection between the invention of the compass, advances in navigation and ship building, and the development of the trans-Atlantic slave trade. He further shows how the invention of the cotton gin in 1793 at first strengthened slavery but then helped the development of capitalism—which ultimately destroyed chattel slavery and replaced it with wage slavery.

He discusses the manner in which technology has been kept from the Latin American colonies and neo-colonies of the U.S. in order to keep them dependent on imperialism. Weapons technology played the decisive role in the conquest of the Native nations and their expulsion from their lands. Thus the development of technology has shaped relations between oppressor and oppressed as well as between the working class and the bosses.

The falling rate of profit

Finally, Marcy reintroduced into the sphere of radical economic analysis a long-neglected but crucial Marxist concept: the tendency of the rate of profit to fall. This law, inherent in capitalism, was discovered and elaborated by Marx. It explains scientifically how the ceaseless struggle of the bosses against the falling rate of profit inexorable drives the present-day technological revolution, as it has from the very dawn of capitalism.

Marcy gave an excellent and easily understandable explanation of this law in Chapter 4 (The Changing Character of the Working Class), in the section on “Changing composition of capital.” Marx called this law “in every respect the most important law of modern political economy.”iv

Marx explained that profit is generated not by machines but by the living labor that operates the machines. Machines—and today software, robots, etc.—are like any other item consumed in the production process, from the plant and equipment used to the raw materials. They have value, but it comes from the past labor incorporated in them when they were created. As they are gradually used up in the process of production, this value is transferred to the new products. The capitalist makes sure that the cost of replacing these items is part of the total price of what is being produced. What the bosses paid out to acquire these items and what they get back to replace them eventually evens out. No profit is generated in this process.

What the capitalists spend for all these items Marx called constant capital, or dead labor. He called wages living labor, or variable capital—variable because how much the bosses must spend on wages depends on how intensely they can exploit the workers.

Profits come from unpaid living labor, or surplus value. The value represented by the wages the workers receive is less than the new value they produce. The more unpaid labor the bosses can extract from the workers and the lower they can push wages, the more profit. Only living labor creates new value.

Under capitalism, all technological innovation is aimed at getting more profit, which is derived from surplus value. Each employer seeks wherever possible to replace workers with machines, as GM has been doing with its robotization. A company which brings in new technology costing less in the long run than the labor it will replace gets an immediate competitive advantage over rival capitalists operating with the old technology.

Prices are based on generalized costs. The boss whose plant produces items at a lower unit cost because of a technological advantage can lower prices and outsell the competition—but only until everyone else adopts the same technology. Then prices fall all around. Now everyone is operating with less labor and more expensive technology. The ratio of variable capital (living labor) to constant capital (dead labor) falls. Since profit comes from living labor and not from technology, the rate of profit falls.

In order to make up for the fall in the rate of profit, production must be expanded. It takes greater sales, i.e., expanded markets, to get the same mass of profit because the rate of profit on each unit sold has declined. Once the acquisition of new technology by all has evened the playing field, each capitalist inevitably looks for even newer technology to regain the advantage.

This process goes on inexorably under capitalism. It intensifies the capitalist competitive struggle for market share and inevitably results in overproduction and crisis.

In fact, the revolutionary socialist perspective hinges upon the operation of this law. The application of this crucial law in the present book is one of the more important contributions made by Marcy to the revival of Marxist theory.

This law is what drove GM, the largest industrial corporation in the U.S., to become the largest single user of robots in the world, beginning in the 1980s. It explains the development and use of management software by Oracle, IBM, Boeing and an array of giant monopolies so they could send everything from engineering to back-office jobs around the globe seeking the lowest wages and salaries.

Marcy traced the different stages of capitalist production, beginning with handicraft and simple cooperation through manufacturing, the industrial revolution and the age of mass production introduced by Ford, all the way up to the scientific-technological revolution in electronics, computers, robots, automated production and so on. He illustrated how the present-day revolution in technology is racing ahead at breakneck speed.

The increasing cost of more sophisticated, high-tech means of production and the simultaneous shedding of workers makes the struggle for profitability a greater and greater burden for capital—and profit is the lifeblood of the system.

After discussing the pauperization of the working class under the impact of the scientific-technological revolution, Marcy concluded his Foreword to the book with the prediction that a crisis of capitalism was coming and that it would heighten the class struggle: “The devastating effects of monopoly capitalism’s latest assault will, after trials and errors, inevitably give birth to an upsurge in the movement of the working class and oppressed peoples—and one which has incalculable potential for progressive and revolutionary working-class solidarity.”

This prognosis, while still completely valid, was delayed by momentous historical developments that necessarily postponed the crisis and the anticipated surge in the class struggle.

As history turned out, Marcy was writing during the early stages of an entirely new configuration of the world capitalist economy. Capitalist imperialism, as a world economic system, was about to take a dramatic turn as a result of two profound developments: the catastrophic demise of the Soviet Union and the East European bloc and the quantum leap forward in the application of the scientific-technological revolution by the capitalist ruling class.

What transpired between High-Tech, Low Pay and Low-Wage Capitalism

In 2008 this author wrote a follow-up to Marcy’s work entitled Low-Wage Capitalism—Colossus with Feet of Clay.v The book traces the drastic global restructuring that has taken place in the quarter of a century since the publication of High-Tech, Low Pay. This transformation of world capitalism developed prior to the present economic crisis and, in many ways, laid the basis for its global character and its severity. Much of what follows here is based on material presented in that work.

Marcy wrote three years before the counter-revolution in the USSR and Eastern Europe of 1989-1991. These developments drastically changed the relationship of world forces in favor of imperialism. The greatest setback for socialism since the collapse of the Second International at the outset of World War I, it opened up vast new spheres for super-exploitation.

For more than 70 years, beginning with the 1917 Bolshevik Revolution, the territorial domain of imperialism had been contracting. Socialist revolutions swept China, Korea, Vietnam, Laos, Cambodia, Cuba, Angola, Mozambique, Guinea-Bissau, Ethiopia and South Yemen. National liberation movements resisted imperialist domination, from Algeria to Egypt, Palestine, Iraq, Iran, the Philippines, Nicaragua, El Salvador, Namibia, Zimbabwe and many other countries.

This situation was reversed with the collapse of the USSR and Eastern Europe. It offered the first major territorial expansion for world capitalism since the “scramble for Africa” in the 1880s. Western and Japanese corporations poured investments into the new-found spheres of influence.

In addition, the fall of the USSR, the material center of the socialist camp, strengthened the “open door” orientation of China toward allowing imperialist corporations to invest there. It pushed India to further open up its economy to foreign capitalist investment. And it removed any protective force—economic, military or political—that could give the former colonial countries some modicum of balance against the influence of imperialism.

It is estimated that between the years 1984 and 2000, another 3 billion people were deeply absorbed into the world capitalist market and that the global workforce available for exploitation doubled, from 1.46 billion to 2.93 Such a development could not but have profound effects on the working class and the class struggle, not only in the U.S. but around the world.

Technology and imperialist globalization

When Marcy wrote about high-tech, it was even before the full development of the Internet and the World Wide Web, before work-flow software allowed the bosses to have real-time oversight around the globe, before a trillion dollars had been invested in fiber-optic cable, before advances in satellite communication, supertankers with powerful and high-speed turbine engines, high-capacity jumbo jet transports, vast computerized ports which became giant distribution hubs, and many other technological innovations.

These technological advances permitted the transnational capitalist monopolies, with huge treasuries and links to the giant banks, to create a new division of labor around the world—what Marx called the social division of labor, as distinct from the division of labor in the workplace.

The new technology opened up to the capitalist class the ability to reorganize and relocate production processes around the globe, using both new and old methods. This process accelerated a worldwide corporate race to find the cheapest labor in the less-developed countries (and in low-wage areas at home) and incorporate them into the networks of the most modern productive processes, as well as to import low-wage labor from abroad.

The process of imperialist super-exploitation was freed from all geographical limits by the scientific-technological revolution. It could now be carried out wherever workers could be rounded up on the globe.

This restructuring was attested to by Ben Bernanke, who in February 2006 replaced Alan Greenspan as chairperson of the Federal Reserve System, making him the principal manager of U.S. finance capital. Bernanke has tried to rescue U.S. capitalism from collapse by handing over trillions of dollars to the banks and other corporate institutions. In more stable times than the present, Bernanke spoke in August 2006 on the subject of global restructuring to a gathering of central bankers at a retreat in Jackson Hole, Wyoming.

Bernanke gave a quick survey of globalization, beginning with the Roman Empire and continuing through Christopher Columbus to the post-Napoleonic era and up until today. After going over what he considered to be similar threads running through the ages, he zeroed in on the new elements.

Among the factors he cited were the “emergence” of China, India and the former socialist-bloc countries, which indicated that “the greater part of the earth’s population is now engaged, at least potentially, in the global economy. There are no historical antecedents for this development.” While Columbus’s voyage led to vast economic changes, they took centuries. By contrast, the imperialists got an opening to China in a few decades.

Furthermore, Bernanke noted, “the traditional distinction between core and periphery is becoming increasingly less relevant, as mature industrial economies and emerging-market economies become more integrated and interdependent. Notably, the nineteenth-century pattern, in which the core exported manufactures to the periphery in exchange for commodities, no longer holds, as an increasing share of world manufacturing capacity is now found in emerging markets.”

Bernanke also stressed how “production processes are becoming geographically fragmented to an unprecedented degree. Rather than producing goods in a single process in a single location, firms are increasingly breaking the production process into discrete steps and performing each step in whatever location allows them to minimize costs. For example, the U.S. chip producer AMD locates most of its research and development in California; produces in Texas, Germany and Japan; does final processing and testing in Thailand, Singapore, Malaysia and China; and then sells in markets around the globe.”vii

World-wide wage competition, race to the bottom

The principal feature of the post-Soviet stage of globalization is wage competition among the workers of the world, organized by giant corporations that are orchestrating the depression of wages in a race to the bottom.

For the first time in the history of capitalism, technology has advanced to the point at which transnational corporations are able to pit workers in the rich, developed imperialist countries in a direct job-for-job wage competition with workers in poor, underdeveloped, low-wage countries. They are doing so on an ever-widening scale.

Autoworkers in Detroit are set in competition with autoworkers in Mexico. Customer service workers in Phoenix are set against customer service workers in Mumbai. The wages of legal secretaries in New York City are measured by law firms against those of legal secretaries in the Philippines. Computer programmers and engineers are set against their counterparts in Moscow or Bangalore.

The other side of off-shoring for low wages abroad is the presence of millions of low-wage immigrant workers in the United States. Millions have been forced to flee the poverty and unemployment imposed on their countries by corporate neo-liberalism and settle for meager wages in the U.S. Thus, the corporations have an expanded army of vulnerable workers. The threat of deportation hangs over them as a bludgeon, enabling employers to impose low wages and miserable working conditions. This is an integral part of the era of globalization.

This is not a temporary phase that world capitalism and the working classes are passing through. It is the result of changes that are as profound as the Industrial Revolution and the age of colonization.

In fact, the revolution in technology and the globalization of capitalist production and services are eroding the national determination of wages.

The wage level of the working class in the imperialist countries, under pressure of the global competition set up by the giant monopolies, is being increasingly determined internationally under the downward pressure of the wage level in the low-wage countries. From the point of view of the bosses, a worker in Detroit with health care, a pension, vacation and a living wage is overpriced, given the world labor market. Stating it from a Marxist point of view, the boss views wages paid that worker to be above the socially necessary value of labor power. The value of labor power, as far as General Motors, IBM or General Electric is concerned, should be closer to the wages in China, Mexico or the Philippines than to the wages hitherto existing in Detroit, New York or Chicago.

During the quarter of a century since Marcy wrote, there has been further devastating harm inflicted on the working class by the capitalist development of technology. Workers now face an era of permanent layoffs. In addition, real wages have been declining since 1973.

The new technology requires fewer skills, so millions of workers who mastered earlier skills find that those skills no longer qualify them for jobs. When jobs require lower skills, workers are more easily replaceable, require less training and consequently get lower wages. Students graduate college into a job market below their skills level and must accept lower wages. Again, this negative development took effect even before the current economic crisis.

Families that used to survive on a single income can no longer do so. It takes two, three or more wage earners just to keep a family afloat. This is, in effect, a wage cut for the entire working class. The number of poverty-level and low-income (defined as no more than twice the poverty level) wage workers rose dramatically even before the crisis.

In other words, prior to the current economic crisis, the working class in the United States, and especially African-American, Latina/o, Middle Eastern, Asian and Native workers, were already suffering from the new regime of low-wage capitalism.

Most of the labor leaders, as Marcy warned, have been absorbed more and more deeply into the capitalist system. They have become enmeshed in the process of transferring the capitalist crisis onto the workers.

With 30 years of concession bargaining, they have taken on the role of saving the “competitive” position of the bosses. Some have called for a “partnership” between labor, business and the government. But government is the representative of big business. There can be no partnership between the exploited and the exploiters. Their interests are irreconcilable.

Now that a full-fledged capitalist crisis has arrived, the labor leaders have led an even further and more ignominious retreat. They have been paralyzed in the face of the crisis and have not summoned the workers to struggle.

The labor leaders repeat the line of the propagandists of capital in calling the present situation an economic crisis—a classless characterization—when, in fact, it is a capitalist economic crisis. It is a crisis of the system of exploitation in which the bosses are trying to pass their crisis of profitability onto the backs of the workers.

The first step in dealing with the crisis is to clearly define it and give the workers a class understanding of what is taking place. This is the only basis on which one can rally resistance to capital. The rank-and-file must take control of the unions and form alliances with communities, as Marcy advocated, based upon a class understanding of their position as an exploited class.

This is not a crisis brought about by greed alone. It is not a crisis brought about by speculation alone. It has not been caused by deregulation alone. There have been greed and reckless gambling by millionaires and billionaires. There has been complicity by all the regulatory agencies in allowing the bankers and financiers of all types to evade every restraint on their machinations and schemes, including subprime mortgages, mortgage-backed securities, derivatives, and other deceptive and secretive measures meant to defraud the people and each other.

But the causes of this crisis are far more fundamental.

The workers and the business cycle

One of Marcy’s concerns was to show how the capitalist business cycle put limits upon what the workers could get and what they would have to give up, so long as they accepted the traditional capital-labor relationship. This problem becomes extremely aggravated during the downturn part of the cycle or the “bust” part of the boom-and-bust, which he took up in Chapter 3.

When Marcy wrote this book, the working class had recently lived through the sharp recession of 1980-1982. Official unemployment reached a post-World War II high of 11 percent. The bosses used the recession to demand concessions and carry out restructuring. The unions were thrust onto the defensive.

During a downturn, the bosses shrink production and there is high unemployment. Marcy showed that, at such times, if the labor leadership simply confines itself to bargaining for wages and conditions, concessions must necessarily follow. He wanted to signal to the more advanced workers in the labor movement that, the next time the cycle turned down again, new strategies would be required to combat the bosses’ offensive.

Marcy’s concern has an urgent relevance in the midst of the current global capitalist crisis, when workers are on the defensive because of the severe rise in unemployment. But it is also timely in a deeper sense because, since he wrote, the capitalist business cycle has changed in general, making the situation even worse as far as the workers are concerned. The “boom” has weakened and the “bust” has dragged on and deepened.

Traditionally, during a capitalist boom the workers can regain some of the positions they lost during the previous bust phase. The bosses, in the race to take advantage of new profit opportunities presented by the capitalist revival, are in great need of expanding their workforce. The reserve army of unemployed contracts sharply. This reduces the competition among the workers, puts them in a stronger bargaining position, and leads to higher wages. At the same time it also leads to much higher profits for the bosses.

The era of ‘jobless recoveries’ 

As the scientific-technological revolution was progressing “at breakneck speed,” as Marcy put it, there occurred a change in the historic pattern of the business cycle. After the recession of 1990-1991, U.S. capitalism entered the era of “jobless recoveries.” For the first time, employment either continued to decline or remained flat long after the economy began to recover. Jobs were either being lost or remained flat for 18 months after the start of the economic upturn. Prior to that time, there had been a typical lag of one quarter, or three months, between the start of economic expansion and job recovery.

The divergence between economic growth and joblessness caused concern among bourgeois economists for a while. However, after the 1990-1991 recession came the collapse of the USSR and Eastern Europe. There followed a surge in investment abroad, a technology boom at home, and the longest period of economic expansion in U.S. history.

The economists promptly forgot about the jobless recovery of 1991-92. They declared the arrival of the “new economy” and the “end of history,” speculating about the end of the business cycle.

The hopes were that, after 75 years of being constrained by socialist revolution and national liberation struggles, the collapse of the material center of the socialist camp would somehow allow infinite expansion and enable the capitalists to overcome the inner contradictions of their system. But as Marx wrote: “The real barrier of capitalist production is capital itself. 

The hopes of the bourgeoisie came crashing down in 2000 with the collapse of the technology bubble and the loss of jobs along with $5 trillion in paper wealth. The vast expansion of capital to every corner of the globe could not eradicate the contradictions inherent in the profit system. It took a speculative boom in technology, with hundreds of companies being created every week, to pump up the economy even with the overseas expansion. The capitalist downturn followed the boom, just as it had since 1825 when the first global downturn took place.

More important than the downturn itself was the nature of the second “jobless recovery” that followed. It turned out that the jobless recovery of 1991-1992 had not been an anomaly but an ominous harbinger of things to come.

During the first 27 months of the next recovery, from November 2001 to March 2004, there was a net loss of 594,000 jobs. It took more than five years for the job level to reach the point at which it had been before the downturn began. According to Stephen Roach, the chief economist of Morgan Stanley at the time, job growth by 2004 was 8 million less than growth in a “normal” recovery.viii

It is no accident that Marcy focused on the business cycle and its consequences for the workers. The question of the business cycle has been of great concern to the working class since Marx first subjected it to scientific analysis.

The boom-and-bust cycle is an essential expression of the fundamental contradiction of the capitalist system. Historically, it has brought both opportunity for struggle as well as shock and disaster to the workers. Understanding it is key to preparing for the class struggle. Studying changes in the boom-and-bust cycle can reveal important underlying features of the evolution of capitalism that the workers need to be aware of.

Marx and Engels on the business cycle

As far back as 1847, in Wage Labor and Capital, Marx discussed the question of the workers and the business cycle. Referring to the upside or boom part of the cycle, the period of rapid growth in profits and capitalist accumulation, Marx wrote:

“Even the most favorable situation for the working class, the most rapid possible growth of capital, however much it may improve the material existence of the worker, does not remove the antagonism between his interests and the interests of the bourgeoisie, the interests of the capitalists. Profit and wages remain as before in inverse proportion.

“If capital is growing rapidly, wages may rise; the profit of capital rises incomparably more rapidly. The material position of the worker has improved, but at the cost of his social position. The social gulf that divides him from the capitalist has widened.


“To say that the most favorable condition for wage labor is the most rapid possible growth of productive capital is only to say that the more rapidly the working class increases and enlarges the power that is hostile to it, the more favorable will be the conditions under which it is allowed to labor anew at increasing bourgeois wealth, at enlarging the power of capital, content with forging for itself the golden chains by which the bourgeoisie drags it in its train.”ix [Emphasis added—Goldstein.]

Engels gave the classic description of the capitalist boom-and-bust cycle in his work Socialism, Utopian and Scientific, published in 1880.

“As a matter of fact, since 1825, when the first general crisis broke out, the whole industrial and commercial world … [is] thrown out of joint once every ten years. Commerce is at a standstill, the markets are glutted, products accumulate, as multitudinous as they are unsalable, hard cash disappears, credit vanishes, factories are closed, the mass of the workers are in want of the means of subsistence, because they have produced too much of the means of subsistence; bankruptcy follows upon bankruptcy…. The stagnation lasts for years; productive forces and products are wasted and destroyed wholesale, until the accumulated mass of commodities finally filters off … until production and exchange gradually begin to move again. Little by little the pace quickens. It becomes a trot. The industrial trot breaks into a canter, the canter in turn grows into the headlong gallop of a perfect steeplechase of industry, commercial credit, and speculation which finally, after breakneck leaps, ends up where it began—in the ditch of crisis. And over and over again.”x

Thus it was Marx who gave a description of the situation of the workers as regards the capitalist business cycle of the time. The period of “rapid accumulation,” that is, the period of the vigorous boom of business following a downturn, has been the most favorable historically for the working class. And it was Engels who described how capitalism goes from crisis to boom to crisis, continuing in that cycle “over and over.”

Even before the 1990s the capitalist business cycle, described a century earlier by Engels, had changed in favor of capital. Marcy, in Chapter 3, focuses on the fact that capitalist recession lengthened in the post-World War II period and that “this is very important in relation to strike strategy, which had a lot to do with the duration of the capitalist economic crisis.” It raises the question of what workers can do if a recession turns out to be protracted and the bosses can hold out for a long time.

Workers, ‘boom-and-bust’ and low-wage capitalism

The new era of low-wage capitalism, worldwide wage competition and slowing capitalist economic growth has put workers under pressure even during times of capitalist upturn. The booms have weakened and have benefited only the bosses, with not even relative gain for the workers.

The era of rapid accumulation, that is, rapid and tempestuous growth of capital investment, has been undercut by the growing productivity of labor and the speed with which markets become saturated. The relative labor shortage during the upturn is a thing of the past. Instead, there are jobless recoveries and the consequent eradication of the opportunity for the workers to make up lost wages by forcing increases on the bosses.

The “golden chains” Marx referred to are not so golden anymore. Marx spoke of workers getting higher wages during a boom while the capitalist got even higher profits. This meant that workers’ real wages went up, although their wages declined relative to the larger profit gains of the bosses. In the present era, these conditions no longer obtain.

For the last several decades, with a slight exception in the mid 1990s, workers’ real wages have gone down or stagnated even during the periods of expanded capitalist accumulation—during upturns. Because of off-shoring, outsourcing and wage competition with workers in low-wage areas, workers in the United States went into massive personal debt and worked extra jobs; whole families worked just to compensate for the wage decline. Not only did the relative wages of the workers decline, but their absolute standard of living plummeted—and this was before the crisis. 

This makes Marcy’s work, his admonitions to the labor movement to develop new strategies to deal with protracted crisis, to engage in class-wide struggle, to break out of the traditional capital-labor relationship, more pressing than ever before.

Engels spoke of the continuous cycle of boom and bust. Certainly the cycle continues, but under conditions of structural changes to capitalism. Booms have become weaker and weaker over time. The classic booms that reemploy most of the workers laid off during the bust are a thing of the past. That is the meaning of the increasingly protracted jobless recoveries.

Solving a crisis by creating a bigger one

In fact, the immediate roots of the latest global capitalist crisis, which began in December 2007, can be traced back to the attempt by the financial authorities to overcome the jobless recovery of 2001-2004, referred to earlier, and the weakness of the capitalist upturn.

The Federal Reserve System pumped hundreds of billions of dollars into the economy by lowering interest rates from 5.5 percent to 1 percent. Alan Greenspan directed much of this credit toward creating an artificial housing boom. He publicly urged home buyers to take out adjustable-rate mortgages. The housing market regulators gave a pass to the most egregious, often racist, subprime mortgage-lending practices The Securities and Exchange Commission synchronized its efforts with the Fed by deliberately closing its eyes to the burgeoning market in mortgage-backed securities, derivatives and other shady practices. The rating agencies Moody’s and Standard & Poor’s played their part by giving potentially toxic assets triple-A ratings.

Much of the credit made available went straight to stock market speculation and banking operations. Huge sums of fictitious capital, paper wealth with no underlying value, found their way through an unregulated conduit known as the shadow banking system—hedge funds, private equity funds and insurance companies—backed by the big Wall Street banks. This shadow system was used to evade even the minimal constraints on finance capital.

In the end, a crisis emerged in the overproduction of housing. The bubble burst, housing prices plummeted and masses of people lost their homes. Throughout the economy, production had outstripped consumption. Auto sales and construction collapsed. Record credit-card debt could not bridge the gap. Debts based on housing sales, credit cards, student loans and auto loans became bad debts. Banks were insolvent.

As Engels had predicted, hard cash disappeared, credit vanished, goods piled up, means of production were destroyed. And in the end the attempt to stem the original crisis by artificially creating a housing boom led to an even greater crisis that enveloped the globe at the speed of light.

Analyzing the present crisis

The meaning of the crisis and its ultimate direction are questions for the ruling class and for the working class, from diametrically opposed points of view. The bourgeoisie has no theoretical framework within which to begin to approach the question. Their system is anarchic. Even government intervention and some limited planning cannot eradicate the anarchy imposed on a system based on private profit.

The bosses operate in competition and in secrecy. Their economists can really only look backward over time at what has happened and hope to divine some pattern that can be used for the future. But they cannot, dare not, analyze the system; they can only describe its behavior in a pragmatic, strictly empirical fashion.

Marxists have a broad theoretical framework combined with powerful, scientific analytical tools at their disposal. These tools must be wielded on behalf of the struggle of the workers and therefore cannot be based upon wishful thinking or pure speculation.

The broad theoretical framework within which to analyze the present situation was laid out by Marx in 1857, in his Preface to A Contribution to the Critique of Political Economy:

“In the social production of their life, men enter into definite relations that are indispensable and independent of their will, relations of production which correspond to a definite stage of development of their material productive forces. The sum total of these relations of production constitutes the economic structure of society, the real foundation, on which rises a legal and political superstructure and to which correspond definite forms of social consciousness. … At a certain stage of their development, the material productive forces of society come in conflict with existing relations of production, or—what is but a legal expression for the same thing—with the property relations within which they have been at work hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an epoch of social revolution. With the change in the economic foundation the entire immense superstructure is more or less rapidly transformed.”xi

This is Marx’s most general statement about the basis for the revolutionary transformation of society. In numerous places throughout his writings he applies this theory to the capitalist system. He describes how capitalism concentrates the proletariat into factories and workplaces, creating an increasingly complex division of labor in the productive process that involves more and varied types of labor from geographically diverse regions.

Marx showed how capitalism, by constantly revolutionizing the means of production under the internal compulsion of the system, socializes the productive forces—bringing workers everywhere into objective cooperation in the production of commodities. He scientifically demonstrated how this socialized production comes into conflict with private property, resulting in repetitive crises for the workers and, ultimately, for society in general.

The fundamental assertion implied by the paragraph quoted above is that sooner or later, capitalist property relations become a “fetter,” a brake on further development of the productive forces. Society cannot move forward any longer because of the stranglehold of private property. Revolution then ensues. The clash between socialized production and private ownership can only be resolved by socializing the ownership—that is, by bringing socialized ownership into harmony with socialized production and setting society on a new course of planned production for human need.

Marx was referring not just to the periodic crises and suffering brought about by capitalism. Nor does his point refer to capitalism holding back development that would be of great benefit to society—such as environmentally safe methods of production and green products. Nor is it a question of the enormous waste and gross inefficiency produced by capitalism. These are relative brakes on development.

Marx posits that at some point, capitalism inevitably becomes an absolute brake on the development of the productive forces, with a consequent crisis for the masses. Society is stymied by capitalist private property and cannot go on in the old way.

It is always helpful for clarity and educational purposes to discuss this fundamental premise put forward by Marx. It is the starting point of understanding Marxism. But it is only at rare historical moments that the discussion goes beyond making a general historical point and is raised in relation to imminent developments.

This question arose at the end of World War I when the economies of Europe had collapsed in the face of military devastation. There was revolutionary ferment in Germany, Hungary and other countries in the wake of the Bolshevik Revolution. Capitalism seemed to be on the ropes.

World War I had signified the beginning of the historic crisis of the capitalist system. The development of imperialism soon resulted in the complete division of the globe among the imperialist powers, as described by Lenin in 1916 in his book Imperialism, the Highest Stage of Capitalism. It meant that capitalism had outgrown the national state as a framework for development. Soon it came to pass that even imperialist expansion could not give capitalism sufficient room to grow by ordinary economic means. It had reached such an impasse that it could only resolve its contradictions through a devastating imperialist war.

The ruling classes in Europe survived these post-war revolutionary crises, only to soon be plunged into the Great Depression. It was during the world depression of the 1930s that the question of the absolute decline of capitalism was widely discussed in concrete terms pertaining to the immediate perspective of proletarian revolution.

For the entire decade, save for a brief period in the mid 1930s, capitalist society appeared to be in a downward spiral with no end in sight. Capitalism had reached a dead end. It seemed to fulfill Marx’s general prognosis that social revolution was on the agenda.

Capitalist property, private property in the means of production, the profit system itself, had become a “fetter” on the further development of the productive forces. Capitalism had brought about the socialization of the productive process on a world scale. Yet a small group of property owners, monopolists, owned and operated this global system for the narrow purposes of enriching themselves through exploitation and profit.

The Great Depression seemed to be the end of the line. Capitalism was unable to revive itself by economic means. In the mid thirties there was a slight upturn, but then world production continued to decline. Massive unemployment remained. The colonial countries staggered under the weight of the world depression, which struck them even more drastically than the imperialist countries.

In the present period it is once again helpful from a working-class point of view to revive this discussion in order to get an accurate estimate of the period, clarify a perspective and prepare for struggle.

From the Civil War to the Great Depression

Many comparisons are made between the present crisis and the Great Depression. But while the depression of the 1930s is fully known, the present crisis is in its early stages and has yet to be played out. Many specifics cannot be known at this point. It is best from a Marxist point of view, i.e., from a materialist standpoint, to focus on what can be studied right now.

What can be compared are the historic periods leading up to the depression of the 1930s and later to the present crisis, which began with the collapse of the housing bubble in 2007. These periods can be effectively compared.

In the first crisis, the economic forces that drove U.S. capitalism forward in the 70 years from the U.S. Civil War to the world depression of the 1930s had exhausted themselves. They were no longer able to stimulate any significant capitalist revival during the entire decade from 1929 to 1939. No economic means could bring back capitalist prosperity.

What were those forces? The Indigenous nations had finally been driven from all their lands. The so-called “frontier” had been occupied, including the half of Mexico that was annexed to become the Southwest of the United States. After the Civil War the African-American population of the South had again been subjugated, this time into a state of semi-slavery through the sharecropping system. The railroad boom had run its course. Imperialist expansion in the so-called Spanish-American War of 1898 had brought Cuba, Puerto Rico and the Philippines into the U.S. empire, along with Samoa and Hawaii. U.S. businesses had pushed deeper into China and Latin America.

Profits rolled in from World War I and helped sustain the system for a period. There was rapid expansion of the auto industry, the electrification of the country and mass production of appliances. But by the late 1920s the expansion had led to overproduction. Massive credit and land speculation led to a crash in real estate and the stock market crash in 1929.

These were the forces that drove capitalism for 70 years after the Civil War. Once they were exhausted, the system went into a state of absolute decline and could only be revived by war preparations and, finally, World War II itself.

It took 15 million U.S. soldiers under arms and an emergency regime of total war production to alleviate mass unemployment in the U.S. It took the deaths of 50 million people or more and the destruction of factories, mines, ports, railroads, bridges and residential buildings throughout Europe and Asia to overcome the pre-war economic crisis and put capitalism back on its feet.

From World War II to 2007 

A review of the situation leading up to the present crisis bears an ominous resemblance to that which preceded the Great Depression. Namely, the forces that have propelled U.S. capitalism and the development of the means of production to higher and higher levels throughout the last 70 years, since the beginning of World War II, have exhausted themselves. Artificial means employed to keep the system going are no longer sufficient to revive it in any significant way. This has led to a period of profound stagnation and perhaps to absolute decline.

In the period since World War II, U.S. capitalism has relied on various artificial methods to keep the system from collapsing. War and war preparation were a basic stimulant for decades during the post-war period. The Korean War, the Vietnam War, the military buildup during the Cold War—all served to generate capitalist production and profits, as the system could not rely on the civilian economy to automatically keep it going. But by the end of the 1980s, even the $2 trillion Reagan military buildup in a “full-court press” to undermine the Soviet Union and the socialist camp was insufficient to sustain capitalist prosperity. The monstrous growth of the military-industrial complex has it limits as an economic stimulant.

Marcy dealt with the role of the military in bolstering the capitalist economy in Chapter 2. He showed how it fostered the scientific-technological revolution and shaped crucial sectors of the corporate economic structure to aid its design for world empire. At the same time, he showed how dependent even the largest corporations had become on the military.

The continuous development of the scientific-technological revolution, the restructuring of capitalist industry, the relentless anti-labor campaign of union-busting, the extraction of concessions, the destruction of benefits, the driving down of manufacturing wages and the steady expansion of the low-wage service economy—all enormously increased inequality in the national income in favor of capital and at the expense of the workers. All this served to bolster the profitability of the bosses and bankers. It gave the bosses a great infusion of surplus value, stolen from the workers, to ease the crisis of capital.

The collapse of the USSR and Eastern Europe in the 1990s and the opening up of China to capitalist investment gave imperialism a brief period of unprecedented global expansion. The monopolies seized this opportunity to create global networks of exploitation and vast super-profits as they engineered a worldwide wage competition among the international working class and promoted the vicious race to the bottom previously referred to. Driving down the value of labor is the time-tested method of capital for combating the declining rate of profit brought about by the growing cost allocated to constant capital (plant, equipment and raw materials) and the reduction in variable capital (wages).

Globalized production has now brought a worldwide epidemic of layoffs and mass unemployment.

Militarism, technological development and anti-labor attacks were not enough to save the banks and corporations. Huge injections of credit were required. The ruling class resorted to speculation, credit bubbles, mortgage schemes, exotic financial instruments and all manner of fraud to make profits based on trading in fictitious capital. To overcome the limitations on the profitability of industry, unlimited paper profits were conjured up.

Crisis deepens despite militarism

In the present crisis, none of these measures is available to restart the system in any significant way.

The two wars now underway in Iraq and Afghanistan are draining the coffers of U.S. imperialism. Overall militarization has largely been accomplished. New rounds of military development are technology intensive, such as laser-guided bombs, satellite-guided missiles, Predator drones, high-tech missile ships and fighter planes. Current imperialist wars are limited and heavily dependent on air power. The hundreds of billions of dollars spent annually on militarism are essential to the system, but, at best, military spending can only help to slow down the economic crisis. It cannot restart the capitalist economy and generate prosperity.

The long period of creating a regime of low-wage capitalism, with a working class in debt and living closer and closer to the poverty level, has intensified. As this trend deepens it only aggravates the crisis of overproduction by further reducing the buying power of the masses. Driving down wages any more will only intensify the contradictions of the system.

Further use of credit on a major scale is a vanishing option. Credit has been stretched to its limit as a mechanism for reviving capitalist accumulation. The government’s handout of trillions of dollars in financial bailouts to the banks and other financial institutions has stretched the credit option even beyond the limit.

Capitalism has reached a point where, even if the trillions of dollars that the ruling class is spending in an attempt to mitigate the crisis were to result in a revival, it would be weak and short-lived, leaving many millions unemployed as jobs continue to be lost even as capital accumulation expands. Capitalism is entering a period of permanent and deepening crisis for the masses.

In the present crisis the historic methods of reviving the profitability of capitalism, of restoring capitalist accumulation and prosperity, appear to have run their course, as they did leading up to the Great Depression. This is what has the ruling class running scared.

Marx’s proposition about the inevitability of social revolution, already quoted, bears repeating here. It was phrased in the most general way:

“At a certain stage of their development, the material productive forces of society come in conflict with existing relations of production or—what is but a legal expression for the same thing—with the property relations within which they have been at work hitherto. From forms of development of the productive forces these relations turn into their fetters. Then begins an epoch of social revolution.”

This is a summary of the broad contours of history. The specifics can only be filled in by analyzing the concrete development of the productive forces of capitalism at each stage.

Sam Marcy in his Foreword to this book gave an economic characterization of the period that pointed clearly in the direction of the present profound crisis of capitalism.

“The justification for each new social system as against its predecessor is that it raises society to a higher level. It has done so in each succeeding social order by raising the productivity of labor. The great achievement of capitalism was that it not only promoted a tempestuous development of the productive forces, of science and invention on an unheard of scale, but it raised the productivity of labor. Over a period of centuries it laid the basis for raising the material standards of society and the wage levels of the working class as a whole.

“The distinctive feature of this particular phase of capitalist development, the scientific-technological phase, is that while it enormously raises the productivity of labor, it for the first time simultaneously lowers the general wage patterns and demolishes the more high-skilled, high-paid workers. It enhances the general pauperization of the population.”

But Marcy looked beyond the crisis to the future of the struggle. He discussed the changing character of the working class from a revolutionary, optimistic point of view that was firmly rooted in a materialist analysis.

He spoke at that time of the fundamental trend arising out of the objective changes in the capitalist economy: the vast expansion of lower-paid workers and the decline of the higher-paid, which he regarded as one of the most significant and profound developments to emerge in the history of capitalism.

Its significance is ultimately political. It means that the lower-paid workers, the downtrodden and oppressed who can ill afford to be held down by a conservative labor leadership, will ultimately become the predominant voice in the labor movement and provide it with the militant and ultimately revolutionary energy to challenge capital. He showed that this transformation of the working class must ultimately have a political expression.

The consciousness of the workers is forced to catch up to their condition. A delay in this process is inevitable, but overcoming this lag is equally inevitable. Being ultimately determines consciousness.

Historical circumstances have delayed this radical development among the workers. But Marcy’s projection of the pauperization of the working class has developed more fully since he wrote.

The days when the conservative labor leadership can hold the working class in check are numbered. Its base is shrinking with each round of concessions it makes to the bosses, with each sweetheart contract it signs. As Marcy noted, at the beginning of each crisis the workers are thrown back onto the defensive. But sooner or later they will cry “Enough is enough!” Then the tide will turn.

There is no bourgeois economist who can see ahead past one quarter. Yet Marcy’s analysis of 25 years ago, proceeding from Marxist theory, put a sharp focus on trends deep within the organism of capitalism and outlined the forces that have shaped the present.

The inevitable imbalance between production and consumption has finally led to a protracted and profound crisis of overproduction. This is certainly the worst crisis in the post-World War II era. As of June 2009, it has lasted the longest—19 months. The measures taken by the world capitalist class to overcome it are by far the greatest. It follows two previous jobless recoveries, the second far more pronounced than the first, which were only overcome by extraordinary, non-reproducible measures (expansion in the wake of the collapse of the USSR, massive bubble-creating measures in the and housing markets).

Even the most optimistic bourgeois economists concede that a recovery of capitalist production would still leave massive unemployment, as the system will be unable to reabsorb a large proportion of the workers laid off in the present crisis.

Furthermore, in the era of imperialism and the scientific-technological revolution, each round of new technological innovation by the ruling class makes it more and more difficult to start the capitalist system up again after a bust. The two most important reasons are that technology reduces the skills and buying power of the workers, while at the same time increasing productivity, thus insuring that production saturates the markets at a faster and faster rate.

The question that remains for the working class is whether or not quantity has turned into quality in the matter of the capitalist recovery—that is, whether or not the scientific-technological revolution and its effects, so profoundly analyzed by Marcy, have brought capitalism to the point where society will not be able to go forward. Has the profit system reached an impasse?

Because of the previous period of expansive globalization of capital, this crisis is the most far-reaching in terms of the numbers of workers affected. The world socialization of the production process has been brought to an extraordinarily high level. Private property is becoming a more and more intolerable brake internationally.

The ruling class is trying to shift this crisis entirely onto the backs of the workers and the oppressed, just as it did during the Great Depression.

Many are promoting the notion that crisis automatically leads to uprisings and the collapse of capitalism. This is sterile, abstract thinking, far removed from the reality of the working class. It fails to take into account the disintegrating forces exerted upon the workers by a capitalist crisis of unemployment. The workers become atomized and lose the sense of strength derived from being together on the job. Their sense of confidence and of their potential power is undermined by a crisis.

It takes great efforts by working-class leaders to find strategies and tactics to counteract the effects of the downturn, develop methods of resistance to every attack, and take advantage of every upturn in the economic situation to push the struggle forward onto the offensive.

This was the principal purpose of High-Tech, Low Pay and of much of Marcy’s life work, for that matter.

Marxism has no crystal ball. It does not dole out prescriptive formulas for how a major, global capitalist crisis of profound dimensions will play itself out.

Capitalism experienced a global economic collapse during the Great Depression. A decade of mass unemployment ensued that could not be overcome except by rearmament in the U.S. and Europe and ultimately war. Thus the manifestation of the absolute, general crisis of capitalism has been economic collapse. This variant must be taken seriously. But the possibility of a protracted period of weak and short-lived recoveries alongside growing and irreversible mass unemployment must also be considered. There could be a temporary delay in a sharp crisis as a result of massive financial manipulation and capitalist state intervention. However, that it could end either in collapse or war or both must also be considered.

The precise, immediate future cannot be known. What is known is that genuine working-class leaders must prepare for struggle and adapt to any eventuality to assist the workers in dealing with the crisis, whatever form it takes. Above all, the working class must rise to assume its historic destiny as the subject of history and lead the way out of the state of permanent crisis, into which capitalism has led humanity, towards a socialist future.

i The late Sam Marcy (1911-1998) was a Marxist theoretician, a working-class strategist and a life-long communist organizer. His articles, pamphlets and books range over a wide variety of subjects, from analysis of the Soviet Union and the Chinese Revolution to the nature of imperialism, anti-war strategy, the Pentagon, militarism and the capitalist economy. He has also written on the struggle against racism and the right of oppressed peoples to self-determination, the politics and inner struggles of the capitalist ruling class, aspects of the class struggle of the workers, both at home and around the world, and much more. Many of his books and writings can be found at

ii Nayan Chandra, Yale Center for the Study of Globalization, interview with Louis Uchitelle,, May 11, 2006.

iii Michel, Lawrence, Jared Bernstein and Sylvia Allegretto, State of Working America 2006/2007, Cornell University Press (Ithaca, New York, 2007), p. 169, cited in Goldstein, below.

ivMarx, Karl, Grundrisse, Penguin Books (London, 1973).

v Goldstein, Fred, Low-Wage Capitalism—Colossus with Feet of Clay: What the new globalized, high-tech imperialism means for the class struggle in the U.S., World View Forum (New York, 2008).

vi Richard B. Freeman, “Doubling the Global Workforce: Presentation to Center for Global Development,” Nov. 8, 2004,

vii Ben S. Bernanke, “Global Economic Integration: What’s New and What’s Not?” Remarks at the Federal Reserve Bank of Kansas City’s Thirtieth Annual Economic Symposium, Jackson Hole, Wyoming, Aug. 25, 2006.

viii Goldstein, op. cit., p. 69.

ix Marx, Karl, Wage Labor and Capital, Progress Publishers (Moscow, 1976), p. 37. Also, for the writings of Marx, Engels and Lenin online, see

x Engels, Frederick, Socialism, Utopian and Scientific, in Karl Marx and Frederick Engels, Selected Works, Vol. 3, Progress Publishers (Moscow, 1970), p. 143.

xi Marx, Engels, Lenin on Historical Materialism, Progress Publishers (Moscow, 1972), pp. 137-38.

Last updated: 28 May 2023