From International Socialism (1st series), No.85, January 1976, pp.9-12.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
OLD Mrs Jackson has given up the two miles walk to the welfare clinic. She used to go on the subway, but now it is too expensive. Then, despite her sixty-seven years, she walked. But now she says that there are so few staff at the clinic she does not get a hearing anyway, and it is too cold and slippery to walk.
There are thousands of others in New York who are similarly learning to live with the slow destruction of the minimum conditions of city life. The city officials, caught between the voters and the city’s creditors, plaintively urge ‘self-reliance’; the city dustmen’s chief recommends householders to sweep’ the gutters themselves, ‘out of a sense of civic responsibility’.
New York has been the heart of American capitalism for more than 150 years. But now the heart has gone somewhere else, and in the general crisis of profitability in the whole system, New York has become victim instead of victor.
A series of processes have combined to destroy the financial basis of the city. Three of the most important are detailed below.
FOR nearly half a century, American industry has been moving its activities away from the cities of the north-east of the country. It is now also moving away from the North-Central region (Chicago-Detroit). Business has been pursuing low costs, escaping from the high living, housing and transport cots of the old cities, and more recently, the urban riot. High technology new industry paying the highest wages has moved to the West (California) and the South (Texas).
The workers have chased the jobs. Put crudely, the relatively high income skilled whites have moved westwards and southwards, while the relatively unskilled blacks and immigrants have moved northwards from the south. A relatively declining average income in the northern cities bites deep into municipal revenue unless there is redistribution between the cities of different regions. Most of the big cities in the expanding regions have continued to increase jobs and incomes through the slump, while the cities of the north and north-east have, to a greater or lesser extent, had financial crises.
This only relates to cities. Every southern and western city has its impoverished ghetto of blacks, Mexicans, poor whites and other ethnic groups, just as the northern cities sport the leafy garden suburbs of the rich.
Nevertheless, the flight of industry changes the whole distribution of income in the north, increasing the extremes of income and making it impossible to finance, let alone rehabilitate, the old cities. Only the centralisation of the country’s government so that business could not escape paying would overcome this. In more centralised countries, like Britain and Japan, the similar problems of London and Tokyo are concealed by direct government subsidies.
New York’s loss of jobs has steadily grown more severe. It is concealed to some extent when the national economy booms, but is starkly exaggerated when there is a slump. Between 1969 and 1974, the city lost 340,000 jobs (or more than had been created in the preceding 15 years). It missed the national boom of 1971-3, which, if the city had expanded as the national economy did, should have brought it a quarter of a million new jobs. In the year of slump up to May 1975, another 93,000 jobs disappeared (or a quarter of a million jobs if we include the surrounding New York – north-east New Jersey area). The decline in jobs prompts people to leave the city altogether – since 1970, the city has been losing about 2½ per cent of its population every year (this is the official figure, and does not include ‘illegal immigrants’). As a result of the contraction in the size of the labour force, unemployment rates have been kept down – 11.7 per cent in the middle of 1975 (as against a national average of about 8 per cent).
AT the same time as industry has been moving nationally, the rich and the middle classes have been trying to escape high city costs by moving beyond the city boundaries. The spread of car ownership is a key factor in this process. The long-run census figures show the movement over a long period – the areas of most rapid population growth at different times was as follows: 1900-1910, central city areas; 1910-1920, a five mile ring around the cities; 1920-1950, a five to ten mile ring round the cities; thereafter, beyond the ten mile radius. Indeed, most city growth since the second World War has been by extending city boundaries, not by increasing the number of people inside the old boundaries. Where cities are allowed – as New York is not – to extend their boundaries, they have come to cover an immense area. Houston in Texas now covers 503 square miles, and its suburbs, over 6000 square miles.
In the 1960s, the American suburban population increased by 30 per cent,.the central cities by five per cent. The relatively poor continue to move into the central city areas, as the rich leave in even larger numbers. Those left in the cities are those who cannot escape and are politically important only when they riot. The municipal boundary – where it will not be extended – becomes the frontier between the suburban rich and city poor, between whites and blacks or ‘immigrants’ (the Mexicans, Puerto Ricans and others, regardless of whether they were born in the United States or not). In the case of New York, between 1945 and 1970, about two million richer people ($10,000 or more income per year) left the city, and slightly fewer poor ($6,500 or less) settled there.
The incomes of the city’s residents is the base for municipal income, so that if the average falls, the corporation has to raise more taxes to keep the same revenue flowing – or extend the boundaries to recapture the rich. But this last reform is impossible while the rich continue to control the State Assembly which could alone sanction a change in boundaries. As a result, New York becomes a kind of poor house, and the financial crisis is insoluble.
AS the tax base has shrunk because of the loss of jobs and the rich, New York municipality has become dependent on increasing taxation (which accelerates the flight of business and richer households from the city) and bank loans. In a boom, when interest rates are high, the city borrows heavily to pay the interest. In the slump, the tax base contracts, the banks become increasingly savage in recovering their loans and most reluctant to offer further advances except under cast iron guarantees. To escape this last problem, the municipality has – like some of the medieval kings did – offered the yield on particular municipal taxes before any other expenditures are considered. The situation is complicated by the sheer corruption of municipal government. The councillors are often there as representatives of local business, out to make a killing in municipal contracts. The web of bank-financed land speculators, large property owners, building and construction contractors, includes municipal officials and councillors. It is said that, while city workers are being sacked to cut costs, the municipality is still leasing office blocks that stand empty because they are not needed; the leases are favours to the banks that finance the land-purchase, the property speculators and building companies.
A different structure secures the voting base. The winning party rewards its followers not only with contracts, but also lucrative sinecures on the municipal payroll. The leaders of particular ethnic communities get their slice if they supported the winning horse. The trade union bureaucrats get their share of the spoils too, and if they seem to be effective in delivering the vote, in prosperous days, a grateful mayor looks to the conditions of trade union members.
The municipal unions have been able to build up a moderately strong position on wages as a result of this share out of spoils. In addition, successive administrations have tried to extend their political base by financing an extensive system of public welfare – hospitals and clinics, schools and what was until recently a free university (CUNY, with about a quarter of a million students), as well as unemployment relief. In a slump, all these elements tend, to increase in cost just as the municipal revenue is contracting.
It is the welfare-education expenditure of the city as well as its wage bill which has made the New York crisis of national significance. The city has become a test case, the ‘creeping socialist menace’ to rally the backwoodsmen of the Right. As in Britain, one section of the ruling class is arguing that the crisis of profitability is so severe because of ‘unproductive’ public expenditure. Private profits must be salvaged by pruning the public sector.
Felix Rohatyn is a banker, leading proponent of the case against ‘the social wage’, and was head of the Municipal Assistance Corporation (’Big Mac’), the group of bankers set up by the State Government last June at the time of New York’s first default crisis, to promote the sale of city bonds. When asked what sum the municipality needed to cut from its expenditure, Rohatyn replied, ‘It’s not a question of how much. The city has to change its lifestyle’. Thus, the city’s ‘lifestyle’ became the anvil on which American capitalism was to hammer a new strategy of profitability.
The myth of New York’s working class wallowing in its feather-bed, on a diet of welfare and free milk, was a useful one, particularly in demoralising the working class itself. It turned class anger into attacks on other workers, supposedly living off the fat of taxes. With some of the worst slums in the United States, a much higher level of unemployment, and a dirty ill-kept city, the myth would have been a joke if it had not been so effective.
The myth has been confirmed by the continual concessions made to the banks by the municipal authority and to the municipal authority by the trade union leadership. Mayor Beame spent a year vacillating, veering between the demands of his political base and the bankers, but all the time promising to pay until he was publicly removed from effective control by the State Governor. Yet still he had promised 67,000 redundancies, a sizeable pay cut for municipal employees, a three year wage freeze, severe cuts in welfare, medical and educational expenditure. It was never in doubt that ‘changing the lifestyle of the city’ meant in practice an assault on the poor. But to keep some, credibility, Beame also had to fiddle the books, yet that only increased the hysteria of the banks and the State Governor. It must have been the banks who put around the rumour in August that Beame was about to have a mental breakdown.
The municipality claims to have sacked 35,000 since last December. Some of the cuts were perhaps directed by Beame at the strongest unions (including the police and firemen) in the hope that the banks would relent or that strikes might be provoked which would frighten the banks. The overall pattern of sacking inevitably hit the poorest city workers hardest, particularly black and Puerto Rican employees, and affected the top paid least. As a result, as city services deteriorate, the unemployment relief bill soars.
THE attack could have been rolled back. But it required a national demonstration of the commitment of New York’s workers not to be used to bail out the banks. In July, Rohatyn himself warned of the dangers of a general strike. But he need not have feared, for the trade union leadership bent all their best efforts to prevent any but token action. At the end, the union leaders pathetically offered up their members’ pension funds to buy their own survival (by September, the pension funds of the teachers, firemen, policemen and municipal employees were all, to some extent, being used to stave off the bankruptcy of the city). De Loury of the dustmen even offered $1.5 million of his members’ funds to buy off redundancies (Beame took the money, and continued with the sackings).
In July, there was a sudden upsurge in popular anger. The dustmen took unofficial strike action for three days; the highway workers occupied their depots, and sacked policemen blocked Brooklyn Bridge. But the teachers’ union leader, Shankar, said he would take no initiative until early September when his members’ contract came up for renegotiation. The transport workers restricted themselves to a demonstration, and welfare and hospitals did not move. The union leadership scuttled its members back to work. In September, as a result, the teachers were left to fight alone, being finally sold out by Shankar, despite his earlier bold talk (14,000 teachers were not rehired, class sizes increased). Other union leaders grumbled, or like Barry Feinstein of the Teamsters, restricted themselves to empty bluster:
‘I’m in favour of a general strike at this time. We have given our blood. The unions are bleeding to death.’
What finally forced President Ford to extend the minimum level of federal aid for very short-term relief, was not a revolt of New York’s workers, but the revelation that if the city defaulted, some of the leading banks and large companies (like the giant ConEdison electricity company) might also go bankrupt. In November, it was discovered that 546 national banks were holding New York city bonds equal to 20 per cent of their capital, and 41 banks in New York State had municipal holdings equal to 50 per cent or more. Furthermore, the downward slide of the city threatened to impose bankruptcy on the State of New York, Ford, asked to give federal assistance last May, had allowed the situation to deteriorate so far that it had come to threaten the whole structure. There was no way of disentangling public and private capital. But the aid granted is on such restrictive terms, it is no more than keeping the city out of default so that it can continue with the cuts.
The New York working class was and still is in the forefront of the attack to save the system, and the municipal employees in the vanguard. The continuing defeat of New York’s workers can only produce a general depression of militancy in other cities and unions. Yet at particular moments, a handful of dedicated city workers could have created the rank and file leadership capable of precipitating a general strike that would have compelled federal intervention on very different terms. One general strike with mass pickets on Wall Street would have forced Ford’s hands, compelling him to concede much more as a political defence of the system than just the financial saving of the banks. As it is, workers blame some anonymous ‘market’ for failing to take up the City’s bonds.
The Left in New York is larger than most other places. Yet it suffers from the bitter heritage of isolation and irrelevance. The city’s crisis has delivered hammer blows at the traditional attitudes of New York workers, but the Left has not been able to relate to it. The Left’s isolation brings the same sense of impotence before gigantic blind forces that afflicts the workers. No-one is prepared to gamble. Yet audacity is the precondition for a rank and file movement. It is not created by occasional leaflets or attending union meetings in a handful of workplaces. That is also required, but there is no ‘building by slow accretion’. A rank and file movement is created by exercising audacious political leadership in conditions of momentary crisis – ‘giving a lead’ when there is a vacuum of leadership. That situation, with fluctuations, has existed in New York for the past year and will go on existing. It ought to be a top priority for any group with a serious orientation on building a rank and file movement and a mass workers’ party.
THE growth of American capitalism in the 1950s and 1960s sucked in an enormous number of workers from Mexico, Puerto Rico, the rest of Central America and the Caribbean, from the Philippines and East Asia, just as the growth of the Common Market siphoned workers out of the Mediterranean countries to France and West Germany. Simultaneously, in both Europe and the United States, whites have been moving out of the assembly line and metal fabricating industries into better paid jobs in the service industries. In the United States, this has meant the movement of black workers and ‘immigrants’ to the old industrial centres of the north and north-east. The long traditions of southern racialism with its foundations in the interests of the slave owners have been passed over to the industrialists and the cities of the north. In the working class, the whites who cannot escape from the cities are particularly vulnerable to absorbing the interests of a white ruling class, as also are those trapped in a particular district that seems about to be absorbed into a black city. The blacks and immigrant groups similarly absorb the same savageries, opening rifts between, for example, southern-born and northern-born, between American blacks and Jamaicans, between blacks and Hispanic peoples and so on.
The effects of the divisions are not abstract. Between 1965 and 1968 the American blacks unknowingly assumed the natural militant leadership of the entire working class. Their politics created the tone and style of all mass politics that came after them; their cultural legacy dominates the Left. Yet the challenge to the system was destroyed by walling off the black leadership from its mass – and mainly white – audience, by reinvoking the racialist barrier. The leadership was then either murdered, exiled or bought off. In the last case, the reward was often some toehold in small capitalism (boutiques, record shops, Soul-food stores, African clothes trade etc) and absorption into the national political leadership: for example, the NAACP leaders, Julian Bond, Marion Bond and Andrew King, now respectively a Georgia Senator, Washington DC City Councillor and member of the House of Representatives. Much of the small capitalism has been swept away by the slump, but the political perks continue; the US Census authorities estimate that between 1970 and 1974 there was an increase in black elective officers in the country; the black population is 11½ per cent of the whole population).
Yet the condition of the mass of black people remains the same as before or has deteriorated. The National Urban League argues that black people have faced ‘chronic depression’ for 20 years, compounded by the economic catastrophes of recession in 1969-71 and slump in 1974-6. Real family income declined by over 3 per cent in 1973, to reach 58 per cent of the average white family income (in 1969, it was 61 per cent). About a third of all black families are classified as below the poverty line (9 per cent of all whites are below the line), and they make up about a third of all the poor. In mid-summer 1975, the black unemployment rate was officially 13.7 per cent (the white rate was 7.6 per cent), but according to the National Urban League, 25.7 per cent (the rate for black youth was estimated by the League to be between 40 and 60 per cent; the official rate for black youth at the end of 1975 was 37 per cent, and for white youth, 17.8 per cent).
The national picture is reflected in the worst areas of all major cities, whether they are generally prosperous or depressed. Take, for example, one of the most famous districts, Watts, with a population of 28,000 in the south-west corner of Los Angeles. Ten years ago the district became famous through its massive revolt that provided the immediate signal for the struggle of black people throughout the country. Yet, despite worsened conditions, there has been no revolt this year. The area is dominated by those on welfare, single mothers and the aged, with an unemployment rate said to be around 50 per cent. The median annual family income – including welfare payments – is around $6,000 (the national average for black families is now $7,500). The area is still ‘an economic and spiritual desert’, with high incidence of alcoholism, hard drug ailments and suicide (it is said that black males under the age of 25 have the highest rate of suicide for any similar group). However, the people of Watts, like those of Compton further south (a 50 per cent unemployment rate), have a consolation they were denied a decade ago – the Los Angeles mayor, the California State Lieutenant Governor and School Superintendant are all black.
The destruction of the Black Panthers’ leadership and the decay of the Black Power movement into a defensive cultural style (exploited by black business – witness the shop sign, ‘Black is Beautiful but Business is Business – don’t ask for credit’) has done considerable damage to the confidence of the mass of black people. Of course, the unemployed kids continue sporadic guerilla warfare, half revolt and half crime (against a police force much more heavily armed than ten years ago). According to the FBI, serious crime increased 18 per cent in 1974, with an increase of 15 per cent for boys under 18 and 21 per cent for girls (the under-18s accounted for 27 per cent of all arrests for serious crimes in 1974). Some proportion of that figure is black revolt.
There is also sporadic communal warfare, seen most sharply in 1975 in the clashes over bussing in Boston and Louisville, the summer warfare over the beach at Boston and demonstrations against the police and harassment in at least three States. The scale of bussing is enormous – 260,000 children are transported in Detroit daily – all to avoid improving schools adequately outside the rich suburban areas. The movement between black and white working class districts provides a ready-made audience for the extreme Right.
It is a measure, however, of the relative weakness of the old forms of communal revolt that, fortunately, the extreme Right has not had more growth, whether it is the new retooled Ku Klux Klan (’sophisticated, college-educated, media-oriented’), front organisations like Louisville’s ‘Kentucky Taxpayers’ League’ or the openly Nazi organisations. Yet there was a temporary working class audience in both Louisville and Boston; in Louisville, the backbone of the white demonstrations identified themselves as trade unionists.
However, concealed in the relative decline of communal action is the growth in confidence of black workers in the mass production industries. With an effective basis of power on the shop floor, a new leadership is emerging, a leadership which, as a necessary element in its tactics of fighting, is becoming not simply the leadership of black workers but of all workers, including the whites and Spanish-speakers. To some extent, the demoralisation of communal politics is made that much worse by this development, but on the other hand, the future prospects of the emancipation of black people become much brighter. The press, of course, can see only ‘race-conflict’, so that the development of rank and file factory leadership receives much less attention than the communal riot. Ex-Black Panthers may well be the most important single source of the new factory leadership; their experience of the violence of the State, their political experience and sophistication, makes them the natural link between the communal revolt of the sixties and the working class revolution of the late seventies.
There are apparently many such small black groups and newspapers, most of them explicitly socialist, boring deep in the major industries, and to a greater or lesser extent, contesting the leadership of all workers in the workplace, not simply black workers. The discipline of the shop-floor and their suspicion of the white Left to some extent insulate them against the absurdities that afflict many, of the socialists – growing herbs in Arizona is an alternative to overthrowing capitalism. Yet it will also impede the creation of a mass workers’ party. At the moment, the lack of any known national alternative makes the Left much weaker than it should be in terms of numbers. The first organisation to achieve national significance is likely thus to inherit all and grow quickly. But there is very little time to waste, given the perspectives for the system. Before the end of the decade, the Left, black and white, could be facing its decisive confrontation.
Last updated: 9.2.2008