Clinton's fundamental economic problem

By Sam Marcy (Feb. 25, 1993)

What's the fundamental problem facing the Clinton administration?

What has created such an urgent need to cut Medicare and raise the taxes of the people Clinton calls "middle-income"?

The crux of his problem is how to resolve the glaring contradiction between the corporate drive to contract the economy and his simultaneous desperate push to expand it.

On one hand, giant monopoly corporations like General Motors, Eastman Kodak and IBM are continuing their drive to downsize their corporate entities with more and more layoffs. This is now the universal tendency of all the corporate giants — to downsize their structures while at the same time trying to obtain the largest amount of profits.

On the other hand, there is the equally imperious tendency to expand abroad, in a struggle as competitively fierce as there ever was, in order to enlarge the operations of the U.S. capitalist establishment.

The process of simultaneous contraction at home and expansion abroad is a contradiction that will not be resolved by mere palliatives. They may give the momentary appearance of suppressing the symptoms, but in reality they drive the malady deeper into the organism. It is not resolvable by exhortations and daily briefings — or nationwide television speeches invoking patriotism. Nor will governmental fiat of a purely administrative character resolve it.

The Clinton administration is dealing with a capitalist crisis of enormous proportions. The capitalist state is only reaching the outer surface of the contradiction.

The real solution to the problem lies in overcoming the immense overproduction in the entire capitalist economy. The crisis of overproduction ranges from industrial inventories to the government's unsupportable indebtedness. Both, in no small measure, are the result of the insatiable search for super profits by the monopoly corporations.

The crisis has deepened as a result of the collapse of the USSR and the economic impossibility of maintaining production by the military-industrial complex at anywhere near the level of the Cold War.

Jobs, jobs, jobs?

Where, then, to begin resolving the crisis? This is the question facing the Clinton administration. Jobs, jobs, jobs — that was the most conspicuous slogan of Clinton's election campaign. Cutting the deficit was Bush's.

Are the roles now reversed? Cutting the deficit is now the Clinton administration's principal objective. With his Jan. 13 announcement that he will seek at least $35 billion in savings from Medicare over the next four years, and his speech two days later in which he announced he will seek to raise taxes on "middle-income Americans" in order to cut the federal deficit, Clinton is proving a famous old adage from a highly conservative Republican president of the 1920s.

Calvin Coolidge, the 30th president of the United States (1923-1929), was once asked about the functions of government. His reply was, "The business of America is business."

What he really meant is that the business of government is big business. Coolidge never qualified or disowned his statement.

This is further illustrated by the fact that succeeding administrations found it necessary to establish an agency within the government to complement Coolidge's remarks — the Small Business Administration. Its purpose was to counteract the impression that the capitalist government devotes all its time and energy to big business.

But the truth is that the business of government really is big business.

Coolidge was saying what the monopolies expected of him in the 1920s, when they had nearly reached their apex of development. Coolidge was only paraphrasing what Karl Marx had written in "The Communist Manifesto": "The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie." The president is merely the chairperson — the executive — of this committee. The president carries out the program of the ruling class.

Clinton takes over the essence of Bush

In the 150 years since Marx wrote the Manifesto, experience has proven to the hilt that the president carries out the program of the ruling class. Clinton's campaign promise to put jobs first as against his Republican opponent, who called for deficit reduction first, has now been abandoned. Clinton has taken over the essence of the Republican proposals.

What else could it mean when he proposes to cut a vital service for the health of people over 65 years old like Medicare? Or to impose a greater tax burden on what he prefers to call "middle-income" people?

From the beginning of his election campaign until now, Clinton constantly invoked the need to serve the "middle class" above all. He almost never refers to the working class. Occasionally he refers to the poor or less privileged, etc., but never alludes to the existence of a working class as against the capitalist class. It's as though there are two classes: the middle class and the very rich. But this is a falsified version of the existing class structure in the U.S.

Class structure of the U.S.

There is the capitalist class, which owns the means of production and employs wage slaves. This class is divided into groups. The small owners of the means of production are the petty bourgeoisie. The petty proprietors, however small they be, are nevertheless exploiters of workers to the extent that they employ wage labor.

As often as Clinton has spoken, he has never used the term "working class" or "capitalist class," which scientifically expose the nature of each class, one living at the expense of the other. The idea of dividing society into income groupings obscures the actual social relationship. According to the Clinton theory, as he has avowed many times, the rich people are those whose income is above $200,000 a year.

But many of the exploiting capitalists may not claim this much income when they turn in their tax returns. A small proportion of capitalists will list their income as above $200,000. Most hide their income in various legal stratagems.

Nor does it clarify relationships merely to divide society into rich and poor. The question is who owns the means by which riches are accumulated. Owning the means of production entails the right to appropriate the labor of others and make a profit on that basis.

When Clinton talks of the poor or "less privileged," it is often only a way to sidestep the issue of racism, of the national oppression of the Black, Latin, Asian and Native peoples. And even with his gestures toward lesbians and gays in the military and his nomination of a woman for attorney general, Clinton has made it clear he is against affirmative action and "special interests." By that he means anyone working in an organized way to end the oppression of women, lesbians and gays, the disabled, youths and the elderly.

Clinton has emerged in his first month in office as a conservative. He's essentially embracing a program that, except in degree, has been the hallmark of right-wing and reactionary Republicans.

Small and big business

Coolidge's adage may have shocked some. But it is as true today as it was then.

The Small Business Administration was supposed to overcome the embarrassment of such an admission, but its sorry role since its establishment has mostly aided and assisted big business. Small business really depends on big business. A few crumbs are thrown to support the notion that small business is being helped by the capitalist state in a way somehow equal to the subsidies given to big business.

It is of course no accident that the most important government posts, such as secretary of the treasury, are almost always reserved for officers of big businesses like General Motors, General Electric, etc. Sometimes the posts even go to the chief executives themselves, like Charles E. (Engine Charlie) Wilson of GM, Eisenhower's secretary of defense, who said that what's good for GM is what's good for the country, or Charles E. (Electric Charlie) Wilson (yes, the same name) of GE, who had a powerful position on the War Production Board in World War II.

One scarcely needs reminding that the Mellons, Rockefellers and others drawn from the biggest, most powerful corporations have adorned the most prestigious offices in the U.S. government. By contrast, who can remember anyone from the labor movement who has ever been granted even the post of secretary of labor? Not that a labor leader should take a post in the capitalist government. But it's significant that they aren't even asked.

Deficit is big business's problem

The issue of the deficit is big business's key problem. The capitalist government's indebtedness is gargantuan, running into trillions of dollars. In times of economic downturn like the present, this situation endangers the viability of the capitalist system as a whole.

Why should the government's indebtedness be such a great peril to the capitalist system? After all, aren't the huge monopolies — General Motors, IBM, Kodak and others — independent entities, separate and apart from the capitalist state?

The answer is that under the conditions of monopoly capitalism, the monopolies are fused with the state. The very idea of the capitalist government maintaining a stance of independence from the monopolies is a falsehood. To a lesser or greater degree, they are mutually dependent in trying to maintain the stability of the capitalist monopolies' exploitation of the working class.

Wouldn't the monopolies like to be independent of the state? In that case the viability of capitalist businesses would not be endangered as it is today, so they might hope. But one has to consider that the capitalist government is the only entity that has the right to coin money considered legal tender for all.

Consider, for instance, the government's indebtedness — its IOUs — which are held not only by the capitalist class but by millions of pensioners and small depositors among the broad working class. These forms of indebtedness are regarded as assets by the depositors and by the banks. Thus, the government's debts are held by the banks of necessity, and listed as assets by the banks. The government's liabilities — in trillions of dollars — are the banks' biggest assets. No sooner is a dollar deposited in a bank than it is listed as an asset by the bank, subject to be loaned immediately and interest acquired.

Hence, it must be understood that the federal government's deficit is of the greatest concern to the big banks and the capitalist monopolies. The slightest change in the government's budget deficit is immediately reflected in changes in interest rates by the banks. And despite attempts by all the capitalist governments, especially the big imperialist seven, to arrive at an agreement to have a stable exchange rate, these continually have to be revised in secret meetings. Nevertheless, the agreements are broken as soon as an economic disaster hits one or the other of the imperialist rivals.

Clinton's switch and embrace of the right-wing Republican position on cutting the deficit is not a whim. It's not part of his nature or a failing in his character. It is a move dictated by the imperious necessity imposed upon him and his administration of defending the capitalist system.

The ruling class is in turmoil. They also face a fundamental contradiction — one between the phenomenal growth of the productive forces on a world scale and the constrictions imposed by their private ownership. In truth, the means of production are now collectivized and socialized in every other sense except their ownership. Only socialism can solve that contradiction.

Only the revolutionary intervention of the masses, only the initiative of the working class, can upset the relations of exploitation and oppression and introduce a new system based upon socialist construction.





Last updated: 15 January 2018