The Economic Crisis, Labor and the Left


The world appears to be on the verge of an economic crisis and, if it turns out to be as serious as some think, one that could rival or exceed the great panics of the late nineteenth century and the decade long Great Depression. The crisis began with unscrupulous mortgage lending on an enormous scale, leading to mass housing foreclosures, then to a collapse of the securities backed by sub-prime mortgages, and finally became a crisis of the banks that held those securities. Over the past weekend government and banking officials worked out J.P. Morgan’s buy out of Bear Sterns, one of the most important U.S. banks which stood on the verge of collapse, a development that threatened to unleash an international financial crisis.

This may turn out to be only another recession, painful as those are, but if it turns out to be a genuine depression, what are we on the left prepared to do? What will this crisis mean for the American working class? What should be the response of the U.S. left? What can be learned from the experiences of the past and how can those lessons be applied to the present challenge?

A Common Recognition of the Danger

The crisis that faces us is now clear to all, even if President Bush-like President Herbert Hoover after the Crash of 1929-denies that the economy is in danger. Already several months ago Lawrence Summers, Secretary of the Treasury in President Bill Clinton’s administration wrote in an opinion piece in The Financial Times warning that, “Even if necessary changes in policy are implemented, the odds now favor a US recession that slows growth significantly on a global basis. Without stronger policy responses than have been observed to date, moreover, there is the risk that the adverse impacts will be felt for the rest of this decade and beyond.”

John Lipsky, the number two official of the International Monetary Fund said this week that government policy makers must be prepared to “think the unthinkable.” One presumes that by that he means a collapse of the world economy.

Robert Brenner, the UCLA economic historian, wrote recently in the leftist journal Against the Current that, “The current crisis could well turn out to be the most devastating since the Great Depression.” He concludes his article writing “because banks’ losses are so real, already enormous, and likely to grow much greater as the downturn gets worse, that the economy faces the prospect, unprecedented in the postwar period, of a freezing up of credit at the very moment of sliding into recession-and that governments face a problem of unparalleled difficulty in preventing this outcome.”

A Crisis for Ordinary People

There is a common understanding of the serious nature of the crisis, even if no agreement on ultimate causes and consequence, among a range of people with quite different politics. Not only do banks, governments, and international financial institutions face a crisis, so do the working people of the world. The crisis has tremendous potential to cause widespread suffering because it is taking the form of a crisis of stagflation, that is simultaneous economic downturn and rising prices.

Josette Sheeran, World Food Program Chief for the United Nations, recently stated that the world economy “has now entered a perfect storm for the world’s hungry.” A series of developments-soaring energy and oil prices, climate change, production of biofuels, and rising demand from India and China-will make it increasingly difficult for millions to afford food.

“This is leading to a new face of hunger in the world, what we call the newly hungry. These are people who have money, but have been priced out of being able to buy food,” she said. “Higher food prices will increase social unrest in a number of countries which are sensitive to inflationary pressures and are import-dependent. We will see a repeat of the riots we have already reported on the streets such as we have seen in Burkina Faso, Cameroon and Senegal.”

Impact on the United States

When a recession occurs, companies fail, plants close, those that survive lay off workers, and unemployment rises. If the current crisis turns out to be merely a recession, unemployment is expected to rise to 6.4 percent by 2009, according to Goldman Sachs, while African American unemployment would reach 11.0 percent. (Blacks’ unemployment is generally twice that of whites.) However, if this turns out to be a more serious recession such as those we have experienced in the last 25 years then unemployment could reach 8.84 percent as it did in 1975 or 9.71 percent as it did in 1982.

And, if this is the kind of economic crisis which many fear, a crisis along the lines of the Great Depression, then we would be talking about an unemployment rate of 25 percent, and for African Americans, 50 percent as it was in the 1930s. Deep recessions and depressions have historically been accompanied by shorter workweeks and wage cuts, so that income also falls for those who have work.

What would we expect to happen if such an economic crisis with such high levels of unemployment were to hit the United States? The United States today has a social safety net such as did not exist in 1929-unemployment insurance, social security, and Medicaid and Medicare-but a tremendous strain would be put on those systems and government at every level would soon face a fiscal crisis.

The Likely Failure of the Social Safety Net

With lowered corporate profits and declining incomes and sales, Federal, state and local government would not have the revenues to pay for those social programs and would also be unable to pay salaries and wages of public employees. In fact this has already begun, as the New York Times reports, “About half of the state legislatures are scrambling to plug gaps in their budgets, shot through by rapid declines in corporate and sales tax revenue…”

With private sector and public sector workers losing their jobs, more families would quickly exhaust their savings, lose their homes, and increasing number of those who rent would be evicted. Homelessness of working class families would rise beyond the capacity of government and charitable institutions. The condition of the African American and Hispanic workers will be much worse than that of the white workers, and that will be quite bad. Significant numbers of recent Hispanic immigrants would return to their homelands in Mexico or Central America, though most would probably stay here, since things will be no better at home.

The Political Response

What will happen to American politics if there is a depression? Whether we have a government headed by Barack Obama, Hillary Clinton or John McCain, we will face similar issues. All three candidates share a commitment to the neoliberal and global capitalist model that has dominated our political economy since the 1980s. While a Republican government might react more rigidly and a Democratic government more flexibly to such a deep economic crisis, still it is unlikely that either will at first take dramatic measures.

Especially since the crisis will probably be developing during the first year or two of a new administration, one would expect that there will be foundering followed by experimentation. The American experience of the 1930s under President Franklin D. Roosevelt or the 1960s under President Lyndon B. Johnson might lead a Democratic president to create a program of public workers, the expansion of the social safety net, and broadening of social programs in housing all paid for by deficit spending along Keynesian lines. Will American capitalism today be able to afford such a political economy given the relative weakness of production and the decline in profitability?

McCain and the Republican Party are likely to seek economic recovery through a program of tax cuts for corporations and the wealthy, reduction of social programs, together with an increase in repressive measures against social movements, immigrants, African Americans and the poor. Whether or not it will be able to find a mass base for such policies after the George W. Bush administration’s termination in the disaster of a failed war abroad and economic crisis at home remains to be seen.

When government and traditional party politics fail in times of crisis, people tend to look for other alternatives, for options to the right and left of the American mainstream. During the Great Depression this took the form of the growth of right-wing, quasi-fascists such as the radio-priest Father Coughlin and rise of left-wing groups, most importantly the Communist Party. With the American dream turning into an American nightmare, millions will begin to look around for other ethical ideals, political values, economic programs, and social strategies. Some will turn to far right organizations that scapegoat blacks and Hispanics. Others will turn to the left looking for a humane organization of society, a system that will improve life for all. What will be the possibilities of the U.S. labor unions and left in such a crisis?

A Comparison of the Labor Movement, Then and Now

The U.S. population today is more than double what it was in 1930. In 1930 the population was 137 million, today in 2008 it is about 304 million. The United States had 3.6 million union members at that time, which represented 12.34 percent of the nonagricultural workforce and 7.45 percent of the total workforce (there being many more farmers at that time). Almost all of these workers were in the private sector, since there were no public employee unions then. With the exceptions of miners and garment workers, those union members were almost all members of craft unions, like carpenters, that had few foreign-born and African American members. The generation of the 1930s had experienced its last major labor movement in 1918-1919, a movement for industrial unions only about 15 years before. That industrial upheaval had been crushed by the employers and the state, but had left behind experienced leaders and dedicated activists. Since then the unions had declined in membership, many were mere skeleton organizations, and strikes were few.

Today 15.7 million workers belong to unions, representing 12.1 percent of employed wage earners. The union membership for private industry workers is 7.5 percent, while that for public sector workers is 35.9 percent. In short, then about 12 percent of all workers were organized and today about 12 percent are organized. The generation of 2008 has not participated in a major labor movement since the period the late 1960s and early 1970s, now almost 40 years ago, when there was a wave of organizing by public employees and farm workers and of wildcat strikes and opposition movements in the industrial unions. Some activists and leaders came out of that generation of 1968. Since then the industrial unions have declined while there has been some growth in the organization of public employees and service workers. Today only a small percentage of workers in unions have ever attended a meeting or participated in a strike.

The Left of the 1930s and the Left of Today

The left of the United States in 1930s was made up of about 20,000 committed members of one or another party and received support at the ballot box from nearly a million voters. The Socialist Party had approximately 13,000 members at that time while the Communist Party about 7,000 members, while the Trotskyists, who at the time considered themselves an excluded part of the Communist Party, had at most a few hundred members. The Socialists were a broad reformist party whose presidential candidate Norman Thomas received over 800,000 votes in 1932, while the Communists were a virtually illegal revolutionary party which had little or no public presence. The loosely organized Socialist Party, a congeries of conflicting ideologies and tendencies, had many talented and dedicated members but its efforts were diffuse.

The highly centralized Communist Party, believing that liberals and socialists were fascists, focused its efforts on the organization of its own labor federation, the Trade Union Unity League (TUUL), and its independent industrial unions with perhaps a couple hundred thousand members. While its sectarian strategy isolated the Communists from many much of the American working class, it also gave them invaluable organizing experience. The Communist party cadre of the 1930s-and their Trotskyist satellite-were true believers in their parties’ ideology, absolutely dedicated activists tested in struggles against employers, rival unions and the government, survivors of beatings, proscription and imprisonment.

The left of the United States today is made up the members of various socialist organizations and broader movements. The largest left organizations in the U.S. today, the Communist Party (CPUSA), the Committees of Correspondence (CC), the Democratic Socialists of America (DSA), and the International Socialist Organization (ISO) represent a few thousand committed members. There are also smaller socialist groups such as the Freedom Road Socialist Organization (FRSO) and Solidarity. Most left activists, however, participate in broader movements such as those that came together in the U.S. Social Forum last summer in Atlanta: community groups, environmentalists, African American organizations, feminist groups. There are also those academic leftists and campus based activists who gather at the Left Forum New York every year. Even taking all of these together, the U.S. left represents a very small organized force in American society.

We could also gauge the left in terms of its electoral support as measured by the 2.8 million voters for the campaign of Ralph Nader on the Green Party slate in the year 2000, a year in which he ran a campaign on what was virtually a social democratic platform. Then too one should take into consideration the unions and activists affiliated to the U.S. Labor Party inspired by the late Tony Mazzocchi and local or state left-of-center political formations such as the Working Peoples Party in New York. None of the organizations of the left, however, has a significant public presence comparable to that of the Socialist Party and none has the dedicated and tested cadres of the Communist Party of the early 1930s.

The Strategy of the Labor Left of the 1930s

The socialist left played a crucial role in the labor movement of the 1930s providing leaders, cadres and activists for the organization of the Congress of Industrial Organizations (CIO) which organized the industrial unions in steel, rubber, glass, auto, electrical, and other industries. While there were important ideological differences between Socialists, Communists and Trotskyists in the 1930s, the three strains of the left shared common strategies and tactics during the 1930s. At the beginning of the 1930s all three groups had the same principal goals: the organization of industrial unions; the creation of a labor party; and the establishment of a socialist society in America.

With the depression, all three organizations engaged in many of the same organizing strategies. In all of the campaigns to organize industrial unions, it was generally experienced skilled workers who had been leftists and members of craft unions who played the key role. The Communist organized their members into industrially to coordinate their union and working class activities. In 1928 the Communist Party which then had 10,000 members had almost 1,000 in the building trades, 1,500 in the needle trades, 850 metal workers, 1,200 miners, 400 auto workers and 150 lumber workers. Many of the Communist union activists would play important roles in organizing throughout the 1930s.

The leftist of all persuasions in cities throughout the country built unemployed councils that engaged in protest demonstrations and confrontations with government officials to demand relief and public works jobs from the government. The few hundred leftists active among the unemployed soon came to lead groups of thousands of jobless workers. The unemployed councils proved key to preventing scabbing and building solidarity.

By 1934 the various leftist parties active among industrial workers succeeded in leading three great strikes in 1934, all of which led to union recognition and contracts: the Communists leading the longshore strike in San Francisco, the Socialists directing the Autolite strike in Toledo, and the Trotskyists heading up the Teamsters strike in Minneapolis. The leftists brought to these strikes the same tactics coordination with the unemployed councils, the use of mass picketlines, the dispatch of flying squads, and violent confrontations with scabs and the police to defend the strikes.

When John L. Lewis, the conservative head of the United Mine Workers, created the CIO, all three socialist tendencies became involved either as paid staff or as volunteer organizers in the organization of the unions in heavy industry. The Communist Party which began with the largest number of union activists played the largest role in the CIO coming to be the leadership of some unions such as the United Electrical Workers. Throughout the 1930s the Communist Party grew while the Socialist Party declined, losing members to both the Communists and the Trotskyists. The CIO succeeded in organizing millions of workers in basic industry, and the AFL also grew by adopting many of the strategies and tactics of the CIO.

The Left and the Labor Movement Today

The labor movement today is divided into two rival federations, the AFL-CIO and Change-to-Win. The AFL-CIO, historically dominated by the more conservative building trades unions, failed during the 1980s to stop the decline of organized labor. This led in the 1990s to the rise of a new leadership under John J. Sweeney which during the 1990s and early 2000s also proved unable to stop the hemorrhage of union members. Then in 2005, frustrated by the continuing decline in union membership, seven unions left the AFL-CIO to form Change-to-Win, a new federation with the goal of developing new strategies and dedicating greater resources to organizing.

Among those Change-to-Win unions, the Service Employees International Union has played the leading role. SEIU’s leader Andy Stern, who has little use for union democracy, developed a top-down strategy, brought in young college-educated organizers, and was accused by some of using workers like cannon fodder. Nevertheless, SEIU succeeded in bringing significant numbers of new members into the union, but it also faced mounting criticism for his treatment of the members, for example, by consolidating huge local unions, large beyond the possibility of membership control. Stern has been criticized recently by leaders of his own union for organizing and getting union contracts by making deals with employers and government officials, sometimes behind the back of the union members.

The Workers Centers and Jobs with Justice also represent important centers of union activism. The Workers Centers, usually led by and assisting immigrant workers, attract young activists interested in the labor movement. Jobs with Justice (JwJ), the national campaign for workers rights, is a large network of labor activists that takes up labor issues through local campaigns. JwJ represents an important venue for radicals and militants of all stripes within in the labor movement. Many radicals work in the labor movement, and whether in their unions, workers centers or solidarity groups such as JwJ, they defend union democracy, organize militant campaigns and challenge the employers. They do so, however, without a broader labor, social and political strategy?

The left today has thousands of members active in the working class and in the labor unions either as union staff, elected officers, or as rank-and-file members. Events such as the Jobs with Justice conference, the Labor Notes conference, and the U.S. or World Social Forum provide opportunities for the labor left in the working class to come together. There is, however, virtually no coordination of the left in the labor movement; in fact, there is very little communication as the different left groups each goes its own way.

The various left groups and social movements have members who are in the union officialdom or hold elected office, but few organizations puts forth a strategic vision for labor independent of that of the union leadership in the two major federations. Solidarity, a small socialist group which came out of a merger of several left organizations in the early 1980s, puts forth an alternative vision for the labor movement based on the notion of rank-and-file power built within unions to transform them into more democratic, militant, and class-conscious organizations capable of mounting a broader working class struggle. Solidarity’s members have been particularly active in building Labor Notes and in support for Teamsters for a Democratic Union.

Unlike the leftists of the 1930s, virtually none of the labor activist in the union movement defends revolutionary socialist politics. Within the working class there is virtually no socialist presence. Socialism exists principally in the academy, while the working class remains tied to the Republican and Democratic parties and is seldom offered a political alternative.

The Labor Movement and Politics in the 1930s

While the labor left of the 1930s started out fighting for industrial unionism, a labor party and socialism, they had by the early 1940s accepted the first and given up on the other two. By the second election of Franklin D. Roosevelt in 1936, the Socialist Party and the Communists had both reoriented toward the Democratic Party; by 1942 they had been subsumed by it. The Socialist Party found that Roosevelt had largely adopted their program of social reforms, while the Communist Party decided that membership in the Democratic Party was the American version of the Popular Front. The Democrats swallowed the left.

After the Nazi attack on the Soviet Union in 1941, for Communists the defense of the socialist homeland blended with American patriotism and found expression in loyalty to Roosevelt, the Democrats, America and the war. The Progressive Party campaign of Henry A. Wallace in 1948 represented the last hurrah of the Communist Party and its Popular Front before it went down to ignominious defeat. After the war, Roosevelt, Truman and Eisenhower succeeded in cohering and consolidating a new political economy based on the limited welfare state, military Keynesianism, war, and imperialism. By 1950 or so, with the consolidation of the new political economic system and the beginnings of the Cold War, the American government began the purge of the Communist left from the unions, society and politics. McCarthyism meant the end of the left for a generation, until the revival of the 1960s.

The American Left and Politics Today

The election of Barack Obama or Hillary Clinton as president in the midst of the greatest economic crisis in 75 years will present the small socialist left of the United States today with an enormous challenge. The left will have to find a way to build an independent labor, social and political response to the crisis without becoming drawn into the Democratic Party. Obama, with his charisma, creativity and flexibility, may prove to be a Rooseveltian figure that will be able to lead the social forces that can cohere and consolidate a new life for American capitalism. The responsibility of the left is to fight to prevent such a consolidation of a new social pact between capital and labor, government and the people, and to build an independent working class movement and political party that can fight for socialism in the coming decade.

The Challenges for the Left Today

The principal organizational problems for the revolutionary socialist left today are its numerical weakness, its division into too many small rival organizations, and its lack of dedicated cadres in the labor movement. The political problems are equally serious: the left lacks an inspiring vision, lacks a political program, and perhaps most important at the moment, lacks a strategic plan for intervention in the working class and society more broadly. The list of deficits more or less constitutes the list of tasks of the American left in this period, though logically the latter political deficits have to be addressed before the organizational weaknesses can be addressed.

First, we need a left that clearly defines itself as revolutionary socialist, that is, that sees change coming through the overthrow of capitalism and the state and the creation of a new social order. That such a revolutionary socialist left fights for reforms goes without saying, but that it participates in struggle for reform with its eye on the revolutionary future must be stressed. Socialism means the liberation of the full potential of the individual through the liberation of the working class from exploitation, of the oppressed from the weight of the state with its police, courts, and prisons, and of humanity from the mass murder of warfare. The fulfillment of individual and collective potential comes from the democratic experience of creating a new economy, a new society, and a new form of human self-government.

Second, such a revolutionary left needs a program for American society, that is a broad statement of principles that addresses the fundamental problems faced by Americans today in our government, our economy, our society and our foreign policy in a way that points to their solution through fundamental social change. The problem of health care for the 50 million uninsured, for example, can be solved by taxing corporations and the wealthy to pay for a publicly funded health care system-without insurance companies or private hospitals-democratically administered by organizations of patients, workers, nurses, doctors. Such a program of transitional demands should have the character of a set of proposals that tend to address the problems of today and propose solution in ways that project fundamental structural changes in the system, the sum total of which would amount to another system, a democratic socialist system.

Third, the revolutionary left must have a strategy that connects with the American working class and the American people. Such a strategy must be able to bring about a fusion between the left and the most critical and active sections of the population, of whom, African Americans have historically been at the forefront. Many of those that we will want to recruit will be found in the movement which at the moment is rallying to Barack Obama. We have to offer the people attracted to his message of change the principles, program and strategy of genuine change through the creation of a socialist movement.

The most important part of a strategy will be the development of strategy for labor. The contemporary American working class is not that of the 1930s or even the 1970s. Industrial workers, while remaining quite significant, no longer have the economic power, social weight or geographical compactness that they did 80 or even 40 years ago. While the strike remains the classical working class form of fighting, it was not then and is not now the only form of struggle. Though unions are the fundamental working class organizations, neither unions nor working class communities have the same character they did in other decades. The globalization of the economy, the international character of production, the dispersion of workers throughout industrial regions, and the revolutionary transformation of communication technology mean that while we have much to learn from the past, we have to find and to create the institutions and forms of struggle appropriate to our own era.

The creation of a contemporary working class and socialist political movement will not be based on an attempt to recreate the American left of the mass Socialist Party of 1912, the Communists Party of the 1930s and 1940s, or by passing once again through Students for a Democratic Society (sds) or the Student Nonviolent Coordinating Committee (SNCC). What we once called internationalism and anti-racism, and which the universities today call multicultural and diversity, will form a more central part of the new working class party. The respect for the integrity and autonomy of every sector of society’s exploited and oppressed form the basis for the unity and solidarity of the class. We will have to discover, invent, and construct the right principles, political program, and strategy for the socialist party of our time. The depth of the crisis suggests that the task is an urgent one.

Dan LaBotz is a Cincinnati-based teacher, writer and activist. He is a member of Cincinnati Progressive Action (CPA) and No Jail Tax PAC (