Forwarded from Anthony (reply to Mine)

[Louis Proyect <lnp3@xxxxxxxxxxxxx>]

Hi Lou please post this.

Reply to Mine on class divisions in the USA.

Thank you Mine for your thoughtful reply to my question. I am always amazed
at how quickly you post, complete with references. I wish I could learn the
trick of doing that.

I haven't thought about the topic of the divisions within the US
bourgeoisie much since 1989. Before that I spent a lot of time thinking
about it. I think we need to examine the question historically and in detail.

It's my opinion that the bourgeoisie in the United States is probably the
least ideologically divided ruling class ever to dominate the world. Their
divisions are not over ideas, but over simple things like who makes money
from which policy adjustment. Like who gets a government contract or
license to drill for oil...

When times are good - and they have been exceptionally good for them since
1989 - there is room for all the pigs to feed at the trough.

But what happens when there isn't enough room for all the pigs?

They start to fight.

And given that this bourgeoisie is very self conscious - and more far
sighted then most people on the left give them credit for - maybe the pigs
started fighting just because they anticipated the good times were coming
to an end for a while.

This is what I suspect the bitter - and apparently momentary - fight over
the elections was really all about.

Which pigs are going to be bacon in the next few years is very hard for me
to say, but I think we need to look at the internal -primarily economic -
tensions and conflicts which now exists within the bourgeoisie in some
detail before we can figure out how that might translate into more open
political conflicts within the ruling class.

What follows are my somewhat rambling thoughts more about where I think we
should be looking, than any hard and fast conclusions I have drawn.

One thing that I think is important, is trying to study the capitalist
class as a whole. In the United States it is a very numerous class of at
least several million people involved in economic activities from
agriculture to drug dealing. Its internal relations are very complex, with
many, many potential fault lines where conflict can occur. It's generally
only when conflicts are occurring along many of the fault lines that they
crystallize into open political conflict that reaches the people who read
the New York Times. Otherwise they fight their battles in the market place,
in the courts of law, in their associations, and on the golf course.

Here are the places I think we should look for emerging conflicts within
the US bourgeoisie.

1. Arms

The arms industry in the United States is a big question mark for the whole
capitalist class. How big a military do they need to control the world in
the absence of the USSR?

The military budget is the biggest single pork barrel in the United States.
But it is a drag on the rest of the economy. Downsizing the military is one
way to cut the government deficit, government interest payments, and taxes.
It's the biggest pork barrel, and one that is the hardest to justify to the
sectors of the bourgeoisie that do not benefit from it directly.

However, very important sectors benefit from it directly. they have gone
through a period of consolidation with the downsizing of the military. This
has made them more efficient, but also cost them political clout.

This sector of capital likes wars - the bigger the better. A little war
doesn't do much for demand. A little war like the one in Colombia is simply
too, too small. Even an Iraq size war is not enough to pump up demand to
the levels they would like.

They are certainly in conflict with other sectors of industrial capital
which do not like the interruption of oil flows, transportation flows, etc.
in places where they are ripping off natural resources (like oil), or where
they want to invest in maquillas.

2. Banking and finance capital.

Your short discussions of the differences in structure between the US
banking system and the German up to 1933, and remarks about US system more
recently are interesting.

I think however, that this discussion leaves out three important sectors of
finance capital: mortgage banking, consumer credit, and insurance.

Mortgage banking is probably more important in the USA then anywhere else
in the world. Its largest portion was the Savings and Loans which - since
their meltdown - and the general deregulation of the financial sector, have
been merged more into a single system of banks, as have commercial and
financial.

The division into separate systems (S&Ls and banks) had a good basis in
conflicting interests. High interest rates collide with rapid appreciation
of the price of real estate: commercial and financial banking favored
government policies that were deflationary, S&Ls used to favor inflationary
policies.

What has happened to this internal conflict in the last decade?

It seems that they have had the best of both worlds.

And this is probably related to the way in which the global debt crises of
the last two decades have been resolved.

My guess is that very high interest rates in international lending - offset
by debt for equity swaps when crisis hits - have allowed the banks to
offset low interests rates in the national economy. At the same time the
new merged banks with all banking functions under one roof, can take
advantage of appreciating real estate prices.

If this guess is correct, what happens when things go sour? Now the
conflicts which previously were more in the open between capital organized
into different sectors, is internalized within merged umbrella megabanks
with different conflicting 'profit centers'.

One thing that is certain, is that the conflicts will be played out for a
long time behind closed doors before the rest of the world becomes aware of
them.

This is a consequence of increased concentration.

As for consumer credit, this "profit center's" dynamic is very similar to
that of mortgage banking - economic growth and inflationary policies are
good, in conflict with the high interest rate policy favored by traditional
banking.

Consumer credit also now comes under the umbrella mega-banks and is a
potential for internal unseen conflicts.

Consumer credit is probably the signal to watch in the economy, since bad
consumer debt is not only the forerunner of bad mortgage debt, it is the
sign of coming contraction in consumer markets.

What is happening with consumer debt in the USA this Christmas I wonder?

Insurance I will leave for later.

3. Stocks and bonds.

I think I will leave this one for later, too. It requires a lot of thought
and some investigation.

However, two short remarks.

A.The markets today are less directly connected to the economic health of
capitalism than in the past. How this delinkage occurred, and how far it
has real gone, are interesting questions.

B. The markets are very volatile, and also appear to contain a lot of
fictitious capital.

Clearly various factions of capitalists are daily trying to rob and steal
from each other in these markets. How that might be related to public
political struggles among the pirates is another interesting question.

Clinton may pardon Miliken.

3. Industrial capital

A. Here is where your discussion of "national" and "international" fits
best - although agro-business has some of the same internal dynamics.

I think there is an important contradiction between the very biggest
industrial enterprises, and the smaller industrial companies.

Think about the automobile industry. Ford, General Motors,
Daimler-Chrysler, VW, and maybe Fiat all have important assembly and even
parts plants now in Mexico. However many of the parts subcontractors are
owned by Mexican capital.

What has happened to this second rank of industrial capital in the USA?

The biggest of them are already in Mexico, but what about the one or two
factory companies in Michigan, Ohio and Indiana?

I think that mobility of capital - a key factor in "globalization" has a
quantitative lower limit. In other words, it takes a lot of cash to hire
lawyers in Mexico, plan a new factory in Mexico, build it, and then operate
it. Certainly some of the small and medium size industrial companies have
access to capital to enable them to move - but many probably do not.

(Other questions are involved besides access to capital. If they shut the
plant in whole. What happens to whoville? More important in this case is
what do Mr. and Mrs. Boss Who do? Do they retire to Florida to swell the
ranks of Bush voters? Or do they stay in their home town to take joy in the
anger of the whos who used to adore them? Or do they move to Mexico to
manage the new plant? GM has none of these problems).

This raises a long term problem with globalization - for capital.

The continued expansion of the consumer market in the USA is vital to the
worldwide growth of maquilllas and nationally owned industrial capital
outside of the USA.

In the long run - and maybe in the shorter run - the movement of capital to
maquillas, and the closure of factories in the USA is in conflict with
maintaining the growth of the consumer goods market in the USA.

This conflict has been papered over by two other developments: the rise of
the "new economy" and the growth of the "service sector".

Both deserve more discussion than I have time for here - but ...

The "new economy" has the same dynamic as the "old economy" when it comes
to globalization. Hewlett packard and IBM manufacture in Mexico and Brazil.
Their smaller subcontractors do not.

Software development has not been able to move "offshore" as quickly and
easily - largely because it is English language dependent. But, luckily for
this sector of imperialism Great Britain and the United States thoughtfully
set up empires in the past where there are important pools of poorly paid,
but fairly well educated, English speaking engineers. India and the
Philippines now are important centers for this industry thanks to those
conditions.

The new economy no doubt has the same tensions and conflicts as the old.

4. The "service sector" is a catchall economic category that includes some
very different parts. Part of its growth is related to the fact that the
USA is the most important center of imperialism, and therefore the
administrative center for multinational companies. (Many US based
multinationals here in Colombia have the real management located in offices
in the USA, not in Bogota. This includes companies with important
manufacturing facilities here, as well as those which simply export to
Colombia. Local managers have lost there jobs, or been transferred out of
the country to administrative centers in Sao Paulo, Mexico City, or the USA.)

Finance capital's growth - (often considered as part of the "service
sector") of course has the same dynamic in this regard.

The other part of the "service sector" worth paying attention to includes
hotels, restaurants, Laundromats, retail commerce, health care, amusement
parks, the entertainment industry, most illegal businesses including
recreational and addictive drugs, prostitution and illegal gambling, legal
casinos, independent professionals - accountants, medical doctors,
dentists, attorneys - etc.

This sector is probably the most sensitive to downturns in consumer spending.

And is the sector which can not move to Mexico or India.

Another words it is the sector most dependent on sustained and continuous
growth in domestic consumer income.

This part of the "service sector" is the sector caught in the middle of the
globalization scissors. Low unemployment pushes wages up - and it can not
move the factory to a low wage third world country. On the other hand high
unemployment and low wages dries up the market for "services" which are for
the most part "discretionary" spending.

This is the sector where the most controversial political issues - like
immigration, minimum wage, etc. have the most immediate resonance.

It is also the sector where the petty bourgeoisie is concentrated, and
where the petty bourgeoisie has faced competition from inroads by big
capital in the sector. HMOs in health care, for instance. The virtual
demise of independent hotels to be replaced by chains - and the mergers of
those chains.

In other words, it is the sector that is most volatile.

This volatile sector of the capitalist class provides a lot of the voter
base, and the foot soldiers of its political machines.

Sensitivity to it is the mark of the good leader of any bourgeois political
machine.

In the United States this sector of the bourgeoisie has enjoyed very good
times from the day Ronald Reagan took office, until the present - with the
S&L meltdown a very unpleasant interval for them.

But if shadows are looming over the good times - as the stock markets and
other indicators seem to be saying - what is happening amongst the nervous
soldiers of the bourgeoisie?

5. Agriculture. Agriculture in the United States historically was the real
engine of growth of the domestic economy. The United States remains the
breadbasket of the world, an important part of the rice bowl of the world,
and thanks to NAFTA the corn belt is now exporting to Mexico. Historically
agriculture's ups and down have been the warning bell of the coming ups and
downs of industry and finance.

Agriculture is divided in a dizzying crazy quilt by sector, by geographic
region, and by business size.

It is still a powerful stronghold of the petty bourgeoisie. In 1997 there
were 2,190,510 farms in the USA, covering 956,010,000 acres of land - an
average size of 436 acres. In 1993 there were 2,201,590 farms in the USA
covering 968, 845 acres of land - an average size of 440 acres. In that
year the number of farms with sales between $1,000 and $9,999 was
1,135,390; the number with sales between $10,000 and $99,999 was 720,400;
and the number with sales of $100,000 and over was 345,800.

In other words there are roughly 2,000,000 petty bourgeois farm households
- half of them poor, and the other half relatively well off. Less than
345,800 large farms were owned by big agrobusiness - but they certainly
account for a very large proportion of agricultural production - close to 50%.

Traditional areas of conflict are with other economic sectors: finance,
transportation, and consumers. And within the sector between big
landowners, and small landowners.

This area of the economy is complicated by land speculation especially in
agricultural areas surrounding growing suburban sprawl. The little farmer
earning $20,000 a year in the middle of nowhere is stuck. The little farmer
near Merced, California might become a millionaire by selling his land to a
real estate developer.

6. Construction. The construction industry is -like consumer credit -
another sensitive bell weather of the economy. It is another sector that
became much more concentrated from the 1980's on, but remains the happy
hunting ground of many, many small firms.

7. Consumer- producer divisions.

Capitalists are also consumers. General Motors and Hewlett Packard use lots
of water, and electricity and have enormous phone bills. Deregulation of
the economy has produced tremendous volatility in the production costs of
manufacturers and service companies which are consumers of the utilities.
Deregulation has been implemented on a worldwide basis. What happens in San
Diego already happened in Santiago, Chile.

8. Energy policy. The love hate relation between the petroleum industry and
the automobile industry is historic. Now this relation is entering a new
phase as oil production is probably peaking out and about to go into
irreversible decline. This is certainly a major unofficial topic of
discussion within the oil and automobile hierarchies. They do plan ahead -
and they are looking at policies to benefit themselves not just for the
next year, but in the medium and long run. 9. Social relations and ideology.

The bourgeoisie contains within itself all kinds of ethnic, religious, and
social divisions. And gender issues and sexual politics play a role within
the bourgeoisie, too.

I think the decline of the Moral Majority shows that - at least for the
moment - major conflicts along these faultlines within the bourgeois are
only like to erupt if they are provoked by economic struggles within that
class.

These faultlines however have great significance for the bourgeoisie - for
it is along these fault lines that they usually mobilize support in the
petty bourgeoisie and the working class.

Anthony


Louis Proyect
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