US Political Crisis Part ?

The US Debt Ceiling crisis is over for now. As suggested in my previous post, the needs of big industrial capital won out, enough of the mainstream Republicans baulked, and voted through the re-opening of the government, until January, and the extension of the Debt Ceiling until February next year.

Markets did not budge on the news. The big capitalists obviously themselves knew that, in the end, their interests would win out, as against the interests of the small capitalists. In fact, today, equity markets have been selling off slightly, rather than their being any major rally. In the meantime, despite the continuation of massive amounts of money printing by the Federal Reserve, which now seems likely to continue until at least next March, and maybe until next June, whereas until a month ago, it was expected to be “tapered” from September onwards, bond yields continue to drift higher, having dropped by around 10% in the initial aftermath of the Fed's decision not to taper.

If you are Mrs Watanabe in Osaka, or Mrs Li in Shanghai, then looking at your latest mutual bond fund statement, will not be pleasant reading, and having watched the US come to the brink of defaulting on its debt, not because it could not pay, but because a small number of politicians were prepared to prevent it from paying, you could be forgiven for thinking that there might be better places to put your hard earned savings.

But, as I've pointed out previously - The Rates Of Profit, Interest And Inflation – the turn in the conjuncture from the Spring to Summer Phase of the Long Wave, means that global interest rates have started a long, secular rise anyway, whatever central banks do, in relation to money printing. Further evidence of that shift has come from the third quarter earnings season which has shown corporate profits failing to grow by anything like what had been previously forecast. There are also clear signs that one reason for that is falling rates of productivity.

Part of the reason for poor productivity itself is the fact that the US, like the UK, attempted to build that low wage/high debt model. The more workers wages are screwed down, the more the quality and quantity of labour-power supplied declines, and the value it produces falls, which in turn means that even as wages fall, surplus value falls with it. Resolving that problem will require considerable amounts of investment in both equipment and education and training, some of which will require policies of fiscal expansion. It will require the same kinds of policies adopted by Asian emerging economies in the late 80's and 90's, to encourage not low, but high wages, so that capital is encouraged to invest in more efficient methods of production, in higher value production and so on, so that higher wages can be paid, and yet commodities be produced that are competitive on global markets.  It is unlikely that the representatives of the small capitalists, whose model is precisely that low-wage/high debt economy, will be pushing in that direction.

The Republicans got nothing out of this crisis. If anything they became weaker, because for now, the Tea Party, may have become stronger. The Republican establishment obtained no concessions. But, under pressure from the Tea Party they were not able to simply concede to everything the Democrats wanted. So, a stay of execution was agreed until February. The Tea Party will not change their position during that time, and nor will the Democrats.

Unfortunately, as I said yesterday, because Tea Party representatives are often elected in 90% solid Republican areas, the consequence of yesterday's deal is likely only to be that the Tea Partiers cast Obama even more in the guise of a dictator, forcing through his policy, whilst the Republican Establishment are pictured as spineless. That indeed, was the message given by Republican Senator Ted Cruz yesterday. As I said some time ago - One Born Every Minute – the Tea Party have all those attributes of other religious fundamentalists, and those whose extreme individualist ideas are a throwback to the 18^th Century and before, deriving from their essentially peasant existence. They are in many ways an exact copy of the religious fundamentalists of the Middle East.

So, this problem is not simply a political problem, but is also a social and economic problem. The Tea Party represent a specific class fraction, whose ideas come from their economic and social position. Ultimately, the logic of the situation is for the Republican Party to split. Increasingly, without doing so, and thereby marginalising the Tea Party, the Republicans have little hope of winning the Presidency again, as demographic changes work against them, which the Tea Party pushing them ever rightwards will exacerbate.

As I said yesterday, the nature of the US political system, and the way electoral districts have been gerrymandered, plays into this crisis. The Republican establishment have an incentive, now, actually, to work with Democrats to create more balanced districts, so that the Tea Party cannot use their caucus to ensure selection of extreme right-wing candidates in safe seats. The Republican establishment will have to treat the Tea Party as an insurgency.

So, the reason for the question mark in the title of this post is that, although this particular crisis has been resolved, it has only been achieved by creating the conditions for another one at the start of next year. It is only the latest in a series of political crises that have afflicted the US in the last three years, since the Tea Party succeeded in getting its candidates elected. Unless, the Democrats win sufficient seats in next year's elections – which may happen as Republicans have fared badly out of this crisis – or the Republicans deal themselves with the Tea Party, those crises will continue.

The US has lost badly to China, and its other competitors in the global market, as a result of this crisis, and at a time, when the US is declining in importance relatively anyway, because of those mistakes made in the 1980's and 90's, referred to before. As in Europe, big capital needs to begin to assert its interests as against the reactionary interests of small capital. In so far as it does so, workers should support it, not in the sense of ourselves advocating the interests of big capital, and certainly not by forming any kind of alliance, but in the sense that we can express our preference for one kind of solution as opposed to another.

But, that does not change our position as socialists in arguing for our own solutions, and advancing them as an alternative to those of the bourgeoisie. The fact, that we defend bourgeois democracy against fascism or feudalism does not mean we are advocates of bourgeois democracy as against workers democracy; the fact we support free trade as opposed to protectionism does not mean that we advocate free trade as opposed to the development of a co-operative economy and so on.

The task of socialists in North America and in Europe is to begin to create that kind of co-operative economy, which in turn will create the changes in material conditions that allow the consciousness of the workers to be transformed. Once workers begin to see on a large enough scale that a new type of economy, and with it a new type of society is possible, an economy and a society far superior to the present one, then they will be able to transcend their current parties, and begin to build new ones based upon those ideas. Then the time of the Democrats and Republicans, Labour and Tories, and all the other such divisions between bourgeois parties that reflect the interests merely of different fractions of the ruling class, will be swept away.