Saturday, November 21, 2009

How David North Embraces Karl Kautsky 1 (1999)

From Spartacist Pamphlet: Imperialism, the “Global Economy” and Labor Reformism (September 1999)

How David North Embraces Karl Kautsky

The “Global Economy” and Labor Reformism
(Part 1)

Over the past couple of years, a flood of books and articles have announced or analyzed what a column in the Washington Post (16 February 1996) called “this structurally new and still imperfectly understood creature known as the global economy.” Whether they hail it or condemn it, mainstream bourgeois economists and leftist ideologues alike argue that the transfer of production operations by “multinational“ corporations from North America, West Europe and Japan to the so-called “Third World” in recent years represents a profound, structural change in the world capitalist system. The liberal Nation devoted a special issue to “globalization” last July. The labor reformists who publish Workers' World News (January-February 1996) speak of “a fundamental change as deep as the industrial revolution of the last century.” An essay on the “global economy” by sociologist Ulrich Beck in the principal German news weekly, Der Spiegel (13 May 1996), which reflects the skepticism of a section of the German bourgeoisie toward European “economic integration,” warns that “we are racing toward a capitalism without labor,” claiming, “What is at issue is political freedom and democracy in Europe.”

Though not all of the more cataclysmic predictions associated with “globalization” are universally accepted, a common theme in this literature is that the possibility of successful defensive struggles by the working class against the attacks of a particular capitalist government or employer is becoming a thing of the past. In a remarkable intellectual convergence, spokesmen for Wall Street, liberal and radical ideologues, labor bureaucrats in the U.S. and Europe and a group which claims to be a revolutionary Marxist (i.e., Trotskyist) international organization have all joined together to proclaim that “globalization” has rendered trade unions around the world powerless to affect wages, benefits and working conditions.

“Unions Threatened by Global Economy,” crows the Wall Street Journal (25 March 1996). The editors of the Wall Street Journal also maintain that present-day capitalism has resolved the problem of the trade cycle. Meanwhile, union leaders have seized on “globalization” as the latest alibi for selling out or avoiding struggles that can, in fact, be won. From the American Midwest to the German Ruhr, labor officials are telling their workers: “If you don't accept a freeze or even a cut in wages and benefits, the bosses will close down your plant and shift production to India or Mexico.” Joining in this defeatist refrain is the so-called International Committee of the Fourth International (IC) led by one David North, which not only denies any possibility of successful trade-union struggle but rejects trade unions altogether – except nonexistent unions to be run by North & Co. – as workers organizations of any kind.

The idea that the capitalist market economy is “global,” that banks and corporations seek out those (low wage) countries where they can get the highest return on their investments, that, indeed, the internationalization of finance capital is a dominant feature of the contemporary profit system, is hardly new. Writing just over 80, years ago, Russian Bolshevik leader V. I. Lenin noted in his 1916 work, Imperialism, the Highest Stage of Capitalism, that “the twentieth century marks the turning-point from the old capitalism to the new, from the domination of capital in general to the domination of finance capital.” In a summary definition, he explained.
“Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capital is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed.”
Lenin not only analyzed the economic workings of the imperialist system, he exposed the bourgeois economists who served as its apologists and the reformist and centrist pretenders to Marxism who sought to downplay the significance of this new stage of capitalist development in order to deny the urgent need for socialist revolution. Lenin took particular aim at the German Social Democrat Karl Kautsky, whose hypothesis of a unitary world “ultra-imperialism” sought to mask the growing contradictions of the capitalist system and Kautsky's own role as lawyer for the “social-chauvinist” and “social imperialist” lieutenants of the German bourgeoisie.

For Lenin, imperialism signified the epoch of “wars and revolutions.” Indeed, the pamphlet was written in the midst of the first inter-imperialist world war, as the major capitalist powers sent millions of young men to die in a bloody scramble to redivide markets, spheres of influence and colonial possessions. And little more than a year after his pamphlet was completed, Lenin's Bolsheviks led the workers of Russia to power in the first victorious proletarian revolution in history, smashing the capitalist state, sweeping out the bankers, bosses and landlords and setting an example to workers around the world.

What is striking in surveying the current literature on “globalization” is the extent to which all the liberal and reformist apologetics and nostrums currently being put forward were already taken up, exposed and demolished by Lenin eight decades ago. While certain quantitative changes have taken place in the world capitalist economy in the last decade or so, much of the current hoopla about “globalization” is a reflection not of any profound new economic transformation but rather of a profound political defeat, the counterrevolutionary destruction of the Soviet bureaucratically degenerated workers state. In its wake, the reformist and centrist left has bought into imperialist triumphalism over the supposed “death of communism.”

The late Michael Harrington, a leading ideologue of American social democracy, defined his political program as “the left wing of the possible.” With the collapse of the Soviet Union and intensifying inter-imperialist rivalries, the American, West European and Japanese bourgeoisies are engaging in an all-sided offensive against the working class and ethnic minorities. Consequently, the labor bureaucracies in these countries now maintain that the left wing of the possible has moved far to the right. This reformist outlook has been taken to its logical conclusion by the Northites: categorical defeatism toward all working-class struggles in this period.

Not coincidentally, North's obituary on the trade unions came in the same speech in which he proclaimed “The End of the USSR” (Bulletin, 10 January 1992). Though wont to denounce all its political opponents as “petty-bourgeois radicals,” North's IC marches in ideological lockstep not only with the petty-bourgeois left and the labor bureaucracies but with bourgeois liberals and worse. Having for years joined with the ‘AFL-CIA’ tops in promoting every counterrevolutionary force aimed at destroying the Soviet workers state, North's tendency seized on the death of the Soviet Union as a justification to apologize for outright scabbing. At the same time, they have embraced a latter-day variant of Kautsky’s ultra-imperialism, using this as an excuse to spit on the struggles of oppressed nations and the colonial and semicolonial peoples enslaved by the imperialist bourgeoisies. Pointing to “vast changes in world economic and political relations,” the IC today openly rejects the right of national self-determination.

“Globalization” and Northite Defeatism

“Globalization” is but a new variation on an old theme. In the 1950s and early '60s, the term “automation” was invested with the same apocalyptic, earth-shaking consequences. Liberal intellectuals predicted that the industrial working class would in large part be replaced by robots and other machinery. One conclusion was that trade unions were becoming or would become obsolete. After all, you can't unionize industrial robots. At the same time, labor bureaucrats told their ranks that if they pushed the level of wages and benefits too high, they would lose their jobs through automation.

Today, it is intellectually fashionable to explain the sharp deterioration in the living standards of American working people over the past generation as a result of “globalization,” especially the transfer of production by major U.S. corporations (“multinationals” or “transnationals”) to low-wage countries in East Asia and Latin America. Speaking in Rome a few years ago, the dean of liberal American economists, Paul Samuelson, predicted: “As the billions of people who live in East Asia and Latin America qualify for good, modern jobs, the half billion Europeans and North Americans who used to tower over the rest of the world will find their upward progress in living standards encountering tough resistance.” In his 1991 The Work of Nations, former Clinton labor secretary Robert Reich wrote that “Americans are becoming part of an international labor market, encompassing Asia, Africa, Latin America, and, increasingly, Eastern Europe and the Soviet Union.” “Top U.S. Exports Continue to Be Jobs,” moans the AFL-CIO News (5 August 1996), official organ of the American labor bureaucracy.

“Runaway shops,” “outsourcing” and the transfer of production to low-wage areas like the U.S. South and Mexico and other semicolonial countries have indeed led to a sharp decline in unionized manufacturing jobs, particularly in the Northeast and Midwest. But instead of seeking to organize international class struggle against attacks on jobs and unions, the AFL-CIO bureaucracy polices the labor movement on behalf of the U.S. capitalist rulers while trying to shift the blame for layoffs here on workers abroad.

The views expressed above by Samuelson, Reich and the pro-capitalist AFL-CIO tops have become the central ideological theme of the Northite tendency. In a speech in Detroit in 1992, North stated:
“The collapse of the old organizations of the working class is, fundamentally, the product of specific historic and economic conditions. Understanding these conditions does not mean that we absolve the leaders of these organizations of responsibility for what has happened. Rather, it enables us to recognize that the rottenness of the leaders is itself only a subjective manifestation of an objective process....
“The global integration of capitalist production under the aegis of massive transnational corporations and the terminal crisis of the nation-state system have shattered the basic geo-economic foundation upon which the activities of the old organizations of the working class have been based. Nationally-based labor organizations are simply incapable of seriously challenging internationally-organized corporations.” [our emphasis]
– Capital, Labor and the Nation-State (1992)
Despite North's disclaimer, his notion of “globalization” and its effects does absolve the labor bureaucracy of responsibility for the decline of the trade-union movement and the degradation of the working class. It is no accident that North's views are also expressed, in almost identical language, by spokesmen for the union bureaucracy. Thus, the general secretary of the International Union of Food and Allied Workers' Associations, Dan Gallin, argues.
“Nation states are becoming irrelevant.... National governments no longer control the flow of financial capital. So they can no longer control their own economies. This in turn weakens the power of national democratic pressures from labour parties and trade unions.
the Workers' World News (January-February 1996)
Gallin, who is at least more intellectually honest than North, openly argues for a popular-frontist perspective of “building a broad-based people's movement” to counter the effects of “globalization.”

But neither does North denounce the union misleaders for not mobilizing the economic power of the workers movement and popular political support against the capitalist offensive. Instead he asserts that the trade unions as such have been made impotent by objective changes in the world economy. This position is stated even more clearly and categorically by Nick Beams, head of the Australian section of North's International Committee: “To the extent that the extraction of surplus value from the working class still took place within the confines of a given state, it was possible to apply pressure to capital via the national state for reforms and concessions to the working class. This was the program of the trade union and labor bureaucracies. That is no longer possible” (International Workers Bulletin [IWB], 15 July 1996). In other words, the Northites maintain it is no longer possible for the working class to defend itself against the predations of capital through strikes or other actions, regardless of the tactics and policies pursued.

This position is radically false and, if accepted, can only foster demoralization and defeatism within the working class. In none of the major strikes which marked the decline and defeat of the American labor movement in the 1980s – the PATCO air traffic controllers, Greyhound bus drivers, Phelps-Dodge copper miners, Eastern Airlines machinists, Hormel meatpackers – did foreign competition or the operations of multinationals abroad play any significant role. Greyhound, Eastern Airlines and Hormel extract almost all of their surplus value from labor within the confines of the American state.
To be sure, there have also been major labor struggles recently against large corporations which are critically dependent on international trade and foreign Outsourcing, notably the two-month-long strike at Boeing aircraft in late 1995. In this case, the strike was actually starting to hurt Boeing when the leaders of the Machinists union called it off for minimal gains while, at the same time, fomenting anti-Asian chauvinism and protectionism.

For a Class-Struggle Perspective!

The decline of the American labor movement is not fundamentally caused by the objective effects of “globalization” but by the defeatist and treacherous policies of the AFL-CIO misleaders. As we wrote right after the defeat of the Greyhound strike.
No decisive gain of labor was ever won in a courtroom or by an act of Congress. Everything the workers movement has won of value has been achieved by mobilizing the ranks of labor in hard-fought struggle, on the picket lines, in plant occupations. What counts is power. The strength of the unions lies in their numbers, their militancy, their organization and discipline and their relation to the decisive means of production in modern capitalist society. The bosses are winning because the power of labor, its strength to decisively cripple the enemy, has not been brought to bear.
– “Labor's Gotta Play Hardball to Win,” WV supplement (March 1984)
The AFL-CIO bureaucracy plays by the bosses’ rules in all strikes, including in the service sector where foreign competition is nonexistent. Consider the strike by janitors and other building workers in New York City last winter. As usual the union tops insisted on porous picket lines. As a consequence an estimated 15,000 scabs replaced the striking workers and office buildings operated more or less as usual. But let us imagine what would have happened if the organized labor movement had sought to mobilize New York City's working people and appealed to the dispossessed population of the ghettos and barrios to actively support the heavily minority and immigrant building workers.

Dozens and hundreds of strikers and other workers-union and non-union-along with black and Hispanic youth could have surrounded every major office building in the city and prevented anyone from entering. David North to the contrary, the CEOs of American multinationals would not have responded by closing their New York headquarters and running their operations out of New Delhi or Mexico City. Rather the cops would have attacked and tried to break the picket lines, arresting militant workers and their supporters. The outcome would then have been determined by the ability of the New York City labor movement to organize effective actions backed by popular support especially in the black and Hispanic communities. A one-day transit strike, for example, might have convinced the powers that be in the world's financial capital to impose a deal on the real estate barons favorable to the building workers.

To take an international example, the defeat of the 1984-85 British miners strike by the Conservative government of Prime Minister Margaret Thatcher opened the way to a crippling assault on all trade unions in Britain. The year-long miners’ struggle was far and away the most significant class battle in West Europe in the 1980s. While the importation of foreign coal did play a role in that strike, the key factor in its defeat was the refusal of the Labour Party and Trades Union Congress tops to countenance joint strike action by other sectors of the British working class, even as workers from France to South Africa expressed their solidarity with the British miners by halting scab coal shipments and raising financial support.

Seeking to limit union struggle to what is acceptable to the capitalist rulers, the reformist labor misleaders generally eschew any possibility of real international proletarian solidarity. Typical of this is the leadership of the United Auto Workers (UAW), potentially still one of the most powerful industrial unions in the U.S. Instead of promoting organizing efforts in the American South and in the Mexican maquiladora industrial belt south of the U.S. border, the UAW tops respond. to “outsourcing” and “runaway shops” by shoving one concession after another down their members' throats while appealing to Washington for protectionist measures. Far from seeking coordinated strike action with Canadian and Mexican workers during last fall's contract negotiations with the Big Three, whose operations throughout North America are now fully integrated, the UAW bureaucracy openly denounced a strike by GM workers in Canada, seeing that as counterposed to its efforts to get Democrat Clinton re-elected.

The existence of “multinationals” simply underscores the historic need for an internationalist class-struggle perspective that transcends parochial, nationally limited trade unionism. Indeed, one of the reasons for the establishment of the First International founded by Karl Marx was to organize trade-union solidarity between workers in Britain and continental Europe.

There are, of course, limits to what can be gained through trade-union struggle, however militant. As their labor costs rise beyond a certain point, capitalists will respond by retrenching (i.e., shutting down less-profitable operations), introducing new labor-saving technology as well as shifting some operations to low-wage countries. The labor bureaucracy points to the ability of the capitalists to counter union gains by such means in order to argue that the workers must accept existing, or even worse, conditions without a fight, while laying the blame on workers in other countries for “stealing American jobs.” As revolutionary Marxists, we point to the limitations of trade-unionism to argue for the need to overthrow the capitalist system of exploitation. As Marx wrote over a century ago.
“Trade Unions work well as centers of resistance against the encroachments of capital.... They fail generally from limiting themselves to a guerrilla war against the effects of the existing system, instead of simultaneously trying to change it, instead of using their organized forces as a lever for the final emancipation of the working class, that is to say, the ultimate abolition of the wages system.”
– Value, Price and Profit (1867)
The Northites now openly repudiate this basic Marxist position. They maintain that trade unions can no longer function as centers of resistance to the predations of capital, and they counterpose a socialist transformation to the defense of the workers' interests within capitalism. According to the wisdom of Nick Beams: “In order to defend even the most minimal conditions-the simple and most ordinary demands-the working class is confronted with the necessity of overthrowing the social relations based on capital and wage labor determined by the capitalist market through which the appropriation of surplus value takes place” (IWB, 1 July 1996).

At first glance, this may seem like a terribly revolutionary position. In fact, it indicates a defeatist and abstentionist attitude toward the actual struggles of the working class, without which all talk of overthrowing the social relations based on capital and wage labor is empty rhetoric. As Leon Trotsky wrote: “The triumph of the proletarian revolution on a world scale is the end-product of multiple movements, campaigns and battles, and not at all a ready-made precondition for solving all questions automatically” (“Independence of the Ukraine and Sectarian Muddleheads,” July 1939).

The mass of workers can achieve socialist consciousness only through the intervention of a revolutionary party in the proletariat's day-to-day struggles. This is a central theme of the 1938 Transitional Program, the founding program of Trotsky's Fourth International.
“The Bolshevik-Leninist stands in the front-line trenches of all kinds of struggles, even when they involve only the most modest material interests or democratic rights of the working class. He takes active part in the mass trade unions for the purpose of strengthening them and raising their spirit of militancy.... Only on the basis of such work within the trade unions is successful struggle possible against the reformists....Sectarian attempts to build or preserve small 'revolutionary' unions, as a second edition of the party, signify in actuality the renouncing of the struggle for the leadership of the working class.”
The Latest Posture of Political Bandits

For years, North’s Workers League agitated for the racist, pro-imperialist, rabidly anti-Communist Meany/Kirkland bureaucracy of the AFL-CIO to form a “labor party.” Now the North gang not only denounces the AFL-CIO tops as reactionary but likens the unions to a “company union or a scab organization.” Having recently rechristened themselves the Socialist Equality Party (SEP), the Northites now declare.
“Workers must face the fact that the AFL-CIO is a failed organization that will not respond to the workers' demands. Workers need democratically-controlled unions, committed to defending their interests without compromise. Such unions can only be established-as the industrial arms of a mass political party of the working class, and this party can only be built in ruthless struggle against the trade union bureaucracy. This is the perspective fought for by the Socialist Equality Party.”
-IWB (15 July 1996)
The nonexistent “industrial arms” of a nonexistent mass workers party are here supposed to replace the actual mass economic organizations of the U.S. working class.

If North, Beams & Co. were honest and courageous politicians, however misguided, they would call on American workers to leave the AFL-CIO en masse, Australian workers to leave the Australian Council of Trade Unions, British workers to leave the Trades Union Congress, etc. According to the Northites, not only have the unions become reactionary but also strikes: “Even when the bureaucracy calls a strike, it does so for the purpose of more effectively demoralizing and defeating the workers” (The Globalization of Capitalist Production & the International Tasks of the Working Class [September 1993]). If that is the case, then the Northites should tell the workers never to go out on strike and should give no support to strikes that do occur. Given its line, there is no reason for the Socialist Equality Party to oppose scabbing.

In fact, following the sellout of a 17-month-long UAW strike at Caterpillar in 1995 which saw widespread scabbing, North's International Workers Bulletin (18 December 1995) openly apologized for strikebreaking: putting the word “scabs” in quotation marks, sympathetically “explaining” that “the large majority of the 4,000 union members who returned to work were not right-wing or anti-union,” and attacking the union tops from the right for “diverting the anger of strikers towards the ‘scabs,’ i.e., those union members who decided to cross picket lines.” Around the same time, North's British acolytes made themselves notorious among striking Liverpool dockers by denouncing international labor solidarity with their struggle. A scurrilous article, “Dockers Must Reject Fake Internationalism” (International Worker, 2 December 1995), attacked as a “fraud” plans by international longshore unions, which were implemented that same month, to refuse to handle ships loaded by scabs in Liverpool (see “David North, ‘Socialist’ Apologist for Scabbing,” WV No. 637, 19 January 1996).

Yet in their platform for a recent parliamentary by-election campaign, the British SEP had the gall to insist that “Workers in Britain must seek the support of workers overseas” (International Worker, 30 November 1996). These are political charlatans who always speak, out of both sides of their mouths. On one side, they denounce the unions as “failed organizations,” thereby seeking to appeal to workers fed up with the bureaucracy’s endless sellouts and angry and frustrated over falling living standards. On the other side, they try to make themselves look good by posing as sympathetic to workers engaged in struggle.

Many years ago, we characterized the tendency led by the late Gerry Healy, North's mentor, as political bandits whose practices stood in flat contradiction to their professed principles, who say and do today the exact opposite of what they said and did yesterday and would say and do tomorrow. Having abjectly tailed the pro-capitalist union misleaders until a few short years ago, the Northites now turn around and repudiate the unions altogether. But the union bureaucracy was no less reactionary then than it is today – and the same can be said of David North & Co.

During Cold War II, the anti-Soviet war hysteria of the 1980s, the Northites marched in ideological lockstep with the AFL-CIO tops in enthusiastically supporting every pro-imperialist, anti-Communist nationalist movement in and around the Soviet bloc – from the CIA-backed Afghan mujahedin to counterrevolutionary Polish Solidarnosc to the Baltic “captive nations” types. In Britain, Healy/North's IC parlayed its support for Solidarnosc into a provocative witchhunt, in league with the most right-wing forces inside and outside the labor movement, against the militant miners union and its leader, Arthur Scargill. In late 1983, the Healyites instigated an anti-Communist furor over Scargill’s description of Solidarnosc as “anti-socialist,” with the aim of isolating the miners from the rest of the British trade-union movement as they prepared for battle against Thatcher and the Coal Board. And in 1991 North & Co. even condemned the Bush administration for not more aggressively backing the fascist-infested Lithuanian Sajudis, which called for secession from the Soviet Union as part of a drive for capitalist restoration.

When the demand for self-determination served as a “democratic” fig leaf for attacks on the Soviet degenerated workers state, the Northites waxed eloquent about their support to “national rights.” Now they denounce the call for self-determination and claim that national independence has become impossible, indeed reactionary, in a “globalized” economy. Having supported the counterrevolutionary destruction of the Soviet Union – the greatest defeat for the international proletariat in decades – the Northites have adopted a position of defeatism toward all struggles by the working class and oppressed peoples in the post-Soviet world.

Marx vs. the “Iron Law of Wages“

The Northite view of “globalization“ – i.e., the large-scale shift in production by “multinational” corporations to the Third World – and its effect on the relation between labor and capital is a present-day version of what in the 19th century was called the “iron law of wages.” This was a doctrine that wages could not be permanently raised above a fixed level regardless of the actions – economic and/or political – taken by the working class. While initially developed by British bourgeois economists, the “iron law” was adhered to by almost all of the early socialist and anarchist tendencies-British Owenites, French Proudhonists, German Lassalleans.

It is readily understandable why the ideologists of the bourgeoisie maintained that the existing level of wages was determined by the immutable laws of the capitalist market. Why would leftists who opposed the capitalist system also uphold such a position? Because they believed that the workers could be won to the program of socialism (or, in Proudhon's case, to anarchism) only if they were convinced that it was hopeless to attempt to improve their conditions within capitalism.

There were different versions of how the “iron law” was supposed to operate. The originator of the doctrine, the Reverend Thomas Malthus, asserted that if wages rose above subsistence levels workers would have more children, more of whom would live to maturity. The increase in the supply of labor would therefore drive wages back to the subsistence level. The leftist adherents of the “iron law” generally argued that any increase in money wages would be quickly and fully offset by rising prices. Hence they regarded trade unionism as useless or even injurious to the working class.

Proudhon's last work, The Political Capacity of the Working Class (published posthumously in 1865), was a sustained attack on trade unionism, which had just emerged in France on a significant scale.
“While threatening to strike, some of them [trade unionists], indeed the majority, have demanded an increase in wages, others have demanded a reduction in working hours, and still others both at the same time. Surely they have always known that increased wages and reduced working hours can only lead to a general price increase.”
In opposing strikes, Proudhon made the additional argument that the financial resources of the capitalists were so much greater that the workers could never win.
Let us imagine that an industrial establishment has a capital of three million and that it employs one thousand workers who one day go on strike. The employer rejects their demands.... After a month the workers have exhausted their funds and will have to resort to the pawnshop. The capitalist will have lost merely a twelfth of his interest and his capital will not have been touched. The match is clearly unequal.
– Stewart Edwards, ed., Selected Writings of Joseph-Pierre Proudhon (1969)
If one substitutes “transnational corporation” for “industrialestablishment" in the above passage, it accurately represents the current Northite line.

Throughout his life as a revolutionary workers leader, Marx opposed all exponents of the “iron law of wages.” His most comprehensive treatment of this question is his 1865 pamphlet, Value, Price and Profit, a polemical response to an old Owenite socialist, George Weston, who was then a member of the General Council of the First International. Here Marx scientifically demonstrated that an “immense scale of variations is possible” in the rate of exploitation (the ratio of surplus value to the value of wages):

The fixation of its actual degree is only settled by the continuous struggle between capital and labour, the capitalist constantly tending to reduce wages to their physical minimum while the workingman constantly presses in the opposite direction.
“The matter resolves itself into a question of the respective powers of the combatants

Marx's theoretical demolition of the “iron law of wages” was confirmed by the actual experience of the working class as mass trade unions developed in Europe and North America in the late 19th century. By the beginning of the 20th century, the “iron law” had been generally discredited within the workers movement and left. A notable exception was the American socialist Daniel De Leon, who counterposed the overthrow of the capitalist system to trade-union struggles for higher wages and shorter hours.

In line with pre-1914 Social Democratic orthodoxy, the De Leonists regarded the decisive event of the socialist revolution as the electoral victory of their party, the Socialist Labor Party (SLP), over the bourgeois parties. Attached to the SLP was an industrial arm called the Socialist Labor and Trade Alliance, which over time tended to shrink to an artificial, Potemkin village organization consisting entirely of the SLP’s own supporters. Despite the name, the Socialist Labor and Trade Alliance was not a trade union in any sense. It did not advocate, much less engage in, struggles to improve the wages or conditions of the workers. What then was its purpose? Following the expected electoral victory of the SLP, the Socialist Labor and Trade Alliance would “seize and hold” the means of production from the capitalists and subsequently administer the socialist economy.

Third World Wages Mean... Third World Economies

The present posture of the North group parallels the old De Leonist program except that the De Leonists were principled, albeit misguided, socialists. A primary activity of North’s Socialist Equality Patty (SEP, formerly the Workers League), and the other SEPs recently set up by IC sections in Britain and Australia, is running for office in bourgeois elections for various levels of government. They have adopted an, at best, abstentionist position in relation to the struggles of the mass trade-union movement. And at least on paper the Northites now project building something akin to the Socialist Labor and Trade Alliance. According to the 1993 Northite pamphlet, The Globalization of Capitalist Production & the International Tasks of the Working Class:

Transnational corporations are systematically shifting the most labor intensive aspects of production to impoverished regions, where wages are a fraction of the existing levels in the advanced capitalist countries. Even high-tech and skilled labor can be purchased on the cheap in India, parts of Latin America, eastern Europe and the former Soviet Union. The inexorable result is a downward leveling of wages and living standards and a relentless assault on past social reforms and legal limitations on the exploitation of labor by capital in the imperialist centers”
As we have indicated earlier, the Northites are here advancing, with a thin veneer of Marxist rhetoric, an argument currently propounded by a wide range of bourgeois and petty-bourgeois liberals. Thus, a recent article in Foreign Affairs (May-June 1996) warns that “inequality, unemployment and endemic poverty” are the “handmaidens” of the “global economy.” And in a special issue of the liberal Nation (15 July 1996), British “Green” spokesmen Colin Hines and Tim Lang assert:
Globalization unquestionably leads to lower-wage economies. The British economist Adrian Wood has calculated a not insignificant shift of 9 million jobs from North to South [i.e., from the industrialized countries to the Third World] in recent years.... Meanwhile, Britain is advertising itself as a low-wage country to attract industry. The trend is clear.”
The version of the “iron law of wages” pushed by North and others based on the supposed globalization of production is no more valid than the various 19th-century versions. Wages in the advanced capitalist countries are not going to be driven down to anything close to Third World levels for two fundamental reasons: one political, the other economic. As we shall see, increased investment by Western/ Japanese banks and corporations in backward countries, especially in the manufacturing sector, requires the maintenance of strong imperialist states to protect those investments. U.S. capitalists are not going to produce a large part of their steel output in South Korea and Brazil, because they need guaranteed access to this steel in case of war with their imperialist rivals – Germany and Japan – or for military intervention against popular revolutions in former colonial countries, like South Korea and Brazil.

The Communist Manifesto, written by Karl Marx and Friedrich Engels in 1848, defines the “executive of the modern State” as “a committee for managing the common affairs of the whole bourgeoisie.” One of the tasks of that executive committee is to ensure that individual capitalists, seeking to maximize their own profits, do not harm the vital interests of the national bourgeoisie as a whole. Thus, a few years ago Washington prevented the management and stockholders of Continental Oil from investing in the modernization of Iranian oil fields, because building up the Iranian economy went against the currently perceived interests of U.S. imperialism. In the next few years, the U.S., Germany and Japan may well impose – against the immediate interests and desires of sections of their own capitalist classes – high levels of trade protectionism, controls of foreign-exchange transactions and strict limits on the inflow and outflow of capital. There is in addition a fundamental economic limitation to the “globalization” of production. Manufacturing wages in East Asia and Latin America have been a small fraction of those, in the advanced capitalist countries for decades. Why then does Siemens still produce most of its electrical machinery in Germany and General Motors most of its autos in North America? Because 15 unskilled workers in Indonesia (earning well under a dollar an hour) cannot replace a skilled machinist in the U.S. (earning $15 an hour) or Germany (earning $25 an hour) in the process of industrial production. The technical-cultural level of the labor force in Europe, North America and Japan is qualitatively higher than in the Third World. Annual expenditure per student for primary and secondary education is over $5,000 in the US., almost $4,000 in Japan, $600 in Latin America and the Caribbean, and $70 in the Indian subcontinent! These vast differences cannot be appreciably narrowed within the framework of the capitalist-imperialist system. The basic premise of Trotsky’s theory of permanent revolution is that in the imperialist epoch countries of belated capitalist development cannot attain the overall level of economic productivity of the pioneer regions of the bourgeois revolution – West Europe, North America and, later, Japan.

This is the geo-economic basis for the division of the world between imperialist countries and neocolonial countries exploited and oppressed by the former. If India’s labor productivity approximated that of the United States and Japan, India itself would be a major imperialist power, since the numerical size of its industrial labor force (about 30 million workers) is the same as that of the U.S. and 50 percent greater than that of Japan. The Northite notion of “globalization” is in its theoretical essence a repudiation of the Trotskyist understanding of permanent revolution, because it posits a tendency to equalize economic conditions throughout the world by leveling up productivity in the backward capitalist countries and leveling down productivity in the advanced ones. The genuine globalization of production requires an internationally planned socialist economy, which alone can raise the peoples of Asia, Africa and Latin America to the technical-cultural level of what is now called the First World.