America in Crisis: The Liberal Challenge and the Prospects for Socialism

America in Crisis: The Liberal Challenge and the Prospects for Socialism

by Susan Rosenthal

America is deeply divided. Most Americans want an end to the war against Iraq and some form of universal health care, while the ruling class is committed to the war and is cutting social services to pay for it. The spectacle of both political parties rushing to bail out Wall Street at the expense of Main Street has deepened this class divide.

In The Trillion-Dollar Income Shift Jack Rasmus documents how,

“From the early 1980s on, income inequality widened, deepened, and accelerated until today well over $1 trillion in income is being transferred every year from the roughly 90 million working class families in the U.S. to corporations and the wealthiest non-working class households.”

Thirty-five years of pro-business social policies have hurtled class inequality back to the level of the 1920s. One percent of Americans now owns half the nation’s wealth. In 2005, the total wealth of U.S. millionaires was $30 trillion, more than the annual wealth produced in China, Japan, Brazil, Russia and the European Union combined!

Gross inequality has enraged the working class and alarmed the liberal establishment. Inequality in “the land of opportunity” is usually blamed on individuals for lacking the skills and determination to succeed. Now that the majority has been left behind, this excuse has worn thin. Consider this editorial comment from the New York Times (August 29, 2007),

“The median household income last year was still about $1,000 less than in 2000, before the onset of the last recession… When household incomes rose, it was because more members of the household went to work, not because anybody got a bigger paycheck…The earnings of men and women working full time actually fell more than 1 percent last year…The spoils of the nation’s economic growth have flowed almost exclusively to the wealthy and the extremely wealthy, leaving little for everybody else.”

Squeezed between falling incomes and a rising cost of living, many Americans borrowed against their home equity to make ends meet. With debts rising faster than incomes, it didn’t take long before many people could no longer pay. Other Americans were sold mortgages with hidden rate increases that were unmanageably high.

The current mortgage “melt-down” was not caused by irresponsible Americans, but by decades of pro-business policies that have impoverished the working class.

Adding insult to injury, the federal government is spending billions of taxpayer dollars to bail out the same crooks who created the mess, instead of using that money to help homeowners pay off their mortgages and to raise the minimum wage.

The mortgage crisis is just the latest in a series of outrages, which include the misery of the war against Iraq, a rise in anti-immigrant racism and the abysmal state of the medical system.

In the spring of 2006, mass anger exploded in the largest demonstrations in the nation’s history. Protesting anti-immigrant policies and chanting “We are America,” the working class rose up and punched the capitalist class in the face. That fall, the Republican majority was swept from office by voters sick of government lies, incompetence and corruption. But things just got worse.

Reform or revolution

As the economic crisis deepens, widespread resentment could coalesce into a generalized rebellion against the system. This happened after World War I, during the 1930s, and again in the 1960s.

There are only two solutions to such crises: reform from above to restore confidence in the system or revolution from below to replace it. Let’s examine the first option.

The emergency bailout of an incompetent, corrupt and greedy financial sector has undermined confidence in the capitalist system. To turn this around, the New York Times advises,

“What are needed are policies to help spread benefits broadly – be it more progressive taxation, or policies to strengthen public education and increase access to affordable health care.”

The elite cry “socialism!” at the suggestion that any portion of the social pie should be returned to the working class in the form of social support. Capitalists want a state that serves and rescues only them. And that’s what they get – socialism for the rich.

The largest corporations are shielded from paying any tax whatsoever. Federal judges have allowed ailing industries to abandon billions of dollars in “burdensome” pension obligations. The federal bailout of mortgage lenders has not been matched by funds for working-class families facing foreclosure. And while the Bush administration has allowed Medicare-funded insurance companies to keep millions of dollars that should have been returned to beneficiaries, it vigorously pursues beneficiaries to recover money that it says is owed to insurance companies.

Most Americans want more investment in the nation’s infrastructure. They want universal health care and more funding for schools. They want job and pension security.  Liberals understand that, unless the system can deliver on some level, the majority will eventually reject that system.

Wiser capitalists remember the lessons of the French Revolution. When the elite take too much, they risk losing their heads. Billionaire philanthropists like Bill Gates and Warren Buffett would rather return a small piece of the pie than forfeit the entire bakery.

Gates criticizes the “inequality gap” and devotes a tiny portion of his fortune to charity. Buffett says it’s unfair that he pays less than 18 per cent of his income in taxes, when his secretary pays 30 per cent of hers. Gates and Buffett aren’t socialists. Like the robber-baron philanthropists of the last century, they understand that their class must appear generous to preserve its system of organized thievery. The obscene bailout of the banking system, this organized theft of taxpayers’ money, has ripped their facade to shreds.

Some say a Roosevelt-type rescue is needed. During the 1930s, President Roosevelt fought for the New Deal over the objections of the business class. However, he did so in response to mass social rebellions that threatened to topple the capitalist system. As Howard Zinn explains in A People’s History of the United States,

“The Roosevelt reforms…had to meet two pressing needs: to reorganize capitalism in such a way as to overcome the crisis and stabilize the system; also to head off the alarming growth of spontaneous rebellion…- organization of tenants and the unemployed, movements of self-help and general strikes in several cities.”

We are nowhere near this situation. There are no mass social movements today, no pressure from below that is strong enough to win significant reforms. And until there is, the system will continue to solve its problems by making the working class pay.

As long as the working class organizes no real alternative, the capitalist system will endure. The benefits of economic growth will go primarily to the upper class, and the hardships of recession will fall primarily on the working class. No matter how dysfunctional, corrupt, or barbaric it is, capitalism will continue as long as the working class believes there is no alternative (TINA).

Containing discontent

The war on terror, with its attack on civil liberties, is the capitalists’ response to inequality and injustice. They seize the wealth; they do not share it. They crush their victims; they do not rescue them. And they don’t feel threatened by a labor movement that is dominated by bureaucrats who serve the Democratic Party. At the same time, the capitalist class is facing major problems including economic crisis, an unwinnable war, and a broken health-care system.

Repression is not the best tool for containing discontent. The capitalist class is a tiny minority that requires majority consent to rule. That consent could be lost if social problems are allowed to deepen. Arguing that an ounce of prevention is worth a pound of cure, liberals align with social discontent in order to contain it.

When the President defended insurance industry profits over the needs of sick children, the liberal New York Times shared the nation’s outrage. In “An Immoral Philosophy” (August 1, 2007), Paul Krugman writes,

“What kind of philosophy says that it’s O.K. to subsidize insurance companies, but not to provide health care to children?…9 in 10 Americans – including 83 percent of self-identified Republicans – support an expansion of the children’s health insurance program…There is, it seems, more basic decency in the hearts of Americans than is dreamt of in Mr. Bush’s philosophy.”

Naomi Klein’s best-selling book, The Shock Doctrine: The Rise of Disaster Capitalism, has joined Michael Moore’s documentary film, SiCKO, to punch holes in the lies that prop up the system. When Oprah and Moore agree on national television that America needs some form of socialized medicine, the wind is definitely shifting.

Suddenly, “socialism” is not such a dirty word. In “A Socialist Plot” (August 27, 2007), Krugman writes,

“The truth is that there’s no difference in principle between saying that every American child is entitled to an education and saying that every American child is entitled to adequate health care.”

In traditional liberal fashion, the New York Times condemns the worst aspects of capitalism in order to preserve the system as a whole. Liberals don’t really want socialism. They want a lesser-evil capitalism directed by the Democratic Party, and they are banking on Obama to provide it. They will be disappointed, because Obama only talks change. His actions preserve the status quo.

Conservatives oppose reforms as the start of a slippery slope. They remember the 1960s, when Americans organized and fought for racial equality, women’s liberation, aboriginal rights, gay liberation, more social support, higher wages, safer working conditions, more affordable housing, better schools and more access to medical care. There was mass opposition to the arms race, nuclear power, the death penalty, American foreign policy and the Vietnam War. It took a concerted effort and many years to beat back that rebellion.

Is America ready for socialism?

The current crisis is opening a space to discuss genuine socialism, a worker-run democracy where ordinary people take collective control of the economy and direct it to meet human needs. The material conditions already exist for such a society.

Because socialism is based on sharing, there must be more than enough to go around. That is not a problem.

If the annual production of American workers were transformed into dollars and equally shared among the population, every man, woman and child in the nation would receive $45,000 a year or $180,000 for every family of four. This sum would be many times larger if everyone who wanted to work were employed and if the wealth produced in previous years was included.

The same is true on a world scale. Between 1800 and 2000, the amount of wealth produced grew eight times faster than the global population. Only a few have benefited. By 2001, 497 billionaires enjoyed assets of $1.54 trillion, more than the combined incomes of half of humanity.

The second requirement for socialism is that the working-class majority loses its faith in capitalism and is willing to take on the task of running society itself, directly and democratically.

Most Americans do not view socialism as a viable alternative, because they have been bamboozled into thinking that there is no alternative to capitalism (TINA). This makes no sense.

Human beings create society. They have changed it many times in the past, and they can change it again.  Most people would be much better off in a cooperative society. However, capitalism cannot tolerate demands for a society based on cooperation. The people in power must make “socialism” a dirty word because,

If the majority realized that they could solve their problems and meet their needs without bosses and rulers, they would abandon capitalism in a heartbeat.

To make socialism a viable alternative, we must build socialist organizations where workers can break free of the lies that bind them to capitalism, including the lie that they are too stupid or lazy to run the world for themselves and one another.

Where the capitalists divide in order to rule, socialists connect individuals, causes, past events and future dreams into a unified struggle for majority rule.

Where the capitalists infect workers with fear, pessimism and a sense of powerlessness, socialists link workers’ experience of individual suffering with their collective power to eliminate that suffering.

Socialists believe in the working class, even when it does not believe in itself.

The anti-globalization movement of the late 1990s raised the hope of change. So did the mass anti-war demonstrations that preceded America’s invasion of the Middle East. When the U.S. began bombing Baghdad, many became discouraged and retreated from organized activity. However, the barbarism of capitalism keeps manufacturing discontent.

After years of being lectured about “personal responsibility,” most Americans are enraged that the same crooks who created this financial mess are being rewarded with billions of dollars.

Only socialists can organize this anger into a force for social change. The Democratic Party is aligned with the Republican Party on all major issues. The most important difference is that the Democratic Party is better at using popular discontent to get itself elected.

The working class is obedient, not stupid. It has rejected the war despite a steady stream of pro-war propaganda. It sees through the sham of “throwing money” at the rich. Workers are patient, but there is a limit to how much they will tolerate.

With the economy sliding into recession, the New York Times warns,

“It seems that ordinary working families are going to have to wait – at the very minimum – until the next cycle to make up the losses they suffered in this one. There’s no guarantee they will.”

No one can know when the next struggles will erupt, or what their outcome will be. One thing is certain. The needs of the capitalist class will continue to clash with the needs of human beings.

We have a choice. We can continue to accept the insanity of capitalism, or we can organize a socialist alternative. The time is now.

(This article is updated from America in Crisis, published in September, 2007)

See also Why I’m NOT Voting for Obama

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7 Comments For This Post

  1. Ron Says:

    September 30/07

    An absolutely excellent article! Really got my brain cells going! So rare that I read something by a real socialist.

    Most people I encounter in “left” circles are what I would call political liberals, that is, a subset of economic liberals. It seems to me that intellectual understanding of socialism stopped in the U.S. in 1910 and in Europe after they attained social democracy. Of course socialism is not social democracy, which is only capitalism with a welfare state added to maintain the system.

    I think that it is extremely important that a revolutionary movement develops here, along with other places in the world, because the U.S. with its military power serves as the linchpin of capitalism. The media and the educational system in the U.S. have been extremely successful in retarding the development of socialist thought as well as critical thinking in general. There is so much unlearning and relearning to be done and Rosenthal’s writing is advancing this project.

    Thank you so much!

  2. Chris B Says:

    April 26/08

    I agree with your whole enticement of socialism and capitalism in a basis of terms.

    I didn’t have a full understanding of socialism until I encouraged myself to read this article, I now get the entire socialist ideology.

    Again I thank you, for your contribution to understanding a capitalism-ruled society.

  3. Lloyd Rowsey Says:

    September 22/07

    Dear Susan,

    What a wonderful article. I’m sixty-five and have been a communist most of my life, but I only joined Gus Hall’s outfit in….1989!

    What has been dawning on me over the last several years – as I’ve been personally experiencing the sicknesses and deaths of myself and loved ones – is what a cutting-edge issue health care truly is. “Of course!” I’ve always known there’s a reserve of radicalism among seniors, but I’d always known it intellectually, not viscerally.

    Howsoever, it’s been better than fresh air to read America in Crisis. I’ve long admired physicians for their courage and commitment to life even more than for their intelligence and compassion. In fact, my greatest heroes are Ali, Fidel, and Dr. Kervorkian. In no particular order.

    Keep up the very, very excellent work, Susan. We need you.

  4. Parser Says:

    September 24/07

    “Most Americans do not choose socialism because they are bamboozled into thinking that it would not be in their interest.”–

    Not true; it is because they are bamboozled into believing it is the same as communism. Regardless of who’s interest is served, anti-socialism is as deeply ingrained in US propaganda as believing the US is the wealthiest, smartest, most honorable nation on Earth. It is part of America-as-a-religion doctrine, or America’s religion, if you will. That is what makes socialism an extremely difficult concept to promote.

    Even though socialism is a more accurate way of describing what American economic society actually is, with its many layers of corporate welfare, altruistic beliefs about charity, and so forth (democracy is actually the belief in the greatest good for the most people achievable) the word ‘socialism’ has been thoroughly stained with the smell of shit by propagandists. Nor can we or should we overlook that capitalism and the ‘free market’ is as much a government-regulated economy game as any in history. Capitalism simply could not function if it weren’t for the government, no matter how loosely defined or organized, intervening in keeping it stable. Raw market forces are as devastating as flash flooding or storms at sea.

    Socialism is exactly like the insurance paradigm: pooling the risk among many to reduce the devastating impact upon the few.

    One other problem with promoting socialism is that the American mindset cannot look its own selfishness in the face. American selfishness is tweaked and fed by the propaganda that socialism is the same thing as communism. They are, of course, very very different. But good luck getting the majority of Americans–who tend to think in terms their grandparents did–understanding this. Tradition is tradition.

  5. Binh Says:

    I’m linking your blog from mine. Great stuff!

  6. Renegade Eye Says:

    This is a really good blog. I was referred to it by “Rustbelt Radical.”

    Really good post.

    I’ve been using the term state capitalist, to describe the bailout. It isn’t a 100% accurate term, but it beats it being called socialism, as by liberals and conservatives. Mischaracterizing socialism has a long history, as done by capitalists and Stalinists.

    Obama is hostile to the universal healthcare, despite his rhetoric. His economic advisors are from the University of Chicago (Friedman).

    With Dems coming to power, it’s time to escalate the fight for a labor party.


  7. alvin portnoy Says:


    Extending health care will just feed more people into a corrupt medical system. We need a new paradigm.

    As presently setup the medical system is at best a disease maintenance system; I argue that in reality it is a disease promotion system.

    Many chronic diseases result from tha SAD (Standard American Diet) and poor life style choices — lack of exercise, lack of relaxation.

    Currently, a drug is prescribed to alleviate symptoms. Over the long term the drug leads to additional problems, for which another drug is given. Thus big pharma is assured increasing profits by a system that ensures increasing debilities

    MD’s see these chronic diseases as a single condition which can be treated by drugs of choice. Their med training and HMO’s reinforce this paradigm. The MD is not rewarded by finding what the causes of the problem are; they are trained to only recognoze a disease state — not to prevent disease. If tests show absence of disease, the patient is presumed healthy.

    HMO’s stint MD’s to the point that they spend only about 5 minutes with a patient. On one visit I asked my primary why my finger nails looked so bad. Without even looking, he left the room, remarking that lots of patients ask him that. I saw a naturapathic doc who told me I wasn’t digesting protein properly; a protein supplemnent fixed the problem without side effects.

    The food inustry under the capitalistic imperative to increase profits has depleted processed foods of nutrients and added colorings, flavorings, preservatives which go a long way to promoting cancer, diabetes, heart disease — the list goes on.

    WBAI in New York runs a diabetes/blood pressure workshop to educate people to improve their health status. People meet in groups throughout the New York tri-state area. There’s a group leader who is not a physician, but who has been counciled by physicians in proper food choices, stress reduction, and monitoring blood sugar and blood pressure. People in the program lose weight, feel better and can lower medications. I believe this is true people power.

    In my opinion these wars on various diseases just reinforce the existing paradigm. These warriors never talk about these diseases caused by food, toxins and stress. By looking for a “cure” they delude us into thinking that food, toxins, stress don’t contribute to these diseases — so we’re free to browse the supermarket shelves, filling-up on lifeless, toxic foods, assured that a “cure” for cancer is imminent.

    I’ve heard it said that the best indicator of a nation’s health is the width of the income gap — the smaller the gap the healthier the people; the wider the gap, the more the illness.


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