Chicago’s Unemployed Rebellion

[Artwork by Mara Garcia, @magavitart]

By Eric Kerl

Originally published at Rampant Magazine.

he social, political, and economic crisis currently unfolding, shaped by a global pandemic, is a damning indictment of modern capitalism. In its first two months, more than 30 million people in the United States have lost their jobs. While business leaders cavort with the Trump administration and right-wing states’ rights advocates demand to reopen the economy, the crisis will only deepen. Indeed, many economists predict that the fallout will be the worst since the Great Depression.

The crisis of the 1930s culminated in the rise of fascist power in Europe. In the United States, it ushered in the New Deal coalition and the expansion of the welfare state. But, by the end of the decade, only the slaughter of World War II finally jumpstarted the global economy through sheer barbarism and unrestrained weapons production.

Like Donald Trump and the rest of today’s ruling class, leading capitalists of the 1930s had little to offer the majority of people after the stock market crashed in 1929. Unemployment, poverty, hunger, and homelessness mushroomed. As the crisis deepened, the industrial overlord, notorious anti-Semite, and failed presidential hopeful Henry Ford advised poor people to take up sharecropping to feed themselves. With paid advertisements in newspapers across the country Ford claimed, “Stocks may fail, but seedtime and harvest do not fail.”[1] Meanwhile, ecological catastrophe devastated the dustbowl-ravaged Great Plains and displaced more than 3.5 million people. By 1934, the Yearbook of Agriculture announced:

Approximately 35 million acres of formerly cultivated land have essentially been destroyed for crop production. . . . 100 million acres now in crops have lost all or most of the topsoil; 125 million acres of land now in crops are rapidly losing topsoil.

While millions went hungry, Ford partnered with the growing Nazi war machine. During the first six months of 1932, Ford’s meagre operations in Germany struggled to make money. Although the plants were ridiculed as “foreign” by the wave of German nationalism, Ford swooned over Hitler’s new plans to shift automobile manufacturing into overdrive, fueled by government cash.  By 1937, Ford was a certified manufacturer of trucks and cars for the Nazi regime’s military.

Back in the United States, Ford summoned the police and National Guard against unemployed workers. During the spring of 1932, three thousand unemployed workers protested outside Ford’s behemoth River Rouge complex in Detroit demanding relief. Police attacked the protesters, injuring dozens. Four workers were shot and killed, including Joseph York, a twenty-three-year-old unemployed worker. The following day, York’s girlfriend, Mary Grossman, faced down the murderous cops:

Yes, I was there. I’m not sorry. I did it for starving millions. Blame capitalism which is the cause of all suffering. Now don’t talk to me![2]

Similar protests erupted in cities around the world, often organized and led by Communist Party members and other radicals. Politicians and media outlets routinely decried the reds and riots of unemployed. International headlines of the time read: “Spanish Jobless Riot,” “Canadians Attack City Hall,” “British Hunger Army Ready to Invade Commons,” “Police Battle Reds with Tear Gas at Detroit Factory,” “Police Protect President from Hunger Parade,” “German Jobless Charge Cabinet, Plunder Dole,” “Red Rebellion Flares in Spain,” and “Batons of Police Halted Red Mob in Washington Riot.”

Yet, as the American Civil Liberties Union noted at the time, “It is a matter of common knowledge among relief workers that vigorous demonstrations—so-called ‘riots’ by the unemployed, produce an almost miraculous effect in loosening the public purse-strings.”[3]

Chicago’s Unemployed Rebellion

During the first month of 1928, nearly two years before the stock market crash of 1929, the entertainment industry magazine Variety expressed its anxiety for Chicago’s theater business. Unemployment, the article noted, was the highest since 1922. And theater-goers had reason to be uncomfortable: “The horde of ’boes and panhandlers infesting the Loop makes New York Times Square parasites seem like a coterie of philanthropists in comparison.” Still, the article remained naively optimistic. “Because of sound financial qualities, it is believed by authorities here the unemployment wave will be relieved considerably this year.”[4]

Instead, the number of unemployed Americans surged from 3 million to 15 million. By 1932, half of Illinois’s workers were jobless. In Chicago, where 60 percent of the state’s unemployed lived, a deep social crisis was underway. One report noted at the time,

There are several Chicago garbage dumps, some of which are under city supervision and some private. About a dozen places where garbage is dumped were visited by different members of the committee; and in every place where “soft” garbage, such as the remains of food, were found, people were reported to be picking it over and eating from it at the dump or taking it home to cook.[5]

The influence of communists and revolutionaries helped galvanize the unemployed into a fighting force, and authorities grew panicked about the increasing militancy and organization of the movement. While cops beat marchers in Detroit and New York City, Chicago police ransacked offices of unemployed and radical organizations throughout the city. Despite the repression, 50,000 workers mobilized in Chicago streets on March 6, 1930, for a national day of action billed as International Unemployment Day.

Less than a week later, three policemen were shot and eleven “communists” were arrested at the north end of Michigan Ave during a “riotous demonstration.” Those arrested included Bryan Moss, Ben Koblentz, Mrs. Anna Rejba, Martin Rich, Evelyn Weiner, William Bart, Frank Cordisco, William Bart, Morris Krivin, Anna Grossman, and Ida Mittelman. Their defense lawyer was Albert Goldman, an antifascist organizer who later emerged as a leader of the fledgling US Trotskyist movement, lead counsel for the Teamsters during the 1934 Minneapolis strike, and a mayoral candidate in Chicago. Ultimately, a “communist parade” preceded their acquittal, “in which several thousand men and women, half of them Negroes, participated.”[6]

The following July, the Communist Party’s Trade Union Unity League initiated a call for a national conference of unemployed councils.[7] More than 1,300 delegates from CP-affiliated organizations and unions met in Chicago. Black workers comprised an important number of the representatives and the conference highlighted racial justice demands in the unemployed movement.

As unemployed workers flooded into Chicago from the Midwest and South in search of jobs, unemployed councils blossomed in neighborhoods across the city. Rent strikes, anti-eviction blockades, and street mobilizations occurred across the city and demonstrations targeted the role of cops in carrying out the evictions and repression. One Chicago Tribune article described a typical action;

300 men and women gathered outside the stations. Policeman Dominick Varsetto, assigned there, closed the door. Members of the group pounded upon it until they broke the glass, but no further damage was done. At that moment Liet. Make Mills of the industrial squad and Capt. Phil Parodi of the Maxwell street stations arrived with eight police squads. Leaders of the crowd made soapbox speeches before the gathering dispersed. Liet. Mills arrested five alleged ringleaders: Joseph Shoster, no address; Edward Van Horn, 642 Liberty street; Joseph Bebko, 1717 West Madison street; and James Adams, no address.[8]

Still, aid to one hundred and forty-three thousand Chicago families was cut by 25 percent, and perishable food supplies were slashed by half in 1932.[9] In neighborhoods across the city, Chicago’s poor rebelled in a firestorm of organizing and riots.

On a cold, rainy Halloween, 2,500 unemployed gathered at the corner of 22nd and Wentworth. On the city’s West Side, 3,000 gathered at Union Park. In Washington Park on the South Side, 2,000 protesters gathered. Along with thousands from other parts of the city, they converged in the Loop, wearing red armbands, red dresses, and carrying red umbrellas and red flags. One journalist reported,

As the singing, shouting, hunger armies moved toward the meeting place from north, west and south, their forces were constantly increased. Detachments joined on the end of the lines until, by the time the three groups were a few blocks apart in the loop, a total of some 15,000 persons was moving.[10]

Military veterans carried a banner that read, “Wilson’s heroes; Hoover’s hoboes.” Other contingents included a group of Italian antifascists and “a platoon of children, 7 to 10 years old, carrying empty milk bottles.” Unemployed Black workers highlighted the case of Scottsboro and pressed the issue of racial justice.

Less than a month later, “a genuine united front of working class organizations was constituted” in Chicago to fight the 50 percent reduction of relief. Unemployed organizations from across the city, along with the Communist Party, Socialist Party, and the Workers League, organized the event. As one participant described:

The call for the conference signed by the three organizations met with a huge response everywhere. The masses reacted as never before, and the conference bore testimony of this fact. 750 delegates representing 350 organizations made up the conference. Included in the conference were over 40 church organizations composed entirely of unemployed workers, the Farmer-Labor Party, the A.F. of L., fraternal organizations, the TUUL.[11]

The city’s authorities responded with a wave of repression, arrests, and deportations of unemployed and radical organizers. While the Chicago Police Department flaunted its racism and brutality routinely, the frequent deployment of cops also provided opportunities to exhibit their bumbling idiocy. On a Saturday afternoon in 1934, just four days before Thanksgiving, four thousand Chicagoans marched to City Hall with demands for unemployment and relief benefits. Nearly two hundred cops were stationed inside the building “in case trouble developed.” When none developed, one of the jackass cops “tossed a few firecrackers under the feet” of a Black cop. A frenzy of gunfire erupted inside the building and seven cops were shot in the barrage of friendly fire.[12]

Winning relief

Like Henry Ford’s sharecropping schemes, government and business leaders had no genuine relief to offer millions of poor and hungry workers. Genuine programs, of course, were organized and advocated by the unemployed themselves. In Pennsylvania, insurgent rank-and-file coal miners pressed their demands for the Workers’ Unemployment Insurance Bill.[13] In Charlotte, North Carolina, the unemployed council organized militant, interracial demonstrations in support of the bill.[14] In Chicago, hundreds of delegates from the Illinois Workers Alliance, Emergency Workers Union, and other organizations of the unemployed—representing about 750,000 workers—endorsed the bill in the fall of 1934.

The Workers’ Unemployment Insurance Bill was unveiled by the Communist Party in the summer of 1930 and quickly won the endorsement of three thousand five hundred local unions. As Chris Wright described the bill,

In the form it would eventually assume, it provided for unemployment insurance for workers and farmers (regardless of age, sex, or race) that was to be equal to average local wages but no less than $10 per week plus $3 for each dependent; people compelled to work part-time (because of inability to find full-time jobs) were to receive the difference between their earnings and the average local full-time wages; commissions directly elected by members of workers’ and farmers’ organisations were to administer the system; social insurance would be given to the sick and elderly, and maternity benefits would be paid eight weeks before and eight weeks after birth; and the system would be financed by unappropriated funds in the Treasury and by taxes on inheritances, gifts, and individual and corporate incomes above $5,000 a year. Later iterations of the bill went into greater detail on how the system would be financed and managed.[15]

The bill was eventually co-opted and presented to Congress by the self-described “La Follette Republican” Ernest Lundeen of the Minnesota Farmer-Labor Party, a rabid isolationist and Nazi sympathizer.[16] Like the homegrown fascist radio personality Father Charles Coughlin he railed against the crimes and inequality of capitalism. But his neck swelled over the threat of communism and its advocacy for racial justice.

Nevertheless, the groundswell of action and organizing by socialists, communists, and unemployed workers—Black and white—ensured that Lundeen’s bill would “extend to all workers, whether they be industrial, agricultural, domestic, office, or professional workers, and to farmers, without discrimination because of age, sex, race, color, religious or political opinion or affiliation.”[17] Indeed, a New York Post poll showed that 83 percent of its readers preferred the more radical Lundeen bill over the Social Security Act.

The strength and popularity of the unemployed movement and genuine relief coincided with a massive strike wave that reached from San Francisco to Minneapolis, Toledo, and the textile mills of the South. While sectarian squabbles often counteracted the potential for solidarity in other areas of work, the Communist Party and Socialist Party both appealed for common, united front approaches to unemployment. For the CP, their united front demands included:

1. Decisive wage increases and reduction in hours, supporting a bold strike movement to win them

2. For the immediate enactment of the Workers’ Unemployment Insurance Bill

3. For the immediate enactment of the Farmers’ Emergency Relief Bill to secure for the farmers the possession of their lands and tools, and to provide abundance of food to the masses

4. For the immediate enactment of the Bill for Negro Rights

5. For the united struggle against war and fascism

6. For the broadest possible united action in localities, in factories, in trade unions, and on every question affecting the workers and toiling masses, to win better conditions[18]

Ultimately, the Workers’ Unemployment Insurance Bill was defeated in favor of Roosevelt’s watered-down policies of the second New Deal. But it was not a foregone conclusion that something more radical—genuine relief—was within the grasp of the unemployed movement.

And, the current crisis of unemployment and poverty will not be magically solved by today’s politicians. Only our own self-activity can win genuine relief from this most recent and profound crisis of capitalism.

Notes

[1] “Henry Ford on Self-Help,” advertisement prepared and paid for by the Ford Motor Company as a contribution to public welfare, Chicago Tribune, June 1, 1932, 14.

[2] “15 Arrested After Police Slay Four in Unemployed Riot,” The Pantagraph, March 8, 1932, 1.

[3]  Quoted in Edgar Bernhard, Ira Latimer, and Harvey O’Connor, Pursuit of Freedom: A History of Civil Liberty in Illinois, 1787–1942 (Chicago: Chicago Civil Liberties Committee, 1942), 158, accessed at: http://hdl.handle.net/10111/UIUCOCA:pursuitoffreedom00chic.

[4] “Chicago’s Heavy Breadline Tells of Unemployment,” Variety, February 1, 1928, 12.

[5] Quoted in Edgar Bernhard, Ira Latimer, and Harvey O’Connor, Pursuit of Freedom: A History of Civil Liberty in Illinois, 1787–1942 (Chicago: Chicago Civil Liberties Committee, 1942), 157, accessed at: http://hdl.handle.net/10111/UIUCOCA:pursuitoffreedom00chic.

[6] “Jurors Acquit 11 Alleged Reds; Fired by Judge,” Chicago Tribune, April 20, 1932, 19.

[7] Solomon, Mark, The Cry Was Unity: Communists and African Americans, 1917-1936 (Jackson: University Press of Mississippi, 1998), 148.

[8] “Seek to Raise Cash Pending U.S. Relief Loan,” Chicago Tribune, July 21, 1932, 2.

[9] “Relief to 143,000 Chicago Families Is Cut 25 Percent,” Alton Evening Telegraph, October 27, 1932, 1.

[10] Robert T. Loughran, “Radicals Parade under Guise of ‘Hunger March’,” Freeport Journal-Standard, October 31, 1932, 1–12.

[11] Albert Glotzer, “Stalinists Make Right About Face in Chicago Unemployed United Front,” The Militant, Vol. V, No. 28 (November 26, 1932), 1–2.

[12] “Hunger March is Peaceful but 7 Policemen Hurt,” Jacksonville Daily Journal, November 25, 1934, 8.

[13] Walter Howard, Anthracite Reds Vol. 2: A Documentary History of Communists in Northeastern Pennsylvania During the Great Depression (iUniverse, 2004), 152.

[14] Gregory S. Taylor, The History of the North Carolina Communist Party, University of South Carolina Press, 2009, 73–74.

[15] Chris Wright, The Hidden History of American Radicalism: The Campaign for the Workers’ Unemployment Insurance Bill” Counterfire, April 25, 2020, https://www.counterfire.org/articles/history/21138-the-hidden-history-of-american-radicalism-the-campaign-for-the-workers-unemployment-insurance-bill.

[16] B.W. Hart, Hitler’s American Friends: The Third Reich’s Supporters in the United States (New York: St. Martin’s Publishing Group, 2018).

[17] M. Poole, The Segregated Origins of Social Security: African Americans and the Welfare State (Durham: University of North Carolina Press, 2006), 22.

[18] United States Congress House Committee on Un-American Activities, Hearings before the Committee on Un-American Activities, House of Representatives, Eighty-Fourth Congress, Second Session (Washington, DC: U.S. Government Printing Office, 1956), 231.

Why Coronavirus Could Spark a Capitalist Supernova

By John Smith

Republished from Open Democracy. This article is part of Open Democracy’s 'Decolonising the economy' series.

“Global yields lowest in 500 years of recorded history. $10 trillion of negative rate bonds. This is a supernova that will explode one day,” tweeted Bill Gross, the ‘bond king’, in 2016.

This day has come closer. Capitalism now faces the deepest crisis in its several centuries of existence. A global slump has begun that is already devastating the lives of hundreds of millions of working people on all continents. The consequences for workers and poor people in Asia, Africa, and Latin America will be even more extreme than for those living in Europe and North America, both with respect to lives lost to coronavirus and to the existential threats to the billions of people already living in extreme poverty. Capitalism, an economic system based on selfishness, greed and dog-eat-dog competition, will more clearly than ever reveal itself to be incompatible with civilisation.

Why is supernova – the explosion and death of a star – an apt metaphor for what could now be about to unfold? Why could the coronavirus, an organism 1000th the diameter of a human hair, be the catalyst for such a cataclysm? And what can workers, youth and the dispossessed of the world do to defend ourselves and to ‘bring to birth a new world from the ashes of the old’, in the words of the US labour hymn, Solidarity Forever?

To find answers to these questions, we need to understand why the ‘global financial crisis’ that began in 2007 was much more than a financial crisis, and why the extreme measures taken by G7 governments and central banks to restore a modicum of stability – in particular the ‘zero interest rate policy’, described by a Goldman Sachs banker as “crack cocaine for the financial markets” – have created the conditions for today’s crisis.

Global capitalism’s ‘underlying health issues’

The first stage of a supernova is implosion, analogous to the long-term decline in interest rates that began well before the onset of systemic crisis in 2007, which has accelerated since then, and which fell off a cliff just as coronavirus began its rampage in early January 2020. Falling interest rates are fundamentally the result of two factors: falling rates of profit, and the hypertrophy of capital, i.e. its tendency grow faster than the capacity of workers and farmers to supply it with the fresh blood it needs to live. As Marx said, in Capital vol. 1, “capital’s sole driving force [is] the drive to valorise itself, to create surplus-value… capital is dead labour which, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks.”

These two factors combine to form a doom loop of awesome destructive power. Let us examine its most important linkages.

Many things both mask and counteract the falling rate of profit, turning this into a tendency that only reveals itself in times of crisis, of which the most important has been the shift of production from Europe, North America and Japan to take advantage of the much higher rates of exploitation available in low-wage countries. The falling rate of profit manifests itself in a growing reluctance of capitalists to invest in production; more and more of what they do invest in is branding, intellectual property and other parasitic and non-productive activities. This long-running capitalist investment strike is amplified by the global shift of production – boosting profits by slashing wages rather than by building new factories and deploying new technologies. This enables huge mark-ups, turbo-charging the accumulation of vast wealth for which capitalists have no productive use – hence the hypertrophy of capital.

This, in turn, results in declining interest rates – as capitalists compete with each other to purchase financial assets, they bid up their price, and the revenue streams they generate fall in proportion – hence falling interest rates. Falling interest rates and rising asset values have created what is, for capitalist investors, the ultimate virtuous circle – they can borrow vast sums to invest in financial assets of all kinds, further inflating their ‘value’.

Falling interest rates therefore have two fundamental consequences: the inflation of asset bubbles and the piling up of debt mountains. In fact, these are two sides of the same coin: for every debtor there is a creditor; every debt is someone else’s asset. Asset bubbles could deflate (if productivity increases), or else they will burst; economic growth could, over time, erode debt mountains, or else they will come crashing down.

Since 2008, productivity has stagnated across the world and GDP growth has been lower than in any decade since World War II, resulting in what Nouriel Roubini has called “the mother of all asset bubbles,” while aggregate debt (the total debt of governments, corporations and households), already mountainous before the 2008 financial crash, has since then more than doubled in size. The growth of debt has been particularly pronounced in the countries of the global South. Total debt for the 30 largest of them reached $72.5tn in 2019 – a 168% rise over the past 10 years, according to Bank of International Settlements data. China accounts for $43tn of this, up from $10tn a decade ago. In sum, well before coronavirus, global capitalism already had ‘underlying health issues’, it was already in intensive care.

Global capitalism – which is more imperialist than ever, since it is both more parasitic and more reliant than ever before on the proceeds of super-exploitation in low-wage countries – is therefore inexorably heading to supernova, towards the bursting of assets bubbles and the crashing of debt mountains. Everything that imperialist central banks have done since 2008 has been designed to postpone the inevitable day of reckoning. But now that day has come.

10-year US Treasury bonds are considered the safest of havens and the ultimate benchmark against which all other debt is priced. In times of great uncertainty, investors invariably stampede out of stock markets and into the safest bond markets, so as share prices fall, bond prices – otherwise known as ‘fixed income securities’ – rise. As they do, the fixed income they yield translates into a falling rate of interest. But not on March 9, when, in the midst of plummeting stock markets, 10-year US Treasury bond interest rates spiked upwards. According to one bond trader, “statistically speaking, [this] should only happen every few millennia.” Even in the darkest moment of the global financial crisis, when Lehman Brothers (a big merchant bank) went bankrupt in September 2008, this did not happen.

The immediate cause of this minor heart attack was the scale of asset-destruction in other share and bond markets, causing investors to scramble to turn their speculative investments into cash. To satisfy their demands, fund managers were obliged to sell their most easily-exchangeable assets, thereby negating their safe-haven status, and this jolted governments and central banks to take extreme action and fire their ‘big bazookas’, namely the multi-trillion dollar rescue packages – including a pledge to print money without limit to ensure the supply of cash to the markets. But this event also provided a premonition for what is down the road. In the end, dollar bills, like bond and share certificates, are just pieces of paper. As trillions more of them flood into the system, events in March 2020 bring closer the day when investors will lose faith in cash itself – and in the power of the economy and state standing behind it. Then the supernova moment will have arrived.

The left’s imperialism-denial, and its belief in the ‘magic money tree’

The gamut of the left in imperialist countries – the Jeremy Corbyn-led wing of the Labour Party in the UK; the motley crew of left-Keynesians such as Ann Pettifor, Paul Mason, Yanis Varoufakis; supporters of Bernie Sanders in USA – are united on two things: they all acknowledge, to one degree or another, that imperialist plunder of colonies and neocolonies happened in the past but do not acknowledge that imperialism continues in any meaningful way to define relations between rich and poor countries.

And they believe in one or other version of the ‘magic money tree’, in other words, they see the decline of interest rates into negative territory not as a flashing red light showing the extremity of the crisis, i.e. not as the implosion phase of a supernova, but as a green light to borrow money to finance increased state investment, social spending, a Green New Deal, and even a bit more foreign aid. In fact, there is no magic money tree. Capitalism cannot escape from this crisis, no matter how many trillions of dollars governments borrow or central banks print. The neoliberals rejected magical thinking, now they embrace it – this shows the extent of their panic, but it does not make magical thinking any less fantastical. The trillions they spent after 2007-8 bought another decade of zombie-like life for their vile system. This time they will be lucky to get 10 months, or even 10 weeks, before the explosion phase of the supernova begins.

Coronavirus – catalyst for cataclysm

The coronavirus pandemic occurred at the worst possible time: growth in the eurozone had shrunk to zero; much of Latin America and sub-Saharan Africa were already in recession; the sugar-high from Trump’s huge tax-giveaways to US corporations was fading; the US-China trade war was causing serious disruption to supply chains and was threatening to entangle the EU; and tens of millions of people joined mass protests in dozens of countries across the world.

Interest rates are now deep in negative territory – but not if you are Italy, facing an enormous increase in its debt/GDP ratio, not if you are an indebted corporation trying to refinance your debts, not if you are an ‘emerging market’. Since March 9, corporate interest rates have gone through the roof; in fact few corporations can borrow money at any price. Investors are refusing to lend to them. Corporations are now facing a credit crunch – in the midst of global negative interest rates! That’s why the ECB decided to borrow €750 billion from these same investors, and use it to buy the corporate bonds which these same investors now refuse to purchase, and why the USA’s Federal Reserve is doing the same on an even bigger scale. Italy’s (and the EU’s) fate now depends on the willingness of the Bundesbank to replace its private creditors. Their refusal to do this would be the final stage of the EU’s death agony.

During the middle two weeks of March, imperialist governments announced plans to spend $4.5 trillion bailing out their own bankrupt economies. An emergency online summit of the G20 (the G7 imperialist nations plus a dozen or so ‘emerging’ nations, including Russia, India, China, Brazil, and Indonesia) on 26 March, declared “we are injecting over $5 trillion into the global economy.” These are weasel words; by ‘global’ they actually mean ‘domestic’! The response of the ‘left’ in the imperialist countries is to clap its hands and say, we were right all along! There is a magic money tree after all! – apparently not realising that this is exactly what happened post-2008: the socialisation of private debt. Or that, unlike post-2008, this time it will not work.

Yet, as imperialist governments belatedly mobilise – and monopolise – medical resources to confront the coronavirus crisis in their own countries, they’ve abandoned poor countries to their fate. The left in the imperialist countries (or we could just say ‘imperialist left’, for short) has also ignored the fact that there is nothing in these emergency cash injections for the poor of the global South. If you are an ‘emerging market’, well, fuck off and join the queue for an IMF bail-out! As of March 24, 80 countries were standing in this queue, waiting for some of its $1tr lending capacity. $1 trillion sounds like a lot of money, and indeed it is, but, as Martin Wolf, chief economic correspondent for the Financial Times, points out, “the aggregate external financing gaps of emerging and developing countries are likely to be far beyond the IMF’s lending capacity.”

Furthermore, as Wolf suggests, the purpose of IMF loans is to help with “external financing gaps” – in other words, to bail out imperialist creditors, not the peoples of debtor nations; and they invariably come with harsh and humiliating conditions that add to the crushing burden already pressing down on the peoples of those countries. In this sense, they are just like the vast government bailouts of private capital in the rich countries – but without anything added on to finance welfare payments or partially replace wages. The aim of the latter is to purchase the docility of the working class in the imperialist nations, but they have no intention of doing this in Africa, Asia and Latin America.

On March 24, the United Nations issued an appeal for $2bn to fight the coronavirus pandemic in Africa, Asia and Latin America. This money, which the U.N. hopes to raise over the next nine months, is 1/80 of the annual budget of the U.K.’s NHS, and less than 1/2000 of the $4.5tr they plan to spend keeping their own capitalist economies alive. It is also less than 1/40 of the money which imperialist investors have taken out of ‘emerging markets’ during the first three weeks of March, “the largest capital outflow ever recorded,” according to IMF managing director Kristalina Georgieva.

The maximum extent of relief for the collateral effects of the coronavirus epidemic on the peoples of poor countries in Africa, Asia and Latin America was indicated by World Bank president, David Malpass, who said after the G20 summit ended that his board is putting together a rescue package valued at “up to $160 billion” spread out over the next 15 months – a minuscule fraction of the economic losses that the coming global slump will impose on the peoples of the absurdly-named ‘emerging markets’.

“We have a revolutionary duty to fulfill" – Leonardo Fernandez, Cuban doctor in Italy

So, what is to be done? Instead of applauding the bailout of big corporations, we should expropriate them. Instead of endorsing a temporary moratorium on evictions and the accumulation of rent arrears, we should confiscate real estate so as to protect workers and small businesses. These, and many other struggles to assert our right to life over the rights of capitalists to their property, are for the near future.

Right now the priority is to do whatever is necessary to save life and defeat the coronavirus. This means extending solidarity to those who are most vulnerable to the pandemic – homeless people, prisoners, asylum seekers enduring ‘hostile environments’ – and to the dispossessed and victims of imperialism in the slums, shantytowns and refugee camps of the global South. Raghuram Rajan, former governor of the Bank of India, points out that “pending a cure or a reliable vaccine, the world needs to fight the virus into submission everywhere in order to relax measures anywhere.” The Economist concurs: “If covid-19 is left to ravage the emerging world, it will soon spread back to the rich one.”

The coronavirus pandemic is just the latest proof that we need not so much an NHS, but a GHS – a Global Health Service. The only country that is acting on this imperative is revolutionary Cuba. They already have more than 28,000 doctors providing free health care in 61 poor countries – more than the G7 nations combined – and 52 in Italy, 120 more to Jamaica, and are helping scores of other countries to prepare for the pandemic. Even the far-right Bolsonaro government in Brazil, which last year expelled 10000 Cuban doctors, branding them terrorists, is now begging them to return.

To defeat coronavirus we must emulate Cuba’s medical internationalism. If we are to defeat this pandemic we must join with its revolutionary doctors and revolutionary people, and we must prepare do what Cuba did to make this internationalism possible – in other words, we must replace the dictatorship of capital with the power of working people. The coronavirus supernova makes socialist revolution – in imperialist countries and across the world – into a necessity, an urgent practical task, a life and death question if human civilisation is to survive and if the capitalist destruction of nature, of which the coronavirus epidemic is merely the latest symptom, is to be ended.

Thanks to Andy Higginbottom, Shih-yu Chou, and Walter Daum for comments on earlier drafts of this article.

Capitalism's Depleted Reserves: Recognizing and Preparing for Systemic Breakdown

By Ben Peck

The capitalist crisis of 2008 was rescued by an enormous transfusion of public money into the banks. The system has been on life-support ever since.

Despite this, the bourgeois see little prospects of a recovery for their system. Rather, they wring their hands and impotently grimace in anticipation of another slump. Many consider this now a question of "when", not "if".

An organism in crisis will begin to burn off its reserves of fat in order to survive. Austerity has been capitalism's economic equivalent of this process. The system has eaten deeply into its reserves, particularly in the advanced capitalist countries. All the accumulated reforms conquered by the working class in the preceding historical period; relatively decent wages, the welfare state, pensions, etc; in order to pay for a system in crisis have been, or are in the process of being, burned away.

One particularly rich reserve has been Chinese capitalism, which has been heavily depleted. In the wake of the crisis the Chinese pumped half a trillion dollars into their economy. It was one of the greatest Keynesian interventions the world has ever seen. Rather than merely propping up the banks, the intervention contributed markedly to the real economy. According to the former US treasury secretary Larry Summers, between 2010 and 2013 China poured more cement than America did in the whole of the twentieth century! Up until last summer a city the size of Rome was being built in China every two weeks. This intervention gave a clear impulse to the Chinese and world economy.

However, the Chinese reserve is now near exhaustion and the effects of the stimulus are turning into their opposite. Debt has ballooned from $7trn to $28trn - 282% of GDP. Imports and exports are falling. The massive economic stimulus has ended up in a massive crisis of overproduction, provoking a world-wide crisis of steel. In Redcar and Port Talbot in Britain steel works are closing, destroying communities. On the other side of the world, the same course is being taken in China itself.

Political reserves

The depletion of these "economic reserves" has had a corresponding effect on capitalism's "political reserves", which are also being burned away. The old political arrangements are falling apart, including many of the traditional workers' parties. According to a report in The Economist recently, the social democracies in Europe stand at their lowest level of support for seventy years.

The classic example is PASOK, which commanded forty-five percent of the electorate in Greece prior to the crisis. On the basis of its complete capitulation to the Troika and the collapse of the Greek economy it has been reduced to a mere four percent. PASOK is now hanging on to a place in parliament by its fingernails.

In Europe in 2015 the social democrats lost power in Denmark and recorded their worst ever results in Poland, Spain, Finland and also came very close in Britain.

In France the so-called Socialist President, Francois Hollande, is the most unpopular leader in seventy years. By attacking the labour laws his government has provoked a mass movement, which on March 31st carried out a general strike involving 1.2m French workers united against the socialist government.

The strike involved a significant participation of French youth, who now compose a very class conscious vanguard of the struggle. These youth did not go home, but stayed out in an occupation of the squares, the "Nuit Debout" movement, which is reminiscent of the Syntagma and Indignados movement in Greece and Spain. These movements were the basis for the rise of parties which have since supplanted the social democracies. It is not difficult to imagine the same process developing in France.

People are turning away from the social democrats in their droves everywhere, laments The Economist. The explanation is not complicated. Where the social democrats offer no alternative to austerity, but instead work hand-in-glove with the bosses to implement it, they completely undermine their reason for existence in the eyes of the working class.

Even in Britain, the two-hundred thousand-strong movement behind Corbyn is not necessarily enamoured with the Labour Party. In Greece, support for Syriza has collapsed to sixteen percent following its betrayal of the OXI movement and its resumption of the austerity programme of its predecessors.

This crisis of Social Democracy is part of the general crisis of bourgeois democracy, which is fast expending its political capital. This is a dangerous development for the ruling class, as noted by the Financial Times' Martin Wolf on February 2nd in an article entitled "Bring our elites closer to the people":

"...we already face the danger that the gulf between economic and technocratic elites on the one hand, and the mass of the people on the other, becomes too vast to be bridged. At the limit, trust might break down altogether. Thereupon, the electorate will turn to outsiders to clean up the system. We are seeing such a shift towards trust in outsiders not only in the US but also in many European countries."

The reference is to the Trump-Sanders phenomenon in the US, which was anticipated in Europe by the rise of Syriza, Podemos, the SNP and Corbyn on the left, and also the French NF and, more recently, the AfD in Germany, on the right. Class polarisation is tearing at the seams of capitalism's political veneer.

Consciously or unconsciously, when the bourgeois start to worrying about "outsiders" interfering in their system, what they actually express is the fear of the working class taking an interest in the way society is run, and interfering in their affairs.

When the next global downturn arrives, the period between that crisis and 2008 will mark a watershed period in the history of the capitalist system. It will be characterised as one in which the system, far from developing, burned away many of the reserve layers at its disposal, economically, socially and politically, which had acted as "cushioning" in 2008.

This will give the class struggles of the not-too distant future a far sharper character. The struggle on the part of the bourgeois will be far more desperate. The struggle on the part of the working class will take place after a period in which sick and enfeebled capitalism has been able to do nothing to solve its fundamental problems. Illusions that previously existed have been burned away, many defenders of the old system discredited. This is something we must prepare for, and intervene in, to build the forces of Marxism.

Originally published at In Defence of Marxism.