The Second International

Division of the subject

In every International, one party was dominant. In the First International, Marx personally seems to have dominated the organization, due to his intellectual authority. In the Second, it was the German Social Democratic Party. In the Third, it was the Russian Communist Party. In the Fourth, it was at first Trotsky personally, and later, it was the Socialist Workers' Party of the United States. Therefore, to examine a history of an International means to focus principally on the history of its dominant party, or personality.

The history of a party is the struggle of the factions within it. But, this history is only the subjective side of the problem. The objective side of the problem is presented by the social and economic problems of the times, the world wars, the revolutions, the civil wars, etc. Hence, every party history has to deal both with the objective and subjective sides.

Hence, the history of the Second International must deal, tentatively, with the following major topics:

1) the history of the German Social Democratic Party (Sozialdemokratische Partei Deutschlands, SPD, from now on),

2) an overview of the Second (Socialist) International,

3) the First World War,

The Russian revolution, and other revolutions which followed WWI, will be dealt with when we deal with the Third International.

Part 1. The History of the German Social Democratic Party (SPD)

1. 2.

1. The logo of German Social Democratic Party (SPD, Sozialdemokratische Partei Deutschlands, http://www.spd.de/ )

2. The logo of the Socialist International today (http://www.socialistinternational.org/), of which the SPD is a member

a. The sources of information on history of SPD

The general rule in gathering information is to use accounts of the people who actually participated in the events described. The higher was the position of the person in the field of action, the more general account of the problem is likely to be.

It should be noted that both Karl Marx and F. Engels criticized the German Social Democracy. Of principal interest here is "The Critique of the Gotha program", 1875, and a letter by Engels to Bebel in 1875.

One source on the history of the SPD is Franz Mehring's “History of the German Social Democracy”, 1897/8. However, this book deals mainly with the early years of the SPD. One may call this a "pre-history".

To understand "revisionism" in the SPD, it is necessary to read Eduard Bernstein. The principal book of the author on this topic is translated in English as "Evolutionary Socialism", 1899 (available at www.marxists.org). 

Close to Bernstein is Karl Kautsky. To understand this "socialist", I recommend reading a collection of articles available in English under the title "Social Democracy vs. Communism" (also available at www.marxists.org).

To hear a criticism of Kautsky, I recommend a book of Lenin's "Proletarian Revolution and Renegade Karl Kautsky", 1918.  

August Bebel is a boring writer. I tried reading his "Reminiscences" several times, but failed to finish. Much more interesting is Leon Trotsky's "My life", Chapter XVI, "The second immigration and the German socialism".

Finally, Rosa Luxembourg, just like Bebel, is boring. The principal pamphlet of hers for understanding the German Social Democracy is "The Junius Pamphlet", 1915. 

1. 2. 3. 4. 5.

1. Franz Mehring

2. Eduard Bernstein

3. Karl Kautsky

4. August Bebel

5. Rosa Luxembourg

b. Struggle between the Lassaleans and the Eisenachs

The SPD originated in the union of two factions: "the Lassalleans" and "the Eisenachs". What were the two factions?

Ferdinand Lassalle (1825-1864, photo on the right) was a son of a wealthy Jewish trader. He participated in the revolution of 1848-49, for which he got a year in prison and was banned from living in Berlin. However, in 1855 Lassalle applied to the police commissioner and to a Prussian prince, begging for the ban to be lifted. Marx says this was a compromise with the powers that be.

In the beginning of 1860's, Lassalle made speeches at the workers' clubs. In 1863, he founded the General German Workers' Association (ADAV, Allgemeiner Deutscher Arbeiterverein). The principles of the organization were: 1) struggle for a general right to vote by peaceful, legal means; 2) state subsidies for workers' productive cooperatives.

Marx, in a letter dating from 13 October, 1868, to Schweitzer, a chairman of ADAV, characterized Lassalle in the following way: "As for the union of Lassalle, it appeared in the period of reaction. After a 15 year slumber, Lassalle has awaken in Germany the workers' movement, and that is his immortal service. But he has committed big mistakes... A trifle starting point - his opposition to Schulze-Delitze - he has made the central point of his agitation, - the state subsidy as opposed to self-help... Thus he was forced to make compromises with the Prussian monarchy and Prussian reaction (feudal parties) and even clerics".

Lassalle was known for his compromising with Bismarck (photo on the left). For example, when a Zolingen mayor, a member of a bourgeois Progressive party, shut down a workers' meeting with Lassalle, the later sent a telegram to Bismarck in which he asked for a protection of the Junker minister against the bourgeois mayor. Appealing to landed aristocracy against capitalists is certainly no revolutionary way.

According to Mehring, in 1864 there were private negotiations between Lassalle and Bismarck regarding the electoral right and state credit for workers' productive associations. All writings of Lassalle were sent by the author to Bismarck. The Junker minister said, in 1878 (i.e. 14 years after Lassalle's death): "Our relations (with Lassalle) could not assume the character of political negotiations. What could Lassalle offer and give to me? He didn't have anything to back him up". Hence, clearly Lassalle was begging, and offering something tangible to Bismarck. 

After the failure of the revolution of 1848, in Prussia we observe a struggle between the Junkers and the bourgeoisie. The Junkers used the organization of Lassalle in support of their interests. For example, Lassalle wanted the Hamburg workers to pass a resolution inviting Bismarck to join Schleswig-Holstein (a state in northern Germany) to Prussia. A union of Prussia with smaller German states, without Austria, was the political plan of the Prussian Junkers. A union of Prussia with Austria was the political plan of of bourgeois parties. 

On 15 December 1864, a trial issue of "Social Democrat", a newspaper of ADAV, was published. Marx and Engels were among the collaborators. In the newspaper, Schweizer spoke favorably of Bismarck and the Kaiser. Hence, Marx and Engels left the editorial board. In a statement of 23 February 1865, they demanded that the same language be used in reference to the feudal-absolutist party as towards the progressive party. Wilhelm Leibknekht (photo on the right) also left the editorial board because Schweizer was too soft on official Prussia.

After the death of Lassalle, his followers were known for compromises with members of the Bismarck government. A friend of Lassalle, Bucher, became an official of Bismarck government and was known for writing memos to Bismarck. Marx and Engels were suspicious of Schweizer. In 1873 his right-hand man, Carl Wilhelm Tölcke, said at a meeting of leaders of ADAV: "Some time before he went to prison, Schweizer told me that in case anything happens, I can always go to Berlin police presidium. Schweizer went there with me and introduced me; especially important is that he manifested a good knowledge of situation of the rooms". C.W. Tolcke said that Schweizer used for his own private purposes the dues paid by the members of the association. After the meeting, Schweizer was expelled from ADAV by a vote of 5595 vs. 1177.

Resume: "Lassaleans" were representatives of the Junkers - the German aristocracy - in the workers' movement. 

As opposed to Lassalleans, another party of the working class of Germany emerged. Its origin (like that of ADAV) dates to 1863, when a Federation of German Workers' Clubs was founded in Frankfurt. The Federation originated from as a left wing of a bourgeois party. Bebel and Rosmessler were the leaders of this movement. Liebknekht, who was originally in ADAV, in 1865 joined the Federation. In 1866 there was a meeting of representatives of Saxon Workers' Clubs and ADAV. As a result of the meeting, a Saxon People's Party was formed, a political wing of the Federation of German Workers' Clubs. At the head of the party were A. Bebel and W. Liebknecht. In 1866, the party adopted a "Hemnitz program". The program:

1) gives a review of the political situation at end of war between Prussia and Austria;

2) discusses "the German question", i.e. the problem of unification of Germany;

3) demands various democratic rights.

We should note that a political program is similar to a medical diagnosis; it must give an evaluation of the subject upon which the party intents to act. Hence, if an organization strives for a global revolution, its program should offer a global evaluation.

Between the Saxon People's Party and the ADAV there were significant differences.

1. The ADAV believed that a compromise with hostile class parties is possible. For example, the workers could support a bourgeois candidate in one district, provided the bourgeois parties supported the workers' candidates in another district. For Liebknecht, the main point of parliamentary elections was enlightenment of the workers.

2. Schweizer was for union with other classes of Germany against "the intrigues of Bonaparte", while Liebknecht thought that Bismarck deserved the difficulties which France and Austria mounted against Prussia.

3. Schweizer of ADAV accepted a German Union called "the North German Confederation", advocated by Bismarck, while Liebknecht opposed it.

Hence, Liebknekht declared Schweizer an agent of Bismarck, while Schweizer declared Liebknecht in secret agreement with the bourgeoisie.

Schweizer had some reasons for accusations against Liebknekht. Mehring writes: "To the question 'what position Social-Democratic Workers' Party takes towards the resolutions of Basel Congress of the First International regarding turning land into collective property', a Social-Democratic Workers Party newspaper replied: 'None. Each member of the party can and should take a certain stand, but the party, as such, doesn't have to do it'... This gave Schwizer grounds to say that the Eisenachs do not have the courage to admit themselves supporters of one of the main principles of scientific communism, i.e. socialization of the means of production, while the German People's Party (of which the Saxon People's Party formed a branch) demanded a straightforward renunciation of the Basel manifesto". In other words, the party headed by Liebknecht and Bebel compromised with those who were against socialization of land.

Also, F. Mehring mentions that the Federation of German Workers' Clubs was subsidized by a bourgeois "Nationalist Union". Supporting the Basel manifesto meant losing this subsidy.

On 17 July 1869 a workers' newspaper announced a general social-democratic workers' congress for 7-9 August, 1869 in Eisenach. At the meeting, there were 110 delegates from ADAV, representing 102 thousand members, and 262 delegates from the Federation of German Workers' Clubs, representing 140 thousand workers. After an initial meeting, it became clear that a mutual work is impossible, and hence each of the two factions started its own meetings. The delegates of the Federation constituted a "Social-Democratic Workers' Party" (SDWP), according to a plan prepared by Bebel. Hence, this party obtained the name of "Eisenachs".

Resume: "Eisenachs" compromised with capitalist political forces in Germany.

In 1874 Tolcke, the right hand man of Schweizer, speaks to the leadership of SDWP about unification of the two organizations. This union was insisted on by Schweizer: "a union at all costs - with the leaders, if they will want it, without them, if they will remain passive, and against them, if they will oppose". ADAV poses no special conditions for unification, and that surprises the leaders of SDWP. We suppose that Bismarck, who was behind the ADAV, wanted the union in order to control the emerging workers' party. 

In 1875 there was a unification congress at Gotha. Marx, in a letter to the leadership of SDWP, criticized a tentative program of the new party. He attacked imprecise, bungled wording of the program, its being geared towards “popular” understanding. Marx argued against clichés of Lassalle which the new unified party was prepared to adopt, such as the Lassallean catchword of the “undiminished proceeds of labor”. Moreover, he criticized the program for its lack of international orientation. For the sake of a political union, the leaders of SDWP gave up Marxist principles and adopted Lassallean mumbo jumbo. From beginning, this was an "opportunistic" party. 

Engels, in a letter to A. Bebel, 1875, restated the objections which he, together with Marx, had against the program:

  1. To begin with, they adopt the high-sounding but historically false Lassallean dictum: in relation to the working class all other classes are only one reactionary mass.
  2. Secondly, the principle that the workers’ movement is an international one is, to all intents and purposes, utterly denied in respect of the present, and this by men who, for the space of five years and under the most difficult conditions, upheld that principle in the most laudable manner.
  3. Thirdly, our people have allowed themselves to be saddled with the Lassallean “iron law of wages” which is based on a completely outmoded economic view, namely that on average the workers receive only the minimum wage because, according to the Malthusian theory of population, there are always too many workers (such was Lassalle’s reasoning).
  4. Fourthly, as its one and only social demand, the programme puts forward – Lassallean state aid in its starkest form, as stolen by Lassalle from Buchez
  5. Fifthly, there is absolutely no mention of the realization of the working class as a class through the medium of trade unions (because Lassalle was opposed to trade unions, and rather organized his people as a sect).
  6. The free people’s state is transformed into a free state. Grammatically speaking, a free state is one in which the state is free of its citizens, a state, that is, with a despotic government.
  7. "The elimination of all social and political inequality”, rather than “the abolition of all class distinctions”, is similarly a most dubious expression. As between one country, one province and even one place and another, living conditions will always evince a certain inequality which may be reduced to a minimum but never wholly eliminated.
  8. “less importance attaches to the official programme of a party than to what it does. But a new programme is after all a banner planted in public, and the outside world judges the party by it”.

Hence:

1. The emergence of the German Social-Democratic Party is tainted by the compromises which its two factions were involved in: the Lassaleans have compromised with the Junkers, while the Federation of German Workers' Clubs with the bourgeoisie.

2. For the sake of a political union, the Eisenachs gave up on Marxist theory and adopted reactionary Lassalean language.

3. The resulting party, the SPD, could not be revolutionary, but opportunistic and reformist, at best.

c. First signs of opportunism in the SPD

On May 11, 1878 an apprentice named Godel took a couple of shots at the German emperor. Franz Mehring, an official historian of the party at the time, represents Godel an an "idiot". The social-democratic press adopted a mocking tone towards the terrorist and loyal tone to the Prussian government. Can one imagine anything similar in the Russian revolutionary movement at the time? Let's remember that in the same year, 1878, Vera Zasulich shot and wounded Trepov, the tsarist governor of St. Petersburg, and how she was met by jubilant crowds and taken away from an attempt by the police to arrest her again.

In Prussia, there was a second attempt at the life of the emperor, committed by a socialist named Nobiling. Among the population, there was a general sympathy towards the terrorist. Mehring writes that "one woman in Brandenbourg got 1 year 6 months of jail for saying, upon getting the first news of the attempt of Nobiling: 'The Emperor, at least, is not poor, he can get a medical care'."

On 19 October 1878, as a consequence of the two assassination attempts, the Reichstag passed a law outlawing socialists. The Social Democratic party did not choose to go underground but simply dissolved itself. Can one imagine anything similar in Russia, where the socialist parties were illegal from the start?

At this time, two illegal social-democratic publications appeared. "Lantern", in Brussels, started publishing in December of 1878. "Freedom", in London, started publishing in January of 1879. These two publications were rejected by party leadership for two reasons: 1) they were too radical; 2) the party was afraid of further persecutions. "Don't confuse us with these terrorists! We're loyal subjects of his majesty!"

However, "Freedom" gained influence on the more revolutionary layers of the party. To counteract that, in September 1879, the party organized, in Switzerland, a publication of its own newspaper, "Social Democrat". Its stated goal was "enlightenment and organization of the masses and struggle against 'making' of revolution". Moreover, the editors said that even though they are outside the power of the German and Austrian law, they intend to avoid any provocations, i.e. even a hint at violence.

d. Economic causes for opportunism in Western social-democratic parties

In 1880's Germany (not only) enters upon the imperialist race and begins to exploit the colonies. The numbers of middle class and well-to-do Germans increase. The income of the workers also improves. Eduard Bernstein, in “Evolutionary Socialism”, 1899, writes:

  1. “The number of members of the possessing classes is to-day not smaller but larger”.
  2. (Similarly to #1) “The enormous increase of social wealth is not accompanied by a decreasing number of large capitalists but by an increasing number of capitalists of all degrees”.
  3. “The middle classes change their character but they do not disappear from the social scale”.
  4. (Similarly to #3) “If the working class waits till ‘Capital’ has put the middle classes out of the world it might really have a long nap. ‘Capital’ would expropriate these classes in one form and then bring them to life again in another”
  5. In spite of the on-going concentration of capital, in the real world there are all sorts of businesses – large, small, medium. Bernstein writes: “The ‘workshop of the world’ [which at this time was England] is, accordingly, far from being, as is thought in the stage of containing only large industries.”

There are several reasons for growth of small businesses. The principal is that some end-products are better adopted to small businesses than to large ones, for example bread made by some small bakeries is more delicious than one made in large bakeries.

Bernstein supports the above assertions with following statistics:

  1. England: “In the British Review of May 22nd, 1897, there are some figures on the growth of incomes in England from 1851 to 1881. According to those England contained in round numbers, in 1851, 300,000 families with incomes from £150 to £500 (the middle and lower bourgeoisie and the highest aristocracy of labour) and 990,000 in 1881. Whilst the population in these thirty years increased in the ratio of 27 to 35, that is about 30 per cent., the number of families in receipt of these incomes increased in the ratio of 27 to 90, that is 233 per cent. Giffen estimates to-day there are 1,500,000 of these taxpayers”
  2. Germany, Prussia: “In Prussia, in 1854, as the readers of Lassalle know, with a population of 16.3 millions, there were only 44,407 persons with an income of over 1,000 thaler. In the year 1894-5, with a total population of nearly 33,000,000, 321,296 persons paid taxes on incomes of over £150. In 1897-8 the number had risen to 347,328. Whilst the population doubled itself the class in better circumstances increased more than sevenfold. Even if one makes allowance for the fact that the provinces annexed in 1866 show greater numbers of the well-to-do than Old Prussia and that the prices of many articles of food had risen considerably in the interval, there is at least an increased ratio of the better-off to the total population of far more than two to one.”

“let us take the figures of the Prussian income tax for 1892, the first year after the reform of taxation of 1891, and for 1907 where the same system ruled. There we get the following picture:

Assessed Incomes

 

Increase

£

1892

1907

Absolute

Per cent

150 to 300

204,714

387,247

172,533

  84.3

300 to 1525

103,730

151,574

  47,847

  46.1

1525 to 5000

    6,665

  17,109

  10,444

156.7

5000 and over

    1,780

    3,561

    1,781

100   

“The increase of the population was slightly over 20 per cent. We see the whole section of the well-to-do go on quicker than the population, and the quickest rate is not in the group of the high magnates, but in that of the simply easy classes. As far as fortunes are concerned, there were, in 1895 (the first year of the tax on fortunes),13,600 with £25,000 and over ; in 1908 this number was in round figures 21,000, an increase of over 50 per cent. This shows how the capitalist clan grows”.

  1. Germany, Saxony: “There from 1879 to 1894 the number of persons assessed for income tax was as follows:

Income

Increase

£

1879

1894

Absolute

Per cent.

Up to 40

   828,686

   972,257

143,571

  17.3

40 to 80

   165,362

   357,974

192,612

116.4

Proletarian incomes

   994,048

1,330,231

336,183

  33.8

 

165

   61,810

   106,136

  44,326

  71.6

165 to 480

   24,072

     41,890

  17,818

  74.0

480 to 2700

     4,683

     10,518

    5,835

154.4

Over 2700

        238

         886

       648

272.0

Total

1,084,851

1,489,661

Average

  37.3

The two capitalist classes, those with incomes above £480 show comparatively the greatest increase.

Conclusions of Bernstein: “It is thus quite wrong to assume that the present development of society shows a relative or indeed absolute diminution of the number of the members of the possessing classes. Their number increases both relatively and absolutely.” This explains why the social democracy of Western European countries talked about “socialist” colonial policy, in the early XX century, and when war came around, in spite of the resolutions of the International congresses, voted for the war credits and supported its bourgeoisie, in the inter-imperialist fight.

 e. What's happening to the assertions of Bernstein today?

The really important question: what’s happening today to the assertions Bernstein made? Let’s look at these again:

1.       “The number of members of the possessing classes is to-day not smaller but larger”;

2.       “The enormous increase of social wealth is not accompanied by a decreasing number of large capitalists but by an increasing number of capitalists of all degrees”

In other words, Bernstein asserts that the number of capitalists is increasing. Bernstein is asserting that Marx's theory that there is a growing economic and social gap between the workers and the capitalists - proposed in vol. I of "Capital" - is false. Let's examine recent economic facts.

1) Mergers and acquisitions

One important fact of modern economic life has been “mergers and acquisitions” of transnational corporations, in other words international concentration of capital. Wikipedia article on “M&A” gives the following rationale for the action:

1.       “Economy of scale: This refers to the fact that the combined company can often reduce its fixed costs by removing duplicate departments or operations, lowering the costs of the company relative to the same revenue stream, thus increasing profit margins.”

2.       “Increased revenue or market share: This assumes that the buyer will be absorbing a major competitor and thus increase its market power (by capturing increased market share) to set prices.” In other words, elimination of competition.

3.       “Geographical or other diversification: This is designed to smooth the earnings results of a company, which over the long term smoothens the stock price of a company, giving conservative investors more confidence in investing in the company”. In other words, reduce the risks by laying the eggs in several baskets.

4.       “Vertical integration”. Vertically integrated companies form one supply chain.

The mergers movement goes back to the turn of the XX century: “The Great Merger Movement was a predominantly U.S. business phenomenon that happened from 1895 to 1905”. Big companies that emerged in the early XX century (DuPont, US Steel, and General Electric) did so because development of technology and mass production required big companies. Thus, as an American economist J.K. Galbraith notes, in his book “The New Industrial State”, a jet airplane or an atomic power station require big companies and a long-term economic planning. Thus, in the capitalist world today, there are only 2 companies that build commercial passenger jets (Boeing and Airbus). So much for the small bakeries.

Wikipedia gives a table with following “waves” of mergers and acquisitions:

Period

Name

Facet

1897–1904

First Wave

Horizontal mergers

1916–1929

Second Wave

Vertical mergers

1965–1969

Third Wave

Diversified conglomerate mergers

1981–1989

Fourth Wave

Congeneric mergers; Hostile takeovers; Corporate Raiding

1992-2000

Fifth Wave

Cross-border mergers

 In a 2000 year article “Corporate Mergers Skyrocket”, we read: “The trend toward corporate consolidation gained significant momentum in 1999, when the value of worldwide mergers and acquisitions reached a new record of $3.4 trillion (in 1998 dollars). (1) This was an astonishing 40-percent increase from the previous record of $2.5 trillion--established only in 1998. (2) Since 1980, the annual value of mergers has risen 100-fold, reaching a cumulative $15 trillion. (3) In 1999, more than 32,000 deals were announced, triple the number of 10 years earlier and more than 30 times as many as in 1981.” So, we’re dealing with an increasing consolidation of companies, squeezing out the little and small capitalists.

The article continues: “(4) In a sign of globalization gathering pace, the dollar value of mergers across national boundaries rose even more strongly than that of all mergers, almost doubling to $1.1 trillion in 1999. (5) While cross-border mergers were typically below 20 percent of the value of all mergers in the early 1980s, today they represent 33 percent. (6) The number of cross-border deals valued at more than $1 billion rose from 35 in 1997 to 89 in 1998”. Conclusion: mergers are increasingly international.

“The current merger frenzy is such that yesterday's record-shattering deal looks almost quaint today. In 1998, the biggest announced acquisition--Exxon's purchase of Mobil--was valued at $86 billion. (11) In 1999, the telephone giant MCI Worldcom proposed to buy its rival Sprint for $108 billion. (12) Early 2000 saw the announcement of the two largest combinations ever--between America Online and Time-Warner for $165 billion, and between Britain's Vodafone Airtouch and Germany's Mannesmann for $183 billion. (13) The merger record of 1999 is on track to be surpassed in 2000: the total value of announced deals just 11 weeks into the year is $864 billion--closing in on the total for 1995”. In other words, the value of these “mergers” is increasing, making yesterday’s giants look like second-rate companies. New companies are international behemoths.

“(14) Recent deals have established new behemoths in such diverse parts of the economy as telecommunications, pharmaceuticals, oil, automobiles, and paper.(15) In 1999, one third of the worldwide merger value was concentrated in just three sectors. The telecommunications industry, with $569 billion, was by far the leader, followed by commercial banking ($377 billion) and radio and television broadcasting ($246 billion).(16) Among cross-border deals, telecommunications, too, is the leader, followed by the metals, oil and gas, and chemical industries”. Hence, the principal mergers have been in telecommunications, medical drugs, oil, cars, and paper industry. We can add that recent acquisitions have been between Internet companies, such as Google buying YouTube. In Wikipedia we read: “Three former PayPal employees created YouTube in February 2005.[3] … In November 2006, YouTube, LLC was bought by Google Inc. for $1.65 billion, and now operates as a subsidiary of Google”.

In an article “Mergers and Supersizing of Businesses”, written in 2003, we read: “Mergers, megamergers and empire-building corporate weddings are back in vogue on Wall Street. Almost every day, there is news of some new billion-dollar combination: banking, healthcare, and tobacco in just the past few days… It's not hard for Americans to find examples of this consolidation in their own lives. Four packers sell over 70 percent of all the beef bought in the US. Only two companies in the world make commercial jets. Three wholesalers control over 90 percent of the distribution of drugs. Three companies control almost 80 percent of the confectionary market.” Again, we have to say “good-bye” to local bakeries of Eduard Bernstein. We’re living in the age of huge international monopolists, transnational corporations (TNC’s). And that implies a decreasing, not an increasing, number of capitalists.

 2) The "middle" classes in the U.S.A.

Next question: what’s happening to the “middle classes”, i.e. the small capitalists and “professionals” who serve the big capitalists and the power elite? Let’s remember what Bernstein asserts:

 

3.       “The middle classes change their character but they do not disappear from the social scale”;

4.       “If the working class waits till ‘Capital’ has put the middle classes out of the world it might really have a long nap. ‘Capital’ would expropriate these classes in one form and then bring them to life again in another”.  

On October 25, 2010, the Voice of America reported that the income inequality between the rich and poor is growing to an unprecedented degree. “The latest U.S. Census Bureau figures indicate the number of Americans in poverty is the highest in more than half a century.  At the same time, the Census Bureau says, the income gap between the rich and poor in the United States has been widening in recent years, reaching the greatest disparity ever in 2009”.

The same thing is explained in Wikipedia in terms of the “Gini index”. A “Gini index” is a “coefficient (that) measures income inequality on a scale from 0 to 1, based on the Lorenz curve. On this scale 0 represents perfect equality with everyone having exactly the same income and 1 represents perfect inequality with one person having all income (scores are commonly multiplied by 100 to make them easier to understand)”.

Here is a data for the U.S.: “According to Gini coefficient data, income inequality in the U.S., already among the highest in the post-industrial world,[17] has risen considerably between 1967 and 2005 among households[45] and individuals”. In 2005, the Gini coefficient for the U.S. was at around 40. It has risen 20% since it was started to be measured in 1967. For comparison: “According to the United Nations (UN), gini index ratings for countries range from 24.7 in Denmark to 74.3 in Namibia. Most post-industrial nations had a gini coefficient in the high twenties to mid thirties”. Accidentally, high level of inequality probably explains the high levels of crime in the U.S.

“The Gini index has risen very quickly among a large number of nations besides the US, in particular Japan, where it rose from 24 in the early 1990s to about 39 in 2007, a much faster increase and larger increase than in the US. The same has happened in China and much of East Asia, which has seen very fast economic growth”. In other words, economic growth in China means a few people – well connected to the Politburo of the Communist Party of China – get rich, while the masses remain near poverty.

Now, let’s look at what people living in the USA are saying. In 1998 R-U-Serious published an article called “Crass analysis, or victory over horseshit”. The title implies a class analysis of the U.S. and unmasking the lies that mainstream media feeds us. R-U-Serious describes the U.S. as a kind of a multi-layered “cake”:

“The top layer is relatively thin, filled with a few million recently minted millionaires. A volatile but basically happy US stock market remains high on the hot air balloon of Yahoo capitalism.”  And so the top layer consists of stock brokers, owners of capital. It’s a relatively thin layer, consisting of “a few million” millionaires, an icing on the cake.

The next layer, according to R-U-Serious, is the “professional class”: lawyers, doctors, top computer specialists. The professionals in the U.S. we may regard as “the upper middle class”. These people have some access to capital.

Next is the “middle class” proper. R-U-Serious writes: “The next layer of the cake is fatter still. It's wobbly, a bit liquid, and constantly threatening to sink to the bottom. In the Eighties, Reaganomics somehow managed to "grow the economy" while at the same time decimating the middle class. It was a revolution in expanded profits and lowered expectations, and if you listened carefully enough, you even heard the explicit propaganda of conservative pundits saying that periods of middle class economic comfort like the Fifties and Sixties were "historical anomalies." By 1992, speedy new President Clinton could pep talk the American people into being excited by the notion that they "will have to change jobs five or six times in your lifetimes." By the mid-90s, the expectation of economic security and consistency was pretty much doused. Our now-a-go-go, no-downtime, pay-as-you-go world had been successfully sold as terribly hip and exciting, and successful businessmen were glamorized as big goddamn risk-takers... as fucking *road warriors!!??* A small expansion of temporary opportunities to work, and to invest in the stock market, was enough to qualify as good times for a shaky young temp class that responded to this slight glimmer of economic hope by following their biological imperative to increase the population. But an inchoate sense of foreboding permeates this layer”. The key here is the economic instability. Some of the “young temp class” manage to “invest in the stock market”, and perhaps win a good position in the hierarchy. However, large chunks of this “young temp class” fall to the bottom, as the whole layer is wobbly and “a bit liquid”. We may assume that some of those who fall to the bottom are not the worst layers of the society, as they are the ones who can’t take the lies and the degradation that the decaying capitalist society imposes on the people. In a society where the killers, liars and thieves prosper, the honest and the good folks sink to the bottom. That’s a sociological law.

So, what’s happening at the bottom? “At the bottom of the cake is a layer that may be as large as the one just above it, it's hard to tell. Economically marginalized people with inadequate incomes come in the widest variety of flavors and many, if not most, are invisible. Aside from low-wage earners and part-timers, consider those who have dropped off the radar and out of the unemployment and welfare statistics completely: couch surfers and street crawlers, prisoners, low level drug dealers, barely-surviving freelancers (sound like *you*?), permanent college students, unemployable over-50s, and can't-get-started young adults. This group is not merely unaccounted for in the economic statistics. We are unpolled, unconsidered by politicians and pundits, and-for the most part-unregistered. I will bet my nascent political career, a tub full of Cheez Whiz and a six pack of Robo that this group is at least close to 50% of the population”. In this category, we have bundled together the lower middle class – “low-wage earners and part-timers”, “barely-surviving freelancers” – and the “lumpen-proletariat” – “couch surfers and street crawlers, prisoners low level drug dealers” and addicts. What’s interesting is that this layer of the U.S. is, in the estimate of the writer, around 50% of the U.S. population.

Adding together the evidence of Gini index and what R-U-Serious is saying, we make a hypothesis: big chunks of the U.S. population have fallen to the bottom layer of "the cake".

Now, let’s look at other sources. "The New York Times" wrote on December 29, 2003: "A couple of million factory positions have disappeared in the short time since we raised our glasses to toast the incoming century. And now the white-collar jobs are following the blue-collar jobs overseas. Americans are working harder and have become ever more productive — astonishingly productive — but are not sharing in the benefits of their increased effort. If you think in terms of wages, benefits and the creation of good jobs, the employment landscape is grim. The economy is going great guns, we're told, but nearly nine million Americans are officially unemployed, and the real tally of the jobless is much higher. Even as the Bush administration and the media celebrate the blossoming of statistics that supposedly show how well we're doing, the lines at food banks and soup kitchens are lengthening. They're swollen in many cases by the children of men and women who are working but not making enough to house and feed their families. I.B.M. has crafted plans to send thousands of upscale jobs from the U.S. to lower-paid workers in China, India and elsewhere. Anyone who doesn't believe this is the wave of the future should listen to comments made last spring by an I.B.M. executive named Harry Newman: 'I think probably the biggest impact to employee relations and to the H.R. field is this concept of globalization. It is rapidly accelerating, and it means shifting a lot of jobs, opening a lot of locations in places we had never dreamt of before, going where there's low-cost labor, low-cost competition, shifting jobs offshore.'" And the paper concludes: "Globalization may be a fact of life. But that does not mean that its destructive impact on American families can't be mitigated. The best thing workers can do, including white-collar and professional workers, is to organize. At the same time, the exportation of jobs and the effect that is having on the standard of living here should be relentlessly monitored by the government, the civic sector and the media. The public has a right to know what's really going on". Capital is going where the labor-power is cheap.

Wikipedia, in an article on the American middle class, writes: “A study by Brookings Institution in June 2006 revealed that Middle-income neighborhoods as a proportion of all metropolitan neighborhoods declined from 58 percent in 1970 to 41 percent in 2000. As housing costs increase, the middle class is squeezed and forced to live in less desirable areas making upward mobility more difficult. Safety, school systems, and even jobs are all linked to neighborhood types”. So, this is another indication that the middle class is disappearing.  

There is an interesting evidence showing that while the wealth disparity is increasing in the U.S., the income of the middle classes is also falling. In an article from November 15, 2007, called "The Immiseration of the Working Class", by Michael Roberts, we read: "Just a couple of weeks ago, America's government tax collectors, the Internal Revenue Service, issued a new report. The IRS found that the richest 1% of Americans earned a record 21.2% of all income in 2005, up from 19% the year before. At the same time, the bottom 50% earned just 12.8% of all income in 2005, down from 13.4%. This was a record. IRS data only go back to 1986, but other academic research suggests that the last time wealthy Americans had such a high percentage of the national income was in the 1920s." We remember that after 1920’s there was the Big Depression of 1930’s, and then World War II.

The article continues: "The IRS data show that the incomes of people right in the middle of all the income brackets (where half earn less and half earn more) fell 2% between 2000 and 2005 when adjusted for inflation, to $30,881. At the same time, the income level for the top 1% grew 3% to $364,657, or over ten times as much!" This is an evidence suggesting pauperization of the middle classes. The political consequences of this in the USA is likely to be a right-wing radicalization, as we’ve seen happening to petty-bourgeoisie in Weimar Germany in 1920’s. The growing "tea party" is one indicator of such right-wing radicalization (photo on the right).

As the middle classes are growing poorer, they have more and more difficulties in paying their rents, and hence face the prospect of joining the huge homeless population. On May 4, 2009, in "The New York Times", we read an article titled "More Middle-Class New Yorkers Face Eviction": "Lawyers, judges and tenant advocates say the staggering economy has sent an increasing number of middle-class renters across New York City to the brink of eviction, straining the legal and financial services of city agencies and charities. Suddenly, residents of middle-class havens like Rego Park in Queens and Riverdale in the Bronx are crowding into the city’s already burdened housing courts, long known as poor people’s court... court records show that the number of cases filed citywide for nonpayment of rent jumped about 19 percent in the first two months of 2009 from the same period last year, to 42,257 from 35,588".

And so what happens to the people who lose their apartments? On May 30, 2009, "The Wall Street Journal" published "On the Street and On Facebook: The Homeless Stay Wired". One example: Mr. Pitts, a 37-year old poet who is living under a highway bridge: "You don't need a TV. You don't need a radio. You don't even need a newspaper," says Mr. Pitts, an aspiring poet in a purple cap and yellow fleece jacket, who says he has been homeless for two years. "But you need the Internet."

"Shelter attendants say the number of laptop-toting overnight visitors, while small, is growing...Some homeless advocates say the economic downturn is pushing more of the wired middle class on to the streets". We hear nothing of their political affiliation.

Here is another story of a middle class man: "Aspiring computer programmer Paul Weston, 29, says his Macintosh PowerBook has been a "lifeboat" since he was laid off from his job as a hotel clerk in December and moved to a shelter. Sitting in a Whole Foods store with free wireless access, Mr. Weston searches for work and writes a computer program he hopes to sell eventually. He has emailed city officials to press for better shelter conditions".

And here is a story of a worker: "Robert Livingston, 49, has carried his Asus netbook everywhere since losing his apartment in December. A meticulous man who spends some of his $59 monthly welfare check on haircuts, Mr. Livingston says he quit a security-guard job late last year, then couldn't find another when the economy tanked. When he realized he would be homeless, Mr. Livingston bought a sturdy backpack to store his gear, a padlock for his footlocker at the shelter and a $25 annual premium Flickr account to display the digital photos he takes. One recent morning, Mr. Livingston sat in a cafe that sometimes lets customers tap its wireless connection, and shows off his personal home page, featuring links for Chinese-language lessons. Mr. Livingston says his computer helps him feel more connected and human. "It's frightening to be homeless," he says. "When I'm on here, I'm equal to everybody else." Equality is still a slogan today, as it was in the time of the French revolution.

And another story of a worker-philosopher: "For Skip Schreiber, 64, an amateur philosopher [can a philosopher be “professional”? If yes, then he’s no philosopher but a well-paid bureaucrat!] with wispy white hair who lives in a van, power is the biggest challenge to staying wired. Mr. Schreiber tended heating and ventilation systems before work-related stress and depression sidelined him around 15 years ago, he says. For his 60th birthday, he dipped into his monthly disability check to buy a laptop, connected it to his car battery, and taught himself to use it. "I liked the concept of the Internet," says Mr. Schreiber, "this unlimited source of opinion and thought.... Mr. Schreiber shows the contents of his laptop, including the complete California legal code and files on thinkers from Thomas Aquinas to the psychologist Philip Zimbardo. Mr. Schreiber says writings about human behavior and motivation help make sense of what has happened to him." These people misfit the capitalist system.

It is important to notice that almost all people mentioned in "The Wall Street Journal" article are blacks. In the words of Malcolm X, they form the "revolutionary dynamite" in the U.S. People of color and immigrants are the first to feel the effects of economic depression due to prejudice in the U.S., in fact an apartheid society. On December 8, 2009, "Time" published an article titled "Continuing Segregation is Hurting U.S. Competitiveness". It says: "African-American and Latino schoolchildren are more segregated, according to a January report from UCLA's Civil Rights Project, than they were at the time of Martin Luther King Jr.'s death, in 1968. Nearly 39% of blacks and 40% of Latinos attended schools composed of 90% to 100% students of color in the 2006-07 school year, the report found, and blacks and Latinos are far more likely than their white peers to attend high-poverty schools and "dropout factories" where huge numbers of students don't graduate. With the segment of nonwhite American students at 44% and climbing, the potential economic consequences are dire. "In a world economy where success is dependent on knowledge," the report said, "major sections of the U.S. face the threat of declining average educational levels as the proportion of children attending inferior segregated schools continues to rise".

It is a U.S. myth that “success depends on knowledge”. If “success” means “money”, we see that capitalists increase their wealth not because of their education and "professional skills", but because they collectively exploit the U.S. state machinery. At the end of 2009, www.Indiweek.com published "The top 10 stories not brought to you by mainstream news media in 2009". Here is one of them, titled, "CONGRESS SELLS OUT TO WALL STREET": "In the 10-year period beginning in 1998, the financial sector spent $1.7 billion on federal campaign contributions and another $3.4 billion on lobbyists. Since 2001, eight of the most troubled firms have donated $64.2 million to congressional candidates, presidential candidates and the Republican and Democratic parties". In return, the U.S. President and the Congress bail out the banks and the monopolists. According to one article from 2009, “U.S. taxpayers could have to pay up to $2.5 trillion more to buy the garbage loans that the banks accumulated, saving them from bankruptcy, while maintaining the same greedy shareholders and inept managers that drove the banks to ruin in the first place”. Obama said in his first State of the Union address: "A year ago when I took over as president, our financial system was on the verge of collapse. Experts told us that if we did not act, we might face a second Great Depression. So we acted immediately and aggressively" (Read here). Obama sheds crocodile tears and says he hated this, but we don’t know how much of the money the Wall Street put back into his pockets.

On September 14, 2009, in "Time" magazine we read: "The Department of Agriculture reported that 35.1 million people relied on government help to buy groceries in June — 713,000 more than in the previous month and a 22% jump from the previous year's figure".

On September 5, 2010, AP reported that jobs with middle income are likely to decrease: "the number of middle-income service-sector jobs will shrink, according to government projections". People's comments to the article point to:

1.       Fear of the petty-bourgeoisie sections of the population. An example: a guy named Robert quotes: "Future hiring will mainly benefit the high-skilled", and says: "yeah this is now me. I used to own a business, now I study to learn how to own a new business. I will, I promise I will. What no one tells you is once self employed, always self employed. YOU WILL NOT GET A JOB AFTER OWNING A BUSINESS." In other words, he's afraid that he won't get any job after the training.

2.       Increasing frustration of the middle class with the capitalist relations. Example #1: "Tell business you are into mathematical n-space manifolds and they will hook you up with an automotive shop that specializes in intake manifolds and wonder why you aren't happy".  Example #2: "Due to the greediness, being thirsty for endless profit, the coperations [sic] ship jobs overseas to completely destroy its middle class."

3.       Frustration of "labor aristocracy", i.e. privileged U.S. skilled or semi-skilled workers, with the U.S. social system. Example #1: "The problem isn't no jobs for the unskilled. The problem is the never-ending outsourcing of skilled or semi-skilled jobs. You can't expect people to pull a career change overnight, 3-4 time [sic] per lifetime. It often takes years to learn a new skill, and most people don't have the kind of resources to wait that long without declaring bankruptcy or selling the house. Remember......60% of American live paycheck-to-paycheck. So what ends up happening is.....skilled workers end up taking entry level jobs, and unskilled worker get the shaft... and further down the rabbit hole we go." Example #2: "The only people who can afford an education in this country are the rich, or those crazy enough to keep signing off students loans. I was the latter, I graduated with my degree and fought and clawed to get a job paying 13 dollars an hour, not even enough to pay my loans." Example #3: "The ‘service economy’: we will all be trained as masseurs and masseuses stand in a gigantic circle and rub each others' backs for $40/hr, paid by the government and funded by loans from China. USA!" Example #4: "I can't predict the future....but it sure seems like the present system has failed miserably....and I don't know who to turn to to repair it. So I just do what's best for my family and friends, downsize, save, trade skills, and hope I keep my $23/hr job as an electronic tech with a small company....(wife lost hers). By the way, I am here at the computer because I contract for Comcast weekends and am on call, but the tone of the discussion here seems to indicate the "haves" are all out enjoying a good Labor Day weekend. Guess the teaparty and trickle down bunch will be back on line tomorrow". A 23 dollar an hour job certainly qualifies the person as a labor aristocracy, on a world scale.

4.       The middle class in the U.S. is disappearing. Example #1: "I was taught in college that Marx's theory of what would always happen as the rich got richer and the poor got poorer never happened here because of a huge middle class. Now that it's disappearing...and rather rapidly". Example #2: "After my IT job was off shored to India, by Mr Mark Turd, former hp ceo [sic], it took 18 months to fine [sic] a new one for less pay." Example #3: "How sad. A country of peasants with a few genius'. Is that what we want? Ditch diggers and Rocket Surgeons? Where is the middle class? What a mess. Have fun building the new road. A $30k a year job that cost the Tax Payers $86k."

5.       Some desperate petty-bourgeoisie clearly turn to Nazism. Example #1: "Illegal Aliens are filling approximately 5 million jobs in the United States. Wages, even for the lucky ones who have jobs, are depressed because of this as well. WAKE UP AMERICAN CITIZENS!" We immediately imagine white militias, shootings of blacks, Muslims, etc. Example #2: "Send the Undocumented People Back to there own country as they sucking up all our resources". This talk about "illegal immigrants" as scapegoats gets repeated in a number of other postings.

6.       Some doubt that revolution is possible in the U.S. One example: "Many societies have vast under-classes that never evolve into revolution. I already pointed out why the US is culturally not likely to become ‘revolutionary’. Without a doubt there will be polarization between haves and have nots. We may go to the old Brazilian model, perhaps South African. A society driven by fear, bars on windows, electric fences, guns, dogs, security guards, signs in yards proclaiming "Protected by XYZ company" etc etc." A brave new world!

7.       However, others predict an anti-capitalist revolution. One person quotes a previous posting: "Many societies have vast under-classes that never evolve into revolution”, and says: “Well, there is a threshold point, when the percentage of under_class hit this threshold point, something big will happen. Looking at percentage of population, America already have a very high percentage of population under proverty [sic], 40MM vs 300M, more than 10%, however, due to the safe net from the government, these people can still survive. However, under this recession, with the U3 unemployment of 22%, or 25MM of people who are now unemployed, and if you add their dependents, you are talking about additional 50MM people have no means to survive absolutely once the benefit is running out , not to mention those have their working hour cut by 10%, 30% or even 50%, millions of them, if you add those , 40MM of them, who have been on welfare for long time, you are talking about 90MM of people, or 30% of the population who absolutely have no means to survive once the safe net from the government is cut off. So, what do you expect these people to do , waiting to die slowly or what ? and that is the threshold point". Let’s notice that this comment estimates the lower middle class, together with the “lumpen-proletariat”, at 30% of the U.S. population (while R-U-Serious estimates it at 50%).

Forbes, on November 30, 2010, estimated that the median income of the U.S. families has decreased. It writes: “Median family incomes across the country decreased dramatically from 2008 to 2009, and no region was left untouched by the recession. But despite shrinking paychecks nearly across the board, some cities still stand out for their bigger than average salaries

The place with the highest median family income is the Washington, D.C., metro area, which includes the nation's capital, as well as wealthy suburbs in Virginia and Maryland. In 2009 families in this region earned a median income of $102,340, a 0.7% increase from 2008. D.C. also boasts a better than average unemployment rate of 5.9%, far below the September's 9.2% national average.

San Jose, part of the country's biggest tech hub, saw median family income drop 6.5% to $96,443. San Francisco, a financial center which also relies heavily on the tech industry, experienced a decrease of 3.7% to $90,730 (?)

In second-ranked Greenwich, Conn., and the surrounding areas that make up the Bridgeport-Stamford-Norwalk, Conn., Metropolitan Statistical Area, median family income plummeted by 6.7% to $98,118.

Overall U.S. unemployment rates have climbed from 5.8% in 2008 to 9.3% in 2009 and an estimated 9.7% in 2010”.

We should note that comparing to the rest of the world, the median income of the U.S. families is still very high. However, it is declining. Thus, the data for the U.S. points to conclusions opposite those which Bernstein painted for labor aristocracy and the middle classes, at the beginning of XX century. We can assert that the middle classes are growing poorer, their situation is becoming more precarious, with large chunks falling into the lower middle class or even marginalized, i.e. becoming homeless.

 


Second International, part 2

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