We wrote this text last year, as a reading suggestion for our debate on current class struggle in the US. We thought it might still be of interest. It focusses on the 'internal dynamics' rather than US foreign (military) policy...
In the first meeting of our series we want to discuss the wider historical and social background of class relations in the US. We want to understand more about the context of current struggles and the dynamics which determine their potentials and the lines of division they will have to overcome. Leftist idealism that thinks the working class should just unite e.g. “we should call on the automobile or Silicon Valley workers to go on strike against racist and anti-poor police repression” is of little help. Instead we want to understand the material and historical reasons why this unification of the working class has proven to be such a struggle. There is no way to understand class struggle in the US without understanding the history of racism and how it has impacted on working class composition since the times of slavery. In this text we want to throw out some very basic points about the general development of capital and the working class in the US. We hope that they can help to sharpen the discussion about the situation today.
Some corner stones of class relations in the US
Kautsky was wrong about many things, but he was not stupid. Writing a few years before World War I, Karl Kautsky observed, “the United States shows us our social future within capitalism”. By the turn of the century it became apparent that capitalism in the US was the most dynamic and that the US state was on its way to global dominance – even though this cemented itself only after World War II. While many on the left explain this fact by pointing at the ‘military power’ or the ‘financial influence of the Dollar’, this only scratches the surface by mistaking the outcome as the reason. The main factors of the rapid ascent of capitalism in the US are based in the particularly dynamic and mobile relationship between labour and capital, channelled into an industry that was not hampered by an artisanal past or skilled workers power like in the old continent. This material base combined with a deeply divisive and exclusive ideology of ‘individual freedom’ – from the freedom to settle on new lands to the promises of ‘free labour’ and ‘self-made men’ – created the backbone of the dynamic.
* Migration of labour
The material foundation of capitalism in the US was the enforced mass migration of slave labour for the plantation economy. What people often forget is that the slave-holder system was not static, it was not feudal. In order to prevent a solidification of slave communities and to guard against the dangers of revolts, slaves were moved on frequently. The system needed constant geographical shifts and expansion towards the (western) borders. During the early and mid-18th century nearly a third of all slaves in the South were moved on, the Seminole Wars in Florida in 1819 and Mexican-American War of 1846 have to be seen in this context. The spacial shifting of slaves was not a purely rural affair. Up to the Civil War many slaves were employed in urban industries, but with the threat of uprisings during the war and the danger of an urban slave revolt, many slaves were re-settled back to rural areas, e.g. the drop in slave population of total city population in New Orleans was from 50% to 15%, in St. Louis from 25% to only 2% of the city population.
Between 1830-1860 around 4.5 million people migrated from Europe, most of them from Ireland and Germany. For these migrants the recent history of ‘white’ indentured servitude and the presence of black slavery formed a reminder of their ‘freedom’ and the possibility of obtaining land was tied to the will to ‘move on’. For those who stayed in urban areas and formed the first trade unions ‘free wage labour’ was politically posed against the power of the ‘reactionary’ slave-holding system, but often also interpreted as a white privilege to keep freed black workers and newly migrated Chinese and Asian workers out of certain professions.
The following waves of migration around the turn of the century swept this segment of the working class up the social ladder. The US saw the biggest wave of external migration in its history: between 1880 and 1930 around 28 million mainly southern and eastern European proletarians arrived in the US. This influx of migrants fused with an increase of internal migration from the 1910s onwards. This movement, termed the black flight, proceeded from the South to the North, e.g. in 1910, 90% of black proletarians lived in the (largely rural) South, by 1965 80% lived in cities and 50 per cent lived in the North; or in other terms: in 1910 there were only around 500 black car workers in Detroit, by 1919 this number had increased to 11,000. This multi-national migrant working class formed the backbone of a new syndicalism, with the IWW as its most developed organisation. Internal migration also played a major role in the re-structuring of the working class during the inter-war period. In the 1930s the State of California declared that it would shut its borders towards the thousands of predominantly white proletarian migrants from the Dust Bowl. Many of the ‘Oakies’ landed as internal refugees in camps, mistreated by members of the local population and authorities. Only the war economy of the late 1930s solved this internal social crisis. There has been hardly a year since the end of World War II that the US state was not ‘at war’.
Though internal south-north migration continued to play a major role for the booming automobile industry in the 1960s – both white (‘Hillbillies’) and black workers from the economically deprived southern regions – migration from Mexico and southern America became the main source of fresh labour, which is still the case today. Three-quarters of agricultural workers in the United States are foreign-born, with one-quarter of those undocumented migrants. One in eight workers in construction are undocumented; one in ten in the leisure and service industries are undocumented. In 2014, more than 11.7 million Mexican immigrants resided in the United States, accounting for 28 percent of the 42.4 million foreign-born population. Between 2006 and 2010, the number of Mexican immigrants increased by 200,000 compared to the more than 2 million who arrived in the five years previously. The increase in raids, the expansion of the deportation system and anti-immigration propaganda are designed to repress and intimidate this labour force.
Apart from the early slave migration capital in the US was able to exploit wave after wave of migrant aspiration to ‘improve their conditions through hard work’ – more than any other industrial country in the 20th century. Each wave of migration re-composed the working class on a mass scale and re-shaped its internal hierarchies. The success of US industrial power is largely based on these two aspects of migration: exploitation of aspiration and re-composition.
* Industrial power and capital concentration
The historical advantage of US industry was that a) it could import the most modern textile manufacturing technologies from the British Empire without the limitations posed by the old artisanal organisations and instead employ recent migrants; b) that the supply of raw material, from cotton to coal, was short-distance and abundant; and c) that the internal market allowed unhindered expansion. Despite the high influx of migrants from Europe, the fact that migrants could obtain land for farming limited labour supply and forced US capitalists to invest relatively more in labour-saving machinery than their European counterparts.
In the last three decades of the 19th century, capital invested per worker almost tripled. This was pretty impressive in light of the enormous population growth at the time. The result was that, whereas in 1870 US productivity was some 14% lower than the UK’s, by the end of the century it was 7% greater, and by 1913 it was 20% greater, and more than twice that of France and Germany. The US share of world production, already 23% in 1870, reached 30% by 1900 and 36% by 1913. This was more than the UK and Germany combined, and not far from the share the US would hold in 1950.
A tremendous concentration of capital took place in this period (almost 30% of the companies that made up the Fortune 500 list in the 1990s were founded between 1880 and 1910). The US model of the ‘corporate form’ and ’scientific production management’ of Ford’s assembly line production emerged during the 1910s and would become the archetype of global capitalism. Export of machinery and communication technologies increased. By the mid 1920s manufactured goods exports were double what they had been before the war, and from 1922 to 1928 total exports grew almost 50% faster even than domestic GDP, which grew in real terms by 40%.
US plants were producing over 80% of all the cars made in the world by the end of the 1920s (not even counting the cars made by American multinational auto manufacturers in Canada and Europe). At the end of the 1920s there were close to 30 million cars in the US, and the number of drive-in gas stations had increased from 12,000 in 1921 to 143,000 by 1929. By this point, one in five Americans owned a car, and 60 percent of these cars were bought on credit. While production capacities were diverted towards the war effort during the 1940s, the car industry increased production again during the 1950s – during the late 1950’s and early 1960’s three quarters of all cars manufactured globally were built in the US.
The hegemonic industrial power of the US was not limited to agriculture, cars and weapons. During the 1970s US expenditure on research and development was about four times that of the countries of Western Europe combined. In the newly developed business computer market, US firms supplied one-third of the computers in Japan, half of those in the UK and France, and more than three-quarters of those in West Germany. And given that three-quarters of the computers in use worldwide were located in the US, this meant that in the early 1970s over 90 percent of the global market was in the hands of US firms.
Since then we have seen a massive decline of the manufacturing industry in the north of the US and relocation of industries to the south, e.g. Alabama and abroad. The US state had to build a wall in order to maintain the huge wage gap within its supply-chain of goods and half-finished goods manufactured in neighbouring Mexico. Japan and western Europe rival US car production on the global market, while China has overtaken the US as the main manufacturing nation. This does not mean that the US is a ‘de-industrialised’ nation: The US is still the second largest manufacturing nation in the world, the export of manufactured goods increased by 403 per cent between 1983 and 2005. In 2015 the leading exported manufactured good was civilian airplanes (worth $63 billion), followed by auto parts ($58 billion), pharmaceuticals ($55 billion), autos ($55 billion), and gasoline, diesel and other refined oil distillates ($46 billion). Today, US factories produce twice as much stuff as they did in 1984, but with one-third fewer workers (currently around 20 million), while the manual workforce in logistics increased significantly during the same period (currently around 6 million people).
The position of the US as a global power was based on this enormous expansion of productive capacity, which in turn depended on the capacity of the US state to secure global supply of raw materials and financial resources. The rapid capital accumulation made it easier to deal with the combative local working class – the IWW was not only beaten by repression, but by the development of a more and more sophisticated industrial system based on a vast network of division of labour (symbolised by the automobile industry) and later on by the ability of capital to force the official representatives of the working class (symbolised by trade unions like the UAW) into productivity deals.
This ability of capital to turn workers’ discontent into developmental leaps – like Ford or later on the companies of the micro-electronic and IT revolution did – is partly questioned by the slow decline of the US as the centre of global industrial production.
* Federal state, trade union and party system
The relation between state and society in the US is charged with a tension around ‘libertarian values’ (personal freedom from state interference, patriarchal family values, focus on individual economic independence) and the necessity of, and belief in, a ‘strong state’ (last, but not least as a military power).
The libertarian values historical origins are to be found in a) the anti-aristocratic beliefs of early European settlers, who often escaped state oppression after the bourgeois revolutions in Europe or state church oppression as religious minorities; b) the anti-colonial state positions of the developing US bourgeoisie towards the taxation policies of the British state. In its early phase this libertarian outlook was uphold internally and towards the free ‘white’ population. Externally, with regards to wars with the native American population and bordering nations the weakness of settler militias convinced the US population of the need for a strong state as a military force – questioning their libertarianism.
With economic development and market expansion the spectre of crisis started to haunt US society. The early populist movements of indebted small farmers from the 1850s onwards and intensifying around the 1880s enforced the development of a more centralised banking system in order to control the credit market and better regulation of the railroad trusts and their land-grab policies.
With the industrial take off big capital itself depended on state concerted efforts, from protective trade tariffs to the development of a state-backed finance system: by 1875 “63 per cent of the investment portfolios of the New York national banks was made up of Treasury securities, and the Treasury increasingly played an active role in providing liquidity during frequent periods of stringency and financial crises.” In the absence of the kind of traditional state bureaucracy that oversaw late-nineteenth-century capitalist development in Europe and Japan, the legal profession came to play an especially important role in the modernisation of the American state. The large law firms that arose alongside the new corporations acted as broker-dealers not only with Wall Street and London investment houses, but also with governments at all levels—even to the point of drafting “the documents they needed to build governance and capital structures to settle the rights, duties, and discretionary authority of the participants in the enterprise and [having] them approved by a legislature or a court.” 
The extremely violent and mass scale class struggles starting from the railroad strike in 1877 and generalising around the 1890s also demonstrated that the private militias of individual capitalists were not able to cope with the organised violence of the ‘collective worker’. In the end the state army was required to suppress the uprisings. The 1929 crisis propelled the state further into economic and social management. By the time Roosevelt was inaugurated as president in March 1933 American exports had fallen to one-third of their 1929 level and the net outflow of US direct investment was the lowest on record. Manufacturing production had been cut in half, domestic investment had fallen by 90%, 5,000 banks had gone out of business, farm incomes had fallen by four-fifths, and 25% of the US labor force was unemployed. The initial work programs were not able to diffuse the impact of mass unemployment; it needed the centralisation of industrial command as part of the war effort – the military industrial complex and the intertwinement of state and industry became an established fact.
Given the extreme quality of the crisis in the US in the pre-war years it might seem surprising that there was no large scale state-sponsored fascist movement in the US. This has little to do with the more ‘democratic culture’ of the US state, but with the fact that a) the ‘red threat’ was contained earlier on with the brutal repression of the IWW and b) the state-sanctioned racist and anti-communist violence of the KKK and other white-supremacist organisations and their influence within the white trade union movement was strong enough to split the working class and tie parts of it closer to the fate of the nation.
* The state and trade union relation
The series of sit-down strikes during the mid-1930s forced the state to formalise the relation with the trade union leadership: allow unionisation in order to prevent wildcat action and hope that the trade unions would support the patriotic duties during the war and dampen industrial unrest. The 1935 National Labor Relations Act was passed in response to what Senator Wagner himself called “the rising tide of industrial discontent.” The Wagner Act legalised unionisation campaigns, collective bargaining and the right to strike.
But the war only interrupted the strike wave: the end of World War II gave birth to the greatest strike wave in US history. The 10 million US soldiers brought back into the civilian economy after World War II were the equivalent of 20% of the 1945 workforce; by this measure, it was a demobilisation two-and-a-half times greater than at the end of World War I. And given that 45% of American GDP consisted of military production by the end of the war, it was hardly surprising that many economists feared that “V-J Day meant major depression and mass unemployment.”  The unions’ trading-off of the right to strike in return for recognition during the war was followed by a doubling of their membership, but this went along with the suppression of the radical union culture of the mid 1930s. The official labour movement’s “marriage to the Democratic Party and the warfare state” therefore yielded institutional gains that advanced the union movement’s internal bureaucratic degeneration.
Whether the integration of the main trade union apparatus would last was put into question by an explosion of strikes in 1945–46. At General Motors 225,000 workers walked off the job; 175,000 electrical workers and 800,000 steel workers soon did the same; and these actions were followed by national strikes in railroads and mining. The 1946 rail strike was ended by President Truman threatening to send in the army to run the railroads. The 1947 Taft-Hartley Act constrained union solidarity by banning secondary picketing and reinforcing state right-to-work laws. Trade union officials could be officially ousted once they were seen as having relations with ‘the Communists’.
The $72 billion growth in personal consumption between 1945 and 1950 (an increase of 60% was more than enough to offset the decline in defence expenditures of $69 billion. The most important attempt to solve the contradiction between a) the need for an increase of private consumption and b) the dangers posed by wage militancy was the 1950 “Treaty of Detroit” between general Motors and the UAW. By tying company-level wage increases to estimates of national productivity increases, they implicitly accepted that collective bargaining would not disturb the existing distribution of income. The Treaty also centralised power within the union. As the focus of collective bargaining shifted to the negotiation of company-wide wage and benefit increases, and as the union accepted management’s control over production at the shop-floor level, local rank-and-file power was undermined.
During the strikes of the 1930s automobile companies were able to play black and white workers off against each other, when black workers were used as scabs and later on barred from jobs other than cleaning and moving around material. By the 1960s black workers were crucial for the automobile industry, forming a major share of assembly line workers. Many of these workers were politicised and gained practical experiences during the Civil Rights movement. During the Detroit riots 1967 black workers who showed their company card of GM or Chrysler were able to pass police barriers despite the curfew. Black workers were the driving force of rank-and-file actions against the UAW pact with capital – putting the entire industrial system and its command into question. Only after years of industrial re-structuring, re-locations and redundancies, orchestrated by state and capital, the lid was put back on and working class confidence dampened.
Another longer-term reaction of the state to post-war militancy, in particular after the late 1960s, was the controlled expansion of the personal credit system: one major response to the urban riots of the mid 1960s, drawing on the long-standing identification of home-ownership as contributing to social stability, had been to answer the cry of “Burn, baby, burn” with “Build, baby, build” as one prominent mortgage banker put it. The extension of mortgage credit to marginalised communities—rather than the renewal and massive extension of public housing—would become the central means of coping with inequality in the decades to come. The basis for the subprime crisis needs to be dated all the way back to this moment. It was in this context that Fannie Mae (the Federal National Mortgage Association, semi-privatised in 1968) stepped in to underpin the mortgage market by creating the first secondary mortgage securities.
Last, but not least, the integration of the revolutionary spirit of the 1960s into the Democratic Party machine was significant, in particular when it comes to Black representation. By 1977, more than two thousand black people held office in eleven Southern states (in 1965 the number was seventy-two). Despite these new opportunities for a small number of Afro-Americans the median black family income of 1977 was only about 60% that of whites. 
Since then the expansion of state participation in economic planning in the 1960s, the repressive neoliberal turn and urban counter-insurgency of the (late) 1970s, the combination of cold-war military expenditures and establishment of the prison-complex, the ‘War on terror’ and ‘War on Drugs’ of the 1980s and 1990s has only intensified the tension between ‘libertarian values’ and the ‘need for a strong state’ – of which Trump’s election is the most farcical expression. The federal state / two-party system is under pressure:
The near bankruptcy of individual states and their budgets would force the federal states to centralise the crisis command, while at the same time individual states react more diversely to the social outcomes of the crisis, e.g. in their relation to illegal migrants, to the ‘war on terror’ or capital punishment. While the two-party system has, over a century or more, guaranteed that no smaller parties can access parliamentary power, the current crisis and internal tensions within both Democratic and Republican party seem to lead to an internal blockade of the party system.
In our upcoming debates we will try to use the historical background to reflect on current developments, e.g.:
* If internal and external mobility of workers was fundamental for the dynamic development of US capital, how can we analyse the (seeming) obsession and major expenditures of the US state to put breaks on proletarian mobility, namely through the expansion of the prison system and border walls?
* Are the current ‘right to work’ orders in various states only expressions of the fact that captial does not have to fear working class action and can therefore limit the influence of trade union institutions – those institutions that guaranteed the curbing of shop-floor militancy for decades?
The Making of Global Capitalism: The Political Economy Of American Empire
By Sam Gindin, Leo Panitch
Postwar Political Economy: The President’s Reports
By M. Bronfenbrenner
A Peoples’ History of the United States
By Howard Zinn
For further reading: