The aim of the first issue of ZEROWORK, which appeared last year, was to begin to provide an analysis of the present crisis from the point of view of the working class. The crisis, we maintained, was generated through a cycle of working class struggle in which capital's postwar Keynesian strategy of planned development was undermined—struggle which occurred throughout the world but which we traced in North America and Western Europe. Beginning with an expanded notion of the working class—one that included the unwaged as well as the waged—we set out to examine the new forms of its activity in the wage struggle, resistance to productivity drives, the battle for autonomy from its official organizations, and the creation of new relations between the employed and the unemployed, the waged and the unwaged, and among the different sectors in each of these groups. The totality of this activity we termed the refusal of work. In looking, in particular, at the struggles of state workers, welfare recipients, auto workers, postal workers, coal miners, students, and housewives, we sought to show how the content, direction, and interaction of these insurgencies posed not simply another cyclical dysfunction of the system, but a historical crisis of capital itself.

In this second issue we continue to develop this analysis with special emphasis on the international character of both the cycle of struggle and capital's response to it, its counteroffensive. Our implicit aim throughout the articles is to determine the composition of the international working class in the context of the circulation of struggle from sector to sector, and from place to place around the world. This is not simply a question of labor and capital mobility or internationalization as such but the simultaneous political recomposition of the global working class and the restructuring of world capital in the crisis—by which we mean the new ways in which workers everywhere are imposing their needs on capital and the ways in which capital is creating new forms of accumulation in which those needs are either incorporated or smashed.

Few would question that the crisis has been developing on a world scale and that capital has been using this critical phase to try to impose a new international "order." But invariably this is depicted as a question of confrontations and deals among countries, or groups of countries—whether industrially "advanced," "developing," "underdeveloped," or "socialist"—concerning terms of trade, international credit, foreign aid, etc. This has been the starting point of all theories of imperialism, whether liberal, radical, or "Marxist"; and there is thus a tendency to claim that the real class struggle of today is the essentially diplomatic effort of the progressive governments of the Third World (and now the Fourth World, etc.) to bring about a New International Economic Order in which the injustices of the global market would be rectified through development. And the issue of imperialism becomes, on the one hand, endless, esoteric discussion of modes of production and forms of dependency, and on the other, lamentations for the death (or at least the limits) of class struggle in the "advanced" countries. For development in those countries is understood as a matter of class collaboration, while the real victims of exploitation—now equated with underdevelopment—are said to be the national economies of the Third World. The final step is to declare the workers of the Third World to be partners with the state in the quest for national self-sufficiency—ironically putting them in the same position as their counterparts in the West supposedly ended up in: cooperating with capital for the sake of development, except that in one case that development is called capitalist accumulation on a world scale, and in the other, socialist accumulation. And it is thus no surprise that there is widespread agreement, from the liberal wing of Western capital to the most ardent Third Worldists, on the prescription for curing underdevelopment: the promotion of labor-intensive production, in other words, putting people to work productively—just as, in the West, the solution posed for the crisis of capital is full employment.

It is indeed difficult to break through this perspective, through the ideologies of national liberation, economic nationalism, and socialist reconstruction—but it must be done, and this second issue of ZEROWORK is a contribution to that effort. In putting forth class struggle as the pivot of the international dynamics of capital, we find ourselves fundamentally at odds with the theories-of-imperialism tradition, beginning with the question of the origins of imperialist expansion. Not only do we reject the notion that its basis was some sort of class accommodation in the West, we maintain that the growth of foreign investment, especially by the U.S. in the past 30 years, was precisely a response to the intensification of domestic class struggle before and after World War II, especially in sectors such as coal, rubber, and transportation. The coupling of U.S. postwar reconversion with the stabilization and penetration of Western Europe and ex-colonial Asia and Africa was the technique by which capital sought to undercut workers' power everywhere through the creation of an international hierarchy of wages, on the basis of which the most powerful sectors of the class could be held in check by capital's mobility, and the conditions of entry of new peasant groups into the multinational factory could be better controlled.

The limitations of the cycle of growth founded on this strategy—Western Europe and Japan were the main beneficiaries—led to a new Development Decade in the 1960's based on investment in productivity-raising technologies and "human capital." Yet this strategy too was violently checked by an upsurge of struggle in which guerrilla movements across the world—but especially in Southeast Asia—along with insurgency among the unwaged (women, blacks, students, etc.) in the West posed a massive refusal of the development being offered. By the 1970's, this situation had created a profound international crisis for capital, forcing it to seek new forms of repression and restructuring of the global system—a new structure of development and underdevelopment in which the Third World as such would begin to disappear.

As the international circulation of working class struggle and as capital in response became more and more a planned, integrated world system, underdevelopment increasingly came to be no longer identified with certain geographical areas. Not only was underdevelopment not an original state, a condition to be overcome through "modernization"—it was no longer simply a function of the interaction of national economies, of a metropole and peripheries. As the focus of the class struggle everywhere began away from national development—whether capitalist or socialist — to the refusal of work and the demand for social wealth, the generation of development and underdevelopment became a set of strategies, weapons used by capital to fragment growing proletarian power by creating a new geography of labor-power and forms of exploitation. In the place of a clear division between a developed West and an underdeveloped Third World, there emerged a complicated pattern of situations, such that we now find rapid accumulation in the Middle East, uneven growth in Brazil, famine in the Sahel, and the rapid flight of investment from Italy, Britain, and New York City, resulting in the "underdevelopment" of the metropolis.

To meet the growing challenge posed by the internationalization of class struggle, capital has been forced more and more to internationalize its circuits as well as its means of control (particularly the state), making it clear that the real "anarchy" of capital lies not in the confrontation of "rich" and "poor" nations, nor in the contradictions of international competition, but in the confrontation of classes on a world scale. Ultimately, the only unplannable and anarchic element of capitalist society is working class struggle, and it is the attempt by capital to stem the international growth of that struggle that has made interimperialist rivalry of secondary importance. Consequently, we now find, for example, the U.S. selling grain to the Soviet Union to help the Kremlin cope with the struggles of Russian agricultural workers; Libya investing in Fiat in the midst of an upsurge of Italian workers; Western banks putting credit pressure on Eastern Europe after another successful struggle over food prices in Poland; China forging improved relations with the governments of Malaysia and the Philippines while insurgent movements continue in those countries; and North Vietnam shipping coal to England during a strike by British miners. What all this points to are increasing concentration and coordination of multinational state power in the West and growing cooperation between capitalist and socialist states—all aimed at resisting a generalized working class struggle for the appropriation of wealth internationally produced. "Imperialism" can now only be understood as essentially the dynamics of the confrontation between the strategy of capital and the struggle of labor on a world scale.

The current phase of class relations in the international crisis shows very clearly not only the extent of capital's counterattack—in the forms of the manipulation of development and underdevelopment, the supposed energy and food shortages, monetary coercion, etc.—but also its limitations. To be sure, there have been serious working class defeats suffered in such places as Chile, Portugal, Afghanistan, and Bangladesh; and it is crucial to understand how this took place. Yet it is also quite clear that in many places capital has faced considerable difficulty in imposing austerity. In Argentina, the military coup has not produced a Chilean situation but an endemic civil war. In Italy, the sacrifices being promoted by the Communists have prompted a confrontation bordering on open warfare. In Poland and Egypt, attempts to increase food prices were defeated by massive riots. In Canada, behind the constitutional crisis set off by the recent electoral victory of the Quebec separatists is a crisis of the national economy resulting from uncontrollable working class demands. In Mexico, rural workers responded to the government's anti-inflation program with widespread land seizures. As far as the U.S. is concerned, despite the talk of a trend towards reinvestment here because of relative stability compared to much of the rest of the world, the "state of the union" is best summarized by the words of the recent report of the Task Force on Disorders and Terrorism: The present tranquility is deceptive. It is urged that it not be taken as a sign that disorder in the United States is a thing of the past. Many of the traditional indicators for disorders are clearly present and need but little stimulus to activate them." (For more on the report, see New York Times, 3 March 1977.)

It is in this context and from this perspective that the articles in this second issue of ZEROWORK seek to analyze the international crisis and thus help to create a framework for understanding the emerging international working class strategy.

The issue begins with a long piece by Harry Cleaver, "Food, Famine, and the International Crisis," which examines the phases of postwar class struggle concerning food and agriculture. Cleaver shows how the various forms of rural insurgencies, along with struggles by urban workers over the availability and price of food, have challenged the successive development/underdevelopment strategies posed by capital in its quest for expansion and global integration of production. From the postwar emphasis on industry and the exploitation of agriculture, to the demise of the Green Revolution and the Development Decade, to the creation of food shortage and famine, Cleaver analyzes the circulation of struggle between workers in agriculture and industry in single countries, between native workers and immigrant workers in regions, and among workers in the First, Second, and Third Worlds—all culminating in a discussion of the present international class confrontation over the basic means of existence.

Philip Mattera's article, "Vietnam: Socialism and the Struggle Against Work," continues a number of themes from the Cleaver piece by focusing on the class struggle history of a country that has played a central role in the postwar period. Mattera reinterprets the course of revolutionary activity against France, Japan, and the U.S. to show that that activity was not simply aimed at the abolition of colonial and neocolonial rule, but was also a refusal on the part of Vietnamese workers to participate in the multinational factory. The establishment of socialism in the north after 1946 and in the south in 1975 turned out to be not the triumph of this struggle, but rather a change in its terms as the plans of the state for Soviet-style industrialization came into conflict with continuing working class resistance to the accumulation of capital in all its forms. Consequently, in his discussion of present-day Vietnam, Mattera goes beyond the current debate among leftists concerning human rights and U.S. obligations to provide reconstruction aid to discern a growing conflict between the demands of the people for greater access to social wealth and the state's efforts to integrate Vietnam into the world economy—a situation that illustrates the crisis of "Third World socialism" and raises the question of the alternatives to it.

The article by Christian Marazzi, "Money In the World Crisis," analyzes how the postwar cycle of struggles has generated an ever-worsening crisis of the international monetary system in the context of the more general crisis of capital. Making the link between unrest in social production and reproduction, and monetary instability, Marazzi argues that the situation following the 1971 inconvertibility move by the U.S. has been one in which a new phase of planned development, a further socialization of capital, is impossible; and as a result, the current international class confrontation, reflected in monetary dynamics, is one of "permanent emergency" in which monetary terrorism is being used to undermine the wage struggle and to thwart a generalized class challenge to the rule of capital. Capital is seeking to maintain this stand-off through the increasing centralization of multinational state power and the simultaneous regionalization of the implementation of austerity, as is seen clearly in the growing power of the International Monetary Fund and the emergence of social democracy as the executor of cuts in social expenditures.

Donna Demac and Philip Mattera's "Developing and Under-developing New York" looks at these monetary dynamics in the context of the paradigmatic struggles within the city that has been at the center of the ''fiscal crisis." Beginning with an account of the struggles of welfare recipients, public sector workers, private sector workers, etc., and showing how the unique interaction of these struggles in the 1960's and early 1970's undermined the social order in the city, Demac and Mattera go on to describe the forms of capital's counterattack in New York. Using reductions in state and federal aid to the city as well as the creation of a debt crisis, business and government have made massive cuts in the budget, laid off tens of thousands of city workers, and ended even the semblance of democratic rule—all in the attempt to bring the working people of the city back under control and thus permit New York to play its role for world capital more effectively.

The article on New York not only concludes this issue, it serves as the starting point for one of the main aspects of the future research and analysis of those of us involved with ZEROWORK. Some of us are working with a group in New York in order to extend our examination of the current crisis by looking at the ways in which the implementation of austerity and the intensification of work in the social factory have affected the life and struggles of people in New York. Taking the city as a paradigm, we are especially interested in he new forms of the segmentation of the working class and how these are reflected in the various alternatives to steady waged work that people have chosen or have been forced to adopt, including living on unemployment insurance or welfare, part time and occasional jobs, hustling, and crime. Our aim in this is not to engage in urban sociology or labor market research, but to determine how different sectors of the class are coping with austerity and how they are organizing to fight it.

Others of us are continuing the examination of capital's counteroffensive on the three vital fronts of food, energy, and money. We will study closely the emerging working class strategies for resisting these assaults and in doing so we hope to clarify the mechanisms of both world capitalist planning and the international circulation of working class struggle. Finally, we want to extend the analysis of the crisis of socialism begun in Cleaver's (Eastern Europe and the Soviet Union) and Mattera's (Vietnam) articles in this issue—particularly the case of China.

Still others of us are engaged in ongoing research in working class history. In all, we are a network of militants with centers currently in New York City, Rochester, Texas, and Montreal and associated collectives in Britain and Italy. We have no pretensions of forming any sort of party; rather, we are seeking to make a major, new contribution to the international debate on the crisis and the working class response. The first issue of ZEROWORK began with the statement: "The present capitalist crisis has made the problem of working class revolutionary organization more urgent." That problem, of course, remains urgent and remains the basic concern of ZEROWORK. And we intend to address this problem more explicitly in our future issues as we work to develop and circulate organizational strategies that do not contradict the autonomy of the working class. This is obviously not the project of ZERO WORK alone, but what we hope is that ZEROWORK can become a forum in which the fundamental questions of the struggle can be discussed in a new and totally undogmatic manner. We invite you to join us in this endeavor.

The following letter was circulated [by the ZeroWork editorial collective] shortly after issue #2 [of ZeroWork] was published:

Dear Friend,
We are writing to you because of your past activity against U.S. aggression in Indochina and your present concern with the process of reconstruction in Vietnam. Over the past year there has been an intense debate within the peace movement and the Left concerning the issue of human rights in the postwar Socialist Republic of Vietnam--a debate that has raised a number of crucial political questions. Yet we in Zerowork feel that the terms of the debate have been too limited, and thus we want to call your attention to an article in our newly published second issue which we think presents the issues in a broader and politically more useful framework.

"National Liberation, Socialism, and the Struggle against Work: The Case of Vietnam," written by Philip Mattera, attempts to analyze the current situation in that country by reinterpreting the history of the revolutionary activity against the French and the Americans. Mattera argues that at the heart of that activity was autonomous struggle by peasants and industrial workers not simply against colonialism and neocolonialism, but against the accumulation of capital itself, against being incorporated into capitalism's growing multinational factory. Moreover, Mattera claims, this struggle continued after the establishment of socialism in the north in 1946 and the south in 1975 as the plans of the new state apparatus for Soviet-style industrialization came into conflict with the demands of the people for greater access to social wealth. It is this conflict, beyond that concerning the reeducation of dissidents, that is the main crisis in Vietnam today, as well as in the rest of the Third World.

Consider these statements in the June 3, 1977 issue of the Far Eastern Economic Review:

"A major incentive to foreigners investing in Vietnam is the availability of cheap labour, with average wages of US S20-$25 a month...Vietnamese officials (have) underlined the investment advantage of Vietnam's political stability . . . Citibank officials seem impressed by the seriousness of the Vietnamese and their accommodating attitudes."

What do we make of this? Do we accuse Vietnam's new leaders of selling out the revolution? Or do We accept that Vietnam must make compromises to survive in the international economy? If we opt for the latter position, then how do we respond to growing evidence--which Mattera begins to document--that urban and rural workers in Vietnam are rebelling against being served up as cheap labor to Western and Japanese multinational corporations? This is a question of grave international political importance, especially for those of us concerned with anti-imperialism and socialism in the Third World.

We think Mattera's article forces all of us to come to grips with the growing confrontation in the Third World between the demands of the people for immediate improvements in living standards and the austere plans for development drawn up by governments. We thus urge you to order a copy of Zerowork and to study and discuss the articles with others. We would also be pleased to receive your responses to the Vietnam and other articles in Zerowork; and we will consider all substantive comments for publication.

Thank you,
The Zerowork Editorial Collective

NATIONAL LIBERATION, SOCIALISM AND THE STRUGGLE AGAINST WORK: The Case of Vietnam
by Philip Mattera

The struggle of the Vietnamese people against the U.S. and its surrogates in Indochina has been one of the most crucial political phenomena in recent history. The astounding victory over the sophisticated U.S. military machine has not only given encouragement to revolutionary movements throughout the so-called Third World, but has also acted as a catalyst for the wave of struggle by young workers in the schools and factories of North America and Western Europe over the past 15 years. All of us involved with Zerowork, undoubtedly as well as most of you reading it, gained much of our political education in the antiwar movement.

It is now two years since the military aspect of the Vietnam struggle came to a successful conclusion with the liberation of Saigon. The country has been reunified, and the Socialist Republic of Vietnam has been declared. Throughout the world, Vietnam is being heralded as a decisive victory over imperialism. But now that the victory celebration is over and Vietnam is getting down to business, we must ask what sort of business it is getting down to. What does it mean to say that imperialism has been defeated in the country? And what is the nature of the system that is taking its place?

The usual response is that the defeat of imperialism means the triumph of national liberation and socialism. This is said to mean, first, an end to colonialism: the campaign for Vietnamese independence and true national sovereignty, which was fulfilled in 1954 north of the 17th Parallel, has now been achieved for the entire country. The second aspect is said to mean an end to neo-colonialism: economic dependence on Western capital has been fully smashed and the country is now free to develop. It is on these bases that the watchwords of the Vietnamese revolution are said to be Patriotism and Production.

It is undoubtedly true that the Vietnamese people were struggling for an end to foreign domination, but what is not so clear is that they were struggling to make possible the kind of development now being imposed by the regime. In fact, there have already been indications of a growing crisis in Vietnam, resulting from opposition between working class demands for significant improvements in and greater power over the conditions of life, and the efforts by the Party and the state to promote rapid accumulation of capital. It is beginning to appear that the struggle of the Vietnamese working class is going beyond the struggle for "Third World socialism"—coercive, labor-intensive production as the price for eliminating poverty—and is emerging as a struggle against the accumulation of capital itself (even in its socialist form): in other words, a struggle against work. The aim of this article is to trace the evolution of this struggle from its beginnings in the resistance to the development imposed by the French to the conflicts within the revolutionary regimes themselves, first in the north and now in the entire country. The significance of this history is greater for the situation in Vietnam is indicative of a new form of international working class struggle that is posing a severe crisis for capitalism and socialism alike.

THE FIGHT AGAINST "CIVILIZATION"

The modern era of working class struggle in Vietnam began with resistance to the "civilizing mission" of the French. The Vietnamese peasants had, even before the European colonial period, a long history of opposition to both the indigenous aristocracy and that of China, which ruled Vietnam (with some interruptions) from 111 B.C. to 1427 A.D. The continuation of this tradition into the period of Western penetration was clearly one of the main causes of the long delay in the consolidation of French control—as is suggested in this comment by a French observer in 1864: "The resistance center is everywhere, subdivided ad infinitum nearly as many times as there were living Annamese. It would be more exact to regard each peasant fastening a sheaf of rice as a center of resistance."(1) After the French finally gained complete "authority" with the 1883 Treaty of Protectorate, peasant resistance intensified in opposition to the colonial administration's establishment of government monopolies on alcohol, salt, and opium. It was through these monopolies and the harsh penalties for violators that the French obtained the capacity for direct manipulation of the standard of living of the Vietnamese and appropriated the funds (supplemented by those from the notorious impot personnel, or head tax) to finance grandiose "public works" projects. Opposition to this brutal fiscal policy culminated in the massive uprisings of March and April of 1908, in the course of which large demonstrations were held and tax collectors were attacked and executed.
The resistance forced the French to make some concessions, such as reforms in the health and justice systems, but the administration pushed forward with its other assault on the peasants: the concentration of land ownership. The French strategy consisted of two movements: the expansion of arable land and the transfer of ownership of this, as well as much of the previously cultivated acreage, to French and a few wealthy Vietnamese landlords. It has been estimated that land appropriation and concessions by the administration amounted to some 900,000 hectares—more than 40 percent of the cultivated surface—with the result that in Tonkin (northern Vietnam), for example, about .1 percent of the total landholders ended up owning 17 percent of the cultivated land.(2) The result for "the economy" was that rice became a major export commodity, with the total sold abroad rising from only 57,000 tons in 1860 to 1,548,000 tons in 1937.(3) The result for the peasants was a rapid decline in their level of consumption, as the French used heavy taxation (in kind) and low prices paid to small producers to maximize the total rice available for export. Joseph Buttinger shows that per capita rice consumption fell from 262 kilograms in 1900, to 226 kilograms in 1913, and down to 182 kilograms in 1937. (About 220 to 270 kilograms a year is considered the minimum necessary to sustain an adult.) And he goes on to declare: "Under this system, the alternative for the small peasant was not either pay [high taxes and high interest rates] or starve: There was no real alternative. In order for the landlords to remain rich and for the French to profit from the export of rice, the majority of the impoverished rural population had to pay and starve."(4)

This process of primitive accumulation created a huge labor force of peasants forced off their land. Some went from being small landholders to being tenant farmers, sharecroppers, or agricultural laborers; but the miserable conditions of these groups, too, led many to seek to live on the margins of society. This created a serious vagrancy problem for the French, who responded in a number of ways, including the shipping of 100,000 Vietnamese to France during World War I to serve as manual laborers in the armed forces and defense industries. Yet, even actions such as this did not deter the resistance of the tadien—the landless rural proletariat—who rose up repeatedly against the colonial administration.

It was thus only through sheer force that the French were able to direct much of this surplus labor into what became, aside from rice growing, the major industries of Vietnam: the coal mines and the rubber plantations. The French introduced rubber into Vietnam from Malaya in 1897, and at about the same time they began to exploit the rich coal deposits at Hong Hai, near Haiphong in the north. Because of the large number of peasants who made themselves unavailable for work on the plantations and in the mines, the French were forced to use more than the promise of a wage to obtain their workforce. Buttinger writes: "Labor for plantations and mines was hard to get because peasants would rather be unemployed and hungry in their native villages than be turned into slaves on rubber plantations . . . Consequently, forced labor, or corvee, as the French called it, although legally abolished by the colonial regime, flourished under the French as never before."(5) Mandarins in the service of the French were empowered to enlist forcibly large numbers of men from each village; but as the resistance to work was maintained, the mine and plantation owners tried using the Cambodians, the Laotians, and the various ethnic minorities in Vietnam, such as the Muongs and the Mois—yet, soon, these groups too gained reputations for being "unreliable" and "very reluctant to work."(6)

The next step was the use of native labor agents (cal) and the contract labor system. The agents used all forms of deception and coercion to get peasants to sign three-year contracts, during which time the peasant became enslaved to both the plantation or mine owner and the agent himself. After collecting his commission from the owner, the agent forced the "coolie" to borrow money from him at exorbitant interest rates and purchase food and medical supplies from him at astronomical prices. The working conditions themselves were savage: the working day was at least 10-12 hours; health care was at first nonexistent and later completely inadequate; the mortality rate was extremely high; and wages were minimal, the French owners claiming that efforts to raise the daily pay of 2.5 francs would "spoil the coolies by killing their incentive to work." The owners also paid workers as infrequently as possible, and in 1927 they pressured the colonial administration to permit them to withhold up to five percent of wages, supposedly to "protect the workers against their own improvident habits and their tendency to squander their earnings on games of chance."(7)

Resistance to all this took many forms. Some workers, desperate to escape from the hellish conditions of the plantations and mines, resorted to self-mutilation to make themselves unfit to work. A much larger phenomenon was desertion: the rate at which workers "breached their contracts" rose steadily in the early 1900's, reaching

Robberies of the wealthy and seizure of their property by bands of peasants became an everyday occurence.
a high of about 50 percent in the 1920's with the burgeoning of a black market in forged identity cards and workbooks. Some workers abandoned the job as soon as they saw the miserable conditions, while others simply didn't return from their short Lunar New Year vacation at home. An indication of the extent of absenteeism and desertion is seen in the fact that in order for plantation owners in the south to maintain a workforce of 22,000 they had to recruit more than 75,000 "coolies" between 1925 and 1930.(8) Similarly, in the principal mines of Tonkin in 1936, of 24,000 workers employed, 18,000 had been working less than five months.(9) This large-scale refusal of work also served to increase the power of those who remained in the plantations and mines. In order to prevent everyone from abandoning, the French were compelled to improve conditions and pay, with the result that the index of wages rose 25 percent between 1925 and 1930.(10)

THE "RED TERROR"

The struggles of Vietnamese workers in the rice fields, the plantations, the mines, and the factories came together in the "red terror" of the 1920's and 1930's. The main thrust of this was in the countryside, where agricultural workers began to undertake more and more daring actions against the landlords. Robberies of the wealthy and seizure of their property by bands of peasants became an everyday occurence, so much so that the French administration was forced to step up substantially its means of social control to cope with this banditry. In Cochinchina (southern Vietnam), for example, the colonial police budget jumped from 7.7 million francs in 1919 to 20.7 million in 1929.(11) In fact, the peasants were threatening the very foundation of social relations in the countryside by attacking and seizing the rice crop and the storehouses. A contemporary report indicated that "Tenants and laborers often confiscated the major part of the crop before the harvest or attacked the granaries of local landowners. Attempts to stop them met stiff resistance—so much so that many landowners left home each night for nearby towns where they could sleep under the protection of the colonial militia."(12)

In 1930, the struggle began to take on mass dimensions as revolts occured in Cochinchina and Annam (central Vietnam). The revolts were all eventually suppressed, but they severely undermined the bases of French rule. The most powerful of the rebellions took place in Nghe-An and Ha-Tinh provinces in the narrow lowlands of central Vietnam, where the French administration was replaced by soviets for as long as nine months.

The first phase of these uprisings centered on resistance to the colonial fiscal policy, especially the head tax and other levies and the monopolies on alcohol, salt, and opium. Large demonstrations were held in the cities—bringing together rural and urban workers—during which government offices were destroyed, tax officials were attacked, cadastral records were burned, and government storehouses were sacked. Then, once these struggles gained a certain momentum, the focus of the revolt became explicitly one of appropriation, meaning not only the refusal to pay taxes, rents, and debts, but also the large-scale seizure of food and other goods from the state and the wealthy; in other words, seizure not of the means of production, but of the means of existence.

All of this indicated the extent to which a bona fide working class had emerged in Vietnam and was making generalized wage demands in both the cities and the countryside. The peasants—whether they were agricultural laborers, tenant farmers, sharecroppers, or small landholders—no longer had a peripheral relation to capital. The French administration's use of taxation, corvée, manipulated prices, etc. established a clear class relation between the peasants and the state. Moreover, the use of land expropriation and the propulsion of the rural population into the labor market destroyed the "feudal" nature of that relation and turned it into one between capital and labor. The French used landlessness, along with the impoverishment of those who managed to hold onto a few hectares, to manipulate rural labor-power and have it serve as a reserve army to help control the wages of those already forced into the plantations, mines, and factories. It is in this sense that even those without a wage were put into a wage relation to and a wage struggle with capital.

This struggle took several forms. First, there was the struggle of the wageless for the wage itself—not for the joy of being truly productive, but for the additional power the wage provided vis-à-vis capital. It was not so much a struggle to enter the factories as it was a struggle to escape the uncertain and miserable conditions of the "Surplus population." At the same time, the struggle took the form of a demand for land—not for the sake of returning to an idyllic feudalism, but for achieving some degree of autonomy from the capitalist labor market. Ownership of some land made it more feasible for people to make themselves unavailable for work in the plantations, mines, and factories—all the more so since the land demand went along with the continuing struggle against taxation, corvée, etc. The most advanced struggle was the one we mentioned in connection with the uprisings of the 1930's—a form of struggle

[The struggles] all aimed at the same goal: to undermine the accumulation of capital being imposed by the French and replace it with the accumulation of the power of the working class.
requiring a great deal of class power—namely, the mass appropriation of social wealth. The demands of rural workers for land or for the wage, the demands of plantation, mine, and factory workers for higher wages and shorter hours, and the demands of all workers for more wealth and less work all aimed at the same goal: to undermine the accumulation of capital being imposed by the French and replace it with the accumulation of the power of the working class.

SOCIALISM AND SOCIALIST EXPLOITATION

It was during the 1930's that the Communists began to appear on the political scene in Vietnam. They started out as a group of individuals sympathetic to the Soviet Union, announcing themselves with a 1929 manifesto that declared: "We want to hand over the factories to the workers, rice fields to the peasants, the sources of revenue to the people, and power to the assemblies of representatives of all the working classes of the nation." But the pressure of the Comintern line was soon felt, and at a congress only one year later—when the Indochina Communist Party was founded—they declared that Vietnam was not ripe for such a revolution and must first undergo a "bourgeois, democratic" one. The vagaries of political ideology aside, the Communists in the 1930's did support the struggles of the working class, and this enabled Ho Chi Minh and the Vietminh (which the Communists dominated) to assume leadership of the resistance movement during the Japanese occupation. The chaos during this period increased the appeal of Communist leadership, especially in the north. For the Japanese continued the French policy of seeking the maximum exploitation of Vietnamese labor, particularly in agriculture. Much of the rice land was converted to jute and other war-related crops, while occupation troops scoured the countryside at harvest time to collect as much rice as they could get away with. This policy, combined with the serious typhoons and resulting food shortages, led to widespread famine in Vietnam in 1943-1945. The most serious situation came about near the end of the war: "Starvation began in October 1944 and before the spring harvest in 1945 as many as two million Vietnamese had perished."(13)

Following the defeat of Japan, the Vietminh proclaimed the Democratic Republic of Vietnam (DRV) in September 1945 and undertook a number of progressive measures to abolish some of the forms of French oppression: the hated monopolies on alcohol, salt, and opium were done away with; the head tax was ended and other levies were greatly reduced; utilities were nationalized; the eight-hour day was established; and wage levels were increased. And once Vietminh rule in the north was solidified by the military victory over the French and the Geneva Accords, the DRV embarked on a comprehensive land reform program. Yet it soon became clear that this policy was not designed to meet the land demands of the working class, but to pave the way for "socialist development," meaning Soviet-style rapid industrialization by exploiting agricultural workers to the maximum. Le Duan, now First Secretary of the Vietnam Workers Party (Lao Dong) and chief theoretician of the north, has described the intentions of the Communists in this way: "Under the conditions of our country, our Party considers socialist industrialization, with heavy industry playing the decisive role, to be the central task all through the period of the transition to socialism . . . The struggle between the capitalist and socialist paths in the North of our country is primarily a struggle to raise small production to the level of large-scale production."(14)

The first step by the DRV while still fighting the French was the tax reform of 1952, which simplified the system of levies, but imposed an agricultural tax of five to 45 percent, with a surcharge of 15 percent for village expenditures. This placed a heavy burden on landholders—especially the richer peasants, but also those with modest acreage. One observer claims that the government ended up taking an average of more than 40 percent of a family's income in the form of paddy (unthreshed rice).(15) The DRV followed this with the Land Rent Reduction Campaign of 1953-1954 and the Land Reform Campaign of 1954-1956. These campaigns were aimed at suppressing the wealthiest of the landlords and were promoted by the Party with the slogan: "Depend completely upon the poor and landless peasants, unite with the middle-level peasants, seek an understanding with the rich peasants, and liquidate the landlords." The Party and the state put enormous pressure on the people to carry out these programs, with the result that an orgy of recriminations swept upon the country. Some observers, particularly rightwing ones, claim that 50,000 people were executed in the campaigns and 100,000 were arrested and sent to forced labor camps.(16) Many of these same writers also claim that the total redistribution of land, animals, and farm implements had a minor impact on the living conditions of the majority of peasants.

It is difficult in subjects such as this to separate out fact from the morass of ideology and propaganda, but what seems clear is that the main importance of the land reform process was not the exact number of hectares redistributed or even the number of people executed or jailed, but the role of this process in the development of the class relations between the rural proletariat and the state. To begin, there is no doubt that land reform as it was carried out served to exacerbate the divisions within the Vietnamese population. The positive side of this was the movement to eliminate the remaining wealthy landlords, who were maintaining the same oppressive conditions in the countryside as existed under the French. At the same time, the campaign brought out the divisions within the working class itself. The fiercest antagonisms were often between the landless peasants and those with small holdings, while the entire rural workforce became further divided from the growing industrial workforce in the cities, which found itself in a better position to demand wage increases from the state.

When these divisions did not disappear as the land reform process continued, widespread struggle came to be directed against the Party and the state, since it was becoming more and more apparent that the campaign was merely a prelude for collectivization. Such a transformation of rural production was opposed as strongly as was the land expropriation under the French, for collectivization meant being recomposed into large units that eliminated the forms of class organization and power bases built during decades of struggle against the colonialists. The strategy of the DRV was to "kill the spirit of ownership" by "kill(ing) a few landlords in every village and frighten(ing) the whole population."(17) The rural working class may have been frightened at first, but it soon turned rebellious. This was anticipated by the DRV, and in 1956 the Party put an end to the period in which "the masses had been given a free hand" in the land reform program. A Rectification of Errors Campaign was instituted, with government spokesman Vo Nguyen Giap admitting publicly that abuses had taken place: peasants with modest holdings had been attacked, too many people had been executed, torture had been used extensively, etc.

The announcement of the campaign was, however, unable to halt the momentum of working class resistance to the reorganization

The only way the government could prevent further mass uprisings was to billet soldiers permanently in workers' homes and to exercise strict control over travelling blacksmiths.
being attempted by the Party and the state. As the rectification process was getting under way, a large revolt erupted in Nghe An province (which, embarassingly enough for the government, was the birthplace of Ho—but it was also the site of the major 1930's uprising against the French)_ The rebellion involved 20,000 people, but it was quickly and brutally suppressed by the army, with an estimated 6,000 people killed or arrested. Yet, people who had fought for decades against the French and Japanese could not be defeated so easily. Resistance continued, and the only way the government could prevent further mass uprisings was to billet soldiers permanently in workers' homes in the province and to exercise strict control over travelling blacksmiths to prevent them from aiding in the illicit production of weapons. The Party and the state admitted a certain measure of defeat on April 19, 1957, when the DRV press agency announced tersely that "for a definite time period, the Party shall, above all, increase its strength in the cities and industrial centers."(18)

Finally, when the DRV proceeded with its collectivization program in 1958, it was forced to scale down drastically its plans for full-fledged communes and accept instead many "semi-socialist" co-ops. Even by 1960, when 76 percent of the land and 85 percent of the farm units in the north were collectivized in some form, only 40,000 hectares were held by communes, while 700,000 hectares belonged to the co-ops.(19) The resistance to the communes was not a matter of reactionary individualism standing in the way of progressive communalism. Rural workers knew that the introduction of communes would mean greater control over their working conditions by the Party and the state, as well as limitations on their standard of living for the sake of accumulation. Increases in agricultural productivity were the concern only of government planners seeking to promote industry; the concern of rural workers was to make themselves less vulnerable to socialist exploitation.

DEVELOPMENT AND STRUGGLE IN THE SOUTH

During this time, workers in the south of Vietnam were struggling against another form of development—that being imposed by the U.S. also at the point of a gun. In the course of the Diem regime in the 1950's—before the outbreak of full-scale war—the attempt to control the rural working class was carried out through a series of land reform schemes which were certainly different from those in the north, but whose ultimate aims were essentially the same: maintaining "order" in the countryside and obtaining maximum agricultural productivity in order to promote industry. A situation in which more than 50 percent of the land was owned by 2.5 percent of the landowners, along with high rents, high irrigation fees, uncertainty of tenure, and exorbitant interest rates, fueled persistent insurgency in the south following the supposedly temporary partition of the country in 1954. The first step taken to control this insurgency through land reform was the 1955 Ordinance Two, which established a rent ceiling of 25 percent of income and protected tenancy rights by guaranteeing three to five-year contracts. This was followed by Ordinance 57 in 1956, which limited basic landholdings to 100 hectares per family and proposed to sell the extra land "appropriated" (actually, purchased with cash and government bonds) from the large owners to the smaller ones. However, these first programs were almost completely unsuccessful, since they failed to gain the support of either the rich landlords or the poor peasants. The wealthy found ways to avoid being stripped of their land, so that of the 1.8 million hectares that should have been available for "redistribution," only 248,000 hectares had changed hands by 1965.(20) The rural workers, meanwhile, turned to the insurgent forces (which in 1960 became the National Liberation Front for South Vietnam) and fought for free land, rent reductions, and higher wages for landless peasants.

Consequently, the next phases of land reform were more explicitly aimed at rural pacification. The Agroville Program initiated in 1959 sought to concentrate peasants in communities of several thousand, where they would be required to do large amounts of "community development volunteer labor" so that it would be more difficult for them to join the insurgent movement. That program was followed by the Strategic Hamlet scheme of 1962, the New Life Hamlet Program of 1964, and the Revolutionary Development Program of 1966—all of which involved increasingly repressive measures to control the rural population and reinforce the discipline of work. The culmination came in the decision by U.S. planners that if the peasants could not be controlled in the countryside, they should be forced into government-controlled cities by bombing them off the land. The hope was that this policy of forced urbanization (which was certainly the most sophisticated strategy of primitive accumulation ever) would create conditions such that, as Samuel Huntington put it, "History may pass the Vietcong by."(21)

We know what happened to this hope, but if history has passed the U.S. by in Vietnam, what is it that has been defeated? To speak of a victory over imperialist aggression is not enough; it is necessary to explain what were the intentions of that aggression. This is surely a complicated question, but in the end it comes down to a matter of making Vietnam safe for the accumulation of capital, that is, making development possible.

Such a perspective appeared most clearly in the plans drawn up by U.S. officials for what would be done in Vietnam after the war was won. The most prominent of these was that drafted by the Joint Development Group, which was established in Saigon in 1967 and was composed of David Lilenthal's Development and Resources Corporation and a group of prominent South Vietnamese professionals. Lillienthal expressed the orientation of the JDG when he wrote in 1969: "We perceive a clear though little recognized relationship between political accommodation and stability on the one hand, and economic stability on the other."(22) (That relationship was indeed recognized at least by Secretary of Defense Robert McNamara, who declared in a 1966 speech on Vietnam: "Security means development...without development there can be no security."(23))

The report of the JDG started out with what now appears as extraordinary optimism, concerning both the outcome of the war and the condition of the south in the postwar period. The infrastructure was expected to be in excellent condition and there would be a large pool of skilled labor—though there was concern about a massive postwar unemployment problem requiring the creation of 900,000 jobs in the first two years. The aim of putting the entire population to work under controllable conditions (which, after all, is what development is all about) was quite clear in the recommendation of labor-intensive public works projects—much like those carried out by the French: "It is vastly preferable to employ people on productive works, of however tow a priority, than to provide relief."(24)

At the heart of the plan was the rapid development of industry, which was supposed to take place with a healthy level of foreign investment. This was seen as necessary, according to Lilienthal, to integrate Vietnam into the world economy and avoid "xenophobia." The main foreign power that was to be welcomed was Japan. Lilienthal ended his Foreign Affairs article on the JDG report with stress on the importance of Tokyo's role in the postwar period—a comment that was obviously appreciated in Japan itself, where a prominent economist wrote at the same time: "The greatest attraction in investing in Vietnam is without a doubt a sufficient supply of cheap labor . . . Particular consideration should be given (in the postwar period) to ensuring an adequate supply of high-quality and inexpensive labor which does not quit easily."(25) Even before the actual end of the war, Japan established a foothold in the country, so that in 1973 large amounts of foreign aid were offered to the Thieu regime and plans were drawn up for a $50 million agricultural project at Phan Rang, while Business Week reported: "Japanese companies have been among the first to tap cheap South Vietnamese labor, paying wages one-half the prevailing level in Singapore."(26) Yet, the Japanese were not short-sighted; they saw the inevitable future course of Vietnam, and thus made overtures to Hanoi as well.

THE POSTWAR SITUATION

The activities of Japanese business in Vietnam have epitomized the remarkable degree of continuity that has appeared in the economic policy of the new regime established following the liberation of the south in the spring of 1975. The momentous achievement of full national liberation and the introduction of socialism in the south have, surprisingly enough, been followed by a sharp escalation of involvement with the capitalist countries—especially Japan, but also the U.S. itself. Only weeks after the liberation of Saigon, it was reported that "the South Vietnamese seem eager to resume trade (particularly exports) with former trading partners of the Thieu regime. Le Dung Dan, who has stayed on as director of Saigon's Export Development Centre, called a meeting of South Vietnamese and foreign traders late last month (May 1975) to discuss pending exports from South Vietnam, for which foreign banks have already opened letters of credit."(27) The same article reported that "in general, Japanese business leaders are encouraged by recent developments in South Vietnam." This was not surprising, since it was soon revealed that "a dozen or so Japanese projects, which could be worth several hundred million dollars, already are in the works as the cash-short Vietnamese proffer raw materials, particularly iron and coal, for industrial equipment."(28) At the same time, a group of Swedish companies began negotiations to build a $200 million pulp and paper mill north of Hanoi and the new Vietnamese government started discussions with French firms concerning the purchase of large quantities of agricultural equipment and industrial machinery. And more recently, the government awarded a $66 million contract to Danish and Japanese firms for the design and construction of a cement plant in the north.

Even more astounding was that steps toward U.S. investment and trade were initiated by the new regime only weeks after the last Marine helicopter took off from the besieged American embassy in Saigon. Louis Saboulle, vice president and Asia representative of the Bank of America, was invited to Hanoi for discussions in early July, making him the first Saboulle returned from his talks bursting with enthusiasm over Vietnam's new potential in the international capitalist system; he told a corporate gathering: "Vietnam could be so successful in this economic reconstruction that the impact that her neighbors, and you as businessmen, should be considering is not only military or political but economic. I think that, before too long, Vietnam could emerge as a serious competitor in the Asian export market."(29) This sentiment was echoed by Huyn h Van Tam, leader of the liberation trade union movement in the south, who, boasting of all the industrial facilities left behind by the U.S., told Wilfred Burchett: "Once we get all the factories working full time Ho Chi Minh City (Saigon) will be a very big industrial center, the biggest in Southeast Asia."(30) To achieve this economic miracle, the new regime has joined the World Bank, the International Monetary Fund, and the Asian Development Bank, and has expressed willingness to accept the "help" of U.S. corporations. Tiziano Terzani, an Italian journalist who remained in Saigon for several months after the liberation, has reported: "One Vietnamese official surprised me by saying: 'On a base of mutual interest we are prepared to accept American private investments in the country.' Though Hanoi's authorities are reluctant to say so openly, the fact remains that what Vietnam has to offer Western capitalism is a hard-working force of cheap labor."(31)

Terzani's remark could have been taken as an exaggeration in the first 12 months after the liberation, since Vietnamese officials insisted that these deals with capitalist countries and corporations were only aimed at obtaining necessary goods and raw materials. Yet the comment took on a greater poignancy in the fall of 1976, when a new policy began to emerge in Hanoi and Saigon. In September the

'Though Hanoi's authorities are reluctant to say so openly, the fact remains that what Vietnam has to offer Western capitalism is a hard-working force of cheap labor.'
government started work on a set of guidelines for foreign investment that included the repatriation of profits, at which time the Far Eastern Economic Review reported that "a highly-placed Vietnamese official said, 'they (the foreign investors) can bring technology and raw materials, we can give labour.'" (32) Subsequent reports on the investment code indicated that the government will in some cases permit up to 100 percent foreign ownership, as well offering incentives such as the elimination of taxes and duties and a 10 to 15-year non-nationalization guarantee. At the same time, although the government has announced nothing about wage levels in these investment operations, "the cost of the plentiful labour in Vietnam is expected by businessmen to be competitive with Southeast Asian countries".(33) The general situation was summed up in the headline of an earlier article in Forbes magazine: "YANKEE, COME BACK! The Vietnamese Want U.S. Businessmen and U.S. Captial."(34)

The question remains, however, whether the Party and the state will be able to mobilize labor in the way and to the extent necessary for their ambitious socialist development plans. A working class that spent 30 years engaged in guerrilla warfare, achieving an almost unbelievable victory over the greatest military force in the modern world, is not easily manipulated. A class that has been armed and that has organized itself so effectively for war will not return to work under the old conditions. This was seen immediately after the liberation, when the new government in the south guaranteed the property rights of the plantation and factory owners, and the workers responded by occupying facilities and making "unreasonable demands." Terzani reported that "at the end of June (1975) the planters in the Highlands began to leave their large rubber, coffee, and tea plantations and moved to Saigon. The Front political cadres had told them to stay on the plantations and continue to cultivate them; but the workers accused them of being exploiters, demanded new indemnities, no longer obeyed orders, wanted to participate in the management, and refused to call them patron."(35)

The greatest difficulty the regime is facing is that of moving labor from the cities to the countryside, for there has been considerable resistance in both places. Many people in Saigon are seeking to maintain a "marginal" existence—living by means of occasional jobs and hustles—rather than accept exhausting work in a factory or rice field. Although the government has not yet used outright coercion to transfer the one million people they hope to place in the "New Economic Zones" of the countryside, there have been reports that rice rations in parts of Saigon have been reduced 40 percent—presumably to add some extra "encouragement" to relocate.(36) Nevertheless, the power of the working class in Vietnam makes unlikely the sort of massive forced de-urbanization and rural mobilization of labor that was carried out in Cambodia. Even without such an attempt by the government, unrest among agricultural workers has been growing, with peasants reportedly showing "reluctance to work hard at double cropping when they are asked to sell rice to the Government at a low price."(37)

In general, the crisis for the Party and the state is tha the accumulated power of the class is standing in the way of the maximum labor productivity that is essential for rapid industrialization and development. This has been an especially acute problem in the north, where workers are no longer willing to accept austerity. Such discontent was apparently growing long before the end of the war. Nguyen Van Phung, a member of the Haiphong city committee, revealed in a 1971 article that during the mid-1960's in the factories of the city there was a situation of: "free work stoppages, of coming to work late and going home early, of disorderly and negligent performances, of profitlessly prolonged meetings, of rules and regulations of production not being respected, and of internal discipline rules being violated . . . In addition, a number of social evils developed, such as dishonest trading, smuggling, the stealing of state property, lives of immoral obsessions, the loss of hygiene, odd and rediculous hair styles and styles of dress, marauding and pestering, the singing of yellow songs, and the reading of indecent books . . . The foundations of labor and of work and of life before the war came close to being turned upside down."(38) Containing this sort of social rebellion became much more difficult for the government once the fighting in the south ended: a diplomat in Hanoi told Terzani in 1975 that "people here are now asking for more comfort, more goods. They see no reason why they should continue to make sacrifices."(39) This perception was echoed by the Far Eastern Economic Review, which reported in 1976 that productivity in the north has been chronically low and that "the labor force (is) fed up with an austerity that seems no nearer relaxation although the war against Washington and Saigon (is) over."(40) A more explicit indication of unrest in the north has been given by Canadian journalist Colin Hoath, who visited there in August 1976. He found that "some of the wealthiest men in Vietnam today are coal miners digging open-cast coal for export to Japan. But those who have money find few things available to buy." Hoath went on to report that officials confirmed that a group of miners "attempted to slow productivity" in 1975 and forced the government to make more merchandise available.(41) Finally, perhaps the most significant general comment on the tension in the north came in a report by Vice Premier Le Thanh Nghi: "Although production has gradually become stable, we have not yet been able to create an atmosphere of truly great enthusiasm for labour as required by the Party and the State."(42)

In an attempt to rekindle this enthusiasm, the government has made a few efforts at promoting moral incentives. In a speech in the fall of 1975, North Vietnamese Premier Pham Van Dong declared: "We call on the working class and other working people in the towns and countryside to bring into play their role as masters under the new regime by working harder than before, with higher productivity, technique, and discipline."(43) The problem is that the working class appears to see its new role as one of working less than before, with less discipline. As a result, the regime seems to be assessing carefully its degree of control in manipulating labor-power, in order to plan stronger measures. It appears than an experiment in this area has involved sending thousands of workers to work in Czechoslovakian factories, presumably to give the government some clues as to how easy it will be to move labor about and how Vietnamese workers will react to sophisticated production technologies.(44)

At the same time, there have been signs that the government suspects it may not be able to control the working class at all as it desires, and is thus considering the possibility of a much more capital-intensive deveopment strategy. An indication of this is the great stress being placed on the development of petroleum resources. Various international oil companies, which had been granted leases by the Thieu regime to search offshore in the South China Sea, found some oil (in the White Tiger strike of 1974) after $100 million had been spent in exploration; but the firms fled during the last phase of the military offensive in the south. Yet, soon after the liberation, there were reports that the new government was in contact with Mobil and Shell in order to draw up new agreements. Subsequent reports have indicated that Vietnamese officials have been planning the establishment of a state oil company and have been negotiating with petroleum executives from Japan, France, Italy, Iran, Venezuela, Mexico, Algeria, and the U.S.(45) The new regime is apparently going to great lengths to protect itself from further excessive demands of the working class, especially the powerful coal miners.

THE CRISIS OF SOCIALISM

This is the situation at present in Vietnam: the Party and the state promoting work and development, and the workers expressing an unwillingness to accept toil and austerity any longer. The crisis of socialism in Vietnam, as well as in the rest of the so-called Third World, arises from this contradiction between the power of the working class to force wage increases and a large reduction in the intensity of exploitation, and the productivity requirements of the socialist development process. The new regime in Vietnam faces the dilemma that the many years of armed struggle against France, Japan, and the U.S. not only organized the class in a way that might permit vast increases in production, but one that has also allowed workers to build an enormous amount of autonomous power. It is this power that is threatening to upset the delicate balance on which "Third World socialism" is based. Although it is too early to determine the outcome of this impasse, there are indications that the power of the working class is forcing the government in Vietnam to alter its strategy. The new Five-Year Plan (1976-1980) presented to the Vietnam Workers Party congress in December 1976 embodied a marked shift from the development policy that had been promoted by officials in the north for many years. The plan toned down the emphasis on heavy industry (which previously was gospel) and called for greater concentration on agriculture and light industry, in other words, the production of more food and consumer goods. Le Duan went so far as to promise that every Vietnamese household would be provided with such "luxuries" as electric appliances.(46) This shift seemed to be motivated not so much by a new theory of development or even populist sentiments as by the need to respond to growing popular pressure for improvements in the standard of living. The Far Eastern Economic Review noted that on the part of the government "there is an apparent realisation that the war-weary population of the north, which has undergone privation for over two decades, cannot immediately be asked to make more sacrifices for socialist accumulation of capital. And the southern population, used to foreign-funded consumerism, similarly cannot easily be returned to subsistence level without serious problems."(47) To some extent, the retreat from rapid industrialization may be the result of insufficient foreign aid, especially from the "fraternal socialist countries" (though Vietnam has already received $35 million from the I.M.F.); but undoubtably the main problem for Le Duan and company is that the workers of Vietnam have a very different notion of what socialism should be all about.

In all post-revolutionary situations in recent history, the socialist regimes have been forced to make significant improvements in wage levels, working conditions, social services, etc. in order to secure the cooperation of the working class in development. This has amounted to a productivity deal analogous to the Keynesian arrangements in the "advanced" capitalist countries in the postwar period. But just as Keynesianism has been torn apart by the cycle of working class struggle over the past 20 years (see ZEROWORK 1), so is a new form of struggle undermining the socialist alternative. Socialism is thus experiencing the same fate as the trade unions in the "developed" world of the West. Both are initially expressions of the power and the victories of the working class, yet both become bypassed because of their integration into the global capitalist system and because of new forms of working class struggle. This integration has reached a point such that the notions of opposing blocs or "worlds" (First, Second, Third) no longer give adequate expression to the international dynamics of class struggle. In addition, this means that the propulsion of a socialist country like Vietnam into the global system—as is seen so vividly in the postwar policies of the new regime—undermines all the arguments for the necessity of austerity and the acceptance of socialist development. The problem for the working class of Vietnam has gone beyond that of building socialism and is now one of engaging in the international struggle over work and income. This change in the direction of struggle, resulting from the new form of class power, strips socialism of its revolutionary content and makes it just one more form of the imposition of work to be fought against.

February 1977

NOTES

1 Pallu de la Barriere, Histoire de Expedition de Cochin-Chine en 1861, Paris, 1864, pp. 230-1; quoted in Christine Pelzer White, "The Vietnamese Revolutionary Alliance," in John W. Lewis, ed., Peasant Rebellion and Communist Revolution in Asia, Stanford University Press, 1974, p. 91.

2 Ngo Vinh Long, Before the Revolution: The V ietnamese Peasants Under the French, M.I.T. Press, 1973, p.21.

3 Eric R. Wolf, Peasant Wars of the Twentieth Century, Harper and Row, 1969, p.165.

4 Joseph Bugginger, Vietnam: A Dragon Embattled, Praeger, 1967, vol. I, p. 166.

5 Ibid., p. 176.

6 Virginia Thompson, French Indo-China, Macmillan, 1937, reprinted by Octagon, 1968, p. 150.

7 International Labour Office, "Labour Condltions in Indo-China," Studies & Reports Series B, No. 26, Geneva, 1938, p. 75.

8 Charles Robequain, The Economic Development of French Indo-China, Oxford University Press, 1941, p. 82.

9 Buttinger, op. cit., p. 194.

10 International Labour Office, op. cit., p. 298.

11 Guy Gran, "Vietnam and the Capitalist Route to Modernity," (Ph.D. dissertation, University of Wisconsin, 1975.), p.226; cited by James C. Scott, The Moral Economy of the Peasant: Rebellion and Subsistence in Southeast Asia, Yale University Press, 1976, p.83.

12 Le Parti Communiste Indochinols, Documents, vol. 4, Hanoi, 1924, p.32; quoted in Scott, op. cit., p.124.

13 Scott, op. cit., p.2.

14 LeDuan, The Vietnamese Revolution: Fundamental Problems and Essential Tasks, International Publishers, 1971, pp. 77, 65.

15 Hoang Van Chi, From Colonialism to Communism: A Case History of North Vietnam, Praeger, 1964, p. 82.

16 Bernard B. Fall, The Two Viet-Nams, Praeger, 1967, p. 156.

17 Hoang Van Chi, op. cit., p. 212 (emphasis added).

18 Fall, op. cit., p. 158.

19 Le Chau, Le Viet Nam socialiste: une Economie de transition, Maspero, 1966, pp. 184-186; cited in Wolf, op. cit., p. 192.

20 Robert Sansom, The Economics of Insurgency in the Mekong Delta, M.I.T. Press, 1970, p. 57.

21 Samuel P. Huntington, The Basis of Accomodation in Vietnam," Foreign Affairs, July 1968.

22 David E. Lilienthal, "Postwar Development in Vietnam," Foreign Affairs, January 1969.

23

24 Republic of Viet-Nam (U.S. Embassy), "Postwar Development of Viet-Nam: A Summary Report," Viet-Nam Documents Series V, March 1969, p. 19.

25 Masataka Ohta, quoted in Banning Garrett, "Postwar Planning for South Vietnam," in The Trojan Horse, revised 1975 edition, Ramparts Press, pp. 141-142.

26 Business Week, 27 January 1973.

27 Far Eastern Economic Review, 27 June 1975.

28 Business Week, 15 September 1975.

29 Far Eastern Economic Review, 13 February 1976.

30 The Guardian (New York), 8 October 1975.

31 Tiziano Terzani, "Vietnam: The First Year," New York Review of Books, 15 July 1976.

32 Far Eastern Economic Review, 24 September 1976.

33 Ibid., 31 December 1976.

34 Forbes, 15 January 1976.

35 Tiziano Terzani, Giai Phong! The Fall and Liberation of Saigon, St. Martin's, 1976, p. 280. For more on the transformation of production in the south immediately after the end of the war, see Wilfred Burchett, Grasshoppers and Elephants, Urizen Books, 1977, part 3, chapter 16.

36 Far Eastern Economic Review, 11 June 1976.

37

38

39

40

41 Dispatch from Hanoi by Colin Hoath, correspondent for the Canadian Broadcast Corporation, transmitted by the Associated Press, 1 September 1976.

42 Le Thanh Nghi, Report to the 2nd Session of the 5th National Assembly of the DRV, December 1975, quoted in Vietnam Courier (Hanoi), February 1976. For more on the productivity problem in the north, see the Economist Intelligence Unit, Quarterly Economic Review for Indochina, No. 2-1976, p. 8.

43 Pham Van Dong, Speech on the 30th Anniversary of the DRV, 2 September 1975, reprinted in Vietnam Quarterly, no. 1 January 1976, p. 61.

44 New York Times, 25 April 1976; Manchester Guardian/Le Monde Weekly, 6 June 1976.

45 Far Eastern Economic Review 20 February 1976; New York Times 27 January 1977.

46 See New York Times, 15 December 1976; Economist 25 December 1976; and Far Eastern Economic Review, 17 December 1976.

47 Far Eastern Economic Review, 4 February 1977.

This article is the preliminary result of discussion and collaboration among a group of comrades linked to Zerowork in London. John Merrington and Mike Sonenscher have made major contributions to the final result. Since this article was written in October 1976, many of the points have been developed further with a view to advancing the debate and publishing a collective book, forthcoming, with the title, Money and Proletarians.

One of the major difficulties in analyzing the current capitalist crisis and reorganization, whether on the national level or globally, lies in seeing how changes in the international monetary system fit in with changes at the level of the international division of labor and production. To approach this question we must grasp both the nature of the money-form as a social relationship of power within capitalism and the historical specificity of the particular organizational forms of that power.

Understood in terms of class power, the money-form cannot be grasped simply in terms of "economic theory"-whether "Marxist" or not. Rather, we must see how money fits into the antagonistic class relations of capital in order to reappropriate the terrain of revolutionary class struggle. If the crisis of today is an historical crisis of Keynesian development-the crisis of a system of planned development based on a certain dynamic equilibrium and internal stratification of class forces (see Zerowork 1)-then the breakdown of the international monetary system established at Bretton Woods in 1944 is part and parcel of it. This crisis of the money-form is not just the point of arrival of capitalist development; it is both produced by a cycle of class struggle and is the point of departure for a new phase of class confrontation.

It was no accident that the crisis reached the point of no return in the years 1970-1971, for that was the moment of maximum tension between all the components of the system; massively generalized wage explosions, price increases following in the wake of the inconvertibility decision, and heavy increases in public and corporate debt to the banking system. The dynamic of this process disclosed the possibility of a classic crisis of overproduction. What was no longer classic, however, were the political relations between the classes, relations which made a repetition of the 1929 crash a political impossibility. Not only was it essential to avoid the devaluation of capital that always followed crises of overproduction, but also to avoid a direct political confrontation with the working class, which had established the "downward rigidity of wages" and undermined the Keynesian use of money.

Marx's understanding of money within capital provides the point of departure for our analysis. He above all understood that "What appears as a monetary crisis is in fact expressive of anomalies in the process of production and reproduction itself." We begin with the reconsideration of Marx's analysis of the money-form in the Grundrisse and Capital, for despite the fact that gold has long ceased to be the "world money-commodity" par excellence, his notion of money as the ultimate expression of value, and of value as the product of capital's ability to impose work (abstract labor) through the commodity-form (exchange value), remains key to grasping capital's attempt to use money against the working class in new ways. The postwar system has shown the possibility of imposing a national currency (the U.S. dollar) as international money, yet the collapse of that system has indicated the limits and weaknesses to which it was prone. The problem, then, is not to try and squeeze contemporary reality into an ossified application of Marx's analysis, but to use that analysis as an entry into an appreciation of the history of money in the last half-century-above all, the challenge launched by the U.S. in 1971 with the inconvertibility move, the point of departure of capital's counterattack in the present crisis. On the basis of our current research, we think we can provide some elements for a debate on this question. We argue that from the beginning of the counterattack, international capital has used money as one of its primary weapons against the working class; indeed, we would argue that money has become the ultimate and most sophisticated instrument for world capitalist restructuring today. On the basis of the analysis which follows, we pose the question of the political elements necessary to bring the debate to the level of working class strategy and organization.
THE CRISIS OF MONEY-FORM IN MARX
In Marx's writings, analysis of what he called "modern crises" is fragmentary. Indeed, analysis of crisis on a world scale, where, as he wrote, production is posed as a totality and where all the contradictions explode, is a chapter Marx never wrote. But from the fragments of such a project which do exist in his works we can follow the direction of his method. It appears that according to Marx what lies at the core of the modern crisis is the contradiction between production and "loanable capital"-between the factory and the credit system. Marx saw credit as a powerful motor of capitalist development because it places accumulated surplus value-the savings of inactive capitalists-at the disposal of active but "impecunious" ones. But, if credit makes possible the full utilization of the capacities of society, why does it become the "main lever of overproduction?"

The answer to this problem cannot be presented in static terms, for credit is the means of overcoming the barriers which productive capital encounters from time to time in the course of its activities. Credit is thus the mode by which capitalists cooperate to overcome the obstacles which lie in their path, meaning that it is what helps the capitalist deal with the problems posed for him by worker struggles. Through credit-that "powerful instrument of development"-capitalists work together to reassert their command, and as such credit is the preeminent means for the socialization of capital.

Yet credit does not in itself succeed in overcoming the real contradiction which lies at the root of capitalist development. The fact of being able continuously to overcome through expansion the obstacles posed by workers does not guarantee continued control over labor. The socialization of capitalist development, the "flight" of the entrepreneur from worker resistance through reorganization, the introduction of new machinery, and the extension of capital to all aspects of the society means that the lever of credit always lies at the origin of new levels of class confrontation. It is at this point that we must refer to the theory of money in Marx. Credit, he wrote, is not yet money, because money must be the "incarnation" and representation of value. Money, if it is to be the universal equivalent of all commodities, must be produced like all other commodities, but at the same time not be a use value. It must, in other words, go out of circulation. Money therefore cannot be understood separately from the commodity and from value. Gold, as money, has to be set apart, to become "autonomous" from all other commodities. Hence, all other forms of money in circulation-bank notes, national currency, etc.-cannot be perfect representations of "hard money." "Behind the invisible value of commodities," Marx wrote, " 'hard money' lies in wait." If credit circulates more rapidly than "real money," it pushes the cycle of production beyond the limit of its valorization and realization: a point arises at which credit enters into conflict with the factory, because the realization of value has entered into conflict with production.

The interruption between production and "real realization" must be analyzed at its point of departure, or else it remains only a possible rupture in the circuit rather than an immanent tendency. Commodities, if they are to be sold in circulation, must be "socially validated," or else there is the possibility of crisis: speculative turmoil, the devaluation of capital, etc. But we cannot reduce this crisis of the transformation of values into prices to a simple problem of "transitory disequilibrium," a problem of realization. We must instead concentrate on the underlying transformations of the organic relationship between capital and labor that occur during the phase of expansion. In this sense crises of overproduction are "violent manifestations" of the law of value and can never be confronted solely at the level of the market, where the commodity completes its trajectory at the point of sale.

Gold, as "money of all monies," symbolizes for Marx the fact that capital cannot escape from the contradiction of the law of value, and thus that every crisis is also a desperate attempt to "reimpose" the law, which in the expansionary phase capital tries to "escape." The way the law is reasserted, the way capital tries to embark on a new cycle of development is through an attack on the obstacles posed by worker resistance and insubordination of all forms. With the development of capital this process is expanded to a global scale, and gold thus becomes the general means of exchange between currencies internationally, the means of payment for regulating international balances: the ultimate determination of the money-form. Only on the level of the world market-where money is divested of all local and particular determinations-can the complete "civilizing activity" of money be understood; and it is therefore at this level that modern crisis between production as a whole and credit must be analyzed. For gold, as money, guarantees the generalization of the law of value over all national currencies. It guarantees that all nations are subjected to the same discipline of capitalist laws in the world market. And it guarantees historically the extension of the world market according to the dictates of capital.

We need to carry the analysis further in order to bring it "up to date." First, the increase of means of payments --whether nationally or on the international level-has always extended beyond the reserves on which it is supposedly based. During the reign of the gold standard, this disproportionate increase of paper money produced cyclical crises, each of which was marked by the violent reappearance of the law of value. But each of these phases of development-crisis was complemented by the progressive enlargement of accumulation on a world scale and the progressive reduction of socially necessary labor time. Credit has acted as a genuine instrument of capitalist socialization. In so far as each phase of development-crisis has been accompanied by a drastic rise in the organic composition of capital, each successive phase of the history of capital has involved ever greater amounts of means of payments in meeting working class demands. In other words, the dynamic development of capital has become ever more detached from the embodiment of the law of value, from its incarnation in gold. Gold has long ceased to function as the sole universal money, as the general means of payment between nations. The important thing here is that it could not have been otherwise. Not only has the real, effective appearance of sterling and then the dollar displaced gold as the "money of all monies,'' but international power has increasingly determined the "value" of all currencies in the last instance. What is even more decisive here is that this transformation of the international monetary system has been the result of the "long march of necessary labor against surplus value." It has been the progressive reduction of socially necessary labor time that has precluded gold from functioning as the sole measure of value, precisely because socially necessary labor time has less and less been the basis upon which real wealth rests. (For more on this see the final section of Mario Montano's article in Zerowork 1.)

This does not mean that the gold standard has never functioned, but rather that each moment of its imposition has led to its transcendence by the real dynamics of international class relations. In the phase before World War I, Britain extended its empire beyond the gold standard by investing sterling in its colonies (thus creating an external demand for its commodities), meeting the deficit it had with Europe and the U.S. by attracting gold through the simple manipulation of the bank rate. The gold standard was in reality always a sterling standard. After 1918 the U.S. imposed the gold standard on Europe, while divorcing its entire domestic monetary policy from any metallic base. The flow of gold into the U.S. in the 1920's never increased the money supply on a proportional basis, thus allowing prices to remain low and the volume of trade and direct investments abroad to increase.

Throughout these phases the gold standard was, in other words, a means of imposing a specific imperialist policy, a policy sustained by the key role of first sterling and then the dollar as means of payment, as national currencies given a fundamental role in the development of the productive forces on a world scale. It would be wrong to conclude that imperialist development and the extension of the basis for accumulation in this latest period has been something "fictitious" or based upon pure "paper money," just as it would be wrong to conclude that international cyclical crises occurred because of the non-functioning of the "law of value" embodied in gold. In fact, the increase in the "monetary consumption" of gold has remained more or less steady from the time when sterling and the dollar began to function as international currencies. Currencies, in other words, have never been completely convertible in any real sense. For if such had been the case, gold reserves would have to have increased in volume to an extent quite disproportionate to annual gold production. In short, gold has always been more or less nominal.

We can now draw some conclusions. First, the international monetary system has more and more grown dependent on the national currencies that have acted as means of payment for world accumulation. Second, both domestic and international credit have been increasingly transformed into credit ex nihilo, into artificially created money which is no longer based on accumulated surplus value, but on no existing value. The requirement for "artificial money" to act as a productive force beyond the value embodied in gold reserves is that it must become money as capital, that is, it must become credit which commands alien labor: money must become command. But precisely because this form of money as capital makes for both an extension and intensification of the basis of accumulation, gold comes to function increasingly marginally as the measure of value, which in turn comes to depend less and less on socially necessary labor time and increasingly on imperial command. In other words, if money becomes increasingly less convertible in terms of gold, it has to become ever more convertible in terms of command of capital over labor-power. The problem for capital is that while international credit-the World Bank, the International Monetary Fund, etc.-has increasingly functioned as the lever of capitalist socialization on a world scale, the command function upon which money now rests is not solid-precisely because of the new era of international working class struggle. What is at the root of the current international monetary crisis is that not only can the international currency-the dollar-no longer be converted to gold, but money as capital itself can no longer be converted into effective command over labor.
INCONVERTIBLE MONEY
The establishment of an inconvertible monetary system by Nixon in August of 1971 has presented challenges to analyses of the monetary crisis. We have said that the crisis, as a crisis of the money-form of capital, exploded because international capitalist organization was no longer able to contain the dynamics of the class struggle. Thus, the inconvertibility of the dollar cannot, as is often done, be examined simply in terms of the U.S. refusal to meet its commitments to the other capitalist nations, a refusal to cover with gold all the dollars accumulated in the central banks of Europe and Japan. An examination must begin with a look at the nature of the monetary system of international power constructed after World War II.

The system established at Bretton Woods in 1944 represented a U.S. victory in which gold was to play a key political role in determining the composition of the International Monetary Fund. The U.S., which during the 1930's had accumulated two-thirds of the world gold supply, imposed the condition that the I.M.F. would be empowered to allocate to nations in difficulty liquidity (credit) on the basis of given amounts of gold and national currencies already committed to the fund by the member countries. In other words, the amount of credit the I.M.F. would make available would depend on the initial contribution of each member country, an arrangement that would later allow the U.S. to expand significantly its foreign debt, since the quantity of dollars in international circulation came to exceed, by 1957-1958, the quantity established in the statutes of the I.M.F. The other members were required to maintain a fixed rate of exchange of their currencies against the dollar, so that the central banks of these countries were put in a position of supporting the value of the dollar. This situation produced an automatic inflationary tendency, given the fact that the acquisition of dollars implied an expansion of domestic money supply. It was clear by the mid-1950's that there was a contradiction between the static principle of the international capitalist order originally conceived in the U.S. "currency principle" and the dynamic development of the new capitalist order that had followed World War I l. The birth at this time of the Euromarket-a U.S. banking system outside of the U.S. to allow the multinationals to ignore the gold-dollar exchange standard-indicated that the U.S. victory at Bretton Woods had been a Pyrrhic one.

The declaration of dollar inconvertibility in 1971 must be situated in this context. Given that worker struggles could no longer be managed by monetary means as a spur to further investment and productivity, the strategy of "planned development"-the Keynesian system-had to be abandoned. The international wave of struggles beginning in the mid-1960's meant the breakdown of the whole system of international stratification of command over living labor, upon which the gold-dollar exchange standard was based. Dollar inconvertibility was imposed on the U.S. because its control over the international system had reached an impasse. The decision was a means of escape from the law of value, from the immediate impact of worker struggles, and from the risk of a dangerous repetition of the classic type of 1929 crisis, which would have generated an explosive class confrontation. But at the same time, this means of escape enlarged the terrain of counterattack, liberated the, range of strategic options for capital. The U.S. redefined its leading role by imposing on the rest of the world a new kind of forced self-discipline in which the ultimate sanction is money as world command, that is, determined and regulated politically and hence freed from any commodity limits. In other words, inconvertibility can only be understood in political terms; it set the strategic framework for reorganization of capital by means of the crisis--a planned crisis against the global working class through the manipulation of money. Given the historical development of capital at the time he was writing, Marx did not explore the notion of an inconvertible paper money very far. He saw that theoretically the "value" of such money was determined by the value of the commodities circulated and the labor commanded, but he had few occasions in the periods he examined to study such a situation concretely. Subsequently, the only serious Marxist effort to do so systematically was that of Rudolf Hilferding in his 1910 work Finanz Kapital, which dealt with the capitalism of the Austro-Hungarian Empire, which was run on the basis of inconvertible money. Like Marx, Hilferding saw that there was no such thing as any real value of money as such; there was only a quantitatively determined rate of exchange of money, and that rate was manipulated by "finance capital." Hilferding had the merit of seeing that one aspect of the problem for the recomposition of capital at that time, and the reason for the way in which money was being manipulated, was the relation between the banking system and the capitalization of the rentier class, the mobilization of all "unproductive income" through credit as capital. This new relation between the banks and the state-the centralization of credit-he saw to be the lever whereby such nonproductive income could be mobilized for a relaunching of productive industrial capital. The relevance of this for the present period should be clear: today, once again, capital is manipulating money to transfer value from an "unproductive" role to a "productive" use in capital investment. But today the unproductive income is not financing a rentier class, but rather the working class, which converts wages to income through its refusal to function as labor power.

But if a rereading of Hilferding reveals this sort of useful similarity, it can also be misleading, because of Hilferding's limitations. For he unfortunately hypostatized the regime of inconvertible money and failed to see the "finance capitalism" he confronted as an historical phase of capital centered on the emergence of the big banks and joint stock enterprises. The subsequent passage of dominance from the big banks to industrial capital marked the transitory nature of what he studied.

Moreover, even in the period of its usefulness for understanding the mobilization of income for capital, other limitations of Hilferding's analysis led to disastrous political practice. Seeing the big banks as the enemy, his strategy was the social democratic nationalization of the banks, pension funds, insurance funds, etc. "Socialism" in this perspective becomes the socialization of credit for the development of the productive forces such as capital was "unable" to achieve. This kind of conclusion was unavoidable, since the problem of money was seen only in terms of dysfunctions within capital and between capital and nonproductive sectors such as the rentier class. What Hilferding and his successors failed to see, and what we must grasp today, is the process of socialization which was at the root of the finance capital phase. The reorganization he observed, which involved both individual capitals and the banking system, marked a step necessary for the widening of the basis for the extraction of relative surplus value from the working class and the generalization of abstract labor. The working class in Hilferding's approach is seen as external, as an exogenous factor in this reorganization, for he could not see the historically defined composition of the working class upon which and against which capital was forced to reorganize itself and which had historically contradicted both the previous industrial and monetary systems. What Hilferding and official Marxism of all varieties failed to see was that the gold standard depended on an international class composition that had been superseded. When we examine capital's recourse to inconvertible money in the present crisis, we must see how it is a means of transforming working class conquests into a further socialization and concentration of control.

Yet we must also see that under today's conditions, the capacity for such a transformation is severely limited. The current transition by means of inconvertible money and floating exchange rates is precarious. It appears that money can no longer serve as the lever for further socialization on the basis of the given composition and demands of the working class, and must thus become an instrument for the violent rupture of that composition-a weapon for the dictatorship of capital in its quest to undermine the advanced form of working class power. At this level of confrontation, where money becomes pure unmediated assertion of state power against the working class, the "transition" is not only more precarious but threatens to become permanent: in this lies the uniqueness of the class confrontation today. There is the danger of a direct un-mediated class battle with the state, in which money loses its mystical appearance-its so-called independence-and in which the "revolution from above" opens up a new level of struggle "from below." The risk is that short term transitional measures are already taking on the characteristics of a highly volatile permanent emergency for the capitalist system as a whole.
THE STATE, MONEY, AND RECESSION
The problem now is to explain why this crisis-a "transitional solution"-might actually become a state of "permanent transition." We must see first what are the constraints which continue to limit the action of the capitalist state in this period of inconvertible money. If the state was able to escape the straitjacket of value embodied in the international monetary system until 1971, why has capitalist reorganization not yet succeeded in becoming a new process of development?

The state's capacity to act upon the money supply through central banks and hence to promote the reorganization of manufacture and circulation has, in every capitalist country, been unable to establish the basis for recovery. Both in terms of financing the industrial sector through banking and other financial institutions, and the public sector through the sale of Treasury Bills and other government bonds, it has not been possible to establish global conditions of productivity capable of relaunching the system. This is because the state, from the beginning of the crisis, has found itself confronted with a widening of the terrain of working class struggle, including a convergence of factory struggles and social struggles as a whole. (For more on the beginning of this process in the U.S., see Paolo Carpignano's article in Zerowork 1.) The struggle for wages separated from productivity in the factory became a generalized struggle over the social wage, involving both waged and unwaged sectors of the class. This made it no longer possible for the state to manipulate the distribution of consumption, using the spur of consumption to control production. From being "distributor in the last instance," the state became "lender in the last instance. " The state was forced to run a debt economy not only for industry, but for the public sector, the cities, etc. Given the pressure on the social wage as a whole, the state, acting in the open market through the issuing of money, continued throughout the crisis to pour more and more money into circulation through the purchase of Treasury bonds, commercial guarantees to cover loans to industry, etc. In other words, the increase in money supplies was increasingly "covered" by the promise of future guarantees of repayment-a practice which continued even when the assets of the banking system no longer corresponded to any real capacity on the part of industry to repay the loans. This is what is at the bottom of the "financial crisis" of the public sector and the so-called fiscal crisis of the state. The point is that we cannot see this crisis merely in terms of inadequacies of the banking system in relation to industry and the public sector. Given the degree of intervention by the central authorities to support the assets of the major banks in cases where institutional investors have been reluctant to provide direct credit, the state is increasingly the source of support for the assets of the whole banking structure, thanks to which the banks are (or were) able to continue to finance the debts of industry and the public sector.

It is, of course, true that this state policy represented nothing new in terms of traditional Keynesian policies throughout the postwar period. But there is a crucial difference-the question of the time lag in which social capital has to transform the money issued by the state through "deficit spending" into capital. The Keynesian model placed the state above the economy as the distributor of income to the whole of society. But the state can only manage global demand if the money created ex nihilo by the central authority succeeds in becoming effective demand, only, in other words, if the additional demand created by the state succeeds in stimulating a level of overall production above the existing level. Only on this condition can money become an active motor of development. The politics of "deficit spending" depends on control over the time period in which money becomes money as capital in order to ensure overall balanced "growth." As Marx put it: "Time is everything, man is nothing."

It is precisely this time period that has become unmanageable in the present crisis. In the Keynesian system this time period is subjectively determined; it depends on the subjective choice and cooperation of social agents --capitalists and workers-having a common interest as partners in growth. Such cooperation was not automatic, and had to be constantly readjusted at new points of equilibrium. Now, not only is this process not automatic, it is not functioning altogether, both at the level of production and at the level of social reproduction. In production, the leap forward in the organic composition of capital in order to restabilize command over living labor and increase productivity has come up against the real impossibility of using inflation to finance future investments. The cash flow generated during the time of production and circulation of goods has not succeeded in financing on its own the new investments needed, forcing industry increasingly into debt. The resistance of workers to productivity increases and their continuous pressure to push up wages has made it impossible to reduce wage costs relative to new investment projects. As a result, industrial capital has been forced to move further and further along the path of restructuration of more and more investment to reach necessary levels of productivity: this spiral of investment has become an ever increasing spiral of debt. Second, despite the massive attack on employment, the parallel resistance of the unemployed and wageless has forced the state to continue issuing money to back up the banking system and to finance the growing debt of the cities. It has become impossible for capital to use unemployment to any great extent to depress general wage level.

Given these parallel pressures in the factory and in the social factory, the time of transformation of money into capital has become the time of the working class transformation of money into income. As the time of capital's transforming of money into capital becomes longer and more uncertain, the working class is more and more able to impose its own needs and shorten the time in which money is taken out of circulation. When money is blocked from becoming capital, it can only remain at the level of simple circulation; instead of becoming capital, it becomes "funny money." It is in this sense that inflation is no longer "controllable," a solution for capital which is no longer a solution, for it has become "runaway inflation" imposed by working class struggle for income.

Seen in this context, the various attempts to restabilize the international system since dollar inconvertibility have failed in their purpose, in so far as they have not provided the conditions for a new basis of international command. To take only the most striking case of this failure: the attempt through the oil crisis after the Yom Kippur war in 1973 to force a new hegemony of U.S. multinationals by draining dollars from Europe and forcing a drastic deflationary movement on the European states did not produce this result. In fact, the oil crisis was not followed by the necessary deflationary discipline by the diminution of reserves in the oil importing countries; it did not slow down the leap-frogging devaluation of currencies and hence the rate of inflation. Nor did it sufficiently increase the surplus of petrodollars in the oil exporting countries to an extent which could make them into a source for the ever increasing demand for investment capital by the multinationals. The condition for this deflationary coup to become effective and to provide for the spiraling needs of investment would have been to provoke a head-on class confrontation, which was not a practical possibility. It has been the new socialized terrain of the struggle that has been the limit of any deflationary counter-attack by capital. The oil coup only served to delay the major offensive against the omnipresent working class demands for income.

The same can be said for the introduction of the floating exchange rates, which were resorted to precisely to prevent the "permissive" expansion of credit through the purchase of dollars within the framework of the old system of fixed rates. This move was not sufficient for limiting money supplies, given that the regulated movement of exchange rates according to the balance of payments-even within the European "snake"-was counteracted by the continuous increase in money supply by the central banks and flows of speculative capital escaping from the uncertainty of working class struggle, struggle that has forced capital to redefine its strategy, as seen first with Chile, then with New York City, and now throughout the world.
TWO, THREE, MANY NEW YORKS
These elements of the crisis can be concretized if we take the case of the situation in New York in 1975-1976, which exemplified the present new line of attack by the capitalist state. The problem of New York was not merely a question of the geographical reorganization of the industrial sector of the U.S. -the abandonment by industry of urban centers in favor of new poles in other parts of the country. The real problem has been the failure to control the demand for income and services: this is what explains why the federal government turned off the tap of subsidies to the big banks, while blaming the crisis of New York on lack of "investor confidence." This use of the argument of "confidence" as a means of political blackmail had, of course first appeared in the monetarist policies imposed in South America, especially Chile. The same discipline was then to be imposed in New York as the testing ground in the battle to cut the social wage in the "metropolis" itself. The important point here is that this strategy was directly imposed by the state in its decision to cut off the flow of liquidity to the banks. To point to speculators and the big banks-finance capital-as the culprit (the mystification which social democracy from Hilferding onwards has always used to cover up the relation between money and the state) is no longer possible. The confrontation was strictly one between the state and the incomes of the working class (especially the unwaged).

The tactics, which are now becoming familiar on a world scale, consisted of increasing the rate of interest on city notes and bonds, creating in this way a climate of loss of confidence and thus provoking a fall in the value of the issues. Basically, the state, as lender in the last instance, refused to lend. But this managed crisis had an extremely significant outcome: it forced the city unions to use their accumulated pension funds to buy the notes and bonds the banking system could no longer cover. The result was a structural change in the financial system in which a new type of attack on the struggle for income by the working class is discernible. On the one hand, the state assumes direct responsibility for paying forms of social wages in order to try to control and regulate the urban unwaged; on the other, it gradually forces the workers in the public sector to cover the borrowing requirements of social expenditures through the investment of their pension funds. This amounts to a transformation of the social wage into a system of reinsurance, forced savings imposed on the working class itself. Thus the political goal of capital becomes clear: the state attempts to divide by this means the various sectors of the class fighting for more income, for more cash. Moreover, this move is covered by the ideology of "co-responsibility" and co-management in the financing of the public sector-a situation analogous to the co-management, profit sharing, and other schemes in private industry. It is significant that this attempt to reimpose Say's Law, mobilizing "deferred wages" for investment and consumption, has been called Pension Fund Socialism.

New York showed the way for the I.M.F. strategy that was already being discussed by the Monetary Negotiations Committee in August of 1975. But it was only with the international agreements reached at Kingston (Jamaica) in January 1976 that the full implications of this new strategy were spelled out on a world scale. The agreements included the decisions to: sell the gold held by the I.M.F. in a series of auctions on the free market; create a "trust fund" with the profits from the gold sales to subsidize the poor nations with annual per capita income of less than $350; abolish the "oil facility," which had been created to cover part of the severe deficits in balance of payments owing to oil price increases; and finally, generalize floating exchange rates to all countries. Not for nothing have these agreements been called "a new Bretton Woods."

The implications of these new conditions became clear immediately with the first big devaluation of the Italian lira in January, followed by devaluations of the Spanish peseta, the British pound, the French franc, and later the Australian dollar and the Mexican peso. How can the New York crisis be linked to the international monetary coup that we have witnessed in the past year?

Let us take the first of the I.M.F. decisions-the gold auctions: this establishes two clear conditions of attack. On the one hand, the sharp fall in gold prices from the peak of $200 an ounce in 1974, besides drastically reducing the "trust fund" for the poor nations, devalorized the central reserves of countries like Italy, France, and Portugal-in which gold is a significant component. This means that these countries, when using gold for "collateral agreements," receive less money in exchange from lenders. Italy, for example, had contracted for a loan of $200 million from West Germany in 1974 on the basis of a given quantity of its gold reserves. By the summer of 1976 Italy was able to raise only $150 million on the basis of the same quantity of gold as a result of the fall in gold prices decided by the I.M.F. Similarly, Portugal, which had contracted a collateral agreement with the Bank of International Settlements in 1975, faced severe difficulties in February of 1976 when it asked for a new loan from the Bundesbank and the Swiss National Bank. The stumbling block was the "negative pledge clauses" which regulate the Eurobanks, clauses which prevent a country from seeking a loan more than once by means of gold collateral without doubling the quantity of gold already exchanged for the original loan (in this case the previous loan by the B.I.S.). It was only the political role of the Socialist Mario Soares in the negotiations that allowed the clauses to be waived. Thus we have a clear example of the new selective political use of gold as a weapon to impose conditions on a country acceptable to the multinational banks. The demonetarization of gold and the arbitrary, in short political, nature of decisions and conditions attached to international loans which this implies have removed the residual autonomy that national states could previously maintain by means of their gold reserves in the face of foreign deficits-deficits which are, of course, mainly made up of public and social expenditures.

The second effect of the gold auctions is to create a climate of speculative uncertainty between national currencies now that gold prices are no longer a stabilizing factor. As a result, the flight from weak currencies ends up strengthening the strong ones, but above all becomes a tap for the Euromarket and hence the U.S. multinationals and Treasury securities, thus aiding the U.S. public deficit.

Finally, we should not ignore the extremely important effect of these measures on the role of the Soviet Union and the Comecon countries. From 1974 onwards the USSR had a mounting debt to Western countries, especially to West Germany and France for machinery imports and to the U.S. for grains. This accumulation of debt has been the result of the level of internal class resistance, which prevented the achievement of the goals of the five-year Plan. The first phase of detente in the 1960's which allowed the modernization of industry-the "Third Phase" of Soviet planning-ran up against a hidden inflationary push resulting from working class use of the limited labor mobility that was permitted. The profound effects of the Western monetary measures was due to the fact that gold has always been used in the Soviet Union to settle accounts with the "outside world"-ever since Lenin established the rule. Thus the USSR has become increasingly bound by the conditions of its Western creditors, and has thus been pushed into a frenzied quest for higher productivity from its workers-which has resulted in a greatly increased intensity of class confrontation.

If these are the effects of the demonetarization of gold, there are also limits within which gold prices have to be managed. If the price is allowed to fall too far, the struggle of the black workers in South Africa would escalate into an open and overall crisis of political control in all of southern Africa. Upon the maintenance of gold prices depends the future of the mining industry, and hence the control of African labor-power. This is the diplomatic constraint (that was represented by Kissinger) within and against which the strategy of the I.M.F. on gold prices has to operate. Indeed, the wave of struggles in South Africa in 1976 was the major "disequilibrating" element in the entire world monetary strategy adopted at Kingston. The margins of maneuver for U.S. policies that this situation imposes are very narrow. If the black struggles cannot be defeated, the choice will be either increasing the price of gold-and hence abandoning the entire deflationary strategy based on demonetarization-or the loss of control over southern Africa. Here we can see how the "pure" policies of the monetarist coup at the world level-the illusion of pure money which must always be used to exorcise the class struggle-have been met by their "opposite pole": hence the narrow and treacherous channel between money and politics through which U.S. global strategy has to steer its course today.

Given these effects and limits of gold prices as a means of international control, what is implied by the system, or better, non-system, of floating exchange rates? Here again, in spite of the fact that from a purely monetary point of view there are no limits to the fluctuations of the various currencies, this devaluation-revaluation movement in 1976 has encountered political obstacles, and if carried through according to pure monetarist logic, it could jeopardize the entire strategy of the restructuration of capitalist command-the only long-term way out of the crisis for capital-as well as undermining the basis of the state and the international order.

The operation of floating exchange rates in 1976, with the enormous devaluation crises and the increasing indebtedness of local authorities and the public sector which have resulted, has narrowed in an unprecedented way the margins of maneuver-the "relative autonomy"-of national states, to the extent of dramatically reducing the area of choice within which national politics has to operate. All governments and their oppositions have in this sense been pulled into the narrow area of choice imposed by the logic of international monetary austerity. And the first consequence has been a loss of autonomy of national states and a shift of state power to the world level --the level at which monetary terrorism operates. At the same time, however, the downward movement of weak currencies and the upward movement of interest rates has been accompanied by the increasing regionalization of monetary control over local authorities, cities, etc.-which in recent years have become more and more dependent on the multinational banks as opposed to state subsidies. In the period from 1974 onwards, in fact, the state (for example in Britain, France, and Italy) has actively promoted this increasing indebtedness of local authorities. In this apparent decentralization of state power (in the form of devolution, regionalization policies, etc.), the conditions are being created for the multiplication of "New Yorks" on an international scale; what we are witnessing is centralization of a new kind: the centralization of multinational state power. The devaluation imposed on countries with large public sector deficits and borrowing requirements-even where cuts have not been drastically and immediately applied-has meant that the local authorities and the public sector as a whole are increasingly caught in a scissor movement between soaring costs and upward interest rates on debts: they thus have to implement their own cuts and become increasingly dependent on the selective decisions of the multinational centers of power. And when, in addition, these mounting debts have to be paid in devalued currency, it is possible for capital to create "two, three, many New Yorks" at virtually 24-hour notice.

To summarize: the downward spiral of devaluation and the upward movement of interest rates have resulted, first, in the regionalization of power, promoted by the state itself, which ceases to operate as lender in the last instance; and second, in the shifting of power as lender to the selective controls exercised by multinational centers of decision making. The political implications of this are enormous. Behind the system of floating exchange rates decided upon at Kingston lies a strategy of austerity by means of forced devaluations that impose self-reduction of spending on local authorities, narrowing the political choice to the point at which the only choice is the distribution of the cuts. The room for bargaining over the distribution of income is no longer open and expansive from the class point of view; it is reduced to a restrictive field in which bargaining becomes a purely divisive and disaggregating instrument in the hands of the state. By shifting the selective power to impose the blackmail of crisis to the international level, the entire framework of consensus through the distribution of income-the basis of the Keynesian state-is thrown into crisis. The mediations on which state power has depended-the party system, the distribution of income via local authorities, partnership with the unions for "planned development", etc.-are undermined. Their self-justification increasingly relied on the illusion that there is still room for bargaining. The new "justification" of the state, the rebuilding of its consensus, depends increasingly on the selling of this monetary terrorism by the official organizations of the working class, primarily the parties and the unions. They not only become directly implicated in the running of the crisis, but indeed become direct agents in the divisive and terrorist politics aimed at containing blocking any widening of the class front. It is increasingly up to the official class organizations to create conditions allowing the relative autonomy of the state-by imposing the logic of austerity while fostering the ideology of deferred, future growth. This is the real function of the new social democracy in the crisis; its "left" component is confined to tilting at windmills. The monetarist blackmail has forced social democracy to become the national government of austerity: whether it is the "government" or the "opposition" is unimportant. To cite two obvious examples: the Italian Communist Party, fresh from electoral victories, above all at the regional and local level, now finds itself trapped in a political impasse. From being the party of guaranteed income, it now has to transform itself into the administrator of cuts in local spending. In Britain there has been a similar dramatic change in the physiognomy of the Labour movement: the "social contract" of 1974 has become the means by which government and the unions impose the deflationary regime, exploiting the monetarist blackmail to the full while externalizing responsibility for the crisis to shadowy and ill-defined "international financial operations." The real power and initiative in selectively imposing austerity is hidden behind the smokescreen in which money supposedly obeys its own laws outside and beyond the sphere of political choice-where "man is nothing."

The experience of New York is also a paradigm for the likely consequences of this overall strategy of austerity for the so-called developing countries. The loan arranged for New York to cover its immediate liabilities was on the condition of no moratorium. The loan had to be repaid within the time specified. The ending of moratoria also appeared at the United Nations Conference on Trade and Development meeting in Nairobi in the spring of 1976, where the "developing" countries met to discuss a common policy for confronting their enormous debts abroad and regulating the pricing policy for raw materials. A large part of the debt of these countries has been increasingly held by the commercial and investment banks of the Euromarket. It is estimated that just over half of these are financed by official agencies-the World Bank, the OECD, OPEC, the socialist countries, etc.-while almost half are from the private banking sector. The total amount of credit required by the poorer countries has been calculated at $40 billion for 1976, while about 50 percent of the profits of the major U.S. banks now come from loans to these same countries-a situation which makes it unlikely that moratoria will be widely permitted. To do so would lead to an open-ended system of "international welfare". The refusal of moratoria on the part of the "advanced countries indicates the strategy of privatization of aid on a world scale by means of conditional, fixed-term credits provided by the multinational banking system, with the result being the proliferation of the "debt economy" on a global level. As in the cases of New York and the Western European countries, the poor countries-the debtors par excellence-can only repay their debts by devaluation, which in turn lowers the purchase price of their raw materials-while their imports from the Western countries have to be paid for in dollars.
A NEW LEVEL OF CLASS CONFRONTATION
If this monetary strategy arising from the restructuration of the financial system represents the general line of deflationary attack on the working class internationally, to what extent can it provide the solution for capital? How far can it succeed where previous deflationary attempts have failed? Rather than providing a solution --that is, a way out of the "open-ended transition" that capital has been faced with-the application of the monetarist policy contains its own inherent and unavoidable contradiction. Monetarism and policies deriving from it presuppose a relation of class forces completely subordinated to money as capital. But such a relation cannot be assumed the present situation. The prerequisite for this strategy to provide the solution, and not merely a response, to the already existing level of international class attack is an ability to exorcise the class struggle, not only in theory but in reality. Yet this strategy is premised upon the already existing open-ended crisis, but contains in itself no inherent capacity to solve the political confrontation which its application implies. On the one hand, it subordinates politics, the arena of subjective decisions and class forces, to the dictates of money: when Milton Friedman says, "Last year New York and Chile, this year Britain," he assumes that the political conditions are already everywhere favorable to monetary attack, that the battle is already won. On the other hand, these conditions are clearly not given: politics cannot be eliminated by a voluntaristic solution to the problem of power. Earlier deflationary attempts failed to solve the political problems of the resistance of the working class-a specter that cannot be exorcised. Equally, monetarist strategy can only establish the basis for the relaunching of the capitalist system by eliminating this contradiction, or else the crisis remains open-ended and the contradiction is merely pushed up to a higher level of class confrontation.

It is against this threat that the state must measure its use of terrorist measures to isolate potential vanguard sectors in order to avoid a generalized class confrontation: the only political "solution" in sight for capital is a long, drawn-out process of (hopefully) eroding working class power, of "holding the fort"-in short, a war of position. Hence capital once again faces the political "limits" that ultimately represent the "limits" or contradiction of the money-form itself. To return to Marx: "From the fact that capital posits every such limit as a barrier and hence gets ideally beyond it, it does not by any means follow that it has really overcome it." In subjecting the state to international monetary dictates, there is a grave risk for capital that these "limits" may not only create a vicious circle in which the contradiction within monetary policy is constantly reproduced, but that they may escalate the crisis of money into the crisis of the state itself.

In October 1976 representatives of the member-countries of the I.M.F. met in Manila to re-examine the world situation in the wake of a new wave of devaluations. What soon became clear was that the general strategy would not change-not until wages, income, and social discipline have been brought back under capitalist control. The terrorism imposed by money will continue, checked only when the political price is too high. The attack on employment will continue, as will the dependence of industrial development, local government, and the public sector on the selective political controls exercised more and more by the multinational banks. In short, each crisis leads on the next, and the monetary transition threatens to become more and more a permanent state of international emergency. This undermines the entire system of mediations on which the state has relied in the past: from the state as distributor, to the state as lender, to the state as distributor of cuts-what comes next?

What is clear is that the longer this period of transition lasts-the more permanent the monetary attack becomes-the more it can develop into the terrain of a subjective reorganization of the working class. While the overall dimensions of this new cycle of struggles are not yet clear, its characteristics have begun to emerge in confrontations ranging from the uprisings of black youth in Soweto and London, to the food price riots in Poland and Egypt, to the pitched battles between students and police in Italy and Britain. What seems to tie these struggles together is that in a crisis situation in which capital is forced to abandon the Keynesian form of money as mediator of class relations in order to maintain its power, the working class-whose very struggles generated that crisis-is pushing forward with demands that aim at the elimination of work altogether and appropriation of social wealth as a whole.

This is not a dream of a future society; rather it is the practical requirement posed by the present situation of class confrontation. And it is not the planning of a party central committee, but the expression of the new needs and new demands of the various sectors of the working class. For, given the new forms of capital's attempt to reimpose command through centralized multinational state power and regionalized implementation of austerity, these very struggles over money, work, and all the conditions of life are immediately struggles against the state. To speak of attacking the coercive power of the state can no longer mean the coup d'etat, the storming of the Winter Palace. It means an attack on the "social contracts" and incomes policies in Western Europe, an attack on the fiscal crisis in the U.S., an attack on "socialist discipline" in the Eastern bloc- in short, generalized resistance to capital's plans everywhere for the erosion of working class power.

The overriding question before us now is one of determining the forms of organization that can carry out these attacks. This is not a matter of establishing a party that attempts to manage the struggle from above and "lead the working class to socialism". Rather it is a matter of analyzing the successes and failures of the modes of working class organization in the previous cycle of struggle, primarily the organizations of the unwaged in the struggles against the state over the social wage. Only then can we begin to grasp the mechanisms of the circulation of struggles, both across geographical areas and among different sectors of the class, and thus organize ourselves in ways that accelerate that circulation. And it will be only then that we may see what it truly means for the working class not just to have power, but to be in power; and what it means for us not just to fight against capital, but to destroy capital in all its forms.

DEVELOPING AND UNDERDEVELOPING NEW YORK: The "Fiscal Crisis" and the Imposition of Austerity*
by Donna Demac & Philip Mattera

[*This article is a revised and expanded version of Developing and Underdeveloping New York: The "Fiscal Crisis" and A Strategy for Fighting Austerity, a pamphlet published by New York Struggle Against Work, 1976.]

New York City—the capital of international capital—has been in a condition of constant turmoil for more than two years now. Hundreds of millions of dollars of public expenditures have been eliminated, tens of thousands of city workers have been laid off, and direct control of the city has been assumed by a set of ruthless planners from the corporate elite and the federal government. Martial law — in a fiscal sense — has been declared, and the order of the day is: work more and get less. The banks and the federal government, with the cooperation of the municipal union leaders and local elected officials, have used the outright manipulation of money — the money used to pay for the wages of city workers, payments for welfare recipients, and all the functions of the social factory managed by the city administration — to accomplish perhaps the most decisive defeat of working class power in the world today.

But what is almost invariably overlooked in analyses of this crisis is that the reason for the intensity of capital's assault was precisely the intensity of the working class offensive that preceded it. It was this offensive that undermined the social control of business and government in New York, and it has been in response to this offensive that those in power have succeeded in making New York part of the "Third World," in the sense that the city has been subjected to capital's most effective weapon: underdevelopment. New York has been serving as one of the main laboratories for the testing of the "fiscal crisis" as a complement to the food and oil crises in the arsenal of weapons used to deal with the international class offensive against work. What had been tried quietly throughout Latin America, Asia, and Africa — manipulation through debt dependency — has now been presented with full force in the metropolis of the "metropolis."

To a great extent, the underdevelopment of the private sector in the city (in response to New York's acute "labor problems") had been in operation for many years: about half-a-million manufacturing jobs were relocated out of the city from 1950 to 1975, and more than 650,000 jobs of all kinds "disappeared" in the seven years following 1969.(1) What is unique about this current crisis is that it concerns the finances and functions of the State and that its leading actors have been, on the one side, the State's managers and creditors, and on the other, its employees and its "clients." It has been through the underdevelopment, the impoverishment of New York's public sector that those in power have sought to end the working class raid on the treasury. Our aim in this article is to recount and analyze both of the processes — the growth of wage struggles against the city administration in the 1960's and capital's imposition of austerity as a means of undermining that struggle — not for the sake of history, but in order to see how we might once again regain the offensive and subvert the "fiscal crisis."

FIGHTING THE HUMAN CAPITAL STRATEGY

The situation which faced those in power at the beginning of the 1960's in New York and, in varying degrees of intensity, cities across the country was one of growing restlessness among all sectors of the working class: the earlier immigrants in the factories of the north were threatening the foundation of the Keynesian system through their increasing wage pressure and their struggle against the disciplinary function of the unions, while recent black and Latin arrivals from the south and the Caribbean were rejecting their designated role as reserve labor in the ghettos. Capital needed a strategy which would both undercut the waged workers' challenge to that delicate Keynesian arrangement and help to bring the unwaged population into that same system by transforming the emerging civil rights movement into something that would promote rather than thwart capitalist development. A solution was sought through the so-called human capital strategy, which was at the heart of the domestic programs of the Kennedy and Johnson administrations. Its purpose was appropriately twofold: with large federal investments in education, job training, health, and community development, the intention was to create a new supply of (hopefully cooperative) wage labor in the ghettos by seeking to channel the frustration of the unwaged in a vocational direction.This, in turn, would increase competition for jobs and undermine the wage offensive. Thus, countless of millions of dollars were invested in programs such as the Manpower Development and Training Act of 1962, the Vocational Rehabilitation Act of 1963, and the crowning glory: the 1964 Economic Opportunity Act -Johnson's frontal assault in his "war on poverty."

But from the very beginning, especially in New York, there were signs that the intended participants would refuse to cooperate with the terms of the strategy. Just before the Economic Opportunity Act became law, the first of the major ghetto riots of the 1960's erupted in New York, beginning in Harlem and spreading in the July heat to Bedford-Stuyvesant and elsewhere. There had been riots in Harlem before — notably in 1935 and 1943 — but it came to be widely acknowledged that there was something different about the 1964 uprising, something that was to characterize the rest of the urban riots of the decade. No longer were these outbursts simply expressions of anger and frustration — they were certainly that! — but they also took on an "economic character." As looting became the primary activity, it became clear that the riots were acts of direct appropriation of social wealth, the wealth that was denied ghetto residents most acutely because of their wagelessness. One of the clearest examples of these acts, which Nathan Glazer and Daniel Moynihan have appropriately labelled "commodity riots," was a 1967 incident in New York in which black teenagers looted Fifth Avenue shops of more than $26,000 worth of very expensive merchandise.

During this period ghetto residents also organized to reduce collectively the prices of the things they needed, especially housing: in 1963 and 1964 a wave of rent strikes swept through New York.(2)

Struggles between tenants and landlords in the city date back to the earliest waves of immigrants. Popular resistance to the miserable conditions of the tenements in the late 19th Century forced the New York state legislature to pass the first set of housing regulations in the country—the 1901 tenement House Law. Yet, since much of the ghetto housing in the city remained in miserable condition, and since Manhattan remained among the most dense areas in the world (surpassing, by some measures, even Calcutta), tenants launched a mass movement against landlords during and after the First World War. In May 1919, thousands of people, led by the Tenants Defense Union, staged powerful rent strikes across the city, frightening the legislature into passing the country's first rent control law in 1920. This upsurge was revived in the 1930's when the original law expired, so the state was compelled to continue the controls. In one decisive incident in 1932, 4000 people in the Bronx fought with police when they tried to evict 17 families on a rent strike.

In subsequent years tenant power kept rents relatively low, but building conditions continued to deteriorate: in 1963, about one-half of the tenements in the city, condemned as unfit for human habitation at the beginning of the century, were, with only slight modification, still standing and being inhabited. It was this situation that prompted the new round of tenant actions, which came to be led by independent activist Jesse Gray and the Congress of Racial Equality. The rent strike movement, which at its height in 1964 involved more than 500 buildings in different parts of the city, resulted in many permanent reductions in rent, as well as new emergency repair funds, a $1 million rat-extermination program, and new protective legislation for tenants. Yet perhaps the greater impact of the struggle resulted from the expression of anger and power on the part of ghetto tenants, including the bringing of rats caught in their apartments to court during rent strike trials and the Rats to Rockefeller action, in which hundreds of toy rodents were mailed to the governor's office.

The message was not lost on city officials, who quickly "opened the lines of communication" with tenant leaders by establishing "hot lines" to heads of agencies — an arrangement which allowed those leaders to get rent reductions for people simply by making a telephone call.

The uprisings and rent strikes of the early 1960's served as the prelude for a much larger and more powerful struggle: the welfare rights movement.(3)

The welfare system — primarily the Aid to Dependent Children (ADC) program — was enacted in 1935 as part of the Social Security legislation, which grew out of the social struggles during the Depression. Welfare rolls shot up immediately after the Second World War but remained relatively low in the 1950's because of harsh restrictions in many states. As late as 1960, the average ADC payment was only $35 per person a month in the northeast, while rates in the south, for example, were even lower.

The welfare rights movement, which grew out of resistance to this miserable standard of living, led to a direct confrontation with the federal government, which was seeking to channel the anger and frustration of the ghetto in directions which would serve capital. The plan was to unionize the ghetto, to put the poor into organizations dependent on federal funding that would seek concessions but keep their members under control and not seriously challenge existing institutions. However, before long, this strategy failed. For not only did people resist unionization, but they used the very money of the programs to thwart development and dependency. For example, one of the roots of the welfare rights movement was in the federally-funded Mobilization For Youth (MFY), a counselling and job-training program that began operation on New York's Lower East Side in 1962. MFY workers and neighborhood people used the organization and its funds not as Washington had intended, but to launch an attack on the welfare administration, forcing it to end the midnight raids (that were supposed to make sure ADC mothers were not actually living with men) and the forced return of many recent migrants from the south and Puerto Rico.

The national welfare rights movement evolved out of the Poverty Rights Action Center, set up in Washington in 1966, which organized a decisive series of demonstrations in more than 15 cities in the summer of that year. The National Welfare Rights Organization, a federation of local groups, was founded that August and expanded to a membership of 100,000 at its height in 1968 and 1969.

The welfare rights offensive was strongest in New York, gaining such momentum in the successful winter clothing campaign of 1965-1966. In 1967 the city WRO group launched a drive to force the welfare administration to give all they were entitled to, while simultaneously fighting for special clothing and furniture grants. By the time the group staged a sit-in at a conference in 1967 of business leaders, convened by Governor Rockefeller to discuss the "welfare problem," the movement had become a formidable political force in the city, capable of undertaking daily demonstrations throughout the five boroughs.

The organized welfare rights movement also inspired other wageless people to take action. In May 1968, for example, thousands of poor women stormed city welfare offices and demanded special payments, and after sit-ins lasting as long as a week, checks were distributed to them. Actions like this forced the welfare administration to disburse more than $13 million in June 1968 alone, while the annual rate of special payments catapulted to more than $100 million. And when the special funds were eliminated through a "simplified payments system," militant protests were held at City Hall, and welfare mothers attacked offices around the city, disrupting operations, destroying property, and confronting welfare administrators.

The most dramatic result of these struggles was the explosion in the number of welfare cases in the city — a jump from 324,000 recipients in 1960, to 889,000 in 1968, to a high of nearly 1.3 million in 1972. At the same time, general ADC payments were forced up sharply from about $2100 a year for a family of four in 1960 to almost $4000 (plus many additional subsidies) in 1971.

During this period, "clients" asserted their right to the payments — the women seeing them as a form of wages for their housework — and fought all attempts by the government to force them into (low-wage) jobs outside the home. A 1966 study found that of a sample of New York recipients placed in jobs during a 30-day period, 84 percent left the jobs within a month — 90 percent of those within two weeks!(4) There was also a breakdown of the work inside the family — a dissolution of "parental roles" — as husbands and wives made arrangement's (what were called "fiscal abandonments") so that welfare payments could be obtained by the woman. The breakdown of the family structure alarmed business and government, which were fearful of its effects not on general morality so much as on the availability of labor. A report by the First National City Bank declared: "The fact that welfare is, in practice, such an accessible alternative to low-income work is troubling . . . The optimum solution lies in the direction of putting the major emphasis for employable males on developing stable job career ladders, so that husbands will be better able to support wives and children without going on welfare or resorting to abandonment." (5) What was undoubtably even more troubling to the bankers and their colleagues was that ghetto men had realized that those career ladders did not actually exist for them and thus began to seek money outside of the waged job.

"THE AGE OF THE PUBLIC EMPLOYEE"

The immediate effect of rebellion among the ghetto population was on city workers, who were usually the ones put in the position of dealing with poor communities as police, firefighters, teachers, and social workers. A surge in public worker militancy was the result, as seen first in the welfare workers' strike of 1965, which coincided with the emergence of the welfare "clients"' movement. The four-week walkout was led by the independent Social Service Employees Union and was mainly concerned with the issue of workload — a matter which the welfare administration was fond of describing as a managerial prerogative. The action was successful not only in terms of winning large wage increases, sharp cuts in workloads, and bargaining procedures in areas previously controlled unilaterally by management, but also in ushering in a period of intense struggle by city workers that continued into the 1970's. During this period, city employees in New York were at the forefront of a nationwide offensive by public workers, whose numbers more than doubled in the course of the decade, while strikes rose from 20 in 1960 to nearly 400 in 1970 — a situation which prompted Fortune magazine to declare that public workers "increasingly look upon unions as a lever to pry loose more money."(6) As strikes became more than mere possibilities, the distribution of power between labor and management in the public sector was radically altered.

After the strike by welfare workers largely destroyed managerial prerogatives concerning wages and workload, the transit workers' strike of 1966 began to establish what amounted to workers' prerogatives on these issues, growing out of rank and file pressure on Transit Workers Union head Mike Quill to adopt a tough stand against the new mayor, John Lindsay, who took office only hours before the strike began. The action succeeded in paralyzing the city, especially business, which lost close to a billion dollars. By the time the transit workers ended the 12-day action, they had won a 15 percent wage increase over three years and a $500 retirement bonus. More importantly, it was this strike which dealt the deathblow to the Condon-Wadlin Act — which was supposed to prevent strikes by public workers — since the law proved useless to the city administration in dealing with the transit workers.

This was recognized by both the city and the state governments, which proceeded separately to search for new mechanisms for controlling New York's public workers. Governor Rockefeller assembled a panel, headed by labor expert George Taylor, that made recommendations which led to the Taylor Act — a piece of legislation that still prohibited strikes but established new procedures for collective bargaining. The city government, meanwhile, created the Office of Collective Bargaining (OCB), which was the more liberal of the two appoaches, as it was comprised of representatives of the city administration, the unions, and the "public." The enthusiasm expressed for the OCB by most of the city union leaders indicated the extent to which they too were concerned with finding ways to restrain their memberships.

Nevertheless, this wish was not fulfilled. In February 1968, thousands of sanitation workers staged a wildcat strike in defiance of both the city administration and union leader John DeLury. The nine-day action created a severe crisis for both city and state officials, prompting the governor to threated to take over control of the city's sanitation department. The wildcat was also all the more significant because it took place simultaneously with the strike by sanitation workers in Memphis, Tennessee. It was in this strike that Martin Luther King, Jr. tried to link the civil rights struggle with the wage struggle — and it was then that he was assassinated.

This era of militancy on the part of public workers reached its highest expression in the gains made by the uniformed services: the police, firefighters, and sanitation workers. After staging separate wildcat actions in 1968, the three groups forced their union leaders to wring higher and higher pay and benefits out of the administration — agitation which prompted Business Week magazine to proclaim this period "The Age of the Public Employee."

The main way in which the uniformed services pushed up wages was through the parity issue. Traditionally, police and firefighters had received equal pay, and sanitation workers eventually won 90 percent parity. But the ratio of the wages of fire lieutenants to those of firefighters grew to be higher than the ratio of the wage of police sergeants to those of patrolmen. Declaring their jobs equivalent to fire lieutenants, the sergeants in 1967 demanded that the newly-created Office of Collective Bargaining raise their wages so that their differential with patrolmen would be more in line with that between lieutenants and firefighters. The OCB agreed to narrow the gap, but the patrolmen objected and demanded a raise to restore the old ratio — a position that they affirmed with a six-day wildcat strike in January 1971. The city gave in to the patrolmen, thus putting itself in the situation of having made contradictory agreements to two groups of workers. The result was that the sergeants and the patrolmen could then drive up wages without limit by alternately demanding the fulfillment of the two agreements. To complicate things more, firefighters and saniation workers came forth with further parity demands, so that after the dust cleared, the administration was forced to pay out $200 million in increased wages! and subsequently, base pay for police and firefighters, which had been $7806 in 1964, rose to $14,300 in 1973, while total labor cost per worker rose from $10,368 to $21,786 in the same period.

The major component in the vastly increased labor costs was the sharply rising contribution the city was compelled to make to the pension funds of its employees. Beginning in the 1950's, city workers began to push for better retirement benefits at less cost to themselves (originally, the city paid half the cost for all workers except police and firefighters, for whom the administration paid 75 percent). Workers won the right to get Social Security along with the pension; the inclusion of overtime in the computation of the pension base; and, in the 1960's, the Increased Take-Home Pay plan in which they obtained what amounted to tax-free wage increases as the city increased its share of pension costs. By 1972, no city worker's share of pension fund costs was more than 40 percent, while the transit workers had forced the administration to pay 100 percent of their retirement costs.

These pension gains — gains which once again gave workers more money for less work — soon alarmed the state legislature, which has ultimate jurisdiction over pension regulations. In 1971 the body rejected pension enrichments agreed upon by the city and District Council 37, the largest of the unions. Victor Gotbaum, head of the union, was thus forced to call the "biggest, fattest, sloppiest strike" in the city's history. The walkout included city incinerator workers, thus compelling the Sanitation Department to dump 700 million gallons of raw sewage into the city's waterways. Nevertheless, this strike, unlike virtually all of those by city workers in the previous ten years, was a failure.

THE CIRCULATION OF URBAN STRUGGLES

The reasons for the failure were complicated, but what was clear was that the crushing of the strike was the turning point in the growth of public workers' power in New York — a development which coincided with setbacks for other sectors of the working class in the city. Those in power had apparently concluded that the social relations of the system were seriously deteriorating: the "community" had become helpless at the hands of city workers, welfare recipients, and others. Something had to be done, and before long, capital's counter-offensive was launched. At its center were the imposition of a climate of austerity, the creation of scarcity, and the attempt to reimpose the discipline of work. Yet, before the counter-offensive can be understood, it is necessary to say more about the nature of the crisis faced by business and government.

For city workers the crisis meant the end of the era of the "civil servant" — the elite corps of public employees whose work had an aura of high status and professionalism. The merit system was effectively destroyed as wages and working conditions came to be determined by nothing other than the collective power of these employees. The result was an enormous growth in the ability of city workers to avoid work and demand higher and higher wages and benefits. By the end of the 1960's, labor analysts for the city administration admitted that there was little that could be done to prevent sleeping on the job ("cooping"), late arrivals, early departures, excessive lunch breaks, and other "inefficient work practices."(7) The steep decline in the work done by city employees necessitated large increases in payrolls: from 1960 to 1970, the number of welfare workers rose 225 percent, teachers 123 percent, and police 42 percent. At the same time, militancy drove up wages at an unprecedented rate during the decade: 112 percent for police and firefighters, 106 percent for sanitation workers, 97 percent for City University faculty, and 77 percent for public school teachers.

This decline in professionalism was intimately related to the transformation of the wageless population of the city, the main "beneficiaries" of the services city workers were supposed to provide. Teachers could no longer function as professionals when pupils became totally undisciplined and often attacked them. Police officers could no longer function as professionals when they were increasingly harassed by ghetto crowds and shot down in the street. Welfare workers could no longer function as professionals when they too were attacked by their "clients."

This rebelliousness of the wageless was a reaction to the system which blocked blacks and Hispanics from following the route to assimilation (and to waged jobs) that had been open to the previous white immigrants. The reason for this was that capital kept the non-white population on reserve as a source of cheap labor for periods of expansion — a situation which created deep divisions in the working class based on the wage or lack of it. What was remarkable, however, was that the wageless population, despite its tenuous links with the factory or office, found ways to confront capital with demands for a higher standard of living. Throughout the 1960's, the unwaged in the ghetto found ways to win more money and less work in the context of the social factory.

The impact of the struggles of the wageless affected not only public workers, but also waged workers in the private sector of New York. The rejection of miserable and low-paying jobs by blacks and Hispanics made it more difficult for business to use them to undermine the power of waged workers, who were then better able to win further gains. This process reached a critical point when the welfare rights struggle pushed the total of payments and subsidies above the amount equal to the pay received by workers at, or just above, the minimum wage. As more and more people made themselves unavailable for employment in the factories and offices, the percentage of the employable population in the city holding waged jobs sank steadily, thus dissolving the labor supply of many low-wage industries.

This aided in the emergence of a period of intense struggles by waged workers in the private sector. The upsurge began with the electrical workers' strike of 1962, which resulted in a 25-hour basic workweek and large wage boosts — gains which so disturbed President Kennedy that he called for all future raises to be tied to increases in productivity and declared that the "national security" required the 40-hour week. But Kennedy's plea for labor moderation was not heeded in New York, as a strike wave began with walkouts by hospital, communications, and, most notably, newspaper workers, who closed down the city's dailies for four months. In the following years the militancy persisted, led by the newspaper workers and the dockworkers, who staged repeated wildcats from 1963 to 1969. By 1970 the annual rate of "mandays lost" due to strikes rose to nearly two million in the city, while wages were shooting up rapidly in virtually all sectors. This period culminated in the postal strike of 1970, which, although it involved public (federal) workers, brought together all of the major issues in the private sector battles of that era, including the fight against speed-up, resistance to the use of sophisticated machinery to discipline workers, and especially the demand for more money and less work. The illegal strike began and remained strongest in New York, and it was also there that the postal workers emerged victorious after the national guard troops sent in by President Nixon were unable (and quite unwilling) to break the strike.

We can now come to an overall generalization about the struggles in New York in this period: each was a cause of and response to struggles by other groups in the working class. We have mentioned ways in which the struggles of the unwaged fueled struggles by the waged, but the opposite was also the case. Disinterested clerks not bothering to check eligibility helped to expand the welfare rolls. Police corruption helped to foster the "criminal" life style of the ghetto. And frequent walkouts by teachers stimulated the rebellion of students. In additon, the growing power of leading sectors of the waged, such as construction workers, in effect strengthened the welfare rights movement, since the barring of blacks from the high-paying jobs made them all the more militant in their confrontations with the government to demand money outside of the waged job.

This is not to say that the divisions in the working class had disappeared; on the contrary, what are called racism and sexism were rampant during these years. But it Is important to see that what was a at the root of these "isms" was not backward thinking, but very real divisions between blacks and whites and men and women based on the wage (or lack of it). What was unique was that while these divisions continued to exist, when groups of the waged and the unwaged confronted one another, they used the antagonisms as a basis for making greater demands on capital. This was even seen in the confrontation between different groups of waged workers in the parity dispute. The dispute was indeed a case of "chauvinist" rivalry among groups of city employees — but more important was that the dispute resulted in quick, large wage increases for all the groups of workers involved. These dynamics were perhaps most dramatically revealed in the conflicts involving teachers and students — both in the public schools and the City University (CUNY) — during this period. The bitter 1968 teachers' strike involved both teacher demands for greater control over their working conditions (especially hiring and firing) and parent demands for greater control over the working conditions of their children in school (the decentralization controversy). While it is true that these demands were largely opposed to one another, in the end both groups gained more power vis-a-vis the city administration. There was a similiar situation at the City University. Black and Hispanic students struggled to have their particular needs met by the administration, while the faculty sought better job security and greater control over their working conditions. The initiation of open admissions (following a series of student demonstrations that forced the closing of most of the CUNY system for several weeks in the spring of 1969) was a dubious victory for both sides; but the faculty members ended up with large wage increases (a rise from $5600 in 1959 to more than $11,000 in 1970) and the black and Hispanic students won greater control over the SEEK program (which, among other things, provided them with living stipends — a form of wages for schoolwork).

In general, there was also widespread animosity between city workers and welfare recipients during these years. Yet, looking at the overall results of the period, we see that the workers gained enormously increased wages and benefits, and the recipients gained enormously increased payments and subsidies. What is crucial to see is that these two phenomena could not have taken place without one another. This is not to say that the struggles of the different sectors were consciously coordinated and planned, but that the divisions were turned around and used against capital itself. There was nothing magical about this: it was the consequence of the discovery by the wageless of effective ways to struggle against capital in the social factory, which in turn "proletarianized" the working conditions of city workers (whose jobs were predominantly involved with the wageless), leading them to make greater and greater demands on the city administration.

CAPITAL BEGINS TO FIGHT BACK

This brings us to the counter-offensive. Those in power were clearly alarmed by this state of affairs, for waged city workers could no longer be counted on to control the wageless, who themselves could no longer be counted on to function as a reserve labor supply to undermine the power of private sector waged workers. The first response took the form of official concern over the budget. Expenditures had been rising much more rapidly than revenues throughout the 1960's — a clear reflection of the successful wage struggles by city workers and city "clients." The federal and state governments had thus been forced to supply higher and higher levels of aid, so that by 1973 these forms of revenue were paying for 46 percent of the city's expenses. The problem of stagnating local revenues and increasing expenditures was then transformed into a "budget crisis" when the external funds propping up the city administration began to decline. In the name of "money shortage," the state and federal governments stopped paying for the gains won by the working class in New York. In addition, the state began to take direct measures to undercut those gains. Besides the squelching of the 1971 pension strike, the Rockefeller administration and the legislature reduced welfare and Medicaid benefits; required welfare recipients to have photo-identification cards; tried to coerce recipients to accept low-wage jobs in the Incentives for Independence Program and the Work Relief Employment Project. At the same time, a three-year moratorium on pension fund improvements was imposed and retirement benefits were reduced for new public employees, while a drive was initiated to impose a stricter correlation between wages and productivity — even though it was admitted to be difficult or even impossible to compute a meaningful measure of productivity in many public services. Mayor Lindsay brought in the RAND Corporation for this purpose, and in 1972 the city spent $20 million for the country's first comprehensive productivity program in government. New York thus became the vanguard of a national attempt by those in power to use this time-honored method for controlling workers. At about the same time as the RAND project, the newly-formed National Commission on Productivity began to fund extensive studies concerned with measuring public worker output, while Fortune magazine published an influential article entitled "City Hall Discovers Productivity," which included the warning that "one of the principal concepts that city officials need to adopt from business is the essential link between productivity and wages."(8)

The problem with these first steps of the counter-offensive in New York was that despite the failure of the pension strike and other setbacks, the working class still possessed a great degree of accumulated power. Hence, while city workers agreed to some changes in work rules, they demanded in exchange wage increases that exceeded the savings the administration hoped to make by the changes — thus blowing apart the entire intent of the scheme. Welfare recipients likewise resisted: when the state announced cutbacks in benefits in May 1971 thousands of people in different ghettos around the city set up barricades in the streets and fought police. And although the rate of growth of the rolls subsided, the benefit levies could not be significantly reduced and there was strong resistance to the imposition of low-wage jobs. In general, then, those in power soon needed to intensify the simple money shortage strategy, to push it beyond mere moves to shake up a few "lazy" city workers and "welfare chiselers." The result was the crisis of debt dependency and the corporate coup d'etat.

Nearly all state and local governments in the U.S. regularly borrow money by selling tax-free long-term bonds and (less frequently) short-term notes. The notes are usually a way for governments to delay issuing bonds for capital projects until the market is favorable. But, in a few cities, preeminently New York, short-term borrowing was made the crucial tool (along with state and federal aid) for dealing with operating deficits and cash-flow problems — the results of urban class struggle. The level of such borrowing by New York's administration exploded beginning in 1969, rising from about $750 million that year to more than $2.5 billion only three years later — a situation that was vigorously encouraged by the major banks and the rest of the business community.(9) It was precisely this growth of borrowing that established the formal dependency of the city on the financial institutions, a dependency which served as the foundation of the intensified counter-offensive.

The exploitation of this dependency was initiated in the spring of 1974 through the demand by the major banks for higher and higher interest rates on short-term notes — supposedly because of "eroding investor confidence in the city." This pressure set in motion a chain of events, now known as the Crisis of New York, which has consisted of never-ending cash-flow and budget deficit problems, and such "solutions" as huge layoffs of city workers and cutbacks of city expenditures, de facto bankruptcy, and the taking of direct control of the city by the federal government and representatives of the corporate elite.

This last item, the transformation of control in the city, has been depicted as a necessary consequence of the failure of local elected officials to exercise effective fiscal control over the budget; but what we can clearly see from the struggles in the city over the previous 15 years is that this was actually a question of failing to exercise effective social control over the working class of New York. The first major step by capital in the intensified counter-offensive to remedy this situation came in June 1975 with the creation of the Municipal Assistance Corporation. MAC, which ended up being effectively controlled by Felix Rohatyn, one of capital's most talented "repairmen," was empowered to supervise the repayment of the city's debt for ten years, doing so through control of New York's revenues from sales and stock-transfer taxes, the limiting of short-term borrowing, and the issuing of its own long-term bonds backed by the state. But it soon became clear that MAC was to be involved with more than the city's cash flow: in the summer of 1975 Rohatyn and his associates forced upon the administration an austerity plan that included a three-year wage freeze for city workers; a 43 percent increase in bus and subway fares, as well as sharp rises in bridge and tunnel tolls and commuter railroad fares; a $32 million cut in the CUNY budget; and a $375 million reduction in the city's capital budget. The attack on jobs and services was also pushed forward with the assembling of the Management Advisory Board and the Temporary Commission on City Finances, both of which were authorized to do research in order to advise those now in power on the most effective ways of imposing austerity. Yet, by the end of that summer, the corporate planners apparently decided they needed an even more powerful body to carry out their grand schemes for disciplining the city. The result came in September with the creation of the Emergency Financial Control Board (EFCB), which assumed virtually complete control over New York's finances and established the framework for possible bankruptcy. The original members of the EFCB, besides the governor, the mayor, and the state and city controllers, were Albert Casey, chairman and president of American Airlines; David Margolis, president of Colt Industries (a major weapons producer); and William Ellinghaus, president of New York Telephone (who was also a member of MAC). Later, Rohatyn also joined the EFCB, replacing Casey.

As it turned out, the EFCB abandoned the idea of formal bankruptcy and instead won agreement from the federal government for a $2.3 billion direct-loan plan—an arrangement which put the feds, specifically the Treasury Department and the Senate Banking Committee, in a position of being able to impose conditions of austerity directly on the people of New York, as seen later in the moves to ensure the enforcement of the wage freeze.

THE ATTACK ON WAGES, PENSIONS, AND SERVICES

The imposition of austerity by the Beame administration, the state government, the banks, MAC, the EFCB, and the federal government has included two lines of attack: on city workers and on those people, primarily unwaged groups such as welfare recipients and students, who are most involved with city institutions. This is not to say that the rest of the working class in the city has been immune: the intensified counter-offensive has also included higher taxes, increased unemployment in the private sector, more expensive transit fares, and reduction in general services such as fire protection and libraries. But because the crisis of social control was primarily a result of the struggles of the city's employees, its "clients," and the students at its public schools, these groups have been the primary targets.
It is extremely difficult to determine with any accuracy the amount of expenditures the city has cut back and the number of employees it has actually eliminated since the beginning of the "get tough" moves in December 1974. A rough estimate is that in the course of the three-year plan ending in 1978, the administration will have eliminated more than a billion dollars in expenditures (not including interest payments). As far as layoffs are concerned, as of early 1977 the city had reduced its workforce by about 50,000 (through attrition as well as dismissals) from the 1974 total of about 300,000. This included approximately 13,000 public school teachers, 6000 hospital workers, 6000 police officers, 5000 CUNY faculty and staff members, 5000 welfare workers, 3000 sanitation workers, and 2500 firefighters. And there have been warnings of many more layoffs and eliminations of positions.

The first major act of opposition to the layoffs came on July 1, 1975 after Mayor Beame ordered the implementation of thousands of scheduled dismissals. The city's 10,000 sanitation workers staged a 100 percent effective wildcat strike, while hundreds of laid-off cops blockaded the Brooklyn Bridge and fought with on-duty cops, hundreds of firefighters called in "sick," and traffic controllers staged job actions during the rush hours. This overwhelming display of militancy turned out to be short-lived, however, as the police and firefighters decided not to strike and the sanitation wildcat ended with an agreement that amounted to the first in what would be a long series of city worker defeats. Nearly 3000 laid-off sanitation workers were rehired, along with 2000 cops and 750 firefighters; but the conditions for the rehirings were that the sanitation workers be paid with $1.6 million in union funds and the others with the revenues resulting from tax increases approved by the state legislature. And these workers were soon laid off again anyway.

Following the imposition of the wage freeze, the next struggle of public workers involved public school teachers, who struck for a week in September 1975. Despite a great deal of defiance demonstrated during the walkout, the teachers ended up with a contract that included no wage increase; only a single $300 cost of living adjustment (COLA) for most union members; and the loss of 9C minutes a week in preparation time for some teachers. The Board of Education agreed to rehire 2400 teachers, but their salaries would be paid with the wages lost and the Taylor Law penalties to be paid by the rest of the union members (and the state supreme court later ruled that the teachers had to pay taxes on the lost wages!). Despite the meagerness of the contract gains, the pact was rejected outright by the EFCB because it was said to "gravely violate" the city's financial plan with its insufficient stipulations for higher teacher productivity. In addition, only ten days later, in the midst of the big October 1975 default scare, the trustees of the teachers union pension fund were pressured into purchasing $150 million in MAC bonds "to help save the city."

The investment of pension funds has been one of the key elements in the offensive against city workers. In the course of the series of default and bankruptcy scares, the funds were made into the primary source of money to pay off the city's debts. The total investment by the five major funds of more than $3.8 billion (of their $10.7 billion total assets) has demonstrated how willing the union leadership has been to "help solve the crisis." This has turned city workers into involuntary partners with the banks and administration in taking responsibility for city finances, thus putting them in a position in which any further serious struggles could threaten their retirement money. And this has taken place while the financial junta has been working vigorously to reduce pension benefits. In February 1976 the EFCB eliminated the Increased Take-Home Pay plan, then Beame announced that steps were being taken so that the city could end its participation in the Social Security system (thus depriving city workers of federal retirement benefits), and at the end of June the state legislature voted to reduce pension benefits for new public workers and increase their required contribution into the funds. Furthermore, it was revealed that the city was neglecting to fulfill its full obligations for pension fund payments. A state commission headed by Otto Kinzel estimated in a March 1976 report that the city had underfunded the five major pension systems by $6 billion.(10)

The first confrontation following the federal "bail-out" of the city involved the transit workers. Even before negotiations for a new contract began in 1976, the federal government indicated its intention of preventing the transit workers from making any advances by limiting the use of federal transportation funds for operating expenses (and thus for paying for wage gains). And after the Transit Workers Union (TWU) and the Transit Authority reached a last-minute agreement that included no basic wage increase but a 25 percent rise in the COLA, the Treasury Department pressured the EFCB to reject the pact and impose another which reduced the COLA increase and made it depend on increases in worker productivity. (The Treasury Department was obviously well aware of the fact that in recent years more than a dozen audits of the Transit Authority by the state controller had found "gross examples of overtime abuses, absenteeism, loafing and poor productivity."(11)) Acting in what had become the typical manner of city union leaders, TWU head Matthew Guinan decided there was no need to submit the revised contract to a new membership vote.

The EFCB and the Transit Authority also used the situation to play off the demands of transit workers against those of transit users. While the original contract was being negotiated, transit chief David Yunich repeatedly warned that any wage gain would necessitate further increases in the fare. At the same time, officials suggested that one of the reasons wage increases could not be given was the widespread use of slugs and jumping of turnstiles by riders. In 1975 the TA admitted that about 140,000 people a day were avoiding the fare, and early in 1976 the head of the transit police proudly announced that the figure had been reduced to 28,000 as a result of a terror campaign in which people arrested for fare-beating (close tc 20,000 in 1975) were stripped and searched after being caught. There were even reports that a black man was shot to death by a transit cop when he tried to enter the subway through an exit gate.(12) The federal role in imposing austerity was intensified after the transit "settlement" as negotiations were beginning on new contracts for most of the other city unions. Senate Banking Committee chairman William Proxmire urged the Treasury Department to end the federal loan program if the wage freeze were not strictly enforced and called for $24 million in further reductions of worker benefits and the elimination of what remained of rent control. Treasury Secretary William Simon himself warned of dire consequences for violating the freeze (even with COLAs) and demanded a revision of the three-year plan and the extension of it through 1979. Thus the principle inserted in the transit contract -that any wage gain be limited to COLAs and that these depend strictly on real increases in productivity — became the federal government's requirement for the continuation of its "rescue" program. The leadership of the city unions accepted this policy with only a few half-hearted charges of "fiscal blackmail" and proceeded to join with the EFCB to implement the $24 million reduction in labor costs through their participation on a newly-formed labor-management committee on productivity. Even the labor editor of the usually reactionary New York Daily News, Michael Patterson, indicated in a news analysis that he was surprised at the extent to which the unions had "joined the mayor's management team."(13)

The productivity policy even played a role when a group of private sector workers in the city went on strike to demand wage improvements in a new contract. During the 11-day walkout of District 1199 workers at 34 non-minicipal hospitals in July 1976, the hospital administrators insisted that wage increases were impossible because the city government had indicated "it could not afford" to increase Medicaid payments to the hospitals. (The city at that time was paying about $260 million in Medicaid subsidies.) EFCB officials kindly recommended that 1199 accept a productivity agreement, adding that wherever public money was involved, worker sacrifices would now be necessary. The union, which was seeking a ten percent wage increase, declined the offer and finally forced the hospitals to agree to binding arbitration; but the arbitrator's ruling, handed down two months later, provided only a 4.5 percent wage increase for the second half of a year-long contract and made some reductions in management's pension costs. Even so, the hospital administrators were disappointed and warned of the need for layoffs and closings of facilities.

The fiscal crisis atmosphere proved even more effective for those in power in August, when 18,000 workers at municipal hospitals went on strike to protest layoffs. As the walkout entered its second day, state officials announced an effective reduction in Medicaid reimbursements to city hospitals of about $22 million a year. The strike ended after four days when the union agreed to give up $10 million in COLAs for 1976. The 1350 laid off workers were reinstated, but two days later the Health and Hospitals Corporation (HHC) announced that as many as 3000 more workers would have to be laid off unless the $22 million in Medicaid reimbursements were made up through productivity increases. The leadership of the union, Local 420 of District Council 37, agreed to join with the HHC on a productivity task force in order to save jobs.

This is where things stood for city workers in the fall of 1976. The EFCB, the federal government, and the rest of the financial junta had managed through outright money manipulation to bring to a virtual halt the wage gains of city employees and to reimpose the strict correlation between wages and productivity that had been smashed by the struggles of the 1960's. And even then, there was no guarantee given that increased productivity would lead to increased wages (actually, only COLAs). Through massive layoffs and attrition, the junta had also imposed a severe intensification of the work of city employees and used the huge investments of pension funds in city notes and bonds to make struggle by those employees a very risky endeavor. Throughout all of this, the role of the union leadership became one of helping to implement the austerity, indicating that those in power had succeeded in one of their major goals in the intensified counter-offensive: to transform the union leadership from a lever used by workers to pry loose more money, as Fortune magazine phrased it back in 1968, to a lever to be used by capital to pry loose and destroy the power accumulated by city workers.

There were some signs in September 1976 that this transformation might be undermined by police officers, who held numerous militant demonstrations against deferred raises and changes in their schedules that required an additional ten days of work a year. There were some tense moments as large groups of off-duty cops (still carrying their guns) staged noisy protests outside Police Commissioner Michael Codd's home, encouraged bands of youths who were mugging people outside the Muhammed Ali-Ken Norton heavyweight championship fight at Yankee Stadium, and blocked traffic on Fifth Avenue outside Jimmy Carter's New York campaign headquarters. In the end, the cops won back their six percent wage increase for 1975 and got the city to modify the schedule change, but there was no momentum built up for a general offensive against the austerity.

THE ATTACK ON EDUCATION, HEALTH, AND WELFARE

The financial junta's assault on the City University has followed much the same pattern of seeking higher productivity — in this case from students as well as faculty and staff. After the $32 million cut ordered by the MAC in the summer of 1975, the Board of Higher Education (BHE) agreed in December to cut its budget for the upcoming spring term by $55 million, a move that was said to require a month-long payless "furlough" for CUNY employees. At the same time, the BHE effectively ended the policy of open enrollment by instituting a "minimum academic standard" for admission, in addition to a high school diploma.(14) (This standard later became one of being in the top three-quarters of one's graduating class.)' In the spring of 1976 CUNY officials made various threats concerning the closing or merging of a number of colleges, but these plans were constantly modified and delayed because of militant student protests. Yet, the BHE did impose a qualifying examination for students to pass from the sophomore to the junior year, and, after closing down the entire CUNY system for 12 days, the board ended the 129-year-old tradition of free tuition for undergraduates, instituting annual charges of $750 for freshmen and sophomores and $900 for juniors and seniors. Meanwhile, the faculty was forced to forgo wage increases and to defer until 1978 two weeks' pay. Then, in order to implement a $69 million retrenchment program mandated by CUNY chancellor Robert Kibbee to comply with EFCB demands, the various colleges began drawing up plans for laying off as much as one-fifth of their faculties, including, for the first time, tenured professors. All of this took place under the shadow of the announcement by the city government that it intended to end its $92 million contribution to the senior colleges in 1977 and leave the financing to make up only $40 million of this figure, thus setting the stage for further cutbacks and layoffs, as well as major structural changes in CUNY to make it serve more effectively the new labor requirements of business in New York.

It has been in the area of welfare and Medicaid that the financial junta has been most cautious about making wholesale cuts, since they obviously recognize the extreme volatility of this situation. Throughout 1975 and 1976 the main attention given to this area was in a series of studies by various government and business groups — including the Temporary State Commission to Revise the Social Service Laws, the Citizens Budget Commission, and the Regional Planning Association — which all reached the conclusion that welfare payments were too high and that there thus continued to exist "disincentives" to working at (low) waged jobs. The Temporary Commission even found that despite wage increases in the private sector, the total of welfare payments and subsidies was still higher than the average wage, while a RAND Corporation study discovered that the total value of payments and services received by welfare families was often as much as 20 percent higher than both annual pay at the minimum wage and the federal poverty level.(15) This residue of power from the struggles of the 1960's clearly had to be attacked. There was an attempt in the state legislature in 1976 to reduce welfare payments by ten percent; but the junta decided to move forward in a manner that was less blunt.

One of the first steps involved the appointment of J. Henry Smith, retired chairman and chief executive officer of the Equitable Life Insurance Company, as head of the city's Human Resources Administration. Smith, who brought with him a reputation for being a ruthless administrator, proceeded to shake up the welfare bureaucracy itself, seeking to solve the problem of low productivity among social service workers.(16) At the same time, the city and state were proceeding with two quiet but intensive federally sponsored campaigns: first, a drive to eliminate "ineligibles" from the welfare rolls, a drive which reportedly lowered "ineligibility" in the city to 10.5 percent in 1975, down from 18.3 percent in 1973. The second, and more crucial, campaign has consisted of an effort to track down absentee fathers and force them to assume financial responsibility for wives and children of welfare. The federal government threatened to withdraw about $50 million in welfare reimbursements unless the city recovered that same amount through establishing paternity and imposing child-support payments on many of the estimated 300,000 runaway fathers in the city.(17) The clear intention was to undermine the "fiscal abandonments" that have worked to the advantage of both husbands and wives, while simultaneously reimposing the discipline of the family on men and women alike.

Then, in early 1977, those in power appeared to be moving forward with a more direct assault on benefits. Governor Carey's proposed state budget for the 1977-1978 fiscal year included a $200 million reduction in welfare and Medicaid expenditures. The Medicaid cut involved the elimination of a broad range of health services, while Carey threatened to carry out the slash in welfare appropriations through the imposition of a 45-day limit on home relief payments to "employable" people without children. (Home relief — a form of welfare not supported by the federal government — mainly covers people who have exhausted their unemployment benefits.) Several days after the presentation of the proposed budget, State Social Services Commissioner Philip Toia, apparently feeling pleased with the attack on "welfare parasites," suggested that the state return to the "soup-line concept" in dealing with the poor.(18) Nevertheless, the important development that the New York financial junta was awaiting was the emergence of the national welfare strategy of the Carter Administration, especially concerning the proposed creation of a standardized income maintenance system under the direct control of the federal government.

This completes an account of the more important aspects of capital's intensified counter-offensive in New York. This long string of defeats for the working class in the city has dramatized the determination with which business and government have sought to undermine the power accumulated in the struggles of the previous 15 years. What has been remarkable — though perhaps not so surprising, given the extraordinary measures used — has been the relative ease with which those in power have implemented the conditions of austerity. This is not to say there have been no resistance and no constraints on the actions of the financial junta; but the situation has been such that even the strongest cases of resistance have been transformed into additional instances of defeat. The two most notable examples of this phenomenon have been the massive rent strike at Co-Op City and the struggle over the "People's Firehouse."

THE LIMITS OF RESISTANCE

Co-Op City is a huge housing project (the largest in the U.S.) of about 60,000 people in the Bronx that was built as part of the Mitchell-Lama Program, an arrangement in which the state provided real estate tax subsidies to promote the construction of middle-income housing. The residences are not actually cooperatives, and the State Housing Division is essentially the landlord. In May 1975, in the midst of the early stages of the "debt crisis," the state announced a 33 percent rent increase, which was to be the first in a five-step hike totaling 100 percent — said by officials to be necessary to compensate for sharply rising mortgage and bond-interest costs. The strike began the following month, and for the next 13 months nearly 90 percent of the families in the project handed over their monthly checks to a steering committee. The strike — undertaken in the midst of capital's fiscal assault, including the continuation of the weakening of rent control — drew a tough response from the financial junta: rent money deposited in a bank by the steering committee was impounded, an injunction and $5 million in contempt-of-court fines were imposed against the committee, and the state threatened to foreclose on Co-Op City's $436 millinn mortgage. And when the tenants wanted to end the strike, the only option open to them was to agree to an arrangement in which they would be given effective control over the project for six months in order to determine for themselves whether the rent increases were "necessary." In other words, what the tenants had won was the right of self-management of austerity: the conditions of the intensified counter-offensive had been so effectively established that — in this case at least — the financial junta no longer needed to exercise direct coercion. The handing over of $20 million (68 carton boxes full of checks) by the steering committee to the State Supreme Court after the settlement of the strike symbolized the new situation in the city: the flow of money (and power) was now from the working class back to capital, a direct reversal of the movement generated during the struggles of the 1960's. Perhaps the fullest impact of the dilemma of the Co-Op City tenants — the dilemma of having to impose austerity on themselves — came two months later, when the maintenance and security staff at the project went out on strike for higher wages. The walkout ended after several days, with the tenant managers agreeing to a moderate pay increase; but the situation indicated the extent to which the working class of the city had been reduced to a position in which it was capable of little more than the redistribution of poverty.(19)

A related sort of defeat resulted from the struggle surrounding the "People's Firehouse." When the city administration — in the midst of closings of numerous hospitals, libraries, and other facilities — attempted in November 1975 to eliminate Fire Engine Company 210 in the Northside section of Brooklyn, community residents began a round-the-clock occupation of the building. After more than a year's occupation by the residents — during which time they renamed the facility "People's Firehouse" (though the occupiers never went out to fight any fires and the engine itself never left the building) — the city capitulated. But the terms of the agreement did not include the reinstatement of Company 210; instead, it involved the transfer of Rescue Company No. 4 from the Maspeth section of Queens to Northside. The occupiers declared it a victory nonetheless, while the residents of Maspeth obtained an injunction in State Supreme Court against the transfer. As of this writing, the issue had not been settled; yet what seems clear is that the Northside struggle, like that at Co-Op City, failed to subvert the conditions of austerity and was thus reduced to a matter of the allocation of scarcity.

Aside from the difficulties of resisting austerity demonstrated in these two cases, a major problem in the formulation of a strategy of resistance is the ambiguous character of many of the services being cut back. Most everyone is opposed to reductions in fire protection, public health care (such as it is), and garbage collection — though firefighters, hospital employees, and sanitation workers usually are unwilling to do more work at lower pay to make up for the cutbacks. Yet, is everyone opposed to police cutbacks that mean reductions in political surveillance or harassment of prostitutes? Is everyone opposed to Welfare Department staff cutbacks that (in some cases) result in a loosening of eligibility requirements? Is everyone opposed to CUNY cutbacks that necessitate the cancellation of required, non-credit "remedial" classes? The problem is that what are usually lumped together under the rubric of "services" are actually some very different sorts of functions, many of which serve business and government much more than they serve the working class. Most of the functions of police and social workers, for instance, are outright forms of social control. "Services" such as the public schools and colleges are engaged in the process of socialization as they try to mold young people to fit the labor requirements of business and government. Finally, there are mixed cases: the transit system, for example, is primarily designed to get people to their waged jobs (which was made quite clear in 1976 when transit officials investigated the possibility of shutting down the subways on the weekends), but millions of people depend on it in all of their activities.

Given these ambiguities, it is perhaps less surprising that there haven't been more violent reactions to cutbacks. Young people who have been tearing up the schools or not showing up at all are not about to protest when the city decides to shorten the schoolday by 30 minutes or shut down facilities altogether. Ghetto residents trying to survive by various hustles on the street are not about to protest when the city reduces police patrols. And, for that matter, it is likely that none of us is prepared to protest unequivocally when the city closes hospitals that have reputations for doing more harm than good to their patients. What all this indicates is that the nature of the intensified counter-offensive has caused the divisions in the working class to once again begin to work to the advantage of capital. No longer do the autonomous struggles of the different sectors of the class in the city result in more power for each vis-a-vis capital. In the place of the circulation of victory exhibited in the interaction of city workers and city "clients" in the 1960's we are faced with the circulation of defeat. No group has been unaffected by the austerity, so controversies over the "racist" or "sexist" nature of the layoffs and cutbacks miss the whole point of what is happening and only serve to accelerate that circulation.

THE FUTURE OF AUSTERITY

The above has clearly done a lot more to illustrate what an effective response to austerity is not than it has done to show what one is. The difficulty in doing the latter is that the initiative at this time is still with capital, so we must devote much of our energy to reassessing the likely plans of the junta for the future of austerity.

Yet, this too is no simple matter, for the direction of the plans has not been at all clear. On the one hand, there have been numerous indications that they may opt for a prolonged period of underdevelopment and austerity. Rohatyn, for example, has warned that "the pain is just beginning" and that in coming years New York will have to undergo "the most brutal kind of financial and fiscal exercise any community will ever have to face."(20) Deputy Mayor John Zuccotti has declared that "the era of the politics of plenty is closed, replaced by the politics of scarcity."(21) And as this is being written, the banks are pressuring the city to accept the creation of a permanent "watchdog" agency for municipal finances after the authorization for the EFCB expires in 1978. Moreover, there have been moves by the junta to push its assault on wages to the limit through the promotion of volunteerism (free work). The New York Times, in an article entitled "City Seen Entering A Retrenchment Era," noted that Rohatyn envisions "a city with a vast army of civilian part-time volunteers relieving clerical workers in the Police and Fire Departments, hospital workers, and all kinds of administrative workers. 'The Mayor has got to tell the people we're at war,' he said. 'In a war you have volunteers, you have rationing.'"(22)

Yet, there have also been indications of plans to redevelop the city (though clearly on capital's terms). In 1976 Roger Starr, then the city's Housing and Development Administrator and now Henry Luce, Professor of Urban Values at New York University and a member of the editorial board of the New York Times, put forth the notion of"planned shrinkage" of the ghettos, meaning that the administration would concentrate cutbacks in those areas to hasten their depopulation and lay the groundwork for their eventual reconstruction into industrial centers. Starr later also came out in favor of a revival of the Resettlement Administration of the New Deal era in order to move (poor) people out of the center-cities and into places where "job opportunities" are greater.(23) Rohatyn has essentially endorsed the same scheme (while avoiding the controversial phrase "planned shrinkage") in his prescription: "Take a 30-block area, clear it, blacktop it, and develop an industrial park with the whole package of tax, employment, financing incentives already in place." He also has looked back to the New Deal, as well as to postwar planning and Kennedy's New Frontier, in his calls for a new Reconstruction Finance Corporation to carry out a new Marshall Plan for the "declining cities" and for an "urban peace corps" of young business executives to help "save" the cities of the northeast.(24) Beyond this, other officials have envisioned the expansion of New York's role as the preeminent "knowledge city" of the world, while various government and private committees (including David Rockefeller's Business-Labor Working Group) have been hard at work drawing up plans for attracting investment back to the city - plans that will undoubtably include more measures like the agreement of the New York construction unions to accept a 25 percent wage reduction for renovation work.

The ambiguity concerning development and underdevelopment is largely due to capital's uncertainty as to how successful it has been in permanently disciplining the working class in New York, and also to the tension between capital's desire to seek that discipline through underdevelopment and the extremely important role New York plays for world business. The city remains the global headquarters, financial, and communications center, and it contains enormous fixed investments in real estate and infrastructure, along with a specialized (albeit often uncooperative) labor force — all of which could not be duplicated elsewhere without many years of upheaval in capitalism as a whole.

What this means is that as powerful as the New York working class may have become, capital cannot underdevelop the city much more. The people of the city are thus in a much stronger position than people in less crucial areas (for capital), who, when capital is forced to "move out," are left with nothing but power over their own poverty. The working class of the city thus has no choice but to build the struggle to gain power over the enormous wealth which is managed in New York. The publisher of the elite journal, New York Affairs, has candidly indicated the essence of the crisis by writing: "Whether or not the promises of social and economic entitlements of the 1960's can be rolled back to a lower order of magnitude without social upheaval is what is being tested in New York City . . ."(25) If nothing else is certain, it is clear that the final result of this test has not been determined yet.

February 1977

NOTES
1 For more on the underdevelopment of the northeast, see the six-part series in the New York Times, 8-13 February 1976; Business Week 17 May 1976; and Empire State Report. October-November 1976.
2 This discussion is largely based on Michael Lipsky, Protest in City Politics, Rand McNally, 1970; and Mark Naison, Rent Strikes In New York, New England Free Press, reprinted from Radical America, November-December 1967.

3 This discussion is largely based on "Protest By the Poor: The Welfare Rights Movement in New York City," RAND Corporation study R-791-NYC, by Larry R. Jackson and William A. Johnson, August 1973; and Frances Fox Piven and Richard Cloward, Regulating the Poor, Vintage, 1972.

4 Cited In Elizabeth Durbin, Welfare Income and Employment, Praeger, 1969, p. 127.

5 First National City Bank, Profile of a City, McGraw-Hill, 1972, p. 41.

6 I. Ross, "Those Newly Militant Public Workers," Fortune, August 1968.

7 See Raymond Horton, Municipal Labor Relations in New York City, Praeger, 1973, especially pp. 105-106.

8 D. Cordtz, "City Hall Discovers Productivity," Fortune, October 1971.

9 See, for example, hearings before the House Ways and Means Committee, 11 March 1969, cited in New York City in Crisi, New York, 1975, p. 15-16.

10 For more on this issue, see Roland Delfausse, "The Pressing Need for Pension Reform," New York Affairs, 1.1, 1973; Charles Holcomb, "The Pension Balloon is About to Burst," Empire State Report, May 1975; and New York Times, 3 May 1976.

11 New York Times, 20 October 1975.

12 See the Guardian (New York), 8 October 1975.

13 New York Daily News, 2 July 1976; on the productivity policy, see also New York Times 23 May 1976 & 17 July 1976; Business Week, 14 June 1976.

14 For background on CUNY and the struggles over open enrollment, see Crisis at CUNY, produced by the Newt Davidson Collective, New York, 1975.

15 New York Times, 28 November 1975 & 29 September 1976.

16 For more on this "problem," see New York Times, 17 October 1975.

17 New York Times, 16 September 1976 & 24 January 1977.

18 New York Times, 21 January 1977.

19 For more on the Co-Op City struggle, see New York Post, 31 January 1976; the Guardian (New York), 4 February 1976; New York City Star, 15 February 1976.

20 New York Times, 10 December 1976.

21 New York Daily News, 3 January 1976.

22 New York Times, 2 February 1976.

23 See New York Times, 3 February 1976; and New York Times Magazine, 14 November 1976.

24 See New York Daily News 7 March 1976; and New York Times, 16 March 1976 & 12 November 1976.

25 L.D. Solomon on "op-ed" page of New York Times, 21 February 1976.