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	Workers Vanguard No. 1010	12 October 2012

The U.S. Capitalist Class, Past and Present

Who Owns America

Fight for Workers Rule!

We print below a presentation, edited for publication, by Spartacist League spokesman Jacob Zorn at a September 22 forum in Chicago.

While I was working on this forum, I spent quite a bit of time procrastinating. The most successful way I discovered of doing this was to watch the Republican and Democratic National Conventions. Of course, each party lies about capitalism against the backdrop of the biggest financial crisis since the Great Depression, now in its fifth year. The Republican Convention was an orgy of reaction. I think it says something that the governor of New Jersey was the human face of the Republican Party. Their slogan, “We built this,” was rich given their open hostility to unions and to working people. The Democratic Party, on the other hand, talked a lot about the bad things that Romney would undoubtedly do. But as the flyer to this forum states, we oppose any support to the Democrats. We advocate a revolutionary workers party.

It’s notable that the Democrats, in their posturing, claim to fight for the “Middle Class First,” as the placards read when Bill Clinton spoke. This is one way this party of capitalism obfuscates the true nature of the social system. However, the idea that the main conflict in capitalist America is between the “rich” and the “middle class” is echoed by the trade-union bureaucracy as well as much of what passes for a left.

The American capitalist class is the most powerful, arrogant and bloodthirsty in the world. At the same time, the United States is unique among advanced capitalist countries in that most of its people do not think in terms of class. There is no party that even claims to be a party of the working class. Many people argue that there aren’t really any classes in the U.S. By contrast, for example in Latin America, everybody knows about big, powerful families like the Garza Sadas and Slims in Mexico or the Cisneros in Venezuela. In the U.S., to be sure, nobody denies that there are rich people and poor people. However, it is common to argue that one’s economic position is fluid, that people can rise as well as fall and that there is no permanent class system. Instead, people talk about the so-called middle class and the “American dream”: the chance to advance into the middle class with the help of education, hard work and maybe some luck.

A good example of how this attitude is reflected among the left was seen in the Occupy protests a year ago, when thousands of protesters in New York, Oakland and elsewhere braved police violence. This movement, like all populist movements, dissolved the working class into what one of Occupy’s early declarations termed “all people who feel wronged by the corporate forces of the world.” Fake socialist groups lapped up the liberal politics of Occupy. For example, Workers World Party called these protests a “fledgling revolution” and the International Socialist Organization (ISO) stated that Occupy had “fundamentally shifted the political landscape in the U.S.”

The term that Occupy popularized is the 99 percent—that is to say, everybody suffering from the capitalist crisis. I think it’s useful to quote what our paper, Workers Vanguard [No. 989, 28 October 2011], said at the time:

“It is false that ‘99 percent’ of the population share common interests. There is a fundamental class divide in society between the capitalists—the tiny group of families that own industry and the banks—and the working class, whose labor is the source of the capitalists’ profits. The working class is not just one more victim of capitalist austerity within the ‘99 percent.’ It is the only force with the potential power and historic interest to sweep away the capitalist system and rebuild society based on a centralized, planned economy.”

Class Divisions

Occupy was a rehash of the ideas popularized more than a decade ago in a book by two “post-Marxist” academics: Empire by Italian philosopher Antonio Negri and American academic Michael Hardt. Hardt and Negri claimed that the working class had been subsumed in what they called the multitude, an amorphous term encompassing almost everybody on the planet—industrial workers, peasants, smallholders, engineers, janitors, homeless beggars, corporate managers, prisoners and prison guards. Hardt and Negri themselves were rehashing the idea—popularized by the New Left in the 1960s—that changes in the economy had rendered Marxist, that is to say class-based, politics obsolete or “outmoded.”

One of the intellectual fathers of the New Left was an interesting sociologist, C. Wright Mills. He chose the term “power elite” over the term “ruling class” because for him “‘class’ is an economic term; ‘rule’ a political one.” For Mills, economic power did not necessarily translate into political power. Another professor of that period, G. William Domhoff—who still is on the faculty at UC Santa Cruz and wrote a very useful book called Who Rules America—more recently criticized Marxism as “too narrow a base for understanding the complexity and variety of power structures against time and places,” especially, he continued, for its supposed “tendency to downplay the importance of representative democracy.”

I want to begin with some basic Marxist definitions of society. We as Marxists define class as a group of people who share a common relationship to the means of production—that is, to the productive wealth of society. Under modern capitalism, there are two important classes: the working class, also known as the proletariat, and the capitalists, the bourgeoisie. Neither can be understood without understanding the constant struggle between the two.

Let me give an example. Many of you are familiar with the struggle by longshoremen in Longview, Washington. Members of the International Longshore and Warehouse Union braved state repression and stood firm, surviving attempts by the EGT grain conglomerate to bust their union. The EGT capitalists own the means of production. Workers create value that is sold in the form of commodities, which longshoremen play a vital role in circulating. And the capitalists try to get workers to produce as much as possible for as little as possible, hence, EGT’s desire to bust the longshoremen’s union. As the Longview battle underscores, under capitalism there is a constant struggle between these two classes over the terms and extent of exploitation.

Keep in mind that the capitalists are a tiny minority. They are the ruling class because they not only own and profit from the means of production but also control the state in order to maintain their power and profits, as the police attacks and harassment of the Longview workers starkly demonstrated. The state comprises armed bodies of men—the army, police, prisons and courts—who keep the ruling class in power. What happened in Longview was no aberration. There is no shortage of similar events in American history. For example, almost a hundred years ago in April 1914, armed troops acting at the behest of the Rockefeller family killed more than a dozen men, women and children when they fired on a camp of striking miners in Ludlow, Colorado.

The Myth of the 99 Percent vs. the 1 Percent

Our goal is for the working class to take power, to become the ruling class, through socialist revolution that smashes the capitalist state, as the Bolshevik Revolution did in Russia in October 1917. Only in this way will the resources of society be able to be used for the benefit of the population and not the profit of a small, parasitical class.

During the Occupy movement, it was not uncommon for so-called Marxists to prettify it by claiming that even if Occupy lacked an explicit class-based perspective it had an implicit one. Paul LeBlanc, a longtime reformist, most recently of the ISO variety, wrote in Socialist Worker (26 April): “The fundamental perspective of the Occupy movement has been to replace the power of the wealthy and oppressive 1 percent with the power of the 99 percent, the great majority of whom are working class whether blue collar, white collar or unemployed.” He continued, “This power shift from the wealthy few to the great majority of people is a revolutionary goal.” In fact, the Occupy rhetoric of the 99 percent is counterposed to a class perspective.

The ruling class is much smaller than 1 percent and the proletariat, while vastly greater than the capitalists, is smaller than 99 percent. Further, it’s necessary to point out that the very concept of 99 percent is not very useful. Usually the way this figure is used is to refer to people’s income.

Capitalists, in fact, do not live off paychecks but returns from their investments—that is, their capital. In 2010, Mitt Romney and his wife had an income of more than $21.6 million, but exactly none of this came in the form of wages or salaries. As an aside, there is quite a bit of confusion over what wealth actually is. Many people, including workers, own a house or a little stock in the form of a pension or a 401(k) plan. As the last several years show, the value of these things can be erased almost overnight.

In any case, when we talk about wealth, it is about the productive wealth of society. This type of wealth is passed down from generation to generation. By contrast, income is quite precarious. Income ends when an individual dies, gets laid off or otherwise can’t work. In the 1930s, Ferdinand Lundberg, a radical journalist, wrote a book called America’s 60 Families that traced how this wealth is controlled and passed down among the bourgeoisie.

There are more than 200 million adults in the U.S., so by definition the top 1 percent comprises more than two million people. It’s everybody who made more than $352,000 in 2010. Most of these are well-paid professionals or businessmen who live much better than most Americans. But the actual ruling class is much smaller, a fraction of this 1 percent.

As I mentioned, not all of the remaining 99 percent of the population consists of workers. This multitude contains all sorts of people who don’t share common interests. The most impoverished and oppressed sections of the population, who have no connection to production, are the people who Karl Marx called the lumpenproletariat, such as homeless people or criminals. There are the ever-growing unemployed, who Marx called the reserve army of labor. The 99 percent also includes direct agents of the state—cops, security guards, judges, prison guards—as well as office workers, technicians, managers, computer programmers, teachers, college professors and other members of the intelligentsia. There are also a few small farmers, especially in New Jersey, where I live. And finally there are actual workers.

Talk of the 99 percent obscures the political importance of the working class. Notwithstanding changes in industrial technique, the proletariat remains central to a revolutionary perspective today. It continues to occupy a unique role in the heart of the process of production, and it is through the exploitation of the working class that the capitalists derive profit. Concentrating workers in large factories and great urban centers, the capitalists have created the instrument of their own destruction as an exploiting class. For the working class to emancipate itself, it must abolish all exploitation, leading to a society without class distinction. This requires a revolution that establishes a workers government to expropriate the capitalists, because capitalism cannot be fundamentally reformed.

Chattel Slavery and Early American Capitalism

Although for many people capitalism seems natural, it is a historically recent development. In the 17th and 18th centuries, the bourgeoisie in different European countries—beginning with the Dutch and the English and then culminating most spectacularly with the French—overthrew the feudal order and made itself the ruling class. This coincided with what Marx called primitive capital accumulation. In other words, the capitalists plundered and stole wealth that they used to kick-start capitalism. As Marx explained in Capital (Volume I):

“The discovery of gold and silver in America, the extirpation, enslavement and entombment in mines of the aboriginal population, the beginning of the conquest and looting of the East Indies, the turning of Africa into a warren for the commercial hunting of black-skins, signalised the rosy dawn of the era of capitalist production. These idyllic proceedings are the chief momenta of primitive accumulation.”

Throughout most of the 19th century, capitalism remade Europe. Starting with Britain, capitalism went beyond its mercantile roots and became industrial. Capitalism was progressive in relation to feudalism because it enormously raised the productive forces of society. So much so that for the first time there was a material basis for envisioning an end to scarcity and class divisions. As Friedrich Engels put it in his book Anti-Dühring: “Only the immense increase of the productive forces attained by modern industry has made it possible to distribute labour among all members of society without exception, and thereby to limit the labour-time of each individual member to such an extent that all have enough free time left to take part in the general—both theoretical and practical—affairs of society.” At the same time, private ownership of the means of production, which is central to capitalism, became a barrier to the continued development of societies’ productive forces. Capitalism also created the working class: the force with the power and interest to overthrow capitalism and replace it with socialism.

Unlike Europe, the United States does not have a feudal history. The British colonies in North America were from the get-go integrated into British mercantile capitalism. Unlike Cromwell in England or Robespierre in France, the American revolutionaries did not need to create a new social system. Rather, they did not like the constraints that the British placed on their ability to develop.

The American bourgeoisie developed much more rapidly than in Europe. Primitive capital accumulation in the U.S., including taking the land from Native Americans and profiting from black slaves, ended much more recently. Indeed, much of the wealth of colonial America came from slave-grown tobacco. In the North, merchants sold food and other products to the slave-based “sugar colonies” in the British Caribbean and imported slave-made sugar. A major cause of the American Revolution was the attempt by the British to restrict the colonists’ ability to import and export slave-made commodities.

After independence, the merchant capitalists shared power in the new republic with the owners of slave plantations. These merchants profited from exporting slave-made agricultural products, first tobacco, later cotton. They also imported products from Europe and sold them to the slave South. Chattel slavery formed the bedrock of American capitalism.

By the mid 19th century, industrial capitalism was challenging mercantile capitalism in America. Big mercantile families looked down on these rising industrialists, in part because many industrialists had originally been artisans or were more involved in the actual production of goods. But it also reflected the fact that these two sections of the bourgeoisie fundamentally disagreed over slavery.

Many merchants were pro-slavery. Industrialists tended to oppose slavery or at least wanted to check its growth, favoring the new Republican Party while the merchants supported the Democratic Party. The dispute was over what social system was going to dominate the U.S.: a modern capitalist system, based on exploiting free labor, or an agricultural slave system.

The Civil War resolved the issue. This was America’s great bourgeois revolution, not the 1776 Revolution. The Civil War smashed the Southern slave system, destroyed the slave-owning class there and opened the road to the development of industrial capitalism. It smashed slavery, but the promise of full liberation for black people—a promise made explicit by some of the more radical bourgeois leaders during the postwar Reconstruction period—was not fulfilled. Even though black people became integrated into American capitalism, they remained forcibly segregated at the bottom. This is why we call today to finish the Civil War through a third, socialist, American revolution.

The Consolidation of the Bourgeoisie

The modern American bourgeoisie really has its origins after the Civil War. Some statistics: In 1869, there were almost twice as many factories in the United States as in 1859. In 1873, there was four times as much capital invested in manufacturing as in 1865. In 1866, London and New York City were connected by telegraph cable. The year before, there were 35,000 miles of railroad track in the U.S.; by 1873, there were more than 70,000 miles of track. This reflected the rise of American industrial capitalism and the American bourgeoisie.

Who was this bourgeoisie? Well, as the statistics indicate, one representative section was the railroad companies. Without railroads, a modern capitalist country was impossible, especially in a country so big. And so a group of swashbuckling pirates filled the breach to develop the railroads. The attitude of the railroad capitalists of the late 19th century was very similar to the Internet start-up capitalists a century later. Actually providing railroad service was far down on the list of their priorities. They raised capital by ripping off their investors—one favored method was issuing too much stock (called “watering” the stock from the practice of giving cattle lots of water before selling them so they would weigh more). The railroad magnates ripped off consumers, and they ripped off the government, and they ripped off each other. In at least one case, different capitalists fought pitched battles over control of the railroads. Some of these capitalists are still famous to this day—for example, Jay Gould.

It’s not for nothing that the capitalists of this period were called “robber barons.” They undertook all kinds of dodgy schemes to get rich. One famous, if comparatively mild, example was the so-called “Hall Carbine Affair.” During the Civil War, J.P. Morgan—then known as the son of banker Junius Spencer Morgan—was involved in a scheme to buy several thousand defective rifles from the U.S. government. In order to raise the money to buy these rifles, Morgan and his partners arranged to sell them to the U.S. government as new rifles at several times the original price. In other words, the government bought its own rifles, giving a large profit to Morgan and his partners. This would have been farce if it were not tragedy, especially for the Union soldiers who had to use the guns.

The 1870s to the 1890s—the Gilded Age—was very important for the American ruling class. The bourgeoisie lost interest in its plans to modernize the South and abandoned the black population to race-terror and discrimination. Some capitalists were also looking to turn a good profit in the South. The evolution of the Republican Party reflects this change. It went from being an anti-slavery party before the Civil War and advocates of Reconstruction after the war to being the party of the most powerful section of the big bourgeoisie.

The shift was also reflected on the legal level. During Reconstruction, Congress approved the Fourteenth Amendment, which declared everybody born in the U.S. a citizen, regardless of race, color or previous condition of servitude. The Amendment also states that all citizens have the right to “due process” and “equal protection of the laws.” In 1886, the Supreme Court ruled that corporations had the same Fourteenth Amendment rights as people did. A decade later, in the infamous Plessy v. Ferguson decision, the Court essentially ruled that the Amendment did not apply to black people at all, consolidating legal Jim Crow segregation.

The capitalists became self-aware of their role in society and determined to maintain that role. The bourgeoisie consolidated as a national class, emerging out of local elites. This reflected the creation of a national market; industrialists, merchants and bankers in one part of the country dealt with their counterparts elsewhere. They often owned factories, banks or railroads throughout the U.S. In this period, more and more capitalists moved to Manhattan, even if they had made their fortunes elsewhere, because it was the meeting ground of the bourgeoisie. Among them were the Armours from Chicago, Andrew Carnegie from Pittsburgh, John D. Rockefeller from Pennsylvania, Maximillian Fleischmann from Cincinnati and Meyer Guggenheim from Colorado.

Part of the self-awareness of the bourgeoisie was the creation of important social networks. In New York City alone, there were dozens of exclusive clubs. These included the Union Club, the Union League, the Manhattan Club, the Knickerbocker Club, the Calumet, the Metropolitan, the Tuxedo, the New York Yacht Club and the Racquet Club. The average wealthy New Yorker belonged to five of these clubs. J.P. Morgan belonged to 19.

Then there were cultural institutions, such as the Metropolitan Opera, the Metropolitan Museum of Art and the New York Philharmonic. These were run by donations from the bourgeoisie. Even today, one of the major benefactors of the Metropolitan Opera is the billionaire and Tea Party backer David Koch, who donated $2.5 million in 2010 alone. There were also private boarding schools and elite universities—particularly Harvard and Yale—that rose to prominence, not to mention the endless balls, dinner parties and other forms of socializing.

If this appears frivolous and wasteful, it was very important to cohering the American capitalist class by linking together capitalists from across the country and from different industries. Not every capitalist knew every other capitalist, but none was far removed from any other, which facilitated trust and a good working relationship. It also created a veneer of culture and refinement—which is often referred to as “class”—something the American bourgeoisie didn’t really have before this point. It emphasized the “right” and calling of the bourgeoisie to run society by helping distinguish it from the rest of the population, who did not have the culture that their “betters” had. On a more practical level, such networks allowed the sons and daughters of the bourgeoisie to get to know one another. As Lundberg documents, just as with medieval dynasties, the American bourgeoisie formed alliances through marrying one another. This served to more closely concentrate the wealth of this class.

Class Battles and Labor Statesmen

The bourgeoisie was also compelled into action by awareness of threats to its own rule. In Europe, the “spectre of communism” threatened capitalism, as was most spectacularly demonstrated by the 1871 Paris Commune, when French workers briefly seized power. In the U.S. at the time, industrial workers began to organize and fight for their interests. The first national strike took place in 1877—the Great Railroad Strike. In the same year, the bourgeoisie abandoned its prior commitment to “reconstructing” the South, shifting its focus to maintaining its rule over the country.

In a series of labor battles over subsequent decades, the bourgeoisie resorted to the power of the state against the workers. Between 1880 and 1930, the courts issued some 4,300 injunctions against unions. Between 1869 and 1892, employers used Pinkerton thugs in 77 different strikes; over roughly the same time, state militias were deployed against striking workers 150 times. As a result, strikers were more likely to be killed or injured in the U.S. than in almost any other advanced capitalist country. As the Commercial and Financial Chronicle put it in 1887, after the explosive growth of the first national labor movement:

“As the Knights of Labor grew in membership, and the number of boycotts increased, merchants and manufacturers began to feel that they had a common interest in preventing the growth of any such irresponsible power; they had a common interest in maintaining industrial order and independence which was more important than any temporary advantage to be obtained over a commercial rival.”

Given the amount of strikes and workers’ militancy in the late 19th century, one could be forgiven for predicting that the U.S. labor movement would become the strongest in the world. Why did this not happen? It was in part because the bourgeoisie was always willing to use brutal repression. But the bourgeoisie also exploited ethnic, linguistic, religious and, later, racial divisions in the working class. As Jay Gould bragged: “I can hire one half of the working class to kill the other half.”

Much of the blame for the low class consciousness of American workers falls on the trade-union bureaucracy. Most early unions represented a narrow group of skilled white workers, mainly native-born but also some Protestant immigrants. Under the tutelage of Samuel Gompers, head of the cigar makers union and later the founder-leader of the American Federation of Labor (AFL), union leaders ignored immigrant and unskilled workers, the majority of the class. They refused to organize black and immigrant—especially Chinese—workers. Gompers also pioneered the so-called non-partisan approach: instead of a party that reflected the class interests of workers—even if in a deformed way—the AFL supported whatever bourgeois candidate promised more. Needless to say, Gompers and his ilk were contemptuous of political struggle and sworn enemies of socialism. They wanted to work within the capitalist system.

The Dominance of Finance Capital

After the Civil War, the tremendous expansion of industry required capital. And for this, banks were crucial. One of the original purposes of investment banks was to provide American companies access to foreign—particularly British—capital.

The 1870s and 1880s set the stage for the ascendency of finance capital and the emergence of modern imperialism. The nation-state system, which had served as a crucible for the rise of the capitalist class, came ever more sharply into conflict with the needs of an international economic order that capitalism itself had brought about. The rapid development of American capitalism meant that the bourgeoisie went from being progressive to being reactionary in the span of a generation.

The growth of finance capital led to American investments abroad, which entailed exploiting and oppressing the peoples of the colonial and semicolonial world, particularly in Latin America, the Caribbean and Asia. In 1898, the U.S. obtained colonies in Cuba, Puerto Rico and the Philippines. Over the next period, the United States invaded many Central American and Caribbean countries, some of them repeatedly. U.S. troops were sent to Nicaragua three times between 1909 and 1933. In the first half of the 20th century, the capitalist Great Powers, having divided the world through bloody imperialist conquest, embarked on a series of wars to redivide it, seeking to expand their colonial holdings and spheres of influence at each other’s expense. Entering the interimperialist World War I in its third year, the U.S. emerged from the carnage stronger than its rivals in Europe.

When the U.S. was first becoming an imperialist power, the capitalist class was stressing the need for stability and common action. The swashbuckling pirates of the robber baron stage of capitalism were not so fit for the imperialist epoch. Through manipulation, reasoning and force, big capitalists organized what they called “trusts”—companies whose owners were interlocked. Again the banks were crucial, since they were able to gain control of various important companies. The banks didn’t necessarily own all of the companies, but because they controlled incoming capital, they were able to sway their owners.

In the 1930s, Lewis Corey (a radical who, a decade earlier, had been a founder of the Communist Party under the name Louis Fraina) called this process “Morganization.” J.P. Morgan gained control of huge portions of the railroad industry and shipping. He bought out other important capitalists—such as Andrew Carnegie—and formed the largest steel company in American history, U.S. Steel. Morgan or those he controlled held 341 directorships in 112 corporations, with an aggregate capitalization of over $22 billion.

Another example is the Rockefellers. Originating with a petroleum company, Standard Oil, John D. Rockefeller expanded his holdings. In 1890, besides his petroleum interests, he had some $14 million in railroad investments, $2.8 million in mining, $2 million in other industries and more than $1 million in banking. He owned mines, paper mills, nail factories, timber mills, banks, insurance companies, orange groves, soda factories, steamship lines, real estate companies.

In other words, he owned lots of means of production. So much so that he could not manage it on a day-to-day basis. The concentration of wealth created the need for a whole array of assistants: technicians, engineers, attorneys, accountants, managers and supervisors. This stratum is part of the petty bourgeoisie and comprises a section of what is considered the “middle class.” The petty bourgeoisie, while large, has no independent social role to play in capitalist production. Its upper layers tend to support the capitalists, and its lower layers are often sympathetic to the workers.

Despite Horatio Alger’s novels and the occasional “self-made” man, the capitalists were a class that passed its wealth down from generation to generation. In 1892, two-thirds of the millionaires in New York City had inherited their fortunes. Sixty-one percent of wealthy New Yorkers in 1828 were still represented, either personally or through their heirs, among the city’s millionaires in the 1890s.

It was obvious that American capitalists formed a ruling class. They didn’t just own the wealth of society, but they controlled the state, and, usually, the politicians and the government. Anything that threatened their profits was smashed. One example was the Populist movement. Populists had demanded reforms (the nationalization of the railroads and banks as well as monetary and tax reforms) that they saw as in the interests of “the people” versus the moneyed interests. This notion is kind of the root, at least intellectually, of both the 1960s New Left and the Occupy movement. The Populists lumped together all “producers”—workers along with small businessmen and farmers. Even though populism did not fundamentally threaten the existence of capitalism, the bourgeoisie reacted with fury. When he was NYC police commissioner, Theodore Roosevelt advocated that the Populists be treated “as the Commune in Paris was suppressed, by taking ten or a dozen of their leaders out, standing them…against a wall and shooting them dead.”

The 1896 campaign of the populist Democratic Party candidate William Jennings Bryan was a thorn in the side of the large capitalists, who flooded the coffers of the Republicans with millions of dollars. A key figure was Mark Hanna, a Republican operative who spearheaded the use of money to, in effect, buy candidates and elections. The underlying concept of Super PACs is not something new. It’s not a perversion of American democracy, but a continuation.

Candidates of both parties have long depended on large corporate donations. Lundberg describes how both Morgan and Rockefeller essentially controlled politicians at all levels, up to the president, in order to assure favorable policies. And the government repaid these contributions, with interest.

Growing Inequality and the “American Century”

By the late 1920s, the top one-twentieth of 1 percent, which was less than 40,000 people, owned 30 percent of U.S. savings. Then came the Great Depression. Since a large portion of the bourgeoisie’s wealth was maintained in stock, the crash of 1929 hurt the balance sheets of the wealthy. Four-fifths of the Rockefeller fortune disappeared. Corporate profits were $10 billion in 1929, but in 1932 there was a loss of $2.3 billion.

Don’t sing any sad songs for the bourgeoisie. The Rockefellers were still unimaginably wealthy. And as always, the bourgeoisie tried to make the working class pay for the capitalist crisis. Unemployment soared. More than eleven million Americans—25 percent of the workforce—were unemployed in 1932. Take U.S. Steel, which in 1929 had 225,000 full-time workers. By the end of 1932, it was operating at 12 percent capacity and did not have a single full-time worker. Following a slight uptick in the economy, the working class began to fight back. In 1934, there were more than 2,000 strikes. Among the most important were three citywide strikes in San Francisco, Toledo and Minneapolis. Led by “reds,” these strikes shook America and paved the way for the class battles that built the CIO industrial unions.

However, the new CIO leadership, often with the help of the Stalinist Communist Party, played essentially the same role, albeit with some more radical rhetoric, that the Gompers bureaucracy had played earlier in keeping class struggle within the bounds of capitalism. The union tops directly tied workers to the class enemy through support to Democrat Franklin D. Roosevelt and his New Deal, a series of reforms that created a basic welfare state in the U.S. Reactionary capitalist ideologues denounced the New Deal. But more farsighted bourgeois representatives realized that such reforms were necessary to save capitalism in the face of crisis and class struggle.

World War II—another interimperialist war—further strengthened the position of U.S. capitalism against its European rivals. Emerging victorious from the war, the bourgeoisie heralded the “American century” because of its growing power. There were two broad trends at the time. First, there was the Cold War. The victory of the Soviet Union over Nazi Germany and the Red Army’s liberation of much of Central and East Europe not only strengthened the USSR, but also gave Communism more prestige among the world’s exploited and oppressed, despite the horrors of Stalin’s bureaucratic rule. The bourgeoisie responded with its drive against the Soviet degenerated workers state.

Second, unions were probably the strongest they have ever been in the U.S. in this period. In 1946, there was a massive strike wave. Between 1933 and 1953, private-sector unionization grew from 15.5 percent to 35.7 percent, and the average manufacturing wage nearly tripled. After WWII, the bourgeoisie could afford higher wages because it was flush. But it could not accept any political challenge to its rule. The unions were purged of the reds who had helped build them.

Starting in the 1960s, U.S. capitalism entered a period of decline. U.S. imperialism’s defeat in Vietnam in the 1970s was both costly and embarrassing for the American rulers. For the workers of the world, it was a victory, especially as the heroic Vietnamese carried out a social revolution.

Over the next decades, millions of jobs were lost as the American bourgeoisie gutted the unionized industrial zones of the North and the Midwest, “outsourcing” plants first to the non-union South and Southwest and later to the semicolonial world. At the same time, the capitalists went on a rampage against the unions, driving down wages, ripping up benefits and attacking the standard of living for the working class. The signal event of this union-busting was Ronald Reagan’s firing of the striking PATCO air traffic controllers in 1981. Last year, there were 16 percent fewer workers in unions than in 1983. Only 11.2 percent of private-sector manufacturing workers are today members of unions, which is worse than it was in the 1920s.

Not surprisingly, this has led to a growth in inequality. Although critical of viewing society in terms of the “top 1 percent,” I want to cite some available statistics, which widely make use of such categories. Between 1979 and 1989, the portion of the country’s wealth held by the richest 1 percent almost doubled, from 22 percent to 39 percent. In contrast, in 1999 the average real after-tax income of the middle 60 percent of the population was actually lower than in 1977. Last year, the Census Bureau reported that the median family income had dropped another 7 percent alone since 2000. Marx referred to such trends as the immiseration of the working class.

The Continuity of the Ruling Class

When I was preparing this talk, several people asked me if the makeup of the bourgeoisie today is the same as it was in the Gilded Age. Of course, as the economy changes, there are new additions to the ranks of the capitalists. In the 1880s and 1890s, the railroads were the key industry, along with heavy industry and mining. Then came the automobile, so that by the 1920s the ranks of American capitalists were full of auto- or oil-related industrialists, such as Henry Ford and J. Paul Getty. Later, there was the airline industry, which contributed capitalists like Eugene Luther Vidal, who helped found TWA and Eastern Airlines (and also was the father of Gore Vidal). Now the bourgeoisie includes many from computer-related industries, such as Bill Gates, Ross Perot and the late Steve Jobs. The labor-hating credentials of the bourgeoisie today are still just as strong as for the “robber barons” of old.

One thing that is the case about the ruling class is that it has been white, reflecting the prevalence of black oppression under American capitalism. In the age of Obama has this changed at all? White families are roughly 20 times wealthier than black families. Due to the gains of the civil rights movement, today there is a small number of well-paid black professionals. But the number of actual black capitalists is infinitesimal. White capitalists tend to inherit their wealth, while the handful of black capitalists largely got their seed money as high-paid performers, celebrities or sports stars. According to Forbes, the richest black American in 2012 was Oprah, followed by Sean “Diddy” Combs. Only a handful of the top 20 richest black Americans were not entertainers or sports stars of one type or another, and two of these were the founders of BET. So there still is no significant black section of the bourgeoisie.

Key elements of the capitalist class display great continuity. In 1974, more than 100 years after John D. Rockefeller founded Standard Oil, Vice President Gerald Ford became president after Richard Nixon resigned. To fill the vice presidency, Ford chose Nelson Rockefeller, John D.’s grandson. This allowed Congress to look at his wealth. In a report for Congress, William Domhoff and Charles Schwartz detailed: “The Rockefeller fortune, although nominally distributed among many individual members of the Family, is actually coordinated under a central management” that was located on a particular floor in Rockefeller Plaza in NYC. They wrote that “fifteen employees of the Family, working out of this office, have been identified on the boards of directors of nearly 100 corporations over a number of years” and that “their combined assets add[ed] up to 70 billion dollars.” In 1992, the New York Times described how the Rockefeller foundation was safeguarding this wealth, which was estimated between $5 and $10 billion, for the fourth generation of the family.

What about today? In May, Rockefeller Financial Services sold a minority stake to RIT Capital Partners. (The “R” in RIT stands for Rothschild, a famous European capitalist family.) According to the London Telegraph, Rockefeller Financial Services had £22 billion, or about $35 billion, in assets. Venrock, whose name is an amalgam of ventures and Rockefeller, is a venture capitalist firm. It was an early backer of one of the emblems of the “new economy,” Apple Computer.

One study estimated that in 2000 the combined wealth of the Rockefellers, the Du Ponts, the Mellons, the Schwabs, the Hearsts, the Phipps (Henry Phipps was the second-largest shareholder in Carnegie Steel) was around $54 billion. The individual members of these families might not be as famous as their ancestors or the newer capitalists, and they probably prefer not to be in the news, especially after what happened to Paris Hilton. But they still own and run much of America.

Workers Revolution Will Rebuild America

Capitalism is increasingly unable to provide a decent life for most of the population. This is even more apparent over the last two decades after the counterrevolutions in the Soviet Union and East Europe that restored capitalism there. Not having to contend with the Soviet Union, much of the bourgeoisie is convinced that it faces no threat to its rule. Increasingly, the bourgeoisie discards things—like education, infrastructure, public transportation, science—which it once considered crucial to its system, making the reactionary nature of capitalism ever more clear. To end this looting and neglect, much less to expand the productive wealth of society for the benefit of humanity, requires overthrowing the bourgeoisie and putting the working class in power through a proletarian revolution.

In its epoch of decay, American capitalism has become more and more parasitical. The bourgeoisie has always been based on exploitation and oppression. But at least Rockefeller, Gould and Morgan’s fortunes were derived from production. To a large extent, today the American bourgeoisie focuses on financial gimmicks. In Imperialism, the Highest Stage of Capitalism (1916), V.I. Lenin described how capitalism created “the extraordinary growth of a class, or rather, of a stratum of rentiers, i.e., people who live by ‘clipping coupons,’ who take no part in any enterprise whatever, whose profession is idleness.”

The deindustrialization of America is reflected in not only the standard of living of the working class but also the very lives of many workers. Detroit, once a citadel of industry, is now largely a wasteland. The famous sign on the bridge spanning the Delaware River—“Trenton Makes, the World Takes”—now seems like a bad joke as huge swaths of the former industrial Northeast and Midwest rust and rot.

This is the state of American capitalism today. The capitalist class in its twilight has shown that it is incapable of maintaining society and is increasingly an obstacle to the survival of the human race. The working class still has the power and interest to wrench society from the bourgeoisie’s death grip and establish a workers government. To this end, we Marxists of the Spartacist League are dedicated to building a revolutionary workers party, the necessary instrument to lead the proletariat in its struggle for power.