COLLAPSE OF US INDUSTRIES MAY BRING THE EMPIRE TO ITS KNEES
By Carmen Lampago
The United States is at the end of its cycle as the world’s hegemonic power and one step away from its collapse as an imperialist power. Its future will be determined to a certain degree by its ability to delay the collapse of major branches of its industry, now heavily subsidized and under overwhelming pressure from competition abroad. This is not, however, due solely to foreign enemies and competitors as much as it is of its own making.
People in the United States are used to enjoying the benefits of being in the largest economy in the world, based on a huge industrial and financial base and surrounded by the most powerful domestic market in history. These benefits have been eroding and the material base which made them possible are disappearing as the US is losing ground to a number of fast-developing economies, many of which – if not all – were nurtured and initially developed by US capital.
Germany and Japan, reconstructed by the US in the post World War II period, became its strongest competitors. Europe as a whole followed suit. Now China, India, Brazil and a number of other countries are undercutting the US economy from all sides. Well before the recent earthquake and tsunami, China had advanced past Japan to become the world’s number two economy.
While its overall size still favors the US, a close look would reveal a scenario in which critical US industries are surrendering to the international momentum of their Chinese counterparts in textiles, machinery, tools, light weapons, steel, home appliances and more. In terms of economic power, China offers a tremendous challenge to US hegemony.
China’s is not the only economy making gains on the US. While China is taking over much of the manufacturing that used to be done in the US, India is taking over many of the service sector jobs. Initially restricted to lower-skilled service jobs like those in call centers, recent work moving to India now includes more skilled white-collar jobs. Tax returns, financial services and analysis, and engineering are increasingly being handled in India. And in the Western hemisphere, Brazil is making solid gains in economic and political power.
With loss of economic power comes a related loss in political power. The US used to hold a lot of political sway due to its capability as the buyer of last resort. Historically, the US was able to support the economies of allies by propping up the value of the dollar relative to foreign currencies and granting access to the most powerful consumer base in the world. That’s no longer the case. The decline in the value of the dollar will continue in lock step with the over printing of paper money by the US Federal Reserve Bank.
Between shipping much of the country’s job base to other countries and the 2009 economic crash, US unemployment has increased and consumer confidence and spending have decreased, ergo the domestic market has taken a big hit. Increased spending on wars and decreased spending on education have further weakened the US economy.
Since the political future of the country is tied to the unemployment rate, the remaining industries which provide jobs are highly valued both politically and economically. These industries (textiles, auto) are heavily subsidized by the US government. Otherwise they could not withstand global competition. Now China is preparing to become a major automobile exporter. Millions of cars, and more every month, are sold in China’s domestic market every year.
The economic crisis and the bailouts of financial institutions and the automakers – policies shared by both Democrats and Republicans to save them from bankruptcy and foreign competition from China – is endangering the life expectancy of major branches of US industry. Money for subsidies has limits. Subsidies cannot be sustained over long periods.
If China overtakes the US in auto exports, that will mean the collapse of the already threatened capitol of the automakers in Detroit and a dozen other cities based on auto production in the US. Manufacturing growth in China, Brazil and other countries is threatening other industries, and US agricultural production is only maintained artificially by government subsidy.
An estimated 30% to 40% of the entire US industrial working class is threatened by this somber future. It is useful here to remember than the industrial working class in the US declined progressively from about 50% of the private sector nonsupervisory workforce in the 1960s to 29% in 1992. Now it is estimated at 25%. In absolute terms, the industrial workforce peaked in the late 1970s at about 22 million and is now at the same level as in the 1960s or slightly more than 20 million production workers. (Department of Commerce Statistics)
This gradual loss of jobs, a decline over decades, which in itself has been disastrous for many workers, is now threatening to become a rapid loss of millions of jobs if critical branches of industry collapse or go bankrupt.
American manufacturing is bleeding lost jobs, which also represents a massive drop in products that once were made in America. According to one economist, the country currently doesn’t produce any television sets. Computer manufacturing in the U.S. employs about 166,000 people; in 1975, it employed almost 300,000. Meanwhile, Asia’s computer manufacturing sector has about 1.5 million workers and a single tech manufacturer, Fox Conn, employs more than 800,000 people. (Daily Finance, 10/17/2010)
“Other numbers illuminate the impact of this massive job drain. At the end of 2009, 15.7 million people were unemployed, while 12.6 million — 20% fewer — worked in manufacturing. This represented only 9% of the American working populace; at manufacturing’s height in 1960, 29% of Americans were employed in the sector.” (Daily Finance, 10/17/2010). These are outdated figures. The reality today, a year later, is much worse.
The collapse of a couple of branches of US industry, let’s say manufacturing and auto, will multiply these figures geometrically. Just do the math. The loss of manufacturing alone could mean the loss of 10 million jobs and the ratio of the employed and unemployed could end up as 2.7 million employed to 25 million unemployed!
Add in losses in the auto, petrochemical, and machinery industries and the emerging picture is a total collapse of the US economy, the shutting down of business. With that goes government, the political regime and the state. In sum, social relations would most likely collapse.
Meanwhile in the government jobs and administration spheres, the decline has been slower over the years. What is happening in Wisconsin and now spreading throughout the country is an indication of the rapidly deteriorating situation there as well. Besides, with the disappearance of industrial branches of the economy will come the collapse of public administration.
After attempting to push for short-term gains and profits over sustainable growth, US business interests are now reaping what they have sown. The recent nationwide campaign against public sector unions, highlighted by the battle in Wisconsin, is making this push, and the results, more apparent. Now that the private sector has been reduced to less than 7% unionized, the public sector, at 36% unionized is the next target.
The plan is to extract as much surplus value from a declining workforce with the least resistance possible while the US bourgeoisie shifts its interests more rapidly into preserving their investments abroad. They are looking for a dominant worldwide finance structure to supply them with the profits of declining domestic industry and manufacturing – with bad results so far – and to try to dismantle every attempt at worker organization domestically to avoid the inevitable social explosion that a collapse will bring.
To put an end to this situation, the tactics of “Buy American” and simple demonstrations and protests are as useless as fighting a lion with a fork. The US union bureaucracy can not be reformed and will not move a finger. Therefore workers need to throw them out of the existing unions or to create new unions and confederations that take up the fights with methods not seen since the 1930s like occupations, militant strikes and electoral action independent and in opposition to the Democrats and Republicans.