Translated from MSZ 1-1989

The social vision and social waste of Reaganomics

After eight years of the Reagan administration, mass poverty is more than ever a normal state of affairs in the USA. Every statistic indicates that the size of the officially defined poor population is constantly growing, that careers in poverty are accelerating and consolidating, that teenagers, blacks and Chicanos are equally at risk of poverty, that a job is anything but protection from poverty. None of this is glossed over or overly problematized. Pauperism is recognized as a form of the American way of life, from the White House down to the slums and ghettos. For some, it is a problem of order, addressed by social workers, police officers and occasionally the National Guard; for others, it is a problem of getting by. Where hunger, homelessness and the neglect of entire regions are still critically noted, they are not seen as an uncomfortable but inevitable result of the new beginning for the nation decreed by Reagan, but as the flip side of a coin whose front shines brightly, even if tens of millions of Americans have never seen it. After all, Reagan is said to have brought about an American economic miracle that is the envy of the whole world.

Even in the social sphere, Reagan did not invent and implement anything that capitalism had not known before. The President knew and took to heart that willing and cheap human material is a basic prerequisite for the production of wealth which cannot be replaced by interest, credit and military power. Nor are the blackmail techniques he has used against his people anything new. However, one cannot deny that the abdicated American leader has made progress in the American way of doing capitalism. The nonchalance and ruthlessness in dealing with social issues increased under his patronage. In other words: ordinary capitalism is held in high esteem. The pretense made by some politicians and other bleeding hearts that the US state is not only the violent midwife and promoter of business, but also a certain corrective authority in social matters, has been refuted by Reagan not only ideologically, but also practically. This normalization, the return to the age-old American tradition of regarding social policy as a rather superfluous business, was hardly held against Reagan by anyone, including those affected. The not inconsiderable price that the majority of US citizens had to pay for the restoration of American national wealth did not shake the American dream, the legend of unlimited possibilities, but rather strengthened it. Misery, a pioneer spirit, and patriotism go together splendidly in the American stable of freedom that Reagan managed for eight years. God knows, the American people have not been a barrier to the enormous revival program of the leading American.

His successor wants to pick up where Reagan left off, including in social matters. This will be no mean feat given the “legacy” that his party colleague has left him:
– a humble and cheap labor force that takes even the lowest-paying job as evidence of the “pursuit of happiness” and blames every lay off by capital on personal failure;
– an ever-widening Lazarus layer of the economically discarded and politically written off who still hold up the Stars and Stripes in their daily struggle for survival;
– and thus a social peace that no one, least of all the American trade unions, intends to disturb.

This state of the class struggle in the capitalist mainland is neither natural nor can it be explained solely by the American national character. Reagan and Co. did a lot to achieve this – with success.

Ronald Reagan was not a misanthrope, not a social extremist, but a good American, equipped with the power of the leader of the world’s number one power. In this capacity, he asked his fellow countrymen, more radically than his predecessors, who have not exactly gone down in history as benefactors of humanity, the American key question, regardless of who they were: Have you contributed to the success of the American nation with your success? Reagan saw the unquestioned equation of personal commitment and the good of the state, which makes it clear who has to serve whom, as being at risk on the home front. He had a correction ready. The President’s order to his fellow countrymen was that hard work must be worthwhile again, for the USA, that is. He and his team wanted to use every means at their disposal to ensure that US citizens were able to face up to economic competition without hindrance for the good of the state. A program that was as ruthless as it was fair: on the one hand, all the barriers to profit making were to be removed. “The rich will achieve more if they get more” is the first sentence of the politically implemented philosophy of success. The decision to treat efficiency in competition as a prerequisite and desired result of state reward necessarily entails the second sentence of the American philosophy of justice. Anyone who falls by the wayside in the departure for new economic shores, which the state is willing to pay a lot for, are simply out of luck and have to pay the price of the loss – the withdrawal of money and entitlements – as a just price for their failure. “The poor do more when they get less.” This is the sentence that necessarily follows, in fine American brashness, but which also rolls off the tongues of every social expert in Germany: social spending encourages abuse.

By practicing the American ideal of equal opportunities, according to which success should be rewarded and failure punished, the American human material is divided into successful people and failures, and careers of wealth and poverty are programmed. The re-sorting of the masses according to this standard is the entire core of Reagan’s social policy. The Reagan team does not need to cultivate any social conscience or the hypocrisy of regret when it creates its victims. Over there, and not just since Reagan’s day, the state’s desire for wealth and the cynicism toward those excluded from wealth have not been dressed up in the ideal of a common good from which everyone ultimately benefits. Reagan has given new validity to the old American rule of thumb: “What’s good for America is always and just as good for its citizens.” Entirely in the spirit of the US Constitution, as his gurus from the “Council of Economic Advisors” have attested to him:

“A general cut in budget programs that serve special interests is necessary to meet the constitutional mandate to ‘promote the general welfare.’”

Reagan’s welfare idea: Social welfare doesn’t pay off

When Reagan took office, faithful to the Constitution, he reviewed the additional social programs that his predecessors had launched under the grandiose title of the “War on Poverty” and found them to be completely ineffective. Not because of the actual results of the welfare programs that had been launched – the redistribution of poverty to more new clients – but because, in his view, they had achieved nothing other than costs for profit-makers and budgetary burdens for the federal government, which were nothing but sabotage of the main tasks of the federal government.

“The federal government is fully committed to its duty to provide all Americans with the services and protections that only a national government can provide. Above all, this involves a powerful national defense. ... In the past, there have been several methods of funding some of our social experiments. One has been to take away from our defense.” (Ronald Reagan)

Of course, even Reagan did not seriously believe that Johnson or Carter had looted the war chest in favor of family assistance or food stamps and rendered the world’s No. 1 power defenseless for the benefit of mothers, children, and the elderly. Nor was his complaint about a different kind of quid pro quo between the welfare and defense budgets, which would have been an impermissible relativization of the highest purpose of government. Reagan was concerned with the principle. The idea that Washington had claimed to achieve any kind of social redistribution with its budget; that the decision on happiness and misery had been taken away from the individual aspirations of Americans; and finally, that the care of social cases had not been left to the charitable network of neighbors, family, and other good people, was deeply repugnant to him beyond all accounting and fiscal calculations.

“The tax power of the state must not be used to control the economy or bring about social change.” (Ronald Reagan)

Of course, the dogmatist of a non-social policy did not discover the truth about the increased share of social spending and subsidies in the federal budget: that the economic and social policies of his predecessors had brought more and more people into hardship, forcing them to accept the little support they were granted. What he discovered in the misery of his fellow countrymen was the supposed misery of a policy which, with its official alms system, was guilty of a fundamental usurpation of authority and a dissipation of the state’s tasks that was completely detrimental to the nation’s wealth. The supreme critic of a false, un-American sense of entitlement finds the scapegoat in the middle of the federal capital.

“Our government is too big and spends too much.”

Of course, Reagan is also very concerned about what government money is spent on. And he and his cabinet certainly didn’t want to say goodbye to politics. Titles such as “too much government” or “paternalism” stand for a program that wants to set competition in motion without superfluous consideration of its effects on those who do not have the means to survive it; and that treats those harmed by competition or thrown out of it without further ado as what they are from the point of view of national wealth: faux frais of the capitalist mode of production. With his criticism and correction of previous social policy, Reagan does not want to give rise to the suspicion that state welfare allocations – if they have to exist at all – are a compensation for the loss of money and entitlements caused by capital and/or the state, or even a shortcut that could make the personal efforts of a US citizen to make a living out of his own pocket superfluous. In his own way, Reagan noticed and “solved” the contradiction of the socio-political program of “helping people help themselves” which had also gained a certain significance in the USA in the 1960s and 1970s – it was precisely the collected pitiful wretches who were supposed to provide themselves with the means to escape their economic plight. He simply declared the help unnecessary. Anyone who cannot help themselves does not deserve any help, at least not from the state; a modern form of state-organized euthanasia that is not suspected of having a burdened past. The program is presented, in true American style, not in a tone of regret, but of national enthusiasm.

“Each individual must strive for extraordinary accomplishments that do not translate into new proposals or billions in new public funds. Instead, it takes an effort of American spirit and simply straightforward American grit.” (Ronald Reagan)

Such recourse to primitive forms of pauperism and its liquidation are by no means backward, as the latest welfare state fanatics like to claim,. After all, Reagan did not preside over a developing country that can neither afford nor wants such “luxurious” faux frais of its rule, but rather the most developed democracy on earth, which considers its citizens to be ready to finance the vicissitudes of capitalist competition that affect them on their own, even if they are unable to do so.

Reagan did not pursue his ideal of the US citizen as a cost-neutral service provider of national wealth just with encouraging slogans. He also made a number of changes in labor and social legislation, cut or completely eliminated social programs, tightened the eligibility criteria for unemployment and welfare benefits, used every means of state influence to suppress wages, in short: reduced social benefits and increased the “service in return” of his clientele. In the end, he developed the whole thing into a completely original, electorally effective program, the “New Federalism,” the content of which simply consists of eliminating the costs of poverty by leaving it up to the individual states to take care of it, which may then decide that it can no longer continue the existing programs. The consequences were not long in coming.

The wage of Reaganomics: less and less

“We have rediscovered that work is a good thing in and of itself, that it elevates us inwardly when we create and contribute, no matter how menial the task.” (Ronald Reagan)

“Reagan acknowledged that many Americans were still out of work. But the government has not forgotten them and will not rest until they, too, share in the success of their God-given talents.”

It may well be that the average American citizen, even at the end of the Reagan era, sees his job, if he has one, as a sign of success, as proof of his own virtue, as his share of the nation’s God-given wealth. His President sees things somewhat differently. What he has rediscovered and wants his work animals to understand, and not just in theory, is the truth, which is also valid in the land of the fortune-makers, that the American does not work in order to live and that their wages are not there to ensure a living. The presidential reference to the fact that the benefit of a job lies beyond the dollar amount; that the government offers its working citizens no other prospect of success than being allowed to put themselves in the service of capital, is not just a sermon for the ideal wage. It is a reminder of the thoroughly practical view of work and wages that Ronald Reagan took up and did his best to assert in office. Work should be profitable for the USA, which requires the production of wealth, and wages as the cost of profiteering is a fundamental barrier to this. Here, too, it’s all about fairness – Reagan is not a villain who wants to snatch wages from workers. All barriers to doing business are to be removed, says the decision and order from Washington, and wages are included here on an equal footing with taxes, state regulations, etc., and are seen by American capital as a single unacceptable form of coddling. The first and most general contribution of the Reagan administration to the impoverishment of the American working class is the position, put forward with all the authority of the state, that wages in general stand in the way of national success, the public mandate to make labor costs cheaper. The two parties in question, capital and the unions, have carried out the mandate in the spirit in which it was given. After eight years of Reagan, America is a very special kind of low-wage country. In 1987, average weekly wages were at the level of 1973, meaning that real wages have been reduced for 14 years. With or without the involvement of the unions (see below), the two-tier wage system is being adopted in more and more sectors, i.e. all new employees are grouped together in a wage bracket that is on average 15% below the standard wage, regardless of their specific job. This type of wage reduction is also a lever for paralyzing the seniority principle, a certain level of protection against dismissal for long-serving employees. And, to anticipate this, most of the American “job miracle” so proudly touted by Reagan is, in the truest sense of the word, vanishing very cheaply:

“According to a study by the Joint Economic Committee of the US Congress, the proportion of low-wage earners increased rapidly between 1979 and 1984, so that 60% of the additional jobs can be attributed to this lowest income group.”

The state-guaranteed attractiveness of the new growth industries, especially in the southern USA, is that capital, freed from legal and collective bargaining restrictions, can buy the cheap labor that the American reserve army provides in abundance. The Reagan team made a direct contribution to achieving the quite deliberate goal of driving down wage costs with its handling of the minimum wage. A statutory, cross-industry minimum wage was introduced by Reagan’s predecessors in order to set a kind of lower limit for wage suppression. Reagan did a great deal to ensure the flexibility of this modest barrier. During his time in office, there was no increase in the minimum wage of $3.35 per hour. There was no inflation adjustment clause for this state-imposed wage anyway, so the immediate reduction in real wages for around 10 million Americans who are paid at this rate is obvious. As his own personal contribution to youth unemployment, Reagan lowered the minimum wage for young people (with a high school diploma) to 75%, so that the next generation of American workers is presented with the pleasant alternative of either embarking on a lifelong welfare career or entering the workforce at a wage that really only serves one purpose: It’s still too high to qualify for a welfare benefit. This is how cheap wages and cheap social costs come together.

The immediate and most striking consequence of the wage policy approved and practiced by Reagan himself is the expansion and consolidation of a typically American form of proletarian poverty. Over 10 million Americans in the labor force are paid below the federal poverty line and form a group with the pleonastic name “working poor.” In these types, no American wants to recognize the truth that the line between poverty and wealth does not depend on having a job. “Poor but working” is regarded not only by the President as a title of (at least ideal) recognition.

America’s New Frontier: Take any job

In terms of his domestic political achievements, Ronald Reagan would like to go down in history as the president who put his country back to work. What he would probably not like to hear as a record of his deeds is the fact that his decision to put the American economy back in the service of unrestrained national ambitions caused tens of millions of his fellow countrymen to be excluded from this very economy, to lose their income, and to fall into permanent poverty. And he would probably not entirely agree with the conclusion that his fight against unemployment consisted of exploiting an easily extorted industrial reserve army. Wherever capital wants to make use of the workforce on its own terms, jobs are always created. But what is there to be proud of or – when viewed from a European perspective – envious of?

That much is certain. What Reagan describes in retrospect as a successful test of the creativity, flexibility, and pioneer spirit of his working people, as the reward for resourcefulness in searching for a job, dissolves when viewed in the light of day by the fact that in the Reagan era, the modest willingness to accept any job became the general attitude of the American working class. The aforementioned “working poor” are just as sad proof of this as the estimated 5 million wage earners who work two or three jobs at the same time. Why is that?

In the meantime, the classic American legend of the dishwasher who becomes a millionaire because he grabs his chance, i.e. was needed, and then, once he has money, makes use of other successful people, has been given a new twist. Now it is definitely considered a desirable opportunity to become a dishwasher, i.e. the main thing is to have a job, and it is considered an achievement to at least not be a burden on the nation with one’s own material needs. That counts as self-employment. A large part of the “job miracle” is due to the crazy decision of the victims of the labor market to become masters of their own exploitation.

“In the period from 1970 to 1984, approximately 2.3 million additional Americans created their own livelihoods. The difficulties in finding a job have apparently prompted quite a few job seekers to take the plunge into self-employment. They do so regardless of the less than rosy earning potential. In 1982, the income of 50% of all self-employed persons was significantly lower than that of all employees.”

Pioneers are hard to kill off. It all started back when the dead weight of the first capitalist state sought a little bit of freedom overseas, even then in the wake of capital:

“Part of them [the surplus population] emigrates, following in fact capital that has emigrated.” (Karl Marx, Capital, Ch. 25, Section 4)

Today, in full-fledged capitalism, the workforce is once again on the move, in its own country. When American capital decides to move south from the traditional production centers, not because of the sun, but because of the subsidies, the favorable legislation, the tax advantages, the low labor costs, then it can rely on the willingness of the Americans to adapt regardless of losses. The government even donates new housing cabins.

“U.S. estimates indicate that, on average, every other job created in the West and South has been filled by a person who immigrated from elsewhere in the United States. Many Americans have followed the – mobile – capital in search of employment; and this has flowed primarily to places where the expected returns are more favorable than in the previous locations.”

Of course, Americans are not born with an unquestioning willingness to start a miserable working-class life from scratch. The voluntary nature of adaptation is also being encouraged – once again, somewhat more freely than elsewhere.

Unemployment insurance, which does exist as a statutory scheme, does not even give rise to the illusion of wage replacement or even insurance against the vicissitudes of working life in terms of the amount and duration of payment and the criteria for eligibility. Only around 40% of unemployed workers receive around 35% of their previous wage for a period of 26 weeks. After that, no further unemployment benefits are paid, and social assistance beckons. Reagan – in line with his firm conviction that the state has no place in the labor market and that the job search should be based on the do-it-yourself principle – has made this pocket money even less attractive. It now has to be largely taxed, all further payments are abolished; there is no entitlement to health and pension insurance. Anyone who has not found a job after six months is out and falls into the hands of the family or welfare. That’s it then, the typical American self-initiative.

Reagan and the unions: Patriots in conflict

“We have come to the conclusion that confrontation and conflict are destructive and that a cooperative solution to the problems of the present is desirable.” (AFL/CIO, 1985)

Labor unions in the land of full-blown capitalism have always seen themselves as uncompromising helpers of their members in and for competition – against the rest of the wage-earning class as well as against wage-paying capital. They have always understood “collective bargaining,” the collective negotiation of wages, as a task to supplement the competition to which workers are exposed by the capitalists with an active struggle for differences. US unions have always assumed that unionization can be worthwhile if and only if the organized workers are visibly better off than those who are not or not organized in the same union. Accordingly, these organizations do not offer themselves to the workers as compensation for their failures, but as guarantors of their relative failures.

The message of Reagan’s renewal program must have seemed quite familiar and essentially plausible to such success-oriented unions. After all, they have always understood and practiced “pay equity” as giving their members a “fair share” of the company’s success. For this reason, despite all their reservations about the man in the White House, it was difficult for them to understand why rallying behind the company and national success was the highest priority.

Under Reagan, the American unions remained true to their principle: based on the performance that a company demands of its workforce, to derive a claim to a share of its success. The equation that the unions wanted to enforce was successful employment = secure livelihoods.

However, if capital does not succeed, and if capital threatens not to use unionized workers, then for the unions the equation is reversed. They have to do everything they can to ensure that capital is successful, i.e. that it continues to need and use more of their members so that they can – crazy logic! – again extract something from capital for the workers. So the US unions discovered that their existing wage policy policy was the only barrier to their participation plan and put it up for discussion. And so they arrived at a sense of responsibility for business and the economy, to the constructivism mentioned at the beginning.

The objective contribution of the US unions to the implementation of the Reagan program is quickly explained. It consists in the introduction and generalization of “concession bargaining,” the voluntary renunciation of positions that have been achieved or the unconditional acceptance of corporate demands. The unions “countered” every attempt at blackmail by the automobile, steel, transport, and other capitalists with offers for which the United Auto Workers (UAW) agreements served as a model:

Collective agreements with zero wage increases for three years; abolition of 9-21 days off per year; comprehensive concessions on work rules; company-specific collective agreements; agreement to break with the closed-shop principle = introduction of the two-tier wage system. Learning from the UAW and the steel pact, the US unions discovered more and more new benefits they could offer up to their collective bargaining partners: Pension and health insurance arrangements, inflation adjustments (Cost of Living Adjustment), the seniority principle. Many unions are now interpreting their function in line with the economic situation: Participation in management, access to the books, buying out bankrupt companies. The consequences of this exaggerated focus on success are obvious.

The wage cuts on all fronts initiated by capital and the state have been complemented by the trade unions in the most exemplary way.

“Between the two economic years of 1981 and 1984, wage increases fell from 11% to 4%. In some cases, workers even agreed to the loss of a wage increase for the first year of the contract. Across the board, people are prepared to buy job security with relatively modest wage demands.”

With their constructivism, the unions are endangering the very basis of their existence that they are trying to save from the other side. By leveling out the wage advantages negotiated by the unions, they are eliminating the only reason for joining them that they have to offer the workers. The consequences are clear: a decline in membership, losses in union representation elections, decertification votes. So the merry-go-round turns once again: the unions court their companies for the purpose of recruiting members – at least they are not supposed to support anti-union tendencies. And the end point of this perverse union struggle: even if there is less and less to be done in terms of advantages and securing success in competition, the harm to the workers still remains the final argument of a union that promises to distribute these somewhat more one-sidedly in favor of those organized in it:

“We can usually count on the company to treat people badly somehow... eventually we do win the vote, if only the fourth time.”

If the US unions don't want to provide their members with wages, they do want to provide them with flawless patriotism. After all, they have taken the word of their top boss that unemployment and misery are always the fault of others, i.e. their competitors. And no self-respecting American will put up with anything from them.

Hungry people in Detroit put up a poster with the meaningful inscription “Hungry? Eat your foreign car!” as if Reagan hadn’t just taken away their food stamps. The largest labor demonstrations are not directed against wage suppression, but instead advocate protectionism and boycotting foreign products; and the highest ranking union official, Lane Kirkland, is angry with the president because he does not honor union nationalism when it comes to the world market.

“There is a great need to channel investment into our domestic production and apply a range of policy instruments to improve the competitiveness of our manufacturing industry.... Normally, a feasible and complete plan to restore competitiveness should be drawn up. This was our concept in 1984, but it died a sad death because the administration in power believed in the magic of the free market.”

Which shows how much a Yank loves his nation.

Ronald Reagan: An enemy of unions on principle

“Collective bargaining often destroys the market, and the price we have paid for it has been the loss of whole industries and the crippling of others.” (Chairman of the National Labor Relations Board)

The US unions have never been any kind of serious opponent of the Reagan administration’s imperialist program of impoverishment. They have left no doubt about their willingness to make concessions on wage issues for the sake of American business success, nor about their patriotic interest in America’s greatness. For a President who wants to lead his nation to new great achievements in world politics, for whom the business successes of his favorite citizens can’t be great enough and the productive pressure of capitalist-generated misery can’t be clear enough, this does not mean that he will decide to rely on the constructive attitude of the national workers’ organizations, to integrate them into the social partnership structure, or even to recognize them as a political factor and contact partner. Nor did Reagan even entertain the idea of involving the unions in the implementation of his social cuts and sorting program – not because of petty differences on the matter or personal animosities toward the union bosses, but once again out of principle.

Regardless of the individual wage agreements at a company level, it bothers him that unions act as a supposed monopolist on the labor market and thus distort competition between capital and wage earners. The general objection that wages should not be determined through negotiations but through unrestricted competition is not entirely unexpected coming from a president whose own monopoly position in wage matters consists of removing all obstacles to capital’s use of the wage lever. Wage haggling, according to the President’s verdict, which certainly meets with an open ear among his citizens, is a very un-American affair. For him, the unions are at the top of the list of scapegoats responsible for the nation’s supposed loss of power. In this sense, Reagan treats the unions as associations that should not be integrated but brought into line. For him, the best and democratically sound prerequisite is their clearly proven powerlessness, made obvious by well-staged defeats. His optimal means of eliminating them is to explicitly demonstrate this powerlessness. In the power struggle against the unions, quite legally, of course, the President has left nothing to chance.

– It all started with the demonstrative decision to fill the highest body in collective bargaining arbitration issues – the National Labor Relations Board – with dyed-in-the-wool anti-unionists (he didn’t have to look far for them). The arbitration awards reflect this.
– Much of American collective labor law now consists of rules that make it difficult or impossible for unions to organize at the company level (they have no say at higher levels anyway): Registration and deselection procedures; undermining unions through fake bankruptcies and new formations; creating “union-free spaces” through specific state laws; breaking up unions through deregulation of industries (the restructuring of transportation has cost the Teamsters union around 500,000 members), etc. etc.
– “Union busting,” legal advice on how to bust unions, took off under Reagan and created new jobs for shysters.
– Right at the beginning of his term in office, the President made an example of the American air traffic controllers’ union (PATCO) and demonstrated that the monopolist in the White House will not tolerate any monopolist, no matter how modest, beside himself: The strike was crushed, the union banned, its officials prosecuted under civil and criminal law. The strike was branded as sabotage against the American nation. The clarification that the Reagan administration pushed through with all its might, and which by no means only applies to the air traffic controllers, is brutal and unambiguous: whenever the state wants to enforce something against organized labor, its means of power are ineffective. Reagan can be sure of one thing: In his democracy, imperialist doctrine no. 1 applies, that nothing is more successful than success and nothing is as deadly as failure, down to the last corner and to the last consequence; and that’s why the demonstration of the impotence of a potential opponent does not create resistance, but rather seals the deal. Thus the American working class is free to choose between two kinds of American patriotism.