Books by Jack Rasmus

Monetary Policy and the Coming Depression

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Central banks of the advanced economies -- despite having been designated by their respective economic and politica elites as their states’ primary economic policy institution -- have failed since 2008 to permanently stabilize the world’s banking systems or restore pre-2008 economic growth.

Rather, central bank liquidity injections since the 1970s not only produced the 2008-09 crisis, but they then became the central banks’ solution to that crisis; and now promise to cause of the next one, as a further tens of trillions of dollars of liquidity-enabled debt has since 2008 been piled on the original trillions before 2008.

Fed policy since 2010 has represented an historically unprecedented subsidization of the financial system by the State, implemented via the institutional vehicle of the central bank. Central banks’ function of lender of last resort, originally designed to provide excess liquidity in instances of banking crises, has been transformed into the subsidization of the private banking system, which today is addicted to, and increasingly dependent upon, significant continuing infusions of liquidity by central banks.

Taking away this central bank artificial subsidization of the private sector, especially the financial side of the private sector, would almost certainly lead to a financial and real collapse of the global economy. It is thus highly unlikely that the Fed, Bank of England, Bank of Japan or European Central Bank will be able any time soon to retreat much from their massive liquidity injections that have been the hallmark of central bank policy since 2008. Nor will they find it possible to raise their interest rates much beyond brief token adjustments. Nor to exit easily from their bloated balance sheets and extraordinary historic policies of liquidity provisioning. That liquidity not only bailed out the banks and financial system in 2007-09, but has been subsidizing the system ever since in order to prevent a recollapse. Truly, as this book addresses in painstaking detail, central bankers are at the end of their rope. Wrought by various growing contradictions, central banks, as currently structured, have failed to keep pace with the more rapid restructuring and change in the private capitalist banking system. As a result, they have been failing to perform effectively even their most basic functions, or to achieve their own declared targets of price stability and employment.

Official excuses for that failure are critiqued and rejected. Alternative reasons are offered, including:

  • the declining effects of interest rates on investment,
  • the relative shift to financial asset investing at the expense of real investment,
  • failure of central banks to intervene and prevent financial asset bubbles,
  • the purposeful fragmentation of bank supervision across regulatory institutions,
  • mismanagement of the traditional money supply,
  • rapid technological changes transforming the very nature of money, credit and financial institutions and markets worldwide,
  • monetary tools ineffectiveness and incorrect targets and
  • central bankers’ continuing adherence to ideological notions of the mid-20th century that no longer hold true in the 21st—like the Taylor Rule, Phillips curves, and, in the case of ZIRP and NIRP, the idea that the cost of borrowing is what first and foremost determines real investment.

Central banks must undergo fundamental restructuring and change. That restructuring must include the democratization of decision making and a redirecting of central banks toward a greater direct service in the public interest. A Constitutional Amendment is therefore proposed, along with 20 articles of enabling legislation, addressing what reforms and restructuring of central banks’ decision making processes, tools, targets, functions, as well as their very mission and objectives, are necessary if central banks are to become useful institutions for society in general. The proposed amendment and legislation defines a new mission and general goals for the Fed—as well as new targets, tools and new functions—to create a new kind of public interest Federal Reserve for the 21st century.

A New Financial Imperialism Emerges

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$24.95 2016 312 pp.


"In this brilliant book, Rasmus shows that the EU is a finely honed device for looting its poorest members of their wealth and their democracy."   PAUL CRAIG ROBERTS, former Assistant Secretary, U.S. Treasury


It is essential to understand that the repeated Greek debt crises are really a reflection of a larger banking system crisis in the Eurozone that has existed since 2008.3 Greece is but a microcosm of a much larger, unresolved problem lingering since 2008 throughout the region. While the problem in Europe is generalized, it appears periodically in eruptions in a given bank or member economy. Last year it was Portugal's Banco Novo. This year it is cropping up in Italy, with its reported more than $400 billion in current non-performing bank loans. Next year may be Deutsche Bank. Or Austria's Raffeisen Bank, with its overexposure to Eastern Europe and Ukraine lending.

There is perhaps as much as an estimated $2 trillion in non-performing bank loans throughout Europe. Troika policy throughout the Eurozone is to provide liquidity as a stop-gap solution, as if it were facing an insolvency problem. Just as the ECB has been throwing QE liquidity at the entire Eurozone, the Troika has been throwing liquidity at Greece since 2010 as a stopgap instead of addressing the more fundamental insolvency of Greece's banks. But here's a critical difference: the ECB cannot resolve Greek bank insolvency unless Eurozone bank insolvency is addressed; both are connected fundamentally in what is one banking system. One cannot be resolved without the other.

    So Greek government total debt - and rising interest payments on the escalating debt - is attributable to six basic causes:
  • transfer of private sector debt to government balance sheets
  • rise of government deficits associated with the 2008- 09 crash and subsequent double dip Euro recession of 2011-2013
  • excessive speculation on Greek government bonds by private investors and vulture funds
  • ECB action during crises that ensured excessive Greek bank withdrawals and capital flight requiring additional ECB lending to Greece's central bank to recapitalize Greece's banking system
  • austerity policies of the Troika that drove Greece into depression, raising deficits and debt
  • Troika insistence that debt be piled onto debt, in lieu of debt relief, to ensure Greece would make payments on old debt with new debt.

The rising interest on the Greek government debt is paid from Greek national production. Just as in basic financial exploitation, where the worker-consumer-taxpayer ultimately bears the burden of payment of interest on private debt, government debt and interest is fundamentally the same-except that payment occurs not on an individual enterprise level, but at the level of the entire economy. The imperialist state structure (Troika) dictates and arranges the terms of the payment on behalf of the banking and private investor interests outside Greece. The Greek state is the 'middleman' in the process, implementing the austerity and other measures from which wealth is extracted from Greece's economy and sent as interest and principal on debt repayments to the Troika. The Troika in turn redistributes the payments to the private bankers, investors and businesses from which it originally raised its bailout funds that it has loaned to Greece.

That is why, as the EMST study showed and concluded, 95% of the Greek government's debt payments ultimately end up in the private sector in the Eurozone outside Greece-i.e. in the hands of Eurozone bankers and investors. Of the 215.9 billion euros in credit extended by the Troika to Greece in the 2010 and 2012 agreements alone, 86.9 billion of principal was repaid but 119.3 billion was repaid in interest, to private investors or to recapitalize Greece's banks. Only 9.7 billion ended up in the Greek economy. What appears as a state-to-state structure transfer of wealth-from Greece to the Troika and its institutions- is really in essence a transfer of wealth from the Greek society and economy in general to private interests outside Greece in the Eurozone.

in the Global Economy

ABSTRACT: SYSTEMIC FRAGILITY IN THE GLOBAL ECONOMY, forthcoming 2015, Clarity Press, by Dr. Jack Rasmus

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Synopsis, Expanded Table of Contents, Introductory Chapter, and
Selected Chapter 11, Shift to Financial Asset Investment;

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Just as contemporary economics failed to predict the 2008-09 crash, and over-estimated the subsequent brief recovery that followed, economists today are again failing to accurately forecast the slowing global economic growth, the growing fragility, and therefore rising instability in the global economy.

This book offers a new approach to explaining why mainstream economic analyses have repeatedly failed and why fiscal and monetary policies have been incapable of producing a sustained recovery.

Expanding upon the early contributions of Keynes, Minsky and others, it offers an alternative explanation why the global economy is slowing long term and becoming more unstable, why policies to date have largely failed, and why the next crisis may therefore prove even worse than that of 2008-09.

Systemic fragility is rooted in 9 key empirical trends: slowing real investment; a drift toward deflation; money, credit and liquidity explosion; rising levels of global debt; a shift to speculative financial investing; the restructuring of financial markets to reward capital incomes; the restricting of labor markets to lower wage incomes; the failure of Central Bank monetary policies; and the ineffectiveness of fiscal policies.

It results from financial, consumer, and government balance sheet fragilities exacerbating each other—creating a massive centripetal force disaggregating and tearing apart the whole, untamable by either fiscal or monetary means.

This book clarifies how the price system in general, and financial asset prices in particular, transform into fundamentally destabilizing forces under conditions of systemic fragility. It explains why the global system has in recent decades become dependent upon, and even addicted to, massive liquidity injections, and how fiscal policies have been counterproductive, exacerbating fragility and instability.

Policymakers’ failure to come to grips with how fundamental changes in the structure of the 21st century global capitalist economy—in particular in financial and labor market structures—make the global economy more systemically fragile can only propel it toward deeper instability and crises.

An appendix describes three simultaneous equations that express in notational form the variables associated with the Theory of Systemic Fragility.


  • Introduction: Fundamental Trends
  • Chapter One: Forecasting Real and Financial Instability
  • Chapter Two: The ‘Dead Cat Bounce’ Recovery
  • Chapter Three: Emerging Markets’ Perfect Storm
  • Chapter Four: Japan’s Perpetual Recession
  • Chapter Five: Europe’s Chronic Stagnation
  • Chapter Six: China: Bubbles, Bubbles, Debt and Troubles
  • Chapter Seven: Slowing Real Investment
  • Chapter Eight: Drift Toward Deflation
  • Chapter Nine: Money, Credit and Exploding Liquidity
  • Chapter Ten: Rising Global Debt
  • Chapter Eleven: Shift Toward Financial Investment
  • Chapter Twelve: Structural Change in Financial Markets
  • Chapter Thirteen: Structural Change in Labor Markets
  • Chapter Fourteen: Central Banks and Systemic Fragility
  • Chapter Fifteen: Government Debt and Systemic Fragility
  • Chapter Sixteen: Hybrid Keynesians and Retro Classicalists
  • Chapter Seventeen: Mechanical Marxists
  • Chapter Eighteen: The Contributions and Limits of Minsky
  • Chapter Nineteen: A Theory of Systemic Fragility
  • Appendix: Preliminary Equations

Recovery for the Few

ABSTRACT: OBAMA’s ECONOMY: RECOVERY FOR THE FEW, forthcoming 2012, Pluto Press and Palgrave-Macmillan, by Dr. Jack Rasmus

After a $9 trillion bailout of banks and financial institutions by the U.S. Federal Reserve, and more than $3 trillion in fiscal stimulus by Congress and the Obama administration, four years after the onset of recession the U.S. economy is still mired in the weakest, and most lopsided, economic recovery since 1947: U.S. stocks have risen more than 100%, corporate profits have more than fully recovered, the largest U.S. companies continue to hoard $2 trillion in cash, and bankers’ bonuses have once again returned to pre-recession levels. In contrast, more than 26 million American workers remain jobless, home foreclosures now exceed 11 million, and state and local governments remain mired in financial crisis. The recent Epic Recession may have erupted on George W. Bush’s watch, but the failure to generate a sustained recovery for all lies directly with Obama administration policies. This book further explains how today’s most lopsided economic recovery since 1947 is the direct result of the failed economic policies of the Obama administration. Tracing the evolution of Obama policies from his presidential election campaign in 2008 through the latest fiscal and monetary policy initiatives of the administration and the Federal Reserve introduced in late 2011, the book explains how the US economy got to where it is today and why it is now experiencing a second ‘economic relapse’ in 2011-12 and sliding toward a ‘double dip’ recession.

The book concludes by offering alternative proposals to ensure recovery for all—not just the few—emphasizing in particular on how to create 17 million jobs, save 11 million homeowners, and re-stabilize State and Local government budgets without increasing federal budget deficits. The book’s ‘Alternative Program’ offered in a final chapter includes not only immediate measures addressing jobs, housing and local government, but more intermediate measures for fundamental reform the tax, banking and retirement systems in the U.S. as well as longer term proposals to reduce debt and raise incomes for the middle and working classes.

by Jack Rasmus, Copyright 2011

  • INTRODUCTION: A Systemic Crisis of Recovery
    Subtitle: ‘The Wasted $12 Trillion’
  • Chapter 1: The Weakest, Most Lopsided Recovery
    Subtitle: ‘Who Recovered, Who Didn’t, and Why?’
  • Chapter 2: From Tax Cuts to Tactical Populism
    Subtitle: ‘Obama’s 2008 Campaign Promises’
  • Chapter 3: Obama’s Jobless-Homeless Stimulus
    Subtitle: ‘The 1st Economic Recovery Program (2009)’
  • Chapter 4: A Record Short, Faltering Recovery
    Subtitle: ‘The 1st Economic Relapse of 2010’
  • Chapter 5: How More Is Less of the Same
    Subtitle: ‘The 2nd Economic Recovery Program (2010)’
  • Chapter 6: Historical Parallels and the Midterm Elections
    Subtitle: ‘Obama as Franklin Roosevelt or Jimmy Carter?’
  • Chapter 7: Deficit Cutting on the Road to Double Dip
    Subtitle: ‘Economic Recovery Policy in Reverse’
  • Chapter 8: Sliding Toward Global Depression?
    Subtitle: ‘The 2nd Economic Relapse of 2011’
  • Chapter 9: From Failed Recovery to Austerity Recession
    Subtitle: ‘The 3rd Economic Recovery Program (2011)’
  • Chapter 10: An Alternative Program for Economic Recovery
    Subtitle: ‘Fundamentals of Economic Restructuring for the 21st Century’
  • Appendix I: A Brief Note on Theory and History
  • Appendix II: Predictions Past and Future

Editorial Reviews: Obama’s Economy: Recovery for the Few
By Jack Rasmus

"Jack Rasmus has written in Obama's Economy: Recovery for the Few a revealing exposé of Barack Obama's economic policies since 2008. Explaining in detail why Obama's programs have failed to generate an economic recovery for all but big bankers, corporations, speculations, and the 1% wealthiest households, Rasmus predicts more of the same economic stagnation, or perhaps worse, by 2013 if current economic policies continue. Rasmus concludes the book with his own detailed 'Alternative Program for Economic Recovery.' It is time to seriously begin public discussion and debate of economic alternatives to the past four years, which Rasmus's book clearly has begun."

- Nancy Wohlforth, Co-Convenor, U.S. Labor Against the War

"Obama was elected because he represented hope and the expectation of change. But as Jack Rasmus details in Obama's Economy: Recovery for the Few, little changed for tens of millions of unemployed, homeowners, and those dependant on local government services for whom economic recovery has been anemic to non-existent the past four years. Rasmus describes in detail how Obama was the most conservative and business oriented of the Democratic candidates in 2008, and how his first term economic policies reflected that pro-business orientation."

- Chuck Mack, Former International Vice-President, International Brotherhood of Teamsters Union

"Jack Rasmus in his new book, Obama's Economy: Recovery for the Few, connects the dots and gives new meaning to common sense economics. While working people reel in the downward spiraling economy, Rasmus analyzes how we got where we are and makes recommendations for sustained economic growth and recovery. It's the kind of reading that makes every leader stop and say 'Wow! That makes perfect sense. Why didn't I think of that?' Then ask yourself, 'Why wouldn't our President think of that?' When you've read the book I'm confident that you will conclude that Rasmus has done a brilliant job of defining the impact of the Obama policies and decisions to this continued economic crisis."

- Donna DeWitt, President, South Carolina AFL-CIO

By Jack Rasmus, Copyright 2011

A Systemic Crisis of Recovery
“The Wasted $12 Trillion”

The defining feature of the U.S. Economy over the past three years since Obama took office has been its failure to achieve a sustained recovery. After three economic stimulus programs costing $3 trillion the past three years, 2009-2011, and after more than $9 trillion in bank rescues by the Federal Reserve, the faltering U.S. economic recovery of the past three years is sliding once again toward double dip recession. (1)

The U.S. economy entered recession in December 2007. The decline accelerated in September-October 2008 with the onset of the banking crash. The collapse set in motion by the events of September-October 2008 continued through the first six months of 2009, at a pace virtually identical to 1929-1930. The economy only bottomed out by June 2009. But bottoming out does not constitute recovery. Nor does the weak and faltering economy that followed the June 2009 bottom.

Recovery means restoring the economy to levels and performance prior to the onset of recession, or at least to some ‘average’ historical level and performance preceding the collapse. The period from June 2009 to the present therefore cannot qualify as a recovery in either of these cases; nor can it in any otherwise normal sense of the term.

Except for financial asset prices—i.e. stocks, bonds, derivative trades, etc.—during the first year, from June 2009 to June 2010, nearly all real (non-financial) economic indicators recovered at best only part of the prior losses of 2008-2009. And critical sectors of the economy, like jobs and housing, recovered virtually nothing. Moreover, many economic indicators that did partially regain some lost ground in the first year after June 2009 thereafter experienced a further ‘relapse’ in the summer of 2010. Meanwhile, jobs and housing experienced a bona fide ‘double dip’. A second partial recovery followed in late 2010, even weaker than the first in 2009-2010. Now once again, in late 2011, the economy has begun to fade once more, as a second ‘relapse’ of the economy has once again emerged. This raises the first of three major themes of this book:

What explains this weak, repeatedly faltering economy and failure to achieve a self-sustaining recovery after trillions of fiscal and monetary stimulus?

By October 2011 an increasing number of economists, and even business sources, have been to predict the ‘relapse’ might soon turn into a ‘double dip recession’. A select few of those with the best forecasting track record to date have even begun to forewarn of a possible imminent global depression. (2)

To the extent there has been any recovery these past three years under the Obama administration, that recovery has been limited to and has benefited a relatively small segment of the US economy and population. After June 2009 stock markets rose more than 100%. Bond markets did even better. Corporate profits exceeded levels even preceding December 2007. US large corporations accumulated more than $2 trillion in cash on hand, while U.S. multinational corporations were able to build a cash hoard of another $1.2-$1.4 trillion in their offshore subsidiaries. Both continue to hoard their more than $3 trillion in cash, not investing it in the U.S. to create jobs and contribute to sustained recovery. Not to be outdone, big banks accumulated—and then also sat on—about $1.5 trillion in excess cash reserves, mostly refusing to lend to smaller businesses to create jobs and assist recovery. (4)

Measuring ‘recovery’ in terms of its human dimension—not just in terms of impersonal economic indicators—yields a similar grossly unbalanced picture: CEO and senior management compensation and bankers bonuses recovered in 2010 to pre-2008 levels. The top 25 hedge fund managers’ did even better. Their income more than doubled in 2009 to surpass previous 2007 peaks. The wealthiest 10% households returned to consuming luxury goods at pre-recession levels.

In contrast, more than three years after Obama took office there are still roughly 26 million unemployed. The numbers of part time and temp jobs have increased by more than 10 million, as full time permanent jobs are churned out and replaced by part time and temp jobs with lower pay and hardly any benefits. Thus, not only the number of jobs but the quality and level of pay and benefits associated with jobs has also not ‘recovered’. Real weekly incomes for more than 100 million non-supervisory workers are less today than two years ago due to wage cuts, fewer hours of work, and escalating inflation of basic items—like healthcare services, education, gasoline, and many basic food costs that have risen at double-digit rates throughout 2011.

In addition to jobs and wage income, home foreclosures have more than doubled in number since early 2009, to 11.4 million by late summer 2011. 17 million homes are ‘underwater’, with home values worth less than their mortgages. States and cities continue to layoff workers by the hundreds of thousands in 2010 and 2011, slash vital services and programs, and raise fees at an accelerating pace. Poverty rates in the US are now at their highest levels in half a century, impacting more than 15% of the population (45 million). That includes more than 15 million children—the latter distributed more or less evenly across white, latino, and black kids. More than 50 million officially—and more in fact—are without any kid of health care coverage. Food stamp usage has more than doubled the past two years, as has student loan debt in two years. Trillions of dollars of seniors’ retirement ‘nest eggs’ have disappeared forever, as Congress in late 2011 nonetheless prepares to reduce their medical and retirement benefits further. The litany of conditions that have worsened is endless. That is not recovery by any stretch of the imagination.

And it’s not just workers, homeowners, students, and the 100 million plus working and middle class households who have not ‘recovered’. Hundreds of thousands of small businesses have gone under since the bottom of the recession in June 2009, more failing than are being created, as banks continue to starve them (and households) of basic loans and credit as the banks continue hoarding more than a trillion in cash reserves on hand. Even banks themselves have been divided into ‘haves’ and ‘have-nots’. The ‘too big to fail’ largest 20 or so banks have in part recovered, propped up by $9 trillion in U.S. Federal Reserve liquidity injections, zero interest loans and direct subsidies, and hundreds of billions in direct grants from the U.S. Treasury and taxpayer. Meanwhile, more than five hundreds small community and regional banks have either failed outright or have been forced into mergers by government regulators to protect what little depositors’ assets remain on their books. In short, a small layer of wealthy households, professional speculators and investors, big banks and multinational corporations, CEOs and senior managers, have indeed ‘recovered’. But virtually no one else. The preceding undisputable facts lead to the second major theme of the book:

How to explain this historically unprecedented lopsided economic recovery—enjoyed so much by so few at the expense of so many?

The Obama team has introduced no fewer than three economic recovery programs over the past three years. One each year in 2009, 2010 and 2011. This does not include Obama’s election year proposals he offered in 2008 as a program for economic recovery. This book will look at each of the three recovery programs and his pre-election promises and analyze each in depth.

Each of Obama’s economic recovery programs share certain similarities, no doubt in large part explaining why all have similarly failed. They are all composed of a particular mix of tax cuts, spending stimulus, Federal Reserve monetary policies, and lesser efforts to expand manufacturing exports and trade. Each subsequent economic recovery program, however, has been less in magnitude and scope than the preceding. In turn, each recovery program’s impact on the economy has therefore been weaker and of shorter duration. Obama’s first economic recovery program (2009) produced a brief and weak recovery of barely 12 months. The second (2010) recovery program produced an even weaker and shorter 9 months recovery. And this writer predicts the third (2011) recovery program, in development since September 2011, will be weaker still than the preceding two.

The book is about the evolution of Obama economic recovery programs and policies from 2008 through 2011, why they were so ‘lopsided’ in favor of the wealthiest few and their corporations why they failed to generate sustained economic recovery. The book not only describes those programs and policies in some detail, but also provides a critique and an analysis of why they failed at recovery as well as benefited just a wealthy few. The book therefore constitutes an indictment and critique of traditional fiscal and monetary policies at the heart of the Obama programs and policies.

The book argues Obama economic programs and policies have been both ineffective and inefficient. Ineffective because they have failed to generate sustained recovery. Inefficient because a mountain of trillions of dollars in tax cuts, spending, and money injection into financial institutions has brought forth a molehill recovery—a recovery that appears faltering yet again.

The current economic crisis has always been global and never just a US centric event. As 2011 draws to a close, not only are signs growing the US economy is undergoing a second ‘relapse’—leading perhaps to an even a more serious double dip recession—but may have entered an evolutionary trajectory toward eventual global depression.

The global economy itself is clearly slowing and heading toward growing instability. While the US economy hovers somewhere between economic relapse and double dip, many economies elsewhere are already experiencing a double dip recession. The Eurozone periphery economies are already there. So is Japan. The main engines of the Euro economy, France and Germany, are near zero growth as of October 2011 and may well soon slip into recession by the fourth quarter should the Euro debt crisis not be resolved soon—which in all likelihood it appears it will not. The U.K. economy is slowing rapidly, to less than 1%, and approaching stagnant growth much like Germany and France. All are on the cusp of a double dip. Meanwhile, economic growth is rapidly slowing in China, India, Brazil and other key emerging economies that over past two years were able to grow robustly and temporarily to help dampen the global contraction of 2007-10 in part somewhat. But now they too are slowing rapidly. There are no remaining props to offset the worsening condition in the core capitalist economies of North America, Europe and Japan.

The eventual slipping into global double dip was predicted by this writer in late 2009 in a prior work, Epic Recession: Prelude to Global Depression, which was written at that time, as others were predicting recovery coming in only a few more months. (5) As others predicted a ‘V-shape’ rapid recovery from the June 2009 recession bottom, this writer was warning that a long stagnation would follow the June 2009 recession bottom. That stagnation would take the form of a series of short, weak recoveries followed by short, mild downturns (relapses) or even double dips. The policies introduced in early 2009 by the Obama administration were rejected as inadequate for generating any sustained, true economic recovery. Not only were those policies, it was argued, insufficient in magnitude of stimulus, but the composition and timing of the stimulus were even more incorrect. And so far as Obama’s and the Federal Reserve’s monetary policy was concerned, it would prove ineffective in whatever form it assumed, given the massive debt that was allowed to remain on bank, general business, and household balance sheets. In other words, Epic Recession argued the ‘system was still fragile’ and would remain so since the Obama economic recovery program of 2009 did not address this key condition affecting banks, businesses, and household balance sheets.

Unlike Epic Recession, however, Obama’s Economy: Recovery for the Few, will not address such issues of economic theory. Readers nonetheless interested in theory are directed to the short Appendix I of this book, ‘A Note on Theory and History’. That Appendix explains in brief the relationship between Epic Recession and this more pragmatic policy critique book, Obama’s Economy. The former work is about how and why the current economic crisis occurred. Obama’s Economy is about how and why recovery from the crisis has failed these past three years and why similar policies will continue to fail to generate a sustained recovery. Appendix I, ‘A Brief Note on Theory and History’, links the two works and expands briefly on the topic of theory. (6)

But Obama’s Economy goes further, beyond just describing, analyzing and critiquing the Obama economic recovery policies of the past three years. Describing and explaining today’s failed recovery is only half the task. If the Obama policies of the past three years have failed, what alternative policies may perhaps prove successful? The most important part of this book therefore is its final chapter—‘An Alternative Program for Economic Recovery’. For the most important question of the day is not answering ‘how did we get here’. It is not even explaining ‘why did recovery fail’. The most important question is: ‘How do we get out of the crisis; what will it take?’ Thus the third major theme of this book, in addition to Why has Recovery Failed and Why Did So Few Benefit So Much a the Expense of So Many is:

What Alternative Policies and Programs Are Necessary to Ensure a Full Recovery for All?

This book therefore concludes with recommendations of policies and programs needed to generate a sustained economic recovery. The proposals for recovery described in the final chapter of this book are of three kinds. The first are immediate policy proposals designed to check the tendency of the economy to continue on its current ‘stop-go’ The second type of proposals address more intermediate level demands. They are institutional in character and are designed to lead to sustained economic recovery. The third set of policy proposals are more long-term, deeply structural and even transformative of the economy, They are designed to make changes that would prevent a future recurrence of today’s continuing systemic crisis in the U.S. economy.

Jack Rasmus
October 2011


1:  The $3.99 trillion is from the Congressional Budget Office baseline actuals and estimates, published as Budget Outlook Updates in August 2010 and August 2011. The $9 trillion Federal Reserve total represents the lending to depository financial institutions, primary dealers, other institutions, liquidity swaps with foreign banking institutions, and other lending to AIG and financial arms of non-bank companies since the banking crisis of 2008. See the ‘Credit and Liquidity Programs and the Balance Sheet’ reports summarized on the Governors of the Federal Reserve System online at www.federalreserve/monetarypolicy/bst.htm

2:  By ‘relapse’ is meant a significant slowing in the rate of growth in several major sectors of the economy (e.g. housing, jobs markets, manufacturing, etc.), or significant slowing in total output in the overall economy itself (e.g. GDP rate of growth falls by half). It may also mean a negative decline in several major sectors, and not just a slowing in the rate of growth. By ‘double dip’ recession is meant an official declaration of ‘recession’ by the National Bureau of Economic Research (NBER), the body of economists responsible for determining and announcing the starts and endings of recessions. Relapses are thus integrally related to ‘double dips’. They precede the latter and may or may not transition into the latter. The relapse of summer 2010 was checked by further policy responses. It remains to be seen if the 2011 emerging relapse is also checked or if it transitions to a double dip. The current budget cutting frenzy in Congress makes it more likely a case of a latter, transition to double dip.

3: Most notable among whom include Dr. Nouriel Roubini, one of the few who correctly predicted the 2007 housing collapse, the banking crash of 2008, and events unfolding in the Eurozone. Others include George Soros, global financier, and Mohamed El-Erian, Co-CIO and CEO of PIMCO, one of the world’s largest bond investing companies.

4: for the paragraphs See chapter one of this book for detailed references that immediately follow.

5: Jack Rasmus, Epic Recession: Prelude to Global Depression, Pluto Press, May 2010. See also predictions by the writer published from late 2009 through 2011 by the author summarized in Appendix II to this book.

6: This writer’s future work, Transitions to Global Depression: Finance Capital in the 21st Century, undertakes once again a definitive consideration of questions of economic theory.

Prelude to Global Depression

Epic Recesssion explains why the current economic crisis is no ordinary recession, why its evolution in 2010 is not yet complete, and why the risks are still high it may yet deteriorate into a more severe economic downturn. The root causes lie in what the author calls a 'speculative investing shift' in the global economy and the emergence of a 'global money parade' of speculator-investors that now increasingly drive the evolution of the global economy. Both Bush and Obama policies have failed to engineer a sustained economic recovery because policy makers do not yet understand the true dynamics of the current crisis. The author provides an alternative recovery program required for a sustained recovery based on a fundamental restructuring of the economy.

About the book, from the publisher, Palgrave:

The US is still in deep trouble. Banks are sustained by trillions of government dollars, unemployment is approaching 25 million and the long-term future of the economy is in doubt. In Epic Recession, Jack Rasmus shows that we need a new way of understanding the crisis if things are to improve. Rasmus interrogates US economic history to show that the current predicament is what he terms an “Epic Recession,” neither a full-blown depression or a short-lived period of contraction followed by a swift return to growth. He then shows that the only way to prevent the onset of depression is to radically restructure the economy through a massive job creation program, nationalizations, a fundamentally new kind of banking structure and a long-term redistribution of income through better healthcare and benefit systems.

Epic Recession provides a rallying point for trade unionists and concerned citizens who want to ensure that any recovery is felt further than Wall Street.

Introduction: Epic Recession—Past, Present and Prologue * Quantitative Characteristics of Epic Recession * Qualitative Characteristics of Epic Recession * The Dynamics of Epic Recession * U.S. Depressions in the 19th Century * ‘Type I’ Epic Recession: 1907-1914 * ‘Type II’ Epic Recession: 1929-1931 * The Epic Recession of 2007-2010 * The Bush-Obama Recovery Programs * An Alternative Program for Economic Recovery * Notes * Index

JACK RASMUS is a Professor of Economics at St. Mary’s College and Santa Clara University. He is a freelance economics journalist and author of The War At Home: The Corporate Offensive From Ronald Reagan To George W. Bush (2006) and several stage plays. He has been a business economist, market analyst, vice-president of the National Writers Union and elected local union president and organizer for various labor unions.

336 pp. / 0-7453-2998-5 / Pluto Press

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EPIC RECESSION: Prelude to Global Depression
By Dr. Jack Rasmus, Copyright 2009
Pluto Press/Palgrave-Macmillan, May 1, 2010

This book explains the origins and future direction of the current economic crisis, and the relationships between the banking system's breakdown and the economy in general. Epic Recession is described as a hybrid, unstable condition that is neither a typical postwar recession nor yet a classic Depression while nevertheless sharing characteristics of both, recessions and Depressions. The book describes how Epic Recession is highly resistant to traditional fiscal and monetary policy solutions and requires major structural changes in the economy in order to check and contain. The book describes and analyzes in depth the origins and causes of Epic Recession—revealing its roots in corporate and government policies and fundamental structural changes in U.S. capitalist economy since the early 1980s. Key variables of analysis include the explosion in global liquidity, expansion of the shadow banking system and its integration with the commercial banking system, the growing relative shift worldwide to forms of speculative investing, the emergence of the ‘global money parade’, the debt-deflation-default nexus, and the interacting of the above variables with forces of both financial and consumption fragility. EPIC RECESSION explains how the current economic crisis is similar to, and simultaneously different from, both the Great Depression of 1929-1934 and post- 1945 recessions in the U.S. It categorizes Epic Recessions in two dominant forms: ‘Type I’ and ‘Type II’: The former similar to events of 1907-1914; the latter to events of 1929-1931. The book argues today’s current crisis is evolving into a ‘Type I’, but has the potential for transforming into a ‘Type II’ and that 2011-2013 will be a critical period for determining which type will prevail.

The book further provides a detailed critique of both George W. Bush and Obama administration recovery programs, in both their monetary and fiscal dimensions, and assesses why they have fared poorly thus far in resolving the crisis. The book concludes by presenting a full alternative program necessary for recovery, which calls for a massive program of job creation, nationalization of residential housing and small business financing, the creation of a new kind of Federal Reserve system and national banking structure, and the long term rebalancing of incomes by a fundamental restructuring of wage, health, and retirement benefits systems and the federal tax structure in the U.S.

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The Corporate Offensive From Ronald Reagan to George W. Bush

What Reviewers Say About THE WAR AT HOME

Reviewers Comments

“Did you like Howard Zinns, A People’s History of the United States? If so, you are going to love the new book by Jack Rasmus, THE WAR AT HOME: The Corporate Offensive From Ronald Reagan to George W. Bush. Rasmus effectively picks up the story where Zinn leaves off….His book is an excellent complement and companion to Zinn’s popular work….Give THE WAR AT HOME a look. It is a sobering and path-breaking effort to ‘put it all in one place’.”

Harvey Schwartz,
Curator, ILWU Oral History Collection
Labor Archives and Research Center
San Francisco State University

“A hard-hitting, full-scale account of the corporate assault on American working people. No one seeing all the strands of that attack brought together in one place can feel anything but outrage. Rasmus’s stirring book is for labor activists, but its effect will be to create a lot more labor activists than there already are. A great job!”

David Brody,
Professor Emeritus of History
University of California, Davis

“THE WAR AT HOME is a path-breaking work which will stand as a milestone on the road to a fight back by and for working people….Jack Rasmus has performed a major service to the movement by starting what needs to be a great debate about our collective future.…we all should read it and spread the word about THE WAR AT HOME.”

Laurence H. Shoup, Ph.D. History
Author, Imperial Brain Trust: The Council
On Foreign Relations and U.S. Foreign

‘The War at Home’

War At HomeTHE WAR AT HOME is a nonfiction book about the current Bush-Corporate offensive against American workers and their unions. Its ten chapters cover the current Jobs Crisis, offshoring, Free Trade and the collapse of manufacturing, declining Wages and workers’ incomes, the great American Tax Shift, attacks on Pensions and Social Security, the pending privatization of Medicare, the health care costs crisis, the transformations of the Republican and Democratic parties, the decline of union membership and bargaining power, the pending split in the AFL-CIO, and the origin and evolution of the corporate offensive from Reagan through George W. Bush.

On this page you can read the PREFACE and the TABLE OF CONTENTS and you can order the book.

Order The War at Home

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Introductory Chapter to the War at Home


Convergence, Crisis, & Corporate Restructuring in America
Copyright 2005 Jack Rasmus

America is fundamentally divided! Like no time since the 1850s, that ominous decade leading up to the Civil War a century and half ago. And like a political slipknot, the rope strands will continue to tighten before they loosen once more.

The vision that burned on TV screens across America on election night 2000 remains. Changed in essence neither by acts of terror or subsequent war. An electronic ghost, its shadow impixelated still on our silicon culture. The story of our time—the struggle between the remnants of the old Roosevelt tradition and the new Reagan-Bush coalition, the latter resurrecting in yet another form the 1920s Coolidge-Hoover vision of America.

A new physics has penetrated the molecular structure of America. A new political equation for the 21st century. A political E=MC2 Now P=CM3. M for Money, Media, and uncompromising religious Morality! C for chronic global economic crisis. P for Power. A dark energy ripping apart the quantum structure of civil society in America. A political entropy, growing in force as the various elements of the American social fabric accelerate ever faster in opposite directions.


At no time in the last century—not in the worst years of the 1930s Depression or the upheavals of the 1960s—has America faced a potentially more dangerous convergence of several fundamental forces.

Structural Economic Crisis

One such force is Economic. Economic crises are generally viewed from the perspective of cyclical events. But underlying the periodic cycles, known as recessions, are more fundamental longer term structural change. Its laws of movement not always as well understood. Today structural and cyclical forces interact in new, unforeseen or unanticipated ways. And with each passing month we enter new territory.

The twin phenomena of massive exportation of jobs and of jobless recovery under George W. Bush are not new, but have been developing in intensity and duration following each recession since1980. More than five million quality jobs were lost on George Bush’s watch between 2001-2004. Jobs that continue to disappear at an alarming rate, churning over, being replaced by part time, by temporary work, by the growing millions of marginally self-employed, the uncounted millions of hidden unemployed, by the discouraged and underemployed, and by lower paid service work at, or near, minimum wage. American workers have not shared in general productivity gains now for three decades. Real average hourly wages and earnings of the 100 million plus workers that constitute the core of the American working class have not risen at all for at least as long. Working class families have compensated by working more than 500 hundred additional hours per family per year, and by taking on historic levels of installment debt. More than forty five million Americans have no health coverage whatsoever, and tens of millions more barely any at all. Retirement income and security are fading for millions, while social services are cut, tax burdens shift from the rich to the rest, and education quality declines as costs rise.

Meanwhile the world moves inexorably toward more deeply synchronized economic cycles and intensifying global competition. New forces sweep the American corporate elite along in an endless search of new markets abroad. A search intensifying within the U.S. as well, as the very interstices of American society itself are scoured relentlessly for new possibilities for commodification—all corners of culture, all manner of personal relationships, and all variety of once available public goods and services. Education. Government services. Public security. The military. Even trafficking in human body parts. Nothing is allowed to remain outside the hungry maw of the market.

This is not the Great Depression of the 1930s. But neither is it the typical post World War II recession. U.S. monetary policy has prematurely begun to turn restrictive once again, paltry tax cuts for workers have been spent, the mortgage refinancing boom as a source of household asset income is over, jobs in the millions recycle from high paid to low, flow to east and south Asia at alarming rates, while chronic high oil and gas prices continue to decimate workers’ incomes—a short list of multiple factors that all but ensure another recession in the US economy within the next 24 months and a resumption of synchronized global downturn among the major industrial economies, a number of which have already turned the corner on the descending road to recession.

George W. Bush and Dick Cheney have both publicly declared we have entered a period of endless global warfare—with forces beyond our shores intent on destroying the American way of life from ‘without’. Meanwhile the undeclared, unmentioned but no less endless economic war continues being waged and intensified from ‘within’, no less effectively destroying the material foundations of that same American way of life.

Assault on Civil Liberties

A second fundamental force at play today is the current assault on Civil Liberties and the destruction of the most basic rights of American democracy. Skulking behind the screen of the War against Terrorism are those in key positions of power in Government and civil society who actually believe there is too much democracy today in America. Their attitude and viewpoint slips through public discourse periodically to revealing true intent.

Supreme Court Justice Antonin Scalia, darling of the Radical Right, in a speech in Ohio stated he believed that Americans now had more democracy than that guaranteed by the original U.S. Constitution. Some of it could therefore be taken back and still remain within the guarantees of that Constitution, in his view. More ominous still were the words of General Tommy Franks, commander of U.S. forces during the 2003 Iraq War, who declared in his retirement interview that the next major terrorist event in the U.S. would mean the imposition of martial law. According to Franks, there will always be a war between the Rich and Poor. It is the natural order of things. Under cover of section 213 of the Patriot Act government agents may secretly burglarize homes without notice, and do so; obtain library records; seize bank, telephone and internet accounts while issuing ‘gag’ orders on businesses preventing them from notifying customers of such acts; and employ roving wiretaps on citizens never accused of any crime. Meanwhile plans for expanding the Patriot Act quietly move forward, below the public radar, including draconian measures allowing the government to strip Americans of their very citizenship and deport them to foreign lands in the event of another terrorist attack.

At the same time and in violation of the 1876 Posse Comitatus Act passed more than a century ago to prohibit military involvement in U.S. domestic politics, the Army’s Special Forces are now engaged in preparing police departments across America in the use of urban warfare tactics. A new Northern (US) Command that never existed before in US history has been established to deal with potential conflicts within the continental U.S. For the first time in memory the regular Army was ordered to standby for possible intervention in social protests that occurred against the World Trade Organization (WTO) meetings in Seattle and Miami. And ‘What If’ reports circulate and are debated within American war colleges and among high levels of the planning staff in the US Army considering scenarios for a coup d’etat in the U.S. in 2012.

The still unfolding assault on liberties and rights is more serious than anytime in the last century—including compared to that of the Cointelpro program of the 1960s, McCarthyism of the 1950s, the illegal internments of American citizens without due process in the 1940s, the aborted military coup against Franklin Roosevelt in 1933, or the infamous Attorney General Palmer raids following world war I. These latter were not official policy entrenched across major government power bases in the Executive, Legislative and Judicial branches. In contrast, today efforts to rollback civil liberties and democracy are the institutionalized policy of the current Bush administration, its many radical friends in Congress, and its ultra-conservative supporters on the U.S. Supreme Court. Only the politically gullible and naïve can believe there are no plans, awaiting only the next provocative terrorist event almost certain to strike America’s power grid or a major port facility, to deny Americans even more of their basic civil liberties.

The growing threats to American democracy since September 11, 2001 have not taken place in an historical vacuum. Rather they are the latest in a chain of events that include the brazen, politically motivated impeachment of a President in 1998, the constitutionally questionable selection of George Bush as President in 2000 by the Supreme Court, and the passage of the most comprehensive legislative assault on the Bill of Rights in all of U.S. history. Like an undetected necrosis within the body politic, however, they spread and undermine the sense of legitimacy in the U.S. political system across large segments of the U.S. population.

Growing Cultural Divide

A third fundamental force converging with the above two is the gaping Cultural Divide in American today which grows ever wider with each new defining event. Fanning the flames of this divide has been the conscious policy of the Bush regime and the ascendant radical wing of the American corporate elite. At the heart of this cultural polarization in America has been the damp pall of religious morality descending upon the political landscape since the latter years of the 1970s. The right wing of the Republican party leadership has learned well, and has developed into a political art, the ability to distract the American populace with fabricated moral values and issues—as they pick everyone’s pockets while backs are turned.

As their checkbooks and wallets shrink, American workers from Kansas to California to the Carolinas are left debating and fighting over peripheral issues such as gay marriage instead of the economic destruction of the American family, abortion instead of the miscarriage of American democracy, prayer in schools instead of the wholesale failure and eventual privatization of the American education system, stem-cell research instead of the absence of health care coverage whatsoever for 45 million American citizens or the lack of adequate health care for another 50 million more.

The problem of religion in politics today, as ever in the past, is that religion is the enemy of democracy. Democracy is based upon compromise. But how do you compromise with the ‘Word of God’? Political compromise to the religious mind is synonymous with heresy. Sooner convince a devout racist that all men are created equal. Or a fascist that all men and women are born with the same inalienable rights. And we know where that all leads.

With the lid on the bottle of the religion genie now removed, cultural conflicts and divisions in America will continue to deepen. Much of the cultural polarization growing in America today has its ultimate roots in differences between secular vs. religious morality and values. At this very moment the Radical Right are financing and consciously promoting the splitting of traditional religious organizations in America, protestant and catholic alike, into conservative and liberal factions. Meanwhile George Bush provides their organizations tax cuts and ‘faith based’ handouts in payment for election assistance and political services rendered. The cultural and religious polarization will therefore continue to worsen, as the right wing of the Republican Party coalition continues, as it has since the late 1970s, to promote religion and religious morality as a domestic political weapon.

The Historic Confluence

The civil conflicts and disturbances of the 1960s were sporadically political and marginally cultural, but never fundamentally religious—and even less so economic. The conflicts of the 1930s were primarily economic but did not produce a corresponding institutional restriction of democratic rights. And the conflicts of those years were certainly were not religious or cultural in character. In contrast, our current period is, and will continue to be, characterized by growing civil conflict over basic economic interests, over democratic rights and civil liberties, and over secular vs. religious morality and values.

The coming conflicts in America will therefore be at one and the same time economic, political, and religious-cultural. Either one would be serious development in its own right. Their confluence therefore is of particular import. Furthermore, it is likely all three will be exacerbated by constant war, continuing in the middle east and possibly coming in the Caribbean basin as well.


American history shows that every few decades the corporate elite and their political representatives restructure the economy to exploit opportunities for expansion in a changing world. To assist the restructuring, the domestic ‘rules of the game’ between Business and Labor, the social relations between their respective associated groups and constituencies, are redefined and changed.

Over the past century the restructuring and redefining of ‘rules of the game’ have occurred on at least four separate occasions.

The First And Second Corporate Offensives

The first restructuring and change in the rules occurred at the turn of the 20th century, as the U.S. began to reposition itself as a newcomer and competitor on the global economic chessboard. The Spanish-American War, the first offshore colonies in the Caribbean and Philippines, the acquisition of the Panama Canal, the corresponding growth of corporate trusts, and the creation of the income tax and the Federal Reserve system to ensure revenues and to regulate the flow of financing for the new economic expansion were the most notable elements of this first restructuring.

A second restructuring and change in the rules of the game took place in the 1930s in the wake of the Great Depression. Unlike the first, now corporate interests found themselves on a definite defensive and the rules of the game were changed again in order to maximize the effectiveness of that defensive. Economic regulation of business was introduced to reduce volatility and instability in the economy, in particular in the critical sectors of Transport, Communications, Energy, and Power generation. The Banking System was overhauled, rules on foreign trade rewritten, and a new emphasis on fiscal policy tools introduced. This was the ‘business side’ of what was then called the ‘New Deal’ at the time. At its core, the New Deal of the 1930s was as much, if not more, about ensuring business stability as about containing labor conflicts.

On the ‘labor side’ of the New Deal changes in the rules of the game were also introduced to stabilize an increasingly volatile labor force by providing minimal retirement guarantees, by allowing workers and unions to collectively bargain, assuring minimal working conditions, temporarily permitting government employment as unofficial last resort, and a host of other measures—all ultimately necessary as well to support the new focus on assisting U.S. corporations dealing with cut-throat international capitalist competition and ensuring general business stability.

A third restructuring took place in the immediate post World War II period, as the American corporate elite repositioned itself for the Cold War and prepared for an unprecedented, several decades-long global economic expansion. At the heart of this third restructuring of the past century was the establishment of the U.S. dollar as the world’s currency, new rules and institutions governing world trade and monetary regulation, the creation of bodies like the International Monetary Fund, World Bank, and other U.S. dominated financial and trade institutions. Further hallmarks of the third restructuring were new innovations in the U.S. financial system, a thorough overhaul of corporate and investment provisions contained in the U.S. tax code, and the completion of the close integration of the U.S. government, industry, and military begun during the second world war.

On the labor side in the post-World War II restructuring, some of the rules of the game previously introduced in the 1930s were ‘re-adjusted’ in a manner decidedly favorable to business. New legislation in the form of the Taft-Hartley Act sharply shifted back the balance of power between workers and their unions in favor of companies and management. Rights to strike, organize and bargain were fundamentally curtailed. The income tax was now permanently extended deeply down into the working population—while guarantees of employment by the government, promises of national health care, and assurances of civil rights in education, housing, jobs made during the World War II period were effectively abandoned.

The Third Corporate Restructuring & Offensive, 1946-1959

Corporate America has never accepted President Franklin Roosevelt’s New Deal—that combination of policies and laws passed in the depths of the 1930s recession that were designed to check the growing militancy of American workers and unions while stabilizing the worst extremes of the capitalist business cycle by means of regulatory policies and other measures.

At the heart of the New Deal of the 1930s were laws that gave American workers the right to form unions and bargain collectively (National Labor Relations Act), that established the right to a minimal retirement guarantee (Social Security Act), created a minimum floor for chronically falling wages and hours (Fair Labor Standards Act), provided emergency Government last resort employment to the jobless (Works Progress Administration), while simultaneously providing regulation for the worst abuses by corporations in the utilities, energy, banking, Wall St., and other industries that were a major cause of the Depression itself.

Since the New Deal, Corporate America has continually probed, tested, and explored ways to neutralize and roll it back. At times it has moved more aggressively in this direction. At other times less so. But it has never surrendered the basic goal of reversing the New Deal someday altogether.
With the return of a Republican Congress in 1946, yet another effort was launched to change the ‘rules of the game’ between Business and Labor at the sphere of production level. That effort culminated in the passage of the anti-Labor Taft-Hartley Act of 1947. Taft-Hartley took back many strategic advantages unions and workers had prior to its passage—not least of which was the right of recently formed unions to provide jobs to workers through a closed shop union hiring hall. As a consequence of Taft-Hartley, workers in the newly formed, fast growing, and economically strategic unions in the manufacturing sector would not be permitted to look to the union for their jobs. The employer would henceforth be the source of that most critical foundation of loyalty: the hiring process.

With Taft-Hartley, unannounced strikes were now also declared illegal. Strikes of major geographical or nationwide impact could also be terminated for up to nearly 80 days by federal edict and injunction. Management rights were expanded dramatically. Federal government bureaucrats now by law were required to become involved in all collective bargaining negotiations prior to and following any strike. And occupation of corporate property by workers (i.e. sit down strikes) was strictly prohibited, solidifying prior court decisions outlawing the same.

Subsequent further revisions to the new ‘rules of the game’ were passed later in the 1950s in the form of the Landrum-Griffin Act, along with multiplying court and administrative decisions. These deepened the original intent of the earlier Tart-Hartley Act—i.e. the neutralization of union power at the point of production! With Landrum-Griffin, remaining loopholes permitting strike action previously not addressed by Taft-Hartley were disallowed. In particular sympathy strikes were no longer tolerated. Nor would workers and unions be allowed to refuse or handle products made by other workers in a dispute with their employer.

By the end of the decade of the 1950s some of the most effective means of expressing union power were thus stripped away. The back of much of union and worker solidarity was thus broken. Key social relations between corporations and workers had been fundamentally restructured. The ‘rules of the game’ significantly changed. Union membership growth, measured as a percentage of the workforce, which grew until the economy peaked in the early 1950s, thereafter began a decades long historic decline that has continued to this day. Any rise in union membership after Taft-Hartley, Landrum-Griffin, and the flood of court and NLRB decisions based on them would come from the economic growth that might occur in industries already organized. That net union growth would not result from union organizing campaigns. But as those once growth industries themselves later declined, so too would union membership begin to plummet en masse. Union and worker economic power in private industry plateaued in the early 1950s, never again to advance to any significant degree as a direct outcome of union organizing initiatives in the core sectors of construction, manufacturing or transport. The drift downward would continue until 1980, after which the drift itself became an accelerating decline due to corporate and political policies initiated under the Reagan years.

The one exception to the above union membership decline was the drive in the 1960s and 1970s to organize public sector workers (city, county, state, federal,) and, shortly thereafter, farm workers. It’s not surprising that both of these areas of the workforce were left outside the control of Taft-Hartley and Landrum-Griffin laws’ restrictions on union power. But aside from these two exceptions, Labor in its strategic base of construction, manufacturing, and transport otherwise marked time throughout the decade of the 1950s.

The 1960s: The Hiatus

The 1960s represented a hiatus of sorts for corporate forces intent on rolling back the New Deal and further restricting strikes, organizing, and union bargaining.

With the overwhelming electoral defeat of right wing Republican Party candidate, Barry Goldwater, in the 1964 elections those among the corporate elite advocating a more aggressive offensive were eclipsed for the moment by more moderate elements, now temporarily ascendant, who believed there was little to be gained at the time by unnecessarily aggravating union and worker opposition. There were windfall profits to be made from the Vietnam War, from the intensification of the Cold War, and from the Space Race with the Soviet Union. Moreover, there were rising social protest movements by minorities, students, and the emerging womens movement. To attempt to directly dismantle or even restructure the key social programs of the New Deal, or try to restrict further union rights to bargain and strike, would only risk adding the protest weight of American Labor to that of the other peripheral social groups and movements in motion at the time.

With the more aggressive wing of the corporate elite thus temporarily marginalized during the 1960s a modest extension, the ‘last hurrah’ of the New Deal occurred with the passage of the Medicare Act at mid-decade. The New Deal’s original promise of comprehensive Health Care for all proclaimed thirty years earlier, then cut short by World War II and the post-war reaction which followed, was reborn as Medicare—albeit now only in partial form as health care only for senior citizens. Medicare would be the last expression of the Roosevelt New Deal and the result of a unique confluence of historical developments at that time which would not be repeated since.

By 1970, the decision had essentially been made to extricate the US from its Vietnam quagmire. The social movements of the previous decade began to lose momentum. The US had won the Space Race by landing astronauts on the moon and had compiled a massive advantage in missiles and warheads over the decade. Thus the conditions underlying the decade-long hiatus in the corporate offensive against American workers and their unions began to dissipate.

In this environment circa 1970-71 two new developments of strategic import absent in the previous decade began to emerge. The first of these was a new wave of capitalist competition in Europe and Asia that had not heretofore impacted U.S. corporations in the post World War II period. By the late sixties the American corporate elite was finding that it actually had to compete with foreign rivals for the first time in many years.

Labor’s Last Hurrah: 1969-1971

The second new development at the close of that decade was the re-emergence of union and worker militancy. It marked a newfound willingness by unions in the strategic sectors of construction, transport and manufacturing to strike aggressively for wage and benefit gains—a development not seen since the mid 1940s.

The union bargaining and strike wave at the end of the decade was led by the construction trades unions, who achieved first year gains in wages and benefits of more than 20% as a result of a series of regional strikes in late 1969-70. Their gains overlapped with the expiration of contracts by Teamsters and west coast Longshore workers, who also struck in 1970-71 and achieved similar significant improvements in wages and benefits.

Following the successful strikes and negotiated gains in Transport, unions in basic manufacturing, in particular Auto, consequently sought to match the gains in construction and transport before them. Worker and union militancy in one sector thus immediately influenced another. ‘Pattern bargaining’ within an industry (eg. GM contract settlement influencing Ford influencing Chrysler settlements) was one thing, and bad enough from the perspective of the corporate elite. But to allow a similar development to occur between industries like Construction, Transport and Manufacturing was unacceptable! Not since 1946 had anything similar happened. It was a situation the corporate elite could not, and would not, tolerate.

While prohibiting sympathy strikes and limiting the right to strike and the scope bargaining, the Taft-Hartley and Landrum-Griffin legislation of the 1940s and 1950s did not succeed in prohibiting the strike per se. Nor did such legislation prevent the still loose but growing coordination of strikes between unions. Those laws could not effectively address the successful leapfrogging across industries and the wage and benefit gains produced in 1969-1971. It was a loophole that needed closing. With Nixon now in office the corporate elite once again closed ranks. The hiatus was over.

To help resolve the problem they turned to Nixon to check the nascent challenge from Labor. Nixon’s response was to impose wage controls on the construction unions in 1970, followed by a general 90 day freeze on all wage increases for all workers in August 1971.

Under the wage freeze workers and unions could still strike. They just couldn’t get anything if they did. That made the strike effectively meaningless. Led now by the Executive Branch of government in 1970-71, instead of Congress as in 1947 and 1959, it was a new way to restrict strikes and determine the outcome of bargaining in favor of corporations and management. Following the ‘shock event’ of the initial 90 day freeze, subsequent strict controls on union bargained wage increases were imposed and remained in place for more than two years. Negotiated average wage increases in union contracts were reduced by more than half, and in some industries like Construction more than three fourths, during 1971-73 as a consequence.

The mysterious death of militant auto union president, Walter Reuther, in a plane crash in 1970 and the stripping of militant Teamster president, Jimmy Hoffa, now incarcerated, of his position as head of the that union in 1971 helped ensure that the brief historic 1969-1971 experience of Labor strike and bargaining militancy would not be repeated again.

In contrast to the decidedly negative impact of wage controls on wages and union bargaining, nominal and totally ineffective controls on prices were also imposed but did nothing to stop the record inflation of 1972-73 that surged to double digit levels. As a result of the cuts in negotiated wage increases and the acceleration of inflation, the prior gains of workers in terms of real wages achieved during the previous three years, 1969-1971, were wiped out. Workers without unions fared even worse.

The true underlying plan and intent of the wage controls program under Nixon was summed up by Arnold Weber, who headed up the Nixon Payboard during those years, 1972-1974. Years after, in 1979, when it was all but history, Weber admitted in a Business Week magazine interview that “The idea (of Nixon’s wage-price controls) was to zap Labor, and we did!”

Following the wage freeze and controls, the corporate elite and U.S. government followed up with plans to ensure the experience of 1969-1971 would not be repeated. The first target was the construction unions who initiated the strike wave in 1969. The plan was called the ‘double breasted operation’. It was an open shop drive much like that which occurred during the 1920s in that sector. Led by the Construction Business Roundtable, which would later morph into the influential Business Roundtable interest and lobby group, the construction industry during the remainder of the decade of the 1970s was successfully de-unionized, beginning especially in the residential housing sector and outside major metropolitan areas but later extending within metropolitan areas as well. In the process what were previously region-wide contracts within the construction industry, which were once the rule, were more and more ‘balkanized’—i.e. broken up into smaller geographic area contracts that further reduced union bargaining power. By the end of the 1970s the backs of the construction trades unions were broken. They would never lead a strike wave again.

By the time the wage controls were formally discontinued in 1974 the economy was already headed into a sharp downturn. Controls on wages were no longer needed in an economy entering the steepest recession to date since the Great Depression of the thirties. Negotiated gains in wages, benefits and other conditions by unions were minimal during the recession of 1973-75, well below what would have been the limits of formal wage controls had they been continued.

If the wage controls and accelerating inflation of 1971-73 wiped out the wage and benefit gains achieved during the strike wave of 1969-1971, then the recession of 1973-75 set in motion what would become a long wage march backward. For more than three decades since 1971 there has not been anything resembling coordinated strike action across industries between unions and workers in America. Nor is it a historical coincidence that real wage gains of American workers from 1973 on halted, stagnated, and then began to decline for the next thirty years as well, despite three decades of record productivity gains by corporations over the same period! Thus three years of formal wage controls turned into three decades of informal, but no less effective, real wage stagnation and decline! A virtual thirty year pay freeze.

The cross industry bargaining and strike militancy of the 1969-71 period can thus be seen as a ‘last hurrah’ of union power at the level of the sphere of production—much like the passage of the Medicare Act a few years earlier marked the high point and ‘last hurrah’ as well of the New Deal in the sphere of social legislation.

Nixon’s ‘New Economic Program’

Nixon’s wage freeze, wage controls, and subsequent neutralization of the 1969-71 gains of workers and unions in construction, transport and manufacturing marked a return by the corporate elite to a more direct and aggressive offensive not seen since the passage of Taft-Hartley in 1947.

Up to 1970 the Executive Branch of the federal government had left the task of such offensives pretty much to corporations on a company-to-company or industry basis to implement directly at the sphere of production, or to Congress and the Courts at the legislative level. Now, however, with Nixon the Executive branch of government was fully engaged. The new phase of the Corporate Offensive that appeared initially to emerge in the early 1970s under Nixon represented a renewed consensus that set new precedents in Corporate-Government cooperation. This deepened direct coordination between corporations and government, important for our analysis, focused on three policy areas in particular—not only on restructuring labor-management relations and thereby on controlling labor costs at the level of production level, but also on trade relations and tax restructuring as well.

This broader Corporate Offensive embracing taxes, trade, as well as wages was called Nixon’s ‘New Economic Program’, or NEP. Introduced in August 1971, the NEP targeted rolling back of union wage gains resulting from the strikes and bargaining of 1969-71, as noted above.

However, a second element of the NEP was a broad initiative to cut corporate taxes. The Nixon NEP tax cuts established new precedents in tax policy that would be resurrected again by Reagan in 1981 and expanded upon even further by George W. Bush after 2000. In fact, 1969-71 marks a watershed in US tax policy history. For it is in this period that the Great American Tax Shift begins to accelerate. More and more of the overall burden of taxation in the US would henceforth shift to the working class, while lightening the load for corporations and wealthy taxpayers. The tax rate on corporations, for example, peaked in 1969 at 23% and has been declining ever since, until today it is barely 7%. Within the structure of the overall Federal Tax burden, a similar shift from the more wealthy to workers has also occurred over the same time period.

The NEP’s third set of policies involved trade relations and programs. Trade policy can be understood simply as those measures which lower costs for US-based corporations in world markets and/or raise costs for their competitors in the same markets (including the US home market). Additionally, trade policy means forcing open foreign markets on favorable terms to the US corporations previously restricted or denied them. And conversely it can mean inhibiting market entry by foreign competition in those markets in which US corporations dominate. Like the renewed direct offensive against union wages and the beginning of the great tax shift, the aggressive trade policy that has been a hallmark of the Corporate Offensive for the past twenty-five years had its initial origins as well in the Nixon NEP.

At the heart of the NEP trade policies was the decoupling of the US dollar from the gold standard. This move gave US corporations a strategic weapon with which to browbeat other nations and economies when trade disputes arose. The world was now indisputably on the dollar standard. No intermediary ‘currency’ like Gold to enable foreign central banks or corporate competitors to hide behind. They could either purchase U.S. dollars or not. The consequence of the Nixon move was to force other countries to invest more in the US as well as directly purchase more US government securities to maintain a trade balance. Buying gold was no longer an option. Buying dollars was now the only game in town. Foreign currencies now had to peg to the dollar, which permitted the US to indirectly, albeit partly, to control the value of those currencies—a tremendous advantage in maneuvering in disputes over trade and in allowing the US to export its inflation abroad.

An even more direct ‘trade’ measure announced as part of the NEP was the imposition of a 10% imports surtax, which resulted in immediate windfall gains for big manufacturers like GM, US Steel, and others in textiles, electronics, and other import sensitive industries.

The various trade related measures of the NEP were designed to provide a clear cost advantage to US companies in international markets, which they did at the time. Their direct effect was in one sweep to reduce an over-valued US dollar in world markets and make US corporations competitive once again in those markets. This was the ultimate trade objective of the NEP, the same objective all Free Trade policies of the US corporate elite since the NEP.

The NEP trade measures thus may be viewed as the historical predecessors to the aggressive trade measures undertaken later by Reagan, the development and passage of NAFTA under George Bush and Bill Clinton, the opening of imports from China, and to efforts currently underway by the US corporate elite and Bush to replicate NAFTA throughout the Americas by extending it to the Caribbean basin (CAFTA) and expanding it throughout the southern hemisphere (FTAA), and by forging in the interim multiple bilateral, country trade deals designed to outflank and drive still resistant nations into CAFTA-FTAA trade blocs dominated by the U.S.

Just as there is no ‘free lunch’, there is nothing ever free about Free Trade. Someone always pays—either the foreign capitalists or the American worker—when it comes to reducing costs and/or opening markets. All the academic theory, rationale, justifications and claims that everyone gains from Free Trade in the long run is either ideology or obfuscation covering up the fundamental reality that Free Trade, in the short run, is essentially a zero sum game regardless what the clever ‘long run’ arguments and defenses may be. And while some arguments for Free Trade may be true in a purely logical sense in the long run, the ‘long run’ may in fact be very long indeed. As the 20th century guru of the economics profession, John Maynard Keynes, has said: “In the ‘long run’ we’re all dead.”

If the decade of the 1960s can be described as a hiatus in the postwar Corporate Offensive, the early 1970s and the brief Nixon period can be understood as a kind of dress rehearsal for what would later emerge under Reagan and other Presidents after 1980 as a renewed aggressive phase of that Offensive. The NEP shows clearly the ground pioneered by Nixon in this direction. Other possibilities he may have planned that were cut by the events of the last years of his administration also reveal the historical transitional character of his term in office with regard to the current Corporate Offensive.

In his 1972 re-election campaign Nixon spoke about a ‘New American Revolution’ that would take place in his second term. The focus of this revolution would be domestic policy. While not all elements of this potential radical redirection of domestic policy were clear at the time, one proposal that was frequently raised by Nixon in his first term was his desire to impose mandatory arbitration in all union contract negotiations.

There is some evident that Nixon’s plans for a New American Revolution in his second term also intended to address the restructuring the welfare system, a further overhaul of the corporate tax system, plans to open up more trade with China, and the introduction of further business deregulation. All these would later become initiatives under Reagan, Clinton and George W. Bush. The close relationship between Nixon and Reagan in particular, both on a policy and personal level, is often overlooked.

The Interregnum: 1974-1977

But Nixon’s ‘New American Revolution’ follow up to his ‘New Economic Program’ did not happen, notwithstanding his 1972 re-election. It was abruptly cut short by his Watergate scandal, impeachment, and his ultimate resignation in 1974. The Gerald Ford caretaker Presidency that followed was consequently preoccupied with the fall of Vietnam and the steep recession of 1974-75. The election of a little known Democrat, Jimmy Carter, in 1976 further delayed any resumption of plans for a domestic New American Revolution and any renewed Corporate Offensive that may have been envisioned along such lines. By mid-decade of the 1970s the corporate offensive initiated briefly by Nixon stalled. A kind of Interregnum set in between late 1973-early 1977.

By mid-1977, however, corporate forces again began to plan a renewal of what had begun earlier in the decade but was cut short by the intervening political events of 1973-76. Organizations like the Business Council, Business Roundtable, CFR, Manufacturers Association, Chamber of Commerce, and others joined with more aggressive ‘Sun Belt’ business forces and right wing oil entrepreneurs, and once again together set about redefining new ‘rules of the game’ and launching a new phase of restructuring.

New business political action committees (PACs) and lobbying operations were set up circa 1977-78 and corporate money was funneled in amounts previously unseen or even imagined. A new aggressiveness in financing pro-business electoral candidates, instead of spreading the money more equally around between Republican and Democratic candidates as before, was adopted. A new alliance with grass roots religious organizations that were pioneering direct mailing and other fund raising techniques was forged, especially in the South, which was now targeted in particular for Corporate-Republican political initiatives. A new focus on polling, consulting, media and public relations expenditures in political campaigns was adopted. Radical right elements financed and founded dozens of conservative ‘think tanks’, whose primary task was to define a new ideology of the Right wedding the old economic arguments with new political and religious moral ideals, while simultaneously undermining in the public mind any legitimacy associated with concepts of ‘liberalism’ or the benefits of business regulation. Cultural themes and moral issues were introduced in a systematic manner onto the American political landscape, primarily as vehicles for attacking the civil rights revolution of the preceding decades and as a means for mobilizing the religious right for a host of corporate objectives at the grassroots level. A so-called ‘Committee on the Present Danger’, composed of the most powerful corporate elements and their surrogate representatives (including Ronald Reagan), was formed during the decade to directly attack Carter’s policies.

This new political equation of money, morality and media was tested out in the 1978 Congress and the final two years of the Carter Presidency.

1978-79: The Corporate Elite Cross the Rubicon

While more overt elements of a new Corporate Offensive did not begin to take shape until 1977, less obvious but no less important piecemeal changes in the ‘rules of the game’ were being implemented throughout the decade by the courts and Executive branch administrative bodies like the National Labor Relations Board (NLRB). These incremental but collectively significant developments further tightened the screws on union organizing, political action, and workers’ rights on the job, albeit still on a company by company basis. By the late 1970s the construction unions and workers had already been seriously impacted by the ‘double breasted operations’ union busting strategy, launched by the Construction Users Anti-Inflation Roundtable. Now it was the manufacturing unions turn to experience the negative impact of the NLRB and the courts over the latter half of the decade on union organizing and bargaining activities.

In response to the growing legal web restricting organizing and bargaining, the AFL-CIO, proposed comprehensive Labor Law Reform legislation to counter the growing restriction on and regulation of union activities. With a Democratic Party now in power in 1976 both in Congress and the Executive branch it appeared there would be no better time to pass general Labor Law Reform. Perhaps the New Deal itself could be reinvigorated in other ways as well—just as it was in the 1960s with the passage of progressive social legislation in the form of Medicare.

But Labor Law Reform, as well as other worker and consumer rights legislation, were resoundingly defeated in 1978 by a massive corporate lobbying campaign reflecting the newly coordinated, well-funded and aggressive Corporate attack on any legislation that in any way seemed akin to the New Deal or protective of working class interests. In terms of financing, organization, and its intensity, nothing like the 1978 anti-Labor Law Reform lobbying effort had been seen in post war memory up to that point. Leading the charge was the renamed and expanded premier corporate lobbying group, the Business Roundtable—the same business organization which earlier in the decade in 1970 as the Construction Users Anti-Inflation Roundtable had led the charge to establish ‘double breasted operations’ and the open shop in the construction industry.

Attempting to restore some of the original intent of the New Deal ‘National Labor Relations Act’ of 1936, the AFL-CIO made the Labor Law Reform bill of 1978 its central political and legislative goal during the Carter administration. When both that goal and the bill went down to humiliating defeat, it marked the first of what would become a long string of failed legislative attempts to resurrect progressive legislation in the decades to follow under Reagan and Bush.

Union efforts to resurrect the New Deal legislative tradition thus died with the defeat of Labor Law Reform. Henceforth, unions and workers would be on a constant defensive at the social-legislative level. 1978 was clearly the watershed with regard to the Corporate Offensive at that level. Thereafter, union efforts would focus on trying to prevent the further unraveling and dismantling of the New Deal tradition and its progressive laws.

If the defeat of Labor Law Reform and the renewed targeting of New Deal legislation by corporate interests marked a renewal of the Corporate Offensive ‘from the top down’—then ‘from the bottom up’ new corporate strategies at the point of production were being rolled out and tested as well after 1978. The imminent fourth Corporate Offensive in the 20th century would not only occur at the legislative level, but at the sphere of production level as well.

Earlier in the 1970s the corporate focus was on eliminating leapfrog bargaining, strikes and settlements across industries. At the end of the decade the focus would expand to breaking up within industries what was called ‘pattern bargaining’. In intra-industry wide bargaining, for example, a nationwide settlement with a company like GM or US Steel would be replicated at a Ford or a Bethlehem Steel. The test case for this occurred in 1979 at Chrysler Corporation involving the autoworkers and their union, the UAW. Chrysler would become the test model for a new corporate strategy and formula at the sphere of production for undermining intra-industry bargaining and contracts in manufacturing. It was a harbinger of things to come.

In 1979 Chrysler Corporation was facing bankruptcy due to a series of bad business decisions and a slow response to new competition from Asia. Chrysler asked for a billion dollar bailout guarantee by the U.S. government. Responding to demands by Chrysler’s bank creditors, President Carter supported Chrysler management and its banks’ insistence on major concessions by the UAW and auto workers as part of the condition for the loans. Carter leaned on the UAW to agree to concessions in exchange for the government guarantee of the bailout of the company. From this strategic settlement was born the new model that would spawn the corporate runaway shop movement of the 1980s, widespread concession bargaining by unions, and ultimately would produce what came to be known as the ‘Rustbelting of America’

What the AFL-CIO and UAW did not realize at the time was that the Chrysler bailout was not an isolated, one time event. It was the pilot program. It was the test case of how to break the back of union bargaining power in manufacturing. It would lead to the decades-long corporate practice of unrestrained outsourcing. Combined with Free Trade practices and policies at both the government and sphere of production level, it would lead to subsequent exporting of US manufacturing jobs on a massive scale.

The Chrysler model was eventually replicated elsewhere throughout manufacturing during the next two decades. Chrysler was the analog for the manufacturing sector comparable to what was already underway with the ‘double breasted’ open shop drive in the construction industry. Both would decimate union membership. Not coincidentally, UAW union membership peaked in 1979 at 1.5 million members at the time of the Chrysler settlement. It has since declined to 624,000 at the end of 2003.

The Chrysler model made effective use of the threats of the plant shutdown and the runaway shop to paralyze unions and workers with a deep fear of losing their jobs. Once that fear was sufficiently established, it then legitimized and helped promote the widespread penetration into collective bargaining and union contracts of new ‘rules of the game’ at the point of production. Increasingly common in union contracts thereafter were corporate provisions like two-tier wage systems, unrestricted outsourcing, expanded management rights language, lump sum pay bonuses in lieu of scheduled wage increases, and the steady elimination of Defined Benefit Pension plans and their replacement with Defined Contribution and Individual Pension plans based on 401Ks. All the above became staple corporate demands and objectives in contract negotiations, particularly in Manufacturing during the Reagan era and beyond. Collective bargaining increasingly focused on concessions during the new decade of the 1980s, and concession bargaining has continued to deepen and spread ever since.

While concessionary bargaining did not originate in 1979, it now became conscious corporate strategy from that point, practiced by more and more major manufacturing corporations. The Chrysler model thus marked the beginning of the decline of intra-industry bargaining within the manufacturing sector. It ushered in concessionary bargaining on a wide scale. At the point of production the new corporate strategy was simple: threaten to close down the plant and use the threat to break up industry-wide contracts, then install two-tier wage schedules, expand managements rights clauses in contracts to enable almost unlimited freedom to outsource and/or remove entire groups of workers from the bargaining unit, give workers lump sum payments instead of raises in their wage schedule, and substitute pensions with no guarantees of retirement payments for union pensions which guaranteed levels of benefits. Chrysler became the model of what the Corporate Offensive could achieve with the right combination of business-government pressure, threat, and aggressive action.

Sources critical of Labor tend to blame the leadership of the manufacturing unions as primarily responsible for allowing the decline in union bargaining power in manufacturing since Reagan. They cite the unwillingness of the leadership to directly confront the plant shutdown/runaway shop developments of the 1980s due to fear of a Reagan response similar to his destruction of the Air Traffic Controllers at the time. They note AFL-CIO leadership over-reliance on Democratic Party help, which was never delivered, instead of taking action and developing its own industry level counter-strategy. Or they point to more senior, better paid workers too willing to agree to lesser pay and benefits (two-tier wage schedules) for younger workers coming into the industries. But American workers in manufacturing and elsewhere did fight. In steel, rubber, meatpacking and elsewhere. They just did so in a very fragmented, industry by industry, and more often company by company approach. There was no coordinated effort to stop the snowball effect of the plant closures-runaway shop strategy, or the legislation and changes in tax and trade that made such corporate strategy financially attractive.

These criticisms also overlook and greatly underestimate the massive corporate effort that underlay that offensive launched during the early Reagan years to undermine the manufacturing unions in America. They assign little or no role to the Government policies that provided the incentives, or the role of the courts and NRLB in legitimizing and institutionalizing the various changes at the sphere of production level reflecting the “new rules of the game”. More than any other cause, it was the CEOs and governing boards of corporations that took the lead in destroying industry-wide bargaining agreements with their constant threats—frequently followed by action—to shut down plant after plant and move them first to the South, then to Latin America, and then elsewhere offshore.

Today outsourcing and offshoring are words the American public has become increasingly aware of as more and more white collar professional, business services, software engineering, and other tech jobs are also rapidly being transferred abroad. But outsourcing and offshoring have been devastating manufacturing jobs in America since Reagan and the early 1980s. In mid-1979 there were 21.2 million manufacturing jobs in America; as of the end of 2004 the number has declined to only 14.3 million. Just about 7 million high quality, well paid, good benefits, mostly unionized jobs have been lost in the U.S. in Manufacturing alone, nearly 3 million of which occurred under George W. Bush during his first term.

By the end of 1978, barely two years after taking office, the Carter administration was essentially played out as a force that might establish an effective defense of the New Deal and protect prior legislative gains. One of the great historic shortcomings of the Carter administration was its failure to develop any strategy whatsoever to revitalize the New Deal—as had been done, for example, in the decade of the 1960s with the passage of Medicare. The conditions certainly were there. The Democrats had control of the Congress and the Presidency. Not since 1932 had the party in 1976 a better opportunity to achieve something in the wake of Watergate, the ending of the Vietnam War, and the severe recession of 1974-75—all events on the Republican Party’s watch. Had they been able to do so, the history of the past three decades might well have been quite different. But the extraordinary weak leadership and lack of vision by Carter and other Democratic Party notables allowed a reopening for, and rigorous renewal of, a new fourth Corporate Offensive once again at the close of the decade of the 1970s.

The final political coup de grace was then delivered to the Carter administration. By late 1979, the decision had been made by the corporate elite to force Carter out. Global business competition was intensifying once again at the close of the decade and more aggressive tax and trade policies were being demanded, none of which Carter was capable of delivering.

In 1979-80 the Federal Reserve chairman, Paul Volcker, spokesperson for finance capital and the banking sector in America, adopted a policy of driving up interest rates well beyond anything justified by the general economic conditions. Volcker’s efforts had the intended result. Inflation and interest rates fed off each other in the short run, driving both to levels to 15% and more by early 1980, an election year. What quickly followed on the eve of the November elections was the sharpest drop in the economy, more than 4%, up to that point in the postwar period. Even a steeper and more rapid recession than that of 1973-75. Volcker handed Reagan his number one campaign slogan, the first ‘cue card’ for the 1980 election campaign: “Are you better off today than before the current (Carter) administration took office!”. It all but ensured Reagan’s election that year.

Both the new political equation and the elements of a new Fourth Corporate Offensive were now in place. All that remained was to put Ronald Reagan in the White House and the corporate elite to begin in earnest a new era of restructuring, a new offensive against workers and their unions at the sphere of production level, and a new legislative assault on the New Deal.

The Fourth Corporate Restructuring & Offensive, 1980-2005

The post-1980 restructuring is characterized on the Business side by the rapid unraveling of the business regulatory rules of the game established as part of the New Deal in the 1930s and wholesale deregulation of entire industries and sectors of the economy. Another hallmark has been the radical redistribution of taxes and acceleration of shifting of tax burdens from corporations and the wealthy to the American working class population. Other major elements of the restructuring have been the introduction of unprecedented financial innovations and communications technologies, the transfer offshore of much of the US manufacturing sector, the restructuring of much of the work force and jobs markets in the U.S. from traditional, permanent full time work to forms of part time, temporary, and otherwise ‘contingent’ work, the establishment of new institutions and rules for world trade, and the closer absorption of the U.S. Media into the U.S. Industrial-Military-Government complex.

On the Labor side, the restructuring after 1980 has meant the advent of corporate and government policies to contain real hourly wages, to rollback various wage and hour guarantees legislated in the 1930s, to shift rising health care costs to workers, and to transform traditional group pensions into bank-administered private plans. The restructuring and offensive has been especially characterized by an increased regulation of workers and unions in areas of organizing, political action, and strikes and a dramatic decline in union membership and bargaining density. An expansion of management rights by the courts and administrative bodies like the NLRB, the institutionalization of concession bargaining and the accelerating export of jobs to lower paid, non-union regions— in particular to Central America and Asia—are additional key characteristics at the sphere of production level.

Just as Nixon and the corporate elite in the early 1970s eliminated leapfrog bargaining and strikes between unions across industries, with even closer assistance by the Executive and Courts a decade later a fourth Corporate Offensive would effectively undermine and destroy intra-industry wide bargaining, break the back of the power of the manufacturing, construction and transport unions, radically change the character of collective bargaining strongly in favor of management for decades to come, and usher in a long period of concession bargaining by Labor in its once strategic ‘core’ industrial base.

In the 1970s the primary corporate-government means for checking union bargaining power and workers’ pay and benefit gains were the wage freeze, wage controls, the threat of compulsory arbitration, and double breasted open shop operations. At the legislative level corporate advances took the form of new corporate tax and Free Trade policies and the checking of labor law reform that might have assisted union organizing and growth.

After 1980, at the point of production the tactics used were widespread threats and plant shutdowns, runaway shops, outsourcing, offshoring, concession bargaining, and use of the courts and executive to prevent union organizing, strikes, and to otherwise undermine the growth of union membership. At the legislative level, after Reagan it was new pro-corporate tax and Free Trade policies ultimately facilitating shutdowns and offshoring, the rolling back of spending on social programs, wage and protective legislation, and privatizing the core of what remained of the Roosevelt New Deal.

In the political-electoral arena, after 1980 the new restructuring and Offensive would also be accompanied by the transformations of both the Republican and Democratic parties, albeit in different ways and forms.

The Republican would become a ‘mobilizing’ party with a base of religious branches able to field an army of grass roots volunteers to turn out voters, push state-wide initiatives, organize recall and referenda elections, and engage in other protest events. A mobilizing party with new ideological elements and a widespread communications apparatus effective at forming and manipulating public opinion. A party with a strategy aimed at maximizing institutional power and imbued with a new aggressive ‘take no hostages’ attitude toward opponents and adversaries.

In contrast, the Democratic Party would drift under some of the most ineffective leadership in its history, then turn toward its pro-corporate wing as represented by its Democratic Leadership Council (DLC). The DLC would assume party control and undertake a reformation of the Party on a moderate Republican image, and become increasingly beholden to corporate interests as it embraced the modern trappings of money-dependent electoral campaigns (i.e. polling, consultants, media time, etc.) requiring massive campaign contributions. Under the DLC the party would transform itself further from the ‘mobilizing’ party it once was under Roosevelt into a mere electoral organization with a shrinking base, no clear ideological focus, no media apparatus to deliver that focus, and increasingly unable to defend itself against grass roots attacks by its Republican opponent. One of the ironic consequences of the new Corporate Offensive is not the direct transformation of the Republican Party by corporate interests, but the indirect transformation of the Democratic Party by those same interests as well.

At the legislative level, the new Offensive would successfully gut social programs, worker protective legislation, and the minimum wage. Central elements would include a shifting of the total tax burden and an opening of the floodgates of Free Trade, as well as a transformation of the private pension system by dismantling tens of thousands of defined pension benefit plans and eventually a direct assault via privatization on the twin great achievements of the New Deal—Social Security and Medicare.

In chapters one through ten that follow the details of the Fourth Corporate Offensive—the offensive that has continued from Reagan through George W. Bush—will be discussed. That Offensive will be examined not only at the sphere of production level but at the legislative level as well. Tax policies, Free Trade legislation and practices, wage legislation and rules, health care costs and coverage, private pensions, and Social Security will be addressed in parallel with what has happened in terms of wages, unions, bargaining, benefits, and jobs at the work level. The consequences in the sphere of organization—whether in the form of the crises in the AFL-CIO or the Democratic Party—will be discussed in the concluding chapter.

The assault today on American workers’ standard of living, basic economic interests, and political rights are coming more quickly, from more directions, and are increasingly virulent and bold. During the decade of the 1990s it was at times intermittent; at other times aggressive, especially in terms of trade and job restructuring. Since 2000, however, the assault has been steady, coming from multiple directions, and gaining in momentum. For those on the receiving end—American workers and their families—it is becoming increasingly clear that something basic has changed. Something fundamental is underway. In this, the first decade of the 21st century the ‘rules of the game’ are once more in flux. The chapters that follow are about those most recent changes in the ‘rules of the game’—and what the consequence has been for 105 million American workers and their families since Reagan took office through the first term of George W. Bush.

Jack Rasmus

CONTENTS of the War at Home

Copyright 2004 Jack Rasmus


INTRODUCTION: Convergence, Crisis & Corporate Restructuring

CHAPTER 1: The Road Back to 1929

CHAPTER 2: The Great American Tax Shift

CHAPTER 3: Corporate Wage Strategies I: The Thirty Year Pay Freeze

CHAPTER 4: Corporate Wage Strategies II: Attacking the Periphery

CHAPTER 5: Free Trade and the Collapse of Manufacturing in America

CHAPTER 6: Welcome to the New World Job Order

CHAPTER 7: Jobless Recoveries and the Bush Recession

CHAPTER 8: Medical Mount St. Helens: The Health Care Crisis in America

CHAPTER 9: Pensions in the Corporate Cross-Hairs

CHAPTER 10: Stealing the Social Security Surplus

CONCLUSION: The Corporate Offensive, Democrats, and the AFL-CIO


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