Translated from Gegenstandpunkt: Politische Vierteljahreszeitschrift 4-2005, Gegenstandpunkt Verlag, Munich

The richest capitalist power looks after its working class
The proletarian version of the “American way of life”

In his inaugural speech, the President of the United States communicates about the material situation of the working class in the United States.[1] He promises his fellow citizens the following:

“America has need of idealism and courage, because we have essential work at home — the unfinished work of American freedom.… In America’s ideal of freedom, citizens find the dignity and security of economic independence, instead of laboring on the edge of subsistence.… We will widen the ownership of homes and businesses, retirement savings and health insurance — preparing our people for the challenges of life in a free society.”[2]

An informative diagnosis. A 200-year-old capitalist success story has not only made the United States the richest and most powerful nation in the world; at the same time an ever-growing number of American citizens lack the basic necessities of life — from an affordable roof over their heads to protection from the costs of illness and old age. And the leading trustee of the nation openly admits this state of affairs: he explains the securing of such necessities of life to be the ideal ambition of state policy, which can only be approached with “courage” and a lot of “idealism.” Of course, Bush is not by any means the first president to pronounce this: whether under the heading “war on poverty” or the Bush variant of an aspired-to “ownership society,” every American President still declares it to be a decisive component of his program to want to take care of the living conditions of that section of its citizenry that never manages to take care of its own maintenance. However, the continual repetition of this message is never meant as an admission of some sort of failure on this front, as a national self-criticism perhaps. Poverty after all is the indestructible downside of American wealth: if, in defiance of all government efforts, growing wealth is accompanied by a tendency for the poor to become ever poorer in increasing numbers, then that’s just the situation that state power sees itself confronted by; a “challenge” it faces and for which it always seeks, and must seek, suitable “answers” anew.

In the case of the Bush administration, the answer is: state power should become active in assisting people who can’t cope with their life in a “personally responsible” way for lack of their own means to do just that. With this promise, the state declares its support for the reasons that from the very first ensure that people become and remain absolutely destitute: on this basis, it wants to do its bit so that people get by nonetheless. It is, after all, the state that has intended these reasons and put them into effect: one is poor in the United States — just like in other countries — because one has the misfortune of belonging to the class of wage laborers. People of this type work just as little in the U.S. as in Europe, Japan, and elsewhere to secure their own subsistence: their work serves the increase of the property of American owners of capital; they endow the American state with wealth and power. For that reason, the state uses its power to ensure that people have to get by with what their labor power is worth to capital; the wage that ensures the growth of capital is the livelihood that the working masses are entitled to. An American president can only approve of this service of American work for American wealth; particularly as the working masses, through their work and the wages that they receive, so adequately participate in the advancement of this wealth, from his perspective. If it remains a tiresome circumstance that this wage is chronically not enough to live on for quite a lot of people in quite a lot of proletarian living conditions — something the state won’t deny too much — then a decent American proletarian has to see how he copes with this situation in his freedom. Provided and as long as he does this, the state helps him out with one or another support program: always strictly according to the criteria that the compensatory substitute for funds that are lacking in proletarian finances has to serve the lofty aim of turning destitute people into personally responsible managers of their own plight. In Bush’s words: governmental support of proletarian poverty should enable wage earners to face up to the “challenges of life in a free society.” Whatever unreasonable demands this holds in store for them, this then is their share in the “American dream.”

I. The American system of social care: “Helping people help themselves”

The first sociopolitical act of the American state consists in giving every citizen, across classes and without regard to person or race, a social security number at birth. With this identification number the state registers its citizens in all the categories of rights and duties that they get involved in over the course of their working and family lives. What the rights and duties are, how they are organized according to which national points of view — all that completely depends. The comprehensive responsibility that the state exercises in social matters for its citizens is not to be confused with a comprehensive endowment of benefits. Rather, a good Yank has to work for them in the truest sense of the word; if not with his own property, then in service to the property of others. How well one proves oneself in that determines what one has from the supplementary arrangements in social matters with which the state accompanies the efforts of its less-well-off citizens to get them through a lifetime of wage labor. In any case, the American state does its best so that private initiative can exhibit its beneficial effects in this “sector,” too, and is hindered as little as possible by government intrusions.

1. Pensions: personal responsibility in the poverty of old age

a) “Social Security”: The state imposes a fund for the poverty of old age

In the U.S., there is a state-organized pension fund with the informative name, “Social Security.” And, in fact, the pension is the only social benefit that is “secure” for the American citizen; i.e., the only social sector in which the state has brought itself to establish a contribution-financed compulsory fund on the European model. This means neither that every Yank gets a pension, nor, for those who get one, that it is enough to finance the twilight years. It is “secure” only in that one is in it as a contributor to the compulsory fund as soon as and as long as one works; the American state takes in the contributions with which the fund finances itself from the income of wage workers as well as the self-employed.[3] The matter of whether one gets a pension — and how much — is however hardly secure: the organizer of the program costs determines both the time that one must have worked in order to receive payments, as well as the amount, according to the state of its finances. And it is certain that one depends as a retiree on receiving the state-allotted payments: for two-thirds of ordinary retirees, the Social Security check represents virtually their entire old-age income.[4]

The procedure that the American state applies in this branch of social welfare is well-known in other countries: based on the judgment that the wages earned in a proletarian working life are not enough to finance life after work, it makes the whole of its working population responsible, through compulsory contributions and a pay-as-you-go system, for ensuring that their class brothers still have an income in old age — or at least that most of them have a little. With complete freedom, the state determines who, when and how much: it sets the retirement age at a soon-to-be 67 years, ties the eligibility for benefits for pensioners to 10 years of paying contributions, and at the same time limits the pension payments to a maximum of 40% of the average wage (calculated according to a complex procedure) earned during the entire “working life time.” In this way, the state ensures that only those people who have shown their willingness to work for a demonstrably long and continuous time get something; and those only discharged from competition due to old age, i.e., never due to a lack of willingness to work. In the state pension fund, the state recognizes the proles’ willingness to render outstanding services to the wealth of the nation; and at the end of all their troubles, it gives them this recognition when it sees the existence of this life-long willingness in their success in acquiring an “entitlement” and remunerating it materially.[5] This is how it combines the principle of collective responsibility with the much-vaunted “spirit of personal responsibility”: i.e., with a mandate to those affected to view the state pension as an incentive to look after themselves privately. And indeed in two regards: they must make sure that they get and remain “employed”; and they must privately see to it that, afterwards, their pension somehow suffices.

b) The company pension: Social security as a subject of contract between capital and labor and an inexhaustible source for finance capital

How hard one is hit by old age poverty depends on one’s private coverage. The government generously admits this to be unaffordable for most when it forgoes checking whether pensioners over 65 have income from work besides their pension. Many retired people — not just those who were previously low-wage workers — continue working somehow; supplementing the state pension through private insurance is just unaffordable for most. It therefore mainly takes place on a larger scale in the form of company pensions, i.e., where companies have negotiated a corresponding agreement with a trade union or workforce representatives, or for their own reasons have set up a pension fund as a company benefit.

Company benefits follow their own logic. Capital calculates the expenses for the company provision fund as a component of the company payroll: i.e., as part of the cost that it pays for the use of labor power. On the other hand, this wage component has the small peculiarity that it is not disbursed to its “recipients,” but remains in the business, and in the hands of the company adds up to a handsome little sum. The money does not lie around in some company safe waiting to be paid out, but is transformed, like any money not required for the immediate continuation of business, as capital, i.e., invested in profit-yielding securities, where they — if everything goes according to plan — yield surpluses.[6] When employees retire, their pension entitlements are paid out of these surpluses. In this way and quite in accordance with the system, wage components are turned into capital and the ordinary capitalist drive for profit is placed into service for the social security of a proletarian’s old age. The state, to which this type of social provision is only right, encourages it by granting tax concessions for company pension reserves and tax exemptions for disbursed pension contributions.

In this way, company- or even directly union-controlled pension funds have grown into the largest financial capital in the United States — the pension funds of companies have tripled in size in the last 10 years to 13 trillion dollars. The business with the private provision for one’s old age is simply a splendid basis for forming and accumulating capital. The small contradiction in this special form of capital investment remains, however, namely in its somewhat capital-adverse purpose: the increase in property taking place here has — in the end — to stand for disbursements whose criteria in regard to timing and magnitude are not those of an optimal return on property, but rather the contractually defined pension entitlements of the employees. Of course, companies master all kinds of methods for dealing with this contradiction, namely: adapting the financial position of the fund to the total pension paid out at any one time or vice versa. Originally, most pension entitlements were based on so-called ‘defined benefit plans,’ in which the amount to be paid in the future is fixed; the amount of the arithmetic wage component that the company pays into this fund at any given time per person employed is then redefined each time or renegotiated between union and company. The majority of companies have in the meantime converted their pension funds into ‘defined contribution plans,’[7] in which the amounts paid-in are fixed, but it remains open how much in the way of pension the payer actually gets at the end. In the course of the introduction of these new pension plans, the beneficiaries are asked as a rule for additional payments. In this way the companies secure for themselves the free disposal over these funds as a means for accumulating capital: while the contributions flowing into the fund remain reliable, the question of how much money will ever land in the pockets of prospective retirees is turned into their risk.

2. American health care: A conglomerate of company health insurance funds, “Medicare,” and “Medicaid”

A health insurance system organized along the lines of the pension fund is alien to the American welfare state.[8] In the United States, concern for preserving and caring for one’s own physical condition is as much a private affair as is eating and housing — to begin with. And because a workingman can just as little cope privately with this risk of life as with poverty in old age, what holds true for pensions holds equally for health insurance: for the duration of an active working life, it is a matter of negotiation between capital and labor, i.e., of company health insurance . While these are found primarily in sectors of the economy in which the unions could assert themselves, other companies also have their reasons under which the establishment of a company health insurance fund makes sense. These company health insurance funds finance themselves in the same way as company pension funds, and are likewise supported with favorable tax treatment by the state. With its statutory rules and regulations, the state makes sure that capital, in setting up the funds, complies with certain basic requirements in terms of health care. How the companies book the costs for the fund as a component of wages and how they bill their workforce is left up to them.

With the enormous demand for the “provision of health services”[9] characteristic of exploitation, and an entrepreneurship that knows how to make a business out of everything, the basis is laid for the largest health industry in the world — thus turning health care into an all-around unsure thing for the wage-earning masses. Not only are the range and extent of health care — for that section of the proletariat that has work — explicitly and from the outset made dependent on the business calculations of capital; for all those who have none, these funds are not responsible. In this way, no comprehensive health care for the population comes about — a circumstance that the American state in the end nonetheless compensates for in a rudimentary fashion. Hence in the 1960s it supplemented its retirement insurance with “Medicare,” its health insurance for retirees, which as a compulsory insurance is an integral part of the pension fund and is financed by an additional contribution percentage — and which, by the way, was already a reaction of the state to the circumstance that company health funds were more and more reluctant to insure retired employees also. And only recently has the state felt compelled to supplement this provision of health care for the elderly with prescription drug coverage;[10] Medicare provides so little — blatantly only the minimum of health care for the elderly that the state holds to be absolutely essential. Also here — exactly as with the pension — services are obtained only by those who have made it through a minimum of 10 years of usefulness for capital. The rest must be content, if at all, with dreadfully and noticeably bad care within the framework of “Medicaid.” With this program established in 1965, the state takes care of those who demonstrably can’t provide for themselves in any way in terms of health care — also here by no means in every case, but rather according to government-defined criteria for authorizing access.[11]

3. Taking care of unemployment

Anybody in the U.S. who has the misfortune to inhabit the free labor market without landing a job is — so dictate the “laws” of the free market economy — destitute. Whether he gets to enjoy any government benefits, and if so, which ones, remains to be seen. With “unemployment insurance” (UI), the state acknowledges in the ‘Social Security Act of 1935’ that although ‘hire and fire’ is part and parcel of the risks of life as a wage earner, that doesn’t mean by a long shot that it intends to sort all the people for whom capital has no use into the category of “unemployed.” Even “unemployment” is a status that one has to have earned; namely, by having already worked once, i.e., having already proved one’s usefulness for an employer. Only then is one eligible for payments from a UI fund.

The federal government leaves the establishment and organization of these funds largely to the budgets of the individual states;[12] the states define whether unemployment is at all a matter for government to take care of. This is very appropriate: the authorities decide in accordance with the “business situation” what funds they want to lay out for the care of the current surplus part of the local reserve army. They then infer from their budgetary situation whether they can do what they plan. The individual states are responsible for getting tax contributions from businessmen, out of which a “trust fund” for the payment of unemployment benefits is to be set up; the companies as a rule pass this amount on to wages. Who is then eligible to claim benefits at any given time is defined by authorities with corresponding titles;[13] who gets how much money for how long is a dependent variable of the funding status of the UI fund. At most 26 weeks of support is possible; in cases of officially declared emergencies — for instance “Katrina” — this period is extendable by 13 weeks. The nationwide average comes to about a 16-week period of unemployment benefits, with significant differences in the amounts disbursed; these on a nationwide average amount to 47% of the recent salary. In this way, the state ensures with the payment period and the total amount that laid-off workers never get the idea of settling down into the status of state-supported unemployed persons instead of trying to take personal responsibility for new employment — if need be, even in an opposite corner of the vast country.

Half of those without work don’t meet the conditions for unemployment insurance. A large part of those who perform their services in the wonderfully flexible labor market — the army of part-time workers, temporary workers, contract workers, etc.— simply don’t manage with their unreliable working conditions to establish proof of any eligibility. In this way, the insurance regulations once again make explicitly sure that this clientele doesn’t fall out of the labor market.

II. The union as social welfare organizer

This much is clear: the unions play an important role in what wage workers in the U.S. can expect in the way of social benefits. They not only fight to obtain wages but also social benefits for their members; benefits which include, in addition to company funds providing for health and pensions, elements of job security. In union shops organized down to the last detail, the union determines eligibility for advancement in the company’s hierarchies of jobs and wages according to length of employment with the company — likewise over layoffs and callbacks; in this way, in contrast to the army of those who have to take any work, unions provide their members with the privilege of belonging to a particular company “reserve army.”

This privilege of working in a unionized company is also the main advertising point by American workers associations for why workers should unionize:

“Union members earn better wages and benefits than workers who aren’t union members. On average, union workers’ wages are 28 percent higher than their nonunion counterparts. While only 15 percent of nonunion workers have guaranteed pensions, fully 69 percent of union workers do. …80 percent of union workers in the private sector [have] jobs with employer-provided health insurance, compared with only 50 percent of nonunion workers.” (AFL-CIO,

So goes the union’s good news about the union advantage. The catch is: the majority of American workers are not unionized and therefore do not take part in union-won social benefits. This has, first of all, something to do with the conditions under which the right to trade union representation comes about in the U.S.

1. How the state regulates the union objection to working and living conditions

Like every capitalist country, the United States cannot avoid regulating, by law, the antagonistic conflict between the nation’s workers and their employers. Union objections to the proletariat’s employment and living conditions determined by capital must be legally channeled, once it cannot be permanently prevented.[14] Like everywhere in the world, it is thereby seen to that the unions, when raising their objections, become only active in accepting the simply leading role of business interests. Since 1935, there has been a National Labor Relations Board (NLRB) in existence for this purpose in the U.S.[15] This institution lays down the procedural forms for a trade union in which it can become active in a company as representative of the workforce. Whether or not a union can achieve this, however, is then left up to the balance of power between capital and labor.

It goes like this: if a union can present signatures from 30% of a workforce, the government labor authority intervenes upon request and organizes a vote for recognition.[16] If more than 50% of the workforce votes yes, the union is recognized for the time being and can ask for the start of collective bargaining with the company. Whether those negotiations will also come about, however, is still very much in question. NLRB regulations allow the employer the right to object, which can indefinitely delay the start of “collective bargaining.” Though there are statutory deadlines for the initiation of negotiations, management always weighs the fines for exceeding deadlines against the advantages of a union-free operation — especially as it can use the time gained to disabuse the petitioning members of the workforce. If the union or unionizing drive decides to bring about the start of collective bargaining with a strike, the company may show the union members the door and permanently replace them with willing strikebreakers. In order that this strategy makes the proper impression, the law adds still another hurdle: until management consents to the initiation of collective bargaining, no trade unionist may enter the premises without their approval. So it is arranged that the answer to the question as to when a union’s objection to working conditions is lawful hangs on being able to assert the objection on location. For that reason, the whole recognition process can be reversed: if at least 30% of a workforce asks for it, a union already established in the company can also subsequently be voted out with the same procedure (more than 50%).

From the start, the state places some sectors of the national economy, as regards union activity, under special rules. Not covered under the NLRB statute are, for example, the sectors of agriculture and infrastructure, and particularly public service. For the latter, it is left to the Public Employment Relations Boards (PERB) of the individual states to determine how far the rules of the NLRB apply to the state as employer. In this field, the southern states particularly distinguish themselves; calculated on a national average, about 40% of state employees are prohibited from engaging in union activities in the workplace. Nevertheless, the degree of union organization is in the meantime still highest in public service.

2. How the unions struggle for influence

a) “Organize or die”

American unions have gotten involved in this state procedure as a positive basis for representing the interests of workers. The work of unions corresponds to this. Collective bargaining with capital takes place between individual companies, or factories and branches of these companies (“bargaining units”) and umpteen thousand union “locals” nationwide. Even where “locals” are organizationally combined in a bigger union federation, which is usually the case, there is a whole range of agreements for different factories and groups of workers. If multiple unions are responsible for various business units or first want to fight over their jurisdiction there, then some beauties often occur, like one union branch coming into competition with another in its fight for representation; even the strategy of one union offering itself as a strikebreaker on the turf of another “brotherhood” is definitely in play for asserting itself. Accordingly, not only do the arguments between union locals and capital rage fiercely, but definitely also those against each other. An American trade union does not organize the class; it has no intention at all of being something like the “arm of a labor movement.” With its struggle for recognition of the “bargaining units,” it fights for and defends the particular rights of its clientele; its success in this matter thus, at the same time, always decides its right to represent them. Therefore, it tries to makes itself as indispensable as possible for this clientele, and strives to do this by making every possible condition of working life a subject of agreement with management: wage brackets, occupational categories, promotion paths, social benefits for sickness and retirement. Hence those represented by unions acquire the status of being “well paid — a status that would otherwise only come about according to the company’s interests, i.e., as a rule not at all.

This then is how things stand with the social programs that these labor representatives organize: the extent to which wage earners get to enjoy them is from top to bottom dependent on which industry, which region, which circumstances of union power and competition they have the luck or misfortune to work in.

b) The union as a lobby

The unions have an umbrella organization over them, the AFL-CIO. This represents the “union advantage” over and above the competing interests of individual unions, i.e., something like a common trade union movement for “working America.” After all, the individual unions are still in agreement on one thing: the success of their struggle is dependent on the “strong arm” of the state. They act on the assumption that the state listens to them, that their voice counts for something in Washington, because in the end they are organizers of social welfare in important parts of the American industrial landscape. So “working America” or the “American middle class,” as the AFL-CIO proudly calls its privileged labor clientele, gets to lobby before the ruling power. The umbrella organization infers the advancement or hindrance of union concerns from all state measures effecting its area of responsibility; the prevailing state of trade union influence is supposed to be seen in any new law, or — what is supposed to be approximately the same thing — more or less good conditions for unionized labor. In order to promote such conditions, the union top brass seek to spread their view of things among politicians and parties, according to which the political authorities are well advised to recognize the unions as key representatives of an important stratum of industrious citizens and include them in their decision-making. To spread this point of view, the union bosses, like any other lobby, make plenty of election campaign contributions available. They not only approach state agencies explicitly responsible for social programs, but also the departments of commerce and state to bring about union-friendly decisions on budgetary issues, on matters of foreign trade, etc. This also entails that in the name of American jobs they side with American workmanship and American companies against foreign “distortions of competition,” and insist in all the government’s trade policy undertakings, from CAFTA to China, that Washington at the highest level clamp down on the exploitation of cheap wages outside America.

c) Why union influence dwindles

To their amazement, the unions get no thanks for this state-supporting “legwork” for the competitive success of American society. For some years now, unions in the U.S. have been increasingly cut out from responsibility for labor and social contracts.[17] The umbrella organization notes this as if its member unions had not been on the scene the whole time:

“The American middle class is in danger — this is demonstrated by the growing number of private bankruptcies, an unmatched level of private debt and a growing uncertainty about the job. It tears apart the social safety net, both at the state level, where the last budget presented by the Bush administration once again cuts crucial social programs; as well as in the private sector where employers take back more and more from health and pension insurance and rarely always pay wages with which a family can make ends meet.” (AFL-CIO, op. cit.)[18]

The attack that capital and state have been launching for some time in the U.S. against the livelihood of workers does not — just as in other countries — lead to a strengthening of the organizations that declare protection of the standard of living as their explicit purpose, but on the contrary weakens them: nationally, the degree of union organization has in the meantime sunk to less than 10%. That has several causes.

  • The “private sector” has never given up on clamping down on union influence wherever possible. The procedure by which the state has regulated the authorization of a union in a company already opens a lot of possibilities for capital not to let union representation come into the company at all. In addition, American businesses pull out every conceivable stop once they have resolved to rid themselves of an already established union representation — it’s called “union busting”:[19] from the employment of specialized lawyers, unambiguous ad campaigns on the question of job security, to ‘bribery’ of the workforce with benefits so that unions remain sidelined. The showcase for the latter strategy is Wal-Mart, America’s largest non-union employer. With its voluntary health insurance program for its 1.3 million employees, Wal-Mart effectively demonstrates that “working America” is much more American without unions. The fact that the program includes substantial co-payments from wages and covers only rudimentary basic care does not weaken this intended proof, as it is paired with a tangible threat: anyone active in unionizing risks their insurance coverage. Thus, according to the compelling logic of Wal-Mart, unions are rather harmful if one intends to cope in competition as a worker.
  • The state not only makes sure with its labor department that the authorization of unions in a company is and remains a question of relative strength between capital and labor . Since Reagan, regulations from trade union laws with which the state, out of its own considerations, clips the power of unions and criminalizes its employment are increasingly applied.[[20]] This, first of all, concerns nationally undesirable strikes — i.e., those that the government determines “imperil the national health or safety.” Hence Reagan did not only prevent a strike by the air traffic controller union PATCO with his objection at that time; the strike leaders were treated as criminals, strikers fired, the strike fund seized, and the union denied the status of collective bargaining partner. Even after Reagan, such actions have remained nothing unusual, such as, for example, the prohibition of a strike by mechanics at United Airlines at the end of 2001, or the suppression of a strike by longshoremen in Oakland, California, in 2002 because they — according to the government’s grounds — would have “obstructed” military logistics for deployment in the Iraq war. Since “9/11” the state secondly has been casting a completely different eye on the union struggle for self-assertion: with the “Homeland Security Act,” new legal barriers for union activity were created. Thus, for example, the “screeners,” those who inspect luggage at the country’s airports, were at the beginning of 2003 denied any right to pursue collective bargaining at all; with the new “Transportation Security Act” these employees were moreover placed directly under the control of a federal agency — it does not help the AFL-CIO and its individual unions at all that they are predominantly loyal to the party line on the “war against terrorism.” With the forcible suppression of strikes together with the unions that organize them, the state additionally provides still one more clarification: about which “side” in the struggle between capital and labor it perceives national security interests to be in good hands with. According to very partisan government findings, it is always the unions that, with their defensive battle against wage cuts, disturb the “social peace”[21] that is so important to the state. In this way, the political power also “proves” with its forceful intervention the ultimate powerlessness of unions in the question of which class is entitled to power over working and living conditions in a free America.

The unions defend themselves against the attacks by capital and the political power in their own way. Where a considerable capacity for representation still remains, such as in the automobile industry, they prove their responsibility for the survival of “their” company with creative “concession bargaining.” With this strategy, they “fight” to secure their vested right to represent a particular workforce at all — and thereby do their part in their members losing any reason to further agitate for union representation. For this reason, it also looks like the Wal-Mart strategy proves to be right after all.

d) How the unions respond to their being cut out: they split up

The unions assess the attacks of capital and state as a failure of their efforts to convey to their potential clientele sufficient reasons to present themselves for membership. Their base dwindles — and with it, according to their findings, also their ability to still somehow make an impression in the company and vis-à-vis the state. The unions are in disagreement over what is to be done to better teach this dwindling base; the union organization recently split over this issue. Since September 2005, there have been two umbrella organizations on the American union scene that compete over the national representation of the “union advantage.” Both want the same thing: to offer a successful agency for the American dream of success also, and precisely, for the proletariat.

The new union federation of the renegades is called CTW: the “Change to Win” coalition; its new program is programmatically called: “Restoring the American Dream.” This association has gathered in the meantime more than 40% of the former AFL-CIO members. It accuses the old umbrella organization of having done too little for urgently needed membership growth. The new coalition sees the reason for the increasingly declining influence of unions on wages and terms of employment in the circumstance that by competing against each other, they weaken their own ability to wring contracts from capital in general, and therefore recruit fewer members. So that the union can better position itself in order then to have again more say with the state, it demands:

“All unions should work together for common, not competing concerns. All union members dealing with the same employer or in the same industry or same sector — no matter in which union they are organized — should unite their power to fight for better contracts and better government legislation.” (Change to Win,

The remaining old half (AFL-CIO) sees things exactly the opposite. Their new program, under the title, “Strengthening our union movement for the future,” which it gave itself on the occasion of the split, blames the dwindling influence of the unions in Washington on the fact that union concerns in the meantime have come to count so little overall in the country. They praise the efforts they undertook in the last presidential election as a tried and tested way to strengthen the union movement:

“We have tried to make the best of the solidarity and strength of the election campaign of 2004 and introduce steps that are required to ensure that the trade union movement can grow.” (AFL-CIO, op. cit.)

The American unionists do not let the defeats meted out to them by capital and the state arouse the slightest doubt about their project of organizing service to capital as a successful life program for wage earners. They define their failure consistently as an organizational problem — and they take this so seriously that they simply split over it into two parts. The higher-level activities of the umbrella organization just never resolved the lively competition between the individual unions, but only continued it. And now competing federations still sort themselves exactly on principles according to which the “local” unions have always worked and by which they have assessed their umbrella organization: How do we evaluate our most powerful weapons? Is it better to first ensure unity across all conflicts “from above” and through successful lobbying create the conditions under which more of a base can be recruited? Or is it better to recruit members with more successful union activity “from below” in order then to make the lobbying activities more successful? As if coping with the “pursuit of happiness” isn’t enough, now the American proletariat is supposed to decide this …

III. Social reform the American way

1. The retreat of capital from social welfare creates a growing impoverishment of those dependent on such funds

How extensively the social system in the United States is based on funds established by companies — whether they are fought for by a union or set up by capital out of its own calculations — becomes clear at the latest when companies start radically reducing their pension and health insurance funds or making them more expensive for their employees. Meanwhile, company pension payments and health insurance benefits are generally acknowledged to have become almost unbearable burdens for capital.[22] And also it’s no great secret what it’s due to:

“Car companies, but also many other traditional companies, suffer from the costs for health and elderly care of its employees and pensioners … The fact that the big industrial groups granted their well-organized employees back in the seventies social benefits that they could not afford now has dire consequences. A dangerous alliance of shareholders and unions ensured that the expensive promises were funded by risky investments in the capital market. When stock exchanges crashed four years ago, the disaster became clear. Pensions and health insurance could only still be financed by subventions from the companies … The dream of social security after decades of work faded away for many families.” (Süddeutsche Zeitung, Munich, October 19, 2005)

A not completely ideologically obstinate reader might rather assume that the workforces of such “traditional companies” cannot afford a kind of social support that only works out when managers have luck gambling on the stock markets. But never mind: whenever capital “suffers,” whenever it must pay out “subventions” to pensioners and sick people against every reasonable capital calculation, it knows on whom it must shift this suffering — and can. Unlike the obligations to pay their class brothers that companies have to fulfil, social costs have the obvious advantage for companies that one can get rid of them. They are just wage costs: and as always with wage costs, contractual arrangements last only as long as they are profitable for the company. If company expenditures for social benefits are bound by contracts with the unions — then these contracts just have to be dropped.[23]

In pension matters, companies confront their contractual partners on the workforce side with corresponding demands. For new hires, benefits are either cancelled or massively reduced; already retired employees are charged once again, such as for additional payments for health insurance; fixed pension benefits are converted into variable ones; “voluntary” funds are established into which employees must pay up to two-thirds of the contributions out of their own pockets; and so on and so forth. Other companies, such as the major airlines, first cut salaries and increase contributions a few times, only to then simply cancel their pension obligations. The same with health insurance: co-insured family members are deleted from health insurance coverage; the continuance of company insurance is made conditional on additional payments and benefit cuts; etc. — so that it becomes ever more questionable whether and to what extent company insurance funds still settle damage claims at all. In this way, ever new sections of the workforce lose all health insurance. Ever since the labor contracts of 2004, the big auto companies have cleared the ten-year job guarantee out of the way. In this way, capital holds total wage costs liable for ensuring that the company’s calculations with social security funds work out as capital investments; at the same time it makes sure with rationalizations and layoffs that the company-paid wage bill, which flows into the funds, constantly shrinks.[24] The whole thing goes off in the usual way: with strikes, negotiations, and “compromises” entered into with a “heavy heart.” They all come to the same thing: unions and workforce representatives can be proud if they succeed in saving company social benefits at all; capital defrays the cost of each concession by lowering wages.

The matter becomes especially straightforward in cases of insolvency. If a firm is insolvent, it drops its payment obligations to the funds from which pensioners and patients are supported. This is why many companies use the announcement of insolvency proceedings in order to get rid of such obligations. In the proven manner, they confront their union contractual partners with the alternative of either being made jointly responsible for the total bankruptcy of the firm or giving their approval to radically lower wages and benefits. This is what happened in the end with the auto supplier Delphi:

“The failing American automotive supplier Delphi Corporation can only fulfill its pension commitments in the long term if its employees work in the future for a third of their current salary and benefits … Only by reducing wage costs considerably could sufficient profits be made in order to close the existing gap between pension liabilities and existing assets to the amount of about $5 billion. Delphi has applied for creditor protection under Chapter 11 of the American bankruptcy law. Previously, the automobile workers union rejected the reduction of the wage and benefits package from an average of $65 per worker per hour to about $18.” (Frankfurter Allgemeine Zeitung, Frankfurt, October 12, 2005)

So goes the “reduction of additional wage costs” in America: not as a large-scale state program to reduce covered benefits as in Europe, but as direct abolition of wage components by capital. On the one hand, the effect is just the same as in Europe: people become ever poorer and ever less capable “on their own” of making any “provisions.” On the other hand, there is a difference: people fall back on what the government promises them, and this was never intended for survival. The state responds — accordingly.

2. The state’s need for reform …

The condition of social services is subject to continual criticism. Those affected start lamenting appropriately, when they are asked[25] — but so much for that. And trade unionists as well always find occasion to denounce the situation, which they helped negotiate into existence, as a social disgrace. However, the only practical criticism of the welfare system is the one made by the organizer of the whole business. For the state, the funds out of which it supports the elderly and the sick always cost way too much and achieve too little — measured in accordance with the demanding criterion that they should merely be a compensation, helping prop up an industrious wage earner in his efforts to cope with his circumstances. This applies all the more when the state discovers more and more people falling out of the former insurance systems that simply no longer exist. One way of dealing with this situation is definitely out of the question: that the political power admit the necessity of jumping in with its own payments once capital quits organizing social wage components. Or to say it the other way around: the only disgrace that is to be remedied is the state’s feeling compelled to help out to a certain extent, as it recently did with ‘Medicare.’

  • Government expenditures for health are too high. ‘Medicare’ and ‘Medicaid’ together now make up approximately 20% of the national budget; that in itself constitutes a truly unacceptable scandal.[26] At the same time, every new government regularly and reliably discovers a “coverage gap,” i.e., an inadequate provision of health insurance for those working as well as for the whole population. Both deplorable situations need to be remedied, but how! On the one hand, any consideration for the health of employees that might imperil business is absolutely to be avoided; on the other hand, no further costs are to fall on the state. The principle of previous reform measures has therefore consisted in providing ever new “incentives” for the calculations of capital to voluntarily organize a reasonably reliable and, at the same time, affordable medical care, at least for the people who work. The project of a “Health Security System” under Clinton was the most far-reaching in this respect: especially small and medium-sized businesses, namely those that were phasing out health insurance to the greatest extent, were supposed to join together and negotiate collective contracts for the whole industry with provisions for health insurance (“health alliances”) — similar to those of big conglomerates under federal guidelines, individual state supervision, and expanded tax relief. The plan failed in legislative proceedings because of its egregious interference with the freedom of entrepreneurial decision-making.
  • Pension funds, too, have always had to bear state scrutiny, for the simple reason that they constitute a major component of America’s national budget. Since they were established, pension funds have commanded a considerable surplus, to which the state helps itself as a matter of course for its budget balancing. On this basis, it is always occupied with ensuring the “financial viability” of pensions. Contributions were gradually raised from the original 2% to the current 12.4% of the wage bill; in 1983 a “trust fund” was established out of premium income as a reserve for future growing payment obligations; at the same time, the taxation of pensions was introduced, whose revenues are credited to the pension fund, and a statutory extension of the group of compulsory insured persons agreed on. In addition, the retirement age for those born after 1959 was raised from 65 to 67… Meanwhile, the state diagnosed a fundamental flaw in its pension fund: if large numbers of pensioners live entirely off government pension payments and at the same time become a burden on other welfare state departments — then something has gone wrong with the principle of self-responsibility, which the fund is supposed to help prop up.

So the political power once again becomes fundamentalist towards its own social system. In view of the circumstance that ever more ordinary Americans no longer make ends meet without state benefits, the topmost officeholders offer self-critical indications that the state, in an un-American way, was wrong to ever have meddled in the social care of the proletariat. The state — so goes the once again prevailing opinion in the United States on this question — has offended against the spirit of self-responsibility that is part of, and has to be part of, what every American citizen lives for. So if the government now decides to hand responsibility for their own social situation back to its citizens — then such a base goal as the mere relief of the national budget from the social costs of wage labor is not the point; the point is then the revival of this spirit. In the words of the President:

“The more ownership there is in America, the more vitality there is in America, and the more people have a vital stake in the future of this country.”[27]

So goes the Bush program called the “ownership society,” with which the President wants to get a fundamental reform of the pension fund under way.

3. … and its current aggravation: The “Ownership Society” as a project to reform the pension fund

On the basis of projections that the surplus threatens at some point to be completely exhausted in pension payouts, the Bush administration has proclaimed the impending “bankruptcy” of the state pension insurance:

“I’m telling you, the system is going to be bankrupt unless we do something about it.” (President Discusses Social Security for Future Generations in Virginia, April 29, 2005)[28]

As a reason for it, he wants to maintain that citizens have lost “control” over their “property” — that is, their claims to the ‘Social Security fund’ — to “government and health bureaucrats” (Bush). The “return” of this “property” to its rightful owners is to kill two birds with one stone: the reform is not only to eliminate bankruptcy; it is at the same time to free the real owners of the pension funds to be personally responsible for dealing with the precautionary funds. This is how easy it is to transform the compulsion to take precautions, which arises from the material hardships of wage labor, into freedom: if this compulsion is no longer exerted as a state collection of contributions and allocation of payments, but everybody may decide for himself how, on the basis of meager means, to balance his current lack of money with that predictable for old age — then this is no longer compulsion, but freely taking responsibility for one’s own circumstances.

According to the Bush administration, it works out that the same money, which in the hands of the fund is not enough for the support of pensioners, is, in the hands of free citizens, always able to achieve this. The pension fund still accumulates gigantic surpluses:[29] and they would be in much better hands in the capital market in terms of future pension payments. By taking control over pension matters, the state has, according to this view of the thing, in truth impeded the average Yank’s being provided with affordable provision for old age, health insurance, etc. The state has deprived the capital market of the financial resources it has amassed in its social funds: invested in the market and employed by business, the funds would be a tried and tested means to solve all the social problems of the proletariat. In this diagnosis, American politicians don’t drive themselves crazy over the fate of various pension funds having gone bankrupt in the course of stock market crashes — why should they. They certainly do not want to have passed any judgment about the course of business with financial assets, but rather to promulgate a principle: if in the free-market economy all income, including the measly pension and health care for worn-out proles, really depends on the growth of capital — then, according to this point of view, the safeguarding of pensions can only succeed if the funds for these provisions are also placed in the service of this growth.

The diagnosis defines the cure. According to the President’s plan, the pension fund should be strengthened by the fact that younger wage workers, in addition to their pension fund contributions, “invest” in tax-deductible, private retirement contracts[30] on the capital market and finance one-third of their future pension this way — an American version of the German “Riester” pension. The pension contributions are to be frozen; for those who are already or are shortly to be retired, nothing in the amount of benefits should change. For company 401(k) programs, it is planned that payments can be increased with favorable tax treatment; moreover, the transferability of pension claims from one company to another should be made easier. The whole thing is supplemented by an item on the program entitled “Ensuring Freedom of Choice”: anyone who has paid into a 401(k) plan for at least 3 years should be able to decide for themselves in which fund the money is invested. Moreover, in the long term, it should be possible to invest part of the statutory social security contributions in private pension funds. And while one is at it, one can of course always speculate about whether the capital market does not offer the solution for all the perils of a worker’s life:

“Lifetime Savings Accounts would give all Americans the opportunity to save tax free to pay for job training, college tuition, the down-payment on a first home, a car to drive to work, or their retirement.” (Fact Sheet: America’s Ownership Society: Expanding Opportunities, The White House, Office of the Press Secretary, August 9, 2004.)

First of all, the whole project costs the state budget something. Payments into the pension fund slump off, while disbursements still have to be made; tax losses are to be expected… — according to government estimates, the burden on the budget adds up to between $50 and $200 billion over the next 10 years. Therefore, there are disputes across all parties as well as among the politically minded public over the project. The need for reform continues to exist; all sides agree on this as on the basic objective. Of course any American politician would in principle find it neat to relieve the state budget and at the same time to offer the prospect of personally responsible financing of old age to current and prospective retirees. But can that work? Doesn’t that become too expensive? Is it currently absolutely necessary in the radical approach as propagated by Bush?[31] And — this misgiving also becomes known — with the privatization of “Social Security,” doesn’t the state relinquish a substantial revenue item that was always good for co-financing other state spending? These objections range all over the place; always from the point of view of how the condition of the state budget is best to be made compatible with the circumstance that a growing old age poverty just costs the state — somehow or other. And within the political spectrum, there just has to be the suspicion that Bush’s entire maneuver in reality is just intended to pass the hard-earned nest eggs of decent Americans into the hands of the financial vultures on Wall Street. To which one can only say that, firstly, he truly wants this; but that, secondly, it is completely mistaken to view these facts as promoting powerful special interests in a way that damages the common good, i.e., as a breach of presidential duty. The private money interests that are carrying on there are after all the business world of the capitalist nation, U.S.A.; in whose hands would the pension funds be better off? Nevertheless, it may be that the entire project in its current form will yet fail. A general murmuring among the people about squandering hard-earned pension money has “led to growing resistance to the reform in Bush’s own party. Next year Congressional elections take place and the candidates do not want to risk being punished by the voters who fear pension reform.” (Süddeutsche Zeitung, Munich, November 9.2005)

Educational work is still needed so that the American wage earner correctly understands the proposals and challenges that the politicians offer him in regard to a personally responsible lifestyle, and honors them with a ballot mark in the right place.

Summary: The “hard-working American” as the central figure of American social policy

The American state will not let it be said that it has to help the particular source of social reproduction, wage labor — which of itself is not fit for living — to fitness through social state support. Because in the most capitalistic of all capitalist countries, there is by general consensus no working class; no class of people whose common characteristic lies in the function they have to perform for capital wealth; whose reproduction is thus determined by what capital is willing to spend on profitable work.. Instead, in the land of unlimited opportunities, there are lots of free and equal citizens striving after their private happiness and struggling through life under really harsh conditions; some of them “pursue their happiness” on the assembly line or in the shipyard, others on the stock market or in the boardroom. No matter: wherever the “hard-working American” may stand in the social hierarchy, he himself works for every penny he owns; in addition, he takes advantage of every opportunity that presents itself, won’t let himself be influenced by the fact that one falls flat on one’s face every now and then, and is proud of the prosperity his own work creates. The state readily grants social benefits to such people: they have themselves earned through honest work every penny they receive from the state, and thus are entitled to it. After all, with their striving for their own success they make themselves at the same time useful for society: the “working American” is the solid basis on which the nation in all its power and glory rests. One may then as an American wage worker be proud of this: of one’s own work, one’s own success — and the esteem that both enjoy in the self-image of the nation.

Postscript I: The administration of poverty
Welfare: Un-American contributions for losers

Every citizen of the United States of America must struggle through life to the best of his ability and with his own means, as a dishwasher or stock market speculator, in any case with a vigorous deployment of his money, labor, or other assets. The principle has general application, in particular in the realm of ‘social security.’ The American welfare state makes an exception for a clear “disability”: those persons incapable of gainful employment according to federal guidelines and special state provisions get a commensurately determined pension.[32] However, anyone who has a minimum of labor power at his disposal also has, as an American, what it takes to secure a decent livelihood. In principle, therefore, judgment has already been passed on people who just can’t hack it: these are not really decent Americans. A large number of them of course supply the practical proof, getting caught in a criminal act and landing in that department of the social net linked to an extensive and — following its partial privatization — vigorously flourishing prison industry.[33]

1. The family: An institution for order on behalf of the state

In one respect, however, the calculation that the state makes and practices actually doesn’t work out for the state itself. In which respect the legislature made crystal clear in the “Social Security Act of 1935” with the designation of a special additional welfare institution: it regards AFDC, ‘Aid for Families with Dependent Children,’ to be necessary. By definition, the dependent little ones truly cannot yet provide for themselves; they shouldn’t be blamed for their progenitor lacking a ‘responsible lifestyle.’ Their poverty and imminent neglect challenges America’s sociopolitical heart to provide genuine emergency assistance.

The state does this out of respect for the institution that it values on principle as the basic economic and moral unit of its society, as a miniature community created by the citizen himself, as the public spirit that the vulture of competition puts into practice as demanded by the American economic ‘way of life.’ From the perspective of the sovereign that rules over a capitalistic class society, the family is the personified duty, the moral imperative, and at the same time the most beautiful and natural, personal and compelling motivation for proving oneself as a ‘hard working American’; for approaching top form in the relentless, bourgeois struggle for existence, in the social biotope of the genuine U.S. citizen; and if necessary also for playing the hero for the home of one’s own family happiness and one’s ‘dependent children.’ Those politically in charge also cherish these ‘family values’ when the legally responsible boss of the nuclear family dies or lands in prison, has cleared out in some other way or is a hopeless failure. Even in such a desolate situation, the family is still supposed to serve as a survival unit and moral institution: the parent still available is to see the light and pull himself (herself) together, engage again or for the first time with societal competition in the interest of what’s his (hers), and so teach the little ones through his practical example how a personally responsible lifestyle works in the ‘land of the free.’ However, it is not enough, especially in periods of economic crisis, to expose everyone possibly capable of work to the productive constraint of poverty: in light of an explosively growing pauperism, the most compassionate government the United States has ever had has forced itself to this conclusion and organized a system of support that includes money in order to enable impoverished family people to lead a moral family life. American social policy is holding to this in principle up to the present day.

However, it has always had a fundamental problem with its — financially rather not very generous — generosity: the support payments offer no guarantee of helping the supported families, as self-supporting moral welfare institutions, out of the woods as intended. Those having parental authority don’t prove themselves reliable as guarantors of a decent way of life for their ‘ghetto kids,’[34] nor do the adults themselves succeed to the desired extent in starting new competitive careers with the success that would make further support superfluous. In this respect, the organized ‘welfare’ misses its target —state gifts of money were never meant as a permanent substitute for a successful struggle for existence, for family self-sufficiency, the only suitable ‘way of life’ for U.S. citizens. Anyone who claims the money, possibly for a long time, therefore attracts the alert mistrust of the authorities: here once again, somebody is making themselves comfortable in the social hammock and is thereby guilty of disregarding the basic rules of ‘fair play.’ Inevitably the suspicion arises that ‘welfare’ recipients only had children to receive AFDC payments; in this respect, social policy itself had ultimately created its impoverished clientele through its quite un-American support of the poor. For this reason, ‘welfare’ policymakers take a hint from the increase of their clientele that in the main, they make it too easy for the poor to be poor. They then seek a remedy along these lines.

2. The racial problem and its social management: Pauperism without discrimination

In their critical review of national pauperism, American social policymakers come upon the finding — and if not by themselves, then once in a while by colored and also non-colored civil rights activists — that one and a half centuries after the forceful liberation of slaves “from above” and decades after the successful struggle against racial segregation and for a real, legal equality of colored U.S. citizens with the colorless majority, the bulk of ‘welfare’ clients have dark skin color. This gives the policymakers pause.

No attention — to say this from the outset — is paid to the political-economic reason for the huge and enduring number of people who simply don’t manage to keep up in the bourgeois competition for jobs and money, or to join in at all. The fact that the capitalistic mode of economy has no use for a substantial percentage of the national population, that relative overpopulation in the country is one of the necessary effects of the original American ‘pursuit of happiness’: this insight has no place in the worldview of those in charge. Instead, they notice the noticeably one-sided distribution of poverty among the domestic races. Even this, however, is no longer noticed under the critical viewpoint that there might be an injustice here, a violation of the sacred principles of ‘fair play’ that has to be made whole. Complaints and demands of this type had their time: between the end of World War II and that of the Vietnam War, black Americans, in the proud knowledge of having bravely served their country as soldiers and thereby to have earned its unreserved recognition, rebelled against the legal requirements and social customs that intentionally or in actual fact blocked the way to unhindered participation in the bourgeois struggle for existence. At that time, some groups went so far in the name of the official American ‘dream that all men are created equal’ as to deny the American state’s American character, and to threaten termination of their loyalty. The state put up with this just as little as it did the Black Panther Party’s transition to notions of class struggle. With many imprisoned and a few deaths, it made clear that there is no “American dream” or “pursuit of happiness” against itself and outside its jurisdiction. It — after considerable unrest and against the delaying resistance of its Southern states — accommodated civil rights activists who banked on the state in this regard: it heard the call for ‘equal rights and opportunities’ and responded in 1965 with the Civil Rights Act. Racial discrimination in the free labor and housing markets, in the educational arena, in participation in public life in general has since then been prohibited and gradually gone out of fashion; support programs, especially in the educational system, have enriched the nation with a black elite. And it was made practically possible across the country, with judicial backing, for citizens of darker skin color to push through a possible demand for support from the ‘welfare’ fund — with the interesting consequence that they are now not just by far disproportionately represented among prison inmates and candidates for the death penalty, but also among the officially managed paupers. The social-legal equality enforced for this part of the population has changed nothing of the fact that it constitutes the major contingent of the capitalistically produced relative overpopulation of the U.S.; it has merely ensured that this proportion is reflected in the clientele of national ‘welfare.’

This, as said, strikes those in charge, and indeed distinctly disagreeably. They cannot help thinking that with their family relief assistance they have spared an entire section of their people, long since no longer excluded from bourgeois competition, from striving for a bourgeois career. They suspect not only, but also very particularly, poor blacks pacified by civil rights of being determined to get support through child money — the scandalous figure of the fat black ‘welfare queen’ carelessly whoring around and surrounded by countless children of different fathers, serves virtually as evidence and proof in the flesh of the necessity to thoroughly reform the egalitarian AFDC financial assistance system without any new racial discrimination.

3. Savings on pauperism: A service to those affected

America’s presidents wage one ‘war against poverty’ after another, but the number of ‘welfare’ recipients will not diminish, showing rather a rising trend. This harms not only the state budget, but in the official view throws a bad light on the spiritual and moral constitution of a large segment of the population that rather obviously shirks the ‘American dream’ of happiness by competitive success. The permanently high crime rate, the decay of entire neighborhoods into ‘no go zones’ where the police have to ensure order with quasi-military operations, and an escalating neglected drug scene confirm the sad finding: the fostering of families has failed all along the line — law enforcement, social policy, educational policy, financial policy. The state can’t help but to respond.

a) “Ending welfare as we know it”

In the reform program of the Clinton Administration, which bears the characteristic title, ‘Personal Responsibility and Work Opportunity Act,’ the state accuses itself of having itself brought about the present failure of the welfare system: the costs way too high, the decline of morality, and the neglect of the people. Just by having granted a legal entitlement to social assistance, it claims to have incited the poor to dependence, and to have destroyed the healthy family that masters life independently through its help for families with children; the pathetic figure of the applicant at the social welfare office would never have been able to arise without the government’s support of the poor. The abolition of this ‘welfare as we know it’ is defined as a measure in the well-understood self-interest of those affected, as liberation from state spoon-feeding and a chance to finally lead a self-determined life.

Consistently, the reform of social policy pursues the goal of, and measures its success by a decrease in, the number of cases that have to be recorded in the files of the social welfare office. The federal government achieves this on the one hand by simply abolishing the legal entitlement to ‘welfare.’ The new ‘Temporary Assistance for Needy Families’ (TANF) is tied to the obligation of the heads of the families to procure their livelihood on the labor market: ‘needy families’ receive ‘welfare’ only if the adults report on a daily basis to the job search center. During the two years they are receiving support, they must find a job or, alternatively, take part in job training or perform community service. Social assistance can be drawn for a maximum of five years calculated over a whole lifetime. Thus nobody can argue any longer with the neediness of children in order to calculatingly procure their own sustenance. The reverse — at long last once again — holds: anyone who does not succeed in providing for themselves must answer directly for the increasing neediness of their children.

On the other hand, the central government delegates implementation of the program to the individual states, placing conditions on the allocation of funds. They receive federal funds as ‘block grants,’ which vary according to the fulfillment of the set target of having reduced the number of benefit recipients, thus working as financial reward or punishment. It is the budgetary techniques that bind the individual states to the reduction program. To receive further federal funding, they have had to prove since 2002 that 50% of those receiving support are doing their job on the free market or are active in official work programs. Moreover, the individual states are free to fix the maximum benefit period by enactment to less than 5 years; nearly half the states have already done so. They are permitted to cut off the support of the parents for a child if it was conceived during the time the family drew ‘welfare.’ Quite a few states demand that ‘welfare’ recipients commit themselves to discipline and good behavior in the workplace through ‘personal responsibility’ contracts with the authorities.

The result: the number of acknowledged welfare cases was reduced from 4.4 million to 2.5 million within two years. The beneficiaries are under control as they are entirely dependent on whatever any regional authority decides about their case. So much for the restoration of ‘personal responsibility.’ Whether the rest have found an opportunity to work is no longer the concern of the state.

b) Remolding the family as a ‘last resort’ against moral decay

Under the motto, ‘to strengthen families and help more welfare recipients work toward independence and self-reliance,’ Bush, the president of a Republican ‘compassionate conservatism,’ has continued his Democratic predecessor’s reform, which was decided on by both congressional parties. Every three years, this reform is regularly reviewed for effectiveness in the budget act extension. The success of the continual ‘war on poverty’ is summed up in three respects: firstly, in the reduction achieved in the number of beneficiaries; secondly, in its effect on savings; but always thirdly, in its contribution to social order and morally beneficial effects on the people, effects which the government expects from its ‘welfare’ spending. After all, economizing on funds doesn’t mean the effect on the social order is to be dropped.

If help has been approved, it is after all supposed to be paid out for this reason. This had somewhat been pushed into the background since the federal government has been using the individual states for economizing measures via their budgets, additionally rewarding their success in this respect, and thus spurring on a certain creativity in their efforts to clean up their budgets. Some, for instance, did not transfer state aid at all or delayed it so as to collect interest payments. This kind of dealing with state aid is to be corrected. Help for the selected poor unable to maintain themselves despite work is partially even expanded. They can now receive $16,000 instead of a previous maximum of $7,000 so that they can ‘throw themselves’ into their job even when wages don’t suffice to survive from one day to the next, and there is special assistance for coping with special situations — how are they to get to their workplaces, where do they leave the children…

According to the Bush administration, all these measures are, however, basically worthless as long as a new alignment with ‘family values’ fails to come about among the slum and mobile-home residents. The government sees a direct connection between all the problems of social order that are piling up in the poverty districts, such as unemployment, drugs, youth violence and crime, and a wrong family structure: according to their social statistics, the increase in these problems is accompanied by an increase in illegitimate births. Hence the key to improving the situation from top to bottom lies in promoting a healthy family. The emergency relief program is therefore supplemented by the ‘Family Composition’ department. People are, for instance, taught in special educational classes that one has to remain chaste before marriage and that marriage has to be monogamous and permanent; young couples are encouraged through material incentives to have a regular wedding. By threatening teenagers who have illegitimate children with the withdrawal of welfare benefits, they are urged to live with their parents and attend school. And the progenitors of illegitimate children are more often tracked down and — not only morally — made responsible. This is how the richest nation in the world rearranges its ‘welfare’ families. As before, the government will ask itself whether this moral corset stabilizes its poor population, and, taking its budgetary situation into account, decide the matter .

Postscript II
Charity: Private contributions for losers

Beyond the world of ‘endless opportunities,’ there is, in America, ‘plenty’ of something else that strikes the eye: a poverty left to its own devices by the state. So it’s convenient that Americans, especially the rich, have a compassionate heart and like to help out the poorer ones. They do not at all do it from a bad conscience, as occasionally overcomes Europeans leaning toward social egalitarianism and which can be satisfied with a donation. Someone who has “made it” in America discovers in beggars and the needy — if he doesn’t have to immediately count them among the criminal failures — either the ‘less fortunate,’ the neighbor whom bad luck has thrown off course and whom one helps along to a successful fresh start, or, depending, a member of that large unhappy part of humanity who for some reason (still) has not arrived in that wonderful American system that offers everyone his chance and invariably ensures — the charitable rich are themselves the best evidence — happiness and prosperity if one only gets involved with enough self-confidence. One lets those who remain outside the system or those who have skidded out of the system share a little in its blessings so that they see, or with new courage believe, how superior and wonderful the ‘American way of life’ is in general, and he who successfully lives it is in particular.

In this spirit, once a year on the fourth Thursday in November, the decent American thanks his economic system in the form of a turkey dinner for how well he has done in it, and the supreme authority guaranteeing its success, the God of the United States of America, under whose care he has prospered, and invoking verses 31 to 40 of Chapter 25 of the Gospel of Matthew (“…for I was hungry, and ye gave me to eat…”, etc.)[35] asks select ‘fellow citizens’ to take their places at the table, in order to fill the guest with food and admiration, and himself with pride and affability. However, for all his heartfelt charity, he knows to differentiate and to budget his donations.

Those in need whose poverty in some way sullies the national honor are in a strong position. All of them are exceptional cases, since capitalistically produced poverty is as a matter of principle never ever blamed on the ruling system, nor on the possibility that it could have failed even once in all its greatness; rather, poverty shows exclusively what a misfortune it is not to be included. But time and again there are exceptions; e.g., neglected war veterans — were such a one to be abandoned, every upright U.S. citizen would feel personally ashamed. On behalf of his nation, he also wouldn’t like to be accused under any circumstances of heartlessness towards malnourished children. And for AIDS sufferers, the nation’s prominent figures — who if not endangered are nevertheless themselves affected as colleagues — have formed their own network. Paupers in this category can hope that TV evangelists and talk show moderators or even the networking events of the elites, ‘charity parties,’ take up one of their problems.

A multitude of professional ‘charity’ enterprises take care of the large number left over. Best known within America are the mostly denominational soup kitchens, which in many places also serve as ‘homeless shelters.’ One cannot accuse these feedings of overdoing it; they are kept stark, both qualitatively and quantitatively. Frequently they are distribution centers for food whose expiration date has passed; donated for tax write-offs and effective advertising by local supermarket chains. In general, the organizers see to it that significant charity publicly shows the donor in a favorable light; in matters of charity, hypocrisy is unknown in America, and showing off is good manners — why should it be good to hide one’s own charity when one can extract benefits for oneself from it without harming the recipient of charitable donations?! No selflessness or modest appearance whatsoever is expected of relief agencies receiving donations, but professionalism is required — uncalculating philanthropy is rather smiled at, and in any case is held to be unsuitable as a basis for solid ‘charity’ work. Serious ‘charity’ not least involves keeping a close eye on the beneficiaries and giving them a hard and serious talk: After all, there is always something questionable and somehow un-American about these figures; a member of decent society would really like to have a certain amount of reassurance that the old clothes from the garage do not end up in the hands of scroungers. TV donation pros like to directly incorporate such a ‘screening’ of alms recipients as part of the entertainment in their begging shows.

Best known outside America is the army of God, the ‘Salvation Army,’ which has selected the doubtful character of the poor as the object of its mission. Within the United States, it has thus procured a significant image advantage over competing donations collectors; it is regarded there as a first contact for natural disaster relief. But its real achievement consists in its being the first NGO to have carried America’s good repute as home to a charitable imperialism to over 100 countries in the world: a synthesis of helping access and ‘public relations,’ which in the meantime has been perfected by countless new organizations. Half the world has been marched through by American aid agencies, which with their deployment to foreign, ‘less fortunate’ countries advertise the ‘American way of life’ as an exemplary model and as an embodiment of all their unsatisfied yearnings. So in the end even the paupers of the capitalist world power are useful for something: as an exemplary model for how a publicity event for ‘family values’ and for America as their protecting power can be made out of poverty.


[1] On the concept of the welfare state, see Chapter 5 of The Democratic State: Critique of Bourgeois Sovereignty, by Karl Held and Audrey Hill. On the British welfare state see “Great Britain — the pioneer of modern social reforms: A model lesson on the magic formula for how to use wages and the social welfare budget as weapons in global competition,” from Gegenstandpunkt Publishers.

[2] G.W. Bush, Inaugural Address, January 20, 2005.

[3] The self-employed pay the full 12.4% contribution rate, but only up to a maximum salary of currently $90,000. Income above this limit is not subject to contributions.

[4] This dependence of the average prole on the government pension payment is the firm basis for the good opinion the people have of this fund: the check, it is said, can’t be taken away from them. One can be wrong about this.

[5] This state point of view — the deserving elderly should not fall into poverty — is the basis for all the ideologies in circulation among the people about “Social Security.” No Yank, who otherwise suspects every recipient of even such pitiful government allowances of being a parasite who wants to escape his duty to compete, would get the idea of making this accusation to the pensioners: they have in fact earned their right to benefits themselves!

[6] The General Electric Company, for example, made 15% of its profits in 2001 from investment profits from its pension fund.

[7] These are called “401(k) plans” following the corresponding section of the Internal Revenue Code.

[8] In Roosevelt’s legislative proposal for the “Social Security Act of 1935,” there was a “feasibility study” on the question of whether health insurance should likewise be drawn up as a collective compulsory fund. Such plans arose again in the Truman era after the second world war . In both cases, American common sense against the hint of socialism prevailed with the majority of politicians in Washington — with active lobbying by the AMA (American Medical Association).

[9] According to official statistics in the United States, more than 13% of the Gross National Product goes for health care, while European countries spend about 9–10%. Of the approximately 285 million Americans, 55% are covered by company health insurance, 9% are insured privately or by the military, 10% through Medicaid and 13% through Medicare. 13% have no health insurance.

[10] President Bush proposed spending 534 billion dollars over 10 years on health care for American retirees — and nobody thinks this will reduce the extent of poverty among the elderly in the U.S. The program opens up additional capacity to pay the American pharmaceutical industry, and supplements this with protectionist measures against imported drugs.

[11] “Medicaid is accessible only to those individuals and families with low incomes who are eligible according to federal and state laws. According to the laws of the respective state, a small part of the costs must be paid in addition for some medical benefits. Many populations are covered by Medicaid; however, within these groups certain conditions have to be fulfilled for the entitlement (age, pregnancy, disability …); income and other possible financial resources (such as bank accounts, real estate or other things for sale) are examined; likewise, whether one is a U.S. citizen or has a permit for legal residence. The rules according to which income and other financial resources are taken into account differ from state to state, as well as between the various groups of beneficiaries.” (Economic Policy Institute,

[12] Federal law and regulations provide broad guidelines and some minimum standards that the states must meet.” (Economic Policy Institute , op. cit.)

[13] An unemployed person has to prove that it was “not his fault” he lost his job. For example, in all the states for some years now, among the criteria for possibly not being at fault is the circumstance in which one was laid off because the product that the company produces is now imported. In this way, the state’s point of view that the losses of U.S. firms in international competition can only be the result of unfair competition finds its way into the maintenance of the working class: as a legal claim of the workingman who has become the victim of such unfair competition.

[14] It took quite a long time and a lot of blood before the political power in the United States arrived at this “insight.” Up to the years of the first global economic crisis, the first response of the state to any rebellion by the proles, to any attempt to put up resistance against the working conditions and wages imposed on them by capital, was merciless suppression, bludgeoning strikers and shooting their leaders. In this way, the state put an end to the anarchistic workers associations in the 1920s. On this basis, an offer was put out in the framework of the “New Deal” to patriotic workers’ associations for constructive cooperation in the reconstruction of the nation. In this sense, the unions in the relevant industries in the war years rendered outstanding services to the material basis of the war victory, and thus laid the foundation for the kind of union power they exercise today:

“Fifty years ago, partnership allowed the main industrial unions to construct what the labor writer Kim Moody calls ‘privatized welfare states’ with big companies like General Motors or U.S. Steel —job security, rising wages, and a decent retirement in exchange for a commitment to the company’s long-term profitability.” (L. Sustar, “The Failure of Partnership,” International Socialist Review 42, July–August 2005.)

[15] “The National Labor Relations Board is responsible for implementing the National Labor Relations Act (NLRA), by means of which labor relations in the private sector are overseen, that is, relations between employers, unions, and those employed; as well, the right of employees to form a union, to join or support one, and to carry out collective bargaining through representatives chosen by them. The NLRB hears claims of alleged violations of the NLRA by employers or unions. The agency further attends to applications by means of which a union requests to represent employees for purposes of collective bargaining; or applications from the workforce who no longer wish to be represented by the union representing them.” (National Labor Relations Board,

[16] In principle, a union can fight for the power of representation in a company by so-called “voluntary recognition,” without the NLRB. For obvious reasons, however, the fewest union rights to have a say have come about “voluntarily.”

[17] Since Reagan, the AFL-CIO is no longer represented in the governing bodies of the NLRB.

[18] It is no coincidence that the union, in its complaint about declining wages, refers to its effect on the family. Their reproach to American employers is that their interest in private profits shakes the foundations of what every good Yank is keen to appreciate as the bulwark of the national community: the cohesion of decent, hard-working people in the family unit. In this way, the union presents itself as the authority to which, with the defense of the “American middle class,” ultimately only the highest of national morals matters: “family values.” Capital and the state are less impressed: As someone like Bush prefers to view the matter, these “values” do not entitle the making of demands, but rather are supposed to help wage earning families overcome even the most difficult conditions as challenges.

[19] Even with American labor unions having long since stopped intending to use the dependence of capital on a willing workforce to enforce any demands, and even though they only bargain and fight for a special position of their clientele relative to other workers, the boom in firms that promise to finish off these labor unions once and for all shows that any right a worker has is too much of a restriction on the entrepreneurial freedom of capitalists.

[20] The ‘Taft-Hartley Act’ of 1947 was the first response of the state to the attempt by the unions to secure their material position during the war years by means of the “closed shop”: they had struck agreements with companies, that only union members were to be hired. The act leaves it up to the individual states to legally establish the unrestricted “right to work,” i.e., to prohibit the “closed shop.” This principle has in the meantime been pushed through in 20 states, particularly in the South. It forms the basis for the company strategy of getting rid of union influence by shifting operations to “union free” states or by corresponding “outsourcing.”

[21] The companies know this, of course, and exploit it: in the strike by the longshoremen, the side of capital refused any negotiations with the union and on its part asked the state to finally decide the matter for reasons of national security in favor of capital.

[22] “Without the pension and health insurance contributions, the profit margin of GM would rise from a meager 0.5 percent to 5.5 percent … According to estimates by analysts, the cost share for past liabilities at General Motors amounts to $1,784 per vehicle produced in the United States.” (Die Zeit, Germany, April 10, 2005)

[23] At the same time, capital of course tries to retroactively reduce the payment obligations it has already entered into; but legally, that is only possible in part. Therefore, “firms try every book-keeping trick to shift the company’s existing pension obligations to the state pension insurance fund, the Pension Benefit Guaranty Corporation (PBGC). This institution, founded in the 1970s, is really only supposed to help out in emergencies … But massive failures … have led to the PBGC itself to operate on the verge of insolvency. To avoid collapse, the American taxpayer will sooner or later have to help out.” (Süddeutsche Zeitung, Munich, November 9, 2005)

[24] Meanwhile, for example at General Motors, 2.5 pensioners are financed from company social funds for every current employee.

[25] For instance: “In a 1993 opinion poll, 90% of Americans complained that health care was too expensive, three-quarters felt insurance coverage was not sufficient, and nearly half were dissatisfied with the quality of care.” (Aus Politik und Zeitgeschichte 8/96, p. 13, Germany) Certainly nothing will have changed in the last 10 years.

[26] As early as 10 years ago it was said: “The increase in enrollees and the rise in costs (for medical benefits) have led the Medicare program to become a burden on the federal budget.” (Ibid.). It could only get worse.

[27] President’s Remarks at the National Federation of Independent Businesses, June 17, 2004. “Bush’s idea of an ‘Ownership Society’ in which everyone is responsible for their own financial security is the appropriate counterpart for the 21st century to Roosevelt’s New Deal.” (Wall Street Journal, October 19, 2004)

[28] The transition to a losing concern is to take place in 2018–2019 according to official government estimates; bankruptcy is forecast for 2025.

[29] “In its annual report for 2002, the Social Security Administration predicts that until 2017 the pension fund will take in more in contributions than they will make in payments.” (

[30] Retirement Savings Accounts (RSAs).

[31] “Enough dramatizing: Social Security is financeable.” (The Seattle Times, March.29, 2005)

[32] Individual state expenditures are supplemented with grants from the federal budget at the same level.

[33] The states lead the way here in social and educational policy, dealing with the losers of the nation with absolute pitilessness — ‘zero tolerance’ — and the threat of completely disproportionate punishments — ‘three strikes and you’re out,’ i.e., life sentences on the third conviction even for petty offenses — and thus seeing to prudence in career planning through a policy of serious deterrence.

[34] Before the sweet ‘dependent children’ of the underclass ultimately leave the straight and narrow, the welfare state gives them one more chance: as a preventive measure at the request of parents who are at wit’s end, or by a decision of a juvenile court as an alternative to a first prison sentence, children and adolescents can be handed over to ‘boot camps,’ where the rules are ground into them with military drills, rules whose observance distinguishes respectable bourgeois competition from its criminal variant.

[35] For the other 364 days a year, verses 14 to 30 apply without qualification and in the most literal interpretation (“For unto every one that hath shall be given … but from him that hath not, even that which he hath shall be taken away”!)

© GegenStandpunkt 2008