During the first days of May, the Greek state was singled out as the pariah of the European Union. When the European Commission and the IMF (International Monetary Fund) imposed austerity measures on Greece, they said it was only fair since Greece was "living beyond its means." And some officials alluded to the risk of a "Greek contagion," which was supposed to spread to Portugal, and to a lesser extent to Spain. All of this was misleading and false, since Greece had little responsibility for the sickness of capitalism in crisis.

Within six weeks, the so-called Greek contagion spread widely. It not only hit the European countries whose economies are the most fragile, and not only those states whose budgeting is the most slipshod, but the major ones.

The cost of French debt became more expensive than German debt while, before the financial crisis, the costs were practically even. "France is falling behind. Its risk premium almost doubled in six sessions compared to Germany," commented a specialist from the Natixis bank.

This was the warning that financial groups were beginning to suspect that the French government might have problems repaying its debts. If speculation continued to drive up interest rates on French state debt, it would only make it more expensive and difficult for the French state to borrow money to continue to pay its bills.

The Sarkozy government responded with a big show, promising to add a balanced budget amendment to the constitution. But financiers want concrete measures. They want to verify that the government can take what they consider to be the necessary drastic actions against the laboring classes to assure that the interest on the debt will be repaid. So, the Sarkozy government adopted a panoply of measures aimed at pleasing the big financial groups. It promised a large, rapid cut in the budget deficit, bringing it down from 8% to 3% over the next four years, mainly by cutting expenses. It promised to cut the number of State workers, while freezing the salaries of those who remain. There were also measures against retired people. Many of these measures covertly make life more difficult for the laboring classes. An article in Le Monde (May 30-31) spells out a few of these cuts: "Healthcare: the government wants to save 600 millions Euros by freezing the funding for hospitals and nursing homes.... Altogether 1.84 billion Euros for the next year will be saved by increasing co-pays on certain drugs and increasing fees for hospitalization."

The same thing is happening throughout Europe. "Today it is not good to be a public sector worker in Europe," wrote Le Figaro, a right-wing daily newspaper. In Ireland, public sector salaries were cut between 5% and 15%. The Greek government imposed a 15% pay cut on public sector workers, and a 7% cut in their pensions. The Portuguese government imposed a salary freeze and reductions in the workforce through attrition. In Italy and Spain, the governments imposed a wage freeze. The British government imposed a hiring freeze and a general cut in its operating budget.

On June 7, Germany, the richest country of Europe, whose government budget is considered to be a model of discipline, announced a first series of austerity measures aimed at saving 80 billion Euros over four years. These included a new tax on fuel, a reduction in social welfare programs and a cut of 15,000 public sector jobs.

It is obviously much worse in Eastern Europe, the much poorer part of Europe. In June, for example, the Romanian government is planning to cut State workers' salaries by 25%, as well as pensions and unemployment benefits by 15%.

In England, as Le Figaro says, "There has not been such a drastic austerity plan since World War II." Given the already decrepit state of some public services in England, the results in four years may be devastating. The new Conservative government claims political responsibility for the austerity plan. But it was the former Labor government that had originally worked out the plan.

The Ballooning Public Debt

Austerity measures may vary in form from one country to another, but not a lot. They all have a common goal: to make the laboring classes pay to replace the enormous sums that these governments spent to get out of the financial crisis of 2008 to 2009, as well as to try to prevent a new episode of this crisis in 2010.

Once more, what the different State apparatuses did during the preceding stage in the crisis has boomeranged back on them. They overcame the most acute stage of the 2008-2009 crisis -- the liquidity crisis and financial panic that followed the September 15, 2008 bankruptcy of Lehman Brothers -- only by extending massive support to the bankers and the banking system. But this massive intervention tore enormous holes in the State budgets. Without exception, the debts of all the States grew to colossal proportions. As the American economist, Nouriel Roubini, described it:"We socialized private debts and we are now in a very dangerous zone. Europe, like the United States, the United Kingdom or Japan, is confronted by gigantic public deficits." Concerning the U.S., he said: "For the moment the country is protected because investors have a big appetite for American debt. But one day, those who hold this debt can wake up and say, 'even the U.S. is in a critical situation.'"

These "gigantic public deficits" represent a bonanza for the financial groups. To finance the deficit, the States borrow more and pay more interest to their creditors, feeding the growth of an ever higher mountain of debt. This debt, which is a consequence of the financialization of the economy, in turn aggravates that financialization. While production and investment suffer because of a lack of profitable markets, capital is attracted toward the financial sphere. In the current situation, it is drawn especially toward government bonds. And based on this movement, speculation is growing on government bonds themselves.

States compete with each other to sell their bonds. A country which is suspected of not being able to pay back its debts has to pay a higher interest rate. This then increases its debt and further weakens its situation.

Under the leadership of France and Germany, the two main imperialist powers on the European continent, the European governments, along with the IMF, tried to stop the speculation by creating a fund containing 750 billion Euros, that would loan money to States that might have trouble financing their debt. This enormous fund was supposed to reassure the financial markets that even if a State went bankrupt and could not cover its debts, the financiers would still get their money.

It was another splendid gift to the banks. But it did not stop the speculation. And for good reason! Enormous amounts of capital circulate on financial markets, and it is inconceivable for their owners not to have it making money, that is, they have to place it somewhere profitable. More and more, that means speculation.

The circle is thus closed: financial operations feed on each other, enriching the bankers and their investors and ruining the real economy.

A New Phase in the Financial Crisis?

A new phase in the financial crisis seems to have been developing for a while. Lack of confidence in States considered to be credit risks has been spreading, along with a lack of confidence in the banks that own a lot of those States' bonds.

This new crisis of confidence among the banks is similar to what happened after Lehman Brothers went bankrupt. The loans to the weaker states are more and more considered like the toxic securities of the subprime crisis of 2008. An article in Le Monde (May 30-31) described it this way: "The crash of 2008 showed that a liquidity crisis -- the inability to borrow money from other banks or from the markets -- can be lethal for a bank even if it is well capitalized.... There are many indications that banks are having difficulty gaining access to liquidity they need in order to provide credit to households and businesses. They show that banks are less and less willing to lend to each other, and have often stopped lending altogether."

The business journal Les Echos (May 27, 2010) evoked the same threat: "American banks are no longer lending dollars to European banks which practically stopped lending cash.... To overcome the difficulties of high costs in interbank loans, central banks must flood markets with liquidity. The principal risk is that banks with great problems refinancing are more reluctant to lend to companies. This further reduces economic growth."

The financial sector is not a completely separate world, disconnected from the productive economy. It is the same economy, above all, because the financial sector, just like productive enterprises, derives its profits in the last resort from surplus value, that is, exploitation. Financial profit is, in reality, the same profit, more exactly, a growing part of the total profit.

At the same time, industrial companies need the financial sector. Daily economic life is conditioned by a myriad of operations, of borrowing, of credits. When the financial pool dries up, the whole economy dies.

And this is what appears to be happening for the second time in two years. The amount of liquidity has been reduced dangerously, due to reasons internal to the financial sphere and its functioning. The large quantity of "bad debts" -- this time, State debt -- has caused another crisis of confidence among the banks, which limits their ability to play their necessary role in the functioning of the capitalist economy. Despite the colossal amount of liquidity held by the banks, the banks are lending very little to each other.

"The proof of this," according to Les Echos (June 8), "is the amount of liquidity that the banks are depositing each day in the European Central Bank that is exploding.... The banks deposited about 350 billion Euros (compared to one billion before the crisis), which are not being used to provide liquidity for credit markets. In other words, financial establishments prefer to hoard mountains of money at a low interest rate rather than lend them."

Since the long period of stagnation in the capitalist economy first began 20 or 30 years ago, finance has become an even bigger parasite on the productive sector. But sometimes parasites kill their hosts. A new liquidity crisis among the banks could perhaps trigger the beginning of a long depression.

To end the crisis of confidence among the banks, the European Central Bank (ECB) increased its intervention. It began to accept the debt of the Greek State as collateral for making loans. It began to do the same thing for the State debt of other countries in the Eurozone that were considered poor credit risks. In so doing, the ECB had to throw out its own criteria for what kinds of debt it would accept. But for the ECB, the main goal was to reassure the bankers, to convince them to lend to each other again. It was a clear statement from the ECB to the bankers: "Don't worry about risky bonds held by your partners in banking operations. The Central Bank is ready to buy all those bonds which you don't trust." This kind of announcement runs the risk of weakening confidence in the ECB, that is to say, in the Euro. Of course, the Euro was already declining in relation to the dollar.

Threats against the Euro

As the economic crisis has developed, the Euro has progressively weakened, falling to 1.20 dollars to the Euro, compared to 1.50 six months ago. And the Euro's own survival is even threatened. No one can predict when and how this might happen.

The end of the Eurozone can take place in many different ways. The countries with the weakest economies could be excluded from the Eurozone, or they could depart voluntarily. This has already been raised for Greece. On the other hand, Germany could leave the Eurozone. Or the Eurozone could be much smaller, limited to the imperialist countries around Germany and France.

The Euro has certainly not saved the different European countries from the crisis. But if it were to disappear, either totally or partially, this would be an important factor aggravating the crisis. It could mark a return to protectionism and the multiplication of monetary devaluations by countries in competition with each other. And it could be the opening of a new period of permanent European monetary instability. The capitalists themselves are conscious of this fact.

On the European continent, where the economies of the different countries are tightly connected, the disappearance of a common currency would be a catastrophic retreat. The German and French bourgeoisies are perfectly conscious of this. Right now, they have a major interest in maintaining the Euro, the most striking expression of a European market which was so painfully constructed. But as determined as the bourgeoisies of the two countries may be to maintain the Eurozone, they have not created a "common governance."

The absence of such a "common governance" is the Euro's principal handicap in relation to the dollar. This absence is also the principal factor behind the speculation on state bonds which are denominated in the same common currency. It is just like a check -- what counts is not the amount written, but who signed it. The signatures of Portugal, Greece or even Spain are worth much less than Germany's.

Even the choice of words is significant. Government officials speak of "common governance," but not of a common State. A real "common governance" presupposes a common State apparatus. But no significant political force, placing itself on the terrain of the bourgeoisie, is considering this.

The Intensification of the Bourgeoisie's Class Struggle Against the Working Class

It would be useless to try to predict how the world economy will evolve in the coming period. The only prediction that we can make is that when it comes to imposing austerity, we have not seen anything yet.

The bourgeoisie is fighting with all its might to maintain the profits of the capitalist enterprises by increasing exploitation. The States fight to re-balance their budgets in the only way the bourgeoisie will allow, by increasing the burden on the laboring classes, reducing social protections and public services, at least those that concern the laboring classes.

Hospitals, schools, public transportation have never been equal for everybody, contrary to what the big reformist parties claim. How could there be equality in a world dominated by money? But all the defects of the capitalist economy, all the inequality it produces and maintains will inevitably be multiplied by the crisis.

The working class will be forced to fight if it wants to prevent the bourgeoisie from stripping it of everything. Social explosions can prevent some anti-worker measures from being applied, but even big ones cannot alter the evolution of this struggle fundamentally. To confront the bourgeoisie's policy of making the laboring classes bear the brunt of the crisis, it's necessary to oppose another policy, one which offers a way forward for the entire society.

It is commonly recognized that the current crisis is the worst since the outbreak of the 1929 crisis. But when you compare both, what is striking is how much better off the big bourgeoisie is this time. The 1929 image of capitalists jumping out of their office windows after learning they were ruined may be mostly a myth. But today, only a very small part of the bourgeoisie, mainly the medium and the small bourgeoisie, have been hit by the crisis.

An article in Les Echos (June 11-12), announced with great joy that "the number of millionaires increased by 14% in 2009.... The crisis slid over the most fortunate. According to the last annual report of Global Wealth, the total level of private wealth made a remarkable comeback in 2009, with the rebound of 11.5% following a fall of 10% in 2008."

The bourgeoisie, at least the big bourgeoisie, has come through the crisis of its own economy very well. It had a few frightening moments confronting what it calls the threat of a "systemic crisis," in order just to start everything all over again. The behavior of the financial groups is enlightening: hardly out of the mess created by all their speculation before 2008, they immediately started to speculate again.

This rebound was paid for by a huge setback not only for the exploited masses but for the entire society. The main issue is not what the bourgeoisie took from society, as extravagant as it is, but the price that it imposed on society in order to do it. The years of the crisis have pushed society backward in a material way. A large fraction of the laboring population has been pushed into long term unemployment and misery. Funding for education and new housing for the broad population has been cut. Many neighborhoods of the laboring masses have been turned into ghettos. These attacks have also impacted social life. The entire society is disintegrating. It is decomposing and becoming more dehumanized. Along with the decline of material conditions of life, there is a decline in ideas, in social behavior, in solidarity.

Never before in history has humanity had at its disposal such a vast arsenal of knowledge. Never has humanity had the material means to act on nature, the potential capacity to overcome once and for all material, cultural and moral poverty.

But never has the responsibility of capitalist organization been so clear in stopping society from going forward. And never has the gap between humanity's possibilities at the scientific and technological level and the backwardness of its social relations been so great.

It has been a long time since the evolution of the capitalist economy has removed all possibility for reformist policies, that is, the hope of a gradual but irreversible movement to improve society. Reformist policy today simply consists in pretending that damage for the exploited masses can be limited. But even that doesn't succeed.

Capitalism takes society right up against the wall. The working class -- the only social force able to oppose the bourgeoisie with the perspective of a revolutionary change of the economic and social order -- finds itself without its own policy and without a political party to impose it. It always comes down to this: the capitalist class will not stop pushing society backwards, attacking the only productive class -- the working class -- until the working class regains its combativity. And, above all, until it organizes its fights around a policy entirely directed toward the overthrow of the domination of the bourgeoisie and the transformation of the economy by ending private ownership of the means of production.

This is not just a question of calling for "the great revolt." The working class must have another policy to counterpose to all the problems created and aggravated by the bourgeoisie's management of the society.

The Only Alternative Policy

"The debt must be repaid," demand the political leaders and commentators servile to the capitalist class. But those who ran up the debts should pay them!

Wage earners, unemployed, retirees never saw the trillions of dollars that the States poured into the economy. The exploited classes do not have to acknowledge a public debt which is, in reality, only the debt of the bourgeois class.

After enormously increasing the public debt, the States demonstratively took aim at all public measures benefitting the laboring classes. Public services are the easiest victims. Their budgets are just cut.

Yet those public services were created and developed in the interests of the bourgeoisie itself. When the State took over education or health care, it was a way to relieve the bourgeoisie of the necessity to pay its workforce enough for each person to pay for their own health care and to educate their own children.

But with the crisis, the bourgeoisie and its political representatives reason in the short term: they must find the money, that's it.

The coming months will be marked by more and more violent attacks, the only limits of which will be set by the relationship of forces. These attacks flow from the capitalist economic crisis and the means by which the bourgeoisie hopes to get out of it. It does not come out of particular policy options, or even less from which political team happens to be in power. They flow from powerful class interests. The role of the political leaders is to apply them and, if necessary, justify them as they can. The range of different political parties in government in Europe, which have all carried out an anti-worker policy, is enlightening. None of these governments has hesitated to justify these attacks, even if they now say the opposite of what they said to get elected.

To present electoral changes as decisive events is always a lie. And it is even a bigger lie during times of crisis. Political people and parties who promise to overcome the crisis or even to protect the laboring classes from it without clearly calling into question the capitalist economy are, at best, charlatans. But, in reality, they directly serve the bourgeoisie or they aspire to, and they are paid to fool the laboring classes.

The only program that opens a perspective is one that responds to the crucial problems of the day from the viewpoint of the laboring classes but, at the same time, ends up calling in question the domination of the bourgeoisie over the society. This program will not become a force until the masses take it up. How and when will this happen? No one can say. But it is not a philosophical question. It is a program for struggle.

The exploited have fallen far behind the exploiters. There is nothing surprising about that. There is the weight of the crisis itself, the pressure of the unemployment. On the political level, there were all the betrayals by the reformist parties when they headed the government. Even when they were in the opposition, these parties long ago abandoned the idea that the working class can't move forward if it lines up behind the bourgeoisie, that it must oppose the bourgeoisie. That is, these parties abandoned all language of class.

In this crisis, the bourgeoisie has all the cards, allowing it to impose its policy. But, at the same time, they demonstrate that there is no solution to the crisis with their all-powerful financial groups and on the basis of the private property of companies and banks. And the prudence of the political leaders of the bourgeoisie in imposing their anti-worker measures, in spreading the attacks out over the longest possible time behind a smoke screen of pseudo-negotiations with union leaders show that they fear the masses will launch a movement. And that can happen quickly.

During such moments a program for revolutionary struggle becomes indispensable and vital. Just as indispensable and vital is the party capable of carrying out this program, capable of not deviating from this road, even under the pressure of the electoral siren songs and the reformist apparatus. That is, a party that is really communist.

Faced with the growing unemployment -- this social leprosy and the principal cause of social decomposition -- there is the need to share out the work among everyone, without a loss of pay, and with a ban on all layoffs.

Faced with the destruction of working people's buying power, which is made even worse by the decay of public services, there must be a sliding scale of wages, as well as pensions.

Faced with the financial crisis, the banks must be expropriated and unified into a single banking institution controlled by the population.

And, above all, faced with the irresponsibility of the capitalist class, it is necessary to impose the control of the workers and the population over the big companies and the economy.

On the day that activists at the Dearborn Truck Plant passed out a leaflet announcing that they intended to see him nominated at the UAW's June Convention, Walkowicz explained his goal to the Detroit Free Press in these words: "I don't have any illusions that I will win the election, but running is a way to give a voice to the membership.... A lot of workers in the UAW really do not agree with what has happened in the last couple of years with concessions."

Despite the support that Walkowicz had among Ford workers, it was obvious that he could not get many votes at the Convention, given the stranglehold wielded by the union apparatus. And he did not. After the chairman declared the election decided, a little more than halfway through the roll call, he ended up with only 74.5 votes -- that is, 3.54% of the recorded roll-call -- compared to 2114 for Bob King, the president anointed last December by the so-called "Administration Caucus."

But the nomination of Walkowicz was significant. A leader of the fight to refuse concessions ran against one of the main union officials who had pushed the policy of concessions on the workers for years. And, for the first time in 18 years, a UAW convention was forced to resort to an actual vote to elect one of its top officers.

The "Administration Caucus" -- An Apparatus Imposed on the Ranks

Over the last six decades, the union's top officers have nearly always been elected by "acclamation" -- meaning that they were chosen ahead of time by the Administration Caucus, with few delegates daring to put their name up for the official election held later inside the Convention.

In the first 12 years of its existence, from 1935 to 1947, the UAW knew a real political life, with conventions held every year -- sometimes twice a year, with fights on the convention floor over the direction the union should take, and with caucuses formed around some of those differences in the fights for union office. On the political level, there was a wide range of views, above all in the period when there were fights over the no-strike pledge imposed by the government during World War II, a pledge that much of the leadership pushed, but the ranks ignored. But whatever political problems existed -- and many did -- at the end of the war there was still a great vitality and internal union life in the UAW.

With the coming of the McCarthy period witch-hunt and with the aid of the bourgeois state, an enforcement apparatus was eventually imposed on the UAW to discipline the ranks. The purges of the militants, who only a decade before had built the union, were already beginning in 1947, when Walter Reuther won re-election in the last fully contested election. That election was marked by vicious red-baiting coming from the Reuther camp. The Reuther forces moved over the next four years to establish their stranglehold over the union -- expelling militants from the union, taking over local unions from which they couldn't expel the militants, working in collusion with the companies as they fired militants, and encouraging anti-communist gangs, which literally dragged militants out of some plants during work hours, giving companies the pretext to fire them.

Stemming from this activity, Reuther established the enforcement apparatus that eventually came to be known as "the Administration Caucus." That shadowy apparatus, little talked about in the plants, has controlled the UAW up to this day, holding down every top office in the International and almost all the positions in the regions for the last 62 years, dictating to local officers. Since that Caucus fastened its grip on the union, there have been only four challenges to its choice for UAW president.

In 1970, Art Fox from Ford Local 600 and Pete Kelly from GM Local 160 headed a full slate contesting for all the top offices, reflecting workers' frustrations at the near freezing of wages during the rapid growth of inflation in the middle and late 1960s, and in opposition to the heavy hand the apparatus was trying to wield against locals in virtual rebellion. But at the Convention, Fox ended up with only 1.62% of the vote. In 1972, Kelly repeated the challenge, this time running on a slate headed by Jordan Sims, a bargaining committeeman from Chrysler, fired after he supported workers in his plant who had wildcatted three times. Sims may have been widely known by workers in the Detroit area, a kind of symbol of the wildcats sweeping through the plants, but he got only 0.72% of the vote at the Convention.

It took another 20 years before anyone else mounted a challenge to the apparatus. Jerry Tucker, who had earlier defeated an Administration Caucus candidate for regional director, campaigned for the presidency in 1992. Tucker's candidacy reflected widespread resentment against the concessions and "whipsawing," that is, setting one plant against another in a downward bidding war to get or keep work. The Administration Caucus pushed a kind of protection racket -- "If you vote for Tucker, your plant will close" -- and combined that with personal threats and blackmail against dissidents to cut into the delegates pledged to him. Tucker ended up with 5.34% of the Convention vote.

The Administration Caucus was able to skate through 18 more years before finally being challenged again at this year's Convention. As an aside, we should add that Tucker and Kelly, both now retired, both backed Walkowicz's candidacy this year.

1947-1970: The Workers Lose Ground to the Companies

The Administration Caucus has been the corporations' most efficient weapon in imposing sacrifices, implicit or explicit, on auto workers, and through them on a big part of the rest of the working class.

During the Reuther years, from 1947-1970, even if the standard of living of auto workers slowly improved, and a certain number of social benefits -- like pensions and health care -- were gained in the contracts, overall, auto workers fell further behind relative to the enormous increase in wealth their labor produced for the auto companies. Most of the benefits from the steadily increasing productivity went to the U.S. auto companies. From 1946 through 1969, wages and other labor costs may have increased by 25%; but profits were up 77%, dividends up 60% and executive income up 80%. Ford, General Motors and, to a lesser extent, even Chrysler used the gains from worker productivity to buy up other companies, fully establish their own financial companies and spread their tentacles around the world.

The Reuther apparatus, which was nationally centralized, was able to push through contract after contract on a workforce that was atomized, numbering in the hundreds of thousands, scattered over a thousand workplaces. But workers registered their anger at the speed-up and the contracts by closing down their own plants with wildcats. In 1961, as a new contract was being pushed through, every GM plant was hit by at least one wildcat that closed it down, as were many Ford plants. Worker anger, unable to touch the Administration Caucus running the national union, focused on local officials. In 1961 and again in 1963, according to Martin Glaberman, one third of all local presidents were voted out of office.

The biggest open attack on the workers' standard of living during the Reuther years came in 1967. In the face of rapidly rising inflation, the auto companies wanted to get rid of the cost-of-living clause in the auto contracts. Faced with resistance from the ranks, Reuther took Ford workers out on a strike that lasted 48 days -- wearing them down, ending with a contract that effectively eliminated the COLA by putting severe limits on it.

1970-1978: Attacks on Worker Militancy

In the post-Reuther years, which coincided with the slide of the U.S. economy into a decades-long stagnation and economic decline that has only gotten progressively worse, the Administration Caucus apparatus worked to impose more open sacrifices on the auto workers, pumping up profits for the auto companies.

At the beginning, as the companies toughened their stance, the Administration Caucus moved to break the auto workers' reliance on wildcat strikes, which had been a regular feature of life in the auto plants all during the 1960s and early '70s. In 1970, a series of wildcats hit Chrysler's Eldon Axle plant, first in defense of a fired worker, then in defense of 12 stewards who had led the first wildcat, then in reaction to several brutal deaths in the plant. Not only did the Administration Caucus leaders refuse to back elected union officials fired by Chrysler -- they actively used union resources to prevent Jordan Sims, the committeeman fired after the third walk-out, from being re-elected. But the most notable attack by the Administration Caucus came in the summer of 1973, a year in which the plants simmered with wildcats. The top union apparatus sent a 1000-member goon squad, fully armed with baseball bats and iron pipes and with a few handguns ostentatiously in evidence, to attack picket lines and crush a wildcat strike that had shut down Chrysler's Mack Avenue Stamping plant. With the support of the International Union, Chrysler very publicly discharged 91 workers and disciplined over a hundred more, putting an end to the wave of wildcats that had simmered all summer long. The UAW leadership moved again the next year to break a wildcat strike that broke out at Dodge Truck in support of a fired steward and several other activists. The centerpiece of that action was the "mobile court," an open collaboration between the union and the state apparatus. A union official drove a flat-bed truck, from which a circuit court judge ordered the immediate arrest of any picketer who didn't move away from the gates. And union officials pointed out the fired steward, whom the judge denounced and ordered arrested. Then in 1976 came the GM Fleetwood strike, called originally by the shop committee after the president and another local officer were fired. After a two-day shut-down, the Administration Caucus sent regional and international reps to control each plant gate. With weapons in evidence, they threatened violence to all those who didn't go in, helping to end the strike. Almost 500 workers were given some kind of discipline for that strike, including 10 permanent discharges, in a deal cut by the International.

Anger by the ranks, who again could not touch the top leaders sitting in Solidarity House, focused on local officers. During 1978 and 1979, half of all incumbent local officers in Chrysler plants, for example, were thrown out in local elections.

1979: The Concessions Begin

By the time the "Big 3" auto companies began to demand outright concessions in 1979, the attack by the apparatus on the ranks had been reinforced by the first wave of unemployment in 1974-75, and then by the vast increase in unemployment and plant closings during the severe 1979-81 recession.

The Administration Caucus leaders openly pushed the concessions, arguing that workers at Chrysler had to sacrifice to save "their" company, and then that workers at Ford and GM must sacrifice also -- to keep "their" companies competitive with Chrysler! And, just like 2009, the federal government extorted those concessions. Democratic President Jimmy Carter threatened he would let Chrysler, with all its jobs, fall into bankruptcy unless workers agreed to the concessions.

This period also saw the development of open "whipsawing," which started at Ford but took particularly virulent form at GM, loaded down with many old factories made redundant by the ever-increasing productivity squeezed out of its work force. Workers at one plant were pitted against another by union officials who advised them that the only way to keep "their" plant open was to give the company what it wanted -- and what it wanted was an end to work rules that impeded the companies' push for greater productivity, productivity which led to even more plant closings.

In 1982, when Chrysler workers voted down a contract pushed by the Administration Caucus, the Caucus came back and pushed a re-vote on the Chrysler workers, this time accompanied by threats that workers who voted "no" would find their plants closed. Workers fought back, mocking the procedure as a demand to "vote, and vote again until you get it right." But ultimately enough arms were twisted, enough threats about plant closings made, that the workers did "get it right," giving the union apparatus the "yes" vote it demanded.

There were a few exceptions. Workers in some of GM's Pontiac and Flint plants refused to ratify local contracts being pushed in a "whipsawing" campaign. In 1987, workers at Blue Cross carried out a 12-week long strike. The Administration Caucus Apparatus openly attacked workers who were attempting to organize their strike to strengthen it, to get out information to the ranks. But, after 12 weeks on strike, Blue Cross workers were able to back off the company -- and the Administration Caucus apparatus.

But overall, UAW workers succumbed to the demands for concessions, which contributed to the enormous increase in company profits from 1990 to 2004 -- profits which were not reinvested in the auto industry, but were drained away into the financial circuits.

Concessions -- Part Two

The new round of concessions from 2005 up to today was carried out in much the same way as the earlier ones, with the union heads carrying the ball for the companies, and with the Democratic Party administration of Barack Obama intervening as Carter had to extort the concessions.

But the impact of these new concessions is vastly greater. King himself admitted that current workers have already lost from $7,000 to $30,000 each, due to the concessions taken since 2005. Scheduled wage increases, bonuses and cost-of living were eliminated; medical coverage was scaled back. And that doesn't tell the half of it. A vast number of concessions in working conditions has reinforced the killing speed-up: ranging from the reduction of break time and vacation time; to work hours that include rotating crews or working 10-hour days on the line; to the requirement that laid-off workers must move anywhere in the country to keep their seniority intact; to the consolidation of skilled trades classifications and requiring that they work 12 hour days. And the right to strike on economic issues was given away until 2015 at GM and Chrysler.

In the midst of a recession, the worst since the Great Depression, with auto sales at a low level, the auto companies are today making profits. This boom-or-bust industry -- which traditionally made lots of money in the good years and lost money in the bad ones -- is today making money in a bad year. And those profits attest to how much has been stolen by concessions from the workers' paychecks, and how much more productivity has been squeezed out of their hides.

But the worst is yet to come. The dumping of retiree medical care into a severely underfunded union-run VEBA eliminates company responsibility for workers as soon as their working lives are used up. The two-tier wage and benefit packages -- aimed at the generation of workers now being hired into the factories -- will cut the standard of living of auto workers in half. These two concessions taken together are expected to lower total labor costs by much more than half, to the great benefit of the wealthy class that owns not only the companies, but also the banks standing behind them.

Ford Workers Loosen the Grip of the Administration Caucus

It's in the context of this long history of concessions, and against this bitter history of control by the Administration Caucus apparatus, that the NO-vote took place at Ford last October.

It was actually not the first time that a majority of workers had voted against a national contract. In 1982, Chrysler workers had voted "No," but had then been bludgeoned into ratifying the contract in a re-vote. And, almost certainly, other national contracts, though officially "ratified," had in fact been rejected by a majority of the workers, who had no means to verify the count announced by the International apparatus. For example, the 2005 vote recorded at Ford (officially, 51% Yes to 49% No) and the 2007 vote at Chrysler (54% to 46%) were particularly suspicious.

But in 2009, for the first time ever, not only did workers reject a national contract pushed by the union leadership, but they forced the apparatus to recognize that rejection. Ford workers opposed the concessions so demonstratively and so publicly that the union apparatus clearly felt it couldn't come back to force a re-vote.

Ford workers found the way in 2009 to link with each other, from plant to plant, and get the information around. They found the way to record the votes from every plant, making a complete and public tally of those votes as they came in. And they showed themselves able to confront the apparatus when it sent hundreds of staff people into the plants to threaten the workers. The top leaders, Gettelfinger and King, were treated to the rude reception they deserved when they came into some plants, trying to extort a "yes" vote.

Ford workers found the way, in their organizing against the concessions, to loosen the decades-long grip of the Administration Caucus on the rank and file.

The 2010 UAW Convention -- A Union in Crisis

The Administration Caucus came into the 2010 Constitutional Convention with its long record of pushing concessions on the ranks. And the ranks of the union had clearly been expressing their disapproval of the policies pushed by the Administration Caucus, marked by the close votes in 2005, 2007 and the 2009 rejection at Ford.

There was no point on the Convention agenda where these questions could be discussed.

Nor was there any point on the agenda devoted to a discussion of the situation facing the union itself. "You would never know this is a union in crisis," said one delegate to the press on the first day of the Convention.

But crisis it is: the ranks of the union itself have been cut from 576,000 to 344,000, just since the last Convention in 2006. The UAW has lost over three-quarters of the members it had in 1979 -- its high point, with 1,528,000 members, just before the drive for concessions began. That enormous membership loss reflects two trends that have beset auto workers and most other workers. First, jobs were rapidly lost as the result of increasing productivity, accepted and justifed by the UAW leadership. Second, hundreds of thousands of jobs were lost when the three Detroit auto companies outsourced work to low-wage companies. Despite the union's propaganda, trying to obscure the issue, most of those low-paying outsourced jobs are in this country, not overseas.

The whole convention was hamstrung by its usual, very formal parliamentary-style procedure that serves the apparatus well in stifling discussion.

Many locals had submitted resolutions for discussion at the convention. Some, fed up with the Caucus stranglehold, focused on the way officers are chosen or the way contracts are negotiated and ratified. Some focused on the way the union's policies have helped lower the standard of living of auto workers or of retirees. Retiree chapters submitted resolutions asking that retirees be given a vote on contracts that change their pension or medical care.

Not a single resolution taking up such issues was put on the agenda for discussion. Overall, 126 resolutions were simply ignored. And to make sure they didn't get called out, the National Steering Committee of the Administration Caucus distributed a "request" that all delegates vote against any proposal to bring a resolution out of committee, and vote against any proposal to modify the convention rules, and vote against any proposal to modify the agenda.

In addition there were uncounted resolutions concerning the attacks on the workers' standard of living. Every one of them was sidetracked, "referred" to the Bargaining Convention, which won't take place for another year!

In general, local elections for convention delegates are the least noted by the ranks -- and thus delegates often are de facto picked by the apparatus of the locals and beholden to it. But even many of these delegates were uneasy with the way the Convention unfolded.

The one way many of them found to express their collective unease was to oppose the top officers' proposal to increase their own pay. Just like the big bosses at the auto companies, who rewarded themselves while cutting the workers' wages, UAW top leaders felt no qualms about pushing through another pay increase for themselves -- eight to nine thousand dollars more than their base rate set four years ago. Ignoring the apparatus for once, about a quarter of the delegates voted "No" to the proposed increase.

Despite all the problems facing the rank and file and the union itself, this Convention was organized to be just business as usual. And it would have been -- except for the fact that someone contested against the Administration Caucus pick for president, thereby putting some of the real issues out there.

In her speech nominating Walkowicz, delegate Cathy Abney declared: "We [at the Dearborn Truck Plant] did not agree to peacefully giving up what our grandparents and parents fought for! We voted 92% in 2005 and 93% in 2009 against concessions, which included a no-strike clause for four years. Giving up our right to strike for one minute was not an option.... Our union faces a huge crisis, a real emergency, brought on by past policies. We need to do a radical 180-degree turn. Turn away from concessions! We need to turn to policies that put the workers' interests first, fighting policies! ... The Rouge site is where the Battle of the Overpass was fought in 1937. The workers at DTP today refer to the overpass, still standing, as the Bridge. And today, the workers in the plants are saying, 'It's time to go back to the bridge.'"

Yes, today's workers need to "go back to the bridge," to prepare to fight.

But that's exactly what this Convention declared itself against, symbolically and practically, when it continued to reduce the funds available to support strikes. Dues money has long formally been divided three ways: 38% for the local union, 32% for the international union and 30% for the strike fund. But through a complicated series of "temporary" rebates, begun seven conventions ago in 1983, part of the dues scheduled for the strike fund has been rebated to the locals, and part handed over to the International. Over time, the strike fund got a smaller and smaller share -- "temporarily." Starting with the 2006 Convention, only 5% of every dues dollar ends up in the strike fund. And since that same Convention, not a penny of the money earned by the fund's holdings has gone to the fund.

In addition to diverting money scheduled to pay into the strike fund, the Administration Caucus also proposed, over the last 15 years, to take out money already in the fund: the 1995 Convention took 50 million dollars; 2002 Convention, 75 million; 2006 Convention, 110 million; and the recent convention, 160 million. That totals 395 million dollars drained directly out of the strike fund, handed over to the International for its running expenses, which include, among other things, the salaries of top officials, or the parties thrown for delegates at the convention, or contributions from CAP to back some politician!

If the strike fund were to fall below 500 million dollars, the rebates would stop. But, of course, since the Administration Caucus over the last four decades has "authorized" very few strikes, the fund has never fallen that low.

It might seem that 500 million is a lot -- but a 10-week strike at GM alone, for example, would drain about half that fund. A proposal made by one local this year to raise the basic amount for the strike fund up to 650 million didn't see the light of day on the convention floor.

The apparatus couldn't have made it more obvious: they intend to make no fight.

In Conclusion

When answering a media question about the Walkowicz candidacy, Gregg Shotwell, one of the leaders of the fight against concessions at GM and then Delphi had this to say: "Gary's audience won't be the hundreds of UAW delegates in an air-conditioned Cobo Center. It will be the more than 100,000 active hourly workers on Detroit 3 factory floors. He's really out to build resistance to further concessions during next year's master contract negotiations."

Walkowicz himself, in a statement issued to supporters after the Convention, declared: "the most important thing was not the outcome of this election. The most important thing is what we as UAW workers are ready to do in 2011 when our contract expires.... Listening to Bob King and the other top UAW leaders during and after the Convention, it seems clear to me that they plan on following the same policies of recent years -- putting the interests of the corporations in front of our interests. If we are going to change around our union, if we are going to get what we deserve next year, it is going to be up to us. All those workers who are ready to stand up, just like the Ford and Delphi workers stood up. It's time to get ready."

There is no road for workers, other than depending on their own forces. And the experience that Ford workers went through, standing up to company threats, can serve the Ford workers and others in the fights they will have to make. When Ford workers for the first time in UAW history made their NO vote respected, they shook the hold of the Administration Caucus on the functioning of the union. And that can open a door through which other workers can pass.

In recent months, a number of workers have turned down extortion threats made by the companies and reinforced by the top union apparatus: a New Process Gear plant in New York state, several former Delphi plants, a GM plant in Indianapolis. They have been joined by other workers in the Southeast Michigan area who refused to cave in to employer demands: City of Detroit workers, Wayne County workers, State of Michigan workers. If what started at Ford continues to spread, this can quickly change the atmosphere, not only inside the UAW, but for the working class in general.

In any case, only through their own struggles can workers have any hope not only to defend themselves but to put their hands on the wealth they themselves produce.

With the banking system beginning to reveal yet more losses, Brian Cowen's coalition government -- regrouping the traditional right wing party, Fianna Fail, and the Green Party -- announced at the end of March another state bailout of the banks.

These developments came as a shock in Ireland. It seemed as if history was repeating itself all over again. Eighteen months after the September 2008 banking collapse had led to the first bailout of the banks, a new collapse prompted the government to announce a new bailout, which requires even more public funds than the previous one!

In the meantime, on January 1^st the workers were hit by a new wave of austerity measures. These followed two earlier attacks in October 2008 and March 2009. In light of this new stage of the crisis and of the way in which the politicians and their capitalist masters are planning to address it, it is clear that the greed of big business, whetted by Cowen's earlier bailouts, has turned into a black hole threatening the very living conditions of the laboring classes.

The Poisoned Heritage of the "Celtic Tiger" Days

The situation in Ireland has a lot to do with the particular kind of parasitism of the country's tiny -- but very rich -- bourgeoisie.

The Irish domestic market being too small to satisfy their appetites, the Irish bourgeoisie sought from the late 1970s onwards to use the country's position in the Common Market to attract foreign investment and take their cut of the resulting profits.

Irish wages, already low, were kept low through a policy of national binding agreements, signed by the Irish trade union leaders within the framework of a "Social Partnership." This legal framework was "sold" to foreign investors as a guarantee of social peace. The level of corporate tax was kept below that of the other European countries, while new investors were offered temporary tax-free inducement programs and ready-to-use industrial zones.

This policy produced the so-called "Celtic Tiger" phenomenon which, between the late 1980s and the 2000 "dotcom crash," resulted in an annual rate of economic growth comparable to that of the so-called "Asian Tigers," like South Korea and Taiwan. Of course, this growth benefitted Irish capital much more than the population. In the long term, most of the foreign companies that installed themselves in Ireland were primarily attracted by tax incentives and direct access to the European market. The workforce they employed was mostly skilled and not very large. So even though these companies accounted for 50% of manufacturing production by the mid-1990s, they did not help to reduce significantly the country's chronic underemployment, nor to increase the standard of living of the working class as a whole.

All this came to an end in 2000, when foreign investment dried up. Foreign manufacturing companies began to cut jobs, close factories or even withdraw altogether from Ireland.

Irish capital itself was still able to expand in another direction -- extending its parasitism. Already, during the 1990s, an International Financial Services Center had been set up in Dublin, offering financial companies all the modern facilities they could expect in London or New York, but at a much lower cost and with a far more benevolent tax and regulatory system. Among other advantages, corporate tax was 12.5%. By 1997, Dublin had become Britain's largest offshore fund management center, with 600 speculative funds managing total assets equivalent to two thirds of Ireland's entire GDP!

So, while Irish workers were being thrown on the junk pile, Irish capital had already prepared to move into financial speculation. This financial activity increased in Dublin exponentially over the following years.

This financial explosion was partly a by-product of a worldwide phenomenon -- the huge flood of floating capital which, having left the sphere of stock market speculation, went on to seek new ways of making a quick buck. But it was also partly due to the specific conditions Ireland offered.

Indeed, when the predecessor of the eurozone was formed, in the late 1990s, interest rates across all member countries were progressively aligned. In Ireland, where the level of interest rates and inflation had been comparatively high before, this process resulted in interest rates falling far more than the rate of inflation. So much so that, for most of the ten years preceding the present crisis, real interest rates (i.e. once inflation was deducted) were negative in Ireland. As a result, the cost of borrowing in Ireland became one of the lowest in the industrialized world, provided the money borrowed was invested locally. Given the additional advantage of Ireland's particularly lenient tax and regulatory structure, this promised huge pickings for floating capital.

The large foreign deposits which had already settled in Ireland for tax purposes fed the expansion of credit. Speculative funds, usually registered in one of the numerous tax havens located in the backwaters of the imperialist countries, set up Irish investment affiliates aided by the local banking system. Once this process was set in motion, the demand for more capital attracted more inflows, feeding a more and more feverish speculation.

This was the basis on which the Irish property and financial bubble began to develop in 2000, even before it did in the U.S. or in Britain. This phenomenon and the mechanisms behind it were similar to what was about to happen, over the following years, in most industrialized countries. But the mass of capital involved in Ireland was much larger than in any other industrialized country compared to the size of the local economy. Being proportionally much more inflated, this speculative bubble was bound to be much more lethal when it burst.

The era of the "Celtic Tiger" was supposed to offer a bright, high-tech future with well-paid, highly skilled jobs for the Irish population. Instead, it gave birth to a massively parasitic economy which relied entirely on the fiction of a real estate market where prices would continue to go up and where there would always be buyers to pay for whatever crazy fantasies real estate developers dreamed.

The Property Bubble

For the best part of the decade before the present crisis, the real state of the Irish economy was concealed by this ever-inflating property bubble, itself fed by a proportionally expanding credit bubble.

The flow of credit artificially boosted the demand for properties, causing property prices to rise. Between 1998 and 2007, the average house price increased 250% in Ireland, compared to 200% in Britain and 120% in the U.S.

At one end of the property market, developers and builders, excited by the rising prices, were given access to unlimited amounts of cash at low interest rates, resulting in a crazy wave of construction projects, which took no account of the nature or volume of the real demand for properties. Commercial buildings and shopping centers were developed and equipped long before any buyer or tenant appeared. Large-scale high end housing developments were built without anyone knowing whether there would be buyers. This frantic drive to cash in on the property bubble was reflected in an unprecedented boom in the construction industry, whose workforce increased by 55% between 2001 and 2007, by which time, it employed almost as many workers as all the production industries put together!

At the same time, at the other end of the property market, buyers were lured by lending conditions designed to look very advantageous, although the banks did not offer low mortgage rates -- which certainly accounts for the enormous profits they made during that decade.

As the ratio of house prices to disposable incomes was increasing to unprecedented and impossible levels (reaching over 200% by 2006 in Ireland, the second highest level among industrialized countries, behind Denmark), lenders found all sorts of tricks to hook in borrowers and keep the property market going. The average ratio of the mortgage to the value of the property increased year after year. By 2006, a third of first time buyers were allowed to borrow more than 100% of the value of the house. Likewise, mortgage lengths were progressively increased: the proportion of mortgages lasting longer than 30 years rose from 10% to 35% over the decade, and 50-year mortgages for non-commercial properties appeared for the first time in the country's history.

As a result of this mortgage explosion, personal debt rocketed, from just under 100% of GDP by the end of the 1990s, to 215% in 2007.

The banking system thrived on this debt-driven speculative bubble. Between 2000 and 2007, the overall size of the banks' balance sheet was multiplied six times -- and in the case of Anglo-Irish Bank, almost 12 times. Anglo-Irish had the biggest involvement in large-scale property developments. The banks' exposure went beyond Ireland. Although the Irish banks were not substantially involved in gambling on the U.S. housing market, they got their claws into the British property bubble through their subsidiaries on the other side of the Irish Channel and in Northern Ireland.

The credit bubble became so large that the huge foreign deposits in Irish banks weren't enough to keep pumping credit into the speculative bubble. The banks' reliance on short-term borrowing in the euro zone money market doubled to 40%. Thus the Irish banking system was loaded with risky lending and over-exposed to the ups and downs of the international money market.

One of the consequences of the "soft touch" financial regulation in force in Ireland was that it was something of a free-for-all, at every level. There existed a "financial regulator" but his passivity was legendary. In 2004, for instance, 200 cases of "overcharging" by financial institutions were identified by the financial regulator, but none of the culprits was charged or even fined: they were simply told to hand back the money they had effectively stolen. Moreover, the regulator refused to publish the names of the institutions concerned, claiming that this would go against "the public interest"!

What was true of small financial misdemeanors was even more true of much bigger ones. In 2005, for instance, the U.S. Securities and Exchange Commission investigated a huge speculative deal involving two of the world's largest insurance companies -- the now defunct AIG and General Re Corporation (part of the business empire of billionaire Warren Buffett). The SEC investigation exposed Dublin's role in the shadowy world of international insurance. A New York Times report revealed that 56 multinational insurance companies had set up shop in Dublin's insurance hub and that these local branches received 14 billion Euros a year in insurance premiums and managed assets worth 45 billion, almost a third of the country's GDP. In fact, Ireland seemed to be on its way to overtaking Bermuda as one of the world's big insurers because Ireland had become "the wild west of European finance," according to the New York Times article.

Of course, this laxity was even worse when it came to the speculative activities involved in the property bubble. By 2007, according to the Financial Times, the lending portfolios of the three largest Irish banks (Allied Irish Banks, Bank of Ireland and Anglo Irish Bank) were dominated by loans to speculative big property developments (respectively 60%, 71% and 80% of their loans in value). What was true of the big banks was just as true of the big credit-unions, regardless of the fact that their main field of activity should have remained, according to their own rules, to lend money to home buyers. For instance, Irish Nationwide, the country's largest credit-union, had lent 80% of its household deposits to a small number of big property developers. Moreover these loans to speculators in big property developments were intertwined in highly suspicious ways. For instance, one widespread, but highly questionable trick involved using the same development (or rather its future profits) as collateral for different loans with different banking institutions -- even though such practices should have been stopped by regulators, since they exposed the banking system to a domino effect should a developer default on just one of its loans. No step was taken against it.

But then, while many commentators warned against the increasing danger of a harsh landing, Irish politicians and regulators had other priorities. In other countries, the phrase "too big to fail" commonly referred to the big banks, meaning that the state would intervene should the banking system be threatened with bankruptcy. The Irish version of this phrase was "too connected to fail" -- which referred to the general corruption of the system and, more specifically, to the close relationship between many politicians, particularly in the ruling Fianna Fail party, and the real estate tycoons who were making a killing out of this crazy speculation.

The Bubble Bursts: The First Bailout

The whole property market and credit system was a house of cards whose stability was premised on a continuous rise in property prices. In fact the operation of the whole Irish economy had become dependent on it.

However, the real income of most of the population had not increased as a result of the boom. Jobs had been created in areas like construction, retail, services and in the public sector. But the wages they paid were not all that great in most cases, especially given the country's high cost of living. Besides they had to replace the many jobs lost in the manufacturing industry of the "Celtic Tiger" years.

Leaving aside the construction boom, the only factor which ensured the expansion of the economy was the rise in domestic consumption which, in turn, depended almost entirely on the rise in property prices. Home owners increased their purchasing power by remortgaging their homes or taking a second mortgage -- something that they could do only so long as the market price of their homes was increasing.

In mid-2006, however, property prices reached a peak, stagnating during the rest of the year. They began to fall at the beginning of 2007. At first, in so far as foreign money markets remained willing to lend to the Irish banking system, credit continued to flow, although mortgages became more difficult to obtain. But falling property prices led to property developers cancelling new projects and, in September 2007, the construction industry began to lay off workers. By April 2008, 39,000 jobs had disappeared in the industry, general consumption had started to slide and the retail industry was closing shops and cutting tens of thousands of other jobs. By that time, Irish banks were having to pay increasing premiums to borrow on the Euro money markets. They had increased interest rates on all loans and remortgaging had dried up, thereby reducing the purchasing power of the population as well as the demand for houses, contributing to the decrease in house prices. But the worst was yet to come.

The day after the collapse of U.S. giant Lehman Brothers, on September 15, 2008, stock in Irish banks and real estate companies began to fall. On September 29, Irish shares experienced their biggest fall in 25 years. During that one day, the shares of Anglo Irish Bank lost 46% of their value. The next day, Finance Minister Brian Lenihan stepped in with a banking bailout: all accounts and debt held by the country's six largest banking institutions were to be guaranteed by the state for two years; capital injections would be provided to these banks if and when this was deemed necessary.

But this first announcement wasn't enough to stop the banking system from seizing up. Within two weeks, faced with the risk of a wave of panic withdrawals by foreign depositors, Lenihan extended the state's guarantee to all Irish-based banking lending and borrowing. This prompted an immediate inflow of foreign funds, seeking to benefit from a guarantee that no other state yet offered.

In proportion to the size of the country's economy, this was a huge bailout. This blanket guarantee represented a potential liability for the Irish state of 500 billion Euros, equivalent to more than 300% of GDP, even before any fresh cash was pumped into the system and without introducing additional control over the banks.

Writing in the Irish Times, Morgan Kelly, an economist known for his harsh criticism of the credit frenzy, summarized the situation: "Irish banks are currently owed 110 billion Euros by builders and developers.... As the property bubble has burst, it is looking increasingly unlikely that banks will get back more than a fraction of this. In particular, very little of the 25 billion lent to builders to construct the ghost estates and vacant apartment blocks that now blight the landscape will ever be seen again.... Not only does the Government guarantee of bank borrowing fail to solve the underlying problem of bad loans; it faces the Irish taxpayer with a real risk of enormous losses.... Suppose that you are a bank that has lent 100 million Euros each to 10 developers who are having problems meeting their repayments. What you do is bundle the loans into one asset and sell it, with Brian Lenihan's signature on the bottom, on financial markets for one billion Euros. When the borrowers default, the taxpayer will be left taking up the tab."

The fact that this bailout had not resolved the banks' problems was exposed very quickly, when the slide in banking shares failed to stop. Three months later, Brian Lenihan finally resorted to the option he had always wanted to avoid -- the part-nationalization of the country's three largest banks through a massive injection of funds. Anglo Irish Bank was nationalized while the state took a 25% share in Allied Irish Banks and 16% in the Bank of Ireland.

In this last case, the National Pension Reserve Fund made a 16% injection into Bank of Ireland. Never mind what this will cost to pensioners!

The consequences of this bailout for the Irish state's finance were almost immediate. Within three months of the announcement, the interest rate that the government had to pay to refinance its ballooning public debt on the international money market had increased by three percentage points -- the largest increase by far across the Euro zone. This served as a pretext for the long series of austerity measures which followed, designed to make the working class majority of the population foot the bill for the speculative frenzy of the small layer of bankers and property speculators who, being "too connected to fail," had been bailed out by the government.

The Government Turns Against the Working Class

By the summer of 2008, the Irish economy was officially declared to be in recession. Jobs were cut left, right and center. In the first six months of 2008, layoffs increased by 27% compared to the same period in 2007 and applicants for unemployment benefits increased by 31%. Countless working class households were behind on their mortgages and often their utility bills. At this point, the government announced an emergency budget to reduce the growth in the government deficit.

This budget, finally adopted in October 2008, included a vast array of cuts. Forty-one state bodies were to be abolished or privatized. A whole series of programs were to be abolished -- like that of a new cervical cancer vaccination program costing only 10 million Euros or 0.07% of the public health budget, a minute droplet in the ocean of the public deficit!

The announcement that automatic entitlement to a Medical Card (which gives access to almost totally free medical care) would be withdrawn from the over-70s caused a scandal. On October 22^nd, an unprecedented protest outside the Dublin parliament brought together 15,000 pensioners from all over the country, some of whom were carrying angry signs saying "Just shoot us, it would be quicker." Likewise Lenihan's decision to slap a 600 Euro increase onto the university registration fee brought thousands of students out in the streets.

But politically, the most important measure in this budget was a 1 to 2% tax on all gross wages and welfare entitlements, including the very lowest, which in reality was a wage cut. This unilateral announcement was a slap in the face for the union leaders who had just negotiated another "Social Partnership" deal in which they had made substantial concessions to Lenihan. They had agreed that the already scheduled general wage increase be cancelled and that wages be frozen.

The union leaders were not against the cut in principle, but now they had to "sell" it to their members! The union leaders protested vigorously. But they stopped short of demanding, for instance, that, instead of the workers, businesses and the wealthy be taxed for a bailout of which they were the main beneficiaries! In the end, union leaders claimed victory when Lenihan "conceded" to exempt earnings below the annual national minimum wage from the tax. At the time Lenihan boasted cynically that this would exempt 36% of the workforce, which probably says it all about real wage levels!

However, this was only the beginning of the anti-working class attacks. 2009 began with two almost simultaneous announcements: first, U.S. electronic giant Dell, Ireland's largest high-tech manufacturing employer, was to cut 1,900 jobs or two thirds of the workforce at its main production plant in Limerick (on which 10,000 other local jobs depend); and second, the symbol of Ireland's traditional industry, Waterford Wedgewood, was declaring bankruptcy and closing its last crystal factory. At the same time, union leaders were returning to the negotiating table to revise the previously agreed deal, following demands for more austerity by the government.

This time Lenihan demanded a 10% wage cut across the whole public sector. When this was turned down by the unions, the government produced an alternative -- an increase of 7% in social security taxes, the deferral of all planned pay increases and a 25% cut on all non-wage payments. Lenihan then added that should his proposals be refused, he would declare an end to the "Social Partnership" framework.

This last threat set the union machineries into motion. They didn't really object to some form of cuts. For instance, coming into these talks, Jack O'Connor, general secretary of SIPTU, the largest public sector union, had stressed that unions "have a responsibility to play our part" (in the austerity drive). Another public sector union leader, Dan Murphy, had endorsed the worn out threat of Ireland being forced to turn to the IMF, that some pro-government commentators were already using to try to push public sector workers into submission.

So, the union machineries launched a program of action, formally against the wage cuts but, above all, against the government's threat to dump the "Social Partnership" framework. This campaign culminated, on February 21^st 2009, in a 120,000-strong march called by the ICTU (the Irish Confederation of Trade Unions) in Dublin (something which was unheard of, in a city of 1.6 million). The next step was meant to be a series of votes for industrial action across the public sector leading to staggered strikes and to a 24-hour national anti-cuts strike, for both the public and private sector. But Lenihan did not take any chances. He rushed legislation through the Irish Parliament to raise social security taxes on March 1^st. Lenihan then proposed to resume the suspended talks -- and the union leaders proved more than willing to oblige, canceling all the strike actions which had been planned.

A Further Turn of the Screw

As it turned out, the measures which had been forced down workers' throats were only for starters.

In fact, the government was not particularly secretive regarding its agenda, taking the pretext of its deficit, especially since the credit rating agencies had already downgraded the debt of the Irish state in March and they did it a second time in July.

An official report published in July outlined a program of "public sector transformation" aimed at achieving 5.3 billion Euros worth of expenditure cuts. Its main proposals included cutting wages, cutting 17,000 jobs (about 6% of the total), cutting welfare payments and increasing the number and level of charges paid by households for public services.

By September, even though it had not yet been officially endorsed as government policy, the impact of this agenda could already be felt. For instance services providing help to poor families and the unemployed were finding that their funding had suddenly dried up. This resulted in numerous protests called locally, starting in October, by SITU branches. This first wave of protest reached its highest point on November 3^rd, 2009, with co-ordinated marches against the austerity drive organized in the main towns, involving an estimated 150,000. Then, on November 6, the ICTU launched its official "Get Up, Stand Up" campaign against the threatened cuts in the public sector. It was launched with a national day of action in which tens of thousands attended lunchtime rallies. The next step was to be a one-day national strike on November 24^th.

By making a demonstration of their strength before the 2009 "Social Partnership" round of pay talks and the December budget, they were probably hoping that, this time, the government would not take the risk of pulling another fast one behind the backs of the unions' negotiators.

But this did not mean that the union machineries were any more determined to organize the fight against the cuts than they had been at the beginning of the year. In fact, on November 24^th, just as the ICTU's one-day national strike was closing down all public services across Ireland, Peter McLoone, the head of the ICTU negotiating team and leader of IMPACT, one of the public sector unions, explained that it would be "necessary" to agree to temporary cuts in the public sector wage bill, that the July report on "public sector transformation" could serve as a basis for a negotiation and that "it would be possible to agree on an alternative that will achieve the savings the government requires." On the same day, SIPTU General Secretary Jack O'Connor gave insight into what the union leaders were willing to concede, when he had the nerve to state that "the boom has disproportionally increased pay and pay costs here against competitor countries"! What more could Lenihan have found to say to support his case for cuts?

In order to demonstrate their "goodwill" in the course of the talks, the union leaders actually called off another one-day national strike which had been planned for December. They came up with their own alternative to the government's cost-cutting agenda. To avoid more wages cuts, they offered a compulsory unpaid leave scheme (equivalent to a 7% wage cut on average) and agreed to new negotiations based on the "public sector transformation" report. Lenihan had almost everything he wanted, but not quite: the cuts of the public sector wages which would weigh down on the wages of the working class as a whole. Besides, at a time when he was aiming at cowing workers into submission, there was no advantage in it for Lenihan to appear to be going along with the union leaders' agenda. On the contrary, he had every reason to make it clear that he was calling the shots -- albeit in the full knowledge that, of course, he could always rely on the union machineries to police workers into obedience if necessary.

So, on December 4^th, the talks between the ICTU and the government collapsed, not because the ICTU walked out, but because the government did! Less than a week later, Lenihan announced the cuts he had kept up his sleeve all along as part of the December budget. Public sector wages were to be cut by 5 to 10%. Unemployment benefit were to be cut as well, by up to 50% in the case of those aged 20-21. Overall, all welfare benefits were to be cut by an average 4%. Prescription charges were to be increased by 50% per item, etc.

Logically, this should have spelt the end of the "Social Partnership" framework for the foreseeable future. But it did not. Over the next two months, the union leaders sulked ostentatiously in protest against Lenihan's unilateral imposition of these cuts. As they had done before the December talks, they organized some protests -- or rather, they allowed their local branches to organize local protests, without giving workers a chance to measure the extent of the discontent across Ireland. But as soon as the government winked in their direction, the union leaders rushed back to the negotiating table, this time, for talks on "public sector transformation" based on last July's report.

The resulting document includes all the cuts outlined in the July report, although the exact number of jobs to be cut is not specified. But it also includes some additions. For instance, until 2014 (when the deal comes to an end), any pay increase will have to be self-financing through job cuts. In the meantime, the pay cuts and taxes introduced so far will remain. In addition, the deal introduces the notion that any public sector worker can be redeployed anywhere else in the public sector, temporarily or permanently. New hires in the public sector are to get worse pension provisions, etc.

Toward Another Slump?

The most recent figures available (at the time this article was written) show that Ireland has seen one of the largest falls in GDP among the industrialized countries (12.7% over the past two years). The stock of homes remaining empty despite being available for sale or rent is now equivalent to the entire production of houses in 2007-2008. Overall, since their 2006 peak, average house prices have dropped by 35%. But the price of land for real estate development is estimated to have fallen by as much as 80% on average. Government income has dropped by nearly 30% since the beginning of 2009 and its deficit is expected to reach 13% of GDP this year. In economic terms, this is a catastrophe which has no equivalent in Irish history since the 19^th century.

This is reflected in the social situation. Due to the wage cuts, Ireland is one of the few countries in which even the nominal average wage has fallen, not taking into account the taxes and the cuts in social benefits. The rate of unemployment is officially close to 14%. But this figure conceals the fact that emigration has resumed on a large scale, with nearly 100,000 Irish emigrating over the past 15 months.

This is the backdrop in which the Irish banking system is revealing more deep cracks. A series of announcements, phased in over the first two months of this year, exposed the colossal extent of the losses that the country's five largest banking institutions had been hiding in their vaults since the implosion of the Irish property bubble. In total, the five largest banks had 82 billion Euros in "toxic" loans, nearly half the country's GDP, with the supposedly nationalized Anglo Irish bank holding about 38 billion.

Even then, these were only the estimates volunteered by the banks themselves. But there's nothing to say these estimates reflect the real losses (and mad speculation) of the banking system, any more than past similar disclosures.

In any case, from the beginning of March 2010, banking shares began to face a speculative run. The 20% fall in Allied Irish Bank shares on March 29^th, 2010 prompted the government to launch another bailout, this time on a much larger scale. A state-owned body, the National Asset Management Agency (NAMA), is to buy back 82 billion Euros worth of unrecoverable loans from these banks, for which the state will pay 52 billion, based on a valuation dating back to November last year. By a cynical twist, it was calculated that this choice of valuation date, rather than using the current market value of these loans, amounted to a 1.5 billion handout to the banks -- equivalent to the total income provided by the public sector pension tax!

The role of NAMA is not just to bail out the banks themselves, it is also to bail out the real estate tycoons who borrowed these funds and now consider that it is the role of the state, and therefore of the working class majority of the population, to pay the bill for them.

In addition, the state is to inject a total of 22 billion Euros into the five banks. As a result, in addition to Anglo Irish which is already nationalized, the government will end up being the de facto majority owner of the four other banks, without any real control over their operations, and without any guarantee that more toxic assets will not emerge out of their vaults at some point in the future. More or less, the Irish state is already in suspended bankruptcy, suspended no doubt because a formal bankruptcy would imply unpredictable consequences for the British and U.S. banking systems. But for how long can this situation be sustained?

Such is the black hole created by the capitalist market for which the Irish working class is now supposed to pay an exorbitant price, with its jobs, wages, public services and conditions of living. So far, the workers have been trapped and paralyzed in their resistance against the attacks of the capitalist class by the "Social Partnership" policy of the union bureaucracy. But an explosion of anger caused by one austerity measure too many could begin to reverse the situation. Maybe a "Celtic Tiger" will revive after all, but this time one armed with a strong proletarian program, to fight to end the parasitism of capital and to free itself from the straightjacket imposed by the union machineries, accomplices of the bosses.

April 25, 2010 and updated July 18, 2010

The fight against the Mafia -- or against organized crime -- has been a permanent activity of Italian governments for decades, but the Mafia has never been as influential as it is today. There have been wave upon wave of arrests and trials, including the so-called "maxi-trials"; repeated announcements of another "decisive blow," with the arrest of another top level Mafia boss -- all to no avail. The power of the Mafia, or rather of several Mafias, is measured by the growing volume of business they control. They already own whole sectors of the economy. And they have countless accomplices at every level in the political system.

The Sicilian Cosa Nostra, the Calabrian ‘Ndrangheta, the Neapolitan Camorra and the Sacra Corona Unita of Puglia not only have deep historical roots, but they have been able to renew themselves, drawing nourishment from the economic mechanisms of today's capitalist society.

The Mafia during the Risorgimento

The Mafia and its peculiar relationship with the state authorities -- especially in Sicily -- derive from the conditions under which Italy was unified in the second half of the 19^th century, in the face of resistance from the Kingdom of Naples, which controlled Sicily and the whole southern part of the Italian peninsula. While this process, called the Risorgimento (resurrection), amounted to Italy's bourgeois revolution, the revolution remained far from complete.

Sicily had a long tradition of secret armies and societies, which pretended to fight against foreign occupation or to defend widows and orphans against the powerful but which carried on an ambiguous relationship with those same powers.

Even before unification, the Sicilian aristocracy organized its own private militias, using them against the peasantry to collect taxes and ensure that recalcitrant peasants met their feudal obligations to the aristocracy. The abolition of feudalism in 1812, which did not put an end to private ownership of the large estates, made these armies more necessary than ever. As the old system of land tenure gradually broke up, the big landlords moved to the towns, leaving overseers, known as "gabellotti," to manage the estates and collect the payments owed by the peasants. The gabellotti relied on the help of the estate's private guards, or "campieri," to collect the "gabella," a term used in Sicily to denote the rent owed to the landlords.

At the same time, the peasants increasingly aspired to own the land they tilled, so much so that the last period of Bourbon rule in Naples was marked by peasant agitation and even insurrections, against which the gabellotti organized their own armed gangs. These gabellotti, now able to acquire land for themselves, constituted a new rural bourgeois class. They used the same repressive methods against the peasantry which they had previously used on behalf of the feudal lords, only now it was on their own account.

The bourgeoisie from Northern Italy wanted to set up a single State, which would include the whole of the Italian peninsula and Sicily, ensuring that it would have a large and protected market for itself. But the Kingdom of Naples relied on the support of the propertied classes of Southern Italy -- that is, basically, on the old large land-owning aristocracy, allied to a weak city-dwelling bourgeoisie, which had only begun to develop in the South and only in Naples.

There is a general tendency to reduce this period of Italian unification to the heroic exploits of Garibaldi and his army of a thousand "Red Shirts," which landed in Sicily in May 1860 to free the island from the Bourbon yoke and win it over for the new State of the whole Italian people. But it was the king of Piedmont-Sardinia and his Prime Minister, Cavour, who had taken the initiative in the unification process, and they used Garibaldi only within strict, well-defined limits. Garibaldi lent the process a revolutionary appearance, thereby helping to secure the support of the nationalist petty-bourgeoisie. But this was no more than window-dressing. The last thing the Northern bourgeoisie wanted was a mobilization of the masses threatening a real revolution, which would have upset the fragile social equilibrium in the Southern regions.

The Piedmont State simply wanted a compromise with the South's propertied classes. Its objective was to convince the Southern propertied classes that the new State would guarantee their social domination and offer them better protection than could a decaying Kingdom of Naples. For their part, Sicily's propertied classes wanted proof that their new protectors would act as unflinchingly as had King Ferdinand II, who in 1848 had even ordered the bombardment of Messina to keep Sicily under his domination.

It fell upon Garibaldi to give them that proof soon after he landed in Sicily. Taking Garibaldi's landing as the signal for their own liberation, the peasantry rebelled against the aristocratic landowners and started taking over the big estates for themselves. But the "revolutionary" sent by Cavour set his thousand "Red Shirts" against the peasants. Garibaldi, who had proclaimed himself dictator of Sicily by the authority of King Victor Emmanuel II, carried out the repression of the peasant movement, much to the relief of the Sicilian aristocracy. Power thus passed from a Bourbon king to a Piedmont king, who established his rule in Sicily and the whole South. Big landowners now had a different protector, but their domination over the rest of society was maintained.

But, the new state was unable to gain a broad social base within the population of the South. Garibaldi's landing and the inclusion of Sicily and the South in the unified State of Italy was not a thoroughgoing revolution: it did not set the whole society afire, overthrowing the old class relations; not did it deprive the gabellottis' armed bands of their role. On the contrary, the old social structures remained, and a compromise was struck between the old propertied classes and the new State -- thus opening up space for the development and consolidation of these armed bands. Mafiaoso organizations were able to impose themselves as a kind of secret power, a necessary intermediary between Sicilian society and the unified Italian State, which was far away.

Armed Bands at the Service the Sicilian Bourgeoisie

Even the origin of the word "Mafia" is unclear, but many historians believe it comes from the Arabic "muhafiz," meaning "protector or guard." The history of Sicily's Mafia is not well known and for a good and obvious reason -- it has always been an organization zealously trying to guard its secrets.

In his study of the Sicilian Mafia at the end of the 19^th century, historian Salvatore Lupo showed that a layer of rich farmers and other notables, including the gabellotti, took advantage of the existing relationship of forces to impose themselves as indispensable middlemen between the declining aristocracy and a State power that had no roots in Sicilian society.

Because they did not hesitate to resort to armed violence, intimidation and murder, in the context of a weak State, these Mafiosi could impose themselves as necessary mediators in situations of conflict. Problems like cattle theft or disagreements over debts were solved, not by the State and its judicial system, but within the framework of a"componenda," in which the local Mafiosi played the role of an arbitrator -- for a fee, of course. The poor population accepted the decisions of this "tribunal," because everyone knew that if they did not accept its verdict, their bullet-riddled bodies would one day be found in the woods. And the "code of silence," the "omertà," would forever prevent the identification of the murderer because of the total absence of witnesses. The Mafiosi were more respectful of the aristocrats and big landowners who, generally speaking, were not submitted to this kind of treatment. But those who dared to try to manage without the Mafiosi's compulsory arbitration ran the risk of being robbed or having their wells poisoned in retaliation. After a while, they too, came to the conclusion that it was more sensible to accept these tribunals' arbitration than wait for the intervention of far-away state authorities.

Twice, after unity, the Italian State carried out a violent repression against the Sicilian population. In 1866, the army was sent to Palermo to quash an insurrection which had been partly led by supporters of the previous regime, but which was also based on genuine popular discontent. The government troops drowned the revolt in blood. Then, between 1891-1894, there was a much larger, more conscious movement of the fascii siciliani dei lavoratori. Even though Mussolini was to steal their name a quarter of a century later, these "Sicilian workers' leagues" of the 19^th century had nothing to do with a fascist movement. All over Sicily, these leagues organized poor peasants, farmhands, sharecroppers, industrial workers, miners, and craftsmen, expressing their demands, especially the peasants' aspiration to own their own piece of land. But the leagues were also stamped with an egalitarian and socialist spirit. When land occupations were organized inside the latifundias (large estates), the central State's army responded with bloody repression including, in January 1893, the massacre at Caltavuturo.

Faced with a mass movement that was rapidly spreading to the rest of Sicily, Giovanni Giolitti's Liberal government made a few concessions. But at the end of 1893, a new government took over, headed by right-winger and former Garibaldi supporter, Francesco Crispi. Under pressure from the Sicilian landowners, Crispi organized a large-scale crackdown that sent the leaders of the movement to jail. As for the Mafia, even though locally some of its members had joined the fasci movement, it intervened above all to reinforce the repression.

"The State consists of special bodies of armed men," wrote Frederick Engels in a well-known formulation, indicating that, in a society divided into classes, a power based on armed force is needed to enforce this social division for the benefit of the possessing class. But in the highly unstable conditions of post-unification Sicily, the armed force of the Italian State turned out to be too weak to carry out this task. Thus, the Mafia was to become an indispensable complement to the State for the Sicilian propertied classes.

The unique conditions of the bourgeois revolution in Sicily and the southern part of Italy meant that the State's "special bodies of armed men" required another armed force, somewhat hidden, but just as necessary for maintaining bourgeois order. Representative of part of the local bourgeoisie, rivalling, but at the same time acting as an auxiliary to the power of the official State, the Mafia's "special body of armed men" became a force to be reckoned with in Sicily's society. But the Mafiosi needed to establish an organization, and this is what they did under the name of the "Honorable Society" (l'Onorata società). This Honorable Society was led by Don Vito Cascio Ferro, who at the end of the 19^th century seemed to be the first real chief of the Mafia. He gave the Mafia its centralized structure and territorial organization consisting of fiefdoms, each controlled by a "family," as well as systematic financing, based on the "pizzo," a tax whereby everyone was forced to pay a share of their own income to the Mafia. This organization later took the name "Cosa Nostra" ("Our Thing"), re-importing the name the Sicilian Mafiosi had given to their American organization.

This "Honorable Society" and its members, the "Honorable Men," inevitably found accomplices and even their own representatives inside the state machinery. Born in a pre-capitalist environment, the Mafia has been able to keep abreast of economic developments and position itself in the business world where it could specialize in those areas which were, of necessity, outside of bourgeois legality.

By the end of the 19^th century, there was a real Mafia "bourgeoisie" in Sicily. In February 1893, the murder of Emanuelle Notarbartolo scandalized the country because the victim was a rich bourgeois, ex-mayor of Palermo, then manager of the Bank of Sicily up to 1890.

Raffaele Palizzolo, who had ordered the murder, was also a well-known and powerful figure, having been elected to the Italian Chamber of Deputies, thanks to his network of political proteges and cronies. Disagreements had sprung up between the two men, such as when Notarbartolo accused Palizzolo of embezzlement. When one of Palizzolo's thugs killed Notarbartolo, it was such a scandal that Palizzolo was actually imprisoned. After a series of trials held in northern Italy, he was eventually freed on grounds of insufficient evidence, making a triumphant return to Sicily and portraying himself as a martyr!

This whole affair showed that the Mafia was no longer just an organization of the rural Sicilian bourgeoisie, but was linked to part of the urban bourgeoisie, where it enjoyed the support of influential members of the political class. The national press responded to the Notarbartolo murder to highlight the links between the Mafia and members of the Sicilian upper class. But Sicilian "polite society" declared that the Mafia doesn't exist, that it was only an invention of ill-intentioned Northerners who wanted to denigrate the people of the South and their customs.

It wasn't until fascism came to power, several decades later, that the Mafia ran into some difficulties -- or, to be more exact, that certain Mafiosi had problems. Mussolini wanted to demonstrate that his dictatorship was unchallenged throughout Italy. He dispatched his prefect, Cesare Mori, to Sicily, instructing him to clamp down on the Mafia, with all the means at the disposal of the State. Mori did just that, staging real military operations which led to a huge number of arrests and deportations of hundreds of people involved with the Mafia. Others felt they had no option but to flee the country, emigrating in particular to the United States. This repression, which won Mori the nickname of the "Iron Prefect," certainly got rid of some of the island's Mafiosi gangsters, but it touched only the layer of hitmen and the families that controlled part of the territory. The Mafia upper crust of financiers and big landowners was not only left untouched, but some of them became prominent members of Mussolini's Fascist party and his government. The "Iron Prefect" eventually fell in disgrace. And in fact the habitual "understanding" between the Mafia and the central power remained intact, even if it was less visible.

After its semi-clandestine existence during the Fascist period, the Mafia came back with renewed strength after the landing of Anglo-American troops on the island in 1943 (which the Mafia had facilitated) and the end of Fascist rule. The Mafia quickly regained control over its territory, thanks to the benevolence of the occupation authorities, which welcomed an organization that carried some weight and was able to keep a tight rein on the population. For a while, some Mafiosi even supported a short-lived movement for the independence of Sicily, declaring that they wanted it to be the U.S.'s 50^th state!

More significantly, the Mafia consolidated its grip over Sicily's countryside when, at the end of the war, the peasant movement broke out again. Peasant unionists and members of the Communist Party started organizing new occupations of the "latifundias," whose owners had reinforced their positions during the Fascist era. The repressive forces of Italy's so-called new "democratic State" and those of the Mafia joined together. As early as 1944, in Villalba, the local head of the Mafia, Calogero Vizzini, ordered his henchmen to use live ammunition against a meeting organized by Communist Party leader, Li Causi. But the most notorious episode was the massacre of Portella della Ginestra, on May 1^st 1947, when thugs of the bandit, Salvatore Giuliano, opened fire on peasants who were meeting there, killing at least ten people. Peasant trade unionists risked their lives every day, threatened by Mafiosi who could rely on many accomplices in the State apparatus, at every level, all the way up to Rome.

Salvatore Giuliano, whose gang was used by the Mafia, was killed in 1950 by Pisciotta, his own lieutenant, who himself died in prison four years later, after drinking poisoned coffee. In all these cases the web of complicity reached all the way up to the Minister of the Interior, Mario Scelba, the strong man of Christian Democracy. These successive assassinations, by eliminating potentially embarrassing witnesses, prevented exposure of members of the state apparatus.

"Order" having thus been restored, the end of the postwar period opened up a favorable period. The construction boom of the 1950s and 1960s is still called the "Sack of Palermo," when fortunes were made by a handful of building contractors, like Mafia chief Francesco Vassallo, thanks to their friendly ties with Palermo's Christian Democratic "decision makers."

Nonetheless, the whole period turned out to involve a degree of uncertainty for the Cosa Nostra. In the 1950s and ‘60s, the Mafia seemed to be losing its grip over Sicilian society. The period was marked by economic expansion and industrial development, by the growth of the service sector and the creation of public service jobs, but also by a massive emigration to the northern parts of Italy where there was a shortage of labor. As a result, fewer people depended on the Mafia to make a living. In a society that appeared to be going forward, the "Men of Honor" no longer inspired respect. Even if Cosa Nostra carried on its usual activities, its role was reduced, at least relative to the development of the rest of society. Unfortunately, this state of affairs was merely an interlude.

In fact, the 1970s represented a turning point for the Mafia. With economic expansion coming to an end, capitalism's parasitic activities came back to the fore. Given the Mafia's collusion with Christian-Democrat city governments, the results of land auctions and bids on government contracts almost always favored Mafiosi contractors. The Mafia collected its own "tax," the "pizzo," on practically every kind of business, from agricultural markets to road construction. Thus the Mafia and the Mafiosi had made a decisive leap: the "Mafiosi bourgeoisie" had become a business-oriented bourgeoisie rooted in real estate, construction, public works and finance. At the same time, the Mafia moved into international trade, taking the leading role in the worldwide expansion of drug trafficking. Its clandestine organization, its "army," its use of coercion and its ties with Cosa Nostra "families" in the U.S., were vital advantages for such activities.

Nonetheless, things were not always so simple inside Cosa Nostra. Not all conflicts could be resolved by the "cupola," a Supreme Court of sorts where representatives of the different families got together to sort out, theoretically in an amicable way, problems like territorial infringements and jurisdiction. Mafia wars between different families broke out periodically and took a heavy toll. And when, periodically, policemen or judges became too curious or seemed to take their role too much to heart, they were threatened and eventually eliminated. Forced to react to the open challenge to the State, government would declare that the "fight against the Mafia" was back on the agenda, limiting the Mafia's freedom of action for a while, or at least forcing it to keep a lower profile.

Camorra, ‘Ndrangheta and Others

The Camorra, Naples' own Mafia, developed in parallel with its Sicilian counterpart, even if it was born in an urban environment which was quite different from the Sicilian Mafia's rural origins. The origin of the word "Camorra" is disputed. But most historians think it comes from the Spanish word, GuarduZa, which was apparently used since the 16^th century to describe the armed bandits who reigned over the districts of Naples and forced people to pay protection money to them. In 1820, during a meeting convened in a church in Naples, the so-called Bella SocietB Riformata ("Reformed Polite Society"), was formed, giving an organizational structure to these bands of armed men. At the time, the king's official guards could not control the socially explosive city, nor prevent district gangs from fleecing the population. So the royal regime tolerated them and occasionally used them. Thus began a long chapter of collaboration with Naples' gangsters. Some were put on the police payroll, which helped to transform the Camorra into an instrument for controlling the population.

In 1860, the unified Italian State inherited the Bourbon kings' old State machinery -- and its methods. With ups and downs, the relations between the State and the Camorra were maintained, based on a mixture of complicity, cooperation and mutual respect -- or, at least, neither encroached on the other's domain. The Camorra experienced a number of setbacks, though. The Bella SocietB Riformata was officially dissolved in 1915. And up until today, the attempts at endowing it with a hierarchy similar to Sicily's Cosa Nostra have all failed.

In the 1970s, Raffaele Cutolo launched the Nuova Camorra Organizzata ("New Organized Camorra") in an attempt to revive the 19^th century's Bella SocietB Riformata. But his attempt met with the hostility of Cutolo's rivals and sparked off a bloody war between criminal clans. In the end, the "families" found a way of sharing out the territory among themselves. The Camorra has survived thus far, thanks to the State's tolerance and to its own capacity to adapt to the economic situation, taking advantage of each and every opportunity offered by trafficking and the underground economy. So much so that, today, the Camorra may be more deeply entrenched in Campania (the Naples region) than Cosa Nostra is in Sicily.

The history of Calabria's ‘Ndrangheta is similar in many ways to that of its Sicilian counterpart. The name ‘Ndrangheta comes from the Greek andragathía ("manly courage") and was used in the 19^th century to designate the secret societies set up by peasants to resist the landlords. Facing extortion by the rich, the peasants developed their own extortion schemes and ended up degenerating into criminal gangs. However the members of these gangs still received a measure of respect from the population, which allowed the upper stratum of the rich to make use of them. So here too, the secretive power of the ‘Ndrangheta was able to impose itself as a necessary substitute for a distant or absent State. The ‘Ndrangheta experienced real difficulties under Fascism, but after World War II and the landing of the Allied troops it resurfaced. As in Sicily, the occupation authorities preferred the cities to be run by men of influence who could control a territory.

The ‘Ndrangheta is the Mafia-type organization that has experienced the most spectacular development in recent years. It is a discreet organization, based on family ties, initiation rites and a strict selection of membership -- all of which make it difficult to infiltrate. It now controls the agricultural economy of the Calabria region. And while it used to be present in the South only, today it controls whole sectors of the North's economy as well.

Finally, the Sacra Corona Unita operates in the region of Apulia (Puglia, the region covering the heel and stirrup of Italy's "boot") and the La Stidda (the "Star") operates in southern Sicily. They are more recent organizations, emanating from the Camorra and Cosa Nostra, at the initiative of several families of these two organizations.

All these Mafia-type organizations have common features, coming from their history. Some of these features may seem like mere folklore -- like the procedures for admission to these secret societies, including initiation rites requiring new members to swear loyalty to the traditions, obedience to the bosses, and to accept in advance their own death sentence as the penalty for betrayal or disclosure of any of the organization's secrets. However, these conditions are less dictated by folklore and tradition than by necessity, in so far as they allow these secret societies to act efficiently, at the margin of the law and to be respected both by their own members and by all those with whom they do business.

The supposed Mafia "culture" originates in such necessity. According to Mafia rules, in Sicily, a "Man of Honor" belonging to Cosa Nostra must obey the following principles: keep his word, reject treason, punish the traitor, be a fair arbiter, agree to sacrifice himself for his "friends" -- that is, for the organization. These moral principles are often presented as being typically Sicilian, but have a lot to do with Catholic conformity. The "Man of Honor" is expected to behave as a good Christian, have no other ambition than to sustain his family and be respectful of women. He would not, for instance, corrupt the youth or live off prostitution. Of course, these last "principles" are brushed aside whenever they run counter to the Mafia's interests, especially when challenged by other organizations that do not pretend to have the same principles. If the issue is winning or losing a "market," principles are thrown overboard in no time.

The "moral" principles of each Mafia organization necessarily reflect the history and the society out of which it evolved, giving each its own special mark. They bind the members of the gang together and allow the "Man of Honor" and his personal and family milieu to maintain a good conscience. Equipped with this sort of ideology, the Mafiosi can declare that even though they act in a way which most people consider criminal, they are only defending their kith and kin, as their own tradition dictates. There are similar rules in every criminal gang on earth. But this particular gang has, for over a century, managed to live in osmosis with a section of society and indeed with a large fraction of its leading strata.

The Mafia and the Economy

The recourse to coercion, murder and all the other methods at the disposal of those operating outside the bounds of legality -- facilitated by the tolerance, if not the complicity of the authorities -- has paved the Mafias' way to success. Today, Italy's Mafias play an ever-growing economic role.

In Sicily, the old rural Mafia has become a genuine business-oriented organization, controlling the bids for contracts in public works and housing construction. It has taken a controlling share in the international heroin trade. It collects the "pizzo" on most activities. It has ties with the world of finance to solve its money-laundering problems. According to some reports, Cosa Nostra's global income is roughly 25 billion dollars -- that is, one quarter of Sicily's GDP -- and growing.

In Campania, by dividing up the territory among themselves, the Camorra families have laid their hands on a sizeable part of economic activity. Author Roberto Saviano, who is still threatened with death by the Casal di Principe clan, whose names were mentioned in his book, Gomorra, has given us an idea of the activities of this criminal organization.

Starting from traditional operations like trafficking in cigarettes and drugs, loan-sharking, prostitution, real estate, public works, and collecting the "pizzo" on shipping activities, the Camorra has shifted to much wider areas. It controls sub-contractors for the textile industry, which employs a lot of illegal workers. It also controls recycling and waste disposal, a huge business. The "salesmen" of the Camorra travel throughout Europe offering their services to help with the dumping of industrial waste -- to bury it in the Neapolitan countryside at rock-bottom prices -- irreparably polluting the whole area. The Camorra's hegemony over Campania reinforces itself. Increasing unemployment with the cutting of industrial jobs has meant that a large number of local youths find the job of Camorra henchman the only one offered. The Camorra's annual income is said to be at least 25 billion dollars as well.

Finally, Calabria's ‘Ndrangheta developed more discreetly than its counterparts in Sicily and Naples. It has always kept a lower profile, engaged in fewer settlings of scores and murders. However it is no less efficient. It January 2010, it showed that it still fulfills the role of an anti-worker militia serving the citrus plantation bosses when its thugs carried out a punitive raid in Rosarno against immigrant workers. In fact, a good deal of the agribusiness sector is today controlled by the ‘Ndrangheta itself, which is active in harvesting and transport, as well as in exporting. It also controls real estate and public works, as was shown by reports on the contracts allocated to various ‘Ndrangheta families for the construction of the Salerno-Reggio di Calabria highway. Still, the greater part of the organization's income comes from the dominant position it secured for itself when it expanded into northern Italy's cocaine market -- which is said to account for over 60% of ‘Ndrangheta's income. Holding, as a result, huge amounts of liquid money, the ‘Ndrangheta has laundered it by investing in real estate, or setting up construction firms for which they secure contracts through threats and racketeering. One area in Italy's rich North, around Milan, pays the "pizzo" directly to clans from Calabria. Thanks to these maneuvers, the ‘Ndrangheta has become the richest Mafia-type organization, with an income of 57 billion dollars in Italy alone. But the ‘Ndrangheta is also now active in other European countries, like Germany, Spain or France.

The yearly revenue of all Italian Mafias together, is estimated at nearly 125 billion dollars. According to the Confesercenti, a small bosses' association, the global balance sheet of Italy's Mafias showed a revenue of 170 billion even in 2009, with a 98 billion dollar net profit. The Mafias' revenue represents more than 7% of Italy's GDP! No trafficking escapes the Mafias' control, whether it be dealing in human organs, arms, radioactive waste, sanitation, casinos, night clubs or illegal immigration.

Mafia and Political Power

From the beginning, the relationships between the Mafia and political power were based on complicity rather than on confrontation. For Sicily's bourgeoisie, the Mafia was and remains an instrument serving its class domination. The ‘Ndrangheta and the Camorra play the same role in Calabria and Campania. This implies, one way or another, that the Mafia itself penetrates the political power, and uses it to a certain extent as its own instrument -- or at least that these two parallel power structures cooperate and sometime coincide.

Collaboration exists, first of all, at the local level, where elected politicians need support. Thanks to their local implantation, the Mafia or the Camorra can provide a ready-made electorate or, on the contrary, withdraw approval from candidates who are not "understanding enough," or just suppress them altogether. Scandals regularly break out when the involvement of the Mafias becomes too visible. But in areas controlled by the Mafia, this collusion is a permanent and inevitable phenomenon.

It was public knowledge, for instance, during the long reign of the Christian Democratic party, that the Christian Democrats in Sicily were the party of the Mafia, or in any case supported by the Mafia. The whole period since the end of World War II was one of open collaboration -- most notably under the reign of Palermo's Christian Democrat mayors, Salvo Lima and then Vito Ciancimino -- even if the central State had to take measures against the most visible Mafia misdeeds. It is worth mentioning that anti-communism and anti-unionism were a cement that bonded the Mafiosi and bourgeois politicians, the Mafiosi doing the dirty work the bourgeois politicians often could not afford to do themselves.

Of course, national political leaders are not openly involved in the Mafia's wheeling and dealings. However, it is obvious that relationships are established between party leaders and Mafia bosses through the intermediary of local politicians who are in closer contact with the organization. The most famous example in this respect is Italy's seven-times Prime Minister Giulio Andreotti, who was a prominent member of practically every government between 1954 and 1992 and presently lives quietly as a "senator-for-life" of the Republic. Because of his exceptionally long career, Andreotti came to be known as the "stainless steel" Prime Minister. But, according to the declaration of a "repentant" Mafiaoso, Andreotti had no qualms about meeting Mafia boss Toto Riina, as he did, for instance, in Palermo in September 1987, a meeting which ended with a kiss in the Mafia fashion, a mark of confidence between the two men. The accusations leveled against Andreotti due to his Mafia ties landed him in court on several occasions, but he avoided conviction because delays in proceedings always managed to exceed judicial time limits. According to one court ruling, however, "the active collaboration" between Andreotti and Cosa Nostra was a fact.

In the 1970s, the biggest Cosa Nostra boss, Stefano Bontate, had close ties with Palermo mayors Salvo Lima and Vito Ciancimino, the two most involved with the Mafia, but also prominent members of Christian Democracy and staunch supporters of Andreotti. Numerous facts prove their "active collaboration". But nothing changed until a new clan, the Corleonesi (named after Corleone, their home town) started challenging Bontate's power. After Bontate's murder in 1981, Cosa Nostra's new capo di tutti i capi (the bosses' boss) was Toto Riina. He was less inclined to compromise than his predecessor and under his rule, the relations between the Mafia and Christian Democracy were more strained. Nonetheless, the State, pressured by the Mafia, made several gestures in favor of the Mafia, like cancelling prison sentences. It also turned a blind eye to the assassination of General Dalla Chiesa, who had been sent to Sicily as a special prefect. The kiss between Riina and Andreotti could have been a gesture of mutual recognition between two bosses, of whom it was hard to say which of the two was the most "Mafia."

Recently, information has come out about the 1992 Mafia "war," which was marked by spectacular bomb attacks, which killed Judges Falcone and Borsellino, who had been carrying out an investigation of the Cosa Nostra. The whole affair was sparked off by the assassination of Palermo ex-mayor, Salvo Lima. Despite being the official intermediary between the Mafia and the State, he failed to obtain the clemency he had promised the "godfathers." We know today that Cosa Nostra's boss, Toto Riina, sent the government, through Vito Ciancimino, the document containing his twelve conditions for putting an end to the "war." Most of these conditions essentially demanded flexibility in the proceedings against Cosa Nostra. People were murdered simply to prove that the Mafia meant business.

Of course the details of the ensuing negotiations are not known. But we do know that a few months later, in early 1993, Riina himself was arrested. He had obviously been thrown to the wolves by his right-hand man, one Bernardo Provenzano. His arrest had been carefully prepared -- as shown by the fact that Provenzano moved in to replace Riina and, suddenly, the relationship between Cosa Nostra and the State improved.

In the meantime, the Christian Democrats, plagued by scandals, began to disappear from the political scene. But, according to the testimonies of Cosa Nostra "turncoats," the Cosa Nostra received new guarantees: the new party, about to be launched by Silvio Berlusconi, "understood" the Mafia's situation. And so the Mafia gave Berlusconi and his party its support. One of Berlusconi's advisors, the Sicilian Marcello dell'Utri, later convicted of criminal conspiracy in connection with the Mafia, brought the Mafia its guarantee -- in exchange for which, in 1994, the vote in Sicily switched to the newly-created Forza Italia party from the old Christian Democracy, allowing Berlusconi to become Italy's Prime Minister.

Thus the Mafia evidently has numerous channels through which it can influence the State, just as the State is able to find the means to control the Mafia, at least to a certain extent. The State can, for example, choose to support one clan boss against another; or to ignore for years on end the hiding place of a Mafia boss, even if it is widely known. This continues until, for one reason or another, the tacit agreement is ended, and the boss in question is found, as was the case with Riina and later with Provenzano. This ambiguous relationship, in which the State and the Mafia fight it out in public, but in fact tolerate each other behind the scenes, sustained itself under all the Christian Democrat governments and has remained in place up until today -- maybe it is even reinforced -- under Berlusconi.

Managing Mafia Capital

The huge income from Mafia businesses and its stupendously increasing profits are indicative of a still more alarming reality: there is a veritable Mafia capital, whose rate of profit and speed of accumulation far outstrips those of other types of capital. In fact for Italy alone, profits are said to be 90 billion dollars per year, of which only a small part can be spent on luxury goods (mansions, yachts, luxury cars, etc.). For the Cosa Nostra, the Camorra or the ‘Ndrangheta, the problem of laundering and placing their gains is a severe problem.

To solve this problem, the Mafia has its own financial experts whose job is precisely to launder the money and place it or invest it in other activities, legal or not. This was banker Michele Sindona's job in the 1960s and 1970s, whose meteoric rise was paralleled to that of the Cosa Nostra. Sindona was also closely tied to the Christian Democracy and Andreotti; the Vatican and its IOR Bank, headed by Bishop Marcinkus; and finally to the Ambrosiano Bank, and its director, Roberto Calvi.

Sindona was not just an opinionated anti-communist braggart. He was above all a pioneer in the laundering of the Mafia's dirty money in tax havens and became famous for doing the same thing for his friends and clients, including not only Cosa Nostra bosses, but bishops and well known society figures he had met as a member of the Masonic Lodge known as P2, a collection of reactionary conspirators. None of this prevented him from engaging in an occasional speculative binge, like his 1973 speculation against the Italian lira.

In 1979, Sindona was behind the assassination of the lawyer Ambrosoli who was conducting an investigation into his business activities. Later on, Sindona himself and Roberto Calvi, Cosa Nostra's other banker at the time, both ended up assassinated. Sindona died in the prison where he was serving a life sentence for the murder of Ambrosoli, after drinking a cup of coffee poisoned with cyanide; Calvi was found hanging from scaffolding under Blackfriar's bridge in London. It seems that both murders were decided in retaliation against their apparently risky management of Mafia funds.

But that did not put an end to what can be called the "special accumulation of Mafia capital." This is precisely what the judges Falcone and Borsalino were trying to assess when they were murdered in 1992 by the Cosa Nostra. But since the 1980s, when the death of Sindona and Calvi shed light on the Mafia's financial organization, revelations about its finances have been rare.

Sometimes a little bit comes to light. In 2009, for instance, Berlusconi's government issued a call to capital owners, inviting them to repatriate the money they had entrusted to foreign financial institutions in exchange for a modest 5% tax, with no questions asked as to the origin of the funds in question.

A total of 106 billion dollars were thus "regularized," of which 49 billion have no strings attached and could be reinvested in Italy -- if the owners want to do it. Probably one part of the Mafia's funds were in these funds, though the bulk of organized crime's wealth is to be found elsewhere: in a whole series of tax havens, or in the accounts of the world's biggest financial institutions.

For two decades now, the globalization of financial trades and the removal of any kind of control over the circulation of capital have de facto helped "Mafia capital" to melt away into the mass of circulating capital which goes in and out of financial institutions every day, so that it is impossible to distinguish between "clean" and "dirty" money -- assuming there is such a thing as "clean" money! In the name of banking secrecy, all financial institutions want to avoid enquiries into the funds entrusted to them. The sums coming from illegal activities are to be found in their accounts, thus protected, at least as much as the sums coming from activities presumed to be legal.

From Medieval Criminality to that of the 21^st Century

The Italian Mafias are not the only organized criminal gangs in the world. Nevertheless, from their history, they have inherited a particular position in society, giving them permanence and longevity. In total, they undoubtedly represent no more than a few tens of thousands of individuals, but their social position has rendered them unremovable.

In Sicily, in Calabria and in Campania, the Mafias have developed a territorial organization which, combined with their violent methods, allows them to have a tight control on society, with the approval of the central State. This situation has obviously facilitated their development in some economic sectors. And it has allowed them to penetrate the organs of political power in ways that go far beyond simple collusion, or corruption of this or that politician. Rather than fight each other, the power of the Mafias and that of the State complement each other, providing additional means for social control.

Although these Mafia organizations have come in a straight line from a medieval and feudal past, they have survived only because the Italian bourgeois revolution, particularly in the South, was incomplete. Economic development could have rendered them marginal, had it been strong enough to bring about the social overthrow not accomplished by the 1860 revolution. But as it happened, southern Italy remained in a permanent state of relative underdevelopment, making it a fertile recruiting ground for the Mafias.

In the end, capitalist development was introduced in the South by the Mafias themselves. Sicily and Southern Italy provided a base from which they could become involved in world trade. Their role as criminal organizations, well-integrated into the rest of society, was an asset for exploring the niches that domestic and international commerce leave to those organizations existing on the margins of legality, managing weapons, intimidation and assassinations efficiently, professionally, and without scruples. From intimidation of the Sicilian peasants unwilling to pay their rent, the Mafia organizations passed over into generalized extortion and racketeering, to speculation in real estate, before taking the dominant position in drug trafficking, in illegal treatment of industrial waste, and in many other kinds of trafficking, not to mention financial speculation.

Just as the State and the economy are interlinked, there is also an interlinking between the parallel State represented by the Mafia, and the circuits of the parallel economy, both national and international, up to and including the level where this parallel economy and the legal economy, the illegal profits and the legal ones, all mix together in the circuits of the financial system.

The Mafias' parallel economy has of course enriched a handful of bosses, but globally, it represents a huge levy on society, which it contributes to holding back and maintaining in backwardness, underdevelopment, brutality and ignorance.

So it is understandable that generation after generation, there have been those who refused to accept that there was no other future other than to rely on the Mafia or to become one of its gangsters. Many of these militants paid with their lives for choosing to oppose the Mafia. One such figure was far-left militant Giuseppe Impastato, assassinated by Cosa Nostra in 1978 for denouncing them publicly in their own fiefdom. But we should also mention the judges, police or journalists, who, convinced that they should serve the cause of democracy, waged a fight against the Mafia only to lose their lives, like Falcone, Borsellino, and many others. Unfortunately, their deaths only served as an alibi for the Italian State and a bourgeoisie, which, far from wanting to exterminate the Mafia, want to live in osmosis with it, permitting it to exist. The bourgeoisie's political personnel need to maintain the fiction of a democratic State in which the law applies to all and criminality is punished. The "fight against the Mafia" that they claim to be waging and the sacrifices of those who were sincerely committed to this fight, allow the State to sustain the idea that it is really taking on the Mafia, whether it is effective or not.

It may be a survival of a medieval past, but the Mafia octopus flourishes today within modern capitalist society under the protection of the State and bourgeois politicians. In fact, it is even stronger today, at a time when the parasitic character of capitalism is being reinforced by its decadence. To annihilate this "octopus" what will be needed is no less than a social revolution, putting an end to the capitalist system itself.

In the past, we have seen the Mafia at the forefront of the enemies of the workers, even providing shock troops to massacre them. Conversely, it is the proletariat, through its struggle, and only the proletariat, that will be able to free society from this cancer.