California's lengthy struggle to pass a budget with devastating consequences for public and social services illustrates the changing role of the State, the apparatus by which one class rules over and imposes its will on another. Under the old industrial capitalism, the U.S. State, including California, provided a rudimentary safety net to partially provide for the education and health needs of workers needed in production.

Now, California, the nation’s most populous state, like others across America, is deeply mired in debt from the national and global economic meltdowns, caused by the accelerating self-destruction of global capitalism.

As corporate profits decline, capitalism seeks to recapture profits by destroying the old social contract and privatizing essential public services. As a result, every system that directly affects the public is breaking down.

Even before the stock market crash of a year ago, California was suffering from shrinking public school finances in cities and suburbs, job losses due to plant closures, escalating homelessness, and one of the highest rates of medically uninsured and underinsured in the nation.

For decades the poorest have suffered the callous indifference of the State, nationally and in California, and are now bearing the worst brunt of the loss of public services. The most recent changes, however, are also having disastrous consequences for middle income and unionized workers.

As negotiated contracts are suspended, government workers from college professors to maintenance workers have been forced to take mandatory furloughs and pay cuts of nine to fourteen percent. Public schools serving 5.9 million students suffered a $10 billion budget cut. Funds for public health have been sharply cut back, hurting seniors on fixed incomes and people with disabilities by eliminating dental, eye, and foot care for people on MediCal.

Manufactured budget crisis

California’s economy, once the 8th largest in the world, is being steered to the brink of bankruptcy. This financial train wreck did not have to happen but the rulers have manipulated the budget crisis to hasten the process of destroying the old safety net and further advancing the domination of government by the corporations. The resources exist to resolve all the budget problems; instead of resolving the problems, both the Democrats and the Republicans have used the struggle over the budget to protect the interests of the wealthy at the expense of everyone else.

California’s manufactured budget crisis is rooted in the successful campaigns of the real estate industry 30 years ago to secure their profits by putting a cap on property taxes. That was the infamous Proposition 13. In each new budget crisis since then, the capitalists have pushed through additional new measures that greatly favor big multi-national corporations and the rich.

Business commentators note that not everyone is devastated by the budget's fine print, which includes tax breaks for large corporations, film companies that keep production in-state, buyers of new homes, and small businesses that hire new employees. Consequently, the largest corporations in the world can enrich themselves with limited or no tax liability in California despite the ever-deeper cuts to public services.

While California’s elected officials and popular media describe this chaos as temporary – something that will end once the global financial system is back on its feet – California’s crisis illustrates something much more permanent and profound. As computer-controlled electronics and robotics replaces human labor in production, fewer and fewer workers are needed to manufacture the world’s supply of goods and services and manufacturing becomes less and less profitable.

As production with minimal or no labor becomes the norm, the economic laws of capitalism are breaking down. In the face of this, corporate capital seeks to hold on to its wealth and power by transforming society into a new form of private property.

Response to economic change

In response to these fundamental changes in the economy, the U.S. State as a whole, including California, is being restructured step by step, in the service of corporate profits, to wipe out all barriers to private property and to create the best possible conditions for capital accumulation.

The biggest corporations and the systems that support them, including the banks and financial institutions, are driven to find new ways to boost their profits as traditional profit channels shrink. That is why Wall Street financiers developed derivatives and other complex financial instruments that led to the global financial meltdown. California has been a rich playground for the manipulation by the financial institutions. Predatory lending, bubbles, and easy credit have led to the third highest foreclosure rate in the nation.

The capitalists are using their political control to shift resources from the poor and the middle income to further enrich the corporate powers. The tax cuts given by the California Legislature and the Governor to big corporations have dramatically increased the wealth of the wealthiest, while worsening the state’s budget crisis.

Responsibility for society is being denied, turning government at all levels into an indifferent and unaccountable apparatus that has no more use or regard for democracy. What is emerging is a new form of fascism to protect private property in a new form, converting the State apparatus from a vehicle that provided some protection for the public into to a vehicle that boldly serves only private property and profits.

Drive to privatize

The restructuring is taking the form of a drive to privatize public services so corporations can enrich themselves by controlling resources and providing services that were once public benefits. The message is: the State is not our brother’s keeper. You only get what you can afford to purchase from a private, profit-making company.

Currently in California this process is marked by a relentless attack on public sector employees. Of California’s nearly 15 million workers, three million are government or public sector workers. Almost 61 percent of government workers are represented by unions, compared to only 11.4 percent of workers in the private sector. While in the past the unions could protect their members from outright layoffs, now they are unable to blunt the assault on public employees and those they serve.

The result is the steadily growing polarization between wealth and poverty. The latest U.S. Census figures show the recession has widened the gap between low- and middle-income families and the rich who are moving rapidly to hoard and increase their wealth at the expense of the rest of us. This polarization is resulting in greater class stratification. California has a poverty rate of nearly 17% and an unemployment rate rising past 12%.

Safety net destroyed

The destruction of the old social contract is along class lines but it is not understood that way. A new class is emerging that is made up from all strata of society who are now being thrown away –former factory workers, laid off service workers, and part-time and contract workers, the homeless, and now government workers who have had good pensions and costly health care packages. The destruction of the social safety net has once comfortable suburbs looking like violence ridden and jobless inner cities. The discontent of the “Walmart poor” can almost be touched, but the discontent lacks class identification and direction.

Countless ideologues help the corporations by deflecting discussion from the real solutions to society’s problems, limiting the focus exclusively to market driven and for-profit proposals. This is especially evident in the discussion over health care in America where the only proposals seriously considered are based on the for-profit insurance, medical and drug industries, while the only real solution to providing health care for everyone is to eliminate profit-making and ensure all health care is public and universal. This is not the old fight against the right as the left sees it, but rather a fight to make what’s private, publicly owned and run.

Battle to solve problems

Although some people still look to the Democrats to solve problems, California Democrats, the majority party in the state legislature, can’t and won’t bring back the social safety net. Both parties serve the interests of capitalists who no longer need a social safety net designed to keep workers healthy enough to perform their work under the industrial capitalism system that is rapidly disappearing.

Both Democrats and Republicans share responsibility for the current crisis. Both are helping to defeat democracy by transforming the State into an apparatus that serves only private property and profits, and abandons even the rudimentary safety net it once provided and any claim to the public good. Horse-trading with the hopes that one or another political party will rescue us is over.

Another social motion is developing in response to this changing economic landscape, but it remains scattered and not yet as effective as the circumstances require. As capitalists and their political allies push to solidify government support for class rule in support of private property and profits in a transforming economy, we are seeing the gradual awakening of Californians to the fact that their futures are being destroyed.

Across the state people are demonstrating against the failures of the system. In late September employees throughout the 220,000-student University of California system staged a one-day strike against the effects of unprecedented budget cuts, including a 33% hike in tuition. Marches and demonstrations over immediate essential needs are growing, such as, the recent action in the Bay area by immigrant workers fighting to stop water terminations on tenants in foreclosed properties. There is a simmering anger as people see more lives thrown away in service to corporations that ultimately have no use for them.

The battle of our time is for the power to establish new priorities and policies, to liberate humanity, and to heal our planet in the interests of the growing dispossessed. That battle requires revolutionaries to enter the numerous struggles with an understanding that to be successful in fighting to secure our needs for healthcare, housing, education, economic security, peace, safety, and justice means teaching about and fighting for class rights and independence. In order to thrive we need a new vision and plan to produce a revolutionary reconstruction of society that benefits all humanity.

This article originated in Rally, Comrades!
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California Restructures to Enrich Corporatiozns, Abandoning Workers