How capitalism ravaged Detroit

Excerpt from talk by Jerry Goldberg at the national WWP conference in New York City, Nov. 15-16, 2014.

If anyone has any doubt that this system is overripe for a socialist revolution, we invite them to come to Detroit and look at what capitalism has done.

When our branch was founded in 1970, Detroit was a city where the Black Liberation and workers’ movements found a synthesis with the role of Black workers in the auto plants. The ideological development of the struggle was at a very high level. The Black Revolutionary Union Movement had a Marxist foundation; Marxists were elected to the City Council and as judges. We had a mayor who, although he was bourgeois in many ways, ran for office showing his defiance of the House Un-American Activities Committee.

Detroit was a center of revolutionary struggle. And that is why it was targeted by the bourgeoisie for an unrelenting war on the workers.

In the 1970s and 80s when the auto companies introduced their restructuring with robotics and automation, they shut down virtually every assembly plant in the city.

By the late 1990s and early 2000s, Detroit’s neighborhoods were coming back, housing prices were going back up, and Detroit had the highest homeownership rate in the country. What happened?

The banks came in with their predatory, racist, fraudulent loans. We had 67,000 mortgage foreclosures from 2005 to 2007 alone, and thousands more after that. The banks drove 250,000 people out of the city with their predatory lending policies.

But that wasn’t enough for them. The banks involved the whole city in predatory loans called interest rate swaps. On a yearly basis starting in 2008, they robbed $50 million from the treasury.

But that still wasn’t enough. The banks decided to impose full austerity in the city by declaring a financial emergency and putting in an emergency manager, displacing the city government, and giving the emergency manager full power to break union contracts and take every benefit from the workers as long as payment of debt service to the banks was guaranteed.

That’s what austerity is. Financial fascism. It’s when Wall Street and the banks take direct control over cities, countries, states and impose their will at the workers’ expense and throw out whatever democratic forms are in their way.

The real target of the emergency manager was the workers’ pensions. So they took the city into bankruptcy. Michigan had the strongest constitutional guarantee of pensions in the country, but bourgeois legality means nothing when the banks want their way. So the bankruptcy judge said the state guarantee doesn’t apply here.

On Nov. 7, the court approved a “plan of adjustment” for Detroit. It dissolves $7.1 billion of debt; $5.8 billion of that comes from the pensioners, who’ve virtually lost their health care and are suffering cuts amounting to 40 percent to 50 percent of their deferred wages owed to them for their years of labor.

The role of revolutionaries

Now how did the capitalist system get away with that in Detroit? They did so because while there was broad opposition, including the unions and community organizations, that opposition was confined to a struggle about bourgeois democracy.

It was our party alone that said, “No, that’s not enough; to fight austerity means to fight capitalism, to fight the banks that are bringing it in.” We called for cancelling the debt to the banks, saying the banks owed us billions for the destruction they’ve caused.

Without that revolutionary, anti-capitalist program, the unions and community groups eventually capitulated and went along with the retiree cuts, which will now set a precedent all over the country when Wall Street and the banks decide to go after pensions.

The lesson of Detroit is that what’s needed is revolutionary organization to fight back. To the extent there was resistance to the bankruptcy, it was led by our party comrades.

We were the only group that went into the bankruptcy and said the banks don’t deserve a damn thing. We forced that judge to take back $200 million from the banks because of our intervention and being out in the street every day.

We brought the water shutoffs into the bankruptcy. We were demonstrating every week, and we forced the city to at least make serious concessions to keep water on — but not nearly enough, because water is a human right and the idea that anyone gets shut off is criminal.

It was our comrades who formed the Stop Theft of Our Pensions committee and organized a grass-roots group of pensioners who fought the city and banks to the bitter end. The cuts to the pensioners would have been a lot greater if it wasn’t for the role of our comrades and those who joined them.

It’s revolutionaries and communists who can fight, and we need more of them — we need to organize them. What will transform the unions? It isn’t appeals to the top. It’s grass-roots organizers — communist organizers from the bottom.

A revolutionary party doesn’t just come from activism. It comes from openly declaring that socialism is the answer, while openly recruiting for the party, bringing that message wherever we can.

Let’s overthrow this rotten system! Build a communist organization! Build Workers World Party!