I want to start by thanking the editors of Left Voice for the opportunity to respond to Jason Koslowski’s provocative “A Labor Aristocracy Exists, and It’s Evolving: A Reply to Charlie Post.” The question of the material roots of persistently reformist, and often outright nationalist and reactionary, politics in the working classes is a central question for revolutionary Marxists around the world. An effective strategy for winning working people to revolutionary socialism must be based on a concrete and realistic analysis of the roots of reformism. This is especially the case today, when revolutionary socialism has a minoritarian and marginal presence in the working class, particularly within the embattled “militant minority” of working people who are trying to organize against the global capitalist offensive. My difference with Koslowski is not about whether most workers embrace reformist, nationalist, or even reactionary politics most of the time. Instead, we disagree that these politics flow from the material privileges accorded to a significant minority of workers from capitalists sharing imperialist superprofits.

Koslowski points to two ostensible flaws in my previous analyses of the labor aristocracy. First, he takes issue with my data on profits earned by U.S. capital from its investments in the Global South. This data, he says, is “too limited,” and as a result I miss “the existence of a U.S. ‘labor aristocracy’ supported by the benefits of imperialism.” Second, my failure to grasp the source and size of the labor aristocracy prevents me from understanding “how that layer’s starkest expression — the labor bureaucracy — has become more integrated into the imperialist machine than probably before.” Moreover, I ignore the growth of a “huge nonprofit bureaucracy.” In response, I identify serious problems with the data Koslowski marshals to demonstrate the importance of capital accumulation in the Global South as the source of either wage differentials among U.S. workers or the growth of the meager U.S. welfare state in the post–World War II period. In place of the labor aristocracy thesis, I present an alternative explanation of the existence of a labor (and nonprofit/NGO) officialdom unconditionally committed to reformism, the existing capitalist nation-state, and, thus, imperialism; the conditional reformism of the majority of the working class most of the time; and the influence of reactionary politics on a minority of workers. Our explanation locates the origins of reformism, nationalism, and other forms of reactionary politics among workers, in both the Global North and South, in the basic relations and processes of capitalist accumulation.

Before proceeding to the substance of my reply, I want to clarify what appears to be a misunderstanding on Koslowski’s part. I never claimed that Lenin and Zinoviev argued that “the entire working class of an imperialist country” was part of the labor aristocracy. I was very clear that these leading Bolsheviks argued that imperialist superprofits form the basis of a “bribe” given to a small minority of workers in the Global North. It was later defenders of the labor aristocracy thesis, in particular Zak Cope, who used notions of “unequal exchange” to argue that the entire working class of the Global North benefited from imperialism. As I attempted to demonstrate, this argument has less empirical basis than those of Lenin and Zinoviev. My argument was, and remains, that if all the profits that U.S. and other corporations derive from their investments in the Global South were spent on higher wages and benefits for “their” workers at home, they would be too small to explain the actual wage and benefit differentials among workers in the Global North.

Data on Imperialist Investment in the Global South

Koslowski deploys data from the International Monetary Fund on “corporate assets” to demonstrate that the U.S. investment portfolio in the Global South constitutes a much larger portion of total U.S. foreign direct investment and total U.S. investment than I had estimated. He claims that in 2022 the total U.S. investment portfolio in the Global South was some $7.2 trillion dollars, representing 28 percent of U.S. gross domestic product (GDP) and 7 percent of global GDP. My estimate that all imperialist investment in the Global South “amounts to just 1.25 percent of the world economy” is “off by 560 percent.” As a result, I significantly underestimate the percentage of total U.S. corporate profits and total domestic wages than I calculated.

Even if we accept these calculations as valid, the percentage of total U.S. corporate profits and domestic wages earned in the Global South remain quite small. In an essay I published in Historical Materialism, I found that all profits earned by U.S. corporations abroad, in both the Global North (the main site of global foreign direct investment) and the Global South, never made up more than 30 percent of total U.S. corporate profits and no more than 7 percent of domestic U.S. wages from 1948 to 2003. Even though only 25 percent of foreign direct investment was in the Global South, I estimated that 50 percent of all profits earned abroad came from the Global South — biasing the data in favor of those who claimed that imperialist “superprofits” were the source of higher wages for a minority of workers in the Global North. Even with this inflated estimate, I found that profits from the Global South came to no more than1 to 2 percent of domestic wages from 1945 to 1995, and at most 2 to 3 percent of domestic wages from 1995 to 2003. If we were to accept Koslowski’s findings, and multiply the share of imperialist projects 5.6 times, the percentage of domestic wages would grow to 5.6 percent to 11.2 percent before 1995., and 11.2 percent to 16.8 percent since 1995.

Ahmet Tonak has recently produced a new estimate of the share of profits from imperialist investment in the Global South in total U.S. wages for 1998 to 2021.¹E. Ahmet Tonak, unpublished class notes, 2023, in the possession of the author. As I did in my earlier work, Tonak estimated that 50 percent of profits from U.S. foreign direct investments came from the Global South, and then multiplied that share 5.6 times to prevent any possible underestimation of their weight. The wage share from investments in the Global South rose from approximately 8 percent in 1998 to a high of approximately 23 percent in 2011, before dropping to around 18 percent in 2021. All these calculations produce a share of wages possibly derived from imperialist profits that are hardly sufficient to explain the 37 percent wage differentials between well-paid clerical workers in advertising agencies and machinists working on oil pipelines, or the 65 percent wage differentials between autoworkers and janitors in restaurants and bars.

There are, however, several reasons to question Koslowski’s data. First, he asserts the importance of U.S. imperialist investments by measuring U.S. assets in the Global South as a percentage of U.S. and global GDP. This confuses a stock of assets with a flow of output — it compares apples and oranges! Corporate assets are a stock of accumulated capital — physical values (plant, equipment, raw materials) and financial ones (stocks, bonds, etc.), the latter fluctuating erratically based on market behavior. GDP is the flow of production — the total value of all goods and services produced within the boundaries of the U.S. In Marxian terms, corporate assets are a measure of the value of stock of constant capital owned by U.S. corporations in the Global South. GDP is the measure of the surplus value (profits, interest, rent), variable capital (wages), and the portion of constant capital used up in the production of goods and services in the U.S. during a single year. Thus, their ratio tells us nothing about the relative weight of imperialist investment — no less imperialist profits — in U.S. corporate investment or profitability. According to a 2019 study, the real market value of U.S. corporate assets grew to nearly $33 trillion by the end of 2017. Using Koslowski’s estimate, the $7.2 trillion in U.S. assets in the Global South constitutes only 22 percent of total U.S. assets.

A more accurate measure of U.S. investment abroad is the “direct investment abroad position,” a cumulative level of investment that does not include erratic market fluctuations. It reveals an even smaller portion of U.S. capital accumulation in the Global South. According to data from U.S. Bureau of Economic Analysis, total U.S. capital invested abroad since 1946 came to a total of $6.58 trillion in 2022. In the same period, total foreign investment in the U.S. came to $5.25 trillion — 80 percent of the U.S. foreign direct investment position. Of the accumulated U.S. foreign direct investment, almost 62 percent, some $4.49 trillion, was invested in Europe and Canada. Another 15 percent of accumulated U.S. capital investments flowed to Asia, a total of $.951 trillion. However, $0.174 trillion were invested in Australia and $0.078 trillion in Japan, both of which are clearly part of the Global North, raising the North’s share of total U.S. foreign investment to 72 percent. This does not include the $.126 trillion accumulated in China and the $0.067 trillion invested in South Korea, countries that many Marxists view as experiencing “diminished dependency” on the Global North and that are potential imperialist powers themselves. Using this, more accurate data, we see that my original estimate that 75 percent of U.S. accumulated foreign direct investment remains in other imperialist economies was quite accurate. The 28 percent of U.S. foreign capitalist investment accumulated in the Global South comes to $1.84 trillion — around 5.6 percent of the inflated estimate of $33 trillion in capital assets. In sum, imperialist investment in the Global South could not produce a sufficient mass of surplus value to explain the marked wage differentials in the U.S.

Other Sources of Imperialist Profits

Koslowski makes two other attempts to bolster his claim that imperialism subsidizes a “labor aristocracy” in the U.S. The first is that this labor aristocracy — in which he includes unionized industrial workers making more than $60,000 a year and enjoying employer-provided health insurance, pensions, paid vacations, and the like — were the beneficiaries of the “barbaric imperialist war and the leaps of productivity and profitability that flowed from it.” While he is correct that greater capital intensity of production, and higher rates of productivity — rates of exploitation — account for wage differentials among workers, there is little evidence that this was the result of either the Second World War or the “imperialist Keynesianism,” known as “Bidenomics,” which promotes the manufacture of microchips and electric vehicles in the U.S.

It is absolutely the case that capitalist state defense spending during World War II, combined with an effective wage freeze enforced through the no-strike pledge, was a massive subsidy to U.S. capitalists. The U.S. state built and equipped factories for private capital to produce the weaponry of war — and the plants remained in private hands after the defeat of Germany and Japan. But wartime spending was not the sole, or even primary, cause of the capitalist recovery. Capital investment in new buildings and machinery had begun before the “defense mobilization” that began in the spring of 1940. The Great Depression of 1930–31 destroyed wide swatches of older, less efficient plant and equipment, and record unemployment radically reduced real wages. The resulting devalorization of constant and variable capital led to a sharp rise in profitability after 1931, spurring a new wave of capital accumulation.²E. Ahmet Tonak and Anwar Shaikh, “Data on Capital Intensity and Profit Rates, 1899–1986” (spreadsheet in possession of the author) The “Roosevelt Recession” of 1937–38 temporarily halted the recovery of profitability and investment, but neither profits nor unemployment reached the level of the slump of 1930–31. Defense spending after May 1940 accelerated the recovery of profitability that had begun a year earlier. In addition, the state did not subsidize the postwar conversion of the defense plants to civilian production. In many plants, machinery and tools had to be either junked or retooled for civilian production. These costs were born by private capital. Given the relatively small amount of U.S. capital stock invested in the Global South, the profit produced there was insufficient to finance the post–World War II golden age in the U.S. and the rest of the capitalist world economy.

Koslowski’s claims that autoworkers, and most other unionized industrial workers, became part of the “labor aristocracy” in the post-1945 period significantly underestimates the price these workers paid for rising living standards before the 1980s. By the late 1940s, most industrial unions had abandoned any attempt to control the organization and pace of work. Instead, rising wages and benefits were linked to increased productivity — an increased rate of exploitation. The union officials’ “surrender of the workplace” to capital unleashed a wave of technical innovations and productive reorganizations that significantly reduced workers’ skill, judgment, and control over their work, allowing the radical intensification of work in the 1950s and 1960s. “Automation” in this period did not refer to a wholesale replacement of workers with machinery, but to the retooling of machines to prevent their operators from pacing their work and maintaining a modicum of workers’ control over the labor process. “Automated” machine tools were “self-pacing” — placing the control of work firmly in the hands of management. Not only did the auto companies eliminate much of the skill and judgment that industrial workers had once exercised, but the unionized industrial workers’ loss of skill, judgment, and control allowed a brutal “speedup” of the production process — fueling the wave of unofficial, “wildcat” strikes that shook industry from 1965 to 1975. ³Nelson Lichtenstein, “Auto Worker Militancy and the Structure of Factory Life, 1937–1955,” Journal of American History 67, no. 2 (September 1980), 335–53.

Since the late 1970s, the wage gap narrowed between relatively well-paid industrial workers and lower-paid workers, and the costs of these “privileges” increased. The employers’ offensive of the past four decades saw a massive de-unionization of industry, the introduction of two-tier systems of wages and benefits, and the dismantling of the minimal protections that workers enjoyed through job categories and work rules. The result has been “lean production” — a new wave of deskilling and speedup. We are only today beginning to see a sustained fight-back on the part of these workers, as evidenced in the first strike against all three U.S.-owned auto companies by the United Auto Workers. Biden’s infrastructure law will do little to end either falling wages, the fragmentation of tasks, or work intensification. While companies receiving tax credits to build microchip and electric vehicle plants have to pay “prevailing wages” for their region, which is significantly lower in the “right-to-work” South, there is no requirement that workers in these factories be allowed to unionize — another central demand of striking autoworkers.

Koslowski makes one last attempt to make a case for imperialist profits as a source of higher living standards for a minority of U.S. workers, arguing that higher-than-average profits financed the U.S. welfare state in the post–World War II era. Unfortunately, there is little data to support the claim that profits, whatever their source, financed the comparatively meager U.S. welfare state. In 2022, total government revenues were approximately $4.9 trillion. Corporate income taxes — taxes on corporate profits — came to only $ 424 billion, a mere 9 percent of total revenues. The majority of tax revenues, some $3.2 trillion, or 65 percent, comes from individual income taxes, which fall most heavily on noncapitalist wage and salary earners. The next largest source of revenues were social insurance and retirement payments — FICA, or Federal Insurance Contributions Act, deducted from workers’ paychecks to pay for Social Security pensions, unemployment insurance, and Medicare. FICA accounted for $2.1 trillion, or 43 percent of total revenues. The 9 percent of revenue derived from all the profits earned by U.S. corporations at home and abroad is insufficient to fund the almost 20 percent of federal spending on social welfare in the U.S. As the Marxist economists Anwar Shaikh and Ahmet Tonak argued in their classic essay, “The Welfare State and the Myth of the Social Wage,” workers, not capitalists, pay for the meager welfare benefits they enjoy in the U.S.

In sum, the profits from U.S. investments in the Global South — imperialist “superprofits” — could potentially finance only a small portion of wage and benefit differentials or social welfare benefits enjoyed by some U.S. workers. There remains, however, an issue that almost none of the advocates of the labor aristocracy thesis account for — the mechanisms by which profits expropriated from the workers of the Global South end up in the wages, benefits, and social welfare payments that accrue to workers in the Global North? What compels capital in the U.S. to sacrifice a portion of the profits appropriated from workers in the Global South to workers in the North rather than accumulating this surplus value as additional plant, equipment, and workers? How are these profits then funneled to workers? Only if we believe that workers are permanently on the verge of contesting capitalist rule, and that capitalists are free to dispose of their profits in any way they choose, can we explain the purported diversion of profits to workers. History, however, has demonstrated that workers are not, unfortunately, permanently revolutionary; nor can capitalists “freely” choose to dispose of their profits in ways that do not contribute to accumulation, competitiveness, and profitability.

An Alternative Explanation of Reformism, Nationalism, and Reactionary Politics in the Working Class

If the Lenin-Zinoviev version of the labor aristocracy argument is fatally flawed, how do we as Marxists explain the persistence of reformism and nationalism among most workers most of the time, and the appeal of reactionary politics (racism, sexism, homo/transphobia, xenophobia, etc.) among some workers at certain times? We are fortunate that there is an extensive Marxist argument, first developed by Rosa Luxemburg and elaborated by Ernest Mandel and Robert Brenner, that roots the varieties of working-class consciousness and organization in the basic structures of the capital-labor relation. Most of the time, the worker in capitalist society is enmeshed in the day-to-day struggle to successfully sell her or his labor power to an employer and to socially reproduce her or him and their household. As atomized and individualized sellers of labor power and members of households/families, workers tend perceive themselves as powerless to change their condition. In other words, most workers see capitalist society as “the way things are” — as natural and unchangeable. Their lived experience leads them to believe that their well-being is tied to their ability to persuade capitalists to hire them (and people “like them”). The availability of “good paying” jobs appears to depend on the competitive success of their employer, the health of the economy, and the stability of the political order. It is this lived experience, rather than ideological manipulation or imperialist bribes, that is the basis of working-class quiescence, nationalism, or even reactionary politics.

It is only in periods of mass, collective, and disruptive struggles that working people begin to see the world differently — to believe that they can change the world in a democratic and solidaristic direction. Struggles that result in workers’ victories involve workers successfully building solidarity across race, nationality, gender, and other divisions; allow workers to experience capital and the state as their common enemies; and to see that their collective labor is the basis of social life. Put simply, it is only in periods of mass struggles, in both the workplace and working-class communities, that workers can develop class consciousness and independent organization.

The development of working-class consciousness and organization is necessarily uneven. This unevenness flows from the necessarily episodic character of the class struggle, the result of capitalist social relations of production. The workers’ separation from the means of production and subsistence, the foundation of capitalist extraction of surplus labor, means that most workers cannot constantly engage in struggle. After massive upsurges, most workers have to return to the hard work of “earning a living” — laboring under the command of capital and reproducing their family/household. Because most workers are only sporadically involved in the class struggle, only a minority of them remain permanently active in the new organizations of struggle — unions; anti-racist, feminist, LGBTQ, and immigrant organizations; and political groups and parties. This active minority becomes divided between a layer of militants who attempt to maintain the struggle “during the lulls” — the “militant minority” or “workers vanguard” — and a smaller layer who become the full-time, paid officials of the new working-class organizations.

The militant minority become the shop stewards and local union officials who build workplace actions, and the activists who continue struggles around issues of social reproduction, racism, gender oppression, and the like between the explosive mass mobilizations. These workers are the ones who will most likely develop radical and anti-capitalist ideas about the world. They organize to maintain and transmit traditions of democratic self-organization and militant activism to their fellow workers, often leading new struggles when the usually inactive mass of workers begin to contest their conditions of life. It is this layer of workers, mostly relatively well-paid skilled and semiskilled workers, who were the mass base of the revolutionary wing of social democracy and revolutionary syndicalism before 1914, and of the mass Communist parties before Stalin transformed them into instruments of the Soviet bureaucracy. The evolution of the Communist parties into reformist parties after ca. 1935–36 led to the social and political disorganization of this layer, as worker activists were integrated into the lower levels of the officialdom. It was the weakness of this layer, not imperialist-financed wages and benefits, that explains why the worker revolt in the 1960s and 1970s was isolated from other radical struggles and was ultimately defeated. The neoliberal offensive against the working class since 1980s has further disorganized this layer and undermined the “infrastructures of dissent” — the working-class organizations that maintained traditions of class solidarity and combativity. It is the weakness of this layer that poses the greatest challenge to the rebuilding of a revolutionary socialist current among working people in the U.S. and globally.

A minority of those who remain active “during the lulls” in the struggle become the full-time, paid officials of the workers organizations — the bureaucracies of the unions, working-class political organizations, and “movement-oriented” nonprofits and NGOs. Their conditions of life differ from those whom they claim to represent. Unlike those they “speak for,” the officialdom of the workers’ movement does not have to work set hours, doing mind-numbing and body-destroying labor under the command of despotic supervisors and managers. Their conditions of life become much more like those of middle-class professionals and managers — they set their own hours, do meaningful and interesting work (always “on behalf of the members”), under their own supervision. While the living and working conditions of most workers ultimately depend on the success of struggles against capital and the state, the officialdom’s socially privileged position depends not on struggle but on the survival of their organizations — their union, party, nonprofit/NGO. Unsurprisingly, the survival of these institutions becomes the officials’ first priority.

The officials have to find a way to balance the survival of the institutions that provide them with a privileged social position, and the defense of the interests of those they represent. Strikes and other forms of militancy, especially those that involve breaking the law and confronting the capitalist state, must be avoided because they risk destroying the organization and returning the officials to capitalist wage labor. The bureaucracy seeks substitutes for struggle. Union officials rely on state-sanctioned union recognition and routine collective bargaining, a grievance procedure to handle workplace issues during the terms of a contract, and strikes that remain within the boundaries of legality. The leaders of unions, NGOs/nonprofits, and even working-class political parties look to influence the existing capitalist state, through lobbying, elections, and court action, in the hope that the state can balance the interests of workers and capitalists in order to ensure economic stability and rising standards of living, and to protect the rights of oppressed groups. It is the unconditional reformism of the labor and NGO officialdom, ultimately focused on the nation-state, that is the basis of their nationalist politics. In the Global North, this leads the labor officialdom to embrace pro-imperialist politics to defend the position of “their capitalists” in global competition, while in the Global South it leads this layer to embrace various forms of pro-capitalist nationalism, often under the guise of “anti-imperialism” — something comrades in Argentina are quite familiar with as they organize opposition to the Peronist labor bureaucracy.

The inactive majority of the working class embraces a conditional reformism. As long as the labor and “social movement” officialdom can deliver gains through reformist means — collective bargaining, lobbying, elections, etc. — the bulk of the working class will opt for these methods rather than engage in class confrontations that risk loss of income and employment. Because of the utopianism of reformist strategy — the notion that the “neutral” state can avoid crises and ensure the well-being of both capital and labor — the reformist officials find themselves unable to “deliver the goods,” especially in periods of economic crisis. As we have seen since the 1980s, the reformists respond with concessions — giving up past gains under the slogan “it could be worse.” The conditional reformism of the inactive majority of working people begins to break down. If there is a sizable and cohesive militant minority, they can help translate the waning of reformism’s influence into collective confrontations with capital and the state. However, when the militant minority and the infrastructures of dissent are weak, workers will attempt to defend themselves as competing sellers of labor power. We have seen, across the world, a minority of workers embracing reactionary politics — racism, sexism, trans/homophobia, anti-immigrant politics — as those in a relatively stronger position attempt to defend their standards of living against those workers they perceive as weaker. While this sectoralist strategy is as utopian as reformism, it will be displaced only when the militant minority can again pose a practical alternative in the form of collective struggle.

Charlie Post teaches sociology at the City University of New York, is active in the faculty union, and is a member of the Tempest collective. He would like to thank E. Ahmet Tonak for help with data sources and methods.