The crisis is unfolding relentlessly and with
gathering speed. In November the USA shed jobs at the fastest pace in 34 years.
World GDP has registered a sharp fall. The recession was preceded by a
financial crisis (the so-called credit crunch). However, this was merely a
prelude to the real crisis. As always, the bourgeois economists draw the
conclusion that the cause of the crisis is a lack of credit. In reality, the
lack of credit is caused by the crisis.
During the boom, everyone is prepared to borrow
and lend, confident of obtaining handsome profits. As always there was a large
element of speculation in all this. The dizzying rise of stock market prices
bore no relation to the real situation. It must be borne in mind that, in the
last analysis, the profits of the capitalists can only be derived from the
unpaid labour of the working class. As long as surplus value is extracted, the
capitalists, landlords, bankers and stock exchange speculators, can all make a
profit. The illusion is created that this merry carnival can go on forever. But
this process sooner or later comes up against the inherent contradictions of
the capitalist system.
The second phase has now begun – the crisis of
the real economy. Millions of workers face short-time working, cancellation of
overtime or sackings and closures. The bosses are demanding wage cuts, under
threat of closure. This means a general reduction in living standards, which in
turn means a new fall in demand, with more closures, unemployment and new cuts.
Falling activity means a fall in tax returns, which in turn must mean new cuts
in social spending.
Payroll employment in the USA fell by 533,000
in November – the biggest monthly drop since December 1974. Unemployment has
risen to 6.7 percent. However, this understates the seriousness of the
situation. A broader definition that includes people who have given up looking
for work, would mean a figure of 12.5 percent. There is now a spate of
closures. The Bank of America is to sack 35,000 workers after it took over Merill
Lynch. Dow Chemicals is closing 20 plants with the loss of 5,000 jobs in the
USA and Europe. A further 2,300 jobs will go in 3M. Anheuser-Busch InBev is
axing 6 percent of its US workforce (three quarters in St. Louis).
Nobody now repeats the nonsense that the crisis
would be confined to the USA. This is an international phenomenon. The big
Japanese company Sony is to shed a further 16,000 workers, cut back on
investments and outsource some of its production. It has halved its annual
profits forecast as a result of a slump in demand for its LCD televisions. The
Anglo-Australian mining company Rio Tinto is cutting capital expenditure and
selling assets to pay back $10 billion of debts. It will cut 14,000 jobs by the
end of 2009. Woolworth, a major department store in Britain, is closing after a
hundred years, with the loss of 30,000 jobs. The list is never-ending and
growing all the time.
The growing alarm of the ruling class is
reflected in the succession of panic measures adopted by governments and central
banks, which are no longer aimed at preventing recession but only of blunting
its effects. But despite all these measures, the crisis is deepening and
spreading all the time. The world economy has entered a downward spiral, and
nobody knows where the bottom lies or when it will be reached.
In the past the bourgeois economists denied the
possibility of a recession. Now the only question before them is whether it
will be a deep recession or a depression. For the millions affected by factory
closures, bankruptcies, sackings and evictions, however, the difference is
merely semantic. The bourgeois and their pet economists imagine that all crises
are caused by the lack of "confidence" and that therefore a few encouraging
speeches (accompanied by large donations of public cash) will solve the
problem. They do not understand that confidence does not drop from the skies
but reflects actual conditions. Contrary to this superficial and idealist
explanation (which explains nothing), we reply: it is not the lack of confidence
that causes the crisis, but the crisis that gives rise to a lack of confidence.
It is necessary to bear in mind that unless the
capitalists sell their commodities, no surplus value can be realised. The
ability to find markets is limited by the limited consumption of society.
Sooner or later a point is reached where markets are saturated and no buyers
can be found. In the crises of 1990-91 and 2001 demand did not fall much. In
the first case the rapid development of Asia (China) provided a cushion that
prevented the recession from developing into a slump. After this, the huge
increase in credit and the speculative housing bubble kept the whole thing
going. But the basis was completely unsound.
This situation could not be maintained. In
effect, the capitalists avoided a deep slump for two decades but only at the
cost of creating the conditions for an even more serious recession in the
future. This explains the alarm with which the bourgeois view the present
crisis.
During the boom, when big profits are being
made, people will buy and sell, loan and borrow, cheerfully acquire debts in
excess of their earnings. If anybody notices that this is all based on
speculation and swindling, nobody minds. Are we not rich? Are we not all making
money? Live for today and to the Devil with tomorrow! But when the boom reaches
its limits – which it must do – this "irrational exuberance" turns into its
opposite. Confidence evaporates together with the mirage of never-ending
enrichment. Instead of the old cheerful optimism, we have panic and despair.
Not greed, but an equally primordial emotion, fear, becomes the predominant
mood of the market.
Contradicting all their previous analyses, the
bourgeois economists now say that this recession will be longer and deeper than
anything since the Second World War. The capitalists are paying the price for
the "irrational exuberance" they displayed in the previous period. Terrified of
the social and political consequences, they are resorting to desperate
policies, which will only serve to exacerbate the problems in the long run. At
every juncture the spokesmen of the bourgeois announce that the "worst is now
over." Such declarations, which were also made at regular intervals after the
Wall Street Crash of 1929, are always followed by further falls on the stock
markets and further cutbacks in production.
The bourgeoisie has dug itself into a deep
ditch, from which it will not be easy to extricate itself. The banks are
sinking under the weight of bad debts. Nobody knows how much these are and
therefore nobody knows which (if any) of the banks is viable. This is why the
economists say that this recession is not "normal". Some economists now look
back nostalgically to the "good old days" of the gold standard, but a return to
the gold standard is impossible now. It would lead to a complete collapse and
an even deeper slump than the Great Depression of the 1930s.
Before the Second World War the world economy
was based on the gold standard, which made sense as a means of regulating money
markets. Governments had to hold a certain quantity of gold bullion as a backup
to their national currencies. Ultimately, creditors could demand repayment for
debts in gold, which, like every other commodity, has an objective value.
The abolition of the gold standard was only
possible because after the Second World War, the USA held two thirds of the
world’s gold in Fort Knox and its industry was intact. It could dictate its
conditions to the rest of the world. Everybody wanted dollars because at that
time the dollar was as good as gold. The dollar became the international
currency (with the pound sterling as a second-class partner). This was a factor
in the upswing of world trade after 1945 – the real basis of the economic
upswing in world capitalism at that time.
Now, however, all that has changed. The USA has
been transformed from the world’s biggest creditor to the world’s biggest
debtor. The dollar remains the world currency, but nobody can be sure how much
it is really worth. Unimaginable amounts of fictitious capital have been pumped
into the world economy over the last two or three decades. The world market in
derivatives alone is more than 500 trillion dollars, most of it of a
speculative and fictitious character. The derivatives market amounts to 36
times the value of total US GDP [US GDP stood at $13.8 trillion in 2007] or
roughly 10 times the value of entire world
output.
The unprecedented expansion of credit in the
last period served to maintain high levels of demand in the USA and other
countries. But now this has reached its limits. The whole process is thrown
into reverse. Now nobody wants to lend money and few wish to borrow. Society is
seized with a parsimonious and miserly mood. The masses have no money to spend
– only debts to repay. Those who previously lent money cheerfully are now
calling in their debts. Many of those who took out mortgages to buy homes are
unable to pay and find themselves evicted. Since the price of their homes has
fallen, they are saddled with huge debts, which unlike house prices, do not
fall.
The bankers, who yesterday were anxious to lend
money to anyone, are now anxious to hoard money and not to part with a cent.
This miserly and distrustful attitude applies not only to private house owners
and small businesses, but also to other banks and big firms. They are not
prepared to lend money to other banks because they are not sure the money will
ever be returned. Nor are they prepared to advance money to firms to buy raw
materials and equipment. They are quite prepared to pull the plug and force
businesses to close as if they were matchboxes, throwing thousands out of work
without blinking an eyelid.
Since credit is the life-blood of the
capitalist system, the interruption of the supply of credit means that not only
"bad" businesses will be made bankrupt but "good" ones also. The drying up of
credit threatens the whole productive process of society with slow
strangulation. The effects can be seen in a sudden spate of bankruptcies and
closures, affecting not only small businesses but also major companies, like
Ford, General Motors, Sony, Nissan and many others. The main reason for this is
the collapse of demand, aggravated by the drying up of credit. Suddenly there
is too much steel, too much cement, too many cars, too many empty offices, too
much oil… In other words, what we are seeing is a classical crisis of
overproduction.
The big US car companies attempted to boost
their share of the market by ferocious discounting. This worked temporarily but
only at the cost of cutting into profit margins. Ultimately, the result was
bankruptcy. Now they are compelled to go, cap in hand, to the US government,
which initially agreed to give them a large slice of taxpayers’ money to keep
them afloat. Coming after the bailout of the banks, this was an unprecedented
action, especially if we bear in mind that the Republicans were supposed to be
the Party of Free Market Economics par excellence. It was a measure of
desperation.
This proposal of a generous donation to the big
car companies was dictated by fear of the social and political consequences of
firms like Chrysler and GM going bankrupt, which would mean the loss of
millions of jobs. It was also a protectionist measure, directed against foreign
car manufacturers. If it is passed, it will undoubtedly lead to similar
measures in Europe and Japan. However, the government insisted on wage cuts in
return for the package, which the unions rejected. The Republicans therefore
voted against the proposal, which was defeated in the Senate. This is a repeat
of the earlier conflict between the White House and Congress over the bank
bailout. It exposes deep contradictions at all levels of US society.
We are entering into a period of growing
protectionism and tensions between the main capitalist nations. The tendency
towards protectionism will be even more pronounced under Obama, who will be
under pressure to "save American jobs". Let us remember that the Democrats were
always inclined towards protectionism. This will provoke retaliation from
America’s rivals. Already Volkswagen is demanding state aid. Others will
follow.
The crisis is revealing deep fissures in the
EU. The British and French are putting pressure on Germany to reflate its
economy (that is, to increase its deficit in order to create more demand for
British and French goods). But Germany is resisting. They see no reason why
Germany should pay the price for other people’s problems. But the participation
of Germany is absolutely necessary if the plans for recovery in Europe are to
be successful. They must all reflate simultaneously, or else Germany would
benefit "unfairly" from the efforts of the others.
But these proposals have not been well received
in Berlin. The German Finance Minister, Peer Steinbrueck derided the general
yearning for what he called "the great rescue plan" as futile, saying such a
plan "doesn’t exist" and dealing with the unprecedented crisis is a puzzle that
will be solved by trial and error. The European authorities who believe the
answer is lavish spending programs are saying, in effect, "let’s get the
Germans to pay because they can," he added.
In reality, what Herr Steinbrueck said was
correct. He pointed out that while policies can ameliorate the situation, the recession is unavoidable, whatever any
government does. The policies of Brown and Bush amount to an attempt to
reflate the bubble that caused the present mess in the first place. They have
thrown billions at the banks in the hope that they will begin to lend again.
But they have failed. The bankers are not prepared to lend under the present
circumstances and no amount of interest cuts or state subsidies will make any
difference. In any case, the scope for such cuts is minimal. In the case of the
USA it is practically zero. One by one, the bourgeois in the richest countries
in the world are using up all their resources in a vain attempt to halt a
recession that is unstoppable.
In effect the bourgeois are trapped. Whatever
they do now will be wrong. If they do not intervene to pump money into the
banks and failing businesses there will be a deep slump with massive
unemployment as in the 1930s. But if they resort to Keynesian methods of
deficit financing, they will create huge debts that will undermine any future
recovery and act as a tremendous drag on productive investment, creating the
conditions for a long period of cuts and austerity.
The unsoundness of the policies pursued in the
previous period is now revealed by a colossal hangover of debts. This has meant
that the recession will be deeper and longer than it would otherwise have been.
The bourgeois has now to pay the price for the "successes" of the last twenty
years. Whole countries now face insolvency. Iceland is already bankrupt. Bank
liabilities now represent 700 percent of the GDP of Switzerland, hitherto
regarded as a safe haven for capital. The figure for Britain is 430 percent.
That of the USA is just under 100 percent – after the huge bailout of the
banking sector.
The intensification of the recession will mean
a sharpening of tensions between Europe and the USA, between the USA, China and
Japan and between Russia and the USA. In the past such tensions would have led
to a world war. It was the Second World War that solved the economic crisis of
the 1930s through massive arms spending and the wholesale destruction of the
means of production during the war. However, the situation now is entirely
different. The collapse of the USSR and the colossal power of US imperialism
mean that a world war is ruled out. With an annual arms expenditure of about $600
billion, no power on earth can stand against the USA. But there will be
constant "small" wars, like the wars in Iraq, Afghanistan, Somalia, the Congo
and so on. The conflict between Russia and the USA can lead to wars like the
war in Georgia.
The diplomatic clashes and tensions will add a
further ingredient to the general instability. The uncontrollable spread of
terrorism is a symptom of the underlying crisis. All these phenomena, which
sentimental pacifists bemoan, are merely an expression of the underlying cause,
which is the contradiction between the colossal potential of the productive
forces and the narrow limitations of private property and the nation state. The
bigger powers (especially the USA) will try to use their muscle to intimidate
their rivals and grab markets and sources of raw materials, but the capitalists
cannot find a way out of the crisis by taking the road of war as they did in
1914 and 1939. Therefore, all the contradictions will be expressed internally,
through a growth of the intensification of the class struggle.
The eyes of the bourgeois are now fixed on
China, from whence they hope that salvation may come. But China is now firmly
embedded in the capitalist world market and must suffer the consequences of the
downturn along with all the rest. In order to keep unemployment at its present
levels a growth rate of at least eight percent is required. If growth falls
below this level, the prospect arises of serious social conflict. The latest IMF estimate for
China’s growth in 2009 is now only 5 percent. Dominique Strauss-Kahn, managing
director of the IMF, said: "We started with China at 11% growth, then 8%,
then 7%, then China will probably grow at 5% or 6%." This is still high
when compared to the growth rates in the USA and Europe. But it is a sharp fall
in comparison to the kind of growth rate of around 10 percent enjoyed by China
in the last period. And it is not clear that even this level will be reached.
China has a large internal market, probably
about 300 million. But this is insufficient to absorb the huge productive
capacity that Chinese industry has built up over the last two or three decades.
The falling demand in the US market is hitting China’s exports. The contraction in Chinese industrial production deepened in
November with steel production down 12.4% from a year earlier, steel mill
product deliveries down 11.3%, generation of electricity off by 9.6% and
petrochemicals output down as well. In November year-on-year exports fell sharply by 2.2
percent, whereas analysts had expected them to rise by 15 percent. To
understand the change, it must be remembered that between 2000 and 2006 China’s
exports grew at an annual rate of 26 percent. In the same month imports fell by
18 percent. This was the first time since 2001 that imports have fallen.
There are emerging signs of overproduction and
overinvestment in China, whose internal market, though considerable, is not big
enough to absorb the colossal productive potential built up over the last two
or three decades, and which is now reaching its limits. The first warning of a
crisis was the sharp fall on the stock exchange, which has lost about 60
percent of its value. But the crisis is not confined to the stock markets.
House prices are falling, construction is slowing and industry is slowing
faster than GDP. Car sales in November in China fell by over 10% year on year.
Power generation, generally regarded as a reliable index of economic growth,
fell by 7 percent.
These figures have altered the views of western
economists on China. The previous optimism is fast turning to pessimism. The Economist (13th December 2008)
stated: "Optimists even hoped that these huge emerging markets (India and
China) might provide the engines that could pull the world out of recession.
Now some fear the reverse: that the global downturn is going to drag China and
India down with it, bringing massive unemployment to two countries that are,
for all their successes, home to some two-fifths of the world’s malnourished
children."
It is true that China has huge reserves, which
it can use to foment public works schemes to develop the infrastructure. In
November the government announced a four trillion yuan (nearly $600 billion) fiscal stimulus package. But according
to some estimates, this would add up to an increase of GDP by just over one
percent. This is insufficient to get the kind of results that China needs.
Beijing only has one other option: to try to solve the crisis by exporting
more. This brings it into a direct collision with Europe and the USA, which is
pressurising China to reflate in order to import more. Paulson visits Beijing
to ask China to revalue the yuan, but
Beijing is more likely to support a devaluation, which will deepen the
contradictions between China and the USA.
The leaders are afraid that the worsening
economic situation will produce what one of them referred to as "a reactive
situation of mass-scale social turmoil". The
Economist (13th December 2008) reports: "Each week brings fresh reports of
factory closures, particularly in the industrial belt around the Pearl River
Delta in Southern China. Unpaid workers have been staging violent protests."
The same journal adds: "Indeed, demonstrations and protests, always common in
China, are proliferating, as laid-off factory workers join dispossessed
farmers, environmental campaigners and victims of police harassment in taking
to the streets."
The slowdown in China is hitting Japan, for
whom the Chinese market has become increasingly important. In the three months
to September the Japanese economy shrank at an annualised rate of 1.8 percent.
Other emerging economies are even less able to provide the necessary stimulus
to the world economy than China. All will be dragged down in the next period.
This signifies social and political convulsions on a huge scale. The chaos in
Thailand is a further indication of this.
After a five-year period in which India grew at
8.8 percent, exports fell in October by 12 percent compared to the same period
last year. Hundreds of small textile firms have gone out of business. But big
firms are also in crisis. The car industry has suspended production. Sales of
the Ambassador, India’s most popular car, have slumped. Pakistan already stands
on the verge of bankruptcy. The central bank has revised its projected figures
for growth to 7.5 percent and this is too optimistic. The real growth may fall
to 5.5 percent – the lowest since 2002.
With a budget deficit of about 8 percent of
GDP, India, unlike China, has very little room to manoeuvre. If China needs a
growth rate of 8 percent in order to absorb the seven million people entering
the labour market each year, how can India absorb a workforce that is expanding
at a rate of about 14 million annually? Its main growth has been in sectors
like information technology, which does not employ large numbers of workers. A
rapid growth in youth unemployment in India will produce explosive conditions
in society. "And as in China unrest and even insurgency are widespread." (The Economist)
The fall in world demand is being expressed in
a general fall in commodity prices. Oil has fallen from a peak of $147 to about
$40 in a few months. This will affect all the oil producing economies in the
Middle East, Iran, Indonesia, Nigeria, Mexico, Russia and Venezuela. Russia has
the third highest surplus in the world but this has fallen by $144 billions
since August. There is a flight from the rouble, underlining the fears of the
bourgeois for the future. The ruling clique is trying to distract the attention
of the masses from the crisis through foreign adventures (such as Georgia). But
the developing crisis must sooner or later express itself in a crisis of the
regime and the growth of opposition, strikes and protests.
The Ukrainian economy is in crisis and the
country has to borrow $16 billion from the IMF. The economic crisis is
deepening the political crisis, which has an endemic character. The impasse of
the regime expresses the complete failure of capitalism to solve the problems
of the Ukraine or any other of the former Soviet Republics. The pro-US
government has avoided elections but in reality it is hanging by a thread. Most
of the other former Soviet Republics are in an even worse position.
The sharp fall in the price of oil will
intensify the pre-revolutionary ferment in Iran, where the regime of
Ahmadinejad is hanging by a thread. There is already widespread discontent and
anger among the youth, but also among the workers and middle class. There has
been a wave of strikes. The fact that the Americans have decided to withdraw
from Iraq means that they will be forced to open negotiations with Iran and
Syria to cover their rear. This deprives Ahmadinejad of his main card –
anti-American chauvinism and war-mongering rhetoric. Deprived of the external
enemy, the contradictions within Iran will come to the fore with revolutionary
implications.
In the poorest countries of Africa elements of
barbarism have begun to appear and in some cases threaten to engulf society and
push it back to savagery. In the Congo five million people have perished in a
murderous civil war. In Zimbabwe people are faced with the horrors of
starvation and cholera. In Sierra Leone over 70 percent of the population live
on 70 cents a day and two-thirds of the women are illiterate. To the nightmare
of hunger and poverty are added the scourge of malaria and AIDS. Everywhere the
productive forces stagnate or decline, creating more unemployment, poverty and
despair.
It is not difficult to portray the whole world
as a nightmare or a lunatic asylum. These are the symptoms one associates with
the senile decay of a system that has outlived its historical usefulness, like
the Roman Empire in the period of its decline. But there is another side to the
picture. There is ferment in society and the beginnings of revolt. This
naturally begins with the youth, which on the one side are the first victims of
the crisis, in the second place are highly sensitive barometer for the moods of
discontent that are maturing silently in the bowels of society.
It is true that the suddenness of the crisis
has shocked not only the bourgeois but also the workers. There will be a
certain tendency to cling to jobs and even accept cuts in the short term,
especially as the union leaders offer no alternative. But there will also be a
general mood of anger and bitterness, which will sooner or later find its way
to the surface. It is inevitable that the first layers to move into action will
be the youth. It was always the case. The youth, beginning with the students,
are always a sensitive barometer of the moods developing in society. They can
anticipate big movements of the workers, as in 1901-3 in Russia and 1968 in
France.
In Italy and Germany there have been big
protest movements of the youth. In Spain the students strikes this autumn were
organised and led by the Marxist-led Students’ Union. There have also been
upheavals of the youth in Hungary and earlier in France. But in Greece this
movement has acquired an explosive and semi-insurrectionary character and was
combined with a general strike of the workers. This is a serious warning to the
bourgeois of what can happen in other countries. It shows the falsity of the
argument that the onset of economic crisis will inevitably lead to a paralysis
of the working class.
The bourgeoisie would like to resort to repression.
This is shown by the recent declarations of Cossiga in Italy, which have a
clearly Bonapartist character. But Greece shows the limitations of this policy.
It was the murder of a young school student by the police that brought the
masses onto the streets. The right-wing government considered a state of
emergency but Karamanlis could not use force to impose order on the streets
because that would have taken Greece to the brink of a civil war. He had to
back down. The government was paralysed.
What the Greek events show is the weakness of
reaction and the enormous strength of the working class at the present time. If
the leaders of the Greek labour movement had had a revolutionary policy, they
could have taken power. But without adequate leadership the movement will be
reduced to pointless rioting, which the government will eventually bring under
control. Nevertheless, the movement was a serious warning to the Greek
capitalists of the mood of rage and frustration that exists in society. The ND
government is finished. A new stage in the class struggle is opening in Greece.
And tomorrow the same process will emerge in one country after another.
In Latin America the revolution has already
begun. This is not an accident, and we explained it a decade ago, when we
decided to orient the IMT towards Latin America. In this continent capitalism
has broken at its weakest link. The Venezuelan Revolution has reached a
critical point, where its future direction must be resolved one way or another.
The crisis of capitalism hits Latin America
hard, although it is unfolding unevenly, affecting some countries more than
others. Brazil, the economic giant of the region, expects to grow by 4 percent
(which is probably optimistic) whereas Mexico, closely linked to the US economy,
is expected to grow by only 0.4 percent. However, at different rates and at
different times, all will be affected.
In October, the IMF forecast a growth rate of
3.5 percent for Latin America in 2009. Two months later, the World Bank cut its
estimate to 2.1 percent and Morgan Stanley is predicting a fall of 0.7 percent
for the seven biggest economies of the region. In the last two months there
have been stock market and monetary crises and shortages of credit. This has
followed a fall in exports and sharp falls of commodity prices. The slowdown in
China affects demand for Venezuelan oil, Peruvian minerals, Argentine soya and
Brazilian iron ore and orange juice.
The crisis in the USA affects the continent in
a more direct way. Whole towns, villages and even regions of countries like
Mexico, El Salvador, Honduras, Colombia and Ecuador depend on the remittances
of their nationals working in the USA or Europe. Since the immigrant workers
are the first to be sacked, these are now forced to return home. So these
countries are at the same time deprived of foreign currency and obliged to
absorb an influx of labour when unemployment is already rising.
The reformists have argued that the "Venezuelan
model" would guarantee immunity from the problems associated with the
"neo-liberal model". But this is a reformist illusion. Because the revolution
has not been carried through to the end, Venezuela is still subject to the
vicissitudes of the capitalist world market. The falling price of oil means
that the reforms of the past period are under threat. Morgan Stanley predicts
an economic contraction in both Venezuela and Argentina in 2009, of 1 percent
and 2 percent respectively. This will mean that the reforms and misiones will be in difficulty. In
addition to the general crisis of capitalism, the Venezuelan economy is
suffering from sabotage and a strike of capital aimed at destabilising the
Bolivarian government and causing mass discontent. Despite all the appeals to
the capitalists, private investment is practically non-existent and there is a
flight of capital. Only the state sector maintains the economy.
Sooner or later the Revolution will have to
decide whether to advance and carry out the socialist transformation of
society, or else be driven back, one step after another, to ignominious defeat.
The demand for drastic measures against the counterrevolution and expropriation
under workers’ control is growing, and matters must be settled. In the past US
imperialism would have intervened militarily to abort the process, but now this
is very difficult. The US is bogged down in Iraq and Afghanistan and cannot
open another front in Latin America, which would have revolutionary
consequences inside the USA itself.
It is now a question of either-or for the Venezuelan Revolution. The forces of the
counterrevolutionary bourgeoisie have taken heart from their partial advance in
the November election, which has given them important points of support from
which to launch a new offensive. The economic crisis will give them further impetus.
Chavez has called for more expropriations and proposes to stand again for
President. Chavez could use his majority in the National Assembly to approve
this even without a referendum. This would provoke clashes on the streets,
which would pose the question of power point blank. The battle lines are drawn
that will settle the fate of the Revolution one way or another.
This will be a period of enormous turbulence
and instability – a period of revolution and counterrevolution that can last
for years, with ebbs and flows. In the past, a pre-revolutionary or
revolutionary situation would not last long. It would either end in the victory
of the revolution or of the counterrevolution in the form of fascism or
Bonapartism. But under present day conditions that is not the case. In the
past, the bourgeoisie in Europe and elsewhere had important reserves of support
in the population, particularly the class of small peasant proprietors. This is
no longer the case. The middle layers of small proprietors has been whittled
away by the development of capitalism, while the working class has grown and
become the majority of society in many countries. In the past the students were
drawn from rich families and were inclined to fascism. Now in most cases, the
students are on the left. The ruling class is not strong enough to move towards
reaction, but the working class is being held back by its leadership. This
means that the present situation of unstable equilibrium between the classes
can last for some time.
The revolution never moves in a straight line.
There will inevitably be ups and downs in the movement, as there were in the
Russian and Spanish Revolutions in the past. Between February and October 1917
there were periods of enormous upswing, but also other periods of tiredness,
despair and even reaction (July-August). The same was true in Spain between
1931 and 1937, where we had the Two Black Years (El Bienio Negro) in 1934-5.
But in a situation where the pendulum is swinging to the left, such "lulls" are
only the prelude to a new and even stormier revolutionary upsurge.
The objective situation that we have now
entered will be far more similar to the interwar period, or the 1970s, than to
the last twenty years. Similar conditions will tend to produce similar results.
The masses will be far more open to our ideas than they were in the past.
The degeneration of the mass organizations has
reached unheard-of depths in the last period. The Social Democrats have
abandoned all pretence to standing for socialism and the former "Communists"
have abandoned all pretence to standing for communism. It is an irony of
history that precisely at this moment they have renounced all claims to stand
for a revolutionary change of society. Now history is taking revenge on them.
The striking successes of the Marxists in
Rifondazione Comunista in Italy and in the French Communist Party are an
indication of the profound change that is taking place. In the past such a turn
in events would have been unthinkable. It shows the existence of deep discontent
in the rank and file. The same discontent exists in all the mass organizations.
It will grow as the crisis unfolds and the policies of the leadership are
exposed in practice.
It is true that consciousness tends to lag
behind events, but sooner or later it catches up with a bang. That is precisely
the meaning of a revolution. We are approaching that critical point now. There
is a general development of an anti-capitalist mood in society, not just in the
working class but also in the middle class. People who never questioned
capitalism before are now increasingly discontented. This is a very dangerous
situation for the ruling class. And the crisis has only just begun.
The occupation of the Republic Windows and
Doors factory in Chicago (which has now been settled) shows the revolutionary
potential that is being prepared in the USA itself. These were mainly poor paid
Latino workers. The factory was forced to close because the banks were refusing
credit, and the bosses were not going to give the workers redundancy pay. This
is what sparked off the occupation. The workers said: "we have no money to pay
our mortgages; we will lose not only our jobs but our homes!" So they occupied.
But then the question of property was raised. The idea took root among the workers:
these assets belong to us! This is how consciousness is rapidly transformed in
the course of struggle.
In Belgium the big banking concern Fortis
collapsed, and the company was plundered by French and Dutch capitalists.
Fortis was regarded as the "People’s Bank". 700,000 people had shares in it.
But the shares collapsed and lost 90 percent of their value. This provoked a
wave of anger directed against the banks. Everywhere we see the same
indignation against the bankers and capitalists, who are obliged to lean on the
leaders of the working class to hold onto power.
In the crisis of capitalism, the workers’
parliamentary leaders cling to the ruling class and the trade union leaders
cling to the parliamentary leaders. In such periods the ruling class prefers
the reformist workers’ leaders in government. Their policy is to use and
discredit. They will use these leaders to do the dirty work and then cast them
aside like a dirty dishrag. Then they will say to the masses: "Now you see what
socialism means!" Thus, a contradiction opens up between the tops of the
movement, which are moving to the right, in the direction of class
collaboration, and the rank and file, which is moving to the left, looking for
radical solution and militant action. Sooner or later this internal
contradiction must be resolved. The coming period will see all sorts of crises
and splits in the traditional organizations of the working class.
Big possibilities are opening up for the
Marxists, and the social crisis is still at the early stage. As the crisis
develops, the radicalization of the working class will reach levels not seen
for decades. Ideas that were listened to by tiny handfuls will find a mass
audience. The basis will be laid for the creation of mass Marxist tendencies
everywhere. This is ultimately the only guarantee of the future socialist
transformation of society.
London, 15th December
See also:
- The Crisis: Make the bosses pay! – Manifesto of the International Marxist Tendency by International Marxist Tendency (November 4, 2008)
