Renewed economic crisis, wars, political polarisation & class struggle perspectives

The following is a report of the plenary discussion on world perspectives at the 11th World Congress of the Committee for a Workers’ International (CWI) held in Belgium from 24-30 January 2016. The very successful week-long Congress was attended by CWI comrades from 34 countries, with delegates and visitors from east and west Europe and Russia, Africa, all parts of Asia, North and Latin America, Australia and the Middle East.

More reports on Congress discussions will be published over the next few days, including on Europe and South Asia.

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The eleventh World Congress of the Committee for a Workers’ International (CWI), held recently in Belgium, took place against a backdrop of volatility in world stock markets due to fears over the Chinese economies and the effects of falling oil prices, the latter partly linked to the turmoil in the Middle East and the threat of further clashes, and increasing crisis in Europe. Peter Taaffe introduced the discussion on World Perspectives by noting that the instability in Europe as a whole is epitomised by Moldova, wracked by a banking crisis, which has just appointed its sixth prime minister in a year.

From the World Economic Forum in Davos, held the week prior to our Congress, Financial Times (London) journalist Gillian Tett reported that one event had a chart showing ‘world protest intensity’ to guide capitalists on where to invest and where to avoid.

The task of the Congress was to politically arm the CWI with the likely perspectives for the economy, world relations and, above all, the class struggle. Arising from this are the role and possibilities for all CWI sections.

At the beginning of this year, there were many articles from a few self-designated ‘super-prophets’, who foresaw the longevity of capitalism despite all the obvious evidence: chaos, economic and environmental catastrophes, terrorism and the overall object failure of the system, all of which is evident to the more serious capitalist analysts and commentators.

We counter-pose to this the Marxist science of perspectives - serious analyses of objective reality and possible rising trends - which means we have been able to trace out likely developments in society. For example, our last Congress in 2010 suggested turmoil in Egypt was possible; we foresaw the ‘Arab Spring’, in reality a revolution.

The defining moment for the world economy was the financial crash of 2007-08. Capitalists internationally have been unable to escape this crisis easily, if at all. As outlined in the discussion by Pera, from Sweden, Holger from Germany and others, this is confirmed by the weakest recovery in history, yet we now stand on the eve of a new crisis, equal to or maybe even deeper than 2008.

Peter remarked that just weeks into 2016 it is difficult to find an optimist. The media is full of pundits predicting a looming economic crisis, with only its timing uncertain. This was confirmed by the gyrations on stock exchanges, with an estimated $6 trillion wiped off shares.

We commented after last July’s falls in shares and stocks that this may not lead to an immediate crash but may be a tremor denoting the earthquake to come. There may be a few more tremors before the bottom drops out of the world economy

Moreover, we said previously there would be not just one crisis but a chain of crises; so we have had the US sub-prime mortgages collapse that led to 2007-08 – with, of course, big repercussions in the rest of the world – then the euro-zone crisis since 2010 and now the devastating crisis in the neo-colonial world. The so-called ‘BRICS’ have hit a brick wall, which has had major repercussions in Latin America, particularly Brazil, and in South Africa.

Oil shock

The oil shock is not like previous crises caused by price increases but the opposite, a dramatic drop with consequences for oil producers, including the US and Saudi Arabia. During the discussion, Dagga and Lanhre explained how the plummet in oil prices is having a big effect in Nigeria, and Patricio, from Chile, and Andrei, from Brazil, discussed the dramatic effect of the decline in commodity prices in Latin America, increasing joblessness and poverty but also class resistance.

Peter outlined how the Saudi regime is determined to smash US ‘fracking’ by allowing the oil supplies to remain high and fracking to become more expensive to carry out but that policy could unleash domestic protests due to falling oil revenues and budget cuts.

Growth projections for the world in 2016 were 2.9% but they have now been downgraded because of fears about European growth. Add in the disastrous perspectives for the neo-colonial world – excepting India, the fastest-growing economy – and world economy prospects look bleak.

Even India’s growth is at the cost of environmental disaster: children in Delhi have lungs like chain smokers. Even outside prime minister Modi’s house there are dangerous levels of pollution. And no solution to worldwide environmental catastrophe was given at the recent Paris Summit.

China was vital in the recovery of the world economy following 2007-08 but it is now leading the downturn. There have been two stock exchange slumps in six months. These presage a serious crisis caused by underlying serious economic problems, which we have analysed in CWI articles. China’s boom was based on debt-fuelled growth; debt has risen from 100% of GDP in 2008 to 250% now, which is unsustainable.

The slowdown will affect China’s role as both a ‘market of last resort’ and as a major exporter to other countries, which will reduce world trade. Its slowdown was affecting countries such as Australia and many countries in Africa and Latin America, as domestic economies were hit by falling commodity prices.

Martin Wolf of the Financial Times (London) recently wrote of a “series of risks” to the world economy, leading to the conclusion: “There is a great deal of ruin in the world”!

During the discussion on world perspectives at the CWI congress, Clare Doyle from the CWI International Secretariat spoke about Japan’s 20 “lost years”. A new generation of youth has spent its entire life in deflationary, stagnant times, with reduced expectations. This mood will change in the future.

However, some economies have grown recently, most noticeably in the US where unemployment has dropped to 5%. But this is a one-sided picture; most of the newly-employed are in ‘Macjobs’ with low wages and zero hours. This is a ‘joyless’ recovery with incomes stagnant overall.

Yet we have seen the stunning growth of inequality; the world’s 62 richest people own as much wealth as half the world’s population. Inequality depresses ‘demand’, which builds discontent and raise the possibility of strikes for workers to catch up.

Peter pointed out that we had hoped socialist consciousness would flow from the failures of capitalism after 2008. It did not, even in Greece, Spain and other countries, where battles have taken place. One reason is the lack of workers’ leadership linking day-to-day struggles with the idea of a new society.

Sascha from Germany described the speed of events on a world scale since the last CWI congress in 2010 but noted that mass consciousness has lagged following the ‘Great Recession’. Defeats as well as victories develop the masses’ understanding of what is necessary, Sascha said.

The collapse of Stalinism and the ideological underpinning of neoliberalism have continued to effect consciousness too, Peter said in his introduction. But this could develop through the next world economic crisis, even if the crisis is not deep. A new crisis would shatter illusions that 2007-08 was ‘exceptional’ in an otherwise supposed upward march of capitalism. Workers would then search for an alternative.

Potential developments in the US and elsewhere are shown by the electoral success around Kshama Sawant, which has had a huge effect on the 15Now! Campaign. This will have had some influence on Bernie Sanders’ decision to stand. The thirst for ideas is shown by the word ‘socialism’ being the most looked up word in search engines in the US in 2015.

Our US co-thinkers have correctly orientated towards Sanders’ campaign. It raises the question of how new parties are created? We cannot be dogmatic on this question. There are a number of possibilities. New parties of the working class can be formed from scratch with a handful of pioneers or even created out of bourgeois formations.

Keir Hardie, founder and leader of the Labour Party in Britain, started as a member of the capitalist Liberal Party. But he broke from it, without official trade union support, initially, to form the Independent Labour Party when he realised the Liberals could not represent workers’ interests.

Interest in socialist ideas

There are objective reasons for the interest in socialist ideas in the US. A fifth of adults live in poverty and uncertainty blights their lives. Between 2009 and 2012, one third of the population had at least one spell of poverty.

Philip from the US expanded on the incredible growth in interest in socialist ideas; instead of socialism, ‘capitalism’ is the dirty word with the youth! There is a loose understanding of socialism but a searing anger at Wall Street and an ideological failure of capitalism.

Bryan, also from the US, spoke about the rise of militancy amongst black youth following the succession of police murders and the rise of ‘Black Lives Matter’. In contrast, however, was the woeful leadership of the US labour unions.

Bruno-Pierre from Quebec showed that militancy in North America was not confined to the US, as public sector workers’ battle against austerity led to the biggest strike Quebec has ever seen, on 9 January. A mood had developed in the union ranks to challenge the leaders who wanted to curtail the movement.

Peter explained that one of the most important features leading to radicalisation is the ‘withering of the middle-class’ (a term which includes the working class in the US), which is shaping up to be one of the dominant themes in the US presidential campaign. This potentially accounts for the rise of Donald Trump, as well as Sanders. Trump tries to cash-in by spouting his extreme, demagogic populism.

But there is an element of denial amongst the forces around Trump. The US is fast becoming a more ethnically diverse society; this could fatally undermine Trump. His policies are not too different to European populists such as the French National Front or the British UKIP. In these current volatile times, we should ‘never say never’. It is possible but unlikely Trump could win the Republican nomination and even the presidency.

This is a reflection of the collapse of stable ‘traditional’ parties worldwide, particularly the weakening or complete collapse of social democracy. Chunks have been taken out of its base by right nationalists and the far-right but also from the left. When former social democrats win office they are rapidly undermined because they cannot carry through reforms; in fact, they preside over devastating counter-reforms, as in Greece, Spain, Britain and elsewhere.

Peter reported that Unilever’s boss recently referred to ‘VUCA’ – “Volatile, Uncertain, Complex and Ambiguous” – to describe the world situation! Who would be a capitalist?!

There are interesting comparisons to the disturbed period prior to the First World War. Then military conflict was ‘natural’. The ‘benign world’ of the recent past has gone, with the same kind of inter-state clashes looming and small wars a fact. The unipolar world is now splintered. No power is able unilaterally to impose itself.

The US is still the strongest military power at the moment, by a long distance, but cannot fully utilise this because of domestic opposition to impose solutions. Russia has been weakened by the collapse in the price of oil yet Putin is a major player in the Middle East. Igor pointed out that Russia spends 4.5% of GDP on defence, more than the US or China.

The future is unlikely to see one dominant power, even if, as predicted by many bourgeois economists, China overtakes the US economically. The US will still exert military power like British imperialism did after it was overtaken economically.

China jostling with US

China is jostling with the US over control and domination of the Pacific. This has gone to ludicrous lengths, with China trying to build an island airstrip out of an atoll in South China Sea, hoping to establish ownership rights. The conflicts in the Asia-Pacific area will be one of dominant themes in the foreseeable period, with the two powers rubbing up against one another economically, financially and militarily. North Korea’s reported recent detonation of a nuclear device further destabilises the region.

The turmoil in the Middle East confirms that this is one of the most disturbed periods in history. The CWI foresaw the possibility of a sectarian catastrophe and terrorism emerging from Pakistan to the Middle East and North Africa, with big repercussions, not just for the region, but in Europe too. The region faces an intractable crisis on the basis of capitalism.

Terrorism has become ‘embedded’ now, not just in the Middle East but in Europe, to a smaller extent in the US and now, as shown by the recent Isis/Daesh attack in Indonesia – the world’s most populous Muslim country – in other parts of Asia and North Africa.

Syria is at the heart of the problem. We analysed the situation and concluded that neither side in the civil war was strong enough to overthrow each other and too weak to be overthrown. Undoubtedly, the Assad regime has been strengthened by Russian intervention.

This and the fear of the recent nuclear deal and, flowing from that, a sanctions-free Iran led to Saudi Arabia’s execution of a high profile Shia cleric. The collapse in the price of oil will have domestic and international repercussions for Saudi Arabia.

The Saudi regime has a pivotal position in the world economy, with the greatest energy reserves the world has ever known. Its oil assets are potentially worth between $4 trillion and $10 trillion yet the company does not publish accounts.

But even Saudi Arabia has been affected by the oil price drop; it has been forced to eat into its reserves, increase prices and cut back on privileges. Its medieval religious restrictions, particularly on women, are an enormous barrier which holds back economic development. There will be discontent as privileges and subsidies are withdrawn. Even some of the numerous princes are preaching ‘revolt’! This will affect the regime’s ability to support reaction throughout the region.

Middle East turmoil

Commentators on the Middle East have compared the turmoil to the ‘30-Years War’ in Europe but it will not take that long before the working class responds against these horrors.

Turkey has been drawn in and has intensified its struggle against the Kurds. A new generation of Kurds are more determined to fight for their rights. ISIS is not likely to succeed in the long term in stabilising its ‘caliphate’.

The potential role of the working class is vital, as has been shown in Tunisia. Recent mass protests have thrown up the slogan: “Jobs or another revolution”.

Gégé from the CWI International Centre explained that the revolutionary movements in North Africa and the Middle East that erupted first in Tunisia in late 2010, planted the idea that change can come about by mass movements.

Trade unions in Egypt and Israel have also been battling. Shahar and Yasha from Israel reported on anti-racist protests in the country. At the same time, resistance of the Palestinians has seen a rise in general sentiment for a new intifada, although one identified with the tactics of the second intifada and not a mass movement.

Inevitably there will be reaction to the horrors in the region, Peter said, and the best workers will look for class solutions. This includes Iran, where there were opportunities in 1979 at the time of the revolution which however was derailed and led to Khomeini taking power. New movements could develop amongst Iran’s young population, particularly women, who are also often highly educated.

In South Asia, new situations have opened up in a number of countries. Khalid discussed about how the assaults on schoolchildren by the Taliban in Pakistan led to a new crackdown by the military. This has reduced the risk of Taliban attacks for the time being, although the recent attack on a university has maintained the threat. The general lessening of attacks has opened up new opportunities for the labour movement in the country and the CWI is playing an important role in this process.

Reaction has not developed in India, as some imagined it would after Modi’s electoral victory. Around 150 million workers were involved in last September’s general strike against labour reform. Jagadish reported on the eruption of protests by college youth in India following the oppression of Dalits, including a suicide in Hyderabad.

Sri Lanka

Peter and Siri said the defeat of President Rajapaksa in Sri Lanka was a key moment and has weakened the role of pro-Chinese forces in the country. The new government inevitably seeks to impose neo-liberal policies which have provoked strikes and opposition from unions. The CWI on the island have struggled heroically to maintain an independent class position and will be to the fore in resistance to new attacks against workers.

Recent elections in Taiwan and Hong Kong have been significant. China has also entered a new political period. Its problems are illustrated by the laying off of 300,000 workers from the military. Cuts in state-organised enterprises will not allow the discharged service personnel to be absorbed, which could create a flashpoint.

There have been attacks by the regime on NGOs and labour lawyers helping workers. The regime’s fears are shown by the recent raid and possible kidnapping from a Hong Kong bookshop. One major incident and the lake of petrol which is China could go up in flames.

Vincent explained that there was a list of 14 publishing companies and 21 magazines the Chinese Communist Party wants to eliminate. Extraordinary inequality is widening in China: in 2014 a new dollar billionaire was created every five days yet thousands of farmers were evicted and 930 workers were killed every five days in industrial accidents.

Peter outlined the significant impact the refugee crisis has had on Europe. The capitalists of some countries initially welcomed this but the numbers have forced them to make a re-evaluation. Gideon Rachman from the Financial Times commented that the wave of immigration into Europe was ‘payback’ for the colonisation of Africa, Asia and Latin America. It is not possible for Europe to ‘stem the tide’ because of its shared land mass with ‘Eurasia’, so the conclusion has been drawn by many of Europe’s elites to manage the problem “as best we can”.

This wave of migration introduces complications into the class struggle, with the far-right playing on it, so socialists need to have a transitional approach to migration and refugees, calling for the refugees’ rights and opposing racism and discrimination, while also campaigning for decent public services for all communities, affordable housing etc.

Peter concluded by emphasising that only the working class, organised as a conscious force, can introduce rational socialist planning and real democracy in every country, on a world scale. Our task is to lay the foundations for such a development, to which the CWI can make a big, crucial contribution.

We can attract in this new period of awakening some of the best elements intellectually, the best fighters from the oppressed masses and the new forces that will inevitably develop. We have to prepare for this future by strengthening the CWI politically and organisationally and all its sections.

Conclusion

Niall Mulholland from the CWI International Secretariat replied to the discussion, pointing out that we have to emphasise the possibilities for struggle although we do not ignore the problems created by reaction. He raised the possible collapse of the EU, as its currently structured, through a combination of the refugee crisis, possible ‘Brexit’, suspension of the Schengen Treaty, tensions in the euro-zone, and the economic and social and political turmoil in countries like Greece. There is extreme nervousness of capitalists towards their own system. The entry of China into the capitalist economy was welcomed but has become a burden through overproduction, or overcapacity as the bourgeois economists term it, in steel and other industries. These problems would not be easily solved in a further economic crisis, as many ‘emergency’ measures have been already been used. Niall said the CWI had predicted the volatility and breadth of the crisis. We are confident workers will move into struggle. Niall quoted comrade Sebei, from South Africa, who commented during the discussion that the “molten lava” of heroic struggles like the Marikana strike have long-lasting effects on the working class. Many can join the CWI and help building our sections, thus having a decisive effect in the class struggle and the battles for socialism.

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