Peter Taaffe of the International Secretariat introduced the discussion on the world economic crisis, while also commenting on the important questions of world relations in the new era.
World economic crisis and world relations
Socialism and marxism are now back on the agenda, popularised in part by the enemies of the workers’ movement. More than that, the role of the CWI now assumes greater importance, partiuclarly as the crisis confirmed our consistent analysis that the boom would come to an end and would provoke struggles.
Capitalist commentators have raised their fear of the ’mob’. There is justified anger amongst millions around the world at the effects of the crisis. In Iceland, where the economy is facing a devastating collapse following the speculative activities of the Icelandic banks and their eventual collapse, demonstrations are now taking place. Bankers and ministers are unable to move around freely! Iceland is 1929 in modern terms; it shows what another Great Depression would look like.
The crisis has stunned the workers of the world but their anger is reflected in many different ways. This has been acknowledged by the Financial Times in London, which raised the fear of ’revolution’ and ’nationalism’, in reality counter-revolution, as features of the coming period. Rosa Luxemburg’s phrase of ’socialism or barbarism’ could easily be a description of the next few years. Look at the break up of Somalia and the recent highly-publicised piracy off its coasts as an example of what this would mean. Socialism will become relevant to the neo-colonial world and ’emerging markets’ but also in ’developed’ countries.
Defining characteristics of this crisis have been the speed of this process, its severity and its likely prolonged duration. So far, the CWI has been conditional on the issue of a ’slump’ but the economy could possibly topple over into a slump in course of crisis. But such is the desperation of the capitalist class internationally that it will ’throw the kitchen sink’ at the crisis so their system survives. Their representatives now realise it was a mistake not to save Lehman Brothers when it was in trouble; two days later they saved AIG.
Now, many capitalists and their commentators have taken critical stances. former US Federal Reserve president Paul Volcker has lambasted the economic witchdoctors that got capitalism into this mess. Nouriel Roubini, whose comments we have carried on our website, has been vociferous in his dire warnings of how bad this collapse is and could be.
Can the capitalists temporarily overcome this? This will be the longest and deepest crisis since the Great Depression of the 1930s and comes on the back of a silent recession, the holding down of wages, the ’joyless’ boom, the lost decade in Japan of deflation and crisis, which still has not been fully resolved. But we live in extraordinary times and the capitalists are prepared to take extraordinary measures and mortgage the future in order to survive. Exploding national debts to fund emergency measures, the state taking stakes in banks and even full nationalisaiton has been mooted, even nationalisation of other industries; all these will be considered and could be implemented by the capitalists to save their system. Many of these will be considered temporary but could last for a long period, as have some of the measures from the 1990s banking crisis in Sweden. What is important for Marxists in these measures is that even capitalist nationalisation challenges the idea that the market is the most efficient method of organising production. From that, we raise the idea of socialist nationalisation with workers’ control and management.
The collapse in commodity prices, particularly of oil and metals, will have devastating effects in primary producers who have budgeted for much higher revenues during the ’boom’, particularly the bubble inspired by China’s economic growth. Very little of the benefits of the price boom saw their way down to the masses and the crisis will see their share reduced still further.
Obama has warned of millions of job losses. He has proposed a $700 billion stimulus to get the US out of the mess. The recent G20 summit attempted to unify the stimulus packages with only moderate success. China’s reflationary package is only smaller than that announced by Obama. The Chinese leadership has a terror of the social consequences if they do nothing. Already tens of thousands of factories have closed this year in China, so will the stimulus have an effect?
The world is now facing a period of ’deflation’. During the expansion of globalisation, the deflation caused by cheap Chinese goods was ’good’ as it kept prices down and forced workers to accept moderate wage increases for fear of their jobs being exported. But this deflation is ’bad’ as generalised price falls are taking place. Capitalist commentators have suggested the ’helicopter theory’ of throwing money at people in order to get them to spend. FT commentator Samuel Brittan thinks Gordon Brown should, if necessary, resort to the printing press to pay for the stimulus package. He accuses the British Tories of being ’Bourbons’ - learning nothing and remembering nothing - by returning to Thatcherite policies in this crisis.
One thing is for sure; this is the end of the era of deregulated, free-market capitalism. That is not to say there will be no neoliberal measures proposed; the bosses will propose holding wages down, make cuts in public expenditure ’so we all make sacrifices’ and may try to implement privatisation.
The election of Obama marks a new period. Millions voted for him hoping for change. That means that illusions in him by take longer to dispel, as there will be a feeling amongst some that he should be given a chance. His economic response has been mentioned above but there will be important decisions to be made in the field of world relations too. His election will not stop the development of inter-imperialist rivalries and there may be geopolitical shocks to deal with, such as instabilty in North Korea if the regime of Kim Jong-Il collapses.
Iraq is a ’mirage of tranquility’ and Obama will be held to his promise to withdraw US troops. He will have to deal with Iran; Obama may try to negotiate with the regime - Israel wanted to attack Iran but was vetoed by Bush - but the Iranian regime is under difficult domestic and international pressures.
Obama has promised a ’surge’ in Afghanistan but the Taliban are still strong and have got stronger despite more and more troop delpoyments. Israel and Palestine is an intractable problem under capitalism, and it remains to be seen the outcome of the Israeli general election and what policies come from the new government and Obama.
Socialists today face a confusion of consciousness; there are elements of revolution and counter-revolution in the situation and workers have not yet seen the clear path forward. The CWI has shown that it has the clarity of ideas, of perspectives, strategy and tactics as an answer to the biggest crisis since the 1930s.
A number of comrades made important points in the discussion. On the economy, a comrade from Rattvisepartiet Socialisterna in Sweden commented on how the fears of the capitalists of a ’stagflation’ crisis earlier this year had now turned to fears of ’stagdeflation’. By its very nature finance capital is volatile; there have been 112 financial crises in 93 countries since 1974. A comrade from our German section Sozialistische Alternative (SAV) explained how the capitalists feel: it is the ’Day after Pearl Harbor’, arch-speculator Warren Buffett had said.
Our Russian comrades reported how quickly the economic crisis had hit that country. This had followed on swiftly after the war with Georgia. The Medvedev-Putin government may not be able to prevent social and political protests against the repercussions of the economic crisis. The rapid fall in the oil price could also lead to international tensions. Russian oil costs $66 a barrel to extract but is sold at $50. Who will pay the difference: Western governments or the Russian government?
A comrade from the Democratic Socialist Movement in Nigeria said the crisis invokes 1929-33 but 80 years on capitalism still survives. Capitalism will survive this crisis if the revolutionary party is not built to take the opportunities presented. A Greek comrade reminded the meeting that the recession of 1974-75 had been the harbinger of revolutionary events in Europe and the neocolonial world.
A Malaysian comrade invoked the 1997-98 Asian economic crisis. Asian countries were forced to beg to the IMF for bail-outs. This time, the IMF has rushed in to save the system. The Asian crisis saw the Indonesian dictatorship fall in the reformasi movement and other regimes rocked. Will Asian countries go through this again with the spreading of this crisis? Already Thailand is in political deadlock and crises developing in Indonesia and Phillippines.
A number of comrades discussed the effect of the Chinese stimulus package. Would it prevent recession in China and, in conjunction with other reflaitonary programmes, the capitalist world as a whole? There was some debate on the former but general agreement that China could neither ’decouple’ from the world crisis nor help to soften it. However, it was clear that the Chinese economy was, at best, facing a considerable slowdown in its growth rates which would feel like a recession. Protests were already building as a result of the slowdown.
Important questions were also asked on whether the Communist Party regime will try and stay in power in the next period. Also, could a ’movement for democracy’ - along the lines of the ’colour’ revolutions in parts of the former Soviet Union - develop, what would be the prospects for such a movement and what role would the Chinese working masses play in such a movement?
Comrades from Socialist Alternative in the US showed what could be possible from the election of Obama. Millions have illusions in him but by maintaining positive criticism of Obama we could gain the ear of radicalised sections of youth and workers. There will be new opportunities too from the election campaigns of Ralph Nader and Cindy Sheehan.
There were contributions too on world relations with comrades explaining the possible convulsions in the Middle East with the economic crisis adding to the explosive general situation throughout the region. Comrades from Maavak Sozialisti in Israel explained that workers have bene taking industrial action to defend their living standards and are turning onto the political plane as well.
Another SAV comrade explained our tasks in the new period ahead. The situation poses the future of the capitalist system and the development of an extremely radical mood amongst a growing section of working class puts everything into question. We need to have a vision of future of socialism; socialist propaganda is becoming much more important but so is our transitional programme and our use of transitional demands to point the way towards socialism. How do we concretely put our demands for workers’ control and management? How should we raise our demand for a workers’ government? The speed and depth of the recession make many developments possible.
This was undoubtedly an inspiring discussion as the ranks of the CWI adapt to the new period, which will see increasing radicalisation and struggle, and an increasing thirst for socialist ideas that only our International can satisfactorily provide.