“The global elite is in fear of an uprising of the masses”. This quote from the German newspaper Die Welt was taken from a survey of 1,500 managers and politicians for next month’s World Economic Forum in Davos. It was mentioned by Aron Amm from Germany in his contribution to the discussion on the ‘World Economy and Inter-Imperialist Relations’ at the recent International Executive Committee (IEC) meeting of the Committee for a Workers’ International (CWI). It shows that the “global elite” – the capitalists and their allies – are trembling at the effects austerity and capitalism generally are having on the vast majority of the world’s population. They fear social explosions internationally which will challenge their rule and bring the ideas of socialism to billions on the planet.
Peter Taaffe introduced the discussion by referring to the social explosions already occurring. This was the most important feature of the last year; the revolt of the working-class and poor masses in a number of countries. As was pointed out at our last IEC, mass movements had been prominent features of politics in Europe and the Middle East, and were joined in 2013 by the mass revolts in Brazil and Latin America in general, Turkey and elsewhere.
Also, the tremendous victory of Kshama Sawant and Socialist Alternative in Seattle has put the US also in the front rank of countries where support for socialism could grow rapidly. US workers and youth are more open to the ideas of socialism, which appears fresh because the working class and youth there have not gone through the same disappointing experiences as the European working class, for instance, that have had decades of experience of social democracy and Stalinism in action.
The starting point, said Peter, is that capitalism worldwide is in a gigantic mess, particularly in the economic sphere. It is difficult to see how the capitalists can extricate themselves from this dire situation. They can come up with short-term palliatives, but none of their solutions can guarantee long-term growth.
It is not just an economic crisis, but social, environmental (as seen by the effects of the recent typhoon in Philippines) and also what the capitalists call a ‘crisis of governance’: an inability to manage their system politically and prevent political crisis. In such an epoch, if changing society is not posed in a situation, the questions of war or even civil war will come to the fore.
In the first years of this century, capitalist globalisation was pursued relentlessly throughout the whole of the globe, with the aim of spreading the alleged advantages of capitalism: growth, higher living standards and a better quality of life. In the process, this would ideologically cement capitalism as the only way forward. However, events since the financial crisis and economic crash of 2008-09 have instilled deep gloom in the ideologists of capitalism.
This lack of confidence amongst their public representatives has been noted and reflected in different ways. There is turmoil amongst economic students worldwide who are revolting against the teaching of ‘free-market’ economics and want alternatives, such as the ideas of Keynes and, significantly, Karl Marx to be put onto the syllabus. Students in Manchester have established a ‘Post-Crash Economics’ group.
In Switzerland, a referendum was called demanding the limitation of salaries of top business executives to no more than 12 times the wages of their lowest-paid employees. This initiative was defeated but will be taken up elsewhere.
The economic background is of intractable economic crisis in all the main regions of the world, both in the advanced industrial countries – Europe, the US and Japan – and, increasingly in the so-called emerging markets and, significantly, Eastern Europe. The capitalists pretended that ‘blooming landscapes’ would transform the lives of people there. Now, even the gangster capitalists and representatives grudgingly admit Eastern Europe “will never catch up with the advanced industrial countries of Western Europe”.
Six years into this devastating economic crisis, the ‘theoreticians’ of capitalism are still thrashing about trying to find a solution. There is a widespread acceptance a full recovery will not take place and the world economy has still not returned to its pre- crisis level. Any growth that occurs will be anaemic and will not substantially eat into the structural unemployment that besets many countries. There will certainly not be enough growth to overcome the problems of austerity. Instead, there has been a remorseless growth of poverty like in the Great Depression of the 1930s.
One wing of the capitalists – perhaps the majority – has concluded it is deflation and lack of demand, that poses the biggest threat to Europe and US, just as it did for Japan in its ‘two lost decades’. This wing has come to same conclusion as Marxists, but from the opposite class standpoint. The main problem confronting capitalism is not the drop in profits but the colossal surplus with nowhere to go. Martin Wolf summed this up in the Financial Times: “The world economy has been generating more savings than businesses wish to use, even at very low interest rates.”
This is what they themselves call a “savings glut”. Yet there has been a drop in investment in new plant and machinery even in this so-called recovery. The drop in productivity is now ‘structural’ which is jamming the system.
Recently, the Economist magazine baldly warned of “the perils of falling inflation”. This is ironic to those who remember the hysterical denunciation in the 1970s of what Leon Trotsky called the ‘syphilis’ of inflation. This was used to attack the wages of working class. Now the capitalists are desperately trying to break out of this dead zone of zombie banks in a zombie economy. Without movement on the economy, the capitalists are absolutely certain to face revolts of the working class.
One wing of the capitalists advocates stimulus programmes, a continuation of quantitative easing, even at a cost of piling up the deficits. This is not classical Keynesianism – increasing the wages of the working class and therefore demand – but it suits big business, or to be more exact, its most parasitic section, the lords of finance.
‘Ultra-expansionary monetary policies’ have benefited speculation and shored up the emerging markets for as time, but it is not investment in the ‘real’ economy. This was amplified by Per-Åke Westerlund from Sweden who pointed to some economists claiming they “need bubbles”. Quantitative Easing has increased share prices and reduced the value of dollar but problems are building up which could have further devastating consequences for the world economy.
Peter commented on capitalist representatives who have called parts of the banking system ‘socially useless’. Others, like Larry Summers – past head of the US Treasury – have advocated concentration on infrastructure spending, particularly through state-generated growth in clean, green technology.
This would be underwritten by the newly acquired advantage of power of the US through increased shale production of oil and gas, which some reports say will make the US self-sufficient in energy by 2035. This, big business hopes, will give a certain safeguard against upheavals in the Middle East and could be used as a counterweight in relation to its rivals, including China and Russia. But for the moment, the oil of the Middle East, particularly of Saudi Arabia, is still of key geopolitical importance to the US. Neither does it guarantee structural growth in the economy in the US or worldwide. For technology to be harnessed fully, new fields of investment, a higher rate of profit and spiralling upwards of the economy are needed.
In general, the economic landscape will be a continuation of the present situation; a perpetuation of the depressionary economic conditions experienced since 2007-08. Even limited growth would strengthen the working class and give confidence to encourage and win strikes and struggles. A continuation of the current economic conditions, given the accumulation of colossal anger of the masses, and no outlet through mass parties to sufficiently express rage can and will result in unprecedented social explosions along the lines of Brazil, Turkey and Egypt.
The ‘Arab Spring’ gave a huge boost to the idea of revolution in general, but particularly underlined the critical role of masses in the urban areas. It was this that evoked the support and enthusiasm of the masses worldwide. The Egyptian revolution gave strength to the idea of the independent role of the masses to change their conditions.
The theocratic regimes in the region, as well as imperialism, particularly US imperialism, were initially helpless to intervene. However, they were given an inroad by events in Libya, Bahrain and now Syria. In all of these uprisings, there were elements of revolution at first but counterrevolution intervened and this has skewed the movements. This reaction has included attacks on women’s rights, including in Egypt, although women themselves are fighting back.
Egypt is the key country, alongside Israel, in region. There has undoubtedly been a big element of the counterrevolution since the military took power in July but this was not clear to the masses initially. Some believed that a ‘strong leader’ like General Sisi, head of the government, was necessary to avoid chaos and cuts in living standards. His figure has been built up almost to the same proportions as the late President Nasser in the 1950s and 1960s. The latest laws attacking democratic rights are a warning that the working class faces a race against time to create independent organisations. Independent trade unions have recruited 3 million workers since January 2011 but at same time, some of their leaders have been drawn into the regime.
In Tunisia, there is an independent trade union with a history and the UGTT is capable, with correct leadership, of taking power, even before creating a party.
The equally intractable and devastating wars in this current epoch are symbolised by Iraq and Afghanistan, and the spread of its poison to Syria, in particular and the whole of the Middle East. Syria has already been described as “Afghanistan on the Mediterranean”. Before the recent Geneva negotiations over Iran, there loomed the nightmare of sectarian war and the biggest clash between Shia and Sunni Muslims for 1400 years. An arc of sectarian strife stretches from Pakistan through Iraq, Lebanon and Syria to Saudi Arabia. The rest of the Middle East, and even Europe (from where ‘jihadis’ have travelled to Syria), would not escape the devastating fallout. Not least is the fear of a new Middle East war with a pre-emptive strike on Iran by Israel. Such an outcome could skew the prospects for workers’ struggle.
The CWI hopes events will not develop in this way but this underlines the urgency for new mass parties with farsighted leaderships that can lead the working class in a united movement to avoid this disaster and prepare the way for seizing power. The working class does not have time if it is to avoid being dragged into the abyss.
The initial agreement over Iran, while not conclusive, is in some respects a ‘game changer’ and could alter perspectives for Middle East. Any subsequent agreement will only be possible because it benefits the main players – the US and Iran – on political, economic and strategic grounds. Judy Beishon from England and Wales pointed to the hatred and mass opposition to US policies in region. The US has no existential threat from Iran whereas Israel has but the US sees a nuclear Iran as a threat to US interests in region.
In Syria, the majority reject both the Assad regime and opposition, which is increasingly under the sway of jihadi groups. The defeat of the campaign to bomb Syria was a turning point. Mass opposition, in the US and Britain in particular, forced the main players to explore the possibility of discussions. Nihat from Turkey reported on the devastating effects of the civil war in the region. Turkey was trying to implement neo-imperial policy and develop a regional role, while improving its relations with the Kurds but this role is receding.
Comrades from Israel reported on the growing anger of Palestinians in the face of increasing colonisation, annexation and attacks with some returning to armed struggle rhetoric. The last chance for a two-state solution may be near. Israeli workers were also becoming angry at austerity policies.
World relations are in a state of flux. The US, said Peter, has been weakened by the recent wars in Afghanistan and Iraq, and there is no appetite for further military adventures. Any further interventions could have a more military police character. This reflects the more multipolar world in which China is beginning to compete with the US, while the smaller powers play a lesser role. Nevertheless, the US cannot retreat into splendid isolation. It is still attempting to affect the outcome of events in its favour through ‘soft power’ and it still has the edge in technology and the productivity of labour.
Russia asserts itself, particularly in its own region, but mainly plays the role of intermediary between the two remaining superpowers, China and US. Russia has tried to reassert its claims to the ‘near abroad’ and Ukraine was brought to heel through economic pressure but this has prompted the huge demonstrations demanding Ukraine sign an economic pact with the EU instead of Russia!
Peter also outlined the situation in Asia, and there was some discussion on perspectives, particularly on China and the country’s relations with its neighbours in South-East and East Asia. He also made comments on South Asia, particularly the difficult situation facing the working class and the CWI in countries such as Sri Lanka and Pakistan.
The recent plenum of the Chinese Communist Party gave some indication of where China may be heading. Comrades from Asia reported that the outcome was ‘more market, more dictatorship’ and confirmed a major shift of power with the rise of President Xi Jinping as the new strongman Peter said this may be possible but the Chinese leadership is still cautious of how far they can go and is haunted by collapse of Soviet Union.
China’s developing world power has come about through its rising economic power, with some economists predicting that, in gross terms at least, it could be the world’s biggest economy as early as 2020. This process could be cut across by the movement of the Chinese working class but the position of the US as the major world power is coming to an end. Robert Bechert, in his reply, pointed to the strikes in China, the relocation of some production away from China due to increased wages and transportation costs and its foreign reserves of $3.6tr. There were different elements to how China could develop.
Peter commented that if China’s economic progress continues, this will be reflected in China’s military, diplomatic and political power. This is shown in the recent clashes in Asia over the disputed islands in the seas around China. The right-wing government in Japan has been keen to reassert its national interests in the region and backed by US, which is seeking to counter China in Asia; the Pacific region is its main interest not the Atlantic., said this showed the need to develop a programme for the working class with sensitivity to the national question but opposed to chauvinism
Comrades also mentioned the slowing of Australia’s commodity boom as China’s economy slows. There was a two-speed economy in Australia, with manufacturing in Eastern Australia stagnating. Australia will not escape from a more dangerous situation in Asia, even under its new right-wing government.
The drop in world trade has indicated the scale of crisis. There are discussions aimed at a new trade agreement between Europe and the US, the Transatlantic Trade and Investment Partnership (TTIP). There are also discussions on a Pacific agreement (Trans-Pacific Partnership – TPP). Since the IEC, the World Trade Organisation has agreed a new trade deal but this is more limited than what was hoped for. On paper, trade agreements circumvent national governments, but tensions both between and within trading blocs are slowing moves towards treaties. Any agreements will try to strengthen neoliberal policies and enshrine the ‘race to the bottom’, as several comrades mentioned.
Peter raised events in Africa and Latin America, which had separate sessions, where politics is volatile on both continents and workers can be won to genuine Marxist ideas. The working class in South Africa have entered politics following the miners’ strikes and the formation of the Workers and Socialist Party (WASP). Since the discussion, Mandela has passed away and the current ANC leaders are being compared very unfavourably to him. This will break some of the loyalties of workers to the ANC since apartheid was removed.
Our victory in Seattle will have a big effect internationally but the masses need time and experience to arrive at roundabouts revolutionary conclusions. There was some discussion from US comrades on the US labour movement; traditional unions are stagnating but organisations taking up the $15 an hour campaign are finding an echo for the action they are organising.
Peter said that, economically, conditions are similar to the 1930s but at the moment, consciousness of the working class lags far behind what is required, even in those countries where the crisis of is at its most extreme (Greece and southern Europe). The effects of austerity are clear in Europe as the recent Red Cross report shows (for more on Europe, see the separate report).There is not a clearly worked out the idea of how to change society and how to construct the socialist alternative. This will ensure the drawn-out character of revolution. Yet this is one of the most disturbed periods in human history on all fronts: economic, political, environmental and military.
Peter concluded that the capitalists cannot overcome the problems of private ownership and national divisions in the long term. We said the nation state would savagely reassert states itself in this crisis and it has done internationally including in Europe. In fact, internationally new walls and barriers are going up everywhere and total 6,000 miles around the world.
The great potential for the CWI is shown by events Brazil, South Africa and the USA, which show that small forces can have a colossal effect out of proportion to their size. In the next period, big opportunities will open up for the working class to move onto the scene of history and the CWI will be present in those movements. An exciting new period is opening up and the CWI will go forward if it has clear perspectives and takes bold action.