1) The last IEC concluded that we were “living through one of the most dramatic periods in history”. This would be marked by mass movements of the working class in Europe, continuous upheavals in the neo-colonial world, particularly in the Middle East, the re-emergence of the working class in South Africa, expectations of important developments in the US following the US elections, as well as changes in China and Asia as a whole and a significant turn in the situation in Latin America. Eastern Europe and Russia were also likely to see oppositional movements of the masses to the corrupt, parasitic robber-gangster capitalists. The impetus for all of this would be the continuation of the most serious world capitalist economic crisis since the 1930s. We also emphasised the crucial role of the CWI in this situation. Despite some difficulties for us arising from conjunctural complications, we would nevertheless be able to intervene successfully in movements likely to erupt and, in the process, attract some of the best of the workers and youth to our banner.
2) We were not disappointed as convulsive movements – dominated by the working class, which led the urban population and poor masses in the countryside – unfolded in Turkey, Brazil, Egypt and South Africa. This was matched by the bitter and sullen resistance through further strikes and demonstrations of the European working class to further brutal austerity measures. Mass occupation of the squares took place in Turkey, followed up by action by the working class itself. Alongside Brazil, Egypt and not forgetting South Africa, these represented probably the biggest mass movements, certainly of the working class, in history!
Egypt – 22 million demanded the removal of Morsi
3) 22 million initially signed the petition for the removal of Morsi in Egypt. The number on the streets during the ‘second revolution’ – which the CWI correctly predicted would inevitably follow from the derailed ‘first revolution’ –but were contested given as 17 million officially or 33 million, according to the opposition. However, the hand of the military, in collusion with the big capitalists, was also present. The Economist called it the “18th Brumaire of Tahrir Square”. The comparison between General Sisi and Louis Napoleon is apt. but, unlike then, there is not yet the re-establishment of an outright military dictatorship. The Muslim Brotherhood’s ‘monopoly of power’ had alienated broad swathes of the population, the ‘liberals’, the youth, who were the fighting cadres of the first revolution, and big sections of the masses. Latest figures indicate the Brotherhood still retains the support of between a fifth and a third of the population. Nevertheless, this was not a classical military ‘coup’.
4) The dire economic situation was a powerful impulse for the overthrow of Morsi. 4,500 factories had closed since 2011 and 18 million people are living below the poverty line or near it. At the same time independent workers trade unions mushroomed to an estimated membership of 2.5 million today. Strikes were running at 800 a month and have continued, emphasising the stress that the CWI has laid on the need for independent organisations and actions of the working class. This is the instinctive mood of workers in the course of a revolution. As yet, they have not moved on to the next and vital stage of creating a mass workers’ party. However further experiences will put this on the agenda.
5) But events will not develop in a straight line. The generals – and behind them the ‘deep state’ of the unreconstructed Mubarak’ security apparatus’ – is attempting to coalesce around the figure of Sisi in order to re-establish ‘order’. They have already issued decrees banning overnight occupations of the squares, demonstrations, etc. One visiting US senator, after meeting Sisi, said he was already the ‘de facto ruler and a little bit intoxicated by power”. However, it is not possible to coldly re-establish at this stage an unreconstructed Mubarak type regime/dictatorship. The army will be compelled to maintain the semblance of ‘democracy’ – perhaps a continuation of a parliament with limited powers – but with real powers firmly in the hands of the military, able to ‘control’ the social situation. It is, however, not excluded that a ‘cold coup’ around Sisi may even initially gain support from big sections of the masses, who seek salvation from the chaos that presently engulfs them. But the Egyptian masses will not go to sleep, and the working class and poor urban masses in particular will press their claims through their newly acquired powers to push the revolution forward. It is urgent that we continue to try and assemble the forces in Egypt and in the region to build the independent power of the working class.
6) Last year, we also wrote: “Latin America has not been in the front line of the class struggle in the recent period.” “It is now,” as an English football commentator famously declared at the end of the 1966 World Cup Final! Brazil, Chile and Argentina have demonstrated this in a spectacular fashion. When Brazil was experiencing its economic fireworks, with growth on average of 7%, we expected an outburst of strikes with workers demanding ‘our share’ and this took place. We also said that Brazil and other countries: “will enter a new phase of economic crisis in a weakened position in their domestic economic base”.
Brazil – mass protests
7) The colossal events of the last period in Brazil have underlined this. Probably 120 big cities and 300 in total witnessed mass demonstrations with at least 2 million or more at one time out on the streets. The deep going nature of the crisis was indicated by support from professional footballers and with the numbers of demonstrators during the Confederation Cup far outnumbering those who filled the stadiums themselves. Even European football commentators were compelled to comment on the poverty they had witnessed, against the background of the obscenely expensive spectacle taking place.
8) Fortaleza, where some matches were staged, is the fifth most unequal city in the world. It is surrounded by 400 poverty stricken favelas. From Porto Alegre in the south to Belem in the Amazon region of the North, this country – in reality a semi-continent – was convulsed. Beginning with protests against bus fare increases in Sao Paulo and the decrepit infrastructure, it spread to protests against education, wages, police repression, etc. The fare increases were cancelled but the movements just grew. The recent strikes have indicated that the discontent will not die down and is likely to be boosted by the World Cup taking place in Brazil next year. This has already led to further protests against the obscene amount spent on this event compared to the neglect of the living conditions and quality-of-life of the Brazilian masses.
9) The persistence and clarity of the perspectives of our Brazilian section and their intervention in this movement stands out, particularly given the panicky reaction of some on the left who took the mobilization at one stage of right-wing forces as an indication of an impending military coup. But the present relationship of class forces and a rising curve of opposition from the working class, means that a Mexico 1968-type clampdown at this stage is absolutely impossible. The tactics of our comrades in relation to PSoL and the general work of our Brazilian section over decades now mean that we are in a position to intervene and expand our forces, perhaps rapidly in the next period.
10) The hopes of capitalist experts that the world economy would be experiencing ‘escape velocity’ by now have proved to be unfounded. In April, the IMF portrayed the world moving at three speeds: the so-called ‘emerging markets’ – Brazil, China, India etc. in the neo-colonial world – would experience growth, the US would continue to ‘recover’ from the crisis and only Europe would still be mired in the economic doldrums. Now they have been compelled to change their views, with ‘momentum’ slowing in the first group of countries with falling growth in China, India and Brazil. Many of the countries in the emerging markets boosted growth through the injection of cheap credit from abroad, speculative funds arising from ‘quantitative easing’ in Europe and America. The mere announcement that this would be ‘tapered off’ by the US Federal Reserve resulted in a rapid exit of finance from these countries, which helped to lower their growth prospects.
11) 2013 was the year when global capitalism realised China had switched roles from ‘miracle economy’ to ‘next global crisis zone’. The liquidity crisis in June, when interbank lending virtually froze threatening a wave of defaults, was a wake-up call about the scale of China’s banking problems. In 64 years of ’Communist’ Party rule, China’s banks have issued a total of 70 trillion yuan (11.5 trillion US dollars) worth of loans, of which 40 trillion yuan (6.6 trillion US dollars) was extended in the past four years, according to Xiao Gang, the chairman of China’s banking watchdog CSRC. In addition to this, unofficial shadow banking entities have issued loans of 20 trillion yuan (3.3 trillion US dollars). There are already elements of a Japan-style debt crisis in many of China’s provinces and cities. If implemented, the regime’s ‘structural adjustment’ policies will raise the cost of credit, leading to lower rates of investment and economic growth, which will be felt around the world. Today, China is the world’s number one trading nation (overtaking the US in 2012). 124 countries count China as their largest trade partner, compared to just 76 for the US.
12) The “high-income economies remain extraordinarily feeble,” writes Martin Wolf in the Financial Times. Out of the six largest high-income economies, only the US and Germany were bigger in the second quarter of 2013 than their pre-crisis peaks five years before. The consensus for prospects for 2014 indicates growth of 2.7% in the US, 1.7% for Japan, and a mere 0.9% for the Eurozone.
13) But economic statistics only give half the picture, even on the question of the economic prospects for the US for instance. The jobs data for the US – supposedly the best economic indicator – are extremely erratic. Officially, the unemployment rate is falling but workforce participation remained steady at about 63% of the population. That is the lowest since the late 1970s. Millions have dropped out of the job market. Household income, which contracted severely during the five or six years of the crisis, is still crippled by the family debt overhang. Moreover, economic and social divisions have enormously widened in the first three years of the US “recovery” as the top 1% have captured 95% of the income gains. Denunciations of the massively inflated ‘bonus culture’ of the top CEOs continue to be voiced, even from within the ranks of the capitalists themselves. Some capitalist economists argue these practices actually helped to create the conditions for the recession in the first place by widening enormously the wealth gap and thereby cutting the market. They also say that what amounts to a plutocracy is still creaming off most of the ‘benefits’, even during a recession, and is therefore helping to perpetuate the crisis.
14) At the same time, the severe contraction in the income share of the working class evident before the recession has widened during it and has led to a campaign by even sections of the bourgeois for increases in living standards. In Britain, the right-wing Tory Mayor of London Boris Johnson has lent his support to a ‘living wage’. Labour leader Ed Miliband has made living standards a central plank of his campaign in the run-up to the general election of 2015 with the proviso that those employers who “can’t afford it” will be compensated by government grants!
USA – economic and social crisis
15) The recovery therefore is seen as fake by the majority of the population. In the US, it was revealed that whereas about 26 million Americans were receiving food stamps in 2007 before the recession, the number today is nearly 48 million. About 11% of all spending for ‘food at home’ is through food stamps. At the same time, even small economic growth has encouraged workers to demand a greater share of the bloated profits of the multinationals. The series of strikes by part-time and zero-hour contract workers is in anticipation of the momentous movement of the American working class that will develop in the next period. What was so illuminating about the strikes was that whole families participated. Unlike in the past when it was students or one or two workers from a family who received an income from such occupations, now whole families are dependent on the income from these low-paid jobs. This is a measure of the scale of the setbacks which American workers have experienced over the last few decades. But it is also a harbinger of a more militant and socialist future.
16) The marvellous success of our comrades in Minneapolis and Seattle indicates what is possible. In Minneapolis we won a tremendous result and narrowly missed scoring a victory. This was an outstanding achievement. This victory in Seattle represents a tremendous step forward. In Seattle a socialist has not been elected to the city council for at least 100 years. This result has provoked an earthquake on the left in the US and inspired a layer of activists internationally. These developments open a new chapter for building our sister organisation in the USA.
17) 80% of parents in the US believe that their children will never have the living standards that they enjoyed, up from 50% who believed this in 1980. This is just one indication of the steady erosion of the living standards of the US working class, which is preparing the way for mass upheavals. We have commented before that the US working class does not carry the same political baggage as their European counterparts; the heritage of social democracy and mass Communist Parties associated with Stalinism and their betrayals weighing them down. Therefore, they can be more open at this stage than the working class elsewhere to the appeal of militant class struggle and particularly socialism.
18) The actions of the American bourgeois themselves are helping this process. The deadlock in Congress over the fiscal deficit, still unresolved, has helped to increase the process of the discrediting of the two capitalist parties. The Republicans, as a result of their attempt to blackmail Congress, have seen their poll ratings plummet. The bluff of the Tea Party, claiming to be the ‘grassroots’ but in reality more like ‘Astroturf’, has been called. But Obama has not come out unscathed, with a reduction in support, particularly amongst young people and workers, evident even before the Congressional battle.
19) He has presided over even more repressive policies than Bush, with the continuation of Guantánamo, the persecution of Edward Snowden and Chelsea, formerly known as Bradley Manning, and the cowardly and bloody use of drones in Afghanistan. Added to this is his bolstering of the national security state with the revelations about mass spying on the peoples of the world, and including the US’s allies, the bourgeois leaders of other states. Daniel Ellsberg commented that this repression is even greater than what he suffered, alongside others, when the protests against the Vietnam War took place. All the apparatus, the laws, are in place for the establishment of a police state.
20) But the bourgeois has no reason to go over at present to outright authoritarian or dictatorial rule. Nor does the relationship of class forces allow them to do it. This is indicated by the measures taken by the New Democracy-PASOK government in Greece, which has been compelled to rein in Golden Dawn for fear that this reactionary ‘whip’ could provoke an even greater revolutionary explosion of the Greek working class than we have witnessed in the last few years. But these intrusive, repressive measures arise from a heightened tension between rival imperialist powers. Also strengthened domestic ‘security’ measures have been given priority mostly in preparation for an intensified collision between the classes. The Greek bourgeois sees Golden Dawn at most as an auxiliary to a right-wing, even authoritarian regime and not as an alternative government.
21) In the US, polls now indicate that a majority – 60% – look for answers in the development of a ‘third party’. After Minneapolis and Seattle, prospects for the comrades in the US are very favourable for a ‘third party ‘of a new type, a mass radical party.
22) The problems of the US economy – still the most important by size and weight in the world – will also contribute to this. The Congressional fiasco has undermined faith in the ‘almighty dollar’. Confidence in what is still the world’s main reserve currency has been dramatically undermined: it is “a very unsafe haven… US Treasuries are anything but risk-free” [Financial Times]. The Chinese ruling elite openly complained during the crisis about the risk to their currency reserves of $3.66 trillion. An implied threat was made to move a considerable part of their assets out of dollars and at the same time they pressed their case for the Chinese currency to serve, alongside the dollar, as a reserve currency. It is possible that in the wake of the ongoing fiscal crisis in the US the Chinese yuan could, over time, develop into a partial reserve currency alongside the dollar, as it already does in some trade in Asia. There are some parallels in the history of capitalism for such an arrangement to evolve.
23) In fact, the City of London, through the new Governor of the Bank of England, Mark Carney, as well as Osborne, British Chancellor of the Exchequer, has already stepped in to propose opportunistically that London should become the hub to further the ambitions of the Chinese regime in world markets. In the process, British capitalism will become even more of an offshore island, more dependent on finance – whose ‘excesses’ helped to pave the way for the devastating crisis which began in 2007. London already has four times as many foreign banks as in 1913 with the assets of UK banks having grown from 40% of gross domestic product to more than 400%! Carney’s proposals would mean that the banking sector will be nine times GDP, putting it in the position of Iceland in 2007. Iceland has never recovered fully from the catastrophe which befell it then. This just bears out the political short sightedness of British capitalism and the inability of the bourgeoisie as a whole to learn anything from the current crisis: “Those whom the gods wish to destroy they first make mad.” Or, as the Irish playwright Samuel Beckett put it: “Ever tried. Ever failed. No matter. Try it again. Fail again. Fail better.”
24) Japan is a key player in the world economy and, in Asia. It is now one year since Japan’s Prime Minister Abe launched his desperate attempt to restore Japan’s economic vigour after 15 years of deflation. This was to be achieved primarily through a massive monetary expansion. We warned at the time that in a “deflationary environment” – with the crisis continuing worldwide and therefore with limited markets able to absorb any increased Japanese exports – this reckless gamble was unlikely to succeed. Japan has averaged 0.8% growth rate over the past decade. The Japanese currency, the yen, is sharply down, the stock market is increased and prices are increasing.
25) The aim was to boost the economy by at least 2%, described as “pie in the sky” by the chief economist at Standard and Poor’s. Defla¬tion, low growth and at the same time, stagnant and falling prices has meant that Japan has not been able to escape from its deflationary trap, unable to lower its national debt, standing at over 200% of GDP. In fact Abe and his eco¬nomic ministers actually want a rise in prices, inflation, which would they hope “inflate” away some of the debt, and at the same time help to boost incomes, which would then be reflected in increased spending. The European capital¬ists are hoping for something similar. The Japa¬nese capitalists also hope to extend neoliberal measures, including more women encouraged to work, this in turn to be helped through breach¬ing Japan’s relatively close society through an increase in immigration. This could then provide , it was calculated, the necessary childcare for working mothers etc. There are also demands for wages to be boosted and the introduction of a minimum wage. The working class through its organisations, primarily the unions at this stage, has not as yet moved decisively into action. There had been some huge pro¬test movements, some gathering 200,000 peo¬ple, over the nuclear catastrophe of Fukushima, with up to 70% in the opinion polls wanting to phase out nuclear power. This issue has split several of Japan’s political parties, al¬though the ruling class wants to maintain nu¬clear power for military as well as economic reasons. But a substantial movement of working people has not yet developed. This will take place as the gen¬eral world and Asian crisis grows, and the failure of the government reflationary measures, be¬come apparent.
26) There has been a sharpening of rivalries between the main powers in Asia since the Obama administration’s military ‘rebalancing’ (also called ‘pivot’) to Asia in 2011, which aims to check China’s rise and restore US hegemony in the region. The US is supporting a more aggressive stance in various territorial disputes with China, by Japan, Philippines, Vietnam and others. In January 2013, The Economist predicted, “China and Japan are sliding towards war.” This is not the most likely immediate perspective for the China-Japan conflict, but rather a prolonged standoff with no swift resolution of the underlying territorial conflicts. A military clash cannot however be completely excluded. With almost daily ‘incidents’ – fighter jets being scrambled or naval vessels accused of violating sovereignty, both governments are using this conflict to build up and train their military machines as part of a wider strategic struggle for influence in Asia. Domestically, the conflicts are used to whip up nationalism and support for Beijing and Tokyo. Despite its overwhelming military edge over all other states, the limitations of US power are shown by Obama’s ‘no show’ at the autumn summits of APEC and ASEAN, due to the budget crisis in Washington. His absence reinforced impressions across the region that the US is a declining power while China’s star is rising.
27) Finance is supposed to support the real economy. Financial instruments such as shares, bonds, etc. are claims on real businesses. But over time, trading in these claims themselves became a ‘rewarding activity’. Serious bourgeois economists have consistently called for it to be reined in, but to no avail. A former head of the Financial Services Authority in Britain, Adair Turner has concluded whole parts of the banks and financial sectors were “socially useless” and Carney warns of this too. Nevertheless, once the immediate crisis appears to be over, the capitalists once more engage in activities which contributed to the build-up to the previous crisis. Like the Bourbons, the bourgeois have “learned nothing and forgotten nothing”.
28) With the continuation of huge public and private debt – particularly in the big economies – there will be no real, substantial ‘recovery’. At the same time, there are growing fears of protectionism once more emerging. Clashes have developed between China and the US on a range of issues, as well as between Europe and the US. Depressionary features will continue, and will be particularly acute in Europe, which remains the most exposed region economically socially and politically in the world. The ideologists of the bourgeoisie have drawn the same conclusions, from an opposite class standpoint, as the Marxists.
29) They now fear that long-term deflation has begun to set in with ‘Japanification’ of the Eurozone. A repeat of the ‘two lost decades’ of Japan looms because of the deflationary effects of the euro in general, but also because of the dominant sway within the Eurozone of German capitalism. It is the only European economy that has fully recovered from the crash that began in 2007. Through its economic dominance, German capitalism has put the rest of Europe on ‘rations’. Previous praise for the tidy economic ‘housekeeping’ of Germany have given way to complaints and growls emanating from rival European powers as well as the US. Now Germany’s ‘huge’ trade surplus has been attacked by the US Treasury because it has “‘hampered rebalancing’ of the economy for other eurozone countries and created a ‘deflationary bias for the euro area, as well as the world economy’.” [Martin Wolf, FT, 6 November 2013.]The IMF has also put the boot in expressing similar “concerns”.
30) ‘Rebalancing’ is in reality code, particularly when deployed by US imperialist spokespersons, for others to cut back on their share of the loot to the benefit of those who will then reap the rewards which flow from this. In a chaotic blind system, which is what capitalism is, it is impossible to have a completely ‘balanced’ system, particularly during a severe crisis. It is possible for rival capitalist powers to peacefully share out the swag on the basis of a bigger and bigger pie. But not in a crisis like the one we are passing through. One of the features of the situation in the next period will be increased collisions between the imperialist powers and blocs.
Europe and the crisis
31) The European working class has exerted colossal energy in trying to combat the attempts of the bourgeoisie to unload full responsibility for this crisis on their shoulders. After such a Herculean effort at resistance – typified by the Greek working class, with 31 general strikes since 2010, four of them for 48 hours in duration – they were defeated by the cowardly actions of the official trade union and labour leaders. They refused to lead this struggle through to a conclusion, with a programme of taking power through the nationalisation of the commanding heights of the economy and an appeal then for the workers of Spain, Portugal and Italy to follow their example and begin together to construct a socialist confederation of these four countries, in the first instance. Such a bold step would have electrified the working class and lit a flame in the rest of Europe and throughout the world.
32) The recent report of the Red Cross indicates the price which the Greek workers and the European working class have had to pay for the failure to end capitalist rule. The number of suicides of Greek women has doubled. There have been many reports, of course, detailing the terrible social effects of the crisis in Europe. But the Red Cross report, coming from what is considered to be a charitable institution, is a particularly devastating indictment in its horrifying details and its conclusions for European capitalism. The picture that emerges is of a generalised and long-term economic crisis. This report, published in early October, states: “Europe is sinking into a protracted period of deepening poverty, mass unemployment, social exclusion, greater inequality and collective despair as a result of austerity policies adopted in response to the debt and currency crisis of the past four years.”
33) It details the crushing poverty that has developed on a continent-wide scale, which has dragged not just the working class, but significant sections of the middle class into the abyss of endless austerity. The amount of people depending on Red Cross food distribution in 22 of the surveyed countries has increased by 75% between 2009 and 2012: “More people are getting poorer, the poor are getting poorer.” It declares: “Whilst other continents successfully reduce poverty, Europe adds to it… The long-term consequences of this crisis have yet to surface. The problems will be felt for decades, even if the economy turns for the better in the near future… We wonder if we really understand what has hit us.”
34) It details the mass unemployment that scars the continent, “Especially among the young”. It also points to the 120 million Europeans living in or at risk of poverty. Millions are queuing for food: “Many from the middle-class have spiralled down into poverty,” including in Germany. The authors write: “Despite the perceived success of Germany, Europe’s economic engine, the EU’s biggest country illustrates the widening wealth gap, raising questions about the longevity of the usual traditional model, the social market economy… some 5.5 million Germans of the middle-class have lost social status over the past decade and have fallen into the ranks of the low income earners.”
35) “The plague of economic crisis and all its social ills has spread to all corners of Europe, parts of Scandinavia… many employed in Slovenia have not been paid for months, 13% of the populations of the Baltic States and Hungary has just left. 600,000 who are employed in Germany did not have enough to live on.” Even the wealthier societies of Denmark and Luxembourg have been drawn into the economic maelstrom. Of course, youth unemployment ravages the countries of Europe, averaging between 33% to over 60 per cent. But it is not just young people who suffer; the figure for 50 to 64-year-olds unemployed has doubled since 2008 – 2012. An indication of the scale of the crisis is shown when the authors write: “The rate at which unemployment figures have risen in the past 24 months alone is an indication that the crisis is deepening.” Combined with decreasing living standards, this constitutes a “dangerous combination”.
36) This dire economic situation has meant inherent political instability. Since 2010, 12 governments of the eurozone of 17 countries have been defeated in elections whether of the right or the left. Merkel is the only leader to buck the trend but while her Christian Democratic Union/Christian Social Union (CDU/CSU) gained votes the former conservative-liberal government was deselected with the liberal FDP falling under the 5-percent-barrier and being kicked out of the Bundestag. This is a blow for the German capitalist class for whom the FDP had been a pressure group in parliament for decades. The electoral success of the newly formed right-wing populist ‘Alternative for Germany’ which only narrowly missed the 5-percent-threshold is a sign of the underlying instability and a warning that the potential for a right-wing nationalist force exists.
37) The outcome of the election has compelled Merkel and the CDU/CSU to seek out a grand coalition with the Social Democrats. Protracted negotiations took place in which the SPD pressed for some limited social reforms so they could sell such a coalition to their rank and file. While this means that the new government most likely will not start with a programme of austerity and cuts this will change as it will have to preside over a worsening economic and social situation in Germany.
38) Unlike most other countries in Europe, Germany does not have a minimum pay level laid down by law. For years trade unions, social movements and DIE LINKE have waged campaigns for the introduction of a legal minimum wage. This pressure has led to a big majority of the population supporting this demand and has pressurised the SPD in also putting it forward. The SPD is pressing for the introduction of such a measure, reflecting the huge pressure of a massive section of the workforce, which are low-paid precarious workers. Also, the second worst election result ever for the SDP (its worst was following its previous coalition with the CDU) compels them to demand the introduction of the legal minimum wage as the minimum for participating in the coalition. In fact, Germany has the largest percentage of low-paid workers, many in ‘mini-jobs’ – numbering 22% of the total workforce – in the eurozone. German bosses, however, are resisting such pressures.
39) Whatever type of government emerges, the economic situation in Europe and Germany will undermine the CDU-led coalition. The open dominant economic and political power of German capitalism has emerged clearly during this crisis. Now, all the problems of Europe are built into its foundations. This government, unlike previously, will be a government beset with the political problems of Germany, as well as the eurozone as a whole. If the SPD, as is likely, goes into a coalition government with Merkel, then that will provide opportunities for Die Linke to develop so long as it works out a sufficiently distinct left and radical position. In the general election, its electoral support declined but will be the largest opposition party if the Grand Coalition is agreed. Unfortunately there is a shift to the right developing within the party on questions of coalitions with the pro-capitalist SPD and Greens and on international policy. Even forces formally belonging to the left-wing of the party are demanding government coalitions with the SPD and the Greens. The right wing pushes for the party to stop it’s principled opposition against the deployment of German troops abroad and for the party to accept Germany’s membership in NATO. At the same time the party has become more engaged in social movements and trade union struggle. This can lead to the paradox situation that the party can attract a layer of workers and youth while moving “silently” to the right.
40) The election in Austria, which our section energetically intervened in, also saw a drop in support for the main parties. The two parties – the SPÖ, the bourgeoisified social democrats and the traditional party of capitalism, the ÖVP – which formed the outgoing coalition saw their votes decline. 40 years ago, these two parties got 90.8% of the votes between them and now just over 50%. This reflects the growing discontent, fuelled by corruption, which has involved all the main parties, including the far right, and an awareness of the economic difficulties to come on the basis of the crisis in Europe and the world. The far-right FPÖ still got over 20% of the vote.
41) After trying and failing to put together a joint left slate – as the Communist Party was not prepared to join – we stood by ourselves on a clear socialist programme and established important points of support for future battles, both on the electoral front but also in the social and industrial field. These are bound to take place, given the cuts which are in the pipeline and will be implemented, no matter what the character of the next coalition government. Austria, along with many other countries in northern Europe that seemed to be insulated from crises, will be caught up by the effects of these crises, which will result in sharp changes in the situation. We are well poised to intervene and gain from this.
42) Like Austria, the Belgian economy is tied closely to Germany’s and has recently grown because of this. However, as in most countries, this growth has not prevented an increase in company bankruptcies, cuts in many local governments or a forecast rise in unemployment in 2014. May 2014 sees simultaneous regional, national and European elections in Belgium and the ruling class is trying to avoid a repeat of the 541 days it took to form a government after the 2010 national elections. This is one of the reasons for the attempt to weaken the Flemish nationalist, and neo-liberal, NVA which emerged as the largest party in 2010. While criticisms of the NVA’s neo-liberalism may have some affect, the continuing national divisions in Belgium will give such parties a basis.
43) The experience of the crisis and the cur¬rent six party national coalition headed by the Francophone “socialists”, has led to both repeat¬ed workers’ protests and an opening to the left. Both within the “socialist” and Christian trade unions there is a continuing distancing from the “socialist” and Christian democratic parties. In the Charleroi region the FGTB has launched a public debate on the need for a “real anti-cap¬italist alternative”. However the former Maoist, PTB/Pvda, the immediate main beneficiary of the start of a left turn in Belgian has attempted to hold back this initiative for a broader workers’ alternative as it hopes to win parliamen¬tary seats in 2014. But given the PTB/Pvda’s history, its political and general organisational approach, it is unlikely that they will be able to build broader, lasting, support in the working class. Whatever the exact outcome of the 2014 elections, there is no doubt that afterwards there will be enormous pressure from the ruling class to carry out further attacks. This will result both in further class struggles and also possibly greater tensions between the Flem¬ish and Francophone regions. The challenge is whether the workers’ movement is able to give a fighting response and alternative; without this the national divisions could deepen.
44) The magnitude of the problems confronting the governments of Europe and particularly Germany is indicated by the fact that there is now a 12% gap in real GDP between where Europe is today and where it would have been had the pre-crisis trend continued. This is unlikely to get any better. This is the new ‘normal’ for European capitalism, with the tortoise the favourite metaphor for describing the economic prospects for the continent. As we remarked in previous statements, the euro is a massive deflationary trap, particularly for those suffering economic ‘distress’ – which, to one degree or another, affects all the countries of the eurozone but particularly those of southern Europe.
45) Therefore, there will be growing opposition to the euro and also to German capitalist domination– which will be certainly manifested in next year’s European elections. The cut of 0.25% in interest rates by the European Central Bank was opposed by the German representative. This will reveal big and growing opposition to the ‘European project’, both from the left but also from the far right, who now have a significant presence in many countries in Europe. This means that breakup of the euro is still on the cards. The ruling classes have managed to prevent this until now. However, we must not be taken by surprise by the prospect of a new eruption of the euro-crisis which can trigger its break up. The underlying crisis it faces has not been resolved. Developments in Spain, Italy, Greece and other countries can explode again and threaten the euro in its current form. Colossal tensions have built up and growing opposition to Germany, with its perceived deflationary effect on the rest of Europe, and the political and social crisis which has been ratcheted up.
46) Countries that are running a large ‘primary deficit’ – which means most of the countries of southern Europe – and costs of ‘servicing government debt’ greater than the nominal growth of GDP are on an unsustainable path. The conclusion from this? “Since 2008, the wretched ‘PIIGS’ (an insulting term for the countries of southern Europe and Ireland) have been caught in such a trap. Anticipating defaults, investors respond by selling their bonds.” [Financial Times] When liabilities exceed 50% of GDP there is a big risk of a debt crisis. On this measure, many countries in southern Europe are vulnerable; Greece, Ireland and Spain are all in this position, unable to fund liabilities at or above 100% of GDP. So all the efforts of the bourgeois to correct the situation have been in vain, as have the unprecedented sacrifices demanded of the peoples in these countries.
47) The banking crisis continues unabated. As with the crisis in Japan from the early 1990s, European banks are now largely ‘zombies’, “More dead than alive.” [Economist] A credit crunch still persists, particularly for the ‘real economy’, as opposed to the finance sector, in which the bourgeois economists place so many hopes. Loans to non-financial firms contracted in May of this year by 4.1% in Italy, 5% in Portugal and 9.7% in Spain. In a vicious spiral, governments have to worsen their own finances by borrowing to prop up the banks. In despair at the seeming inaction of European governments, and particularly of Germany, the Economist concludes: “Waiting for zombies to come back to life is a fool’s game.” This position cannot hold. Explosions are inevitable, as we have seen in Greece, Spain and Portugal in the past period. The masses take to the road of struggle, strikes, occupations, even when they feel that their actions will not result in a fundamental change in the situation.
Greece – crisis unresolved
48) Greece is in its sixth year of economic depression. The Greek working people are on a descending slide into social catastrophe. Rarely has a country in the ‘advanced’ world demonstrated so clearly the complete disintegration, the blind alley, of capitalism. Under the whip of the troika and the Greek bourgeoisie, the economy has contracted by at least 25%, with an expected 4% drop again this year. Unemployment stands at 1.3 million (30 per cent officially) but is probably a lot higher than that. Unemployment has soared, with over 60% of young people without work. Salaries have been slashed by an average of at least 25%, taxes increased ninefold and mass firings take place remorselessly. The public sector has been dismantled, followed by the wholesale privatisation, and selling off of national assets. It is not just workers but also increasing sections of the middle-class who are plunged into poverty and forced to resort to the food banks, with over 50,000 people daily fed by the Orthodox Church, and 7,000 by municipal authorities in Athens.
49) In a movement almost unparalleled in Europe in the post-1945 period, the Greek working class tried again and again through general strikes, of 24 and also 48 hours in duration, to roll back these attacks. Even when there seemed little prospect of success, they have come out in one heroic action after another. Just when their resistance appeared to be waning, they have discovered new reserves of energy and struggle. This year, at least four general strikes have taken place, as well as mass mobilisations against the attack on the broadcasting media, the ERT. Had they a party and fighting leadership, they could have taken power. This failure allowed the emergence of the far right neo-fascists Golden Dawn. From a small base of just 0.29%of the votes in the 2009 general election, it captured 7% in the last general election of 2012. Polls subsequently put its support much higher than this at 10%.
50) With encouragement from sections of the police and others on the right, it posed a real threat to immigrants who have been attacked and, on occasion, murdered. It is also now a threat to the left and workers’ parties. However the killing of a left-wing rap artist provoked widespread opposition and the fear of new major clashes which compelled even the government to seek to rein in Golden Dawn. The withdrawal of state money for the parliamentary party and arrest of its leaders indicates that the bourgeoisie are afraid that Golden Dawn will provoke big social and class upheavals and clashes. Already, a new stage of mass action against Golden Dawn has ensued, with our comrades playing an important role. If this was to escalate then a revived mass movement would threaten the government itself. The capitalists do not need Golden Dawn at this stage. They will not cede power to them. When the bourgeois did hand over power to Mussolini and Hitler, the revolutionary wave after the regimes’ collapse threatened the very reign of capital itself. They may need Golden Dawn and similar far-right organisations as auxiliaries but they are unlikely to give them sole power again. They can play a supporting role to a Bonapartist military coup but even this is not immediately on the cards. At a certain stage this cannot be discounted.
51) At the same time there is an increasing recourse towards more authoritarian and repressive measures by the ruling class internationally. In many countries there is an attempt to “criminalise protest”. This is a warning to the working class and we need to ensure that where necessary we raise democratic demands and measures to oppose this development.
52) After the historical experience of the Greek workers, a right-wing coup is guaranteed to provoke a revolutionary explosion that could repeat the movement of the Portuguese workers in 1975, which led to the expropriation of the banks and put most of the wealth in the hands of the state. The big danger, at the present time, is that the anger and frustration of the working class, particularly the youth, directed towards Golden Dawn and their backers could result in the reappearance of left terrorism in Greece, as the killing of two Golden Dawn members has shown (although there are suspicions in Greece the murders were the work of agents provocateurs). We must, as our Greek section has done, argue and warn the youth that this is not the answer. Only a mass alternative from the working class, particularly a mass revolutionary party with the correct strategy and tactics, can defeat the Greek capitalists and international capital. There are divisions and splits within the left at the present time. Our Greek section has correctly sought to unify those viable left forces, both from within Syriza and outside its ranks, as a means of creating a left pole of attraction.
53) Our Cypriot section has also passed through a very important phase, which has been changed fundamentally through the economic crisis. The last nine months, with the collapse of the banks, the implementation of the levy on bank deposits, the signing of the memorandum with Troika and the neo-liberal policies that DISI, the right wing neo-liberal government implemented have taken society back 40 years. The unemployment rate, for the first time since 1974 war and invasion by Turkey, has risen to a dramatic 17.1%, and youth unemployment figures reach 43%. 25% of the people live on or under the poverty line and over 10,000 families rely on food banks for their survival. People are disillusioned, disappointed and insecure for the future, and have no one representing them and fighting for their rights. AKEL, the communist party of Cyprus, is facing a huge collapse in the polls, getting only 15%, as a result of them being in government up until February last year when they implemented cuts and austerity measures. They brought the Troika to the island, and now are also paying the price for not fighting the current cuts. The right wing is conducting a systematic attack on them as well. Many people have turned to populist forces and even some towards neo-fascist forces whose support in the polls has rapidly grown. 2014 is likely to see an even worse round of attacks with more privatizations, cuts and evictions from homes. This can result is movements similar to the one which took place in March and open up new opportunities for the left forces which remain small but like our own organisation can play a significant role and intervene.
54) Spain, Portugal, Italy and France all display the symptoms, to one degree or another, of Europe’s enduring political, social and economic crisis. Spain is in a particularly exposed situation. The speed and scale of its collapse from a turbocharged, debt-fuelled boom – particularly in the property sector – is astounding. In 2006, the construction sector accounted for no less than 13% Spain’s GDP, employing 2.7 million workers. That same year Spain was responsible for more housing starts than Germany, France, Britain and Italy combined. Construction today accounts for just 5% of Spanish GDP with 1.7 million construction workers having lost their job. Housing starts are roughly 95% below their peak.
Spain and Portugal
55) This catastrophe for the masses provided the impetus for the colossal general strikes, demonstrations, etc. that have taken place. 400,000 Spanish families have been evicted from their homes since 2008. The country is stuck with an unemployment rate of 26% for at least five years, according to the forecast by the International Monetary Fund. ‘Reduced wages costs’ – code for slashing wages – has taken place on a huge scale. Prevented by membership of the euro from carrying through devaluation of its currency, the Spanish bourgeois government, led by the PP, has done the next best thing by carrying through an internal devaluation. Therefore, all attempts of the corrupt government to convince the population that sacrifices now will result in jam tomorrow have failed. There were nine successive quarters of decline in the economy until the 3rd quarter of 2013 when the economy rose by just 0.1%. Nevertheless, the economy is still predicted to contract by 1.3% in 2013 as a whole. Now, through growth in exports, the economy is expected to grow by a small amount in 2014. Some expect around 1% growth, which will hardly dent the unemployment figures and has resulted in the flower of Spanish youth fleeing to the four corners of Europe and the world in search of employment.
56) At the same time, the national question, particularly in Catalonia, has regained some prominence. In September, up to 1.6 million Catalans took part in a human chain to demand independence from the Spanish state. Soon afterwards on 12 October, another smaller mass demonstration in opposition to separation from the Spanish state took place in Barcelona, which included many participants from outside of Catalonia. This shows that polarisation can take place on this issue, which can only be cut across by a clear class policy of recognising the right of self-determination, but also the need for this to go alongside workers’ unity to oppose bourgeois nationalism of all kinds.
57) This, in turn, raises the need for a workers’ party to work out a clear programme. For historical reasons – the Civil War and its aftermath, the Franco regime, etc. and the struggle against it – the consciousness of the Spanish masses is perhaps higher – alongside Greece – than in other countries in Europe at the present time. But as with other countries in southern Europe, the Spanish left is divided into seemingly myriad organisations. The best hope for Marxists wishing to unify the best fighters seems to lie at this stage in the United Left (IU). But this is not without complications, as the IU history of participating in cuts-making coalition governments with the capitalist PSOE has not been broken. The IU has propped up the PP in Extremadura (but not without internal opposition) and supported a PSOE government in Asturias. It currently shares government in the region of Andalucía and has presided over the biggest cuts package in the region’s history. The IU’s main leaders see this as a dress rehearsal for a ‘left’ government with PSOE in Madrid following general elections. However, the struggle against this right wing within the IU can lead to success in mobilising a broader left alliance, along the lines of what our comrades in Greece are attempting. At the same time, it does not make a vital difference from where we get initial support, and there are opportunities outside of the IU as well as within. The drive to establish a firm base in Spain is one of the priorities for all the sections of the CWI, particularly in Europe.
58) In Portugal, such is the depth of the crisis the right-wing coalition government has threatened to disintegrate on a number of occasions. It has faced four general strikes, defeat in the recent local elections and opposition from the Portuguese people at the terrible price they have been compelled to pay for ‘austerity’.” Even the Financial Times wrote: “Portugal is reaching the political limits of austerity. Finance ‘experts’ admit that there is no guarantee even if the vicious programme of the troika is accepted that ‘sustainable growth will emerge’.”
59) There has been a massive erosion of Portugal’s narrow industrial base. Prime Minister Coelho confessed that the bankruptcy of Portuguese capitalism means it is unable to integrate young people into society and the economy. Their only future, he stated, is for them to leave Portugal. As with the exodus of the Portuguese in the 1960s because of the stagnation under the Salazar/Caetano dictatorship, emigration has now developed on a vast scale. 100,000 people are leaving each year from a country of 10 million. The difference between now and the 1960s is that, in the past, it was older workers who left but now it is the youth, the future of Portugal, which is leaving. In their wake, services collapse – the health service, for instance. This in turn compels professional medical staff to seek employment abroad.
60) The task of our small forces, as elsewhere, is to first of all assemble a politically-developed cadre capable of winning and educating the new layers of workers, and youth who are open to ideas and moving into action. Then the tactical question of where these forces should be deployed can be discussed. Our comrades are quite correctly attempting to build bridges with the best activists in the Left Bloc, critical of the rightward turn of its leadership. How the Left Bloc develops in the next period is an open question, with its disastrous performance in local elections in September a reminder of the consequences of the leadership’s move to the right towards the social democracy. We require flexible tactics which may mean seeking opportunities elsewhere, including an orientation towards the Portuguese CP, which despite many of the bureaucratic features it retains from its Stalinist past is one of the few traditional mass workers’ parties that still exists in Europe.
61) In Italy, the most important development on a national scale is the rejection of Berlusconi by the leadership of his own party after 24 years of domination: “Silvio Berlusconi is dead. He is at the end of the road. One of his greatest fears now is ending up in prison.”[A former Berlusconi “loyalist”] This was the biggest schism in the centre-right since the breakup of the Christian Democrats two decades ago. The trigger for the removal of Berlusconi was the parliamentary impasse and his refusal to support the government of Letta. But behind this lay the support of the Italian bourgeoisie for a government that was prepared to continue to attack the working class. His demagogic/populist opposition to a property tax, which was finding an echo amongst the electorate, was clearly the last straw for considerable sections of his own party and the bourgeois as a whole after two decades of intermittent dysfunctional rule, to keep himself away from the courts and the possibility of going to prison.
62) But the underlying factor for Berlusconi’s overdue departure lies in the worsening econom¬ic situation and the necessity from a bourgeois point of view to confront the Italian working class. Italy has all the same features of mass unem¬ployment, chronic housing shortages, etc. that beset the other countries of southern Europe, although it has not experienced the same level of mass struggle as in coun¬tries like Greece, Spain and Portugal. Never¬theless, the underlying anger of the working class has been evident in bitter local strug¬gles, including the struggle against the priva-tisation of local transport and other services in Genoa in which our comrades are playing a leading role. This struggle resumed at the end of November with spontaneous trans¬port strikes that paralysed the city and the workers occupying the council chamber. In mid-October a strike called by the ‘unions of the base’ (USB, CUB and COBAS) cancelled flights and affected other public transport and schools.
63) The nervousness of the Italian bourgeois and its state at the prospect of any opposition, particularly on the streets, is symptomatic of the underlying tensions within society. A na¬tional march in October of tens of thousands involved in the social movements and organ¬ised from below was peaceful but there was nevertheless an attempt to whip up an opposi¬tional mood amongst the population of Rome to the prospect of so-called ‘anarchist violence’.