Global Turmoil
Capitalist crisis, a socialist alternative
Section One: World Relations
Chapter Four: The semi-developed capitalist countries and Australasia
Economic calamity
Revolutionary events will not be restricted to the advanced industrial world. In fact, the already calamitous economic and social situation in Africa, large parts of Asia, and Latin America will be enormously aggravated by a new recession or slump. The Asian crisis has already had an effect on many of the ‘undeveloped’ countries.
The oil producers, led by OPEC, have already been forced to slash production from "over-supplied world oil markets". This comes just six months after OPEC had approved a 10% production increase. The price of oil has dropped by about a third in the first five months of 1998. In real terms, the oil price is now lower than it was before the first oil crisis of 1973-74. The Independent newspaper in Britain estimates that the real drop in oil prices is even greater than admitted; ‘Arab Light’ has dropped in price from $19 to $9 a barrel in June 1998. It comments: "If the oil price had doubled, think what a story that would have been." Indeed, when there was a dramatic increase in oil prices in 1974 and then in 1979, the bourgeoisie of the West screamed that the oil producers were "holding them to ransom". Now when the oil price is halved, in the words of the British Independent, "most of us have hardly noticed".
But the collapse in the price of oil is just part of the general drop in commodity prices which is already exercising a big depressionary effect on the majority of the ‘undeveloped’ world. This is not a new problem. The concentration on commodity production, either through food, fuel, metals, diamonds, etc., automatically meant that the economically dominant countries of the advanced industrial world have been able to impose brutally unequal terms of trade. The ‘undeveloped’ world supplied cheap commodities and received back dear manufactured goods; in the words of Marx, they got "less labour for more labour". It is true that in the 1950s and 1960s the rise of some commodity prices, noticeably oil, fed through into higher per capita incomes and more money for health, education and infrastructure. The struggle between imperialism, particularly US imperialism, on the one side, and Stalinism on the other, allowed the bourgeoisie and the emerging bourgeoisie of the ex-colonial world to balance between the two camps. This led to a certain increase in incomes, which fed through into the development of the economy and, in the words of the Guardian in Britain, "still left something to be gleaned off into Swiss bank accounts".
However, the 1970s, 1980s and 90s, have seen commodity prices slump sharply so that "they are now lower in real terms than during the Great Depression of 70 years ago". (The British Guardian) Non-fuel prices reached depressionary levels in 1992-93 and have, in fact, halved in price since 1980. Metal and agricultural prices have dropped by a quarter from their 1995 highs while, as mentioned, energy prices have fallen dramatically.
Superimposed on the long-term decline of the drop in commodity prices has now come the Asian crisis. Asia, up until recently, accounted for two-thirds of the increase in world petroleum consumption between 1992-96, raising Asia’s share of world petroleum consumption from 12% to 15%. Base metals, rubber, grains, fats and oils showed similar trends. Other factors, such as the relatively warm winters in the northern hemisphere and increased crop production, have acted to depress prices. This, in turn, has had a beneficial effect on cutting inflation in the advanced industrial world, and is one of the factors in the so-called economic ‘paradigm’ in the US of low inflation, low unemployment, etc.
However, a terrible price has been paid by the peoples and countries of the underdeveloped world who are dependent upon commodities, sometimes on a single commodity. At least 25 countries are dependent on petroleum for a fifth or more of their foreign exchange earnings. These include Russia, Nigeria, and several Latin American countries, as well as the familiar Middle East producers. Income from petroleum is vital for maintaining government spending which, in turn, accounts for the feeding of big sections of already impoverished populations. Moreover, falling copper prices have had a catastrophic effect on Zambia and led to a deterioration in the conditions of Chile and Mongolia.
These blows come against the background of a worsening cycle of deprivation, hunger and poverty in the underdeveloped world. The figures of the United Nations on poverty in the underdeveloped world have become familiar. About a quarter of the world’s population - some 1.3 billion people - are living on incomes of less than a dollar a day; nearly a billion are illiterate; some 840 million go hungry or are living from hand to mouth. Moreover, whereas those lucky enough to live in the developed West can expect to live until they are almost 80, nearly one third of the people in the least developed countries are not expected to survive to 40.
The chasm between rich and poor is growing ever wider. The share of the poorest 20% of the world people in global income stands at a paltry 1.1%; down from 1.4% in 1991 and 2.3% in 1960. The income of the top 20% was 30 times higher than the poorest 20% in 1960; by 1991 it was 61 times higher. The UN says the latest figures put it at 78 times as high.
Crushing debt problem
Superimposed on this situation, and further dragging them down, is the crushing weight of the debt burden on these countries. The "gangrene of debt" has once again suddenly leapt back into the headlines of the bourgeois press in the West. All kinds of liberals, in the old sense of the term, have denounced the "new slavery" of Africa, Asia and Latin America. The debts of these areas of the world to the West have soared from $600bn in 1980 to $2.2tr today. This is accounted for not just by increased loans to the underdeveloped world during the 1980s but by the huge increase in interest rates which has massively inflated repayments and acts to suffocate the countries affected. Guyana, a former British colony, typifies the situation. Out of every £1 it earns, it pays 45p to bankers and northern treasuries. In the past, Guyana was considered to be ‘unstable’ by imperialism. The British bourgeoisie, by a combination of gerrymandering and military intervention, secured the removal of Cheddi Jaegan and his People’s Progressive Party, which was threatening the nationalisation of important assets in the 1950s. After the collapse of Stalinism, Guyana is now ruled by Jaegan’s widow and the PPP, which is now pro-market and Guyana is a model of financial rectitude. It has carried out the IMF’s austerity programme for the last 12 years. The IMF official responsible for Guyana says that the IMF prescription is like when you "take antibiotics. You must follow the whole course. It doesn’t help to stop." Yet after 12 years of "antibiotics" Guyana has repaid $1,700m without repaying a single cent of the original capital. This ‘success story’, that is for the capitalists, has left 45% of the population below the poverty line. Moreover, the IMF man admits,"Guyana will never pay its debt".
The figures of the debt burden, when broken down into individual countries and continents and set against the colossal wealth of the rich in the West, are mind boggling. If African countries did not have to repay their debt, the money released would save the lives of about 21 million children by the year 2000 and provide 90 million girls and women with access to basic education. Rupert Murdoch’s wealth, on the other hand, is estimated at $4bn, the same as the debt of Lebanon. The 1,000 richest people in Britain have a combined wealth of $175bn - more than the entire $150bn debt of all south Asia, and almost as much as Brazil’s $179bn. The debt burden of the ‘developing’ countries is 94% of their entire annual economic output!
The current IMF ‘rescue package’ for Indonesia approximates to the estimated wealth of the Suharto family. Moreover, 95% of the country’s foreign debt - of some $800bn - is owed by 50 individuals, not the 200 million Indonesians who end up suffering the costs. Invariably, loans from the West have been linked to increased access for western firms, arms procurement programmes, etc. Although it is claimed that world military expenditure has decreased, the elite, some of them in the most underdeveloped and semi-developed countries, have been eager buyers of weapons from the West in order to bolster their positions. Of the ten most indebted countries, eight have suffered civil war or violent conflict since 1990. Of the 25 most indebted countries, 15 are ‘conflict countries’.
With the resources of the semi-developed countries being squandered, disease and famine are on the increase. Tuberculosis, for instance, is the single biggest infectious killer of young women worldwide. More than one million women between the ages of 14 and 55 will die of it, and 2.5 million will become ill from the disease this year alone, according to the World Health Organisation. British Guardian reporter, Maggie O’Kane, has written searing reports on ‘the Grazer’, a disease which attacks the muscles, tissues and bones of those it affects. She wrote of the effect of this disease on children in Niger. The pressure of debt repayments means that the public purse is empty. Salaries have not been paid for three months, the hospitals have no wages to pay their doctors and nurses. Every year eighty thousand children in Niger will die because there is no antiseptic cream and mouthwash to fight the Grazer. Just under half-a-million children are scheduled to die in Niger before the year 2000, according to Oxfam…Given the size of the population, that is the equivalent of three million children dying in Britain from curable diseases…Niger owes Britain £8m ($13 m)…The country pays £750,000 a year to Britain. If Britain canceled the debt for the millennium, the money saved would be enough to inoculate 750,000 children against killer diseases. One doctor commented: "In the last five years I have seen the number of children dying from infectious diseases related to malnutrition creeping up from around 30% to 50%. It’s getting worse."
Little wonder that 70,000 people protested at the recent G8 summit in Birmingham, England, demanding the lifting of the debt incubus from the backs of the poorest nations on the globe. But their pleas have not softened the stone hearts of the bourgeoisie who dismissed them as "soft in the heart, and soft in the head". They are not opposed to a certain mitigation of ‘debt relief’, but any idea that the debt should be repudiated, that the indebted countries should simply refuse to pay, is met with threats and predictions that the world would be brought to its knees. Indebted countries must demonstrate a ‘sustained performance’ before relief is at hand. Tell that to Guyana which has taken the ‘medicine’ for 12 years and finds itself in a much worse situation. One bourgeois commentator declared: "Unfortunately, having one’s heart in the right place says little, or nothing, about the state of one’s head. The plight of the world’s poorest people cannot be explained by the debt their countries owe. They were desperately poor before the money was borrowed; they remain poor because they wasted the money; and even today they receive far more money than they pay out." The latter is a blatant lie, but the philosophy of international capital is the "poor have always been with us, and always will be".
Increased imperialist exploitation
Indeed, western capitalism, rather than lifting the burdens, is intending to impose new ones on the semi-developed and underdeveloped countries, particularly on those countries that have been brought further to their knees by the economic situation. Even a House of Commons committee in Britain has accused the European Commission of introducing measures, ‘Fortress Europe’, which will enormously aggravate the problems of the ‘Third World’. There are plans to replace the Lomé Convention, which allowed favourable access to European goods for 71 African, Caribbean and Pacific (ACP) countries. Most of these were former colonies of European powers. But this agreement will expire in the year 2000 and any new agreement must fit in with the tougher new rules set up by the World Trade Organisation (WTO), which is - like the World Bank and IMF - a tool of western imperialism.
The WTO frowns upon ‘special deals’ for particular countries. This has produced the catastrophe for the banana-growing islands of the Caribbean which, by diktat of the WTO, has resulted in them being denied access to Europe’s markets. The European Commission is proposing that ‘developing countries’ should set up regional free-trade areas, which would then enter into an agreement with the EU. But this, in turn, would allow the opening of the markets of these countries to European goods which, according to the Commons committee, would "devastate their fledgling economies". It sums up the situation: "To put the matter crudely, ACP countries will have a choice of either opening up their markets to EU products or suffering an increase in taxes on their exports to the EU. This threat was tantamount to blackmail." At the same time, the Commons committee shows naivety, to say the least, when it argues, "It is immoral for the EU to misuse its economic strength to dictate clearly unfavourable terms [to the developing countries]."
But there is nothing new in this. When it serves its purpose, European capitalists dispense with ‘free trade’. For instance, Europe’s big farms and the sale of agricultural goods, are protected, and kept artificially high by the maintenance of high tariff walls which protect them from the cheaper agricultural products of developing countries. The proposal to replace the Lomé Agreement with the WTO measures, have been compared to a "battering ram for free trade, forcing the infant industries of the developing countries into unfair competition with the industrial economies of Europe". In other words, the pattern of the past imperialist domination is set to continue.
If anything, what these facts represent is a new imperialist penetration, which has developed on a massive scale in the aftermath of the collapse of Stalinism. The constraints on imperialism, in competition with the Russian Stalinists in particular, have been shredded. The UN set targets of a miserly 0.7% of GDP to be channelled to ‘developing nations’ as a lever for transforming their situation. Only about five countries actually meet the 0.7% target on aid. Clinton on his visit to Africa, bluntly stated that "trade must replace aid". And yet, as we have seen, the unequal terms of trade mean that the underdeveloped countries will be further punished by the economic giants of the West. Under GATT (the General Agreement on Tariffs and Trade), the WTO, and all the battery of imperialist restrictions, increased barriers to trade are actually put in the way of the underdeveloped countries competing on a level playing field with the monopolies in the West.
And the bourgeoisie in the former colonial and semi-colonial world have collaborated in forging new chains for Africa, Asia and Latin America. The bourgeoisie in these countries have been incapable of carrying through to a completion tasks of the bourgeois democratic revolution. (We do not include here the newly-industrialised countries, which cannot be fully included in the underdeveloped world. However, many of these countries are ‘semi-colonial’ because of the crushing economic weight of the advanced industrial countries, which limits, restricts and stultifies the development of their national economies.) A thoroughgoing land reform, the solution of the national problem and the genuine unification of many of these countries have not been carried through - nor is this possible on a bourgeois basis.
The role of the working class
The CWI needs to reaffirm the central role of the working class in the revolutionary storms which loom in the underdeveloped world. The collective consciousness and capacity to struggle as a class allows it to play the leading role in the revolutionary process and lays the basis for the building of socialism.
The composition of the working class internationally has changed in geographic and gender terms as a result of the industrialisation of the "developing countries". In these countries women make up 31% of the labour force. In many of the industrialised countries there will be as many women working as men by the year 2000. The global capital of the 80s and 90s has sought out a cheap female workforce. 80% of those employed in the export processing zones in South East Asia are women. The capitalists have reverted to a pre-industrial mode of production: home working. 90% of those who produce goods in the homes are women. The recruitment of women into the workforce does not automatically mean better rights. In Europe figures show that most new jobs go to women, but what kind of jobs are they? Women only make up one third of the full-time jobs in Europe - the rest are part time, casual etc. But the entrance of women into the production process gives them collective strength.
The 'urban poor', which often constitute an important layer within the cities, despite often being able to play an important part in the mass struggle, are not able to assume the leading role of the organised working class.
In Asia, Africa and Latin America a massive crisis has developed in agriculture that has already provoked big movements amongst the peasantry and rural workers. The massive movement of the MST in Brazil illustrates this process. It is important to realise that in many areas of the world the peasantry of today does not resemble the totally isolated and inward looking sector that it did in the past. There is far more contact and interchange with the cities. This has partially broken down the isolation of rural sectors of society and linked them more with the working class. If armed with a revolutionary socialist programme this process will make it easier for the proletariat to win the support of the poor and middle layers of peasantry and rural workers.
Guerrillaism, which is in general the traditional method of the radicalised peasantry, can also come back onto the agenda. The 1990s has witnessed the demise in Latin America of guerrilla movements, with the exception of a few countries, like Colombia, Mexico, etc. In Africa, given the weakness of the proletariat, guerrillaism can develop as a manifestation of mass discontent with dictatorial, unstable regimes, as the Congo demonstrates.
In the competition between Stalinism and imperialism in the post-1945 situation, reinforced by the world economic upswing of 1950-75, the bourgeoisies of these countries were able to play a relatively independent role. But the collapse of Stalinism led to the bourgeoisie of the underdeveloped world going over completely to the market. Lavish promises were made that Latin America and Asia, in particular, would escape from their cycle of economic weakness, poverty, mass unemployment, and degradation. That promise, however, has turned to ashes, particularly in the wake of the Asian meltdown.
The bourgeoisie of the former colonial and semi-colonial countries in the course of the 1990s has, in effect, become a broker for imperialism. It is mainly a transmission mechanism for the programme, policies and ideology of imperialism. Countries like Ghana, led by Jerry Rawlings, once ‘Africa’s Castro’, have moved from ‘socialistic’ measures to firmly ‘market orientated’ regimes. The prospect was held out that Ghana would become the Tiger of West Africa, while Uganda would become the Tiger of East Africa. While not as seriously affected as other parts of Africa, Ghana has, nevertheless, not managed to escape from the economic domination of imperialism. Its problems are those of all African countries to one degree or another.
The turn towards the market has been shown to be a failure. The new imperialist penetration, the buying up of already weakened domestic industry on the cheap, as a consequence of the worsening of the economic situation, will lead to a revolt from below. The growth of an anti-imperialist mood, sometimes initially taking the form, in countries like Indonesia and even Japan, of "an anti-foreigner" attitude will compel a change of tactics on the part of the national bourgeoisie in many of the countries in the underdeveloped world. The demand for action to be taken against foreign capital, alongside the intervention of the state in the form of the nationalisation of failing industries, can grow enormously. Above all, the demand for the cancellation and repudiation of the debt can develop into hurricane proportions. This accounts for the concern expressed in the media in the West.
At the same time, learned articles have appeared showing how ‘impractical’ are proposals to cancel the debt. Yet radical figures, like Noam Chomsky, have pointed out that Britain, France and Italy defaulted on US debts in the 1930s: "Washington ‘forgave (or forgot)’, as the Wall Street Journal reported." Moreover, Hitler, when he came to power in 1933, repudiated Germany’s foreign debts. More recently, Mexico in 1982 repudiated its debt, which compelled US imperialism to step in and bailout the Mexican economy. Any other course could have triggered a worldwide economic financial crisis and, above all, the Mexican economy would have plunged, resulting in millions of Mexicans pouring over the border into the USA itself, with the social and political instability that would have meant for the US.
Fearful that there is now a real possibility of the debts being repudiated not just by one but a series of countries, the West has developed a new line of argument. They now argue that it will not be the bankers or financiers in New York, Tokyo, London and Frankfurt who will pay for any cancellation of the debt but the workers and middle class of the advanced industrial world. It is true that it is the workers and the middle class, through the imposition of increased state taxes, who pay for the ‘mistakes’ of the banks and finance houses in the advanced world. But this should not dissuade either the workers and peasants in the underdeveloped world or the masses in the advanced industrial countries from demanding that the ‘pound of flesh’, in the form of debt, extracted from the underdeveloped world should be immediately cancelled.
But the workers of the world should go further than this and demand that it should be the financiers and big business who should pay the price for their blunders, and not the workers themselves. Our slogan in the underdeveloped world has got to be the immediate cancellation of the debt. In the advanced industrial countries it should be, ‘no increased taxes to pay for debt cancellations’, ‘for the nationalisation of the banks’.