Global Turmoil
Capitalist crisis, a socialist alternative
Addenda
Congress Resolutions and Amendments which were defeated or remitted.
Section One - World Relations
Swedish amendment on the class character of China.
From Per-Åke Westerlund, Laurence Coates and Elin Gauffin.
Remitted for further discussion to the IS.
Explanation: While agreeing with the main points on China in the document, there is need for further clarification on the class character. The position of the document is that China is "moving irrevocably in a capitalist direction" (para 195[of Congress draft]). But contrary to the analysis of the former USSR-republics or ex-Yugoslavia, the document seems to describe an unfinished process, or even the beginning of a process: "the regime is clearly set on transforming China to capitalism" (para 208).
Of course, Marxists should not be trapped into pure yes-or-no descriptions, but have an rounded out analysis of the ongoing processes. On the other hand, lagging behind could lead to wrong conclusions on our tasks and China’s role internationally.
We believe that the process in China is completed on the same lines as in the former USSR and Belarus, as explained in the document, paragraphs 331-332. State ownership and contradictions remaining from Stalinism will exist after the restoration of capitalism has been completed. These are in short the main argument for changing some formulations in paragraphs 195, 208, 209.
Amendment: The process of capitalist restoration started with the land reform 1978. A turning point, which increased the speed of the process, was in 1989 with the events in Tiananmen Square and the workers’ protests linked to it, followed by the fall of Stalinism in Eastern Europe.
During the process of globalisation in the 90s, China has become integrated into world capitalism. The ruling bureaucracy changed sides as their colleagues in Poland, Russia etc., did. The state monopoly of foreign trade has been abolished. China’s economy has become the world’s second biggest recipient of FDI. Exports equal 18% of GDP (or 4.5% in purchasing parity). Multinationals employ 17-18 million workers, 10% of the urban work force. China was for a long time a model country of the IMF and contributed with one billion US dollars to the first IMF-package for Thailand.
This process is not only economic, but social as well. "Everything that led to Koumintang’s collapse in 1949 is back, but worse than then: corruption, poverty, inflation, banditry, inequality", was how communist veteran Liu Binyan, described the development. In Shanghai, the night clubs with prostitution of the 30s have reopened, run by the Chinese secret police, the old triads (mafia) or Taiwanese "businessmen". Mass unemployment is officially 18-20 million, probably only a fifth of the real figure.
Neither devaluation nor hesitation to implement the massive privatisation programmes can block the coming crisis. The world crisis of capitalism is going to hit China in no fundamentally different way than in other countries. All the signs of the Asian crisis are there: banks with bad loans, huge debts, deflation, mass unemployment. The bubble is going to burst. This has been underlined by the market nervousness following the crisis of the "itics", the investment arms of regional governments. The strong central power, which is a Stalinist remnant, is already in process of being undermined and the coming crisis will create new and stronger centrifugal pressures.
China’s role in the region is described in the document. In Hong Kong, the unification with China has meant full backing for Hong Kong capitalism. Hunger striking trade unionists in Hong Kong correctly described government boss and multi billionaire Tung Chee-hwa: "He only helps capitalists, not us workers". To prop up the Hong Kong stock exchange, the Chinese government has bought shares for $15 billion. The Taiwan question further underlines China’s capitalist-imperialist role in the region. From this follows the conclusion that the coming Chinese revolution is a social, socialist revolution, and that Marxists will not advocate critical support of China in regional conflicts or wars.
Section Two - Europe
Swedish amendment on EMU from the Swedish EC.
The EMU project has been the central strategic aim of Europe’s governments throughout the 1990s. With the start of EMU on January 1st 1999 the struggle against this counter revolutionary project, a vital political question and task for the Marxists, will enter a new phase.
Our position can be summarised as follows:
The long term viability of the EMU project, and the idea of a capitalist united Europe, are ruled out.
EMU does not solve any of the fundamental problems facing capitalism, it raises class and international contradictions to new levels.
The CWI emphasises the decisive role of mass struggle in the defeat of EMU.
EMU flows not from a position of strength, but from the crisis of European capitalism: internationally in relation to its external rivals in America and Asia; and internally where it faces the strongest working class with the highest achievements.
The world downturn can, especially in the event of a slump, result in the collapse of EMU before 2002. However, a collapse is not the only perspective, especially in the short term.
The bourgeoisie have invested enormously in this project. EMU is the means by which they hope to carry through a historically imperative counter revolutionary programme of cuts and attacks on Europe’s post war reforms: dismantling of welfare; privatisations/ mergers of state-owned infrastructure; "Americanisation" of labour markets etc. The failure of national attempts to carry through his programme is a key factor holding the EMU powers together, despite the numerous risks and drawbacks of EMU.
EMU collapse will have catastrophic consequences for the ruling class: a massive loss of prestige and standing on the international arena, a further weakening of the European capitalists against their main rivals, and a massive loss of face at home. The entire establishment with isolated exceptions is pro-EMU. Every government will be completely compromised.
It will threaten not just EMU but also EU, risking break-up: a European "civil" trade war starting with competitive devaluations, and especially threatening the German-French axis which has been of strategic importance for capitalism since the Second World War.
An EMU fiasco will take its toll on banks and multinationals, which have invested in the project, as well as governments. It would lead to capital flight, relocation of multinationals and new crashes on financial markets.
For these reasons, it’s clear the bourgeoisie will not abandon EMU lightly. They will resort to all possible means, manoeuvres, threats and concessions to save "their" project. This can include a dilution of the stability pact criteria or simply turning a blind eye to violations; IMF-style "EMU rescue packages" for member states threatening to quit, facing economic collapse, revolutionary upheavals etc. Some of the present eleven may split from the EMU but be forced to return later as a result of retaliatory measures. Even in the event of a complete break-up, new attempts will be made to patch things up and launch a "new" version of EMU. The dilemma facing the ruling classes is that they have no "plan B".
A break up of the present EU would mean a fundamental change in post war world politics. It would cripple one of the three blocs, which would tend to pull apart in the frantic search for new markets and international alliances. It would raise national tensions within Europe to crisis levels. EMU does not solve these problems, the contradictions merely assume another form, also with explosive consequences.
The EMU question underlines the central and decisive role of the working class and the CWI’s struggle to build a new mass international, as the only force that can unite Europe and prevent, in a longer term perspective, a nightmare repetition of history .
The Swedish amendment was put to the vote at Congress. The IS called for a vote against. Full delegate votes: For 5, Against 22, Abstentions 5. Consultative votes: For 3, Against 11, Abstentions 0. The amendment was lost.
Resolution from the Austrian Section on Globalisation
Explanation:This is not an amendment but a resolution which deals with a series of points raised in the documents on Europe and World Relations. If the World Congress adopts this resolution these two documents would have to be changed accordingly.
Amendment:Is Globalisation a fact?
As Marxists, it is our task to analyse processes. We have to separate facts from assertions, we have to be clear about the terms used and, as we aim to lead the working class, it is also our task to highlight the political background to processes.
The bourgeoisie use the term "Globalisation" as an ideological weapon against the working class, but is it also a scientific term in the sense of scientific socialism? Although the documents for the World Congress comment in passing that "Globalisation has become a reality thanks to the development of the world market, world trade, monstrous financial markets and the speed, size and interconnections of the movements of goods and information cross the world" (Congress Resolution on Europe, paragraph 29), there is no critical disputing and further examination of the processes. The situation as a whole is very complicated and contradictory (internationalisation versus regionalism, withdrawal of the state versus extension of the repressive apparatus), these contradictions have to be taken into account in our documents.
The emphasis of the International regarding "Globalisation" has changed. Whereas a few years ago regionalisation and the dominance of the Advanced Capitalist Countries (ACCs) had been put forward and an article entitled ‘Global Myths’ was published in Socialism Today (December 1996/January 1997), it is now stated in the documents for the World Congress that "Globalisation has become a reality". It is true that the documents on World Relations and Europe are dealing with certain aspects regarding ‘Globalisation’ (the slowing-down of the process, the basing on the nation state etc.,). However the ‘Reality of Globalisation’ theme dominates the document, compared to the mentioning of countervailing trends or factors, which would put the phenomenon ‘Globalisation’ into a more differentiated perspective. The political component (‘Globalisation’ as an ideological weapon of the bourgeoisie) is missing.
What is ‘Globalisation’?
Although ‘Globalisation’ is an often used term there is no clear definition, a fact which gives room to different interpretations. The following points are mentioned:
The geographical spreading and the growing level of integration of world trade and new communication technologies make it possible to outsource services.
A strong growth of foreign direct investment (FDI) and therefore a strengthening of multinational companies, which have become more and more independent of a national base.
A global network of the finance markets: this encourages short-term investments, accelerates the flow of capital and makes it more difficult for national governments to intervene
A transformation of multinational companies into transnational companies without national identity, roots and links
An acceleration of monetary processes, but also processes in the real economy and a growing international integration ("domino-effect").
Comparing the above-mentioned points with what Lenin wrote in ‘Imperialism, The Highest Stage of Capitalism’, i.e. the last stage which production has come to, a stage which it cannot go beyond:
The concentration of production and capital and the formation of monopolies.
The fusion of finance capital with the industrial capital and, on the basis of this finance capital, the emergence of a finance oligarchy as the ruling layer of the bourgeoisie.
The export of capital compared to the export of goods.
The division of the world between the gangs of capitalists.
The end of the division of the world and imperialist wars as one main characteristic of imperialism.
Regarding world trade, FDI and the finance market there are "proofs" for and against ‘Globalisation’ – depending on the used statistics.
World trade
It is undoubtedly right, that there has been a growth of world trade in the last period but firstly this is not a new development and secondly the significance of exports and the narrowness of the flow of goods have to be taken into account.
On the one hand it is right that the share of export of the world-GNP has grown from 1% (1820) to over 8.7% (1913) and to 15% (1995). But on the other hand exports are only 15.9% (exports of goods) or 20% (exports of goods and services) of the GDP of the OECD which dominates the world trade. From 1960 to 1990 the share of export regarding the international output had doubled to 20% - but this also means, that in the "global supermarket" 80% are produced for the domestic markets.
Moreover, to a predominant extent world trade takes place between the 3 economic blocks (85% of world trade), within these blocks (Western Europe approximately 2/3, North America 1/3, Asia ½ ) and/ or within the multinational companies (1/4 of world trade) - the majority of people are excluded from world trade.
Trade has been liberated (by the end of the 1950s the tariffs had been reduced from 40 to 15%, up to the 1990s they were reduced to an average of 4%). But in fact this was mainly to open up the markets of the ex-colonial countries. The ACC knew how to protect themselves through special regulations. The lastest steps of the IMF and World Bank are also aimed at the creation of new markets for the imperialist countries.
Foreign Direct Investment
Foreign direct investment is, as the world-export of goods and services, seen as a main factor in the process of economic involvement. In fact, FDI rose from 1960 to 1992 from $67.7 billion dollars to $1,949 trillion, an annual 11% increase. Since the beginning of the 1980s the capital flow in the form of FDI rose per year by 27.8%, which is three times faster than exports rose (11.1%) and four times faster than the world GNP (9.8%).
On the other hand is the fact that FDI is only a small proportion of the overall investments - that means that the overwhelming part is invested on domestic markets. The US Economist Krugmann argues that the record capital outflow in 1993 only withdrew 3% investment from the domestic markets of the rich north. In Germany the FDI accounts for not more than 6% of the investments as a whole, the overwhelming part of investment is in the home market.
There is also an extreme concentration of FDI in the ACCs. In the early 1990s 75% of FDI was concentrated in the 3 blocks (with 14% of world population). 90% of FDI had its origin in only 10 countries, two thirds of which came from four countries (USA, Japan, Germany, GB).
Financial markets
The crisis of capitalism/ the "tendency of the rate of profit to fall" and the fact that it is increasingly difficult to materialise profits, has led to capital flight into the speculative sector of economy. Optimal preconditions for this were established through the liberalisation of the financial markets and new technologies. This led to an explosion of the financial trade which today has reached unimaginable dimensions.
Altogether we can say, that a number of processes, analysed by Lenin in ‘Imperialism’, have intensified. Much more important than the quantitative growth of cross border economic activities is the question whether there has been a qualitative change.
Nation states
The relationship between capital and the nation state is one of the contradictions of capitalism. A new quality would in fact exist if capital would detach itself from its national basis. Is this the case?
Has finance capital lost its national links and is there really a significant number of transnational companies existing, companies without national integration and anchoring and with a management to match? Since "productive capital" is increasingly speculative, since there is speculation, for example, with money from pension funds, it is doubtful how "stateless" the finance capital really is.
In relation to the transnational companies we have to state that only a very tiny minority of companies has successfully transformed themselves from being multinational to becoming transnational companies. The workforce and the markets are still mainly in the domestic country or region. World-wide only 5% of all workers work in multinational or transnational companies and their suppliers. And even nearly all major international publicly quoted companies do not have more then 10% of their shares owned by foreigners. In the management of multinational companies foreigners are rare.
The distance to the market, the infrastructure of the ACCs, and a stable political situation are important conditions for the capital to decide where to locate. However capitalism still needs the national state to assert its interests (the extension of the repression apparatus - the armament and increasing competence of the police, surveillance, the switching from conscription to professional armies - show a trend in the direction of a stronger orientation towards the nation state).
The regionalisation/ building of blocks raises the question if in the future the blocks could take over the role of the nation states, if a "European bourgeoisie" could develop? The increasing tensions between the European states, which will intensify with the end of economic downturn (that fact is dealt with in the document on Europe), point in another direction.
Therefore, the most important question is not why multinational companies threaten all the time to move production from one country to another, but why the overwhelming majority of them do not move but stay in their home-base.
New quality?
Does ‘Globalisation’ really mean the end of the possibility for political regulation and are the governments losing their power to act in relation to the economy?
There is no doubt that there is growing "internationalisation", a process which is inherent in capitalism and has therefore existed since its early beginnings. The question is what is the new quality. Why are terms like "internationalisation", "imperialism" and "neo-liberal politics" not sufficient anymore to characterise the character of the period? Where was the leap from quantity to quality? What is meant by talk of a "new phase"? Capitalism has run through several phases since its formation, but now with ‘Globalisation’ they (not the IS, but capitalist propagandists) try to suggest, that it is a post-imperialist phase.
Capitalism has become global again in so far that, since the collapse of Stalinism, it has spread over the whole world. At the same time capital has launched an ideological offensive. However economically it is in a crisis. While there is no such thing as a "global culture" or a "global democracy", the "global attacks on the working class" are present all the time.
Naturally, capitalism, which is not completely static, has changed, but the key things in relation to ‘Globalisation’ are the ideological, political and economical attacks against the working class in the name of ‘Globalisation’.
‘Globalisation’ is used to switch the responsibility for the neo-liberal policy of the 1990s from the national governments to a far away, almost esoteric level ("the market is omnipotent"). As capitalism "became" the market economy or even social market economy, neo-liberalism, imperialism "became" ‘Globalisation’. ‘Globalisation’ did not come out of the blue, but is the result of political decisions of the last period. In that sense it is wrong, when the document on Europe reads: "the process (of Globalisation) has been accelerated by political decisions" (para 27). The liberalisation of the financial markets and the reductions of trade-barriers were political decisions. Technological innovations, of course, were an instrument to help capital to be more flexible, but they were definitely not the source of this process.
Although we as Marxists have a more differentiated and scientific approach towards ‘Globalisation’, in the public discussions and in the consciousness of the working class ‘Globalisation’ stands for a process where a) governments and companies are totally relieved of their responsibility for social grievances and, b) where it is conveyed that every resistance is futile, because capital is flexible.
Fighting against illusions
In the documents there is a special emphasis on the aspect that "there are no national scopes". In the June 1996 issue of Socialism Today, No. 9, we find a different emphasis: "Most importantly the book (Globalisation in Question) challenges the idea that the national state is powerless before the national market and its representative institutions ...the assertion that national states - especially in the advanced countries – are capable of defining national economic and social priorities is welcome."
Because of the election victories of the European Social Democracy, but also as a reaction to the social movement of the recent years against neo-liberal politics, proposals for Keynesian measures are back on the agenda. There is a necessity to stand up against this because again there is an attempt to create illusions that through the correct (i.e. Keynesian) policies it is possible to build "capitalism with a human face". We always stood up against this illusion, but a total rejection of possibilities on a national scale (which, though unquestionably smaller still exist) would make every national fight against attacks or for improvements ad absurdum. The size of possibilities on a national scale is not only dependant on economic conditions but also, to an important part, on the power relations between the classes. In the past we never argued one-sidedly with economic factors and have never reduced our demands because of these "objective facts", but we always stressed the political component.
In the trade unions there are contradictory ideas - looking paralysed at the ‘Globalisation’ and using it as an excuse not to fight and even put their hopes in a "new red Europe" (the realisation of the Social Union, a "offensive employment policy"). In the case of Austria - where because of its geographical nearness to eastern Europe and because of its extraordinary export orientation (OECD: 15.9% of GDP, Austria: 25.3% of GDP) the question of industry locating and moving is of outstanding importance. The trade unions, using ‘Globalisation’ as an excuse, have watered down their demands and activities leading to the situation that in 1999, the relative wage cost in manufacturing will be more then 10% below its level in 1995. One of many extortions done in the name of ‘Globalisation’ and against which we have to stand up - ultimately on an international scale.
To write, "today’s world is more ungovernable" (Europe, paragraph 29) supports the excuses from trade unionists, politicians and bosses who argue that "they would like, but cannot act because of Globalisation". Practically, ‘Globalisation’ is often used as a threat - which is not put into practice - to achieve improvements for capitalists on a national scale.
The internationalisation of the economy and the globalisation of attacks on the working class create chances for us. It is more "logical" that resistance can ultimately only be successful on an international scale and that therefore it is necessary to organise internationally. Because the room for concessions becomes smaller for capitalism, even "reformist demands" reach the limits of the system very fast and the resistance becomes political faster.
It is not a formal question if using the term ‘Globalisation’ is "politically correct". Rather this term is seen by the public and the working class as linked to powerlessness and should therefore be rejected. ‘Globalisation’ is used by the bourgeoisie as an ideological weapon against the working class and must be dealt with as such!
The fact is that capitalism is in a global crisis, that it tries to use global attacks on the working class to overcome this crisis and that global resistance against this is necessary.
The Austrian amendment was put to the vote at Congress. The IS called for a vote against. Full delegate votes: For 1, Against 31, Abstentions 1. Consultative votes: For 0, Against 14, Abstentions 0. The amendment was lost.
Section Three - The Former Workers’ Parties
German EC Amendments.
[Proposed changes to paragraphs 37, 39 and 48 of Congress draft document].
All remitted for further discussion to the IS.
[Pragraph 37] The reasons that these [new Left formations] have developed in this way [a rightward direction] was because of developments in the international economic and political situation. The days where reformism, ideologically based on the ideas of state-controlled capitalism and the "social market economy", could achieve progress are long gone. The U-turn made by the Socialist-Communist government in France within a year of its 1981 election, symbolised that traditional reformism had reached an impasse. Capitalism is on the decline. The increase in profits was only possible through the intensified exploitation of the working class, the ex-colonial countries and through the looting of the inner market in the form of privatisation. That is the economic content of neo-liberalism. This process of deregulation, flexibilisation and privatisation started in the 80s. The fall of Stalinism helped the bourgeoisie and made possible the scale and tempo of this process, which we experienced during the 90s. The breakdown of Stalinism seemed to have shown the inferiority of the planned economy. The bourgeoisie could portray all elements of state economy, state regulation to protect the working class, and the public sector as inefficient and anachronistic. The leaders of the left, with a few exceptions, were unable to explain the real reasons behind the downfall of the Stalinist countries and capitulated, faced with the ideological offensive of the bourgeoisie. They lost their faith to build an alternative to capitalism. From the very beginning the leaders of new left formations were impressed by the alleged superiority of the "free market" and consequently neither had an alternative against concrete neo-liberal attacks nor against capitalism in general.
[Paragragph 39] The beginning of the present economic crisis means that the bourgeoisie can’t go on like before with their neo-liberal economic policy and their propaganda. They will be forced to nationalise banks gone bankrupt, to reintroduce capital controls and elements of Keynesian demand-policy and other tools of state interventionism. We can see the beginning of this process in the countries which have already been hit hard by the recession. The obvious failure of the "free market" is the basis for the reawakening of left reformist ideas and programmes in the workers’ movement and in connection with that, the emergence of new mass reformist currents and parties. Part of this process will be a new broad discussion on an alternative to capitalism and on socialist ideas. But socialist ideas won’t come up in a clear, worked-out Marxist fashion, but in a more confused manner. During this process, being part of coming class struggles, we will get the opportunity to prove that only a revolutionary-internationalist programme can offer a way out of capitalist misery.
[Paragraph 48] The onset of a deep recession and crisis will lead to a development of consciousness amongst the working class. The existing alienation with the establishment will develop to an anti-capitalist consciousness and to greater openness for socialism. We can see the early stages of the re-emergence of reformist ideas amongst intellectuals and workers. This is one basis for the development of new workers’ formations in the course of the next years. The other will be a further increase in the class struggle, both industrially and politically, which will lead to generalised movements of the proletariat. We cannot foresee exactly how new workers’ parties will develop. They will not come out of the blue. In different countries it will develop differently and out of different sources. In many countries developments within the trade unions will be the decisive factor for the emergence of new political mass formations of the proletariat. This can develop first through left wing opposition currents within the old trade unions or through smaller more left wing unions. This could be seen in the development of the US Labor Party (US LP). Although it must be said that the US LP is not a new mass party and that it is not at all certain that it will develop into a mass party. In other cases it might be that a regroupment of existing left wing currents, maybe including split-offs from the (Ex-) CP’s or even social democratic parties, can lay the basis for a new formation. This happened in Turkey where the ÖDP was formed by different left-wing currents and was able to attract some substantial forces. Again the ÖDP is not yet a mass party of the working class and it is not certain that the ÖDP will become a mass party. It is also possible that in some countries we will see the emergence of different kinds of local or regional formations, which only after a period maybe come together as national forces. In such cases we will have to implement extreme flexible tactics with different orientations in different regions. For the period up to the next world congress it is likely that the idea of new workers’ parties can gain mass support in some countries and that in some countries the basis will develop for new formations. But it is not most likely that within the next three years we will see the full development of new mass parties. The issue can develop...
[Add in paragraph 74] After the last sentence ("One crucial task in this period is to assist in the process of rebuilding the idea of socialism as an alternative to capitalism"): "It is important for us today to explain the reasons for the emergence of Stalinism and the collapse of the Stalinist system."