Capitalism unable to deliver an advance in living standards, peace or equality.
The past year has shown clearly the incapacity of capitalism – a system based on the millionaires rather than the social needs of the millions – to deliver to the peoples of the world an advance in living standards, peace or equality. This was symbolised by the reaction of all capitalist governments to the natural disasters of the Asian tsunami, the South Asian earthquake and the hurricanes, particularly Katrina, which swept through the Americas.
Despite the colossal outpouring of mass support worldwide for the victims of these tragedies, as well as the huge amounts of cash generated to help them, hundreds of thousands of victims rot in squatter camps or huddle on freezing mountainsides with hardly a blanket to protect them from the bitter winter elements. Their suffering is a monument to a blighted system. It will take years to eradicate the legacy of these events on the basis of rotten capitalism.
Contrast the lack of preparation, the inaction, inefficiency and corruption to the actions of Cuba, where the hurricanes’ effects were mitigated through the voluntary movement of a million people before the hurricane struck. One system is unplanned and based on the interests of the propertied classes. The other, although unfortunately not a democratic workers’ state, still has the outline of a planned economy, which makes it possible to lessen the impact of natural disasters.
In Iraq, another example of a failed regime, US imperialism has sunk in the last year even further into a sectarian and bloody abyss. The “stench of Vietnam”, as one commentator expressed it, hangs heavily over the Bush administration.
For 25 years, right-wing Republicans in the US have striven to reassert the presidency’s ‘executive authority’. This was shattered by the American people’s reaction following the first-ever foreign defeat of US military forces, the ‘Vietnam syndrome’. Bush used 9/11 to partially re-establish this ‘authority’. Now that has completely dissipated with the death of 2,100 US military personnel and upwards of 30,000 wounded, many of them seriously.
Neither the 15 December elections nor Bush’s so-called ‘plan for victory’ in Iraq can rescue this doomed ‘mission’. 60% of the US population now considers that it was ‘wrong’ and a ‘mistake’ to invade Iraq. Bush’s rating in the polls has plunged to support in the 40-45% range.
Previous ‘hawks’, like the Democrat John Murtha and the Republican ‘establishment’, such as Brent Scowcroft, are attacking Bush for dragging the US into this ‘quagmire’. If half a million US troops in Vietnam, supported by one and half million soldiers, sailors and aircrew in neighbouring bases and countries, could not win in Vietnam, what chance does a force of 160,000 US troops have of avoiding defeat in Iraq?
The ‘de-Americanisation’, read ‘Iraqification’ – handing ‘security’ to Iraqi military forces – has the same chance of success as ‘Vietnamisation’ 35 years ago, precisely zero. The present Iraqi forces, where they are not ‘ghost battalions’ – existing on paper so corrupt officers can receive payment for non-existent troops – are sectarian death squads inflicting a reign of terror on ordinary Shias, Sunnis and Kurds.
On the other hand, the ‘asymmetrical stakes’ – what the US gains or loses in Iraq – are higher than in Vietnam. Iraq is the world’s third largest oil producer with massive untapped reserves – 90% of the country has not even been tapped for oil – so it is critical for world capitalism and particularly the US in this era of ‘energy insecurity’.
However, there is no way out, no coherent strategy, to hand that would allow the US to neatly disengage from this nightmare. In fact, because of the importance of oil in Iraq, the US, even if it formally ‘withdraws’ will retain a sizeable military presence, perhaps 100,000 troops, in bases from which it could intervene in the country and the region.
Some US strategists imagine that if Iraq breaks up then they could forge an alliance with the oil-producing areas dominated by the Shias in the south and the Kurds in the north, against the ‘oil-less’ Sunnis.
This, however, would be in the context of the balkanisation, the break-up, of Iraq on sectarian religious and ethnic lines. But this could lead to the centrifugal disintegration of neighbouring states and unleash an ethnic conflict, which would rage for years, throughout the Middle East.
On top of this, Hurricane Katrina has broken the political levee which previously shored up Bush’s domestic position. It lifted the lid on the brutal race and, particularly, the class realities of US capitalism. A discernible growth of class feeling is the political result of Bush’s attacks on the working class and the poor, reinforced by Katrina. This led to the defeat of Schwarzenegger’s anti-trade union referendum in California and resistance to the Washington regime’s shameless pandering to the appetites of the rich.
The workers at Delphi, General Motors and Ford face cutbacks on pension rights and mass redundancies while the billionaires who really rule the US and sustain Bush have their snouts even further into the financial trough which constitutes capitalism today.
One commentator has pointed out: “The gap between Mr Rich and Mr and Ms Average [in the US] is 311 times as great in the age of [Bill] Gates [owner of Microsoft] as it was in the age of Rockefeller [John Rockefeller, a late 19th/early 20th century oil magnate – eds] and historians call that the ‘age of the robber barons’.” Gates’s wealth increases by $50 million a day while almost half the people of the world have to survive on less than $2 a day.
Rich and poor
This is the picture not just in the US but throughout world capitalism. Capitalist commentators were taken aback by the recent riots in France. The French movement was mass rage, an inchoate cry of despair, at the oppression, denial of basic human rights such as a job and racism. The banlieux, the working-class suburbs, are now synonymous with the regions of the excluded poor.
However, the real surprise is that these riots had not taken place before and in many more countries than just France, even in whole regions, given the searing, unprecedented disparity between rich and poor.
For instance, the Balkans – an area of recent ethnic conflict fuelled by poverty which has not gone away – is now described as a ‘suburb’ of ‘rich Europe’. A process of ‘re-ruralisation’, urban dwellers returning from poverty-stricken cities to the countryside in order to scratch out a living, is under way in this region.
Could anything testify more to capitalism’s bankruptcy? We were told 15 years ago after the collapse of the Berlin Wall, that capitalism offered a glittering future to the peoples of this area, as well as Eastern Europe and the former Soviet Union. Yet only 40% of Serbia’s population bothered to vote in recent elections.
And this takes place during a boom which is characterised by slow, niggardly economic increases but that also sees the rise of poverty, which is woven into the very fabric of capitalist society. Most growth is in the pockets of big business and not in the share going to the working class or the poor.
The US economy, for instance, may be growing in real terms at 2.5% or 3% but the average ‘median’ income of the US family has declined in the last 20 years. Bush, while being compelled to increase expenditure in the wake of Katrina, still attacks Medicare, Medicaid and the social security system, which are relied on by the poor in the US.
‘Race to the bottom’
If the US economy inches ahead in the next year or two, it will be because of the investment boom in China, creating huge productive potential through new factories, and a ‘consumer boom’ in the US sustained by low interest rates. The cost of this will be, however, a huge increase in an already record trade deficit. This could balloon to 7% of US gross domestic product by the year 2007.
The US government’s budget deficit, the difference between what Washington spends and what it gets in income, is covered by foreign investors continuing to buy ‘dollar assets’, US government Treasury bonds, paper money.
How long this will go on against the background of the widening of the ‘twin deficits’ is another question. At a certain stage foreign investors could pull the plug and a repetition, only on a much wider scale, of the 1997 financial meltdown in Asia could take place. Even if this does not happen for a time, the future for the working class will not at all become easier on the basis of ‘modern’ neo-liberal capitalism.
Notwithstanding Gordon Brown’s claims to the contrary, capitalism is involved in a ‘race to the bottom’, a ruthless wage-cutting exercise by different groups of bosses as to who will pay the lowest wages to the working class.
Isn’t this the essence of the Irish Ferries dispute, where low-paid Eastern European workers were smuggled on to the ships to replace ‘highly-paid’ Irish workers? The Socialist Party in Ireland took a prominent role through its MP Joe Higgins in alerting the Irish labour movement to what was happening and calling for a 24-hour general strike.
Pushed from below, the Irish trade union leaders were compelled to ratify partial action on Friday, 9 December, when 40,000 marched in Dublin and thousands more in other Irish cities. This is in anticipation of how the working class will react to the whip of neo-liberalism, which the capitalists will continue to use unless they are stopped by mass industrial action, accompanied by determined efforts to re-establish a viable political voice for the working class.
In the past year, Britain has glimpsed what the threat of strike action can accomplish. Before the election and afterwards, the determination of five million public-sector workers to reject attacks on their pensions was sufficient to force the government into a partial retreat. Present pension arrangements for three million workers were upheld.
Unfortunately, this was linked to a change in the conditions for new starters (see explanation of the agreements in previous issues of the socialist). The public-sector unions must begin an immediate struggle to change this in the next year. The employers, through their mouthpiece the Confederation of British Industry, expect, on the contrary, greater attacks and more ‘concessions’ to their members than we have witnessed up to now.
From British capitalism’s point of view, the underlying position of their system demands this. The slowdown of the economy, probably to a 12-year low, is now admitted by Gordon Brown, who has seen the wheels begin to come off his much extolled economic chariot. The British economic boom has been sustained, like in the US, by consumer spending.
That also is heading south. Growth has been halved with Brown expecting the economy to grow by less than 2% in 2005 – he predicted 3.5% in his pre-election budget nine months ago. Manufacturing industry is on course to lose about 100,000 jobs in 2005 with employment in this sector expected to fall below three million this year.
Brown claims that his past measures helped to lessen the burden and scale of poverty, particularly through increased public expenditure. But in the eight years he has been chancellor, the overall percentage of gross domestic product taken by the public sector is “below the proportion in most years of the Thatcher and Major governments” [William Keegan, The Observer].
It was around 48% in the middle-Thatcher years and around 40% in the middle-Major years. Yet in the financial year 2004-5 – when public expenditure was supposed to be ‘ripping’ ahead – it was 41.4%! Implacable against working-class demands for increases in wages, Brown has tried to ‘balance’ this by increasing corporation tax on oil companies. But given the cash cow which oil companies are today, because of the trebling of oil prices, his measures merely trim the fingernails of big business.
New mass workers’ party
Neither of the other two major capitalist parties offers anything substantially different. Tory Chairman Frances Maude has suggested that the Tories could go into a coalition government with the Liberal Democrats in the event of a hung parliament after the next general election. On the other hand, Cameron ‘generously’ offers to help Blair out in supporting his education ‘counter-revolution’ even if he does not have enough votes from his own backbenches.
The Cameron-led Tory party and the Liberal Democrats are both signed up to New Labour’s neo-liberal agenda. Verbal jousting in the House of Commons is merely a façade to cover this fact. Indeed, Guardian journalists have suggested that before the advent of Cameron, New Labour strategists feared the complete collapse of the Tory party. This would have taken away Blair’s ‘fear threat’ that opposition to him and his policies would open the door to the ‘even worse’ Tories.
New Labour’s utter degeneration under Blair was underlined by former Tory leader Michael Howard’s last speech in parliament. He taunted Blair with his “scathingly embarrassing reminder” of Blair’s boast: “I have taken from my party everything they thought they believed in. I have stripped them of their core beliefs. What keeps it together is power.”
The New Labour government is not in power but ‘in office’. The real power is big business, which determines the policies of any government which remains within the framework of the capitalist system. But Blair’s statement showed there should be no illusions now about the capitalist character of this government and the party which raised it to power.
It is time to create the conditions for a new mass workers’ party! This is a central task for the Socialist Party in the next year. Tens of thousands if not millions are looking for a socialist pole of attraction to fight capitalism and all the parties that represent it. This, and the need to strengthen working-class people’s resistance to all attempts to take back past gains, is a vital aspect of the Socialist Party’s work in the coming period.
This winter promises to be one of ‘discontent’ as will the next year as a whole. Events have already demonstrated the drawbacks of the capitalist system on a world scale. A growing mood of anti-capitalism exists. This has now been strengthened by a layer of workers and young people seeking a socialist solution.
The next few years promise to be the most interesting period from a socialist and working-class point of view for some 20 years.
From The Socialist, paper of the Socialist Party, cwi in England and Wales