World Perspectives: Global capitalism’s enduring crisis

Political, social and environmental consequences and tasks of the workers’ movement

The following CWI Statement was adopted by the CWI’s International Executive Committee (IEC) its recent meeting in Belgium, 2-9 December 2009. This very successful meeting brought together over 70 representatives from Europe and Russia, Asia, Central Asia, Latin and North America and Africa.

We previously published a summary of the IEC meeting discussion on the World economy and World Relations and will shortly publish reports of the discussion on Europe and on Programme and Slogans (the Transitional Programme today).

Global capitalism’s enduring crisis

The dominant feature confronting the world working class and poor is the enduring economic crisis of world capitalism. There is no easy or quick exit for capitalism from the worst economic calamity to confront it since the 1930s. The consequences of the colossal financial bubble or bubbles, which seemed to send capitalism into the economic stratosphere – a new ‘paradigm’ – now act as a massive barrier to a sustained capitalist economic renaissance. ‘Recovery’ will be anaemic and could be very short-term. The CWI at its December 2008 IEC meeting concluded that the world bourgeoisie, learning from the Great Depression of the 1930s, would move heaven and earth to avoid a similar outcome today. This has been borne out. The huge bailouts to the financial system, amounting to $14 trillion worldwide – the equivalent almost of the gross domestic product (GDP) of the most important and powerful economy in the world, the US – combined with ‘quantitative easing’ and the ‘scrap and buy’ or ‘cash for clunkers’ schemes, have had some result in softening the effects of the downturn but have not solved the underlying problems.

The world economic crisis has opened a new era for capitalism, the working class and the forces of the CWI. Significant struggles of the working class and youth have taken place in a number of European countries. In Britain, the strikes and occupations involving workers at Lindsey, Linamar, Visteon, Vestas and the postal workers represent an important change. Ireland has experienced strikes by the electricity workers, the public sector, Coca Cola workers, dockers and others illustrating how explosive the situation can become. In France the "bossnappings" and occupations, two national strikes and the general strikes in Greece, along with the youth movement reflect the underlying moods which exist. Together with the youth movements in Germany and Austria, these movements and others all illustrate the willingness of the workers and youth to struggle when faced with attacks by the ruling class.

However, the absence of a clear mass socialist alternative and the conservative and cowardly role of the trade union leaders have, for a period, limited how these struggles have developed at this stage. But the situation facing world capitalism will ensure that new phases of conflict and opposition amongst workers and youth to the effects of the crisis will present bigger opportunities for the working class and the CWI.

The historic analysis of the CWI that for almost 30 years world capitalism was in the grip of ‘depressionary features’ is now recognised by some economists. With demand depressed through the holding down of the share of the wealth going to the working class, with profitability reduced, particularly in manufacturing industry, and outlets for profitable investments therefore limited, a way out was achieved through the huge extension of the financial sector and, with it, of credit. The measures of neo-liberalism, of financial deregulation and privatisation, furthered this process. This was given a further boost by the collapse of Stalinism accompanied by the demise of the planned economies, which opened up new fields of investment and markets – although of a limited fashion and not at all as much as was expected at the time of the collapse of the Berlin Wall. This gave a new twist to the appearance of a considerable expansion of capitalism. However, the real wealth-creating industries in the advanced industrial countries contracted and were outsourced to the ex-Stalinist states and the neo-colonial world.

This did not result in a substantial overall expansion of capitalism, certainly not on the scale of the structural upswing of 1950-75. Indeed, the collapse of the only rival to the hegemony of world capitalism – Stalinism, particularly Russia – served to mask the underlying problem of stagnation. The financial sector – rather than manufacturing- was given a boost. The number of manufacturing jobs in the US, for instance, has contracted from an already low 17 million to a catastrophic 12 million during this crisis. As a result protectionist measures – already pronounced – have now increased as US auto and steel unions demand tariffs against industrial goods from abroad, particularly Asia. Similar protectionist sentiments are evident in Europe over the fallout from General Motors’ problems. Consequently de-industrialisation took place in the advanced industrial countries. The irony is that the current world crisis has revealed the underlying weakness of world capitalism that has developed over a lengthy period, just as the crisis that existed in the Stalinist states, especially in East Germany, lay hidden until their collapse.

The financial sector as a lifeline for world capitalism has suffered a near-death blow in this crisis, although it is inconceivable that world capitalism could exist without a developed credit system. But this sector is now seen as "socially useless" – in contrast to the now favoured manufacturing sector – in the words of one of the British captains of industry, Adair Turner. In reality, capitalism as a whole is increasingly seen as "socially useless" by its victims, the working class, particularly the unemployed and the poor. Indeed, Barry Eikengreen and Kevin O’Rourke, two economists who have compared the Great Depression of the 1930s with the "Great Recession" of today, have concluded that, up to now, the current economic situation parallels the events of 1929-33.

The US economy has seen an overall loss of eight million jobs in two years. Obama’s stimulus packages, which are halfway through, have produced a modest ‘uptick’ of one million jobs which have been created. In Britain, the ‘quantitative easing’ of the Brown government has already reached £200 billion, with sections of the bourgeois in panic at its ineffectiveness so far, urging increased spending of at least another £25 billion as a means of dragging the British economy out of its ‘Bermuda Triangle’. This, however, is generally agreed as the ‘limit’, the ‘nuclear option’, the last desperate throw of the dice to rescue the British economy. It is not certain to succeed. But the alternative of the ‘government-in-waiting’ of Cameron’s Tories – to take the sword immediately to public expenditure and slash the budget deficit – will not only wreck any chance of a recovery. It will also provoke the greatest social upheaval in Britain since the period immediately prior to the 1926 general strike.

In effect, world capitalism has transferred the huge debts of the private sector, the banking and financial ‘plutonomy’, onto the shoulders of the state. This has stoked up colossal class opposition and a demand for the ‘banksters’ to be punished. Their profligacy and high living have aggravated the present economic crisis which has blighted the lives of millions of working-class people. Yet unlike the Savings and Loans crisis in the US in the 1980s, when over a thousand bankers were dragged before the courts and imprisoned, even two heads of Bear Stearns charged with financial offences have recently been acquitted. To compound the situation, the largesse doled out by the governments to the banks has not been used to extend credit lines to ailing industries, particularly to the ‘small fry’ of small businesses and banks. Over 100 small banks have collapsed in the US alone. Instead the ‘banksters’ have funnelled the funds from the government to rebuild their balance sheets, paying huge bonuses (only 117 bankers will be affected by Obama’s demand for a cap on bonuses) and setting off a new orgy of speculation and financial bubbles in the newly-boisterous ‘carry trade’. In the post-crash situation, this led to a return of ‘risk appetite’ – the same search for increased ‘yield’ that led to the financial meltdown.

‘Double Dip’

This accumulation of ‘risky assets’ could, as Nouriel Roubini warned, lead to an even bigger financial crisis than that which preceded the economic collapse. Hence the agreement now of serious sections of bourgeois economists with the CWI that a double dip of one kind or another – ‘L’, ‘W’ or ‘saxophone’ shaped – is more likely. Some have now compared the situation to a "bungee jump": "The economy falls off a cliff. Activity drops a long way. Then there’s a rebound. For a while, the rebound looks very good and it’s easy enough for economists to stick to their straight-line thinking. But the economy never returns to normal; instead it is left dangling by a thread." It will be the ‘green weeds’ inherited from the previous period rather than the immediate sprouting of ‘green shoots’ that will dominate, hampering any real upswing. Despite the world’s governments placing the financial sector in an ‘emergency ward’, the patient is far away from real ‘recovery’. For instance, there is a massive accumulation of credit default swaps (CDS) on the books of the banks. At the same time, the American consumer – the market of last resort and still the biggest in the world – has rebuilt savings by an average of 4% of GDP but is being tempted to invest in these ‘risky assets’, which are stoking a new bubble and will result in a further deepening of the devastating social effects of the crisis on the American people.

At the moment, the US and European economies appear to be technically coming out of recession. But it "still feels like a slump", as the Financial Times put it. Share prices have increased, as has the price of oil. There is a rush for security and ‘quality’ through investment in gold and commodities. There has been a certain revival in the ‘BRIC’ economies – particularly Brazil and China which have experienced significant growth rates. A rise in the Brazilian currency, the real, has led to measures taken by the Lula government to tax the inflow of speculative capital. The Chinese regime – with its significant state sector – has been able to carry through the most successful stimulus measures, which have resulted in significant claimed growth. Moreover, the Beijing regime has pushed, if anything, towards a strengthening of the state sector while private industry has played a limited role in this growth. At the same time, there is a Chinese financial bubble inflating which could burst at any time, reverberating back to the ‘real economy’.

In any case, the attempt to ‘rebalance’ the world economy will be stillborn. China, India and other ‘growth’ countries cannot fully take up the slack resulting from the contraction of US consumption and its colossal debt overhang. At the same time, the idea floated by the International Monetary Fund that the Chinese currency, the renminbi, could either replace or act in parallel with the dollar as a world reserve currency, is a non-starter. The renminbi could act as a medium of exchange between China and countries in Africa, Latin America and Asia which they are seeking to draw into a trading bloc. Special Drawing Rights (SDRs) are also being floated as an alternative. But the US economy remains the overwhelmingly dominant and strongest economy of world capitalism and – despite all the dangers and complications – the dollar will still be forced to act as the world’s currency. It had declined by October 2009 to a 14-month low. This has increased the competitive edge of US industry but also China because the renminbi is pegged to the dollar. This is at the expense of the rest of the world. While the dollar could not be displaced now by a single rival currency, it is possible that a basket of currencies, in which the euro and the renminbi could play substantial roles in the reserves of national governments, may work alongside it. But there is unlikely to be ‘rebalancing’ which could extricate the more exposed countries and regions from the continued chronic effects of the crisis.

This is particularly the case in Central and Eastern Europe, in which the difference between a ‘recession’ and a ‘depression’ is academic. According to the European Bank for Reconstruction and Development, the fall in GDP of ‘transition countries’ will average 6.2% in 2009. But declines vary widely, the worst falls being 18.4% in Lithuania 16%, in Latvia, 14% in Ukraine and 13.2% in Estonia, described as "depression numbers" by Martin Wolf of the Financial Times. Slovenia will contract by 6.5%, Slovakia by 6% and the Czech Republic by 4.3%. Hungary is also on its back as not just the working class but the middle class is plunged into ‘immiserisation’. "It’s a catastrophe. Everything is under a frog’s arse," complained a Hungarian building worker to the Guardian, meaning things could get no worse. Russia after the ‘glory days’ of ballooning oil prices is plunging down to the dark days of the immediate post-Stalinist period of the early 1990s. Whole cities like Togliatti – ‘mono-towns’ relying on the manufacture of one product – are on the verge of ‘closure’ with tens of thousands thrown out of work. The Bonapartist regime of Medvedev and Putin – with a thin ‘veneer’ of ‘democracy’ – will be wracked by crises in the next period.

Where is the economically productive outlet for world capitalism in this chronic drawn-out crisis? In fact, world capitalist governments, faced with an average of 10% deficits in the state budgets, have resorted to the axe in slashing jobs and services. Half of the hospitals in Latvia have already been closed. This is the music of the not-too-distant future for many other countries, even in the ‘rich’ world. Combine this with the huge income disparity – a polarisation between the classes – and the problem of demand, bemoaned by capitalist economists in general, will be compounded.

But the criteria for the capitalists and, ultimately, for their ‘executive committees’ – their governments – are not to provide for social need but to defend and enhance profitability. Therefore, this period, as we have remarked, will be characterised by not just one crisis but a series of crises stretching over years. This will be marked by underlying stagnation of the productive forces, with occasional feeble ‘recoveries’, but possibly also at a certain stage the return of inflation, currency crises and huge deficits in state budgets. These can only be corrected by swingeing attacks on the living standards of the working class.

The bourgeois were shaken from the outset of this crisis, which they incorrectly characterised as lasting for only the past year. However, it had begun earlier in 2007 and even before this in the US housing sector and resulted in whole economies and industries ‘falling over a cliff’. They feared not just for the economic future of their system and the huge meltdown which loomed but also for the social consequences and political repercussions in a mass revolt against their system. Unable to argue that capitalism was capable of ‘delivering the goods’, with their ‘moral compass’ smashed, as millions pay the consequences for the failure of their system, now they have fallen back onto threadbare arguments. The former Tory Prime Minister Winston Churchill has been dragged out of the storeroom of history to justify their system. No longer representing the ‘end of history’, "Capitalism… has proved again to be the worst possible system of economic management, except for all the alternatives." They are able to do this at this stage because of the failure of the model of Stalinism and the lack of an alternative, democratic socialist pole of attraction.

To this devastating economic crisis must be added the crisis unfolding in the environment. The climate crisis is closely connected to the economic crisis. The IPCC has argued that the global median temperature has increased 0.8 degrees since the mid 1800s. Emissions already released will increase temperatures another 0.9 degrees – meaning a combined increase of 1.7 degrees. The consequences of the ‘roof-level’ set by scientists and politicians of an increase of 2 degrees Celsius are well-known: melting of the North Pole and glaciers, a rise of ocean levels, spread of deserts, draughts and water scarcity etc. Worst hit are workers and the poor globally, particularly in poor countries. The UN climate summit in Copenhagen in December -Cop15 – will not provide any solutions. National and capitalist interests are incompatible with the necessary global measures and planning.

The fight to save jobs and living standards does not run counter to a solution to the climate threat. On the contrary, the fundamental obstacle in both cases is the capitalist system – symbolised by the power of oil and energy giants, as well as the car and aircraft industries etc. Only the working class can transform society to create a democratic socialist planned economy, including conversion of polluting industries into really green ones. Today’s inter-imperialist contradictions over the climate can only be overcome by a truly internationalist and socialist working class movement to save the climate.

Searing discontent, growing anti-capitalist mood

There is a searing discontent, a growing anti-capitalist mood, amongst the masses. The BBC World Service found in a special poll that "disillusion with free market capitalism is rife". The collapse of the Soviet Union is viewed differently today than in 1989: "Majorities in Egypt, Russia and Ukraine say that disintegration [of the Soviet Union] was a bad thing." Moreover: "Add Brazil, Indonesia and France to the list when it comes to the view that governments should own or control major industries." The fact that this has not yet cohered into a changed political attitude on the part of the masses, with a revival of socialist ideas, is down to a number of factors. On the one side, at the outset of this crisis, the masses hoped against hope that it was temporary, that a sustained upswing would follow and the situation prior to the crisis would be restored. At the same time, there was no mass focal point in the form of mass parties and leaders who could argue for ‘socialism’ in a broad sense, even in the way that the most gifted leaders of social democracy were able to do in their heyday – either in the run-up to the First World War or in the period of real reforms during the 1950-75 upswing.

Even the direct political consequences of the 1930s were different to what we have experienced in the past 18 months to two years. The crisis of 1929 stunned the working class on the industrial plane, in particular in the US. But even there, a political radicalisation took place, reflected in the growth of left parties such as the Communist Party, both in the immediate aftermath of the 1929 Crash and throughout the 1930s. The 1930s were a period of revolution and counter-revolution, unlike the picture painted by some commentators today. There was a radicalisation, in fact a revolutionary upsurge, in Spain beginning in 1931 leading to the events of 1936-37, and in France where the effects of the Crash were somewhat delayed. The opportunity for the fascists to take power in Germany and Spain (Italy earlier was the prototype for fascist regimes) was only possible after the failure of the working class and its faulty leadership in particular to take power.

New left parties and alliances

There is no crystallisation as yet of a broad socialist layer in the advanced capitalist countries or in the underdeveloped world, let alone in the ex-Stalinist states of Eastern Europe and the former Soviet Union. Even the new left organisations – Die Linke in Germany, SYRIZA in Greece and the earlier promising experiment of P-SoL in Brazil – have not developed in a consistently left direction. Their leaders have no clear vision of the future society of socialism. Even the NPA in France – initiated by Trotskyists or ex-Trotskyists of the Mandel tendency – has not developed a clear anti-capitalist programme, never mind connecting the present explosive struggles in France with the idea of a democratic socialist overturn. Indeed, in these parties the idea of coalitionism – which in itself reflects an undeveloped stage in the consciousness of the masses and members who adhere to these formations – will undoubtedly change. The whip of events and the consistent work of our forces can result in a polarisation in these parties, as we seek to push them towards the left.

In some countries, like Britain and Greece, ‘lesser evilism’ exists amongst significant sections of the masses. In the former, it is fear of a return of the Tories that is pulling workers, with the help of the right-wing trade union leaders, behind the idea of stopping a Cameron government at all costs, openly referred to as ‘torygeddon’ (Tory Armageddon). In the case of Greece, it was the violent rejection of New Democracy mixed with some expectation that PASOK would be ‘better’. This is despite the bitter disappointment of previous PASOK governments. The hopes of a layer of workers that a PASOK government would be "better" do not compare with the illusions in, and the social roots that existed for PASOK in the 1970s and 1980s. SYRIZA, despite its political weakness, is an important force which serious Marxist forces should be part of. At the same time we need to employ flexible work and activities in intervening in response to other opportunities amongst the working class and youth.

But these formations may not be the last word and some could even disappear. This, for instance, is a possibility in the case of P-SoL, which started out as the most left formation, with a broad advanced layer investing great hopes that it could act as a left revolutionary rallying point. However, under the influence of one of the ex-Trotskyists of the Morenoite tendency combined with refugees from the PT, this party may not even stand a candidate in the forthcoming presidential elections but instead give ‘critical’ support to a Green candidate! However, even if these formations stall or disappear (like Rifondazione Comunista in Italy or P-SoL), this may disappoint many of the more developed layers of the working class. Nevertheless, it will not eliminate the need for mass left formations rooted in the character of this period. Therefore, the CWI does not adopt a fetish towards any political formation. We seek to apply flexible work and activities, but must be where the most receptive layer of workers and youth are active or orientate. We will not abandon these organisations until they have demonstrated that they are no longer ‘fit for purpose’ or capable of playing a progressive role.

Marx emphasised in the latter part of the 19th century that a real movement of the working class was worth a dozen programmes. We must adopt the same basic approach towards the tasks of the workers’ movement and particularly its most advanced detachments in this period. These parties, even when they appear as shadows, with a small active layer, can nevertheless under the pressure of events fill out with new, fresh layers of workers, youth, etc. They can have reserves of support which are not fully revealed in relatively quiescent periods. This applies even more forcefully to the trade unions, which through short-time working, unemployment, etc. have in many countries been weakened in numbers and influence, but, through big events which impend, can take on flesh.

The development of a Marxist mass party will inevitably be preceded by ‘staging posts’ in the form of broader formations in which Marxists will collaborate with others who have not arrived at a clear socialist, Marxist outlook. Even where the process appears to have stalled or gone back, we will press for their development as a means of gathering together the forces of the left and the most decisive combative elements of the working class. The experience of broader layers of workers in such a formation is invaluable, even necessary, for the creation of a broad socialist consciousness, which can be facilitated both by these kinds of parties but also the experiences of the masses in struggle. At the same time, this task must be combined with building and consolidating a clear Marxist force around the programme and ideas of the CWI. The opportunities now for genuine Marxism are more favourable than at any time since the mid to late 1980s.

Crisis will hit all Europe

In Europe, there is not one country which has evaded the effects of the crisis. In the powerhouse of Europe, Germany, the underlying economic situation is explosive. Manufacturing industry in Germany has the highest proportion of GDP of any large developed economy. At 24% of GDP, it is almost double the UK’s 13% manufacturing base. But this year, Germany’s engineering and electronics industries are heading towards big losses for the first time since 1945. They have been able to sustain themselves largely until now on the world market and particularly by sales to China. Government ‘featherbedding’ of industry is estimated to come to 1% of GDP. This involves keeping ‘unneeded’ workers in their jobs [Financial Times], with the government making up the wages of workers who are on short-time. This in turn means that the federal budget deficit will balloon to about €100 billion next year, two and half times the previous €40 billion peak reached when the country was dealing with the costs of reunification under the CDU government of Kohl in 1996.

Merkel’s promise to cut taxes while shying away from big cuts in public expenditure has led to unease in the new CDU-FDP coalition. The harbinger of future difficulties, of splits, and even the possibility of an early defeat for this coalition was shown when not all the coalition parliamentarians voted in the Bundestag to confirm the government, leaving Merkel with a majority of just 11 votes. The overall position of German capitalism, as with its counterparts in the rest of Europe, necessitates a confrontation with the working class in order to snatch back the hard-won gains of the past. The inevitable attack on pensions, on wages – where there is an attempt to cut the wages of ‘new entrants’ into the labour force – the rise of mass unemployment, with its tendency to become permanent, guarantee enormous class polarisation and intensification of the struggle between the classes.

As with wars, so classes fight more intensely over the division of a reduced ‘cake’. There is not one country in Europe now that will not experience over a matter of months and years a heightening of class conflict. This is symbolised by the rash of occupations in Ireland, Britain and France, including the ‘bossnappings’ and even the threat to dynamite a factory in France. This will be repeated in other countries where factories are closed down unceremoniously by the bosses. These occupations implicitly challenge the hitherto ‘sacred rights’ of management to manage, which is now something akin to a dictatorship of capital, as even Sarkozy said in the euro-elections. Implicit in the situation in Europe and in every country is not just big conflicts but also a general strike – probably first in the public sector, but in the coming period, it will also embrace workers in the private sector. And this is against the background of a weakening, numerically at least, of the trade unions in many countries; in France, the membership is down to 8%. In Britain, Spain, Portugal and probably even Italy the unions have been weakened.

In Britain the conflict promises to be intense because under the stewardship of New Labour the country has gone from being a ‘star’ of the neo-liberal firmament to being on its knees, officially falling behind Berlusconi’s Italy! In Greece, not withstanding the ferocious backlash against the savage austerity of New Democracy and the resulting victory of the formerly discredited PASOK, a huge collision impends. The state debt is now over 100% of GDP, with the agencies downgrading the country’s credit ratings – as they have threatened to do to Britain as well – which will make it difficult to persuade the bond markets to continue to buy government debt. Bankruptcy threatens not just industries but whole countries, as the example of Argentina has demonstrated. One country being taken ‘into receivership’ is one thing; a batch of countries is another. This is what happened in the 1930s and a similar situation threatens today for a host of countries in Eastern Europe and the neo-colonial world as well.

On a continental level, the European bourgeoisie, despite the continuing strength of the euro against the dollar, has not been able to consolidate a rival integrated bloc to that of the US. The euro is "able to look the dollar in the face" from its current position of strength. But it also acts as an iron corset to squeeze the life out of already economically debilitated countries like Ireland and Italy, which are prevented from devaluing their currencies – as is the case now with the US – and thereby seeking some relief from its present economic trough. One of the intentions of the capitalist classes in Europe in coming together in the European Union was an agreement to rule out competitive currency devaluation through the adoption of the euro in order to force themselves to implement ‘internal devaluations’ (wage cuts, social spending reductions etc.) If this crisis deepens and their difficulties grow, one or two countries could come out of the euro. This of course will not provide an escape route from capitalist crisis while it can temporarily by some relief for one or other national group of capitalists, while also ultimately sharpening intra-european and international tensions.

Capitalist commentators like Philip Stephens of the Financial Times, openly and derisively refer to Europe as the "museum", unable to compete successfully against the US. The confirmation of the Lisbon treaty, with the second referendum in Ireland and the signature of the Czech president, appears to be an unstoppable triumph for the European train. But it is precisely at this moment that the weakness of the capitalists’ European project is revealed and it could fall apart. The EU constitution, like the earlier Treaty of Rome, wishes to ‘legally’ enshrine capitalism ‘forever’ as the ultimate economic model. The constitution enshrines neo-liberal capitalism, by ruling out state subsidies for ailing industries and nationalisation, while supporting privatisation, etc. The character of this document and the European Commission is shown by the ‘instruction’ to the Brown government in Britain to sell off profitable parts of the nationalised banking sector in the interests of ‘competition’. A similar anti-worker approach is enshrined in the different European directives.

Internationalist approach

However the constitution remains, like all capitalist laws, bits of paper which can be ripped up and cast aside once the working class moves to impose solutions to its problems. This was shown in the Lindsey dispute in Britain, which was not, as ultra-left groups like the British SWP indicated, a strike for "British Jobs for British Workers". Because of the intervention of conscious socialists, particularly the Socialist Party, the element of nationalism which can be in all conflicts which appear to be a ‘fight for jobs’ (as the struggle over General Motors has demonstrated) can be countered by a clear class and internationalist approach. Marxists completely reject the bosses’ ploy of the European directives to reinforce the ‘race to the bottom’ on wages under the signboard of the ‘free movement of labour’. We fight for a class and unified approach, the central demand of which is ‘the rate for the job’. We totally reject the attempt of the bosses, aided and abetted by some trade union leaders, to play off one section of the working class against another, be it private sector workers pitted against those in the public sector, the young against the old for being ‘job blockers’ and of the workers of one country of Europe used against another.

The reality of the capitalist attempts at the ‘unification of Europe’ is that on the ground the bosses whip up nationalism, ethnic conflict and racism in the age-old policy of ‘divide and rule’ in order to facilitate their rule and the defence of their profits and privileges. The integration of the productive forces worldwide and particularly in Europe necessitates an internationalist approach to the key struggles, to defend past gains such as pensions and benefits, and to combat the growing menace of the far right. The recent success of the far right – notably the election of Griffin of the British National Party – in the euro-elections is a direct reflection of the shift towards the right, a pro-capitalist position, of the leaders of the ex-workers’ organisations and the trade unions. A vacuum has been created and has even widened recently by the failure to develop in many countries a vibrant left alternative. The ‘scissors’ – the gap between the underlying objective situation and mass consciousness – has never been wider. The success of Die Linke in Germany, at least on the electoral plane, has up to now managed to prevent substantial electoral success for the far right and neo-fascist forces at a national level. But the danger has not gone away and, in fact, it is the far right in general that has been the first beneficiary in Europe of the mass revulsion against the crisis.

Immigration is a key issue for the left and the workers’ movement in Europe. No concessions can be given to racism or discrimination on the basis of ethnicity or religious belief. But on the other hand, in a situation of mass unemployment – almost 20% in Spain, for instance, with a significant immigrant population – the mere incantation of opposition to racism, etc. is not enough. It is more important than ever that anti-racism is linked to class demands for jobs, houses, education, health care and the need for joint unified struggles. The capitalist governments are preparing a crackdown, the setting of ‘caps’, on immigration. We reject the idea that any such measures can offer a solution to the problems related to immigration and benefit the workers of Europe. There is no capitalist measure which will prevent the hungry and the poor – particularly in an era of mass communication – to seek to escape from a worsening poverty trap in the neo-colonial world alongside persecution and oppression, by seeking a ‘better life’ elsewhere. Immigration by itself will not solve the problems of the poor and the oppressed – relatively few have the resources to make the journey to the advanced industrial world. We must press for a general socialist solution to solve the problems globally. This is incompatible with the maintenance of landlordism and capitalism in the neo-colonial world.

Shine comes off Obama

In the US, some of the shine has inevitably come off the Obama administration as the devastating economic crisis continues. This is combined with the unwinnable war in Afghanistan, and also the deadlock and therefore the worsening of the position in the Middle East, with the prospect of sectarian civil war also looming once more in Iraq. From over 70% approval ratings soon after his election, Obama now stands at just over 50%. The economic crisis has affected the whole of the US but has reached depression levels in some key states and cities. Such is the dialectic of history that those states that economically were in the first rank in the past are the most severely affected by the crisis with reduced revenue from taxes, etc. California – the former ‘Golden State’ – is wracked by unemployment, cuts to state employees’ jobs and benefits, thousands of homeless people living on the streets, in cars, etc. Up to 100,000 people sleep on the streets of Los Angeles every night. But it is not the only afflicted state. Fully 10 states – with one third of the US population – share a similar fate. More states could join them next year.

Detroit typifies the crisis in the cities. In the 1950s, ‘Motown’ boasted the highest median income and highest rate of home ownership of any major American city. Decades of collapse of its manufacturing base, especially of its world-famous auto industry, have brought the city to its knees. Fifty years ago it was dubbed the ‘arsenal of democracy’ and boasted almost two million citizens, making it the fourth largest city in America. Now the population has shrunk to 900,000, a third of Detroit effectively abandoned to tall grass, shrubs and urban farms. Even in downtown Detroit, one ruined skyscraper sprouts a pair of trees growing from its roof! It has a shocking jobless rate of 29%; moreover the crisis has affected huge swathes of the middle class, both in Detroit and in other cities. California, which if it was a separate country would still be the eighth-richest in the world, is economically a ‘failed state’.

Even those in work have been forced to turn to free government food stamps and the average working week is now about 33 hours, the lowest on record, while the numbers forced to work part-time because they cannot find full-time work has risen by more than 50% in the past year to a record 8.8 million. Wages and benefits have declined; unemployment stands at 10% but when part-time work is taken to account is probably about 15%. The Financial Times reported that 40% of the families who are on government food stamps with "earned income" increased by 25% compared to two years ago, a staggering increase. On top of this, we have seen the ferocious counter-attack by the Republican right and their allies to the very mild Obama-sponsored health insurance scheme, which aims to cover the majority of the population, well over 90%.

These conditions have borne down precisely on Obama’s base. Almost one in five of the young and more than one in seven of African-Americans and those without a high school diploma are without a job. Almost a third of young black men have no work. Seven of the ten states with the highest levels of unemployment voted Democrat in the presidential election. In an electoral test in Virginia, the Democrats were beaten by the Republicans. However, this does not necessarily presage a defeat for Obama in the 2012 elections. Roosevelt, despite persistent mass unemployment of over 15% following his first election victory in 1932, was re-elected in 1936. But the success of the Obama administration in the future depends on the ability to satisfy, at least partially, the demand for jobs. He has promised, like the New Deal, a massive increase in government-sponsored ‘shovel-ready’ make-work measures. But this depends on getting his proposals through Congress, which is problematical.

As with other countries, the urgent need is for a new radical mass party. One worker in Detroit contemplating the ruins of his city and what should be done about it declared: "Poor people just don’t have the political clout to lobby and get what they need in the way Wall Street does." This puts in a nutshell the dilemma facing the American working class. The prospects for the forces of the CWI in the US have never been better, so long as we seize the opportunities amongst the youth, workers, the Latinos, African-Americans, etc.

Iraq and ‘Afpak’

World relations following Obama’s accession to power and the demise of the hated Bush regime are also in a state of flux. The unipolar position of Bush is no more, as Obama was compelled to recognise even before he was elected. The US remains the dominant power economically on the globe and also retains the capacity, particularly militarily, to intervene throughout the world. But he has been made rapidly aware of the extreme limits to this power in the ‘Afpak’ (Afghanistan and Pakistan) imbroglio. His administration took the decision to withdraw American troops from the cities of Iraq but this has not brought a period of peace and amity for the Iraqi people. On the contrary, it has set the scene for a new sectarian civil war, with the Sunni elite shut out of the Maliki administration and therefore likely to sanction further attacks on the Shia majority. Moreover, Kirkuk and other cities could be torn apart by new sectarian conflict and a struggle over who controls the region’s oil. Besieged by power cuts, mass unemployment and a massive increase in inflation, this regime will also be rejected by the Shia. US forces could easily be drawn back into a conflict with no easy escape route from the quagmire.

If anything, Afghanistan is worse, with the involvement of US forces for the past eight years, twice as long as the American involvement in the Second World War. The situation is intractable. The current British defence chief declared that British forces could be involved in Afghanistan for another 30 to 40 years. This is totally unacceptable to the majority of the British people, who in opinion polls have swung decisively towards withdrawal of troops from Afghanistan, as the coffins of very young British soldiers are returned to Britain on a daily basis. A significant growth of anti-war sentiment is also evident in the US. While the number of US casualties is not on the scale of Vietnam, involving as it does now a professional rather than a conscript army, Obama does indeed face a "Vietnam moment" over the deployment of extra US troops in Afghanistan. He faces the same dilemma that J F Kennedy confronted in the early 1960s in relation to Vietnam, just prior to his assassination, and Lyndon Johnson later: whether to go in further or retreat. Moreover, the fact that this situation exists is further proof, as we contended at the time, that Bush after 9/11 would fail in the attempt to remove the ‘Vietnam syndrome’ from the outlook of the American people.

The demand for 40,000 more troops by the US commander General McChrystal threatens to escalate the conflict to the level of Vietnam. If Obama even opts for a ‘McChrystal-lite’ deployment of perhaps 30,000 troops or less, this would meet with ferocious resistance both in the region and the US itself. Moreover, it is not likely to halt the violence that has spread out of control and has now fed into Pakistan. The urgings of the Obama administration to the Zardari regime in Pakistan to deal with the Taliban has fallen on deaf ears. Hillary Clinton, on a visit to the country, said the government should root out the Taliban and eliminate al-Qa’ida. But the ISI, Pakistan’s military intelligence organisation, has, as Clinton blurted out, known for some time where Osama bin Laden has been hiding in Waziristan. They could probably pick him up at a day’s notice. But they will not do so as long as Pakistan is locked into a conflict with India. Traditionally, Afghanistan has been seen by the military as a hinterland of Pakistan, a buffer zone against India and particularly in the ongoing conflict over Kashmir, with half a million Indian troops stationed in the Indian sector of Kashmir. US imperialism and the Obama administration are in an impossible position.

The Afghan conflict has led to the ‘talibanisation’ of sections of Pakistan. An American withdrawal from the region would enormously speed up this process, with the prospect of Islamic fundamentalists even eventually getting control of Pakistan’s nuclear weapons. Even a ‘colonels’ coup’, while not immediately on the agenda, is possible at a certain stage given the failure of the ‘civilian’ administration of Zardari and every other government to control the situation. To continue the use of drones to bomb Pashtun areas will only aggravate the hostility to US imperialism. In desperation, it has been floated at the beginning of November that the US military is even considering the stationing of US forces in Pakistan, with the government’s permission, to guard its nuclear installations!

The recent elections in Afghanistan showed up the limited social base of the Karzai regime, which has its base primarily in the Pashtun population accounting for 40% of the population. The Taliban can never exercise complete control either over Afghanistan or Pakistan, given the tribal and ethnic divisions. No foreign military power has been able to occupy the country effectively. It was also a ‘Vietnam moment’ for Russian forces when they were forced to withdraw from Afghanistan. The US and Britain do not confront nationalism, as such – there is only a limited national consciousness of Afghanistan. It is more "localism" and, as one commentator said recently, "valleyism" that are the dominant features of Afghanistan. In other words, the tribe and valley takes precedence over ‘national projects’. To simply maintain the current US and British presence would mean laying waste to the country and a ‘feedback loop’ affecting Pakistan. On the other hand, to withdraw would plunge the whole region into chaos and would be an enormous blow to the prestige of the US’s authority, particularly militarily. This is the background to the discussion amongst the US and British governments about attempting to win over at least some of the insurgent leaders, in the hope of thereby being able to scale down their intervention.

The same applies to the situation in Israel-Palestine. The disastrous intervention of Hillary Clinton, who refused to criticise and indeed accepted that there would be no ‘freezing’ of Israeli settlement building on the West Bank, has contributed to the crisis in the Abbas government and the explosive situation which could flow from this. The net outcome has been the strengthening of Hamas and the right-wing political Islamic fundamentalist forces in the Palestinian Territories, with the increasing questioning of the ‘two-state’ solution. Hamas has formally re-adopted and is now giving greater emphasis to the idea of one Palestinian state ‘from the river to the sea’. At the same time sections of its leadership continue to discuss a ‘two-state solution’ as a step towards one state. The Israeli population will not accept the idea of just one Palestinian state to replace the present situation. On the other hand, to refuse to accommodate the Palestinian bourgeois even in a truncated two-state solution will now set the scene for a ‘South Africa’-type development: a campaign could develop for "one person one vote".

Palestinians could reason that there is no possibility of the Israeli state guaranteeing their ‘nationhood’ and therefore the battle must be for equal rights within Israel. This the Israeli ruling class will not accept. If the ‘Israeli Arabs’ (Palestinians living in Israel) mobilise behind this demand, it could set the scene for the mass expulsion of the Palestinians. This could result in massive bloodshed on a scale which would dwarf the two intifadas. Moreover, it would reverberate throughout the region, probably resulting in a new Middle East war with all the bloody consequences that could flow from that, including the use, or threat to use, nuclear weapons by Israel, if it found itself militarily besieged. It could also lead to a new oil embargo which would wreak economic havoc. The only alternative to this nightmare is that of our Israeli and Arab comrades for a socialist confederation, with the national rights of both the Palestinians and the Israelis guaranteed. Capitalism offers absolutely no way out of this bloody trap.

At the same time upheavals have rocked Latin America where the struggle of the masses, especially in the "Andean volcano" encompassing Venezuela, Bolivia, Ecuador and El Salvador, has been in the front line of the class struggle. The coming to power of Hugo Chavez in Venezuela and Evo Morales in Bolivia represented an important development. Reflecting the revolt of the masses against neo-liberalism these governments were compelled to introduce a series of popular reforms and increased state intervention. Chavez in particular has put the issue of "socialism" back on the political agenda which represents an important step forward. However, a critical phase has now opened up in both Venezuela and Bolivia. The top down, bureaucratic methods of Chavez’s regime, and its failure to overthrow capitalism, have resulted in an impasse opening up in Venezuela as the CWI has explained in other material. These methods can also discredit the ideas of socialism. In Bolivia the re-election of Morales by a landslide in recent elections is sure to open up a new phase of the struggle there, as the masses demand more than the limited reforms so far introduced by the government. Now Morales and the MAS have no excuse to further hold back the movement. The demand of the masses to advance the revolutionary process will come up against the reformist policies and methods of the MAS leadership opening up an explosive situation which can have an impact in Venezuela and the rest of Latin America.

Brazil, the regional power, has, together with Chile, managed thus far to avert the full impact of the crisis. This has resulted in a relatively low ebb of the struggle in these and some other countries. As a result Lula in Brazil has been able to maintain high approval ratings in the polls. However, this will not last indefinitely and the entry into struggle of the extremely powerful working classes of Brazil, Argentina, Chile and Mexico – with strong revolutionary traditions – is certain to have a major impact on the struggles and revolutionary processes throughout the continent. The coup in Honduras is a warning to the working class and poor throughout the continent of the need for independent organisations of the working class with a revolutionary socialist programme to defeat capitalism and landlordism. The absence of such independent organisations and parties of the working class is reflected in the growth of radical populist forces in many countries. These movements are a phase of the movement and need to be overcome through the building of independent organisations and parties of the working class.

In Africa the opportunities to build the CWI, and our responsibilities, are starkly posed. Working people and the poor throughout the continent, who hardly, if at all, gained from the recent years’ world economic growth, now, in this new recessionary period, have no prospect of a substantial improvement in their lives. This will only serve to reinforce the local ruling elites’ kleptomania as they seek to steal whatever assets they can get their hands on. This is one of the reasons behind the continuing conflicts in central and east Africa. But recent years have seen renewed protests against rises in the price of food and fuel.

In South Africa the removal of Mbeki and his replacement as President by Zuma caused expectations to rise and opened the door to a new period of struggle. In Nigeria there is a new groundswell in favour of action against the government’s repeated attacks on living standards and looting of the country’s wealth, but after many mass protests, including six general strikes since 2000, there is a growing understanding that "regime change" is necessary. The challenge is to build an independent movement of the working class and poor that can take power. The developments in Guinea since the December 2008 military coup show the dangers of relying on the military to clean up. Only mass action, led by the working class, can begin to stamp out corruption, defend democratic rights and, by breaking with capitalism and imperialism, make a start in the socialist transformation of society.

Decisive Period

For the CWI, this is a new decisive period. We have begun to accumulate new forces. In Ireland, which is hit particularly hard by the economic crisis, we saw the spectacular success in the election of Joe Higgins to the European Parliament and his leading role in the Lisbon Treaty ‘No’ campaign. The profile and role of the SP and Joe is indicated with the publication in Ireland of four new books on the ‘Celtic Tiger’ crash which all cite our MEP and the party.

Many of the new CWI members are won as fighters, most, but not all with a mainly anti-capitalist consciousness. This is a consequence of the colossal ideological barrage against "socialism" unleashed by capitalism and its agencies in the aftermath of the collapse of Stalinism and, with it, the state-owned bureaucratically planned economies. This effect was reinforced by the world boom of the 1990s and the first part of this century. The overwhelming majority of the official leaders of the labour movement abandoned the socialist project as well as most of the left intellectuals, including some "Marxists" and "Trotskyists". The CWI stubbornly fought in defence of the ideas of socialism, particularly with the historic aim of rehabilitating them in the programmes of new workers’ parties. At the same time, we sought to defend and enhance the revolutionary forces gathered behind the CWI. We still have to argue for these ideas. But at the same time, given the throwing back of political consciousness arising from the factors already described, we are winning many who are fighters against the system, some with a socialist understanding, but as yet not rounded out Marxists. While we must strive to increase our forces and particularly our influence in the workers’ movement internationally, we must at the same time give a rounded-out Marxist education to those who join the CWI.

Our task is much the same – only on a higher level – as confronted the workers’ parties before the First World War. In almost virgin territory, they were forced to construct parties from the raw mass. Many who joined the mass social-democratic parties in France, Germany, etc. – which considered themselves ‘Marxist’ organisations – were moulded and developed into Marxists and socialists within the ranks of these parties. This essentially involved creating cadres, which is not merely a matter of education but is also linked to events. The Bolsheviks would not have become the force to change society without the heroic examples of previous generations in struggle – the Narodniks, the Emancipation of Labour group in the 1890s in Russia, the 1905 revolution, 1917 and the international consequences of the revolution, etc. But events will move quickly and provide the opportunity for the CWI to perform a similar task, on a smaller scale at the outset, but with the hope of reaching tens of thousands of adherents and millions at a later stage. The CWI must address these challenges in order to prepare us for the tumultuous events that impend.

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December 2009