New Year 2010: World economic crisis provokes mass revulsion and anti-capitalism

2010 – Savage social cuts, workers’ resistance and growth of socialist ideas

The Committee for a Workers’ International (CWI) extends warm New Year greetings to the members of its sections and groups worldwide and to supporters and readers of

We thank all those who have given assistance – large and small – to the CWI over the past year. We call on all readers of to join us today to meet the challenges for the international workers’ movement in 2010 and to help in the struggle for a socialist world, a new society free of the diseases of capitalism – mass unemployment, poverty, wars and environmental catastrophe.

Below, Peter Taaffe (General Secretary, Socialist Party (CWI England and Wales) looks at the main events of 2009 and perspectives for 2010.

World economic crisis provokes mass revulsion and anti-capitalism

The British capitalists, together with their counterparts worldwide, have unleashed a barrage of propaganda – disguised as “irrefutable facts” – to soften up working class people for an unparalleled assault on their living standards. The International Monetary Fund says this will mean “ten years of austerity”. Like their previous Tory ideologue, Margaret Thatcher, they wish to create the impression that “there is no alternative”.

Yet the past year, 2009, demonstrates beyond doubt that working-class people reject the bosses’ mantra that they must pay the price for capitalism’s most devastating economic crisis. Look at the French workers who staged two magnificent general strikes against the right-wing Sarkozy government. French supporters of the Committee for a Workers’ International (CWI), Gauche Révolutionnaire, have also estimated that 8,000 individual disputes have rippled from one end of France to the other in the past year alone. ‘Bossnapping’ – the imprisonment of bosses in their offices by workers faced with closures of factories and, consequently, the collapse of their lives – have taken place.

So have the occupations, in Ireland with Waterford Glass, in Britain, with Visteon (and N Ireland), Vestas and Prisme, together with the victory of the Linamar workers in the defeat of the bosses’ attempt to sack Socialist Party (CWI England and Wales) member and works’ convenor Rob Williams. It was shown in the magnificent school students’ strikes in Germany, Austria, and Spain – which has also witnessed a massive demonstration and a general strike, as has neighbouring Portugal. The year culminated in December with the tremendous mass demonstrations in Copenhagen against the capitalist market’s ruination of the planet’s environment.

The masses in the neo-colonial world, from South Africa to the mass demonstrations in Iran against the dictatorial regime of Ahmadinejad and the right-wing fundamentalist mullahs, also indicated that in continents covering two thirds of humankind there is massive resistance to the attempt to unload responsibility for this crisis onto the shoulders of the working class and the poor.

The occupations of the factories – limited though they were and largely of a defensive character – showed an instinctive workers’ challenge to the so-called ‘divine right’ of management to rule within ‘their’ workplaces. Working-class people are, in effect, seeking to exercise a veto over the powers of the capitalists to open and shut factories and sites at their will. This was also fully manifested in the marvellous struggle at the Lindsey Oil Refinery, which not only defeated the bosses’ ‘race to the bottom’ – the undermining of wages – but managed to unite British and Italian workers in a common struggle. Moreover, an element of workers’ control through trade union involvement in hiring and firing was achieved, not least because of the intervention of workers influenced by the ideas of the Socialist Party in this dispute.

This sets the scene for 2010. The world economic crisis adds to the mass bitterness, despair and searing anger. Even the trade union leaders have been compelled, on occasions, to reflect this mood. But this invariably amounts to ventilating the boiling anger without a serious attempt to mobilise to defeat the capitalist enemy and its savage programme of attacks.

Ireland faces ‘second world’ status

Two years ago, Ireland had nominally the highest wages in the European Union – although prices were and are astronomically high. The economic onslaught of the capitalists now threatens to plunge the country from a ‘first world’ into a ‘second world’ of mass unemployment – already at half a million in a country of four and a half million – the slashing of wages and a big axe taken to public services. The reaction has been two massive public sector strikes and demonstrations.

Even the Financial Times described the programme of the ruling coalition of Fianna Fáil and the Greens as “masochistic”. Forced to borrow €500 million a week to plug its state deficit, the government has now wielded the axe for a second time, cutting social welfare by 4%, public pay by up to 15%, child benefit by 10%, and capital spending in the health budget. These cuts are on top of the ‘emergency budget’ of last April, which raised taxes and cut public sector pay.

The official trade union leaderships, accustomed to 20 years of ‘partnership’ with capitalist coalition governments, sought to barter with the government. They even thought they were within a whisker of a ‘deal’, which would still have included the acceptance of ‘unpaid leave’ and other cuts. But in the class war, as with war itself, weakness invites aggression! In the run-up to the 1926 British general strike, Prime Minister Baldwin ignored the British trade union leaders’ last-minute plea for ‘peace’ – he was already in bed!

A similar scene was played out in Ireland in 2009, as the government – seemingly under ferocious pressure from the banks and big business reflected on the back benches of Fianna Fáil, the main governing party – arrogantly dismissed the pleas of the trade unions for a ‘deal’. This should have been the signal for organising an immediate 24-hour general strike, involving all workers in the private and public sectors, alike. But the trade union leaders have prevaricated. Yet a set-piece battle of this character between the infuriated Irish working class and the government of the ‘banksters’ is not ruled out as we go into the new year.

General strikes implicit

Indeed, implicit in the whole situation in Europe – and in any number of countries – is the possibility of general strikes. The same applies to Britain, where a pre-election industrial stand-off may temporarily stay the hand of the trade unions, although this is not at all guaranteed, as the scandalous threat to close the Corus steelworks on Teesside, as well as the still-threatened mass action at British Airways show. Moreover, such are the dire economic choices on offer within the framework of capitalism a mighty collision between the classes impends. Past boasts of economic superiority are dashed – Britain was in the ‘economic vanguard’ according to Gordon Brown and Tony Blair before him – as the country has now fallen economically behind even crisis-ravaged Italy! Normally, the capitalists promise pain today and ‘jam’ tomorrow. But the Pre-Budget Report of Alastair Darling, the Chancellor of the Exchequer, promises us not just pain today but pain tomorrow, stretching into an indefinite future.

The main establishment parties vary only by degrees, with New Labour, the Tories and the Liberal Democrats presenting themselves as different ‘management teams’ for the bosses’ Great Britain plc. Capitalist economic experts also virtually unanimously agree that ‘a price has to be paid’ for the £175-200 billion ‘black hole’ in government finances. They also chorus that it is us, the working class and the poor, who will have to foot the bill. But if we had a democratically planned, socialist economy in place, rather than cuts, the increased production would mean a massive expansion of public spending on transport, education, social services etc. What stands in the way is the naked lust for profits of the bosses.

The ‘attack’ on bankers’ bonuses by Darling is totally ineffective. These economic criminals – they were seen as such in the Savings and Loans scandal in the US in the 1980s when over one thousand bankers were jailed – have seen a massive transfer of their debt to the state. At the same time, they have used cheap, state supplied credit, to reboot their profits. The working class will ultimately be called upon to pay for this through service cuts or tax increases. When the British government slaps the bankers on the wrist, they screech in protest and threaten to decamp in a ‘flight of capital’ to Europe or the US. Unfortunately for them, the rest of the world – including Europe and Obama in the US – threaten to emulate the measures of Darling and Brown.

In answer to this blackmail and sabotage of the British economy, a real workers’ government would take over completely the assets of the banks and financial ’institutions’ with minimal, if any, compensation to the top financiers. A state monopoly of foreign trade would nip in the bud the threat to ‘take their money’ abroad.

Not individuals alone but capitalist system responsible

Who is responsible for this ‘mess’ referred to by Tory shadow chancellor George Osborne? Certainly Gordon Brown and the whole New Labour crew bear a responsibility for presiding over a system that threatens the lives of millions both here and worldwide. But it is not a question of individuals alone but the workings of the capitalist system that is responsible for a doubling of unemployment in the US and a 30% increase, so far, in Europe. It is a system based not on social need but on ‘profit’, which is the unpaid labour of the working class.

For a time, capitalism can overcome the contradiction at its heart by ploughing the surplus – this unpaid labour – back into production. But it reaches a stage ultimately when the working class cannot buy the full product of its labour, resulting in ‘overproduction’, a ‘lack of demand’, manifested in economic recessions or depressions. In fact, world capitalism, as the CWI has pointed out, has faced an underlying depressionary situation for almost 30 years.

Karl Marx pointed out 150 years ago that capitalism can expand production and a market by the injection of credit but ultimately this has to be paid for. Yet even Marx would not have been able to envisage the colossal and unprecedented expansion of credit by companies, governments and even households over the last 20 years, in particular. Facing limited opportunities to increase profitability by investing in industry, particularly manufacturing industry at home, the capitalists in Western Europe and the US, in particular, engaged in a massive orgy of financial ‘bubble blowing’. Their system was given a boost by neo-liberal policies of driving down wages and conditions, in effect the ‘cheapening of labour’ or the share of wealth going to the working class (and transfer of production to China, Asia and central/eastern Europe). In the two years preceding this crisis, the ‘income gap’ between the rich and the rest was of a scale not seen since 1917! A date ominous for world capitalism?

European crisis

The collapse of Stalinism and the return to the market economy in the former Soviet Union and Eastern Europe also gave a fillip to the capitalists. However, the recent celebrations on the 20th anniversary of the collapse of the Berlin Wall were muted because the ‘dream is over’, as John Lennon once said. The promise of a new capitalist Eldorado, or at least West German or American living standards, made in 1989 and the early 1990s to the peoples of the countries of Eastern Europe, turned to ashes. The Baltic States and Hungary have now plunged not into recession but ‘depression’. They are joined by Ukraine.

In southern Europe, Greece, wracked by its worst economic crisis since the 1930s and with inevitable mass resistance by the working class already taking place, threatens to default on its state debt. The richer countries, such as Germany, have made it clear that they are unlikely to bail out Greece. Ireland faces a similar situation, with government bonds to fill the deficit ‘marked down’ by the capitalist ratings agencies. The country is a candidate to be bracketed with Greece in the camp of possible ‘defaulters’ and consequent ejection from the euro zone. The only other alternative is ‘internal devaluation’, a draconian programme of slashing wages and annihilating big parts of the cherished social services built up over generations.

Britain is not far behind, notwithstanding the ‘promissory note’ of future cuts mapped out by Chancellor Darling. In fact, according to the Financial Times, “The government expects to borrow more in 2009 and 2010 than the entire borrowing of centuries of British governments between 1692 and 1997”! With one voice the capitalists and their hirelings declare that the deficit is ‘structural’ and the axe must be taken to public services, combined with tax increases levied against the working and middle classes and poorer sections of society. In fact, the promised national insurance increase by Darling in the post-election period will bear down on the middle class and upper sections of the working class. The Tories will milk this for all its worth in the pre-election period and election campaign, as a means of riding to power. They are likely to reap a whirlwind if they manage to grab the ‘poisoned chalice’ of government office.

No easy escape

The capitalists will not easily escape from their present crisis. True, there has been a statistical increase in ‘growth’ in the US and Western Europe. Even Britain – the last to officially come out of this crisis – will probably experience small growth in the earlier part of 2010. The only reason this has happened is because of the massive injection of $14 trillion, worldwide, to rescue the banks and the financial system, more than a year’s gross domestic product (GDP) of the US. This will have to be paid for by undermining living standards and conditions. It has been combined with ‘cash for clunkers’, which has only produced pale-green shoots.

The huge stimulus packages have helped, it is true, to avoid plunging the world into a 1930s-type depression. But they have not acted as the ‘firelighter’ for the ‘damp wood’ in the real economy, thereby laying the basis for a sustained economic upswing. China, because of the strength of its state sector and the renationalisation of some industries, has added a lever to maintain growth in the short term. Yet a big financial bubble, even reflected in speculation over garlic production, which has made some Chinese ‘stinking rich’, has taken shape.

At the same time, the return of ‘risk appetite’ and a new ‘carry trade’ – speculation by borrowing money in currencies with low interest rates to invest in countries with higher returns – is under way. This time, it is the dollar that has fallen in price rather than the Japanese yen, as before. This is highly unstable and could help to trigger off another collapse in 2010, a ‘double dip’, which even Gordon Brown and Obama concede is possible.

In The Socialist [newspaper of the Socialist Part] and the websites and journals of the CWI, we have pointed out that a capitalist crisis, particularly one as severe as the current crisis, means the slaughter of value and the jobs and conditions of the working class. This is now openly admitted by some of the gurus of capitalism, such as Kenneth Rogoff, Harvard, who has stated, “the effects of the 2008-09 financial crisis and recession are akin to those of a war”. The parallel to be drawn in the future may not be the classical ‘depression’ of the US in the 1930s but it will be a ‘grey world’ with the possibility of persistent mass unemployment for years to come, at rates of 10% or thereabouts for many countries or regions, with some like Spain, Eastern Europe and Britain maybe even exceeding this.

The parallel to be drawn for the future for the capitalists of the world is that of Japan since 1991. It has experienced since then a nominal average growth of GDP of just 0.1% per annum, when the effects of deflation, that is falling prices, are taken into account (The Economist).

Working class not accept assault

It is out of the question, as some seem to suggest, that the working class and the poor of Britain and Europe, indeed the world, will calmly accept this situation. If, as some have argued, there are ‘dispersed agencies’ of opposition to capitalism, the responsibility for this rests on the shoulders of the official leaders of the labour and trade union movement.

When Tory shadow chancellor George Osborne declares “we are all in this together”, this provokes a horse laugh. Out of the other corner of his mouth, Osborne said earlier in 2009 that his and Cameron’s Tory government “would be the most unpopular since 1945”. For once, Osborne spoke the truth. The scale of the promised attacks on the public sector – with, for instance, massive effective cutbacks in the NHS – are on the scale of the Geddes report of 1922, which led to the General Strike of 1926.

The opportunist leaders of the trade unions and the Labour Party at the time were ‘raving Bolsheviks’ compared to the present holders of those positions. The majority of the trade unions – including the public sector trade union leadership – are propping up a party which promises to take the axe to the wages and conditions of their own members. Like Mr Micawber, their only policy is to hope that “something will turn up”. Even worse, in Unison union, the leadership are banning from office and threatening the expulsion of Socialist Party members and other lefts who demand a fighting leadership for the union in the testing period ahead.

‘Lesser evilism’

The British general election, now suggested for May, may still not give a full victory to Cameron. The Tories need a 10% lead over Labour in votes to win a majority of at least one seat, a lead only achieved in the modern era in 1997 by Labour after 18 years of Thatcherite Toryism. There is, moreover, a real and palpable fear of ‘Torygeddon’ if Cameron takes office. This has allowed the leaders of the trade unions, once more, to hide behind ‘lesser evilism’, i.e. that New Labour is ‘preferable’ to the Tories. In reality, they are part of the same ‘management team’ with slight variations in the plan to keep the ‘company’ afloat at the expense of the mass of working people.

The threadbare and pathetic justification for supporting New Labour in the forthcoming election was spelt out by Polly Toynbee in the Guardian: “There are many – myself included – who often yearn to wreak revenge on Labour for its crimes, cowardice and craven appeasement of the rich. But in the light of the alternative, revenge is a luxury the low-paid couldn’t afford. It’s a miserably weak reason to support Labour, but don’t imagine things couldn’t get worse: oh yes, they could” (5 December 2009).

If Cameron gets in, the trade union leaders will argue that it is necessary to remain behind New Labour – which will not change from its pro-capitalist character today – in order to defeat the Tories in the future! And so this argument will be trotted out over years, while the working class goes to hell in a handcart. No! It is time in 2010 to take decisive steps towards a new mass workers’ party. The first priority, the launching and building of a coalition for the general election between the RMT union, the Socialist Party and others, to present a real choice and perspective for the future, must be taken. Only a fighting, militant and socialist programme offers any hope for the mass of the British people.

‘Paradigm shift’ in the mood of millions

2009 was a decisive turning point economically, socially and politically. The clear deficiencies of capitalism have provoked worldwide revulsion. A pronounced anti-capitalist mood – evident in the streets of Copenhagen and in the battles of 2009 – is beginning to take shape. A BBC World Service poll recently concluded: “It appears that the fall of the Berlin Wall in 1989 may not have been the crushing victory for free-market capitalism that it seemed at the time – particularly after the events of the last twelve months.” Fifty-one per cent thought that free market capitalism has problems that could be addressed by regulation but 23% called for an entirely new system. In France, 43% wanted radical changes, 67% wanted the state to intervene to distribute wealth more evenly.

These are the portents of a ‘paradigm shift’ in the mood and outlook of millions. On this basis, a new socialist consciousness can develop, particularly if the socialist forces are built. The past year has been one of the most successful for the Socialist Party for building and participating in struggles in Britain. We have seen the biggest ever ‘Socialism’ event – days of discussion and debate hosted by the Socialist Party in November, in London – followed by the magnificent Youth March for Jobs, which went through central London. Working people are crying out for a lead; they will be compelled under the whip of this crisis to search for alternatives. Many of them will find their way into the ranks of the Socialist Party and the CWI in the next period.

World capitalism is convulsed. It has demonstrated its basic incapacity to satisfy the basic needs of humankind. Not just economic devastation but wars over resources, such as water, loom in the Middle East and the rest of the neo-colonial world, if this system is allowed to continue. In the Middle East the conflict between Israel, the Palestinians and the Arab peoples will not only continue on a capitalist basis but might even break out into military conflict, as it did at the turn of 2009. The Israeli ruling class may even attempt a ‘pre-emptive strike’ against Iran’s ‘nuclear threat’.

Mass unemployment, poverty, wars, environmental catastrophe; these are the products of a system, world capitalism, in decay. We have to prepare for a new society free of the diseases of capitalism, which will offer undreamt of plenty for humankind. That system is a democratic socialist society; the idea of which will come into its own in the next year.

[A version of this article will be published in the first 2010 issue of The Socialist, weekly newspaper of the Socialist Party (CWI England and Wales)]

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December 2009