World & Europe: New period of instability and revolutions

Thesis of the European bureau of the CWI

At the beginning of April, leading members of the CWI from Europe, as well as from Pakistan and Israel, met to discuss developments internationally, and in Europe in particular. The following thesis was discussed there and adjusted according to the discussion.

The World Congress took place just over three months ago and yet the world situation has been changed dramatically since then by the revolutions in the Middle East and North Africa. This was followed by the natural disaster of the earthquake and huge tsunami in Japan. These have served to reinforce the impression, created by the enduring economic crisis, of a world in turmoil. The danger of a meltdown in the nuclear reactors – and the repercussions of this in a possible Chernobyl-type radiation fallout – has also served to underline the irresponsibility of capitalism over the environment. The building of nuclear plants on known earthquake fault lines, with the escape of radioactive particles and the dangers of the terrible legacy of nuclear waste left to future generations, has horrified the world.

The Revolution in the Middle East and North Africa

In broad outline the CWI did predict the events in the Middle East. In the last World Relations document adopted at the 10th World Congress of the CWI in December 2010 we correctly foresaw that the Middle East was on the verge of a social explosion, highlighting the possibility of the Mubarak regime being overthrown. We anticipated, along with other issues, that: “Another ‘hotspot’ for imperialism is the Middle East. There is not one stable regime in the region.” (paragraph 54). In particular in the same document we anticipated: “While the conflict between the Arabs and the Israeli’s is important it is not the only factor which must be taken into account in working out perspectives for this region. Much more than previously the economic situation is preparing here big social and political movements. This is particularly the case for Egypt …seismic shifts in this country are on the agenda. The 30 year old reign of the Mubarak government is drawing to an end.” (Paragraphs 62/3). This prognosis has been borne out in the tumultuous events which are still taking place in which revolution and the idea of revolution has leapt from one country to another.

This has served to underline once more Trotsky’s theory of the Permanent Revolution. However Trotsky’s ideas do not lend themselves to a superficial and one-sided interpretation of how the process of Permanent Revolution will unfold. He never envisaged a smooth and even process. The Russian revolutions did not triumph without serious attempts at counter-revolution. Equally the revolutions in the Middle East were bound to confront attempts at counter-revolution. In Tunisia and Egypt, given the unpreparedness of the masses and the lack of independent organisations, allied to the fact that the military security apparatus of the old regime had not been completely dismantled, counter-revolution was bound to be a serious threat to an as yet unsecured victory of the masses. This in turn was conditioned also by the fact that the masses had emerged out of the dark night of decades of dictatorship. This was reinforced by the lack of genuine revolutionary workers’ parties, with cadres capable of rapidly politically orientating the masses. Nevertheless, each effort of the counter-revolution has served to provoke stubborn opposition, to resurrect when it appeared to be flagging or dormant the mass movement, against the remains of the old regimes and, in Tunisia, pushed the revolution forward.

In Egypt, the occupation of the security police headquarters – because of rumours that they were attempting to destroy files detailing the torture under the Mubarak regime and the role of the army in this, as well as an equally stubborn movement in Tunisia – indicates that a revolution cannot be easily put to sleep. But the imperialist intervention – through the so-called ‘no-fly zone’ in Libya is part of the attempt to intimidate the revolutionary masses. It masquerades as siding with the Libyan opposition when, in reality, it is part of a general offensive of reaction within the region and internationally to halt and complicate the process of revolution. It is also an attempted insurance policy on the part of Western imperialism to ensure the maintenance of its grip on the oil resources of Libya. After having courted Gadaffi, supplied him with arms, etc., the best way to do this now, imperialism calculates, is to abandon him – a former ‘friend’ – so ensuring that they are ‘on the right side of history’, particularly economic history! They will not succeed as the events in Egypt, Tunisia and in the last period in the Yemen have indicated.

The brutal massacre in Yemen only served to harden the resolve of the mass movement leading to the biggest demonstration yet against the regime and the likely departure of Saleh. A key moment was the defection of the army chief of staff to the side of the revolution. This indicates that Saleh does not have sufficient forces on which to rely. But the welcome that this general received from the Yemeni opposition shows the confused consciousness to say the least within the ranks of the revolution. His photograph was taken down from the rogue’s gallery of counter-revolutionary villains and relocated amongst the angels!

The ruthless intervention of Saudi Arabia in Bahrain to crush the revolution is intended to intimidate the Bahraini masses and also to frighten the workers and farmers in those countries not yet engulfed by the revolutionary wave to desist from following the path of Egypt and Tunisia. Internally, in each country, the counter-revolution is biding its time – is forced to bend with the revolutionary wind – until it can use the disappointment with the results of the revolution to strike back. No sooner was the referendum on the generals’ constitutional amendments out of the way in Egypt than the military announced its intention to restrict and outlaw demonstrations and strikes. Nevertheless, the trend in the next period will be for a deepening of the revolution but, of course, the perspectives for each country will vary.

Also, a new Middle East war cannot be ruled out. The trigger for such a war could be the increased violence between Israel and the Palestinians or the bombings in Jerusalem and increased conflict in and around Gaza. Once it starts and particularly if it broadens into a major conflict, it can also draw in the Arab states. The Egyptian military, for example, is weakened compared to the period of the slavishly pro-US and Israeli stance adopted by the Mubarak regime. In the new situation the pressure of the Arab masses to defend the Palestinians will be intense. This will be especially the case if mass protests like the 15th March in the West Bank continue to develop.

Libya – as this document was being prepared – is at the eye of the storm. For all the reasons we have gone into – in articles and material on the website – Libya is much more complicated than the processes in Egypt and Tunisia given the peculiar character of the Gadaffi regime. There is no doubt that the Gadaffi regime is a blood-soaked one. The uprising in Benghazi defeated Gadaffi’s troops – led by his sons – initially who then fled to the safety of Tripoli. Popular committees began to take shape, but unfortunately were dominated – and this has been reinforced since – by petty bourgeois and bourgeois forces, some of them former ministers from Gadaffi’s regime. Our demand for these committees to be firmly rooted amongst the masses, with full workers’ democracy, and on the basis of a clear programme could have led, if necessary, to the formation of a revolutionary army. This could have developed in the manner of the Durutti columns after the insurrection against the fascists in Barcelona at the beginning of the Spanish Civil War in July 1936. The mere announcement of such a force could itself have been the spark which would have led to a successful rising against Gadaffi in Tripoli.

The tribal character of Libya – reinforced by regional divisions, particularly between the West and the East – has allowed Gadaffi a certain room for manoeuvre. The flying of the royalist flag – King Idris hailed from Benghazi and was the head of the Senussi ‘tribe’ – a political-religious order – which accounts for one third of all Libyans – has allowed Gadaffi’s regime to picture Benghazi to be a base for counter-revolutionary forces who wish to turn back the wheel of history. This impression is reinforced by the stance of the leaders of the Benghazi movement to call for assistance – through the ‘no-fly zone’ – from imperialism. This represented a volte face from the previous stand in Benghazi, which opposed imperialist intervention: “Libyans can do it themselves.”

It is difficult to work out exactly how the situation will pan out. Support for the no-fly zone will disintegrate if the results do not lead to a quick overthrow of Gadaffi. Public opinion in the US – where there is a massive two thirds majority wishing for a pullout from Afghanistan – ruled out any land campaign. The forces of the US and France are incapable of fighting an effective land war. Moreover public opinion, which initially appeared to favour the bombing of Gadaffi, can turn into its opposite if the number of casualties increases. The US and Britain are already stretched by the imbroglio in Afghanistan. Moreover, support for military measures in Britain as a whole is very shallow with widespread fear – including amongst the bourgeois – of ‘mission creep’, limited action which develops into an extended military engagement.

Imperialism – together with the Benghazi forces – hope that sufficient military pressure will lead to a repetition of what happened with Yemen with Gadaffi’s generals switching sides. On the other hand, military stalemate could ensue and an effective partition of Libya takes place. This would probably lead then to military/terroristic campaigns against the major imperialist powers engaged in action against the Gadaffi regime. It is highly unlikely that the forces of the larger Arab states – for instance Egypt – could be used to overthrow Gadaffi, given the unstable and suspicious public opinion in the Arab world already in relation to outside intervention in the region. Even Amr Moussa – head of the Arab League – who initially supported limited no-fly action, was compelled to draw back when, as was inevitable, civilians were killed and injured in British, American and French airstrikes. In fact, the major imperialist powers are already divided – despite the UN resolution sanctioning the action – and this will grow if the war is extended and is intensified.

Egypt is the crucial arena where the epic battle between the forces of revolution and counter-revolution could be decided. The army tops, in collusion with the established political forces of the remnants of the Mubarak’s party, the NDP, and the Muslim Brotherhood have carried out a referendum removing some of the repressive laws of the Mubarak regime and laying the basis for elections within six months. The most conscious elements of the opposition to the army called for a boycott. But the boycott appeal had an effect; there was only 41% participation. However, the opposition did not get sufficient support to derail the referendum; 77% of those who voted were in favour of the amendments. Our demand for a real revolutionary constituent assembly therefore retains its full force. Crucial however is the urgent task of building the independent forces of the working class, particularly the trade unions, and laying the basis for a new mass workers’ party. Imperialism – through the European and US right-wing trade union leaders – is intervening, like they did in the Portuguese revolution to steer the new trade unions in a pro-capitalist direction. In Portugal, they used the German trade union leaders allied to the SPD to build up the Socialist Party of Mario Soares and his trade union affiliate, the UGT, to help to derail the revolution.

In Tunisia the same fundamental tasks are posed, but of course the situation is not identical to Egypt. Tunisia has a certain history of organised opposition in the underground against Ben Ali, particularly clustered around the trade unions. This goes together with a relatively high cultural and political consciousness, which means that the masses are well aware that the revolution was made by their sacrifices but they have not yet inherited the fruits of this. Nevertheless, this movement from below has succeeded in toppling a number of governments. The CWI, both in Egypt and Tunisia, has made gallant efforts to reach out to the most conscious forces and sought to attract them to the banner of the CWI. This work must continue in the next period.

We can look forward to further movements affecting practically every country in the region. In addition to Egypt, Tunisia, Libya and Bahrain, the regimes in Syria now, the Gulf States – despite the massive bribes doled out by the Saudi royalty – in Iraq, and even Iran will all be affected. There is no going back; it is impossible to re-establish the old regimes on the same foundations as before. There is a real thirst for ideas and an insistent demand for democratic rights everywhere, as well as visceral hatred of despotic and dictatorial regimes. On the part of the working class there is a striving for independent organisations both on the trade union and the political field. This all adds up to a favourable situation for the genuine ideas of Marxism and Trotskyism. It will not be easy, given the rival ideologies to Marxism with which we are forced to contend. But for the first time, probably, since the demise of the mass communist/Stalinist parties because of their false ‘stageist’ theories, the ground has never been more fertile for the growth of genuine Marxist and Trotskyist ideas. Equally the general economic and social situation – largely determined by the overall world economic scenario and its impact in the region – means that there can be no real stability. After all, it was the deterioration in the economic situation, manifested in a spiralling of unemployment and particularly in youth unemployment, which was the trigger for the uprisings in Tunisia followed by Egypt and everything that followed. This underlines the crucial importance of economic perspectives, as the CWI has always emphasised. However, if the working class fails to put its stamp on the situation – through its own independent organisation – then right-wing political Islam, largely marginalised up to now, can grow again. The clashes in Egypt between Copts and Muslims, deliberately fostered by the army, are a warning, as is the deliberate fomenting of divisions between Shias and Sunni in Bahrain.

World Economy

The Middle East also exerts huge pressures on the world economy, particularly through the price of its most important commodity of oil. And the colossal upheavals in the region have exerted upward pressures on the price of oil which is now likely to go into overdrive given the military complications of Libya, an oil-producing country. The faltering world economic ‘recovery’ is likely to be halted, if not go into a downward spiral, as a result of this. The current spike in oil prices is the fifth significant rise since 1973 and on each occasion this was followed by a recession. Some experts expect the price of crude oil, to hit $160 a barrel and some even expect it to go higher. One unexpected result of this is the bonus to crude-oil producing states: Russia – every $10 increase in oil swells Russian revenues by $20 billion – Iran and Venezuela as well as those in the Arab world will all gain. Some have been able to use this – as in the case of Saudi Arabia – to buy off, or attempt to do so, rising domestic opposition. The chorus of capitalist commentators who proclaimed that capitalism was on a roll to a healthy recovery and the promised ‘sunny economic uplands’ earlier in the year was entirely mistaken.

Similar claims were made in 2005 that the boom would continue through to 2007 and beyond. True, the FTSE index of shares in Britain zoomed over 6040 points at the turn of the year. However, then the most favourable current fields of investment in stocks and shares, it seems, were in Mongolia and Sri Lanka! Even this has now been undermined by the devastating floods in Sri Lanka, where one million people have been affected and 20% of rice production destroyed.

The gyrations on the stock exchange – a giant casino – are of little real relevance in measuring the economic health today and the prospects of real growth in the future. More significant is the admission by the pro-capitalist, ‘liberal’ commentator and historian Simon Schama: “Life for millions in burgered America goes on only through food banks and food stamps. Seventy per cent of the population has a close friend or family member who has lost a job. We are still living in 3D America: desolation, devastation, destitution.” This, in relation to the engine room of world capitalism!


China and Asia, however, still appear to be going ahead, fuelled by the colossal stimulus package in China, predicted in its scale and in its effects by the CWI. This has pulled in tow many countries with some effect in Europe. In the neo-colonial world countries are experiencing a commodities boom and, to some extent, an increased market for their exports. The other side, however, of China’s growth is the accumulation of bubbles on a massive scale which could bring the Chinese economy juddering to a halt far quicker than capitalist economists imagine. The scale of the overheated housing sector is reflected in the devastating effects on urban dwellers, particularly in places like Beijing. Inflation is always an extremely sensitive issue for the Chinese state because of the historical role that it played in the Chinese revolution that led to the overthrow of the Kuomintang in the late 1940s and brought Mao to power. In January, inflation topped 5.1%, which has led to big “dissatisfaction with price rises [which have] reached the highest levels since records began in 1999” according to a recent Central Bank survey.

Just what this has meant for the millions of Chinese vainly hoping to put their foot on the property ladder is shown by estimates which indicate “how long citizens would need to work to afford a 100-square-metre apartment in central Beijing, which currently sells for about Rmb3m ($450,000). As long as there were no natural disasters, a peasant farmer working an average plot of land would just have been able to afford an apartment if he or she somehow had worked since the Tang dynasty, which ended in 907AD, until today! If a Chinese blue-collar worker had been on the average monthly salary of Rmb1,500 since the opium wars in the mid-19th century and had given up weekends, then he or she might just have been able to afford a place of his or her own [today].”

At the same time China’s colossal, uncontrolled economic growth is inflicting more than 1 trillion Yuan’s worth of damage on its environment each year according even to government planners. The cost of pollution spills, deteriorating soil and other impacts surged to 1.3 trillion Yuan (£130 billion) in 2008. This was the equivalent of 3.9% of the country’s GDP. The loss of soil and water “posed severe threats to the ecology, food safety and flood control," declared the Chinese vice-minister responsible for water resources. Reservoirs are unable to cope with the demands of a rising and increasingly developing population. Beijing has had to rely on non-replenishable aquifers to meet the accumulated water deficit in the city. This could lead to controls on water use, particularly for heavy users such as factories. From an economic point of view, China’s pell-mell development on the basis of capitalism is unviable and this is graphically underlined when it comes to the environment.

Radicalisation in the US

As for the US, it is running yawning budget deficits (at all levels of government) which threaten a fiscal train wreck. At one stage last year the uptake of Treasury bonds, necessary for the continued financing of the deficit, was poor and threatened a crisis in government finances. However, with the capitalists possessing massive surpluses in cash and with nowhere to really invest productively – in itself an expression of the organic crisis of capitalism – a further sale of bonds was successful. The Obama administration is faced with the invidious prospect of seeking to cut the deficit which will severely impact on living standards. If this concentrates on welfare – as the Republican right hope – it will enormously aggravate the social situation and lead to a big radicalisation.

The dramatic events in Wisconsin illuminate what happens when the Republican right is unleashed against the US working class, which appeared to be dormant and passive. Bolstered by the success of the Tea Party in the mid-term congressional elections, Wisconsin’s Republican governor launched a wholesale attack on union bargaining rights and workers’ conditions. This provoked an uprising of the working class, unprecedented in the US for decades. There were many workers, ironically, who had voted for Tea Party candidates and who themselves became victims of these attacks and joined in the opposition movement. Workers raised the example of the Egyptian revolution! They resorted to spontaneous strike action and calls were made for a general strike. Workers in other states, like Indiana and Ohio, followed Wisconsin; they also found similar attacks from hard-nosed Republican governors.

Like a crack of thunder, Wisconsin has aroused the sleeping giant of US labour and opened up a very favourable opportunity for our US organisation. Whether this leads to a sustained shift leftwards partly depends, as elsewhere, on the creation of a left pole of attraction in the form of a new left party or formation. The majority of trade union leaders is desperately trying to head this movement down the road of supporting the Democrats, albeit sometimes only as the ‘lesser evil’. The same thing is happening in Europe with trade union leaders afraid and incapable of leading a successful industrial struggle against the austerity programme of the bourgeois. They seek to shift the movement to the electoral plane by boosting support for social democracy. On the other hand, to attack the huge ‘defence’ budget would bring down even greater criticism from the right-wing Republicans – led by the Tea Party – on the heads of Obama and his administration. Up to now, he has met this right-wing offensive by retreating and making concessions, for example on taxation of the rich. This can only spur on the right to force further retreats from Obama. On the other hand, the attacks on the working class by the right-wing Republicans are stoking up support for the ‘lesser evil’ of Obama in the next presidential elections in 2012. He will now probably be re-elected.

Europe and the World Economy

In Europe, the economic meltdown in Ireland threatens to spread to Portugal and even to Spain, which according to some capitalist economists is the fourth largest economy in Europe and “too big to save". Even Italy and Britain are not entirely immune from the effects of the European banking crisis – because that’s what it is – triggered by the events in Ireland. The bailout of the Irish banks is an indication that it is a question, as Benjamin Franklin said, of “hanging together or hanging separately”. Yet Ireland is likely to default on its debt – or ‘reschedule’ in the more diplomatic language favoured by capitalist economists – despite all the best efforts of the EU member states and the different national governments to bail the country out. Osborne, the British Chancellor of the Exchequer, found £7 billion to help Ireland – in reality to save British banks which would be affected by economic meltdown in Ireland – as a ‘good neighbour’. And yet he is no ‘Good Samaritan’ to the poor and the working class in Britain as he seeks to push through the biggest austerity package for 80 years.

Mainly based on the developments of the Chinese economy, the German machinery and car producers were able to quickly recover from the first part of the crisis. Using their competitive strength, German capitalism feels like the winner of this crisis. But this is developing on weak ground and can and will be put into question in the not to far future. Despite this underlying weakness this gave German capitalism some economic options to help to avoid a full economic meltdown in Europe and also – unwilling and hesitant – to make some concessions to save the Euro so far. This was not enough to rescue the European economy or start a new boom; however it will have decisive effects if future economic eruptions in Germany hit European developments.

The intertwining of the fates of all the economies of Europe through the sovereign debt crisis shows how crucial developments internationally are in shaping events on a national scale, sometimes decisively so. The underlying assumptions of the ConDem government in Britain are that, despite the savagery of the cuts, eventually ‘all will be right on the night’. Events will work out in their favour, because of the ‘inevitable’ rebound of the economy. The ‘normal’ economic cycle will reassert itself, it is argued, with a crisis followed by a boom and so the merry-go-round continues. These hopes will be dashed by the march of events. This is not a cycle similar to 1950-75 or even the weaker boom of the ‘noughties’. This crisis is totally unfamiliar in its character, depth and seriousness to both the current rulers and the ‘ruled’.

At best, the world economy will limp along; it will not immediately fully recover to its level prior to the crisis in 2008. This means that long-term, endemic unemployment will tend to be consolidated with minor ups and downs. Millions of workers will be unable to be integrated back into industry. Where they do find a job, these will be short-term, part-time, and what in the US are called ‘survival’ jobs. Workers take them in the vain hope they will climb back to the position they had in the past. But for a foreseeable period ahead, the era of full-time jobs, of rising or even stagnating living standards, is over for the majority of the population.

Consumption plays a crucial role in sustaining a modern capitalist economy, particularly in the more advanced economies. In the US in the 19th century roughly 20% of the economy was accounted for by consumption. Today, in the US, it accounts for 70% of total output. In China, on the other hand, consumption today is 38% of GDP – which is relatively much less than the 50% under the Stalinist regime of Mao. Yet the austerity programmes which have become the main economic policy of the majority of bourgeois governments act to depress the economy, precisely because of the crucial role of consumers. And this is not compensated for by the redirection of investment – the surplus – back into productive industry, which was the norm in the past. The ruinous policies of financialisation of world capitalism were rooted in the lack of profitable outlets for capital, beginning really in the late 1970s. This is something which the CWI has consistently – and almost alone among Marxists – pointed out again and again in written material.

The colossal investment of fictitious capital – by means of the credit system – laid the basis for the bubbles which have now exploded. But capitalism, taken in the round and on a world scale, has not learned from this, and is not applying any new policies in the old continent of Europe or in the US. In fact, we have seen a repetition of the same policies of the ‘noughties’ which are building up further bubbles, even while the system is struggling to free itself from the huge consequences of previous policies, the debt overhang. Therefore investment in industry – the real force for creating value – is lagging behind. In fact, investment has actually dropped in real terms in manufacturing industry. Britain, for instance, has dropped from number one manufacturing nation in the world in the 19th century to occupy fifth position today. According to the Brazilian finance minister, his nation has overtaken Britain to become the fifth largest economy in the world, particularly after the 7.5% economic growth in 2010, the fastest rate since 1986.

The recovery in equities has been hailed as a precursor for economic growth, which is completely false. In fact the ‘experts’ in the behaviour of stock markets historically are on the side of the ‘bears’ – the pessimists who are expecting a continuation of financial Armageddon. One commented recently to the Guardian in Britain: “When the markets are entering a new phase of madness that leaves me scratching my head with bemusement. The notion that we are back in a sustainable economic recovery is as ludicrous as it was in 2005-07. But investors are back on the dance floor, waltzing their way towards the next, inevitable implosion, [which] yet again they will no doubt claim in retrospect, was totally unpredictable!”

Modern capitalism does not appear to be able to absorb the ‘surplus labour’ – the sanitised term for mass unemployment – created by the overaccumulation, reflected in the crisis, unless it can reach a sustained growth rate of at least 3% and even then at a compound rate. Yet even the most optimistic bourgeois economists have no expectation that capitalism – even those economies that appear to be in a favourable position, Germany for instance will not be able to attain such a rate of growth in the foreseeable future. The outgoing and discredited president of the Bundesbank, Axel Weber, speaking in London recently said that Germany would not be back to pre-crisis levels until the end of 2011: "It’s not a success story. It’s three lost years." He then added for good measure: "The long-term trend rate of growth for the German economy is 1%. That’s not a dynamic driver of the European economy."


The output of the world economy is back to the levels of 1989! The IMF estimates that in 2008 the world economy lost a colossal $50 trillion in devalued assets and loss of production, a sum equal to the total production of goods and services in the world for a year. The crisis has left a huge, debilitating legacy which capitalism will find difficult to overcome, if it ever does so fully. Obama’s quasi-Keynesian policies – through the various stimulus packages – have completely failed to cut unemployment which officially stands at 9% of the labour force (but in effect probably twice that level) and it has been at this figure for 20 consecutive months. 47 out of 50 US states have actually lost jobs since Obama introduced the stimulus packages.

There are more than 200 million people officially unemployed worldwide, of whom 78 million are under 24. And this is probably a gross underestimate because it does not cover under-employment, the partially employed, etc. According to the International Labour Organisation, there are 1.5 billion people in vulnerable employment. Moreover the world population is likely to rise by another 2 billion in the next 40 years. In Europe, youth unemployment in the 17 countries of the eurozone stands at 20.2% on average, up from 14 to 15% three years ago. Youth unemployment increased to a staggering 35% of young people in Greece and a mind boggling 40% in Spain!

Given that there is little state support for the unemployed in these countries – with the jobless compelled to fall back for help on their families and friends – it is amazing that we have yet to see the even greater discontent that these figures warrant. True we have seen big and very angry general strikes but given the objective conditions of the working class, particularly in southern Europe, we can expect in the next period a workers’ protest movement which can overflow the banks of ‘official’ society. Already in Greece we see that the masses, in sheer desperation – very often believing they have very little chance of success – have nevertheless hurled themselves into battle, as with the Athens bus workers, who insisted on continuing the struggle, against the advice of their trade union leadership, despite the fact that the bill had already become law; or, the 2,500 temporary workers of Athens council who also occupied the Council Chambers against the attempt of the new PASOK Mayor to sack them in order to employ new temporary workers with lower wages and fewer rights. This is likely to prove infectious for workers – and not just in Greece – who will undoubtedly seek to emulate them, as well as the student youth who will come into conflict once more with the government and the education authorities.

But political consciousness always lags, sometimes chronically so, behind the objective economic situation. The 1929 Wall Street Crash stunned the working class in the US and it took at least a couple of years for them to gather their forces and resist the onslaught of capitalism. An offensive movement only took place, as we have emphasised many times, with the beginning of the boom from 1934 onwards. It is highly unlikely, particularly on a general level, that such an upswing will take place, at least in the advanced industrial countries. As Brazil has shown, it is possible for a certain level of growth to take place for some countries and regions even in the midst of a general world recession. There is a specific reason in the case of Brazil, as in a number of other countries; it was on the back of Chinese growth in sucking in commodities to keep the wheels of Chinese industry running.

Political repercussions in Europe and new formations

It is only now – in the last period – on a general level throughout Europe that the political repercussions of this deep and organic crisis of the economy are beginning to be felt. It was reflected in the general strikes and mass demonstrations last year in France, Portugal, Spain, the sustained eight general strikes in Greece, and in Italy.

This has been followed by the massive repudiation of the Irish governing party Fianna Fáil in the general election in February. The election was important for many reasons not least for us, the CWI, but also for the working class and the left in Europe as a whole. The splendid electoral breakthrough of our comrades in Ireland was a triumph for the Irish party and the work of the CWI over a long period of time. It brilliantly contrasts with the failure of others on the revolutionary left to make a mark in what is after all the most difficult terrain for revolutionaries, the electoral field. It came after the spectacular success in the European parliament elections.

If we do not shout about our successes, nobody will! Our comrade Joe Higgins brilliantly used the platform to publicise and support all workers’ struggles. In the process, this considerably raised the authority and prestige of him and us amongst workers. But absolutely no public recognition or credit was accorded to him or the CWI by our erstwhile ‘allies’ on the far left, particularly in their publications. The same applies to our success in two comrades getting elected to the Dáil as part of the United Left Alliance (ULA). For instance, an Irish correspondent, writing about the success of the ULA in a recent edition of the London Review of Books, managed the difficult feat of mentioning all the TDs elected under the umbrella of the ULA by name with the exception of Clare Daly and Joe Higgins!

The election victory in Ireland, moreover, was achieved in an alliance with some forces that, in the past and most likely in the future, in our view, have a dubious record in terms of a consistent revolutionary position. This was nevertheless the correct tactic for us to adopt, and flowed from the long-held demand of the CWI for steps towards the formation of a new mass party of the working class. The time is not yet propitious for launching such an initiative in southern Ireland but this task will be posed before us – we will be the main movers in this project – in the forthcoming period.

In Scotland also, we are participating in an electoral alliance – through Solidarity – with George Galloway in the elections to the forthcoming Scottish parliament. In England in the council elections and in Wales in the assembly elections to be held in May, we are in an alliance through TUSC with unions like the transport union RMT and others. The ConDem government is also holding a referendum on the same day to change the electoral system from first past the post to the Alternative Vote, which we oppose because we consider it is a step backwards for the working class and the labour movement. We are standing in the local elections on a much broader front than before. We are trying to form broad alliances which mean that in some council elections we will be making a much more general challenge by standing in more seats. This emphasises that we are making serious attempts to take control of councils out of the hands of what are now the three main capitalist parties.

As our experience with other attempts to form an alliance with the left, it is vital that we build not just influence but the organised forces of the CWI before such a project is launched. This is not because of any narrow, ‘sectarian’ reason as our critics suggest. Our historical experiences, including in the recent period in Greece, for instance, shows that without a firm Marxist core – with clear perspectives and an understanding of strategy and tactics – even the most promising opportunities can be squandered. There is, moreover, the experience of the collapse of the RC in Italy. If, from the outset, the CWI had had an organised group in Italy, then it would have been possible to have built a significant Trotskyist force which could have acted as a check on the opportunist leadership of the RC, perhaps even preventing its disintegration. But even if this had not been possible – because of the limited number of Marxists– at the very least we would have come out with a much more powerful force, both politically and numerically, capable of facing up to the current situation in Italy. Our Italian section – which has been a huge addition to the CWI – shows what was possible in the past but also, more importantly, in the explosive period that is opening up. The events in Ireland signify that we have now entered a new decisive period in which the ‘subjective factor’ can make a crucial difference.

One of the more striking features of the period through which we have passed is the feebleness and the tendency towards disintegration of some of the new “left forces”. When they were founded, they promised the beginnings of new left workers’ parties. This demand has been a cornerstone of the CWI’s policies for over a decade now. But ironically, the deeper the crisis and the greater the discontent of the masses, the more the leaders of these formations have abandoned their previous left positions; in fact, they have shifted towards the right. This applies to Die Linke in Germany, to the Left Bloc in Portugal and even, unfortunately, to the Mandelite-dominated NPA in France. The SWP in Britain and, to some extent, internationally have followed a similar political trajectory. This, perhaps, is the most astonishing metamorphosis given what appeared to be their unbending sectarianism in the ‘noughties’. In reality it is no surprise to us; opportunism is always the reverse side of the coin to ultra-leftism.

More important for the CWI is the broad approach that we adopt towards the new left formations. Where they have stagnated and gone into reverse – degenerated politically– then it would be foolish for us to stubbornly devote too many resources to them. In any case, when we worked in big mass organisations in the past we always had an orientation towards the masses outside that did not join them necessarily but generally adhered to their banner. We face a very complicated situation now – itself conditioned by the transition from one period politically to another – in which all kinds of possibilities can be posed. Ireland has demonstrated the attraction of an independent stand up to now, as has our position in Britain. Because of our influence in the trade unions – through the correct policy towards the National Shop Stewards Network, union caucuses, work in broad lefts, etc. – we have been able in Britain to significantly influence the left both at the leadership and rank-and-file levels within the trade unions.

We cannot pursue a uniform policy which fits the situation in every single country. This period, which has some of the features of the 1930s, requires us to be extremely flexible in our tactical orientation at each stage. The CWI needs to explain again and again, and at this important turning point in particular, the importance of new formations standing on the left as a necessary stage of development of the mass workers’ movement. At the same time, where they fail to act as a serious pole of attraction, we have to explain the reasons for this. On the one side are the intrinsic weaknesses politically of these organisations, mostly at a leadership level, and an inability to correctly understand the stage through which we are passing. This is allied to a lack of confidence in the attractiveness to the working class of an action programme of day-to-day demands but which has as its core the crowning slogan of the need for a socialist plan as an answer to the chaos of capitalism which becomes clearer almost every day. At best, they put forward a version of anti-capitalism and even then not always in a clear way. Anti-capitalism is probably the prevailing political outlook of the majority of workers although there is a growing socialist layer or awareness of socialism, particularly amongst the new generation who are moving into struggle.

Nevertheless it is vital that the opposition to the system – inchoate as it maybe – is the starting point for driving home the need for socialism, which to new layers has to be explained in the simplest possible terms, without being overtly simplistic. If this does not happen and the opportunity is not seized, then the movement will not be taken forward onto a higher plane. These are ABC points in a way but ones which are entirely misunderstood, even by those who still claim to be Marxist and Trotskyists. As we have argued many times against the ultra-left, sectarian doctrinaires, left to its own devices in time the working class will arrive through experience at socialist conclusions. But a party – particularly a mass party – enormously speeds up and transforms the outlook of the working class; in the first instance, the more politically-aware sections of the working class. It is therefore of crucial importance that we still argue for a mass workers’ party, even in those situations where the steps towards such a formation have either faltered or even fallen back. And events are helping us in this task.

Japan and the consequences of the disaster

The objective situation on a world scale could not be worse for capitalism, short of an outright slump. The current situation means the worst of all worlds for the ruling class. Economic stagnation and now a bout of inflation – stagflation, at least in some parts of the world – without any real prospect in the foreseeable future of the capitalists extricating themselves from the situation. Japan – blighted by the earthquake and tsunami – is likely to need $300 billion to repair the damage.

A natural disaster can have different results for different countries depending upon its previous economic and social situation. Sometimes it can act as the midwife of revolution as in Nicaragua in the 1970s. Yet it can also play the same role as a slump, fulfilling the same task as capitalism in a crisis of so-called ‘creative destruction’. By opening up new fields of investment – in construction for instance – it can lead to a certain economic growth. Lebanon appeared to have escaped the crisis which began in 2007-08 which, as we have seen, has had a profound effect on the rest of the Arab world. This probably arises from the devastation inflicted on Lebanon during the war with Israel, which in turn laid the basis for a construction boom.

Similarly and paradoxically, Japan by drawing on the internal savings of its people – hitherto locked up in the banks – could in time experience a certain economic growth in the medium to longer term. But at the same time it is not at all certain that this will be the case, given the already huge state debt, at over 220% of GDP. The immediate effect has been to damage growth prospects through the destruction of energy supplies, the increased cost of oil, etc. But even if Japan manages to grow this will not change in any fundamental way the outlook for world capitalism. The perspective is still one of an enduring economic crisis with profound political repercussions which the Middle East has demonstrated.

Radicalisation and reaction in Europe

Europe has been significantly affected by this crisis. Paradoxically, evidence of this comes from the most unlikely quarter. The new leader of the National Front in France, Marine Le Pen, in an incredible demagogic outburst, and obviously in an attempt to dress this far-right party in ‘radical’ garb, claims that France is now in a "pre-revolutionary" situation! France faces, she says, the same challenges as at the time of the French Revolution! She is deluded in imagining that her far-right brand of "revolution" – in reality counter-revolution – is the solution. But she strikes a chord – albeit that she exaggerates somewhat in describing it as a fully "pre-revolutionary” situation. We have also emphasised that there is a big element of a pre-revolutionary situation present throughout Europe today. We link this to a socialist solution; Le Pen wants to perpetuate capitalism, an increasingly outmoded system.

Since the World Congress the most striking feature of Europe is the deep disenchantment of the masses, the political discrediting of the ruling classes of the continent. This arises from the enduring economic crisis and the consequent squeeze on living standards, not just for the working class but for sections of the middle-class as well, not affected seriously in previous crises. The Governor of the Bank of England, Mervyn King, has admitted that living standards have been at a standstill in Britain – while prices are increasing by almost 5% –for six years! Because of the cuts of the ConDem government, King admits that the assault on the living standards of the British working class is likely to be the most severe since the early 1920s, the period which led up to the 1926 General Strike. The political reflection of the discontent that this has generated has been muffled up to now by the delay of the trade union leaders – through the Trades Union Congress – in calling national, general protest action, let alone strike action. But the very delay in calling such action has resulted in the stoking-up of anger and bitter hostility to the government, which is displayed in the demonstration of 26 March, the biggest specifically working-class demonstration for 20 years.

Britain is now catching up with the rest of Europe. A continent-wide revolt – partly prepared by the giant demonstrations and strikes of last year – is in the offing. Only 6% of people across Europe say they have a great deal of trust in their government, 46% say they have not very much and a staggering 32% none at all! Only 9% think that politicians – in opposition or in power – act with honesty and integrity. The lack of trust in government in general is greatest in Poland and France, where distrust outweighs trust by a net 82 percentage points! In France, the net negative scores 78 points and in Germany, perhaps surprisingly 80 points. Even less believe that politicians are honest. In Poland 3% agree; in Spain 8%; in Germany 10%; in France 11%, in Britain 12%. Overall 40% of Europeans think that the economy will get worse over the next 12 months. [Guardian/ICM poll, 14 March 2011.]

At the same time the remorseless propaganda barrage that state spending should be cut, because it has not been effectively countered by the workers’ movement, at least at leadership level, as had some effect. 78% agree with the statement "the government has been spending too much", while only 10% say there should be no cuts. General statements like these, however, do not reflect how groups and individual workers react when the ‘cuts’ are applied to them! Moreover, once the mass movement confronts the consequences of the austerity programmes which are to be implemented across Europe then the reaction is quite different. In France, for instance, there is a consciousness of the gains of the ‘welfare state’ as there is in Britain and many other countries, and therefore the struggle will continue.

In Portugal, even the opposition party, the centre-right Social Democrats (PSD) have rejected joining the ‘grand bargain’ of all the bourgeois parties in support of the ‘Socialist’ Party’s austerity programme. This is despite the fact that the Portuguese bourgeois are overwhelmingly in favour of such a programme. This has led to the fall of the government and a new general election in two months. In effect, the Portuguese government has been brought down by the pressure of a colossal mass movement. This will lead probably to the election of the present bourgeois opposition, who in turn have absolutely no solution to the economic catastrophe facing Portugal. The country, probably alongside Greece and Ireland, at the second stage of the crisis is likely to default on its debts, which could provoke a new generalised crisis, beginning in the banking sector that could be every bit as serious as in 2008 and plunge Europe further into an economic dark age.

But as recent experience has shown the left will not automatically occupy the political space – a huge vacuum in reality – resulting from the crisis. The far right has maintained an important presence and has been a political beneficiary up to now in some countries, like Austria, from the current situation. It has made significant political and electoral headway, in the absence of a serious left challenge, which could only be provided in this situation by new mass workers’ parties campaigning on the day-to-day issues affecting the working and middle classes but also linked to a strong challenge to the system on the basis of a socialist alternative. The far right has combined their traditional hostility to ethnic and racial minorities – in the main in the recent period targeting Muslims and Islam (and in some countries, the Roma) – with elements even of an anti-capitalist programme.

They can appeal to workers – and have met with some success in this – who face greater insecurity and feel a challenge to their existing living standards by the waves of immigration of the last 10 years, which will be now added to considerably by the expected one million immigrants to Europe in the aftermath of the revolutions in the Middle East. These immigrants of course often form the most oppressed layers of the working class, are denied basic human and democratic rights – as the hunger strike in Greece has demonstrated. And no matter what the reasons are for fleeing their homeland, it is the duty of the labour movement to seek to protect them and particularly the workers to integrate them into union-based workforces.

The bourgeois parties are compelled in words to oppose this ‘uncontrolled’ immigration – particularly in countries like Britain which has faced the biggest wave of immigration in its history – as a ploy to cut off support for anti-immigrant right-wing and far-right parties. But they continue immigration because this helps to drive down ‘wage costs’, through cheap labour, thereby boosting profits. We have seen recently the incredible attack on ‘multiculturalism’ by Cameron in Britain and Merkel in Germany as well as the quite blatant policy of xenophobia by Sarkozy in France, which in this case was calculated to cut across the National Front, and the appeal of its new leader, Marine Le Pen. This has completely backfired as it has legitimised the National Front and its leader in the eyes of UMP voters. The leadership of the NPA in France has also not exactly covered itself in glory in its stand over Muslim women’s headscarves which both Sarkozy and the National Front attacked. We defend the right of women to resist reactionary pressure to coerce them into adopting any particular form of clothing but also defend the right of all religious and ethnic minorities to wear whatever headgear and clothing they deem appropriate, on condition, of course, that this does not infringe the rights of others. It is incredible for anyone – particularly those claiming to be socialists or Marxists – to agree with the state banning of headscarves, as some have done in the past.

The NPA leadership did enormous damage to their party by not clearly supporting their own election candidate who was wearing a headscarf, thus paving the way for more reactionary attitudes even within the ranks of the party. The inability of the leadership to open a real political debate on the question prevented it from voting a clear position at its national congress. The consequence of the political zigzags of the leadership are that the candidate, Ilham Moussaid, and many other rank and file members with a Muslim background have left the party, and as a matter of fact more youth and workers like them will probably move away from the party.

Euro-zone crisis

Merkel now wants to renegotiate how much Germany will pay to set up the new $500 billion eurozone rescue fund. But as the billionaire hedge fund chief George Soros has written in relation to the euro crisis – and he should know! – "The ‘euro crisis’ is generally seen as a currency crisis that is also a sovereign debt and even more, a banking crisis." He has warned that the imposition of penalties on the ‘debtor’ countries means that they will not be able to pay and will collapse. This threatens a repetition of what happened in Latin America in the 1980s which resulted in the ‘lost decade’ of the 1990s.

As mentioned earlier, a massive banking crisis looms over Europe. The policy of Merkel, with Sarkozy in tow, will compound this with their demands for greater austerity in countries like Greece, Ireland and Portugal. In the case of Ireland, for instance, the German government demanded that it should raise its low corporation tax rate, which is enormously beneficial to those foreign capitalists choosing to invest in Ireland and was undoubtedly an important factor in the past in fuelling the so-called Celtic Tiger. It is difficult for any Irish government – given the sensitivity felt by the Irish people about any foreign interference – to accede to this request.

But the economic power of German capitalism disguises the current political weakness of Merkel. She has suffered electoral setbacks recently in Hamburg and elsewhere, partly because the German government is seen as being too ‘sympathetic’ to the ‘peripheral countries’ over their chronic sovereign debt problem. The struggle over Stuttgart 21 and the closure of Germany’s nuclear power plants following the disaster in Japan have also affected the election in Baden-Württemberg with one of the last opinion polls suggesting that a Green-SPD coalition could defeat the CDU, which has led the government in the state since 1953! There has been a revival of big anti-nuclear demonstrations in the wake of the disaster and this could be repeated in many other countries. After the disaster there was a 45-kilometre human chain of 60,000 people from a nuclear power station to the centre of Stuttgart. This is just one indication of the revulsion felt on this issue.

Throughout Europe rising euro-scepticism, an emphasis on national interests by the bourgeois in the different countries, has severely dented the attractiveness of the ‘European project&rsq

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April 2011