CWI School: World capitalism fails working people

System offers economic crisis, insecurity, poverty and wars

“Capitalism has no solution to the crisis of its system – that is official. The OECD, one of the main economic agencies of capitalism, confirms this in its latest report on prospects for the next 45 years.”

Peter Taaffe’s introduction to the session on World Perspectives at the CWI’s recent European School in Belgium highlighted the doubt and fears the capitalists have for their system. For some, short-term thinking prevails; they just try to get out of the current crisis or avoid the next one.

The long view is still the approach of the main leaders of world capitalism, particularly those of the US, but the OECD concludes that economic growth worldwide from now till 2060 will be two thirds of its present meagre rate.

Peter Taaffe introducing the discussion

The CWI concurs with capitalist economic experts that their system has failed. Even in the advanced capitalist countries there is mass unemployment, unparalleled inequality and poverty.

Fortunately, the acceptance of the continuation of capitalism for the next 50 years is unlikely, said Peter. The longevity of the system will depend on the preparedness of the working class, to mobilise, organise, seize the opportunity and take power. This means the building of an organisation, a party that will be able to achieve working-class power and cement it on a national and international scale.

There was a spat recently between Thomas Piketty, author of ‘Capital in the Twentieth Century’, and the Financial Times on inequality, where each side has disputed the others’ figures. However, it is clear to most that inequality has increased internationally. Author Upton Sinclair once said: “It’s difficult to get a man to understand something when his salary depends on his not understanding.”

Desperate migration

The neo-colonial world is a nightmare. Desperate people scramble over fences in North Africa and the US, or risk death by crossing oceans to reach a ‘better life’, which often proves illusory. The OECD predicts the wave of migration will continue with 50 million people expected to travel to both Europe and the US. But it also paints the picture of the conditions they flee from – which already exist in the germ in Europe –becoming the norm in advanced countries.

Peter outlined the economic position of world capitalism. Capitalist economists accept that the ‘new normal’ is stagnation. They concur agree with the points the CWI made, that the supposed ‘productivity miracle’ of information technology was overestimated and any lasting benefits have already been achieved. Automation and robotics have the potential to liberate humankind yet under capitalism they will be jobs killers. 47% of jobs in the US are threatened by new technology.

One thing is certain: capitalism will be challenged again and again by unparalleled mass movements, a taster of which we have been given in the last five years.

These struggles will not just embrace the working class but also the increasingly impoverished middle layers. The New York Times wrote that the US middle-class is falling behind its Canadian and European counterparts. If not them, their sons and daughters will be drawn behind mass movements we, the working class, organise for change.

The current, chaos and turmoil of capitalism largely arise from the effects of the 2007-08 crisis. The rhythm is different in each continent but is felt everywhere, including in those continents and countries which have up to now escaped most of its effects.

Australia has had a 23 year boom but is now joining the rest of the world because of the slowdown in China. Kat from Australia expanded on this by explaining that Australia’s prospects are linked to what happens to the Chinese economy. Twenty years ago Australia’s economy was same size as China’s but China is now four times larger. Australia also occupies a difficult position balancing between China and the US, its main ally in the Asia-Pacific region, potentially the most dangerous political conflict in the world.

Peter affirmed that Brazil and the whole of Latin America will see mass movements resumed with ferocity after the World Cup. Brazil’s growth rate of 7.5% in 2010 has now fallen to 1%! The outcome of the presidential election is likely to see the current president, Dilma Rousseff of the PT (Workers’ Party), re-elected with a reduced majority but anything is possible.

Ty Moore, Socialist Alternative, USA

The epicentre of the world movement against capitalism at the moment is in the Americas, north and south. Europe is suffering a mild reaction, arising from workers’ frustration that colossal mass movements have battered the foundations of capitalism but for the moment have been contained by the capitalists. This is largely due to the lack of leadership, with no alternative on offer and, in some cases, outright sabotage from the ‘leaders’ of the mass organisations both on the political and trade union field. This will change in the next period.

The much trumpeted economic ‘recovery’ is fake for millions, shallow at best. The US has not been able to drag the rest of the world out of recession. There are no bright spots for capitalism. Inevitably, resistance by the working class will resume in Europe and elsewhere.

Sluggish capitalism

We have already seen the development of mass movements, like the convulsions in Egypt and the Middle East as a whole. Revolution is not one act but a process. Counter-revolution has the upper hand at the moment but new outbreaks of mass resistance are likely. It is premature to read the last rites for the movement

“The US recovery simply refuses to live up to expectations,” commented the Economist (London). Economic growth has not been large enough to provide enough jobs for a rising population. The tendency is that unemployment will become permanent with its accompanying poverty.

This indicates the sluggish character of capitalism. It has taken six years of anaemic recovery to get the economy back to pre-crisis levels yet there is no ‘feel-good factor’ inn this ‘joyless boom’. Where recovery and economic growth does take root, the mood of workers will be: “we want our share”.

But capitalists have no faith in this recovery, reflected in stagnating or collapsed investment and the accumulation of huge cash piles. This is taking place as interest rates and the cost of capital are at historic lows; in the case of Britain, the lowest for over three centuries!

There are suggestions rates will be raised to choke off looming financial bubbles. This threatens a repeat of 2008, indicating the shaky character of capitalism.

Capitalist economic theoreticians like Larry Summers and Robert Gordon believe there are not sufficient investment opportunities to absorb the world’s ‘savings glut’. They express deep pessimism for their system.

At the same time, in desperation, capitalism is attempting to create the conditions for mass privatisations. The Economist, at the beginning of the year, looked towards a vast looting of state assets internationally amounting to $9 trillion, equal to the GDP of China!

Weizmann Hamilton from WASP, South Africa

The ‘Great recession’ has also damaged capitalist globalisation, with collapsing cross-border finance, trade in goods and services. Tanja from Belgium explained the dangers of the Transatlantic Trade and Investment Partnership (TTIP), which aims for closer collaboration between the US and the European Union as a counterbalance to Asia and Russia. This is not a traditional trade agreement about lowering tariffs but imposes privatisation and the free market on services and removes any restrictions on making profits.

Debt levels in advanced countries are higher than before 2008, Peter remarked. However, the piling up of debt is seen as the only method of fuelling growth under capitalism. Per-Åke from Sweden emphasised that debt is the main engine of growth. He added that the last 5 years have seen an increase in unemployment internationally from 32m to 48m while the working class lost 10-15% of its income. He believed this period will be the “calm before the storm”.

Peter also mentioned the return of ‘shadow banking’ – the so-called ‘dark pools’ – and the continuing crisis in European banks with the collapse of Portuguese bank Espírito Santo, which are threats to the world financial system.

The process of debt accumulation includes China, with debt levels rising from 130% of GDP in 2008 to 220% in 2013. If the brakes are applied, there will be an economic slowdown with massive consequences.

Hong Kong demos

In this sense, the Hong Kong mass demonstrations, in which the CWI participated, are highly significant with the admirable determination of youth, eagerly participating against their parents’ wishes. Despite the pleadings of their bosses, workers also took part, which upset the Beijing regime. It has responded in a heavy-handed way, particularly against Occupy Central, because it fears colossal political effects in China itself. A small group with the right policies can become a significant, even mass, factor in China. The proverbially accidentally dropped match could trigger revolution, which is inherent in the situation. One city in the mainly Muslim Xinjiang province has actually banned matches!

Sally from Hong Kong developed the points around China’s impact on world economy – it could be bigger than US already on the Purchasing Power Parity measurement. However, the increase in debt has been more rapid than that of Japan in 1980s and could trigger a major banking crisis. The future of China looks more and more like Japan’s with the property market the biggest threat to the Chinese economy. There will be a deflationary process once the property bubble bursts.

Workers have fought back with the number of strikes, although still small, 49% higher than last year. The CWI is preparing for the future mass movements of the Chinese working class, which is the main focus of our work

Seattle success

Peter mentioned that the events in Seattle have shown the way that working people in the US, where opportunities are presented, can make a significant impact. A factor in this is the openness of US workers and youth to the ideas of socialism and Marxism, if they are presented in a skilful and audacious manner.

This is partly because the advanced workers and youth in the US are not weighed down with the baggage from the past of discredited social democratic and communist parties and their rotten policies. Also the small economic recovery helped to give confidence to the fast-food workers to strike.

The unions did not properly follow this up but Seattle did in the election of socialist Kshama Sawant and the $15 Now! Campaign, which met with great success, giving great opportunities throughout the US for Socialist Alternative to grow in authority and influence. This, in turn, can have effects on some of the radical elements who still try to work through the Democrats. The weakened position of the US ruling class and its inability to deliver has led to an intensification of the class struggle.

There is not just an economic crisis but also the legitimacy of capitalist institutions internationally. The US political system is dysfunctional. One billionaire spent $90 million backing candidates in the last US presidential election. Yet he is “now looking for a Republican candidate who has convictions but is not totally crazy”. The FT commented: “A more difficult task than it sounds.”

There are splits within both the Republican and Democratic parties. The confusion in the parties means the outcomes of both the mid-term elections this year and the next presidential elections in 2016 are not clear. The two-party system is in crisis with millions, particularly young people, alienated and looking for an alternative. The idea of a new mass radical or socialist party of workers will emerge at certain time. ‘Socialist’ senator Bernie Sanders is considering running in the presidential election. This could be an important step forward to such a party – although Sanders has damaged his image by voting in the Senate for funding for Israel during its war on Gaza.

Ty from the US showed the potential for socialists. The recent Left Forum had 6,000 participants. Kshama Sawant’s speech at this showed how to build a left force. This is the most favourable situation in decades for building a left alternative to the two-party system

Peter said that US capitalism’s remaining economic and military power is the reason why socialist successes like Kshama’s election resound internationally.

The US has been severely weakened, not least because of the blunders made by George W Bush and the ‘neocons’ post-9/11. They claimed then that the US had become the sole dominant power; the ‘Vietnam syndrome’ had been abolished. The CWI warned of the inevitable blowback, in the US itself and internationally. The US population is now more opposed to foreign adventures than after the Vietnam War, a mood strong enough to check Obama over the proposal to bomb Syria.

Kat Galea, Socialist Party (CWI in Australia)

Middle East in flames

Francis Fukuyama essentially had the same position as the neo-cons, with his theory of the “end of history”; the victory of permanent capitalist democracy. He now finds difficulty fitting this model into the realities of the Middle East and North Africa where we have seen mighty revolutionary events. We now see though a phase of counter revolution reflected in new dictatorial regimes in the region.

The CWI said the overthrow of Saddam Hussein in Iraq would lead to at least three new ’Saddams’ emerging, and this is unfolding. There is now likely to a Shia states in the south, a Sunni one in the central areas and a Kurdish state in the north.

Borders fixed 90 years ago have disappeared. The Economist wrote: “Iraq and Syria are no longer considered countries.” Marxists warned that intervention would give chances to the Taliban, Al Qaeda and now its stepson, the Islamic state in Iraq and the Levant (Isis).

Isis has defeated the Iraqi army, not because of its inherent influence or strength, but because former Baathists and other completely alienated Sunnis went over to its side. The largely Shia Iraqi army was not prepared to die for the corrupt and discredited Malaki regime.

The net result of US intervention is an arc of sectarian war from Pakistan to the Middle East and beyond, with incalculable consequences, not least for the unity of the working class, the only hope of escape from this impasse.

Our opposition to military intervention in Libya has been justified by the current disintegration of the country and rule by different warlords. There is no shortcut to advancing a programme which sees the working class as the solution to the current sectarian impasse. We should always seek to observe the class criteria: that foreign policy is only the continuation of home policy.

We have to remember that the initial impulse to the Arab Spring was primarily economic and social not religious. The alienation of the youth and the working class, driven by the incapacity of capitalism to solve the accumulated problems, drove the Egyptian and Tunisian revolutions which we predicted would break out, not least because of the dramatic rise in unemployment.

Even in Syria it was the drought of 2006-10, driving predominantly starving Sunni peasants into the burgeoning urban slums, which fuelled the 2011 uprisings. These were legitimate but, because of the absence of a socialist leadership, degenerated on sectarian lines.

The present vicious sectarian war is backed and fuelled by the Gulf States, primarily Saudi Arabia.

Desperate US imperialism, in a major somersault, has even turned to its former major regional Middle East opponent, Iran, for help in stopping the advance of Isis! This hypocrisy was justified by Lindsey Graham, Republican Senator: “We allied with Stalin in the past.”

However, the current catastrophe cannot undermine the example of the class battles of the past in Iraq where the Communist Party was once the biggest party, as was the Tudeh party in Iran, but both collapsed because of the false policies of their leaders.

The population, particularly the working-class, was, before the US invasion, integrated to some extent in the towns and villages. This is why mass demonstrations took place in 2011 alongside the other Middle East uprisings, with chants of “We are not Shia or Sunni, but Iraqis.” This mood was dissipated by the sectarian policies of those like Malaki and the lack of a mass working-class alternative.


On top of this absolute horror comes the new war between Israel and Palestinians. Hamas was isolated and the tunnels were shut down by the Egyptian regime because of its (and the Saudi regime’s) hatred of the Muslim Brotherhood, co-thinkers of Hamas. The fear of Netanyahu of a prolonged ‘occupation’ of Gaza is that Hamas is bad but the alternative of the growth of Isis-style organisations is worse.

Shay from Israel/Palestine explained that the dead end of war could not solve the Palestinian question. Even 52% of Israelis do not believe this offensive will stop rockets on Israel. There has been growing support for ‘Jewish Home’, the settlers’ party, which attacks prime minister Netanyahu from the right. There is huge support for attacks on Gaza because ‘something needs to be done’. Socialists want security too but explain that Israel is the main aggressor and this round of war has underlined the growing isolation of the Israeli government internationally. The growing anger in the West Bank has led to clashes, a general strike and a national demonstration called by representatives of Israeli Arabs. Palestinian prime minister Abbas has tried to act as middleman but is perceived as a collaborator while support for Hamas increased

Yet there are still many class issues in Israel with attacks on working-class living standards, around which socialists campaign.

Peter explained that President Sisi of Egypt is called the new ‘Napoleon’ because he acts in a Bonapartist fashion. He imagines himself as the new Nasser, the populist Egyptian leader of the 1950s/60s. But his pro-capitalist policies will not permit this. A new movement of the working class is inevitable in the future.

Our programme is for a socialist confederation of the Middle East which can cut across sectarianism on class lines.


Ukraine and Russia has been the other hotspot in world relations. The CWI adopts the same class criteria, seeking to emphasise the commonality of workers’ interests irrespective of their nationality. We cannot and should not support, even critically, Putin’s Russia regime and its alleged approach that it was fighting a ‘fascist’ government in Kiev, although far right and fascist elements are in the government. It was pursuing a policy primarily determined by the interests of the Russian state and those it represents, the oligarchic gangster capitalists.

Last year saw a genuine movement against oligarchs in Ukraine but no force able to give direction to the movement and so far right, nationalist and outside imperialist forces took it over. There is also the complication of the legacy of Stalinism to consider.

Initially, there were elements of independent movements of the working class in the creation of militias and independent councils but this was obscured by the presence of Svoboda, the Right Sector and fascists in Ukraine. But the far right’s real influence was shown by it winning only 3% of the votes in the presidential election.

We support self-determination for Crimea but ‘foreign liberation’ can ultimately undermine this. Only a democratic constituent assembly, convened by a united workers’ movement or a genuinely democratically controlled referendum, for example, can guarantee this in Crimea and South-Eastern Ukraine.

Neither do we support the Kiev regime. Robert Bechert in his reply explained that European powers were defending their own interests in Ukraine.

We always put forward a class-based programme in the interests of the working class – not just abstract unity on the national question but a concrete programme and demands – emphasising working -class solutions and internationalism.

The CWI, as Peter said, seek an independent working-class axis, even though they might be weak at this stage.

A new period of intensified conflict has arisen between the US and its allies, and Russia. The US also in its pivot towards Asia has increasingly come up against China’s attempt to assert itself, with its new economic strength.

China has clashed with Vietnam and Japan in territorial disputes. An armed clash, even a small-scale ‘war’ is possible.

Asia also faces economic slowdown and big upheavals. A number of comrades from Asia, including Jaco from Hong Kong, Isai from Sri Lanka and Xu from Malaysia outlined China’s growing economic influence in the region and the political, diplomatic and military clashes developing as China exerts its power. They also showed how China’s influence is impacting on the governments of Asia, with China backing the hated Rajapakse regime in Sri Lanka

Although Modi won a big election victory in India, the Indian economy has a falling growth rate of only 5%, half of what it was. Modi’s programme for the withdrawal of subsidies will provoke mass movements, already seen against rising railway fares.

In South Africa, the big idea of a new party has been taken up by the metalworkers’ union, NUMSA. This will become the main theme of the workers’ movement in South Africa as it develops. Weizmann from South Africa said the recent elections did not resolve a single problem for the pro-capitalist parties. The ANC only got 34% of votes from urban areas and faces the prospect of defeat in 5 out of 6 major metropolitan areas in looming council elections.

Peter concluded by emphasising that world capitalism is in turmoil and incapable of solving any problems: economic, social, environmental, war and peace. Socialism is knocking at the door of history. It may seem strange to say this when the active forces of socialism appear to be very weak.

Yet out of the chaos of capitalism today, mass movements will arise. Trotsky saw the socialist future through the horrors of the First World War and the inevitable outbreak of revolution, as did Lenin even though the latter thought it was a distant prospect.

Yet Lenin assiduously prepared the forces to intervene in this revolution. That is what we are about today. Then it would be possible to reach out to other socialist forces to establish democratic rule by the working class through a worldwide socialist confederation. The CWI must open a path to the best workers and youth.

There is a socialist world to win, which opens up a vista not just of plenty, but opportunities to develop all the talents of all peoples of the world. This is a perspective worth fighting for.

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