A decade ago, following the worldwide financial crash, a Financial Times editorial congratulated capitalism on a bit of luck that “the left” was “missing in action in what should have been its finest hour. In the deepest global downturn since the second world war, no blueprint for a fundamentally different method of organising the economy has been proposed.”
Capitalism was in a dire crisis, resulting in the impoverishment of many millions of people worldwide, but ruling elites had a crumb of comfort to cling to – the hope that their system would survive because of lack of a mass alternative.
While it survived, it did not recover. It was shaken by mass movements – including general strikes in several European countries and a revolutionary wave that swept North Africa and the Middle East. Nor did the ‘great recession’ that followed the financial crash give way to healthy growth. On the contrary, all of the underlying fault lines which led to the 2008 financial crash remained.
Worldwide trillions of dollars were pumped into the financial system to prevent collapse. This, however, was ‘socialism for the rich’. The banksters and financiers that had triggered the crisis were rewarded while the working class in Britain, the US and elsewhere suffered the longest period of pay restraint since the 19th century.
Wages stagnated and levels of investment in developing science and technique remained at historic lows. Instead, the ‘masters of the universe’ rewarded themselves. In the US for example, Fortune 500 companies (the top 500 US companies) have repurchased more than $3 trillion worth of their own shares.
These buybacks were used to reward big shareholders and fatten executive pay packages. Meanwhile, levels of corporate debt soared. Even before the Covid crisis erupted, capitalism was an ailing system heading towards a new global downturn.
The pandemic has been a huge additional shock, laying bare the sickness of capitalism. Once again, a handful at the top has done very nicely out of the prevailing misery. In the US the wealth of 643 billionaires has increased by a third since the start of the pandemic, equivalent to $4.7 billion a day.
At the same time, 50 million Americans have experienced losing work and 37 million do not have enough to eat. More than 200,000 have died from Covid-19, with the poorest sections disproportionately affected.
Vast sums have been pumped into the economy by governments – far greater even than 2008 – in an attempt to put a floor under the crisis. And once again that has had a certain effect, but will not prevent a devastating global economic slowdown, which can only be worsened by the developing second peak of the virus.
While there has inevitably been some recovery from the unprecedented economic slump that took place when most countries were in lockdown, attempts to paint that as a vigorous ‘V-shaped’ recovery are laughable.
On 10 April, this year, the World Bank estimated that global production was 20% lower than it would have been without Covid-19. By September, Goldman Sachs estimate it had soared; but remained a gigantic 8% below where it would have otherwise have been.
This is a far deeper crisis than in 2007-08. Back then, the major capitalist powers cooperated in order to defend their system. As the Committee for a Workers’ International (CWI – the socialist international organisation to which the Socialist Party is affiliated) predicted, since then, inter-imperialist tensions have enormously intensified.
The crisis of capitalism and the decline of US imperialism – which while still the most powerful country on the planet is no longer able to ‘call the shots’ – has led to the situation today, where the crisis is exacerbated by the lack of a coordinated international response and growing tension between the different regional blocs, above all China and the US.
The severity of the crisis, combined with the already unhealthy debt-laden character of many companies, has resulted, for example, in predictions from the European Commission that one-quarter of all European companies with more than 20 employees will be facing insolvency by the end of the year, even without the consequences of a new upsurge in Covid-19 cases.
In economically developed countries, capitalist governments have racked up massive debts to help keep such companies afloat via various subsidies and loans.
They cannot afford to do so indefinitely, however, and at some stage will try to make the working class pay for the debts they have accrued.
The capitalists are also worried about the political consequences of their actions. That is what Tory Chancellor Rishi Sunak meant when he talked about it being ‘unhealthy’ for the furlough scheme to continue for too long because it stops workers getting used to the ‘jobs market’.
The Tories, like all capitalist governments, want workers to accept the misery of unemployment as a ‘natural disaster’ that cannot be prevented. The Tories inadequate replacement for the furlough – the Job Support Scheme – will not prevent a huge leap in unemployment. It will not be accepted as natural though. Millions will put the blame squarely on the Tory government and the capitalist system it defends.
Capitalists’ ‘luck’ running out
Right now, the strategists of capitalism globally may be hoping that they will have the same bit of luck in the coming decade as they had in the last: the absence of mass workers’ parties offering a clear socialist alternative to capitalism. There is every prospect, however, that this time their luck will run out.
Over a decade of capitalist austerity has undermined the authority of all the institutions of capitalism, leaving the global elite in a far weaker position today than a decade ago.
In a number of countries, the capitalist politicians who have been able to win elections are right-wing populists – like Trump and his ‘Poundland’ version Boris Johnson – and are not reliable representatives of the interests of big business.
The Tories selected Johnson as the only candidate they thought could win them a general election victory. He fortuitously did so. But despite the size of his majority, the government is very weak and crisis-ridden, and has made countless U-turns.
From having been the golden boy of the Tory party rank and file, according to ConservativeHome, Johnson is now ranked 24th out of 25 members of his cabinet, with only the education secretary Gavin Williamson, faring worse.
Johnson could be out on his ear before long, but the deeply divided Tory Party has no unified idea of who should replace him or what they should stand for.
US capitalist chaos
A clear majority of the US capitalist class would prefer Democratic Party candidate Joe Biden to win a decisive victory in November’s election.
Biden, however, offers nothing for working-class Americans other than not being Trump. Even before the extra layer of unpredictability added by Trump’s Covid-19 diagnosis, the outcome of the US election was highly unsure. It is certain, however, that it will open up a new period of crisis and instability for US capitalism.
If Trump claims victory, particularly if he hasn’t clearly won, the protests against him will dwarf the women’s rights marches which followed his election in 2016.
If Biden wins, Trump is likely to claim the election was rigged, further whipping up his support base, including far-right armed gangs like the Proud Boys. These forces, while dangerous, remain relatively small, but there is nonetheless a growing polarisation in society, with many stripes of right and far-right groupings growing in confidence.
That does not mean, however, that the right will be the dominant force in US society in the next period. Clearly mass movements would erupt against a second Trump term.
However, a Biden presidency would not lead to social peace. Like Obama and Clinton before him, Biden would act to defend the interests of the capitalist class. Against the background of an economic and environmental crisis, mass working-class movements would be on the agenda. More than 70% of millennials in America say they would vote for a socialist, reflecting a search for a left alternative among broad sections of US society.
Right now, of course, there is an almost global absence of mass left parties of any kind. The wave of global struggle in the aftermath of 2008 threw up attempts to create such parties in numerous countries – including the election of Corbyn as Labour leader, which he rightly put down to the effects of the financial crisis.
Support for left-wing presidential hopeful Bernie Sanders in the US came from the same cause. Corbyn has, however, now been replaced by Keir Starmer, who is quickly moving to jettison Corbyn’s anti-austerity programme, saying that Labour must “fundamentally rethink” what to “offer the electorate”.
Sanders is campaigning for Biden. Syriza – the anti-austerity party elected in Greece in 2015 – went on to capitulate to the institutions of capitalism and to implement austerity. At the same time, the majority of trade union leaders worldwide have failed to lead serious struggles in defence of their members’ jobs, pay and conditions.
There are therefore serious obstacles to fighting back, but they have not prevented struggle taking place. In recent months alone there have been numerous powerful mass movements, made up largely of the working class and poor, in different countries around the world.
Black Lives Matter has swept the US, Britain, and many other countries. Lebanon, Belarus, and Thailand are among the countries where the elites have been shaken to their foundations as a result of uprisings from below.
Capitalism in the coming years is going to offer a diet of unremitting impoverishment – including mass job losses and evictions, plus instability and environmental destruction.
In response, there is no question that wide sections of the working class and young people will struggle in defence of their interests, sometimes in semi-spontaneous movements, sometimes forcing the trade union leaders into battle. Against weak capitalist governments, they can win victories – as the A-level students in Britain recently demonstrated.
Finding a ‘fundamentally different method of organising the economy’ is going to be urgently posed. The failure of the last round of attempts to create new left parties flowed ultimately from their leaderships’ attempts to compromise with the defenders of capitalism, rather than fight for fundamental socialist change. The need to fight for the independent organisation of the working class in every battle, including mass parties that stand for the socialist transformation of society, is clear.
The Covid-19 crisis has demonstrated beyond doubt the lie of the last Tory government that there is no ‘magic money tree’. To save their system the Tories – like capitalist governments around the world – found unprecedented sums of money overnight.
In this profit-driven capitalist society, however, the priority is saving profits not lives or livelihoods. In the US, for example, the government Paycheck Protection Program gave out more than $500 billion in loans to businesses over six months, allegedly so the government could save jobs. They saved a puny 2.3 million jobs, while 40 million workers filed for unemployment. That works out as over $500,000 per job!
In Britain, Sunak tells workers to get used to the ‘new normal’ of unemployment but takes a very different approach to big business. EasyJet, for example, was given access to more than $750 million in government money in April, even though the airline had paid out nearly $230 million in dividends to shareholders just a month earlier.
Only by taking decisive socialist measures will it be possible to harness the enormous wealth, science and technique that capitalism has created through the labour of the working class, to start to meet peoples’ needs, and to safeguard the environment.
That would require breaking with profit-driven, ailing capitalism and taking the major corporations and banks which dominate the economy into democratic public ownership, allowing the development of a democratic, socialist planned economy in Britain and internationally.
The priorities of a socialist economy would be decided democratically. Instead of filling the coffers of corporate chief executives, priorities would include providing a real, living income for all, mass building of high-quality and carbon-neutral housing, and creating and expanding decent public services, health care and education.
As the Financial Times made clear back in 2010, the capitalists fear above all that such socialist ideas – put forward by the Socialist Party and CWI worldwide – will gain mass support. In the coming era, their fears will be realised.