Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM

Economic Recession: Failure of Capitalism

Economic Recession: Failure of Capitalism

Working People Must Defend Living Standards

The Socialist Party of Nigeria (SPN) sees the Second Quarter 2016 report of National Bureau of Statistics (NBS) which officially confirms the sliding of Nigerian economy into recession as a bitter confirmation of the failure of capitalism and the incapacity of Nigerian ruling elites to move the nation forward. It has also further shown that there cannot be real, lasting change for the masses under Buhari government as there is no fundamental difference between the APC and PDP as they both support capitalism.

We call on the labour movement to reject and resist the current situation in which workers and the poor masses, who did not significantly benefit anything at the period of boom, are being made to bear the burden of the crisis of capitalism and failure of capitalist ruling elite.

The NBS reports that the “growth” rate of the Gross Domestic Product became negative, going down from -0.36 per cent in the first quarter of the year to -2.06 per cent in the second quarter, while inflation rose from 16.5 per cent to 17.1 per cent and unemployment rate increased from 12.1 per cent to 13.3 per cent.

Over a million jobs were lost between January and August 2016. Also over 272 firms have collapsed in the last one year, 50 of which are in the manufacturing sector. This has taken the unemployment situation to alarming levels with an army of young people, 54% of the youth population, without jobs of any kind.

Beyond those damning figures, the current crisis is seriously felt by the masses with rising prices of goods and services, increasingly high costs of living in a country where the masses have to largely provide for themselves the basic necessities (education, health, housing, water, electricity, etc.), job losses and worsening poverty.

It is clear all the capitalist policies being used to address the problem have failed. Already, there is an alleged clamour by the oil marketers for a new increase in petrol price despite about 65% hike in May from N87 to N145 under the guise of deregulation. The “flexible” exchange rate, which is euphemism for devaluation, has failed to attract the so-called investors over two months after its introduction. Naira is on a free fall against dollar and thereby triggering rising inflation. This worsening crisis of capitalism has meant that the so-called expansionary budget, albeit limited, cannot be implemented as the crisis gets deeper.

Yes, the current recession triggered by slump in crude oil prices, which account for over 95 percent of foreign earnings and 70 percent of government revenue, is a manifestation of the crisis of global capitalism in Nigeria. But the failure of the rapacious capitalist ruling elite in Nigeria in government at all levels, to build infrastructure, invest in agriculture and industry and provide for rainy day when oil prices were high, as a result of looting and mismanagement of huge resources, eliminates any possible buffers against the oil shock and makes the impacts to be severe.

For instance, the current situation in which at least 27 state governments owe workers’ salaries and pensions running into many months has much less to do with the declined oil revenue than the profligacy and mismanagement of resources at the period of oil boom by the state governors.

We therefore call on the working people and youth not to accept any call to continue to endure this suffering but rather prepare to defend our living standards. We must reject any attempt to increase fuel price, impose or increase taxes and implement any anti-poor policy. We have to struggle as capitalist politicians and bosses in private sector will only want to continue to preserve their outrageous pay and privileges while unleash the burden of the crisis on the poor masses. Also importantly, we also have to struggle against this deepening economic crisis in order to reverse the growing social crisis in the country.

We call on labour leadership to organize a series of mass activities including a 24-hour general strike, as first step, to demand payment of arrears of salaries and pensions, reject retrenchment of workers in both public and private sectors under the guise of failing economy, call for an emergency plan to address the unemployment crisis and demand immediate negotiation on labour’s demand of N56, 000 as the new national minimum wage.

We hold that these demands could be met if jumbo salaries and allowances of bloated political office holders are cut to the level of civil servants and wastages and leakages are stopped. But it would take firm revolutionary measures to rescue the economy from the clutches of the super-rich one percent for a decent life and a better future to be guaranteed for the working masses and the teeming youth population.

Over 90 percent of banks’ total deposits, according to Nigeria Deposit Insurance Corporation (NDIC), are owned by 2 percent of the population. Despite the recession for instance, billions of dollars continue to stay idle in the domiciliary accounts of the dollar billionaires – a tiny oligarchy with investment in oil blocks, banks and other juicy sectors of the economy. Yet the federal government is talking of borrowing to finance the budget when these funds, some of which are from illicit deals, could be plunged into reflating the economy.

We hold that government has not been able to mitigate the crisis because of its capitalist policies and philosophy. The economy would have been jumpstarted and jobs created if banks are nationalized under a democratic control of workers and consumers to provide cheap credits for agriculture, industries and small businesses, and public works departments are equipped and staffed for massive road constructions and infrastructure development. Nationalization of banks under democratic control would also ensure allocation of scarce forex to critical sectors of the economy. The power sector has to be re-nationalized under democratic control of workers and consumers to organize an effective electrification drive that will guarantee adequate supply for homes, workplaces and industries. Very important too is the urgent need to nationalize the oil industries including the International Oil Companies (IOCs) and place them under public democratic control and management in order to ensure that Nigeria’s crude oil wealth fully serves the interest of the working masses and not the profit of a few.

It is urgent that preparations start for a serious fight back. The trade union leaders must back up their calls for resistance with a sensitisation drive that includes the production of large numbers of leaflets, posters and the holding of mobilization rallies in workplaces, communities and campuses to prepare mass action. Rank and file activists must be fully involved and encouraged to take their own initiatives to build the campaign.

At the same time the roots of this worsening situation must be addressed and dealt with. We reiterate that the current crisis is a failure of capitalism. This much was said by the Academic Staff Union of Universities (ASUU) when it called for “a socialist welfare state” as a way out of capitalist crisis. Support needs to be built for a socialist alternative and therefore we call on ASUU and others in the wider labour movement to call a special conference of trade union, artisan, trader, youth and socialist organisations to discuss how to build a political movement to wrest political power from the capitalist ruling elite and enthrone a workers and poor people’s government armed with genuine socialist policies.

Chinedu Bosah
National Secretary, SPN