World Economy and Relations
World Economy and Relations
Global Crisis of Capitalism, Political and Social Consequences and Struggle for Socialism
National Committee Meeting
October 14-15, 2017
The global economy seems to have started emerging from the monumental crisis set off by the global financial crisis of 2008-2009 which is the most severe since the 1929 depression. In the last one decade there was no let off as the world economy is gripped by one crisis or the other: the subprime crisis, euro crisis, “submerging” emerging markets, the collapse of commodity prices especially oil and slowdown in China or what some commentators called fears of meltdown in China.
But now as the Economist magazine put it, in America, Europe, Asia and the emerging markets, all the burners are firing at once for the first time since a brief rebound in 2010. The vigour of the American economy is said to have partly made it possible for Fed (American Central Bank) to raise rates many times this year. Fears about Chinese overcapacity, and of yuan devaluation, have receded. Euro-zone unemployment is at its lowest since 2009. Prices of commodities especially oil have begun to pick up, though well below mid 2014 level.
The so-called emerging and frontier markets crushed by the collapse of commodity prices and slowdown in China have begun to show positive outlooks. Brazil has exited the recession it was plunged for eight quarters. Nigeria and South Africa, the two biggest economies in Africa have also emerged from recession. Indeed, IMF, in its World Economic Outlook released this month raised its global economic growth projection to 3.6 per cent for 2017, up from 3.5 per cent projected in July, citing accelerating economic activities in Europe, China, Japan, and the United States, as well as emerging markets in Asia. The Fund similarly raised its global growth projection for 2018 to 3.7 per cent from 3.6 per cent projected in July
Whether this is another false dawn is moot question. But what is disputable is there will be another dusk as capitalism cannot resolve the cyclical crisis of boom and bust. In any case, this is not even a boom but a recovery which is still very weak. Indeed, as a recent United Nations report put it this is more an indication of economic stabilization than a signal of a robust revival of global demand. The fact is that the growth is debt-fueled especially by China. So the recoveries are already pregnant with outset of another crisis. This has not been lost on the guardian angels of capitalism. Maurice Obstfeld, the chief economist of IMF in April took note of the risks of China relying too much on credit. He observed that, “growth [in China] has remained reliant on domestic credit growth so rapid that it may cause financial stability problems down the road”. “These problems could, in turn, spill over to other countries,” he warned. Already, according to Economist magazine, the world has had to shake off not one debt crisis, but three: the subprime crisis in America; the sovereign-debt crunch in Europe and then the bust in corporate borrowing in emerging markets.
However, the working people who were made to pay for the crisis of capitalism have not shared from the gains of the so-called recovery. This is a hard fact that even the IMF cannot ignore. In its World Outlook report released this month, it notes that nominal wage growth in most advanced economies remains markedly lower than it was before the Great Recession of 2008â€“09. It can be glimpsed from the report, albeit not stressed, that nature of the most of the jobs being created are what it is called “involuntary part-time employment” and temporary employment contracts, which are euphemism for casualization. This according to the report accounts largely for the slowdown in wage growth. Therefore, it would require struggle by the working people around the world to force some concessions from the bosses and capitalist governments.
Already, in the last decade the economic crisis has triggered political crises and instability across the world and remarkable political developments. Some have mellowed, even though the crisis of capitalism has not abated, as in Greece where Syriza has dashed hope of the working people of defeating the austerity unleashed by the troika. Remarkably, the betrayal of Syriza has not prevented the working people elsewhere who are discontented with the establishment from looking at direction of anti-austerity or anti-corporate parties and politicians such as Podemos in Spain, Bennie Sanders in America, Jean-Luc MÃ©lenchon in France and Jeremy Corbyn in Britain.
However, on the flip side was also the threat of the far right as in France and Austria as well as the victory of rightwing populist Donald Trump in the United States. The crisis has also exposed the limitations of the reformist left governments which came to power in Latin America around the turn of the century making right wing neo-liberal capitalist elements to regain confidence or ascendancy. The economic crisis also helped bolster support for separatist movements as in Scotland and Catalonia as self-determination struggles provide platform for the working people to spew deep-seated anger against austerity.
Britain and Corbyn Moment
Since Syriza, with Corbyn as the leader of Labour Party, there is high prospect of another party to be elected on the crest of anti-austerity program. Corbyn is riding high on the poll in Britain as his messages and program resonated with the working people and especially the youth. Though very radical in the current context, Corbyn’s programme was anti-austerity and mildly social democratic, objectively way to the right of the 1983 Labour manifesto which was a product of the support then for socialist demands within the Labour Party. Nevertheless, Corbyn’s opposition to neo-liberalism and offer of change evoked tremendous enthusiasm.
Among other things, he has pledged to bring the privatised utilities back into public ownership, scrapping the public sector pay cap, and abolishing fees for higher and further education. As a result, he has helped breath life back into the Labour Party. The last Labour Party conference in September and attended by around 8,000 people was its biggest conference in many years.
As Hannah Sell, the Deputy General Secretary of Socialist Party our sister organisation in England and Wales aptly put, it is anger at the increased inability of capitalism to meet the needs of the majority – while the richest 1,000 have doubled their wealth since 2010 – which is driving increased electoral support for Corbyn. It is also this which fills the capitalist class with dread that a Corbyn-led government would massively raise the expectations of workers and young people, who could then push such a government into going much further than Labour’s current, modest programme and threaten the existence of their crisis-ridden capitalist system.
It is absolutely clear that the capitalist class would do all they could to prevent a Corbyn government fully implementing serious radical measures in the interests of the majority. The experience of the Syriza government in Greece and the Mitterand government in France in 1981, which retreated from a left programme under the assault of the international markets, are two of many examples of how the capitalist class would behave.
This does not at all mean that socialist policies could not be implemented. With a determined movement of the working class and a clear-sighted leadership, the capitalist class would be unable to prevent a socialist government implementing its policies. Just as in Greece the outcome could have been entirely different had the leadership of Syriza not capitulated but shown the same determination as the Greek working class and poor.
However, the experience of a Corbyn government would urgently pose to wider layers the need for more thorough-going socialist measures, including nationalising the 100 or so major banks and corporations that dominate Britain’s economy, with compensation paid only on the basis of proven need in order, to be able to introduce a democratic socialist plan.
This would allow a socialist government to begin to manage the economy in a planned way under democratic workers’ control and management – that really would be “for the many, not the few.” To succeed in building a society for the many not the few it is necessary either to transform Labour into a party that fights for such a society or to create one which will.
As a step to begin to transform Labour to such a party, comrades in England and Wales have called on Jeremy Corbyn to urgently put his full weight behind a programme to democratise the Labour Party and build it as a genuinely socialist force. He should appeal to the party’s membership and to the working class over the heads of the right wing party machine to ensure that a new democratic constitution is put in place. This would have at its heart mandatory reselection (the right of recall) and the replacement of the pro-capitalist elements still in key positions in local governments, parliaments and the party apparatus, so that power rests in the hands of the membership, not least new members and the trade unions. The measures should also include opening up the party to all those expelled and a return to a genuinely federal form of organisation that would include the right of the Socialist Party (CWI in England & Wales) to affiliate.
Spain and Self Determination in Catalonia
The agitation for right to self-determination of the Catalan people came to a head with referendum on October 1 which was visited with terror by the Spanish state. The physical assaults of unarmed voters including old women by the police that were beamed on televisions and internet around the world from the polling centres in Barcelona and other Catalan cities show that capitalist state with its apparatus of repression is fundamentally the same everywhere regardless of whether in the west or the third world countries. On the same day, about 11 people were reportedly killed in Southern Cameroon where the minority English speaking people are agitating for an independent state. Few days earlier, Nigerian government sent troops and tanks to Southeast Nigeria to crush the agitators for independent state of Biafra under the guise of a military operation against armed robbers, kidnappers and other criminal elements. Moreover, the development in Spain underscores the inability of capitalism to resolve the nationality questions not only in neo-colonial countries but also in advanced capitalist countries.
However, October 1 also saw the resolve of Catalans to exercise their rights to self-determination in the face of state terror. The following days also saw hundreds of thousands pouring on the street in a massive movement including a general strike to defend the right. Despite this, the Spanish state has continued to maintain the conduct of the referendum is unconstitutional. The reactionary forces using all methods at their disposal, and with the absolute monopoly in the media and the state apparatus, have launched a rabid campaign combining Spanish nationalism and exploitation of fears of what independence would mean to mobilise their social base. Therefore, there have been also massive protests in Barcelona and Madrid against the independence of Catalonia. The capitalists in dread of the revolutionary character the struggle has assumed have started relocating headquarters of companies out of Barcelona in order to break the resolve of the Catalan people.
Carles Puigdemont, Catalan President and his party PDeCAT have developed cold feet failing to declare the independence of Catalonia as mandated by results of the referendum. But as comrades of the CWI in Spain (Izquierda Revolucionaria ) explained the turn towards independence of Puigdemont, PDeCAT and the Catalan parliament represented, at the time, a political manoeuvre to divert attention from their policies of cuts, and to neutralise the great social response that had been unleashed against them in the streets of Catalonia. However, the movement of the masses that has opened a revolutionary crisis that threatened the Spanish regime has completely surpassed Puigdemont and PDeCAT. Therefore, the big confusion at this time in Catalonia is because of the absence of a left leadership that poses a class position to give a way out to this revolutionary crisis in benefit of the majority of the population and set an example to follow to workers and youth in the rest of Spain.
The comrades have further argued that a Catalan republic won through revolutionary action would necessarily involve a frontal struggle against the PDeCAT and Puigdemont, against all the political and economic oligarchy that has governed Catalonia with the same neoliberal policies as the PP (the Spanish ruling party), turning the battle directly against capitalist oppression through mass action. It would open the door to a government of the left that should immediately end cuts and confront the dictatorship of the Catalan and Spanish economic powers, nationalising the banking and the big companies.
The comrades have called on the leadership of the CUP, Podemos [“We can”], and Catalunya en Comu[The Commons], ERC, the student movement and their organisations (Sindicat d’Estudiants, SEPC), the workers’ movement and their unions in Catalonia, to establish a left united front. This should be based on the Referendum Defence Committees and on all the bodies that have been emerging these weeks in Catalonia, to organise committees for the republic in workplaces and factories, neighbourhoods and schools and colleges and coordinate them to boost the movement with increasingly bold actions, preparing an indefinite general strike capable of resisting any violent action by the state and winning a Catalan republic with a left government. This left front must break any subordination to the Catalan right, the PDeCAT or Puigdemont, and must call for the active solidarity of the workers’ movement and youth in the rest of the Spanish state as part of building a movement in favour of the oppressed, against the domination of the capitalists, against the established social order and for a socialist republic in Catalonia and a socialist republic based on a free and voluntary union of peoples and nations that currently compose the Spanish state.
An international campaign by capitalist politicians and media has been unleashed against President NicolÃ¡s Maduro’s Venezuelan government. It has been used by Labour’s Blairista right wing to try to weaken Jeremy Corbyn. In Spain, the spectre of Venezuela has been held up as a warning of what a Podemos-led government would mean. Across Latin America this campaign has been conducted for a longer period of time to try to discredit the idea of socialism, with Venezuela presented as ‘another socialist failure’. In a Nigeria which is also experiencing its worst economic crisis in 25 years as a result of slump in oil prices, the crisis in Venezuela is used by right-wing commentators as a cynical riposte to any suggestion of socialist alternative as a solution to the current crisis. This is against the background that the situation in “socialist” Venezuela appears much worse than what obtains in Nigeria.
Socialists need to draw a balance sheet of the current devastating crisis in Venezuela in order to draw crucial lessons and to answer the propaganda of the defenders of capitalism. They hope that their claim that socialism has failed will have the same effect as the collapse of the Stalinist regimes â€“ bureaucratic dictatorial regimes based on nationalised planned economies – 1989-92. However, the situation is entirely different. Then, the capitalist world economy was growing. Today, there is a global crisis and the working class has experienced harsh neoliberal policies and austerity. Even so, the capitalist propaganda will have a certain effect, especially in Latin America and some other countries.
There is a catastrophic economic, social and political crisis in Venezuela. This has developed not because of a failure of socialism but as a consequence of the failure to break conclusively with capitalism and introduce a democratic, socialist, planned economy. That would need to be linked up with the working class in other Latin American countries to establish a voluntary socialist federation which could act as a counterweight to imperialism. The tragedy of the current situation is that the opportunity to break with capitalism did exist in Venezuela and some other Latin American countries, especially Bolivia and Ecuador. The opportunity was lost.
Coming to power in 1999, the ChÃ¡vista regime implemented reforms which benefitted the working class and poor by using funds from the country’s nationalised oil industry. The government was pushed to the left under pressure from the masses but, despite its adoption of socialist rhetoric, ChÃ¡vez and Maduro have left the bulk of the economy in the hands of the capitalists. With the 2008 economic crash and subsequent slowdown in China, the basis for ‘oil socialism’ was undermined and social spending cut.
The CWI warned of this threat early on. In an article, Venezuela: The Revolution in Danger (Socialism Today No.115, February 2008), we pointed to important lessons from history: “While the reform programme has been financed largely through the rising price of oil, this can change with the onset of a crisis in the world economy. This can trigger a fall in oil revenue and result in the rolling back of the reforms. Between 1974-79, the left-of-centre nationalist, populist regime of Carlos AndrÃ©s Perez introduced some significant social reforms which were paid for by rising oil prices. By 1979, oil had reached US$80 per barrel. Yet these reforms were wiped out in the 1980s as a major economic crisis hit Venezuela following a crash in oil prices to US$38 per barrel. Those living below the poverty line rocketed from 17% in 1980 to 65% in 1996. This is a warning to ChÃ¡vez and the working class if capitalism is not replaced by a democratically planned socialist economy”.
In Venezuela, socialists are confronted with an extremely complex situation arising from a failure to complete the socialist revolution and break with capitalism. It has provoked much discussion and debate, including among the revolutionary left. There can be no question of socialists supporting the capitalist reactionary opposition led by the MUD with the support of imperialism and international capitalism. At the same time, it is necessary to oppose the policies, programme and methods of the Maduro government.
To solidify his position, Maduro called elections to a Constituent Assembly to draft a new ‘revolutionary’ constitution. In reality, the elections to the constituent assembly were not a step to drive the revolution further forward. It was an attempt by a corrupt bureaucratic caste to try and cling onto power when faced with a threat from an even more degenerate and corrupt section of the ruling class â€“ which has been strengthened by the failures of the Maduro government’s economic and political programme.
In any event, constitutional tinkering cannot resolve the crisis facing the Venezuelan people and fend off the threat of the right. That will require a break with capitalism and the adoption of bold socialist policies, including the nationalisation of the banks and all key sectors of the economy under democratic workers’ control, the development of a plan of production to meet people’s needs, a state monopoly on foreign trade and a moratorium on the national debt. The CWI in Venezuela is campaigning to build independent organisations of the working class to fight for this programme.
The series of North Korean bomb and missile tests and the bellicose reaction of the US, underline the volatile and dangerous situation in the Korean peninsula and entire region. Many people in the region and across the world are understandably fearful that the aggressive actions of the US and North Korea’s arms programme can lead to armed conflict, by design or ‘accident’, and even nuclear war. The thought of an armed exchange that would affect the whole planet â€“ a ‘nuclear winter’ – costing untold lives and environmental destruction, rightly horrifies millions.
Appalling as North Korea’s weapon programme is, it is nothing compared to the 7,000 nuclear warheads the US superpower possesses. And the US is the only country to have ever used nuclear weapons, on the Japanese cities of Nagasaki and Hiroshima, in 1945, killing hundreds of thousands. While Trump condemns North Korea’s threat to “world peace”, it is the US imperialist superpower that has unleashed over 6,000 bombs in several countries, so far, in 2017, killing thousands of innocent poor civilians.
Both China and Russia border North Korea and are vying with the US in the Eurasia region. They criticise Pyongyang’s nuclear arms programme partly because it gives US imperialism the pretext to vastly increase its military power on the Korean peninsula. At the same time, China and Russia steadfastly oppose severe sanctions, including oil embargoes, as they could lead to social chaos in North Korea or even the collapse of the Pyongyang regime, with millions of refugees entering China and even Russia. They fear the end of the North Korea ‘buffer’ would see a US dominated ‘reunified’ Korea, with weapons of mass destruction on their doorsteps pointed towards them.
Whatever sanctions might be brought to bear on North Korea â€“ for which working people will suffer the most â€“ the Pyongyang regime regards nuclear weapons as its only real bargaining chip and chance to survive. Apparently, to rein the North Korea or force it to the negotiation table, China has issued ultimatum to the North Korean companies operating in the country to leave China. Trade with China is the major lifeline for North Korea
Also in the long run, the US will most likely have to face the prospect of entering negotiations with North Korea and reaching some sort of deal to try to “contain” nuclear-armed North Korea. The Washington Post reports that the United States and North Korea have maintained “a quiet diplomatic channel over the past months that could be used to set up more substantial negotiations”.
However the only way to ensure long term peace and stability in the region is for the development of strong international working class opposition to the aggression of the Trump administration, against militarisation of the Korean peninsula and for the scrapping of all nuclear arms worldwide. Linked to this, is the struggle to fundamentally change society – run for people’s needs not profits – by the working class across the Korean peninsula, the region and the US. The unification of Korea on a genuine socialist basis, and the creation of a voluntary and equal socialist federation in the region, would see an end to class exploitation and wars.
A growing flashpoint in Africa is the mass uprising which has erupted in Togo in the past three months. Each protest has drawn tens of thousands of people into the streets marching essentially against Gnassingbe Enyadema dynasty, who has ruled the country for over 50 years. The protesters are demanding the resignation of President Faure Gnassingbe the son of Eyadema Gnassingbe, who ruled the country from Independence for about 40 years, as step towards genuine multiparty elections. Faure himself has been in power since 2005.
According to media reports, authorities have often responded to the protests by blocking mobile and internet communication. There were also crackdowns by security forces, leaving several people dead.
In Lagos two members of Democratic Socialist Movement joined solidarity protest and picketing of Togolese Embassy in Lagos forces organized by some left, socialist and Pan-Africanist groups on Friday, 6th October, 2017. The solidarity protest which also had some Togolese living in Nigeria was less than 20 people. Though small in number, it shows the potential of organizing of much bigger solidarity actions in support of the Togolese people.
However, as experience in other countries has shown the so-called multi-party democracy or credible election, though desirable, cannot guarantee improvement in the conditions of ordinary Togolese people. Therefore, struggle for democratic rights must be linked to the struggle to defeat capitalism, particularly the neo-liberal variant which currently dominates neo-colonial Africa and the basis for the ruthless dictatorships and economic deprivation in Togo.
The situations around the world have underscored the incapacity of capitalism to guarantee decent quality of life for the vast majority despite enormous human and material resources. In economy or in environment it is a disaster capitalism has wreaked on the working people despite the pretences of the defenders of the iniquitous system. The last decade has seen austerity and neo-liberal attacks around the world attracting varying resistance of the working people. The current “good” tiding from the institutions of capitalism that the worst is over will likely provoke more working people into action demanding their own shares from the reported gains. Sections of the CWI have continued to intervene in different countries mobilising resistance against different capitalist attacks and building socialist forces that would lead the mass of the working people to defeat capitalism.