Draft Theses on the Crisis and World Situation

Greek Youth February 2010

1- Objectively we are living through a major structural crisis of global capitalism. We said when this crisis hit in mid 07 that it was a major crisis of falling profits endemic to capitalism. The subprime crisis was only a surface effect of the underlying failure to invest in production that was not profitable. So-called ‘financialization’ is just the appearance of ‘finance capital’ (understood in Lenin’s terms as the fusion of industrial and banking capital) being driven out of the productive circuit by the tendency for the rate of profit to fall. The result has been many trillions of overproduced surplus capital speculating in existing commodities driving up their prices and creating a bubble of fictitious capital. The crisis will only be resolved for the ruling class when they have devalued sufficient surplus capital to enable profits to be restored.


2- The first phase of the crisis brought about the biggest rescue of capital by the state in history yet the crisis is not over and capital is still facing trillions of bad debts which have yet to be devalued or destroyed. Nor have the ruling classes yet imposed the deep austerity measures that they need to restore their profits. The initial reaction to the 'financial crisis' was to increase state spending i.e. reflation. According to Ticktin, however, this year the G20 made the decision to reverse reflation and radically deflate by massively cutting state spending to reduce budget deficits. Only the US resisted this change, probably because the US is not bound by the normal rules and can run massive debts because the dollar is the world currency. The logic of a structural crisis as the ‘solution’ to falling profits is to ‘restructure’ or devalue capital – both constant (plant and raw materials) and variable capital (wages) - by concentrating and centralising capital as the weak firms go bankrupt and strong firms buy up their cheap assets. This means necessarily in the epoch of imperialism a growing rivalry between imperialist powers to re-divide the world in the survival of the fittest monopoly firms. This rivalry takes economic form in trade rivalry as each state attempts to block imports but increase exports, but this rivalry can only be resolved by imperialist war or international class war. Today at this point in history this rivalry is most intense between the US led bloc and the China bloc, and it is this growing antagonism that gives concrete expression to the dominant aspects of the epoch of imperialism, of crises, wars and revolutions. Once again a structural crisis means we have to choose between socialism or barbarism and we are well down the road to barbarism.


3- The so-called currency war is a first step in a trade war with China that the US cannot win because China's low labor costs combined with rapid technological upgrading means it is the most productive of commodities with least labour time (value) and can out-compete its rivals. China has overtaken Japan and Germany as the workshop of the world and cannot be beaten in the trade war. The value of the yuan is therefore not artificially kept low but reflects China’s capitalist productive dynamism. What is more China is moving rapidly from a capital importing country to a capital exporting country which means it is extending its high productivity base globally in sourcing cheap raw materials and labor power and finding new markets outside the US and Asia in which to manufacture and sell its cheap commodities.


4- China is winning the trade war and rapidly expanding its spheres of interest at the expense of the US and its main partners the UK, France and Spain. A number of countries have avoided the worst aspects of the recession through trade driven by China. US allies like Italy, Germany and Australia are trading and investing heavily with China. Turkey is turning from the EU towards China. In Brazil one fraction of the national bourgeoisie is opposed to further growth in China investments especially in agriculture and in key sectors such as communications. The ALBA states are becoming dependent on China and looking for new loans to maintain popularity with the masses. In Ecuador, Correa is doing deals with China to build dams and infrastructure and loan money to balance the budget. The recent attempted coup was a weak move by the US to exploit discontent with Correa’s move to the right, which was not to appease the US but rather China which is driving hard bargains with Ecuador.


5- This growing rivalry with China and the increasing power of the China bloc (which threatens to split NATO) means that the US must rev up its use of military force around the world to counter China’s influence. Its struggle for control of Central Asia that has justified the invasions of Iraq and Afghanistan has not been able to contain or weaken China or Russia. Russia is now looking to collaborate with NATO in its military intervention in Afghanistan.The wikileaks exposed the fact that Iraq was always under the dominance of the Shi’ites. Kazai gets money from Iran and seeks a deal with the Taliban. The dominant national blocs in Iraq and Afghanistan are aligned to Iran and Pakistan respectively, both of which are closer to the China bloc than the US bloc. Therefore the US must move on Iran and Pakistan to squeeze out China. The US is renewing its plans for building the TAPI pipeline from Turkmenistan through Afghanistan and Pakistan to India to weld an alliance in South Asia to break Russia and China’s domination of Central Asian oil.


6- The growing US drone attacks on Pakistan mean that the US wants to take direct control of Pakistan to isolate its nuclear weapons and to checkmate China’s overland access to Arabian Gulf and Iran. Bangladesh has now been incorporated into NATO South Asian allies and is sending troops to the war in Afghanistan. In the growing military confrontation over control of Central Asia the nuclear armed India is being pressured by the US into buying Patriot 3 missiles to complete the ring of missiles surrounding Russia and China stretching from Japan to Afghanistan. India is also preparing for border wars with China over Kashmir and Nepal. Bangladesh is now part of the encirclement.


7- Ultimately, and inevitably these actual and impending wars must be at the expense of the workers of the world. The huge cost of military spending is driving the US further into debt. While it is still reflating with Quantitative Easing Mark 2 (printing money) this money is going to the banks which are not investing but paying out profits and bonuses. It is not going to the workers who are still losing jobs and homes. With reflation causing inflation the US working class is suffering an historic decline in living standards not seen since the 1930's. The US is bullying Japan and China to carry the debt which becomes translated into attacks on workers living standards in these countries. China is easing back on buying US bonds and shows no signs of bending to any of the threats being issued by the US. It appears instead to be moving to more FDI in the US. Japan is more compliant but unable to finance US debt as its economy is not strong enough. Japan under the Democratic Party government is under pressure from Japanese workers opposed to paying billions for US bases.


8- Thus the US and other increasingly bankrupt imperialists have no option but to impose the cost of the crisis onto the backs of the worlds’ workers with so-called austerity measures. The bailouts of the banks has imposed big budget deficits which the ruling class is determined to cut by cutting social spending and/or by “quantitative easing” both of which cuts the value of variable capital (wages). The US, UK and EU imperialist states are forcibly expropriating surplus value not only from workers today, but from workers in future generations, to maintain the monopoly profits of their imperialist classes. This means massive unemployment and social spending. These so-called austerity measures are draconian. In every country the ruling class is trying to solve its crisis of falling profits by reducing taxes on capital, and this means massively cutting social spending on the social wage. In Britain the Conservative-Liberal Democrat Coalition government is promising a cut in public sector spending in excess of 20%. In Greece, Spain, Portugal, Ireland and France there are major cuts on social spending being imposed on workers.


9- As unemployment rises and services are cut, the anger of millions of workers facing poverty and destitution is growing. But this anger is being steered by the main union bosses into token protests to build mass pressure to push the bourgeois regimes to the left containing and diverting the rise of working class militancy onto the parliamentary road. Where the social democratic parties are in power imposing austerity as in Greece and Spain, the fight-back is being limited by the unions to pressuring these governments to make these austerity measures less damaging. In the US where the open bourgeois Democrat Party controls Congress and the Presidency, the One Nation Project is being organized by the union tops to put pressure on the Democrats to adopt a new deal Keynesian counter-cyclic policy. Where they are out of power, social democratic parties are shifting slightly to the left to head off mass militancy against the ruling conservative parties, so that this fightback is contained and channeled into the election of Social Democratic governments at the next elections. In Britain the Blairite Labour Party under Ed Milliband has feinted slightly to the left in recognizing that if the CONDEM regime cannot contain a mass fightback and is brought down, then social democracy can still try to play a role in containing militant industrial action from developing into a revolutionary challenge to the bourgeois system itself.


10- These social democrats or left liberals are arguing that austerity is a wrong policy since it leads to deflation and depression. They hope to direct workers anger into social democratic and left liberal programs that can solve the crisis. In Britain the fake left SWP (see New Left Blog) argues that the CONDEM austerity is not necessary for the restoration of profits! Of course this exposes their non-Marxist view that capitalist crises are merely the result of wrong policies and elite greed. Marxists know that capitalist crises are the inevitable result of capital over-accumulation, and while reformists sow illusions in the possibility of reflation to boost jobs and incomes, crises can only be resolved in the bosses’ interests by massive deflation. The crisis forces a devaluation of total capital by destroying the weakest banks and firms allowing the strongest to concentrate and centralize their ‘good’ assets into even bigger monopolies. We can see this has been happening since 2007. It is not in the interests of Morgan Stanley, HSBC, Citibank etc., as well as the big Euro banks and big Chinese banks, to resort to reflation if it devalues the good assets and prevents the devaluing of bad assets. These gigantic monopolies completely control their nation states and dictate economic policy to protect their class interests. This is why the bailouts have gone into bosses’ pockets and not into new investment in production. This means that the ruling class will close ranks behind their national states in defence of their monopoly corporations and make the weakest firms, nations, and of course workers, go to the wall.


11- The result is that the destruction of total value to restore profits includes the total value of labour power through job losses and wage cuts. Thus it is the working class that ultimately always pays for the crisis. As the austerity bites we can see the spontaneous fightback spreading from Greece to Spain, to France in the EU. From the first strikes that began in 2008 in Greece we have seen a succession of strikes controlled by the bureaucracy. In Spain it is the same, no strike call has lead to a national coordination of strike actions, or an indefinite general strike. Not until France have we seen the strikes spread and threaten to break out of the control of the bureaucrats. Yet, even here we do not see a breakdown of bureaucratic control, because no revolutionary leadership has emerged that can turn spontaneous strikes into a general strike to bring down the bourgeois government and put a workers government in its place. The fake Trotskyists of the NPA say that they will not call for a general strike and will back the negotiations between the bureaucrats and the bourgeois regime. (Le Monde).The IMT calls for a general strike to defeat the government and paralyze the economy, and for the Communist Party to demand the nationalisation of the big companies and the banks!


12- The objective dynamic of worsening crisis clashes with the subjective absence of a revolutionary leadership to lead the working class to solve the crisis in it class interests. The failure to build this leadership will mean that working class struggle is unable to challenge the power of the ruling class, leaving the middle classes who are also hit by the crisis and the more backward non-unionized sectors of the working class. They will be ripe for fascist mobilization to smash the workers organisations blaming them as responsible for the flood of migrant workers, and for the loss of jobs and the austerity measures rather than the capitalist class itself. In France while the unions mobilise strike action there is almost no organized opposition to Sarkosy’s campaign of forced extradition of Roma and the ban against the wearing of Burqa in public. It is clear that the bureaucratic leadership of Labour and social democratic parties are part of the national salvation blocs that are always formed by the imperialists and national bourgeoisies to unite workers and middle class with the bourgeoisie against foreign workers and against the international threat of a socialist revolution.


13- In the face of mounting evidence of man-made climate change and big changes in weather patterns that cause devastating floods and crop failures, the climate change denier lobby is working for the corporates to inflame the populist petty bourgeois and backward workers into blaming carbon taxes on profits as more taxation of the little person by big states. The oil giants like BP can still get away with massive destruction in wars for oil in the Middle East, and a catastrophic oil spill in the Caribbean and pays only a small part of the social and environmental costs of such capitalist disasters. Here we see the full face of capitalism riding roughshod over national states to destroy the forces of production including the habitat of whole populations as in Pakistan and in the Gulf of Mexico. And while China is now leading the world in ‘green’ technology, it is still building dams and nuclear plants, rail-tracks through tundra and forests around the world, high speed rail even in California, cultivating vast tracts of agricultural land despoiling natural habitats in Brazil and Tibet, enlarging its carbon footprint with each giant step around the world.


14- We can see the proto-fascist movements already in existence. In Britain the national salvation bloc is the Bj4Bw campaign of 2009 which sought to protect jobs for British workers against other EU workers. This puts the British trade unions in the same reactionary national camp as the BNP and other extreme right forces. In Germany and the Netherlands there are proto-fascist organisations campaigning against migrant workers, especially of Islamic religion. Germany has had a backlash against immigrants and bailing out Greece. Merkel has called ‘multiculturalism’ a failure. The EU is in danger of being torn apart by the centripetal forces of the bipolar world into rival xenophobias. In the US the Tea Party is a rightwing populist movement aligned to the Republicans that can easily develop into a fascist movement. As the crisis deepens we will see the working class organize to resist its attacks and this will pose a threat to the bourgeoisies who will revive the old fascist arguments for national salvation against alien forces.


15- While Islam has been projected as the main enemy of freedom and democracy since the collapse of the Soviet Union, it is now being rivaled by Chinese ‘communism’. The US ruling class is leading the demonizing of China as a communist regime that is putting capitalist democracy under threat. What underlies this demonization of Chinese ‘communism’ is of course the rise of China as a threat to US hegemony. The weakness of the US economy has prompted a suggestion by a US professor teaching in China that China could even invest its excess finance capital in the US to fund a ‘new deal’? That this can even be proposed marks the perception of a real decline of the US as the hegemonic imperialist power to one that can become dependent on China as the newly hegemonic power. This sense of a loss of hegemonic power is what underlies the blaming of the crisis on China. The rallying of the Tea Party reactionary populism against liberal or ‘socialist’ elites implies that the US people have been sold out to China and to Latin American migrants. China and Bolivarian ‘socialism’ becomes perceived as the overarching enemy of the American people and the cause of its historic decline.


16- The fake ‘left’ defends Castro and Chavez from US imperialism, but sows illusions in their converging brand of Chinese-style ‘market socialism’, or ‘green capitalism’, and so disarms the international working class against the rise of anti-China xenophobia and proto-fascism in the imperialist countries. (Green Left News). The reformist left puts its faith in bourgeois Bonapartist leaders (who balance between the masses and the imperialist bourgeoisie) in the ALBA countries and the restorationist bureaucratic Bonapartists in Cuba rather than call for a political revolution because they think that China as a global power offers a progressive alternative to the imperialist US and its allies. This treachery leaves workers unprepared to stop the restoration of capitalism in Cuba and the coming counter-revolutionary wars at the hands of all the imperialist ruling classes, including China.


17- Facing this objective crisis and the subjective crisis of the failure of revolutionary leadership this puts a huge responsibility on the shoulders of revolutionary Trotskyists to struggle all the more urgently to re-found a revolutionary international on the basis of the Transitional Program of 1938. Trotsky laid down the principles of revolutionary internationalism to fight imperialist crises in the 1930s. In the epoch of imperialism workers have to break from the patriotic popular fronts with their bourgeoisie, and with the labor bureaucrats that act as the agents of the bourgeoisie, and refuse to fight against the workers of other nations. Instead they become brothers and sisters of working class fighters in every nation. Facing a deepening crisis and the inevitable transformation of trade wars between rival imperialist powers into military wars, we must demand the unity of workers of all countries to fight for an international socialist revolution. We must defend all workers especially the most oppressed - on national, ethnic, gender and sexual grounds - against attacks by uniting them into one force across national borders to defeat all attempts by the ruling class and their labor lieutenants to divide and rule the world proletariat.


18- The refounding of a new World Party of Socialism based on a Leninist Trotskyist program will solve the crisis of revolutionary leadership. The only way for workers internationally to stop the fascist counter-revolution is to break from the Bolivarian and Chinese Bonapartist bourgeoisies and their bureaucratic lieutenants and organise their own independent workers councils and workers militias to mount political general strikes to bring down the bourgeois regimes and replace them with Workers and Peasants governments forming socialist federations on every continent!