Part one: The Long View - The crisis continues - The lifeblood of capitalism - Quantitative easing - Crisis in the USA
Part three [NEW]: The BRICS - China - Perspectives for class struggle - Russia - India and Pakistan - Afghanistan
Part four [To be published]: Latin America - Brazil - Venezuela - World Relations - Syria - The Egyptian Revolution - Iran
Part five [To be published]: Inequality and the concentration of capital - An abysm between the classes - “Concentrated economics”. The mass organizations - The unions - The role of the youth - Are the conditions ripe for revolution?
The Long View
Marxism takes the long view of history. There are certain moments in
history that are decisive turning points. Such moments were 1789, 1917,
1929. At such times the whole process is accelerated, and processes that
seemed to be fixed for all time turn into their opposite. To this list
of great historical turning points we must now add the year 2008. The
new period that opened with the crisis of 2008 finds its reflection in
an intensification of the class struggle, and in relations between
states, by wars and international conflicts.Dialectics deals with processes in their development through contradictions. The dialectical method enables us to look beyond the immediately given (the “facts”) and observe the deep-seated processes that lie beneath the surface. The capitalist system historically produces and destroys its internal equilibrium. This is manifested at intervals in the outbreak of crises. In the economic sphere this is expressed in the alternation between booms and slumps, which are a fundamental characteristic of the capitalist system for the last 200 years. Periods of prosperity and full employment are followed by periods of slump in which investment falls off, factories are closed, unemployment soars and the productive forces stagnate.
Marx explains that the fundamental cause of all real capitalist crises is overproduction, or, in the jargon of the modern economists, excess capacity (which is the result of overproduction of the means of production). The fact that society is plunged into crisis because it produces too much is a feature of capitalism that was unknown in previous societies. It is the fundamental contradiction of capitalism, which cannot be resolved within the limits of private property of the means of production and the nation state. For what appeared to be a long period—approximately three decades, this seemed to have been falsified by history.
The collapse of Stalinism was an important turning point. From a psychological point of view it gave the bourgeoisie and its ideological defenders a new lease of life. It further impelled the Social Democracy towards the camp of capitalism, creating new illusions in the “free market economy”. It set the final seal on the former Stalinist parties, which abandoned any pretence of standing for socialism and became a pale reflection of the Social Democracy. The same process led to the virtual collapse of left reformism as a definite tendency in the labour movement.
During the last boom, capitalism went beyond its natural limits through the unprecedented expansion of credit and the intensification of the world division of labour through so-called globalization. The growth of world trade propelled the system upwards in what appeared to be an unending spiral of growth. The expansion of credit temporarily increased demand. In the case of Britain, the size of private credit, as a proportion of GDP, has doubled to 200% in the last 50 years. The USA and other countries went down the same road.
The sun shone, the markets boomed and everybody was happy. Everything seemed to be for the best in the best of all capitalist worlds. Then came the crash of 2008. With the collapse of Lehman Brothers, they came very close to a catastrophe on the scale of 1929—or even greater. They were only saved by massive injection of public money. The whole burden of debt accumulated by the private banks was placed on the shoulders of the taxpayers. The state—which the economists insisted had no role to play in the economy—had to prop up the whole crumbling edifice of the “free market economy”.
The crisis continues
Since
2008, all the factors that drove the system upwards have combined to
drive it downwards. The massive increase in credit has become a huge
mountain of debt, a colossal burden on consumption, which is dragging
the economy down under its weight.While the press and politicians talk about a recovery, the serious strategists of capital are plunged into the blackest pessimism. The more far-sighted economists are talking not of recovery but of the danger of a new and even deeper crisis. The “recovery” is really a convenient fiction, calculated to soothe the nerves of investors and restore “confidence”.
Insofar as it is possible to speak of it, the partial recovery in the USA is the weakest recovery from a slump in history. Normally after a slump, the economy tends to rebound strongly on the basis of productive investment, which is the lifeblood of the capitalist system. But this is not the case now. According to the IMF, the world economy is on track to grow just 2.9%, which is roughly half its pre-crisis level.
The irrational nature of capitalism, trapped in the vice of insoluble contradictions, has been given an even sharper and more painful and destructive character through globalization. “National sovereignty” has become an empty word, as every government is subjected to the vicissitudes of the world market.
Speculation flourishes despite all the talk about regulation. A vast amount of money is sloshing around the world, adding hugely to the danger of an unprecedented economic collapse. The global derivatives market, which amounted to $59 trillion in 2008, had risen to $67 trillion by 2012. This is a measure of the unbridled speculative frenzy that has gripped the bourgeois in our times. The tangled interconnections of the derivatives market, which it seems nobody truly understands, have introduced complex and new risks.
The nervousness of the bourgeois is mirrored in the feverish rise and fall of the markets. The slightest incident can cause a panic: political tensions in Portugal; social unrest in Egypt; uncertainty over the outlook for China’s economy; the possibility of military action in the Middle East leading to a sharp rise in oil prices; any of these things can cause a panic that can plunge the world economy back into a deep recession. The yields on government debt play approximately the same role as the charts on the bottom of a hospital bed that denote the rise and fall of a fever. Beyond a certain limit, the increase in the level of a fever threatens the patient with death.
The lifeblood of capitalism
The most serious problem is the lack of productive investment. In the
US, private investment remains below even its long-term share of
national output, while public investment peaked with the stimulus in
2010 and has been falling ever since. The capitalists are not investing
in the kind of productive activity that would lead to the hiring of
American workers in sufficient numbers to allow the economy to take off.
The reason is because there is no market for their goods; that is to
say, there is no “effective demand”.
The economic outlook is dark and uncertain. Nobody wants to spend or invest because they cannot predict the future. The number of jobs increased in 2013 but factory employment continued to decline. Initial forecasts that the US recovery would be led by a manufacturing rebound have been comprehensively falsified. A healthy and sustainable recovery must be based on productive investment, not a larger number flipping burgers in McDonald’s.
The costs of investment are actually far lower now than in 2008. Yet business investment in the US is running at only slightly above its 2008 level. A recent survey of the 40 biggest publicly traded US companies recorded that roughly half of them intended to curtail their capital expenditures in the course of 2013. What is the point in building new factories and investing in costly new machinery and computers when they cannot use the productive capacity they already have?
In the UK, a mere 15% of total financial flows actually go into investment. The rest goes into supporting existing corporate assets, real estate, or unsecured personal finance. Instead of investing in new plant and machinery, the big companies are borrowing large sums of money at negligible rates of interest in order to buy back their own shares. In the first nine months of 2013 alone, $308 billion was spent for this purpose in the USA.
The problem is therefore not lack of liquidity. In the USA, businesses are awash with cash yet they do not invest in productive activity. In the last four years vast sums of money have been pumped into the economy, particularly the banks. The result has been to increase the public debt to alarming levels, without producing any economic recovery worthy of the name. Yet Moody's estimate at the beginning of 2013 (reported by Forbes in March 2013) was of $1.45 trillion in cash stashed away by US non-financial corporations. The increase for the year 2012 alone (included in the total) was of $130 billion. This is not a new phenomenon. In the late 1920s, there was a massive accumulation of unspent cash in the economy—just before the crash.
The bourgeois economists have an aversion to pronouncing the word “overproduction” (strangely, some self-styled Marxist economists suffer from the same affliction). But from a Marxist point of view the root cause of the crisis is very clear. Surplus value is extracted in the process of production, but this does not exhaust the process of money-making. The ability of the capitalist to realise the surplus value extracted from the labour of the workers ultimately depends on his ability to sell his commodities on the market. But this possibility is limited by the level of effective demand in society, that is, by the ability to pay.
The capitalists’ urge to produce in order to obtain profit is virtually unlimited, but his ability to find a market for his produce has very definite limits. The world economy is perilously dependent upon the USA. In reality, the whole world now depends on US consumption. But consumption in the USA is hardly in an ideal condition to act as the engine of world growth. Median earnings have fallen by 5.4 per cent since the US recovery began. Unemployment hovers around 7 per cent. Consumption accounts for roughly 70 per cent of US gross domestic product and about 16 per cent of global demand. Exporters everywhere are thus hoping the US consumer will come to the rescue.
But this creates new contradictions. Last year, surging imports pushed the US trade deficit up by 12 per cent to $45bn per month, which was the largest jump in five years. Imports from China accounted for almost two-thirds of that. If this continues, the US-China deficit will exceed $300bn. On the other hand, US exports fell. Obama’s goal of doubling exports in five years is a hopeless dream. The US recovery might peter out, dragging the global economy down with it.This resembles the old Russian fairy tale of a hut supported by chickens’ legs.
Quantitative easing
The so-called recovery is based almost entirely on the injection of
huge quantities of fictitious capital into the economy of the United
States and other countries. Like a terminally ill patient, capitalism is
being kept alive by a continuous blood transfusion of public money. The
Central Banks are compelled to rely on so-called quantitative easing—or
in plain language—printing money. QE and zero interest rates have
failed to produce serious results and have clearly inflationary
implications.
The relative improvement of the US economy was due in no small measure to the loose monetary policies that were carried out by the Federal Reserve. Since 2009, the Federal Reserve has been buying financial assets—US Treasury bonds and some types of corporate debt. Through an expansion of the monetary base, they kept interest rates low, which served to prop up indebted businesses and households. This has been the major factor in the so-called recovery, and it is propping up the financial markets as crutches support a man with no legs.
The capitalist system is based on the economics of the madhouse. In their greed to make quick profits from speculation the bourgeois only succeeded in creating gigantic asset price inflation in the twenty years prior to the crash of 2008. This was brought about by the Federal Reserve’s policy of holding down interest rates. The same insane policy is now being pursued in a desperate attempt to reflate the bubble. They seem to have forgotten that this very policy was what led to the collapse in the first place. It seems as if the bourgeoisie has taken leave of its senses. But as Lenin once said: “A man on the edge of a cliff does not reason.”
The Federal Reserve’s quantitative easing programme amounts to $85bn per month. The UK, the Eurozone and, most particularly, Japan, are all slavishly copying Bernanke’s long-term promise of easy money. Paradoxically, this is just when he is attempting to back away from it. Bernanke therefore found himself in a very delicate balance. He tried to signal the beginning of the end of zero interest rates without triggering a panic.
Those who are engaged in this activity are well aware that they are performing a dangerous experiment. They have known this for some time. Fred Neumann, chief Asia economist at HSBC explained that QE “buys us time but it does not solve anything fundamentally.” (FT, 20/9/13) “The longer they continue in this process the worse it gets for our ability to pull out of the slump”, said Mike Crapo, Republican on Senate banking committee.
Moreover, experience shows that this policy is subject to the law of diminishing returns: ever bigger quantities of money are required to obtain ever more meagre results. Gillian Tett, Financial Times chief columnist states: “one way to interpret this week's dance around QE is that policy makers are continuing to prop up a financial system that is (at best) peculiar and (at worst) unstable”. We are “in a world where asset prices and animal spirits are now dependent on cheap money”.
The Financial Times pronounced its verdict on QE in the US in an editorial (21/9/13):
“Although QE has lifted spirits, its effect has been more muted than some had hoped. Despite low funding costs, investment is in the doldrums. Governments are cutting deficits, households are repaying debt, and corporations are piling up cash. Consequently, the money created by the Fed is not funding activity such as house building or capital investment, which would contribute directly to growth. Instead, it is lifting the value of existing assets.”
The housing finance agencies Fannie Mae and Freddie Mac remain as
before, pumping credit into the mortgage market. But while before the
crisis they controlled 60% on the mortgage market in the US, now they
control 90%. This kind of thing was what ended in the collapse of 2008.
Conscious of the dangers involved, Bernanke, cautiously announced last
June that the Fed might be phasing out QE. The Keynesians, led by Paul
Krugman, were horrified. They warned that it was a premature move that
would send the wrong signal to the world economy, that the central banks
would tighten before the private sector recovery has achieved escape
velocity. This is what happened in 1937-38.
Bernanke attempted to soften the blow by introducing all manner of “ifs” and “buts”. He stated that the Fed will end its asset purchases only if unemployment falls below 7 per cent—which it now has—reducing the risk of tightening before the economy can take it. Short-term interest rates would stay close to zero for a long time after that. Any rises would be gradual. And so on and so forth.
It was all to no avail. The bourgeoisie has become dependent on QE and cheap credit, just like a junkie who has become hooked on heroin and needs a regular dose to keep going. The announcement caused an immediate panic in the financial markets hedge funds began selling off bonds, causing a big drop in their prices. Borrowing costs (or “yields”) soared. By mid-September the Fed was forced to retreat. The markets rose again on hearing the decision of the Fed to leave the QE3 “punch bowl” in place, although new Fed chief Janet Yellen has now announced plans to taper it off to nothing by the end of 2014.
Crisis in the USA
In 2009, two weeks after entering the White House, Obama made a
speech in which he said: “We cannot rebuild this economy on the same
pile of sand. We must build our house upon a rock. We must lay a new
foundation for growth and prosperity—a foundation that will move us from
an era of borrow and spend to one where we save and invest; where we
consume less at home and send more exports abroad”.
Four years later, the US is still building on foundations of sand, preparing the ground for a future crisis. This is reflected in the staggering figure for the nation’s accumulated debts. The precarious nature of the situation was shown by the US government shutdown, which threatened to drag the USA and the world economy as a whole into free-fall. US government debt reached the astounding figure of $16.7 trillion, which is the limit agreed by Congress.
The severity of the crisis is shown by an open split in the US ruling class and its political representatives. In the boom period, the two parties of capital, broadly representing two different wings of US capitalism, could bargain their way to a compromise on most issues. Now, when the cupboard is bare, the old political set up becomes a complete fetter on the further development of society and the capitalist system, with disastrous consequences.
The need to increase the US debt limit brought this split to a crisis point. Failure to do so would have meant pushing the USA into default. This would have provoked an estimated 6.8 percent drop in US GDP and five million job losses in the OECD. Yet the right-wing “Tea Party” Republicans in Congress, propelled by their hatred of Obama, Obamacare, and their narrow-minded obsession with deficit reduction, were quite prepared to bring the US and the world economy crashing down.
The Keynesians point out, that reducing living standards in the middle of a recession will only deepen and prolong the slump. That is correct, as far as it goes. But the monetarists are equally correct in pointing out that the Keynesian policies of deficit financing are a recipe for inflation and will ultimately make a bad situation worse still.
In a capitalist economy there are few levers to pull on private investment when interest rates are close to zero and there is a massive public deficit. It is ironic that an economist like Jeff Sachs—the man who unleashed neo-liberalism onto East Europe—is now calling for a worldwide version of the New Deal. This is a reflection of the desperation of the bourgeoisie, which feels it is in an impasse. The ruling class is split over what action to take over the huge debt that is hanging over the US economy like a terrifying sword of Damocles.
The US government shutdown caused alarm in bourgeois circles internationally. The head of the World Bank, Jim Yong Kim, called it “a very dangerous moment… Inaction could result in interest rates rising, confidence falling and growth slowing”. The head of the IMF, Christine Lagarde, delivered an even clearer warning when she said that the stalemate in the US Congress threatened tipping the word into a new recession. The dollar began to slide against other countries as investors lost confidence.
The insane policy of sequestration led to cuts to investment in scientific research, education and infrastructure, actively reducing the very things that America needs more of in order to achieve a minimal reduction to the budget deficit. The Republican right demanded that Obama abandon his timid health reforms. The deadlock in Congress was a graphic expression of the split in the ruling class, which has been papered over but not resolved.
Another section of the bourgeois economists are now speaking in favour of moderating or abandoning austerity, protecting the poor, raising their skills, focusing the investment flow towards green energy, etc. This is intended to boost demand by increasing consumption. But such proposals immediately clash with the bitter resistance of the bosses, the Republicans and the monetarists.
This is a very risky policy, which some economists have compared with the situation facing Roosevelt in 1938, when Congress forced him to rein in stimulus, prompting a new downturn. As a matter of fact, it was not Roosevelt’s New Deal policies that ended the Great Depression but the Second World War. But this option is no longer possible at a time when the American President cannot even order a bombing raid on Syria.
In his 2009 speech, Obama chose not to mention what becomes of the house built on sand: “And the rain descended, and the floods came, and the winds blew, and beat upon that house; and it fell: and great was the fall of it”.
The crisis of Europe
The global nature of the crisis makes it impossible to “decouple”
Europe and America. The announcement that the USA was going to wind down
quantitative easing caused an immediate upheaval in the markets, which
pushed up interest rates across the eurozone. The effect was to tighten
monetary policy when the recession and rising unemployment required
precisely the opposite policy.
Nowhere is the crisis revealed in starker terms than in Europe. All the dreams of the European bourgeoisie of a united capitalist Europe have rapidly been reduced to ashes. All the national contradictions have come to the surface, threatening the very future, not only of the euro, but of the European Union itself.
The weight of debt is like a gigantic millstone round the neck of the European economy, dragging it down and preventing a real recovery. Nobody knows the real extent of the debts of Europe’s banks. The bad loans of EU banks have reached at least €1.05 trillion (twice as much as in 2008) according to the Wall Street Journal. But this is only an estimate (i.e., a guess) and the real figure will be much greater. Most investment banks estimate that Europe’s banking sector must shrink by around €2 trillion to €2.5 trillion to reach a size that could be described as adequately capitalized.
There has been a sluggish recovery in Germany, but Italy and Spain remain in recession and Greece is in a deep slump. Italy has lost 9% of its GDP since the beginning of the crisis and Greece at least 25%. Nor will it be possible for Germany to maintain growth if there is no recovery in the eurozone as a whole, which is the main market for its exports. In 2012, European car sales fell to their lowest level since records began 24 years ago, in 1990. Car sales in Europe continued to fall in six of the first eight months of 2013.
The euro’s launch in 1999 was hailed as the key to a golden future of peace, prosperity and European integration. But as we predicted, under conditions of crisis it has become the source of national conflict and disintegration.
Although the euro is not the cause of the problems of countries like Greece, Italy and Spain, as narrow-minded nationalists imagine, it has undoubtedly exacerbated them to the nth degree.
In the past, these countries could find a solution to a crisis through devaluation. Now this is impossible. Instead of boosting their share of markets at the expense of foreign competitors by devaluing the currency, they are compelled to resort to “internal devaluation”, that is to say, savage austerity. But this only has the effect of deepening the slump and sharpening the class divisions in society.
The immediate catalyst was the Greek crisis, which threatens the euro and the European Union itself. It was natural that the crisis should emerge first in the weakest links in the chain of European capitalism. But the repercussions of the Greek crisis affect the whole of Europe. During the upswing that followed the launch of the euro, Germany gained a lot from exporting to the eurozone. What began as a tremendous plus has become a tremendous minus. When Mario Draghi, the European Central Bank president, promised that he would use all the economic resources at his disposal to save the euro, he forgot to say where these resources would come from.
In any fiscal transfer to save the eurozone, the transfer will always be of German taxpayers' money to somewhere else. This poses some serious problems for Angela Merkel. Germany has adopted the position of an implacable defender of austerity and fiscal restraint. It can afford to do so. It is the strongest of the European economies, and economic power must sooner or later be expressed as political power. Despite the illusions of the French bourgeoisie in the past, it is Germany that decides everything.
However, the politics of austerity has definite social and political limits. Countries like Greece and Portugal have already reached these limits, and Spain and Italy are not far behind. Despite the recent optimism of the bourgeoisie, nothing has been solved. The eurozone crisis can erupt again at any moment. The imposition of vicious austerity provoked a severe political crisis in Portugal, where huge mass protests almost led to the collapse of the government. Portugal’s public debt is rising, and is likely to be above 130 per cent of national output by 2015. So what was all the sacrifice and pain for?
Some sections of the "left" in Europe - for example Lafazanis, the leader of the left in SYRIZA - are calling for an exit from the Euro, and even from the EU itself, as a solution to the crisis and the problems of the working class. However, as Marxists we do not see the crisis as being due to the existence of the European Union. It is a crisis of the capitalist system.
The European Union is nothing more than a bosses' union aimed at bolstering the interests of the powerful European capitalists. The EU is imposing anti-working class policies everywhere. And this body cannot be reformed into some kind of “social Europe”. We are opposed to it, but the answer is not a series of little national capitalisms, but the unity of the workers of Europe in the struggle for a United States of Socialist Europe.
The political instability, caused by the austerity measures, is reflected in a series of unstable coalition governments and violent swings of public opinion. In Italy they only managed to put together a coalition of the Democratic Party with Berlusconi with the greatest difficulty, and the leaders of the coalition spend most of their time attacking each other in public. Berlusconi’s main concern is to keep out of gaol. The general interests of Italian capitalism must take a very poor second place to this overriding consideration.
The unedifying spectacle of squabbling and splits at the top, corruption scandals (as in Spain), not delivering on their promises (France), and politicians filling their pockets (Greece), while inflicting severe pain on the rest of society has caused a general backlash against all the existing parties and their leaders. This is an alarming development for the bourgeoisie, which is using up the political reserve weapons it possesses to defend its system. A massive social and political crisis is being prepared in Europe.
The bourgeoisie is staring into the abyss, and may well be forced to retreat. Apart from anything else, austerity has signally failed to reactivate the economy. On the contrary, it has made a bad situation infinitely worse. But what is the alternative? The bourgeoisie is caught between the devil and the deep blue sea. It is not clear whether the eurozone will break up completely—a prospect that terrifies the bourgeoisie and not just in Europe. In order to prevent a complete breakdown, the EU bosses will be forced to abandon some of their more stringent conditions. In the end very little will be left of the original idea of European unification, which is impossible on a capitalist basis.
The problem of the European bourgeoisie is simply stated. The ruling class cannot afford to maintain the concessions that were won by the working class over the last half century, but the working class cannot accept any further cuts in living standards. Everywhere we see sharp falls in living standards; wage cuts; emigration is back as a phenomenon in countries of southern Europe towards countries like Germany. But when Germany is also hit by recession, where will they emigrate to?
The working class has been enormously strengthened since the Second World War. The social reserves of reaction have been sharply reduced. The peasantry, which was a very large proportion of society in the past, not only in Spain, Italy, France and Greece, but also in Germany, has been reduced to a small minority. Sections like the teachers, civil servants and bank employees, who in the past regarded themselves as middle class and would not dream of joining a union or going on strike, are now among the most militant parts of the labour movement. The same is true of the students, who before 1945 were mainly right-wing or even fascists, and are now firmly on the Left and in many cases open to revolutionary ideas.
The European workers have not suffered a decisive defeat for decades. It will not be easy to force them to give up what they have conquered. That was shown in October 2013 by the Belgian firefighters who turned up outside the parliament with thirty lorries, blocked all access, and sprayed the police with water and foam, demanding an extra €75 million to increase staff to acceptable security levels. The government were forced to give in when the railway workers also offered to help firefighters in blocking rail stations. This change in the balance of forces poses a serious dilemma for the bourgeoisie in applying the necessary austerity measures. Nevertheless, the ruling class is compelled by the crisis to continue their attacks.
Germany
On the surface it would seem that Germany has escaped the worst of
the crisis. But Germany’s turn will come. The Achilles heel of German
capitalism is its unprecedented dependence on exports: in 2012 German
exports reached a record 44% of GDP (€1.1 trillion). The reason for this
apparent success was that the real wages of German workers have been
held at the same level that they were in1992. According to the FT:
“Germany now has the highest proportion of low-paid workers relative to
national median income in western Europe”. One quarter of the workforce
are on “low income” wages. The number of temporary workers has trebled
in ten years.
German exports, the sole source of growth in the last period, were thus based on low wages and high levels of investment. The high levels of productivity squeezed from the German workers gave German industry a big advantage over its European rivals, as we see from the following figures:
Performance of industrial production 2000-October 2011:
Germany + 19.7%
Portuga - 16.4%
Italy - 17.3%
Spain - 16.4%
Greece - 29.9%
Portuga - 16.4%
Italy - 17.3%
Spain - 16.4%
Greece - 29.9%
The fact is that German capitalism gained at the expense of its weaker European rivals who could not compete with its industries. Their loss was Germany’s gain. The euro then worked for the benefit of Germany above all. German banks were quite happy to lend money to countries like Greece to enable them to buy German goods. But now this process has turned into its opposite. Although they cannot admit it publicly, the leaked minutes of the first IMF bailout of Greece prove what we have stated in the past, namely that the bailouts to Greece are above all needed to save German (and French) banks.
The right-wing demagogues now heap curses on Europe and the euro. But the more serious strategists of German capitalism are filled with foreboding. They understand that Germany cannot restore its economic equilibrium as long as the rest of the eurozone is immersed in crisis. Where will it export its goods?
Speaking during an important economic summit in the German city of Hamburg, the former leader of the German SPD, Helmut Schmidt warned that: “Public confidence in European governments and the European Union has been shattered and Europe is on the verge of revolution”. He further stressed that major political and economic changes are necessary in Europe. But what changes are needed? And who will ensure that they are carried out?
Britain
The former workshop of the world has lost its industrial base and is
entirely dominated by parasitic finance Capital and services. The UK has
more bankers earning over a million pounds a year than the rest of the
EU. Britain was claiming a “recovery” but the underlying picture is one
of decline.
The recent period has seen the biggest and most consistent fall in living standards in Britain since the 1860s—over 150 years ago. There have been warnings of a new explosion amongst the youth along the lines of the riots that engulfed towns and cities all over Britain a few years ago. It is estimated that two million children go to school hungry every morning in Britain. This revelation so shocked the public that the government hastily announced the introduction of free meals for all primary school children.
Social attitudes in Britain have seen a massive shift. The old attitudes of respect and deference towards the establishment have turned into hatred. The people who were regarded with reverence in the past, Members of Parliament, the Press, the Judiciary and the Police, are regarded with suspicion and contempt.
“The public seems to think there is something rotten in the establishment”, states John McDermott in the FT. “In 2010, a Policy Exchange poll found that 81% of Britons agreed with the statement: ‘Politicians don’t understand the real world at all’. The British Social Attitude Survey reported that only 18% trusted governments to put the nation’s needs above a party’s, down from 38% in 1986. Banks fare worse. In 1983, 90% thought they were ‘well run’, compared with 19% today, perhaps the most dramatic attitudinal shift in the report’s 30-year history.
“Britain’s views of its institutions wax and wane—ask Her Majesty. But the successive scandals hitting banking, parliament and the media have the feel of an almost operatic collapse of faith in those who exert power in the country… There is a profound ignorance among the powerful as to the depth of anti-elite sentiment, in Britain and beyond.” (FT, 28/9/13)
Labour leader Ed Miliband was finally compelled to echo, even in the
mildest way, the growing anger against big business and the banks after
mounting pressure from the ranks of the Labour movement. Despite its
limited and feeble character, this provoked an outburst of rage from the
bourgeois press. The Financial Times accused Miliband of “trafficking
in populist gimmickry”. Here we already have an outline of the
contradictory pressures that will be multiplied a thousand fold when
Labour enters government under conditions of crisis.
France
The EU was originally intended to be a condominium in which France
would be the political leader of Europe and Germany the economic engine.
But now these plans of the French ruling class have been exposed as
utopian dreams. Berlin decides everything, Paris decides nothing.
At the last elections the Socialist Party won a sweeping victory at every level. But very quickly the support for Hollande has evaporated. Like every other reformist leader he has accepted the role of managing the crisis of capitalism. As a result he now has the worst ratings of any President since 1958. The latest polls register an increase in support for the rightist Marine Le Pen, with Hollande trailing behind.
The media will try to present this as a swing to the right. Actually it expresses a general mood of frustration and discontent with the existing parties and disillusionment with the “Left”, which promised much and has delivered little. It remains to be seen whether the Communist Party with its reformist policies can win support from the Socialists or the Front de Gauche or can recover its earlier electoral successes.
Partly in order to divert attention from his domestic troubles, Hollande has launched a series of foreign military adventures in Africa (Mali and the CAR). Blocked by Germany in Europe, he is trying to revive France’s old role in Africa and the Middle East. But in reality, French imperialism lacks the muscle to play an independent role on a world scale. These military adventures will inevitably end in tears, adding fresh fuel to the flames of discontent at home.
France remains a key country for the class struggle in Europe. The French workers have shown time and time again that they have never forgotten their revolutionary traditions. The masses are seeking a way out of the crisis. They put their trust in the Socialist leaders, but the latter are organically linked to the capitalist system and the existing order. The “Left” dashes the hopes of the masses. Already in the municipal elections, the leaders of the CP and the Parti de Gauche have broken the Left Front. The CP is in alliance with the SP, a party of government, while the Parti de Gauche in some municipalities is in alliance with the Greens, who also have two ministers in the present government. By breaking the Left Front – at least at municipal level – they are disappointing those workers and youth who are seeking an alternative to the left of the SP. It is an indication of the complete reformist blindness of the CP leaders that they are clinging to the SP precisely at a time when Hollande and his government are discredited and deeply unpopular. Instead of maintaining a clear opposition to the government, they are desperately trying to preserve their positions in local government. Marxists should demand the leaders of the Left Front break with the Socialists and the Greens and strengthen the Left Front on the basis of genuine left and socialist policies.
What we see is a clear process of polarisation between the classes that will be expressed in a social explosion at a certain stage. Frustrated on the electoral plane, the workers and youth can take to the streets as they have done so often in the past. A repetition of May 1968 is being prepared. But this time it will be on a higher plane, and the Stalinists no longer possess the strength or authority to betray it.
Italy
Italy is teetering on the brink of a downward spiral of downgrades
and rising bond yields. The consequences would be disastrous, not just
for Italy but for the eurozone. Its accumulated debts amount to around
€2 trillion. The government's borrowing costs threaten to strangle the
Italian economy in the long run.
Unemployment is rising. In the last three years, one million people between the age of 25 and 34 have lost their jobs. Of those, under age 35 only four out of ten are working. Officially, there are over three million unemployed in total, but many people have given up on looking for a job because they have no confidence that they are going to find one. In 2012, more than 9 million people were classed as poor, of which 4.4 million are living in absolute poverty conditions.
A recent survey carried out by Legacoop (the main supermarket chain) confirms in writing what has been obvious for some time: three million households—12.3 percent of the population—cannot afford a high-protein meal every two days; 9 million Italians would not be able to meet an unexpected expenditure of €800; Italians are increasingly giving up the use of a car (25 per cent of the population); they no longer go on holiday (4 million fewer people this summer); and they don’t buy new clothes (23 per cent of the population). Spending on food in the past six years has fallen by 14 %, falling to the levels of 1971 (€2,400 per capita).
The Financial Times describes the tasks facing Italy as “economically
painful and politically suicidal”. (7/10/13) Italian capitalism cannot
compete with Germany and France and is falling behind. In the past it
would have devalued its currency, but with the euro, that avenue is
blocked. Instead it must resort to an “internal devaluation” (that is,
deep cuts in living standards). But for this, a strong government is
needed. That, however, is not possible.
Every one of the parties in Italy is divided. In the PD there is a split between the old CP apparatus and the openly bourgeois elements from the Christian Democracy. Monti's small party is riven with factions and is expected to fall from 10% down to 4% in the next elections. Even Grillo's Five Stars Movement is divided, with some clearly leaning in favour of collaboration with the PD.
The union leaders have played a pernicious role in supporting the so-called national unity government, swallowing all the anti-working class austerity measures. This particularly applies to the “left” leaders of the metalworkers’ union, the FIOM who, having aroused the hopes of the workers, then dashed them by joining CGIL leader Camusso in signing a common document for the CGIL congress. Here we see the precise role of left reformism in action. The right-wing trade union leaders cling to the bourgeoisie and the left union leaders cling to the right wing. None of them have any faith in the working class, which is left leaderless at the critical moment.
The betrayal of the leaders can lead to temporary demoralization and apathy. But that will not be the end of the matter. The Italian workers—like the Spanish, Greek and French—have a long tradition of spontaneous, insurrectionary movements. Blocked by their traditional mass organizations, they will find a way of expressing their anger in an explosive fashion. That was the meaning of the Hot Autumn of 1969. The five days of open-ended strike against privatisation of the Genoa transport workers in November 2013 show the real mood developing in the Italian working class. Such developments are implicit in the situation in Italy. And this is still truer in the case of the youth.
Spain
Five years after the start of the recession, Spain's economy will
fall a further 1.4% in 2013. Unemployment is at a record high of nearly
27% of the workforce, with youth unemployment at a painful 57%. Over 6
million jobs have been destroyed since 2007, and hundreds of thousands
of young people been forced to emigrate.
After several years of massive packages of austerity cuts, the budget
deficit in 2013 is still expected to be a huge 6.5% of GDP, while debt
will approach 100% of GDP. Austerity cuts have been combined with
sweeping counter-reforms in the labour market which have allowed Spain
to regain competitiveness in relation to her European neighbours. In
other words, workers have been made to pay the full price of the
capitalist crisis. And after all this pain and suffering all that has
been achieved is vague talk of a mild recovery next year with growth
rates being forecast of a mere 0.2% in 2014 and perhaps a full 1% in
2015. On this basis, it would take until 2021 to even recover the
pre-recession level, nearly 15 lost years!
The truth is that the enormous amount of corporate, household and now state debt which was accumulated during the long years of the boom have not yet been absorbed fully by the system. Until that takes place, there can be no real sustainable recovery for Spanish capitalism. The current “optimistic” forecasts are based on a recovery of exports, which is wholly dependent on Europe coming out of recession—a very fragile basis for optimism.
The impact of the economic crisis on the consciousness of the masses has been profound and will be long-lasting. To the economic recession we must add the accompanying corruption scandals affecting all institutions of bourgeois democracy (the judiciary, the Monarchy, Congress, the ruling party). What we see in Spain is a crisis of the regime which is unravelling the whole edifice on which the ruling class had built its legitimacy since the end of the Franco dictatorship. All the old ghosts of the past are coming back to haunt the weak and retrograde Spanish bourgeoisie. The national question in Catalonia, fuelled by the economic crisis, has revived. The struggle for justice for the victims of the Franco regime has come back to the fore uncovering the reactionary character of the state apparatus and the ruling class under a thin veneer of democracy.
There has been a wave after another of mass mobilisations, particularly since 2011. The movement of the indignados, the anti-evictions movement, the education strikes, the battle of the miners, the spontaneous movement of the civil servants, two 24h general strikes, etc. Of course, the masses cannot be in a state of permanent mobilisation and there will be ups and downs, and periods of hiatus. However, the anger which has accumulated under the surface and that finds no channel of expression, is still there and can give rise to explosions at any time.
Portugal
Portugal remains mired in recession, with forecasts for a 2013 GDP
contraction of between 1.6% nd 2.7% and (perhaps) very mild growth in
2014. Unemployment is at a record high of 16%, and the government will
miss the deficit reduction targets for this year (5.5% of GDP is the
target, the real figure will be more like 6%), despite years of massive
austerity cuts imposed by the 2010 €78bn EU bailout.
The 2014 budget includes further cuts in public sector wages of between 2% and 12% per worker, and €728 million in pension cuts. Yet a further €3.3bn cuts are needed in 2014, together with yet another bailout. This has led to a collapse of support for the right-wing government. In the 2013 local elections the parties of the ruling coalition were heavily defeated. “The political environment is deteriorating”, moans the Financial Times.
The Portuguese government, which has slavishly carried out all the austerity measures dictated by the EU, begs for patience: “Please give us a little more time”. But the Money-men in Washington, Brussels and Frankfurt and the troika are not in a mood for patience. As the price for a new bail-out they will demand cast-iron guarantees that the austerity programme will continue to be implemented. The stage is set for even bigger mass protests.
Passos de Coelho, who boasted of being a strong man and a model pupil of the troika when he was elected in June 2011, is now exposed as the weak leader of a divided coalition. His government, which has earned the hatred of the people of Portugal, came very close to collapse after the general strike on June 27, 2013. This was the latest in a series of sustained mass mobilisations against the right-wing coalition.
The Portuguese working class is rediscovering the traditions of the 1974-5 Revolution. One million people came to the streets in September 2012, then one and a half million in March 2013. The problem is one of leadership. The “opposition” Socialist Party is still discredited (it signed the bailout conditions just before being booted out of office) and only gains in percentage terms because of the increased rate of abstention.
The Communist Party is the main beneficiary of this unprecedented
wave of discontent. However, the two parties to the left of the SP are
afflicted by a lack of a serious alternative to the crisis, the Bloco de
Esquerda espousing a reformist-Keynesian “social Europe” and an “audit
to the debt”, while the PCP advocates a semi-Stalinist “patriotic and
democratic” economy outside of the euro.
Greece
After five years of grim austerity the problems of Greece, far from
being solved, are worse than ever. The slash-and-burn policies of the
troika have plunged the country into a deep slump. 1.4 million people
are unemployed, including two out of every three youngsters. Levels of
poverty that have not been seen since the war years have become the
norm.
The government of Athens complains (with reason) that the cuts demanded by Brussels are pushing the economy further into recession, pushing tax revenues down, increasing the deficit and forcing them to borrow yet more. But these appeals fall on deaf ears. The Germans and other lenders reply that the southern Europeans have lived beyond their means for years and must “learn discipline”.
Each successive rescue package has served merely to gain a little time. But the markets are not deceived. The final denouement of the Greek crisis has only been postponed, but sooner or later it will become inevitable.
At the same time, Greece is a land of opportunity for financial speculators. The Financial Times published an article entitled “Hedge funds profit in land of Greek opportunity” where we read:
“Greece’s banking sector has been the area of greatest interest. Paulson & Co, Baupost, Dromeus, York Capital, Eaglevale and OchZiff are among those to have taken stakes in Alpha Bank and Piraeus Bank. All have profited handsomely. Frenzied trading in the warrants also means that hedge funds could end up dominating Greek bank share registers”. (11/10/13, our emphasis)
This plundering of Greece, the vicious impositions of the troika, and
the collapse of living standards have provoked a massive wave of
general strikes, demonstrations and mass protests. Two governments have
already fallen, and a third is about to fall. Samaras is struggling to
hold together a fragile coalition that cannot last long. The main
beneficiary will be Syriza. But on the right the Golden Dawn has also
grown.
Impressionistic elements have drawn the conclusion from the rise of Golden Dawn that there is an imminent danger of fascism. But what has happened to Golden Dawn confirms our position on prospects for fascism in present epoch. The Greek bourgeoisie is a vicious and reactionary ruling class, and a section of it would probably be prepared to hand power to the Golden Dawn—if they could. In fact, the most reactionary sections of the ruling class (the shipbuilders) have openly backed and financed it.
Unlike other right-wing political formations in Europe (Fini in Italy, Marine le Pen in France), who are striving to disassociate themselves from their fascist past and present a “respectable” parliamentary image, Golden Dawn is an openly fascist organization whose close links with the police and army officers have been exposed. These mad dogs had their own agenda, which seems to have included the seizure of power.
The problem is that the Greek working class is powerful, militant and undefeated. The bourgeoisie fears that by taking premature action, the fascists can provoke a mass movement that will be impossible to control. The Golden Dawn thugs went too far when they murdered a well-known left-wing singer, provoking massive protests. The Greek bourgeoisie was compelled to take some measures against them.
Of course, the bourgeoisie has no intention of wiping out the fascists. They have taken some measures for cosmetic purposes to calm the anger of the masses. Later on, the fascists will regroup under another banner, probably as part of a right-wing coalition with a more respectable (less Nazi) image. Meanwhile, the most rabid lumpenproletarian elements will remain as an auxiliary to the repressive apparatus of the state (to which they are organically linked), acting as strike-breakers and thugs, beating up immigrants and attacking left-wing people.
The immediate perspective for Greece is neither fascism nor Bonapartism but a further swing to the left. The inevitable collapse of the Samaras government will pose the question of a Syriza government. But to the degree that Tsipras gets closer to power, he moderates his language in the hope that he will get more votes. On the contrary, this provokes a mood of scepticism on the part of the Greek people who have grown accustomed to leaders who promise much and deliver little when they are elected.
The real mood of the masses was shown in an opinion poll that revealed that the workers of Greece are already drawing revolutionary conclusions. It stated that 63% of Greek people want a “profound change” in society—which means a revolution—while 23% say directly that they stand for revolution. The problem is not any lack of revolutionary maturity on the part of the masses, but the fact that not one of the existing parties or leaders is prepared to give a conscious expression to the burning desire of the masses to change society.
For the last four or five years the Greek workers have amply demonstrated their will to change society. They have staged one general strike after another. But the seriousness of the crisis is such that even the stormiest strikes and demonstrations cannot solve the problem. The call for more one-day strikes will meet with increased scepticism in the factories. Blocked on the road of strikes and demonstrations, the workers will move onto the electoral plane. Sooner or later they will elect a Left government, which will confront Syriza with a straight choice: either carry out a socialist policy or accept the role of managing corrupt and degenerate Greek capitalism. This will mark a new stage in the Greek revolution, opening up important possibilities for the Greek Marxists.
The BRICS
Since
the end of the Second World War, the most important motor force for the
world economy has been the growth in world trade. However, the UN
agency UNCTAD now predicts that world trade is likely to remain sluggish
for many years, and this will have profound effects on emerging
economies that have depended on exports.The exaggerated hopes that Asia could act as the motor force of the world economy have been dashed. China’s growth is slowing and India is falling still faster. The European economy remains stalled and Japan’s prospects are already fading. The Japanese government has attempted to revive a stagnant economy by pumping in money. But this policy is completely unsound. Japan’s government debt amounts to 250% of GDP. The BRICS are all in the same position and even IMF predictions for the South East Asian economy have had to be scaled sharply downwards. The IMF now talks of “a structural slow-down occurring” in emerging economies.
Growth in the so-called emerging markets has slowed. This is not difficult to understand. If Europe and the USA are not consuming, China cannot produce. If China cannot produce, then countries like Brazil, Argentina and Australia will not be able to export their commodities.
The speculative money that flowed into the BRICs in the last period is now flowing out, causing a steep fall in the value of their currency. The Indian rupee, the Indonesian rupiah, the Argentinean peso, the Brazilian real and the South African rand have all registered sharp falls. Nigeria’s finance minister warned that the end of US quantitative easing will rattle emerging markets and lift their borrowing costs. The same point was made by Najib Razak, the Malaysian prime minister, who predicted that money will flow back to the USA.
Strong economic growth and rising living standards blunted the class struggle for much of the past decade, but in both Brazil and Turkey growth has plummeted. In fact, across the developing world growth has slowed markedly to levels that make it difficult or impossible to permit the entry into the labour markets of the new generation of youth.
China
The crisis of the BRICS is organically related to the slowdown in
China. The emergence of China, which was seen by some—even some who
called themselves “Marxists—as a guarantee of the future of world
capitalism, has only served to sharpen all the contradictions. For a
period, the explosive growth of the Chinese economy provided oxygen to
world capitalism. Now this colossal advantage turns out to be a colossal
problem. The massive investment in Chinese industry was bound to
express itself as a mass of cheap commodities, which had to find a
market outside China. For global manufacturers, the avalanche of cheap
Chinese exports over the past decade has exacerbated the crisis of
overproduction.
The combination of a vast supply of cheap labour from the countryside and modern machinery and technique fuelled by state subsidies has enabled China swiftly to develop a powerful industrial base. It has destroyed jobs and capacity all over the world, shuttering factories in competitor nations. Foreign companies learned to tremble at the flow of cheap goods from China. Initially, there was a very high rate of profit, but as Marx explains, all that happens is that other capitalists pile into the market and the rate of profit reaches more normal levels. We see this happening in China. The period of explosive growth has reached its limits. Now China finds itself faced with the same problems that afflict every capitalist economy.
China's low-cost goods have come to dominate many sectors. But once the bulk of global manufacturing in a given industry has moved to China, overcapacity quickly follows. Now they are increasingly worried about rising overproduction (“overcapacity”) in the Chinese economy. This poses a significant risk to what is now the world’s second-biggest economy.
During the global financial crisis, China helped save the capitalist system by launching a colossal stimulus package that provided a supply of oxygen to the world market. As a result, China's economy steamed along, growing 8.7 per cent and 10.3 per cent in 2009 and 2010. This was the biggest experiment in Keynesian economics in history. But now the contradictions have become apparent. Now many of the industries that were beneficiaries of the stimulus—from steel to shipbuilding to metals smelting—are paralysed by huge overcapacity, or, to give it its correct name, overproduction. The slowdown in China's economic growth spells enormous losses and the necessity for a painful process of elimination.
The Financial Times (17/6/2013) comments: “From chemicals and cement to earthmovers and flat screen televisions, Chinese industry is awash with excess capacity that is driving down profits inside and outside the country and threatens to further destabilise China’s already shaky growth”.
China produces nearly half of the world’s aluminium and steel and about 60 per cent of the world’s cement, but new productive capacity is being added rapidly, even as the economy slows down and export markets dwindle. Though China's steel production is running at record levels, only about 80 per cent of the country's production capacity is being used. Industry chiefs and government officials say more excess capacity needs to be shut down in order for the sector to come back into balance.
Again:
“Only about two-thirds of cement capacity was used last year, according to a survey from the China Enterprise Confederation.
“Usha Haley writes: ‘There is enormous overcapacity and no gauging of supply and demand and we found that subsidies account for about 30 per cent of industrial output. Most of the companies we looked at would probably be bankrupt without subsidies.’
“In almost every industry companies' investment and growth plans have been predicated on the belief that the government would never allow growth to drop below 8 or 9 per cent. But that is no longer the case. China's growth fell to 7.5% and later increased to around 7.8 per cent. But even this was its slowest pace in 13 years.
“Overcapacity in the auto industry is rampant and in the case of Geely, which bought Volvo in 2010, more than half of its net profits came directly from subsidies in 2011. In fact, subsidy income for Geely that year was more than 15 times greater than the next biggest source of net profits—‘sales of scrap metal’—according to analysis from Fathom China.” (FT, 17/6/2013)
The scale of overcapacity and the slowdown in Chinese growth suggest
many more firms will face bankruptcy. This will have profound effects on
the psychology of every class in China.
Perspectives for class struggle
All the successes of China’s economy were based ultimately on the
labour of the Chinese workers, toiling for low wages in conditions
resembling those of Victorian England. Nowhere is inequality so resented
as in China, which was supposed to be a “socialist” country. A new
class of Chinese bourgeois has emerged, revelling in luxuries unknown to
the vast majority of the population.
China is run by a tiny elite of super-rich oligarchs who have enriched themselves by plundering the state and brutally exploiting the labour of the Chinese workers. But the base of the Chinese capitalist class is very narrow. Out of a population of around 1.354 billion, there are only 1.2 million millionaires (in US dollars). That is: 0.1% of the population. The number of dollar millionaires is rapidly growing but shows also how weak the capitalists are in China. 1.2 million Millionaires are less than the absolute numbers of millionaires in Britain or Italy.
It is true that beneath them there is a layer of sub-exploiters and sub-sub-exploiters: factory managers, directors, foremen, engineers, bureaucrats and officials in the State and Party institutions. Together with their families, they form part of the establishment. But even after taking this into account, the overwhelming majority of the population is excluded from the economic wealth and the power that comes with it. The obscene wealth of the ruling elite and their children (the “Princelings”) is bitterly resented by the population.
The all-pervasive corruption that flourishes at every level is an additional cause of indignation. The highly publicized trials that often lead to the death sentence for officials who have gone too far with their corrupt practices are a way in which the ruling elite attempts to assuage the anger of ordinary Chinese, while at the same time trying to prevent the corruption that is an inevitable concomitant of a bureaucratic and totalitarian regime from consuming an excessive amount of the wealth created by the working class.
The new generation of young workers is not prepared to put up with the low wages and bad conditions that the older generation of former peasants recently arrived from dirt-poor villages were willing to accept. The growing mood of discontent in Chinese society is expressed by the rising number of strikes, demonstrations and suicides in the factories. In a totalitarian society, where discontent is forcibly suppressed and there are few legal safety valves, explosions can occur suddenly and without warning. It is no accident that for the first time in history the Chinese state spends more on internal security than on defence.
Russia
Unlike the majority of European states, the Russian state does not
yet have a serious debt problem. Thanks to oil and gas exports and the
growth of the economy in the last period, it has built up considerable
financial reserves. But this has now reached its limits. In common with
the other BRIC countries, the Russian economy is also in decline, with
an estimated rate of growth of around 1%.
This is the background to a rising mood of discontent, not only among the working class but also in a wide layer of the petty bourgeoisie, reflected in the rise of the anti-Putin opposition. As a result of the expansion of credit, the majority of workers and young people now find themselves burdened with heavy debts. The same is true of companies and municipalities. The result is falling investment and economic stagnation. For the first time, sectors of the economy like the automotive industry are experiencing serious problems with sales.
The economy is being propped up by the state through Keynesian methods of direct state investment in infrastructure, or in projects like the 2014 Sochi Winter Olympic Games and the FIFA World Cup in 2018. This modern equivalent of the Egyptian Pharaohs' pyramid-building is possible only on the basis of the exploitation of low-paid workers and the high price of oil and gas. However, a long period of high oil prices has had inevitable results in new technologies for oil and gas production in the USA (“fracking”). Putin’s “imperial energy” project has turned into a farce. His hysterical reaction to the antics of Greenpeace in the Barents Sea was a clear sign, not of strength, but of panic.
The growth of the economy in the last period enabled Putin to follow a kind of semi-paternalistic policy. That is what gave his regime the appearance of stability. But this cannot continue for long. The majority of new workers are faced with low wages and bad working conditions. There has been a steep increase in the numbers of illegal or semi-legal migrants from Central Asia. Social and political stability is already showing signs of strain, and this determines Putin's policy—and also that of the opposition.
The main aim of the liberal opposition is to wrest petty-bourgeois elements from the arms of Putin. The main figure in the opposition is now Alexey Navalny. In the last election for Moscow's mayor in September 2013, he won 27.24%, as against 51% for Putin's candidate, Sobyanin. The Communist Party candidate and leader of the “left” wing of the Party, Ivan Melnikov, obtained only 10.69%.
A lawyer and small investor, Navalny was expelled from the Liberal Party Yabloko for nationalism. His programme includes a struggle against corruption, “cheap government”, low taxation, the introduction of a visa regime for the countries of the former Soviet Central Asia and the deportation of unemployed non-citizens.
The reintroduction of capitalism has led to an extreme polarisation of wealth. The latest Credit Suisse Wealth Report shows graphically how much of world wealth is still concentrated in US hands in terms of absolute numbers of dollar millionaires, and the amount of accumulated wealth that is concentrated in their hands.
But it also highlights the fact that Russia now has the highest level of wealth inequality in the world, apart from small Caribbean nations with resident billionaires. Worldwide, billionaires collectively account for 1%–2% of total household wealth; in Russia today, 110 billionaires own 35% of all wealth.
The increase in tension between the classes was partially and temporarily alleviated by economic growth. But now that has slowed sharply, reflecting the general crisis of world capitalism. The IMF slashed its GDP growth forecast for Russia in 2013 to +1.5%, compared to 5% to 8% growth before the financial crisis. The situation in Russia is pointing towards a social explosion, even in the short term.
Lenin said that the first condition for revolution is that the ruling stratum should be in crisis and unable to continue ruling in the old way. There is a general mood of pessimism in the establishment, at times bordering on panic. Putin's main idea is to build a strong police state before the crisis breaks.
Lenin’s second condition for revolution is a ferment in the middle layers of society, which swing between revolution and counterrevolution. The mass demonstrations against electoral fraud, which were predominantly middle class in character, indicate that this process has already begun.
The third condition, that the workers should be prepared to struggle and make sacrifices to change society, has not yet matured in Russia. But the advent of economic crisis and growing disillusionment with Putin means that it is only a matter of time before Russia experiences social explosions similar to what have taken place in Turkey and Brazil.
The problem is one of leadership. The complete inability of the
so-called Communist Party to offer an alternative to the masses means
that the protests have been led by bourgeois Liberals and petty
bourgeois democrats. But this movement is only a symptom of a growing
unrest, which sooner or later must be expressed in a social explosion.
In time, the Russian working class will rediscover in action the real
traditions of the October Revolution and Bolshevism.
India and Pakistan
The Indian bourgeoisie had delusions of grandeur. Prime Minister
Monamhan Singh claimed that India’s “cruising speed” was 8-9%. Now it is
about half that. Private investment has dried up. Inflation is more
than 10% and rising. The rupee fell 13% in the space of three months in
2013. The Economist (24/8/13) warned: “Tycoons who used to cheer India’s rise as a superpower now warn of civil unrest”.
This prediction is already becoming reality. The ferment in Indian
society is reflected in a series of mass movements on different issues.
First there was the anti-corruption movement, which was followed by mass
demonstrations against rape and attacks on women. Both were largely
petty-bourgeois in character but revealed an undercurrent of discontent
with the conservative Hindu-nationalist foundations of the Indian state.
These manifestations were like the froth on the waves of an ocean;
that is to say, symptoms of far deeper and stronger currents below the
surface. The discontent of the masses, who have not benefitted from the
growth in the Indian economy, is turning into anger. That was shown by a
series of peasant insurrections and above all by the two-day general
strike in February 2013.
On the other side of an artificial frontier, Pakistan has been
reduced to a level of misery worse than anything it has seen since
Independence. Economic collapse, terrorist attacks, suicide bombings,
power cuts, price hikes, suicides of impoverished families, the selling
of children and human organs, the torture and murder of women. All this
brings to mind Lenin’s statement: “Capitalism is horror without end”.
The masses’ hopes for improvement under a PPP government were cruelly
betrayed. Now the right-wing government of the Muslim League is
carrying out further attacks. They are plundering the state through the
privatizing of state-owned enterprises like Pakistan International
Airlines, the postal service, railways, WAPDA (Water and Power
Development Authority), and other companies.
As a result, there will be more sackings, more unemployment, more
poverty and more economic dislocation. The misery of the people is
aggravated by the monstrous religious sectarianism, communal massacres,
the bloody proxy wars in Baluchistan, the drone attacks in Pukhtoonhua,
etc. The Pakistani secret service (ISI) continues to operate like a
state within a state, stirring up conflicts, murder and violence to
serve its dark intrigues. As a way of diverting attention from the
terrible suffering of the masses, the degenerate Pakistan ruling class
is playing with fire in conflicts in Afghanistan and with India. The
conflict in Kashmir continues to poison relations between the two
countries like an infectious ulcer.
On a capitalist basis there is no way out. Neither the Muslim League
nor the PPP nor a military dictatorship can succeed. Only the Socialist
Revolution can show a way out of the hell in which millions of people
are living in Pakistan, India, Bangladesh, Nepal and Sri Lanka. The
terrible conditions of life are becoming intolerable. The objective
conditions are being prepared for a revolutionary upsurge on the lines
of the Revolution of 1968-69. That Revolution was derailed by the lack
of leadership. But the growing forces of the IMT in Pakistan, under the
most difficult conditions imaginable, offer the hope of future victory.
We must redouble our efforts to strengthen the forces of the Pakistan
Marxists to ensure that victory.
Afghanistan
After thirteen years of bloody fighting, the imperialists are
striving to extricate themselves from the Afghan morass. When the US-led
coalition army went into Afghanistan, we predicted that their initial
success would eventually end in failure. We wrote at the time:
“The swiftness of the collapse of the Taliban's defence, and the ease with which the Northern Alliance entered Kabul, has led many to conclude that the war is over and that the Taliban are finished. This is a serious misreading of the situation. […]
“The Taliban have lost their grip on power, but not their potential for making war. They are very used to fighting a guerrilla war in the mountains. They did it before and can do it again. In the north, they were fighting in alien and hostile territory. But in the villages and mountains of the Pushtoon area, they are in their own homeland. The prospect opens up of a protracted guerrilla campaign which can go on for years. The first part of the allied war campaign was the easy bit. The second part will not be so easy. British and American troops will have to go into the Pushtoon areas on search and destroy missions, where they will be sitting targets for the guerrillas. Casualties will be inevitable. At a certain stage this will have an effect on public opinion in Britain and America.
“The Americans had hoped to be able to carry out a quick, surgical strike against bin Laden, relying mainly on air power. Instead, the conflict is becoming ever more complicated and difficult, and the prospect of an end is postponed almost indefinitely. They will have to keep troops stationed not only in Afghanistan but in Pakistan and other countries in order to prop them up. […]
“This is a far worse and more dangerous position than the one in which the Americans found themselves on September 11. Washington will now be compelled to underwrite the bankrupt and unstable regime in Pakistan, as well as all the other ‘friendly’ states in the region, which are being destabilized by its actions. If the aim of this exercise was to combat terrorism, they will find they have achieved the opposite. Before these events, the imperialists could afford to maintain a relatively safe distance from the convulsions and wars of this part of the world, but now they are completely entangled in it. By their actions since September 11, the USA and Britain has got themselves dragged into a quagmire, from which it will be difficult to extricate themselves.”
This was written on November 15, 2001 (Afghanistan after the fall of Kabul: Is the war over?). Twelve years later there is no need to change a single word of what we wrote then.
With a per capita GDP of $528 in 2010/11, Afghanistan is among the 10
poorest countries in the world. In 2008, 36 percent of the population
lived below the poverty line; more than half of the population is
considered vulnerable. At 134 per 1,000 live births, infant mortality is
highest in the world. Life expectancy is 48.1 years. 75 percent of the
population is illiterate. It is also the world’s largest supplier of
opium.
The vast amounts of money spent on a useless war would have been
sufficient to transform the lives of the people. Instead, the
imperialists have devastated the country and are now compelled to leave,
having solved nothing. They are negotiating with the Taliban, who will
inevitably have a big say in any future government in Kabul. Nothing has
been achieved except to further destabilise the entire region, starting
with Pakistan.
The crisis of Europe
The global nature of the crisis makes it impossible to “decouple”
Europe and America. The announcement that the USA was going to wind down
quantitative easing caused an immediate upheaval in the markets, which
pushed up interest rates across the eurozone. The effect was to tighten
monetary policy when the recession and rising unemployment required
precisely the opposite policy.
Nowhere is the crisis revealed in starker terms than in Europe. All
the dreams of the European bourgeoisie of a united capitalist Europe
have rapidly been reduced to ashes. All the national contradictions have
come to the surface, threatening the very future, not only of the euro,
but of the European Union itself.
The weight of debt is like a gigantic millstone round the neck of the
European economy, dragging it down and preventing a real recovery.
Nobody knows the real extent of the debts of Europe’s banks. The bad
loans of EU banks have reached at least €1.05 trillion (twice as much as
in 2008) according to the Wall Street Journal. But this is only an
estimate (i.e., a guess) and the real figure will be much greater. Most
investment banks estimate that Europe’s banking sector must shrink by
around €2 trillion to €2.5 trillion to reach a size that could be
described as adequately capitalized.
There has been a sluggish recovery in Germany, but Italy and Spain
remain in recession and Greece is in a deep slump. Italy has lost 9% of
its GDP since the beginning of the crisis and Greece at least 25%. Nor
will it be possible for Germany to maintain growth if there is no
recovery in the eurozone as a whole, which is the main market for its
exports. In 2012, European car sales fell to their lowest level since
records began 24 years ago, in 1990. Car sales in Europe continued to
fall in six of the first eight months of 2013.
The euro’s launch in 1999 was hailed as the key to a golden future of
peace, prosperity and European integration. But as we predicted, under
conditions of crisis it has become the source of national conflict and
disintegration.
Although the euro is not the cause of the problems of countries like
Greece, Italy and Spain, as narrow-minded nationalists imagine, it has
undoubtedly exacerbated them to the nth degree.
In the past, these countries could find a solution to a crisis
through devaluation. Now this is impossible. Instead of boosting their
share of markets at the expense of foreign competitors by devaluing the
currency, they are compelled to resort to “internal devaluation”, that
is to say, savage austerity. But this only has the effect of deepening
the slump and sharpening the class divisions in society.
The immediate catalyst was the Greek crisis, which threatens the euro
and the European Union itself. It was natural that the crisis should
emerge first in the weakest links in the chain of European capitalism.
But the repercussions of the Greek crisis affect the whole of Europe.
During the upswing that followed the launch of the euro, Germany gained a
lot from exporting to the eurozone. What began as a tremendous plus has
become a tremendous minus. When Mario Draghi, the European Central Bank
president, promised that he would use all the economic resources at his
disposal to save the euro, he forgot to say where these resources would
come from.
In any fiscal transfer to save the eurozone, the transfer will always
be of German taxpayers' money to somewhere else. This poses some
serious problems for Angela Merkel. Germany has adopted the position of
an implacable defender of austerity and fiscal restraint. It can afford
to do so. It is the strongest of the European economies, and economic
power must sooner or later be expressed as political power. Despite the
illusions of the French bourgeoisie in the past, it is Germany that
decides everything.
However, the politics of austerity has definite social and political
limits. Countries like Greece and Portugal have already reached these
limits, and Spain and Italy are not far behind. Despite the recent
optimism of the bourgeoisie, nothing has been solved. The eurozone
crisis can erupt again at any moment. The imposition of vicious
austerity provoked a severe political crisis in Portugal, where huge
mass protests almost led to the collapse of the government. Portugal’s
public debt is rising, and is likely to be above 130 per cent of
national output by 2015. So what was all the sacrifice and pain for?
Some sections of the "left" in Europe - for example Lafazanis, the
leader of the left in SYRIZA - are calling for an exit from the Euro,
and even from the EU itself, as a solution to the crisis and the
problems of the working class. However, as Marxists we do not see the
crisis as being due to the existence of the European Union. It is a
crisis of the capitalist system.
The European Union is nothing more than a bosses' union aimed at
bolstering the interests of the powerful European capitalists. The EU is
imposing anti-working class policies everywhere. And this body cannot
be reformed into some kind of “social Europe”. We are opposed to it, but
the answer is not a series of little national capitalisms, but the
unity of the workers of Europe in the struggle for a United States of
Socialist Europe.
The political instability, caused by the austerity measures, is
reflected in a series of unstable coalition governments and violent
swings of public opinion. In Italy they only managed to put together a
coalition of the Democratic Party with Berlusconi with the greatest
difficulty, and the leaders of the coalition spend most of their time
attacking each other in public. Berlusconi’s main concern is to keep out
of gaol. The general interests of Italian capitalism must take a very
poor second place to this overriding consideration.
The unedifying spectacle of squabbling and splits at the top,
corruption scandals (as in Spain), not delivering on their promises
(France), and politicians filling their pockets (Greece), while
inflicting severe pain on the rest of society has caused a general
backlash against all the existing parties and their leaders. This is an
alarming development for the bourgeoisie, which is using up the
political reserve weapons it possesses to defend its system. A massive
social and political crisis is being prepared in Europe.
The bourgeoisie is staring into the abyss, and may well be forced to
retreat. Apart from anything else, austerity has signally failed to
reactivate the economy. On the contrary, it has made a bad situation
infinitely worse. But what is the alternative? The bourgeoisie is caught
between the devil and the deep blue sea. It is not clear whether the
eurozone will break up completely—a prospect that terrifies the
bourgeoisie and not just in Europe. In order to prevent a complete
breakdown, the EU bosses will be forced to abandon some of their more
stringent conditions. In the end very little will be left of the
original idea of European unification, which is impossible on a
capitalist basis.
The problem of the European bourgeoisie is simply stated. The ruling
class cannot afford to maintain the concessions that were won by the
working class over the last half century, but the working class cannot
accept any further cuts in living standards. Everywhere we see sharp
falls in living standards; wage cuts; emigration is back as a phenomenon
in countries of southern Europe towards countries like Germany. But
when Germany is also hit by recession, where will they emigrate to?
The working class has been enormously strengthened since the Second
World War. The social reserves of reaction have been sharply reduced.
The peasantry, which was a very large proportion of society in the past,
not only in Spain, Italy, France and Greece, but also in Germany, has
been reduced to a small minority. Sections like the teachers, civil
servants and bank employees, who in the past regarded themselves as
middle class and would not dream of joining a union or going on strike,
are now among the most militant parts of the labour movement. The same
is true of the students, who before 1945 were mainly right-wing or even
fascists, and are now firmly on the Left and in many cases open to
revolutionary ideas.
The European workers have not suffered a decisive defeat for decades.
It will not be easy to force them to give up what they have conquered.
That was shown in October 2013 by the Belgian firefighters who turned up
outside the parliament with thirty lorries, blocked all access, and
sprayed the police with water and foam, demanding an extra €75 million
to increase staff to acceptable security levels. The government were
forced to give in when the railway workers also offered to help
firefighters in blocking rail stations. This change in the balance of
forces poses a serious dilemma for the bourgeoisie in applying the
necessary austerity measures. Nevertheless, the ruling class is
compelled by the crisis to continue their attacks.
Germany
On the surface it would seem that Germany has escaped the worst of
the crisis. But Germany’s turn will come. The Achilles heel of German
capitalism is its unprecedented dependence on exports: in 2012 German
exports reached a record 44% of GDP (€1.1 trillion). The reason for this
apparent success was that the real wages of German workers have been
held at the same level that they were in1992. According to the FT:
“Germany now has the highest proportion of low-paid workers relative to
national median income in western Europe”. One quarter of the workforce
are on “low income” wages. The number of temporary workers has trebled
in ten years.
German exports, the sole source of growth in the last period, were
thus based on low wages and high levels of investment. The high levels
of productivity squeezed from the German workers gave German industry a
big advantage over its European rivals, as we see from the following
figures:
Performance of industrial production 2000-October 2011:
Germany + 19.7%
Portuga - 16.4%
Italy - 17.3%
Spain - 16.4%
Greece - 29.9%
Portuga - 16.4%
Italy - 17.3%
Spain - 16.4%
Greece - 29.9%
The fact is that German capitalism gained at the expense of its
weaker European rivals who could not compete with its industries. Their
loss was Germany’s gain. The euro then worked for the benefit of Germany
above all. German banks were quite happy to lend money to countries
like Greece to enable them to buy German goods. But now this process has
turned into its opposite. Although they cannot admit it publicly, the
leaked minutes of the first IMF bailout of Greece prove what we have
stated in the past, namely that the bailouts to Greece are above all
needed to save German (and French) banks.
The right-wing demagogues now heap curses on Europe and the euro. But
the more serious strategists of German capitalism are filled with
foreboding. They understand that Germany cannot restore its economic
equilibrium as long as the rest of the eurozone is immersed in crisis.
Where will it export its goods?
Speaking during an important economic summit in the German city of
Hamburg, the former leader of the German SPD, Helmut Schmidt warned
that: “Public confidence in European governments and the European Union
has been shattered and Europe is on the verge of revolution”. He further
stressed that major political and economic changes are necessary in
Europe. But what changes are needed? And who will ensure that they are
carried out?
Britain
The former workshop of the world has lost its industrial base and is
entirely dominated by parasitic finance Capital and services. The UK has
more bankers earning over a million pounds a year than the rest of the
EU. Britain was claiming a “recovery” but the underlying picture is one
of decline.
The recent period has seen the biggest and most consistent fall in
living standards in Britain since the 1860s—over 150 years ago. There
have been warnings of a new explosion amongst the youth along the lines
of the riots that engulfed towns and cities all over Britain a few years
ago. It is estimated that two million children go to school hungry
every morning in Britain. This revelation so shocked the public that the
government hastily announced the introduction of free meals for all
primary school children.
Social attitudes in Britain have seen a massive shift. The old
attitudes of respect and deference towards the establishment have turned
into hatred. The people who were regarded with reverence in the past,
Members of Parliament, the Press, the Judiciary and the Police, are
regarded with suspicion and contempt.
“The public seems to think there is something rotten in the establishment”, states John McDermott in the FT. “In 2010, a Policy Exchange poll found that 81% of Britons agreed with the statement: ‘Politicians don’t understand the real world at all’. The British Social Attitude Survey reported that only 18% trusted governments to put the nation’s needs above a party’s, down from 38% in 1986. Banks fare worse. In 1983, 90% thought they were ‘well run’, compared with 19% today, perhaps the most dramatic attitudinal shift in the report’s 30-year history.
“Britain’s views of its institutions wax and wane—ask Her Majesty. But the successive scandals hitting banking, parliament and the media have the feel of an almost operatic collapse of faith in those who exert power in the country… There is a profound ignorance among the powerful as to the depth of anti-elite sentiment, in Britain and beyond.” (FT, 28/9/13)
Labour leader Ed Miliband was finally compelled to echo, even in the
mildest way, the growing anger against big business and the banks after
mounting pressure from the ranks of the Labour movement. Despite its
limited and feeble character, this provoked an outburst of rage from the
bourgeois press. The Financial Times accused Miliband of “trafficking
in populist gimmickry”. Here we already have an outline of the
contradictory pressures that will be multiplied a thousand fold when
Labour enters government under conditions of crisis.
France
The EU was originally intended to be a condominium in which France
would be the political leader of Europe and Germany the economic engine.
But now these plans of the French ruling class have been exposed as
utopian dreams. Berlin decides everything, Paris decides nothing.
At the last elections the Socialist Party won a sweeping victory at
every level. But very quickly the support for Hollande has evaporated.
Like every other reformist leader he has accepted the role of managing
the crisis of capitalism. As a result he now has the worst ratings of
any President since 1958. The latest polls register an increase in
support for the rightist Marine Le Pen, with Hollande trailing behind.
The media will try to present this as a swing to the right. Actually
it expresses a general mood of frustration and discontent with the
existing parties and disillusionment with the “Left”, which promised
much and has delivered little. It remains to be seen whether the
Communist Party with its reformist policies can win support from the
Socialists or the Front de Gauche or can recover its earlier electoral
successes.
Partly in order to divert attention from his domestic troubles,
Hollande has launched a series of foreign military adventures in Africa
(Mali and the CAR). Blocked by Germany in Europe, he is trying to revive
France’s old role in Africa and the Middle East. But in reality, French
imperialism lacks the muscle to play an independent role on a world
scale. These military adventures will inevitably end in tears, adding
fresh fuel to the flames of discontent at home.
France remains a key country for the class struggle in Europe. The
French workers have shown time and time again that they have never
forgotten their revolutionary traditions. The masses are seeking a way
out of the crisis. They put their trust in the Socialist leaders, but
the latter are organically linked to the capitalist system and the
existing order. The “Left” dashes the hopes of the masses. Already in
the municipal elections, the leaders of the CP and the Parti de Gauche
have broken the Left Front. The CP is in alliance with the SP, a party
of government, while the Parti de Gauche in some municipalities is in
alliance with the Greens, who also have two ministers in the present
government. By breaking the Left Front – at least at municipal level –
they are disappointing those workers and youth who are seeking an
alternative to the left of the SP. It is an indication of the complete
reformist blindness of the CP leaders that they are clinging to the SP
precisely at a time when Hollande and his government are discredited and
deeply unpopular. Instead of maintaining a clear opposition to the
government, they are desperately trying to preserve their positions in
local government. Marxists should demand the leaders of the Left Front
break with the Socialists and the Greens and strengthen the Left Front
on the basis of genuine left and socialist policies.
What we see is a clear process of polarisation between the classes
that will be expressed in a social explosion at a certain stage.
Frustrated on the electoral plane, the workers and youth can take to the
streets as they have done so often in the past. A repetition of May
1968 is being prepared. But this time it will be on a higher plane, and
the Stalinists no longer possess the strength or authority to betray it.
Italy
Italy is teetering on the brink of a downward spiral of downgrades
and rising bond yields. The consequences would be disastrous, not just
for Italy but for the eurozone. Its accumulated debts amount to around
€2 trillion. The government's borrowing costs threaten to strangle the
Italian economy in the long run.
Unemployment is rising. In the last three years, one million people
between the age of 25 and 34 have lost their jobs. Of those, under age
35 only four out of ten are working. Officially, there are over three
million unemployed in total, but many people have given up on looking
for a job because they have no confidence that they are going to find
one. In 2012, more than 9 million people were classed as poor, of which
4.4 million are living in absolute poverty conditions.
A recent survey carried out by Legacoop (the main supermarket chain)
confirms in writing what has been obvious for some time: three million
households—12.3 percent of the population—cannot afford a high-protein
meal every two days; 9 million Italians would not be able to meet an
unexpected expenditure of €800; Italians are increasingly giving up the
use of a car (25 per cent of the population); they no longer go on
holiday (4 million fewer people this summer); and they don’t buy new
clothes (23 per cent of the population). Spending on food in the past
six years has fallen by 14 %, falling to the levels of 1971 (€2,400 per
capita).
The Financial Times describes the tasks facing Italy as “economically
painful and politically suicidal”. (7/10/13) Italian capitalism cannot
compete with Germany and France and is falling behind. In the past it
would have devalued its currency, but with the euro, that avenue is
blocked. Instead it must resort to an “internal devaluation” (that is,
deep cuts in living standards). But for this, a strong government is
needed. That, however, is not possible.
Every one of the parties in Italy is divided. In the PD there is a
split between the old CP apparatus and the openly bourgeois elements
from the Christian Democracy. Monti's small party is riven with factions
and is expected to fall from 10% down to 4% in the next elections. Even
Grillo's Five Stars Movement is divided, with some clearly leaning in
favour of collaboration with the PD.
The union leaders have played a pernicious role in supporting the
so-called national unity government, swallowing all the anti-working
class austerity measures. This particularly applies to the “left”
leaders of the metalworkers’ union, the FIOM who, having aroused the
hopes of the workers, then dashed them by joining CGIL leader Camusso in
signing a common document for the CGIL congress. Here we see the
precise role of left reformism in action. The right-wing trade union
leaders cling to the bourgeoisie and the left union leaders cling to the
right wing. None of them have any faith in the working class, which is
left leaderless at the critical moment.
The betrayal of the leaders can lead to temporary demoralization and
apathy. But that will not be the end of the matter. The Italian
workers—like the Spanish, Greek and French—have a long tradition of
spontaneous, insurrectionary movements. Blocked by their traditional
mass organizations, they will find a way of expressing their anger in an
explosive fashion. That was the meaning of the Hot Autumn of 1969. The
five days of open-ended strike against privatisation of the Genoa
transport workers in November 2013 show the real mood developing in the
Italian working class. Such developments are implicit in the situation
in Italy. And this is still truer in the case of the youth.
Spain
Five years after the start of the recession, Spain's economy will
fall a further 1.4% in 2013. Unemployment is at a record high of nearly
27% of the workforce, with youth unemployment at a painful 57%. Over 6
million jobs have been destroyed since 2007, and hundreds of thousands
of young people been forced to emigrate.
After several years of massive packages of austerity cuts, the budget
deficit in 2013 is still expected to be a huge 6.5% of GDP, while debt
will approach 100% of GDP. Austerity cuts have been combined with
sweeping counter-reforms in the labour market which have allowed Spain
to regain competitiveness in relation to her European neighbours. In
other words, workers have been made to pay the full price of the
capitalist crisis. And after all this pain and suffering all that has
been achieved is vague talk of a mild recovery next year with growth
rates being forecast of a mere 0.2% in 2014 and perhaps a full 1% in
2015. On this basis, it would take until 2021 to even recover the
pre-recession level, nearly 15 lost years!
The truth is that the enormous amount of corporate, household and now
state debt which was accumulated during the long years of the boom have
not yet been absorbed fully by the system. Until that takes place,
there can be no real sustainable recovery for Spanish capitalism. The
current “optimistic” forecasts are based on a recovery of exports, which
is wholly dependent on Europe coming out of recession—a very fragile
basis for optimism.
The impact of the economic crisis on the consciousness of the masses
has been profound and will be long-lasting. To the economic recession we
must add the accompanying corruption scandals affecting all
institutions of bourgeois democracy (the judiciary, the Monarchy,
Congress, the ruling party). What we see in Spain is a crisis of the
regime which is unravelling the whole edifice on which the ruling class
had built its legitimacy since the end of the Franco dictatorship. All
the old ghosts of the past are coming back to haunt the weak and
retrograde Spanish bourgeoisie. The national question in Catalonia,
fuelled by the economic crisis, has revived. The struggle for justice
for the victims of the Franco regime has come back to the fore
uncovering the reactionary character of the state apparatus and the
ruling class under a thin veneer of democracy.
There has been a wave after another of mass mobilisations,
particularly since 2011. The movement of the indignados, the
anti-evictions movement, the education strikes, the battle of the
miners, the spontaneous movement of the civil servants, two 24h general
strikes, etc. Of course, the masses cannot be in a state of permanent
mobilisation and there will be ups and downs, and periods of hiatus.
However, the anger which has accumulated under the surface and that
finds no channel of expression, is still there and can give rise to
explosions at any time.
Portugal
Portugal remains mired in recession, with forecasts for a 2013 GDP
contraction of between 1.6% nd 2.7% and (perhaps) very mild growth in
2014. Unemployment is at a record high of 16%, and the government will
miss the deficit reduction targets for this year (5.5% of GDP is the
target, the real figure will be more like 6%), despite years of massive
austerity cuts imposed by the 2010 €78bn EU bailout.
The 2014 budget includes further cuts in public sector wages of
between 2% and 12% per worker, and €728 million in pension cuts. Yet a
further €3.3bn cuts are needed in 2014, together with yet another
bailout. This has led to a collapse of support for the right-wing
government. In the 2013 local elections the parties of the ruling
coalition were heavily defeated. “The political environment is
deteriorating”, moans the Financial Times.
The Portuguese government, which has slavishly carried out all the
austerity measures dictated by the EU, begs for patience: “Please give
us a little more time”. But the Money-men in Washington, Brussels and
Frankfurt and the troika are not in a mood for patience. As the price
for a new bail-out they will demand cast-iron guarantees that the
austerity programme will continue to be implemented. The stage is set
for even bigger mass protests.
Passos de Coelho, who boasted of being a strong man and a model pupil
of the troika when he was elected in June 2011, is now exposed as the
weak leader of a divided coalition. His government, which has earned the
hatred of the people of Portugal, came very close to collapse after the
general strike on June 27, 2013. This was the latest in a series of
sustained mass mobilisations against the right-wing coalition.
The Portuguese working class is rediscovering the traditions of the
1974-5 Revolution. One million people came to the streets in September
2012, then one and a half million in March 2013. The problem is one of
leadership. The “opposition” Socialist Party is still discredited (it
signed the bailout conditions just before being booted out of office)
and only gains in percentage terms because of the increased rate of
abstention.
The Communist Party is the main beneficiary of this unprecedented
wave of discontent. However, the two parties to the left of the SP are
afflicted by a lack of a serious alternative to the crisis, the Bloco de
Esquerda espousing a reformist-Keynesian “social Europe” and an “audit
to the debt”, while the PCP advocates a semi-Stalinist “patriotic and
democratic” economy outside of the euro.
Greece
After five years of grim austerity the problems of Greece, far from
being solved, are worse than ever. The slash-and-burn policies of the
troika have plunged the country into a deep slump. 1.4 million people
are unemployed, including two out of every three youngsters. Levels of
poverty that have not been seen since the war years have become the
norm.
The government of Athens complains (with reason) that the cuts
demanded by Brussels are pushing the economy further into recession,
pushing tax revenues down, increasing the deficit and forcing them to
borrow yet more. But these appeals fall on deaf ears. The Germans and
other lenders reply that the southern Europeans have lived beyond their
means for years and must “learn discipline”.
Each successive rescue package has served merely to gain a little
time. But the markets are not deceived. The final denouement of the
Greek crisis has only been postponed, but sooner or later it will become
inevitable.
At the same time, Greece is a land of opportunity for financial
speculators. The Financial Times published an article entitled “Hedge
funds profit in land of Greek opportunity” where we read:
“Greece’s banking sector has been the area of greatest interest. Paulson & Co, Baupost, Dromeus, York Capital, Eaglevale and OchZiff are among those to have taken stakes in Alpha Bank and Piraeus Bank. All have profited handsomely. Frenzied trading in the warrants also means that hedge funds could end up dominating Greek bank share registers”. (11/10/13, our emphasis)
This plundering of Greece, the vicious impositions of the troika, and
the collapse of living standards have provoked a massive wave of
general strikes, demonstrations and mass protests. Two governments have
already fallen, and a third is about to fall. Samaras is struggling to
hold together a fragile coalition that cannot last long. The main
beneficiary will be Syriza. But on the right the Golden Dawn has also
grown.
Impressionistic elements have drawn the conclusion from the rise of
Golden Dawn that there is an imminent danger of fascism. But what has
happened to Golden Dawn confirms our position on prospects for fascism
in present epoch. The Greek bourgeoisie is a vicious and reactionary
ruling class, and a section of it would probably be prepared to hand
power to the Golden Dawn—if they could. In fact, the most reactionary
sections of the ruling class (the shipbuilders) have openly backed and
financed it.
Unlike other right-wing political formations in Europe (Fini in
Italy, Marine le Pen in France), who are striving to disassociate
themselves from their fascist past and present a “respectable”
parliamentary image, Golden Dawn is an openly fascist organization whose
close links with the police and army officers have been exposed. These
mad dogs had their own agenda, which seems to have included the seizure
of power.
The problem is that the Greek working class is powerful, militant and
undefeated. The bourgeoisie fears that by taking premature action, the
fascists can provoke a mass movement that will be impossible to control.
The Golden Dawn thugs went too far when they murdered a well-known
left-wing singer, provoking massive protests. The Greek bourgeoisie was
compelled to take some measures against them.
Of course, the bourgeoisie has no intention of wiping out the
fascists. They have taken some measures for cosmetic purposes to calm
the anger of the masses. Later on, the fascists will regroup under
another banner, probably as part of a right-wing coalition with a more
respectable (less Nazi) image. Meanwhile, the most rabid
lumpenproletarian elements will remain as an auxiliary to the repressive
apparatus of the state (to which they are organically linked), acting
as strike-breakers and thugs, beating up immigrants and attacking
left-wing people.
The immediate perspective for Greece is neither fascism nor
Bonapartism but a further swing to the left. The inevitable collapse of
the Samaras government will pose the question of a Syriza government.
But to the degree that Tsipras gets closer to power, he moderates his
language in the hope that he will get more votes. On the contrary, this
provokes a mood of scepticism on the part of the Greek people who have
grown accustomed to leaders who promise much and deliver little when
they are elected.
The real mood of the masses was shown in an opinion poll that
revealed that the workers of Greece are already drawing revolutionary
conclusions. It stated that 63% of Greek people want a “profound change”
in society—which means a revolution—while 23% say directly that they
stand for revolution. The problem is not any lack of revolutionary
maturity on the part of the masses, but the fact that not one of the
existing parties or leaders is prepared to give a conscious expression
to the burning desire of the masses to change society.
For the last four or five years the Greek workers have amply
demonstrated their will to change society. They have staged one general
strike after another. But the seriousness of the crisis is such that
even the stormiest strikes and demonstrations cannot solve the problem.
The call for more one-day strikes will meet with increased scepticism in
the factories. Blocked on the road of strikes and demonstrations, the
workers will move onto the electoral plane. Sooner or later they will
elect a Left government, which will confront Syriza with a straight
choice: either carry out a socialist policy or accept the role of
managing corrupt and degenerate Greek capitalism. This will mark a new
stage in the Greek revolution, opening up important possibilities for
the Greek Marxists.
The BRICS
Since
the end of the Second World War, the most important motor force for the
world economy has been the growth in world trade. However, the UN
agency UNCTAD now predicts that world trade is likely to remain sluggish
for many years, and this will have profound effects on emerging
economies that have depended on exports.
The exaggerated hopes that Asia could act as the motor force of the
world economy have been dashed. China’s growth is slowing and India is
falling still faster. The European economy remains stalled and Japan’s
prospects are already fading. The Japanese government has attempted to
revive a stagnant economy by pumping in money. But this policy is
completely unsound. Japan’s government debt amounts to 250% of GDP. The
BRICS are all in the same position and even IMF predictions for the
South East Asian economy have had to be scaled sharply downwards. The
IMF now talks of “a structural slow-down occurring” in emerging
economies.
Growth in the so-called emerging markets has slowed. This is not
difficult to understand. If Europe and the USA are not consuming, China
cannot produce. If China cannot produce, then countries like Brazil,
Argentina and Australia will not be able to export their commodities.
The speculative money that flowed into the BRICs in the last period
is now flowing out, causing a steep fall in the value of their currency.
The Indian rupee, the Indonesian rupiah, the Argentinean peso, the
Brazilian real and the South African rand have all registered sharp
falls. Nigeria’s finance minister warned that the end of US quantitative
easing will rattle emerging markets and lift their borrowing costs. The
same point was made by Najib Razak, the Malaysian prime minister, who
predicted that money will flow back to the USA.
Strong economic growth and rising living standards blunted the class
struggle for much of the past decade, but in both Brazil and Turkey
growth has plummeted. In fact, across the developing world growth has
slowed markedly to levels that make it difficult or impossible to permit
the entry into the labour markets of the new generation of youth.
China
The crisis of the BRICS is organically related to the slowdown in
China. The emergence of China, which was seen by some—even some who
called themselves “Marxists—as a guarantee of the future of world
capitalism, has only served to sharpen all the contradictions. For a
period, the explosive growth of the Chinese economy provided oxygen to
world capitalism. Now this colossal advantage turns out to be a colossal
problem. The massive investment in Chinese industry was bound to
express itself as a mass of cheap commodities, which had to find a
market outside China. For global manufacturers, the avalanche of cheap
Chinese exports over the past decade has exacerbated the crisis of
overproduction.
The combination of a vast supply of cheap labour from the countryside
and modern machinery and technique fuelled by state subsidies has
enabled China swiftly to develop a powerful industrial base. It has
destroyed jobs and capacity all over the world, shuttering factories in
competitor nations. Foreign companies learned to tremble at the flow of
cheap goods from China. Initially, there was a very high rate of profit,
but as Marx explains, all that happens is that other capitalists pile
into the market and the rate of profit reaches more normal levels. We
see this happening in China. The period of explosive growth has reached
its limits. Now China finds itself faced with the same problems that
afflict every capitalist economy.
China's low-cost goods have come to dominate many sectors. But once
the bulk of global manufacturing in a given industry has moved to China,
overcapacity quickly follows. Now they are increasingly worried about
rising overproduction (“overcapacity”) in the Chinese economy. This
poses a significant risk to what is now the world’s second-biggest
economy.
During the global financial crisis, China helped save the capitalist
system by launching a colossal stimulus package that provided a supply
of oxygen to the world market. As a result, China's economy steamed
along, growing 8.7 per cent and 10.3 per cent in 2009 and 2010. This was
the biggest experiment in Keynesian economics in history. But now the
contradictions have become apparent. Now many of the industries that
were beneficiaries of the stimulus—from steel to shipbuilding to metals
smelting—are paralysed by huge overcapacity, or, to give it its correct
name, overproduction. The slowdown in China's economic growth spells
enormous losses and the necessity for a painful process of elimination.
The Financial Times (17/6/2013) comments: “From chemicals and
cement to earthmovers and flat screen televisions, Chinese industry is
awash with excess capacity that is driving down profits inside and
outside the country and threatens to further destabilise China’s already
shaky growth”.
China produces nearly half of the world’s aluminium and steel and
about 60 per cent of the world’s cement, but new productive capacity is
being added rapidly, even as the economy slows down and export markets
dwindle. Though China's steel production is running at record levels,
only about 80 per cent of the country's production capacity is being
used. Industry chiefs and government officials say more excess capacity
needs to be shut down in order for the sector to come back into balance.
Again:
“Only about two-thirds of cement capacity was used last year, according to a survey from the China Enterprise Confederation.
“Usha Haley writes: ‘There is enormous overcapacity and no gauging of supply and demand and we found that subsidies account for about 30 per cent of industrial output. Most of the companies we looked at would probably be bankrupt without subsidies.’
“In almost every industry companies' investment and growth plans have been predicated on the belief that the government would never allow growth to drop below 8 or 9 per cent. But that is no longer the case. China's growth fell to 7.5% and later increased to around 7.8 per cent. But even this was its slowest pace in 13 years.
“Overcapacity in the auto industry is rampant and in the case of Geely, which bought Volvo in 2010, more than half of its net profits came directly from subsidies in 2011. In fact, subsidy income for Geely that year was more than 15 times greater than the next biggest source of net profits—‘sales of scrap metal’—according to analysis from Fathom China.” (FT, 17/6/2013)
The scale of overcapacity and the slowdown in Chinese growth suggest
many more firms will face bankruptcy. This will have profound effects on
the psychology of every class in China.
Perspectives for class struggle
All the successes of China’s economy were based ultimately on the
labour of the Chinese workers, toiling for low wages in conditions
resembling those of Victorian England. Nowhere is inequality so resented
as in China, which was supposed to be a “socialist” country. A new
class of Chinese bourgeois has emerged, revelling in luxuries unknown to
the vast majority of the population.
China is run by a tiny elite of super-rich oligarchs who have
enriched themselves by plundering the state and brutally exploiting the
labour of the Chinese workers. But the base of the Chinese capitalist
class is very narrow. Out of a population of around 1.354 billion, there
are only 1.2 million millionaires (in US dollars). That is: 0.1% of the
population. The number of dollar millionaires is rapidly growing but
shows also how weak the capitalists are in China. 1.2 million
Millionaires are less than the absolute numbers of millionaires in
Britain or Italy.
It is true that beneath them there is a layer of sub-exploiters and
sub-sub-exploiters: factory managers, directors, foremen, engineers,
bureaucrats and officials in the State and Party institutions. Together
with their families, they form part of the establishment. But even after
taking this into account, the overwhelming majority of the population
is excluded from the economic wealth and the power that comes with it.
The obscene wealth of the ruling elite and their children (the
“Princelings”) is bitterly resented by the population. The all-pervasive
corruption that flourishes at every level is an additional cause of
indignation.
The highly publicized trials that often lead to the death sentence
for officials who have gone too far with their corrupt practices are a
way in which the ruling elite attempts to assuage the anger of ordinary
Chinese, while at the same time trying to prevent the corruption that is
an inevitable concomitant of a bureaucratic and totalitarian regime
from consuming an excessive amount of the wealth created by the working
class.
The new generation of young workers is not prepared to put up with
the low wages and bad conditions that the older generation of former
peasants recently arrived from dirt-poor villages were willing to
accept. The growing mood of discontent in Chinese society is expressed
by the rising number of strikes, demonstrations and suicides in the
factories. In a totalitarian society, where discontent is forcibly
suppressed and there are few legal safety valves, explosions can occur
suddenly and without warning. It is no accident that for the first time
in history the Chinese state spends more on internal security than on
defence.
Russia
Unlike the majority of European states, the Russian state does not
yet have a serious debt problem. Thanks to oil and gas exports and the
growth of the economy in the last period, it has built up considerable
financial reserves. But this has now reached its limits. In common with
the other BRIC countries, the Russian economy is also in decline, with
an estimated rate of growth of around 1%.
This is the background to a rising mood of discontent, not only among
the working class but also in a wide layer of the petty bourgeoisie,
reflected in the rise of the anti-Putin opposition. As a result of the
expansion of credit, the majority of workers and young people now find
themselves burdened with heavy debts. The same is true of companies and
municipalities. The result is falling investment and economic
stagnation. For the first time, sectors of the economy like the
automotive industry are experiencing serious problems with sales.
The economy is being propped up by the state through Keynesian
methods of direct state investment in infrastructure, or in projects
like the 2014 Sochi Winter Olympic Games and the FIFA World Cup in 2018.
This modern equivalent of the Egyptian Pharaohs' pyramid-building is
possible only on the basis of the exploitation of low-paid workers and
the high price of oil and gas. However, a long period of high oil prices
has had inevitable results in new technologies for oil and gas
production in the USA (“fracking”). Putin’s “imperial energy” project
has turned into a farce. His hysterical reaction to the antics of
Greenpeace in the Barents Sea was a clear sign, not of strength, but of
panic.
The growth of the economy in the last period enabled Putin to follow a
kind of semi-paternalistic policy. That is what gave his regime the
appearance of stability. But this cannot continue for long. The majority
of new workers are faced with low wages and bad working conditions.
There has been a steep increase in the numbers of illegal or semi-legal
migrants from Central Asia. Social and political stability is already
showing signs of strain, and this determines Putin's policy—and also
that of the opposition.
The main aim of the liberal opposition is to wrest petty-bourgeois
elements from the arms of Putin. The main figure in the opposition is
now Alexey Navalny. In the last election for Moscow's mayor in September
2013, he won 27.24%, as against 51% for Putin's candidate, Sobyanin.
The Communist Party candidate and leader of the “left” wing of the
Party, Ivan Melnikov, obtained only 10.69%.
A lawyer and small investor, Navalny was expelled from the Liberal
Party Yabloko for nationalism. His programme includes a struggle against
corruption, “cheap government”, low taxation, the introduction of a
visa regime for the countries of the former Soviet Central Asia and the
deportation of unemployed non-citizens.
The reintroduction of capitalism has led to an extreme polarisation
of wealth. The latest Credit Suisse Wealth Report shows graphically how
much of world wealth is still concentrated in US hands in terms of
absolute numbers of dollar millionaires, and the amount of accumulated
wealth that is concentrated in their hands.
But it also highlights the fact that Russia now has the highest level
of wealth inequality in the world, apart from small Caribbean nations
with resident billionaires. Worldwide, billionaires collectively account
for 1%–2% of total household wealth; in Russia today, 110 billionaires
own 35% of all wealth.
The increase in tension between the classes was partially and
temporarily alleviated by economic growth. But now that has slowed
sharply, reflecting the general crisis of world capitalism. The IMF
slashed its GDP growth forecast for Russia in 2013 to +1.5%, compared to
5% to 8% growth before the financial crisis. The situation in Russia is
pointing towards a social explosion, even in the short term.
Lenin said that the first condition for revolution is that the ruling
stratum should be in crisis and unable to continue ruling in the old
way. There is a general mood of pessimism in the establishment, at times
bordering on panic. Putin's main idea is to build a strong police state
before the crisis breaks.
Lenin’s second condition for revolution is a ferment in the middle
layers of society, which swing between revolution and counterrevolution.
The mass demonstrations against electoral fraud, which were
predominantly middle class in character, indicate that this process has
already begun.
The third condition, that the workers should be prepared to struggle
and make sacrifices to change society, has not yet matured in Russia.
But the advent of economic crisis and growing disillusionment with Putin
means that it is only a matter of time before Russia experiences social
explosions similar to what have taken place in Turkey and Brazil.
The problem is one of leadership. The complete inability of the
so-called Communist Party to offer an alternative to the masses means
that the protests have been led by bourgeois Liberals and petty
bourgeois democrats. But this movement is only a symptom of a growing
unrest, which sooner or later must be expressed in a social explosion.
In time, the Russian working class will rediscover in action the real
traditions of the October Revolution and Bolshevism.
India and Pakistan
The Indian bourgeoisie had delusions of grandeur. Prime Minister
Monamhan Singh claimed that India’s “cruising speed” was 8-9%. Now it is
about half that. Private investment has dried up. Inflation is more
than 10% and rising. The rupee fell 13% in the space of three months in
2013. The Economist (24/8/13) warned: “Tycoons who used to cheer India’s rise as a superpower now warn of civil unrest”.
This prediction is already becoming reality. The ferment in Indian
society is reflected in a series of mass movements on different issues.
First there was the anti-corruption movement, which was followed by mass
demonstrations against rape and attacks on women. Both were largely
petty-bourgeois in character but revealed an undercurrent of discontent
with the conservative Hindu-nationalist foundations of the Indian state.
These manifestations were like the froth on the waves of an ocean;
that is to say, symptoms of far deeper and stronger currents below the
surface. The discontent of the masses, who have not benefitted from the
growth in the Indian economy, is turning into anger. That was shown by a
series of peasant insurrections and above all by the two-day general
strike in February 2013.
On the other side of an artificial frontier, Pakistan has been
reduced to a level of misery worse than anything it has seen since
Independence. Economic collapse, terrorist attacks, suicide bombings,
power cuts, price hikes, suicides of impoverished families, the selling
of children and human organs, the torture and murder of women. All this
brings to mind Lenin’s statement: “Capitalism is horror without end”.
The masses’ hopes for improvement under a PPP government were cruelly
betrayed. Now the right-wing government of the Muslim League is
carrying out further attacks. They are plundering the state through the
privatizing of state-owned enterprises like Pakistan International
Airlines, the postal service, railways, WAPDA (Water and Power
Development Authority), and other companies.
As a result, there will be more sackings, more unemployment, more
poverty and more economic dislocation. The misery of the people is
aggravated by the monstrous religious sectarianism, communal massacres,
the bloody proxy wars in Baluchistan, the drone attacks in Pukhtoonhua,
etc. The Pakistani secret service (ISI) continues to operate like a
state within a state, stirring up conflicts, murder and violence to
serve its dark intrigues. As a way of diverting attention from the
terrible suffering of the masses, the degenerate Pakistan ruling class
is playing with fire in conflicts in Afghanistan and with India. The
conflict in Kashmir continues to poison relations between the two
countries like an infectious ulcer.
On a capitalist basis there is no way out. Neither the Muslim League
nor the PPP nor a military dictatorship can succeed. Only the Socialist
Revolution can show a way out of the hell in which millions of people
are living in Pakistan, India, Bangladesh, Nepal and Sri Lanka. The
terrible conditions of life are becoming intolerable. The objective
conditions are being prepared for a revolutionary upsurge on the lines
of the Revolution of 1968-69. That Revolution was derailed by the lack
of leadership. But the growing forces of the IMT in Pakistan, under the
most difficult conditions imaginable, offer the hope of future victory.
We must redouble our efforts to strengthen the forces of the Pakistan
Marxists to ensure that victory.
Afghanistan
After thirteen years of bloody fighting, the imperialists are
striving to extricate themselves from the Afghan morass. When the US-led
coalition army went into Afghanistan, we predicted that their initial
success would eventually end in failure. We wrote at the time:
“The swiftness of the collapse of the Taliban's defence, and the ease with which the Northern Alliance entered Kabul, has led many to conclude that the war is over and that the Taliban are finished. This is a serious misreading of the situation. […]
“The Taliban have lost their grip on power, but not their potential for making war. They are very used to fighting a guerrilla war in the mountains. They did it before and can do it again. In the north, they were fighting in alien and hostile territory. But in the villages and mountains of the Pushtoon area, they are in their own homeland. The prospect opens up of a protracted guerrilla campaign which can go on for years. The first part of the allied war campaign was the easy bit. The second part will not be so easy. British and American troops will have to go into the Pushtoon areas on search and destroy missions, where they will be sitting targets for the guerrillas. Casualties will be inevitable. At a certain stage this will have an effect on public opinion in Britain and America.
“The Americans had hoped to be able to carry out a quick, surgical strike against bin Laden, relying mainly on air power. Instead, the conflict is becoming ever more complicated and difficult, and the prospect of an end is postponed almost indefinitely. They will have to keep troops stationed not only in Afghanistan but in Pakistan and other countries in order to prop them up. […]
“This is a far worse and more dangerous position than the one in which the Americans found themselves on September 11. Washington will now be compelled to underwrite the bankrupt and unstable regime in Pakistan, as well as all the other ‘friendly’ states in the region, which are being destabilized by its actions. If the aim of this exercise was to combat terrorism, they will find they have achieved the opposite. Before these events, the imperialists could afford to maintain a relatively safe distance from the convulsions and wars of this part of the world, but now they are completely entangled in it. By their actions since September 11, the USA and Britain has got themselves dragged into a quagmire, from which it will be difficult to extricate themselves.”
This was written on November 15, 2001 (Afghanistan after the fall of Kabul: Is the war over?). Twelve years later there is no need to change a single word of what we wrote then.
With a per capita GDP of $528 in 2010/11, Afghanistan is among the 10
poorest countries in the world. In 2008, 36 percent of the population
lived below the poverty line; more than half of the population is
considered vulnerable. At 134 per 1,000 live births, infant mortality is
highest in the world. Life expectancy is 48.1 years. 75 percent of the
population is illiterate. It is also the world’s largest supplier of
opium.
The vast amounts of money spent on a useless war would have been
sufficient to transform the lives of the people. Instead, the
imperialists have devastated the country and are now compelled to leave,
having solved nothing. They are negotiating with the Taliban, who will
inevitably have a big say in any future government in Kabul. Nothing has
been achieved except to further destabilise the entire region, starting
with Pakistan.
