THE
CRISIS OF WORLD CAPITALISM:
A
FAVORABLE SITUATION FOR REVOLUTION
by Thomas Gounet and Bert De Belder
Workers’ Party of Belgium
November 1998
The economic and financial crisis of world capitalism
has spread like wildfire. Starting in July 1997 with the devaluation of
the baht, the Thai currency, it contaminated the rest of Southeast Asia,
reached Russia, then Brazil and the rest of Latin America.
At this year’s World Economic Forum in Davos,
2000 Very Important Bourgeois declared that the current situation is the
most critical since the ’30s.1 On September 23, Alan Greenspan, president
of the US Federal Reserve, was forced to admit: “It is just not credible
that the United States, or for that matter Europe, can remain an oasis
of prosperity unaffected by a world that is experiencing greatly increased
stress”.2 Robert Rubin, the US Secretary of the Treasury, declared: “Never
before did so many countries have to tackle so many problems at the same
time”.3
Ten years after they arrogantly announced “the
end of history” - by which they meant “the end of socialism” - capitalists
are now worrying about “the end of capitalism”!
A generalised economic crisis
The crisis in Southeast Asia, Russia and Latin
America cannot be explained away by pointing to this or that specific condition.
It is the general condition of capitalism that is at its base. It is interesting
to note that the economic meltdown started in a region, Southeast Asia,
that until recently used to be the motor of capitalist development, with
unparalleled growth figures.
Japan and Southeast Asia were long considered
capitalism’s model pupils. Russia in 1997 and Brazil since the ’90s were
among the “emerging markets”. They all embodied the myth that capitalism
worked, and that it worked in the most differing historical and geographical
conditions. This myth has been blown away: capitalism does not work, and
even a restored capitalism on the basis of a completely destroyed socialism
has gone bankrupt. Between 1990 and 1995, the Gross National Product of
Russia nosedived with 61%. The European Bank for Reconstruction and Development
foresees another 5% decrease for this year, and yet another 7% decrease
for 1999.4
The mechanism that is at the base of the capitalist
crisis, is the rupture between production and consumption. In their race
for maximum profit, the capitalists are forced to continuously increase
production. The rapid development of new technologies allows for a much
higher productivity. But in order to defeat their competitors, capitalists
are also forced to diminish production costs. This means dismissing workers
- from 1991 to 1997, the world’s 200 largest companies killed 832.000 jobs
- and slowing down or even reversing salary increases. This means less
purchasing power for the workers. Consumption slows down, the capitalists’
goods are no longer bought. There is a crisis of overproduction. The capitalists’
profits go down, and the process of accumulation, so essential to the capitalist
cycle of production, sputters.
In the automobile sector, production capacity
worldwide is 70 million cars per year, but only 50 million cars can be
sold every year. Europe alone has an overcapacity of 5 million cars, which
means that another 25 plants of the size of Renault-Vilvoorde are threatened
with closure. The European steel sector is able to produce more than 200
million ton, but it has an actual overcapacity of 50 million. This is 50
times the production of Forges de Clabecq, a steel factory that survived
closure last year only because of a militant workers’ struggle.
The economic crisis brings to the fore all the
inherent contradictions of capitalism. Capitalists want to increase their
profits, but in the fierce competition among capitalists, some may have
to accept lower profits and even losses. Capitalists systematically plan
the expansion of their production, but this enhances the anarchy of the
entire system, as the increased production heightens competition. Capitalists
need to increase production, but at the same time they are forced to implement
anti-worker measures that diminish the workers’ power to purchase the capitalists’
goods. At the same time, capitalists have to invest more, at the expense
of their own consumption. Both situations intensifythe crisis of overproduction.
And more fundamentally, capitalists keep producing
with the one and only, holy motive of private profit, while the social
needs of the proletariat and the people are ever increasing and remain
unmet. The basic contradiction of capitalism is more manifest than ever:
between the growing social character of the forces of production and the
private character of appropriation by the capitalist class, based on its
private ownership of the means of production.
“Neoliberalism”: a new stage of capitalism?
Several petty bourgeois ideologues and political
forces (among social-democrats, revisionists and trotskyites) have called
the appearance of capitalism since the ’80s “neoliberalism”. With the vagueness
characteristic of these forces, they don’t seem to agree whether “neoliberalism”
constitutes an ideology, a set of economic policies or a new stage of capitalism.
In this paper, we will not go into detail why we think that the theory
of “neoliberalism” is in fact neo-reformist. But we will say a few words
about the question whether capitalism has entered a new stage.
What is required to speak of a new stage of capitalism?
A structural change of capitalism itself, or of a major element of it.
According to Lenin, capitalism has known two stages: competitive capitalism
and monopoly capitalism or imperialism.
For the current period, which decisive objective
changes may be observed? We distinguish three new developments: the economic
crisis, the collapse of socialism in the East, and the increasing internationalization
of production. But we think that none of them is sufficient to alter the
essential character of the current stage of capitalism.
1. The economic crisis, as explained above, is
part and parcel of the general crisis of capitalism, that began in the
period around World War I. When an economic crisis superposes itself on
the general crisis of capitalism, the latter deepens and becomes more chronic.
2. The restoration of capitalism in the former
Soviet Union and in the other formerly socialist countries of East and
Central Europe, as well as the introduction of capitalist elements and
bourgeois ideas in China, constitute an important recent development. This
allowed imperialism to recover lost ground. Practically unchallenged, imperialism
could make itself the single guardian and standard bearer of a New Capitalist
World Order, even as it intensified the exploitation and oppression in
the Third World as well as in its own centers.
The restoration of capitalism in those countries
debunks the revisionist illusions regarding the “peaceful coexistence between
socialism and capitalism”, the “peaceful competition” between the two systems,
and the “peaceful transition to socialism”. It is clear that what has failed
in those countries was not socialism, but revisionism, initiated by Tito
in Yugoslavia and by Krushchev in the Soviet Union.
The existence of socialist countries and the relation
between the socialist and the capitalist camps did, understandably, not
figure in Lenin’s definition of imperialism. Thus, although a major blow
to the world proletariat, the reversal of socialism in those countries
does not constitute a basis to speak of a new stage. It rather confirms
the fact that we are still in the era of imperialism and proletarian revolution.
3. The third basic characteristic of the current
period is the internationalization of the economy - often erroneously called
“globalization”. The internationalization of the economy may be characterised
by three new phenomena:
a) The financial markets are linked with each
other worldwide. Capital can be freely transferred, the globe over, in
a matter of seconds. This is in fact the ultimate consequence of Lenin’s
description that under imperialism, the export of goods would no longer
be characteristic, but the export of capital.
b) The information technology has known a stormy
development. This has facilitated the export of capital, the international
management of production processes, and the uniformisation of information.
The internationalization of financial markets
and of information technology can be said to be truly “global”, albeit
with the limitation that it concerns only the industrialised capitalist
countries and the big cities and industrial centers of the other countries.
c) The organization of production itself is taking
place at a level that transcends national boundaries. While transnational
corporations have developed since World War II, systematic international
production planning - for markets larger than the national - has started
in the ’70s, and remains largely confined to world regions or continents.
A large part of the international transactions have remained intra-firm
(estimates put intra-firm trade of the US, Japanese and German TNCs at
one third of the entire world trade). For these reasons, it is not correct
to speak of “globalization”, but only of an intensification of the internationalization
of the economy.
Reasoning the other way round, we see clearly
that the five characteristics of Lenin’s definition of imperialism still
stand today, even more than ever before:
a) The formation of monopolies, due to the increasing
concentration and centralisation of capital. (The largest merger until
now was the one between Daimler-Benz and Chrysler, but other mega-mergers
are in the offing: the one between Hoechst and Rh“ne-Poulenc would make
the merger company number two in the pharma-business; and the one between
Exxon and Mobil would make this alliance the number three of all the world’s
companies.5)
b) The merger of bank and industry capital into
finance capital is starker today, with the enormous increase in stock companies.
c) The export of capital.
d) The division (and redevision) of the world
market among capital groups. (Recently, news broke that the European Commission
and the US Federal Trade Commission were investigating price agreements
between the two remaining civilian airplane builders, Boeing and Airbus.6)
e) The territorial division of the world has
been completed. In Lenin’s time, this was in the form of colonies; today
it is in the form of neocolonies and “spheres of influence”.
For all these reasons, we believe that the current
crisis of capitalism is not the crisis of the “neoliberal stage” of capitalism,
but that it forms part of the general crisis of capitalism, in which all
contradictions in the world sharpen and the possibility and necessity of
socialism becomes clearer and nearer.
If ever the actual period should deserve a specific
characterisation, we might call it a new phase of the general crisis of
capitalism.
No way out
Capitalism in the stage of imperialism has four
ways to temporarily overcome a crisis of overproduction.
First, public indebtedness can artificially create
public and private purchasing power to stimulate production and consumption,
and thus stimulate the process of accumulation. This is what happened in
the ’70s, when many Third World countries were enticed to take on huge
debts for infrastructure works, arms purchase and elite consumption spending.
But since Mexico’s defaulted on its debt payments in 1982, the “solution”
of Third World debts offers too many risks for the capitalist financial
system. Subsequently, the centers of imperialism themselves got into debt
in order to spur economic growth.
In the ’80s, the US launched Star Wars, thus pushing
the growth of the high-technology sector. But this created a public debt
of 10.000 billion dollar, too huge to continue along this risky road. In
the ’90s, it was Japan that was forced to go on a public spending spree
to prop up its economy. It dished out some 700 billion dollar, and just
this year it paid yet another 350 billion dollar to save its banking system.
But this has not lifted Japan’s economy out of its crisis. The “debt solution”
has clearly lost its magic.
A second possibility is to create wealth the easy
way: not in the production process, but on the financial markets. These
have seen an enormous explosion. Today, total foreign exchange transactions
amount to 1500 billion dollar per day, as against only 18 billion dollar
per day in the early ’70s.7 But not more than 5 to 10% of this incredible
amount is directly connected to the real economy, to the production and
exchange of goods. This capital is in fact largely fictitious, the result
of mere speculation regarding the evolution the economy may take.
If speculators, investment fund managers and bankers
have reason to believe that the economic prospects have become bleaker,
they will flood the financial markets with stocks, their prices will collapse,
and part of the fictitious capital that had been created, will be destroyed.
By this mechanism, in the two-month period July-September 1998, some 3500
billion dollar were destroyed - the equivalent of the Gross Interior Product
of Germany and Italy combined .8
Not only has the “stock market solution” proven
to be far too vulnerable, but the crash of the stock market has also exacerbated
the crisis in the real economy, where now less money capital is available,
while the purchasing power of the workers has further gone down. The spectacular
increase in the financial markets has intensified all contradictions, has
deepened the crisis and has rendered its consequences more horrible.
A third possible way out for the crisis of capitalism
is to find a region, a country or a structure that would have the capacity
to absorb the goods it cannot sell elsewhere. The only and last frontier
that exists today is China, with its 1.2 billion potential consumers and
a growth rate that continues to surpass those of the rest of the world.
Therefore, the world bourgeoisie is praising China today for its economic
stability, and it hopes that China will maintain a strong currency.
But it is uncertain whether China will completely
and permanently accept the role that imperialism has assigned her. Up to
this day, China has shown a relative independence from imperialism, and
not all socialist elements have been discarded or destroyed yet by the
Chinese leadership. Recently, China has approved new subsidies to state
enterprises, has introduced more stringent controls on capital movements
and has become cooler to the possibility of joining the World Trade Organization.9
The fourth possibility for capitalism to overcome
its structural crisis is, of course, war, with its concomitant massive
destruction of means of production. This brings us to the contradictions
in today’s world.
All contradictions in the world are sharpening
1. The contradiction between capital and labour
is sharpening. In order to safeguard their profits, the capitalists are
increasing the rate of exploitation by all means. New technologies allow
them to increase productivity and to dismiss workers, producing more goods
with a reduced workforce. They increase the intensity of production, and
they introduce longer working days and other forms of flexibilisation of
labour.
But increased exploitation engenders more class
struggle. In South Korea, a militant struggle of the Hyundai workers reduced
the number of workers to be dismissed to 227 workers. In a Philips plant
in Manila, the workers under the militant KMU trade union struck against
the plant’s closure, and achieved the reintegration of the workers in other
Philips plants. In the Clabecq steel factory in Belgium, a long and arduous
battle of the workers resulted in the reopening of the plant - although
only with 800 out of 1800 workers.
In order to maintain herself as the ruling class
and to permit herself to carry out their anti-worker policies, the bourgeoisie
is intensifying repression. The bourgeoisie is creating and implementing
laws to strengthen her dictatorship over the working class. This can be
seen seen in the many “Anti-Terrorism Bills” or “Criminal Organisation
Acts” that are being prepared and executed worldwide against the working
class and her vanguard organizations. In Belgium, the bourgeois state has
brought 13 trade union leaders and workers of Forges de Clabecq to court
on 43 different accusations. At the same time, the “democratic” parliament
is preparing a law that will criminalise all acts of resistance to the
capitalist system.
As the contradiction between the bourgeoisie and
the proletariat intensifies, the former may resort to open fascism or to
far-reaching fascisation under the guise of bourgeois democracy, in order
to impose super-exploitation and severe repression on the latter.
2. The contradiction between imperialism and the
oppressed peoples and nations is sharpening. The dictates of international
capital, imposed by the International Monetary Fund, the World Bank and
the World Trade Organisation, are causing misery on a scale never seen
before. In a rich country like Indonesia, tens of millions of people are
going hungry. In Bangkok, Thailand, between 250.000 and 500.000 workers
have lost their job.10 In Russia, between 1990 and 1995 life expectancy
went down from 69 to 58 years.11
Transnational corporations intensify their plunder
and exploitation. Never before was the gap between rich and poor as wide
as today. The 225 richest people in the world amass a fortune larger than
the combined annual revenue of the 47% poorest people in the world.12
Imperialism uses all types of interference, embargoes,
military interventions, wars, terror, racism, fascism and other reactionary
ideologies and policies to enforce its economic domination and to suppress
the peoples’ struggles.
3. The contradiction among the imperialist powers
is sharpening. They do have a common interest in trying to resolve the
economic crisis, in augmenting the exploitation of the workers and in plundering
the Third World. But among them, the three main imperialist centres - the
US, Japan and Europe - are fighting more and more ferociously to get the
bigger share of the pie.
This rivalry can be seen in the non-conclusion
of the Multilateral Agreement on Investments, in the trade wars being waged
within and without the World Trade Organisation, in the adoption of protectionist
measures like the Super 301 in the US, and so on. Competition is also apparent
in the efforts of each imperialist power to create zones of economic influence
and control, such as the NAFTA, the APEC and the European Union.
At the moment, this contradiction translates mainly
in trade wars. But already in the ongoing military conflicts, such as in
Yugoslavia, the former Soviet Union and Congo, aspects of inter-imperialist
contradictions are conspicuous. In the not too distant future, it may be
expected that the crisis-driven, highly competitive quest for markets,
investment opportunities and raw materials will lead to open war, to an
imperialist war of worldwide proportions. Jacques Attali, former adviser
to French president Mitterand and former president of the European Bank
for Reconstruction and Development, recently declared: “It is in our interest
to carry out reforms (of the international financial system) quickly, before
a world war breaks out!”13
4. The contradiction between socialism and capitalism
continues to play a role. Imperialism has never allowed and will never
allow the existence of socialist countries, as attested to by their permanent
aggression against Cuba and the People’s Democratic Republic of Korea.
Imperialism will continue to wage war against socialism as long as there
remain socialist countries and countries that maintain significant elements
of socialism, and as long as peoples espouse socialist ideals, harbour
socialist aspirations or cherish the collective memory of socialism. And
of course, this contradiction is bound to sharpen as socialism recovers
and expands in the years to come.
The situation is favorable for revolutionaries
The current severe and widespread economic crisis
of capitalism, and the sharpening of all contradictions in a world under
imperialist domination, reminds us that we are in the era of imperialism
and proletarian revolution. It is the era of moribund capitalism, that
will give way to its only possible, logical and necessary alternative:
socialism, the exact opposite of capitalism.
Under socialism, private ownership of the means
of production will be replaced by their collective ownership. The private
profit motive will disappear and the social need motive will take center
stage. Planned production will do away with the anarchy in production.
The development of the productive forces will be uninterrupted and crisis-free.
The road to socialism passes through the national-democratic
revolution with a socialist perspective in the Third World countries, the
restoration of socialism in the formerly socialist countries, and socialist
revolution in the industrialised capitalist countries.
With today’s highly developed productive forces,
the construction of socialism is better possible than ever before. But
even in the case of less developed countries, history has shown that socialism
is not a myth nor a failure, but can be a glorious reality for hundreds
of millions of people.
Socialism had made the Soviet Union, in 1917 still
a backward, largely agricultural country, the world’s second power. Socialism
has given China, in 1949 still a very poor Third World country, so strong
a base that it may well become the world’s first economic power by 2010
or 2020. Socialism has made Cuba, just 40 years ago still a banana republic
under the yoke of the US, a model for the entire American continent.
Above all, socialism has liberated hundreds of
millions of people from feudal bondage and capitalist wage slavery, and
has liberated the productive forces so that they could be developed for
the welfare and the well-being of the proletariat and the broad masses.
While the objective situation is favorable, the
subjective forces have to be prepared to grasp the opportunities offered
by this. Much remains to be done, but generally speaking, the situation
of the subjective forces is more favorable today than it was ten years
ago. Class contradictions have become clearer, while revisionist and reformist
recipes have proven their utter bankruptcy.
The exploited and oppressed peoples of Asia, Africa
and Latin America are struggling against imperialism and for national and
social liberation. There are the mass struggles, spontaneous as well as
organised, of workers, peasants and agricultural workers, indigenous peoples,
women, youth and students and other sectors. More importantly, there are
the revolutionary armed struggles in various parts of the world, several
of them following the path of protracted people’s war under the leadership
of a Marxist-Leninist vanguard party.
In the former Soviet Union and in other formerly
socialist countries in East and Central Europe, the working class is fighting
to reestablish the dictatorship of the proletariat.
In the industrialised capitalist countries, the
working class is resisting the onslaught on their economic and social rights
and achievements, and is fighting the repressive forces and measures of
the bourgeois state. General strikes and different kinds of mass movement
are on the rise.
The remaining socialist countries and the countries
that still possess strong socialist elements, are waging complex struggles
to maintain their independence from imperialism and to defend their socialist
character and achievements.
It is the mission of the communist parties to
transform the favorable objective situation into a situation that is also
favorable as the subjective forces are concerned. This can only become
reality if the communist parties keep to the theoretical guidance of Marxism-Leninism
and Mao Zedong Thought, wage and lead class struggles, and always keep
the interests of the masses at heart.
Under these conditions, we may be assured that
the XXIst century will be the century of great socialist revolutions.
#
1 Wall Street Journal, 30-31 January
1998
2 Press statement Federal Reserve,
23 September 1998
3 International Herald Tribune, 7
September 1998
4 De Standaard, 24 november 1998
5 De Standaard, 26 and 27 November
1998
6 De Standaard, 27 November 1998
7 Le Monde diplomatique, January
1998
8 Les Echos, 12 October 1998
9 De Standaard, 16 November
1998
10 Far Eastern Economic Review, 8 October
1998
11 Le Monde ‚conomie, 8 September 1998
12 United Nations Development Programme,
World Human Development Report 1998
13 Le Monde ‚conomie, 6 October 1998