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From The Socialist newspaper, 4 January 2002

2002: Capitalist Crisis - Workers' Struggles

AT THE start of a new year, PETER TAAFFE, general secretary of the Socialist Party, asks will the recession last? Will the workers move into action? What are the prospects for 2002?

"LETTER TO Santa Claus may be laced with Anthrax" (warning from United States Postal Service)

WHAT A fitting epitaph to 2001, a truly 'annus horribilis' for the whole of humanity! Last year will be etched into the collective consciousness by 11 September and its aftermath - the slaughter of innocents, not just in New York but also in Afghanistan, Gaza, the West Bank and Israel.

In an especially poignant moment, as the stricken Twin Towers began to disintegrate, a spaceship with an international crew (the International Space Station) happened to pass over New York and witnessed and photographed the unfolding carnage below.

In that incident alone is encapsulated the choice which confronts the peoples of the world. Together, we can harness and develop science, technique, and the organisation of labour on a gigantic scale which would eliminate the poverty and oppression which created the conditions for 11 September. Or the products of the genius of humankind can be misused to create a world of horror without end.

The choice is not between 'evil' or 'good' as George Bush or Tony Blair pretend. It is between outmoded rotten capitalism - which will be a world 'war without end' according to US Vice-President Dick Cheney - or a determination to share the resources of the planet for the benefit of all. This can only be fully achieved through world democratic socialism.

Paradoxically, 11 September bound the world together with iron hoops like no other event before. Amidst the poisonous fumes of war and mass terror the idea that we live or we perish together, that oppression or persecution in one part of the world touches us all, took hold.

Even in the US - a continent sized "island" whose population was led to believe they were immune to outside events - a questioning has begun about the role of the US government internationally; "Why is the US is hated so much?"

This mood will endure and grow in this year and in the future. This will happen despite the triumphalist rampage of US imperialism through Afghanistan, which may be followed by further ruthless incursions against Iraq and other 'failed states'.

Big events in the this year and beyond - above all in the economy, and their reflection in the field of politics - will shake to its foundations the newly acquired confidence of world capitalism. This is especially true of the 'victorious' ruling classes of the US and Britain.

Last year, the United Nations warned of a "vicious circle of downward adjustment" rippling out from the battered US economy to the rest of the world. That was confirmed in December with the drop in US output, "almost three times faster than earlier estimates" [The Guardian, 1 December 2001].

It was the biggest drop in output since 1991 in the midst of the last recession. White House spokesperson Ari Fleischer even declared: "The president is troubled by the fact that the economy has shrunk again".

This was followed one week later by revised figures showing that there had been 330,000 job losses in November - 100,000 more than expected - with revised figures for October of 468,000 redundancies. In services, where most Americans work, 70,000 lost their jobs, with amusement parks alone down by 25,000.

These represented "the worst two-monthly period for American jobs in twenty years". Moreover, according to the economists at Morgan Stanley, "profit margins have suffered their biggest drop in 50 years and so in one sense it is no surprise that the response to this is restructuring and cutting jobs".

Simultaneous recession

PERHAPS THEN, Europe and Japan will take up the 'slack' created by the downturn in the US. Yet, in Japan unemployment has climbed to 5.4% of the workforce, the highest levels ever recorded. Japan is mired "in its second recession for three years", says The Guardian [8 December].

In reality, Japan has suffered from a decade-long depression - a general stagnation in production - with minuscule growth in the economy in just a few years. Now it is unemployment, a dramatic rise in homelessness, cuts in wages (by 15% to 20% for those over 51 years of age), slashing of bonuses and a lowering of hourly wage rates, which are the order of the day.

The country's massive and spiralling debt is now more than 130% of gross domestic product. In the last decade the Japanese ruling class have postponed the day of reckoning, preferring to pile up debts rather than carry out savage retrenchment and brutal attacks on the Japanese working class.

That now appears to have come to an end as they steel themselves to close banks and factories and ruthlessly rein in the Japanese workers. The working class of Japan, which has a long history of struggle but which has been relatively dormant in the past period, will revive and move into action.

Big battles in defence of jobs, a revival of trade union struggle and above all a generalised opposition to capitalism are posed in Japan in the next period.

The same thing goes for Europe. Industrial output in Germany, Europe's economic powerhouse, contracted by 2% in October. The OECD has now warned that eurozone unemployment "would rise by 700,000 to 12.5 million next year and reach almost nine million in the United States, implying savage job cuts to come" [The Guardian 1 December].

At the same time, Canada has become the fourth of the seven major economies to post a record decline in output in the third quarter, its first in nearly a decade.

The International Monetary Fund has recently defined a world economic recession as growth of less than 2% internationally, given the rise in the world's population. Clearly, the powerful "triad" of world capitalism, the US, Japan and Europe, are in a simultaneous recession and this will deepen this year, thereby plunging millions of workers and poor peasants into even greater poverty and misery.

The International Labour Organisation estimates that this year a minimum of 24 million workers will be thrown out of their jobs. This will add to the one-third of the world's labour force which is either unemployed or underemployed at the present time.

And this is a system which the capitalists, in their Panglossian world, extol "as the best in the best of all possible worlds". Tell that to those in Eastern Europe, such as the Czech workers, who were promised in 1989 US living standards.

The Czech members of the Committee for a Workers' International retorted at the time: "Yes, via Bangladesh". The reality of capitalism for those in Eastern Europe and the former Soviet Union is shown by the figures from the UN which says that "nearly 18 million children in this region are living on less than $2.15 (1.50) a day - a World Bank yardstick for poverty" [The Independent, 20 November].

Crisis of capitalism

DEFENDERS OF world capitalism like Blair, in his 'sermon by the seaside' at last year's Labour Party conference in Brighton, offer to transform the world within the confines of this system.

Dubbed by a former US ambassador to Britain as the 'president of the universe', Blair almost promised that he alone, with a walk-on part for Bush, would bestride the world scene, abolishing poverty, economic crisis, war and oppression wherever he went.

But devastating crises are not an 'act of God'. Poverty and oppression are not unnecessary, accidental features of capitalism. They flow from the very character of the system. Its driving force is profits, which come from the unpaid labour of the working class.

There are many factors which can lead to or trigger a crisis in capitalism - such as the tendency for the rate of profit to fall and a sudden drop in profits.

However, the ultimate contradiction of this system is that the working class cannot buy back the full value of what they produce. What Marx called "surplus value" - profits - is that part which is appropriated by the capitalists. However, this contradiction - the working class not being able to buy back the full value of their product - is temporarily overcome by the capitalists reinvesting back into production.

For a time, the economic cycle once more goes forward but then reaches a saturation point - a market glut of unsaleable goods - which Marx described as "overproduction". This is accompanied today by "overcapacity".

Part of industry lies idle because the working class and the middle class, with stagnant or even contracting incomes, cannot buy back the goods which they produce. Hence the cycle of boom and bust, which like poverty, national oppression and all the other ills which beset humanity, are organic to capitalism and cannot be 'reformed' away.

The economic day of reckoning can sometimes be postponed on the basis of an injection of what Marx called "fictitious capital" - massive borrowing which was a feature of the 1990s. The result is a huge piling up of debt; national debt as the case of Japan shows, corporate debt and personal debt.

The US consumer for a time provided a lifeline for world capitalism, by buying the goods of the rest of the world. But this was at a huge cost of borrowing and debt. The inevitable recoil is now taking place, reinforced by 11 September. The tendency now is, it seems, to retreat to "nesting" - not flying as much as usual, remaining at home instead of shopping, etc.

This appeared to be cut across in the pre-Christmas shopping spree in the US and particularly in Britain. This has even led to a renewed capitalist 'confidence' - in the teeth of the evidence to the contrary in the real economy - that the "worst is over", and the revival of world capitalism is under way.

There has even been an upturn in the US stock markets, with the Dow Jones Index on Wall Street rising above 10,000 points once more. There is even hope that the NASDAQ and technology stocks, which have slightly risen recently, will once more zoom into the stratosphere.

In view of the present historically low returns on deposits kept in banks, undoubtedly some of the speculators have once more tried for quick returns from equities. However, they could be burnt even more savagely than during the collapse of the last two years. Such blips as we are witnessing in the US and British stock markets today are not uncommon.

Many times in the past a temporary upsurge in stocks can take place, and yet the curve of capitalist economic development is stagnant or even downward. Similar upsurges took place even after the 1929 Wall Street Crash but it did not save the US or world capitalism from the most devastating slump in world history.

Workers' resistance

THE MORE serious capitalist economists are in no doubt when they discuss perspectives for the economy, at least in the short term. Experimenting with the "economic alphabet", they have chosen between a 'V'-shaped recession, in which the downward side resembles a very sharp, fast and deep ski slope.

Or they look at an 'L', similar to the depression in Japan of the past ten years but on a world scale. The more hopeful have recently looked towards a 'U'-shaped recession, of a drop and a lengthy 'bottoming out' before the economy begins to climb again. Because capitalism is not a planned system, but works blindly, it is not possible to accurately predict the speed or scale of economic events.

However, it will be the working class which will pay the price of this crisis, no matter what its character or length will be. They will not tamely lie down and accept the bosses onslaught against them.

Even as the economy sinks and declines, Europe has been marked by workers' resistance, symbolised by the mighty demonstrations in Brussels. This has dashed the hopes of the capitalists that the post-11 September mood would squash the anti-capitalist movement.

No one should allow 11 September to blot out the balance sheet of the last year; the magnificent demonstration in Gothenburg, followed by the titanic movement of the Italian workers - supported by international detachments of workers and youth - in the battle of Genoa.

The turnout of the Italian workers, led by the metalworkers and Rifondazione Comunista, was given added impetus by the coming to power of the right-wing Berlusconi government. This government has sought to attack the working class by removing obligations on employers to reinstate sacked employees if an industrial tribunal deems they have been unfairly dismissed.

They have also attacked pensions and other parts of the "workers' statutes" - the cornerstone of Italian labour law. The anger of the working class has merged with the enormous anti-war movement, such as the massive 300,000 who marched to Assisi in October.

Two-hour national strikes have been called in protest at the government's plans and the mood is building within the unions for a one-day general strike throughout Italy.

It is not lost on Berlusconi that it was a wave of strikes which defeated his last 'pension reform' and brought down his seven-month coalition government in 1994. The same scenario could be played out in Italy in the next period. But Italian workers will be sceptical of a return of the discredited 'Olive Tree' coalition, whose failure led to the resurrection of Berlusconi.

The strikes of Italian workers, accompanied by the magnificent strikes of school and university students, signify the re-emergence of the Italian working class who will be looking for a socialist alternative to the discredited capitalist parties.

A similar strike wave gripped France in the latter part of last year and will be carried over into this. Following an unprecedented wave of public protests by the paramilitary gendarmerie, big concessions were made on jobs, wages and working conditions.

This movement was preceded by earlier protests by hospital workers and other public-sector workers such as prison officers contemplating strike action over the introduction of the 35-hour week.

In Germany also, the powerful IG Metall engineering union is demanding significant pay increases, which will meet with the resistance of both the employers and the German government. Spain has also been convulsed by strikes of workers, and a massive strike and demonstration of students over Aznar's right-wing government proposals to attack state education.

Britain: capitalist crisis - workers' struggles

BRITAIN, AND the British workers, will not be immune from similar processes. Various pundits, such as Mervyn King, Deputy Governor of the Bank of England, puts Britain's chances of "going through recession" as one in ten. But even the most 'pessimistic' economists have speculated that the odds are no more than one in four.

In this fools' paradise, in which sections of British capitalism live, Britain will be an island not just geographically but also economically. Paradoxically, it is the very weakness of British capitalism which has meant it has not been as seriously affected up to now. Manufacturing industry, which is in a deep recession already, will shrink to no more than 16% of the whole economy.

This weakness, together with the high value of the pound - which could drop quickly and dramatically - has meant that British manufacturing exports have been slaughtered in world markets. Indeed, exports in this sector are at a 21-year low.

Manufacturing, and particularly manufacturing exports, is still crucial as the experience of Germany and even the US demonstrates. Knowledge-based services account for only a fraction of total export earnings; less than a third of receipts for manufacturing exports and only a quarter of domestic expenditure on manufactured imports in the year 2000.

The falling behind of enfeebled British manufacturing capitalists is shown in manufacturing labour productivity, which has grown, while output is almost stationary.

US firms produce almost twice as much with the same number of workers as they did in 1973, whereas British firms produce almost the same as before with only half as many workers. In other words, the so-called 'productivity miracle' of British capitalism is largely based on sweated labour, lower wages and worse working conditions.

Now it's not just exports which have collapsed, but income from abroad and inward investment - which has bailed out the economy - is drying up. One result is a big increase in redundancies in formally solid companies such as BAe, Waterford Wedgwood, GKN, chemical companies involving thousands of workers, and Rolls Royce.

As many as 30,000 workers in Consignia (the former Post Office) face being emptied out of their jobs in the next period. The benefit workers' strikes could be repeated in the Post Office and other sectors of the economy, such is the rising anger of the British working class.

Indeed, if they had a leadership in the trade unions at national level which was equal to the task, a strike wave on a higher scale to France or Italy would loom in Britain at the present time.

Transform the unions

DICKENSIAN CONDITIONS in the workplace and elements of the third world in the areas where they live or work; this is the lot of millions of British workers. Even the Chairman of the Labour Party, Charles Clarke, admits that the waiting lists for hospital appointments are longer now than when Labour came to power in 1997.

A leading surgeon is incredulous at the conditions in most hospitals and has said that this is the prospect we face for years to come. Alan Milburn's decision to allow patients to travel abroad for operations and his programme for privatisation in the health sector is a confession of bankruptcy.

In Germany, for instance, there are no waiting lists at all for hip operations or knee replacements. In reality, most people would still prefer to be treated locally, close to their family and loved ones.

The transport system is described by the government's own findings as "the worst in Europe", which will be compounded enormously if Blair allows the discredited privatisation of the tube to go ahead. In despair, The Mirror's political editor, Paul Routledge, declared: "We invented railways - now they are better in Bolivia than in Bradford".

Brown and Blair's "lifeboat Britain" - which they envisage will keep them afloat in the stormy economic seas which loom - will be found to have holes. Joblessness and poverty will increase, and with it will grow the anger of the working class.

The year 2002 could see the British workers begin to rediscover the fighting traditions of the past, fill out the trade unions and demand that the trade union leaders put up a struggle against the bosses and government offensive. From below, the unions in Britain will begin to be transformed into instruments for the working class to defend past gains and future conquests.

This will be through the emergence of new, fresh layers of young workers in particular who will be driven into seeking action by the blind alley of the bosses' system and those who defend it.

No such transformation, however, is possible in the Labour Party. Not just its leadership but at every level the Labour Party has been transformed into a capitalist party. Even Nigel Lawson, Thatcher's Chancellor, could declare recently that Blair espouses "Thatcherite conservatism - dressed up in Clintonesque rhetoric". It takes a Thatcherite to know one!

Socialist alternative

The defection of Paul Marsden to the Liberal Democrats - the first such move of a Labour MP since the SDP defections of the early 1980s - symbolises the rotten character of the Labour Party under Blair's tutelage.

Marsden can pass from New Labour to the Liberal Democrats with as little difficulty as former Taliban switching from support for bin Laden and Mullah Omar to the side of the Northern Alliance by changing the colour of their turbans. If anything, the Liberal Democrats are perceived by many as slightly to the left of New Labour!

The sleazy corruption of New Labour (which the Socialist Party predicted when it abandoned Clause Four, which was its adherence in words to socialism) has deepened in the past period and will grow in the next.

McLeish in Scotland, Robinson, more Scottish MPs, and who knows what further revelations of sleaze and corruption - all these show just how far Labour's leaders, councillors and officialdom are removed from the original ideals of self-sacrifice of the pioneers of the labour movement in Britain.

It is certain, however, that New Labour will be convulsed given the likely development of events in Britain and worldwide. Further defections, only more serious than Marsden's, are possible. A division already exists between Blair and Brown, who has been promised the 'crown' if and when the 'king' abdicates.

This, together with clashes over the Euro, could mean that the fault lines in New Labour could grow into a chasm. Splits within New Labour, largely on secondary and personal issues, nevertheless could encourage opposition to their programme and methods.

The ground is being ploughed in Britain and worldwide for the development of alternative ideas to those which have been tried and have failed: right-wing conservatism, the so-called 'Third Way' and Keynesian ideas, as shown with Japan. The growing anti-capitalist movement could gain renewed vigour this year.

Out of this and movements amongst the 'heavy battalions' of the working class, support for the ideas of socialism will grow. The knot of history was broken to some extent by the collapse in Stalinism in 1989-90 and the mood of market triumphalism which followed.

This knot will be retied in the mass struggles of the working class, of solidarity and socialism, which will be back on the agenda in the next period.

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In The Socialist 4 January 2002:

Build The Socialist Alternative

Argentina: Capitalist Crisis Intensifies

India/Pakistan conflict: Only Socialism Can End the 'Madness Of War'

Brussels demos: Marching Against Capitalism And War

2002: Capitalist Crisis - Workers' Struggles


 

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