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From The Socialist newspaper, 17 December 1999

Millennium Crisis

The turn of the century and the start of a new millennium. An occasion for making a frank assessment of the state of the world and to risk some bold predictions. Lynn Walsh, editor of Socialism Today, gives his millenarian thoughts on the present capitalist crisis and the prospects for socialism.

The rich and super-rich are doing fine: record profits, low taxes. Many middle-class people and some sections of workers are enjoying a few crumbs from the capitalists' table. But let's take a wider view. Who can seriously argue that capitalism is a successful system?

A majority of the world's population are currently suffering from one or more of the following (mostly life-threatening) problems: low pay, excessive working hours, hazardous working conditions, unemployment, poverty, food shortages, inadequate shelter, disease and non-existent health care, environmental degradation, war, banditry, dispossession, persecution, violent political repression...

Every day, crisis symptoms are reported on TV news and in the press.



Wall Street, London and other western stock exchanges are still soaring. The bubble economy is driving the United States, Europe is growing moderately. But Japan is still locked into its ten-year stagnation. Half the world, in fact, is now gripped by slump, steadily creeping around the world since the 1997 Asian currency crisis. With a new wave of mergers, finance, production, services and trade are more and more concentrated into the hands of a tiny number of multi-national corporations. The globalised world market is dominated by highly volatile flows of speculative capital. Brazil is in recession, pulling other Latin American economies down. Far from reviving Russia and Eastern Europe, the capitalist market economy has brought the worst economic depression in modern times, recalling the medieval plague or the Thirty Years War.


The unbound market is digging a chasm of inequality into the foundations of the advanced capitalist countries. The US leads the way: the wealthiest 1% own over 40% of all wealth, more than the bottom 92% of the US population. The media focuses on 'winners', but there are far more 'losers'. In the US, 45 million live below the poverty line, without healthcare. In the EU, 50 million people live in poverty, 18 million are unemployed. Drug abuse, crime, etc, are rising. The crisis in the semi-developed and poor countries, weighed down by massive debts, is much worse. The bottom fifth of the world's people share only 1% of world GDP. Seventy countries are poorer in the 1990s than they were in the 1980s.


When the Soviet Union collapsed and the US launched the Gulf war in 1991-92, US president Bush proclaimed a New World Order. The US superpower would maintain peace and stability. Despite its immense power, it has failed miserably. Nationalistic leaders carried out massive ethnic purges in former Yugoslavia. Nato bombing failed to avert a humanitarian disaster in Kosova, and has pulverised Serbia. US forces have pulled out of Somalia and Haiti without any problems being solved. The Indonesian military were allowed to lay East Timor to waste before the Australian-led UN force went in to protect western interests (especially oil).

The 'Cold War' supposedly ended in 1989-90, but the US (and Britain and France) and Russia (and China) still have huge nuclear arsenals. Clinton has revived Reagan's 'Star Wars' plan, a hugely expensive anti-missile system. In 1998 India and Pakistan (once again a military dictatorship) carried out nuclear tests. The US Congress recently refused to ratify the Nuclear Test Ban Treaty, encouraging other regional powers to demonstrate their nuclear capacity.


The 20th century opened with the first world war (26m dead), continued with the second world war (54m dead), and ends with war. Apart from Bosnia and Kosova, there is a continental-scale war in Central Africa. Since 1989: 61 major armed conflicts, three between states, the rest civil wars (often with the intervention of outside states). Symptoms of deep social crisis, and they aggravate the crises even more.


The giant multi-national corporations treat the natural world as a consumable resource, just another source of profit alongside human labour. Besides disturbing the normal climate, global warming will have unimaginable consequences. Deserts are spreading, rainforests being destroyed. More air pollution, more respiratory diseases. Both food and land are contaminated by intensive farming methods (chemical fertilisers, pesticides, over-farming, etc). Attempts by capitalist governments to curb pollution and prevent environmental destruction are pathetically inadequate.


Liberal democracy supposedly triumphed after the collapse of 'communism', but parliaments and parties everywhere have been hit by corruption ('sleaze') scandals. Paedophile and food-poisoning scandals in Belgium, Kohl's slush fund in Germany. Traditional capitalist parties have been discredited (British Tories, CDU in Germany). Opposition parties (Labour, Social Democrats, etc) and former Communists (Left Democrats in Italy, etc) have swallowed free-market policies and are trying to manage capitalism. Voters are increasingly abstaining (less than a third vote in US elections), or giving protest votes to mavericks (Jesse Ventura in the US) or right-wing populists (Haider in Austria). Denied a voice, workers, farmers, students, have increasingly taken to the streets (public-sector strikes in Europe, mass demos outside WTO meeting in Seattle). There's deep cynicism about all establishment parties and politicians, with growing recognition that big business manipulates governments and bribes politicians. The 'democratic legitimacy' of capitalist governments has been drastically undermined, politics has become much more volatile.


Workers throughout the world, despite many great struggles, have suffered some severe setbacks during the 1980s and '90s. De-industrialisation, deregulation of finance and industry, privatisations, globalisation processes, high unemployment - reinforced by the aggressive free-market policies by capitalist governments - have undermined many of the gains made by the working class during the long post-war economic upswing 1950-73. Politically, the leaders of the Labour and Social Democratic parties, the trade unions, proved incapable of defending working-class interests. The severe weakening of the left, rank-and-file organisations, etc, made things worse. The disarray of the workers' movement allowed the capitalist class to get away with murder, enormously intensifying the exploitation of the working class in the advanced and the underdeveloped countries.



The symptoms are all interrelated, adding up to a fundamental crisis of the system. It's not a temporary, passing sickness: it is deep-rooted, long-term.


Despite the booms in the 1980s and 1990s in the advanced capitalist economies and a handful of 'Tigers' or 'emerging markets', the world economy moved into a state of depression after 1973: high unemployment, huge pockets of poverty, relatively slow growth, and pathetic productivity growth despite the appearance of new technology (computers, rapid communications, new materials, etc). Financial speculation dominates manufacturing activity. Markets are highly volatile. Globalisation spreads crisis rapidly around the world.


The modern economy depends on harnessing the resources of the whole of society (workforce, infrastructure, social structure). But the factories, most services, most transport, etc are owned by a tiny majority, the capitalist class, who also control the state. Their egotistical pursuit of profit accumulates enormous wealth into their hands. The reduction of the share going to the working class, plus cuts in social spending, not only impoverishes the working class but cuts the market for capitalist goods and services, aggravating the crisis. Private ownership of the means of production is an absolute barrier to broad, sustained economic growth.


Despite the immense power of the world market, increased by globalisation, the capitalist world is still divided into rival national states. There is a sharpening polarisation between a handful of major economic powers (US, Japan, Europe) and a host of states which are falling further behind, some declining absolutely. There are major trade conflicts between the big powers (US and EU). Some poorer states are collapsing (Congo, Indonesia). National antagonisms, breaking out into armed conflicts, underlie the new world disorder. Even the most powerful nation states cannot guarantee prosperity and security for all their people. National frontiers are a barrier to the rational use of human resources, technology, natural resources, etc. The capitalist nation state has become an absolute fetter on economic development and social progress.


The systemic crisis arises from what Marx called a collision between the 'forces of production' (technology, plant and machinery, instruments of production) and the 'relations of production', by which he meant the social and political framework within which the economy operates: the state structure, the relationship between the bosses and the working class, government policy, the role of nation states, the international economic-political framework, etc. Such a basic conflict is a fundamental condition for social revolution.


The working class, in alliance with other exploited sections of society, is the only force capable of breaking the deadlock and taking society forward (the capitalist class is tied to private property and the nation state). At the moment, the working class internationally lacks the consciousness, leadership and organisation to challenge the capitalists for control of society. The former Soviet Union and East European Stalinist states were a grotesque caricature of socialism. But their collapse caused great confusion, with a shattering of the traditional left. It was intensified by a world-wide capitalist propaganda campaign: 'socialism is dead, capitalism triumphant'. The workers' movement, however, was not smashed as it was under fascism in the 1930s. Strike waves in Europe, the mass movement in Indonesia, etc, show things are beginning to change.



Things will unfortunately get worse before they get better. When the US bubble bursts, the US will enter a stagnation period (like Japan's), dragging the whole world into a serious downturn: overproduction, mass unemployment, trade war between the major blocs, social upheaval.


World disorder will intensify, with further interstate conflicts and civil wars. Social conflict will erupt in all countries, including US, Japan and other advanced capitalist states. Serious splits will occur within the capitalist class, while sections of the middle class, hit by crisis, will be radicalised and move into opposition (while some sections may well move to the right). In the poorer countries, the social disintegration now occurring in Africa will spread to other continents.


Recent mass strike waves and protest movements point to the way in which things will unfold (France, Germany, wharfies in Australia, public-sector strike in South Africa, general strike in Colombia, workers and students in Israel, and so on). A new generation of class fighters will re-establish rank-and-file organisations in workplaces and neighbourhoods, democratise the trade unions, and engage in titanic defensive and offensive battles against the capitalist class. Community campaigns will erupt. There will be moves towards the formation of new, broad workers' parties based on class struggle and fighting policies. A new generation of worker-activists will revive the fighting traditions of the workers' movement and rediscover the genuine ideas of socialism. Fighting the battles of the moment, they will become increasingly conscious of the need for a programme for a fundamental social transformation.


Social crisis, splits in the ruling class, struggles of workers and exploited masses will erupt into revolutionary movements. Indonesia points the way. The 1995 mass strike wave in France also displayed revolutionary features: workers' committees, paralysis of whole regions, support from the middle class, clashes with the state.


The distorted Stalinist model of socialism has been swept away. The reformist Labour and social-democratic parties have become 'left' capitalist parties, though reformism (the idea that capitalism can be changed gradually) will still be a strong political trend. A successful struggle against a crisis-ridden capitalism, however, requires a thorough-going anti-capitalist programme: socialism.


The working class, now the big majority in advanced capitalist countries, must replace the capitalist class as a ruling class and take over the running of society. Socialist forces will have to mobilise workers, big sections of the middle class, for a socialist transformation. For the first time society would be run democratically, with the full participation of all sections.


The commanding heights of finance, industry, transport and services need to be nationalised and run under a plan of production. This would be run under democratic workers' management, and with workers' control in workplaces, democratic consumer committees, etc. The economy would serve the needs of society. Rapid growth would raise living standards and soon create a much more equal society.


The struggle for socialism has to be international, with solidarity across capitalist borders. Socialist transformation in one country would immediately be spread to other countries. Socialism would guarantee self-determination for oppressed nationalities and the rights of minorities, but at the same time begin to transcend the nation state through international cooperation and economic planning. Through planned use of resources, grotesque inequalities between countries could rapidly be eliminated. Wars (motivated by greed for territory, wealth, power, prestige, etc) would become a thing of the past.


The aim of world socialism would be to provide everyone on the planet with all the necessities of life and more: food, homes, healthcare, education, and so on. Then people could really begin to enjoy life through stimulating work, culture, sport, developing personal and social relations. Anti-social vices (greed, aggressiveness, etc) bred by a capitalist society dominated by the greed for profit would quickly begin to die out. Insecurity and fear would no longer generate prejudice against social scapegoats or hatred of foreigners, and so on. Socialist society, as Marx put it, will lift humankind out of the realm of necessity and into the realm of freedom.


The hardest thing to predict. The 21st century, however, will undoubtedly open with a major economic downturn, triggered by the bursting of the Wall Street bubble. This will shatter what's left of the capitalist triumphalism that followed the collapse of the Stalinist states. There will be a massive reaction against capitalism, and a search for an alternative. The more politically conscious will grasp the ideas of socialism. Throughout the world, there will be a radicalisation of a wide layer of workers, students, and sections of the middle class. The world will move into a new, deeper phase of capitalist crisis. Nobody can give a timetable. But we have a clear diagnosis and definite aims. What else do we need? An audacious commitment to struggle.

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In The Socialist 17 December 1999:

Millennium Crisis


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