Link to this page: https://www.socialistparty.org.uk/issue/790/17805
Europe - Centre of capitalist crisis
Peter Taaffe, Socialist Party general secretary
Despite capitalist 'experts' predicting that the world economy would by now be experiencing 'escape velocity', capitalism is still in deep crisis. And Europe is most acutely affected.
But, with 'momentum' slowing, these 'experts' have been compelled to change their views. Out of the six largest high-income economies, only the US and Germany were bigger in the second quarter of 2013 than their pre-crisis peaks five years before.
Growth rates of 2.7% in the US, 1.7% in Japan, and a mere 0.9% in the eurozone are predicted for 2014.
With the continuation of huge public and private debt - particularly in the big economies - there will be no real, substantial 'recovery'.
At the same time, there are growing fears of protectionism once more emerging. Clashes have developed between China and the US on a range of issues, as well as between Europe and the US.
Depressionary features will continue, and will be particularly acute in Europe, which remains the most exposed region economically, socially and politically in the world.
The ideologists of the bosses now fear that long-term deflation has begun to set in with 'Japanification' of the eurozone.
A repeat of the 'two lost decades' of Japan looms because of the deflationary effects of the euro in general, but also because of the dominant sway within the eurozone of German capitalism.
Through its economic dominance, German capitalism has put the rest of Europe on 'rations'. In the Financial Times, Martin Wolf wrote that Germany's 'huge' trade surplus has been attacked by the US Treasury because it has "'hampered rebalancing' of the economy for other eurozone countries and created a 'deflationary bias for the euro area, as well as the world economy'."
'Rebalancing', particularly when deployed by US imperialist spokespersons, means while some cut back on their share of the loot - others benefit.
In a chaotic blind system, which is what capitalism is, it is impossible to have a completely 'balanced' system, particularly during a severe crisis.
It may be possible for rival capitalist powers to peacefully share, on the basis of a bigger and bigger growth.
But not in a crisis like the one we are passing through. One of the features of the situation in the next period will be increased collisions between the imperialist powers and blocs.
The European working class has exerted colossal energy in trying to combat the attempts of the capitalists to unload full responsibility for this crisis on their shoulders.
The Greek working class has staged 31 general strikes since 2010, four of them for 48 hours in duration.
They were defeated because of the cowardly actions of the official trade union and labour leaders.
The devastating recent report of the Red Cross states: "Europe is sinking into a protracted period of deepening poverty, mass unemployment, social exclusion, greater inequality and collective despair as a result of austerity policies adopted in response to the debt and currency crisis of the past four years."
This dire economic situation has meant inherent political instability. Since 2010, 12 governments of the eurozone of 17 countries have been defeated in elections, whether of the right or the left.
German Chancellor Angela Merkel is the only leader to buck the trend. But even she did not manage to win an overall majority of the seats in September's election.
Following one of its worst ever election results, the Social Democratic Party (SPD) is pressing for a minimum wage as the basis for its participation in a coalition.
This reflects the huge pressure from low-paid precarious workers. Unlike most other countries in Europe, Germany does not have a national minimum pay level laid down by law.
But 22% of the total workforce are low-paid workers, many in 'mini-jobs'- the largest percentage in the eurozone. German bosses, however, are resisting such pressures.
There is now a 12% gap in real GDP between where Europe is today and where it would have been had the pre-crisis trend continued.
This shows the magnitude of the problems confronting the governments of Europe and particularly Germany. This is likely to be the new 'normal' for European capitalism.
The euro is a massive deflationary trap, particularly for those suffering economic 'distress' - which, to one degree or another, affects all the countries of the eurozone but particularly those of southern Europe.
Therefore, there will be growing opposition to the euro and also to German capitalist domination - which will be certainly manifested in next year's European elections.
This will reveal big and growing opposition to the 'European project', both from the left but also from the far right, who now have a significant presence in many countries in Europe. This means that the breakup of the euro is still on the cards.
Countries that are running a large 'primary deficit' - most of the countries of southern Europe - and costs of 'servicing government debt' greater than the nominal growth of GDP are on an unsustainable path.
The conclusion from this? "Since 2008, the wretched 'PIIGS' (an insulting term for the countries of southern Europe and Ireland) have been caught in such a trap. Anticipating defaults, investors respond by selling their bonds." [Financial Times]
When liabilities exceed 50% of GDP there is a big risk of a debt crisis. On this measure, many countries in southern Europe are vulnerable; Greece, Ireland and Spain are all in this position, unable to fund liabilities at or above 100% of GDP.
So all the efforts of the capitalists to correct the situation have been in vain, as have the unprecedented sacrifices demanded of the peoples in these countries.
The banking crisis continues unabated. As with the crisis in Japan from the early 1990s, European banks are now largely 'zombies', "More dead than alive." [Economist] A credit crunch still persists, particularly for the 'real economy', as opposed to the finance sector, in which the capitalist economists place so many hopes.
Loans to non-financial firms contracted in May of this year by 4.1% in Italy, 5% in Portugal and 9.7% in Spain.
In a vicious spiral, governments have to worsen their own finances by borrowing to prop up the banks.
In despair at the seeming inaction of European governments, and particularly of Germany, the Economist concludes: "Waiting for zombies to come back to life is a fool's game." This position cannot hold.
Explosions are inevitable, as we have seen in Greece, Spain, Portugal, etc, in the past period. The masses take to the road of struggle, strikes, occupations, even when they feel that their actions will not result in a fundamental change in the situation.
Greece is in its sixth year of economic depression. The Greek working people are on a descending slide into social catastrophe.
Rarely has a country in the 'advanced' world demonstrated so clearly the complete disintegration, the blind alley, of capitalism. The economy has contracted by at least 25%, with an expected 4% drop again this year.
Unemployment stands at 1.3 million (30% officially) but is probably a lot higher than that. The public sector has been dismantled, followed by the wholesale privatisation of national assets.
It is not just workers but also sections of the middle class who are plunged into poverty and forced to resort to the food banks.
In a movement almost unparalleled in Europe in the post-1945 period, the Greek working class has come out in one heroic action after another.
Just when their resistance appeared to be waning, they have discovered new reserves of energy and struggle.
This year, at least four general strikes have taken place, as well as mass mobilisations against the attack on the broadcasting media, the ERT. Had they a party and fighting leadership, they could have taken power.
The trade union and labour leaders refused to lead this struggle through to a conclusion, with a programme of taking power through the nationalisation of the commanding heights of the economy and an appeal for the workers of Spain, Portugal and Italy to follow their example and begin together to construct a socialist confederation of these four countries, in the first instance.
Such a bold step would have electrified the working class and lit a flame in the rest of Europe and throughout the world.
This failure allowed the emergence of the far-right neo-fascists Golden Dawn. From a small base of just 0.29% of the votes in the 2009 general election, it captured 7% in the last general election of 2012. Polls subsequently put its support at 15%.
With encouragement from sections of the police and others on the right, it posed a real threat to immigrants who have been attacked and, on occasion, murdered.
It is also now a threat to the left and workers' parties. However, the killing of a left-wing rap artist provoked widespread opposition and the fear of a new, incipient civil war compelled even the government to seek to rein in Golden Dawn.
The arrest of its leaders and subsequent exclusion from parliament indicates that the capitalist class are afraid that Golden Dawn will provoke the working class into action.
Already, a new stage of mass action against Golden Dawn has ensued, with Xekinima, the Greek CWI, playing an important role.
If this was to escalate then a revived mass movement would threaten the rule of capital itself.
The capitalists will not cede power to Golden Dawn at this stage. When the bosses did hand over power to Mussolini and Hitler, the revolutionary wave after the regimes' collapse threatened the very reign of capital.
They may need Golden Dawn and similar far-right organisations as auxiliaries but they are unlikely to give them sole power again.
They can play a supporting role to a Bonapartist military coup but even this is not immediately on the cards.
After the historical experience of the Greek workers, a right-wing coup is guaranteed to provoke a revolutionary explosion that could repeat the movement of the Portuguese workers in 1974, which led to the expropriation of the banks and put most of the wealth in the hands of the state.
The big danger, at the present time, is that the anger and frustration of the working class, particularly the youth, directed towards Golden Dawn and their backers could result in the reappearance of left terrorism in Greece.
Xekinima warns the youth that this is not the answer. Only a mass alternative from the working class, particularly a mass revolutionary party with the correct strategy and tactics, can defeat the Greek capitalists and international capital.
There are divisions and splits within the left at the present time. Xekinima has correctly sought to unify them as a means of creating a left pole of attraction
Spain, Portugal, Italy and France all display the symptoms, to one degree or another, of Europe's enduring political, social and economic crisis.
Ireland has not recovered from the crisis. The mood of the working class has been set back because of the consistently serious betrayals by the trade union leaders.
But mass dissatisfaction will translate into active opposition at a certain stage, which will result in strikes and an increase in social struggle.
This will, in turn, have an effect on the trade unions, with the rotten trade union leaders pushed aside and the emergence of more militant layers prepared to fight.
Throughout Europe, the far right has advanced electorally, sometimes significantly, in the past period.
In the Netherlands, it is through the far right Party for Freedom (PVV), in Austria the Freedom Party (FPÖ) and also in Scandinavia, including Sweden and Norway.
Sometimes this is matched by a polarisation and strengthening of the left, as with the Socialist Party in the Netherlands.
But the main reason for the continued presence and even strengthening of the far right arises from the crisis and the lack of an alternative through mass parties of the left.
Northern Europe has not escaped from the process. The Nordic countries have seen perhaps the most rapid process of privatisation in the whole of Europe.
Unemployment in Sweden among youth is over 25% and the neglected estates in the suburbs this year saw an inevitable explosion of anger against authority, including arson attacks on buildings and vehicles and clashes with police.
The consciousness of the working class, taken from a world point of view, has not yet caught up with the objective situation.
This will not occur in one leap but in a series of battles, over an extensive period. There are bound to be ups and downs, periods when the working class goes on the offensive and other periods when hesitation and doubts take hold.
We are passing through a phase like this in Europe at the present time, but in no way does it mean that we cannot seize opportunities that exist.
Socialists have to recruit and build now in order to face the even greater storms that will undoubtedly take place because of the incapacity of capitalism to solve the problems which are piling up.
Europe by numbers
75% - the increase in the amount of people depending on Red Cross food distribution in 22 of the surveyed countries between 2009 and 2012
120m - the number of Europeans, especially young people living in or at risk of poverty
5.5m - the number of middle class Germans who have fallen into the ranks of the low income earners
600,000 - the number of workers in Germany who do not have enough to live on
13% - the proportion of the population of the Baltic States and Hungary that has left
100% - the increase in the number of 50 to 64-year-olds unemployed between 2008 and 2012
France - a case study
After just 18 months in power, President François Hollande has recorded the lowest opinion poll ratings of any French president, just 20%.
This, of course, arises from the deteriorating economic situation that he inherited when he came to power, which his actions have compounded.
Standard & Poor has just downgraded France's credit rating once more. Hollande is being ground between the millstones of the working class on one side and the French capitalists on the other.
Hollande has not been able to carry through substantial cuts in government expenditure because he is terrified of a head-on confrontation with the French working class.
Public expenditure presently stands at 57% of gross domestic product, which is the highest in the eurozone.
Instead, he has resorted to tax increases which have brought protests down on his head from the rich, predictably, but also from farmers and truck drivers in Brittany and across the country protesting against an 'eco-tax' and forcing its suspension.
The government was also forced to step back from proposed higher levies on popular individual savings products.
He was threatened with a strike by France's top football clubs, protesting against the 75% tax levied on incomes of more than £1 million.
At the same time, these tax increases compound the problems of the French economy; by cutting spending power they cut the market.
Le Pen's Front Nationale (FN) stands at over 20% in the opinion polls, its highest ever rating, and could come first in next year's European elections.
This is the first time the FN has led in a national poll. A significant section of this support comes from discontented working class voters.
Significantly, Le Pen's party has toned down its more openly fascist features in favour of 'real socialism', saying of the Socialist Party: "It may be in power, but they are in hock to Europe and the banks."
This article is based on an extract from the document that has been produced by the International Secretariat of the CWI for discussion at the forthcoming meeting of the International Executive Committee of the CWI (IEC).
Following this meeting a full report of discussions and the final document agreed by the IEC will be published on socialistworld.net
The Committee for a Workers' International (CWI) is the socialist international organisation to which the Socialist Party is affiliated.
The CWI is organised in 45 countries and works to unite the working class and oppressed peoples against global capitalism and to fight for a socialist world.
For more details including CWI publications write to: CWI, PO Box 3688, London E11 1YE.
In The Socialist 27 November 2013:
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Socialist Party news and analysis
International socialist news and analysis
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