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From The Socialist newspaper, 3 December 2008

CWI International Executive Committee 2008

Crisis-hit capitalism fears prospect of revolution

THE INTERNATIONAL Executive Committee (IEC) of the Committee for a Workers' International (CWI) met in Belgium on 23-29 November. The meeting was attended by over 60 IEC members and visitors from over 25 countries.
Its first session, introduced by Peter Taaffe on behalf of the CWI's International Secretariat, looked at the global economic crisis and its political consequences. Hannah Sell gives a summary of Peter's introduction and some highlights from the discussion.

IN THE space of two or three months the face of the world has changed. The ideas of Marxism are back on the agenda. Sales of Marx's works, including Capital, are on the rise. In Japan a comic version of volume one of Capital has even been brought out. The work of the CWI, an organisation that consistently predicted the crisis now unfolding, is of unprecedented importance.

The ruling classes are beginning to be scared of the anger of what they sometimes call 'the mob'. In the first instance the anger of 'the mob' is being directed at finance capital, at the bankers. The suddenness of the crisis in some countries means that a layer of the working class has temporarily been stunned, although their anger is no less for that.

The Financial Times has talked of the danger of 'revolution' and 'nationalism'. They mean this immediately in relation to the neo-colonial world. However, revolution is not something for the 'emerging', or more accurately the 'submerging', markets alone. In the next decade the advanced industrial countries will begin to experience what the neo-colonial world is experiencing - and revolution and counter-revolution will be on the agenda.

The economic crisis is developing with enormous speed. We have to discuss and work out the likely severity and longevity in so far as we are able to do so. This is the biggest financial crisis since 1929 and it is possible that the world economy will topple into a slump on the scale of the 1930s Great Depression.

However, the world's capitalist classes are desperate to prevent this, above all in the economically advanced countries. Prudence has gone out of the window; the capitalists are now in a period of reckless "profligacy". Following the collapse of Lehman Brothers, which was a mistake to let happen from the point of view of the capitalist class, their slogan has been 'no more Lehmans', regardless of the cost.

Over the last decade, the world's capitalists really have been tobogganing towards disaster with their eyes closed. Financial speculation developed on an incredible scale. The managers of the financial institutions didn't know what they were doing; they were like alchemists, trying to turn dross into gold.

The betrayals of the labour and social democratic parties, which have been transformed into parties of big business, cheer-leaders for neo-liberalism, are partly responsible for the scale of the crisis, because there were no mass parties which acted as a check on the excesses of the capitalists' profit bonanza.

As economist Nouriel Roubini put it, we now have: "A housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, a hedge funds bubble, all now bursting at once in the biggest real sector and financial sector de-leveraging since the Great Depression".

Whole countries could go the way of Iceland and literally face bankruptcy. A third of Icelanders now want to leave the country. Hungary, Pakistan, Ecuador and others are lining up behind Iceland. The global losses from the financial crisis are at least $2 trillion.

Can the capitalists escape a great depression? Even if they do they will not escape a 'great recession'. The best-case scenario is that the world economy will experience the deepest and longest crisis since the 1930s. This will come on the back of the 'silent recession' of recent years, in which, while economies have been growing, wages and living conditions for a majority of people have been held down.

Faced with the abyss, the capitalists are prepared to mortgage the future to try to prevent catastrophe. They are attempting what the capitalist class did in Japan in the 'lost decade' of the 1990s, a sustained attempt to pump-prime the economy, this time on a global scale. Today, as a result of its Keynesian policies, the accumulated national debt of Japan is equal to 180% of GDP. At the start of its crisis, however, Japan, unlike the US today, had considerable savings.

In their desperation, when their preferred measures to rescue the economy don't work, the capitalists are immediately prepared to try something else. In the US, when Paulson's bailout package didn't work they turned to buying shares in the banks, in a partial imitation of Brown's approach in Britain.

However, Britain's part-nationalisation of the banks, while it prevented Armageddon, has not unfrozen the credit markets, and some commentators are now starting to say that the outright nationalisation of the banking sector may be necessary.

These are considered temporary measures by the capitalists, who aim to return banks to the private sector as soon as possible. However, given the severity of the crisis, this may not be as soon as they expect.

The crisis has, of course, now gone far beyond the finance sector. The collapse in commodity prices is having an immediate effect on many countries. The collapse in oil prices, in particular, will have a dramatic effect in Venezuela, Nigeria, Russia, Iran and elsewhere.

Now, a classical crisis of overproduction and overcapacity is developing. The spare steel producing capacity in China today is equal to the total output of the US steel industry.

240,000 jobs were lost in the US in October alone. Japan and the Eurozone have also entered into recession. In China in the first half of this year 67,000 factories have closed. In response to this crisis, the US Federal Reserve has just announced a package worth a huge $800 billion. China has also announced a huge reflationary package, although it seems that not all of it is new money.

The world's ruling classes are terrified of the development of a depressionary spiral - where prices keep falling so consumers don't spend but wait for goods to get cheaper. In order to try to prevent this they are prepared to even consider using Milton Friedman's 'helicopter theory' - throwing money at people in order to get them to spend.

The Thatcherite Financial Times commentator, Samuel Brittan, is one of many who have even suggested that governments resort to the printing press in order to get people to spend, saying: "Where will the money come from? The short answer is: the Bank of England printing works in Debden".

In what ways and how quickly the working class will react to the crisis will vary from country to country, depending on what has gone before.

In Britain, for example, where there has been sixteen years of economic growth, the working class may initially be unsure how to combat the economic onslaught facing them. In Germany, which had a brutal recession a few years ago, workers may be quicker to respond.

However, every country will see important defensive struggles as workers fight to defend their living conditions. The recent magnificent movements of the old and the young - pensioners and students - in Ireland shows the potential for explosive struggles to develop which can, as in the case of the Irish pensioners, force governments to retreat.

The election of Barak Obama in the US marks the beginning of a new period. Millions of Americans voted for change. Obama will be under phenomenal pressure to deliver some concessions to working-class Americans. He will not be able to allow the US car industry to go to the wall. For a period there will be illusions that Obama could bring real change. However, he will not do so, and the coming years will see the need for a mass party for working people in the US and opportunities to build it.

Obama will also face pressure to act on international issues. He himself has said that he does not "know where to start". His election marks an end to the era of the neo-cons but it will not prevent an increase in inter-imperialist tensions.

Following the US troop 'surge', Iraq has only been a mirage of tranquillity. The US population expects Obama to withdraw the US troops.

However, a complete withdrawal is not the most likely scenario, given the US oil companies' interests in Iraqi oil, the sectarian forces that the occupation has unleashed, and the danger of the break-up of Iraq. At the same time Obama has promised a 'surge' in Afghanistan - a surge that will be met by a strengthened Taliban.

The Committee for a Workers' International has worked hard to defend the ideas of Marxism in an era in which the market has reigned triumphant. That era has now come to an end. There are now far greater possibilities to build the CWI than at any time in the last two decades.


IN THE discussion, an IEC member from Sweden spoke on the inherent instability of finance-dominated capitalism, saying that there have been 112 financial crises in 93 countries since 1974.

A German IEC member spoke on the effects on the eurozone, with some countries considering joining it to shelter from the storm, while at the same time troubles and tensions within the zone are growing under the pressure of the crisis, as was shown by the 'competitive guaranteeing of bank deposits' fiasco. It is likely that the euro will not survive the coming years in every eurozone country.

An IEC member from Russia explained how the fall in the price of oil is having a devastating effect on the Russian economy. The government budget for this year was based on an oil price of $78 a barrel, far higher than the current price.

Members of the CWI's US section spoke on the effect of Obama's victory and on the Nader campaign which, while it had received a low vote, had been important in that it had registered an electoral alternative. Cindy Sheehan, the anti-war activist, received 17% of the vote in the area where she stood, beating the Republicans into second place.

A number of people, including speakers from Nigeria, Northern Ireland and Germany, emphasised that in the light of the economic crisis we must widely declare that Karl Marx was right, and that we need to discuss and deepen our programmatic demands in the face of the crisis.

A member of the CWI from Malaysia spoke about the devastating effect that the 1997 crisis had on south-east Asia. At the time the Malaysian government carried out bail-outs and introduced capital controls in order to try to protect Malaysian capitalism - it had been criticised for doing this by US imperialism!

Another speaker commented that, while the imperialist powers are using Keynesian policies on a vast scale, the IMF loans to neo-colonial countries still come with brutal neo-liberal strings.

Lynn Walsh, of the International Secretariat, emphasised that the current attempts to bail out the world economy are unprecedented and that this is, in a sense, the first great test of Keynesian policies.

The Keynesianism of the post-war upswing was entirely different. Keynesian policies were used for boom management, rather than slump management as Keynes had envisaged and as is now taking place.

These measures will not solve the crisis, but might act as a certain cushion. However, the working class will be expected to pay for the current unprecedented scale of borrowing - via future increased taxes and cuts in services.

Replying to the discussion, Peter Taaffe stressed the inevitable movements of the working class that will develop in the face of this crisis. Where there are not conscious movements there will still be inchoate mass revolts. In Britain one bookmaker, Paddy Power, was taking bets on which city 'credit crunch' riots would take place in first.

Peter emphasised the role that the CWI can play - if we intervene in events with audacity - in helping to act as a catalyst for, and in leading, mass movements in the coming era. There is a rapidly growing minority who can be won to the CWI.

China's failing boom cannot soften world crisis

SEVERAL SPEAKERS in the discussion raised the question of what effect the Chinese stimulus package will have. Will it prevent recession in China and, in conjunction with other reflationary programmes, the capitalist world as a whole?

There was some debate on the former but general agreement that China can neither 'decouple' from the world crisis nor help to soften it.

However, it is clear that the Chinese economy is, at best, facing a considerable slowdown in its growth rates which will feel like a recession. Protests are already building as a result of the slowdown.

Other important questions were raised, such as on whether the Communist Party regime will try to stay in power in the next period. Also, could a 'movement for democracy' - along the lines of the 'colour' revolutions in parts of the former Soviet Union - develop, what would be the prospects for such a movement and what role would the Chinese working masses play in such a movement?

Australia: Socialist fighter keeps Melbourne council seat

AS THE meeting of the CWI's executive came to an end, news came in that a leading member of the CWI in Australia had won an impressive election victory in Melbourne.

Steve Jolly, Socialist Party councillor in Yarra council, Melbourne, topped the poll in his ward in November's local elections, winning 29.9% of the vote, to the Greens' No.1 candidate on 26.0% and the Labour Party's (ALP) No.1 candidate on 15.4%.

Steve's vote is a massive increase on his first preference vote when he was first elected, in 2004, on 12%. The result is a huge endorsement for a well-known socialist campaigner and for socialist ideas.

Many supporters and trade unionists financed the campaign and over 100 people helped at the polling booths, knocked on doors throughout the ward and put 75,000 leaflets through letter boxes.

Voters moved, in big numbers, from the Greens and ALP to the Socialist Party. The terms 'socialism' and 'socialist party' in this area, are historically linked to 'left' Australian politics (the area was the heartland of the Victorian ALP).

The names are now clearly identified with socialist campaigners, like Steve, who has fought, for example, for public housing tenants against big business developers, for childcare and kindergartens, and for real action on the environment.

A more detailed report of Steve's election win and the local election results will be available on the CWI site at soon.

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In The Socialist 3 December 2008:

Job losses

Fight back now against job cuts

Woolworths jobs threat

Fighting the threatened closure of Hoover factory

Environment and socialism

Our planet not their profit

Socialist Party editorial

India and Pakistan conflict

Terror mayhem strikes Mumbai

Socialist Party campaigns

Judiciary challenged over the right to protest

Building a left wing political alternative

Southampton uni students fight fees

Liverpool: mobilising against the far right

In brief


Social workers demand proper resources

Secondary education: PFI's gloss soon peels away

Socialist Party LGBT

Fighting homophobia

Socialist Party Marxist analysis

Crisis-hit capitalism fears prospect of revolution

International socialist news and analysis

Venezuela elections: Chávez wins victory but opposition gains ground

Marxist analysis: history

The Isle of Man general strike 1918: Workers' power paralysed government

Socialist Party news and analysis

Help fund the alternative to big business politics

Socialist women: Looking at the past to take action today

Housing crisis

Stop the repossessions

New Labour's housing crisis

Socialist Party workplace news

Vote 'no' to BT's pension cuts

A Christmas message from the Unite leadership

Dover docks strikes

Appledore shipyard


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