Link to this page: https://www.socialistparty.org.uk/issue/220/9172
World Economy: The Panic Spreads
A RECENT Economist special report on the world economy, 25 August, sums up the panic now gripping the capitalists internationally.
The report's opening line states: "One by one, economies around the world are stumbling. By cutting interest rates... the Federal Reserve hopes it can keep America out of recession. But in an increasing number of economies... GDP is already shrinking. Global industrial production fell at an annual rate of 6% in the first half of 2001."
We have stated on many occasions (see issue 217 for most recent article), the US economy is the Atlas that held up the world economy.
Now, it threatens to turn into its opposite and drag world capitalism into an economic abyss.
Technically, the US economy is not yet in recession (described as a drop in production in two successive quarters) although US manufacturing industry is in a deep crisis.
Serious capitalist economists agree with The Socialist that 1997 was the turning point. Stephen Roche, Morgan Stanley's chief economist argues that "the global recession of 2001 is very much a by-product of the previous downturn of 1998... indeed... the two downturns should be viewed more as a continuum of one long, drawn-out global business cycle... that could go down in history as the world's first recession in this modern era of globalisation".
The Economist also agrees with us that this recession or slump will be much more synchronised than any other post-1945 economic contraction.
In other words, much worse and more prolonged.
A whole series of defensive battles for jobs and conditions by the working class internationally is inevitable.
The preparedness of workers to struggle is magnificently highlighted by the two-day general strike by five million workers in South Africa (see page 4).
Despite the worsening economic situation, we have also seen offensive struggles such as the refusal to accept a wage increase of 10% by Volkswagen car workers in Mexico.
Public-sector workers in Brazil have been on strike for a 74% increase in wages.
Europe has experienced important strikes in the past period, and these will intensify, reflecting the changed economic situation.
There were important metalworkers' strikes in Italy, even prior to Genoa. In July, Belgian transport workers struck against privatisation. In Spain, 40,000 telecommunication workers came out on strike in June.
Clearly a new period is opening up for the working class and socialists should prepare now for future struggles.
In The Socialist 7 September 2001: