Socialist Party documents

British Perspectives: a Socialist Party congress 2011 document

[Back] [Next]

World Economy

5) The chorus of capitalist commentators to the effect that capitalism is on a recovery road to promised 'sunny economic uplands' is bogus. The claim of a sustained regeneration of capitalism is as "ludicrous" as the similar claims made in 2005 that the boom would continue through to 2007 and beyond.

True, the FTSE index of shares in Britain zoomed over 6040 points at the turn of the year. However, at the beginning of the year the most favourable current fields of investment in stocks and shares, it seems, are in Mongolia and Sri Lanka! Even this has now been undermined by the devastating floods in Sri Lanka, where one million people have been affected and 20% of rice production destroyed.

6) The gyrations on the stock exchange - a giant casino - are of little real relevance in measuring the economic health today and the prospects of real growth in the future.

More significant is the admission by the pro-capitalist, 'liberal' commentator and historian Simon Schama: "Life for millions in burgered America goes on only through food banks and food stamps.

"Seventy per cent of the population has a close friend or family member who has lost a job.

"We are still living in 3D America: desolation, devastation, destitution." This, in relation to the engine room of world capitalism!

7) China and Asia, however, still appear to be going ahead, fuelled by the colossal stimulus package in China, predicted in its scale and in its effects by the Socialist Party and the CWI.

This has pulled in tow many countries in the neo-colonial world that are experiencing a commodities boom and, to some extent, an increased market for their exports.

The other side, however, of China's growth is the accumulation of bubbles on a massive scale which could bring the Chinese economy juddering to a halt far quicker than capitalist economists imagine.

The scale of the overheated housing sector is reflected in the devastating effects on urban dwellers, particularly in places like Beijing. This was indicated in an article in the press over the Christmas period, dealing with inflation and price rises.

This is always an extremely sensitive issue for the Chinese state because of the historical role that it played in the Chinese revolution that led to the overthrow of the Kuomintang in the late 1940s and brought Mao to power.

In January, inflation topped 5.1%, which has led to enormous "dissatisfaction with price rises [which have] reached the highest levels since records began in 1999" according to a recent Central Bank survey.

8) Just what this has meant for the millions of Chinese vainly hoping to put their foot on the property ladder is shown by estimates which indicate "how long citizens would need to work to afford a 100-square-metre apartment in central Beijing, which currently sells for about Rmb3m ($450,000).

"As long as there were no natural disasters, a peasant farmer working an average plot of land would just have been able to afford an apartment if he or she somehow had worked since the Tang dynasty, which ended in 907AD, until today! If a Chinese blue-collar worker had been on the average monthly salary of Rmb1,500 since the opium wars in the mid-19th century and had given up weekends, then he or she might just have been able to afford a place of his or her own [today]" (Financial Times).

9) At the same time China's colossal, uncontrolled economic growth is inflicting more than 1 trillion Yuan's worth of damage on its environment each year according even to government planners.

The cost of pollution spills, deteriorating soil and other impacts surged to 1.3 trillion Yuan (130 billion) in 2008. This was the equivalent of 3.9% of the country's GDP.

The loss of soil and water "posed severe threats to the ecology, food safety and flood control," declared the Chinese vice-minister responsible for water resources.

Reservoirs are unable to cope with the demands of a rising and increasingly developing population. Beijing has had to rely on non-replenishable aquifers to meet the accumulated water deficit in the city.

This could lead to controls on water use, particularly for heavy users such as factories. From an economic point of view, China's pell-mell development on the basis of capitalism is unviable and this is graphically underlined when it comes to the environment.

10) As for the US, it is running a yawning budget deficit which threatens a fiscal train wreck. At one stage in late December the uptake of Treasury bonds, necessary for the continued financing of the deficit, was poor and threatened a crisis in government finances.

However, with the capitalists possessing massive surpluses in cash and with nowhere to really invest productively - in itself an expression of the organic crisis of capitalism - a further sale of bonds was successful.

The Obama administration is faced with the invidious prospect of seeking to cut the deficit which will severely impact on living standards. If this concentrates on welfare - as the Republican right hope - it will enormously aggravate the social situation and lead to a big radicalisation.

Whether this is reflected in a shift leftwards partly depends, as elsewhere, on the creation of a left pole of attraction in the form of a new left party or formation.

On the other hand, to attack the huge 'defence' budget would bring down even greater criticism from the right-wing Republicans - led by the Tea Party - on the heads of Obama and his administration.

Up to now, he has met this right-wing offensive by retreating and making concessions, for example on taxation of the rich. This can only spur on the right to force further retreats from Obama.

[Back] [Next]