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AUSTRALIAN
MARXIST
REVIEW

Journal of the Communist Party of Australia

ISSUE 51March 2010

Workers Party of Belgium

Contribution by Baudouin Deckers

The economic crisis is getting deeper

When the financial crisis broke out at the end of 2008 it brought about a worldwide crisis of the economy. This was inevitable. Indeed, the financial crisis is rooted in a structural crisis of overproduction, which has been worsening in successive waves since the first years of the seventies. As Marxists, we know that it is tightly linked to the production mode of the capitalist system.

Such a thesis has been developed time and again, at the International Communist Seminar of May 2009 among other platforms, as is attested by the Declaration which was endorsed there.

Since then, a number of banks and companies have been registering profits again. The slightest signs of recovery are bringing about convulsive movements of euphoria on the stock exchange. Various bodies of the capitalist world are issuing rather optimistic health reports: the disease seems to be as good as warded off. Judging from what they say, the world will not be confronted with a repeat of the years 29 and 30 of the past century.

Can it be surmised that capitalism is in a position to really surmount its crises?

The capitalist states have used their entire financial arsenal of weapons in order to avoid a long-lasting depression.

The relief provided by states to the large capitalists has reached limits which are unheard of. At world level, they have spent more than $2,000 billion in order to rescue banks from bankruptcy, in Belgium alone, $20 billion. The states have provided guarantees in order to restore confidence, both between banks and at investors’ level.

They have intervened massively, to buy back obligations and toxic credits.

These enormous efforts (which will have to be paid for by the population … ) have given a certain result, temporarily, contrary to what happened after ’29. We are coming out of a period of recession and re-entering one of slow growth, though at a much lower level than a year ago.

A sharp rise in unemployment will nevertheless remain the outstanding feature of the coming months and years.

There is an excess of capacity and the period of restructuring, liquidation of capital and rationalisation is only starting. No investments are made for the time being, except for takeovers and restructuring. The slight recovery is mostly due to the reconstitution of stocks. In Belgium, the Bureau du Plan foresees an increase of 175,000 unemployed between 2008 and 2011. And of over 200,000 if the growth of the active population is to be taken into account. In the US, the unemployment rate has overshot the 10 percent mark for the first time since 1983. As a result of the sharp increase in unemployment, pressure on salaries will be maintained (which in turn reinforces the weakening of the purchasing power).

Recovery will remain weak, very hesitant and unstable.

As a result of job losses, income decrease, and scarcity of loans, consumption has dropped and savings are on the increase.

The financial risks (banks) are far from being eliminated; the possibility of new crashes cannot be excluded. Suffice it to refer to the bankruptcy of the DSB Netherlands Bank and to that of the American CIT, which rates fourth in importance in the history of the US.

A large amount of toxic products is still present in the financial circuits. Moreover, the economic crisis is now taking its toll on banks as well, since the latter have more and more to do with debtor companies in default. This situation encourages the central banks to pursue their low interest-rate policies. Massive intervention by the central banks amounts to massive minting which, in turn, could result in a very important inflation rate.

The states have run into debt more than ever before in order to save the banks and the big companies. The budgetary deficits are exceeding all norms.

The dismantlement of services and public enterprises is speeding up and once again health care and education budgets are affected. Plans for savings or an increase in various taxes are going to burden the income of households yet further.

In order to re-establish their benefits and counter the danger of inflation, the capitalists have resorted to perceptible cuts in salaries and an increase in productivity. In the US, the wage cost per unit produced has gone down by 3.4 percent in the third quarter of 2009.

All this is not going to make it easy to get out of the crisis.

A relapse is certainly not to be excluded.

Consumption in the US is not pulling the world economy anymore, and there is no one to face the challenge for the time being. The Chinese economy still shows the highest growth rate (between 7 and 8 percent). However, it cannot replace American consumption as the driving power of the world economy. The Chinese GIP (Gross Internal Product) is only one-fifth of the American GIP. Furthermore, consumption in China reaches only 35 percent of the GIP, while in the US, it reaches 70 percent.

We may say, by way of conclusion, that both the plans to boost the economy and the use of incitements have got us out of the predicament, but it should be stated that all these measures are very temporary.

The financial and economic crisis gives an impulse to a new world order

After their victory over revolution in 1989, the great imperialist powers believed they could ensure global control by a militarist policy. In fact, their attacks on Yugoslavia, Iraq, Afghanistan and elsewhere have deepened the gap between them and the rest of the world. The financial crises in Asia in 1997, Latin America in 1998 and globally in 2008-2009 increasingly discredit the free market system itself, imposed in addition by anti-social measures dictated by the IMF or the World Bank. It is precisely that system which is pushing many of the world’s economies to the brink.

Meanwhile, Asia and Latin America, countries with socialist regimes such as China or Cuba, nationalist-progressive regimes such as Venezuela, Bolivia, Brazil and others, or emerging powers such as India have managed to break the yoke of total dependence and underdevelopment, in which imperialism had locked them for over a century.

China and Cuba and other emerging countries have become powerful levers of a new world order. There is indeed a long way still to go. But nobody can doubt the inevitable decline of imperialism.

Already the dollar is being widely questioned as an international currency. Joseph Stiglitz, Nobel Laureate and renowned professor of economics spoke recently of “a worldwide battle over ideas over what kind of economic system is likely to deliver the greatest benefit to the most people. Nowhere is that battle raging more hotly than in the Third World, among the 80 percent of the world’s population that lives in Asia, Latin America and Africa. In much of the world the battle between capitalism and socialism still rages. They are increasingly convinced that any economic ideals America may espouse are ideals to run from rather than embrace.”1

Global environmental crisis

Capitalism is not only discredited because of the economic disasters in which it plunges the world, but also by its complete failure to respond to that other major crisis: the one that threatens life itself on our planet.

The United Nations Environment Program (UNEP) has recently submitted to the G20 a document entitled Global Green New Deal. The first sentence of that document says exactly what it is: “In response to the financial and economic crisis, UNEP has called for a ‘Global Green New Deal’ for reviving the global economy … while simultaneously accelerating the fight against climate change.” Environmental technologies, according to this report, must primarily serve to revive the global economy, the market economy. They are certainly immense opportunities for capital seeking investment and will contribute to some economic recovery. Since the economic criterion is dominant, however, it limits at the same time the scope for saving our planet. It was this unlimited pursuit of profit which led both to the financial and economic crises and to the disastrous situation of our environment. It is not private capital seeking ever-greater profits, which will be able to resolve the immense environmental crisis in which our planet is plunging.

History has shown that capitalism can only overcome its crises by destroying each time immense productive forces.“During the depression of the 1930s it was not the ‘new deal’ that saved capitalism from languishing but the Second World War. We are facing a period of sharpened contradictions, with capital becoming more aggressive. This risks leading to new armed conflicts.”2

Our tasks as communist parties

Everywhere workers are active and protesting. Some worry that class struggle is lagging behind in the face of the scale of the capitalist crises. We must remember that it was not in 1929 that the most important struggles of the working class took place, but some years later. It is only when workers feel the full weight imposed on them by governments and employers that they react.

In addition, we must not underestimate the void left by the counter-revolution. In 1930, workers saw that socialism in the USSR was the alternative. Today, workers are increasingly losing confidence in capitalism, but they do not see what to oppose to it.

The European Left Party persist in defending a left-reformist position, an updated version of social democracy. Obtaining partial improvements within the current system is already sufficiently ambitious. We will never collaborate with these attempts to bind workers to capitalism and imperialism.

It’s up to us to help both blue-collar and white-collar workers, as well as the unemployed, students and self-employed to realise that this is not our crisis, but that of capital. That the fundamental problem is the private ownership of the major means of production, combined with the continuous search for higher profits by the few holders of big capital.

Only a truly socialist economy, planned by the workers’ state can ensure that production is determined by the needs of the masses and not by profits for a minority.

This understanding does not pass so easily today in our imperialist countries. It is no good whining about this, for we know the reasons: the overthrow of socialism in the USSR and the increasing stranglehold of a few large monopolies in the media. We must start with reality and discover the ways in which workers can now move in an anti-capitalist direction.

We have decided to walk on two legs. On the one hand, we want to get rid of rigidity and dogmatism in our mass work; we must start from what people understand today i.e. correct demands for which they are prepared to act — whatever the level — and support and help develop the struggles they undertake. For example, we are currently engaged in a major campaign for a tax on millionaires, a tax that would hit the 72,000 euro-millionaire families in Belgium. Compared to the population, it is the largest number in the European Union. Taxing the very rich is a claim that has already met with some support in various trade union circles, but bourgeois political circles claim it is absurd and “unrealistic”. We are also advocating a reduction of VAT on energy, from 21 percent — the current rate — to 6 percent. We have already collected over 200,000 signatures and we will continue this campaign as long as the measure has not been applied. I could give you a much longer list of demands or actions that we undertake and which are at a level people can engage with.

The danger of turning to the right of course exists. This would be a real risk, if we did not also walk on the other foot: the strengthening of Marxist-Leninist education in our party, through party schools and our theoretical journal and through open conferences.

We must strengthen the revolutionary communist movement. This requires deepening our understanding and our Marxist critique of capitalism, in struggle with reformist and social-democratic ideas. This requires that we strengthen our cooperation at this level. We must also share more experiences in organising the masses, and organisation of our own communist parties, and our experience in tactics. All our work must be based on scientific socialism. But it is clear that the specific response to typical problems of our time will not be found as such in these messages. It can arise only from the scientific assessments we make of our experiences.

  1. Vanity Fair, Joseph E. Stiglitz, July 2009
  2. Declaration on the Economic Crisis, 18th International Communist Seminar, Brussels, 15-17 May 2009

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