World capitalist crisis – "Socialism and marxism now back on the agenda”
Socialism and marxism are now back on the agenda, popularised in part by the enemies of the workers' movement, explained Peter Taaffe of the CWI’s International Secretariat introducing the discussion on the world economic crisis. More than that, the role of the CWI now assumes greater importance, partiuclarly as the crisis confirmed our consistent analysis that the boom would come to an end and would provoke struggles.
Capitalist commentators have raised their fear of the 'mob'. There is justified anger amongst millions around the world at the effects of the crisis. In Iceland, where the economy is facing a devastating collapse following the speculative activities of the Icelandic banks and their eventual collapse, demonstrations are now taking place. Bankers and ministers are unable to move around freely! Iceland is 1929 in modern terms; it shows what another Great Depression would look like.
The crisis has stunned the workers of the world but their anger is reflected in many different ways. This has been acknowledged by the Financial Times in London, which raised the fear of 'revolution' and 'nationalism', in reality counter-revolution, as features of the coming period. Rosa Luxemburg's phrase of 'socialism or barbarism' could easily be a description of the next few years. Look at the break up of Somalia and the recent highly-publicised piracy off its coasts as an example of what this would mean. Socialism will become relevant to the neo-colonial world and 'emerging markets' but also in 'developed' countries.
How deep, how long?
Defining characteristics of this crisis have been the speed of this process, its severity and its likely prolonged duration. So far, the CWI has been conditional on the issue of a 'slump' but the economy could possibly topple over into a slump in course of crisis. But such is the desperation of the capitalist class internationally that it will 'throw the kitchen sink' at the crisis so their system survives. Their representatives now realise it was a mistake not to save Lehman Brothers when it was in trouble; two days later they saved AIG.
Now, many capitalists and their commentators have taken critical stances. former US Federal Reserve president Paul Volcker has lambasted the economic witchdoctors that got capitalism into this mess. Nouriel Roubini, whose comments we have carried on our website, has been vociferous in his dire warnings of how bad this collapse is and could be.
Can the capitalists temporarily overcome this? This will be the longest and deepest crisis since the Great Depression of the 1930s and comes on the back of a silent recession, the holding down of wages, the 'joyless' boom, the lost decade in Japan of deflation and crisis, which still has not been fully resolved. But we live in extraordinary times and the capitalists are prepared to take extraordinary measures and mortgage the future in order to survive. Exploding national debts to fund emergency measures, the state taking stakes in banks and even full nationalisaiton has been mooted, even nationalisation of other industries; all these will be considered and could be implemented by the capitalists to save their system. Many of these will be considered temporary but could last for a long period, as have some of the measures from the 1990s banking crisis in Sweden. What is important for Marxists in these measures is that even capitalist nationalisation challenges the idea that the market is the most efficient method of organising production. From that, we raise the idea of socialist nationalisation with workers' control and management.
The collapse in commodity prices, particularly of oil and metals, will have devastating effects in primary producers who have budgeted for much higher revenues during the 'boom', particularly the bubble inspired by China's economic growth. Very little of the benefits of the price boom saw their way down to the masses and the crisis will see their share reduced still further.
Obama has warned of millions of job losses. He has proposed a $700 billion stimulus to get the US out of the mess. The recent G20 summit attempted to unify the stimulus packages with only moderate success. China's reflationary package is only smaller than that announced by Obama. The Chinese leadership has a terror of the social consequences if they do nothing. Already tens of thousands of factories have closed this year in China, so will the stimulus have an effect?The world is now facing a period of 'deflation'.
During the expansion of globalisation, the deflation caused by cheap Chinese goods was 'good' as it kept prices down and forced workers to accept moderate wage increases for fear of their jobs being exported. But this deflation is 'bad' as generalised price falls are taking place. Capitalist commentators have suggested the 'helicopter theory' of throwing money at people in order to get them to spend. FT commentator Samuel Brittan thinks Gordon Brown should, if necessary, resort to the printing press to pay for the stimulus package. He accuses the British Tories of being 'Bourbons' - learning nothing and remembering nothing - by returning to Thatcherite policies in this crisis.One thing is for sure; this is the end of the era of deregulated, free-market capitalism.
That is not to say there will be no neoliberal measures proposed; the bosses will propose holding wages down, make cuts in public expenditure 'so we all make sacrifices' and may try to implement privatisation.
Capitalist commentators have raised their fear of the 'mob'. There is justified anger amongst millions around the world at the effects of the crisis. In Iceland, where the economy is facing a devastating collapse following the speculative activities of the Icelandic banks and their eventual collapse, demonstrations are now taking place. Bankers and ministers are unable to move around freely! Iceland is 1929 in modern terms; it shows what another Great Depression would look like.
The crisis has stunned the workers of the world but their anger is reflected in many different ways. This has been acknowledged by the Financial Times in London, which raised the fear of 'revolution' and 'nationalism', in reality counter-revolution, as features of the coming period. Rosa Luxemburg's phrase of 'socialism or barbarism' could easily be a description of the next few years. Look at the break up of Somalia and the recent highly-publicised piracy off its coasts as an example of what this would mean. Socialism will become relevant to the neo-colonial world and 'emerging markets' but also in 'developed' countries.
How deep, how long?
Defining characteristics of this crisis have been the speed of this process, its severity and its likely prolonged duration. So far, the CWI has been conditional on the issue of a 'slump' but the economy could possibly topple over into a slump in course of crisis. But such is the desperation of the capitalist class internationally that it will 'throw the kitchen sink' at the crisis so their system survives. Their representatives now realise it was a mistake not to save Lehman Brothers when it was in trouble; two days later they saved AIG.
Now, many capitalists and their commentators have taken critical stances. former US Federal Reserve president Paul Volcker has lambasted the economic witchdoctors that got capitalism into this mess. Nouriel Roubini, whose comments we have carried on our website, has been vociferous in his dire warnings of how bad this collapse is and could be.
Can the capitalists temporarily overcome this? This will be the longest and deepest crisis since the Great Depression of the 1930s and comes on the back of a silent recession, the holding down of wages, the 'joyless' boom, the lost decade in Japan of deflation and crisis, which still has not been fully resolved. But we live in extraordinary times and the capitalists are prepared to take extraordinary measures and mortgage the future in order to survive. Exploding national debts to fund emergency measures, the state taking stakes in banks and even full nationalisaiton has been mooted, even nationalisation of other industries; all these will be considered and could be implemented by the capitalists to save their system. Many of these will be considered temporary but could last for a long period, as have some of the measures from the 1990s banking crisis in Sweden. What is important for Marxists in these measures is that even capitalist nationalisation challenges the idea that the market is the most efficient method of organising production. From that, we raise the idea of socialist nationalisation with workers' control and management.
The collapse in commodity prices, particularly of oil and metals, will have devastating effects in primary producers who have budgeted for much higher revenues during the 'boom', particularly the bubble inspired by China's economic growth. Very little of the benefits of the price boom saw their way down to the masses and the crisis will see their share reduced still further.
Obama has warned of millions of job losses. He has proposed a $700 billion stimulus to get the US out of the mess. The recent G20 summit attempted to unify the stimulus packages with only moderate success. China's reflationary package is only smaller than that announced by Obama. The Chinese leadership has a terror of the social consequences if they do nothing. Already tens of thousands of factories have closed this year in China, so will the stimulus have an effect?The world is now facing a period of 'deflation'.
During the expansion of globalisation, the deflation caused by cheap Chinese goods was 'good' as it kept prices down and forced workers to accept moderate wage increases for fear of their jobs being exported. But this deflation is 'bad' as generalised price falls are taking place. Capitalist commentators have suggested the 'helicopter theory' of throwing money at people in order to get them to spend. FT commentator Samuel Brittan thinks Gordon Brown should, if necessary, resort to the printing press to pay for the stimulus package. He accuses the British Tories of being 'Bourbons' - learning nothing and remembering nothing - by returning to Thatcherite policies in this crisis.One thing is for sure; this is the end of the era of deregulated, free-market capitalism.
That is not to say there will be no neoliberal measures proposed; the bosses will propose holding wages down, make cuts in public expenditure 'so we all make sacrifices' and may try to implement privatisation.
