World Economy and Perspectives

“Capitalism shaken by worst crisis since 1930s”

Following two short films, one showing some of the important world events of 2009, so far, and the dramatic night in Dublin in June, which ended with Joe Higgins being elected as a Member of the European Parliament, Lynn Walsh opened the first discussion of the Committee for a Workers’ International (CWI) School of 2009 on World Perspectives. Starting with a socialist analysis of the collapse of the world economy over the last year, Lynn described how “capitalism had been shaken by its worst crisis since the 1930s”. The financial destruction caused by the speculation innate to capitalism destroyed about $50 trillion of wealth, so far, and forced the governments of the world to outlay trillions of dollars to prevent the implosion of the whole financial system. Lynn mentioned how some commentators had warned that if nothing was done to save the system, the bankers and the bosses would face an “anti-capitalist tidal wave” that might sweep them away such was the anger amongst the working and middle classes at those who had ruined many lives.

Lynn pointed out that the fundamental reason for the slump was the crisis in capitalist production and the conscious turning away from industrial investment to financial speculation that began during the Thatcher-Reagan era because of the capitalists’ lust for ever-increasing profits. In the US, for example, the share of corporate profits taken by financial companies had risen from 16% before 1980 to a peak of 41% in recent years. The capitalists’ claim that they had eliminated risk and found a source of continuous profits was shown to be just the opposite, with huge dangers to the financial system had governments around the world not intervened.

Lynn then outlined the various prognoses for recovery that capitalist economists were suggesting. The trillions of dollars spent on stimulus programmes had made some effect, but could this be continued? Central banks were spending billions of dollars on buying assets to pump money into the system (Quantative Easing or ‘QE’) but this risked inflation in the future. Neither had deflation been avoided in many countries yet. Whatever happens, there was the prospect of a further stalling of the world economy some time in the future.

In reality, the capitalists have no clear way out. They are trying to make the working class pay for their crisis through redundancies, closures, short-time working in the private sector, and massive public-sector cuts, leading to service closures and redundancies. These attacks and/or a growth of inflation will also lead to social breakdown and trade union struggles.

China and Iran

Lynn, and later speakers in the discussion, took up the question of whether China could pull the world economy out of recession. China’s announced growth figures were respectable given the falls in the major industrialised countries but the recession in its main markets and the cuts in income will reduce the chances of China being the locomotive for the world economy. Developing a domestic market has been hit by redundancies and wage cuts in Chinese industry.

Lynn and others also commented on the reasons behind the recent ethnic unrest in Xinjiang province, which reflections of the development of China and its regions, the mobility of labour and the incapacity to solve the social and national problems of all the peoples of China.

The recent mass protests in Iran have also shaken the regime in that country. While the protests seem to have subsided for the moment, they were momentous in being the first generalised protests since the formation of the Islamic Republic in 1979. The ruling elite were split and Mousavi had become an accidental leader of the protests because of his belief that the regime had to come to an agreement with US imperialism. But Ahmadinejad and the group around him had carried out a ‘coup’ to concentrate power in their hands and brutally suppress the protests. This movement had been brutally suppressed but when the working class comes to the fore with its own class demands, the regime will once more be shaken and will face severe difficulties.

As well as Iran, US imperialism faces a number of difficult problems: in Iraq, with Israel-Palestine, and Afghanistan-Pakistan. Obama had effectively pulled the US out of one quagmire (Iraq) only to be sinking fast in another (Afghanistan-Pakistan), which was beginning to develop features of the Vietnam War. These conflicts and others will hit Obama’s popularity, which is currently quite high both domestically and internationally. However, Obama’s domestic programme is facing opposition within Congress, including among some Democrats, and failure to implement some of his more popular proposals will lead to disillusion amongst sections of his supporters, particularly workers.

The general position looks gloomy for world capitalism but Lynn explained the system will find a way out if workers are unable to build a fighting alternative. The capitalists’ attacks will provoke mass opposition. The CWI will participate in these events, explaining our ideas and tactics to those workers and youth who will be in struggle. The present crisis is creating more favourable conditions for socialist idea than the past period. The CWI’s role is vital in constructing the forces that will abolish capitalism altogether.

Discussion

A number of comrades intervened in the discussion. Elin from Sweden outlined the capitalists’ degradation of the planet. The CWI will participate in protests that will take place at the December conference on climate control in Copenhagen. Comrade Brett from the US explained the crisis facing the car industry worldwide. Comrades from Malaysia and Australia showed how the crisis was affecting the economies and political systems of those countries.

Peter Taaffe from the International Secretariat made a contribution showing the similarities between this period and the 1970s, when world recession provoked revolution in Spain, Portugal, Greece and Cyprus. We should be preparing for similar events now, as we are now in the first stages of a revolutionary, though drawn-out, period. Every member and every section must be aware of how we can build now. This was emphasised in Robert Bechert’s summing up. The crisis in the system and the anger at its collapse has put the existence of the whole capitalist system into question. The CWI must use this anger to build socialist forces internationally.

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