World relations and the world economy

world congress 2007
Building a socialist alternative around the world

Peter Taaffe, a member of the CWI’s International Secretariat (IS), opened the discussion on world relations by saying that we are on the eve of quite tumultuous events worldwide, both negative and positive. That is the view of the strategists of capitalism as well as the CWI. Some parts of the world are being torn apart by brutal conflict or military onslaught, such as in Iraq, Sudan, Palestine and Somalia. The issue of nuclear weapons has come back to the fore in relation to North Korea and Iran. Many governments in the ‘advanced’ capitalist countries are either almost paralysed or very unstable, such as in Canada, Germany and Italy. Blair in Britain has gone from strutting the world stage to being discredited and in the departure lounge. The replacement of Chirac as French president is not expected to change the gloomy prospects for French capitalism.

In Venezuela, the recent announcement of Hugo Chávez in which he said “We are moving towards a socialist republic of Venezuela" and his comments that he was, "very much of (Leon) Trotsky’s line – the permanent revolution," helps to popularise Trotsky’s ideas worldwide. However, Chávez has not applied Trotsky’s ideas as far as the role of the working class in the socialist revolution is concerned. Present events in Venezuela are extremely important for workers internationally to observe and analyse. In Bolivia too, it is a tumultuous period. Across a number of countries of Latin America there is the reappearance of a form of reformism, as was once expressed by the old-style Labour Party in Britain.

This overall picture of instability is despite the continuation of economic growth worldwide. This growth has not prevented half of humanity from living in poverty, and everywhere the gap between the richest and poorest is widening. The last five years has seen the biggest redistribution of wealth in the history of modern capitalism. Of the wealth generated by workers’ labour worldwide, a record high share of it is going to capitalists in the form of profit and a record low share is going to the workers themselves.

Iraq & the Middle East

The situation in Iraq is already a debacle for US imperialism, and George W Bush’s recent speech declaring a ‘troop surge’ has compounded the situation further. Bush is increasingly isolated and at odds with the US ruling class, who in the main supported the conclusions of the US ‘Iraq Study Group’ report. This report, which concluded that US troops should be removed from Iraq by the first quarter of 2008, was a complete indictment of the ideas of the neo-conservatives around Bush. They are viewed as having created a catastrophic situation in their quest to plunder the oil of Iraq. The CWI was the only international organisation to warn that the US-led invasion of Iraq would foster sectarian division among the Iraqi people and unfortunately we are being proved right. Even the hanging of Saddam Hussein was a sectarian event, with the task being handed to Shia agents of the Maliki government.

Working people in America have turned massively against the occupation, with polls showing 70% opposing the sending of extra troops. US delegates at the CWI congress reported that 1,000 personnel in the US military, including dozens of soldiers in active service, have publicly called for withdrawal from Iraq and that only 44% of US soldiers in Iraq now think the invasion was right. Yet Bush has said he will be the last person to propose withdrawal. ‘Surges’ were tried in 2004, 2005 and 2006 but none of them succeeded in ‘stabilising’ Iraq. When US forces tried to smash the Shia Mahdi army in 2004, this only led to the militia’s strengthening, now having an estimating 100,000 fighters. The sending of an extra 20,000 US troops cannot succeeding in destroying that army and taking control of Baghdad.

If Iraq breaks up into three entities it will have huge repercussions for surrounding countries, including Iran, where around 50% of the population consists of various minorities. The Sunni Arab elites in the Middle East are very alarmed by the rise of the Shias to power in Iraq. In the event of a spiralling of the conflict, they could feel compelled to enter the fray to assist the Iraqi Sunnis, so contributing to a new wider war. Half of the Iraqi population lives in just four large cities: Basra, Mosul, Kirkuk and Baghdad. The latter three have very mixed populations, so a break-up of the country along ethnic and religious lines would create a nightmare situation. The spectre of the the Balkan wars now haunts the Middle East, though with the prospect of a much worse scenario, more akin to the 1948 division of the Indian subcontinent with its millions of refugees.

Can Bush be stopped from continuing the occupation and present ‘surge’? The US Congress has the power to withdraw funding as was done in the latter stages of the Vietnam war, and Congress now has a Democratic Party majority. However, while this could happen, as could the start of an impeachment process against Bush, these possibilities are not the most likely scenario. The Democratic Party is too implicated in the invasion and occupation. While it has felt compelled to oppose Bush’s present strategy, it has no alternative to offer.

The desperation of Bush & co reflects the fact that US direct domination in the Middle East is coming to an end. They will even have difficulty in holding onto their military bases in countries like Bahrain and Qatar in the coming period.

The Iraqi Kurds mainly supported the US invasion, but the CWI warned that if they look to the imperialist powers to support their aspirations, they will be betrayed by these powers, as they have been in the past. For instance, US imperialism will support the interests of the Turkish regime against the Iraqi Kurds’ desire for independence.

On the question of whether the US will attack Iran, US forces would not be able to carry out a land invasion with the aim of bringing down the Iranian regime, as they are already over-stretched. But severe though the repercussions would be, it is unfortunately possible that either the US or Israel could launch an air assault on Iran’s nuclear installations.

The people of Lebanon, having endured the 2006 Israeli military onslaught, are now threatened by an upsurge of sectarianism. Before and during the war with Israel, Hezbollah leaders moved away from pushing the concept of an Islamic state in an attempt to broaden their appeal and draw wide sections of society behind their banner. But unless they adopt a position of support for workers’ unity and full minority rights, and oppose the programmes of all the capitalist parties, in a situation of worsening ethnic and religious polarisation they will inevitably revert to basing themselves on the Shia population.

The CWI section in Sri Lanka, with its class-based support for decent living standards for both Sinhala and Tamil peoples and for the right of self-determination for the Tamils, has shown that this is the only way to counter division and pose a way forward. Likewise, the Malaysian Socialist Party, who sent visitors to the CWI congress, explained how they fight for workers’ unity among Tamils, Chinese and Malays in Malaysia, as a central plank of their work.

The Israeli ruling class have been weakened by their 2006 war on Hezbollah, and their government is in crisis. Prime minister Olmert’s Kadima party has sunk to 7% in opinion polls and the government is being rocked by a series of corruption and sexual scandals. An Israeli delegate to the congress described the present situation as the worst leadership crisis in the history of Israel. With Israeli workers facing increased insecurity and poverty – a third of Israeli children live in povery – and Palestinians suffering to a much greater degree under brutal occupation and starvation conditions, the CWI’s position of arguing the need for a socialist Israeli and a socialist Palestine was reiterated in the congress discussion.

In Afghanistan, following the US declaration of victory over the Taliban five years ago, the Taliban just moved their base over the border into Pakistan and are now fighting the occupying forces in the south of Afghanistan. A congress delegate from Pakistan reported that 93% of people in Afghanistan have no electricity and 79% have no clean water. The manoeuvring of the Musharaff regime in Pakistan, between its links with the Taliban and the interests of US imperialism, were referred to in the congress discussion. In Pakistan, Benezir Bhutto of the PPP, who is completely discredited in the eyes of the working class and poor, is waiting in the wings to join Musharaff in power.

Also raised was the front that the Bush regime has opened up in Somalia, by supporting the Ethiopian invasion. This has plunged the Somali people back into the nightmare of warfare, which will spill over into Ethiopia and Eritrea.

World Economy

There is no consensus among leading capitalist economists on the direction of the world economy. Some see growth ending soon while others see no reason for alarm. Could the world boom continue to be one of the longest in capitalist history? On this question, the CWI congress supported the conclusion of many articles already written by the CWI on prospects for the world economy. The congress warned that a downturn with severe consequences is inevitable, although it is not possible to predict whether growth will first stumble on for another 2-3 years or whether there will be a sudden economic collapse in the nearer future.

There are a number of ‘bubbles’ in the main world economies, including in housing, commodities, power utilities, mergers and acquisitions. Financial speculation and credit have reached new heights. In 2005, the total value of equities, bonds and loans reached $140,000 billion, which is three times the value of global GDP. If present trends continue, it would reach $200,000 billion by 2010. And yet household savings in the US are at their lowest since 1933, which is also a worldwide trend. This is an extremely precarious situation; a major failure in a hedge fund for example, could lead to a financial collapse, bringing the upswing to an abrupt halt. The US capitalists or other world powers would not be able to ‘bail out’ a huge default, of say tens of billions of dollars, which is possible. Some hedge funds are larger than the reserves of China!

The US ‘twin deficit’ situation is unsustainable. Despite the growth in their economies and their resulting increased importance in the world trade arena, neither China nor India will be able to substitute for the effects of a serious world recession. China accounts for just 4% of global output, contains its own multiple bubbles with resulting instability and its consumer power does not come close to that of the US. Nor could any of the weak EU economies save the world economy from a serious downturn, or that of Russia, which despite now being the 10th largest in the world, is a fragile, lopsided economy, based predominately on natural energy resources.

It is a massive indictment of capitalism that the world economy is unable to commit the necessary resources to reversing the severe environmental damage that capitalism has caused on the planet. Global warming is predicted to cause massive suffering to millions of the poorest people worldwide. In China, pollution has risen to almost unbearable levels in many cities, with 36% of Chinese people now drinking polluted water.

Documents and amendments

During the CWI congress a number of small amendments to the world relations document and to a separate document on the CIS were proposed and agreed. The amendments, included the insertion of a few paragraphs on the role played by non-governmental organisations (NGOs) in the ex-colonial countries. There was then full agreement on the documents, which outline the main trends and relations in the world.

Regarding China, the delegates from Sweden raised some questions regarding the present class character of that country, arguing that we should describe it as a capitalist state rather than a state that is still in transition. There was complete agreement at the congress on all the essential features of China. It no longer has a Stalinist-style planned economy, that there is strong and growing capitalist development which is the dominating trend and that this is a counter-revolutionary process. The Chinese regime presides over vicious neo-liberal attacks on the Chinese masses, including much reduced access to health care and sweatshop conditions in industry. Its rapaciousness does not stop at the Chinese borders; a delegate from Nigeria commented that Nigerian workers would rather suffer the exploitation of US and European imperialism than that of the Chinese capitalists, as the latter are particularly ruthless when it comes to workers’ rights and conditions.

In response to the Swedish delegates, IS member Lynn Walsh explained that the IS views China as still being in transition towards capitalism, and therefore resists referring to it as a ‘capitalist state’. There are no fully reliable figures on the amount of private ownership in the Chinese economy. Nevertheless, it is clear that the economy contains a mixture of state enterprises, private companies financed by state banks and independent private firms – many of which are foreign owned – that are all subject to varying degrees of state influence or intervention. Ownership of shares in China does not necessarily give ownership of company assets and land is state owned, with businesses having to lease it from the state, so some of the fundamental capitalist property norms have not yet been established.

Whereas in Russia there was a very rapid shattering of the previous Stalinist state, China at present has more of a ‘hybrid’ character, with its bureaucratic elite deliberately maintaining a higher degree of state ownership and control. This state element can wax and wane according to the fortunes of the Chinese economy. When the economy moves towards a downturn, it is likely that state intervention and control will be stepped up. This will not, however, result in a return to a Stalinist planned economy, but rather would be a form of state capitalism which would not be stable in the long-term.

Altogether there were 37 contributions from delegates and visitors during the CWI congress world relations discussion, which covered a vast range of countries, from the Philippines, Thailand, Bangladesh, Pakistan, Indonesia, North Korea, India and Kashmir in Asia, to all other parts of the world, including many countries in the Middle East, the CIS, countries such as Somalia, Algeria and Nigeria in Africa, and the US and Australia.

The discussion included references to the many significant workers’ struggles in the past year, including an insurrectionary movement in Mexico, a movement against anti-trade union laws in Australia and struggles in Europe such as that of the Greek students and the French workers defeating the CPE law. The most developed situation regarding struggle is in Latin America. Here revolutionary ideas will be vying with populist ideas for the ear of the working masses.

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