{"id":730,"date":"2019-09-18T14:29:14","date_gmt":"2019-09-18T12:29:14","guid":{"rendered":"http:\/\/marxistworkersparty.org.za\/?page_id=730"},"modified":"2019-09-18T14:39:22","modified_gmt":"2019-09-18T12:39:22","slug":"chapter-three","status":"publish","type":"page","link":"https:\/\/marxistworkersparty.net\/?page_id=730","title":{"rendered":"Chapter Three"},"content":{"rendered":"\n

The Crisis\nof the Capitalist Powers <\/strong><\/h2>\n\n\n\n

The upswing of capitalism after the Second World War became\nthe main determining factor of world history for an entire generation.<\/p>\n\n\n\n

It is essential to understand that the precondition for this\nupswing was the defeat of the revolutionary wave at the end of the war. The\ndevelopment of the productive forces is not autonomous or independent of the\nclass struggle. The crisis of proletarian leadership, which was responsible for\na whole series of defeats, bears the central responsibility for prolonging the\nlife of world capitalism.<\/p>\n\n\n\n

Lenin and Trotsky had explained that, if the class struggle\nis left out of account, capitalism can always regenerate itself out of a crisis\nin which productive forces are destroyed. For the bourgeoisie, the human misery\nof depressions and wars has its positive side\u2014in restoring the rate of profit\nand creating a renewed market for capitalist production.<\/p>\n\n\n\n

By the dialectic of the system, the devastation of Europe\nand Japan in the war provided a market especially for capital goods and thus\nstimulated the post-war upswing. UN economists have estimated that the\nreconstruction of Europe exerted an effect on the world market for about ten\nyears.<\/p>\n\n\n\n

Also, through the destruction of previously accumulated investment\nin buildings, machinery, communications, etc., the war had allowed the rate of\nprofit on new investment to be temporarily raised.<\/p>\n\n\n\n

The bourgeoisie internationally was spurred on in the\nreconstruction of Europe by their fear of the consequences of the strengthened\nposition of Stalinism in Eastern Europe.<\/p>\n\n\n\n

To re-consolidate their power in Western Europe, the\nbourgeoisie could not afford to leave the population languishing in hunger,\nhomelessness and unemployment. Defeated revolution always turns to counter-revolution.\nBut the strength of the European proletariat at the end of the war, its\nvolatility held in check only by its own leaders, resulted (in most countries)\nin the bourgeois counter-revolution taking place in a democratic form<\/strong>.<\/p>\n\n\n\n

Thus a big injection of capital investment into Western\nEurope was accompanied by a period of political and social reforms, and\nimprovements in the living standards of the population. In Britain, for example,\nwhere Labour came to power in 1945, the essential measures of what became known\nas the ‘welfare state’ were introduced.<\/p>\n\n\n\n

The expansion of production after the war was by no means a\nnew phenomenon. There had been a boom also after the First World War. But in\nthe 1920s and 1930s, each new cycle of growth had soon run up against the\ninternal contradictions of the system, a crisis of profitability and\noverproduction. <\/p>\n\n\n\n

The revolutionary turbulence of the inter-war period was\nmaintained by the repeated cycles of boom and slump, in which capitalist\nproduction crashed against the barriers posed by private ownership of the means\nof production and the nation-state. Each new boom quickly faltered on the\nlimits of the capitalist market, made all the more inflexible by the\ncompetition between the great powers. <\/p>\n\n\n\n

After the Second World War, in contrast, the upswing\nextended over 25 years, with only minor interruptions. It is impossible to\nunderstand this development without recognising the change in the international\nsituation brought about as a result of the war.<\/p>\n\n\n\n

The scale and duration of the post-war upswing was made\npossible by the fact that United States imperialism emerged from the war as the\nundisputed dominant world capitalist power. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Technique <\/strong><\/p>\n\n\n\n

The foundations of the American economy had been laid in the\nperiod of the rise of capitalism as a world system. The American bourgeoisie\nenjoyed the advantages of a relatively late development in which they were able\nto use the latest productive techniques. At the sated time they had the benefit\nof a market on a continental scale, which, because of its great distance from Europe,\nwas relatively insulated for decades from competition by the other powers.<\/p>\n\n\n\n

The geographical position of America also ins. from the\ndestructive effects of the First World war_ The Second World War brought US\nimperialism even more profound advantage. The productive of America were\nvirtually unscathed by the war, while they underwent enormous development on\nthe basis of war industry.<\/p>\n\n\n\n

Meanwhile the war shattered the economies of almost all the\nother capitalist powers. At the end of the war, 50% of world capitalist\nproduction and 70% of trade was in the hands of the US capitalist class. At the\nsame time they had in their vaults 75% of the world’s monetary gold (i.e., gold\nused as money).<\/p>\n\n\n\n

Thus US imperialism was in a position of overwhelming\nadvantage at the beginning of the post-war boom. It was in a position to cash\nin on the reconstruction of Europe and the expansion of production and trade\nworld-wide. <\/p>\n\n\n\n

<\/div>\n\n\n\n

World market <\/strong><\/p>\n\n\n\n

Before the war each power had attempted to protect its own\nindustries against more efficient competitors, by means of barriers to free\ntrade. Now the US ruling class wanted the whole world market open to its own\ngoods, and therefore compelled the systematic dismantling of tariffs and other\nimpediments to trade.<\/p>\n\n\n\n

Hence the US-sponsored GATT (General Agreement on Tariffs\nand Trade) which, from 1948, set about dismantling protectionism from the world\nmarket.<\/p>\n\n\n\n

Thus the unrivalled power of US imperialism allowed a\npartial overcoming of the contradiction between the development of the\nproductive forces and the constriction of these productive forces within the\nframework of the nation-state. World capitalism for a time was able to overstep\none of its own inherent limitations.<\/p>\n\n\n\n

In a way never before seen, the national markets became\ninter-penetrated. During the 1950s and early 1960s world trade expanded at an\nunprecedented rate of 12% a year.<\/p>\n\n\n\n

The monopolies (especially, to begin with, those based\nwithin the US) underwent enormous further development as multi-national corporations.\nAt the same time the American market\u2014the biggest in the world\u2014was opened to the\nindustries of Western Europe and Japan.<\/p>\n\n\n\n

To set in motion the post-war upswing, the bourgeoisie found\nit necessary and advantageous in another respect also to ‘go beyond’ the\nordinary limits of the capitalist system, private ownership, investment and\nprofit.<\/p>\n\n\n\n

The upswing was financed by the expansion of credit on a\nscale never seen before.<\/p>\n\n\n\n

Advanced by banks, other financial institutions and the\nstate directly, credit allows the capitalists more scope for investment than\nthe quantity of profits which they have so far accumulated. It is paid out in\nanticipation of being repaid out of future production.<\/p>\n\n\n\n

At the end of World War II, the US ruling class imposed the\ndollar as the effective means of payment in international trade. The unrivalled\npower of the US economy enabled it to do this. As a guarantee that paper\ndollars were “as good as gold”, the US government promised that\ndollars could be exchanged for gold with the US Treasury, at a fixed price of\n$35 an ounce.<\/p>\n\n\n\n

Confidence in the dollar provided the foundation for the\nwhole spiral of credit that then developed. On this basis the US administration\nextended vast sums of dollar credit to finance reconstruction in Europe, through\nthe Marshall Plan and other measures ($24 billion up to 1967). Used to purchase\nUS goods, these dollars also stimulated the American economy.<\/p>\n\n\n\n

But this was only the beginning of the explosion of credit.\nTo constantly expand the market for goods, and thus sustain the momentum of\nupswing of production, the US ruling class in particular continued vastly to expand\nthe supply of paper money and credit. The state in effect printed money so as\nto spend more than it had in its reserves or collected in taxation. The term\nfor this is `deficit financing’. Equally credit extended by private banks\nexpanded massively.<\/p>\n\n\n\n

The US government debt increased between 1946 and 1974 from\n$270 billion to $700 billion; while private debt increased from $153 billion to\n$2 000 billion. Annual production in the meantime had expanded only from $208\nbillion to $1 395 billion.<\/p>\n\n\n\n

Other capitalist countries also resorted to deficit\nfinancing and the expansion of credit. Thus both national and international\neconomic activity was sustained by a flood of credit.<\/p>\n\n\n\n

The upswing was also repeatedly stimulated by the opening up\nof new markets; by the enormous extension of the division of labour on a world\nscale; and by the development of entirely new industries such as plastics,\nelectronics, etc.<\/p>\n\n\n\n

For a period of more than two decades these factors allowed\ncapitalism to outgrow the limits of\ncapitalism itse<\/strong>lf\u2014in a spectacular spiral of production and increasing\nworld trade. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Intensified <\/strong><\/p>\n\n\n\n

The post-war period saw the penetration and extension of\ncapitalist relations all the more thoroughly into the economic life of the\ncolonial countries. In fact the intensified exploitation of the colonial\npeoples, now undertaken collectively by the imperialist powers, was itself a\nkey factor in sustaining the boom.<\/p>\n\n\n\n

In the under-developed countries the imperialist bourgeoisie\ngrasped the advantages of cheap labour, while also imposing super-exploitation\nin the form of unequal terms of trade. The products of the colonial world\nwere\u2014and are\u2014exchanged for less than their equivalent value in products of the\nindustrialised countries. We will expand on these relationships in later\nchapters.<\/p>\n\n\n\n

It has already been shown how capitalism failed to secure\nthe all-round development of the economies of the colonial countries; how\nimperialism has obstructed and distorted their development; how in this epoch\nof monopoly capitalism they have fallen further and further behind the\nmetropolitan countries.<\/p>\n\n\n\n

At the same time the struggles for independence, the change\nfrom direct colonial rule to neo-colonial domination, and the resulting partial\nindustrialisation of the under-developed countries, in fact contributed to the\nexpansion of the world market and in this way added a further stimulus to the\npost-war upswing.<\/p>\n\n\n\n

Using dollar credit the US bourgeoisie bought heavily into\nthe rising industries of Europe, Japan, and elsewhere. Profits were piled on\nprofits, success upon success. These parasites became intoxicated with the idea\nof ‘The American Century’.<\/p>\n\n\n\n

Shedding its former policies of isolationism, the US state\nnow took on the role of ‘policeman of the world’, to protect imperialism\nagainst the expansion of ‘world communism’, and against the struggles of the\ncolonial masses.<\/p>\n\n\n\n

But the inability of the capitalist system in this epoch to\nuplift the conditions of the peoples of the colonial world, subjecting them\ninstead to worsening poverty, led to a wasting of the economic substance of US\nimperialism in repeated and protracted wars.<\/p>\n\n\n\n

Between 1946 and 1968, the US government spent some $58\nbillion on military activities abroad and $36 billion in grants to foreign\nmilitary forces, to prop up NATO and various military-police regimes. <\/p>\n\n\n\n

The post-war decades were the greatest period of development\nof world capitalism\u2014but the rising intensity of the colonial revolution\nthroughout these years demonstrated how shaky has been the social basis of the\ncapitalist system in this epoch, when considered world-wide. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Vietnam <\/strong><\/p>\n\n\n\n

Above all it was the Vietnam war which demonstrated that\ncapitalism has built a mansion on chicken legs. Combining the most savage\nbarbarities with the most devastating techniques of modern science, US imperialism\nnevertheless proved incapable of defeating the struggle of the Vietnamese\npeople.<\/p>\n\n\n\n

In the Vietnam war the US dropped 13 million tons of high\nexplosives\u2014more than six times the total weight of bombs which they dropped in\nthe course of World War 2, and enough to excavate both the Suez and Panama\nCanals ten times over. They used 90 000 tons of gas and liquid poisons. 20 000\nsquare km of forest were laid waste and the crops on which 2 million people\ndepended were destroyed. Between 1 and 2 million people were slaughtered.<\/p>\n\n\n\n

Nevertheless the workers and peasants inflicted a humiliating\ndefeat on US imperialism, in the course of which they also overthrew\nlandlordism and capitalism in the whole of Vietnam.<\/p>\n\n\n\n

The victory of the Vietnamese revolution was a turning point\nin history, shattering illusions in the invincibility of US imperialism. But it\nwas not only in relation to the colonial revolution that the brittle basis of\nimperialism was becoming exposed.<\/p>\n\n\n\n

Marxism teaches that, in the course of development, things\nturn into their opposite. Thus, precisely for reasons Marx had explained, all the factors which fuelled the upswing\nof world capitalism turned dialectically into factors of crisis in the system.<\/strong><\/p>\n\n\n\n

In the post-war boom the inner contradictions of capitalism\nhad not been removed, but only softened and postponed, preparing to burst out\nagain on a higher scale than ever.<\/p>\n\n\n\n

The combined and uneven development of capitalism worked in\na way unforeseen by the bourgeoisie, not only in the colonial world, but in the\nindustrialised countries as well. <\/p>\n\n\n\n

<\/div>\n\n\n\n

The Decline of US Imperialism <\/strong><\/h4>\n\n\n\n

Over a decade or two, the former industrial powers\ndevastated in the Second World War, especially West Germany, recovered\nstrength. New industries were created on the basis of the latest machinery and\ntechnique. Even more spectacular was the rise of Japan as an industrial power\non the basis of cheap labour and the massive investment of technology.<\/p>\n\n\n\n

Contemptuously referred to after the war as the ‘kept pet’\nof American imperialism, Japan now rose as a major rival to the US in world\nmarkets.<\/p>\n\n\n\n

It is important to emphasise that the very predominance of\nthe US economy now turned to its disadvantage. It is the case of the muscleman\nturning to fat, and getting a thumping at the hands of younger and more\nvigorous competitors.<\/p>\n\n\n\n

A similar process had brought about the downfall of Britain\nfrom its former position as the greatest of the world powers a century or more\nago to what is now only a second-rate power.<\/p>\n\n\n\n

A combination of factors worked together in this process.\nBritain had established its predominance by being the foremost country of the\nindustrial revolution. It led the field in the development of new techniques,\nmore advanced machinery, and production on an ever larger scale.<\/p>\n\n\n\n

But because machinery has a life of some years, while\nconstant innovation is taking place, those who industrialise later have a\nrelative advantage. They immediately reap the benefits of the most up-to-date\nmachinery and technique.<\/p>\n\n\n\n

This advantage of late development on the basis of\ncapitalism has not, as we have seen, allowed the countries of the former\ncolonial world to catch up with their former colonialist masters. In a world\neconomy dominated by monopolies they are doomed, with few exceptions, to fall\nfurther and further behind.<\/p>\n\n\n\n

But, as between the industrialised countries, the benefits\nof the latest technology can still secure a relative advantage. Of course,\nunder the pressure of competition, the wealthiest of the powers would generally\nbe able over time to maintain and extend its lead\u2014if all else were equal.<\/p>\n\n\n\n

However, where the predominance of one power is enormous\u2014as\nin the case of Britain previously, and the US after the Second World War\u2014there\nis a tendency for the ruling class to rest on its superior position, and fail\nto invest in industry and fail to innovate.<\/p>\n\n\n\n

Especially where giant monopolies dominate the economy,\npartially holding the pressures of competition at bay, the bourgeoisie turns\nall the more eagerly to the most parasitic means of reaping profits\u2014speculating\non the stock market, speculating in land, concentrating on financial manipulations\nand revenue in the form of interest, etc. <\/p>\n\n\n\n

Thus the manufacturing base of the economy, which was the\noriginal source of their power, becomes eroded and they are so outstripped by\nmore vigorous rivals that their’ decline becomes irreversible.<\/p>\n\n\n\n

The decline of British capitalism has unfolded over the\nwhole of the 20th century. In the case of the USA, the process has manifested\nitself clearly over the last two decades or so.<\/p>\n\n\n\n

The position is clearly shown in relation to the productivity\nof industry, which is a measure of investment. Over the period 1870 to 1950,\nproductivity in the US rose at an annual average rate of 1,8%, compared with\n1,2% in Britain, 1,1% in Germany, and 1% in Japan.<\/p>\n\n\n\n

Since 1950, however, America’s annual productivity growth\nhas averaged 3-5% lower than West Germany’s or Japan’s. Since 1974 it has risen\nonly 0,25% annually, and then only by running inflation at twice the level of\nWest Germany and Japan.<\/p>\n\n\n\n

At present, Japan (with a population of 115 million) buys\nmore new plant and equipment each year than does the USA (with a population of\n220 million). The average machine in a Japanese factory is now 6 to 7 years\nyounger than an American one. Consequently, for ex-ample, while Ford makes 2\nengines per employee, Toyota is making 9. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Output <\/strong><\/p>\n\n\n\n

The declining position of the US economy is reflected in its\ngross output. In 1950 the US produced 52% of OECD production, but by 1979 it\nproduced only 34%. The combined production of the EEC countries now exceeds\nthat of the US.<\/p>\n\n\n\n

Meanwhile the rise of Japan as an industrial power has been\nphenomenal. In 1960, for example, Japan produced only 168 000 cars; in 1980 it\nproduced 11 million-40% more than the US.<\/p>\n\n\n\n

The US share of the world markets has been declining\nrapidly. In 1960 it had 16% of world exports; in 1980 it had less than 11%.\nAmerica is now rivalled by West Germany as the world’s single biggest exporter.\nThe decline of the US position in the world economy is similarly reflected in\nfinance. American banks’ share of total deposits in the world’s top 100 banks\nfell from 29% in 1970 to only 15% by 1978.<\/p>\n\n\n\n

Its former position of world dominance has turned in-to a\ndisadvantage for the American bourgeoisie in another way as well. There is no\nway that American imperialism can now extricate itself from its international\nrole as policeman and chief butcher, especially in relation to the\nunder-developed countries. On the contrary, its preparations for aggressive\ninterventions in various parts of the world are being massively increased.<\/p>\n\n\n\n

The US has promised military help to about 100 capitalist\nregimes. Its military spending has been running at around 5% of production\n(GNP), and Reagan plans to raise this level to 7%. Meanwhile the shrewd\nJapanese capitalists, sheltering under the American military umbrella, have\nbeen spending only 0.9% of GNP on armed forces, and, under pressure to spend\nmore, have now raised this to–1%!<\/p>\n\n\n\n

The decline of American capitalism relative to its European\nand Japanese rivals helped to precipitate the economic crisis of world\ncapitalism which was being prepared throughout the period of the post-war\nup-swing.<\/p>\n\n\n\n

During the decades of boom the ideologists and propagandists\nof the bourgeoisie internationally convinced themselves that the problems of\ncapitalism had been solved. They now maintained that, with the aid of state\nintervention, they could ‘control’ and ‘manage’ the system. By means of state\nspending and deficit financing they could avoid the slumps and catastrophic\ndepressions of the past. <\/p>\n\n\n\n

The ideas of Marxism were pooh-poohed and held to have been\ndisproved by history.<\/p>\n\n\n\n

Dazzled by the seemingly endless expansion of capitalism,\nthese people were totally blind to the real processes at work beneath the\nsurface. They could not see that a Frankenstein monster of inflation was being\nprepared\u2014by the very factors that had fuelled the post-war upswing.<\/p>\n\n\n\n

Over 100 years ago Marx explained the role of money in the\ncirculation of commodities under the capitalist system. He pointed out that if\nyou put two pound notes, dollars, rands, etc., where one should be, the goods\nin circulation will soak up the extra currency and rise accordingly in price.<\/p>\n\n\n\n

The vast quantities of credit created by the capitalist\ngovernments and banks since the war\u2014$200 000 million in the case of the US\nalone!\u2014inevitably resulted in an explosion of inflation.<\/p>\n\n\n\n

This had been largely held at bay while production in the world\ncapitalist system was growing more or less continuously and at a rapid pace.\nThe vast increase of commodities in circulation offset for a time the inflationary\neffects of deficit financing. But as world capitalist production began to run\nup against the limits of the world capitalist market, as eventually it did, the\ninflation latent in the system burst through the door.<\/p>\n\n\n\n

In the OECD countries inflation averaged only 3% during the\n1960s, but in the crisis-ridden 1970s it averaged 8%. The effect of inflation\nis devastating not only on the living standards of the working people, but also\non the stability of the whole economic system. The declining position of US\ncapitalism, together with the crisis of inflation, has brought an enormous\ninstability especially into the international money system. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Dollar <\/strong><\/p>\n\n\n\n

The steady expansion of world trade during the boom years\nhad been dependent on the willingness of the various countries to accept the\ndollar as the medium of world trade. The dollar continued to play this role\u2014and\nto be accepted under US pressure as having a stable value\u2014even though in\nreality it was being increasingly debased and undermined.<\/p>\n\n\n\n

As the mountain of dollar credit built up, the US economy\nwas growing weaker in relation to its rivals.<\/p>\n\n\n\n

Because of its massive outpouring of dollars (buying up\nforeign industry, military and economic ‘aid’ programmes, etc) US imperialism\nhad been running vast deficits in its balance of payments. Within these\ndeficits, however, it maintained a surplus of exports over imports.<\/p>\n\n\n\n

But, in 1971, given its declining position in world markets,\nthe US balance of trade fell into deficit. Simultaneously its total balance of\npayments deficit for the first time exceeded its total gold reserves. <\/p>\n\n\n\n

By now the convertibility of the dollar into gold at its\nofficial price was an obvious fiction.<\/p>\n\n\n\n

Thus the scene was set for a crisis of the dollar, which was\npushed to the precipice as the holders of dollars around the world sought to\nexchange them for other currencies or threatened to demand their conversion\nin-to gold. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Danger <\/strong><\/p>\n\n\n\n

Faced with the danger of a collapse of its currency, the US\nadministration was forced in 1971 to cut the dollar loose from its link to\ngold, and declare it in-convertible. The dollar was now ‘floated’ with its\nex-change rate relative to the other leading currencies to be determined in the\ninternational money market.<\/p>\n\n\n\n

This effectively meant an immediate devaluation of the\ndollar by 12%, reflecting the weakened position of US capitalism.<\/p>\n\n\n\n

Devaluation of a currency gives a relative advantage to\nindustry in that country-by lowering the price of its exports on world markets.\n(Simultaneously, however, it ordinarily leads to inflation because the prices\nof imports from other countries correspondingly rise.)<\/p>\n\n\n\n

Not only did the crisis of the dollar jeopardise the stability\nof the whole international monetary system; it also threatened to produce the\nfirst trade war since the 1930s, because the industries of all the capitalist\npowers were squeezed by the small recession taking place in 1970-71.<\/p>\n\n\n\n

Now all the factors of crisis began to pile on top of each\nother. Most of the capitalist governments resorted to policies of further\ndeficit spending in order to boost the economy out of recession. In the 1960s\nthe money supply in the OECD countries had grown at an average rate of 8% a\nyear. Now it shot up to 20% by early 1973, thus giving a sharp twist to\ninflation.<\/p>\n\n\n\n

Troubles never come singly, as the saying goes. World\ncapitalism was now hit by the ‘oil shock’. Imperialism had been accustomed\nsince the Second World War to paying less than $2 a barrel for its oil. This\nwas a particularly clear expression of the way in which the under-developed\ncountries have been subjected to stagnant or barely rising prices for their raw\nmaterials, while the prices of industrial goods from the metropolitan countries\nhave risen steeply.<\/p>\n\n\n\n

However, since oil can be produced in relatively few\ncountries, it lends itself to a cartel on the part of the producers. Hence the\ncreation of OPEC, as the oil-producing countries tried to bolster revenues cut\nby the declining value of the dollar. <\/p>\n\n\n\n

At the same time, the post-war upswing of capitalism had\nbrought about a big increase in the dependence of the advanced capitalist\ncountries on imported energy. In 1952, for example, the USA was 99%\nself-sufficient in energy; but by 1972 this had fallen to 85%. Western Europe\nwas 86% self-sufficient, but by 1972 only 41%.<\/p>\n\n\n\n

These conditions prepared the way for the steep rise in oil\nprices, amounting to 136% from 1973-74. (However, even this and the subsequent\nsharp price rises have not been enough to compensate for the massive in-creases\nwhich have taken place in the prices of manufactured goods.)<\/p>\n\n\n\n

Against this background the world crisis of capitalism set\nin with a vengeance in 1974-75. In the OECD countries taken together, total\nproduction actually fell, while unemployment doubled. <\/p>\n\n\n\n

Underlying the whole crisis has been the falling rate of\nprofit. This manifested itself from about the early 1960s onward, while the\nupswing of capitalism was firmly under way, and while the mass<\/strong> of profits continued to rise. Eventually, combining with\ninflation and overproduction, it led to a dramatic fall-off in investment, and\na period of stagnation opened up.<\/p>\n\n\n\n

The growth of investment in all sectors of the capitalist\nworld fell from an annual average of 6% in the 1960s to less than 2%\nthereafter. In the developed countries productivity had grown by an average of\n5,3% per year between 1960 and 1973. From 1973 onwards its rate of growth fell\nto 1,7% and is not expected to rise much above that again.<\/p>\n\n\n\n

In most capitalist countries the onset of the crisis was\nmarked not by an absolute fall in production, but by a sharp fall in its rate\nof growth. In the OECD output had risen 60% during the 1960s; in the 1970s it\nrose only 40%. <\/p>\n\n\n\n

The growth of world trade fell from its former average of\n12% a year to only 4% a year from 1973-78, and even lower after that. Given the\ngigantic productive forces of modern capitalism, the world-wide division of\nlabour and the acute inter-dependence of countries through the world market,\nthis fall in growth represented a crisis for capitalism more severe than any in\nhistory.<\/p>\n\n\n\n

In previous crises overproduction\u2014when markets are glutted\nwith commodities for which there are no buyers\u2014has led to a general fall in\nprices. Falling prices have been an important ingredient in eventually restoring\nthe strength of the system for a new cycle of expansion. <\/p>\n\n\n\n

<\/div>\n\n\n\n

\u2018Stagflation’ <\/strong><\/p>\n\n\n\n

But the characteristic of the present crisis is that   has continued\u2014and indeed risen\u2014precisely\ndicing a period of overproduction and industrial stagnation. For this new phenomenon\nthe bourgeois economists coined the term ‘stagflation’.<\/p>\n\n\n\n

On the one hand this is the result of the fact that for\ndecades production was bouyed up on a flood of fictitious capital, arms\nspending and deficit finance. On the other hand it is the result of the\nprofiteering activities of the monopolies, which prey like vultures on the\nwounded but living flesh of society.<\/p>\n\n\n\n

Through inflation and rising unemployment, the crisis of\ncapitalism has immediately been transIated into falling living standards for\nthe mass of the working class. Hence the resurgence of the class struggle in sharper\nand sharper form in the industrialised countries. In this way the bourgeoisie\nis confronted by the most important contradiction of its system. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Class Struggle and Economic Crisis <\/strong><\/h4>\n\n\n\n

The unprecedented expansion of world capitalism since the\nwar brought with it the massive growth of the working class. At the same time,\nwith the crushing of small businesses under the juggernaut of the monopolies,\nand the constant elimination of peasants from the land, the size and social\nweight of the petty bourgeoisie in the developed countries has steadily\ndeclined. The industrial workers, meanwhile, have been concentrated together in\never larger numbers.<\/p>\n\n\n\n

While the upswing of capitalism brought a relative calm into\nthe class struggle in the industrialised countries for almost a generation,\nthis had its other side. Over time the wounds of past defeats were healed, the\nworkers recovered confidence, and maintained a constant pressure for improved\nliving standards and other reforms.<\/p>\n\n\n\n

These gains in turn consolidated the strength of the class,\nand allowed the workers time to develop their organisations systematically and\non a massive scale.<\/p>\n\n\n\n

Lenin, in the conditions of the early part of the century,\nhad believed that it was impossible for more than about one-third of the\nworkers under capitalism to be organised in trade unions. This was because, in\nthe intensity of struggle between the classes, such organised strength would\nquickly lead the workers on to challenge the survival of capitalism itself. <\/p>\n\n\n\n

Conditions after the Second World War, however, allowed a\ndifferent development. In Britain the number in trade unions multiplied to more\nthan 12 million at its peak\u2014over 50% of the workers. In Italy about 55%, in\nBelgium over 70%, and in Sweden 90% of industrial workers are unionised! <\/p>\n\n\n\n

Growing sections of white-collar workers are also in unions\nand, to a greater extent than ever before, feel themselves part of the working\nclass. <\/p>\n\n\n\n

With the bourgeoisie of the advanced capitalist countries\nenjoying a deluge of profits, the workers were able to use their organised\npower to win a whole series of social reforms. Improved housing financed by the\nstate and local authorities; a national health service; improved pensions,\nchild benefits, sickness and unemployment pay\u2014all these became standard in most\nof the industrialised countries. All these gains depended on the expansion of\ncapitalism during the post-war upswing.<\/p>\n\n\n\n

In fact, as we have seen, the upswing itself was only\npossible through the capitalist system overstepping the limitations inherent\nwithin it. By developing the productive forces beyond these bounds, capitalism\ngave the working class of the industrialised countries a tiny glimpse of the\nabundance which is possible on the basis of modern science and technique.<\/p>\n\n\n\n

In this sense the ‘welfare capitalism’ of the post-war\nupswing represented a foretaste of the material advances which will become\ngeneralised world-wide and massively extended on the basis of a socialist transformation\nof society\u2014but which the capitalist system can-not sustain. <\/p>\n\n\n\n

With a long period of rising living standards, and with\nbourgeois-democratic; rights secured, the mass of the working class in the\nindustrialised capitalist world obviously did not seek the road of revolution.\nOn the contrary, reformist ideas gained an enormous hold, while reformist\nleaders became entrenched at the head of all the mass organisations.<\/p>\n\n\n\n

For decades the hurricane of revolution swept only through\nthe colonial and ex-colonial world.<\/p>\n\n\n\n

But with the turn of world capitalism from boom to crisis,\nthe working class of the advanced capitalist countries has been forced into\nstruggle once again in order to defend its gains. Every advance of the post-war\nperiod has been cut back or threatened, and living standards are everywhere in\ndecline.<\/p>\n\n\n\n

With the crisis of profitability, the ruling class in all\nthe capitalist countries has taken to the road of attacks on the real income of\nthe working people. From reforms they have turned to counter-reforms, trying to\noffload the crisis of their system onto the workers’ backs.<\/p>\n\n\n\n

With the crisis of inflation, the bourgeoisie has abandoned\nits former policies of deficit spending. The ideas of Professor Keynes, that by\nsuch means capitalist crisis could be avoided, have led to calamity and are\ndiscredited. Instead the bourgeoisie has turned to a new witch-doctor,\nProfessor Friedman, and his ideas of `monetarism’. <\/p>\n\n\n\n

The monetarist policy attempts to turn back the clock to the\ncapitalism of the 19th century. It proclaims the virtue of the ‘balanced\nbudget’, in which state expenditure is limited to what is raised in taxes. In\nthis way, so it is alleged, the disease of inflation can be eliminated and the\nhealth of the economy restored. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Attack <\/strong><\/p>\n\n\n\n

Under the cover of appeals to ‘common sense’ and `good\nhousekeeping’, the bourgeoisie in reality is mounting a slashing attack on the\nmaterial standards of the working class. Cuts in state expenditure are combined\nwith a relentless campaign by the state and the employers to cut the workers’\nreal wages. By this means, and by tax cuts for the rich, they hope to restore\nthe rate of profit of capitalism and so regenerate investment and production.<\/p>\n\n\n\n

In the last half of the 1970s, not only the bourgeois\nparties but also the right-wing reformist leaders of the social-democratic\nparties, turned to policies of monetarism. However, the most extreme form of\nmonetarism is represented by the Thatcher government in Britain and by the Reagan\nadministration in the USA.<\/p>\n\n\n\n

These governments have shown that the bourgeoisie is quite\nprepared to cut down productive forces, smash whole industries and induce mass\nunemployment in the hope of restoring the basis of profitability in its system.<\/p>\n\n\n\n

Under the Tory government, Britain\u2014once the industrial\nworkshop of the world\u2014is being turned into an industrial desert. Combining with\nthe irreversible decline of British capitalism already under way for\ngenerations, the policies of Thatcherism have turned recession into a\ncatastrophic slump. In the Great Depression of 1929-31, industrial production\nin Britain fell by 11%. Since 1980 it has fallen 20%!<\/p>\n\n\n\n

In the United States the Reagan administration, following\nessentially the same policies as Thatcher, has made a swingeing attack on\npublic expenditure. His programme includes the elimination of public service\nemployment programmes; cuts in health services, social welfare, education and\nyouth training; reduction in federal social security payments, food stamps, Medicaid,\nunemployment benefits, etc.<\/p>\n\n\n\n

At the same time there is a reduction in company taxation\nand in personal income tax which will amount to a 20% bonus for the very rich.<\/p>\n\n\n\n

A whole series of capitalist governments have followed a\nsimilar path. Now, in West Germany for instance, against a background of rising\nunemployment and falling real wages, the Social-Democratic government seeks to\nimpose DM18 billion of cuts in the course of 1982.<\/p>\n\n\n\n

In turning away from the disastrous policies of\nKeynesianism, the bourgeoisie has shown a grain of sense. The rampant inflation\ninevitable on the basis of deficit financing is a mortal threat to the\ncapitalist system. <\/p>\n\n\n\n

But, as every schoolboy and schoolgirl knows, no marks are\nawarded for getting your sums only slightly right. The policies of monetarism\nare shot through with the contradictions of capitalism, and are leading no less\nsurely to disaster.<\/p>\n\n\n\n

In the first place, monetarism fails to reckon with the\npower of the working class. Although, with the help of mass unemployment, the\nbourgeoisie have managed to curb wage settlements, they have been unable to\nforce the working class to the depths of cheap labour and impoverishment which\nthey believe necessary to revive the system. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Market <\/strong><\/p>\n\n\n\n

Moreover, to the extent that they do succeed in cut-ting\nreal wages, they come up against the other side of the contradiction\u2014because\nthereby at the same time they cut the market still further. With capitalist\nproduction already straining against the limits of the world market, monetarism\nthus turns a dose of economic ‘flu into double pneumonia.<\/p>\n\n\n\n

Then again, when even a slight upturn in the economy does\ntake place, the organised workers immediately fight vigorously to recover\neverything which they have lost. Even a small increase in employment, a rise in\norders to the factories, and the stepping up of overtime, produces an immediate\nchange in the psychology of the workers.<\/p>\n\n\n\n

The uncertainty and demoralisation engendered by\nunemployment is shed overnight. A rash of strikes for higher wages breaks out. The\nbourgeois are left moaning pathetically about the need for “a permanent\nchange of attitudes” by the working class!<\/p>\n\n\n\n

With every improvement in wages, of course, the capitalists\nhasten to recover their profits by raising prices even further. Thus the rate\nof inflation takes a further leap.<\/p>\n\n\n\n

For the bourgeoisie in this period contradictions are\nlurking round every corner. The wooden-headed Thatchers and Reagans, imagining\nthemselves back in the last century, thought they could make the working class\nalone pay the price of unemployment. After all, in “the good old\ndays,” when workers were thrown out of jobs onto the streets, what did it matter\nif they starved to death?  For this the\nbourgeoisie has always shown the most ruthless and callous disregard. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Strength<\/strong><\/p>\n\n\n\n

But the strength of the workers, fighting through their\ntrade unions over many years, has won the right of unemployment pay. Try as\nthey might, the bourgeoisie has not succeeded\u2014and will not succeed\u2014in taking\nthis away.<\/p>\n\n\n\n

Therefore, the policies of monetarism\u2014intended to cut state\nexpenditure have precisely the opposite result. Because monetarism contributes\nto an enormous increase in unemployment, it leads at the same time to a massive\ngrowth in the funds necessary to pay the unemployed.<\/p>\n\n\n\n

Thus we have the howling irony that even the most fanatical\nmonetarist regime has presided over a sharp increase in the rate of government\nspending. In Britain under the Tories, government spending in 1980-1 was 44,5%\nof production (GDP)\u2014compared with 41,5% in the last year of the Labour\ngovernment!<\/p>\n\n\n\n

In Sweden, where a bourgeois government was elected in 1976,\nfollowing 44 years of social-democratic rule, deflationary policies to deal\nwith the crisis have produced the same result. Not only has unemployment risen\nsharply, but the government has been compelled to come to the assistance of\nailing industries. Public spending has grown by leaps and bounds to reach an\nestimated 67% of GDP in 1981. The public sector deficit is now more than 12% of\nproduction.<\/p>\n\n\n\n

In fact in the OECD countries as a whole, current government\nspending has risen fairly constantly from about 25% of GDP in 1960 to about 35%\nby the end of the 1970s.<\/p>\n\n\n\n

Even in Japan public expenditure has risen from 20 to 30% of\nproduction between 1970 and 1980. In West Germany, despite cuts, the budget deficit\nis now over Dm500 billion.<\/p>\n\n\n\n

But if anything demonstrates the futility of monetarism, it\nis the situation in the United States. `Reaganomics’ set itself the impossible\ntask of trying at one and the same time to increase military spending, cut\ntaxes, cut welfare\u2014and balance the budget.<\/p>\n\n\n\n

Welfare services there have always been miserly in\ncomparison with the major countries of ‘Western Europe. Nevertheless,\nthree-quarters of the Federal budget is “relatively uncontrollable,” increasing\nautomatically each year. Despite Reagan’s cuts, in 1982 Medicare, social security,\nfood stamps, etc., will constitute 48% of the total budget outlay.<\/p>\n\n\n\n

In addition, some $220 billion is allocated for defence\nspending in 1982. Federal spending as a percentage of GNP is running above 23%.<\/p>\n\n\n\n

Falling profits and stagnant employment have led to falling\ntax income for the government. At the same time, failing industries have to be\nbaled out. In September 1981, the US Treasury was obliged to ask Congress to\nraise its debt limit by a further $16 billion, bringing the total government\ndebt to a million million dollars!<\/p>\n\n\n\n

By November, Reagan was faced with record levels of\nunemployment as a direct result of his monetarist policies. Unable to slash\nthis spending, unwilling to sacrifice financing his military build-up, he was\nforced to retreat from his promise to ‘balance the budget’ by 1984. Every\nsubsequent assessment projects that deficit spending will in fact increase to\nrecord levels.<\/p>\n\n\n\n

Probably Professor Friedman will not be in the running for\nany more Nobel Prizes in economics! <\/p>\n\n\n\n

<\/div>\n\n\n\n

No way out <\/strong><\/p>\n\n\n\n

Nevertheless, the bourgeoisie in general will be obliged to\ncling on to monetarist policies, although there is absolutely no way out for\ncapitalism on this road. The consequences of a return to policies of massive\ndeficit financing and reflation would result in an explosion of inflation, even\neventually to Latin American proportions. This would spell catastrophe for the\nworld capitalist system.<\/p>\n\n\n\n

But if the crisis has revealed the bankruptcy of the\npolicies of the bourgeois, it has also highlighted the bankruptcy of reformism.\nThe right-wing reformists in the leadership of the labour movement in the West\nhave gone over to monetarism, even if in a diluted form.<\/p>\n\n\n\n

But the left reformists, unwilling to break decisively with\ncapitalism, are left with only the discredited policies of Keynesianism for\nnourishment.<\/p>\n\n\n\n

Marxists support the demand for massive government spending\nto create jobs and raise the living standards of the working people. But in\ncontrast to the left reformists, Marxists constantly explain that on the basis\nof capitalism this will inevitably lead to rocketing inflation, and in fact\npush the system towards a 1929-type crash.<\/p>\n\n\n\n

Therefore it is necessary for the labour movement, not to\nrely on a programme of half-measures, but to fight for a socialist programme\nlinking the struggle for reforms to a complete overthrow of capitalism and the\ntransformation of society.<\/p>\n\n\n\n

In the heady years of the post-war upswing, it was difficult\nfor the bourgeoisie to pursue ‘wrong’ policies\u2014everything turned to gold. Now\nevery policy of capitalism is wrong, and turns to disaster. Keynesianism and\nFriedmanism; deflation and reflation; devaluation and revaluation\u2014all have been\ntried, with each about-turn leading to worse consequences.<\/p>\n\n\n\n

The power of the monopolies enormously aggravates the\nunderlying contradictions. Monopoly capitalism is a monstrous tumour sapping\nthe life-energy of society.<\/p>\n\n\n\n

With the rate of profit falling, the monopolies have turned\ntheir attention more and more away from the development of industrial\nproduction, and seek instead every means of grabbing a ‘fast buck’. Ruthlessly\nthey snatch every dollar of profit possible out of stock market manipulations,\nbuying and selling property, conspiring together to raise prices, parasiting on\nthe state, and engaging in currency speculations on a staggering scale.<\/p>\n\n\n\n

Chasing short-term gains on the company balance-sheet, they\nengage at a time of crisis in frenetic take-overs of smaller companies and\nmergers between the monopolies themselves. In the USA, $11 billion were spent\non mergers in 1975. In 1980 the figure was $44 billion; in the first half of\n1981 alone, $35 billion. In just a few weeks in July 1981, American banks\nraised $38 billion in loan commitments to support take-overs.<\/p>\n\n\n\n

In the world of high finance, far removed from the\ncomprehension of the mass of the producers in society who work for their\nliving, the capitalist gangsters engage in vast currency manipulations,\nspeculations and swindles. The equivalent of about $1 300 000 000 000\ncirculates in the currency markets of Europe, changing hands between central\nbanks, multi-national corporations and wealthy individuals.<\/p>\n\n\n\n

The deposits in the international banking system now exceed\nthe domestic money stocks of most of the major capitalist countries.\nAstronomical sums are moved rapidly from one country to another and from one\ncurrency to another, resulting in wild fluctuations in the ex-change rates.<\/p>\n\n\n\n

The extent of\nspeculation is shown by the fact that the value of exchanges on the currency\nmarkets of Europe are 15 times the value of world trade!<\/strong><\/p>\n\n\n\n

The stability of the world money system after the Second\nWorld War was the result of the dominance of US capitalism and the dollar. That\ncan never be restored, and the present situation is a nightmare of instability\nand chaos. Only the socialist revolution can bring this insanity to an end.<\/p>\n\n\n\n

The parasitism of the monopolies, their turning away from\nthe production of real wealth, is illustrated by their refusal to invest. The\npolicies of monetarism, designed to raise the rate of profit and stimulate\ninvestment, also run aground on this rock. Similarly, when capitalist\ngovernments devalue their currencies, in order to secure an advantage for\nindustry, the monopolies typically cancel that advantage by merely raising\ntheir prices at a stroke. In this way they earn super-profits, without regard\nfor the effect on industry. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Research <\/strong><\/p>\n\n\n\n

It might be thought that the gigantic resources of the\nmonopolies would result in increased spending on research and the development\nof new technology. But in the USA spending on research and development, as a\nshare of total production, has fallen steadily since about 1964. In Britain it\nhas been falling since 1967. In France, West Germany and Japan it has levelled\noff in recent years.<\/p>\n\n\n\n

Moreover, only a fraction of the fruits of research and\ndevelopment are turned to productive purposes. This is especially the case with\nBritish capitalism, whose share of world markets will have fallen 40% in the\nfive years up to 1982. <\/p>\n\n\n\n

Using figures supplied by a former chief scientific adviser\nto the British government, the Economist<\/em>\n(17\/1\/81) has calculated that British manufacturing industry invests less than\none-third of what would be needed just to keep its products up-to-date and to\nhold on to existing markets. (This figure alone is enough to refute the lying\nclaims of the bourgeois, trumpeted round the world in the ‘popular’ press, that\nthe working class is responsible for the declining competitive position of the\ncountry’s industry.)<\/p>\n\n\n\n

The failure of the monopolies to invest means their failure\nto create employment. Over the whole of the 1970s, for instance, 6,5 million\njobs (net) were created in the private sector of the US economy\u2014but not one of\nthem was created in the 1 000 biggest companies!<\/p>\n\n\n\n

The gigantic productive forces generated by the 25 years of\ncapitalist upswing, now stand as a formidable obstacle to the regeneration of\nthe capitalist system. Even one of the great chemical monopolies, such as ICI,\nhas the capacity to produce for the Whole world market. Just the shipyards of\nJapan can glut the world market for ship-building. And so on, in every sector.<\/p>\n\n\n\n

The productive power of modern industry has the consequence\nthat the economic cycles – of world capitalism are now much shorter than in the\npast. With every partial upturn and expansion of the market, it is quickly\nsaturated again with a flood of goods.<\/p>\n\n\n\n

During the 1970s, the economic cycles lasted between 2 and 4\nyears\u2014compared with a normal cycle of 10 years at the time of Marx and Engels.\nThis puts a big obstacle in the way of investment, especially since, even\nduring the upturns, little more than 80% of existing productive capacity is put\nto use. In turn, sluggish investment tends to shorten the upturns still\nfurther.<\/p>\n\n\n\n

Thus instead of the productive energies of modern industry\nserving the needs of mankind, they clog up in the constricted arteries of the\nsystem of private profit. At the same time the inability of capitalism to\nintegrate production and distribution in the world economy in a planned and\nharmonious way, means that the productive forces choke up also in the coils of\nthe nation-state. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Shelter <\/strong><\/p>\n\n\n\n

We noted how, during the post-war upswing, the bourgeoisie\nwas able partially to overcome these limitations. In the balmy climate of\nexpanding production and trade, some capitalist powers took a number of small\nsteps towards the greater integration of their economies. The creation of the\nEuropean Common Market (EEC) was an example of this.<\/p>\n\n\n\n

However, with the first squalls of economic crisis the\nbourgeoisie of each country runs for shelter under the protective roof of its\nown national state, and is ready to resort to any means to defend -its\ncompetitive position.<\/p>\n\n\n\n

This is not fundamentally altered by the existence of\n`multi-national’ or `trans-national’ corporations. While these straddle the\nnational boundaries, they are themselves heavily entangled with the various\nnational states, and only aggravate the problem.<\/p>\n\n\n\n

If there is ‘no honour among thieves’, there is certainly no\nchivalry among the bourgeois. Each capitalist government manoeuvres to achieve\nan advantage over its rival economies, by manipulation of currency exchange\nrates, veiled or not-so-veiled measures of sup-port for domestic industry,\nbarriers against foreign goods, etc.<\/p>\n\n\n\n

Each such step forces retaliation by the competitors. A\ntemporary advantage for one leads quickly to the mutual disadvantage of all.\nThe futility of economic policy conducted on a national plane in this epoch is\nquickly revealed. Yet, driven by the manic compulsion of the profit system, the\nbourgeoisie has no alternative but to fight for its life on this basis. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Interest rates <\/strong><\/p>\n\n\n\n

The absurdities are illustrated by the recent situation\nwhich developed over interest rates. <\/p>\n\n\n\n

With typical narrowness of outlook, the Thatcher government\nin Britain aggressively raised interest rates in an attempt to reduce borrowing\nand cut the amount of money being injected into the economy. This was supposed\nto ‘squeeze inflation out of the system’, and thus eventually bring the British\neconomy out of its coma. <\/p>\n\n\n\n

In the first place, by raising the cost of borrowing, this\nmeasure led to a further decline of investment, in-creased bankruptcies\nespecially of small firms, and a steeper slump of production. It also had\ninternational repercussions with exactly the opposite effect on the British\neconomy to that intended.<\/p>\n\n\n\n

When interest rates in one country are raised, this induces\nthe financiers and speculators to buy that currency because it brings them a\ngreater return on their deposits in the banks. The value of the currency rises\nin the international money market, while the relative value of the other\ncurrencies tends to fall.<\/p>\n\n\n\n

Thatcher’s policy of raising interest rates in Britain put\npressure on the dollar and provoked immediate retaliation by the US Treasury.\nCarter raised interest rates sharply and they were raised still further by the\nReagan administration, pursuing the same monetarist nostrums as the British\nTories.<\/p>\n\n\n\n

Now the international reverberations were redoubled. Because\nthe dollar is the pricing currency of oil and many other commodities in world\ntrade, other countries (including Britain) immediately faced an increased bill\nfor imports as the dollar appreciated against the pound, the mark, the franc,\nthe yen etc. OECD economists estimated that the effect of US interest rates in\nthe first half of 1981 was to increase import prices for a typical European\ncountry by 20%. (The even more serious effect on the under-developed countries\nwill be dealt with later.)<\/p>\n\n\n\n

By plunging the US economy further into recession, Reagan’s\nhigh interest rates policy had the result of further deflating the world\nmarket. This accentuated trade friction among the industrial powers. At the\nsame to protect their own currencies and ward off inflation, these and other\ncountries followed suit in raising their own interest rates. Thus the world recession\nof 1979 to 1982 was deepened.<\/p>\n\n\n\n

The collective effect of these measures has been to delay a\nnew upturn of capitalism by probably 12 months.<\/p>\n\n\n\n

The cycles of the capitalist system are not ended, but the\nfundamental perspective is one of a general decline\u2014a drawn-out death agony of\nthe system. Against this background, as far as the eye can see, there will be\nshort and weak ‘booms’ followed by short recessions tending to become deeper.<\/p>\n\n\n\n

In the whole of the OECD, economic growth is likely to be\nonly 2% in 1982, while unemployment will continue to rise. In Western Europe,\nwhere output declined by 1% in 1981, it is expected to rise only 1,5% in 1982.\nJapan’s growth will probably be several percent higher, but nevertheless much\nlower than the rates achieved in the past.<\/p>\n\n\n\n

The position may be even more dismal in these countries,\ndepending on the economic situation in the USA. There, on the most “pessimistic\nassumptions” of the OECD forecasters, real GNP could actually fall, or\nrise only 0,5%. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Sluggish <\/strong><\/p>\n\n\n\n

The bourgeois economists themselves now have the expectation\nof no more than short cycles of sluggish production at least as far as the end\nof the century. However, it would be a mistake to believe that this condition\ncan be extended indefinitely.<\/p>\n\n\n\n

Within the general crisis of capitalism acute economic\ncontradictions are accumulating, which\u2014quite possibly within the space of this\ndecade\u2014will lead ultimately to a catastrophic world slump. That will mean a\ndepression far exceeding the proportions of 1929-31.<\/p>\n\n\n\n

The entire capitalist system is balancing on a balloon of\ninternational debt which could be punctured at any time. In the US, for\nexample, the level of debt in the economy is such that 47% of the ‘corporate\ncash flow’ is taken up by interest charges and repayments of debt. It is now\ninherent in the situation in all the industrialised capitalist countries that\nthe collapse of even one major corporation, leading to the collapse of even one\nmajor bank, could set in motion an unstoppable avalanche of economic disasters.<\/p>\n\n\n\n

But it is the situation in the under-developed world which\nhas the bankers, financiers and indeed the bourgeoisie as a whole in a cold\nsweat. The debts of the under-developed world have risen from $62 billion at\nthe end of 1970 to $416 billion at the end of 1980!<\/p>\n\n\n\n

Every day<\/strong> these\ncountries fall the equivalent of R95 million deeper into debt to the\nimperialist countries and the international banks. They have absolutely no prospect\nof ever<\/strong> repaying these debts, and in\nfact must continually borrow more just to pay the interest!<\/p>\n\n\n\n

Reflecting the anxiety of the bourgeoisie over the\nin-stability of its system, the Economist<\/em>\nwarns:<\/p>\n\n\n\n

If this overborrowing were ever punctured, there could be crashes in property prices from California to Hong Kong, in companies from Detroit to Seoul, in state corporations from Milan to the North Sea, in overstocked materials from Oregon timber to Nigerian oil, in government credit from Washington to Tokyo, in financial consortia and their clients everywhere. The downward multiplier from all that could make 1929’s little local stock market difficulties look like a controlled parachute drop.<\/p><\/blockquote>\n\n\n\n

But the world capitalist system could equally be driven over\nthe precipice by the onset of a serious trade war between the industrial\npowers. The present situation is pregnant with such a possibility, which will\ngrow all the greater as the years go by.<\/p>\n\n\n\n

Because of the immense scale of the productive forces of\nmodern industry, production in all the major countries is inevitably geared to\nthe whole world market. Even regional markets of 200-250 million people which,\nin the past, provided the basis of industrialisation of the major powers, are now\ninadequate to their giant industries.<\/p>\n\n\n\n

At the same time the world market is stagnating. It is\nestimated that world trade actually fell<\/strong>\nin 1981, and only a’ small growth of trade is anticipated in 1982. The hopeless\nimpasse for capitalism which this represents is shown with particular clarity\nin the case of the motor industry.<\/p>\n\n\n\n

Even the small recessions of the 1970s have had dramatic\nconsequences, especially for the older capitalist powers. In 1980, for example,\nproduction of motor cars in the USA was down to 1959 levels. The motor industry\nis the source of employment for one in every six Americans. With the downturn\nof car production, for instance, the US capitalists closed down 20 tyre plants\nbetween 1975 and 1980.<\/p>\n\n\n\n

In Britain, in 1980, the output of cars was less than half\nthe total for 1972. In mid-1981, for example, General Motors decided to give up\naltogether the manufacture of spark plugs, alternators and air-cleaners in\nBritain. <\/p>\n\n\n\n

Meanwhile the Japanese motor industry has outstripped not\nonly its British and American rivals, but also countries such as West Germany.\nThe basis of this is greater investment in more advanced machinery, combined\nwith cheaper labour.<\/p>\n\n\n\n

Some Japanese production lines are so automated, that cars\nare almost entirely assembled by robots governed by computers. At the same\ntime, a Japanese car worker is obliged to work 300 hours more every year, for a\nwage which is one-third less per hour than a West German worker. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Penetrating <\/strong><\/p>\n\n\n\n

Thus Japan is heavily penetrating the West German market in\ncars, motor cycles, electronics and even ball bearings. Simultaneously, Japan\nhas captured 29% of the US car market, and 30% in Belgium and Holland.<\/p>\n\n\n\n

Under the pressure of competition, the motor car industries\nespecially of the older powers face the prospect of ruin on a capitalist basis.\nThus the British Financial Times<\/em> has\nvoiced the prediction that by 1990 Japan may be the only mass producer of cars\nleft in the capitalist world!<\/p>\n\n\n\n

But that is a nightmare perspective for the other industrialised\ncountries, when one considers that the jobs of 35 million people around the\nworld are directly or in-directly dependent on motor vehicle production.<\/p>\n\n\n\n

Nor is the problem confined to this industry alone\u2014in every\nsector of manufacturing a similar development is taking place. In fact the Economist<\/em> (27\/12\/80) baldly declares\nthat steel production, textiles, the motor industry\u2014in fact all the main\nmanufacturing industries\u2014would only be maintainable in the West by\n“depressing their people towards competing with Indian standards of\nlife”!<\/p>\n\n\n\n

That is a brutally frank statement of the inhuman\nconsequences with which the capitalist system now threatens the working people.\nBut it is absolutely false<\/strong> as a real\nperspective for the advanced capitalist countries.<\/p>\n\n\n\n

The process will be cut across by economic, social and\npolitical convulsions, nationally and internationally, on a greater scale than\never in history. In the first place, for the ruling class to plunge the working\nclass of the industrialised West into conditions of mass privation will be\nimpossible except by crushing and destroying the workers’ organisations. That\nis ruled out except by the route of civil war, which the bourgeoisie in any event\ncannot be certain to win.<\/p>\n\n\n\n

Moreover, even economically such a development would have disastrous\nconsequences for capitalism. Such a savage slashing of living standards would\ncut the world market down to the roots and ensure a collapse of production, no\nless in Japan than in the industrialised countries of the West. <\/p>\n\n\n\n

Long before their manufacturing base is devastated by crisis\nand competition, at least sections of the bourgeoisie in the industrialised\ncountries, together with the state, would try by all means to squeeze out the\nex-ports of their rivals. Policies of protection of national industry against\nthe biting winds of international free trade would become irresistibly tempting\nto the bourgeoisie.<\/p>\n\n\n\n

Already over the last ten years the number of articles in\nworld trade affected by some device of protectionism has doubled from about\none-third to two-thirds. In the first six months of 1981, capitalist\ngovernments introduced more protectionist measures than in the previous six\nyears. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Import controls <\/strong><\/p>\n\n\n\n

At the present time these are still relatively mild and\nveiled. There are both open and surreptitious forms of import controls. There\nare trade credits; state subsidies (for example, for steel); informal quota\narrangements; `tit for tat’ agreements on mutual trade; appeals (especially to\nthe Japanese) for ‘voluntary restraint’ in curbing exports to Europe and\nAmerica.<\/p>\n\n\n\n

The bourgeoisie knows that the advance of its system for 25\nto 30 years has rested on the enormous expansion of world trade and the\nelimination of trade barriers. Now the whole situation is turned upside down.<\/p>\n\n\n\n

In this period capitalism is in the grip of a mortal contradiction.\nIn the cut-throat battle for survival each capitalist class faces what is\nreally a choice between jumping from a high building or waiting to be pushed.\nFree trade is becoming ruinous; protectionism is only an alternative route to\ndisaster.<\/p>\n\n\n\n

A generalised trade war would inevitably result from the\nimposition of heavy protectionist controls by even one important industrialised\ncountry, because its rivals would at once be compelled to retaliate. This would\nquickly lead to a devastating world depression.<\/p>\n\n\n\n

It is testimony to the bankruptcy of capitalism as well as\nthe bankruptcy of reformism, that the left reformists in the labour movement in\nthe West today present themselves as the foremost advocates of import controls\nas the means of rescuing ‘national industry’!<\/p>\n\n\n\n

There is no way out\nof the contradictions of capitalism\u2014except for the working class to take power\nand carry through the socialist revolution world wide. <\/strong><\/p>\n\n\n\n

<\/div>\n\n\n\n

The Crisis of Leadership <\/strong><\/h4>\n\n\n\n

A new epoch of social revolution has now opened in the\ncapitalist world. In the struggles already under way in the industrialised\ncountries, and in the still greater struggles which lie ahead, the balance of\nclass forces is more favourable to the working class than ever before in\nhistory.<\/p>\n\n\n\n

Certainly, the bourgeoisie has dropped its smiling mask of\nthe past few decades, and is beginning to con-front the working class with the\nbared fangs of reaction. However, the forces of potential reaction\ntraditionally relied on by the bourgeoisie have been reduced to a tiny\nproportion of society. <\/p>\n\n\n\n

In the 1920s and 1930s, it was the urban middle class,\ndriven mad by unending crisis, which provided the mass base for fascism. Today\nthe social weight of the middle class is comparatively minute. The workers’ organisations\nabsolutely tower over it.<\/p>\n\n\n\n

This weakness is in turn reflected in the feebleness of the\nforces of fascism in all the developed countries, despite the onset of mass\nunemployment. The fascist organisations are fragmented, and comprise mainly\nlumpen-proletarians of the lunatic and thug variety. They represent an entirely\ninsufficient basis for bourgeois counter-revolution in the coming period.<\/p>\n\n\n\n

In any event, the bourgeoisie would not be willing to\nentrust its fate to the likes of Hitler and Mussolini again, because in the\n1930s this ended with capitalism losing half of Europe.<\/p>\n\n\n\n

The core of the state, and the bedrock of capitalist\nreaction, is the military-police apparatus. The bourgeoisie is compelled to\nbase its long-term strategy for dealing with the workers’ movement on the\nstrengthening of these forces. In the course of the clashes and polarisation of\nthe classes over the coming years, the ruling class will be obliged to rely\nincreasingly on the military, and prepare for military-police (or bonapartist)\ndictatorships in all the advanced capitalist countries.<\/p>\n\n\n\n

However, they are presently held back from this course by\nthe realisation that, unless the workers’ movement is first smashed, by a whole\nseries of de-moralising defeats, it will be impossible to effectively use the\nmilitary in this way.<\/p>\n\n\n\n

In the past, the social foundation for the army has been the\npeasantry\u2014but in the advanced capitalist countries today the peasantry has been\nentirely eliminated or vastly whittled down. Scarcely one person in twenty now\nworks on the land.<\/p>\n\n\n\n

The armies of the major capitalist powers are now\nconstituted mainly from the proletariat (under bourgeois and petty-bourgeois\nofficers) and are recruited particularly from the unemployed youth. The fact\nthat the ranks of the military are now ‘workers in uniform’ confronts the\nbourgeoisie with a major headache. They realise that their armed forces would\ncrumble in their hands if an attempt was made to drown in blood a really\nconcerted mass movement of the workers.<\/p>\n\n\n\n

Even in a largely peasant country like Iran, the army\ndisintegrated completely under the pressure of the masses and brought the\ncollapse of the Shah’s regime. It would be a thousand times more difficult for\nthe ruling class to use the army successfully against a determined mass\nmovement in Europe or the United States. <\/p>\n\n\n\n

In the period since the Second World War, the strength of\nthe working class has led to the chronic in-stability of military-police\nregimes in Europe. The Portuguese Revolution of 1974, in which a section of the\nmilitary in fact played a prominent role, demonstrated the new balance of class\nforces\u2014and Portugal is the least developed country of Europe.<\/p>\n\n\n\n

In Spain the dictatorship of Franco underwent internal\ndisintegration over many years and eventually had to give way to a\nsemi-bonapartist parliamentary regime. The junta<\/em>\nof the Greek colonels survived barely seven years. Today there is not a single\nmilitary-police dictatorship in Western Europe.<\/p>\n\n\n\n

The strategists of the capitalist class have learned the\nlesson that it is one thing to use the army to take power\u2014but it is an entirely\ndifferent thing to hold on to power in that way. Even Napoleon warned that you\ncan build a throne with bayonets but you cannot sit on them!<\/p>\n\n\n\n

Therefore, while it is possible to do so, the bourgeoisie\nprefers to rule by leaning on the collaboration of the reformist leaders of the\nworkers’ own organisations. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Contradiction <\/strong><\/p>\n\n\n\n

The most crying contradiction of our age is that, on the one\nhand, the working class of the industrialised countries possesses immensely\npowerful organisations which would make it possible to take power peacefully\nand carry through the socialist transformation of society. But, on the other hand,\nthese organisations are saddled with a leadership which is utterly incapable of\nrising to the tasks posed by history.<\/p>\n\n\n\n

This fact guarantees a tortuous, convulsive and con-fused\nprocess of the revolution, and would ultimately make inevitable a bloody\nsettlement of the question of power between the classes.<\/p>\n\n\n\n

In the last analysis the whole crisis of mankind is sum-med\nup in the crisis, of proletarian leadership. This essential conclusion drawn by\nTrotsky towards the end of the 1930s applies with redoubled force and urgency\nto the situation today.<\/p>\n\n\n\n

The 25-30 years’ upswing of world capitalism after the war\ncompleted the degeneration of the social-democratic and ‘Communist’ party\nleaderships. They became absolutely hardened in the ideas and methods of\nnational-reformism, of class collaboration and com-promise with capitalism.\nThey drew the conclusion that the proletarian revolution was an anachronism, a\ncuriosity of the past, and that gradual reforms of capitalism were all that the\nworking class required.<\/p>\n\n\n\n

They accepted entirely the bourgeois idea that the living\nstandards of the working class could rise indefinitely on a capitalist basis,\nand that the eventual transition to socialism, if it ever came, would be a\nmatter for the dim and distant future. <\/p>\n\n\n\n

Resting on the passivity of the working class during that\nperiod, reformists entrenched their bureaucratic grip on the trade unions and\nworkers’ parties, while themselves becoming integrated with bourgeois society\nand the state. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Careers <\/strong><\/p>\n\n\n\n

Bourgeois and petty-bourgeois elements at the same time\nsought careers for themselves in the workers’ organisations, and became\naccustomed to occupying seats in Parliament as ‘Labour’ or ‘Socialist’ MPs.<\/p>\n\n\n\n

The degeneration of the CP leaderships proceeded along\nessentially similar lines. The only real difference has been that they have\ncoupled it with the old Stalinist methods of ruthless bureaucratic dictatorship\nin the par-ty itself.<\/p>\n\n\n\n

In Italy, France and Spain, where Communist Parties have a\nmass base in the working class, the leadership went over openly and unashamedly\nto reformist ideas under the label of ‘Euro-Communism’. It is no small irony\nthat they repudiated even a nominal adherence to the ideas of Lenin and the\nsocialist revolution just on the eve of the new period of world capitalist\ncrisis.<\/p>\n\n\n\n

Thus the Italian CP leadership advanced the idea of an\n‘historic compromise’ with the capitalist class, and all the ‘Euro-Communist’\nleaders cling to essentially the same idea. But if other ‘Communist’ parties still\nhold nominally to ‘Marxism-Leninism’, this is a difference of posture on the\npart of the leadership rather than a difference of essence. There is today not\na Communist par-ty in the world whose leadership puts to the working class the\ntask of taking power. None of them possesses a single grain of the method and\nrevolutionary ideas of Lenin.<\/p>\n\n\n\n

The practical consequences of a degenerated leader-ship were\nrevealed with complete clarity in the French revolutionary events of 1968.\nThose events were a brilliant anticipation of the new epoch of convulsions\nwhich has now opened up.<\/p>\n\n\n\n

With three million organised in trade unions, at least ten\nmillion French workers joined the general strike. Factories were occupied. The\narmy and police were paralysed, while open support for the workers’ movement\nwas indicated within their ranks. <\/p>\n\n\n\n

Thus the possibility of a peaceful transformation was posed.\nWhite-collar workers, small farmers and all other strata of society except the\nbig bourgeoisie were affected by the revolutionary mood. <\/p>\n\n\n\n

State power was within the grasp of the French working class.\nBut the CP leadership, at the head of the big-gest unions, hastened to call off\nthe general strike, brought the factory occupations to an end, and ensured that\nthe capitalists retained power.<\/p>\n\n\n\n

It was the enormous strength of the proletariat\u2014which had not\nbeen defeated but was held in check only by its own leaders\u2014together with the\ndepth of the ferment in society, and the fear of the bourgeoisie of provoking a\nfurther movement, that prevented the consequent Gaullist reaction from taking\nan extreme form.<\/p>\n\n\n\n

In Portugal in 1974, once again the capitalist state apparatus\ncame within an inch of being overthrown. In fact the forces of the state broke\ninto splinters, and the ruling class found itself without any basis of support.\nPeasants seized the land from the landowners and workers occupied factories.\nUnder decisive leadership there would have been nothing to stop the working\nclass from taking and consolidating power.<\/p>\n\n\n\n

However, it was the leaders of the Socialist and Communist\nparties (the latter an unreconstructed Stalinist party under the direct\ninfluence of Moscow) who held the movement back from victory and allowed the\nforces of the bourgeoisie gradually to regroup.<\/p>\n\n\n\n

Even now, however, the strength of the working class\nprevented the bourgeoisie from carrying out a vicious reaction. It has been\nable to proceed only painstakingly and feebly towards the consolidation of a\nright-wing regime. One of the consequences of the revolution has been that 84%\nof the Portuguese workers became organised in trade unions.<\/p>\n\n\n\n

While reformist leaders have been able repeatedly to bar the\nworkers’ movement from power, the bankruptcy of reformist policies in this\nperiod of capitalist crisis means that there is no resolution of the problems\nof the mass of society. Thus the working people are driven again and again into\naction. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Crisis of reformism <\/strong><\/p>\n\n\n\n

The crisis of capitalism manifests itself also as a crisis\nof reformism\u2014of the social-democratic and Communist parties in the industrialised\ncapitalist world.<\/p>\n\n\n\n

Because these are traditional mass organisations of the\nworking class, the bankruptcy of their leadership does not lead directly to the\nmass of the proletariat abandoning these parties and seeking new ‘revolutionary\nparties’ constructed from scratch. The workers return again and again to the\nvery mass organisations whose leaders have led them to defeat.<\/p>\n\n\n\n

This is something which all the ‘Marxist’ sects have utterly\nfailed to understand, and are incapable of understanding. Drawn mainly from the\npetty bourgeoisie, from students and intellectuals, there are now literally\nswarms of little groups and grouplets, warring among themselves, calling\nthemselves ‘Marxist-Leninist’, ‘Maoist’, ‘Trotskyist’ and a whole exotic\ncombination of labels. All of them proclaim their mission to create ‘mass\nrevolutionary parties’ which are to be sucked out of their own thumbs. In\nreality they are all completely by-passed and ignored by the mass movement. <\/p>\n\n\n\n

Alien to the working class in background, outlook and the\narrogance of their pretentions, the sects are incapable of grasping the\npsychology and real needs workers as they move into action to defend standards\nand seek a way out of the crisis.<\/p>\n\n\n\n

Above all, in a serious confrontation with the capitalists,\nthe workers understand the need for unity and the strength that comes from\nnumbers. The whole experience of the past 30 years, where the active layers of\nthe working class have struggled through the trade unions and the labour\nparties for reforms, has reinforced the idea that the size of their\norganisations has been more important in battle against the bosses than this or\nthat leadership or programme. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Process <\/strong><\/p>\n\n\n\n

In fact, of course, from the standpoint of the Marxist\nunderstanding of the process, this position is inadequate. In the new period it\nwill be quite impossible to sustain the struggle for reforms and for the\ndefence of the working class without linking it to a programme for social\nrevolution. Strength of numbers is indispensable, but on its own it will not\nsuffice. Without a revolutionary leadership, the mass working-class organisations\nwill repeatedly find themselves led up the blind alley of class-compromise, and\nthus open themselves to the dangers of defeat.<\/p>\n\n\n\n

But it is through the\nmass organisations<\/strong>\u2014the trade unions and the traditional parties of\nlabour\u2014that the working class as a whole will take to the road of struggle.\nAlready this is amply demonstrated in all the industrialised countries.<\/p>\n\n\n\n

What is true of the working class generally is, in this\nregard, true also of its most active and far-sighted contingents. Again and\nagain they seek to use the old organisations as an effective weapon against the\nclass enemy and its governments.<\/p>\n\n\n\n

But again and again they come up against the obstacle of the\nentrenched reformist leadership of these organisations, and are forced to\nstruggle to change the leadership. Already, to varying degrees, there is\nturmoil and polarisation between left and right in all the mass workers’\nparties of Western Europe\u2014at a time when the crisis is still only in its early\nstages.<\/p>\n\n\n\n

The whole of the working class has not yet been driven into\nstruggle. The active layer, moving into the trade unions and the workers’\nparties, is only an anticipation of the mass inflow of the proletariat into\nthese organisations which is still to come.<\/p>\n\n\n\n

In the course of the coming years there will be struggle\nafter struggle to transform and re-transform the workers’ organisations, to\nequip them for the tasks which only the working class can fulfil. In the course\nof these struggles, out of a whole series of experiences, the active fighters\nof the labour movement will be drawn unavoidably to the method’ and programme\nof Marxism\u2014that is, provided the Marxists are there to patiently explain and resolutely\nfight for their ideas.<\/p>\n\n\n\n

Just as the economic crisis of capitalism is likely to be\nlong drawn out, the process of awakening and sharpening of the class struggle\nwill also be extended. It will not proceed in a straight line. The working\nclass learns from experience, and above all from the experience of active\nstruggle.<\/p>\n\n\n\n

It is impossible for the mass of the proletariat to proceed\ndirectly to revolutionary conclusions, especially in this epoch. The mass of\npeople always seek the path of least resistance as a way out of their problems,\nand the scope for illusions in ‘alternatives’ to the socialist revolution is\nstill far from exhausted.<\/p>\n\n\n\n

There will be a testing out of all the apparent\nalter-natives to Marxism. This is made unavoidable in the advanced capitalist\ncountries by the experience of the working class over the past three decades. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Revolution or Reaction <\/strong><\/h4>\n\n\n\n

It will require a number of sharp shocks, and even defeats,\nbefore workers and their families in their hundreds of thousands and millions\ndraw the conclusion that the method of struggle of the past\u2014limiting their\nmovement to pressure for reforms\u2014can no longer advance their position or secure\ntheir needs.<\/p>\n\n\n\n

For vast masses of the working people in the countries of\nthe West, where the strength of their organisations has won bourgeois-democratic\nrights and freedom from police tyranny, their impression of ‘Marxism’ and ‘communism’\nis the repulsive totalitarian Stalinist regimes of Eastern Europe, Russia, etc.\nBourgeois propaganda tirelessly drums home that these are the inevitable result\nof revolution.<\/p>\n\n\n\n

As the bourgeoisie is forced, in the coming period, to mount\none attack after another on the democratic rights and freedoms of the working\nclass, these mists of confusion will gradually be cleared away. In the course\nof struggle to defend democracy, to end the nightmare of capitalism, layer\nafter layer of the working people (and through them the middle class as well)\nwill come to understand that the only solution is the socialist revolution and\nthe creation of a democratic workers’ state.<\/p>\n\n\n\n

But it will require a whole process of development of the\nclass struggle before it becomes clear that genuine Marxism, genuine socialism,\nis inseparable from workers’ democracy and stands in irreconcilable conflict with\nStalinism.<\/p>\n\n\n\n

Above all, the revolutionary process will be long drawn out\nbecause of the weakness of the forces of Marxism in the world today.\nRevolutions are not over-night changes. Revolution is a whole tumultuous sequence\nof changes, reverses, and further changes. Whether a workers’ revolution results\nin victory or defeat has always depended on the question of leader-ship.<\/p>\n\n\n\n

The Russian Revolution was victorious within the space of\nonly nine months precisely because of the strength of the Bolshevik Party, the\nfirm roots which it had laid in the workers’ movement, and the quality of its\nleadership.<\/p>\n\n\n\n

In Spain in the 1930s, the revolution unfolded over six\nyears before it was finally defeated. As Trotsky pointed out, the Spanish\nproletariat could have taken power on at least ten occasions, had it not been\nfor the obstacles placed in its way by its own leaders.<\/p>\n\n\n\n

At the present time, the process in the advanced capitalist\ncountries will be still further drawn out, to an extent which the great\nteachers of Marxism in the past could not have foreseen. They pointed out that\na revolutionary situation, in which the struggle between the classes rises to\nan unbearable pitch, leads quickly to a resolution of the issue in favour\neither of the ruling class or the proletariat. <\/p>\n\n\n\n

But today, for example, in Italy there has been a\npre-revolutionary situation extending for more than ten years. This is the\nresult of the enormous power of the working class and its organisations; of the\nweakness of the forces of bourgeois reaction; and of the complete in-capacity\nof the workers’ leaders to resolve the situation by leading the class to power.\nOne revolutionary opportunity after another has been squandered, which in an\nearlier period would have been enough to open the way to counter-revolutionary\ndefeat. Yet it is still impossible for the bourgeoisie in Italy to form a\nstable government.<\/p>\n\n\n\n

The process of the socialist revolution in the West is\nlikely to unfold over a period of one or even two decades. But at the same\ntime, this will be a period of enormous turmoil and upheavals, of sharp turns\nand sudden changes in the situation.<\/p>\n\n\n\n

Because the crisis of capitalism is now endemic, and each\npolicy of the bourgeoisie leads in turn to a new impasse; because all the\nvarieties of reformism are bankrupt, but have not yet sufficiently exposed this\nfact in practice to the working class; because of the rapid sequence of feeble\nbooms and deepening recessions, each leading to new expectations and new\ndisappointments\u2014there will be a contradictory process of repeated turns and\nchanges in the class struggle and volatile swings of mood.<\/p>\n\n\n\n

With the issue of power between labour and capital\nunresolved, there will inevitably be a protracted see-sawing as the workers’\nmovement is dragged down again and again by the deadweight of its reformist\nleadership. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Centrist <\/strong><\/p>\n\n\n\n

As the impotence of reformism becomes revealed there will be\nthe development of mass centrist trends within the workers’ organisations\u2014leaders\nand groupings which vacillate between revolutionary phraseology and reformist\npractice. This will give enormous opportunities for the crystallisation of\nMarxism as a mass force, provided a firm cadre of Marxists works correctly in\nthe mass organisations.<\/p>\n\n\n\n

In fact, the drawn-out character of the process provides a\nprecious advantage for the forces of Marxism, which, beginning from very small\nresources, would otherwise be swamped in the revolutionary flood.<\/p>\n\n\n\n

The Marxist perspective bases itself on the general lines\nand direction of the process which is mainly deter-mined by the crisis of the\ncapitalist system. But within this general framework we must be prepared for\nextremely contradictory developments and paradoxical zig-zags.<\/p>\n\n\n\n

Under the pressure of events, different classes and sections\nof classes move in different directions. Among the workers, the first onset of\nthe crisis has led to the radicalisation of the active layer. Hence, for\nexample, the upheavals in the British Labour Party, the struggles of left\nagainst right, and the emergence of a strong left-reformist current among the\nrank and file. The speed of this process has been accelerated by the existence\nin the Labour Party of a Marxist tendency.<\/p>\n\n\n\n

However, the process of radicalisation and polarisation is\nstill at an early stage. The Party and several of the main unions are still\ndominated by a right-wing bureaucracy which rests on the passivity of the broader\nmasses of the class, inherited from the past. Nevertheless, this base is being\nsteadily eroded as more and more workers are impelled into action to defend\ntheir living standards, and come up against the suffocating barrier of the\nright wing. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Convoluted <\/strong><\/p>\n\n\n\n

In the country as a whole, developments are still more\nconvoluted and contradictory. Reacting to the cuts in living standards\ninflicted on the working class by the last Labour government, more backward or\nunorganised layers abstained or followed the middle class in voting for the\nTories\u2014and so inflicted on themselves the Thatcher government with its vicious\nanti-working class policies and still more savage cuts.<\/p>\n\n\n\n

Now, on the rebound, confused by the manipulations of the\nbourgeois press, radio and TV, many of these have swung over to support the new\nSocial-Democrats\u2014the split-off from Labour\u2014whose leader-ship comprises\nprecisely the most hardened of the Labour right-wingers whose policies had\nalienated these voters in the first place! It requires a whole sequence of\nexperiences before clarity among the masses is reached, and class consciousness\nmatures.<\/p>\n\n\n\n

A broadly similar contradictory process has led to\nright-wing governments In the United States, in Sweden, in Jamaica and in a\nnumber of other countries<\/p>\n\n\n\n

 In Spain, where the\ndownfall of the Franco regime led to a flowering of the trade unions, the\nSocialist Party and the Communist Party as mass organisations, the bankruptcy\nof the leadership led to a severe\u2014if temporary\u2014demoralisation of the active\nworkers. In turn, this has affected the whole working class. Thus the trade\nunions have lost three-quarters of their membership during the past few years;\nthe membership of the Socialist Party fell by 100 000; and that of the CP by 80\n000.<\/p>\n\n\n\n

It was in these conditions that the Spanish generals were\ntempted to carry out the coup in February 1981. However, it was realised by the\nmore far-sighted strategists of the bourgeois, and by the king, that a military\nregime would lead to a backlash of revolt by the proletariat, and possibly\nprovoke a revolutionary situation. Therefore the ruling class drew back, and\nthe coup was aborted.<\/p>\n\n\n\n

The volatility of the situation in Western Europe is shown\nby the 1981 election in France, which produced an outright victory for the\nworkers’ parties for the first time in history. The French constitution was\ndesigned by de Gaulle to ensure a high degree of autocratic power for the\nbourgeois President. Now this office has fallen into the hands of the Socialist\nParty, who also hold an absolute majority in the Assembly!<\/p>\n\n\n\n

A similar historic victory has been won by the Socialist\nParty (PASOK) in Greece. There is also now the possibility of the Spanish\nSocialist Party winning_ the next election\u2014despite the acute fears of the\nleadership of what the consequences of their own victory would entail.<\/p>\n\n\n\n

In the United States, where the trade union bureaucracy has\nclung to the tail of the capitalist Democratic Party, and where the voters have\nhad to make their choice between the two bourgeois parties, there is now a\ngroundswell in the trade union movement for the creation of a Labour Party. <\/p>\n\n\n\n

That would represent a turning point in the history of the\nUnited States and of the world. Beginning with a reformist leadership and\nprogramme, a mass workers’ party in the US would polarise and evolve towards\nthe left even more swiftly than its counterparts in Europe.<\/p>\n\n\n\n

It was little more than a year ago that Reagan came to power\non a popular mood of confused anger, discontent, and chauvinist hysteria. But\nalready he has been faced with a trade-union led demonstration against his\npolicies which mobilised half a million people in Washington alone. Sharp turns\nand sudden changes are characteristic of the present period.<\/p>\n\n\n\n

In Western Europe, as in the USA, possibilities for new\nreactionary developments are by no means exhausted. In fact, in France and\nGreece, where enormous expectations have been aroused among the workers by the\nelection of Socialist governments, disappointment is unavoidable. This is\nbecause the Socialist leaders are determined to remain within the framework of\ncapitalism, and are therefore unable to sustain the promised reforms. This will\nprepare a swing back towards the right, as the crisis of the economy deepens. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Swings <\/strong><\/p>\n\n\n\n

It is particularly the petty bourgeoisie which swings\nradically from one side of the spectrum to the other, but sections of the\nworking class are also drawn in tow as a result of the failure of the\nworking-class leadership.<\/p>\n\n\n\n

Nevertheless, each swing towards reaction in turn leads to a\nsharpening of contradictions, intensifies the class struggle, and whips the\nworkers into action against the class enemy.<\/p>\n\n\n\n

Because of the relationship of forces in society it is now\nruled out that the bourgeoisie can take to the road of fascism. The fascist\norganisations are now capable of being no more than jackals running at the\nheels of a military-police reaction. It is on the latter that the bourgeoisie\nwill be compelled in the coming period to stake its existence.<\/p>\n\n\n\n

The ruling class will have absolutely no alternative but to\ntry to defeat the workers’ organisations, roll back the social and political\nrights of the working class, and constantly depress living standards. When the\nrole of the reformist leaders in holding back the workers’ movement begins to\nbe played out, the bourgeoisie will have no alternative but to try to impose\nmilitary-police dictatorship in all the countries of capitalism.<\/p>\n\n\n\n

But, as in Spain in the 1930’s, this course would lead\nunavoidably to civil war. That is the prospect on the agenda in all the\nadvanced capitalist countries in the next period, if it is not forestalled by\nthe victory of the socialist revolution.<\/p>\n\n\n\n

In revolution as in civil war, the outcome will turn above\nall on the calibre of the proletarian leadership. Only if the mass\norganisations of the workers are guided by the programme of Marxism, by the\nprogramme of the international socialist revolution, will a way forward be\nfound out of the chaos and misery of capitalist society.<\/p>\n\n\n\n

The forces of Marxism will arise mainly out of the fresh\ncontingents of the proletariat, especially the youth, pouring into the mass\norganisations in the coming years. It is from these organisations that the\nfuture revolutionary International of the working class will arise, bearing the\nheritage of Marx, Engels, Lenin and Trotsky.<\/p>\n\n\n\n

The myriad, so-called “Trotskyist” sects are of no\nimportance to this process. In fact, they are merely an irritating nuisance to\nthe labour movement, and have served to surround the name of Trotsky with a bad\nsmell. The fact that some of these sects posture as the “Fourth\nInternational” is irrelevant. The Fourth International whose foundations\nwere laid by Trotsky in the years before the Second World War, never arose as a\nmass force. Such a development was prevented by the peculiar course of the war,\nfollowed by the defeat of the post-war revolutionary wave; and by the whole\nperiod of the post-war upswing of capitalism.<\/p>\n\n\n\n

As Trotsky always explained, an International is essentially\na method, a perspective, and a programme. As an organisation, it can only\ndevelop in this epoch as a mass force of the international proletariat. The\nheritage of ideas, method and programme represented in the work of Marx,\nEngels, Lenin and Trotsky, has been defended, extended, and deepened over the\npast forty years by only a slender force of Marxists within the international\nlabour movement. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Sects <\/strong><\/p>\n\n\n\n

The organisational apparatus of the Fourth International\nunderwent a complete degeneration and disintegration in the years after the\nSecond World War. It splintered into innumerable sects and sub-sects, increasingly\npetty-bourgeois in composition, each more incapable than the other of orienting\nto the processes at work in the working class.<\/p>\n\n\n\n

Confused and demoralised by the new world situation and the\npost-war upswing, these sects retained only the name of Trotsky while\nabandoning his ideas and method. Capitulating to the ideas of Keynesianism,\nmany of them drew the conclusion that capitalism had solved its problems and\nthat the working class was no longer a force for socialism. Others stubbornly\nmaintained that the upswing of capitalism was in fact not taking place, and\nasserted year by year that a new world war and world revolution would shortly\nexplode.<\/p>\n\n\n\n

All of them completely lost their bearings. Chasing after\nevery passing phenomenon, impatient for results, seeking always a short-cut,\nutterly without the scientific perspective of Marxism, they underwent irreversible\ndecline.<\/p>\n\n\n\n

Abandoning the working class, they turned uncritically to the\nstudent movement, then to the guerrilla armies of the colonial world, to\nGuevarism, Maoism, terrorism, and every new apparent panacea. Without the\nanchor of the Marxist method, they only split and splintered among themselves.<\/p>\n\n\n\n

Today there are at least 15 different organisations claiming\nto be the Fourth International! In each and every case, these are the deluded\nfantasies of intellectual sects. It is best to leave them to their own fate. <\/p>\n\n\n\n

<\/div>\n\n\n\n

Marxism <\/strong><\/p>\n\n\n\n

The real forces of Marxism\u2014of Trotskyism\u2014are taking shape\nwithin the mass organisations of labour in many countries. Most notably in\nBritain and Sri Lanka, but also in Spain, Sweden, Ireland, India and other\ncountries, signs of the influence of Marxism within the working-class movement\nare becoming apparent.<\/p>\n\n\n\n

As the history of the international workers’ movement has\nrepeatedly demonstrated, the forces of Marx-ism are capable of rising to mass\nproportions from the smallest beginnings, in the course of a revolutionary\ncrisis in society. There is an enormously optimistic perspective for the growth\nof the Marxist tendency internationally in this period.<\/p>\n\n\n\n

In that way alone can the crisis of the proletarian\nleadership be resolved and mankind find its way to the socialist and communist\nfuture.<\/p>\n\n\n\n

But more than this hangs on the question of the proletarian\nleadership in the coming years. The victory or defeat of the socialist\nrevolution will determine also the future survival or the complete annihilation\nof mankind.<\/p>\n\n\n\n

Inherent in the crisis of world capitalism is the prospect\nof world war. At the time of the First World War Lenin explained\u2014in answer to\nthe bourgeois argument that this was the “war to end wars”\u2014that if\ncapitalism survived it would guarantee yet another world war, and yet another,\nand another, until it was overthrown. The Second World. War was the grisly\nproof of the correct-ness of Lenin’s analysis.<\/p>\n\n\n\n

Facing intolerable contradictions of its economic system at\nhome, the bourgeoisie of each major power has repeatedly sought a “way\nout” through war\u2014through conquest and redivision of the world market.\nHowever, the change in the international situation since the Second World War\nhas placed a new obstacle in front of this tendency of capitalism.<\/p>\n\n\n\n

A Third World War would inevitably mean a nuclear war,\nfought essentially between the USA and Russia. Because this course would\nannihilate Europe, and would quickly lead also to the complete destruction of\nhuman life\u2014in fact leaving the planet to the plants and the insects\u2014it is ruled\nout as a deliberate and conscious policy of the bourgeoisie.<\/p>\n\n\n\n

But there is nevertheless a deadly danger of nuclear war\ninherent in this epoch of crisis of capitalism. <\/p>\n\n\n\n

The existence of bourgeois democracy in the advanced\ncapitalist countries has been the product of the strength of the working class\ncombined with the ability of the bourgeoisie, riding on the wave of progress of\nits system, to afford material concessions.<\/p>\n\n\n\n

The parliamentary regimes in these countries allow the\nbourgeoisie the most direct influence and control over the conduct of state\npolicy that is possible under capitalism.<\/p>\n\n\n\n

Paradoxically, because it is forced to attack the living\nstandards of the working people, the bourgeoisie will also be compelled in the\nperiod ahead to attack bourgeois democracy, and, if necessary, to replace its\nparliamentary rule with military-police dictatorship. But regimes of generals,\nwhile in the last analysis they serve to defend the property and profits of the\ncapitalist class, at the same time raise themselves above any restraining hand.<\/p>\n\n\n\n

Should the working class be defeated in the coming period,\nresulting in a series of military-police dictator-ships in the advanced\ncapitalist countries, it is entirely possible\u2014and indeed inevitable\u2014that one or\nother fanatical general will reach for the nuclear button in the crazy pursuit\nof a “first strike” advantage against Russia.<\/p>\n\n\n\n

Thus in the course of the next decade or two decades, the\nissue of the socialist revolution\u2014and with it the issue of the survival of\nmankind\u2014will be resolved in struggle. Before the Second World War, Trotsky said\nthat mankind faced the choice between socialism or barbarism. Today it is the\nchoice between socialism or annihilation.<\/p>\n\n\n\n

Those are the alternatives contained in the mighty development of the productive forces of modern society. That is the ultimate contradiction, which only the triumph of the forces of Marxism can resolve.<\/p>\n\n\n\n

Continue to Chapter Four<\/a><\/h4>\n","protected":false},"excerpt":{"rendered":"

The Crisis of the Capitalist Powers The upswing of capitalism after the Second World War became the main determining factor of world history for an […]<\/a><\/p>\n<\/div>","protected":false},"author":1,"featured_media":0,"parent":709,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"class_list":["post-730","page","type-page","status-publish","hentry"],"aioseo_notices":[],"acf":[],"_hostinger_reach_plugin_has_subscription_block":false,"_hostinger_reach_plugin_is_elementor":false,"brizy_media":[],"_links":{"self":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/pages\/730","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=730"}],"version-history":[{"count":2,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/pages\/730\/revisions"}],"predecessor-version":[{"id":738,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/pages\/730\/revisions\/738"}],"up":[{"embeddable":true,"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=\/wp\/v2\/pages\/709"}],"wp:attachment":[{"href":"https:\/\/marxistworkersparty.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=730"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}