Daily Times

The year 2014 marks the 100th anniversary of the First World War — a war that resulted in the mass slaughter of at least 13 million people. Bourgeois academics often explain wars and conflicts as an inevitable result of the innate aggressiveness of human beings. Reality, however, is different. In an uneven world, contradictions can only be solved by violent means when they reach a critical point. The renowned Prussian general, Clausewitz, from the 19th century, bluntly explained the reality: “War is only the continuation of politics by other means.”

The most essential parallel is that the contradictions of capitalism have emerged yet again in an explosive manner on a world scale after 100 of World War I in 1914. A long period of capitalist expansion — which bears some striking similarities to the period that preceded it — came to a dramatic end in 2008. On March 6, 2009, six months after the collapse of the Lehman Brothers, the prospects for the corporate US looked bleak. While the mighty General Motors was publicly confessing its inability to survive, General Electric’s share price around an 18-year low and Citigroup’s shares trading for less than $1, the Dow Jones Industrial Average closed below 6,627, a 53 percent decline from its all-time high less than two years earlier. The corporate US and world capitalism are in the throes of the most serious economic crisis in the entire 200-year history of capitalism. The bourgeois have tried everything to climb out of it, from quantitative easing, to zero interest rates, to the socialisation of banking losses, but to no avail. Five years into the crisis, the world economy remains mired in recession and stagnation.

The recovery in the US is extremely sluggish and fragile. Europe is in deep recession. The former powerhouse of its growth, Germany, is on the verge of recession. The weaker economies of southern Europe are in a deep slump. Meanwhile, the slowdown of the Chinese economy is causing alarm. The so-called BRICS economies are also entering into crisis. The crisis in Europe most dramatically expresses the sickness of world capitalism no matter how hard bourgeois economists try to put on a brave face.

Nothing has been solved. With a projected growth rate of less than one percent, record numbers of youth are out of work in Europe (56 percent in Spain and 65 percent in Greece). They just do not know what to do except apply more cuts in living standards and wages. The bourgeoisie is faced with a serious problem: they must take back all the concessions they made over the past 50 years. However, the balance of forces is unfavourable. The real programme of the bourgeois is to destroy the welfare state. This is not merely because they are cruel, vicious, evil, ignorant or stupid. All governments — left, right or centre — are following the same policy. Francois Hollande in France, who came to power on a left socialist platform, has been rudely awakened by the French bourgeoisie and has been forced to do the same.

During 1945 to 2005, world exports rose at annual rate of five percent, and annual world output rose at 3.5 percent. Output followed trade. So-called globalisation, especially since the fall of the USSR, and the emerging economies saved capitalism by providing it with oxygen. The entry of 1.2 billion Chinese into the world market had an effect — how could it not? New area for investment and abundant supply of cheap labour helped them firm up profit rates and drive down wages in the West.

The system could keep going admittedly at the cost of the working class everywhere, including the brutal exploitation of workers in places like China. Contrary to the theories of the bourgeois economists, globalisation did not abolish the fundamental contradictions of capitalism. It only reproduced them on a far vaster scale: globalisation now manifests itself as a global crisis of capitalism. The root cause of the crisis is exactly the same as in 1914: the revolt of the productive forces against the two fundamental obstacles that are preventing human progress, private ownership of the means of production and the nation state. There has been a massive increase in credit up to 2007. In the US, national credit stood at a staggering level of $ 50 trillion. In the last 20 years in particular, the bourgeois were drunk with illusions. They thought this would continue forever.

The year 2008 marked a fundamental and historical turning point. Capitalism has gone so far beyond its limits. It must go back now, on pain of extinction. What goes up must come down. Dialectically, all the factors that pushed things up in the last 30 years are turning into their opposite. That explains the present crisis. Capitalism now has embarked upon removing the role of the state, which is a contradiction, considering that it was the state that saved the system in the past. They leaned on the state as on crutches. Trillions in public money was given to the banks to bail them out.

The so-called ‘troika’ — the European Central Bank (ECB), the European Commission and the IMF have spearheaded these attacks. The bourgeoisie saw the crisis as an opportunity to implement the ‘reforms’ articulated by the IMF in a 2009 report: “Historical experience indicates that successful fiscal consolidations were often launched in the midst of economic downturns or the early stages of recovery.” European capitalists could not raise taxes on the rich, as this would have resulted in a strike of capital, capital flight and factories’ shutdown. Instead, they pursued a political agenda; by using the crisis to declare a war on the working class. Regressive taxes, fees and cuts were introduced. In other words, the idea was to reduce the size of government, reduce the bargaining power of labour and cut spending on pensions and healthcare. It is not surprising that these are the kinds of policy changes that were imposed on south European countries like Greece, Portugal and Spain, where real healthcare spending has been cut by more than 40 percent, or Portugal, where the number of private sector workers covered by union contracts has shrunk from 1.9 million to just 300,000. The idea was to make the working class pay for the crisis by imposing austerity policies.

However, the willingness of the masses to accept further reductions in living standards has definite limits, and these are being reached. In Portugal the constant pressure on living standards has provoked rising social and political tensions, expressed in a general strike and mass demonstrations that plunged the government into crisis. The economic crisis produces a political crisis, unstable governments, coalitions, etc.

The dramatic social explosions in the recent period in Turkey, Brazil, Egypt, Tunisia, Spain, Greece, Bulgaria, Romania and many other countries are a graphic indication that we have now entered an entirely new situation on a world scale. Countries like Spain, Italy, France and Greece are on the verge of massive movements. The task for conscious sections of the class vanguard is to prepare for the coming explosions and revolutions.

The writer is the editor of Asian Marxist Review and international secretary of Pakistan Trade Union Defence Campaign. He can be reached at ptudc@hotmail.com