World capitalism finds no way out of crisis

Despite the surface impression of ‘recovery’, the world crisis of capitalism has got worse

CWI International Secretariat

“The crisis of world capitalism is deeper and the bourgeois strategists are filled with greater foreboding about the prospects of their system than even at the time of the World Congress. A constant theme is the lack of ‘legitimacy’ of capitalism: in the economic sphere, in world relations, on the issue of the environment, climate change and the reflection of this socially and politically. Above all, there is a real fear, although largely unspoken, that the obvious failures of capitalism mean that we are living ‘on the edge of the volcano’; bourgeois speak for mass upheaval and even revolutionary change.” [Thesis on World Perspectives, IEC December 2016]

The only addition to this is that the world crisis of capitalism – despite the surface impression of ‘recovery’ – has got worse. The world bourgeois faces a further erosion of its political ‘legitimacy’ as the splits within the ruling class have sharpened and become more open. In a number of countries, the bourgeoisie propagates the idea of an economic recovery using the, in reality, quite weak growth figures. But this ‘recovery’ does not lead to any real improvements for the working class. It is far from a real recovery or boom as the under underlying contradictions of capitalism have not been solved but, in reality, have been brought onto a higher level. There is continuing overall stagnation in the advanced industrial countries. In Africa and Latin America the promise of a ‘brighter future’ has now been dashed as the commodity boom of the previous period has now largely evaporated despite a recent partial increase in exports in some countries. This in turn has led in some countries – like Brazil – to the biggest economic crash in history, which has led to general strikes and political turmoil that will intensify in the next period.

It resulted in the dismissal of the Dilma government accompanied by mass protests by the trade unions. The idea that these countries on the basis of capitalism were on a path to prosperity has been completely shattered. In Asia, the shine has also come off, not just in India, if it was ever there in the first place, but in the rest of the continent as well.

The fact that living standards of working class people are still under attack despite ‘growth’ shows that the crisis of capitalism is not over and there is no room for lasting concessions despite the propaganda of a boom. This has ratcheted up class tensions in Europe – including in Eastern Europe – and the US, with the whip of reaction, represented by Trump, enormously aggravating the domestic and international position of US imperialism.

Tensions between Russia and the US, EU and even to a degree China continue to worsen. The Kremlin’s initial support for Trump has now been forgotten, as the conflict of imperialist interests in Syria, North Korea and elsewhere continues. It allows Putin’s regime to use anti-western rhetoric at home, fuelled by the closure of its embassies in the US and the continuing controversy of the Kremlin’s ‘trolls’ and interference in western elections. The permanent deadlock of the Minsk negotiations and the breakdown of each successive ceasefire leave millions still afraid to return to their homes in East Ukraine. The recent admission by the Ukrainian Defence Ministry that over 10,000 of its soldiers have died (many from disease and bullying) in the war indicate that the ‘low level” conflict continues unabated.

In the neo-colonial world, with many countries still tied largely to commodity production – with manufacturing output stalling and in some cases going back –  expectations have been lowered with the collapse of commodity prices. The goal of Africa, Latin America and Asia soon attaining ‘first world’ high-income and status is still far away.

The continuation of searing poverty that goes with this has resulted in health provision plummeting and with it the hope of banishing age-old poverty, including ‘medieval’ diseases like the plague (Black Death). The elements of barbarism, always present in the neo-colonial world, have been strengthened, illustrated by Zimbabwe, which has just seen 50 desperate unemployed people apply for one grisly ‘job’: that of the national hangman! National struggles have multiplied, not only in the neo-colonial world – Myanmar’s expulsion of the Rohingya – but also now in the heart of Europe, in Catalonia.

Catalonia and the national question

Whereas the British bourgeois, given their long historical experience, tends to bend when confronted with the ‘winds of change’ their Spanish counterparts, with big elements of the Francoist state still intact, and presided over politically by the heirs of Franco – the PP, the first instinct is to resort to repression including now the suspension of Catalan autonomy. This can only further stoke up opposition to the Spanish state and aggravate the national question.

The approach of the Spanish bourgeoisie can lead to a much bigger escalation of the class struggle and deepen the political crisis, strengthening its revolutionary features and provoking similar movements in the Basque country and Galicia. The national question is posed much more sharply in Catalonia than in Britain at this stage because of the history of repression by the Spanish state. But If the British bourgeois had reacted in the same way towards Scotland as the Spanish ruling class is doing now in relation to Catalonia, this would have enormously speeded up the movement towards independence, which is temporarily ‘on hold’ with the Scottish government of the Scottish National Party carrying out the Tory UK government’s ‘austerity’ programme.

Catalonia saw significant changes in population in the 1950s, 1960s and 1970s, absorbing internal migration on a big scale from areas like Andalucia and Extremedura, particularly to the main city, Barcelona. Many of these immigrants formed the “red belt” of the Catalan capital and constituted a bastion of the social democratic and Stalinist left in the 1970s and 1980s. This layer has still not yet been decisively influenced by the independence movement, due to, amongst other factors, the leadership of the bourgeois nationalists that historically have been the political instrument of the Catalan oligarchy. These Catalan bourgeois nationalists have been especially racist and anti-worker towards these sections of the working class. This, however, does not mean that these layers of workers homogeneously support the PP or the right-wing reactionary block. A big majority of these workers respect the right of the people to decide, as was reflected in PODEMOS winning the last two Catalan general elections. Amongst the youth of these working class districts, pro-independence sentiment is much greater than in previous years. Amongst broad layers of workers, especially in health, education and public administration – that have been in the forefront of the struggle against cuts – there exists a very strong support for independence.

There is a real fear of the ‘domino effect’, with big repercussions from this in the rest of Europe, where there are many unresolved national issues, which are lying dormant at the moment but can be fanned into life very quickly. In Italy, for instance, there are moves for greater autonomy in the regions of Veneto and Lombardy. The national question is a litmus test for the labour movement and particularly for a Marxist organisation wishing to find a road to the mass of working class. Not all have been able to meet this test and as a consequence risk falling under the wheels of history. Our section, particularly through the marvellous school students’ union, has splendidly met this test in the tremendous intervention in the stormy events in Catalonia and the rest of the Spanish state.


We are for the defence of the national aspirations of all oppressed groups and nations, so long as this does not violate the rights of others. We are against the slightest compulsion against any nationality even the smallest groupings, as Lenin pointed out. We are, at the same time, also in favour of the maximum unity of the working class which transcends all national, racial and other boundaries in the struggle to realise democratic workers’ states which will enshrine and defend the rights of all nationalities.

However Marxism opposes the slightest taint of concessions to bourgeois nationalism which seeks to divide and mislead the masses along ‘national’ and separatist lines. This involved fighting for the right of self-determination, not just in Catalonia but defending this throughout the Spanish state while at the same time situating the idea of an independent socialist Catalonia in the context of a socialist Spain and Europe.

In this year of the centenary of the Russian Revolution we should remind the workers’ movement internationally of the tremendous theoretical heritage bequeathed to us today by Lenin’s approach on the national question. Without a correct approach on this issue it will be impossible to achieve a socialist revolution, as was the case with the Russian revolution itself. This included not just the right of self-determination but also after the taking of power by the Bolsheviks implementation of this in practice, e.g. in Finland. The population of Czarist Russia at the time of the revolution comprised roughly 43% Russians and 57% oppressed nationalities.

It would not have been possible to cement an alliance between the masses on an all-Russian basis – and therefore could have risked the failure of the revolution itself – without the Bolsheviks’ defence of the right of self-determination linked to the idea of a democratic socialist federation, today expressed through our demand for a confederation.

In the modern era there has been a mushrooming of the national question. Many have common characteristics but others need special features and a careful analysis, particularly in relation to slogans, if we are to find our way through the ‘Ariadne thread’ of the national question. Older ‘national questions’ can be resurrected, while entirely new ‘national’ issues can be brought to the fore, by economic collapse or war.

This is a key question for the Middle East where the legacy of past imperialist oppression and occupation left a patchwork of states, many of them cutting across the living bodies of groups and peoples, separating them. This has now been enormously aggravated by the recent wars in the region which has resulted in a ‘victory’ of a kind over Isis (Daesh) but a mountain of victims, massive displacement (11m Syrians and 4m Iraqis), devastation and the flattening of cities, as well as the armies of refugees. It has more the feel of a devastating defeat!

Events have underlined that only the working class movement can mobilise the masses in the Middle East, including with correct policies on the national question. Only this force can achieve a just and democratic peace and the elimination of the present horrors.

Fourteen years after the beginning of the Iraq war which was meant to usher in a new democratic and prosperous future for the country and the region, peace remains as elusive as ever. The chapters of horrors still continue apace with no real solution in sight. The military defeat of Isis first in Mosul then in Raqqa – the capital of the would-be ‘caliphate’ – and its likely eviction from the rest of Syria does not signify the end of their terrorist methods and organisation. As the CWI pointed out, their fascistic methods could not succeed and they would face inevitable military defeat by imperialism with its overwhelming firepower. They made a fundamental error of uniting all the ‘imperialist’ powers against them, as well as all the Shias and all the other minorities. They were able to hold on for so long, particularly in Raqqa, partly because while they totally alienated the Shias and increasingly the Sunni population, they virtually went ‘underground’, like the National Liberation Front in Vietnam, by creating a vast network beneath the city. This mitigated the effects of the aerial bombardment. The vicious sectarian nature of this organisation is illustrated by the use of slave labour to build this network.

In this, they are only imitating the worst aspects of ‘modern’ capitalism, which worldwide utilises slave labour on a scale bigger in numbers than the slave trade between the 15thand 19th centuries (13 million people were sold as slaves then compared to estimated figures of between 21 million and 46 million today, generating $150 billion profits!)

Moreover, because of Isis’s messianic methods it was bound to alienate the mass of the peoples of the Middle East and elsewhere. However this does not mean that they are finished. They will now fall back on their original guerrillaist tactics in Iraq, and other countries in the region, including Afghanistan and possibly a stepped-up presence in Pakistan as well. There will probably be an attempt at an intensified terrorist campaign in Europe, in the US and elsewhere, particularly in Asia, which is home to the biggest number of Muslims in the world.

A socialist and Marxist approach, which seeks to unite all the peoples of the Middle East, is one of the keys to solving the problems of poverty and sectarian divisions in the Middle East. Take the ‘Kurdish question’, which has taken a new turn and not necessarily for the better, with the referendum for an independent Kurdish state in northern Iraq, encompassing the oil-rich city of Kirkuk. This city is confronted with claims and counter-claims from the Kurds, Turkmen and Iraqi Arabs. The only way to satisfy all the aspirations, particularly of the working and middle classes, and avoid another gruesome sectarian civil war, is for the masses in the city to fight for a special status for Kirkuk.

This would be similar to the approach of the CWI and our Belgian section towards Brussels which has a preponderance of French speakers but is located within the Flemish region. We advocate the right of self-determination for all the peoples and regions in Belgium within a socialist confederation of Belgium, with the Brussels region having a special relationship with the other parts of Belgium.

This would be the only way to satisfy all sides and cement the unity of the people, in particular the working class. The referendum on ‘independence’ in the region which included Kirkuk, took place with reservations from the PUK who were involved in most of the fighting against Isis in the recent period. This could in turn lead to further conflicts between other Iraqis and the Kurds which has resulted in the occupation of the city now by Iraqi government and Iranian-backed forces with the possibility of a new conflict, adding to the carnage which has gone before.

When the US/British invasion of Iraq took place 14 years ago, we said it could replace one dictatorial regime, that of Saddam, ultimately with three separate states or statelets, of the Shia, the Sunnis and the Kurds, which on a capitalist basis could lead to three dictatorships! The only way to avoid this – another bloody chapter for the region – is through agreement between the peoples currently in Iraq and Syria on a socialist and democratic basis. The same applies to all the countries of the Middle East which are now divided on national and ethnic lines.

In Tunisia the ruling class is very conscious that the revolutionary period opened in 2011 is not closed. Despite the fact that there has been a certain impasse in the situation, with negative features such as the development of individual terrorism, new social explosions and upheavals are posed in the situation. The so-called ‘National Unity Government’ is gripped by instability and unpopularity, against the backdrop of economic stagnation. The IMF is putting pressure on the government for a vast austerity offensive. In this context, the shift to the right marked by the UGTT leadership since its last congress, illustrated by a recent speech of the general secretary calling on workers “to finish with the culture of demands”, will come into sharper conflict with the union rank and file in the coming period. Among this layer as well as in the youth, the need for a clear socialist alternative will find a renewed resonance.

Latin America

Perspectives for Latin America are dealt with separately. Suffice to say here, and in Asia and Africa, they present a similar picture: a deepening of the economic crisis, a sharp polarisation between the classes, political crises, aggravated by endemic corruption, and the inability of the ‘national bourgeoisie’, insofar as it now exists as a coherent force, to show a way forward for society.

Brazil, the biggest country in Latin America and previously the most prosperous is presently experiencing a major crisis which has produced almost a position of political deadlock following the impeachment – a ‘soft coup’ – of the Workers’ Party (PT) President Dilma. The previous vice-president Temer, who orchestrated her removal and replaced her, has been shown to be implicated in colossal bribery and corruption.

He faces massive opposition from the trade unions and the working class, which has already resulted in the unions organising general strikes and calls for his own impeachment! The colossal privatisation programme that he has launched, which has even included selling off the national Mint, has received expected plaudits from Brazilian and international capital but huge opposition from the labour movement and working class.

The bourgeois press speculates that public scepticism about the privatisation drive, already milked by the opposition and the unions, could further push Brazil in a ‘populist’ direction – a further radicalisation of the workers’ movement – in the elections. Argentina presents the same picture of economic and political deadlock which the election of Macri, rather than offering up a ‘new’ road, has resulted in more of the same.

The social, political and economic crisis in Venezuela has worsened. The ruling class internationally has tried to use this to discredit the idea of ‘socialism’ as it did following the collapse of the Stalinist regimes in Eastern Europe. However, the entire world situation and crisis of global capitalism will tend to weaken these attempts. The Maduro regime has swung further to the right and is struggling to maintain itself in power to defend the interests of the ruling bureaucratic elite which includes the main sections of the military. At the same time, the reactionary right-wing opposition has failed to gain sufficient support and momentum to remove the regime. A polarised impasse and stalemate currently exists. Exactly how this process will develop is uncertain at this stage. The crisis which exists is not, of course, a failure of socialism but a consequence of not breaking with capitalism, as we warned would be the case. The forces of the CWI in Venezuela, in extremely difficult conditions, work to try and assist those, especially the ‘dissident Chavistas’ to learn the lessons from the failure to carry through a break with capitalism and introduce a genuine democratic socialist alternative.

In sub-Sahara Africa, the same blind alley for landlordism and capitalism exists. The key countries in this area, and particularly for the CWI, are Nigeria – the most populous with 192 million people, and the most industrialised South Africa. In the latter, the key developments are the continuing crisis of the ANC – with the possible eviction of Ramaphosa from Zuma’s Cabinet – and the repercussions of this within the labour movement and the working class. The issue of a new mass workers’ party is still a live issue in the workers’ movement.

The class polarisation inherited from the 2007-08 crisis continue to exercise a profound effect on the US, Europe and other parts of the ‘developed’ world, while enormously compounding the problems in the neo-colonial world.

Under the whip of the crisis a further intensification of conflicts between the major capitalist powers and blocs has taken place. This has added to the perception of a world in chaos, not least in the ranks of the ruling class itself that have lost control of events in big parts of the world.

There is a widespread popular perception that this is the case in the economy, in social and political relations and in climate change. A series of devastating earthquakes, floods and hurricanes – some of them ‘man-made’ – has added to the picture of social and political impotence and gross failure of governments to act, particularly the US government of Trump. His dismissal of Puerto Rico’s complaints that it was not getting sufficient help from the president after their hurricane could come back to haunt him if he intends to stand again. Four million Puerto Ricans who are US citizens are eligible to vote in elections if they decide to decamp to the US.

The ruling classes internationally are divided and in each country the fissiparous tendencies now develop into open splits – revolution always starts from the top! There is ideological turmoil in society in general, which forces the bourgeois to search for policies to solve the crisis economically and how to ‘manage’ this process politically and socially.

In the search for the policies and methods to head off the movements of the masses from below the ruling class on a national scale divides into different groups, factions which ultimately can lead to separation into different parties. The Tory party in Britain is divided as never before and could collapse completely as did the Christian Democrats in Italy in the 1990s following the collapse of Stalinism which was the glue – the foreign bogeyman that previously held them together.


“Those whom the gods wish to destroy they first make mad,” said the ancient Greeks, obviously with the US and particularly Donald Trump in mind! His presidential election ‘victory’ was also a delayed reaction to the 2007-08 world economic crisis, as was Corbyn’s near victory in the British general elections. We argued that a Trump presidency would turn out to be an unmitigated disaster for US and world capitalism. He would act as the best recruiting sergeant for mass struggle and the ideas of socialism, not least in America.

And so it has proved to be.  In less than a year he has succeeded in breaking the crockery of world capitalism, both on the domestic and the international front, as he has rampaged like the proverbial bull through the china shop. He has a minor mimic in Boris Johnson, nominally Britain’s Foreign Secretary, who is so distrusted by his permanent government officials because of his undiplomatic gaffes that they have expressed behind the scenes the wish that should he go on foreign visits, he be permanently asleep as that is when they can control him!

Trump has implicitly threatened to eviscerate – through a ‘tactical’ nuclear attack – North Korea and overthrow its ‘rocket man’ Kim Jong-un. South Korea correctly fears that, caught in the middle, it could be erased from the face of the earth.

Much as Trump’s ‘liberal’ bourgeois critics, including the tops of the US Democratic Party, would like to pretend otherwise, this is not the first time that US imperialism has engaged in nuclear sabre rattling, particularly in Asia. There were threats made against Cuba and Russia over the location of nuclear weapons on Cuban soil.

We also revealed in our book on Vietnam that at the time of the French encirclement by the Vietnamese at Dien Bien Phu in 1954, Richard Nixon, then Republican vice-president and later disgraced as president, revealed: “In Washington, the Joint Chiefs of Staff devised a plan, known as Operation Vulture, for using three small tactical atomic bombs… To relieve the French garrison.” Later, President Clinton also drew up plans for a ‘tactical’ nuclear attack on North Korea. The prospect of wiping out millions of people in the process was secondary.

The North Korean population was so much small change for Clinton and US imperialism. His hand was only stayed because of the likely political fallout, worldwide outrage with mass demonstrations and uprisings which could threaten capitalism to its very foundations. This would be the case if even just one nuclear bomb was dropped or a nuclear explosion resulted from an ‘accident’.

Trump has now also attacked Iran, thereby putting in jeopardy the agreement on Iran’s nuclear facilities as well as upsetting the already delicate balance in the war-torn Middle East. Rather than weakening and undermining the Iranian hardliners – in the ranks of the ‘Revolutionary Guards’, who have grown rich through corruption and privatisation – Trump’s proposals, if carried out to the end, could strengthen them.

His policies have brought him into collision, not only with the working and middle classes but also with significant sections of his ‘own side’, the Congress Republicans, although he seems to have maintained his support amongst his ‘electoral base’, which includes significant sections of displaced and alienated workers . However, his ratings overall are at the lowest level for any president at this stage. He has also seriously clashed with the dominant sections of the US ruling class as well as US traditional ‘allies’.

And the ‘militarisation’ of the US government, with a big increase in the number of generals in the present administration, at the expense of civilians who usually directly wield the power – rather than causing consternation has actually produced a sense of relief amongst the US bourgeois. They are perceived as more of a check on the out-of-control Trump!

However this may not be a sufficient brake on Trump. With echoes of the Nixon presidency of the late 1960s and early 1970s, mass opposition is gathering apace on any number of issues and their combination could force Trump from office even before the mid-term elections in November 2018.

His erratic behaviour, his parliamentary bonapartism, of balancing between his own party, the Republicans, and courting the Democrats, for instance on raising the ceiling for government debt and on other issues, has alienated him from the Congress Republicans. And there might be a method in his madness. He is obviously flirting with the idea of splitting the Republican Party which, if it was successful, would be the first time this had been done successfully since Abraham Lincoln before the US Civil War. Trump could form his own new ‘populist’ party. Steve Bannon, who was forced out of Trump’s cabinet, is obviously an outrider for this project.

This could be paralleled with a similar fracture within the Democratic Party, with Bernie Sanders and his forces around ‘Our Revolution’ splitting from the Democrats and creating some new formation. This could become in time either a new radical left alternative, or even lead to a new specifically mass US workers’ party.

Four major parties would then be in competition for votes and influence. A new mass party or even radical formation would represent a big step forward for the US working class. The ongoing crisis of American capitalism will further this process and provide big opportunities for our co-thinkers Socialist Alternative to grow and become a significant force.

Rarely has the world faced a more critical phase with the crisis tending to infect all areas, all continents, with no hope in sight for the bourgeois to insulate their system from serious crises and the resulting mass opposition. The working class has been profoundly affected with the beginnings of an important change in consciousness. This does not always and automatically lead to an immediate increase in struggle on economic issues but can also find its expression in various protests on social questions. In India, ongoing protests against rape, on the question of abortion in Poland and Ireland, the #metoo around the world, the international women’s strike 8th March in 58 countries, the ongoing “Ni una Menos” in Latin America and the historic Women’s Marches against Trump, in January 2017, to mention some. A generation of young women do not accept the stark differences between formal equality and the reality of lower pay, harassment and paternalism. We might be at the beginning of a new wave of the women’s movement that comes side by side, and as part of, a reawakening workers’ movement.

Economic stagnation, with a spluttering economic ‘revival’ – mostly in low-paid, insecure jobs – in a few regions and countries, has further stimulated growing unease and a questioning of the validity of the system amongst the mass of the population, particularly those at the ‘bottom’, the working class and the poor.

This has resulted in virtually permanent political instability, particularly reflected in the recent elections in Europe where the traditional parties have been weakened and both right-wing populist and new reformist Left organisations have made headway. But then these forces very quickly lose their popularity. There has been a speeding up of events with the disappointment of the masses sometimes speedily reflected in the unpopularity of those parties who are seen as the victors.

The Alternative für Deutschland (AfD – Alternative for Germany) for instance made a breakthrough in the federal elections, with the far right entering the Bundestag, and the corresponding worst result in history for the Social Democrats (SPD). This whiff of reaction however produced a counter-mood shown three weeks later in the improved results for the SPD in Lower Saxony and the defeat of the right-wing parties. This is just one expression of the volatility, and in the one country in Europe that appeared, until recently, on the surface the most stable!

A new resurgence in the mood of opposition to the capitalist system, of a pronounced anti-capitalism, has also taken hold and has powered the Corbyn movement in Britain, led to developments around Bernie Sanders in the US, and the Melanchon movement in France.

Shaken by these developments the bourgeois, their parties and ‘institutions’ have sought to head this off by presenting themselves as ‘agents of change’ (Macron in France, Kurz in Austria). Even Theresa May in Britain is trying to ‘steal Corbyn’s trousers’, on issues like student tuition fees, council housing and a general criticism of the system. Their mantra includes criticisms of inequality. Whereas following the 2007-08 crisis the search was on for a ‘better capitalism’, now there is a more demand amongst the working class and the youth for an alternative to the capitalist system as a whole.

Clouds remain over world economy

This new mood has forced the capitalist economic institutions such as the IMF and the World Bank to come out as advocates, almost as apostles for wage increases! These are the voices which previously demanded worldwide wage repression, as a part of brutal austerity. If this meant that Greece and other countries were to be crucified to enforce this then so be it. The result has been ‘endless austerity’ in which parts of Europe and some countries in other continents have returned in real terms to the catastrophe of the 1930s Depression. If these institutions of capitalism have now changed their tune, at least in words, this is because they see no possibility of increasing ‘demand’ on the present track. This remains the central problem for capitalism; there is no alternative other than by lifting wage restrictions, even if this means risking a return of inflation and a rise in state debt.

However, individual or groups of capitalists will resist such measures. In the US, the capitalists as a whole and Trump in particular are more concerned with boosting ‘share value’ and thereby the returns for Chief Executive Officers and shareholders than creating real value in the form of jobs. They are not even prepared to return their huge profits from abroad to the US unless they are assured that they will not face increased taxes.

Moreover the current state finances of most governments do not allow them to step in and boost the ‘market’ through increased public expenditure. On the contrary, most of them see no alternative but to continue with bone-crushing austerity.

Roosevelt’s pre-Second World War significant boost to the economy through increased public expenditure was at the time, as Trotsky commented, only possible because, almost alone amongst the capitalist powers,  US capitalism had accumulated ‘plump savings’, fat. But even that programme, while it significantly boosted the infrastructure by building dams, providing jobs that ‘stimulated’ the economy, was running into the sand in the late 1930s. A new crash loomed in 1937, particularly because of cuts to public spending and measures that tightened the supply of loans (having the same effect as an interest rate rise today), but these were hastily abandoned once it was understood that it would enormously aggravate an already fragile economic situation. Therefore, the US managed to avoid another slump, which would have been even more devastating than in 1929-33, only by increasing arms production in preparation for the Second World War.

The bourgeois, for instance in Britain and the US, are in danger of making the same mistake today of implementing a rate increase which can significantly aggravate their economic problems. They believe that they have ‘cleaned up the banks’, thereby avoiding the stored-up problems brought to the surface in the last world financial crisis.

The current economic ‘upswing’ affecting the US and Europe in the main has been fuelled by the injection of liquidity, colossal debt, which in turn has been sustained by low interest rates. A decade of ‘quantitative easing’ has resulted in the main central banks presently owning one fifth of public debt! The new ‘debt junkies’ with high levels of indebtedness include Australia, Canada, South Korea, Sweden and Norway. Most of these countries were not as badly affected by the last crisis but they will be in the next inevitable downturn, which will mean a sharp social polarisation and the same convulsive political developments which we have seen in the rest of the world.

And that does not even take account of the stored-up problems of China, described by some economists as a giant ‘Ponzi scheme’! Since 2008, China’s credit-driven growth has accounted for more than half of global growth.

The recent Chinese ‘Communist’ Party Congress is unlikely to result in any immediate or long-term solution to this crisis. Its main purpose was to cement the authority of Xi Jinping as the undisputed leader of the ‘party’ and thereby the government. He also made clear that the ‘party’ – the ruling elite – would continue control the army, economy, etc. He is destined, through this plan and the development of a new cult, ‘Xi thought’, to occupy a role on a par with previous Chinese leaders Mao Zedong and Deng Xiaoping.

However, such displays of unrivalled power are not a guarantee of stability but the opposite. If power is centralised it is because of the fear of economic, social and political storms to come in China. Moreover by concentrating this power nominally in the hands of one man, the opposition will similarly concentrate on this individual as well as the regime that supports him. And opposition has grown. Sections of the population, the very poor and largely the middle class support or rather tolerate the regime. But this will not last forever.

The ‘One China’ policy and the brutal manifestation of this in the Hong Kong repression, while having the appearance of being successful in the short term, are ultimately destined to fail. You cannot hold a whole people in chains in the modern era of mass communication through social media, particularly if they have had a recent and lengthy experience of even truncated bourgeois ‘democracy’ as is the case in Hong Kong. It is to the great credit of our Chinese comrades and of the CWI sections which magnificently rallied to their cause, that we have had a significant effect in this situation.

The fear of a new economic crisis is ever present in the discussions amongst capitalist ‘thinkers’ in the IMF, the World Bank and the Bank for International Settlements. The banks and finance houses are now ‘flush’ with cash and are making ‘risky bets with the same abandon as before 2007-08. Following this crisis there was a general consensus of the bourgeois – as there always is – that ‘never again’ will they allow reckless and ‘irresponsible’ risk-taking which could endanger the system. But that is soon forgotten or discounted as capitalism’s ‘animal spirits’ once more take hold. There is a new threat to the still unreconstructed financial sectors with the return of collateralised loan obligations – bundles of low-grade loans packaged into attractive ‘products’ amounting to $75 billion this year alone. These have received ‘triple-A’ credit approval from the rating agencies.

The overall conclusion from the foregoing analysis – taken together with the reports carried on our website of developments in the countries were the CWI has a presence – is that objectively world capitalism, rather than going forward, is stagnating and in some regions going back. That has created overall an objectively pre-revolutionary situation – particularly in the decisive economic sphere – similar to what existed in the 1930s.

However, as Trotsky pointed out many times, for this to mature, for the pre-revolutionary to develop into a revolutionary situation requires the intervention of the conscious factor, mass movements of the working class armed with a clear revolutionary programme and led by mass revolutionary parties fighting for power.

Events arising from the crisis have had a profound effect in beginning to change consciousness of the masses worldwide. We are now seeing the rejection by significant layers of neoliberalism, an idea that Jeremy Corbyn has echoed and has been a constant theme in the analysis of the CWI in the past years. This has led to a generalised phase of left radicalisation in the workers’ movement internationally. Even in New Zealand, for instance, the new Labour leader Jacinda Ardern – who once worked in Tony Blair’s office in Britain – but claims to have never met him (!), has just won the election and formed a coalition government with the Greens and nationalists of New Zealand First!

This phase of left radicalisation can be followed by a more ‘distinct’ left reformism and become an international phenomenon. It will give way under the hammer blows of the events that loom to a more determined class mood and consciousness amongst the working class and particularly the youth.

This will lay the ground for big opportunities for us to win the new layers in particular to a clear revolutionary programme and organisation. The forces of the CWI require audacity in the interventions that we have made and we will make a next period. But equally it is vital to understand the rhythm of events, which sometimes on the surface can appear to be moving slowly but which are preparing the ground for huge political convulsions, out of which we can grow and become a significant force. We need the urgency but we also need patience in relating to the mass movements that are developing, which will not be just a simple repetition of the past but will have new features, will throw up new issues to which we must respond in order to build the national sections and the International.

CWI International Secretariat

27 October 2017