2019 finds humanity in an increasingly dangerous place. The consequences of global economic stagnation, itself the product of a much deeper crisis of profitability, can be seen in the rise of nationalism, racism and xenophobia. These in turn threaten not only to add to the increasing proliferation of unending wars around the world but to the possibility of more general conflict further down the line. Not unconnected to the current wars are the environmental disasters which the pursuit of profit has already inflicted on millions across the globe. If allowed to proceed unchecked capitalism threatens, in one way or another, the very existence of the only home humanity has.
An Economy in Crisis
The world of 2019 is still dominated by the same elements that led to the worst financial crash of the post-war period a decade ago. We described then how the bursting of the speculative bubble created a financial crisis for the main American credit institutions and then cascaded down to engulf global financial markets. However the origin of this crisis is not in the financial sphere, which is only an off-shoot, but in the real economy.
Despite productivity increases, upswings and downswings, despite the shifting of much production to low wage economies, the profitability of investments in all the most advanced capitalist sectors, has been declining for decades. As a result, more and more capital is abandoning the “real” economy – the one that produces goods and services and which create new value through the exploitation of labour power – in order to chase the mirage of easy profits offered by speculation. An attempt, in other words, to somehow replace the profits capitalism lost in the productive sector with speculative gains. This only helped to depress “real” production and led to the growth of fictitious capital, or financial instruments backed by nothing more than debt based on easy credit. As a result, the economy was flooded by an ocean of debt – from the State, to companies and even families. When interest rates rose slightly the bubble burst with the global consequences we have all seen. The explosion not only hit the financial apparatus – the banks which had to be saved at any cost (too big to fail) – it also had a heavy impact on the fragile productive fabric which originally generated it, bringing lower wage rates and greater exploitation for the international proletariat.
Today, the situation has not only not improved, but has changed for the worse. Between 2000 and 2009 global debt (state, corporate, personal) rose from $57 to $109 trillion. By July 2018 it had risen to $247 trillion. It continues to rise inexorably and the first quarter of this year brings added pressures. Global manufacturing output (as measured by JP Morgan economists) is actually falling. So too is global trade. Corporate profits, which are the main driver of investment, are also declining in some of the richest economies. China has just announced the biggest drop in industrial profits in ten years, down 14% in Jan-Feb over last year. After more than a decade of Quantitative Easing, and all the other state dodges to pour money into the system, the economy has not fundamentally changed. At least 20% of the world’s companies are “zombies” (i.e. don’t earn enough to service their debt) according to the Bank of International Settlements. The IMF has just (April 2019) cut its growth forecasts for the world economy for the next two years calling on governments to cut debt and balance budgets so that they have some wriggle room when the bad times return (these are apparently "good times"!). In short the system is still in the grip of the same problems as it was ten years ago. The difference is that they won’t be able to repeat the same tricks to save the system in the event of what many (and not just critics like us) see as the next inevitable crash.
The Capitalist 'Solution'?
For the moment the only way capital can try to get out of the economic and financial crisis in the short term is through competitive devaluations, speculation, import duties, more intense exploitation of the workforce, and dismantling of the welfare state. Thus competition is increasing on all fronts – manufacturing and industrial, commercial, monetary, and strategic – but as this fails to solve the economic problem it is turning into more open military confrontation. In the final analysis only a substantial destruction of capital values can resolve the crisis of profitability of capital. It was no accident that in the Second World War it was the productive sectors which were most devastated and it was this destruction of capital which laid the basis for the post war recovery.
The consequences around the world for many are already dire. On the edges of the system states are failing (Somalia, Mali, Congo, etc.) and/or are engulfed by civil wars (as in Yemen, Libya and Syria). In Syria a series of episodes have brought about the ruin of an entire country with two million dead and over four million refugees and more than half the population “internally displaced”. Turkey, Russia, Iran and the Shiite axis are on one side, the US, Israel and the Sunni axis are on the other. Each has its own interests to defend, whilst in the middle the various Kurdish nationalisms have become the military instrument of one imperialism and thus the target of attack for others, even though they are part of the same coalition. It is no figment of the imagination to think that the next financial crash, driven by increased interest rates, will lead to an even worse economic situation worldwide and bring with it the danger of more generalised war through an intensification of current wars or the outbreak of new ones.
A World on the Edge of the Abyss
But another global war is not the only threat that the continued existence of capitalism poses for humanity. Global warming, which has now become a threat to life on Earth in the longer term, is only the most publicised part of a general ecological degradation of the planet. This degradation stems from the way the capitalist system operates, the result of which is a continual and relentless demand for profit and reduction of production costs. The system’s need for infinite and wasteful growth stands in contradiction to the finite resources of Earth. Under capitalism nature is a resource to be ruthlessly exploited on one hand, and on the other as a rubbish tip into which inexhaustible quantities of toxic trash can be dumped indefinitely.
Environmental activists have been very good at publicising the consequences of global warming and environmental degradation (Arctic ice sheets, melting tundra, deforestation, oceanic pollution, etc.) but cannot offer a solution. This is because they will not tackle the root cause of the problem which is the capitalist system itself. Only when the ecological problems start to affect profits will capitalists start to treat them seriously, but by then it will be too late to do anything about it. And many “green proposals” are middle class capitalist “solutions”. Some are just another commercial racket, as in the case of carbon swaps. Others hit the working class and the poorest in society the hardest with green taxes. By constantly talking of what “we” must do (as if workers were responsible for the misdeeds of the system) and ignoring the class divide in society they pose the solution as a choice for individuals and not an issue which can only be tackled by concerted global action. A capitalism in crisis, with every state and corporation chasing every bit of revenue, cannot take on board the expense of reducing emissions. The clock is ticking but there is no alternative. The entire system of production based on wage labour and capital needs to be replaced with a sustainable system which produces not for profit but for human needs.
There is an Alternative – Class Struggle
Looked at from any angle the contradictions of the capitalist system threaten not just the daily lives of most of the world’s population today, but the very future of humanity itself. Just look at what has happened since the last crisis. Bailing out the banks to save the system has only led to an obscene concentration of wealth in fewer and fewer hands. The number of billionaires almost doubled since the financial crash and in 2018 26 people owned as much wealth as the 3.8 billion who make up the poorest half of humanity. And the gulf gets wider every single day. And whilst Quantitative Easing etc. has brought the system a little oxygen this has only postponed the crisis. It is not a solution and is being paid for by an assault on the world’s workers.
Austerity has meant a direct attack on wages (which overall continue to fall despite minimum wage laws), the intensification and precarisation of labour, cuts in welfare, and cuts to vital services like education, health and care of the elderly.
The answer is not, as the reformists claim, to have a “fairer” capitalism by “taxing the rich”. Exploitation and oppression would remain untouched. There is no such thing as a better capitalism. Indeed all the signs are that today capitalism will only get worse.
The victims everywhere are the working class but its response across the globe has so far been muted. There are many complex reasons for this. The massive restructuring of production which saw manufacturing shift from the heartlands of capital to the low-wage periphery disorganised the class for decades. Today some still fear to fight back in case their precarious situation is made worse, and this makes it difficult for those ready to fight to collectively organise any kind of resistance. Even worse the various ideological assaults of nationalist, xenophobic and “identity” propaganda have undermined the class’s sense of itself and hence its collective strength. Most obscene of all has been the deflecting the anger of some of the victims of the crisis away from the real villain, the capitalist system, towards the “other”. The migrants who are driven to the North by the very wars, environmental degradation, and poverty that the system has itself produced, face more officially-orchestrated racism and discrimination if they survive the journey.
Despite all this the international working class remains humanity’s last hope. As the collective producer class, which actually does the work to produce the real wealth of the world, it potentially has the capacity to halt the system in its tracks. And more than that. In its collective fight against the evils of the system it can not only produce its own bodies to run strikes but the basic organisation of a new society as well (workers' assemblies can become workers' councils, strike committees can become factory committees). This is as yet some way off but there is reason for optimism.
The wildcat strikes in Mexico’s maquiladoras, the ongoing class struggle across Iran accompanied by calls for workers' councils and the sea of industrial unrest that is China (where 400 strikes in the first two months of this year have been admitted officially) all point to a long-overdue rise in class resistance. Embryonically the world working class is beginning to declare its antagonistic opposition towards the capitalist system. Equally encouraging has been the renewed interest in communism amongst a new generation. They reject the support for any side in all the imperialist wars going on around the planet, they reject reformism as well as the idea that the USSR was ever socialist or that there is any socialist model to be found anywhere in today’s world. This too is important since the working not only needs the organisation mentioned above to build a new society but also needs to forge a political weapon to programmatically draw together the communist minority in the class and lead the fight against capitalism and all the false “socialist” solutions put forward by the left wing capitalist parties (from Maoists and Stalinists to Trotskyists and Social Democrats).
Many communists recognise that the working class needs a new international political organisation to provide a long-term political vision and consciously guide that struggle in a communist direction. This political organisation is not a government in waiting and certainly not another parliamentary project (as Social Democrats and Stalinists maintain), but a necessary political instrument to unite and guide the movement for emancipation of the immense majority which emerges from the class struggle itself. It is this type of international political organisation which the Internationalist Communist Tendency has dedicated itself to being a part of, to fight for a world without classes or states, without exploitation or borders, without famines and wars, in which the freedom of each is condition for the freedom of all.
In 2019 the choice facing humanity is growing starker. Either a capitalist collapse into imperialist war and/or environmental extinction or a new society based on the principle of “to each according to their need, from each according to their ability”. The alternative is social collapse or socialism.
May Day Statement of the Internationalist Communist Tendency 2019
Il Partito Comunista Internazionalista (Battaglia Comunista) [Italy]
Communist Workers’ Organisation [UK]
Gruppe Internationaler SocialistInnen [Germany]
Internationalist Workers’ Group [USA]
The statement is also signed by
Internationalist Communists Oceania [Australia/New Zealand]
Los Angeles Internationalist Communists [USA]
To find out more about the Internationalist Communist Tendency contact us at: [email protected]
A shorter version of the above article can be found in the current edition (No. 47) of Aurora, bulletin of the Communist Workers’ Organisation.