The New World Crisis
Socialist Outlook1990sPhil HearseScanned print read by OCR, and not yet proofread: expect run-together words, dropped letters and, where a piece began partway down a page, a few lines of its neighbour. The printed page is the authority.
Nineteen eighty-nine will go down as one of the key years in twentieth century history. The breaching of the Berlin wall symbolised the collapse of the Stalinist regimes in Eastern Europe. The terrible events in Beijing shattered any remaining illusions that the bureaucratic order in China provided a more humane and progressive model. Rumbling on behind these events is the prolonged drama in the Soviet Union itself, with no certainty of any short-term socialist outcome.
A related event was the electoral defeat of the Sandinistas in Nicaragua, a profoundly demoralising event for the masses in Latin America and beyond. It is easy to conclude that it is therefore just world Stalinism that is in crisis, dragging down the whole socialist project. But the reality is much more complex. The collapse of Stalinism is a central feature of the new world crisis, but far from the only one.
The crisis of the Stalinist order is combined with a decades-long crisis of international capitalism, which is far from resolved. The new rise of imperialist militarism in the third world is just one aspect of the attempt to overcome that crisis and make the world safe for capitalism. To get a rounded picture of the world crisis it is necessary to integrate the following tactors.
World capitalism has failed to escape from its long cycle of relative decline The November 1987 stock market crash ended the 1980s speculative and inflationary mini-boom. World capitalism is now in its post- yuppie phase. For nearly twenty years international capitalism has been trying to overcome the crisis of profitability, a consequence of the end of the post war boom which lasted from 1950 until the end of the '60s.
International capitalism did undergo an expansion in the 1980s - a limited expansion within an overall wave of crisis and decline. This expansion was fuelled by the debt-led growth of the US economy. This growth, in part to fund the enormous US rearmament programmonds of financed minee was unded beline major capitalist countries. The debt was used to finance US capitalism in a period when it was in fact a declining industrial power. Now the 1980s boom has gone into reverse. In the United States it has led to fiscal chaos as the government has teetered on the verge of bankruptcy.
Japan's economy is heading towards recession, and Japanese bankers can no longer be relied on to purchase vast amounts of US treasury bonds to bail out US government spending. Germany, the major capitalist power to have strengthened its overall position in the 1980s, is struggling hard to pay the costs of reunification. And Britain of course is heading to full scale 'stagflation' - a deep
recession combining high unemployment and inflation, which is a testament to the long-term failure of Thatcherism'. A key response by the United States to its declining economic power has been to attempt to use its military outreach, its military and political leadership of the 'free world' to reinforce and extend its economic position. Its most spectacular success, so far, in winning full-scale military and political leadership of the West has been the Gulf crisis. But it is a risky enterprise. Anything less than total victory over Saddam Hussein threatens the authority of imperialism, and the political and military standing of the US in particular. During the 1970s and '80s both the US and the USSR were declining economic powers, and owed their 'superpower' status to their military might. In economic terms both Western Europe and evan ted he mentary beir ach the Soviet polin, leavingi has as the one power able to use militarism to offset economic decline. It is using that option ruthlessly, as the invasion of Panama, intervention in the Gulf, the new military 'crusade against drugs' in Latin America, and continued huge presence in the Pacific all show. The general capitalist response to the long crisis, most spectacularly after the 1974-75 recession, has been a prolonged effort at restructuring and social engineering to restore profits. This involved, among other things, the emergence of mass unemployment (40 million in the advanced capitalist countries); attempting to undermine the strength of the trade unions and other workers organisation; the attempted creation of a 'two-thirds society to try to permanently casualise a huge section of the workforce and remove welfare benefits; and new forms of organisation of production (misleadingly called 'post-Fordism') whose fundamental aim is to lower production costs, especially labour costs. All these attempts at restructuring have hit women, black workers, and immigrant workers especially hard. Despite nearly two decades of intense effort, the underlying capitalist crisis has not been overcome, because the solutions do not adequately address the problem. At root the profitability crisis is a crisis of overproduction (of the rising organic composition of capital') that can only be finally solved by finding new productive outlets for investment at a much higher rate of profit. Key to this is drastically cheapening the cost of labour power - in other words imposing gigantic defeats on the world labour movement. In spite of everything, such massive defeats have not yet occurred.
To say that capitalism is in a long crisis does not mean that it will collapse on its own. Lenin used to say that there is no crisis capitalism can't get out of provided the working class is prepared to pay the cost. There are ways out of this crisis for capitalism. In the long-term, if capitalism were to be re-established in Eastern Europe and the Soviet Union, this could establish a huge new centre of capitalist production with labour costs much lower than in the West. But this depends on the workers in those countries being absolutely defeated, not only over the establishment of capitalism, but over their pay rates and social conditions as well. The gap between the rich and poor countries is relentlessly increasing For more than 10 years now real living standards in Africa and Latin America have been declining - both in absolute terms and in relation to the living standards in the more prosperous North. During the same period per capita incomes in Asia have increased slightly, but this is mainly a result of the relative wealth of the four 'newly industrialising countries - Taiwan, Singapore, Hong Kong and South Korea (as well as the increase in the productivity of agriculture in China). Even in the four newly industrialising countries, most of the population are poor in Western terms.
The key factor here is the prolonged tendency of the major capitalist countries towards lower profit rates, and the resultant debt crisis. During the 1970s huge investment funds were transferred to the third world - especially Latin America. Now the investment flow is in the other direction - the poor are investing in the rich through debt repayments, and the collapse in basic commodity prices, upon which many third world countries depend. The result is permanent political instability in the South. The ecological time bomb is still ticking away Degradation of the environment has been a feature of capitalism since the industrial revolution - a phenomenon underestimated by Marx. But the dimensions of this have now become a world crisis for one simple reason : because it threatens to become irreversible. The most threatening aspect of this is well known -
global warming and the destruction of the ozone layer. Nobody knows, and nobody can accurately predict, the precise dimensions of the ecological crisis. What we do know is that unless radical planet-wide action to stop the burning of fossil fuels, the destruction of the forests and the use of CFCs is taken, global catastrophe could result. This is a central aspect of the developing world crisis, and one which more far-sighted pro-capitalist ideologists understand. But capitalism and the Stalinist bureaucracies are incapable of tackling the crisis. It requires international planning and the establishment of ecological priorities that neither the market nor bureaucratic planning can provide. The above considerations show that while the present situation presents itselt as primarily a political crisis of international Stalinism, world capitalism faces long-term trends that threaten it. From the point of view of humanity as a whole, the search for an alternative to capitalism and the bureaucratic economies is not just a moral question, but one of burning practical necessity.