G20 in Pittsburgh: the end of the crisis?

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In Pittsburgh, on 24/25 September, the third summit of the G20 took place, a new ‘international forum' specially created to hold back the crisis which has been hitting the world economy with full force since the summer of 2007. If we were to believe the final communiqué, this mission has already been accomplished. Drawing up a balance sheet of the measures adopted in April at the previous summit, in London, the G20's members were very content with themselves: "It worked. Our forceful response helped stop the dangerous, sharp decline in global activity and stabilise financial markets"(point 5 of the communiqué).Now it's a question of boosting ‘the recovery'. UK prime minister Gordon Brown thus welcomed the fact that "here at Pittsburgh, the leaders representing two thirds of the world population have adopted an international plan for employment, growth, and a lasting economic recovery". How are they going to do this? The answer is in the text:

"We meet in the midst of a critical transition from crisis to recovery to turn the page on an era of irresponsibility and to adopt a set of policies, regulations and reforms to meet the needs of the 21st century global economy.

Today we agreed

- To make sure our regulatory system for banks and other financial firms reins in the excesses that led to the crisis. Where reckless behaviour and a lack of responsibility led to crisis, we will not allow a return to banking as usual
- We committed to act together to raise capital standards, to implement strong international compensation standards aimed at ending practices that lead to excessive risk-taking, to improve the over-the-counter derivatives market and to create more powerful tools to hold large global firms to account for the risks they take."
Following these decisions, President Sarkozy didn't hesitate to talk about a "historic" change in financial regulation: "For the first time, the central banks will have the power to limit the general rise in bonuses". And "banking secrets and fiscal paradises are all over."

Let's summarise: "the deepest economic crisis in human memory" (as the OECD has put it), millions of lay-offs, the spectacular rise in unemployment and the worsening of poverty all over the planet...all this was simply caused by the folly of the financiers and a lack of scruples on the stock market. And the great and the good logically declare: if we regulate the banking and stock market sectors, if we put the lid on bonuses, then tomorrow everything will start to get better in the best of all possible worlds. The media have already been talking about the ‘economic recovery' and the analysts have announced ‘the end of the tunnel', while the stock exchanges are shooting upwards

When the twenty greatest liars on the planet join in a chorus saying ‘trust us and things will get better', it would be wise to be suspicious and to look at all this again. What is this ‘durable growth' we can look forward to?

Capitalism has been a decadent system for over a hundred years

The bourgeoisie tirelessly repeats that we have been facing the worst crisis since 1929. Which is true. But the way they put it, they would like us to think that in between these two ‘great depressions', capitalism has been doing rather well. These are basically two ‘accidents'. In 2008 we went off the road a bit but the vehicle of the world economy is now ready to get back on course.

Reality is obviously elsewhere. For more than a century, capitalism has been a decadent system - sick, dying, regularly going through violent and devastating crises:

- In 1914, with the First World War, capitalism loudly entered its period of decline. Twenty million dead. Through this atrocious butchery, this system of exploitation proved that it has nothing more to offer humanity;

- In 1929, an unprecedented crash plunged the main world economies into a profound economic swamp. For over a decade millions of unemployed and homeless workers survived thanks to the soup kitchens[1];

- In 1939, a new horror follows the one before: the Second World War ravages the planet. 60 million dead.

- In 1950, a sort of calm descends. While dragging humanity through the terror of the Cold War with its permanent fear of a nuclear conflict, on the economic level there was a period of growth for nearly 20 years. Naturally this ‘prosperity' was achieved on the backs of the working class through constant increases in productivity. The appearance of the ‘welfare state', social security, and paid holidays had the aim of producing a workforce in good health, capable of intensifying its efforts and producing more and faster;

- In 1967, this interlude closed. The crisis reappeared through the brutal devaluation of the pound sterling. Unemployment, a scourge which had almost disappeared, once again began to haunt the working class and since then it has not ceased growing. The different strike movements which broke out all over the world - including the movement of May 68 in France - were the response of the working class to the return of the crisis;

- The 1970s and 80s were marked by a series of economic convulsions. In 1971 the dollar plunged. In 1973 we had the first ‘oil crisis', followed by two years of recession. Then inflation started galloping in the USA and Europe (prices shot up but wages didn't follow them). In 1982, the ‘debt crisis' broke out. In 1986, Wall Street crashed. The 1980s ended with another recession;

- In 1992-3, a new recession, even more brutal. Explosion of unemployment;

- In 1997, the crisis of the ‘Tigers and Dragons' in Asia shook the world bourgeoisie: the ruling class was afraid that it would contaminate every region of the world - a justified fear because Russia and Argentina also subsequently went bust. The growth in all these countries had been artificially stimulated by the creation of a mountain of debts which could not be repaid. Bankruptcy was waiting at the end of it all. The bourgeoisie nevertheless managed to avoid the worst - a world depression - by massively injecting money into the economy through its international agencies (in other words, by contracting new debts!) and by having us believe that a new era of prosperity was opening up thanks to the ‘New Economy' and the ‘wonders' of the Internet;

- In 2000-2001, surprise surprise, the promises of a New Economy evaporated and the speculative bubble around the ‘Start Up' companies on the net burst. But once again the world economy managed to get going again. How? Through a new injection of debt. This time it was above all US households (but also those in Spain, Britain, Finland, etc) who piled up the debts in order to support economic growth. Loans were made easy, there was no more control, no conditions or limits. And now we know where all this led;

- In brief, for over a century, capitalism has been dragging humanity down with it. In particular, for over 40 years and the end of the ‘Thirty Glorious Years'[2] of the post-war boom, the economy has been in a total mess. One recession after another and recoveries based on an accumulation of new debts. And logically, each time it's time to pay the piper, we have the crash.

After the crisis? The crisis!

This short historical reminder, which presents the current recession as the last link in an uninterrupted chain of economic convulsions, is enough to show that all the hopes about ‘coming out of the crisis' sold to us over the last few weeks are just a huge tissue of lies. For the working class, as for the whole of humanity, the future is one of growing poverty.

In its last issue, the Global Europe Anticipation Bulletin, a group of economic experts, uses a very appropriate image to describe this monumental ‘rebound':

"Here is a very illustrative analogy of the crisis today that imposed itself on our researchers: a rubber ball on a staircase. It seems to rebound on every step (then giving the impression that the fall has stopped) but it falls even lower on the next step, ‘resuming' its collapse". GEAB no 37, 15 September 2009)

For 40 years this rubber ball has been going downstairs, but in doing so it has gathered speed and now it is going down four steps at a time!

Obviously, nobody knows exactly what form and what breadth this new fall will assume. In a few weeks, will the annual balance sheet of the banks reveal dizzying deficits, throwing numerous international firms into bankruptcy? Or, in a few months, will the dollar totter, resulting in global currency deregulation? Or will it be inflation that will ravage the economy in the next few years? One thing is certain: the bourgeoisie is incapable of halting this infernal spiral and of achieving any durable growth. If they have managed to avoid the worst for the moment by injecting billions of dollars via its central banks (to date around $1600 billion), it has basically just created new deficits and prepared the ground for even more devastating cataclysms. Concretely, for the working class, this means that it has nothing to gain from this moribund system except more unemployment and poverty. Only the world proletarian revolution can put an end to all this suffering!  

Pawel 25/9/9



[1] This dark period, especially for the American population, was immortalised in Steinbeck's novel The Grapes of Wrath and in Pollack's film They Shoot Horses Don't They?

[2]  A falsehood in itself since even in France this ‘boom' really only lasted about 17 years.

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