Sinking into the economic crisis

In the series May 68

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In issue number two of Révolution Internationale, published in 1969, there is an article called ‘Understanding May’ written by Marc Chirik, who had returned from over a decade of exile in Venezuela to take an active part in the ‘Events’ of May 68 in France[1].

This article was a polemical response to the pamphlet ‘Enragés and Situationists in the Occupation Movement’ published by the Situationist International[2]. While recognising that the SI had indeed played an active part in the movement of May-June, it punctured their almost unlimited pretentiousness and self-regard, which led them to the frankly subsitutionist conclusion that "the agitation unleashed in January 1968 by the four or five revolutionaries who were to constitute the enrages group was to lead, in five months, to the virtual liquidation of the state". And that "never has an agitation undertaken by so small a number led in so short a time to such consequences"

But the principal focus RI’s polemic was the underlying conceptions which provided the soil for this exaltation of ‘exemplary’ minorities – their rejection of the material bases of the proletarian revolution. Indeed, Marc’s article concludes that the voluntarism and substitutionism of the SI was a logical consequence of repudiating the marxist method which holds that massive and spontaneous actions by the working class are intimately connected to the objective situation of the capitalist economy.

Thus, against the SI’s notion that the “revolutionary events” of May-June had broken out against a capitalism that was “functioning well”, and that there had been “no tendency towards economic crisis” in the period leading up to the explosion,   Marc demonstrated that the movement had been preceded by a growing threat of unemployment and by falling wages – signs that the “glorious” prosperity of the post-war period was coming to an end. And these signs were not limited to France but expressed themselves in various forms across the ‘developed’ world, notably in the devaluation of the pound sterling and the dollar crisis in the USA. He stressed that these were indeed only signs and symptoms, that “this is not yet an open economic crisis, first because we are only at the beginning, and second because in today's capitalism the state possesses a whole arsenal of means to slow down, and temporarily to attenuate the crisis' most striking expressions”.

At the same time, while repudiating the anarchist (and Situationist) idea that revolution is possible at any time, the article also affirms that the economic crisis is a necessary but not a sufficient condition for the revolution, that profound changes in the subjective consciousness of the masses are not automatically produced by the decline of the economy, contrary to the affirmation of the Stalinists in 1929, who declared the opening of a “Third Period” of imminent revolution in the wake of the 1929 crash, ,when in reality the working class was experiencing the most profound defeat in its history (of which Stalinism was, of course, both a product and active factor). 

May 68 was thus not yet the revolution, but it did signify that the counter-revolutionary period that followed the defeat of the first world wide revolutionary wave had come to an end. “The full significance of May 68 is that it was one of the most important reactions by the mass of workers to a deteriorating world economic situation”. The article does not go any further in examining the actual events of 68; that is not its purpose. But it does give some indications about the consequences of the end of the counter-revolution (a period which Marc had lived through from beginning to end) for the future unfolding of the class struggle. It meant that the new generation of the working class was freeing itself from many of the mystifications which had imprisoned it during the previous period, above all Stalinism and anti-fascism; and although the re-emerging crisis would push capitalism towards another world war, today, unlike in the 1930s, “Capitalism disposes of fewer and fewer themes of mystification capable of mobilizing the masses and sending them to the slaughter. The Russian myth is collapsing; the false choice between bourgeois democracy and totalitarianism is wearing very thin. In these conditions, the crisis can be seen immediately for what it is. Its first symptoms will provoke increasingly violent reactions from the masses in every country”.

Furthermore, as a series of articles written in 2008,May 68 and the revolutionary perspective’[3], insisted, May 68 was more than a purely defensive reaction to a deteriorating economic situation. It also gave rise to an intense political ferment, to innumerable debates about the possibility of a new society, to serious attempts by young politicised elements - workers as well as students - to discover the revolutionary traditions of the past. This dimension of the movement was above all what the revived the perspective of revolution, not as an immediate or short-term possibility, but as the historic product of a whole period of resurgent class struggle. The more immediate fruit of this new-found interest in revolutionary politics was the constitution of a new proletarian political milieu, including the groups that would form the ICC in the mid-70s.

The question we want to raise here, however, is whether, fifty years later, the predictions contained in Marc’s article have been proved correct or found wanting. 

At the level of the economic crisis

The majority of marxist currents in the first decades of the 20th century considered that the First World War marked the definitive shift from the era in which capitalist relations of production had been “forms of development” for the productive forces to becoming fetters on their further development. This was concretised, at the economic level, by the transformation of the cyclical crises of overproduction which had marked the 19th century to a chronic state of economic crisis accompanied by a permanent  militarisation of the economy and a spiral of barbaric wars. This did not mean, as some of the marxists in the revolutionary period that followed the 1914-18 war thought, that capitalism had entered into a “death crisis” from which any kind of recovery would be impossible. Within an overall epoch of decline, there would still be recoveries, expansion into new zones previously outside the capitalist system, and real advances in the sophistication of the productive forces. But the underlying tendency would be one in which economic crisis was no longer a passing storm, but a permanent, chronic illness, which would at certain moments enter into an acute phase. This was already becoming clear with the crisis of the 30s: the idea that ‘leaving well alone’, relying on the hidden hand of the market, would naturally allow the economy to recover -  the initial response of the more traditional bourgeois sectors - had to give way to a more openly interventionist policy by the state- typified by the New Deal in the US, and the Nazi war economy in Germany. And it was above all the latter which revealed, in a period of defeat for the working class, the real secret of the mechanismswhich served to alleviate the acute crisis of the 1930s: preparation for a second imperialist war. 

The return of the open crisis which our article proclaimed in 1969 was confirmed within the next few years, with the shock of the so-called ‘oil crisis’ of 1973-4 and the growing difficulties of the post-war Keynesian consensus, which expressed itself in mounting inflation and attacks on workers’ living standards, particular the wage levels which had risen steadily during the period of post-war prosperity. But, as we showed in our article ’30 years of the open economic crisis’ written in 1999[4], the tendency towards the open crisis becoming a permanent feature of decadent capitalism has become more evident in the entire period since 1968: today we are due an article on ’50 years of the open economic crisis’. Our 1999 article traces course of the crisis through the explosion of unemployment which followed the application of ‘Thatcherism’ and ‘Reaganomics in the early 80s; the financial crash of 1987; the recession of the early 90s; the convulsions in the Far Eastern ‘Dragons and Tigers’, Russia and Brazil in 1997-8. An updated version would include further recession at the turn of millennium and of course the so-called financial crash or credit crunch of 2007.  The 1999 article underlines the principal features of the crisis-ridden economy in these decades: the untrammelled growth of speculation, as investment in productive activities become increasingly unprofitable; the de-industrialisation of whole areas of the old capitalist centres as capital was drawn to the sources of cheaper labour power in the ‘developing’ countries; and, underlying a large part both of the growth and the financial shocks of this whole period, capital’s incurable addiction to debt. And it shows that the crisis of capitalism is not only measured in unemployment figures or rates of growth, but in its social, political and military ramifications. Thus it was the world economic crisis of capitalism which was a decisive factor in the collapse of the eastern bloc in 1989-91, in the sharpening of imperialist tensions and the exacerbation of war and chaos, above all in the weakest zones of the global system. In our putative update we would also seek to show the link between the increased competition demanded by the crisis and the accelerating plunder of the natural environment, the consequences of which (pollution, climate change etc) are already having a direct impact on human populations throughout the world.  In brief: the prolonged character of capitalism’s open crisis in the last five decades, with the two major classes caught in a social stalemate, neither able to their respective solutions to the crisis – world war or world revolution – underlies the emergence of a new and terminal phase in the decadence of capitalism, the phase of generalised decomposition.

Of course, the trajectory of this period has not shown one long decline or even a permanent state of stagnation, and the ruling class has always made maximum propaganda use out of the various recoveries and mini-booms that have taken place in the advanced countries in the 80s, 90s and 2000s, while for many of its mouthpieces the impressive rise of the Chinese economy in particular is proof positive that capitalism is far from being a senile system. But the fragile, limited and temporary bases of these recoveries in the established centres of the system was cast under a very bright light by the enormous financial crash of 2007, which exposed the degree to which capitalist growth was founded on the shifting sands of unlimited debt. This phenomenon is also an element in the rise of China, even if the latter’s growth has a more substantial basis than the ‘vampire recoveries’, the ‘recoveries without jobs’ and the ‘recoveries without wage rises’ which we have seen in the western economies. But in the final analysis China cannot escape the contradictions of the global system and indeed the dizzying scale of its expansion has the potential to make future world crises of overproduction even more destructive. Looking back over the past five decades, it becomes evident that we are not talking about a cycle of boom and bust as in the 19th century, when capitalism really was a system in its prime, but a single, protracted, world-wide economic crisis, itself the expression of an underlying obsolescence of the mode of production. The 1969 article, armed with this understanding of the historic nature of the capitalist crisis, was thus able to diagnose the real significance of the small signs of economic ill-health that were so easily dismissed by the Situationist doctors.

The development of state capitalism

Looking back in this way we can also appreciate the correctness of the article’s assertion that “today's capitalism the state possesses a whole arsenal of means to slow down, and temporarily to attenuate the crisis' most striking expressions”.

The main reason why this crisis has dragged on for so long, and has so often been so difficult to perceive, is precisely the capacity of the ruling class to use the state to hold off and postpone the effects of the system’s contradictions. The ruling class from the 60s onwards did not make the same mistake as in the apologists for ‘laisser-faire’ in the 1930s. Instead, an older and wider bourgeoisie maintained and strengthened the state capitalist interference in the economy which had enabled it to respond to the crisis in the 30s and which helped to sustain the post-war boom. This was evident with the first Keynesian responses to the reawakened crisis, which often took the form of nationalisations and direct financial manipulations by the state, but, ideological fog notwithstanding, it has continued, albeit in an altered form, throughout the epoch of ‘Reagano mics’ and ‘neo-liberalism’, in which the state has tended to delegate many of its functions to private sectors with the aim of increasing productivity and the competitive edge.

The 1999 article explains how this revised relationship between state and economy operated:

The mechanism of ‘financial engineering’ was as follows. On the one hand, the state issued bonds and securities in order to finance its enormous and ever-growing deficits which were subscribed to by the financial markets (banks, business and individuals). On the other hand, it pushed the banks to search for loans in the financial markets, and at the same time to issue bonds and securities and to carry out successive expansions of capital (issuing of shares). It was a question of a highly speculative mechanism which tried to exploit the development of a growing mass of fictitious capital (idle surplus value incapable of being invested in new capital). In this way, the weight of private funds became more important than public funds in the financing of debt (public and private).

This does not mean that there was a lessening of the weight of the state (as the ‘liberals’ proclaim), but rather there was a reply to the increasing needs of financing (and particularly immediate liquidity) which meant a massive mobilisation of all the available disposable capital”.

The credit crunch of 2007 is perhaps the clearest demonstration that the most ubiquitous cure adopted by the capitalist system in the last few decades - the resort to debt – has also poisoned the patient, postponing the immediate impact of the crisis only to raise future convulsions to an even higher level. But it also shows that, in the final analysis, this cure has been the systematic policy of the capitalist state. The credit bonanza which fuelled the housing boom prior to 2007, so often blamed on the greedy bankers, was in reality a policy decided and supported at the highest echelons of government, just as it was government which had to step in to shore up the banks and the whole tottering financial edifice in the wake of the crash.  The fact that they have done this by getting even further into debt, and even by unashamedly printing money (“quantitative easing”) is further evidence that capitalism can only react to its contradictions by making them worse.


It is one thing to show that we were right to predict the reappearance of the open economic crisis in 1969, and to offer a framework to explain why this crisis would be long drawn out affair. It is a more difficult task to show that our prediction of a resurgence of the international class struggle has also been vindicated. We will therefore devote a second part of this article to this problem, while a third part will look at what has become of the new revolutionary movement which was born out of the events of May-June 1968.

Amos, March 2018

[1] See also our short biography of Marc to get a better idea of one aspect of this “active participation” in the movement. “He had the opportunity on this occasion to show one of the traits of his character, which had nothing to do with those of an armchair theoretician. Present wherever the movement was going on, in the discussions but also in the demonstrations, he spent a whole night behind a barricade with a group of young elements, having decided to hold out until morning against the police...”


[3] World Revolution 313-316

[4] International Review 96 and 97