The abyss behind "uninterrupted growth"
At the end of 1999, a sort of euphoria reigns over "economic growth". In 1998, the collapse of the "tigers" and "dragons" ose of the "tigers" and "dragons" of South East Asia, and of Brazil, Venezuela, and Russia had provoked the fear of a recession, and even a "depression", a fear which today seems "unjustified" if we are to believe the great bourgeois media. The millennium seems to be ending on an optimistic note, which feeds the propaganda aimed at the working masses: the eulogy of capitalism, that "only viable economic system", ever ready to confront its crises. In short, the message boils down to: "capitalism is doing fine and that’s how things will continue".
Whereas in early 1999, some forecasts envisaged a "recession" in the developed countries, today’s figures reveal non-negligible growth rates, accompanied by a fall in unemployment - according to the official figures of course. We ourselves wrote:
"The plunge into a new open recession which will be still deeper than its predecessors - some or even talking of ‘depression’ - is silencing all the talk about lasting economic growth promised by the ‘experts’" (International Review no.96),
"Although the central countries of capitalism have escaped this fate [ie the bankruptcy of South East Asia] until now, they are certainly facing their worst recession since the war - in Japan it has already begun" ("Resolution on the International Situation", International Review no.97).
Did we adventure too boldly into an unjustified forecast? What is the real economic situation today?
We are being treated to a new sleight of hand, a new and enormous lie about the state of the world economy. At the level of some official figures, we are indeed seeing a slowdown in the world economy which is less rapid than expected, especially in the United States - a phenomenon which the hired hacks falsely describe as a "boom". But the continued seven or eight years of growth, even weak growth, without recession, has not been seen since World War II, and is the sign of a certain "prosperity". However, the figures are deceptive.
Firstly, the bourgeoisie possesses all kinds of tricks whereby it uses financial and monetary manipulation to hide the slowdown in the growth of real production. And while it is fashionable to proclaim the "continuation of uninterrupted growth" and to boast of the economy’s good health when addressing the population, and eessing the population, and especially the working class, in the more select circles of the ruling class, which needs a concrete not a mystified understanding of the state of the economy, the talk is already less optimistic. Some examples are worth citing:
"In the most optimistic scenarios, world growth is forecast to be 50% below last year’s projection, but it will remain at 2% in 1999, as it was in 1998. For the pessimists, growth practically disappears. The threat of a global recession in 2000 thus seems to us to be a real one (…).America booms while the old dragons are in depression: what an incredible turnaround! But let’s be clear: it is the swelling bubble on Wall Street which has saved expansion in the US, and therefore elsewhere in the world also. Historians will call it the ‘Greenspan bubble’. For some, the president of the Federal Reserve remains a magician. For others, he is a sorcerer’s apprentice, for the correction will be on the same scale as the error. It is already present in the experts’ ‘pessimistic’ scenarios: a 13% fall on Wall Street for the IMF, 30% for the OECD… Why? Because the rise on the stock market is absolutely unjustified by the tendency of the real economy, which is in decline" (L’Expansion, October 1999)., October 1999).
"The Fed’s stimulus measures last autumn seemed to have averted an immediate catastrophe. Some economists and policymakers fear the easing of monetary policy has significantly increased the gaping imbalances that now dominate the US economy. By pumping up stock prices, it helped inflate an asset price bubble that now poses the greatest threat to global stability, say the critics. By allowing global spending to surge, it widened the already vast US current account deficit to more than $300 billion this year - 3% of gross domestic product. The Fed, of course, has already taken back two of the three quarter-point rate cuts of last year. But the gloomy view is that it is already too late to stop the imbalances ending in a smash. The current account deficit is undermining the dollar; once investors leave the US currency in droves, inflation will pick up speed and the stock market will collapse. That would provoke a new round of global financial instability, significantly damage domestic US demand, and perhaps even precipitate the world recession the G7 worked so hard to avoid a year ago" (Financial Times, October 1999).
Perhaps, one year ago, we were wrong to follow the forecasts of economic "recession". Nonetheless, we persist in our conviction that the crisis has got considerably worse. The bourgeoisie’s experts themselves are forced to recognise it, in their own way: there is no perspective of any lasting improvement of the economic situation. On the contrary, everything points to new tremors on the way, whose cost will as always fall on the proletariat.
Moreover, the recession is far from being the only expression of the capitalist crisis. We have already pointed out the mistake of only taking into account the figures for "growth" provided by the bourgeoisie, which are based on
"the growth of the crude figures of production, without any concern for what was being produced (in reality, mainly weapons), or without asking who was going to pay for it" (International Review no.59, 4th Quarter 1989, "Resolution on the International Situation").
At the time, we pointed to all the other elements which allow us to measure the true gravity of the crisis:
"the dizzying growth in the debt of the under-developed countries (…) the acceleration of the process of creating industrial deserts (…) the enormous aggravation of unemployment (…) the increasing number of calamities hitting the under-developed countries" (ibid.).
Today, not only are all these elements still present, they have got worse. And factors such as debt (not to mention "disasters" in terms of health or safety) are now affecting the heart of industrialised capitalism as well as the peripheral countries.
The US trade deficit, officially estimated at $240 billion, is beating every record, and will widen to more than 3% of GDP this year (see above). Developing domestic consumption, which has been the most "spectacular" factor in this "growth" is not based on rising wages, since despite all the fine talk the tendency during recent years has been for wages to fall. It is based above all on income from shares, whose distribution has been "democratised" (even if this has been above all in the direction of company management, in the form of stock options).
This income has been substantial, because it has been linked to the constant "record-breaking" rise on Wall Street. This growth in consumption is thus extremely volatile, since the slightest downturn on the stock market will be a disaster for those workers a large part of whose income or pensions comes from shares. The "growth rates" hide this fragility, just as they mask a new historical aberration - from the economic standpoint: the fact that today, the rate of savings in the USA is negative, in other words American households overall have more debts than savings! This has not escaped the "specialists":
"American industry is on the verge of bankruptcy. This is incompatible with the rise in share values on Wall Street, whose valuation is at its highest since 1926: expected profit is higher than at any time since the war. All this is untenable, but vital in maintaining the confidence of households and the distribution of the impression of wealth which encourages them to consume more and more on credit. The savings rate has become negative, a phenomenon unseen since the Great Depression. How can the (inevitable) touchdown be made a soft one?" (L’Expansion, op.cit.).
The official indicator of recession - negative growth of production - negative growth in production - has once again been hidden, the recession has been pushed back with the same palliatives: debt, a headlong flight into credit, and speculation (in shares, in this case). And another symbol of this headlong flight which no longer has any tie to the real production of wealth, is that the share prices which have risen the most in recent months have been those of companies offering access to the Internet, which are basically selling hot air! The situation of the world economy is thus more fragile and pregnant with the next "purges" which will once again leave masses of workers on the street.
Finally, inasmuch as the "recession", in other words a negative growth rate, is for the bourgeoisie a symbol of the crisis of its system, it is also a factor of destabilisation and sometimes even panic within capitalist circles which serves to amplify the phenomenon still further. This is one reason that the bourgeoisie has done everything it can to avoid such a situation.
Another reason, perhaps still more important, is the need to hide the system’s bankruptcy from the working class; as the specialists put it, it is
"vital in maintaining the confidence of households and the distribution of the impression of wealth which encourages them to consume more and more on credit".
When the "growth rate" collapses, it jeopardises all the propaganda about the validity of the capitalist system; it encourages the class to struggle, and above all to think, and consequently calls into question the whole system. This is what the bourgeoisie fears more than anything else.
For the millions of proletarians thrown onto the street in the so-called "emerging" countries (like those in South East Asia, which will never recover from the acceleration of the crisis in 1997-98), or for the pauperised masses of the so-called "developing" countries on the capitalist periphery (in Africa, Asia, Latin America), but also for the increasing numbers left out of the "growth" in the industrialised countries, there is no need for great theoretical demonstrations. They already suffer, in their day-to-day living conditions, the bankruptcy of a system which is increasingly incapable of providing them with the most basic means of subsistence.
Some see in this a sort of "natural" fatality, a law according to which the strong are called on to survive, while poverty and death for the "weak" is no more than the "normal" result of this "law". This is obviously nonsense. Today, as it has done since World War I, capitalism is suffocating from a crisis of over-production. Potentially, society today disposes of all industrial and technical means to provide in abundance for the whole of humanity, and has done ever since the beginning of the 20th Century. The millions of workers in the industrialised countries are suffering unemployment and falling living conditions, the tens of millions of human beings in the peripheral countries of capitalism are hurled into direst poverty by the proliferation of local wars, because of the survival of this capitalist system based on the law of profit and the accumulation of capital.
Up to the end of the 19th Century, the developed of capitalism, albeit already in "blood and filth", still corresponded to an increase in the satisfaction of human needs. With the First World War, it entered its period of historical decadence and decline, and ever since has dragged the world down in a spiral of crisis-war-reconstruction, followed by a new and deeper crisis, a new and bloodier war, a new economic crisis; the latest expression of the crisis has lasted for thirty years, and the threat of planetary destruction is still real indeed, even if no longer in the form of a world-wide nuclear war since the two great imperialist blocs disappeared a decade ago.
This irreversThis irreversible decline of the capitalist system does not mean that the ruling class will declare itself bankrupt, give up and go home, as might happen in the case of an individual capitalist company. The whole history of the 20th Century is there to prove it - and especially world capitalism’s "solution" to the Great Crash of 1929: World War II. The capitalists are ready to drag the whole of humanity down to destruction in their merciless struggle for the pie of the world market. And although in thirty years of crisis they have been unable to draw the great masses of workers into war, they have endlessly cheated with the laws of capitalist development themselves in order to keep the system alive, and made the workers and unemployed pay the price for the death-agony of their moribund economy.
Against the ever stronger attacks on their living conditions, understanding the economic crisis - its irreversibility, its constantly worsening dynamic - is an essential factor in the development of an awareness of the vital necessity of the class struggle, not only in self-defence against capitalism, but also to open up the only real perspective left to humanity: the communist revolution, the real one, not the hideous face of Stalinist state capitalism which the bourgeoisie has offered as a travesty of communism.