Economic boom is an illusion:
What’s happening to the ‘economic boom’, led by the US and the internet, that we have heard so much about recently? Dot com companies are going to the wall, prestigious US banks are wobbling, manufacturing – especially the car industry – is slowing down, and there are fears of a return both of recession and inflation in the world’s biggest economy. For the ideologues of the ruling class, these are just temporary blips in an otherwise healthy world economy. But as we argue in this article, they are in fact pointers to the real state of the capitalist world economy, and a warning of savage attacks on the living standards of the working class, which have in any case continued to worsen throughout this period of phoney boom.
Since the end of the 1960s, when capitalism once again entered into an open crisis of overproduction, the ruling class has seized on any subsequent period of growth – even if each growth – even if each one is shorter than the last, and is followed by phases of ever more devastating recessions – to fuel its ideological campaigns about capitalism’s new-found prosperity. And there is no doubt that it has had some success in masking the real degradation of the economic situation over the past 30 years.
But haven’t things really changed since the recession at the beginning of the 90s? Hasn’t capitalism in this period shown that it can still be a factor of progress? Certainly the USA has just been through nine years of positive growth, without any interruption. This hasn’t been seen since the Second World War. The European powers have also registered growth since 1994. As for the ‘Asian crisis’ of 1997-8, it didn’t have the devastating effects on the world economy that were at first feared. Could that have been a crisis of growth rather than a sign of the system’s insurmountable contradictions? What’s more, isn’t capitalism proving that it regenerates itself through the development of new technologies? And finally, doesn’t the present fall in unemployment in the industrialised countries constitute definite proof that we really have entered a period of prosperity?
All these supposed expressions of capitalist prosperity are based on indicators created by the bourgeoisie itself. If we are to take them into account, we have to place them in their proper context – in other words, after examining the real evolution of social conditions.
What has been the real situation of the working class during the 90s?
In the 19th century, while showing that the contradictions of capitalism had no ultimate solution, marxists also showed that this system of exploitation was capable of playing a progressive role for humanity. It was able to accomplish a considerable development of the productive forces and of the working class, on the basis of a real prosperity.
Since the beginning of the 20th century, revolutionaries have been pointing to a new reality, one which the bourgeoisie has constantly tried to hide: the decline of the capitalist mode of production, which among other things has been characterised by a deterioration in working class living conditions and a tendency to exclude a growing mass of proletarians from the process of production. The reappearance of the open crisis of overproduction at the end of the tion at the end of the 1960s (1) is an illustration of this tendency since it has brought about a major regression in the situation of the working class in the industrialised countries, notably in the form of massive unemployment and the development of absolute pauperisation. Its consequences have been even more dramatic in the so-called third world countries, where a huge mass of people live without work in the most inhuman conditions. And it was the aggravation of this crisis which was at the root of the collapse of the Stalinist regimes as well. Finally, the economic impasse has seen its destructive effects considerably amplified by the headlong rush of the different states into wars and environmental destruction. In sum, the economic crisis is at the core of an unprecedented social crisis which threatens the very existence of humanity.
The ‘years of growth’ over the past decade are in no way an exception to this dramatic picture (2), since they have been accompanied by an aggravation of the situation at all levels: proliferation of wars and ecological catastrophes, the intensification of poverty all around the world, including for the working class of the central countries of capitalism.
As for the diminution2>As for the diminution of unemployment which the bourgeoisie has boasted about so much, this has been brought about by statistical manipulation on the one hand, and by the explosion of part-time and short-term work on the other. Although the number of such precarious jobs created has been higher than the number of stable jobs suppressed, the overall balance sheet in terms of workers’ living standards has been largely negative. This situation is illustrated in particular by the fact that, in the USA, more and more people with jobs can’t afford to house themselves.
What has been the reality of growth in the 90s?
The crisis is above all a crisis of overproduction, the result of a lack of solvent markets to absorb capitalism’s production. In their efforts to palliate this problem, from the end of the 60s (as during the 1930s), the different states have created an artificial market by running up massive debts. And since this remedy is no real solution, every time that economic activity starts to stumble, the system has had to pile up even greater debts, which on the world level have now reached astronomical proportions. These are debts which can never be repaid and which constitute an ever-increasing threat to the stability of the worhe stability of the world economy.
If, despite all the contradictions assailing capitalism, the crisis has only deepened at a relatively slow rhythm, this is because the most powerful states have done everything in their power to postpone its effects at the centre of the system – and debt has been the main instrument for achieving this. The policy of the ruling class has been aimed in particular at preventing sudden accelerations of the crisis from provoking large-scale workers’ reactions to massive and brutal attacks. Such reactions could lead to the working class developing an understanding of the necessity to do away with this system. But while the bourgeoisie can influence the pace of the crisis, it can’t stop it from getting deeper. Even during so-called phases of growth, the crisis has been getting worse and worse, as can be seen for example from the process of industrial desertification which hit the central countries of Europe and the USA during the 80s; or again by the savage amputation of the productive apparatus in certain countries on the periphery of capitalism, including some of the most industrialised ones, such as Korea, in the second half of the 90s.
In fact the indicators used by the bindicators used by the bourgeoisie are a deception. For example, when it measures growth, it throws in all sorts of unproductive expenses, as well as those which do produce wealth, but which have to a large extent been paid for through debts that will never be reimbursed.
When capitalism is no longer able to hide its contradictions
At the time of the ‘Asian crisis’ in 1997-8 we were told that it was basically the result of the irresponsibility of certain sectors of the bourgeoisie who had run up ‘shady’ debts; debts that had no chance of being repaid. To avoid the bankruptcy of countries which were unable to repay their debts to the big industrial powers, huge salvage plans amounting to billions of dollars had to be set in motion. In fact, here once again, this explanation was distorted for propaganda purposes, so that it could appear that the collapse of certain Asian countries, which resulted in millions of redundancies, was caused not by the crisis of capitalism but the bad management of a few greedy and irresponsible leaders and bosses. Today reality is putting paid to all these lies, in the shape of two significant events. The first is the financial crisis in Argentina and Turkey. The first country had been touted as a model whi touted as a model which conformed in every respect to the rules for managing capital laid down by the IMF. And yet we have recently seen new salvage plan brought into effect to prevent Argentina from going bankrupt, a plan consisting of new debts and new attacks on working class living conditions. The scenario is very similar in Turkey. The second is the ‘discovery’ of dubious debts contracted in the US itself. If growth there comes to a halt, we are now being told that it’s the European banks which will pay the heaviest. The USA is not going to go through a purge like certain Asian countries did three years ago. But it still shows that American economy, like that of all the big powers, is not as healthy as the bourgeoisie has been claiming. And this at root is because the world economy has not been cured of the disease of which the Asian crisis was but a symptom.
On top of this, a number of important indicators which the bourgeoisie has been presenting as signs of economic health over the past six years or more are beginning to point in the opposite direction. In the USA, the index of values for the ‘old economy’, the Dow Jones, has fallen by over 9% since January 2000. In the same period, the index of the ‘new economy’, the Nasdaq, has loste Nasdaq, has lost 43% of its value and 53% over the last 8 months (figures from Le Monde, 1 and 22 December 2000). And more generally “most of the world’s major stock exchanges fell during 2000. There hasn’t been a similar result since the beginnings of the 90s in the US and since 1994 in Europe” (Le Monde 2 December).
“No one is prevented from getting rich” (French ad); “Either you’re rich, or you’re a cretin” (Business). These media slogans, which reveal the profound cynicism of the bourgeoisie towards those who ‘don’t succeed’, were based on the share performances of the ‘new economy’. As even the bourgeoisie is beginning to admit that the new economy wasn’t a miracle cure after all, such slogans are becoming totally out of synch with reality for the vast majority of people.
Although the optimism of the official version hasn’t altered, the American bourgeoisie has accepted that growth is slowing down, that unemployment and inflation are on the increase. Faced with new threats of recession, there is no alternative but to resort even more to the drug of debt. But this is not a neutral procedure. Among other things Among other things it opens the door to the spectre of inflation. This is causing great unease among those in charge of economic policy: the bourgeoisie fears open recessions because they tend to give an impetus to the class struggle. But it also fears inflation because it can push the working class as a whole to fight for the defence of its purchasing power.
Even if it is difficult to be precise about the form that the new acceleration of the economic crisis will take, it is clear that this is what is already happening. Further signs of this are the job cuts in important industrial sectors in France 2000 at Bull, 2700 at Gilette; in the USA 15,000 at General Motors, between 75,000 and 80,000 following General Electric’s acquisition of Honeywell, 26,000 at DaimlerChrysler, 16,000 at Lucent technologies, 7700 at WorldCom, 5300 at J.C.Penney, 1300 at Amazon.com; in Britain threatened closure of Vauxhall in Luton, and of steel plants in South Wales, etc… But while the crisis means the worsening of an already unbearable situation for millions of people, it is also the best ally of the proletariat, because it compels it to engage in massive struggles against the attacks of the bourgeoisie and, in the longer term, to develop the perspective of the overthrow of capitalism.
(1) See the articles in the series ‘30 years of the open crisis of capitalism’ in International Reviews 96, 97 and 98.
(2) See the article ‘The abyss behind “uninterrupted growth in International Review 99.
(3) The control of the rhythm of the crisis demands a degree of international cooperation between the big industrial countries but, among the latter, there is a balance of forces which obviously acts in favour of the most powerful ones, enabling them to take the decisions which are less unfavourable to themselves.