According to the bourgeoisie, the working class should be happy. Not a day goes past without its newspapers, journals, TV and radio telling us about the current health of the economy. To do this it gives us figures for growth. At the level of the world economy these increased by 3.2% in 2005, after having registered 4% in 2004 and less than 2.6% in 2003. It calmly forecasts a growth above 3.3% for the year 2006. This class of exploiters hides reality from itself. But above all, it brazenly lies to the working class.
Faced with the aggravation of its economic crisis, the lies of the bourgeoisie
It tries at all costs to hide the gravity of the situation. To do this, anything goes. In the UK, which elements of the ruling class hold up as a solid and stable economy, official unemployment figures are the highest for 7 years. While nobody believes these ridiculously low figures, underestimating real unemployment by millions, they nevertheless point to the underlying tendency and the real results of massive job cuts in every industry and sector. In the face of the ‘vibrant UK economy‘, workers who have to keep 2 or even 3 precarious jobs going, or work all hours to make ends meet, know very well about the lies of the bourgeoisie. But this is nothing in comparison with what’s to come. World capitalism is in economic turmoil and for the predators of the ruling class, the sharpening economic war leaves it no choice but to step up its attacks against the living conditions of the working class. Behind all the lies, the economic crisis is re-entering a new phase that will have much more devastating effects than anything since the return of the open crisis in the 1960s.
The proletariat pays for the bankruptcy of the capitalist economy
The working class is living daily through this violent degradation of the economy. Plans for massive redundancies follow each other without respite. Supposedly efficient companies such as Alcatel and Intel announce job cuts one after the other. In the automobile industry, the bourgeoisie envisages the loss of 70,000 jobs between now and the end of the year at General Motors, Ford and Delphi. This figure gives the measure of the difficulties of this sector in the United States. The situation is no better in the rest of the world, leading the motor industry everywhere to announce massive job cuts. In France, it’s the turn of Renault and Peugeot-Citroen to announce thousands of new redundancies. All the leading sectors of capitalism are in a mess. After the U.S. plane-maker Boeing, the European plane construction firms announced thousands of job cuts. In Seoul, South Korea, one of the biggest naval dockyards in the world belonging to the Halla Group has announced the loss of 3000 jobs, or half of its workers. Such massive job cuts were unknown in this country up to now. But the working class isn’t just subjected to a frontal attack in the area of job cuts. All its conditions of life are under attack. In Germany, the bourgeoisie has just declared that it will push back the retirement age to 67. In Britain, legislation is currently being enacted to make it 68. The same offensive is underway in every country. The bankrupt bourgeoisie can no longer pay for pensions. After sucking the life-blood from the workers, it throws them into the gutter. The Welfare State, already largely dismantled, cannot resist this new economic deterioration. The bourgeoisie wants to definitively bury social security. In all sectors, public or private, the ability of workers and their families to take care of themselves is being savagely attacked. With wages kept down the working class must battle every day to house, clothe and feed itself. It’s exactly the same policies that are rampant under the government of Angela Merkel in Germany or in Italy under Romano Prodi. There is no exception to this policy of a frontal anti-working class attack, no matter what the country or the political colour of the government.
The capitalist economy on the edge of ruin
An organism as representative of the bourgeoisie as the UN, through the intermediary of its Economic and Social Business Department, says that world growth can only slow down in 2006. “In the near future, the eventuality of new rises in oil prices, the possibility of crisis caused by an avian flu pandemic, or a house price collapse in the richest countries, increases the risk of a gradual slowdown of world growth” (Courrier International, 10/06). Millions of deaths from a possible avian flu pandemic do not pose any human problem for the bourgeoisie. On the contrary it is happy to make ideological capital out of it, in order to spread the lie that a sharp acceleration of the crisis would be due to a catastrophe independent of its system. But to the displeasure of the bourgeoisie, facts are more stubborn than its lies. The bursting of the housing bubble has already begun in the United States (and in the UK the FSA has warned banks to prepare for a possible 40% reduction in house prices). From this millions of Americans will find themselves incapable of repaying their debts. The bursting of the housing bubble will have grave repercussions for the world financial system as on the whole of the economy. This bubble has been financed by ‘cheap’ money, that is, very low interest rates. During the course of the last few years the US administration has stepped up the printing of money, thus inundating the world and the USA itself with dollar bills. An article in Courrier International (27/7/06) clearly showed the policy followed by the central US bank, the whole flight into debt: “In June, the consumer price index shows, if there was still need for it, what an immense error the US central bank has committed in monetary policy between the end of 2003 and 2005”. This “error” is much more serious since, contrary to the speeches of the bourgeoisie, it is the United States which continues to pull world demand. A major crisis of the American economy would inevitably plunge the world into a violent recession. The record rates of growth undergone by China depend on the American economy. This year, China will overtake Mexico to become the second commercial partner of the US, just behind Canada. China, like India and all the south east Asian states, could not stand a significant slowdown in US external demand without suffering a violent brake on their growth. And this is the road that the world economy has already begun to take. The USA is in debt beyond imagination. The US deficit has reached 800 billion dollars. It is quite evident that of all the symptoms of a collapsing financial structure, the level of debt causes most concern to the ruling class. In 2002, following a stock market collapse, due in part to the bursting of the ‘new economy’ bubble, the bourgeoisie feared the arrival of deflation. It was able to stave this off. But in the opinion of a number of bourgeois specialists, this spectre is again possible in the present situation. The incredible mass of dollars in circulation today around the world can be dragged into an abyss, with repercussions on the whole world economy. The suppression of the M3 index by the central American bank, an index which allows the measurement of the mass of dollars in circulation, demonstrates the growing impotence of the bourgeoisie in mastering its problems. It is reduced to the politics of the ostrich, hiding the danger because it can’t do anything about it. Meanwhile, this policy of cheap money in the USA, as in all the developed countries, is threatening a new surge of inflation. For twelve months prices have increased in the United States at an annual rhythm of 4.3%, and for three months at 5.1%. As a result, the central US bank, like the central banks of Europe or Asia, can only continue to increase its interest rates. Or else the banks will decide to accelerate their flight into debt by letting the value of the dollar fall, thus financing their debts with devalued money. In both cases the result for the world economy will be the same: recession. The present rise in stock market prices doesn’t correspond to an improvement in the capitalist economy but to its exact opposite. It is a precursory sign of the storm to come. A widespread stock market crisis lies in wait for the capitalist economy and this will be more profound than those we have known up to now.
The capitalist economy faces chaos
In order to face its open crisis at the end of the 1960s, capitalism resorted to massive debt while bringing on its first frontal attacks against the working class. The central countries then began pushing the effects of the crisis onto the poorer countries, which sunk into a misery and chaos that has deepened ever since. Meanwhile, at the heart of capitalism, the traditional sectors of capitalist industry began to be dismantled: mines, steelworks, textiles, etc. The bourgeoisie, for the first time since the post-war boom, had to resort to the printing of money and to a level of debt unknown until then in order to artificially create an effective demand. This debt, though well below what exists today, produced a level of inflation that rapidly became intolerable. The bourgeoisie had to re-orient its economy without pushing it into too violent a recession. This is what was done at the beginning of the 1990s and, despite the suffering inflicted on the proletariat for ten years, it gave some respite to capitalism. Private debt, to some extent, took over from public debt. The banks, pension funds, insurance, financial institutions, businesses and the ‘middle class‘, notably in the USA, played the role of supporting growth. This policy, required by all states throughout these years, allowed economic activity to continue while choking back inflation, all the more because the bourgeoisie did all it could to reduce the cost of labour. The bursting of the ‘new economy’ bubble rang the bell on this period. Since the 80s and 90s, an unimaginable public debt has to be added to an incalculable private debt. The bursting of the housing bubble in the United States signifies the end of this economic madness. Financial and industrial instability is reaching insupportable levels, notably in America, pushing the capitalist economy into a new phase, a phase where financial and industrial bankruptcies will shake the entire world economy.
The bourgeoisie has no choice. This new aggravation of the economic crisis will oblige it to develop its attacks on the working class to a higher level than we have seen since the return of the open crisis at the end of the 1960s. There will be no respite for the proletariat. However, these attacks will not rain down on an amorphous and beaten working class. Since around 2003, everywhere in the world, the working class has returned to the path of struggle. At a time when the working class of the central countries is beginning to draw the first lessons of this resurgence of struggles, the accelerating economic crisis and the generalisation of attacks on living standards can play a major role in the development of consciousness and militancy in the working class.
Tino 23/10/06 (From Revolution Internationale 373)