The irruption of decomposition on the economic terrain: Report on the economic crisis

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The global economic crisis is now worsening sharply. Concretely, and without a doubt, the working class everywhere in the world will suffer the explosion of unemployment, exploitation, precariousness and poverty.

With this new step, capitalism is going further down the road of its decadence, which forces revolutionary organisations to clarify the following questions:

1) What is the historical significance of this developing crisis, the most serious of decadence, including the one that began in 1929?

2) What are the implications of the fact that the effects of the decomposition of society will have a very important weight on the evolution of this new phase of the open crisis?

At the same time, we must beware of an immediatist and economistic vision of the crisis, as the report presented argues: to avoid any hazardous prognoses, having in mind past overestimations on our part concerning the rhythm of the crisis and a certain catastrophist vision with the idea that the bourgeoisie was at an impasse. In addition to a lack of mastery of Rosa Luxemburg's theory, we underestimated the capacity of state capitalism to act faced with the manifestations of the open crisis, to accompanying its deepening historical crisis and thus allow this system to survive. Its weapons: permanent intervention in the economic field, manipulation and cheating of the law of value… In doing so, the bourgeoisie has maintained the illusion within the proletariat that capitalism is not a bankrupt system, its convulsions being only transient, the product of cyclical crises necessarily followed by a period of intensive general development.

In the 18th and 19th centuries, the great capitalist nations were in a frantic race to conquer new markets and territories. But around 1900, they encountered a small problem: the earth was round and not that big. Thus, even before a global economic crisis erupted, imperialist tensions reached their climax, world war broke out and capitalism entered into decadence.

The war of 1914-18 was the manifestation of the most extreme barbarism, the consequence of the fact that “At a certain stage of development, the material productive forces of society come into conflict with the existing relations of production (…) From forms of development of the productive forces these relations turn into their fetters.” (Preface to the Critique of Political Economy, 1859).

It was only at the end of the 1920s that the various national bourgeoisies were to be confronted for the first time with the directly "economic" manifestation of this entry into decline: the crisis of generalised and historical overproduction. Let us quote Marx again:

“The more capitalist production develops, the more it is forced to produce on a scale which has nothing to do with the immediate demand but depends on a constant expansion of the world market (…) [Because] the commodity has to be converted into money. The demand of the workers does not suffice, since profit arises precisely from the fact that the demand of the workers is smaller than the value of their product. The demand of the capitalists among themselves is equally insufficient.” (Theories of Surplus Value Part 2, Chapter 16). “If it is finally said that the capitalists have only to exchange and consume their commodities among themselves, then the entire nature of the capitalist mode of production is lost sight of; and also forgotten is the fact that it is a matter of expanding the value of the capital, not consuming it.” (Capital Volume 3, Chapter 15)

In other words, the crisis of generalised overproduction which appeared in broad daylight in 1929 is not linked to a kind of dysfunction that the bourgeoisie can regulate or overcome. No, it is the consequence of a fundamental and insurmountable contradiction inscribed in the very nature of capitalism.

The national bourgeoisies drew lessons from the catastrophic crisis of 1929: the need to develop state capitalism and establish international organisations in order to manage the crisis so as not to reproduce the error of protectionist policies.

At the end of the Second World War, the bourgeoisie put into practice the lessons of 1929. The post-war boom sowed the illusion that capitalism had recovered prosperity, momentarily erasing the nightmare of the Great Depression of the 1930s and the horrors of war. But, inevitably, the contradictions inherent in the very nature of capitalism remained, as its historic crisis. This is what the return of the open crisis of 1967-1968 reveals.

Since then, from stimulus plans to deeper recessions, the bourgeoisie has been trapped in a headlong rush into indebtedness, in an attempt to constantly push back to the next day the effects of the historic bankruptcy of its system. World debt has become more and more massive, not only absolutely but also compared to the evolution of world GDP. At the same time as this headlong rush, the central countries changed the organisation of the world economy:

1) During the 1970s, the increase in public spending, the end of the Bretton Woods agreements and the policy of Special Drawing Rights, the opening of credits to weaker countries, all allowed a level of growth to be maintained which gave the illusion that, despite the "oil crisis", capitalism remained dynamic;

2) In the 1980s, following the serious recession at the start of the decade, entire sections of production were moved to areas where labour power was inexpensive, such as in China. For this, it took colossal investments made possible by extensive financial "liberalisation" on a global scale. This is the beginning of "globalisation".

3) In the 1990s, after the fall of the Eastern bloc, international organisations were reinforced, giving rise to a structure of "international cooperation" at the monetary and financial level, to coordination of economic policies with the establishment of international production chains, stimulation of world trade by the elimination of customs barriers, etc. This framework is obviously established by and for the strongest countries: to conquer new markets, relocate their production, appropriate more profitable companies from weaker countries...

If this "international cooperation" has been able, to a certain extent and for a time, to slow down and mitigate the effects of everyone-for-themselves economics on states, it has been incapable of stemming the underlying tendency inherent in capitalism’s entry, at the same time, into its phase of decomposition.

4) The systematic recourse by all states to massive indebtedness to respond to the lack of outlets was also a risky policy, causing the financial crisis of 2008 which resulted in even more indebtedness. The "global organisation of production" began to be shaken in the decade from 2010; China, after having benefited greatly from the mechanisms of global trade (WTO), began to develop a parallel economic, commercial and imperialist "circuit" ( the New Silk Road). In July 2017, Germany passed a decree blocking the sale of strategic national companies to foreign investors. The trade war escalated further with the rise to power of Trump. These phenomena undoubtedly demonstrate that capitalism is increasingly encountering major difficulties in pushing ever further the limits of the capitalist mode of production, as was the case with globalisation.

Today, the bourgeoisie has accumulated immense experience in slowing down the effects of its historic crisis, thus prolonging its agony even further. We must therefore be extremely careful about our forecasts and beware of any catastrophism. In the current worsening global economic crisis, it is above all the major underlying historical trends that we must highlight:

From 1929, the bourgeoisie learned to support its declining economy, notably through "international cooperation". Even in 2008, the famous G20 showed this capacity of the big bourgeoisies to maintain a certain cohesion in order to manage the crisis with the least possible damage. The year 2020 marks the growing difficulty of maintaining this world organisation, the irrationality linked to the decomposition hitting the highest summits of the state. Everyone for themselves, which has come to light with the calamitous management of the pandemic, is its most spectacular expression. This centrifugal force has two roots:

1. The inexorable worsening of the global economic crisis is exacerbating the struggle to the death between all rival nations. Note that, unlike 2008, the most affected are the central countries (Germany, China and especially the United States) and that if the bankruptcy of the banks was then mainly caused by real estate speculation, today it is directly productive enterprises that are in danger.

2. Decomposition, which first and foremost affected the nations in their imperialist relations, is also starting to strike at their capacities for managing the economy. This only follows and worsens the perspective emerging from the resolution on the international situation of our last international congress:

"The current development of the crisis through the increasing disruptions it causes in the organisation of production into a vast multilateral construction at the international level, unified by common rules, shows the limits of ‘globalisation’. The ever-increasing need for unity (which has never meant anything other than the imposition of the law of the strongest on the weakest) due to the “trans-national” intertwining of highly segmented production country by country (in units fundamentally divided by competition where any product is designed here, assembled there with the help of elements produced elsewhere) comes up against the national nature of each capital, against the very limits of capitalism, which is irremediably divided into competing and rival nations. This is the maximum degree of unity that it is impossible for the bourgeois world to overcome. The deepening crisis (as well as the demands of imperialist rivalry) is putting multilateral institutions and mechanisms to a severe test” (Point 20).

What we see is that, in response to the pandemic, a very significant advance in measures of "national relocation" of production has begun to develop, the preservation of key sectors in each national capital, development of barriers to the international circulation of goods and people, etc., which can only have very severe consequences for the evolution of the world economy and the overall capacity of the bourgeoisie to respond to the crisis. National decline can only worsen the crisis, leading to a fragmentation of production chains that previously had a global dimension, which in return can only wreak havoc on monetary, financial, trade policies... This could go as far as blockage and even partial collapse of some national economies.

It is too early to measure the consequences of this relative paralysis of the economic apparatus. Most serious and most significant, however, is that this paralysis is taking place internationally.

The current acceleration of the global economic crisis is part of the general evolution of the decadence of capitalism. Beyond the visible phenomena linked to the current "open crisis", what matters to us is to better understand the reinforcement of the deep contradictions of capitalism and therefore the worsening of its historical crisis.

Report on the Economic Crisis


With regard to the economic crisis, there are central aspects that we can clearly point out:

1) The crisis that is already looming will be, in its historical scope, the most serious of the period of decadence, surpassing in this respect the one that began in 1929.

2) What is new in the history of capitalism is that the effects of decomposition will have a very important weight on the economy and the evolution of the new open phase of the crisis.

However, beyond the validity of these general forecasts, the unprecedented situation that has opened up will be more than ever dominated by strong uncertainty. More precisely, at the current stage reached by the historical crisis of overproduction, the eruption of decomposition on the economic terrain profoundly disrupts the mechanisms of state capitalism intended to accompany and limit the impact of the crisis. However, it would be false and dangerous to draw the conclusion that the bourgeoisie will not use its political capacities to the maximum to respond, to the best of its abilities, in the face of the global economic crisis that is beginning to unfold. The eruption of the weight of decomposition means moreover that there is a factor of instability and fragility in economic functioning that makes it particularly difficult to analyse the evolution of the situation.

In the past, we have too often fixed our eyes only on those aspects of the situation that were pushing the economic crisis of capital towards its inexorable worsening, forgetting to take sufficient account of all the factors that tended to slow down its development. However, in order to be faithful to the marxist method of analysis, we have to identify, not only the historically important trends  from the perspectives that are opening up, but also the counter-tendencies that the bourgeoisie will activate. It is therefore our duty to identify, as clearly as possible, the general lines of the future evolution, without falling into risky and uncertain forecasts. We must arm ourselves to face the situation, ensuring that we develop and implement our capacity for rapid reflection and response to events of very great importance which are sure to develop. Our method must be inspired by the approach already recalled in our debates:

"Marxism can only trace with certainty the general historical lines and trends. The task of revolutionary organisations must obviously be to identify perspectives for their intervention in the class, but these perspectives cannot be ‘predictions’ based on deterministic mathematical models (and even less so by taking at face value the predictions of the ‘experts’ of the bourgeoisie, whether in the sense of a false ‘optimism’ or an equally mystifying ‘alarmism’)". [quoted by an internal discussion document).

The seriousness of the crisis

The crisis of 2008 was a very important moment for capitalism. The recovery (2013-2018) has been very weak, the weakest since 1967. It was described by the bourgeoisie as a "soft" recovery. In the decade 2010-2020, before the Covid 19 crisis, the Cycle Business Bourse site assessed world growth at slightly less than 3% on an annual average. The economic crisis that came to light with the pandemic had already seen its first clear expressions, especially from 2018. We anticipated this in the report and Resolution on the international situation at the 23rd ICC Congress (2019):

"On the economic level, since the beginning of 2018, the situation of capitalism has been marked by a sharp slowdown in world growth (from 4% in 2017 to 3.3% in 2019), which the bourgeoisie predicts will be worsening in 2019-20. This slowdown proved to be greater than expected in 2018, as the IMF had to reduce its forecasts for the next two years and is affecting virtually all parts of capitalism simultaneously: China, the United States and the Euro Zone. In 2019, 70% of the world economy has been slowing down, particularly in the ‘advanced’ countries (Germany, United Kingdom). Some of the emerging countries are already in recession (Brazil, Argentina, Turkey) while China, which has been slowing down since 2017 and is expected to grow by 6.2% in 2019, is experiencing its lowest growth figures in 30 years." (Point 16 of the Resolution).

It is in this context of slowing growth that the pandemic has become a powerful accelerator of the crisis, bringing to the fore three factors:

- The degree to which public health systems, one of the key elements of state capitalism since 1945, have been undermined. This process of weakening of the health system is linked to the economic crisis and has accelerated considerably with the 2008 crisis. In the vast majority of states the health systems have been unable to cope with the pandemic, which has forced containment measures leading to a brutal economic shutdown never experienced in peacetime. For capitalism, ready to sacrifice the lives of millions of people in imperialist wars, the dilemma was not whether to save lives or maintain production, but how to simultaneously maintain production, economic competitiveness and imperialist rank, since the full blossoming of the pandemic could only seriously damage production and the commercial and imperialist position of each power.

- The growing degree of loss of any sense of responsibility and the negligence of a majority of bourgeois fractions in all countries and especially in the central countries, a factor linked to the decomposition of society.

- The brutal eruption of everyone for themselves on the economic level, a factor also linked to decomposition but having very important consequences on the economic level.

The most important manifestation of the gravity of the crisis is that, unlike 2008, the most central countries (Germany, China and especially the United States) are the most affected; even if they deploy all the means to cushion the crisis, the shock wave they provoke will strongly destabilise the world economy.

The brutal fall in oil prices has hit the USA hard. Before the outbreak of the pandemic crisis, there was a ‘price war’ over oil. As a result, oil prices became negative, perhaps for the first time in history:

"Even the most optimistic energy analysts are predicting the collapse of hundreds of oil companies in the United States. Some have accumulated billions of dollars in debt, much of it high risk. ‘The first hotbed of risk in corporate debt is energy,’ says Capital Economics, although Macadam says it is not a systemic risk. But a chain of defaults in the oil sector would increase the risk of a financial crisis. And if one of the world’s most indebted oil giants - Shell, for example, has a debt of US$77 billion, one of the highest in the world - were to run into trouble, the repercussions would be devastating".[1]

These negative prices are a perfect illustration of the level of irrationality of capital. Overproduction of oil and rampant speculation in this sector has led to the owners of oil companies paying to get rid of oil that can no longer be stored due to lack of space.

While in 2008 the failure of the banks was mainly driven by property speculation, today it is directly productive companies that put them at risk:

"The four largest American lenders, JP Morgan, Bank of America, Citigroup and Wells Fargo, have each invested more than $10 billion in the oil fracking sector in 2019 alone, according to Statista. And now these oil companies are at serious risk of becoming insolvent, leaving banks with paperwork on their balance sheets (…)  According to Moody's, 91% of US corporate bankruptcies in the last quarter of last year occurred in the oil and gas sector. Data provided by Energy Economics and Financial Analysis indicates that last year, oil fracking companies were unable to pay $26 billion in debt.”[2] With the pandemic, the situation is seriously worsening: "Rystad Energy Consulting estimates that even if the $20 a barrel were to be recovered, 533 US oil companies could become insolvent by 2021. But if prices remain at $10, there could be more than 1,100 bankruptcies, with virtually all the companies being affected.”[3]

The crisis of the "multilateral" phase of state capitalism

Capitalism - through state capitalism – is making an enormous effort to protect the vital centres of the system and avoid a brutal fall, as the report on the crisis of the 23rd Congress says: "By relying on the levers of state capitalism and drawing the lessons of 1929, capitalism is able to preserve its vital centres (especially the USA and Germany), to follow the evolution of the crisis, to lessen its effects by pushing them back to the weakest countries, to slow down its rhythm by prolonging them in time.”

State capitalism has gone through different phases that we have begun to deal with, notably in a day of study in 2019. Since 1945, the needs of the blocs have imposed a certain coordination of the state management of the economy at the international level, especially in the US bloc, with the creation of international bodies for "cooperation" (OECD, IMF, early EU) and trade organisations (GATT).

In the 1980s, capital in the central countries, overwhelmed by the rise of the crisis and suffering from a sharp fall in profits, tried to move whole sections of production to countries with low-cost labour power such as China. To this end, it required a very strong financial "liberalisation" on a global scale to mobilise capital to make the necessary investments. In the 1990s, after the fall of the Eastern bloc, international organisations were strengthened, giving rise to a structure of "international cooperation" at the monetary and financial levels, for the coordination of economic policies, establishment of international production chains, stimulation of world trade by the elimination of customs barriers, etc. This framework was designed to benefit the strongest countries: they could conquer new markets, relocate their production, and take over the most profitable companies in the weaker countries. The latter were forced to change their own state policy. From now on, the defence of the national interest was not done through the customs protection of key industries but through the development of infrastructure, training the workforce, international expansion of its key companies, capture of international investments, etc.

There was "a vast reorganisation of capitalist production on a global scale between 1990 and 2008 (…) Following the EU's reference model of eliminating customs barriers between member states, the integration of many branches of world production has been strengthened by developing veritable chains of production on a global scale. By combining logistics, information technology and telecommunications, allowing economies of scale, the increased exploitation of the proletariat's labour power (through increased productivity, international competition, free movement of labour to impose lower wages), the submission of production to the financial logic of maximum profitability, world trade has continued to increase, even if less so, stimulating the world economy, providing a “second wind” that has extended the existence of the capitalist system." (Point 8 of the 23rd Congress Resolution).

This "international cooperation" was a very risky and bold policy to alleviate the crisis and mitigate some of the effects of decay on the economy by trying to limit the impact of the capitalist contradiction between the social and global nature of production and the private nature of the appropriation of surplus value by competing capitalist nations. Such an evolution of decadent capitalism is explained in our pamphlet on decadence where, criticising the vision according to which decadence is synonymous with a definitive and permanent blockage of the development of the productive forces, it argues:

"If we defended the hypothesis of the definitive and permanent halt in this development, the deepening of this contradiction could only be demonstrated if the outer bounds of the existing property relations were 'absolutely' receding. However, it happens that the characteristic movement of the different periods of decadence in history (including the capitalist system) tends rather in the direction of expanding these frontiers up to their final limits than towards their restriction. Under the aegis of the state and under the pressure of economic and social necessities, the system's carcass swells while casting off everything that proves superfluous to the relations of production, everything not strictly necessary to the system's survival. The system is reinforced but at its last limits.” This is even truer of capitalism, the most elastic and dynamic mode of production in known history.

As the 23rd Congress Report on the economic crisis and the Resolution on the international situation shows, this "world organisation of production" began to be shaken during the decade from 2010: China, after having profited greatly from the global trade mechanisms (WTO), began to develop a parallel economic, commercial and imperialist mechanism (the New Silk Road); Germany has taken protectionist measures; the trade war has accelerated with the coming to power of Trump... These phenomena clearly express the fact that capitalism increasingly encountered major difficulties in its tendency to enlarge the frontiers cited in our decadence pamphlet.

"Since the 1960s, this indicator [which measures the proportion of exports and imports in each national economy] has followed an upward trend that has slowed down over the last 18 months. Over this period, it has gone from about 23% to a stabilisation at about 60%, and since 2010 it has been falling steadily.”[4]

The brutal irruption of decomposition into the economic terrain

Three factors at the origin of the pandemic crisis show the irruption of the effects of decomposition into the economic terrain: each for themselves, negligence and loss of control. Two of these find their origin directly in capitalist decomposition: each for themselves and loss of control. These are very sensitive factors which the bourgeoisie - at least in the central countries - had succeeded in controlling as best it could, even if with increasing difficulty. At the present stage reached by the development of the internal contradictions of capital, and given the way in which they manifest themselves in the evolution of the crisis, the explosion of the effects of decomposition now becomes a factor of aggravation of the world economic crisis, of which we have only seen the very first consequences. This factor will influence the evolution of the crisis by constituting an obstacle to the effectiveness of state capitalist policies in the current crisis.

"Compared to the responses to the crises of 1975, 1992, 1998 and 2008, we see as perspective a considerable reduction of the capacity of the bourgeoisie to limit the effects of the decomposition on the economic terrain. Up until now, the bourgeoisie has succeeded in preserving the vital terrain of the economy and world trade from the highly dangerous centrifugal effects of decomposition. It has done this through the ‘international cooperation’ of the mechanisms of state capitalism - what has been called ‘globalisation’. At the height of the economic convulsion of 2007-2008 and in 2009-2011, with the ‘sovereign debt’ crisis, the bourgeoisie was able to coordinate its responses, which helped to soften the blow of the crisis a little and guarantee an anaemic ‘recovery’ during the 2013-2018 phase" (from a contribution on the economic crisis to discussion in the ICC).

With the pandemic we've seen how the bourgeoisie tries to unite the population behind the state,   revamping national unity. Unlike 2008, when the nationalist tone was not as strong, now the bourgeoisies across the world have closed their borders, spreading the message: “behind national borders you find protection, borders help to hold back the virus”. This is a way for the different states to try to rally the population behind them; they speak everywhere in martial terms: “we are at war, and war needs national unity”, with the messages “the state will help you”: “we will bail you out”; “by closing the border, we will keep the virus away”; by imposing emergency plans, by organising shutdowns, the states want to convey the message: “a strong state is your best ally”.

The WHO has been completely inoperative while its action was vital to develop effective medical action. Every state fearing a loss of competitive position has suicidally delayed action in the face of the pandemic. The obtaining of medical equipment saw the staggering spectacle of all kinds of robberies between states (and even within each state). In the EU, where ‘cooperation between states’ has gone as far as possible, we have seen the uncontrolled development of a brutal surge of protectionism and of economic every man for himself: ‘It is not only that the EU does not have any legal possibilities to impose its rules on the EU in the health sector, but above all each country took measures to defend its borders, its supply chains; and we have seen if not for the first time a real blockage of goods, confiscation of health equipment - and the prohibition to deliver them to other European countries’” (another internal contribution).

We have here an illustration, more serious, of the perspective set out in the resolution on the international situation at our last international Congress:

"The current development of the crisis through the increasing disruptions it causes in the organisation of production into a vast multilateral construction at the international level, unified by common rules, shows the limits of ‘globalisation’. The ever-increasing need for unity (which has never meant anything other than the imposition of the law of the strongest on the weakest) due to the ‘trans-national’ intertwining of highly segmented production country by country (in units fundamentally divided by competition where any product is designed here, assembled there with the help of elements produced elsewhere) comes up against the national nature of each capital, against the very limits of capitalism, which is irremediably divided into competing and rival nations. This is the maximum degree of unity that it is impossible for the bourgeois world to overcome. The deepening crisis (as well as the demands of imperialist rivalry) is putting multilateral institutions and mechanisms to a severe test." (Point 20).

What we see is that in response to the pandemic there has been a very significant return to  measures of "national relocation" of production, preservation of key sectors in each national capital, development of barriers to the international circulation of goods and people, etc., which can only have far reaching consequences for the evolution of the world economy and the global capacity of the bourgeoisie to respond to the crisis. The national withdrawal can only worsen the crisis, leading to a fragmentation of production chains that previously had a global dimension, which can only wreak havoc on monetary, financial and commercial policies. This could lead to the blocking and even the partial collapse of some national economies. It is too early to measure the consequences of this relative paralysis of the economic system. However, the most serious and significant is that this paralysis is taking place on an international scale.

The generalised response of states to the pandemic illustrates the validity of an analysis already made in the 23rd Congress Report on the economic crisis:

One of the major contradictions of capitalism is that arising from the conflict between the increasingly global nature of production and the necessarily national structure of capital. By pushing the economic, financial and productive possibilities of the ‘associations’ of nations to their ultimate limits, capitalism has obtained a significant ‘breath of fresh air’ in its struggle against the crisis that is plaguing it, but at the same time it has put itself in a risky situation. This headlong rush into multilateralism is developing in a context of decomposition, that is, a situation where indiscipline, centrifugal tendencies, entrenchment in the national structure, are increasingly powerful and affect not only fractions of each national bourgeoisie but also lead to large sectors of the petty bourgeoisie and even fringes of proletarians wrongly believing that their interest is attached to the nation. All this crystallises into a kind of ‘nihilist nationalist revolt’ against ‘globalisation’”.

How will the bourgeoisie respond?

We are going to examine the response initiated by the bourgeoisie which will be articulated in 3 parts: 1) continuation of astronomical levels of debt; 2) national withdrawal; 3) brutal attack on workers' living conditions.

Global debt stood at $255,000 billion, or 322% of global GDP, whereas before the 2008 crisis it amounted to $60,000 billion, with global GDP since having progressed only relatively "sluggishly". We have here a picture of the development of private and public debt over the last thirteen years, which has helped sustain what the bourgeoisie has called “sluggish” growth. Faced with the violent acceleration of the economic crisis induced by the pandemic, the bourgeoisie has reacted everywhere in the world by the creation of money issued by the central banks of all the developed and emerging countries. Contrary to the crisis of 2008, no coordination between the world’s main central banks has been implemented. This massive creation of central money and debt has been equal to the anxiety that immediately took over the bourgeois class in the face of the scale of the recession which seems to be opening up before it.  Taking an average of the figures given by the bourgeoisie at the end of May, we have the following forecasts of falls in growth:

- 6.8% of GDP for the EU as a whole and 11 to 12% for the southern Mediterranean countries...

- For the United States the figures given express the difficulty or ideological perfidy of the bourgeoisie in its evaluation, giving figures ranging from 6.5% to 30%! In statistical terms this has never been seen before. The Philadelphia FED even put forward the figure of 35%.

- China announced a drop in its GDP of 3.5% and a 13% drop in its industrial activity.

If we take the lowest hypothesis put forward by the bourgeoisie and in the absence of a second wave of the pandemic, world growth in 2020 is expected to experience a sharp contraction of at least 3%, a much sharper decline than during the 2008-2009 crisis.

Here is a summary of the uncertain outlook expressed by the IMF (which is in line with the average of the forecasts made by official bodies at the international level):




Advanced countries



Euro zone

































World Total



Volume of world trade




Imports by advanced countries



Imports by emerging and developing countries



Exports by emerging and developing countries



These tables provide an overview not only of the envisaged recessionary process, but also of the expected level of contraction in world trade.

A synthesis of our discussion gives the following figures, which are quite telling:

The situation is only sustainable because state debts and their repayment are taken over by the central banks; thus the FED is injecting into the US economy $625 billion per week, while the Paulson Plan launched in 2009 to stop bank failures was globally $750 billion (although it is true that other plans to buy back debts by the FED will be launched in the following years)". "The most striking response of all has come from Germany, although it is only part of a wider European reaction to the acceleration of the economic crisis. The reason that the projected measures of the German government are of especial importance is explained in an article in the Financial Times of Monday 23rd March: ‘The measures proposed by Olaf Scholtz, finance minister, represent a decisive break with the government's strict adherence to the “schwarze Null” or "black zero" policy of balanced budgets and no new borrowing[5] (…) “Since February, 14,000 billion dollars have been released, to avoid collapse. All this takes place in a completely different context from the past. How have these ‘expansionist’ policies, which have overcome differences between central banks and states, the recovery, rescue plans - how can they be effective?"[6].

A less well-known example concerns China, which is one of the most indebted countries in the world, even if it also has significant advantages that should not be underestimated. China's global debt in 2019 is equal to 300% of its GDP, or $43,000 billion. In addition, 30% of businesses in China are categorised as “zombie companies”. This is the highest percentage in the world. It is also in this country that the rate of production capacity utilisation is the lowest; in fact all the developing countries are experiencing this phenomenon of excess production capacity. Officially, the industrial capacity utilisation rates of the world's two leading powers - and this before Covid-19 - were 76.4% in China and 78.2% in the United States. The stimulus package implemented in China would amount to $64,000 billion, which is pharaonic and probably intended largely for ideological propaganda. The stimulus package is planned for a minimum of five to twenty years, and regardless of what the reality will be, it cannot be unrelated to China's economic and imperialist hegemonic aims. The US stimulus package has reached $10,000 billion. In comparison the EU's recovery plan appears almost ridiculous, since it reportedly amounts to $1290 billion in the form of loans, financed partly by the financial markets and partly directly by the ECB. In reality, the money injected by the ECB into the entire economy, private and shadow banks and businesses, amounts to several billion euros. The states, especially Germany, will guarantee by mutualisation part of this plan which will be in the form of subsidies and loans repayable between 2028 and 2058! In reality the bourgeois class is admitting that much of the world’s debt will never be repaid. Which brings us to the aspects we are going to discuss now.

We cannot describe in the framework of this report all the monetary creations in progress in all their extent, nor to detail all the recovery plans. If all this seems beyond imagination, the fact remains that capitalism is using this astronomical money creation to invest and make its goods. From this point of view, central and private money creation must grow exponentially (in different forms) to allow accumulation as much as possible to be maintained and, as far as the present situation allows, to curb the plunge into depression. This depression contains within it the danger of deflation but above all of stagflation. The devaluation of currencies even beyond the current monetary war is inscribed in the perspective of the crisis of capitalism. The acceleration of the current crisis is a very significant step in this direction. The crux of the question is: in each country, more and more, global capital is mortgaging the future value to be produced and realised in order to allow current growth and continue accumulation. It is therefore largely thanks to this anticipation that capitalism manages to capitalise and invest. This process materialises the fact that, more and more, the colossal debt issued is less and less covered by the surplus value already produced and realised. This opens up the prospect of ever greater financial crashes and destruction of financial capital. Logically, this process implies that the internal market for capital cannot grow infinitely, even if there is no fixed limit in the matter. It is in this context that the crisis of overproduction at the current stage of its development poses a problem of profitability for capitalism. The bourgeoisie estimates that around 20% of the world’s productive forces are unused. The overproduction of means of production is particularly visible and affects Europe, the United States, India, Japan, etc.

This is important if we want to establish how state capitalism must absolutely strengthen itself in the face of the looming crisis, but also how the recovery plans contain very strong limits and contain growing perverse effects. And how “everyone for themselves”, in this context, is the product of decomposition, but also of the growing economic stalemate, a trend which capitalism cannot escape, but which is also historically a deadly dynamic. It will be important in this sense, in the period to come, to study and compare the history of the open crises of capitalism, in particular those of 1929, 1945, 1975, 1998, 2008.

National withdrawal

The situation that is opening up with the very deep acceleration of the current crisis brings back to the fore the role of states (and therefore of their central banks, because the myth of their  independence is over). It would be interesting to show what the economic policies, the role of states and Keynesianism were in concrete terms in the periods 1930 and 1945, then to show the difference with the way in which the bourgeoisie faced the situation in 2008. There are during all of this period differences of very great importance: for example there is the question of the  existence of markets and extra-capitalist zones, but also the extent of the world economy and the great imperialist and economic powers, plus the question of the blocs , etc. But in this crisis, the recovery plans have been made in the form of public deficit and state debt and not, as in the 1930s and 1940s, by tapping off most of the surplus value already realised and hoarded, to which was added a share of debt having nothing in common with that of today. The current stimulus packages will prove increasingly difficult to sustain in their financing, as the levels of debt they require and the growth they will generate will diverge. However, a number of questions are posed.

The lessons of the 1929 crisis led the bourgeoisie, despite and against its own "nature", to move towards greater cooperation in order to slow down as much as possible the development of its crisis either by Keynesian policies or by the orchestration of globalisation by states. Even if, in the current situation, there will indeed be a return to Keynesian-type policies, in the context of a growing trend towards everyone for themselves, their effectiveness, with regard to the means implemented, will not be comparable with past periods.

We must see in this regard the tendency to a greater weight, compared to the previous period, of isolated responses by the bourgeoisie at the national level. For example, the new tendency consisting of closing the borders to stop passenger transport from one continent to another, or to close national borders, as if the virus respected national isolation; all this is much more a reflection of helplessness and a state of mind than a scientifically-based decision to quarantine intended to ward off the virus. In what way is there more risk of catching the virus in an international train between Stuttgart and Paris rather than between Stuttgart and Hamburg in a national train? Closing national borders is of no help; it expresses the "limits" of the means of the bourgeoisie.

The repatriation of production to central countries is increasing: with the pandemic 208 European companies have decided to bring back production from China:

"According to a recent survey of 12 global industries, 10 of them - including the automotive, semiconductor and medical equipment industries - are already moving their supply chains, mainly out of China. Japan is offering $2 billion to companies to move their factories out of China and back to the Japanese archipelago.” [7] A president like Macron, who seems to be a proponent of multilateralism, has said that ’delegating’ food and medical supplies is ‘crazy’. His finance minister, Bruno Le Maire, calls for ‘economic patriotism’ so that the French consume national products”.[8]

In all countries local economic plans are favoured, preferably consuming local or national products. It is a withdrawal into oneself that tends to break the industrial, food and other production chains, designed on a global scale, and which have greatly reduced costs.

It can therefore be concluded that these centrifugal, ‘each-for-himself’ tendencies have reached a new level, while at the same time every country, the state and each national bank has pumped or promised to pump gigantic sums (unlimited in the case of Germany) into industry. None of these measures have been adopted and harmonised by the ECB or the IMF; it must be added that it was not only the populist Trump who acted as a champion of each for himself; Germany – with the agreement of the main parties – has acted in the same direction, as has Macron. Thus, whether populist or not, all governments have acted in the same direction; retrenching behind national borders, ‘each for himself’ - with only a minimum of international or European coordination.

The consequences of these actions seem counterproductive for every national capital and even worse for the world economy:

"Between 2007 and 2008, due to a fateful convergence of unfavourable factors - poor harvests, rising oil and fertilizer prices, a boom in biofuels, etc. - the world economy has been hit hardest by the crisis. - 33 countries limited their exports to protect their ‘alien sovereignty’. But the cure was worse than the disease. The restrictions increased the prices of rice (116%), wheat (40%) and maize (25%), according to World Bank estimates (...). The example of China, the first country affected by the epidemic, does not bode well: the threats to global supply chains have already led to a 15% and 22% increase in food in this Asian country since the beginning of the year".[9]

Counter tendencies to national withdrawal

The bourgeoisie is sure to react. At the EU level, Germany has finally agreed to “debt pooling”, which shows that counter-tendencies are at work in the face of this surge of decomposition. Perhaps the US bourgeoisie will sack Trump in the next elections in favour of the Democrats who are traditional supporters of "multilateralism".[10] In addition, "On April 22, the 164 member countries of the World Trade Organisation (WTO), which account for 63% of world agri-food exports, pledged not to intervene in their markets. At the same time, the agriculture ministers of 25 Latin American and Caribbean countries signed a binding agreement to guarantee supplies to 620 million people".[11]

With the "ecological transition" plan and the promotion of a "green economy", efforts to reorganise the economy - at least at an EU level - will be made: with the massive development of telecommunications, the application of robotics and IT, new and much lighter materials, biotechnology, drones, electric cars etc., traditional heavy industry based on fossil fuels is tending to become obsolete, including in the military field. Imposing "new standards" for economic organisation is becoming an asset for the central countries, especially Germany, the United States and China.

The bourgeoisie will fight step by step against this tide of national fragmentation of the economy. But it comes up against the increased force of its historical contradiction between the national nature of capital and the global nature of production. This tendency of each bourgeoisie to want to save its economy at the expense of others is an irrational tendency which would be disastrous for all countries and for the whole world economy, even if there will be differences between countries.  The tendency of each for themselves may be even irreversible and the irrationality which accompanies it puts into question the lessons drawn from the crisis of 1929 by the bourgeoisie.

As the 1919 Manifesto of the Communist International stated, "The end result of the capitalist mode of production is chaos". Capitalism has resisted this chaos in many ways during its decadence and has continued to resist during its phase of decomposition. Counter-tendencies will continue to emerge. However the situation that is opening up today is one of a significant aggravation of chaos, especially on the economic terrain, which is very dangerous from the historic point of view.

A nightmare for the proletariat of all countries, but especially in the central countries

The 23rd Congress Resolution on the international situation gave the following framework:

"Concerning the proletariat, these new convulsions can only result in even more serious attacks against its living and working conditions at all levels and in the whole world, in particular:

- by strengthening the exploitation of labour power by continuing to reduce wages and increase rates of exploitation and productivity in all sectors;

- by continuing to dismantle what remains of the welfare state (additional restrictions on the various benefit systems for the unemployed, social assistance and pension systems); and more generally by ‘softly’ abandoning the financing of all forms of assistance or social support from the voluntary or semi-public sector;

- the reduction by states of the costs represented by education and health in the production and maintenance of the proletariat's labour power (and thus significant attacks against the proletarians in these public sectors);

- the aggravation and further development of precariousness as a means of imposing and enforcing the development of mass unemployment in all parts of the class.

attacks camouflaged behind financial operations, such as negative interest rates which erode small saving accounts and pension schemes. And although the official rates of inflation for consumer goods are low in many countries, speculative bubbles have contributed to a veritable explosion of the cost of housing.

- the increase in the cost of living notably of taxes and the price of goods of prime necessity.” (Point 23)

This framework has been strongly confirmed but the situation has also seriously aggravated with the outbreak of the pandemic. At the core of the economic situation is the attack on the conditions of the proletariat all over the world.

High-speed pauperisation.

In 2019, according to the UN, 135 million people were suffering from hunger; in April 2020, with the outbreak of the pandemic, the UN project that 265 million people will be in this situation. The World Bank stated in March that the poor population would reach 3.5 billion people with a sudden acceleration of more than 500,000 per month. Since then this pace appears to have continued, particularly in Central and South America, as well as in Asia including the Philippines, India and China. The impoverishment of workers will accelerate. According to the Report of the International Labor Organisation (ILO), "the pressure on incomes resulting from the decline in economic activity will have a devastating effect on workers who are near or below the poverty line". Between 8.8 and 35 million more workers will be in poverty worldwide, compared to the initial estimate for 2020 (which predicted a decrease of 14 million worldwide).

Mass unemployment.

In India and China, the number of proletarians being made unemployed is counted according to the IMF in the hundreds of thousands. Business Bourse speaks of several million workers having lost their jobs in China.  All these figures really need to be taken with great caution as they often vary from one news site to another. What is true here is the massive aspect of this phenomenon and its rapid extension due to the containment and shutdown of a large part of global activity. During the same period, mass unemployment has reached 35 million people in the United States and, despite the exceptional state aid, the queues at food distribution points are growing longer and longer, resembling images of the 1930s in the United States. The same phenomenon is taking place in Brazil, where the unemployed are no longer even officially registered. In France unemployment could rise to 7 million within a few months. The explosion of mass unemployment is taking the same pace in Italy and Spain. At the moment, plans for mass redundancies are starting to arrive, as in aviation and aircraft construction but also in the automobile industry, oil production etc. The list will grow longer and longer in the coming period.

Generalised precariousness.

In an initial assessment of the consequences of the pandemic, the ILO estimated that the pandemic would cause the permanent loss of 25 million jobs worldwide, while precariousness would increase sharply: "Under-employment is also expected to increase exponentially, as the economic consequences of the virus epidemic are reflected in reductions in working hours and wages. In developing countries, restrictions on the movement of people (e.g. service providers) and goods may this time cancel out the buffer effect that self-employment has had in these countries.”[12] In addition, in the informal economy tens of thousands of workers - who do not fit into any statistics and who do not qualify to receive financial support from the state – are out of work. For the moment it is too early to have an idea of the level of overall deterioration in living standards.

Attacks on all levels

Wage cuts, increased working hours, lower pensions and social benefits. It also appears, as in France, that the bourgeoisie is trying to extend real working time. But it is also lowering direct wages, in particular by means of new taxes, as a pretext. The European Union, for example, is seriously considering a Covid tax, a whole programme!

The debt is always more and more colossal, necessarily involving a quid pro quo: the intensification of austerity measures against workers. It is within this framework that we must examine the meaning of universal basic income as a means of containing social tensions and dealing a major blow to living conditions as a state-organised step towards universal impoverishment.

In the central countries and especially in Western Europe, the bourgeoisie will try to administer the attacks as judiciously as possible and to ensure they are applied in a "political" way, by provoking the greatest divisions within the proletariat. Although the bourgeoisie's margin of manoeuvre on this terrain will tend to shrink, we must not forget that:

At the same time, the most developed countries, in northern Europe, the USA and Japan, are still very far from such a situation. One the one hand, because their national economies are better able to resist the crisis, but also, and above all, because today the proletariat of these countries, and especially in Europe, is not ready to accept such a level of attacks on its conditions. Thus one of the major components of the evolution of the crisis escapes from a strict economic determinism and moves onto the social level, to the rapport de forces between the two major classes in society, bourgeoisie and proletariat.” (20th Congress Resolution on the international situation)


[1] La Vanguardia, 25 April 2020, "Las zonas de riesgo del sistema financiero".

[4] La Vanguardia, 23 April 2020, "Cómo el coronavirus está acelerando el proceso de desglobalización".

[5] BBC World Service, 6 April 2020.

[6] Presentation in a meeting of the organisation.

[8] Ibid.

[9] However, within the Democratic Party protectionist positions similar to Trump's are developing. Two Democratic congressmen presented in March 2020 a proposal to withdraw the United States from the WTO.

[12] ILO Report, March 2020.


World economic crisis