This crisis is going to be the most serious in the whole period of decadence

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For the ICC, “The crisis that has already been unfolding over decades is going to become the most serious of the whole period of decadence, and its historic import will go beyond even the first crisis of this epoch, the crisis which began in 1929. Ripening after more than 100 years of capitalist decadence, with an economy ravaged by the military sector, weakened by the impact of the destruction of the environment, profoundly altered in its mechanisms of reproduction by debt and state manipulation, prey to the pandemic, increasingly suffering from all the other effects of decomposition, it is an illusion to think that in these conditions there will be any easy or durable recovery of the world economy.” (“Resolution on the International Situation” (2021), International Review n°167)

The proletarian political milieu, for its part, underestimates the depth of the crisis: for the PCI (International Communist Party), which concentrates essentially on its financial aspects, the current crisis seems to be no more than a replay of the 1929 crisis. As for the ICT (International Communist Tendency), while empirically it can see certain phenomena of its aggravation, its economist approach, based solely on the downward trend in the rate of profit, obscures the extent of the decline of the capitalist system and the seriousness of the crisis. By continuing to conceive of the crisis as the sequence of cycles typical of the ascendant phase of capitalism, it fails to understand the forms it takes in decadence, or really its consequences and the resulting stakes for the proletariat. Above all, it sees Capital "... generating wars as a means of pursuing the process of accumulation and extortion of surplus-value which is the basis of its existence"[1].

This report bases its assessment of the current severity of the economic crisis on the achievements of marxism and the elements of its evolution since the late 1960s, as set out in various ICC publications.


The crisis is one of overproduction


A. The impasse of the crisis of overproduction is based on capitalist social relations which are too narrow for the extended reproduction of capital[2] and on the limits to solvent extra-capitalist markets

The crisis that resurfaced in 1967 and is still raging today is a crisis of overproduction. At its root is a fundamental cause, the principal contradiction of capitalism from its very beginnings, which has become a definitive obstacle once the productive forces reached a certain level of development: capitalist production does not automatically create the markets necessary for its growth. Capital produces more commodities than can be absorbed by the capitalist relations of production: part of the realisation of its profits, that which is destined to extend the reproduction of capital (i.e. neither consumed by the bourgeois class nor by the proletarian class) must be realised outside these relations, in extra-capitalist markets. Historically, capitalism found the solvent outlets necessary for its expansion first among the peasants and artisans of the capitalist countries, then compensated for its inability to create its own outlets by extending its market to the whole world by creating the world market.

"But by generalising its relations of production across the whole planet and by unifying the world market, capitalism reached a point where the outlets which allowed it to grow so powerfully in the nineteenth century became saturated. Moreover, the growing difficulty encountered by capital in finding a market for the realisation of surplus value accentuates the fall in the rate of profit, which results from the constant widening of the ratio between the value of the means of production and the value of the labour power which sets them in motion. From being a mere tendency, the fall in the rate of profit has become more and more concrete; this has become an added fetter on the process of capitalist accumulation and thus on the operation of the entire system" (ICC Platform, section on “The Decadence of Capitalism”). "It thus becomes clearer that the two contradictions traced by Marx do not exclude each other but are two sides of one overall process of value production. This ultimately makes it possible for the ‘two' theories of crisis to become one” (“Marxism and Crisis Theories”, International Review n°13, 1978).

On a more immediate level, the open crisis of the late 1960s put an end to two decades of prosperity based on the resumption of the exploitation of extra-capitalist markets (which had slowed down during and between the two world wars) and on the modernisation of the productive apparatus (Fordist methods, introduction of information technology, etc.). The return of the crisis once again opened the way to the historical alternative of world war or generalised class confrontation leading to proletarian revolution.

B. What criteria should be used to assess the seriousness of the crisis?

Faced with the resurgence of the crisis in the 1970s, the organisation retained three criteria to attest to the seriousness of the crisis: the development of state capitalism, the growing impasse of overproduction, and the preparation for war with the development of the war economy.

B1. The development of state capitalism

As an expression of the contradiction between global socialisation and the national basis of the social relations of capitalist production, the universal tendency towards the strengthening of the capitalist state, in all spheres of social life, fundamentally reflects the definitive unsuitability of capitalist social relations for the development achieved by the productive forces. The state is the only force capable of:

- curbing the antagonisms within the ruling class with a view to imposing the unity essential to defend the national capital;

- organising and fully developing on a national scale the cheating of the law of value, to restrict its field of application in order to slow down the disintegration of the national economy faced with of the insurmountable contradictions of capitalism;

- placing the economy at the service of war and organising national capital with a view to preparing for imperialist war;

- strengthening, by means of its repressive forces and an ever-heavier bureaucracy, the internal cohesion of a society threatened with dislocation by the growing decomposition of its economic foundations; imposing, by means of omnipresent violence, the maintenance of a social structure increasingly incapable of automatically governing human relations – relations which are less and less accepted and more and more an absurdity from the point of view of the very survival of society.

B2. The growing impasse of overproduction

There is no solution to overproduction within capitalism; all the policies implemented to mitigate its effects are doomed to failure, and capitalism is constantly confronted with this insurmountable fundamental contradiction. In essence, this contradiction can only be eliminated by the abolition of wage-labour and exploitation. At most, the bourgeoisie can only try to mitigate the violence of the crisis by slowing it down.

The "present situation clearly illustrates what the ICC has always said about the nature of the crisis: that we are dealing with a general crisis of overproduction which in the capitalist metropoles takes the form of an overproduction of commodities, capital and labour power” (“Resolution on the crisis”, International Review n°26, 1981)

This impasse is expressed in the development of inflation, which is fed by the burden of unproductive costs mobilised by the need to maintain a minimum of cohesion in a disintegrating society (state capitalism) and the sterilisation of capital represented by the war economy and arms production. Inflation, which is also fuelled by cheating the law of value (debt, money creation, etc.), is a permanent feature of the decadence of capitalism, and becomes even more important in times of war. An enormous mass of capital, which can no longer be invested profitably, then feeds speculation.

"The whole period of decadence shows that the overproduction crisis implies a displacement of production towards the war economy. To consider this an ‘economic solution’, even a momentary one, would be a serious mistake. The roots of this mistake lie in an inability to understand that the overproduction crisis is a process of self-destruction. Militarism is the expression of this process of self-destruction which is the result of the revolt of the productive process against production relations” (“Conditions for the revolution: Crisis of overproduction, state capitalism, and the war economy”, International Review n°31, 1982)

B3. Preparing for war and building the war economy

"In the decadent phase of imperialism, capitalism can only direct the contrasts of its system towards one outcome: war. Humanity can escape from such an alternative only through proletarian revolution." ("Crises and cycles in the economy of dying capitalism - Part 1”; Bilan No. 10, August-September 1934), International Review n°102, 2000). Indeed, as the economic crisis is prolonged and deepened, it intensifies inter-imperialist antagonisms. For capital, there is only one "solution" to its historical crisis: imperialist war. So, the sooner the various palliatives prove their futility, the more deliberately each imperialist bloc must prepare for a violent repartition of the world market.

B4. Reinforcement of the exploitation of the proletariat

The establishment of a war economy implies the development of production (particularly armaments production) which cannot be usefully employed to increase the value of capital, i.e. which cannot be integrated into the production of new commodities. In this sense, it implies a sterilisation of capital, which must be compensated for by an increase in the surplus value extracted. This compensation is basically achieved by reinforcing the exploitation of the working class.


Balance sheet of the 1970s and 80s: the eruption of decomposition


At the end of the 1970s and the beginning of the 1980s, capitalism reached an impasse: in the Western bloc, the overproduction of goods was reflected in the fall in industrial production, which peaked, particularly in the USA, where recessions brought steel production back to its 1967 level. In the Eastern bloc, there was a shortage of capital, underdevelopment and backwardness of industrial production, and a complete lack of competitiveness of capital on the world market[3]. The myth that the so-called "socialist" countries could escape the general crisis of the system collapsed definitively in the 1980s. Many of the poorest, so-called ‘Third World countries’, had already collapsed by the mid-1970s.

In the American bloc, the economic crisis accelerated the trend towards a strengthening of state capitalism. Not only were measures of Keynesian stimulus on the scale of those taken after the 1929 crisis no longer feasible, but the subsequent stimulus policies also failed. One recession followed another, becoming deeper and deeper.

Each bloc escalated its preparations for a third world holocaust, notably through a considerable increase in arms spending to support inter-imperialist competition. War preparations were also intensifying in terms of the political strengthening of the blocs with a view to imperialist confrontation (but also to confronting the working class).

But for Capital, "While they have made it possible to strengthen the imperialist supremacy of the USA, the arms orders have not saved American industry. On the contrary. Between 1980 and 1987, the role on the world market played by the three key industrial sectors - machine-tools, automobiles and computer technology - has declined respectively from 12.7 to 9%, 11.5 to 9.4% and 31 to 22%. Arms production reproduces neither labour power nor new machinery. It represents a destruction of capital, of wealth, an unproductive puncture which deflates the competivity of the national economy. The two bloc leaders who emerged after Yalta have both seen their economies become less competitive than those of their allies. This is the result of the expenditure they have had to devote to the strength­ening of their military power, which is the guarantee of their position as imperialist leaders and, in the last instance, of their economic strength” (“The crisis of state capitalism: The world economy sinks into chaos”, International Review n°61, 1990).

A. The collapse of Stalinism - the consequences of decomposition

At the turn of the 1980s, as the two fundamental and antagonistic classes of society confronted each other without succeeding in imposing their own decisive response, the contradictions and manifestations of moribund capitalism did not disappear with time. Instead, they were maintained, accumulated and deepened, culminating in the phase of generalised decomposition of the capitalist system which completes and crowns three quarters of a century of agony of a mode of production condemned by history.

The eruption of decomposition resulted in an unprecedented phenomenon: the collapse of an entire bloc outside the conditions of world war or proletarian revolution.

"Overall, this collapse is a consequence of the capitalist world economic crisis; nor should we forget to take account in our analyses of the specificities of the Stalinist regimes as a result of their origins (see our ‘Theses on the economic and political crisis in the USSR and the Eastern bloc countries’ in International Review n°60). However, we cannot fully understand this unprecedented collapse from within of an entire imperialist bloc, in the absence of either world war or revolution, without incorporating into the analytical framework this other unprecedented element: society’s entry into the phase of decomposition that we can see today. The extreme centralisation and complete statification of the economy, the confusion between the economic and political apparatus, the permanent and large-scale cheating with the law of value, the mobilisation of all economic resources around war production, all characteristic of the Stalinist regimes, were well adapted to a context of imperialist war (these regimes emerged victorious from World War II). But they have been brutally confronted with their own limitations as the bourgeoisie has been compelled for years to confront a continually worsening economic crisis without being able to unleash this same imperialist war" (“Theses on Decomposition”, International Review n°62, 1990 and International Review n°107, 2001. )

B. The crisis of state capitalism and its significance

“After decades of state capitalist policies carried out under the whip of the imperialist blocs, the current process of the dissolution of the alliances which have hitherto divided up the planet represents, to a certain extent, a victory for the market, a brutal adaptation of imperialist rivalries to economic realities. It symbolises the inability of state capitalist measures to short-circuit ad eternam the remorseless laws of the capitalist market. This failure, which goes well beyond the limits of the former Russian bloc, expresses the incapacity of the world bourgeoisie to deal with the chronic crisis of over­production, with the catastrophic crisis of capital. It shows the growing ineffectiveness of the statist measures which have for decades been employed more and more massively, on the scale of the blocs, and which since the 1930s have been presented as a panacea to the insurmountable contradictions of capitalism as expressed in its market" (“The crisis of state capitalism: the world economy sinks into chaos”, International Review n°61, 1990).

"The absence of any perspective (other than day-to-day stop-gap measures to prop up the economy) around which it could mobilise as a class, and at the same time the fact that the proletariat does not yet threaten its own survival, creates within the ruling class, and especially within its political apparatus, a growing tendency towards indiscipline and an attitude of ‘every man for himself’. This phenomenon in particular allows us to explain the collapse of Stalinism and the entire Eastern imperialist bloc" (“Theses on Decomposition”,ibid).

The ICC recognised that the Western-style model of state capitalism, integrating private capital into a state structure and under its control, is far more efficient, more flexible, more suitable, with a more developed sense of responsibility for the management of the national economy, more mystifying because it is more masked, and above all, it controls an economy and a market that are far more powerful than those of the countries of Eastern Europe. But we also pointed out that the bankruptcy of the Eastern bloc, after that of the "third world", heralded the future bankruptcy of capitalism in its most developed areas. "The spectacle which the USSR and its satellites are offering us today, of a complete rout within the state apparatus itself, and the ruling class’ loss of control over its own political strategy is in reality only the caricature (due to the specificities of the Stalinist regimes) of a much more general phenomenon affecting the whole world ruling class, and which is specific to the phase of decomposition” (“Theses on Decomposition”, ibid).

In the following period, it was also confirmed that vast parts of the world, such as Africa, were economically marginalised on the world market. Despite the prospect of World War 3 receding, militarism continued unabated, and the ravages of war plunged ever larger areas into chaos at the direct instigation of the major powers, led by the USA with its catastrophic interventions in Iraq (1991 and 2001) and Afghanistan (2003).


Globalisation, 1989-2008


A. Globalisation: an attempt to maintain the profitability of capital

However, in the chaotic context of this new historical situation of decomposition, and in a capitalist world profoundly altered by the effects of its decadence, the disappearance of the blocs nevertheless offered an opportunity which was seized, particularly by the major powers led by the USA (as the sole remaining superpower in both economic and military terms), to prolong the survival of the capitalist system.

The attempts made through globalisation to limit the impact of capitalism's contradiction between the social and global nature of production and the private nature of the appropriation of surplus value by competing capitalist nations were fundamentally based on:

- the better exploitation of already existing markets, due to the disappearance of their competitors, swept away by the crisis which underlay of the collapse of the Eastern bloc countries, even if these markets were far from being the El Dorado presented at the time by the bourgeois campaigns.

- In addition, above all, the exploitation of the remaining extra-capitalist markets in a world where the disappearance of the blocs meant the disappearance of the main barriers to their access as long as they were under the tutelage of the enemy. However, not all markets are necessarily solvent, i.e. able to pay for the goods available for sale.

- State action. We no longer see the bloc leader, in the name of the necessary unity of the bloc, imposing the measures to be put in place by each national capital, but the economic and political power of the United States still enables it to blackmail each state into accepting the new rules of the game, on pain of being deprived of the financial windfall necessary for survival in the capitalist arena. States have been the main instruments for organising globalisation, playing a decisive role through their intervention in establishing regulations favouring maximum profitability, defining attractive tax policies, etc.

- The extension on a global scale of the cheating of the law of value by generalising the measures and mechanisms which had begun to be developed under the aegis of the USA within the framework of the Western bloc in the last decade of its existence. This was aimed at combating - by means of a demand artificially financed by debt - the consequences of the narrowness of the markets, which can only affect the profitability of Capital.

The new international organisation of production and trade imposed by the world's leading power essentially took two forms: the free movement of capital and the free movement of labour. These two provisions are closely linked to the fight against the downward trend in the rate of profit, in the context of a shortage of solvent markets.

It is this law which provides the explanation for the export of capital, which appears as one of the specific features of decadent capitalism: “‘the export of capital’, says Marx,is not caused by the impossibility of employing it at home, but by the possibility of placing it abroad at a higher rate of profit’. Lenin confirms this idea (in his Imperialism, the Highest Stage of Capitalism), saying thatthe need to export capital results from the capitalism’s excessive maturity in certain countries, where advantageous investments [our emphasis] are in short supply,” (Bilan, op cit) At the same time, it had the effect of destroying the industrial apparatus of the central countries, as soon as there was the possibility of relocating it elsewhere in the world on more profitable terms.

The race for productivity, designed to compensate for the downward trend in the rate of profit by increasing the amount of profit made, also intensified.

The question of the commodity "labour power" (the living labour from whose exploitation capitalism extracts its surplus value) has played a central role. The disappearance of the blocs allowed the search for available labour power, which could be exploited more profitably, and also favoured the extension of capitalist class relations to areas hitherto outside the field of capitalist production. As a result of the proletarianisation of huge masses of small producers separated from their means of production, the number of wage earners worldwide rose to a total of 1.9 billion workers and employees in 1980, and exceeded 3 billion in 1995. The increasingly drastic exploitation of the labour power of the working class (through the direct or indirect reduction of wages, the intensification of work or the extension of working hours) in all parts of the world in competition with each other, as well as the integration of new labour forces into the capitalist social relations of production, enabled the major powers, for a time, to better achieve expanded accumulation by exporting capital to zones of relocation. Freed from the imperialist corset dividing the world into blocs, capitalism extended its relations of production to the whole planet, right up to its final limits.

On the other hand, the struggle for survival and the unbridled quest for maximum profit have also led to even more devastating and destructive exploitation of the other basis of capitalist wealth: nature. The plundering and predation of nature caused by the need to drive down the price of raw materials has reached such heights that the 'Great Acceleration' of environmental destruction produced by decaying capitalism, especially since the Second World War, has been gathering even more momentum since capitalism entered its final phase of decomposition.

Literally every means of maximising profit for the ruling class has been deployed:

1) The mechanisms of financial capital, occupying a key position, have the logic of draining an increasingly considerable part of the wealth created worldwide towards the ruling class in the central countries.

2) The policy of spoliation, particularly of the other producing classes (petty bourgeoisie), a typical phenomenon of decadence, takes on a new extension and becomes more general "the necessity for finance capital to seek a super-profit, not from the production of surplus value, but by despoiling both the consumers (by raising commodity prices above their value), and the small producers (by appropriating a part of a part of their labour). Super-profit thus represents an indirect tax raised on the circulation of commodities. Capitalism tends to become parasitic in the absolute sense of the term” (“Crises and cycles in the economy of dying capitalism, part 2”, Bilan n°11, October-November 1934, republished in International Review n°103, 2000).

3) Speculation, driven by official institutions and governments, is taking on new scope and significance: it is fuelling indebtedness at all levels of the economy by putting ever more exuberant quantities of fictitious capital into circulation (reaching 10 times world GDP in 2007[4]), trapped in 'bubbles' which have the 'good fortune' of making government debt disappear from the accounts, masking inflation and blurring its negative effects.

4) The gangsterisation of the economy; fraud, illegal trade, trafficking, counterfeiting, etc. are taking on an unprecedented scope and dimension with the corruption of sectors of the State, or even at the instigation of States (such as Serbia, North Korea, etc).

B. The emergence of China

It was the unprecedented circumstances of the disappearance of the imperialist blocs that made China's emergence possible: "The stages of China's rise are inseparable from the history of the imperialist blocs and their disappearance in 1989: the position of the communist left affirming the ‘impossibility of any emergence of new industrialised nations’ in the period of decadence and the condemnation of states ‘which failed to succeed in their “industrial take-off” before the First World War to stagnate in underdevelopment, or to preserve a chronic backwardness compared to the countries that hold the upper hand’ was valid in the period from 1914 to 1989. It was the straitjacket of the organisation of the world into two opposing imperialist blocs (permanent between 1945 and 1989) in preparation for the world war that prevented any major disruption of the hierarchy between powers. China's rise began with American aid rewarding its imperialist shift to the United States in 1972. It continued decisively after the disappearance of the blocs in 1989. China appears to be the main beneficiary of ‘globalisation’ following its accession to the WTO in 2001when it became the world's workshop and the recipient of Western relocations and investments, finally becoming the world's second largest economic power. It took the unprecedented circumstances of the historical period of decomposition to allow China to rise, without which it would not have happened.

China's power bears all the stigma of terminal capitalism: it is based on the over-exploitation of the proletarian labour force, the unbridled development of the war economy through the national programme of ‘military-civil fusion’ and is accompanied by the catastrophic destruction of the environment, while national cohesion is based on the police control of the masses subjected to the political education of the One Party and the fierce repression of the populations of Uighur Muslims and Tibet. In fact, China is only a giant metastasis of the generalised militaristic cancer of the entire capitalist system: its military production is developing at a frenetic pace, its defence budget has increased six-fold in 20 years and has been ranked second in the world since 2010" (Point 11, “Resolution on the international situation (2019): Imperialist conflicts, life of the bourgeoisie, economic crisis”, International Review n°164, 2020)

C. The 2008 crisis

The period 1989-2008 was marked by a series of difficulties which demonstrate that globalisation, despite the spectacular upheavals in the hierarchy between economic powers, has not put an end to the tendency towards overproduction and the stagnation of capitalism as evidenced by:

- weaker growth;

- the under-employment or destruction of huge quantities of productive bases;

- the enormous quantity of surplus labour (estimated at between a third and a half of the world's total workforce), unemployed or underemployed, which capitalism is incapable of integrating into production, condemned to languish in the informal sector or on the margins of the capitalist economy;

- major instability and the inability to avert crises: the crisis in the European monetary system in 1993, the Mexican crisis in 1994, the Asian crisis in 1997-98, the crisis in Argentina in 2001, the bursting of the Internet bubble in 2002... with a permanent and growing risk of the implosion of the international financial system (even if, for two decades, capitalism managed to limit crises to certain parts of the world, at the cost of exorbitantly increasing costs and damage to the system);

- the lack of remission of the cancer of militarism, which has continued to suck the lifeblood out of global production, affecting the main parts of the world in different ways: European countries managed to cut their military spending by around half compared to 1989 levels; China did not engage in any conflicts during this period, reserving its economic strength for its emergence as the world's second largest power; but long and costly wars (Iraq, Afghanistan, etc.) waged by US imperialism have helped to weaken its economy in relation to its rivals.

In fact, this period was merely an interlude that allowed the capitalist system to preserve its economy somewhat from the effects of its decomposition.

Thus, the worsening of the real state of the economy and the revenge of the law of value led to the financial crisis of 2008, the most serious financial crisis since the Great Depression of 1929. It erupted in the USA, at the heart of global capitalism, and spread to the rest of the world. The weakening of the dynamics of globalisation, reducing the scope for broad-based accumulation, the burden of military spending and imperialist intervention, and the impasse of overproduction are causing the gigantic Ponzi pyramid of international financial scaffolding based on unlimited general indebtedness of the US state to implode and shatter, with speculation serving as a substitute for global growth to keep the capitalist system alive.

The gigantic, historically unprecedented rescue plans implemented by the central banks of the major powers, and China's role as a driving force, succeeded in stabilising the system and stemming the liquidity crisis, but not in really reviving the economy. The year 2008 marks a turning point in the history of the sinking of the capitalist mode of production into its historic crisis.

D. The end of the last extra-capitalist markets?

This violent explosion of the crisis, which concluded more than two decades of over-exploitation on a global scale, sparing no zone of influence in the world, no market - including extra-capitalist markets - confirms that the capitalist system is now even more completely locked into the situation where the universal hegemony of class relations makes extended reproduction increasingly difficult. Once the world market had been constituted and divided among the powers, the mere trend towards this end had meant the entry of capitalism into its phase of decadence, as Rosa Luxembourg pointed out;

“Thus capitalism expands because of its mutual relationship with non-capitalist social strata and countries, accumulating at their expense and at the same time pushing them aside to take their place. The more capitalist countries participate in this hunting for accumulation areas, the rarer the non-capitalist places still open to the expansion of capital become and the tougher the competition; its raids turn into a chain of economic and political catastrophes: world crises, wars, revolution.

But by this process capital prepares its own destruction in two ways. As it approaches the point where humanity only consists of capitalists and proletarians, further accumulation will become impossible. At the same time, the absolute and undivided rule of capital aggravates class struggle throughout the world and the international economic and political anarchy to such an extent that, long before the last consequences of economic development, it must lead to the rebellion of the international proletariat against the existence of the rule of capital”. (R. Luxemburg, The Accumulation of Capital, An Anti-critique).


The impossibility of a world dominated by capitalist relations


Many of the phenomena already existing in decadence take on a qualitatively new dimension in the period of decomposition, in particular because of the impossibility of capital to offer a perspective: "the bourgeoisie is totally incapable of mobilising society’s different components, including within the ruling class, around any common objective other than a step by step, but doomed, resistance to the advancing crisis (….) This is why today’s situation of open crisis is radically different from its predecessor of the 1930’s" (“Theses on Decomposition”)

As long as each nation has been able to benefit from globalisation, capitalism has generally managed to preserve the capitalist economy from the effects of decomposition. In particular, ‘every man for himself’ has been contained and the law of the strongest tolerated without question. The situation was quite different after 2008, when the 'opportunities' of globalisation closed: the even more obvious inability of the ruling class to overcome the crisis in its mode of production led to an explosion of every man for himself, in relations between nations (with the gradual return of protectionism and the unilateral questioning by the two main powers of multilateralism and the institutions of globalisation) and within each nation.

A. The 'whirlwind' effect of decomposition, an unprecedented factor in the worsening of the economic crisis

The 2020s have seen the effects of decomposition take on a new scale and significance that are powerfully destructive for the capitalist economy. They were ushered in by the global pandemic of Covid 19, a pure product of decomposition which brought the world economy to a standstill, necessitating massive state intervention and spiralling debt. The pandemic was soon followed by the return of war to Europe in Ukraine in 2022, the shockwaves of which continue to shake the capitalist world. Consecrated by the pandemic, the development of every man for himself on an unprecedented scale and the abandonment of any form of cooperation between nations are undermining the entire capitalist system, thus running counter to the lessons drawn from the 1929 crisis regarding the need for relative cooperation between the major nations.

The effects of decomposition are not only accelerating, they are also returning like a boomerang to express themselves most forcefully at the very heart of capitalism, as the combined effects of the economic crisis, the ecological/climate crisis and the imperialist war accumulate, interacting and multiplying their effects to produce a devastating spiral with incalculable consequences for capitalism, hitting and destabilising the capitalist economy and its infrastructure of production ever more severely. While each of the factors fuelling this 'whirlwind' effect of decomposition risks the collapse of states, their combined effects far exceed the mere sum of each of them taken in isolation.

The global disruption of the water cycle is a case in point. As a consequence of global warming attributable to the capitalist system, extreme and long-lasting droughts are the cause of mega-fires; they lead to the desertification of entire areas of the globe, making them uninhabitable, and often giving them over to war. They force populations to migrate; they were one of the causes of the collapse of the Arab states in the Middle East after 2010[5]. Productivity and even the practice of agriculture have been destabilised in the United States, China and Europe. Extreme rainfall and flooding are irreparably ruining entire regions or even states (Pakistan), destroying vital infrastructure and disrupting industrial production. Rising sea levels are threatening 10% of the world's population, as well as conurbations and coastal industrial infrastructure in central countries. Access to water is becoming a crucial strategic issue, leading to tensions and clashes between states over its control.

As the unleashing of militarism in Ukraine shows, war (as a deliberate decision by the ruling class) is the decisive accelerator of chaos and economic crisis, among the various factors in the 'whirlwind effect': increased famine worldwide, disruption of supply chains, shortages, destruction of the Ukrainian economy, environmental destruction, etc.

Decomposition also affects the way in which the ruling class tries to deal with the impasse in its system.

B. Decomposition fuels the headlong rush into militarism

The outbreak of war in Ukraine represents an "epochal change" for capitalism and the central countries: war, with its increasingly irrational character, where each side ruins and weakens itself, is no longer a distant prospect. It is drawing ever closer to the centres of world capitalism and involves most of the major powers. It continues to have profound negative repercussions on the world economic situation and is disrupting all relations between capitalist nations.

While chaos continues to spread in its wake (with the conflict between Israel and Hamas), all states are now preparing for "high-intensity" war: each national capital is reorganising its national economy in order to strengthen its military industry and guarantee its strategic independence. Military budgets are rising fast everywhere, catching up with and even exceeding the proportion of national wealth devoted to armaments at the height of the confrontation between the blocs.

The general sharpening of imperialist tensions, and within them the major conflict between China and the USA, is having profound repercussions on the economic stability of the capitalist system. A tendency towards fragmentation of the world market is developing as a result of the United States' desire to torpedo China's industrial power (which is the basis for the rise of China's military power and desire for global expansion) and to involve its allies in decoupling the Western economies from China by promoting "friend-shoring". The economic decisions taken by the major powers are increasingly determined by strategic considerations that follow imperialist fault lines and lead to major disruptions in global supply and demand.

C. Decomposition aggravates the crisis of state capitalism in the core countries

The mechanisms of state capitalism and its effectiveness are tending to seize up. The seriousness of the deadlock in capitalism and the need to build a war economy are fuelling confrontations within each national bourgeoisie, while the effects of decomposition on the bourgeoisie and society are expressed in the tendency for the ruling class to lose control of its political game. The tendency towards instability and political chaos within the ruling class, as witnessed by the American and British bourgeoisie, affects the coherence, long-term vision and continuity of the defence of the global interests of national capital. The coming to power of irresponsible populist factions (with programmes that are unrealistic for their national capital) weakens the economy and the measures imposed by capitalism since 1945 to avoid the uncontrolled contagion of the economic crisis.

If Western state capitalism has been able to survive its Stalinist rival, it is in the way that an organism with a stronger constitution resists the same disease for longer. Even if the bourgeoisie can still rely on more responsible factions with a greater sense of the state, capitalism today displays tendencies similar to those that caused the downfall of Stalinist state capitalism. In the case of Chinese state capitalism, marked by Stalinist backwardness despite the hybridisation of its economy with the private sector, and rife with tensions within the ruling class, the stiffening of the state apparatus is a sign of weakness and the promise of future instability.

Debt, the main palliative to the historic crisis of capitalism, is not only losing its effectiveness: the weight of debt is condemning capitalism to ever more devastating convulsions. By increasingly restricting the possibility of cheating the laws of capitalism, it reduces the room for manoeuvre of each capital to support and revive the national economy. The role of 'payer of last resort' taken on by governments since 2008 is weakening currencies, while debt servicing is severely restricting governments' ability to invest.

D. The impasse of even more implacable overproduction

The picture painted by the capitalist system confirms Rosa Luxemburg's predictions: capitalism will not experience a purely economic collapse, but will descend into chaos and convulsions:

- the almost complete absence of extra-capitalist markets now alters the conditions under which the main capitalist states must achieve expanded accumulation: increasingly, as a condition of their own survival, this can only be achieved at the direct expense of rivals of the same rank, by weakening their economies. The prediction made by the ICC in the 1970s of a capitalist world that could only survive by reducing itself to a small number of powers still capable of achieving a minimum of accumulation is increasingly becoming a reality.

- The deadlock of overproduction, combined with the anarchy inherent in capitalist production and the increasing destruction of ecosystems, is beginning to cause more and more shortages or disruptions (medicines, agriculture, etc.) because of the inability to generate enough profit to produce them.

- As an expression of this impasse, inflation, instigated by the return of war, is making a spectacular reappearance, destabilising the economy and depriving it of the long-term vision it needs.

- The frantic search for new sites to relocate capital (e.g. in Africa, the Middle East) and to exploit cheaper labour is coming up against the Dantean conditions of chaos and underdevelopment; an obstacle for the Western powers as it is for the Chinese Silk Roads project, which is collapsing.

- Nor does India offer a viable long-term alternative that could play a role equivalent to China's in the 1990s and 2000s; the circumstances that made the 'miracle of China's emergence' possible are no longer present, and such a prospect is now impossible.

- The enormous costs of tackling the ecological crisis and decarbonising the economy far outstrip Capital's ability to make the required level of investment. Many eco-projects are simply being abandoned because the cost of credit is killing their profitability, both in Europe and the United States.

- Despite the considerable slowdown in the development of the productive forces, capitalism is still able to make some advances, for example in medicine, biotechnology, artificial intelligence, etc. But these advances, deeply perverted by the use made of them by capital, are turning against the working class and humanity. AI, for example, apart from the risk of destroying thousands of jobs with no way of freeing up the workforce to find work elsewhere, is seen by governments as a tool for controlling the population or destabilising their imperialist rivals, and above all as a weapon of war and a tool for destruction (for example, Israel, which boasts of waging the first AI war, sees it as the "key to modern survival"). Some of its developers have warned that AI poses a risk of the extinction of humanity, on a par with other risks, such as pandemics and nuclear war.

- The massive shortage of labour in many Western countries is the result of the anarchy of capitalism, generating both overcapacity and shortages, but also of trends towards demographic crisis, towards the collapse in population renewal, which is affecting Western countries and China. Ageing populations in the most developed countries are reducing the working-age population to such a level that every country has to resort to immigration. The massive shortage of labour also reflects the growing inability of education systems to provide the market with a workforce that is sufficiently trained for the level of technical skills required in production, while many sectors are being deserted because of the conditions of exploitation and remuneration that prevail.


United States, Europe, China: the heart of world capitalism hit by the convulsions of the crisis and the effects of decomposition


The 25th Congress of the ICC clearly identified the implications of this historic situation for the major nations:

"Not only has the capacity of the main capitalist powers to cooperate in order to hold back the impact of the economic crisis more or less disappeared, but, faced with the deterioration of its economy and the deepening of the global crisis, and in order to preserve its position as the world’s leading power, the USA has increasingly been deliberately aiming to weaken its competitors. This is an open break with a large part of the rules adopted by states since the crisis of 1929. It opens the way to a terra incognita more and more dominated by chaos and unpredictable consequences.

The USA, convinced that preserving its leadership against the rise of China depends to a large extent on the power of its economy, which the war has placed in a position of strength at the political and military level, is also on the offensive against its rivals at the economic level. This offensive operates in a number of directions. The US is the big winner of the ‘gas war’ launched against Russia to the detriment of the European states who have been forced to end Russian gas imports. Having achieved self-sufficiency in oil and gas thanks to a long-term energy policy begun under Obama, the war has confirmed America’s supremacy in the strategic sphere of energy. It has put its rivals on the defensive at this level: Europe has had to accept its dependence on America’s liquefied natural gas; China, which is greatly dependent on imported hydrocarbons, has been made more fragile given that the US is now in a position to control China’s supply routes. The US now has an unprecedented capacity to put pressure on the rest of the world at this level.

Profiting from the central role of the dollar in the world economy, from being the world’s leading economic power, the various monetary, financial and industrial initiatives (from Trump’s economic recovery plans to Biden’s massive subsidies to products ‘made in the USA’, the Inflation Reduction Act, etc) have increased the ‘resilience’ of the US economy, and this is attracting the investment of capital and industrial relocations towards American territory. The US is limiting the impact of the current world slow-down on its economy and is pushing the worst effects of inflation and recession onto the rest of the world.

In addition, in order to guarantee its decisive technological advantage, the US is also aiming to ensure the relocation to the US, or the international control of, strategic technologies (semiconductors) from which it aims to exclude China, while threatening sanctions against any rival to its monopoly.

The USA’s drive to preserve its economic power has the consequence of weakening the capitalist system as a whole. The exclusion of Russia from international trade, the offensive against China and the uncoupling of their two economies, in short the declared will of the USA to reconfigure world economic relations to its advantage, marks a turning point: the US is proving to be a factor in the destabilisation of world capitalism and the extension of chaos at the economic level.

Europe has been hit especially hard by the war which has deprived it of its main strength: its stability. European capitals are suffering from the unprecedented destabilisation of their ‘economic model’ and run a real risk of deindustrialisation and delocalisation towards the American or Asian zones under the blows of the ‘gas war’ and American protectionism.

Germany in particular is an explosive concentration of all the contradictions of this unprecedented situation. The end of Russian gas supplies places Germany in a situation of economic and strategic fragility, threatening its competitive edge and the whole of its industry. The end of multilateralism, from which German capital benefited more than any other nation (also sparing it from the burden of military expenses), is more directly affecting its economic power, which is dependent on exports. It also runs the risk of becoming dependent on the US for its energy supplies, while the latter pushes its ‘allies’ to join in the economic /strategic war against China and to renounce their Chinese markets. Because this is such a vital outlet for German capital, this is facing Germany with a huge dilemma, one which is shared by other European powers at a time when the EU is itself under threat from the tendency of its member states to put their national interests above those of the Union.

As for China, although two years ago it was presented as the big winner of the Covid crisis, it is one of the most characteristic expressions of the ‘whirlwind’ effect. Already suffering from economic slowdown, it is now facing major turbulence.

Since the end of 2019, the pandemic, the repeated lockdowns and the tsunami of infections that followed the abandonment of the ‘Zero Covid’ policy continue to paralyse the Chinese economy.

China is caught up in the global dynamic of the crisis, with its financial system threatened by the bursting of the property bubble. The decline of its Russian partner and the disruption of the ‘Silk Roads’ towards Europe by armed conflict or the prevailing chaos are causing considerable damage. The powerful pressure of the US further increases its economic difficulties. And faced with its economic, health, ecological and social problems, the congenital weakness of its Stalinist state structure is a major handicap.

Far from being able to play the role of locomotive for the world economy, China is a ticking time bomb whose destabilisation holds unpredictable consequences for world capitalism" (“Resolution on the International Situation of the 25th ICC Congress”, International Review n°170, 2023).

Russia seems to be showing a certain resilience to the sanctions designed to bleed its economy dry. Paradoxically, it has been able to benefit from the backwardness of its economy (already evident before 1989 and typical of decadence), based above all on the extraction and export of raw materials, particularly hydrocarbons, and to take advantage of the "every man for himself" mentality in relations between nations to sell them to China, or via India, in order to mitigate some of the effects of the sanctions. However, this fragile and temporary "asset" will not be able to withstand the gradual strangulation of its industrial capacities forever.

Many countries are on the verge of bankruptcy, unable to honour their debts because of rising interest rates, and victims of capital flight to the United States. The expansion of the BRICS from five to eleven members (including Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates) represents an attempt to emancipate themselves from the United States and escape the strangulation of their economies. The introduction of a common currency or the use of China's currency as an alternative to the dollar is unlikely to happen because of the many differences between these countries, particularly as regards their relationship with the Chinese state.

The three main parts of capitalism are sinking into stagflation, with no hope of a real rebound in the capitalist economy; there is the risk of a plunge into recession, which the EU and possibly China are already on the brink of, while the United States is seeking to escape at the expense of its rivals.


The situation of the working class


"The capitalist crisis affects the very foundations of this society. Inflation, insecurity, unemployment, hellish pace and working conditions that destroy workers' health, unaffordable housing… all testify to an unstoppable degradation of working class life and, although the bourgeoisie tries to create all imaginable divisions, granting ‘more privileged’ conditions to certain categories of workers, what we see in its entirety is, on the one hand, what is possibly going to be the WORST CRISIS in the history of capitalism, and, on the other hand, the concrete reality of the ABSOLUTE PAUPERISATION of the working class in the central countries, fully confirming the accuracy of the prediction which Marx made concerning the historical perspective of capitalism and which the economists and other ideologues of the bourgeoisie have so much mocked" (“Capitalism leads to the destruction of humanity... Only the world revolution of the proletariat can put an end to it”, International Review n°169, 2023).

After decades of downward pressure on the price of labour power, labour's share of the wealth created has fallen steadily throughout the world since the late 1970s. Real wages have regressed to pre-1980 levels. A large proportion of the working class now lives below the poverty line or just on the edge of it.

The bourgeoisie boasts that it has managed to curb inflation, but in terms of workers' purchasing power, every proletarian has to pay much more for fuel, food and repayment of their loans, while their wages have been cut by "progressing" well below the rate of inflation, meaning the most basic needs can’t be met.

The extraction of relative surplus-value goes increasingly hand in hand with the extraction of absolute surplus-value, the intensification of work going hand in hand with the lengthening of the working day and the duration of the time of exploitation in the life of each proletarian.

The conditions of exploitation even tend more and more to exceed the physiological limits of proletarians by literally killing workers at work.

Some American states have tried to force employees to work during heatwaves, causing deaths and accidents to soar. In Korea, where death on the job is a widespread phenomenon (as in the rest of South-East Asia), the state's desire to increase the working week from 52 to 69 hours was thwarted by the response of the class.

Every year, accidents at work cause a hecatomb: officially, almost two million workers are killed worldwide, with 270 million injured or maimed.

In many sectors of production, the overworked workforce suffers such accelerated nervous and musculoskeletal wear and tear that they are discarded and join the cohorts of unemployable proletarians well before the legal retirement date.

Finally, situations of virtual slavery of the workforce (particularly in the agricultural sectors of developed countries), debt bondage or forced labour (for example in the industrial fishing sector in China) are commonplace, especially among migrant workers.

With the crisis set to worsen, the economic attacks on the working and unemployed classes are bound to continue.

But enough is enough! Over the last two years, the working class has begun to fight back by taking up the struggle in all the strongholds of the global economy. This historic return to class struggle, after several decades of proletarian passivity, confirms the importance in marxist theory of the role of the crisis and defensive struggles for the future of the workers' struggle: "...the economic attacks (falling real wages, layoffs, increasing productivity, etc) resulting directly from the crisis hit the proletariat (i.e. the class that produces surplus value and confronts capitalism on this terrain) directly and specifically; unlike social decomposition which essentially effects the superstructure, the economic crisis directly attacks the foundations on which this superstructure rests; in this sense, it lays bare all the barbarity that is battening on society, thus allowing the proletariat to become aware of the need to change the system radically, rather than trying to improve certain aspects of it" (Point 17, “Theses on Decomposition”).

ICC December 2023


[1]  “The Fall in the Average Rate of Profit - the Crisis and its Consequences”, (ICT website ‘The Internationalists’, November 2009).

[2] Capitalism cannot constitute the market needed to sell its production, which is why it has always had to sell the surplus to extra-capitalist markets, either within the countries dominated by capitalist relations of production or outside them.

[3] Read “The capitalist crisis in the Eastern Bloc”, International Review n°23, 1980.

[4] La Mondialisation Ed Bréal, p 107 by Carroué, Collet, Ruiz.

[5] On this subject, read Jean-Michel Valantin, Geopolitics of a disordered planet, Seuil, 2017, pp.240 to 249, chapters: The “Arab Spring”: political crisis, geophysical crisis”; “Extreme weather events and political crises”; “Climate, agrarian crisis and civil war: the case of Syria”.


Report on the economic crisis