In the summer of 1993, the crisis of the European Monetary System (EMS) highlighted the acceleration of some of the world economy's most important and deep-seated tendencies. These events have revealed the extent of artificial and destructive practices such as massive speculation; they have laid bare the power of the tendency to "look after number one" which is setting nations against each other. And in doing so, they have shown what will be the immediate future for capitalism: a future stamped with the mark of degeneration, decomposition and self-destruction.
These monetary upheavals are merely the superficial expressions of a far more dramatic underlying reality: capitalism's growing inability, as a system, to overcome its own contradictions. For the working class, and for the exploited classes all over the planet, this means the worst economic attack since the end of World War II, in terms of massive unemployment, the reduction of real wages, the fall in the "social wage", and so on.
"The speculators are burying Europe (...) The West is on the verge of disaster". These were the comments of Maurice Allais, a Nobel Prize winner in economics on the events leading to the virtual disintegration of the EMS in July 1993. Such an eminent defender of the established order could hardly consider his system's economic difficulties as anything other than the result of the activity of elements "outside" the capitalist system: on this occasion, "the speculators". But the degree of economic disaster is at such a point that it has forced even the most obtuse bourgeois to a minimum of lucidity, if only to realise just how bad the
situation has become.
Three quarters of the planet (the "Third World", the ex -Soviet bloc) is not "on the verge of disaster", but right in the middle of it. The West, the last bastion, if not of prosperity then at least of non-collapse, is taking the plunge in its turn. For three years, powers like the United States, Canada, and Great Britain have been sinking into the longest and deepest recession since the war. The economic "recovery" greeted by the "experts" in the US on the grounds of renewed growth in GD P (3.2 % in the second half of 1992) has deflated since the beginning of 1993, with 0.7% growth during the first quarter, and 1.6% during the second, in other words virtual stagnation (the "experts" were expecting at least 2.3 % for the second quarter). The "American locomotive", which powered the Western recovery after the recessions of 1974-75 and 1980-82, is running out of steam even before it has begun to draw the train. As for Germany and Japan, the West's two other great economic poles, both are falling into recession in their turn. By May 1993, industrial production had fallen, year on year, by 3.6% in Japan, and by 8.3 % in Germany.
This was the backdrop for the crisis in the EMS, the second in less than a year. Under the pressure of a worldwide tidal wave of speculation, the governments of the EEC were forced to abandon their commitment to keeping their currencies linked with stable exchange rates. By extending the "floor" and "ceiling" from 5 % to 30 % variation, they in effect reduced the agreement to mere verbiage.
Although these events take place within the special sphere of finance capital, they are nonetheless a product of the real crisis of capital. They are indicative, in at least three important ways, of the fundamental tendencies determining the world economy.
Unprecedented development of speculation, trafficking, and corruption
The size of the speculative forces that shook the EMS is a major characteristic of the present period. During the 1980's, speculative capital poured into everything from stocks and shares to property and art. As the 1990's began, many of these speculative values began to collapse, and capital has had to seek a refuge in speculation on the money markets. It has been estimated that on the eve of the EMS crisis, monetary speculation had reached $1,000 billion a day, the equivalent of one year's British GNP, and forty times greater than the flow of money corresponding to commercial payments! This is no longer an affair of a few rich and unscrupulous men ready to take risks in search of quick profits. The entire ruling class, led by its banks and states, is indulging in this artificial activity, which is totally sterile from the view-point of real wealth. They do so, not because this is the easiest way to make a profit, but because there is less and less possibility of investing capital profitably in the real world of trade and industry. The recourse to speculative profit is above all an expression of a difficulty in realising real profit.
This is also why capital's economic life is more and more infected with the most degenerate forms of illicit trade and generalized political corruption. The turnover of the world drugs trade has reached the same level as the trade in oil. The convulsions of the Italian political classes reveal the extent of the profits that can be made from corruption and all kinds of fraudulent deals.
Some radical bourgeois moralists deplore their ageing democracies' increasingly raddled image. They would like to rid capitalism of the "speculating vultures", the drug dealers and the corrupt politicians. Claude Julien, editor of the very serious Monde Diplomatique has suggested, quite seriously that the democratic governments should" Sterilize the enormous financial profits produced by illegal trade, make it impossible to launder dirty money, by putting an end to banking secrecy, and eliminating tax havens".
Because they cannot imagine for a moment that there could exist a form of social organisation other than capitalism, these defenders of the system think that the worst aspects of present-day society could be eliminated with a few energetic laws. They think that they are dealing with curable ills, when in fact they are confronted with generalized cancer: the same kind of cancer that destroyed the decadent society of ancient Rome; a degeneration that will only disappear with the destruction of the society itself.
Capitalism forced to cheat its own laws
The inability of the EMS countries to maintain a real monetary stability expresses the system's growing inability to live in accordance by its own elementary rules. To understand the importance of the failure of the EMS, it is useful to remind ourselves why the EMS was created.
Money is one of the most important instruments of capitalist circulation. It provides a measure for exchange, of preserving and accumulating the value of previous sales in order to be able to buy in the future. It makes possible the exchange of the most varied commodities, whatever their nature and origin, by providing a universal equivalent value. International trade requires international money: sterling played this role until World War I, and has since been replaced by the dollar. But this is not enough. In order to buy and sell, and to make use of credit, different national currencies must trade "reliably", sufficiently constantly not to upset the entire exchange mechanism.
If there are not a minimum of rules respected in this domain, the results are felt throughout the economy. How is it possible to trade if nobody knows whether the price of a commodity will remain the same between the moment of placing the order and the moment of delivery? When currencies fluctuate widely, it is possible for a profitable sale to be transformed, in a matter of months, into a loss.
Today, international currency insecurity has reached such a point that we are seeing the resurgence of the most archaic form of exchange: barter, in other words the direct exchange of commodities without having recourse to money as an intermediary.
There are various ways of cheating with the monetary system in order to escape, at least temporarily, from the constraints of the law of capital. There is one today, which is gaining a special importance: what the economists like to embellish with the name "competitive devaluation". This is a way of "cheating" with the most elementary laws of capitalist competition: instead of improving productivity to win market share, a nation's capitalists devalue their currency. They therefore reduce the prices of their products on the world market. Instead of going through the difficult and complex business of reorganizing the productive apparatus, instead of investing in increasingly costly machinery to ensure an ever more effective exploitation of labour power, they need only let their exchange rate fall. Financial manipulation takes the place of real productivity. A successful devaluation can even allow a national capital to penetrate the markets of other more productive capitalists with their own commodities.
The EMS was an attempt to limit this kind of practice, which transformed all commercial "understanding" into a game for dupes. Its failure expresses capitalism's inability to ensure a minimum of rigour in a crucial domain.
But this lack of rigour, this inability to respect its own rules, is neither temporary, nor specific to the international money market. For 25 years, capitalism has been trying to "free" itself in every domain from its own constraints, its own stifling laws, often by using the apparatus in charge of its legality (state capitalism). During the first post-reconstruction recession, in 1967 it invented the "special drawing rights", which in fact were nothing but the ability of the great powers to print money on the international level, without any other backing than governments' promises. In 1972, the USA got rid of the constraint of the dollar's convertibility into gold, and of the monetary system established at Bretton Woods after the war. During the 1970s, monetary rigour gave way to inflationary policies, budgetary rigour to chronic budget deficits tight credit to unlimited, and unbacked, loans. The 1980s continued the same trend with the politics of so-called "Reaganomics , the explosion of credit and state budget deficits. Between 1974 and 1992, the overall public debt of OECD states rose from an average 35% of GDP to 65%. In countries such as Belgium and Italy, the state debt was greater than 100% of GDP. In Italy, the interest on this debt is greater than industry's entire wage bill. .
For 25 years, capitalism has survived its crisis by cheating with its own mechanism. But this has changed none of the fundamental reasons for the crisis. It has merely succeeded in undermining its very foundations, and piling up new difficulties, new sources of chaos and paralysis.
The growing tendency to "look after number one"
The EMS crisis has really highlighted the intensification of capital's centrifugal tendencies: "every man for himself, and devil take the hindmost". The economic crisis endlessly exacerbates the antagonisms between every fraction of capital, both nationally and internationally. The economic alliances between capitalists are merely temporary agreements between sharks to confront other sharks. They are constantly threatened by the allies' tendency to devour each other. Behind the EMS crisis looms the development of all-out trade war: a merciless, self-destructive war, but one which no capitalist can escape.
The complaints of those who, whether cynically or unconsciously, sow illusions as to the possibility of a harmonious capitalism, can do nothing about it: "We have to disarm the economy. It is urgent that we ask the businessmen to abandon their generals' and colonels' uniform (...) The G7would do itself a favour by setting up, at its next meeting in Naples, a "Committee for World economic disarmament?". He might as well ask the summit of the seven main Western capitalist nations to form a committee for the abolition of capitalism.
Competition is part of capitalism's very soul, and always has been. Today it is merely being exacerbated in the extreme. This does not mean that no counter-tendency exists. The war of all against all encourages the formation, willy-nilly, of indispensable alliances. The efforts of the 12 EEC countries to ensure a minimum of economic cooperation against their American and Japanese competitors were not just bluff. But the reassure of the economic crisis, and the resulting sharpening of trade conflicts, these efforts already, and will increasingly, come up against more and more insurmountable internal contradictions.
Neither businessmen nor governments can "abandon their generals' and colonels' uniform", any more than capitalism can be transformed into a system of economic harmony and cooperation. Only the revolutionary overcoming of this decomposing system can rid humanity of the absurd and self-destructive anarchy that it is suffering.
A future of unemployment, destruction, and poverty
War destroys material productive forces with fire and steel. The economic crisis destroys the productive forces by paralyzing them. In 25 years of crisis, whole regions like the north in Great Britain or France, or around Hamburg in Germany, have been abandoned, littered with closed-down factories and shipyards, devoured by rust and desolation. For the last two years, the governments of the EEC have been conducting a program to reduce Europe's cultivated land by 25%, because of a crisis of over-production.
War destroys men physically, both soldiers and civilians; the dead are mostly the exploited - workers or peasants. The economic crisis unleashes the scourge of mass unemployment. It reduces populations to misery, through unemployment or the threat of it. It spreads despair among today's generation, and blights the future of those to come. In the under-developed countries, it takes on the form of a veritable genocide by hunger and disease: the major part of the African continent has been abandoned to death by famine and epidemic, to desertification in the real sense of the term.
Ever since the late 60's, which marked the end of the prosperity due to post-war reconstruction, unemployment has gone on increasing all over the world. Its development has been uneven from one region or country to another. There have been periods of rapid increase (the open recessions) and periods of respite. But the general direction has never wavered. With the new recession that began at the end of the 1980's, it has reached unprecedented proportions.
The countries which were the first hit by the new recession (the USA, Canada, the UK) are still waiting for the recovery in employment, which was announced three years ago. In the EEC, unemployment is growing at the rate of 4 million a year (20 million unemployed are forecast for the end of 1993,24 million for the end of 1994). It is as if, in one year, every job in a country like Austria were to disappear. Between January and May 1993, there were 1200 more unemployed every day in France, 1400 more in Germany (and this is only according to official statistics, which systematically under-estimate the real unemployment figures).
In branches of industry which had supposedly been "slimmed" (to use the cynical term of the ruling class), new bloodlettings are announced: the EEC steel industry, which has already been reduced to 400,000 jobs, plans a further 70,000 redundancies. IBM, the model company of the last 30 years, has not stopped "slimming", and is planning 80,000 more job losses. The German car industry plans to lose 100,000 jobs.
The working class of the most industrialised countries, and especially in Europe, has never seen such violent or widespread attacks.
The European governments do not hide their alarm. Jacques Delors, president of the EEC, speaks for its governments when he warns of the danger of a forthcoming social explosion. Bruno Trentin, a leader of the main Italian union (the CGIL) who last autumn was hissed and booed by angry workers demonstrating against the austerity measures imposed by the government with the help of the unions, sums up the fears of the Italian bourgeoisie:
"The economic crisis is such, and the financial situation of the great industrial groups is so desperate, that we can only fear social unrest next autumn" (La Tribune, 28th July 1993).
The ruling class is right to fear the workers' struggles that the aggravation of the economic crisis will provoke. It is not often that objective reality has so clearly demonstrated that it is no longer possible to fight the effects of the capitalist crisis without destroying capitalism itself. The system's degree of decomposition, and the gravity of the consequences of its continued existence are such that its revolutionary overthrow will appear more and more as the only "realistic" way out for the exploited.
 Liberation, 2nd August 1993
 In September 1992, Great Britain was forced to leave the EMS, "humiliated by Germany", and the weaker currencies were allowed to devalue. Their fluctuation bands within the EMS were widened.
 In August 1993.
 Ricardo Petrella, of Louvain Catholic University