Towards a major and unprecedented crisis

Since the end of the first decade of the 21st century, the capitalist mode of production has been facing an economic situation that once again brings it up against the historical limits of its development. This historical impasse, which is generally underestimated by groups within the revolutionary movement, has been exacerbated in recent years by a succession of events – the Covid crisis, wars in Ukraine and the Middle East, a drastic increase in tariffs by the Trump administration, the blockading of key maritime routes, such as the Strait of Hormuz – which have destabilised global trade and energy production and plunged the world economy into chaos.

Furthermore, developments in the war in the Middle East have, over the past two months, been a powerful factor in accelerating the ‘every man for himself’ mentality at all levels of society, significantly hampering any inclination within the bourgeoisie to cooperate in order to limit the damage. The defeat of the great American global military machine at the hands of a third-rate military power is, in fact, reinforcing the trend towards the fragmentation of alliances and greatly amplifying the economic chaos on the world market, from the disruption of production chains for vital industrial components to the destabilisation of financial markets.

On top of this already perilous situation an even more brutal threat looms over the financial system, reminiscent of the one that led to the crises of the 1930s and 2008. Indeed, while capitalism is faced with colossal, unrepayable debt, it is now highly vulnerable to a cascade of defaults, which strongly confirms the risk of a new, entirely unprecedented and ‘dead-end’ global economic depression.

The historical impasse of the decadent capitalist mode of production

The destabilisation and destruction caused by wars, or the uncontrollable nature of debt, do not in themselves constitute factors that necessarily lead to a major crisis. What is expressed and accentuated by these phenomena, and what makes such a major crisis inevitable, is the depth of the impasse of overproduction, which is increasingly paralysing the world economy and which reveals the historical limits of the capitalist mode of production: “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 […]”[1]

This intrinsic contradiction of the capitalist mode of production is acutely expressed through the growing saturation of these extra-capitalist markets, which marks the system’s entry into its phase of historical decline. In this context, the ICC identifies “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. […] 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 2”; Bilan No. 10, August-September 1934 in International Review n°103, 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.”[2]

1. The combined impact of overproduction and decomposition.

With the implosion of the Soviet bloc, the capitalist world, already profoundly altered by the effects of decadence, entered the chaotic context of a new phase of this process. The implosion of the Soviet bloc initially offered the opportunity to maintain the profitability of capital and prolong the survival of capitalism by extending the technological knowledge of the Western powers and optimising capitalist exploitation to the far corners of the globe, hitherto inaccessible due to the confrontation between imperialist blocs. In reality, ‘globalisation’ was merely a parenthesis allowing the capitalist system to temporarily shield its economy from the major effects of decomposition. But soon, as the actual economic situation deteriorated, the weakening of the dynamics of globalisation under the weight of the growing tendency to ‘each against all’, which hinders the realisation of generalised accumulation, the burden of military expenditure and the impasse of overproduction caused the collapse of the global financial edifice founded on abysmal levels of debt; the 2008 crisis, the most severe since 1929, marks a turning point in the capitalist mode of production’s descent into its historic crisis.

It confirmed that the capitalist system is today even more deeply mired in a situation where, owing to the relative exhaustion of extra-capitalist markets, the universal hegemony of capitalist class relations makes the realisation of expanded reproduction increasingly difficult. Under these conditions of deadlock and decomposition, the phenomena already present in the period of decadence take on a new dimension, owing to the bourgeoisie’s inability to offer any perspective other than that of ‘resisting step by step’ — yet without any real faith in success — against the advancing crisis. This is why the resurgence of the system’s historic crisis in 2008 presents itself in terms radically different from the previous crisis of the same kind, that of the 1930s.

After 2008, the closure of the ‘opportunities’ offered by globalisation and the increasingly evident inability to overcome the crisis of overproduction led to an explosion of ‘every man for himself’ in relations between capitalist nations, but also within the ruling class of each nation. In this framework, the effects of decomposition have taken on a new and powerfully destructive scale for the capitalist economy. Since the early 2020s, these effects have been accelerating and are once again striking at the very heart of capitalism: the combined effects of the economic crisis, war, the bourgeoisie’s loss of control over its political apparatus, and the climate crisis are interacting and multiplying their impact on the system’s descent into chaos and destruction: “While each of the factors fuelling this ‘whirlwind’ effect of decomposition represents, in and of itself, a serious risk factor for the collapse of states, their combined effects far exceed the mere sum of each of them taken in isolation”.[3]

1.1. The growing influence of war on the global economy

The effects of decomposition, leading to fragility and instability, had already exacerbated the economic crisis, while Covid-19 had caused a shock to global production, supply and production networks. It had also revealed the extent of the bourgeoisie’s reluctance to cooperate on an international scale, even in the face of a pandemic. The war in Ukraine has accelerated the process of disintegration of production, supply and financial networks, which began during the pandemic. Inflation has soared, severely impacting grain production and oil and gas supplies. It has forced the ruling classes of Western Europe to increase their military spending and to step up their attacks on the working class to finance these expenditures.

The fiasco of US imperialism in Iran has greatly intensified this process. One of the world’s most important shipping routes has been paralysed for months, severely restricting supplies of oil, helium, sulphur, urea, aluminium and many other raw materials. At present, it is impossible to fully grasp the extremely serious implications for production, transport, shipping, agriculture and finance.

1. Agriculture

Fertiliser prices have risen by 80 per cent. The shortage will intensify competition for available fertiliser, which will drive prices up further and exacerbate shortages. There has been a decline in sowing this year. Reduced use of fertiliser could lead to a 50 per cent drop in yields. The most severe consequences will be felt in the poorest countries, but globally, the working class and the most disadvantaged will face soaring food prices over the coming year, as well as potential shortages and even famine in certain parts of the world.

2. Maritime transport

90 per cent of global trade by volume is carried by ship. The closure of the Strait of Hormuz has disrupted maritime traffic in the Gulf and stranded hundreds of vessels. The repercussions for international maritime transport are immense: delays in deliveries, disruption to production – mainly in Asia – growing shortages, and rising costs (between 30 and 60 per cent for maritime transport). It will take months for maritime transport to return to normal, if indeed it ever does.

3. Energy

Oil supplies have been maintained through the use of government emergency reserves and the depletion of oil companies’ stocks. This cannot last indefinitely and, “Even if the Strait of Hormuz were to reopen tomorrow, the market could not simply snap back to normal”. The energy issue raised once again by the situation in the Strait of Hormuz is a priority strategic challenge and, above all, a major factor in economic destabilisation. Thus, “Tankers displaced from Gulf routes have to reposition. Ships sent elsewhere have to return. Cargo schedules need rebuilding. Producers that curtailed supply because storage filled up still have to restart operations. Physical systems move more slowly than financial markets. Much more slowly. A tanker heading back toward Gulf loading zones may spend weeks repositioning before loading even begins. Then cargoes still have to travel toward Asia or Europe. Depending on the destination, this can add another month.”[4]

Furthermore, the United States has used up all the oil produced since the start of the year and has had to draw heavily on the Strategic Petroleum Reserve. The US economy is already facing a shortage of petroleum products, such as industrial lubricants and engine oil. The US imports 44 per cent of its Group III base oil – essential for modern engines – from the Gulf. “South Korea, which normally supplies Group III oil to the U.S., has seen its production and exports disrupted by the war. And U.S. refiners that make base oil have prioritized producing diesel, another fuel facing a crunch with U.S. inventories at the lowest level in more than 20 years.” [5] Diesel prices, for their part, have risen by 40–50 per cent in the US, thereby impacting transport and logistics: 85 per cent of agricultural produce is transported by lorry. Transport costs are compounded by the rise in fuel costs for agricultural machinery. These increases are exacerbated by rising fertiliser costs. Many US farmers are reporting fuel shortages or stating that they cannot afford to buy it. This will lead to a reduction in sowing and crop yields, which will result in higher food costs and potential shortages later in the year.

4. Chemical industry

Rising fuel prices are having a devastating impact on the European chemical industry. Plants operated by BASF, INEOS, Covestro, Lanxess and Evonik are operating at capacity utilisation rates of between 62 and 68 per cent, which is below the 80 per cent break-even point. By 2023, BASF had already begun to permanently reduce capacity at its Ludwigshafen complex, the world’s largest integrated chemical site, due to the impact of the war in Ukraine. “The cut-off of Russian gas in 2022 was a manageable shock as it was presented as a temporary emergency. Brussels introduced energy subsidies, German taxpayers absorbed €200 billion in costs linked to the price cap, and BASF, Covestro, reduced their production only marginally whilst waiting for prices to normalise. They have not fully normalised. Industrial gas prices in Europe remain around three to four times higher than in the US and twice as high as in China […]. The chemical industry is the upstream supplier to all European manufacturers of plastics, fertilisers, paints, adhesives, pharmaceutical intermediates, semiconductors and battery materials. […] The war in Iran has not added a new problem for the chemical industry; it has brought into full relief a problem that the 2022 war in Ukraine had triggered”.[6]

5. Microprocessor production

The leading microprocessor manufacturers – TSMC, Nvidia, Foxconn and Infineon – have all warned of the impact of rising energy, precious metals and freight costs, as well as shortages. The production of a chip, which involves 1,000 separate manufacturing steps, requires crossing 70 international borders and takes 10 days. “Silicon wafers start in Japan or Germany. Chip design happens in the US or the UK. The actual fabrication, for the most advanced chips that power AI workloads, is done almost entirely in Taiwan (92%) and South Korea (8%). Assembly and testing happen in Malaysia, Vietnam, the Philippines. The finished chip ships to a US data center.” However, “Every step in that chain costs energy. Every border crossing costs money. Every logistics node, the freight forwarders, the marine insurers, the fuel for the container ships, is now running hotter than it was on February 27th”[7]

This instability also threatens the AI boom in the United States and elsewhere: “The companies increasingly driving the stock markets, known as hyperscalers, are at the heart of the recent surge in AI investment and are expected to account for 70 per cent of AI-related capital expenditure, estimated at $3,400 billion by 2029. A key short-term risk is that these investments could be weighed down by the implications of the conflict in the Middle East and other related sources of uncertainty. If this is the case, the entire AI value chain – including infrastructure companies (‘builders’), energy producers (‘power providers’), chip and software developers (‘hyperscalers’) and downstream operators, could experience a synchronised decline in revenue and enterprise value, given its dependence on catalytic investments from hyperscalers” [8]

6. Financial sector

Another source of uncertainty lies in the impact of the war on an already fragile financial system. The International Monetary Fund’s April 2025 report on global financial stability highlighted major uncertainties surrounding global trade: “Risks to global financial stability have increased significantly as global financial conditions have tightened and uncertainty surrounding economic and trade policies remains high. This assessment is also underpinned by three key forward-looking vulnerabilities.

Firstly, despite the recent turbulence, valuations remain high in certain key segments, meaning that valuation adjustments could intensify should the outlook deteriorate. […] .

Secondly, certain financial institutions could come under severe strain in volatile markets, particularly those with high levels of debt. As the hedge fund and asset management sectors have expanded, their overall levels of debt and their links to the banking sector have also increased. […].

Thirdly, further turbulence could hit sovereign bond markets, particularly in countries with high levels of public debt. […]. Overall, investor concerns regarding the sustainability of public debt and other vulnerabilities in the financial sector may intensify in a mutually reinforcing manner”[9]

It is difficult to assess precisely the extent of the destabilisation caused by the war, given that the bourgeois media are concealing the growing impact of shortages, disruptions, disorganisation and uncertainty. Furthermore, no one knows when the war will end, when the blockade will be lifted, what restrictions will be imposed on traffic through the Strait, whether it will be blocked again, or whether a toll will be introduced. The international ruling class feels as though it is facing a volcano that is increasingly dragging world trade towards disaster.

1.2. The growing influence of militarism and the war economy

“The whole period of decadence shows that the over-production 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.”[10] This process of self-destruction is far more profound today than it was in the early 1980s. Reagan’s opening of the floodgates of debt to finance the Star Wars programme enabled the United States to act as a global driving force. The destructive impact of military spending could still be passed on to the rest of the global economy and into the future. Subsequently, between 1989 and 2009, the impact of the Gulf Wars, the Iraq War, the Afghanistan War and the war on terror was offset by the global reduction in military spending, linked to the end of the ‘Cold War’, the arms race between the two rival blocs.

Today, the impasse in capitalist production means that the self-destructive nature of military spending has a direct and immediate impact. The US policy of ruining its rivals is an expression of this destruction. US imperialism can only maintain its domination by crushing its rivals, whether economically or militarily. Consequently, its need to finance its war machine forces it to siphon off capital from the rest of the global economy, which is then forced to fight over what remains.

The ruling class in the United States, in Europe[11] and elsewhere presents the increase in its defence spending as a means of stimulating the economy. It cites the impact of defence spending in the 1930s to justify its claims. Forty-five years ago, we had already exposed this lie: “In the present situation such arms budgets not only in the US but everywhere in the bloc (especially in Germany and Japan) cannot maintain the level of industrial production even in the short run as they did in the 30s or after the war. On the contrary, they are rapidly accelerating the decline of production. […] Thus weapons development today cannot hide the general crisis of overproduction. In fact, with the deepening of the recession and the acceleration of inflation which arms investment provokes, the crisis of capitalism is also the crisis of the war economy”[12]. Against this backdrop of the capitalist economy’s historical impasse, military spending will not lead to increased employment or growth, as it did in the 1930s, but will instead destroy them.

To finance this spending, governments will take on more debt, raise taxes, cut social spending, and divert investment, material and human resources away from the rest of the economy. A process of accelerated destruction of the structures of capitalism is underway; the non-productive sectors of the economy — such as the environment, health, education, housing, etc. — are all being targeted in order to finance armaments. These attacks are having, and will continue to have, a profound impact because, after 60 years of crisis, capitalism is already in a state of profound decay. In Europe, the bourgeoisie is telling the working class that it must accept sacrifices in the name of the war economy. Such a direct link between the needs of the war economy and these sacrifices has not been made since the 1930s and 1940s. Between 1968 and 2020, the argument was that people had to accept these attacks, and so on, in the name of a future for all. Today, there is no longer any talk of a better future, but only of the need for the working class to suffer in the name of preparing for war.

1.3. The wall of debt

Faced with the resurgence of the crisis in the 1970s and 1980s, it was US public debt that enabled the country to act as the driving force behind the global economy. At the end of the twentieth century, recourse to debt was one of the driving forces behind globalisation[13] and, from then on, its long-term destructive impact – which amounts to mortgaging the future for the sake of the present – was masked by the growth made possible following the collapse of the Eastern Bloc. The integration of extra-capitalist markets, also including China, marked a new turning point in the crisis. After 2008, the floodgates of debt were opened simply to prevent the collapse of the international financial system and its descent into a depression on the scale of that of the 1930s. The massive flows of debt and other financial instruments in the 2010s fuelled massive stock market speculation, but production stagnated, despite China’s efforts to play a leading role in reviving the global economy.

Since the 1970s, capitalism has increasingly relied on debt to keep unprofitable sectors of the economy afloat. This has given rise to ‘zombie’ companies, which survive because they are allowed to repay their debts by taking on more debt. Such companies accounted for just 1.5 per cent of the top 20 economies; by 2021, this figure had risen to 6.5 per cent. In the United States and Japan, these figures stand at 20 per cent and 14.3 per cent respectively, illustrating the true scale of the crisis. One in five US companies is kept afloat by taking on more debt! Far from being rid of its dead wood, the forest is cluttered with it.

The financing of colossal public debt on a global scale is exacerbating instability. By the end of 2026, the United States will have to refinance a third of its $38,000 billion debt, which means taking on more debt to repay existing debt. This $10,000 billion represent 2.5 times the amount of global corporate profits in 2023 ($4,000 billion). All other countries must finance their debt, leading to a fierce battle to sell debt securities on the bond markets.

At the height of capitalism, debt played a significant role in stimulating production and in financing the opening up of the global market. In its decline, it has slowly caused capitalism to rot from within. It keeps this bloated corpse standing, both by stimulating overproduction and by destroying it.

1.4. Trump’s populist vandalism and nepotism are exacerbating the chaos

American capitalism is facing, in the most radical sense, its worst military failure and its consequences, with at its helm the most irrational, irresponsible and incoherent administration imaginable. The Trump team is mired in the conflict and lacks both the political coherence and the capacity to extricate itself from it and cause the least possible damage to US national interests. The destruction of decades of experience, expertise and knowledge caused by the purge of the State Department has been catastrophic. Amateurs, Trump’s cronies, and adventurers are fumbling their way through the Gulf, further undermining US national interests, whilst seeking to line their own pockets, and, of course, Trump’s. Consequently, the economic consequences of the war continue to mount.

Furthermore, the instability of international stock markets and oil prices is being manipulated by the Trump clan. Every week, Trump makes a habit of driving up the markets and oil prices on a Thursday or Friday with a bellicose statement, then causing them to plummet on Sundays. The ruling class knows just how destabilising this is, but it is entirely prepared to manipulate the markets in the most profitable way possible for its own personal gain, without scruples and without regard for any potentially disastrous consequences for the economy

Trump’s threats against other countries, his tariffs and his open threats aimed at destabilising his ‘enemies’ are effectively dismantling the alliances and the commercial and financial structures which, until now, had allowed for at least some form of international cooperation in the face of the economic crisis. Even this minimal level of cooperation has almost entirely disappeared.

2. A financial crisis is looming, on a far greater scale than that of 2008

For several years now, many economists have recognised that the question is no longer whether a new financial crisis will occur, but when and where; they assert that a “pressure cooker buried in the depths of deregulated finance threatens to explode”.[14]

Indeed, the upheavals caused by the war in Iran are generating a shockwave which, through the persistence of an unprecedented energy crisis, is affecting a financial system whose increased vulnerabilities risk triggering a catastrophe far more severe, far more widespread and far more profound than the 2008 crisis, which was already catastrophic

Against the backdrop of a debt-fuelled capitalist economy that is killing the patient and an extremely fragile and unstable financial system, one of the primary consequences of the war in Iran — beyond even the uncertainties regarding its duration and the impossibility of returning to the pre-war status quo — is the erosion of the ruling class’s confidence in the deception it has itself put in place to prolong its reign, due to doubts about the solvency of the states themselves and, above all, of the dominant power, the United States. The latter, the very cornerstone of the architecture of this decadent system, has seen its debt double in ten years, whilst embarking on an unprecedented rearmament programme (without any real funding secured, at a time when Washington is suspected of preparing for a default). The same is true of the most indebted powers, including Japan, as well as France, Germany and the United Kingdom.

This reality is reflected in the dramatic rise in long-term borrowing rates (above 5 per cent), which have reached their highest levels since 2007 for US debt: “Now that the genie is out of the bottle, it won’t necessarily be easy to put it back in. Public debt has skyrocketed everywhere – particularly in the United States – and it is clear that the days of complacency on the bond markets are over. […] J. Dimon, the influential CEO of JPMorgan Chase, has warned that, in his view, rates could rise much higher. […]. Rising sovereign yields are driving up financing costs for businesses. This is putting pressure on the most vulnerable players, who are already having to cope with rising energy costs and a slowdown in growth”[15].

2.1. The early signs of the crisis

Various economic and financial indicators have turned red in recent months, confirming the threat of a ‘financial time bomb’:

- The scale of debt, exacerbated by the intensifying turmoil, is beginning to affect the stability of currencies, such as the Indian rupee.[16] This is why the European Central Bank (ECB) “has called for greater fiscal responsibility on the part of Member States, as a prerequisite for preserving the scope for manoeuvre in monetary policy. ”[17] Many central banks are increasing their gold reserves to underpin the economy’s monetary base and reduce their dependence on the dollar, whose role as a reserve currency has fallen below 60 per cent and could drop further to 40 or 50 per cent.

- Warning signs are emerging simultaneously from several sectors of the global financial system: these include commercial property, consumer credit and the financing of artificial intelligence. According to reports from financial institutions such as the Federal Reserve Bank of New York, the rate of borrowers in default in the United States — defined as a two-month delay in repayment — stands at 8 per cent for car loans. As a reminder, the total outstanding balance of car loans is 1600 billion dollars. The same rate applies to credit cards, also at 8 per cent – out of a total outstanding balance of $1,200 billion. And what about student debt? Outstanding balance: $1,600 billion; default rate (payment arrears of more than 90 days): 14 per cent. In the securitised commercial property loans sector – with an outstanding balance of $1,800 billion – the default rate has reached 12 per cent, its highest level since the 2008 crisis. Three years ago, it stood at less than 2 per cent.

- Private credit is the component of the global financial system that causes the bourgeoisie the greatest concern. Consequently, in early May, the G20’s international body responsible for monitoring vulnerabilities in the financial system issued a warning regarding ‘the growing risks of private credit”[18] which “now accounts for a significant share of the financial system”, “particularly in the United States, to finance SMEs (small and medium-sized enterprises) and mid-cap companies, which currently find themselves in the eye of the storm”. This concern stems, on the one hand, from the rise in payment defaults and bankruptcies in the United States, as well as from the existence of “the often massive levels of debt among borrowers in the private credit market, which makes them more vulnerable to ‘economic slowdowns’” and to the “interconnections between private credit and banks, insurers and private equity”[19], and, on the other hand, from those “between banks and non-bank institutions” [20].

Thus, “Out of the public eye, the cauldron of “private credit” has been simmering for years. Yet creditors are beginning to panic. A crisis in this sector would trigger a devastating chain reaction for an economy already weakened by rising energy prices’”[21].

- The rise in payment defaults. Negative signs regarding payment defaults have been multiplying since 2025, particularly because a significant proportion of the funds have exposed their assets through loans to companies in the IT sector, which have been left extremely vulnerable by the devastation they are suffering as a result of the introduction of AI, which threatens to drive many of the very companies that constitute these funds’ assets into bankruptcy. Left in the hands of sorcerer’s apprentices, hypnotised by the illusions generated by the new, hidden AI bubble and prepared to take any risk in an attempt to maximise hypothetical profits, these companies often go bankrupt, thereby triggering further disasters. This is a serious situation that threatens the remaining companies with running out of liquidity once again and finding themselves without a solution.

– The technology and AI funding bubble. These sectors, fuelled by private credit, face colossal future financial needs, whilst they are not yet generating any profits, or none at all. This situation is all the more worrying given that: “Planned investment in the artificial intelligence sector for the period 2025–2029 is estimated at 3,000 billion dollars” (source: Morgan Stanley). Companies valued at between 800 and 900 billion dollars have not yet made any profit. It was predicted that OpenAI would begin to turn a profit from 2030 onwards, but an analysis by HSBC dated November 2025 dashed these hopes, estimating that by that time, OpenAI would still need to raise $207 billion and would continue to operate at a loss.

A growing proportion of private credit is being channelled into highly specialised sectors, notably data centres linked to AI development: “It is estimated that several hundred billion dollars are tied up in these projects, the returns on which will depend on whether demand for AI services actually materialises. Overcapacity in this sector could lead to significant losses.”[22]

2.2. Is a credit crisis looming on the horizon?

Today, the $2,000 billion credit bubble is beginning to burst and, as it spreads throughout the banking sector, it poses a potentially more serious threat than the 2008 sub-prime crisis. For, in the meantime, the scale of the problem has changed completely. The outstanding sub-prime debt stood at 700–800 billion dollars. Today, that of private credit stands at between 1,500 and 2,000 billion dollars. Added to this is the volume of bank loans – a further 1,800 billion – granted to non-deposit-taking institutions, that is to say, non-bank financial institutions – a respectable name for what is otherwise known as the shadow banking system.

However, if the banks begin to suffer heavy losses, the entire financial system will falter, and with it the real economy. Private banks control deposits, loans and payment systems: fundamental tools for the smooth functioning of the economy. When they are weakened, their instinctive reaction is to turn off the credit tap, a process known as a credit crunch.

In short, against the backdrop of the historic crisis of overproduction, we are seeing, on the one hand, economic destabilisation and an energy crisis linked to the proliferation of military clashes between imperialist powers on all sides and the explosion of militarism, and, on the other hand, a financial crisis linked to the increasingly unsustainable burden of debt. And what makes the situation even worse today is the explosive impact of their interaction.

3. On the brink of economic collapse: the consequences for the working class

In conclusion, as far as the future is concerned, what is clear to certain sections of the bourgeoisie itself is that the current economic crisis opens the door to the unknown. And indeed, the current economic crisis will lead to unimaginable upheavals and massive attacks that will only plunge a growing proportion of humanity into absolute poverty.

The ruling class is well aware of the growing destabilisation of its system. The International Monetary Fund (IMF), the World Bank and the Organisation for Economic Co-operation and Development (OECD) have all published reports warning of the threat hanging over the global economy. As early as 2025, an IMF report highlighted the prospect of financial instability: “Globally, the risks of financial instability remain high. The global financial system is currently facing the ongoing war in the Middle East, possible inflationary pressures, growing risks of a further tightening of financial conditions, as well as several amplification channels that could transform market turbulence into financial instability”[23] For certain sections of the bourgeoisie itself, it is clear that “we are heading towards the unprecedented”, towards something comparable to “A nuclear crisis, no pun intended, in which all the components reinforce one another in a chain reaction, but without a graphite rod. The scale of the social upheaval is almost unimaginable. Mass redundancies, bankruptcies – both personal and corporate – inflation, and worse still: shortages.”[24]

Whilst the bourgeoisie itself, in its most clear-sighted factions, glimpses the terrifying prospect of a ‘nuclear crisis’, it has no solutions to offer other than even more ruthless attacks on the working class: “The repercussions of the current crisis will be the most profound and brutal of the entire period of decadence, under the cumulative effects of inflation, budget cuts, redundancy plans (exacerbated in particular by the introduction of artificial intelligence into the production system) and the drastic reduction in wages”[25]

The likely emergence of major upheavals, unprecedented in history, which reveal ever more clearly the ruling class’s loss of control over its own decaying system, demands that revolutionary organisations make a theoretical effort to strengthen their analytical framework so that they can fulfil their responsibilities in terms of intervention: in particular with regard to the necessary understanding of the factors that are undermining the ability of the capitalist system as a whole to cope with the unfolding crisis –but also in relation to the ruling class’s growing failure to respond in a coordinated manner to the impending catastrophe. All past modes of production have experienced a phase of decline and moments of crisis linked to the contradictions and inherent limitations of their social relations. The same is true of the capitalist system. But unlike those of the past, where new relations of production could be established and take over to breathe new life into society, capitalism, as the final system of exploitation in history, can only continue to rot from within until its revolutionary overthrow takes place. It therefore poses an ever-greater threat to the whole world through its deadly convulsions.

The ICC, in line with the marxist tradition, maintains that the effects of the economic crisis nevertheless remain the prime breeding ground on which the struggles of the proletariat will inevitably develop, even though immense obstacles and difficulties lie ahead. The economic crisis, within the context of the historical decline of a decaying system, is indeed a fundamental foundation upon which the proletariat is compelled to defend its living conditions, because it will have no choice but to fight! This necessity will ultimately drive it to generalise its struggle; this struggle must be politicised so as to reaffirm, consciously and in unity, the revolutionary perspective of the cause of communism.

Syl & W, July 2026

 

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[1]‘This crisis is going to be the most serious in the whole period of decadence’ International Review 172, 2024

[2] Ibid

[3] ‘The historical significance of the impasse of the capitalist economy’ Report on the Economic Crisis from the 26th Congress of the ICC; International Review 174, 2025.

[4] ‘Why Oil’s Supply Crunch Could Arrive Late’ OilPrice.com, 21 May 2026

[5] ‘Iran War Is Going to Make Oil Changes More Expensive’ Transport Topics, ttnews.com, 13 May 2026

[6] ‘How the Iran War Just Broke European Chemical Industry’ European Business Magazine, 15 May 2026

[7] ‘Why the Iran War May Have Just Killed the AI Boom’ OilPrice.com, 20 March 2026

[8] ‘Report on global financial stability’ IMF, April 2025

[9] Ibid

[10] ‘Conditions for revolution: crisis of overproduction, state capitalism, and the war economy’ International Review 31

[11] EU military spending will reach €454 billion in 2026, compared with €204 billion in 2022.

[12] ‘Conditions for revolution: crisis of overproduction, state capitalism, and the war economy’ International Review 31

[13] In other words: “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.” ‘This crisis is going to be the most serious in the whole period of decadence’ International Review 172, 2024

[14] ‘A financial time bomb about to explode? The heinous crisis’, Le Monde Diplomatique, May 2026.

[15] Les Échos, 22-23 May 2026

[16]  “A currency that keeps falling whilst hydrocarbon prices continue to rise. Faced with this ‘scissor effect’, which threatens growth, inflation and the balance of payments alike, India is once again forced to come to the rescue of the rupee, which has been in freefall since the start of the war in Iran.”, Les Échos, 22–23 May 2026

[17] Les Échos 29-30 May 2026

[18] Private credit is a form of financing in which non-bank institutions (investment funds, hedge funds, pension funds, insurance companies, etc.) lend money directly to unlisted companies, without going through regulated markets or the traditional banking system. It is therefore a debt relationship between two private, non-financial entities, operating outside the scope of regulators. In the wake of the subprime crisis, banks were forced to clean up their balance sheets (to a certain extent) and to become more selective. As a result, a large number of companies found themselves denied access to credit, either because they were too small to access the bond markets or because they were too financially fragile to convince a banker to lend to them. It was in this gap that private lending emerged. The business model is very simple: on the one hand, investors seeking returns in a context of historically low interest rates; on the other, businesses that banks refuse to finance. Between the two, there are funds promising investors an annual return of 10 per cent – a very attractive return. The funds then lend to these companies over a period of 5 to 7 years at rates of 13 to 14 per cent, which enables them both to remunerate investors and to generate their own margin. This structure has two major structural weaknesses. The first concerns the borrowers. Most of these are companies in a precarious financial position – which, incidentally, justifies interest rates of 13 to 14 per cent. […] When defaults rise and confidence erodes, investors want to recoup their investment. This is where the second weakness comes into play: the lack of liquidity. The money lent to companies is tied up for 5 to 7 years, so it is not available as cash.

[19] Private debt funds do not lend solely from their own capital. They borrow themselves from banks – around 30 per cent of their exposure – to boost their returns. This mechanism creates an indirect link between the banks and the private credit market. (See (in French) ‘Private credit crisis: what the US turmoil reveals and why Europe is holding up better’ Rhétorès Finance)

[20] Les Échos, 7, 8, 9 May 2026

[21] ‘A financial time bomb about to explode? The heinous crisis’, Le Monde Diplomatique, May 2026.

[22] ‘Private Credit: the source of an impending financial crisis’ lafinancepourtous.com, 22 May 2026

[23] ‘Report on global financial stability’ IMF, April 2025

[24] ‘A financial time bomb about to explode? The heinous crisis’, Le Monde Diplomatique, May 2026.

[25] ‘Report on the Class Struggle’ International Review 174