As economic crisis wracks the globe, the international bourgeoisie seems to be on the ropes.
It's true that the massive injections of credit into the money markets, the equally massive budget deficits and now the latest round of ‘quantitative easing' has enabled the bourgeoisie to prevent a total implosion of the financial system in most of the central countries. But none of this has actually resolved the underlying crisis. The bourgeoisie now accepts that the world is facing its most brutal recession since the end of World War II. According to some commentators, over 40% of the world's wealth has been destroyed by the ‘credit crunch'. Countries such as Japan and Germany are suffering massive collapses in exports (-49.4% and -20.7% for the year respectively) and industrial production (-10% and -22.8% for the year respectively) at a rate rivalling the Great Depression. Much of Eastern Europe is threatened with outright disaster on the scale of Iceland, and Greece, Ireland, Italy and Spain are not far behind. The ‘emerging markets' that shone as beacons only last year are also beginning to show the strain - China's lay-offs alone number tens of millions - as these economies are caught up in the same tsunami as the rest of the world. Both the OECD and the IMF are now predicting the world economy as a whole will contract this year - a phenomenon unprecedented since the end of World War II.
Capitalism exists as a global economic system and the crisis is no less global. But the world economy is also divided into disinct economic units locked in brutal competition for resources, markets and profit. The highest synthesis the bourgeoisie can reach is the nation state. In decadent capitalism unfettered competition only exacerbates the crisis and the threat to the entire system. In the 1930s, the bourgeoisie responded to global crisis by a series of beggar-thy-neighbour policies which only made the crisis worse until some nations attempted to resolve their domestic crisis by stealing the spoils from other capitalist states. This was the underlying cause of World War II.
After the war, the bourgeoisie concentrated its efforts on trying to forge a united front to tackle the crisis on a more global level. Economic policy was co-ordinated through the bloc-system and the development of international instruments such as the OECD, IMF and World Bank. Forums such as the World Trade Organisation have allowed the ruthless competition endemic to capitalism to be pursued according to ‘rules' that prevent the situation degenerating into total chaos. The G20 is another such body, a forum allowing the most powerful states to discuss economic issues together.
Capitalism is bankrupt
The circumstances of the latest G20 meeting are historically unprecedented. After 40 years, since the end of the post-war boom, all the policies which the bourgeoisie have used to systematically manage (or delay) crises are on the brink of failure. The main mechanism for maintaining demand in the face of massive over-production - ever-increasing amounts of credit - has now left the economy in a similar situation to a patient who has overused antibiotics: the effectiveness of any counter-measures have been reduced to virtually zero. Credit has become part of the problem: the whole of the system is now, literally, bankrupt.
Faced with this prognosis, the bourgeoisie is trying desperately to marshal a response that can finally end the crisis and return to the elusive path to ‘growth'. But the bourgeoisie is faced with the unpleasant question: what do they do now? Some parts of the bourgeoisie bewail the loss of the manufacturing base in Europe; and talk about ‘rebalancing' the economy, expanding manufacturing and ending the addiction to credit. Can this lead the way to a new economic Eldorado? Hardly! Although the financial powers (especially the US and UK) have been the epicentre of the crisis, the major manufacturers (Germany, China and especially Japan) are confronting dislocations every bit as profound as the ‘profligate' countries. This is because it was only the massive liabilities of the debtor countries which provided a market for the exporting countries in the first place. All the current-account surpluses and foreign-currency reserves of the manufacturing powers have turned out to be just as illusory as the so-called ‘wealth' generated by the property bubble.
Because the vast quantities of credit poured into the system have failed to produce acceptable results, the bourgeoisie is now trying to up the dosage to even more massive levels. The US wants to co-ordinate this on an international scale and has been pressuring Europe to join in a global fiscal stimulus. This met with some resistance at the beginning of the G20. The weaker members of the eurozone are already facing bankruptcy and would probably have suffered a currency collapse were it not for the Euro. Germany, the most powerful economic engine of the EU, was, along with France, very vocal in its opposition to excessive stimulation of the world economy. Ironically, after accusing the UK of "irresponsible Keynesianism", the German bourgeoisie has already pushed through measures even bigger than those of its British rival. Britain's national debt was already dangerously high before the crisis exploded. It's now at such levels that it threatens the country's sovereign AAA rating. The latest auction of British state debt failed to shift all the bonds on offer.
No real recovery
In the end the world leaders came up with a deal in which some of the French-German proposals - such as stronger controls over hedge funds and tax havens - were exchanged for a trillion dollar injection into the world economy. Gordon Brown immediately proclaimed that this amounted to "a plan for global recovery". In reality, this is just a rejigging of the same failed policies whose limitations have been so exposed by the world crisis.
Whichever way the bourgeoisie turns, it is confronted with the ever-growing contradictions of decadent capitalism. As their united efforts become increasingly ineffective, the temptations of "each to their own" will become harder to resist. France has already tied state aid for car manufacturers to conditions on keeping investment within the country. Obediently, Renault has begun to shift production back to France, announcing the closure of a factory in Slovenia. Other European powers blather about the dangers of protectionism, but it's clear they've had the same thought.
It may still be possible for the ruling class to maintain a united front against the economic storm but the obstacles against this are increasing. It may also be possible for them to squeeze some kind of economic ‘recovery' out of the wreckage of the world economy - but this can only delay the inevitable. For the working class, the results will be largely the same: a vicious assault on jobs, wages and living conditions that will make the last 40 years look like an oasis of prosperity. There is only one answer to this irreversible decline: world revolution!