When the CBI announced recently that Britain would escape recession, this was hardly enough to inspire confidence, particularly once we take into account the fact that manufacturing in Britain is in recession, with a 2% slump in output last quarter. This was followed by the news that the US economy is also just staying out of recession but with a growth rate close to zero. It has cut its forecast growth rate severely and its forecast budget surplus by 50%.
The world's other major economies are no better off. Japan, after a decade of recession, has seen its Nikkei stock exchange fall to a 17 year low at the end of August. The Euro zone cut interest rates after the ECB announced it had underestimated the effects of the global and US slowdown. Clearly the economic problems we are talking about are global in nature.
The ruling class and its media have changed their tune. We are no longer hearing about the success of the economy, based on globalisation or the dot com companies, as we did at the end of the 90s. But even that 'success' was not all it was cracked up to be. If the USA enjoyed a decade of continuous growth in the 90s, the average growth rate was significantly lower than in the 80s, which was lower than growth in the 70s. Furthermore, this growth was largely based on the massive resort to debt, another fact that the ruling class is no longer able to conceal. The potential disasters contained in debt-fuelled growth were demonstrated at the end of the 90s, which saw the crash of the Asian 'tiger' economies in 1997, followed by further international economic convulsions as other second rank economies, such as Russia, defaulted on repayments. The 'boom' of the 1990s was nothing but a part of the global crisis of capitalism that has been developing slowly but surely since the end of the 1960s, with massive unemployment and economic convulsions that the ruling class claimed to have overcome 30 or 40 years ago.
The long slow decline in the economy world wide is not the result of any mismanagement or stupidity on the part of our rulers, but due to the fact that for a almost a century the capitalist system has been in decay. That is to say that it has no way out of its historic crisis, can only continue on the basis of increasingly massive debt, and can only reinvigorate its cycle of production on the basis of a bloody redivision of the world market, as occurred in 1914-18 and 1939-45. Since the end of the post-second world war reconstruction in the 60s, there has been a continuing escalation in imperialist conflicts, and things have getting worse since the cold war ended in 1989, as witness the wars in the Gulf, ex-Yugoslavia, Africa or the Middle East (see p3). The plans for the 'Son of Star Wars' defence system show the USA trying aggressively to maintain its status as the world's only remaining super-power (see p8).
While the arms industry does indeed employ workers, this does not mean it is in any way positive for the economy. Its products cannot be eaten or worn or make new products, but can only be used to destroy. Yet the vast resources eaten up by this industry must be taken from somewhere, particularly from social spending. The choice 'guns or butter' remains as relevant today as in the 1930s, and the bourgeoisie will always choose guns over the living conditions of the working class unless it is forced to do otherwise.
Job losses and other attacks on working class living standards
If the 'boom' of the 90s did not mean any respite for the working class, today's slowdown is definitely the signal for new attacks. In fact two recent surveys of consumer confidence, in the USA and in the UK, have shown a fall in confidence to levels similar to those in 1998, after Russia defaulted on its repayments, or 1992 after 'Black Wednesday'. One of the main concerns expressed was the fear of rising unemployment. The reality of this concern is illustrated in Japan where unemployment has now risen to the highest level since records began in the 1950s. And we also see massive job losses being announced.
Some of these job losses have been announced internationally, as with the 16,000 due to go from Fujitsu, some of which will be in Britain, to follow the 850 jobs already lost over here in the past year. Hitachi and Toshiba will axe 20,000 jobs, as will NEC.
Home grown companies are also shedding jobs. Postal sorting offices are being closed and the work moved out of London with over 2,000 jobs to be cut, and 6,000 jobs to go at BT, to take just two examples.
Job losses are always accompanied by worse conditions and increased exploitation for those remaining in work. And we must not forget the attacks on health services, with fewer services available on the NHS after increased state control through the National Institute of Clinical Excellence and the Primary Care Trusts. Nor the long process of cutting entitlement to social security payments.
There is a great deal of anger in the working class against the effects of the crisis and the attacks on it, which will force it to respond. In doing so it faces great difficulties. There are no important struggles to provide a beacon for the working class as there were with Poland in 1980 or the miners in 1984. The working class lacks confidence in its ability not just to change society, but even to defend itself on a day to day level. This gives much more scope for the trade unions and the left to pose as defenders of the working class through campaigns against privatisation (see p4) or within the anti-globalisation campaign (see p1 and 4). These are both used by the bourgeoisie to pretend it is not capitalism, but only this or that aspect of it (private ownership, multinationals etc) that is responsible for the crisis, and so to divert workers from struggling for their own needs into a dead end that is harmless to the ruling class.
However slow and difficult the development of workers' struggles will be in these conditions, this is the only way for the class to regain confidence in its own strength and to remember the lessons of the great struggles it has already engaged in. Faced with the impasse of capitalism today that is the only way out for humanity. WR 1/9/01.