CIK
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Slowly Deepening Crisis
The so called “Great
Recession” is now in its sixth year and is acknowledged, even by the capitalist
class, as the most serious economic crisis since World War Two. Although the
crisis now appears to have stabilised it is in fact slowly deepening. The
violent gyrations in global stock markets of recent months indicate a
nervousness and uncertainty, not a return to confidence. The fact that markets
can collapse when the chairman of the Federal Reserve Bank announces that money
printing will be scaled back because the US economy is improving
indicates the upside down world which global finances now inhabit.
The strategies of the
capitalist class for overcoming the “Great Recession” whether they base
themselves on reflating demand, or austerity and balanced budgets, both rely on
achieving economic growth as the only escape route. Growth is, however, proving
elusive. The World Bank expects the global economy to grow by only 2.2% this
year but this is almost entirely due to higher growth rates in China and India.
For the UK, the economy has actually shrunk by 3.9% from its level of 2007 and
for the EU as a whole growth has been negative with European Commission
predicting only 0.5% growth in 2013.
Attempts at balancing budgets
have also been unimpressive. The EU has a budget deficit target of 3% of GDP
for all EU members. The UK deficit is now 8.2%, which is the highest since
2008, and the target date for achieving a balanced budget has been pushed back
from 2015 to 2018. The EU bailout countries have all been given extended
periods to cut their deficits. Portugal and Ireland have each been given
another 7 years beyond the original bailout terms. The US budget deficit,
though falling, is still expected to be 6.5%.
The strategy of “Austerity and
Balanced Budgets” is itself now being questioned by one of it architects, the
IMF, which now admits mistakes have been made in earlier bailouts particularly
Greece and the medicine dished out with the loans has made the situation worse.
A completely opposite strategy
is being attempted in Japan. After two decades of deflation a massive programme
of Quantitative Easing has been initiated. Money is being pumped into the
economy at a rate of 1% of the GDP per month which is double the maximum ever
undertaken by the US. The government aims to increase the rate of growth at the
price of allowing inflation to rise to 2%. At present Japanese taxes cover a
mere 46% of government expenditure and these measures will increase Japanese
debt; a debt which stands at 245% of the GDP and is the highest of any country
in the world. These measures reflect a sense of desperation.
The issue of debt in general
is, of course, not limited to Japan. The UK government debt, which was £700bn
in 2010, has doubled to £1400bn and is expected to rise to 85% of the GDP by
2015. This is just the government debt, once the corporate debt and personal
debt are added the total figure is £7500bn or approximately 500% of the GDP.
While this indicates little
success in finding a route out of the “Great Recession” it does suggest things
could get dramatically worse. A significant rise in global interest rates would
be a catastrophe. The figures for rescuing the financial system in the present
conditions would be measured in trillions not billions as in 2008. These
amounts would be beyond the capacity of the nation state. What the capitalist
class would do then is a matter of speculation but, writing down debts,
confiscation of deposits, as occurred in Cyprus recently, nationalisation of
pension funds, as occurred in Argentina 1990, or devaluing debts by inflation
of currencies could occur. All these things would produce a massive financial
crisis and loss of “confidence” which in its turn would produce a social
crisis.
Accompanying these
manoeuvrings in the financial sphere the ruling class has followed a strategy
of trying to shift the burden of the crisis onto the working class. There are
indications that this strategy on its own is proving insufficient. A hint of
this was the so-called “bail-in” of large depositors, namely sections of the
bourgeoisie themselves, in the case of the Cyprus rescue. The decisions of the
European Union at the end of June established the “bail in” of bank
shareholders and creditors as a policy to be followed in future rescues. The
signs are that this strategy isn’t working, even though the working class has
not yet been able to successfully oppose it.
Far from indicating that a
route out of the crisis has been found, these developments only indicate that
the underlying problems of capitalism continue and that the ruling class is
unable to either understand them or address them.
Attacks on the Working
Class
The attempts of the ruling
class to impose austerity on the working class have generally been successful.
Before considering why this is the case we wish to briefly outline the extent
of burdens which have been heaped on workers’ shoulders.
Since 2008 the attacks have
been on two fronts, a direct attack on wages and an indirect attack via social
benefits. The severity of these attacks can be illustrated by many statistics,
but probably the most dramatic are those from Greece. Here we find that;
Average family income has
fallen by 38% from its level in 2007
Wages and pensions have fallen
by 35 – 50%
Unemployment is 28.6% and 40%
of youth are seeking employment abroad.
Collective labour agreements
have been revoked
Pension age has been raised to
67
Vat has been increased to 27%
One of the results of all this
is that 37% of all children are now living in poverty.[1]
Infant mortality has increased
by 40%.
In the other EU bailout
countries there have been similar, but smaller, attacks on direct wages with
reductions of 5-10%. Minimum wages have similarly been reduced. For the UK, the
Institute of Fiscal Studies reports that there have been falls of 4.8% and 9.9%
in wages in the private and public sectors respectively since 2008.
At the same more flexible
conditions have been enforced with workers having to give up previous
entitlements such as holidays, bonuses as well as having to sign individual
contracts with employers or accept zero hours contracts.
Reduction in the social wage
have been imposed through reduction of benefits and services. For example in
the UK, disability benefit has been cut, the bedroom tax introduced, workfare,
which means working for free, has been imposed together with increases in the
pension age and reductions in pension payments etc.
This has been coupled with
restructuring of the economies and speed-ups which, of course, has led to
massive unemployment. In the EU as a whole the rate is 12% but in certain
countries it is much worse. 12% unemployment represents 18.8 million workers!
For the capitalist class this
has resulted in a net reduction in labour costs. For Greece this amounts to
some 14%. Why has the working class proved unable to resist all this?
Working Class Resistance in
Metropolitan Countries
The working class in the
so-called “developed”, or metropolitan, capitalist countries, particularly
Europe, the US and Japan, has proved unable to resist these attacks. In general
the capitalist class has succeeded in enforcing most of the attacks on wages
and conditions of workers it wanted. We consider two factors need to be
considered in explaining this, firstly the reorganisation of global capital
which has been carried out under the banner of “globalisation” and secondly the
confinement of workers’ struggles in the prison of the trade unions.
During the last 25 years
globalisation has changed the material situation in which the metropolitan
working class is forced to struggle. It has given the capitalist class a
flexibility they did not previously have, and an ability to outmanoeuvre
working class resistance. Richard Freeman, a Harvard economics professor,
estimates that the entry of China, India and the former Soviet bloc into the
world economy resulted in 1.47 billion additional workers becoming available to
global capital. This resulted in a doubling of the size of the size of the
workforce to approximately 3 billion. These additional workers brought very
little additional capital with them, and as a result cut the global ratio of
capital to labour which decreased to between 55% and 60% of what it would
otherwise have been_[2]_.
Richard Freeman himself makes
the obvious point that:
“The capital/labor ratio is
a critical determinant of the wages paid to workers and of the rewards to
capital. The more capital each worker has, the higher will be their
productivity and pay. A decline in the global capital/labor ratio shifts the
balance of power in markets toward capital, as more workers compete for working
with that capital.”[3]
The additional workers who
have become available have been made use of by the metropolitan capitalist
class by exporting production and service industries to the areas where they
are available. This has resulted in massively cheaper labour power becoming
available to capital. Technical developments in communications and the internet
have, obviously, greatly assisted the exploitation of this new labour force.
Much of the surplus value generated by these global operations has, of course,
been returned to the metropolitan countries and in part been used to fund those
service industries which cannot be exported.
For the metropolitan workers,
globalisation has as its corollary a tendency to fragmentation of the entire
working class. Large factories are split into smaller units forming a small
section of a global production process, or simply closed down and production
moved to peripheral countries. In the wake of the defeats of the bastions of
working class resistance in the 80s the metropolitan capitalists have succeeded
in reforming much of the organisation of labour under the banner of
“flexibility”. This has resulted in workers working in smaller units. For
example, construction workers working for “labour only” subcontractors, or
being “self-employed”, or being on flexible contracts such as the infamous
“zero hours” contracts[4]. The workforce is thus split into smaller units with
apparently differing interests.
The sector of the economy which
illustrates the decline of large scale production and large concentrations of
workers most brutally is manufacturing. This accounted for 40% of the UK
economy in 1955 employing 8 million workers and today accounts for just under
10% and employs only 2.5 million.[5] UK coal mining which employed 470,000
workers at the time of nationalisation in 1947, had contracted to approximately
half, 200,000, by the time of the miners’ strike in 1984, and today employs a
mere 6000. The same type of reduction of employed workers applies to the steel
industry. In 1951 it had 450,000 workers and today the figure is 18,500[6].
Similar figures could be produced for other industries, but these industries
are instructive as their decimation followed bitter strikes, strikes which
failed to prevent either the plant closures or lost production being replaced
by imports. They indicate how the previous methods and particularly the extent
of struggle, which had won battles in the 60s and 70s, were no longer
effective. Today steel making, vehicle production and whole swathes of
manufacturing industry are owned by international capitalist corporations. They
are thus able to transfer production elsewhere in the world in response to
local profitability, or in response to strikes. Globalisation of production has
given the capitalist class the ability to outflank previous methods of
struggle.
As the surplus value producing
industries, in particular manufacturing, have been cut back industries which
generally appropriate surplus value produced elsewhere in the economy, have
increased. This in turn has been made possible by globalisation. The service
industries, now employ 81%[7] of the workforce in the UK, according to the 2011
census. The sectors included in “service industries” are government employees,
health and education workers, transport, tourism and, of course, the famous
financial sector, which, employs 17% of the workforce and which, until 2008 was
supposed to be the saviour of UK capitalism[8]. Despite the obvious parasitism
of the financial sector, not all of these sectors are totally unproductive in
value terms and increasing numbers of ‘service sector’ workers are finding
their service work is being turned into commodity production. It is no accident
that these sectors have borne the brunt of the latest round of attacks on wages
and conditions. However, in these sectors strike action is more difficult than
in manufacturing, mining or steel-making and is less effective as so many key
commodities are imported from abroad.
The second obstacle preventing
any effective fight-back in the metropolitan countries is that struggles
generally remain controlled by the trade unions. The conditions in which the
trade unions operate have also been changed by globalisation, as described
above, and the more general change in capitalism’s profitability which has
occurred as the system moved from a phase of reconstruction, following World
War Two, to one of crisis which started from the early 70s. Whereas the trade
unions were able to negotiate some improvements in conditions and pay in the
post-war period this was possible because capitalism was in a period of growth,
caused by increased profitability brought about by the destruction of capital
during the Second World War. As soon as the crisis set in the capitalist class
tried to restore profits by reducing workers’ wages and benefits. In the
changed circumstances trade unions’ principal activity became about negotiating
redundancies, speedups and worse conditions.
This should not surprise us
since trade unions do not in any way oppose the wages system which is the basis
of capitalism. They locate themselves within the capitalist system and are
therefore a part of it. Their principal task is to negotiate the rate capital
pays for labour power and to assure its availability. This is a negotiation
within the system, and it accepts the conditions and premises of capitalism.
Trade unions therefore accept the need for a profitable economy and logic which
goes with this. They consequently accept such things as the need for
flexibility, speedups, redundancies and the rest. They stand for a healthy
national economy and their vision of socialism is an entirely statified
economy, that is to say, a system of fully integral state capitalism. Trade
unions are consequently agents of capitalism and, as such, they will sabotage
any effective fight against the system itself.
For workers in the
metropolitan countries, the situation is thus one in which they are under a
general attack because of structural changes in the global economy, changes
which are bringing about a slow equalisation of global wage rates, and a
specific attack resulting from the financial collapse of 2008. We expect these
attacks to intensify as the economic crisis deepens. At the same time
resistance remains generally organised by trade unions who advise workers to
knuckle down and submit to these attacks otherwise their situation will get
worse and could reduce their conditions to those of workers in the peripheral
countries. This is the background to the current failure to halt the wave of
attacks which the capitalist class is launching on workers in the metropolitan
countries.
Resistance in the
Peripheral Countries
The situation in the
peripheral countries is more or less the inverse of that in the metropolitan
countries. Here we find huge concentrations of workers in large factories,
reminiscent of the situation in Manchester in the Nineteenth century, but many
times larger. Perhaps the most dramatic example of this is Foxconn, the
Taiwanese electronics company producing such things as smartphones, tablets,
computer servers etc. which employs 1 million workers worldwide. Its 3
production facilities in China employ approximately 700,000 workers[9]. The
biggest factory in Shenzhen employs 390 000. Similar massive concentrations of
workers in production plants are found in India, Bangladesh, Brazil, South
Africa and other peripheral countries. The conditions which many of these
workers suffer are similar to those described by Engels in his study The
Condition of the Working Class in England. In China
some 250 million workers earn less than $1 per day and 700 million live on less
than $2 a day. Workers often have to work 60 to 70 hours per week.[10] In
Bangladesh clothing workers are locked in the factories, have pay deducted for
toilet breaks and work in notoriously unsafe conditions for a pittance. In
November 2012 a fire in a factory burned 117 workers to death, and this year
the collapse of a single factory crushed 1100 workers to death. These few examples
give an indication of pay and conditions in the “Brave New World” which
capitalism has constructed in the peripheral countries, conditions which
revolutionaries can only brand as an outrage.[11]
In most peripheral countries
the role of the trade unions is not so entrenched in the capitalist apparatus
as in the metropolitan countries. China, of course, is the exception where the
unions are visibly integrated into the state. This means that much of the class
struggle takes place outside union control. Strikes are wildcats and often do
achieve some concessions but a price is paid, frequently in blood.
A majority of the workers in
the peripheral countries are first generation workers without a previous
tradition of class struggle. When class struggle breaks out it is with
elemental violence on a local level often leading to violent clashes with the
police. In China, for example, while there are no statistics, it is estimated
that there are thousands, if not tens of thousands, of strikes every year. All
of them are wildcats.[12] These have recently led to clashes with the police
and army leading to deaths of workers. One of the most brutal examples of
violent suppression of workers’ struggles in a peripheral country is that of
the strike at the Marikana platinum mine in South Africa in 2012. Here the
police simply gunned down 34 striking miners.[13]
In the periphery, therefore,
it is generally the case that workers are struggling against the savage
exploitation and achieving minor concessions in wages and conditions. These
struggles remain local and are generally contained by the repressive forces of
the state. There is, however, no perspective that this struggle is part of a
general struggle against capitalism itself.
Globalised Resistance
While globalisation has provided
the capitalist class with the means to undermine local and even national
workers’ struggles it has also, as predicted by Marx in the Communist
_Manifesto_, created a global working class and a global system of production,
which lays the basis for the international unity of the working class. While
the capitalists are able to outflank strikes in a single industry or in a
single country, strikes which generalised to many industries or became
international could not be defeated. It is clear that workers need to unite
worldwide exactly in the way the Manifesto states. This
has become necessary to achieve even immediate economic demands. The capitalist
crisis, however, makes economic gains short lived since the capitalist class
will always find ways of taking such gains back or introducing other changes
which compensate for these concessions. The real problem is the capitalist
system itself which, because of its exploitative nature, is leading the world
to catastrophe. The real issue is the replacement of the capitalist system with
a communist[14] one, and future struggles need to be given an orientation
towards this goal. The question is how can this be done?
The working class owns nothing
but its ability to labour. It is a property-less class in capitalism and is
thus forced to sell its labour power to survive, and this sale of labour power
is the basis of the entire capitalist system. To free itself from this
condition it has to break the wage labour-capital relationship and, of course,
doing this means exploding the whole capitalist system. It is for this reason
that Marx described the working class as a class held in “radical chains” since
it cannot break the chains without breaking the entire system apart and
reorganizing production and society globally. In these circumstances the
working class has only two weapons on which it can rely, its consciousness and
its organisation.
Workers’ Consciousness
At present the working class
accepts the ideas of the capitalist class since, as Marx noted in The German
Ideology
The ideas of the ruling
class are in every epoch the ruling ideas*[15]*.
In general workers accept that
the present crisis is a temporary interruption in the operation of a system to
which there is no alternative. For the present, for most workers, it seems best
to hold onto what you have, keep your head below the parapet and wait for the
better future, which our rulers are always promising. However, as Marx also
notes in the Preface to a Critique of Political Economy:
The mode of production of
material life conditions the social, political, and intellectual life process
in general. It is not the consciousness of men that determines their being,
but, on the contrary, their social being what determines their consciousness.
At a certain stage of their development, the material productive forces of
society come in conflict with the existing relations of production or – what is
but a legal expression for the same thing – with the property relations within
which they have been at work hitherto. From forms of development of the
productive forces these relations turn into their fetters. Then begins an epoch
of social revolution.[16]
As workers’ lives become ever
more difficult and the promised glorious future never comes, it is this which
will determine their consciousness. This is, of course, in direct contradiction
with the ideas propagated by the capitalist class through their media, their
education system and their ideological apparatus. It is in this situation that
ideas of wider class struggle and international struggle can take root.
The “social being” of the
working class, which Marx talks of, is, of course, enmeshed in the social being
of capitalist society at large. The present phase of the crisis has produced a
general dissatisfaction with capitalist society which has expressed itself in
social movements in which workers have participated as individuals. We have
witnessed mass struggles in peripheral and central countries; social uprisings
in Tunisia and Egypt; occupations of central squares in major cities in Greece,
Spain, US, UK and elsewhere; followed by social movement in Turkey, Brazil and
once again in Egypt[17]. While movements are interclass movements without any
clear objectives they undoubtedly do express a dissatisfaction with capitalism
at a fundamental level and also a dissatisfaction with the formal structures of
capitalism such as bourgeois democracy, political parties and trade unions. The
crisis has, therefore, brought about an incipient challenge to bourgeois ideas
in which workers have participated as individuals.
The CWO argues that capitalist
relations of production are a “fetter” on the forces of production in the sense
used by Marx in the passage quoted above. Although it is undeniable that the
forces of production have grown enormously since the Second World War we argue
that this growth depended on the massive devaluation and destruction of
constant capital which the war brought about. This destruction of previously
produced wealth has become an essential and integral part of capitalism’s
survival because of the systemic problems of accumulation which cause a
tendency for profit rates to fall. When it is understood that the historical
cycle of modern capitalism entails general destruction of wealth through global
war it is clear that capitalist social relations are indeed a “fetter” to the
forces of production. At present we are at the stage in the present cycle of
reproduction where general destruction of constant capital through war is
appearing again as the only solution to capitalism’s impasse. However, since
the conditions for general war are not yet developed, the present impasse is
characterised by ever increasing attacks on the working class.
This is the material
background to the working class’ situation. However, the “social being” of
workers within capitalism does not directly raise questions such as these. What
workers experience are increasingly difficult conditions until it becomes
impossible to continue living in the old way. The issue will them be
confronting immediate problems, but problems, which when they try to solve
them, will necessarily lead to the confrontation of the more fundamental
historical questions. Both the Paris Commune of 1871 and the Russian
Revolutions of 1905 and 1917 moved from initially trying to confront
essentially bourgeois nationalist issues to world historical tasks, and there
is no reason why this should not recur.
Organisation
The material conditions exist
for the working class to become conscious that its immediate struggles need to
be generalised and made international if they are to succeed. There is however
no automatic trigger that will make that happen. At the moment the most
widespread hope amongst many workers is that capitalism can be made “fairer”
despite all the evidence that the wealth gap around the world continues to
increase notwithstanding the crisis. This is a necessary stage we have to go
through. In the course of their continuing exploitation the wider working class
will be faced with the impasse that capitalism has created. It will be faced
with the recognition that the system is no longer compatible with the future of
humanity (and we have not even raised here the environmental destruction it is
creating[18]). Its struggles will become wider and more collective. Street movements
may bring impressive anti-capitalist masses out but it will be the mass strikes
of the future which will really threaten the system. Only by paralysing the old
system of production can we pave the way for a new one. It is worth noting in
this respect that, where the struggles have had any success in the “Arab
Spring”, strikes by the local working class have provided the force required to
achieve the capitulation of the authorities, notably in Tunisia and Egypt. This
indicates that the only real power able to confront the capitalist authorities
is the working class.
At present workers’ struggles
everywhere are largely in the hands of the trade unions which, as has been
argued above, form part of the capitalist system of control of labour. For
future struggles to have any chance of success it is therefore necessary to
take their organisation out of the hands of the unions.
Struggles need to be organised
democratically through workers’ assemblies which delegate members to strike
committees who would give themselves the task of extending strikes or struggles
to other industries and, where possible, internationally. These delegates are
answerable only to the assemblies and are recallable.
But this alone will not be
enough to defeat the system. In this process a historical consciousness will
have to arise which will take many forms but will find its political voice in
an international party. This will be a necessary instrument for the working
class to be able to build a new world. We are not talking here about a party of
government but a party of the working class, in the working class, whose task
is to fight for the spread of international communism.
Such an organisation needs to
be embedded in the struggles of the working class as this is the only way it
can influence them. Without a clear political aim even the most determined
workers’ struggles will ultimately end in confusion and failure. To fight for
the construction of such an organisation is the key task of the present period
for revolutionaries who understand the historical lessons of the class struggle
and the stakes of the present situation. How to engage in workers’ struggles
and propagate the revolutionary way forward is the key challenge to everyone
who sees that only the working class can forge an historic alternative to
capitalism.
CP
Footnotes
[2]“Labour Market imbalances”
Richard Freeman, Harvard University paper. Richard Freeman
[4] These contracts allow
employers to retain workers but only pay them for hours they work. Often they
are informed when they are required to work by text to a mobile phone. In the
UK in 2012 there were 200,000 workers on these contracts with 100,000 of them
in the National Health Service. This system has been extended to professionals
such as doctors, engineers, lecturers, journalists and others and the numbers
increased by 25% in the last year. It represents a way of cheapening the costs
of labour and making employment more precarious. Figures from Financial
Times 8/4/13.
[6] See Financial Times
14/05/13
[8] The City of London
produces 9% of GDP but generates 27% of government taxes.
[9] See Financial Times
4/01/13. For an article on Foxconn see leftcom.org
[10] Reported in Financial
_Times_ 9/12/05
[14] When we speak of
Communism we mean production for human needs, where the means of production are
socialised and society will be organised so that each person will contribute
according to their ability and each will receive according to their needs. This
has nothing whatsoever to do with the state capitalist societies which existed
in Russia, China etc.
[15] Karl Marx The German
Ideology
[16] Karl Marx Preface to _A
Critique of Political Economy_
[17] See articles which follow
this one.
[18] See our pamphlet Capitalism
and the Environment by Mauro Stefanini or leftcom.org
Saturday, August 3, 2013
