Death Agony of World Capitalism and the Crisis of Proletarian Leadership

Discussion is beginning in the Fourth International, the worldwide revolutionary socialist organization, in preparation for the next World Congress.

As an initial contribution to the discussion, we print below major excerpts from the World Political Resolution approved by Socialist Action’s national convention in August 1998.

The financial crisis that erupted last October in the so-called “emerging economies” of Southeast Asia is dramatic evidence confirming the fundamental theses of revolutionary Marxism: that the objective conditions for socialism are rotten-ripe, but the subjective factor, revolutionary proletarian leadership, has not yet been solved.

Although the “Asian Tigers” represent only a tiny portion of the world economic system, their troubles are symptomatic of the developing global crisis of overproduction.

Most immediately, it has added dangerously to Japan’s economic woes since the latter has a major stake in the economies of these countries. However, the sudden collapse of these sources of super-profits has transformed them into super-losses.

Consequently, as this is being written, Japan’s economy, which had been teetering since the beginning of the 1990s on the threshold of economic collapse, now seems to be just inches away from a 1930s-style depression. Moreover, if Japan goes, it threatens to also drag the powerhouses of world capitalism down with it. Such a calamity could trigger a global crisis dwarfing that of the Great Depression.

To the superficial observer, however, this assessment seems to have been refuted by the last 50 years of relative capitalist economic equilibrium and expansion. According to the most vulgar Wall Street financial “experts,” the global profit system has been transformed by John Maynard Keynes, the noted English economist, into a higher species of capitalism, with 1930s-style global depressions a thing of the past.

There is, of course, a grain of truth to such irrational optimism. Capitalism has indeed been changed by the Keynesian strategy of separating the world monetary system from its base in gold. This change, gradually instituted, allows the world’s currencies to express their values primarily, and very inaccurately, by measuring them against each other-rather than against the world of commodities.

But, in the same way that one cannot cheat the laws of nature, neither can the laws of capitalist market relations be cheated-at least, not for very long.

Impending economic crisis

The Keynesian strategy succeeded in allowing a far greater degree of economic regulation than was possible in a monetary system based on precious metals. The baseless paper currency permits an unprecedented expansion of credit not possible in a monetary system based on gold.

Keynesianism, thus, has allowed world capitalism to postpone a major crisis of overproduction since World War II-but only by paying the terrible price of making debtors of every nation. Moreover, aside from episodic fluctuations in the size of each nation’s debt, the general trend is toward an ever-heavier debt load weighing down global capitalism.

Then, as Keynes himself conceded, capitalism must pay the terrible price of a growing public and private debt ultimately rising to unsustainable heights. The interest on debt moreover, is taking an ever-higher proportion of every capitalist country’s gross national product. Ultimately, the vastly inflated global monetary system as a whole is doomed to collapse.

That, in essence, is what triggered the collapse of the Southeast Asian bubble economies. Unrepayable debt can be sustained only so long as the interest owed to banks is “serviced.” And when creditors merely believe that interest payments owed by the nation in question can no longer be maintained, they attack its currency-testing its ability to pay on demand. If the currency fails such a test, they carve away their pound of flesh!

Thus, in Southeast Asia last year, speculators attacked one after another of these countries’ currencies. The targeted country’s government bonds came under almost simultaneous attack. Values of currencies and bonds fell precipitously, one after another, followed swiftly by withdrawal by the imperialist world of investment from the region. As we have seen, it resulted in almost total economic, financial and monetary collapse.

Rocked to its foundations, the International Monetary Fund and other agencies of world imperialism took steps to “bail out” the foundering Asian economies.

But such bailouts are in no sense charitable acts. Their primary concern is to tie austerity to the bailouts so that repayment of all debts to imperialist financial institutions is assured. Above all, if there were no bailout, global capitalism as a whole would be placed in mortal danger.

Japan vs. United States

To get a better feel for the dilemma facing world capitalism, we must take a closer look at how it’s shaping up in Japan, especially as viewed by the latter’s American “critics.” These critics, whose ulterior motives are at the same time organically linked to their real concerns, have been offering free advice regarding “solutions” to Japan’s current troubles.

In the first place, Japan is being lectured along the lines of the following paraphrased argument:

It’s your own fault, your style of highly regulated “bureaucratic” capitalism is the cause of your eight-year-long stagnation. Moreover, you have allowed your banks to lend trillions of yen with reckless abandon-mainly to those industries involved directly or indirectly with production of the means of production.

You should have known it would lead to a crisis of overcapacity of such things as auto factories and high-rise office buildings-way beyond what the market could bear. [Bourgeois economists prefer to call itovercapacity, in order to avoid the more precise term, overproduction, made famous by Karl Marx.]

Your irrationally exuberant building boom, in turn, put a heavy premium on the price of land on which to build. This fueled further speculative lending by your banks.

You also made the mistake of financing a similar speculative boom in Southeast Asia. Now that these Asian Tigers turn out to have been made of paper [in more senses than one], the Japanese stock market has fallen by 60 percent, land prices have declined by 80 percent, and a major sector of your financial institutions are really hopelessly bankrupt-with bad debts to the tune of 30 trillion yen ($233 billion).

The Economist of March 21, 1998, (the source of these statistics and the paraphrased argument) complains that rather than letting the market do its work, Japan has been trying to cut its growing budget deficit by raising taxes, slashing public spending, raising employers’ contributions to welfare, and other austerity measures.

“The net effect,” according to The Economist, “was to squeeze 9 trillion yen from demand.”

This mouthpiece of British imperialism, which has been following the economic trail blazed by its American cousins, parrots U.S. imperialism’s argument that Japan must increase its already dangerously high budget deficit in order to pump currency into its economy to absorb surplus goods-in strict accord, they argue, with time-tested principles of economic regulation.

But cutting government spending when the economy shows signs of recovery-and that was what was happening at the time-is in line with these Keynesian principles.

The Economist notes this but in the same breath dismisses it by arguing that what Japan’s critics “do fault is Mr. Hashimoto’s timing. The government believed that last spring’s recovery was real, and that with the yen once again falling against the dollar, Japan had put the worst of the post-bubble years behind it.”

(This magazine’s superior judgement that that “recovery” was not real is the kind of wisdom one gains after events have settled the question of whether the recovery was real or not.)

Underscoring its hypocrisy, American imperialism is demanding that Japan allow its failing banks to go into bankruptcy so that free market principles can restore stability to its “highly protected, and deeply flawed, banking system.”

Japan’s economy is, in fact, only more highly protected. All countries, including the United States, resort to protectionism in those spheres in which they are at a competitive disadvantage.

But Japanese capitalists aren’t stupid; they know that letting a large sector of its banks get wiped out would allow U.S. banks to take over large chunks of the Japanese financial industry! Thus, it remains to be seen whether-or more accurately, perhaps, how much-Japan will be compelled to bow to American pressures.

In any event, the British news magazine gets down to the nitty-gritty of Japan’s desperate plight:

“No one faults [Japanese prime minister] Hashimoto’s determination to get a grip on the budget. The accumulated deficit run up by central and local governments during the immediate post-bubble years had become nearly as big as (and is now bigger than) the country’s Gross Domestic Product (GDP).

“When pension liabilities were added, the government found itself staring into a gaping hole twice the size of [Japan’s] GDP. Just servicing that debt now takes the biggest slice (22 percent) out of the national budget-accounting for more than education, defense and pensions combined.” [Emphasis added]

Japan is not alone in its dilemma; this is the dilemma of the post-Keynes, global monetary system. Because it remains subject to the economic laws of capitalist production, it cannot postpone major economic crises forever!

Capitalism remains subject to a fatal contradiction: Competition drives every capitalist along willy-nilly in a never-ending race with its competitors to produce ever more goods, ever more cheaply. And, because that’s achieved by replacing human labor with machines, there is always less paid in wages to working people as a class than the total value the working class adds to the product of its labor.

Asia’s former prosperity was not based on solid foundations. It was based on a mountain of credit supported by an inflated currency. And by the same token it also signifies that the post-World War II “prosperity” enjoyed by world imperialism is a massively extended credit bubble-which is now being put under increasing stress.

Inflation “disappears” from U.S. economy

But, if all currencies, including the dollar, continue to lose value, how explain the strange phenomenon of “disappearing” inflation in the U.S. economy?

In the first place, even the most honest government statistics do not register the real inflation rate since no account is taken of the falling value incorporated in commodities: The steady increase in productivitymeans that each unit of a given commodity tends to fall proportionally in value. Thus the falling value of ever cheaper commodities is not expressed in a proportional fall in their prices.

(How else explain why it now takes two in the average working class family to be able to afford a lower living standard than was enjoyed by the previous generation with only one employed member?)

Secondly, the U.S. rate of inflation in recent years appears to be approaching zero because the world’s capitalists have been increasing investment of their surplus capital in American stocks and bonds, and other assets denominated in dollars. This flow of capital into the United States is largely because of two reasons:

1) The attack on workers’ living standards in the United States has increased the rate of exploitation over the last several decades, and thus serves to increase the average rate of profit in this country.

2) It’s also the safest place for the world’s capitalists to store capital they cannot profitably invest elsewhere-at least for the time being. (The average Japanese interest paid on capital invested in bonds considered safe is .5 percent; in the United States it’s 10 times higher, at five percent.)

This capital flowing into the American economy is what sharply increases demand for the U.S. dollar. Thus, in accord with the law of supply and demand, its price, or value relative to other currencies has tended to rise when demand for other currencies fall. But the values of all currencies, the U.S. dollar included, are falling in value relative to their real purchasing power.1

But a test of the real value of the dollar along with all dollar-denominated assets is certain to come-as it eventually does to all currencies. As we will see below, such a test may not be too far ahead.

Japan can retaliate

apan has financial and economic weapons it can wield in defense of its economic interests against U.S. pressures. One of its most powerful is its enormous holdings of US Treasury bonds and other American assets. If American capitalism tries too hard to force the Japanese up against the wall, they have the option of cashing in portions of their foreign holdings.

Japan’s prime minister, Ryutaro Hashimoto, claims these holdings add up to $800 billon in foreign assets and $220 billion in foreign reserve currencies. (A not-very-subtle threat-fully understood by world capitalism’s financial experts.)

Since much if not most of it is in U.S. assets and currencies, if Japan is forced to dump its U.S. Treasury bonds onto the world currency market, that alone could set off a major fall in the relative value of the dollar.

Then, if that doesn’t force the Americans to retreat, Japan’s weapon of last resort is to gradually dump all its foreign holdings onto the world market. That could sink all currencies below their true values! That’s the way the market system works: prices of commodities (even paper money acts as a commodity) are always either above or below their true values.

Even a modest sale of U.S. Treasuries, which Japan may be compelled to do if its currency comes under attack, could also burst the Keynesian paper bubble, resulting in an explosive general rise in the price of commodities. And by the same token, this could cause a fall in the price of the dollar, and ultimately a decline in the value of all the world’s currencies.

The implications of such a scenario is the monetary equivalent of the game of “nuclear chicken” played during the Cold War.

However, just as the Cold War didn’t have a nuclear conclusion, no capitalist country, at the present juncture at least, would dare risk taking such drastic retaliatory economic action-unless their economic survival is clearly at stake. Thus, the world’s capitalists are sure to seek a less risky way to extricate themselves and their world system from its current dilemma-if they can.

Hashimoto, consequently, has been taking steps, the latest on April 9, 1998, toward a heavy increase in deficit spending to restart Japan’s failing economy. He has also given in a little to U.S. demands that he open Japan’s economy a little wider for the entry of the goods and capital of its global competitors.

This shows that he doesn’t take lightly Clinton’s warning some months ago-“Don’t try to export your way out of your recession.” He knows that failing to heed Clinton’s warning would lead to very effective retaliation: Tariffs and other barriers would be erected in the United States and elsewhere to stop too many cheap Japanese goods from displacing the products of their imperialist competitors in world marketplaces.2

Such a sequence of unrestrained protectionism contributed heavily to the 1929 stock market crash and added to the severity of the Great Depression of the 1930s.

But even those Americans and others pressuring Japan to spend its way out of an impending economic collapse have indicated that this might not, and probably won’t, work! In which case, billions of dollars more in deficit spending will become necessary-increasing the danger of an attack on the yen that could send Japan over the brink into financial and then economic chaos.

Many of the world’s financial experts openly worry that their economic system seems to have entered a new phase in which the measures that served it well for half a century may no longer produce their expected results.

This is most starkly manifested in the size of Japan’s central government debt, which is greater than its Gross Domestic Product (Japan’s GDP is estimated at close to $4 trillion.) This over $4 trillion in central government debt, which is the world’s largest, doesn’t include local government debt, nor the new deficits already being piled up or in the works.

Neither does it include the far larger private debt already accumulated by Japanese financial, commercial, and industrial institutions-much of which, bourgeois economists claim, is hidden. (Japanese banks, alone, are admittedly sitting on more than $600 billion in bad loans.)

Moreover, this enormous private debt is being steadily transformed into public debt as the Japanese government bails out banks and sinks government funds into the stock market to prevent it from crashing.

Meanwhile, Japan’s GDP has begun to fall, which means that incoming tax revenues will also fall-making it far more difficult to service the public debt. This all adds up to an increasing rate of bankruptcies and the awesome menace of the Japanese state itself going bankrupt.

It’s not for nothing that world capitalism is in a dither over Japan’s crisis. The ruling classes are right when they warn that if Japan’s economy collapses, one after another of the world’s economies may also be sunk and the world will be faced with the mother-of-all economic catastrophes.

The April 12, 1998, New York Times, reflecting the growing spate of warnings of a stock market crash, devotes more than half its Week in Review front page to a graphic comparison of the astounding similarities between Japanese euphoria in 1989 at the height of its “bull market” and today’s American euphoria over its skyrocketing “bull market.”

The piece notes that “the eerie similarities are a reminder of what can happen when boom times beget a boom psychology. … Americans were sounding more and more like the Japanese did in late 1989, just before they reached the mountaintop and blindly stepped into the void. Now by some measures, Americans are beginning to act like them too.”

The Times makes very clear that it’s certainly something to worry about!


A growing layer of reformist groups and publications have pointed to the dangers to workers arising out of what they term the “globalization of industry.” The nation state, they argue, including the United States, is more and more losing its central capacity to regulate its economic affairs.

In place of the nation state, according to these pro-capitalist “radicals,” an increasing number of powerful transnational corporations, whose incomes exceed that of many nations, including advanced capitalist nations like Italy, are subjecting even the most powerful states to their will.

But in the first place, in no sense is that new. Karl Marx and Frederick Engels described the process of capitalist concentration and monopolization 150 years ago in the “Communist Manifesto.”

Moreover, the founders of scientific socialism long ago noted that nation states are organized to serve the needs of their ruling classes and have always been subordinate to its most powerful capitalists-who also tend to dominate multinational corporations. Thus, the state functions in every arena-political, economic, judicial and military-to meet their needs.

Transnational corporations, however large in economic terms, have no private armies to defend their interests. They don’t need them; they have the armies of their nation-states and military alliances between nation-states to defend their national and international interests.

Opponents of the “globalization of industry” (or “super imperialism” as it was called in Lenin’s time) demand that so-called democratic nations recapture their sovereignty by withdrawing from the growing numbers of world trade and banking institutions. That is, they demand that the power to decide basic economic policy (which has in reality never been lost) be returned to the current capitalist state power-ie., to the same capitalists who dominate the transnational corporations.

Most opponents of globalization argue that working people now have a hidden enemy, an enemy far removed from their national state boundaries, an all powerful enemy that operates independently of all nations.

These reformists, some of whom call themselves socialists, deny that the real enemy of working people is the capitalist class operating in their own countries. Pretending that the capitalist state has been superseded by not-so-shadowy multinational corporations is a dodge. It’s designed to direct attention from the capitalist class and its state and point the finger of blame for the anti-worker policy of each nation’s capitalist class elsewhere.

It’s no coincidence that it also serves as their rationalization for subordinating workers’ class interests to maintain the ability of theircapitalists to stay competitive (read, “profitable”) against capitalists elsewhere.

Europe’s workers stall capitalist offensive

It’s no accident that the first transitional demand listed in the program of our world movement is the “sliding scale of wages and sliding scale of hours.” The entire world working class will be faced by the combined menace of unemployment and inflation in the months and years to come.

In recent decades, the demand for a shorter work week to meet the growing shortage of jobs has been at its lowest point (in the United States) since the worker upsurges of the 1930s and ’40s.

This seeming decline of interest in shorter hours with no reduction in weekly pay is also neither accidental nor the result of a decline in the objectively revolutionary nature of the working class.

The labor bureaucracy in the United States, particularly, has been working overtime to convince workers that unless “our” capitalists are “competitive” (read “profitable”), our country will lose the war for markets-and thus “our” workers and their jobs will go down along with their bosses.

And as fast as global capitalist competition has been intensifying, so have workers’ misleaders everywhere intensified their efforts to convince the rank and file that “all of us must sacrifice in our national interest.” The American labor bureaucracy has been most successful of all the world’s reformist socialists and labor bureaucrats in convincing workers that their fate is tied to “reasonable” profits for America’s capitalists.

The European reformists and labor bureaucrats work no less diligently to serve the interests of “their” capitalists. The growing movement for a shorter work week to offset growing unemployment in Europe is accelerating, but that’s despite the efforts of their misleaders.

France’s Socialist Party prime minister, Lionel Jospin, campaigned and won election based on support to the workers’ demand for a 35-hour week with no reduction in pay. It’s been over a year since his election and the 35-hour week has yet to be put into effect.

The delay is being used by Jospin’s Socialist Party and his allies in the French government to convince the French working class that the capitalists will accept the shorter week only if it doesn’t cost them any more in weekly wages. How is that strange policy to be carried out?

The scheme being worked up between the Socialist government and French capitalism to accomplish such a miracle is this: Shorter hours at the same weekly pay will be acceptable to the bosses, providing workers accede to their demand for flexible working hours, rotating shifts, and requiring workers to handle more operations to gain “more efficiency” to make up for the shorter hours of the changed workweek.

That is, do the same or more work in 35 hours that they now do in 39!

An April 19, 1998, New York Times article describes Jospin’s success in cutting the French budget deficit to a hair above the 3 percent limit required for charter membership in Europe’s new currency, the euro.

The article is designed to reassure American capitalists who may think that Jospin is out to solve the problem of French unemployment at the expense of profits. The author writes:

“Just because the work week is legally 35 hours doesn’t mean that everybody will work 35 hours,” Mr. Stauss Kahn [Jospin’s Minister of the Economy] said. “Until now, the legal work week was 39 hours, but some companies had people working 43 hours and some were working 32, depending on how shifts were structured and what their business was.

The main impact of the change will come from the fact that hours above the legal limit are paid presently at a 25 percent overtime premium. A company that decides to stay at 39 hours a week will pay four hours at the overtime rate, the equivalent of 40 hours pay for 39 hours a week….

There’s a carrot as well. If a company goes to 35 hours before 2000 [apparently the date the law is effective], the state will offer some financial aid to make it easier to do.

In reality then, France’s Socialist-led government strives to create more jobs by making their capitalists more competitive and thereby gain a larger share of the world market. But in the context of today’s world, this sort of a “reduction” of the workweek in France will not reduce unemployment for French workers.

Furthermore, even when they succeed in making their capitalists more competitive with this sort of “reduction” of the workweek, their bureaucratic counterparts everywhere else will redouble their efforts to help “their” capitalists become “more competitive.”

Neither rats nor any other species win in such rat-races. It’s a hopelessly reactionary goal, with no solution possible within the framework of a finite, and shrinking world market.

Europe’s workers are well aware that the only way to combat unemployment is by shortening hours of work without a reduction in income-or intensifying the rate of exploitation. They also are showing that the rate of unemployment can be further reduced by such reforms as earlier retirement.

Consequently, major mobilizations were initiated by French workers in rail and other state-owned industries at the end of 1995 and early 1996. And later that year and in the following year, French truckers also struck for earlier retirement and other gains.

The latter strikes showed a rising consciousness among French workers that strikes cannot be won by abiding by the rules of class war set by the capitalist enemy. Thus, the most recent truckers’ strikes included the incipiently revolutionary tactic of blocking the main highways of France.

These truckers’ strikes, moreover, blocked truck transport across France’s borders with most surrounding countries. In some cases, truckers from countries affected by these strikes initiated supporting actions in their own countries oriented toward advancing their own virtually identical class demands.

So, even before a global economic collapse-demonstrations, strikes, and other actions around the demand for a genuine shortening of the work week with no reduction in pay, and other measures designed to defend living standards, will tend to gain momentum.

The process we see unfolding in France is not essentially different from that in the rest of Europe. The workers in Germany, Italy, Greece, and most recently, Denmark, have been mounting assaults in defense of their living standards. Their most aggressive actions have had an offensive content as well. Consequently, Danish workers joined the fight against unemployment when 500,000 workers struck for a sixth week added to their annual vacation.

But how far each reformist misleadership can go in subordinating working-class interests to counter the growing pressures driving the average rate of profit down depends on many factors. Everything in this world has its limits. And the old saying applies here as elsewhere: Things tend to get worse before they get better.

Economic/political impact of Stalinism’s collapse

With the collapse of the Stalinized Soviet Union, there has been nothing to inhibit the penetration by monopoly capitalism into every nook and cranny of the world market. And by the same token, there is nothing standing in the way of ever-sharpening global competition for market-share.

Without the “cold war” to limit capitalist competition and related political antagonisms, inter-imperialist conflicts of interest are becoming less restrained. Moreover, in line with the nature of capitalist competition, the concentration of capital into fewer but larger global monoliths is accelerating with even less restraint. The losers in the economic wars are gobbled up by the victors, whose main aim is to eliminate competitors and thus capture larger shares of the world market.

Clear evidence that capitalism has entered a new stage of concentration and monopolization of capital is registered in the accelerating “merger mania” of recent years. Large banks and corporations are finding themselves unable to compete effectively against their larger competitors. And the way such things work is that they do more than catch up.

This is not in the way of good news; it reflects the consequences of sharpened competition, which in turn further accelerates and foreshadows the coming economic collapse.

Most ominous of these is the largest merger yet, between Citicorp and Travelers. It is downright illegal since it unites brokerage houses and other financial institutions trading in stocks with banks holding savings deposits insured by the government.

The April 12, 1998, New York Times article quoted earlier notes: “It is clearly forbidden by the Depression-era Glass-Steagall Act, designed to keep financial institutions from mingling federally insured bank deposits with Wall Street trading.”

In other words, if this megabillion-dollar merger should go bankrupt, as some giant Japanese institutions have done recently, a major share of the losses will be borne by the U.S. Treasury!

Meanwhile, the world’s capitalist predators struggle on according to the law of the jungle. While they all feed on the surplus value expropriated from workers, when the opportunity presents itself they feed on each other.

But workers are pure losers in the game called capitalism, since an ever-larger portion of the wealth they produce is expropriated-partly at the point of production and partly by shifting the burden of taxes from capitalists to the working class.

That, however, has inherent limits. These limits take two distinct but organically connected forms:

The higher the rate of exploitation and the smaller the labor force-both inescapable consequences of the drive by capitalists to lower the cost of production by reducing real wages and by replacing human labor by machines-the less the purchasing power in society.

Despite having become fabulously richer, the rich need only so many houses, cars, multiple wardrobes, multiple residences, etc. Consequently, world markets are less able to absorb the ever-larger quantity of goods produced.

At the same time, the rate of profit also tends to fall since machines, which relentlessly constitute an ever higher portion of invested capital relative to wages, produce no new exchange value-that is, surplus value.

Machines and other means of production only transfer the “dead labor”-the exchange value incorporated by living labor into machines-into the mass of commodities produced by ever-fewer workers. But only living labor produces more value than the capitalist pays in wages.

In other words, profit is not something added to the cost of production, it’s a deduction from the value produced by living human labor. This surplus of value over the cost of production is the surplus labor product expropriated from workers by capitalists-more commonly known asprofit.

However, the rate of profit is determined by measuring profit against the total cost of production-machines, plant, raw materials, etc., as well as wages. Thus, as profit becomes an ever-smaller percentage of total capital invested, the average rate of profit falls.

And since capitalists invest only wherever the profit rate justifies the risk (and all capitalist investments are more or less of a risk), the average rate of profit tends to fall toward unacceptable levels.

World capitalism needs an arbiter and enforcer

The developing crisis plays a major role in American imperialism’s determination to establish its absolute authority over the entire capitalist world. It is steadily extending its role as world policeman.

Until recently, the U.S. ruling class had sought the cover of the United Nations for its “police actions.” But in its latest threat to rain death and destruction on Iraq, Clinton made clear that from now on they will act without any cover whatsoever whenever they deem it necessary.

Moreover, American imperialism’s long-standing de facto blockade of Cuba has been made explicit through passage of the Helms-Burton law. Thus, U.S. imperialism threatens to punish its fellow imperialists, not to mention the lesser world powers, if they dare violate American law!

The assault on Iraq serves a similar purpose. Each such step that goes unchallenged strengthens Washington’s claimed “right” to act unilaterally everywhere, thus establishing itself as the supreme arbiter over any dispute between the peoples of the world-friend and foe alike!

American imperialism’s aim is two-fold. The first and primary objective is in harmony with the interests of world capitalism as a whole:

All capitalists understand the need for leadership. They know that they can’t allow their bickering over secondary questions to get in the way when decisive action is necessary in defense of the interests of their world system. Thus, throughout the history of capitalism they tend to put their sharpest differences aside when their class interests are threatened.

But, when a super-power like the United States takes charge of the defense of the profit system, it rarely restricts itself to just that.Inevitably, the country that succeeds in establishing itself as the supreme arbiter uses its power and authority in its own narrower national interests at the expense of its rivals.

Consequently, because of all the problems of world capitalism described above, the conflict between the United States and its imperialist competitors is bound to grow deeper as the already troubled global economy worsens.

And as we shall see in the section on the degenerating workers states [in next month’s Socialist Action], the expansion of NATO toward the border with Russia does more than threaten that country’s emerging capitalist competitors.

The North Atlantic military alliance dominated by the United States is positioning itself to more easily suppress worker uprisings they expect when bureaucrats mutating into capitalists attempt to obliterate the remaining conquests of the October Revolution.

Effective opposition to imperialism and its wars

Leon Trotsky begins the section of the “Transitional Program” titled The struggle against imperialism and war with these words:

The whole world outlook, and consequently the inner political life of individual countries, is overcast by the threat of world war. … In the next period a revolutionary party will depend for success primarily on its policy on the question of war. A correct policy is composed of two elements: an uncompromising attitude on imperialism and its wars and the ability to base one’s program on the experience of the masses themselves.

· · ·

A little background is in order.

World War II broke out in 1939, almost one year to the day after the “Transitional Program” was written and adopted by the founding conference of the Fourth International in September 1938.

Mass resistance to the second imperialist war had been undermined by the betrayal of a long series of revolutionary opportunities by Stalinism and the Social Democracy in Germany, France, and Spain, to name only the most outstanding instances.

War production subsequently permitted world imperialism in both fascist and democratic capitalist countries to revive their stagnant economies by initiating what was then the world’s most massive deficit spending spree ever. Then, when the war broke out, scores of millions of workers were set against each other to kill and be killed-so that “their” capitalists could win the right to super-exploit the colonial and semi-colonial world.

A victorious socialist revolution in Germany, France, or Spain was a very real possibility in the decade (and even earlier) before the eruption of World War II. A socialist revolution in just one of those countries would have inspired and strengthened the struggle for a socialist world and made the second imperialist war extremely unlikely, if not impossible.

Then again, at the end of World War II, revolutionary mobilizations spontaneously erupted in Italy, France, and Greece:

Working-class resistance fighters in Italy captured fascist dictator Benito Mussolini in 1944 as he sought to escape revolutionary justice and hung him by his heels. His government had no choice but to surrender to its imperialist enemies. No small part of that decision was the unreliability of the defeated Italian army. They needed the protection of their former enemies against their own people.

Resistance fighters in France freed Paris from Nazi troops, speeding Germany’s defeat. And then for the next several years the future of French capitalism hung in the balance.

And similar forces in Greece, having forced the withdrawal of the fascist army of occupation, gained effective control over that country as well.

Power in these three countries lay in the streets. And because the great majority of the indigenous capitalists had stayed to collaborate with fascist occupying armies, they had little support in any sector of the population. But Stalinists and Social Democrats set up coalition governments with the discredited capitalists to block socialist revolution in these and other countries in Europe.

These betrayals laid the basis for the Cold War, the counter-revolutionary wars by imperialism against African and Asian wars of national liberation, and accelerated the erosion of capitalist civilization.

Thus, as in 1938, the war question remains central to a correct policy and has served as an indispensable guide for the world revolutionary socialist movement ever since.

War and socialist revolution

The Fourth International carried out a principled opposition to all imperialist wars starting with World War II. We explained, in contrast to Stalinism and the Social Democracy, that the war had nothing to do with democracy versus fascism.

We explained that it was an inter-imperialist struggle over re-division and domination of the colonial world. This is a tendency intrinsic to world capitalism in the epoch of its decay that continues to this day.

At the same time, we took sides in the case of the Soviet Union’s entirely defensive war against imperialist Germany, and we took sides as well with colonial China’s defensive war for self-determination against the invasion forces of imperialist Japan.

This three-sided policy-against imperialist war, against suppression of the national democratic revolution, and for the struggle for world socialist revolution-constitutes the heart and soul of the “Transitional Program”: “[I]t offers above all an approach, a method, for coping with the central problem of ‘uniting the masses for a revolutionary struggle for power’.”3

Five years after the end of World War II, American imperialism invaded Korea under cover of the United Nations. Despite an hysterical anti-communist witch hunt, American Trotskyists opposed the American-led invasion of the Korean Peninsula.

In the rabidly anti-communist hysteria of that period, however, it proved virtually impossible to build an effective opposition in this country to the counter-revolutionary American war in Korea.

Then in the early 1960s, American imperialism moved to crush the Vietnamese people’s right to self-determination-including the right to revolution. It gave our world movement, and especially here in the belly of the monster, the opportunity to apply the method of the “Transitional Program” with extraordinary success in this country, despite our very limited forces.4

We ultimately played a major role in winning the majority of the American people to oppose the counter-revolutionary war on the Vietnamese workers and peasants.

Our central slogan, “Bring the Troops Home Now!,” was advanced in opposition to “Negotiate Now!,” the slogan of the Stalinists and liberals. It was also in opposition to the ultra-left slogan: “Victory to the Vietnamese Revolution!”5

The “demand” for negotiations presumes the right of American imperialism to negotiate the future of the Vietnamese people and the revolutionary socialist orientation imposed on its Stalinist leaders by the laws of Permanent Revolution.

And the “demand” addressed to the American people for the victory of the Vietnamese revolution went way beyond their existing level of consciousness and conflicted with the very healthy opposition of the U.S. masses to sending their sons, brothers and husbands to die in a war to deny the Vietnamese masses their basic democratic right to self-determination.

Then, again, in the first Gulf War, with an even smaller cadre, we in Socialist Action were able to initiate the mobilization of close to 200,000 people in San Francisco against the war initiated and commanded by U.S. imperialism on Iraq.

The unparalleled “weapons of mass destruction” wielded by the United States against Iraq, however, brought a quick and tragic end to that episode.

George Bush, then president of the United States, allowed Saddam Hussein’s government to remain in power. Bush knew that to remove Hussein would cost countless American lives in the course of an invasion and prolonged occupation of all Iraq.

Instead, he imposed draconian sanctions on the Iraqi people, hoping that Hussein would end any further resistance to American imperialist rule over Iraq.

That didn’t happen. Hussein, seeking to defend and advance the interests of his capitalist class, continued to maintain a measure of independence. That’s why Clinton set in motion a new assault on Iraq early in 1998.

Clinton’s motive went beyond Iraqi oil; it was also intended to establish the right of the American imperialist colossus to act independently whenever its allies were indecisive or in outright disagreement.

Again, we helped mobilize a surprising degree of opposition (given it occurred before any loss in American lives) to US threats to launch another round of mass destruction of Iraq and its people.

International opposition, moreover, also came from France and Russia, as well as from the Middle East, as well as most of the world’s peoples. Having made a deal with Iraq to develop the extraction and export of its oil, France and Russia were and remain very much opposed to American sanctions blocking the realization of their lucrative contracts.

The protests at home and abroad stayed Clinton’s hand, but only temporarily. He keeps his hand on the trigger to be squeezed whenever he believes it’s necessary to gain the ends of American imperialism.

Russian President Boris Yeltsin sent a shock through the world when he warned Clinton during the height of the crisis that bombing Iraq could lead to World War III. It was discounted by the mass media as just another gaffe by Yeltsin, who is noted for making rash comments embarrassing to his own political friends.

But this Yeltsinism has real substance, although the world is not yet prepared to perceive the depths of the developing inter-imperialist antagonisms-and its potentially dreadful military consequences.

To sum this up, then, the world is certainly much changed since 1938. But, in regard to imperialism and its wars, the only thing really changed is the destructive power of military technology in the age of the hydrogen bomb.

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