By MICHAEL SCHREIBER
Below are portions of the World Political Situation Report, delivered by Michael Schreiber to the Socialist Action National Convention on Oct. 18.
Capitalism’s offensive against the world’s working class—which gathered momentum as a consequence of the major economic recession that began in late 2007—continues unabated. Even in the major industrial nations, the ruling class has been waging an all-out struggle to make working people shoulder the debilitating effects of the economic crisis.
The watchword everywhere has been “austerity,” signifying a program of wholesale cutbacks in social services, jobs, working conditions, and wage and benefit packages, along with the elimination of environmental or other impediments to the free flow of capital. Indications are that “austerity” policies will deepen.
Recently, the International Monetary Fund sounded the alarm that the growth of national economies around the world is far weaker than had been anticipated. The so-called “recovery” from the recession appears to be stalling—especially in Europe.
The IMF suggested that a renewed eurozone debt crisis would become the “major issue” facing the world economy. It warned that the crisis was now spreading from smaller economies like Portugal and Greece—in the latter country, unemployment levels are still over 25 percent—to core nations like Italy and France. Actually, the current crisis has rebounded back with renewed intensity to countries like Greece; a weaker bond market has made it far more difficult for them to pay their debts.
The IMF also underscored the fact that several economic indicators have recently declined for Germany. Stagnation in Germany, known as the engine of European growth, could have dire consequences for the rest of the continent. The German economy shrunk by 0.2 percent in the second quarter, and continued to slump throughout the summer. Exports fell by a significant 5.8% in August, the biggest drop since the beginning of the recession in 2009. Unemployment rose in September, and investments tailed off in both domestic and foreign sectors.
Britain, which has had the fastest growth of the major economies, also seems to be slowing down. Manufacturing barely grew in August, with economists blaming the slump on the lack of demand in the European markets that Britain exports to. Uncertainty stemming from the conflict in Ukraine and the sanctions imposed on Russia are another obstacle to export growth in some European countries.
Europe now faces the threat of a second (or as some see it, a third) dip into recession. Everywhere in Europe, officials are speaking of economic “turbulence” ahead. In fact, Europe has never recovered fully from the recession—overall Gross Domestic Product for the European Union countries is still well below its peak in early 2008, and corporate profits remain 23 percent below those of 2008. Profit margins have been around 5.5 percent this year, down from 9 percent before the recession—indicating that the working class has not been squeezed hard enough to suit the bosses.
There has been talk here and there (especially in France) of a necessity to shift to what are called Keynesian solutions—the use of government funds for job-creating public-works programs. But the capitalist class has generally resisted these ideas, especially in Germany, expressing the fear that it would raise the public debt still further and also raise corporate taxes. So for now, the program of European capitalism continues to be for more and deeper “austerity.”
But workable solutions are not easy for European capitalism. Flat or depressed wages—as well as heightened unemployment—has subdued the growth of a consumer market both in home economies and in exports. In Germany, wages fell in real terms in 2013, although workers made some gains this year. Wages have barely risen in Britain as well.
The continuing economic crisis has only heightened the competition between advanced industrial countries. This year, for example, European heating-oil refiners are facing a glut of cheaper oil and natural gas—which increasingly comes from the United States. European companies have had to cut prices, which has lowered their profits to just 10 percent of what they received in 2012. Some companies are closing their refineries. Italy’s largest oil company is negotiating with the unions to shut down over half of its refinery capacity, with over 3500 jobs at risk.
This competition extends to investments in less developed countries, where the major imperialist powers are vying with each other (though sometimes cooperating) to secure areas to invest their financial capital, as well as to extract raw materials—like oil and gas.
A constellation of countries that were formerly in the orbit of the Soviet Union presents new opportunities for capitalist investment. We see those countries as the legacy of a counter-revolution, presided over by the jaded and corrupt remnants of the Stalinist bureaucracy, whose leaders stole untold amounts of state property and privatized it into their own hands, becoming capitalist billionaires virtually overnight. These counterrevolutions were put into effect to a certain measure through the agency of the United States—and to a lesser extent, Germany and other imperialist states—which sent agents into those countries in an attempt to gain them as military allies and fields for investment.
Since then, Germany and other Western European countries have had some success in capital investments in Eastern Europe. The United States has been ever present in the former Soviet Republics in Central Asia, and particularly in the oil-rich Caspian and Caucasus regions, where it butts up directly against Russian interests.
Studies show that Ukraine might have the fourth largest deposits of frackable shale gas in the world.This helps explain the intense interest of Western capitalism in bringing Ukraine into the European Union and into NATO, while muscling Russian capitalism out of the picture.
In the meantime, the U.S. has virtually encircled Russia with military installations. NATO plans to base some 4000 battle-ready soldiers in Eastern Europe as part of a new “rapid reaction force.” As a step toward that goal, military exercises have been conducted regularly in Eastern Europe and the Baltic states in recent months. In November, 2500 soldiers from the U.S., Canada, Germany, Britain, and several Eastern European nations will participate in war games in Lithuania, just miles from the Russian border.
In summary, despite continued and heightened attacks on the working class by international capitalism—leading to a huge increase in poverty worldwide and a huge shift of wealth upward to the already wealthy— none of the efforts by the masses to thwart these attacks has yet resulted in lasting victories.
In recent years we have seen many mobilizations and revolts in the world, most often centering on questions of political democracy—as with the present demonstrations in Hong Kong. Unfortunately, inadequate leadership among the masses has allowed these struggles to be diverted, defeated, and even turned back into reactionary channels. In many instances, we have seen the traditional parties that workers looked to for leadership—often large social democratic parties and parties with Stalinist origins—abandon any semblance of a program or struggles to aid their working-class constituencies. With few exceptions, they fully embrace neoliberal capitalist programs.
The absence of effective working-class leadership has allowed ultra-right, ultra-nationalist, and fascist parties to grow in some areas, luring petty bourgeois and even working-class sectors into their ranks withrhetoric that blames social problems on immigrants or minority ethnic populations. Thus in Sweden, a few weeks ago, although the social democrats were able to reclaim power in a minority government, together with the Greens and the Left Party, the major parliamentary gains were by an ultra-right and anti-immigrant party, the Sweden Democrats.
Like their counterparts in France, Britain, and elsewhere, the Sweden Democrats have for now put away their neo-Nazi regalia, put on business suits, and presented themselves as a “respectable” electoral party. But the capitalist class knows that fascist thugs will have value for them in the long term as a force of repression and violence to be used when the repetitive charade of bourgeois elections is no longer successful in snaring working people, and great masses of people are in revolt in the streets.
And thus, the patient construction of a revolutionary party, capable of providing effective leadership to huge masses in motion, remains the central task for the working class and its allies worldwide.