The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

Crisis, War and Changes in the Balance of Power

Oct 10, 2022

The situation is far worse than the statistics comparing the drop in production of material goods and international exchange show. A financial crisis is looming. And the killings and war destructions in Ukraine, on the very soil of the privileged European continent, should not make us forget that more and more people around the world are suffering the consequences of the worsening capitalist crisis.

Even in the imperialist countries that grew rich by pillaging and exploiting the poor majority of the planet, the popular masses are being driven into the same level of poverty that existed before the previous imperialist war (1939—1945). And this is happening despite the charitable gestures from the states of these countries to try and prevent and defuse explosions of anger.

As for the poor countries where the norm for the working class is to be deprived of the bare minimum, they are already hit by famine.

In an epoch when humanity has the scientific, technical and productive means of the 21st century, society is regressing to a calamitous situation worthy of the Middle Ages. It is one of the most revolting signs of rot in this anachronistic social organization.

As capitalism’s crisis gets worse, war becomes a permanent presence in the life of society.

Even Les Échos, a publication that is very representative of bourgeois conformism, cannot decide how to characterize the current period: “a new cold war”, “a prelude to the third world war” or “an era of chaos”.

Production of material goods and the offer of services that are useful to everyone is receding everywhere; the cost of living is rising even while unemployment gets worse and international exchanges stagnate.

Skyrocketing energy prices are strangling the European metal industry”, which has “lost 50% of its production capacity in only a few weeks” (Les Échos, 22 August 2022). “It will take 10 to 20 years for Germany to regain its former competitiveness” (Les Échos, 4 August 2022). “Deep fear of a metal shortage” (Les Échos, 26 September 2022). “Energy: prices are shooting up, plants are stopping” (Le Monde, 21 September 2022).

On the economic pages of daily newspapers, the list of major companies that are ceasing production or closing down keeps getting longer, from Germany to Great Britain, from Sweden to Slovakia. In France, there is talk of “slowing down” or “a temporary halt”. But, simultaneously, “London shows record activity on the currency market” (Les Échos, August 2, 2022).

With spasmodic ups and downs, the latent financial crisis is surging again, this time due to the increase in the interest rate on the dollar. The U.S. government took the decision to increase it, causing a drain of capital from poor and semi-developed countries. This in turn has caused the currency values of those countries to plummet.

Kenya, Tunisia, Egypt, Ghana and Mongolia have all been hit but so have Chile and Hungary. An analyst has even stated that the latter country may well face the same situation Argentina faced a few years ago. The currency value drop in the above countries is pushing up the cost of living and external debt.

Capitalism has always closely mixed the economic and political aspects. Sometimes one conditions the other, sometimes they are opposed; they ebb and flow permanently. But the contradictions of senile capitalism are highlighted in the crudest way by the periods of crisis and heightened violence between the social classes and between nations. Tension is high in international relations, reflecting the exacerbated competition between capitalist groups and between capitalist nations. This international tension, the wars that are its military embodiment and the reactions that wars provoke—sanctions, boycotts, etc.—are a major economic factor.

The war in Ukraine (between Russia and the imperialist powers of the politico-military alliance, NATO) and its accompanying economic sanctions powerfully represent the economic trends that started well before the war. They also represent the balance of power and its evolution. Wars give birth to history, as they do to revolutions.

The War in Ukraine and the Change in the Balance of Power

The balance of power that the war is likely to unsettle most directly is the one between Russia and the coalition of Western imperialist powers. But that’s not the only one. Tipping the balance of power in favor of the Western imperialist powers will have inevitable repercussions on the balance of power between the U.S. and China. There is a good reason why China shows a certain solidarity with Putin’s Russia even if China is strongly restrained by the links forged in recent years between the Chinese economy and that of the U.S. And there are reasons for a number of underdeveloped countries hesitating or even refusing to apply the same sanctions against Russia as the U.S., including those countries with the means (through their economy, demography and mining monopolies) to assume a certain autonomy against the pressure of U.S. imperialism.

The economic consequences of war also change the balance of power between the imperialist powers themselves. This favors U.S. imperialism to the detriment of Germany, the greatest power in Europe, with unavoidable consequences for the European Union.

During the Cold War, the U.S. gave Germany diplomatic and military protection. When the USSR broke apart, Germany had three mainstays for its growing economic weight: Russian gas, the Chinese market and the existence of a “hinterland” in Eastern European countries. This historic “hinterland” of German imperialism was reconstituted when the former People’s Democracies collapsed after the break-up of the USSR. Gaining this poor area of Europe, which supplies workers who are both competent and a great deal cheaper than those of Western Europe, meant that Germany’s biggest capitalists could delocalize some or all of their sub-contracting and sometimes even their production to a nearby region (thereby avoiding long-distance transport difficulties). Le Monde wrote in February 2018: “From 1991 to 1999, the flow of direct German investment toward Eastern European countries was multiplied by about twenty-three” and went on to say: “Car manufacturing, plastics and electronics plants are sprouting like mushrooms because, from Warsaw to Budapest, average pay is ten times lower than in Berlin in 1990”. And that’s how capitalist companies are enforcing an economy of subcontractors and subordination, i.e. underdevelopment in the poor part of Europe.

Mercedes, BMW and Audi cars may have a “made in Germany” stamp but many of their parts are made in Hungary, Slovakia and even Poland. In the latter country, they are often made by Ukrainian workers paid even less than Polish workers. These are the true reasons why the European imperialist powers are interested in Ukraine, despite all their speeches about “democracy” or on “the Ukrainian people’s right to self-determination”.

The war in Ukraine and the sanctions imposed on Russia for starting its latest episode are disrupting the profits that German but also French big business (particularly PSA and Renault) make from the Eastern European countries.

On the other hand, in the U.S., shale gas now has more value since the price increases have made it more competitive on the international market. U.S. companies have an advantage because the prices at which they can fulfil their requirements in natural gas and energy have increased far less than those of their European competitors.

Because of Germany’s weight in the European Union, if it is weakened this will obviously affect the EU’s stability and possibly even its continued existence. The United States gave its blessing at the start of the Common Market and may well dig the grave of what is now the European Union.

During the pandemic, the parochial squabbles about masks and vaccine doses clearly showed the limits to simple solidarity between European Union countries.

The outcry in several European Union countries when Germany promised state aid of 100 billion euros per year to its own capitalist groups is significant. Those protesting deem it to be twisted competition that favors German capitalists against their capitalists. Most states whose finances are less well-off than those of Germany are noisily demanding that this type of aid be shared throughout the Union. Despite its pompous-sounding name, the Union has not eliminated the rivalry that had existed, and has been heightened by the crisis, between the states inside Europe itself.

Military Spending, Wastage and Rationing

Military spending has soared, particularly in Germany, because European countries have followed the U.S. lead. This represents additional taxes at the expense of essential collective spending. Supply difficulties, notably in energy, mean rationing for the laboring classes. German leaders are already announcing that their population should get ready for gas to be rationed.

Rationing gas for everyday citizens has little or no effect on the bourgeoisie. Governments are paid to manage that sort of thing and invent justifications for any measures they may take.

But what about Germany’s powerful industry? It has a vital need of gas, not just as an energy source but also as a raw material. Les Échos of August 14—15 asked: “How can rationing be decided for chemical giant BASF and the 45,000 products that come off its production lines?” And a top executive of the chemical giant underlined in the same article that his sector, which uses 15% of the gas reserves, “is at the heart of the German economic model and is essential to agriculture, pharmaceuticals, the building industry, not to mention car manufacturing.

The Microchip and Car Manufacturing: Both Hit by the Crisis

This year, the public has discovered that two Taiwanese companies hold what is practically a monopoly in the manufacture of a certain type of high-performing electronic chip that is essential to several industrial branches, particularly car manufacturing. “And yet, in 1990, the United States produced 44% of the world’s electronic chips and Europe 37%” (Le Figaro, Aug. 11, 2022). “Today, the Taiwanese trust TSMC alone produces 53% of the world’s semiconductors. Added to UMC, the number 2 in Taiwan, the Taiwanese market share has reached 60%.”

For U.S. and European capitalists in the domain that holds patents, it was more profitable at one time to sub-contract their production to a country like Taiwan where skilled labor costs considerably less than in the U.S. and where, moreover, the authoritarian regime was able to ensure that pay remained low!

The individual choices of capitalist companies in the semiconductor industry have had a collective effect: companies and clients further down the line are victims of one of the capitalist economy’s own laws.

Almost as soon as the capitalist groups in car, computer and telephone manufacturing, etc., began to suffer from the blockage due to the monopoly in specialized semiconductors, their respective states acted to set up, in their own countries, the manufacture of those electronic components.

Le Monde of 20 September 2022 asked the question “Is worldwide electronics production going from not enough to too much?

The governments of States that have the means to do so have rushed to help their capitalists.

And financial speculation has joined the free-for-all. Speculators are already betting on a reversal of the market because they expect that state funding will mean new plants and, consequently, an excess production capacity.

Le Monde published a photo that illustrated this problem better than many explanations could. In Ohio on September 9, Biden announced the gift of 52 billion dollars to the semiconductor industry. He was standing in front of heavy machinery busy clearing a site belonging to Intel to lay the first stone of a future plant. Even if the plant is built really quickly, it may not be able to sell anything before the market will be saturated!

The blast furnaces built in the region of Fos-sur-Mer (on the South coast) in the early 1970s are a case in point. The growing car manufacturing industry then seemed likely to increase the demand for steel. In the time it took to build the four blast furnaces, the demand had reached its upper limit and only one of the furnaces was started up.

State intervention, apart from the fact that it is the exploited classes who have to finance an investment on which only the capitalists receive a return, does not prevent crises. It can however make them worse. Both the blast furnaces in Fos and, on a larger scale, electronic chips, illustrate this.

The predominance of Taiwan in the semiconductor field is an example of the growth of centralization, of the concentration of production, in which Marx and later Lenin (“Imperialism, the Highest Stage of Capitalism”) saw one of the basic aspects of capitalism’s evolution toward imperialism. But it also highlights the need for planning on a global scale.

Globalization and concentration on the scale of the world will remain as powerful as the laws of gravity for as long as capitalism continues. Capitalists themselves and their political leaders deplore certain causes of this fundamental evolution, causes which are set in the laws of an anarchic economic system.

Capitalism is in desperate need of international planning but there are two fundamental properties of capitalism that work against this: the private ownership of the means of production and national fragmentation into States. Both make it impossible to achieve what capitalist evolution itself demands: the international planning of the functioning of the principal means of production.

The deregulation of the energy market demanded by the financial sharks is turning against the capitalists themselves. This illustrates the same fundamental contradiction that, under capitalism, imposes greater coordination but cannot go all the way to meeting this need.

Even the big bourgeoisie is asking the state to intervene and regulate. It wants state-set prices for energy. It agrees that the state should orchestrate and plan energy distribution. It prefers this to a black-out. It is an admission that the laws of the market and of competition are no longer compatible with concentrated production. It is an admission that the law of profit is absurd. In the same way that borders are absurd.

In the middle of the great depression in 1934, Trotsky stated: “if state borders could be swept away with one stroke, productive forces, even under capitalism, could continue to rise—at the price of innumerable sacrifices, it is true—to a higher level.” He concluded, “With the abolition of private ownership of the means of production, the productive forces could, as the experience of the USSR shows, reach a higher development even within the framework of one state. But only the abolition of private property as well as of state barriers between nations can create the conditions for a new economic system: socialist society.”

This is even more evident today than it was in 1934 and in a number of domains where humanity’s problems span the globe, like climate change, the rational management of ocean resources, etc.

This is becoming a necessity even in areas where capitalism itself has been forced to apply an ersatz caricature of concentration of production through bargaining between national states, each one vying for its own interests. This is true for energy where it has taken decades to set up a European system that takes into account the differing interests of those who have the easiest access, some to natural gas and oil, some to coal, and others to hydroelectricity or to wind power.

Financial crises, shortages, economic storms are not aberrations of capitalism but its inevitable consequences.

Society is ripe for socialism, for planning, for collectivization and the rational organization of the means of production.

The controversy opposing gasoline and electric cars—dear to the ecologists—serves as a smokescreen for big maneuvers involving the automobile and oil trusts.

Les Échos on August 9, 2022 expressed its admiration for the big bosses of the automobile industry in an article with an evocative title: “Seven years after ‘dieselgate’, the car has been revolutionized.” Having listed the problems that have hit the industry—plunging sales, particularly for diesel-powered cars, lack of spare parts, production-line disturbances, etc.—“what is most noteworthy in all this is that car manufacturers have transformed these difficulties into a windfall. They have used the opportunity to switch from one economic model to another. And, much to their advantage, passed from a volume-of-sales approach to an exclusively profit-seeking one….”

The paradigm has changed. Industrials no longer fight for market share. From now on, operational margins are setting the law so they are giving priority to the most highly profitable vehicles.

The major change in the automobile industry is that they are now aiming for the top-of-the-range market in both gasoline and electric cars.

As for lower-range gasoline cars, there will always be a market, even if only in underdeveloped countries.

Gasoline cars have been meeting the profit imperative for more than a century, leading to an increase in the demand for fuel oil. For numerous reasons, there is not the same kind of certitude about electric cars. The electricity grid does not exist to support them, nor do sufficient battery charging stations.

Capitalist groups count on their states to help. In the past, particularly in the U.S., “Fordism” and “democratized” consumption were not held back by insufficient infrastructure, by a lack of roads accessible to cars or widespread fuel distribution. The state stepped in to construct roads, to subsidize the development of gas stations.

For electric cars, battery manufacture is behind schedule and so is the development of the network of roadside quick-charging points. Above all, no one is sure that the necessary resources (lithium, nickel, cobalt, rare earth metals, etc.) are sufficient for a development equal to that of gasoline vehicles up to now. What’s more, rare earth metals are mainly to be found in China and Russia.

Because nothing is certain in this domain, the interests of capitalists in the automobile and car fuel industries are coinciding for an operation similar to that which the oil trusts used in the early 1970s: making the best of their monopoly by selling less but at a higher price. With a supplementary advantage: the consumers pay right now for the current and future investments necessary for electric car production if it ever gets off the ground.

The future of the electric car is as yet unknown, but the rivalry between trusts has already begun over countries where the metal necessary to manufacture it is presumed to be. “The automobile industry is in the race for raw materials” was a headline in Les Échos on 26 September 2022. Elon Musk already has his hands on several regions in Indonesia.

War for raw materials is a feature of imperialism. The clashes between major powers, some openly, some more discreetly, for a reshuffle of possessions in Africa illustrate this.

Since the Congress of Berlin in 1878, scientific and technological progress has indeed created needs in raw materials, the use of which was not even dreamed of over a century ago. Since then, some have been exploited, others not. But trusts know how to anticipate and get their hands on mineral reserves, even if simply to stop a competitor from getting them. That is what has happened to Congo-Kinshasa, a country that geologists label a “geological miracle” due to how rich it is in rare earth metals. Some, such as cobalt, are already being mined in dreadful conditions, some have been appropriated thanks to concessions.

On this same subject, the longer the war in Ukraine lasts, the more U.S. interests in Ukrainian gas are revealed. Not only does the U.S. want to bring the country over to the West both politically and militarily; it wants Ukraine for economic reasons. In his work “Hidden wars. What lies beneath the Russian-Ukrainian conflict”, the journalist Marc Endeweld makes it clear that the specialized Westinghouse trust and the American construction giant Bechtel have been particularly interested in Ukraine’s nuclear power plants for years.

The Fundamental Struggle

The only time that the existence of the bourgeoisie was threatened was during the revolutionary wave begun but not completed with the October 1917 proletarian victory in Russia.

The wave was contained. The international proletarian revolution was defeated. Not by open war between the imperialist bourgeoisie and the proletariat, but in a different way, unforeseen by Marx. It was beaten by the bureaucratic degeneration of the workers’ state that the Russian proletariat had created.

The stake in this first major battle was to see which class would exercise power on the international scale. It affected the history of the following years.

Between the two world wars, class struggle continued to be particularly sharp. The imperialist bourgeoisie won the fight at the price of fascism, authoritarian regimes and, finally, another world war.

The bourgeoisie’s deep-seated fear of the proletariat, due to the threat embodied by the revolutionary wave that followed the First World War, lasted for a generation. It was the motive behind the bombing of Dresden, Hiroshima and Nagasaki.

The fear was justified because the Second World War was followed, like the first, by a new revolutionary wave, the colonial revolution. But although it was as widespread and as determined as the previous wave, it was no longer led by the proletariat with the aim of overthrowing the capitalist order but by national bourgeoisies whose aim was limited to defending their right to exist without the direct control of imperialism.

The goal of the colonial revolutionary leaders—even the most determined and the most combative, from Mao to Castro to Ho Chi Minh—was not to destroy imperialism by ending capitalism but simply to rearrange the social order so that they were allowed a small place in the sun.

The capitalist order managed to absorb all these attempts by integrating them. Imperialist big business remained master of the planet. But it was, nevertheless, not “The End of History.”

Triumphant capitalism remains capitalism and the ills which devour it from within are all of the same nature.

Even if the reign of the bourgeoisie is never contested at any time by the proletariat—the only class capable of incarnating a superior social form in human development—capitalism will continue to be consumed from within.

The construction of a revolutionary communist party whose goal is to overthrow the power of the bourgeoisie is not a prognosis but a battle plan.

The Relevance of the Transitional Program Today

This text, written in 1938, is of burning relevance today. In many ways it could have been written recently as an analysis of the current situation. It was designed to help plan a fighting program that would allow the proletariat to take up its fundamental struggle to overthrow the bourgeoisie’s power. It is impossible that militants for a proletarian revolution would not base their actions on this text.

Although it was written eighty-four years ago when the international situation was different from what it is today, it is based on an almost intimate understanding of capitalism’s crisis and the intensification of the class struggle that stems or is likely to stem from it.

Based on the “objective prerequisites for the proletarian revolution,” most of the demands remain valid today. As stated in the chapter of the Program on the Soviets: “Not one of the transitional demands can be fully met under the conditions of preserving the bourgeois regime.” They all rely on “increasing pressure by the masses” that will lead to the movement entering “an openly revolutionary stage.

It is not a collection of recipes but a program for revolution. It would be vain to try and guess which path worker mobilization will take and what subsequent demands will be dictated by the evolution of the situation. But there is a need to be aware that, in a period when workers rise up, the situation can change very rapidly and requires the same rapidity in knowing which demands are the most important demands of the moment. The analysis and the comprehension of the concrete steps of the workers’ mobilization should be the base of the reasoning made by communist revolutionaries.

It is interesting to think that, even before workers started to rise up, some of the slogans from the Transitional Program, even if they could not be followed, were comprehensible for more than the modest number of revolutionary activists who were propagating them.

Against increased unemployment, the slogan “division of work among all existing workers with no reduction of pay” was a useful tool for propaganda and even, in some circumstances, for stirring things up. The recent price hikes and an awareness of the high cost of living have rendered the demand for the sliding scale of pay tangible. The chapter of the Transitional Program on “the struggle against imperialism and war” has been made easier to understand by the outbreak of war on European soil.

It is not hard to imagine how rapidly a wave of strikes—even long-term ones—poses the immediate problem of picket lines and, by extrapolation, of workers’ militia. It will also, right from the start, pose the question of strike committees, i.e. “factory committees” that are a “factual dual power … in the factory.

There is no point in speculating on the order in which all these slogans can be put forward. All the objectives set out in the Transitional Program are interwoven with causes and effects.

We might be tempted to consider that the chapter “The USSR and the problems of the transitional epoch” is no longer relevant. This is only because its subject—the USSR—has broken up. But the reasoning remains true, as does the viewpoint taken by Trotsky that the Russian revolution is a past of which the proletariat should be proud.

Despite the evolution of the Russian bureaucracy since the 1930s when it consolidated its power, Trotsky’s analyses are still what help us to best understand the reality of Russia today.