Nov 7, 2011
Translated from a text adopted by Lutte Ouvrière in its annual Congress, published in Lutte de Classe (Class Struggle) Issue #140.
This year’s most important event in the evolution of the global capitalist economy was the return of the financial crisis, under the form of the so-called “sovereign debt” crisis. Its diverse expressions include the euro crisis, stock market turbulence, the threat of a new crisis in the banking system and the return of inflationary policies, open or hypocritical. The insane turmoil in finance is the expression of the crisis of the capitalist economy as a whole. At the same time, it is one of the aggravating factors for this crisis. Even official statistics note that economic activity has slowed. The growth of unemployment globally is certainly the most significant marker of the period, which began in 2007 with the American housing crisis and still continues. The World Trade Organization (WTO), one of the official economic organizations of the bourgeoisie, has sometimes designated it as “the Great Recession” in reference to the Great Depression that followed the stock market collapse of 1929.
The earlier phase of the crisis was the freezing up in bank liquidity following the September 2008 collapse of Lehman Brothers. The means used to overcome that boomeranged, unleashing the next problem: the hundreds of billions of dollars handed over by the major governments to the banking system and big capitalist groups aggravated the financialization of the economy and increased government debt. This massive assistance by governments to the banks and big companies assured them two short, prosperous years. Profits increased. Production in principal sectors from auto to information technology continued to decline, even while governments and economists began in 2009 to salute the recovery. For profits, there was a recovery. From the capitalist viewpoint, profit is the alpha and the omega of the economy.
Even in this period of high profits, unemployment remained high. The economic base for the creation of surplus value was expanded only through an increase in exploitation, not through an increase in the number of those who were exploited. Profits, in production as well as in finance, ultimately come from the surplus value created by exploitation in production. The financial gifts by the governments allowed some big companies, especially in auto, not only to survive, but also to thrive with high profits. But it increased demand only in an artificial and temporary manner. It did not convince the capitalists that the market was expanding, which could have made new investments in production profitable.
The balance sheet of the governments’ bailout of the financial system essentially only turned private debt into public debt. And the new financial jolts that began in August 2011 represent a greater threat than those of 2008. Not only are private banks in danger of undergoing a chain reaction of bankruptcies, but so are countries. This is the concern of the financial system – and not only in Europe – faced with the possible bankruptcy of Greece and the domino effect that this could trigger.
Having begun in 2007 with the mortgage crisis in the United States, which was transformed into a banking crisis in 2008, the financial crisis then bounced over to the European Union. The euro zone is now the epicenter of the crisis.
We are not going to discuss the specific form of speculation against the euro zone, and less the almost daily shocks. We will only say that speculation found the fault lines in the euro zone: the European states had created a single currency, but did not align their fiscal systems; above all, they did not set up a state authority able to intervene on currency matters. Speculators seized the opportunity.
Inside the euro zone, political leaders and the media, both of which serve finance, blame Greece for the chaotic turbulence around the euro. But they all know that any other state in this zone can be hit, whether it be Italy or Spain tomorrow, or maybe France the day after tomorrow. In fact, when it comes to sovereign debts, speculation can break out elsewhere in the world (not to mention the other forms of speculation that can break out).
The sovereign debt crisis is only the current manifestation of a succession of crises due to financial speculation – one hundred of them of varying seriousness – that sprinkle the history of finance since the end of the 1960s. The monetary crisis that led to the implosion in 1971 of the international monetary system, which had been put in place after World War II at Bretton Woods, opened up a long period of crises and stagnation of production.
The European Union, and especially the euro zone, corresponds to the interests of big industrial and financial groups in Europe and the United States. The European Union may gradually have established a parliamentary functioning – which is, however, powerless. But the sole aim behind the building of the EU was to provide the big companies with a wider economic space than their respective national markets. However, the financial activity of these groups is today in the process of destroying the foundations of the euro zone and the European Union. This may be contradictory – but it is only one more contradiction in the capitalist economy today.
The year 2009 was also the year when international trade declined. After several decades of permanent expansion, international trade had been brutally halted, starting in November 2008. The plunge in 2009 was the largest since World War II. According to the WTO, trade declined by 22% of its value and a little bit more than 12% of its volume. This decline in trade was linked to the decline in production, but it also was a consequence of the financial crisis of 2008. About 90% of international trade requires short-term credit, according to the WTO. The crisis of confidence between the banks, and the generalized lack of confidence that followed the failure of Lehman Brothers, led a number of companies to give up financing international operations, lacking guarantees from the banks. This decline in 2009 puts the so-called recovery of 2010 in perspective. And it was a very limited recovery. By the first half of 2011, international trade had once again begun to decline.
As the 2010 results of the big companies came out in March 2011, big business was swimming in euphoria. In the United States, the companies that make up the S&P 500 – which consists of the 500 biggest companies – made 700 billion dollars in profit, close to their 2006 record (Les Echos, March 3).
The same thing in France: 82.5 billion euros in profits for the 40 big companies that make up the CAC 40. That is below their 101.4 billion in profits in 2007, a record year, but the 85% growth in profits in 2010 ended the stagnation of 2009 (Le Monde, March 5). It is significant that the highest growth in profits came, in addition to the banks, from the auto companies or companies connected to them, like Peugeot, Renault, Michelin, which all benefited from state aid, as well as from companies like Vivendi, which live on expenditures from state or local authorities. Investments in manufacturing nonetheless fell by 2% (according to INSEE, the Bureau of Statistics and Economic Analysis). And real investment, that is, the construction of more factories, is being carried out mainly in the big semi-developed countries (China, Brazil or India). These investments essentially are aimed at getting around protectionist barriers put up by the semi-developed countries, in order to conquer part of their national markets.
High profits sharpen competition, not only between big companies in the same sector, but also between the mastodons of the same big country, situated either upstream or downstream in the process of production. Upstream, the prices of raw materials skyrocket, as a result not only of the appetite of big production groups, but also even more of financial speculation. While speculation had been at the origin of the 2008 financial crisis, threatening the banking system with bankruptcy, nevertheless, it took off again, as soon as the immediate threat had passed. And the inflationary policy of the governments has continued to feed it.
In the United States, this inflationary policy was openly carried out under the vague expression, “Quantitative Easing,” under which the Federal Reserve bought bonds issued by the U.S. government. It’s nothing but a new name for the old practice of printing money. This manipulation allowed the U.S. Treasury Department to finance an extra 600 billion dollars, practically everything the federal state needed to cover its budget shortfall in 2010. (Le Figaro, June 14, 2011). The Bank of England follows the same policy. The Central European Bank also dumped 75 billion euros (100 billon dollars) into the economy by buying securities from Greece, Ireland and Portugal, despite legal barriers established in the treaties that accompanied the formation of the Central European Bank.
With fresh money at very low rates of interest provided by the U.S. Federal Reserve and the European Central Bank, financiers rapidly increased their speculative operations, focusing on shares in the stock market, raw materials, the euro and other currencies. They contributed to a big part of the increase in the prices of minerals and of raw materials, giving a wild, jolting character to the price increases. The same is true for the price increases for raw materials in energy. Despite the crisis, oil and gas prices are increasing, and the profits of the oil companies, skyrocketing.
Speculation in the stock market created a bubble that burst in August 2011, and the beginnings of a panic amplified the drop. Since then, share prices vary day by day in jolting upheavals. This doesn’t stop the speculation; in fact, it offers new possibilities.
Financial groups can make fortunes even when speculating on declines in stock prices. And beyond speculation in the strict sense, falling share prices of a big company can offer a more powerful and wealthier competitor the opportunity to buy enough shares to take control of that company. Companies are buying back large amounts of their own shares, rather than investing – reflecting the aim of increasing the fortunes of shareholders by increasing the value of each share of stock. But it is also a way to keep away a possible predator.
During the months following the 2008 panic, financial products were hit by unbridled inventiveness. The diversity of financial products had an increasingly complex and risky character. Worth a special mention are the different securities, representing a kind of insurance against possible losses. Thus, today, there are credit default swaps (CDS) that insure against a default in payment of a sovereign debt, that is, a kind of insurance against the bankruptcy of a debtor state. Given the prevailing climate of uncertainty, the volume of these CDS’s exploded. These insurance securities are themselves an object of speculation. Their volume amplifies the speculative moves and links the banks to each other, all of them existing as both insured and insurer.
Despite their imagination, financiers cannot enlarge the planet, but they did find ways to speed up financial operations. “High Frequency Trading” allows traders, or more exactly their computers equipped with software specially designed to make a gigantic number of trades, buying and selling shares or currencies in a few tenths of a second. These types of trades have grown from 9% to 40% of all shares sold on European exchanges from 2007 to 2011 (Economic Images of the World 2012, published in September 2011). In a sign of how finance has gone incredibly mad, one of the “regulatory measures” that is seriously discussed is to limit the speed of the computers used in speculating.
The crisis in financial operations in September 2008, just as the dazzling recovery of these same operations a few months afterwards, have each contributed to financial concentration. The 10 biggest banks in the world (including Bank of America, JPMorganChase, Deutsche Bank, Barclays, UBS, Citigroup, HSBC) carry out 77% of all currency transactions on the world market and, as a consequence, they dominate speculation. Behind the neutral expression, “financial markets,” is the harmful ability of 10 boards of directors to intervene in the world economy.
Financial groups don’t work just with their own money, but with the liquid assets of big industrial groups.
Despite the crisis, the industrial groups of the S&P 500, which in 2010 had 940 billion dollars in cash, were able to gain 700 billion dollars in profit on their operations. (Images Economiques du Monde 2012). These companies consecrated only what was strictly necessary to productive investments, and even less to paying their employees. Despite spending 300 billion dollars buying back their own stock in order to increase its value, they still had considerably more left to place in the financial system.
The most odious form of speculation in raw materials is on food. The price of grains increased in 2006, 2007, and 2008, only to skyrocket again beginning in 2010.
The prices of wheat and corn – which were, at the beginning of the 2000 decade, respectively $80 and $110 a ton – rose to $160 and $220 in 2006. After prices leveled off in 2009, the prices resumed rising in 2010. In the spring of 2011, the price of a ton of wheat was $350!
Even worse: prices are not only overall higher, they are also more unstable. In 2008, for example, the price of a ton of these two cereals, so important for feeding the planet, hit peaks of $240 for corn and $400 for wheat.
There was the same evolution for rice, whose price per ton hit $150 at the beginning of 2000 and $350 eight years later, causing hunger riots in a number of big cities in Southeast Asia and West Africa.
The capitalist groups don’t have confidence in the future of their own economy and in the future growth of the marketplace. What they don’t invest in production is directed toward financial operations that contribute to the speculative increase in raw material prices, which then makes productive investment less profitable.
During 2010, the price of raw materials increased on average by 50% (Les Echos, March 9). The industrial enterprises decided to pass through the price increases of raw materials. This intensified their struggle over the division of profits with the capitalists involved in distribution. In the jungle of this intense competition, the relationship of forces is decisive. A number of subcontractors or smaller distributors paid the cost, while the workers of these companies, who are the first victims of “cost reduction schemes,” paid a much higher cost.
Public debt nourishes finance. But the extent of this debt is threatening to bankrupt whole countries. Public debt is the new flag that is being waved to impose new sacrifices on the exploited. Austerity policies, being carried out everywhere today, correspond to the interests of the capitalists. The wage freeze and the legal lengthening of the work week give the bosses weapons to increase exploitation. The reduction of social spending allows a greater part of the budget to go to the capitalists. At the same time, this reduces the number of consumers and shrinks the markets for capitalist expansion. By becoming more dependent on the state and its ability to extort money from the working masses, big capital demonstrates more and more clearly its parasitic nature.
The immediate cause for the brutal fall in stock prices was the bursting of a speculative bubble. Following after the fall in price of bank shares, the stock market capitalization of the big enterprises dropped 20 or even 30%. But this was not only a financial phenomenon. It also meant that capital is not optimistic about the profit these enterprises will produce in the future.
Since the middle of August, the specter of a recession floats once again over heavy industry, steel, and automobile. In only one month, European enterprises linked to steel saw the value of their stock plunge by 34% (ArcelorMittal, for example, plunged by 38%).
The memory of the recession that followed the financial crisis of September 2008 is still too fresh not to serve as a warning. In 2008, the automakers foresaw a drop in sales and reduced their production so they would not accumulate costly inventory. That pushed their steel suppliers to shut down a number of blast furnaces. This then reverberated throughout industry, in particular against machine manufacturers, whose sales collapsed. In 2011, the same mechanism is beginning to be set in motion.
The financial crisis has another effect on production. Although one cannot yet speak about a crisis of confidence among the banks, as in 2008, it is already difficult for companies to get the credit necessary to run their businesses. This lack of confidence by the banks is not limited to small and medium-sized companies whose representatives denounce the difficulty in obtaining loans, even those whose business appears healthy.
“Difficulties of French banks makes the placement of loans for airplanes more fragile,” was the headline of Les Echos on September 22. The difficulties in the aviation industry are worse because purchases and sales are in dollars. Speculation against the euro, which makes European banks weaker, does not encourage American banks to respond favorably to requests from European banks to refinance loans in dollars.
Beyond these problems, austerity measures taken by all the governments to satisfy the demands of financial capital limit the ability of a growing part of the population to consume, and therefore also limit the market for the products of industrial capital. Financial capital thus undermines industrial capital, even if they are two forms of the same capital. To believe the opposition between them could be resolved is a delusion.
Today it is fashionable to denounce the excesses of finance. The economist Joseph Stiglitz, ex-economic adviser to Clinton, and Nobel prize winner in economics, and considered one of the leading theorists opposing globalization, entitled his work analyzing the last developments of the crisis: “The Triumph of Greed.” As if greed was something unknown to capitalism before the fateful deregulation of the 1980s!
To critique “neo-liberal policies,” deregulation or even globalization or financialization of the economy, and to remain at that level, without explaining how all this is rooted in the evolution of the capitalist economy, is a way of defending the capitalist economy. The fact that the Socialist Party, the Communist Party and parts of the extreme left also take up these kinds of explanations shows that they put themselves fundamentally on the terrain of the bourgeoisie.
To the question of why there is such a development of financialization, the antiglobalization movement offers only platitudes. They go no further than denouncing the neo-liberal policies that governments follow or denouncing the influence of the “monetarist theories” of bourgeois political-economy gurus. They do not explain why these policies became dominant at a specific moment in postwar economic history – after the first signs of the economic crisis appeared at the end of the 1960s.
It is obvious that national States and their leaders played a role at each stage of the financialization of the economy. All the measures taken to “deregulate” – to get rid of the obstacles in the way of investing or moving capital from one country to another, from one sector to another – were taken by the national States. But governments simply translated into legal terms the evolution of capitalism itself, of its internal dynamics – sometimes anticipating that evolution.
The antiglobalization movement exposes the economic neo-liberal “theorists” who argue that markets regulate themselves. With good reason. The multiplication of financial crises and their growing seriousness prove the stupidity of such arguments. But the crises of the capitalist economy have always existed, even when the market was more or less regulated. And let’s not forget that the regulated market bred the deregulated market. First it incubated it, then it gave birth to it. It prepared the financiers to demand it, economists to justify it and politicians to provide its legal framework. So how could a return to regulation – if that were possible today – be preserved in the capitalist economy?
The preponderance of financial capital over industrial capital has a history that stretches back more than a century. It’s even one of the characteristics of the evolution of capitalism that has reached maturity, or senility, as Lenin put it; one of the signs that capitalism has passed from the stage of competition to the monopoly stage of imperialism. In the context of this global evolution, financial and productive activity evolved symbiotically. Their respective roles reflect the rhythm of the capitalist economy.
The regulatory measures wished for by economists who pose as experts for the bourgeois left were reinvented in the context of the 1929 crisis and the years of depression that followed. They took on different forms in the imperialist democracy of the U.S. and under the fascist regime of bourgeois Germany, but the goals were the same: to save big capital.
During World War II, “regulation” was the norm in all imperialist countries. This regulation not only didn’t stop the major trusts from prospering but, on the contrary, the war was a period of enrichment for the biggest sharks of the capitalist economy.
Regulation continued long after the war, imposed by the need to give State crutches to private capital because it couldn’t, on the basis of private profit and competition, accomplish all the tasks of reconstruction and of restarting production. Even in the imperialist countries, particularly those of Europe, the State not only regulated, it played an important role in production and credit. Myriad legal and administrative rules were drawn up, among them the separation of the respective activities of banking and insurance; and the compartmentalizing of deposit banks and investment banks within the banking system itself. Moreover, in the relations between countries, an international monetary system with the dollar predominating was established, and controls over currency exchange were added.
Those years stand as proof that it is possible for the capitalist system to be stuffed with regulations, but also as proof that, if we don’t make fundamental changes to the capitalist economy, to private ownership of the means of production and to the race for profit, then the crises will not disappear; and as soon as the rules initially designed to help big capital become restrictions, capital will throw them off.
The Reagans, Thatchers – the high priests of neo-liberal capitalism – were only instruments, carrying out the wishes of big capital at a particular time in its evolution.
Among the nonsense it has spouted, the antiglobalization movement criticizes the treaties of Maastricht and Lisbon for forbidding the Central European Bank to lend to States, causing the States to borrow from the financial markets, thus making them prisoners of those markets. Increasing public debt is apparently due, therefore, only to the interest paid to private banks.
It’s true that an important part of the debt is interest owed to the banks and that the decision of governments to finance themselves on capital markets, paying interest, has been an immense gift to the financial system. But the antiglobalization movement’s explanation is partial and given for selfserving reasons.
First of all, while they vilify the Maastricht and Lisbon treaties, which were the legal foundation in Europe for limiting what the Central European Bank can do, they purposely avoid mentioning the fact that public debt is also considerable in the U.S. and Great Britain, even though these two countries are not in the euro zone and were therefore not concerned by the obligations in the Maastricht and Lisbon treaties.
Second, presenting a return to the right of each country in the euro zone to print money as an alternative to the current financial crisis is in no way a solution to overcome the crisis, nor does it give a more favorable perspective to the exploited classes. It’s only an inflationary policy. And even if it is implemented by a national State, it is nonetheless a policy designed to empty the workers’ pockets by destroying their purchasing power.
Circumstances may persuade the bourgeoisie to adopt this policy. The U.S. is already doing so. Europe also, to some extent. Workers obviously should not find themselves lining up behind the policy of the bourgeoisie, whether it aims at monetary stability or whether it is inflationary. This again raises the need for the working class to put as one of its objectives the sliding scale of wages in order to preserve its purchasing power.
In the text of last year’s congress, dedicated to “The capitalist economic crisis,” we noted that: “Contrary to the fears in financial circles, and among the political leaders of the great imperialist powers, the frenzied printing of money has not, or not yet, caused the high inflation of the 70s....
“It’s as if the economy were compartmentalized and the surplus cash due to printing money were absorbed by the financial system itself.”
It is nevertheless probable that the cash created by the frantic printing of money in the U.S., in Great Britain and to some extent in Europe, will simultaneously feed the casinos of the wealthy and cause inflation for the masses.
The antiglobalization movement is careful never to call into question the foundations of the capitalist economy even while criticizing some of the damage it does. No surprise that they aspire to be economic experts for the Socialist Party. They are already flattered that the very reactionary duo of Sarkozy and Merkel looks kindly on their Tobin tax, a tax which is derisory since it changes nothing fundamental in the capitalist economy, the true cause of the crisis, while it hardly touches the financial speculators’ interests. The latest meeting of the G20, that coterie of imperialist dignitaries, even put the idea of taxing financial operations on their rhetorical agenda.
The governmental left, along with antiglobalist theorists, are bidding to carry out the wishes of big capital should the current financial chaos bring it to ask for help from the State.
The return to a more “Statist” terminology and the evocation of nationalization haven’t come out of nowhere. It is possible that new rules will come out of the current crisis to try to confine finance a little, to protect the national or European economies by using protectionist measures.
If the crises of the capitalist economy are always catastrophic for society, particularly for the exploited who are pushed into unemployment, they are simple pulsations in the economic life of capitalism. For the major companies, crises are often favorable because they cut out dead wood, getting rid of the less viable companies. They are periods when capital is rapidly concentrated. The will to control energy sources and minerals, which are essential to production, is combined with the speculative skyrocketing of prices, and this sharpens the rivalry between the major specialized companies who share the planet. They take advantage of the surfeit of financial capital to merge or to buy out one another. (In 2010, the total spent on mergers and acquisitions reached a record sum of 2.48 trillion dollars.)
The hold that a few monopolies or oligopolies have on the mineral riches of the planet was reinforced. As it already was in the time of Lenin’s “Imperialism: the Highest Stage of Capitalism,” their hold is complete in the essential sectors of petroleum, iron, bauxite, gold, copper and nickel, and it aggravates the antagonism between cartelized and noncartelized industries.
One of the consequences of the hold that the big trusts have over the sources of raw material is the control the trusts have over the underdeveloped countries in which those raw materials are found. This results in a local ruling layer being put and kept in place, a layer whose duty is to prevent the exploited classes of their country from sharing in any of the return from the country’s mineral wealth. Africa, where a number of countries have particularly rich mineral deposits, remains the continent with the poorest population. Even if colonial domination has run its course, these countries remain totally dominated by the major companies. Even if no Fashoda incident highlights the race to share out colonies, the rivalry between capitalist groups seeking to control the resources stands behind many of the civil or ethnic wars.
Mergers and acquisitions in the extraction industries aren’t aimed at increasing the merged company’s production capacity. They simply allow the most powerful multinationals to grab the markets that previously were beyond their reach.
This quantitative extension of the major monopolies has also brought about qualitative change. All the major companies have solid national bases and, as far as major American companies are concerned, a huge national market, but they are also present in a large number of countries. Their strategy has been to develop all the specific qualities in other nations that would serve the companies’ interests (proximity to raw material sources or the price and the quality of the workforce, etc.). Together with their subcontractors and their suppliers, they make up conglomerates whose tentacles grasp the world economy as a single whole. By favoring specialization, they refine the international division of labor. The large multinational firms have become international production networks, which include a multitude of plants in a multitude of countries, each holding a specific place in the production process for the global market. They have thus pushed the “universal interdependence of nations” (Marx, The Communist Manifesto) to an unprecedented level.
The international division of labor is now organized, for the most part, within these major conglomerates and according to their needs. Under the reign of big capital, the development of the multinational constitutes a formidable shackle, which submits the world to the search for profit for the fewer and fewer boards of directors that dominate the world economy. But these multinationals also are a sign of the growing socialization of production.
Lenin, in Imperialism: The Highest Stage of Capitalism, foreshadowed in his day how much of a weight monopoly capitalism would become.
“The extent to which monopoly capital has intensified all the contradictions of capitalism is generally known. It is sufficient to mention the high cost of living and the tyranny of the cartels. This intensification of contradictions constitutes the most powerful driving force of the transitional period of history, which began from the time of the final victory of world finance capital.
“Monopolies, oligarchy, the striving for domination and not for freedom, the exploitation of an increasing number of small or weak nations by a handful of the richest or most powerful nations – all these have given birth to those distinctive characteristics of imperialism which compel us to define it as parasitic or decaying capitalism. More and more prominently there emerges, as one of the tendencies of imperialism, the creation of the ‘rentier state,’ the usurer state, in which the bourgeoisie to an everincreasing degree lives on the proceeds of capital exports and by ‘clipping coupons.’ It would be a mistake to believe that this tendency to decay precludes the rapid growth of capitalism. It does not. In the epoch of imperialism, certain branches of industry, certain strata of the bourgeoisie and certain countries betray, to a greater or lesser degree, now one and now another of these tendencies.”
Since Lenin wrote this text, the great imperialist states have tended to become rentier states and leave production to the “workshops of the world” in underdeveloped countries, from China to Brazil and a string of countries in Eastern Asia. This has made the contradictions more pronounced between the rentier states, in which financial activity has taken over from industrial activity, and the poor countries, whose growing industrial activity feeds the financial activity of the imperialist countries.
But since Lenin was a revolutionary communist, he saw what this development would bring in the future:
“When a big enterprise assumes gigantic proportions, and, on the basis of an exact computation of mass data, organizes according to plan the supply of primary raw materials to the extent of twothirds, or threefourths, of all that is necessary for tens of millions of people; when the raw materials are transported in a systematic and organized manner to the most suitable places of production, sometimes situated hundreds or thousands of miles from each other; when a single center directs all the consecutive stages of processing the material right up to the manufacture of numerous varieties of finished articles; when these products are distributed according to a single plan among tens and hundreds of millions of consumers (…) – then it becomes evident that we have socialization of production, and (…) that private economic and private property relations constitute a shell which no longer fits its contents, a shell which must inevitably decay if its removal is artificially delayed, a shell which may remain in a state of decay for a fairly long period….”
Lenin’s “fairly long period” has in fact been a lot longer than the revolutionary communists of the time thought it would be. Barely a year after Lenin wrote Imperialism, The Highest Stage of Capitalism in 1916, the capitalist world was shaken by the powerful wave of revolution that began with the Russian revolution, but the wave was not strong enough to destroy capitalism. We know the rest of the story.
Society paid for the survival of capitalism with the crisis of 1929, the Great Depression, fascism, World War II and, as a sort of boomerang effect, the degeneration of the workers’ state itself.
Twenty years later, in The Transitional Program, Trotsky wrote, “The objective prerequisites for the proletarian revolution have not only ripened, they have begun to get somewhat rotten.” The transformation of society is taking a lot longer than Trotsky thought it would.
But the obstacle is still the same as Trotsky described. An economic and social organization, even if it has been obsolete for a long time, does not fall until it is overthrown – in other words, not unless there is a revolutionary class, putting itself forward to run society and to fight for power.
Despite the destruction brought about by World War II, despite all the damage caused by the perpetuation of capitalism, despite the succession of crises that have shaken it, during the years when the capitalist economy was regulated and the years since it was not, humanity has continued to develop its scientific and technological knowledge and therefore the efficiency by which it exerts a growing power over nature. The division of labor on a global scale, which has continued to develop, is part of this growth, even if it has exacerbated the inequalities and heightened the chaotic nature of this development.
Financialization is not a break in capitalism’s history. It has not changed its laws, nor any of its contradictions; on the contrary, it has amplified them.
Financialization has contributed to the concentration of the world economy into a single whole. It has widened the polarization between the wealth of a small minority and the poverty of the greatest number, between the owners of capital and the exploited, between rich countries and underdeveloped countries. It has accentuated all the contradictions of the capitalist economy. It has given economic life a still more chaotic character than before.
In this dreadful waste that the perpetuation of the capitalist order has cost humanity, we must count the considerable price paid in multiple wars, with or without direct intervention by the imperialist powers; and the famines, particularly those caused simply by speculation on food products.
Above and beyond the millions of dead and wounded in the wars caused directly or indirectly by imperialism’s domination of the world, we should also take into account what humanity loses by the restriction of so many people to a vegetative life, exclusively preoccupied with surviving from day to day, with no access to education or culture.
The economists of the bourgeoisie have invented a “Human Development Index” (HDI) to fill in what the GDP does not show. But the damage that comes from the survival of capitalism cannot be counted by a statistical index. How many child Mozarts, da Vincis, Rembrandts, Balzacs, Einsteins, or Marxes die of hunger before reaching adulthood? How many survive but have no chance to join the ranks of those who help to further humanity?
At the time of Marx, a communist organization of the economy, with socialized production and distribution, was only an inspired anticipation.
At the time of Lenin, because the Bolshevik party took power in an underdeveloped country, it had to try to do, by means of administration by the workers’ state, what capitalism had not done in Russia. Facing this Herculean task, Lenin knew what he was talking about when he said that the Russian economy wasn’t suffering from too many monopolies but from too few.
His main preoccupation during the years that preceded his death was to insist on the need for censuses, in order to know what means of production then existed in Russia.
Despite the tardiness of the proletarian revolution since the first try in 1917, history has not stopped.
Although the deadline is further away than Marx, Engels, Rosa Luxemburg, Lenin or Trotsky thought it would be, the question “socialism or barbarism?” has not yet been definitively decided, even if moldering imperialism has resuscitated a multitude of barbaric forms from the past, such as religious fundamentalism of various stripes, ethnic sectarianism or chauvinism. To all of these should be added others, coming out of human activity itself: like the nuclear threat or, more generally, all the threats to nature and the environment represented by production for profit only.
It is as true now as it was in Lenin’s time that the gigantic multinationals that devour the product of human activity in the four corners of the world, also herald what society can become. The growing socialization of productive activity and imperialist globalization are the tributes paid by vice to virtue, by rotting capitalism to the future, communist, reorganization of society.
An important aspect of the political fight of revolutionary communists is the fight against those who, under the pretense of attacking this or that consequence of the survival of capitalism, do it with reactionary ideas, which, at best, cannot be applied, and at worst would represent a step backward.
Revolutionary communism cannot be reduced to defending acquired advantages. Protectionism or de-globalization, even when rehashed by the left, is not only a stupid idea in the face of the great interdependence of economies. (How many factories spread over how many countries are involved in the production of an airplane? How many workers here in France work for an American, Japanese, English or even Chinese company?)
Protectionism has been a little – and already very little – progressive for poor countries that were trying to protect their national economy against imperial robbery. But in the imperialist countries, even when protectionism is presented as a way of protecting workers, it is pretty obvious that it is going to be used against competition from workers in poor countries, in Africa, China or Mexico. In whatever convoluted way it is presented, protectionism sets workers of one country against their class brothers and sisters from other countries and chains them each to their imperialist bourgeoisie.
Humanity can be emancipated from capitalism only as a whole. It is as a whole and by taking advantage of the division of labor prepared by capitalism, up to and including by globalized imperialism, that it is possible to reorganize production, consciously and rationally, on a planetwide scale.
The future of humanity is not a world with a “Fortress Europe” and a “Fortress America,” each protecting their privileges against the sea of misery in the rest of the world. That would not only be humanly vile. It would be unrealistic. Capitalism builds twentyfourfoot walls and puts barbed wire around territories that are considered privileged; it gives carte blanche to the crooks in top positions who direct the hunt against immigrants. But it cannot make these walls impassable. And the barriers it puts up to protect itself from the poor people of poor countries don’t protect it against the poverty that grows even inside these capitalist heavens.
Communist revolutionaries took Stalin’s saying that it was possible to have “socialism in a single country” as a sign that Stalinism had passed irretrievably into the capitalist camp and had accepted a capitalist future for society.
Humanity cannot move forward until it has rid itself of the economic power of the bourgeoisie, starting with its vision of the world. The only perspective really opposed to a world dominated by imperialist capitalism, regulated or not, depends on the capacity of the proletariat to play its historic role. Even more than in Trotsky’s time “the turn is now to the proletariat, i.e., chiefly to its revolutionary vanguard. The historical crisis of humanity is reduced to the crisis of the revolutionary leadership.”