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
Jan 7, 2008
On December 18,the central banks of the main capitalist countries were forced to put hundreds of billions of dollars at the disposition of the regular banks in their own countries. The European Central Bank announced that this was only a beginning, that it was prepared to extend credit to the banks without limit. In other words, in the midst of a financial panic, government-run central banks are running an indirect bail-out operation.
The current financial crisis, the direct consequence of the collapse in the U.S. subprime mortgage market, continues to weaken the entire world financial system. The big Wall Street banks, no longer trusting one another, refuse to lend each other money, though this is the basis of their activity. As a result, the international financial system is threatened with paralysis. If this crisis of confidence continues to spread, and if the investors who deposited money in the biggest banks demand to be reimbursed, the banking system can collapse.
Since last August, financial markets and stock exchanges throughout the world have been wildly fluctuating. This only shows that the stock exchanges, supposedly the market places where stocks are simply bought and sold, have become the center of generalized speculation, particularly financial speculation.
In order to avoid panic, governments are today trying to reassure the middle and small bourgeois. They fear a generalized crisis.
For decades now–in fact since the middle of the 1970s–the whole world capitalist system has been in crisis, open or latent. The basis of profit for the capitalists is and remains the exploitation of human labor within the framework of the cycle of production of goods. But for years, the production cycle hasn’t brought in enough profit to satisfy stockholders. Thus, the capitalists have placed most of their profits into the financial markets, instead of more production, searching for greater returns. This has transformed the financial markets into uncontrollable giants.
The collapse of the U.S. real estate market is the latest manifestation of uncontrolled speculation. And the crisis of confidence it reveals goes well beyond previous crises. It can very well lead to an explosion in the entire world’s economic system. This system rests on the necessary confidence in the exchange of all those financial instruments, which daily circulate throughout the world. If the system severely seizes up, all these exchanges can stop and the world could enter the greatest economic crisis of its history. By comparison, the crisis of 1929 would appear very small.
This whole economic system, based on profit, is rotten to its core. It can’t be reformed. It’s urgently necessary to change it.