Contribution to the Forum on Global Financial Crisis
ILPS Third International Assembly
By Professor Jose Maria Sison
Chairperson, International Coordinating Committee
International League of Peoples’ Struggle
I wish to comment on the gravity of the current financial crisis of the world capitalist system and on the impact of this in the various major contradictions in the world, with special attention to the people’s resistance in Asia, Africa and Latin America and in the imperialist countries.
Gravity of the Global Financial Crisis
The economic and financial crisis of the US and world capitalist system has worsened to a new and unprecedented level since the Great Depression. This signifies the utter failure of the attempt of the US and other imperialist powers to overcome the problem of stagflation under Keynesianism with the policy shift to neoliberalism. Instead, the latter policy has aggravated and deepened the crisis of overproduction in the real economy and has given free rein to the abuses of finance capitalism.
The states of imperialist and other countries have adopted the policy to press down wage levels and cut back social spending. They have allowed the monopoly bourgeoisie to accelerate the concentration and centralization of productive and finance capital in its hands through the denationalization of underdeveloped economies, privatization of public assets, liberalization of investments and trade and deregulation at the expense of the working people, women, children and the environment – all in the name of “free market” globalization.
The consistent result has been the actual contraction of the world market, as the purchasing power of the working people has declined and has limited the demand for the products of expanded production. Ever intent on maximizing profits by raising the organic composition of capital (constant capital over variable capital), the monopoly bourgeoisie has reduced industrial employment and regular employment in imperialist countries by shifting production to a few other countries, like China, India and the Southeast Asian countries, in order to avail of cheap labor.
The illusion of economic growth has been conjured for the entire world capitalist system through the wanton expansion of money supply and credit. The imperialist states and nearly all other states have gone into unrestrained local and foreign borrowing to cover trade and budgetary deficits. The state and private banks have expanded credit and the private corporations have gone into heavy indebtedness by getting bank loans and issuing corporate bonds. To maintain the US as the biggest consumer market, US households have been given a seemingly endless flow of credit, culminating in the housing bubble and ending in the ongoing mortgage meltdown.
The truth about the US economy is now out. The sordid facts about the con game of the lead economy of the world capitalist system are being exposed. The debts of the US federal government, the private corporations and households are unsustainable and cannot be paid back. And yet the US policy makers continue to expand the money supply and lower the interest rates. The industrial decline and the runaway federal debt of the US have undermined the long-touted role of the US as the engine of global economic growth and the global market of last resort as well as the value of the US dollar as the reserve currency of the world.
The US economy has become dependent on credit provided by certain oil producing countries and by countries supplying consumer goods. It has fallen into a prolonged state of camouflaged recession since 1999 when the hightech bubble was about to burst. Some US economists now describe the US economy as being in a state of inflationary recession and is halfway into an hyper-inflationary Weimar Republic-type of depression that has a high potential of leaping into Great Depression II. The other industrial capitalist economies are being pulled into the vortex of the global financial crisis that the US chiefly has stirred up.
The few other countries from which the US imports cheap consumer goods face decreasing orders, a credit crunch and the declining value of the US dollar. The chronically depressed underdeveloped countries in the third world find themselves in a far worse situation than before. The overwhelming majority of them have become net fuel and food importers. Their peoples are grievously victimized by the manipulated shortages and price gouging by the global and regional cartels directed by the monopoly capitalists in the US and other imperialist powers. The entire world capitalist system can be summed up as being in a state of depression, especially if we fully take into account the actual social and economic conditions of the oppressed peoples and nations.
Consequences of the Global Financial Crisis
The gravity of the economic and financial crisis of the world capitalist system is such that we can expect the worsening and sharpening of contradictions between the imperialist countries and the oppressed peoples and nations, between the imperialist countries and certain countries that invoke national independence, among the imperialist powers themselves and between the monopoly bourgeoisie and the working class in the imperialist countries.
The crisis of the world capitalist system inflicts social devastation at its worst and suffering at its most painful on the oppressed peoples and nations in Asia, Africa and Latin America. It is therefore understandable why we see here the most widespread spontaneous and organized actions of mass protest and the revolutionary armed struggles that seek to end imperialist domination and overthrow the puppet regimes. The main contradiction in the world is that between the imperialist powers and the oppressed peoples and nations.
The extent of existing revolutionary armed struggles is already formidable, as we observe those in Iraq, Afghanistan, Colombia, Peru, Brazil, Nigeria, Philippines, Turkey, India and other South Asian countries. The potential is high for the revolutionary armed struggles to arise in more countries in several continents. The crisis of the world capitalist system generates the favorable objective conditions for the further spread of people’s wars for national liberation and democracy.
Since the end of World War II, many new national states have arisen from the colonies and semi-colonies either as a result of the revolutionary movements for national liberation or as a result of neocolonial compromise. Most of them are now in the clutches of neocolonialism and neoliberalism. But there are some states which invoke bourgeois nationalism or socialism and assert national independence against the imperialists and their agents. Those states born from successful national liberation movements, such as China, North Korea and Cuba, have been the most effective in asserting national independence and preventing US aggression.
We have also seen the Yugoslavia of Milosevic and Iraq of Saddam resisting the worst of imperialist impositions and being subjected to wars of aggression launched by the US. Currently, there are other countries whose governments stand up to imperialist domination and move to nationalize imperialist enterprises. Venezuela of Hugo Chavez is a prime example. As the crisis of the world capitalist system worsens, we are going to see more dramatic events in the contradictions between the imperialist countries and the countries that assert national independence.
The imperialist powers collude with each other against the oppressed peoples and nations in general. But they compete with each other for sources of cheap raw materials, markets, fields of investment and spheres of influence. As a result of the full restoration of capitalism in former revisionist-ruled countries, imperialist countries competing with each other and seeking to redivide the world have increased in number. The world has become more cramped than ever for the competitions and rivalries of the imperialist powers.
The US is increasingly resented by other imperialist powers for presuming to have sole hegemony over the whole world and for trying to grab the lion’s share of spoils in every continent. At the same time, it is already overextended and weakening in certain parts of the world. Contradictions are developing between the US and Russia and China jointly or separately. So are those between the US and the European Union. These contradictions involve economic, financial, political, security and other issues. As the crisis of the world capitalist system worsens, the contradictions among the imperialist powers will sharpen and generate conditions favorable for the rise of revolutionary movements.
Within imperialist countries, contradictions are surfacing between the monopoly bourgeoisie and the working class. Under the auspices of neoliberalism, the wage and living conditions of the working class have deteriorated drastically. Job security for most workers has evaporated. Worker youth, women and immigrants are discriminated against, exploited and oppressed. Social benefits won over a long period of time have been gravely eroded. Trade union and other democratic rights have been undermined and curtailed.
As the crisis of the world capitalist system worsens, the monopoly bourgeoisie will try to further exploit and oppress the workers. It will pit one section of the working class against another. For the purpose, it will use chauvinism, racism, religious bigotry and fascism. But it is precisely the escalating exploitative and oppressive acts of the monopoly bourgeoisie that will drive the workers to fight back and wage revolutionary struggle. The class struggle in the imperialist countries has never been eliminated. It has only been suppressed for quite a long while. It is now resurgent.