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The "American century"" draws to a close

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The Twentieth Century ends in economic crisis and deepening political instability the League for a Revolutionary Communist International analyses the period ahead and the tasks facing the working class.

Over the past two years developments in the world economy have shocked the prophets and pundits. In the early nineties there was much talk of the Asian model of high and sustained growth rates and of a globalisation that would force this model on the entire world. Europe was regarded as the sick man of world capitalism, an analysis apparently confirmed by the collapse of the European Exchange Rate Mechanism before the assault of the hedge funds and currency speculators in 1992-3.

Yet in 1997 an unexpected financial crash struck the Asian Tigers. The ensuing slump brought misery and hunger to tens of millions throughout the region. Japan, after years of stagnation was tipped into slump by the crisis. Signs are growing that China is also being drawn inexorably into the crisis.

The Asian crash rapidly activated the fault lines of "globalised" capitalism, spreading to the other "developing" sections of the semi colonial and former Communist countries most importantly Brazil and Russia. The total effect has been to discredit free market capitalism now often given the hostile adjectives, "savage" or "uncontrolled".

In August 1998 the Russian rouble, after several years of stability, collapsed, The government effectively defaulted on repayments of loans to foreign creditors and a number of European banks were heavily hit. Despite a huge IMF rescue plan the Brazilian currency the real was driven off its fixed exchange rate, devalued by 20 per cent and forced to float, ruining the newly re elected Cardoso government's anti inflationary strategy and leaving a discredited regime to try and impose a savage austerity programme.

In Europe signs of a slowdown in the German economy appeared.

In marked contrast to the recessions in Asia, Russia and Latin America, the US has witnessed the longest running bull market since the 1960s. Throughout 1998 predictions of either a soft or a hard landing failed to materialise. Instead the Dow Jones spiralled into the stratosphere.

These contradictory movements of the different sectors of the world economy have divided the analysts some predict a 1929 style stock exchange crash, first in the USA and then in Europe. Others insist that the new technology fuelled expansion in the US and the launch of the euro will make North America and Europe insulated islands of stability whatever happens elsewhere.

In world politics most of the expectations of the early 1 990s have proved a mirage. Anyone who refers to the New World Order today does so only as a satire on the vanity of human wishes! The "villains" once targeted by George Bush for heavy restraint or removal Saddam Hussein, Slobodan Milosevic, Fidel Castro and Muammar Gaddafi cling obstinately to power. Despite economic blockades or aerial bombardments, the "world policeman" has scored remarkably few arrests or convictions . Instead it was US president Bill Clinton who was arraigned by a Republican dominated congress.

The bourgeoisie's hopes that fall of communism would lead to the gradual disappearance of the world workers' movement have also proved vain. The Social Democratic and Labour parties have not experienced the same fate as their Stalinist brethren: now they dominate the governments of all but two of the fifteen states of the European Union!

Their election is a rejection of the right wing neo liberal governments of the 1 980s and early 1990s. Millions of organised and unorganised workers in the EU will are now intent on turning the social democratic rhetoric of a "social Europe" into a defence of welfare spending and job creation.

Even Stalinism has not disappeared completely. The CPRF, the lineal successor of the CPSU remains the largest party in the Russian Federation indeed it has become stronger whereas the neoliberal parties are dead in the water. In Romania the Jiu valley miners, who bucked the trend at the beginning of the 1990s, at the end of the decade have marched, routed the paramilitary police and halted the privatisation and closure of their mines.

Impotent nationalism

The right wing parties, those most closely tied to neo liberalism, are impotently resorting to anti EU nationalism, driven to stealing the dangerous anti immigrant racist policies of the far right.

From France, Germany and Italy to Korea and Indonesia workers have shown that the predictions of the death of the class which creates the wealth of capitalism have been exaggerated, to put it mildly.

Africa, despite freedom from "outside interference" by the forces of world communism, is wracked by civil wars which have led to the collapse of states such as Somalia, Congo, Liberia and Angola. Rival groups of African countries (each with different imperialist backers) feud over the mineral resources, and mount military interventions against one another's puppets. Not only in South Africa but in Zimbabwe, Kenya and Nigeria trade unionists have used the strike weapon for political purposes and the potential exists for workers' parties to be formed.

In Latin America neo populist figures such as Chavez in Venezuela, sweep out the neo liberals only to betray their electors in weeks rather than months. This not only ensures continued instability and future social explosions but also the possibility of rejecting populist demagogy and a rebirth of class politics.

In the realm of ideas doctrinaire neoliberalism is in disorderly retreat before a bewildering array of alternatives; the Third Way, neo Keynesianism, neo populism political Islamism, etc. Vague proposals to regulate the "untamed" and destructive forces of globalisation fill the serious media and a host of hastily written hardbacks and paperbacks propose reforms to the world financial and banking system.

George Soros, foremost of the financial market raiders of the early 1990s, has had a make over and markets himself as an outspoken critic of unbridled capitalism, denouncing its moral and social wrecking effects and solemnly warning it of total collapse if it does not mend its ways.

Millenarian malaise

But the panicky chattering of the intelligentsia will change nothing in the immediate future. The next twelve months will determine the fate of the global capitalist economy for the five years or more. Over 40% of the world's population live in countries in recession. Their numbers are being added to daily. Slump has a vice like grip in much of East Asia and Japan. Russia is experiencing an economic catastrophe. Recession is gathering pace in Latin America. China's exports have been battered. Manufacturing is retrenching in the USA and UK. Europe's recovery is tailing off.

The main reserves of buoyancy are in the service sectors and financial markets. Here volatility is the watchword as crash gives way to renewed feverish speculation, further correction, more froth and another crash. The volatility expresses profound unease and uncertainty in the world financial markets; and well there may be as profits and equity prices move in sharply different directions.

The last year of the millennium is critical. East Asia's economies have stabilised their financial crisis for the moment but are mired in a slump in output, which will not improve at all in the next six months. Japan is gripped by a deflationary price spiral. In the first six months of 1999 the recession will deepen.

China's economy seems doomed to slide into crisis. Exports have slumped exposing huge company debts and idle stock; state banks teeter on the edge of bankruptcy.

Brazil is the axis around which the Latin American economy revolves, accounting for around 47 per cent of the region's GDR Over $40 billion of IMF money was committed late in 1998 to defend the currency; a huge hike in interest rates failed to stem the exit of short term capital but did push industry into free fall. The inevitable devaluation of the real (Brazilian currency) will see the budget deficit balloon more and provoke more austerity measures. The economy will decline in 1999 by at least 5 per cent; unemployment will jump.

The next six months will prove decisive for the United States' medium term prospects. The cycle of accumulation is clearly coming to an end despite its recent consumer spending frenzy and the further inflation of the stock market bubble. A rude awakening is in store! A violent readjustment between the vastly inflated stock market and the shrinking rate of profit is inevitable in 1999. Overproduction, declining profits and faltering ing investment all point to in one direction recession.

The US will experience little respite from the adverse effects of the East Asia crisis over the next six months or so. Its exports to the region will continue to fall and imports from it will rise, worsening the US trade deficit. The Latin American recession will cause a further decline in the profitability of many US MNCs, which in general are more exposed in Latin America than East Asia.

The only question is whether the end of the speculative bubble will lead to an uncontrolled flight to cash and bonds, panicky asset sales and a generalised credit crunch that overpowers any interest rate cuts and other Federal counter cyclical measures that are designed to stem the recession. But a US recession, whatever its size, will hit East Asia and Latin America hard at this stage of the cycle, cutting off any attempts at export led recovery.

The European Union now has a single currency the euro. Its foundation is an event as important as the foundation of Bretton Woods financial system in 1944. Europe in 1997/98 benefited from lower global commodity prices and the effect of capital flight from Russia and East Asia. The latter has caused an increased demand for its bonds which led to lower interest rates, all smoothing the path to the euro's launch.

But the real economy is beginning to turn down and this will deepen in the first six months of the year. The UK recession is underway and in continental Europe profits and investment are set to fall. Although not critically exposed to the fluctuations in the US market, the mainland EU economies will be hit by declining markets there in 1999. A weaker dollar will also erode EU competitiveness and any US recession will exacerbate the Atlantic trade war. By the second half of 1999 or early 2000 the EU will likely be in recession.

By mid 1999 it should be clear whether we are in a normal post 1973 synchronised global recession in which global output falls by up to 3 per cent in 1999/2000, with widespread stock market corrections of around 20 per cent by the end of the year; or whether something qualitatively different is happening, something far worse than we have seen since the second world war.

The bosses most optimistic scenario, requires that the global recession remains unsynchronised with very weak and/or much delayed US and European recessions keeping output, prices and profits low but stable during 1999. Meanwhile Japan and East Asia bottom out of their cycles and resume investment and growth. Unfortunately for them this is the least likely outcome.

In fact, what is uppermost in the minds of many commentators is a serious world recession: a stock market collapse of 30 per cent or more, producing a deep slump in output of 5 to 10 per cent; a global liquidity crisis; a deflationary spiral of prices and output; competitive devaluations; and the use of protectionist measures. They fear that this recession will prove resistant, in the short term, to the interventions of the Federal Reserve and European Central Bank, or even the IMF and World Bank.

End of the "American century"

Internationally, there is stark contrast between the self confident policy of the USA in 1989 1993 when it was able to create a coalition for the Gulf War, which included a wide range of Arab states, all the imperialist powers and most semi colonies and former communist states.

The hectoring on off military and diplomatic threats of the post 1995 period culminated in the bombings of December 1998 and the desultory air skirmishes since then. These air strikes against Iraq have proved ineffective and even counter productive. They have alienated the US's imperialist partners and most of their Arab allies.

In the Middle East the Oslo "peace process" is shattered. The US's credibility in the Middle East has been undermined by the combination of the attacks on Iraq with the spectacle of Netanyahu ripping up all the promises Israel made to the PLO in the Oslo Peace accords.

The Kosovo cease-fire has not prevented Milosevic's atrocities, which brutally expose the impotence of the CSCE monitors. The pattern of the Bosnian genocide is being repeated in Kosovo, albeit on a smaller scale. The imperialist powers will not hear of independence for the 90% Albanian population and do everything in their power to stop the Kosovo Liberation Front from combating the Serbian occupation forces.

In short, the US cannot maintain order on any continent, despite its absolute military hegemony, despite the abject subservience of all but a few semi colonial regimes, despite the EU's military and political impotence. It has not even been able to overcome the Vietnam syndrome, the refusal of the US population to countenance the large scale use of US ground forces in a shooting war.

What a lesson the workers and peasants of a small underdeveloped country gave the world superpower! A quarter of a century on the rulers of the US have not forgotten the beating they took and neither should progressive forces around the globe!

Instead of ground wars the US, and its British ally, are forced to rely on unilateral air attacks on its main post cold war "enemy of the state" Iraq. The renewed bombing late in 1998 reflects both the continuing temporary strength of the US to go it, virtually, alone and force the EU and Japan to follow it, but also their increasing isolation. Moreover it can hardly be seen as a military strategic, let alone a political success.

The UN has been humiliated, its Secretary General turned into an abject figure. The revelations of the spying role of Richard Butler and the other UNSCOM inspectors have unmasked the entire anti Iraq campaign as little more than an attempt to achieve what the Desert Storm failed to do to provoke the Iraqi high command into removing Saddam and bowing to Clinton. Blair and Clinton's public excuses for the December attacks were as threadbare Saddam's violation of UN resolutions, the need to "degrade" Saddam's forces of repression, to destroy his capacity to make "weapons of mass destruction" or to "threaten his neighbours".

Again, the stark contrast with US support and protection of Israel was not lost on anyone. The Zionist state is a serial violator of UN resolutions and solemn treaties, practitioner of torture and mass repression with regard to the Palestinians, possessor of both nuclear and chemical and biological "weapons of mass destruction", occupier to this day of the lands of neighbouring states.

The necessary corollary of Clinton's strategy more economic sanctions and repeated air attacks will, if persisted with, provoke open splits amongst the imperialist powers and the long-term alienation of their semi colonial puppets.

Also the dispute about the future role of NATO (question of nuclear firststrike doctrine, peace making operations without UN approval) show existing potential for conflicts between current allies. The creation of the euro will lead to huge shifts in the financial sector and in time could seriously weaken US hegemony in the world institutions like the IMF and the World Bank.

The use of the Asian crisis by US banks and multinationals to cherry pick the major banks and leading edge manufacturing companies of the region is storing up bitter conflicts in the first decades of the new century. The crisis and the US response to it has brutally reminded the bourgeoisies of the Asian Tigers of their semi colonial servitude and, perhaps, even warned the Chinese bureaucracy of its likely fate.

US bankers and politicians have peremptorily dictated terms to Japan in a way not seen since the late forties. The plan of the Japanese government to create an Asian fund to bail out crisis ridden semi colonial governments in SE Asia represents a first feeble attempt to resist US hegemony.

'While all of these developments pose challenges to US hegemony they will not end it in the short term. Neither the EU nor Japan are able to replace the US politically and military even in their own regions. It will take years, if not decades to create what history and geography have endowed the North American colossus with. Nevertheless, these developments will increase and point the way to the future relentless sharpening of inner imperialist rivalry.

Renewed struggles ahead

The political crisis will continue in East Asia especially in Indonesia and South Korea. In the former, the next six months will be dominated by continued recession and renewed protests against the old parliament's minimal constitutional changes, climaxing with the May/June elections. The level of class struggle will decide if the military, with or without Habibie, try to stage a preventive coup to suppress the mass movement, or if sections of the ruling class will instigate a right wing Islamist mass mobilisation, which could be accompanied with protectionist, anti neo liberal measures.

The objective situation in Indonesia military Bonapartism, landlordism and acute peasant land hunger, national liberation struggles, IMF imposed austerity and wholesale buy outs of Indonesian banks and industries by foreign multinationals places the revolutionary democratic struggle in the foreground.

At the same time only the Indonesian proletariat can lead all the oppressed and exploited classes, strata and nationalities in a revolution that can sweep the whole corrupt establishment into the dustbin of history and free Indonesia from the shackles of imperialism.

In most countries of the European Union social democratic reformist parties are in government, either on their own or in coalition, in For the capitalist class in Europe the bourgeois workers' parties and trade union bureaucracies have become their key agents for containing working class resistance as well as ensuring the implementation of economic and currency union.

As long as the economic crisis does not affect the EU these governments will have room for manoeuvre and will be able to integrate the trade union bureaucracies and even some left reformist parties. But as soon as the crisis becomes serious fissures within and between these forces will grow

The economic shock underway in Russia will most likely deepen in the months ahead. The growing mass unrest, which led to strike waves in the summer, was only halted through a fake shift to the left in the form of the Primakov government. In return for Yeltsin's semi retirement and the integration of a couple of CPRF ministers the latter and the trade unions ended the movement with a feeble a one day protest strike. However this government has made promises such as paying back all workers' outstanding wages that it cannot keep while holding to its simultaneous pledges to the IMF that it will resume debt repayments and avoid the inflationary printing of money. But the illusions in Primakov will only be dissolved by experience.

When this occurs a resurgence of mass strike action is probable. Renewed social pressure from below could either oblige Primakov to force Yeltsin's resignation or it could tempt the palace clique around the ailing Yeltsin into a presidential coup against Primakov.

The Crisis of Leadership

The onset of the fourth world recession since the end of the long mid century boom, the rising resistance from youth, workers and popular masses in the semi colonial world, raises once more a major problem. What sort of leadership will these struggles find? If the power and influence of the Stalinist bureaucracies has been enormously weakened and even disintegrated this has, as yet, often opened the way to all sorts of demagogues, adventurers and charlatans.

At best, in the countries with new trade unions and workers' movements in Asia and Africa, it has led to tentative moves to form labour or workers' parties on a very limited or inadequate programmatic basis. In the countries where capitalism is being restored there is terrible political confusion. Some former Stalinists, transformed into extreme nationalists, find themselves at the head of militant workers' struggles, as in Romania. In other countries fragments of the old bureaucracy of the state parties or the trade unions lead the movement for want of any organised alternative. Such bureaucrats or demagogues will disrupt and dissipate the mass actions. Without revolutionary leadership much of the heroic efforts of the coming struggles could go to waste.

The central contradiction of the coming period remains: the disjuncture between the ripening revolutionary situations and the immaturity of the revolutionary political forces of the proletariat. This problem, as well as the basis for a solution to it, was first formulated by Leon Trotsky in 1938 in the Transitional Programme. The programmatic method to resolve it remains as relevant today as it was when it was first written: a system of immediate and transitional demands which pose the questions of workers' control over production and the seizure of power by the working class organised in workers' councils.

This method must be the fundamental axis of a new international programme and cadres must be assembled and organised to carry that programme into each and every concrete struggle of the working class around the world. This means not only new parties in these countries but a new world party of socialist revolution.

Despite the renewed discredit into which capitalism has been plunged, despite the great weakening of the Stalinist bureaucracy, despite the ultrabourgeoisification of the social democracy, the forces of a revolutionary communist alternative are still very small. Even among the tens of thousands who regard themselves as both revolutionary and communist the numbers with such a strategy (programme) adequate to the new crisis is even smaller. Most who are willing to call themselves communists today, such as in Turkey and the Indian sub continent, remain Stalinists in programme and organisational methods.

In contrast to the 1970s and the early 1980s, within the unions and the reformist parties, the forces of rank and file opposition to the bureaucracy are cowed or apparently non existent. Nevertheless, conflicts in the unions and workplace organisations continue beneath the surface. It is the task of revolutionaries to make contact with those workers in opposition to the bureaucracy, raise their confidence and cohesion, and win them to a bolder programme and tactics.

'When the recession hits Europe, the conflicts within the reformist mass organisations and unions will increase and parties will grow.

This ferment will effect the whole reformist labour movement pitting those who will defend workers' interests against those who have sold themselves body and sold to the bourgeois order.

However, in next year or so, the experience of right wing socialist and labour governments will once again present opportunities to existing centrist parties to win vanguard workers and youth to mounting a challenge to these governments. In France organisations like Lutte Ouvriere and the Ligue Communiste Revolutionnaire or in Britain the Socialist Workers Party and the Scottish Socialist Party are standing in elections with varying chances of success.

In Italy the left reformist Rifondazione Comunista is in a position to challenge the craven pro capitalist policies of the PDS led government. Unfortunately, though inevitably given the centrist nature of many of these groups, the vanguard workers and young will not have a fighting revolutionary action programme put before them despite the fact that thousands of cadres of these organisations agree with the main planks of such a programme.

Unfortunately the number of these who today "disdain to conceal their views and aims" and who dare openly "declare that their ends can be attained only by the overthrow of all existing social conditions" is far smaller due to the political cowardice and decomposition of their centrist leaderships. The latter think it is a clever trick to pick up the programmes of Stalinism and Social Democracy from the 1970s and 1 980s, dropped in the mud by the big parties over the last decade and a half, and to win votes and seats on a political nostalgia basis rather than campaigning for a strategy of active resistance and new fighting organisations.

In Europe revolutionaries have to come forward openly as champions of a new programme and of new revolutionary parties. They have to work to transform from top to bottom all workplace organisations and the trade unions. In the new century we must eradicate the root cause of all its defeats in the old century: bureaucratism, whether in its Stalinist, social democratic or trade unions forms.

In the United States rank and file trade union militants, sections of the reformist left wing and centrist propaganda groups are setting about building a Labor Party. If this is not to end up as a caucus for "friends of labor" amongst the Democrats or a reformist dead end then a revolutionary action programme needs to be adopted. A Labor Party can only be built through active involvement in the struggle to organise millions of non unionised workers and those who suffer racial oppression and discrimination not solely or primarily through electioneering.

In the mass revolutionary struggles in East Asia, in countries as different as Indonesia and South Korea, there are further problems. The task is certainly that of bringing together all the threads of the factory based and community based opposition to military dictatorship, presidential democracy and IMF austerity, into a revolutionary workers' party

But a real danger exists of economism (restriction to local or sectional strikes) or petty bourgeois democratism (limiting the struggle to one for democratic demands). The democratic and social questions must be consciously linked.

Mass self organisations of workers and peasants councils of their delegates must be erected. Only such bodies can ensure that democratic demands, a constituent assembly, the right to secede for oppressed nationalities, land redistribution, are pursued with revolutionary mettle.

Only such organisations can ensure that companies are not only nationalised but that the owners are expropriated and production put under workers' control.

In South Korea sharper attacks on the workers in the chaebols will emerge in the first half of the year, creating a crisis of leadership within the trade unions and posing the best ever opportunities for the creation of a workers' party

There are also huge dangers facing Russia's workers given the acute crisis of leadership. Right wing, chauvinist forces and local governors such as Alexander Lebed will seek to use mass anger to build populist support which could even lead to a further fragmentation of the Russian Federation. Worse some "red brown" Stalinist forces inside the CPR, like former general Albert Makashov, could attack the government not from a class point of view but with anti Semitism.

A clear class struggle perspective a general strike to oust Yeltsin and smash the bonapartist presidential regime, the summoning of a sovereign constituent assembly, the building of workers' councils must be combined with fight for an internationalist revolutionary workers' party.

When Trotskyist International first predicted that the new historic period being ushered in by the collapse of Stalinism was not one of unchallenged capitalist stability many on the left mocked this prediction as catastrophism.

The events of the last year have greatly reduced the capitalist optimists and the hand wringing pessimists on the left.

It is increasingly clear to all that the new millennium will be born under skies heavy with the clouds of economic crisis, regional wars and wave after wave of class struggle. Contrary to the bourgeois propaganda and leftist pessimism of the early and mid 1990s capitalism did not enter a new era of growth and stability thanks to the collapse of Stalinism.

Economically, we remain locked in the near 30 year long period of low growth. We are witnessing an accelerated tendency to the formation of economic blocs. This will lead inexorably to increasing rivalry over sources of vital raw materials, over access to new markets. This will create trade wars and later open political and military clashes.

The way out of depression for Japan, the way forward for a new stage in European imperialism's global plans all lead to renewed attacks on their own working classes and to contesting US dominance.

European and Japanese workers will not calmly see their job security or their social gains torn up in the name of shareholder value or globalisation. The new workers' movements in East Asia will not return to the old ways once the present cyclical crisis abates.

These changes will lead to a new, higher level of class struggle than we have seen in the 1990s a return to the scale of the struggles of the 1910s, 1920s 1930s and of the 1970s and '80s. The scale and regularity of these struggles in the twentieth century show the historic exceptionality of the mid century boom and the phase of defeats in late 1980s and 1990s. This in turn will present decisive opportunities for the building of a new, revolutionary communist International.

"We have entered a world historic revolutionary period in which all the relations inherited from the settlement at the end of the Second World War are being disrupted or destroyed... We recognise that the first few years of this new period have a negating, destructive, even a counterrevolutionary character. But the present events are sweeping away everything that is decayed, rotten and emptied of vital force within the movements of the oppressed and exploited ... For this destruction is clearing the ground for a new and profound period of struggles and for the crystallisation of a renewed revolutionary leadership. Capitalism cannot recover its youthful vigour. Neither its crises nor its class struggle will abate. On the contrary, a world arena for titanic struggles in the new millennium is being created by these very events." Trotskyist International, April 1992