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Cracks in the “new world order”

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It is presidential election year in the USA and foreign policy is not prominent on the hustings. As Helen Watson explains, the gap between the USA’s global political reach and its domestic economic and social decline cannot be bridged by campaign rhetoric.

The end of the 1980s and the beginning of the 1990s witnessed a series of historic events unparalleled since the years immediately after the Second World War. In the forty intervening years US imperialism’s entire foreign policy and system of military alliances was based on containing Soviet power and influence, and isolating the post-capitalist states created in Eastern Europe, Asia and the Caribbean. The collapse and disintegration first of the East European satellites and then the USSR itself, has sent huge shockwaves through both the surviving degenerate workers’ states and the semi-colonial countries that looked to them for support.

Sensing impending victory in the Cold War, George Bush seized a uniquely favourable opportunity, when Iraq invaded Kuwait, to mobilise the support of almost the entire United Nations (UN) for his crushing of the strongest military power in the “Third World”.

But with scarcely a moment for celebration the triumphant imperialist nations are now having to face fresh problems that victory has brought. Bush’s “New World Order” is proving to be a new world disorder, as the new democratic and economically neo-liberal regimes of the disintegrating workers’ states and semi-colonial world turn with expectant eyes and open hands to their imperialist paymasters.

On the other hand, for those who gained inspiration or material support from the bureaucratically ruled workers’ states the future looks bleak indeed.

The continuing collapse of the degenerate workers’ states has caused a corresponding collapse in the ideology that arose to support them – Stalinism. In itself this is nothing but a cause for rejoicing. But the deadly effects of what Trotsky called this “syphilis” within the labour movements of the world, linger on after its demise. The Stalinists stole the mantle of Marxism and Leninism. Now, with the collusion of the bourgeois propagandists, they claim the collapse of Stalinism to be the collapse of Marxism and of the idea that class struggle is the motor force of history. Communist society is proclaimed to be an exploded utopia, one that could only be realised as a hell on earth. Worse, Stalinism’s hold has been broken only to be replaced by other reactionary ideologies and leaderships – petit bourgeois nationalism, religious fundamentalism, bourgeois populism.

And we are not only witnessing a sea change in ideas. Actual struggles around the world are being adversely affected by the renewed political strength of imperialism. The USA has recovered a degree of political influence it has not possessed since before the Vietnam War, or even since the Second World War. Able to use the UN almost as a sub-office of the State Department, the USA has been forcing through political deals that have sabotaged or aborted progressive struggles. The re-assertion of imperialist domination in the Middle East, the settlements in Kampuchea, Southern Africa and El Salvador all suggest that the balance of power in the world has shifted massively in favour of the forces of reaction.

Yet strangely Bush’s presidential campaign is extremely defensive. Why is he reluctant to trumpet his record as the man who humbled the “Butcher of Baghdad”, who finally won the Cold War, who masterminded the ousting of the Sandinistas in Nicaragua and who is now turning the screws on Castro? The short answer is that the slump afflicting US capitalism has eroded the “feel good factor” amongst US voters. Victories for the New World Order have done nothing to stem the tide of urban decay and mounting social misery for those in whose name this order was proclaimed. The gap between global military omnipotence and political hegemony on the one hand, and domestic economic decline on the other cannot be bridged by windy campaign rhetoric.

What is “ordered” about this new world? In this decade of “virtual reality” simulation, as long as you keep the computer headset on you can believe the world has been restored to high summer in the “American Century”. But take it off for a moment and Saddam is still butchering the Kurds from Baghdad, the Zionists are still bombing Lebanese villages, the towns and villages of Yugoslavia and the Caucasus are engulfed in the flames of pogrom and civil war while several countries in Africa and South Asia are in a state of collapse.

And what is “new” or inspiring about mass unemployment, falling incomes and faltering bourgeois democracies – the reality of life in Eastern Europe and the ex-USSR today?

A few years ago it seemed to Bush that, under a pliant and obedient Gorbachev, the USSR would be an invaluable ally in imposing the new US order on a reluctant world; Moscow had miraculously become part of the solution. Today, Yeltsin’s Moscow is once more part of the problem.

While there is no denying the scale of the recent or impending defeats suffered by the working class, the USA is facing genuine difficulties in establishing total world hegemony. At present these difficulties flow, not so much from any subjective challenge to its rule, but from the disparity between its relative economic decline and its suddenly increased obligations as world arbitrator, world policeman and world banker. It is torn between its imperial obligation to fill the vacuum created by Stalinism’s collapse and its doubtful ability to extend its system of semi-colonial regimes and imperialist alliances so as to guarantee both social stability and increased exploitation.

In the spring of 1992 the world economy remains in recession, nearly three years after the peak of the last recovery. That recovery began in 1983 after three years of the deepest post-war recession. During that recession the major imperialist countries were able to improve the relations of exploitation through mass sackings, relocation of investment and huge destruction of plant and machinery, including widespread closures.

But they simultaneously created a serious problem of profit realisation. This was symbolised by two things; the fact that OECD average real wages were stagnant throughout the 1980s and that Latin American and African markets were laid waste through debt repayment. The global recovery could only be sustained by massive reflation in the USA based on increasing debt. This then stimulated the upturn in the rest of the world. The consequent huge rise in government, corporate and consumer debt eventually choked off the recovery. Profits were squeezed by the rise in real interest rates caused by the debt explosion.

The current cyclical recession began in the USA, spread to Europe via the UK and by the end of 1991 embraced the whole EC. In 1991 Japan registered 4% growth, allowing the global recession to remain unsynchronised, with the OECD registering overall growth of 1%.

However, in the first quarter of 1992 the recession finally became synchronised and will remain so for at least the first half year of 1992. This is so for several reasons. First, there is little prospect of recovery from within either the USA or UK. The post-Gulf War stimulus to output in the USA was not sustained, and recession has taken a firm grip again as an unprecedented level of household and corporate debt continues to prevent a credit driven recovery despite low real interest rates.

Secondly, Germany’s recession is likely to deepen in the first half of 1992. Its strict monetary policy, with high interest rates, is dictated by the need to control increasing production costs and a rising budget deficit. But this is squeezing profits and hence investment. Moreover, Germany’s exports have been seriously affected by the collapse of demand in the North American and EC markets. In turn the German recession has – in the context of the dictatorship of the Deutschmark over the other EC countries – reacted back upon the other EC economies and strengthened their recessionary tendencies.

Thirdly, Japan’s industrial sector is now in recession. By early 1992 attempts to prolong the cycle there through reflationary monetary policy were ineffective, with a slow but steady collapse of stock market assets in Japan back to the same level as five years ago. This has badly affected the ability of companies to borrow for business investment – always the engine of growth for Japanese capitalism.

Judged by the performance of industrial sectors rather than countries, the recession is in many ways worse and more generalised than in 1980-82. The pharmaceutical industry was the only one to register growth in 1991. Cars, steel and raw materials all continue to show over-production and over-capacity, as in 1980-82. But in addition, traditionally immune sectors such as aerospace/aviation and computers are in the throes of an unprecedented contraction in this recession.

The recession is shallower and longer than the last global downturn. But the shallow character of the recession is itself hampering recovery, especially as the rationalisation of the financial sector and the elimination of bad debt have not gone far enough to stimulate new investment or allowed interest rates low enough to substantially ease profit margins. Only a sustained assault on fixed costs – such as labour – within the OECD countries, or the widespread relocation of fixed capital (to Eastern Europe, the CIS, China and India) could provide a return to the rates of accumulation witnessed in the 1980s.

But this kind of strategic relocation of industry involves overcoming enormous class and state barriers and would take several years to effect. In the shorter term (the next one or two years) the prospects for a strong cyclical upturn and a decisive escape from the present stagnation would require at least a successful conclusion to the present GATT talks. For the last thirty years steady liberalisation of world trade has been vital to the boosting of production. But such a clear breakthrough for the USA against its more protectionist European and Japanese rivals is unlikely.

Nowadays GATT merely delays the rise of protectionism and bi-lateralism. The dominant trend is towards de facto protectionism between the regional blocs concomitant with the growing freedom of trade within them. Tearing down the semi-colonies’ barriers to trade and investment will only party offset this since these countries do not represent anything but a small fraction of output, trade and investment flows.

The USA insists on maintaining its global political and military dominance and its right to act unilaterally and define the interests of the other imperialist powers. But the contradiction ticking away underneath this is that the USA does not have the economic power to sustain this global reach. Consequently, it relies upon economic support from Europe and Japan to carry out its role as world policeman. But this support can only ever be conditional on the interests of these blocs coinciding. There are important signals that, with the disappearance of the Soviet threat, this coincidence will not survive indefinitely.

The USA sought and willingly received assistance from Japan in the 1980s. Japan has filled the gap vacated by the USA in overseas aid. It has increased its defence budget and thus boosted the US defence industry, without enhancing Japan’s regional military independence. In addition, Japan has liberalised its economy, reduced its trade surplus and covered much of the US budget deficits.

An end to the Japanese recession will not lead back to the traditional levels of growth and continued generosity towards the USA cannot be expected from the new Japanese Prime Minister. In the long term that is more likely to be an intensification of episodic trade frictions into trade wars and a recrudescence of protectionism.

In Europe the historic economic and political interests of the old imperialist powers repeatedly lead to clashes and present a major obstacle for the creation of a unified European independent state. While a central bank with sovereign power is a major step in that direction, control over armed forces is essential for a super state. But France and Britain, as nuclear powers with large independent forces, will not surrender these and risk German hegemony over them.

The sharpest contradiction lies in the relations between the USA and Europe, both in trading and also in the USA’s military role. The likely course of development is towards a more protectionist Europe led by Germany, at the level of trade (agricultural tariffs etc) and increasingly frequent diplomatic disagreements (over theatres of conflict in the Eastern Europe, the CIS and the Middle East) The differences between Europe and the USA will deepen as the decade wears on.

These economic factors are frustrating the imperialists’ plans to cash in on the opportunities presented by the collapse of Stalinism. The potential for imperialist exploitation of these vast new markets, areas rich in natural and human resources, is great. But before that can be achieved they have to successfully complete the process of restoring capitalism. This would be the most decisive defeat the world working class has suffered since the 1930s. Already imperialism has been massively strengthened on a world scale by the victory of restorationist forces within these states. But outside of the GDR the economic transition to capitalism remains incomplete.

The imperialist powers, separately and jointly, have found that they lack the depth and breadth of economic resources, that were needed for the post-Second World War Marshall Plan. That would require a massive investment plan to overthrow the planned economies and ensure their transition to a “mixed” (private and state capitalist) economy without major social conflict. The destruction of decrepit means of production, the dismantling of social gains, the rise in social inequality, the integration into the world market, the creation of viable bourgeois classes – all of these are necessary to the restoration of capitalism. But the fruits of such a catastrophic restoration will be revolutionary crises, internal national conflicts within the ex-Stalinist states and the intensification of imperialist rivalry over the spoils or who pays the bill.

A massive economic crisis will produce national and ethnic divisions in the former USSR as republics resort to the erection of new borders and customs barriers in rancorous disputes. This will hugely multiply the difficulties of imperialism gaining from the restoration process. In Yugoslavia and the Caucasus the process has already begun bringing in its train bitter fruits – reactionary civil war, pogroms and nationalist movements. These could be repeated on an even greater scale in the Ukraine, throughout the Caucasus, within the Russian Federation itself and in Central Asia. The instability caused by these conflicts poses a threat to the project of restoring capitalism with the passive consent of the working class.

The arming of broad sections of the masses through the nationalist militias will not produce confidence for investors. The imperialists will of course try to exploit the divisions created in this way. Instead of seeking to solve everything with a “Marshall Plan”, they could well solve a few things by concentrating economic assistance on Poland, Czechoslovakia, Hungary and parts of the USSR, and play a containing game with the conflicts that will arise in the other countries. In the longer term a number of stable semi-colonies in Eastern Europe would be imperialism’s best hope in stabilising the other, weaker, former workers’ states.

Whilst the imperialists set their sights on the new markets of the former Stalinist states, they continue to face instability resulting from their exploitation of the existing semi-colonial world. The semi-colonial ruling class is more and more integrated into, and subordinated by, the world imperialist economic agencies – the World Bank and the IMF. In many semi-colonial countries their representatives, like the old imperialist proconsuls, rule on every important economic government proposal.

In general the imperialists have succeeded in imposing their favoured semi-colonial “model” (the Tigers of South East Asia) with open economies and close integration into the imperialist world market, on whole new areas of the semi-colonial world. Attempts at semi-autarkic and economically nationalist development in Latin America and Africa have been abandoned in the 1980s under the pressure of imperialism, and replaced with neo-liberal anti-statist strategies. State capitalist semi-colonies like Iraq or Libya are the exceptions today. In the 1990s India has joined the club of those abandoning long established state capitalist strategies.

Neo-liberal austerity programmes have temporarily halted the hyper-inflation that convulsed many semi-colonial countries in the mid and late-1980s but only by dramatically reducing the already desperate living conditions of the masses. The opening up of these economies to penetration by imperialist multinationals, has led to only limited and grossly uneven increase in investment. Rather than contributing to the general and rounded industrialisation of the semi-colonial nations, this penetration is key to maintaining their economic backwardness and political oppression.

The decisive question, settling the character of the next decade, will be the level of resistance put up by the exploited and oppressed. If imperialism is to come out of its decades long period of stagnation, escape its sharpening internecine contradictions and really impose a stable new world order, it can do so only by inflicting qualitatively more severe defeats on the masses, than it has succeeded in doing in previous years. But these successes are testimony to the absolute and fundamental crisis of leadership of the working class.

Massive class struggles marked the 1970s and the 1980s. But on a world scale the proletariat suffers a chronic crisis of leadership which has resulted in serious defeats for the working class over the last decade. The final destruction of the degenerated workers’ states, if carried through to the restoration of capitalism, will be a historic defeat for the working class and victory for imperialism.

The collapse of world Stalinism is being used by bourgeois forces to discredit even the watered down “socialism” of state intervention into the economy. Traditional post-war social democracy was identified with high levels of state spending to subsidise ailing industries and to fund social welfare. The “triumphs” of free enterprise and the market world-wide and the disintegration of Stalinism are already pushing social democracy further and further to the right.

Moreover, both the break up of the USSR and the global capitalist recession have fuelled the growth of nationalism and racism. In Eastern Europe it marches under the banner of national freedom after decades of oppression under Stalinism. In Western Europe racism flourishes with every move towards European integration. Xenophobic fears that a European super-state will lead to loss of national identity have fed a poisonous hatred of all those outside the EC who may seek refuge within it after 1992.

In the USA we are witnessing a return to the “yellow peril” phobias directed against Japan, a mood carefully cultivated within the trade unions by ailing big business in the USA against the Japanese superior economic performance. There is a systematic growth of far right parties. This all breeds apace in the absence of a credible working class politics able to provide answers to the crisis.

In the major imperialist countries (USA, Britain, France, Italy and Japan) a decade of domestic economic or political defeat and retreat for the working class has left the open bourgeois parties strengthened and social democracy uninhibited in its right wing trajectory. The swift and decisive military victory in the Gulf has a profound domestic political significance in the USA. The exorcism of the “Vietnam syndrome” has made it much easier for the ruling class to justify the role of world policeman. War is no longer an unthinkable option. The anti-war and “anti-imperialist” movements in the USA will find opposition to these interventions objectively more difficult.

In Germany, the working class of the former DDR suffered a strategic defeat through capitalist reunification. This defeat had serious reactionary consequences for West German workers as well. Increased taxation and the creation of a larger reserve army of labour have worsened social conditions in the west and the conditions of struggle for all German trade unionists.

The workforce of the former DDR is now reduced to two thirds of its former strength and, despite some signs of resistance, is badly demoralised. However, although it is ideologically on the defensive too, this does not apply to west German workers. They are well organised and willing to defend the gains they have made in past decades. The German bourgeoisie must attack and destroy as many of these gains as possible. The 1990s will be a crucial decade for the German proletariat. If it does not struggle it will undoubtedly lose those economic and social gains.

The crisis of leadership is not only profound but is getting deeper. A common crisis of leadership is hampering workers’ struggles in the Stalinist states and those of the workers and urban poor in South Africa, the Middle East and Latin America. Only the remaining strength of the imperialist economies allows their masters the luxury of not immediately launching an all out assault on the foundations of the working class’ post-war gains, instead continuing for the present along the road of sectional attacks. Unlike Latin America or the Stalinist states, the existing leaderships of the labour movement remain conservative and securely in place. Any profound deepening of recession in this cycle or the next will provoke resistance to them that could sweep them away. If this occurs then the crisis of leadership in the imperialist countries will become as acute as it is in the other “two sectors” of the world.

The present and approaching economic and political crises will force the radicalised masses to seek new leaderships. Although the demise of Stalinism is a blow, its collapse also represents the weakening and destruction of what are and were agents of the bourgeoisie within the workers’ movement. The replacement of those agents by more demagogic and shallow rooted instruments of mass control holds grave dangers for the ruling class.

In weakening or destroying the reformist parties they are blocking up the safety valves for the anger of the exploited. They are ensuring that in the coming decades social explosions will be less predictable and less controllable. In this situation new combative layers will emerge, some of them from the rank and file of Stalinist, social democratic or petit bourgeois nationalist organisations.

For the next two years it is probable that all the major imperialist powers will be able to profit, politically and militarily, from the collapse of Stalinism. Institutions of global co-operation and conspiracy that bind imperialist countries close can hold together and even be strengthened in the next period, and so organise their work against the struggles of the oppressed.

However, the collapse of Stalinism, the state of the world economy and the wracked nature of the semi-colonies will, in the medium and long term, greatly intensify the contradictions between the major imperialist powers. Without the crisis of profitability at the heart of the system being resolved, any renewed general expansion of the productive forces can only come about at the expense of a huge increase in poverty and misery for the bulk of the world’s population. This can only be done by inflicting a historic defeat on the proletariat, not only of countries like the USA and Britain, but by extending and deepening the successes achieved there to countries like Germany, Japan and a host of other imperialist and advanced semi-colonial countries.

A massive restoration of the rate of profit analogous to that achieved following the great depression and the Second World War could lay the basis for the penetration and exploitation of the CIS and China. This might then lead to a new prolonged upswing into the third millennium. But the obstacles to this “optimistic scenario” for world capitalism are enormous. Each of them is a major contradiction which will be the site of key struggles in the coming decade and beyond. The interaction of these contradictions, not the least of which is the class struggles of all the exploited and oppressed classes, can act back upon the stagnant and top heavy word economy to produce a major slump to rival previous ones.

Just such an intensification of conflicts, combined with a renewed imperialist offensive will pose the objective conditions in which the crisis of leadership can be solved. The growth and the explosion of fundamental objective economic and political contradictions will fissure and fragment this apparently all powerful neo-liberal conservative ideology. Already the greatest victories of neo-liberalism are behind it in Europe and North America. It has created huge majorities in Latin America with no stake in the system. It is about to be put to the test of fire in the degenerate workers’ states.

In this situation the fundamental task for revolutionaries is to solve the crisis of proletarian leadership in order that the working class can benefit from the inevitable struggles ahead. The task is daunting but not without precedent. In the opening years of the First World War there appeared to be only a handful of internationalists on the planet as the Second International betrayed the working class.

Likewise Trotsky faced the triumph of Hitler and Stalin over a revolutionary proletarian movement millions upon millions strong, with only a tiny number of comrades by his side. It is part of the history and the nature of the revolutionary struggle against capitalism to see organisations, be they never so imposing, smashed and then rebuilt or replaced. Beginning again, but with the rich lessons of experience to guide us, is in the very nature of our already centuries long struggle against capitalism. We have to solve this crisis of leadership and we will do so.

But, of course, we will not do it alone, or in ignorance or defiance of the objective and subjective conditions which favour or retard it. 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. Those who clung to Stalinism, who developed illusions in it, will now either revile not only it but Marxism, Lenin and the October Revolution; or, inconsolable, they will sit and weep in the ashes and the ruins.

Tempered revolutionaries will scorn such an attitude. We recognise that the first few years of this new period have a negating, destructive, reactionary, even counter-revolutionary 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. All past gains must be defended to the end. But their loss, if it occurs, is not the end of our struggle. We recognise the laws at work undermining today’s victors even as they crush our past gains and past efforts underfoot.

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 the class struggle will abate. On the contrary, a world arena for titanic struggles in the new millennium is being created by these very events. The LRCI is dedicated to preparing the leadership and the cadres that can respond to these events and to resolve the epoch long crisis of leadership.