The Crisis is Terminal; the “Recovery” is an Illusion

The article which follows was submitted by our comrade Ant more than one month ago. We have published it in Revolutionary Perspectives 58 without attempting to edit it. Since then its essential argument holds. The UK economy has posted “growth” figures of 0.2% (it used to be stated that 2% was equal to stagnation). In the US the situation is no better as the “jobless recovery” fails to generate growth. The working class all over the planet is faced not just with a couple of years of belt tightening but with a decade of decline - unless of course it rediscovers its collective strength to fight back. We publish this as a contribution to debate.

September 2008’s financial crash may mark a turning point, a fairly abrupt signal that the “best of all possible worlds” (so the neo-liberals taught) may still prove to be, despite the fact that “there is no alternative” (again another pearl from the same camp), rather far from the utopia some may imagine such a phrase may encapsulate. But, ever since, the same sources, perhaps slightly toned down by an element of opportunistic Keynesian rhetoric and a hint of repentance over this or that excess, have been encouraging the faithful to believe that the blip is simply an aberration and normal service will be resumed shortly, no cause for alarm, things get rough, things get better, thus it is and always shall be, get on with life and do not adjust your blinkers.

However, this not quite rosy scenario bears little resemblance to what we, the working class, experience. No doubt the September 2008 turning point marks a qualitative change in our condition of life, but it is hardly the fact that we were strumming our harps in paradise anytime before that date.

The Premise

This article, possibly like all other articles we publish in this, the imperialist epoch, the epoch of wars and revolutions, the epoch of capitalist decay and parasitism, only serves to illustrate the validity of a perspective that is becoming ever more justified, that of the abolition of an obsolete mode of production and its replacement with one which is not subject to the conditions which inevitably cause the social devastation with which we are all too familiar. It does not seek to fundamentally change or destroy the revolutionary case; it simply serves to update its essence with the data that the present moment provides, data which confirms the validity of the original, unadulterated revolutionary perspective; the momentary, not eternal, nature of capitalism’s ability to provide a vehicle of progress for humanity, the inevitable pauperisation of the proletariat, the stark alternatives of revolution or common ruin, socialism or barbarism. But beyond the presentation of percentages, facts regarding unemployment, debt, the scientific and mathematical, the article serves as a reminder that the revolutionary movement is not vindicated by even the massive economic calamities and the ever more glaring social, economic, political, in short, total, crisis of this society, but is valid because capitalism throughout its historic arc has always been based on the systematic extortion of the working class. The simple existence of class is the aesthetic of our revolutionary perspective and the improvement or deterioration of the slave’s conditions does not change the essence of the absolute negation of humanity that slavery, in whatever guise, be it direct individual ownership of the person, or domination by a collective bourgeoisie, represents.

Yet, no doubt, the sophisticated arsenal which the ruling class has developed to maintain the working class in a state of ignorance regarding the cause of its suffering does depend on a certain level of material support for the exploited. It is this which allows the working class to subsist and takes the edge off its misery, thus preventing the all-out life or death struggle which is revolution. So, the momentary condition of the capitalist economy does impact most decisively on the forces of revolution, particularly on the generalisation of communist consciousness. As Engels stated:

The condition of the working-class is the real basis and point of departure of all social movements of the present because it is the highest and most unconcealed pinnacle of the social misery existing in our day (1).

Even if the reality is that capitalism, having provided a material basis for the construction of socialism, now and for over a century has nothing further to contribute of benefit to humanity, and is truly decadent in the sense of having played out its historic usefulness and standing as an obstacle to the classless future, the working class in general does not necessarily see this but is led down the garden path of “aspiration”, the American dream, gradual but endless improvement, reform and a brighter tomorrow. All of this requires a capitalism sufficiently dynamic to support it. And at this moment in time, an essential plank in the propaganda of the ruling class, the soothing opiate which reduces the worker to an atomised shadow, an anaemic powerless host to the capitalist parasites, is that the recovery is here, or just around the corner or some other such happy fairy tale which has to be sustained in the face of a reality which could hardly be more contradictory. The fact is that capitalism is in terminal crisis, and that the working class will have no option but to turn and fight. The “recovery” is a fiction and the ruling class bluff has to be exposed. Our task will not be to get workers to engage in struggle, it is hardly conceivable that they will simply allow the ruling class to degrade them to absolute pauperisation without a fight. Nor is this empty prediction, the massive struggles have already begun, At the time of writing, huge movements in Greece and Spain are sending shock waves through the capitalist edifice. The UK is seeing the stirrings of wide scale revolt as hundreds of thousands of workers simultaneously meet the same slammed door with their faces; unemployment, wage cuts, pension cuts. Our task is to present an alternative to the capitalist cul de sac.

An Historic Crisis

The 2008 financial crash did not arrive out of the ether. It was a direct result of the decades of capitalist crisis which came before it. And that was part of an even longer cycle. Capitalism’s Achilles’ heel, the cause of its crisis, is its inability to generate profit rates that enable the growth of capital. Due to its competitive nature, capitalism is constrained to follow the most productive path possible and in doing so it undermines its own foundation. Ever fewer workers are able to process ever more materials due to the drive to use the most productive techniques and machines, leading to automation, robots. However, as only the exploitation of living labour provides capitalism with an exploitable source of profit, this means that ever greater investment generates a relatively ever declining profit margin: hence the capitalist is forced to hike the rate of exploitation or go under. World wars are the ultimate expression of this competition, this attempt by the capitalists to maintain profitability by dominating the planet, access to raw materials, cheap labour and markets at the expense of vanquished rivals.

Two world wars served to put a pause to the crisis for a while, but the crisis always returns, paradoxically the fruit of the very dynamics, the efficiency that capitalism’s apologist cite as its justification. Once again, the inability to profitably produce led to the collapse of many capitalist concerns, the exodus of masses of capital to build a massive speculative bubble which burst in 2008, yes, but this was the culmination of a historic process and in no way an aberration. Thriving capitalism born in the English manufacturing revolution gave way to Crisis - World War 1 - Recovery - Crisis - World War 2 - Recovery - Crisis, this is the brief history of capitalism and the pattern will complete itself again if allowed - a third World War is not off the agenda.

Hence, the underlying cause of the financial crisis was and remains the incurable cancer of the real productive economy. The inner contradictions of capitalism, as described by Marx, denied over and over by the ruling class apologists with every temporary recovery based on the devastation of World War. In short, the tendency for profit rates to decline which the capitalists cannot prevent, which has no cure outside of the massive destruction of capital and population, which is choking the entire planet and placing a ring of fire around the two historic opponents, bourgeoisie, and proletariat who are constrained for their very survival to grasp each other by the throat and squeeze to the death.

What Recovery?

The recovery is a fiction. The truth is the terminal crisis of capitalism, unless one cares to speculate that there could be another round of accumulation after a third World War. The figures of the bourgeoisie illustrate this perfect storm, even if they can hardly be accepted as gospel. For example, the World Bank’s latest Global Economic Prospects report, (June 7 2011), predicts a slowdown of economic growth everywhere except sub-Saharan Africa for this year and the next. The bank predicts that the world economy will expand by only 3.2% this year, even less than the poor 3.8% for 2010. Such growth will not simply not cure the mass of unemployed, the youth without future, it will worsen it. Such growth (if it occurs) will see the working class worse off. This is illustrated especially by the case of the number 1 player in the imperialist arena- the USA. The US economy is expected to grow only 2.6 percent this year and continue to remain below 3 percent through 2013 at the very least. Consider that it requires a sustained growth rate of at least 3 percent to reduce the near-double-digit official US unemployment rate. Recovery? For the unemployed? For the workers? In the USA, the supposed recovery which began in June 2009 only served to accelerate the trend in workers’ falling share of national income which began in the 1980s. And it’s not only fat old Uncle Sam that cannot keep up with the new kids on the block. Worse still, the World Bank believes the growth rate of the developing countries such as China, India, Brazil, is set to go down to 6.3 percent through 2013, a full percentage point below the 2010 growth rate. These are the countries that have been able to provide a modicum of optimism in the capacity of the world economy to grow since the financial meltdown in the advanced countries. Countries where proletarian conditions are already shockingly bad and are now set to worsen as they are everywhere, from the metropoles to the periphery, the recovery is a fiction.

Despite the clutching at straws, the sigh of relief at a brief lull in the rise of official unemployment figures, little fluctuations here and there, the point has been reached where the dire predictions of the Marxist press are being echoed by the so-called mainstream. Commentators may argue that the present course is the road to doomsday as a pretext for unleashing a holocaust against the working class in an attempt to save the system. For example, Lawrence Summers, who until the latter part of 2010 was the director of Obama’s National Economic Council declares that between 2006 and 2011, US economic growth averaged less than 1 percent a year, similar to that of Japan “in the period its bubble burst.” (2) Equally pessimistic, in a Sunday interview on the NBC television program 'Meet the Press,' Treasury Secretary Timothy Geithner held little back on the current state of the US economy. In response to the question 'when do you think recovery is actually going to start feeling like recovery?' his reply was remarkably honest: Oh, I think it's going to take a long time still. This is a very tough economy. And I think for a lot of people it's going to feel very hard, harder than anything they've experienced in their lifetime now, for some time to come.

Or, for example Professor Nouriel Roubini of New York who labelled fiscal deficits in the US, a slowdown in China, European debt defaults and stagnation in Japan a “perfect storm”. At the time of writing, the “unthinkable” previously reserved for “extremists”, seems to be well within the range of the bourgeoisie’s perspective. Greece, having recently received 110 billion euros in return for austerity, is threatening to default, the cycle of bailout austerity and further economic crisis is multiplying, after Greece, Ireland and Portugal, notably Spain is on the brink of bailout, clinging on to the edge by plunging its citizens into misery.

The real danger is that Spain, which is already sneezing, could go down with a full-blown case of debt 'flu. Already it is battling with spiralling borrowing costs while its banks are burdened with mortgages linked to house prices plummeting daily in value.
Should we see Spain start to spiral lower, then it would make the falls of three years ago look like a picnic," says Jeremy Cook, chief economist at World First.

Berlin: FC0.BE News

But these scenarios of financial crisis and default dwarf in comparison to the effects of the USA defaulting. Precisely such an “unthinkable” scenario is being thought, very seriously.

Esta semana, el presidente de la Reserva Federal, el banco central estadounidense, Ben Bernanke, aseguró que la reputación crediticia del país está en peligro.

BBC Mundo

This week, the president of the US Federal Reserve declared that the credit reputation of the country is in danger.

The investor Stanley Druckenmiller, an old ally of the famous George Soros, recently told the Wall Street Journal that a suspension of payments “would not be catastrophic”. The subjective opinion of the author of this article thinks that the validity of that statement would rest on a definition of catastrophic, but in the future history of the demise of capitalism, it is difficult to say that such an event, the first in US history (3), would not be a significant milestone.

Poverty Indices

But, rather than risk the accusation of being fanciful crystal ball gazers, let us look at some concrete evidence regarding the current state of capitalism. Certainly we have touched upon the colossal debt of the USA where millions are being threatened with absolute destitution as unemployment benefits are removed in a situation where jobs simply do not exist, we have mentioned the declining growth of the so-called emerging or developing economies, the misery of Greece and Spain is all over the media at the moment, with figures of 40% youth unemployment and the like. Perhaps a snapshot of the UK situation may add an emotional aspect to the percentages and figures, worthy of Engels’ compilation of injuries in “The Condition of the Working Class in England”, one which should serve as a bullet to the head of this fantasy tale of recovery, green shoots and new dawns, in fact of the entire edifice of capitalism, given that our humanity has not yet been totally eroded:

A growing number of children in the UK are living in extreme poverty because of huge increases in the cost of energy, petrol and food, according to a leading charity.
Save the Children says the figure has risen to 1.6 million, with 290,000 in London.
The rising cost of living and a slow economic recovery has left thousands of families struggling to pay for even the basics.

Let us consider that fully one quarter of British primary school children are from the ethnic minorities, it would be an interesting question to untangle the threads of poverty and ethnicity, but there is little doubt that this specific group of children face the lion’s share of extreme child poverty. For example:

Within Black or Black British households,48 per cent of children are living in poverty. This rises to 63 per cent in Pakistani and Bangladeshi households compared with 27 per cent of White children.
Worklessness is one of the key drivers for higher poverty rates for some ethnic minority groups. The UK overall employment rate, 70.5 per cent of working age adults, falls to 59.7 per cent when looking at working age adults from minority ethnic groups.
Educational achievement is an important factor in poverty rates amongst ethnic minority groups. The achievement gap between white pupils and their Pakistani and African-Caribbean classmates has almost doubled since the late 1980s.
In work poverty rates are also higher - 54 per cent of Pakistani and Bangladeshi children in working households are in poverty in comparison to 12% of White children (4).

And while we are considering the phenomenon, let us take a brief look at a measure on a global scale;

Of the estimated 2.2 billion children worldwide, about a billion, or every second child, live in poverty. Of the 1.9 billion children in developing nations, 640 million are without adequate shelter; 400 million are without access to safe water; 270 million have no access to health services. In 2003, 10.6 million children died before reaching the age of five, which is equivalent to the total child population of France, Germany, Greece, and Italy. 1.4 million die each year from lack of access to safe drinking water and adequate sanitation while 2.2 million die each year due to lack of immunizations.

The Recovery is a Fiction

The recovery is a fiction. The crisis can only continue to devastate the lives of the exploited; it has no way out apart from the horror of generalised imperialist war or the revolutionary abolition of capitalism. In this sense it is terminal. How long it can drag on, leaving a wake of catastrophe, we cannot say, but we will state that any recovery will not be in the realm of proletarian conditions, far from it. The crisis is seared into the little minds and bodies of toddlers, another generation of youth without work, workers facing ever more exploitation, a war of attrition on every conceivable aspect of working class conditions that has started to reach a point where it is unbearable, bringing the masses onto the streets, the Marxist perspective playing out in its entirety;

The modern labourer, on the contrary, instead of rising with the process of industry, sinks deeper and deeper below the conditions of existence of his own class. He becomes a pauper, and pauperism develops more rapidly than population and wealth. And here it becomes evident, that the bourgeoisie is unfit any longer to be the ruling class in society, and to impose its conditions of existence upon society as an over-riding law. It is unfit to rule because it is incompetent to assure an existence to its slave within his slavery, because it cannot help letting him sink into such a state, that it has to feed him, instead of being fed by him. Society can no longer live under this bourgeoisie, in other words, its existence is no longer compatible with society.

Marx/Engels, Manifesto of the Communist Party, 1848

(1) Preface, The Condition of the Working Class in England, 1845. F. Engels.

(2) June 13 in both the Washington Post and the Financial Times




A lovely heart warming article. I love being told that there's no way-out for the bourgeoisie. But today I happen to be wearing my most pessimistic of hats and so couldn't help but be drawn to this: "Our task will not be to get workers to engage in struggle, it is hardly conceivable that they will simply allow the ruling class to degrade them to absolute pauperisation without a fight." But consider this. We may be reduced finally to a fight against total pauperization, and barbarism, but unless we have a strong communist party to point the way forward, we can still lose. The future is in our hands. We must not let it slip through our fingers.