Economic Crisis, War and Revolution

Despite all the optimistic noises emanating from capitalist politicians their economic system is in deep trouble. What is more, the options open to them are as limited as they have been since the Wall St Crash. In Marxist economic terms the problem is that the organic composition of capital is too high to make investment profitable.[1] Banks are not and cannot lend anyway. They are too busy gobbling up the money the government prints to get them out of the debt hole they are in ever since they discovered “toxic assets”. Even so there is no shortage of money around. The problem is finding somewhere to invest it profitably. Apparently the investment management firms, like Pimco etc, have between them $79.3 trillion in cash. This dwarfs the global public debt of all the world’s governments (currently standing at about $54 trillion, but ever rising as we write). The great bulk of this sovereign debt has been acquired to save the financial sector which indulged in such reckless speculation in the decade and a half before the bubble burst in 2007. Now the working class all over the world face government attempts to bring down the public debt via austerity. But this has so far been in vain. Global debt continues to rise and the world economy is largely stagnant. Debt in the past could be taken on because future growth would make the money that would repay it. This is not happening. Our financial asset managers are sitting on piles of cash which they cannot get much return on. Since 2007 they have speculated in currencies, in primary products (especially agriculture) and in so-called developing economies but real rates of return are meagre. The main reason why the stock markets are doing well is because they are funding company mergers. Such mergers inevitably mean taking on more debt and sacking people to raise the bottom line. The result is a global economy in stagnation. Commenting on this low rate of return in invested capital last year James Mackintosh even seemed to see some virtue in the Marxist analysis

Most investors … would probably be happy to dismiss the idea of a world war or communist revolution destroying their investments in coming decades, so a global historical average may be far lower than they would be ready to assume.

Financial Times March 14 2013

And indeed this is what capitalism has come down to. The organic composition of capital is too high for any significant measure to raise the rate of profit and get the system going again. What is needed is a massive devaluation on a scale not seen since the Second World War. Basically we have been 40 years in a period of relative stagnation at the end of this cycle of accumulation and the capitalist class has used all its tools to try to revive accumulation without resorting to all out imperialist war or provoking working class revolution. But today the situation is different. The speculative bubble was the last card they had to play. Its bursting in 2007 has set world history off on a different course.

Its precise outcome is, of course an open question. The historic alternative of war and revolution may be the only one possible, but we are not on the cusp of either currently, so our investors can relax and take their 1% for some time yet. However the increasing international tensions from the borders of the EU to the South China Sea via the turmoil of the Middle East are all indications that imperialist imperatives never go away. The dangers of a situation where the power which dominated the world for a century is now experiencing threats to that dominance from several quarters, but above all China is a recipe for more tension. At the end of the Second World War a victorious US government laid down the marker for the “American century” which was that US GDP should equal some 45% of global purchasing power. According to the Financial Times (17.7.14) that figure has now fallen to 19.2%. And when a rising power feels it is being thwarted by the former great powers the scope for negotiation narrows. Already the US has responded to the more aggressive policy of Beijing in the South China Sea with its “Asian pivot” which seeks to reinforce its Asian allies (especially Japan and the Philippines). The consequence of this has been to spark off an arms race in the region.[2] The lesson of history in the period leading up to the First World War was that arms races only end in war and those wars are often started by big powers supporting their little power allies when the stakes are high enough. We are not there yet but we should recall that Engels predicted in 1887 that the next war would be of an entirely and global different character 27 years before it actually broke out. We may stand in a similar relation to the next one.

Of course the other half of the alternative is working class revolution. This seems at first sight to be even further off. After decades of restructuring and the fragmentation of the old working class organisations of every description in the traditional capitalist states, a great deal of our historic memory as a class has been lost. However today there are 3.2 billion workers around the world and we can see from China to South Africa that they are not a mere sociological category. They are fighting against the drive to exploit them more and more which is the very essence of how capitalism has always treated its wage slaves. It is also the reason that the class struggle never goes away.[3]

Whilst some weep over the demise of the old mass labour movement of social democracy (in all its forms) we have no such regrets. As the article in this issue on the First World War and Social Democracy shows this movement was riddled with opportunism, racism and imperialism. Despite the shock of its support for imperialist war in 1914 the signs were there long before that historic moment. It is a lesson we have to take on board. Today in the older capitalist countries too we are seeing the creation of a class of young educated workers who cannot be integrated into the system other than via part-time precarious zero-hour work. It can only be a matter of time before this helps to create a wider anti-capitalist movement than currently exists. At present serious economists recognise that austerity will have to last 15 years. 15 years of declining living standards, even when cleverly managed as it is now, cannot but find an echo. The key will be if they understand the lessons of working class history, of our failures and our moments of success. Our greatest success has been the discovery of workers’ councils as the organisational tool which not only allows each and all to participate actively in the decision-making process in society but will also ultimately lead to the abolition of the state itself and the institution of a really communist society. However this will not come about overnight as we argue in our document on the period of transition. The post-bubble crisis has led once again to interest in what comes after capitalism and some are now denying that we need a period of transition at all. In this issue we also look at three theories arguing that there is no need for any transitional measures. And finally we should be aware that any simultaneous move to generalised warfare is only the final attack of the capitalists on our very existence. To the nationalist agenda which is being whipped up everywhere our task and duty is to oppose it with our own agenda; class war to create an entirely different world order. For us this means contributing to the construction of a global political organisation, not as a government in waiting (as Onorato Damen always argued) but as a rallying point for real anti-capitalists, one capable of taking the ideological fight to the system and against all its supporters.

Editorial Revolutionary Perspectives 04


[1] For the theoretical stuff behind this see many of our previous issues. In particular “The Tendency for the Rate of Profit to Fall, the Crisis and its Detractors” in Revolutionary Perspectives 62 Series 3 (Summer 2012)

[2] See “Imperialist Rivalry in the Pacific” in Revolutionary Perspectives 01 (Winter-Spring 2013)

[3] See “Recovery: Whose Recovery?” in Revolutionary Perspectives 03 (Winter 2014)

Wednesday, September 24, 2014


An excellent editorial this; clearly stated and easy to follow. And strangely encouraging too in an anything but encouraging world. The key for the new, younger, better educated proletariat is "understanding the lessons of history." Let's hope they do. Let's hope they will. Any future that may still be possible has to be ours alone to win. The bourgeoisie are a dying class.

The article begins

Despite all the optimistic noises emanating from capitalist politicians their economic system is in deep trouble...I think we should be cautious about "the new, younger, better educated proletariat", I am not particularly convinced that any of the claims of educational impriovement are true. More like ''optimistic noises''.

In the UK half of kids do not attain a grade C GCSE English or maths. Further education has soaked up a lot of youth unemployment but a lot of students are themselves questioning the quality of the higher educational experience. Too many young people are starting life in situations of deprivation deeper than their parents experienced. Surely this has an impact on educational attainment.

Cleish, I am going to translate the original into Spanish for this site.

Of course, stevein 7, it all depends what is meant by "better educated proletariat". Does it necessarily mean better educated in terms of the bourgeoisie's training and conditioning system, or something else? That people question the quality of the higher educational experience - apart from its cost - is probably a good thing in itself, and could be a sign of an educational maturity not usually encouraged by your actual bourgeois system. But this might be difficult to prove.

Austerity is painful, and deprivation nasty: but both could provide massive educational insights into the nature of capitalism, and initiate criticism with regard to its continuation. I don't say they do, but think they might. After all, the birth of communism was at a time when official state education and schooling barely existed at all. Yet the working class was still capable of action in 1848, and of bringing the communist league and the Communist Manifesto into existence, just by being alive, and cruelly exploited as a class, and with a tendency to revolt.

The purpose of the bourgeoisie's so-called education system, is to condition people into accepting the capitalist system and the rule of the bourgeoisie without question. You could say, for the sake of argument, that this is what happened to the generations educated during the wonderful, prosperous and happy times for workers during the reconstruction period now definitively over, when full employment, "free" education and "free" health care were available to all. This didn't do much for the revolution though, did it?

If the prospect of only a nebulous miscellaneous conglomeration of workers councils is all that, so far, is on offer to run a revolutionary post-capitalist economy, then it seems to me that a workers' government in waiting would, or, at any rate, should, give workers a much better idea of what positive definite outcomes can be expected and worked for. To even just begin to construct something, you need plans for success, which of course will need to be developed in the light of necessities and experience. Let's be clear as to whether we are advocating a planned or an unplanned communist economy.

I think that the workers councils will not be a simple conglomeration of autonomous regional groups, but I think that is a conception some have. In my perspective the councils will exist at various levels and will produce a centralised organ which is effectively the ''government'' of the entire socialist area. Therefore to speak in terms of workers councils vs workers government is not correct. The proletarian dictatorship is the rule of the councils. In one sense the councils are the vehicle for the influence of the party over the class but that has to be carefully considered. Without revolutionary input from the party the councils are not revolutionary and will not be a vehicle for proletarian revolution.

The final sentence of stevein7's comment of 2014-10-14 15:14 declares that (quote) "Without revolutionary input from the party the councils are not revolutionary and will not be a vehicle for proletarian revolution". Does that imply that workers councils will not be revolutionary without 'a party' in a revolutionary situation ? Obviously there can be a question as to which party would be concerned. Also, if the social economic situation has reached a revolutionary stage, does the comment imply some necessity of voluntarism to advance workers' anger from only consisting of widespread rioting ? In any case, there is likely to be more than one party claiming a leading role which is the situation already.

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