Witnessing the end of capitalism.
Believe it or not but we are witnessing the end of capitalism as we know it. Brokers, who have swallowed the idea that after the collapse of Berlin Wall and the Soviet Union there is no alternative to capitalism are jumping off hotel balconies in Hong Kong. In Thailand, the government has put out a mental health alert. Suicide hotline switch boards are jammed in Korea. Currencies have become worthless and stock markets are reeling. These are casualties of the great illusion of our era - the utopian worship of the capitalist free markets and a belief in capitalism's short run rationality. Instead of accepting the fact that capitalism has reached the end of its voyage, the whole debate around the world has been limited to what can be achieved within its already set confines.
This is exactly what happened in the months before the crash that ushered in the Great Depression, the Financial Post declared that a survey of the leading brokers and investment bankers "failed to reveal any person who is pronouncedly pessimistic as to the future." When the crash came, the quite universal advice from the business community was to slash budgets and cut wages ? policies that guaranteed that the Depression would grow worse. While business likes to dress itself in the garb of the future as it puts forth the "only" solutions and direction possible, it sounds very much like it did back in the 1930s ? or even earlier.
The attempts of the capitalist elite in the West to shrug off the crisis in Asia verge on the comical. Now they try to belittle the previously exaggerated importance of Asia. To argue that a slump in Asia will have no effect on the world economy is to fly in the face of the facts. Marx explained long ago that these capitalists are capable of "solving" its crises, but only at the cost of preparing new and deeper ones in the future. The history of the past two decades is a graphic witness to the truth of this observation.
In an interview with the Spanish paper El Pais (1/12/97), Camdessus was asked whether the Asian model, "based on massive exports and the absorbing of foreign investments" which was supposed to be "a paradigm", was finished. His answer was a model of unconscious humour: "Economic models are not eternal. There are moments in which they are useful and other in which, as the world evolves, they become out of date and have to be abandoned. Unamuno [a Spanish philosopher] used to say that he used his ideas the same as his boots: he used them and then threw them away. We must do the same with economic models."
This amazingly frank reply, accurately reveals that capitalism and its free markets are a lot less useful to us than a good pair of boots. All that the so?called "economic paradigms" reflect is a desperate attempt to latch on to any real or imaginary success, to re?live the age?old dream of the capitalist class and its ideological representatives??that the boom?slump cycle has finished forever. The propensity for self?delusion is directly related to the dizzy heights reached by the stock?market, profitability, economic growth and other indices which are normally related to the peak of the economic cycle??just before a downturn. Thus, in the words of the proverb, "pride comes before a fall". And also, if it comes to that, "the bigger they come, the harder they fall!"
Camdessus, and the other representatives of the big Western powers to some extent appear to take a perverse pleasure in seeing the collapse of the "Asian model". They appear to believe that they can somehow evade the consequences and, in the process, teach those upstart Easterners a lesson in humility and show them who is the boss. The director of the IMF brags about forcing the closure of unprofitable "Chaebols" (South Korean industrial monopolies) and Indonesian banks. The arrogance, and at the same time, the blind approach of these gentlemen, is really breath?taking. Their "solutions" will inevitably deepen and extend the crisis beyond Asia. The idea that this will not have serious consequences for the rest of the world economy is sheer madness.
The medicine dished out by one of the main organs of capitalism, the IMF, is the same as ever. Loans are given on condition that the entire burden of the crisis is placed squarely on the shoulders of the masses in the form of "austerity." Growth must slow down, unemployment must grow, factories and banks must close, interest rates must rise, budgets must be balanced, living standards reduced. In exchange, the international loan?sharks dispense their largesse: by the end of 1997, the IMF had organised bailouts for Thailand, Indonesia and South Korea totalling more than $ 100 billion. When the crisis occurs, the same debt is the leverage to bring the rule breakers into the game. All these countries, like Russia's 200 million citizens, have become dutiful slaves to the brokers of power.
The development of capitalist tendencies since the World War-II has led to a rapid increase in inequality, between the ruling elite and the masses, and between towns and countryside. Social tensions have expressed themselves in a wave of strikes, demonstrations and protests. There is a huge number of unemployed, who have drifted from rural poverty to seek employment in the booming cities. There is brutal exploitation of factory workers in the private sector. Corruption abounds. Moreover, the imperialists are exerting remorseless pressure on the developing countries to privatise the state?owed industries, which leads to an explosion of unemployment and social unrest.
Istvan Meszaros suggests in his book "Beyond Capital: Towards a Theory of Transition" that today, having conquered the entire planet, capitalism may be at the end of its tether. Indeed, for a while now, capitalism has lost its "civilizing" function as a ruthless but efficient organizer of labour. His book describes the harmful effects of this artificial survival. Just to get on, the capitalist system relies more and more on waste, on "planned obsolescence," on arms production and the development of the military?industrial complex. At the same time, its uncontrollable drive to expand has by now had catastrophic consequences for natural resources and the environment.
According to Meszaros, none of this prevents the system from manufacturing "superfluous labour," that is to say, mass unemployment. And, as if to underline the gravity of its current crisis, capitalism for the past twenty years has been cancelling all those concessions that, under the generic name of welfare state, supposedly justified its existence. The book concludes time is ripe for forging a genuine socialist alternative. It claims the opportunity will neither certainly be seized nor quite rules out that humankind could be driven to suicide.
One speaks of the historical winning of capitalism versus communism. But, in this triumph of imperialism reveals it rottenness and unrepairable bankruptcy. In Eastern Europe, the Velvet Counter?revolution indicates already unemployment, misery, chauvinism, racism and fascism; as a result it provokes the collapse of the production and the domination of the foreign economical interests and it leads to chaos, destabilisation and civil war. Indeed, this is the beautiful triumph of capitalism and social?democracy.
Under capitalism, today, the life of all humanity is essentially determinated by some 40,000 multinationals that have 250,000 branches. The leading multinational, General Motors, for instance, has a yearly turnover of 170 billion dollars. In short, 358 billionaires of the imperialist world possess a cumulated fortune equivalent to the yearly income of 45% of the world's population.
In the Soviet Union and Eastern Europe, the multinationals and the local bourgeoisie have destroyed all the socialist structures in order to impose their dictatorship. In these countries, the gross interior product has fallen from 15,700 billion dollars in 1990 to 8,100 billion dollars in 1995: in fact, the reinstatement of savage capitalism yearly destroys 48% of the wealth produced under socialism. The Third World is crushed beneath the burden of debt amounting to 2,095 billion dollars in 1996. Truly a slave of imperialism, the Third World pays 233 billion dollars as service to this debt and receives in return 55 billion dollars of development aid, 25% of what is wrenched from the Third World through debt repayment alone.
Today, imperialism says to Kabila: "We will help you, but only if you pay Mobutu's debts." With a debt of 15 billion dollars, the Congo will have to pay between 500 million and one billion dollars; and the imperialists will give the Congo, at most, a 200 to 300 million dollars 'aid'. So who is helping who? Freedom for the multinationals means the end to independence and sovereignty for the Third World countries. To emerge from its most recent crisis, South Korea had to borrow more than 58 billion dollars, its total indebtedness now exceeds 200 billion dollars. The International Monetary Fund imposed its policy: many Korean companies will be gobbled up by German and American multinationals. According to a Korean politician, "the IMF has become the real Prime Minister in charge of the economy."
Since the reestablishment of capitalism in the Eastern countries, imperialism has privatised state owned firms in the Third World worth 124 billion dollars, 40 to 50% of which have fallen under control of the multinationals. Since1955, imperialism has imposed on all countries the rules of the new World Trade Organisation. As a result, in many countries, the banks and the telecommunication companies have fallen under the control of the multinationals. The international dictatorship of dominant capital expresses itself with great clarity through its plan to impose upon the world the Multilateral Agreement on Investment. This agreement was drafted secretly by the imperialist countries regrouped in the OECD and with the participation of major European and American employers' organisations as well as the International Chamber of commerce that brings together the world's largest multinationals.
Having negotiated and signed the agreement between themselves, they intend to impose it on other countries. The aim is to lift all restrictions concerning international investments. A multinational that feels that it has been wronged will be able to drag a government to court. The Americans want to force other countries to respect their rules prohibiting American firms as well as firms from other countries from doing business with Cuba, Libya and Iran. They want to legitimise their campaigns of economic warfare and terror against sovereign countries, which are often even more cruel than military warfare.
Last year, South?East Asia was still presented as the showcase of capitalist success. Then, like a bolt of lightning, a terrible crisis, set off by the thirst for immediate and maximum profit, completely upset the lives of hundreds of thousands of people. There will be seven to ten million jobless in this region. The Philippines?where more than ten million people survive thanks to the income of migrant workers will have to cope with a million repatriated labourers. In Indonesia, 7.5 million workers are already suffering from famine. Through devaluation, the income of an Indonesian worker has been slashed by 80%, the income of a South?Korean worker by 50%. The Prime Minister of Malaysia, a rich capitalist who has strong disagreements with the imperialist centres, has declared: "After decades of sweat, labour and tears, all the efforts of the South?East Asian countries have been wiped out in one night."
The imperialist powers intend to maintain this capitalist economic dictatorship of dominant capital all over the world through military dictatorship. NATO has been transformed into an aggressive military power covering practically the whole world. The aggression against Iraq was the first exercise and the continuing military occupation of the Balkans is the second. Twenty countries, from Lithuania to Egypt through Ukraine, have been drawn into the occupation of the Balkans. NATO declares today that it wants to obtain "a total engagement on a military level from the 26 partners for peace countries that must be prepared to act jointly during crises to come." The American general John Sheehan landed in Central Asia in September 1997 with 800 paracommandos. The assistant Secretary of State Strobe Talbot pleaded in favour of the creation of a "corridor for commerce and transportation under military supervision" to ease the export of oil (reserves: 200 billions of barrels) and minerals from Kazakhstan, Uzbekistan, Kirghistan etc.
The fact that the stock markets of the USA and Europe subsequently staged a rally (how long for is another question) does not alter the fact that the advent of "globalisation" which was presented by some as the final solution to the capitalist crisis now presents another very different face. It means that the conditions are being created for a slump of truly gigantic proportions in the next period on a world scale. The fact of globalisation, the high degree of interpenetration, means that one factor rapidly affects another. Cause becomes effect, and effect cause. The losses suffered by foreign banks in Asia now means that the cost of credit to that area will increase. The bankers are demanding a hefty surcharge to lend money there. And not only to Asia, but to Eastern Europe, Russia and "emerging markets" in general.
Here we have the "other face" of globalisation something predicted by Marx more than a hundred years ago. In its insatiable greed for profit, the capitalist class is constantly seeking new markets, outlets for investment and sources of raw materials. The creation of the world market is the inevitable result of the fact that the development of the productive forces has long since outgrown the narrow limits of private property and the nation state. Whoever does not grasp this fundamental fact will forever be incapable of understanding the most decisive phenomena which are taking place on a world scale. Participation on the world market is now a necessary condition for capitalist production.
Ten years ago, only the equivalent of 6 per cent of US GDP was devoted to exports. This has now been increased to 13 per cent??quite a staggering increase in only a decade??and the American bourgeoisie would like to increase this figure to 20 per cent by the end of the decade. By means of participation in world trade, the capitalist system could, for a time, alleviate its problems, developing new markets and (in part) combatting the tendency of the rate of profit to fall. Big profits can be obtained for a time by this means, and crises can be postponed or alleviated (the Asian market had the effect of softening the effects of the recession of 1990?92 and prevented it from turning into a 1930s?style depression). But this was achieved only at the cost of preparing even deeper crises on a far vaster scale in the near future.
The natural impulse of capitalism to push aside all barriers that stand in the way of extracting surplus value has been manifest in every period of capitalism from the blood?stained chapter of primitive accumulation, passing through the enslavement of the colonies to the school of "free trade" to the modern epoch of imperialism and monopoly capitalism.
The scene is therefore set for the most violent and cataclysmic crises of the world economy, which will put in the shade the crises of the past. This is turn will completely destroy the relative equilibrium which has characterised world trade, world relations and the relations between the classes since the end of world war two. We have entered into the unchartered waters of the most disturbed period in the history of capitalism. This is what fills the most intelligent representatives of the ruling class with deep foreboding.
Although it is true that, for temporary periods during an economic upswing when markets are plentiful, the big monopolies and capitalist states may reach a "gentleman's agreement", to share out the spoils, this immediately breaks down when (as at the present) there is ferocious competition for scarce markets. Thus, all such proposals remain pious wishes. The predominant economic "theory" asserts just the opposite: that the "market", left to itself, will sort everything out ?? sooner or later. This is merely the ideological expression of the age?old obsession with the capitalist elite with making easy, short?term profits, regardless of the consequences. Anything that interferes with this must be ruthlessly destroyed.
The untrammelled rule of Capital in the form of the big banks and monopolies has never been seen in such a clear almost laboratory form as at present. By making a bonfire of all controls and regulations, especially in the last decade, by mass privatisation and the looting of the state, vast and uncontrollable forces have been unleashed which at any time can bring the whole unstable edifice crashing down. All the warnings fall on deaf ears. There is nothing new in this. As old Hegel once remarked??the only lesson one can draw from history is this??that no?one has ever learnt anything from history. At any rate this is absolutely true of the capitalists, as the history of every crisis shows.
The most august mouthpiece of British capitalism, the Financial Times, finishes its editorial of the second of January 1998 with a sombre warning: "A cheerful tale can still be told for North America and the EU. Perhaps it is the most likely one. But uncertainties are now huge. This crisis can spread, not just to other emerging economies, but more deeply in Japan and it can break out in other advanced countries. The timing of such typhoons can never be predicted. But nobody looking at today's financial picture can be sure one will not strike, more centrally, in 1998."
The late Akio Morita, who was chairman of Sony Corporation, repeatedly warned in the 1980s of the mortal danger to the capitalist system of the trend away from productive industry towards services. In an article in the Director (February 1988), Morita compared the situation of world capitalism to playing poker on a sinking ship, and concluded: "It is a heady game, full of excitement, but wins and losses at the poker table don't obscure the frightening fact that the ship is sinking and no one realises it." Since Morita wrote these lines, the situation has got worse. The gigantic world market in "derivatives" has now reached the staggering total of US$ 25 trillion and is completely out of control. This amounts to gambling on a colossal scale. It makes the South Sea Bubble look like a mere trifle. This shows the fundamental unsoundness of world capitalism, which could end up in a new 1929?style financial crash.
The main reason for the grinding poverty of the third world is the two?fold looting of the resources through the terms of trade, and the trillion dollars debt owed by the third world to the big western banks. Just to pay the interest on the debt, these countries have to export food needed by their own people and sacrifice the health and education of the people. According to UNICEF, debt repayments have caused incomes in the third world to fall by a quarter, health expenditure by 50% and educational expenditure by 25%. Despite the hypocritical outcry against the destruction of the Amazonian rainforest, Brazilian economists have proved that this is mainly motivated by the need to raised cash for agricultural exports, such as beef, raised on reclaimed land. The financing for such export projects comes from the World Bank and other international financial organisations.
Rober J. Samuelson argues in the Newsweek (Sept. 10, 1998): "spreading capitalism is not simply an exercise in economic engineering. It is an assault on other nations' culture and politics that almost guarantees a collision. Even when countries adopt some trappings of capitalism, they may not embrace the basic values that make the system work. This is what happened ....[and] the global capitalism became a dangerous hybrid." John Gary in his book "False Dawn" also predict that the globalist project eventually will fracture and fail, but in doing so will promote international anarchy. The ultimate effects of "the emancipation of market forces from social and political control" he says, will ensure "that the age of globalisation will be remembered as another turn in the history of servitude."
In a very literal sense of the word, humanity stands at the crossroads. On the one hand, all the potential exists to build a paradise in this world. On the other, the elements of barbarism threaten to engulf the entire planet. As the 20th century draws to a close, there is a palpable and all?pervasive feeling of weariness and exhaustion in capitalist society. It is as if a whole way of life has become old and decrepit. This is not just what writers refer to as the mal du siecles. It is a vague realisation that the "market economy" has reached its limits. Yet, though a given form of society has outlived itself, this does not mean that the development of humankind is similarly limited.
The solution to the pressing problems of the world can only be found in a socioeconomic system which is under the conscious control of people. The problem is not that there is an inherent limit to development. The problem is an out?dated and anarchic system of production which squanders lives and resources, destroys the environment, and prevents the potential of science and technology being developed to the full. What must be abolished is not only classical capitalist society but the reign of capital as such. Indeed, the Soviet example proves it is not enough to "expropriate the expropriators" if you do not uproot the domination of labour on which the rule of capital rests. An alternative exists, or more precisely, can be forged, provided it is radical and fundamental. Our financial managers, however, should take some time to ponder and plan for the bad days to come in the not too distant future.
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