Another world war? (2026)

Book Review from the April 2026 issue of the Socialist Standard

The Economic Foundations of Capitalism’s Rise and Decline. Communist Workers Organisation. 2026.

‘For global capitalism the devastation of world-wide imperialist war is the solution to its ineluctable profitability crisis’. This — that a third world war is needed for capitalism to continue — is the position that this 100-page book seeks to defend.

The argument starts from the view that under capitalism there is a tendency for the rate of profit to fall as capital accumulation proceeds, due to an increasing proportion of capital being invested in plant, machinery and materials rather than in employing workers (whose labour is the only source of profits). This was something noted by Marx but he also noted other tendencies, arising too from capital accumulation but conversely tending to raise the rate of profit, such as plant, machinery and materials becoming cheaper and increasing surplus value per worker. So, what happens over any given period — which tendencies prevail and so whether the rate of profit does actually fall — is unpredictable. There are also other factors that reduce profitability, such as overproduction in an important industry having a knock-on effect on the rest of the economy resulting in a general slump in production.

The book hopelessly mixes up all the various tendencies, elevating a theoretical slow long-term tendency for the rate of profit to fall into ‘the drive towards the collapse of the capitalist system’. The authors also see this as, in the shorter term, the cause of slumps but to do that there would have to have been a fantastically rapid increase in mechanisation and productivity. They are correct, though, that an important way out of a slump is the restoration of the rate of profit due to devaluation of the capital invested in the plant and machinery.

According to the CWO, a new factor entered into the equation at the beginning of the 20th century: capitalism, after coming to dominate the whole world and creating the basis for a world socialist society, passed its peak and entered into a period of decline which they call ‘decadence’. In this period, the boom/slump cycle continues but:

‘Capitalist competition is no longer a purely economic battle between firms but imperialist rivalry between “great powers”; where, in short, the massive devaluation of capital required to assuage the crisis of low profitability and achieve a new round of accumulation is obtained by the destruction of capital values via war’.

‘The history of capitalism since the start of the twentieth century’ we are told, ‘has been this cycle of crisis-war-reconstruction’. That the First World War was caused by imperialist states being driven to war as the only way out of a fall in the rate of profit doesn’t hold. Conflict between the ‘great powers’ over sources of raw materials, markets and investment outlets makes more sense. Replacing the destruction caused during the Second World War will have been one explanation for the resumption of capital accumulation in the postwar period but by no means the only one and would have been completed within a decade or so. Another, more significant factor will have been the expansion of the world market as more and more parts of the world were industrialised.

Whether or not the rate of profit has fallen since the 1970s is a moot point since it is not easy to calculate. On some assumptions it has; on others it hasn’t. In any event, a hard-to-calculate and unknown average rate of profit will not have been a factor influencing decisions to invest by those in charge of capitalist enterprises; shorter-term and particular sectoral considerations will have been the deciding factors.

The question also arises as to why the long gap between the end of reconstruction and the outbreak of the Third World War. The authors provide an economic history of the period since the 1970s but don’t answer this question. They describe well enough the extent of the non-productive, financial sector that has grown on the basis of the real, productive sector of the capitalist world economy, but can’t explain away the real capital accumulation that has taken place.

When they write that, if socialism is not established, ‘capitalism could continue on its demented course for centuries’, it is not clear what they mean. Is it that capitalism could continue after a nuclear world war or that capitalism might not lead to one for centuries?

In short, the CWO have not proved their claim that present-day capitalism must, for capital accumulation to continue, lead to a Third World War (they are suggesting it’s going to be between China and the US). As long as capitalism continues, there will be wars but there is no compelling reason why there should be another world war, this time between states armed with nuclear weapons. It is not entirely impossible of course, but it wouldn’t be to restore the rate of profit.

Adam Buick

Polycrisis (2025)

Book Review from the February 2025 issue of the Socialist Standard

The Insecurity Trap. A Short Guide to Transformation. By Paul Rogers, with Judith Large. Hawthorn Press, 2024. 92pp.

The main author of this book, Paul Rogers, Professor Emeritus of Peace Studies, sees the world as being in a ‘polycrisis’, whose principal features are wars, right-wing populism, poverty and environmental breakdown. He refers to it as an ‘insecurity trap’, in that the disruption caused by these factors makes everyone’s life prone to uncertainty and instability. Viewing the factors in question as planetary and often interdependent, his declared purpose is to suggest ways in which we can set about ‘navigating’ them on that same planetary level. In her Foreword, the book’s co-author sees humanity as having the technology and productive capacity to achieve world-wide security for all as long as these are not perverted in the service of, for example, fomenting hatred between peoples or producing increasingly sophisticated weapons of war.

One of the major obstacles to this, according to this book, is the free market, or ‘neoliberalism’ as it is referred to, which it sees as beginning seriously in the 1980s, in the era of Thatcher and Reagan, and having intensified since (though it is also recognised as a way of running capitalism that dates back to the 19th century). It is a way of organising things, the authors tell us, that focuses on ‘the prioritisation of private enterprise in place of state ownership’. It also, they go on, eschews ‘cooperative intergovernmental action’ and turns its back on the environmental and military drivers of migration, pushing ‘the richer states to close the castle gates and concentrate even more than at present on looking after themselves’. This in turn makes them ‘terribly ill-suited to responding to global challenges’, such as pandemics and climate breakdown and much more suited to encouraging the arms industry to supply weapons for use in the wars easily prone to breaking out. ‘Now thrive the armourers’, as they put it.

So, what is the solution Professor Rogers and his co-author have to offer to these ongoing and interlocking problems which affect the whole of humanity? First and foremost, they see ‘the need for cooperation at every level from neighbourhoods right through to intergovernmental level’, especially in view of increasing climate breakdown which ‘an economic model rooted in competition cannot cope with’. In support of this they provide a long list of ‘small steps’ people could take to ‘cooperate’ with one another on a daily basis (eg, use of cloth or paper bags rather than plastic ones, conserving water, using chemical-free products, car sharing, volunteering to help in food banks). They also suggest involvement in support of production of local food, sustainable energy, ‘ethical’ banking and campaigns such as against the arms trade and against fossil fuels, and in favour of, for example, Amnesty International. They advocate all of this, and much more – and this is where the problems arise – within the framework of the existing system of buying and selling and dependence on money and the market. In addition, they want to skew the system as it currently exists by having a much larger degree of state ownership of industry and services, arguing that, if governments have more control, they can control ‘market fundamentalism’, introduce more regulation and reform that will make things less unequal, and can also, for example, tax the wealthy, bring in carbon reduction programmes, invest in electrification, and adopt ‘green’ policies generally.

But what all of this fails to reckon with is that, with all such change – if it were possible – we would still be left with capitalism with its market and its money system. Nor would anything of what is proposed change the profit imperative that drives it. At best it would amount to a tinkering at the edges of that system and would certainly not have the effect of mending the inequality that characterises it. Above all, it would do nothing to create the more ‘sharing’ system the authors wish for, nor to remove the ‘insecurity trap’ which the authors’ well-meaning aim is to do away with. Above all, whatever individuals or individual governments may do to attempt to ease the burden on the most deprived, what cannot happen in a world of competing national economic interests is the ‘intergovernmental cooperation’ that this book advocates for. That is an illusion, because all governments are an expression of the interests of the owners or controllers of wealth in their country – whether that wealth is state managed or privately owned – and will only cooperate with other governments to the extent that those interests are not unduly affected. They cannot act against the profit motive and they do not possess the power to regulate the profit system as they wish. That is the bleak truth of the world we live in and the kind of ‘small steps’ advocated by these authors are destined to remain just that and not to lead to any larger change or a different kind of society.

It is in fact a failure of the imagination not to look beyond ‘small steps’ and to a completely different kind of world (a moneyless, stateless, leaderless one with free access for all to all goods and services) – one which is eminently realisable once majority consciousness of the need for it spreads and leads to democratic political action to bring it about. It will be a society of planned cooperation which takes advantage of existing technologies in a sustainable way and in which everyone can develop their interests and abilities with full social support and live without the ever-present threat of the pervasive material insecurity the authors of this book rightly perceive and are so keen to see removed.

Howard Moss

The Politicians and the crisis: Part 2 (1977)

From the September 1977 issue of the Socialist Standard

Link to Part 1.

These are the times when unthinking workers look for scapegoats, as they did in Germany in the latter period of the Weimar Republic. There the once proud and powerful Social Democratic Party (SPD) were in government; they unwittingly paved the way for the Nazis. Hence, the concern of the political leaders of Western Europe, North America and Japan. They reason as follows.

The slump of the early ’thirties undermined the established regimes in places like Germany and Japan and many other less powerful countries too. Imitative fascist-type parties sprang up all over Europe (some holding power), gaining support from disenchanted workers. In the case of Germany the Nazis gained power through the ballot box in 1933. In Japan the militarists managed to mobilize popular support against the existing Liberal administration because of the economic situation—unemployment and deflation—not, as now, inflation. The new regime began reflation in 1932 and before the bottom of the world slump had been reached Japanese industry began to recover being propelled along by an aggressive drive in export markets.

This was bad news for capitalist interests whose markets were being successfully penetrated by Japan, e.g. the colonial possessions of the Western industrial states were taking an increasing volume of textiles. This was one of the reasons for “protectionism” of the 1930s, which the governments now wish to avoid. This encouraged Japanese capitalism, with militarists firmly in the saddle, to possess colonies of their own. In 1937 they attacked China, having as early as 1932 driven the Chinese out of Manchuria without any formal declaration of war.

War economy

Germany from 1933 onwards pursued a twin policy of re-armament and so-called "economic self-sufficiency”. Unemployment decreased (although it was still above 1 million in 1936) and the armaments industry and its adjuncts, like the new autobahns and airfields, increased. Many workers were employed on the work connected with numerous Nazi rallies; the 1936 Nuremberg Rally alone cost £2,000,000 to stage. To limit imports, license schemes were introduced and synthetic materials developed, partly to deal with Germany’s balance of trade problem and also geared to their “war economy”.

Germany entered into trade arrangements with countries in South-East Europe and Latin America. These countries agreed to take more exports from Germany in exchange for imports from them, but their volume was only 69 per cent. above 1929; whereas Britain’s exports were then 83 per cent. above that year. Britain had achieved this advantage by bi-lateral arrangements with various countries. The Commonwealth and Empire countries increased their import preferences for each others’ goods and as mentioned above placed restrictive quotas on textiles from Japan.

In spite of all this, unemployment in Britain was still over 1.3 million in 1937. In the June 1939 issue of the Socialist Standard was the following:

When Hitler for the German capitalists says that Germany must expand or explode, find markets or perish, he meets his opposite in Mr. Hudson. British Secretary for Overseas Trade who said in Warsaw on March 21st [1939] that “we are not going to give up any markets to anyone . . . Great Britain is strong enough to fight for markets abroad. Britain is now definitely going to take a greater interest in Eastern Europe”. (From News Chronicle, March 22, 1939). Fighting that at present takes the form of words, trade agreements, loans, guarantees against aggression etc. may. as in 1914 turn into an armed conflict, and that armed conflict will be yet another war produced by capitalist rivalries.

This area of Eastern Europe was Germany’s existing and expanding sphere of influence, for recovering territory lost in the previous imperial conflict—the Sudetenland from Czechoslovakia, Danzig and the Polish Corridor, and Memeland from Lithuania. Germany also had eyes on the Rumanian oilfields (hence the British guarantee to that country in spite of the fascist regime there), and the wheat-growing areas of the Ukraine, in Russia and Poland.

These brief references are to the seeds which helped produce the second world war, and the politicians at the recent London summit conference said so quite openly. By any sense of logic working-class ears should be pricking up at these statements, questions should be asked and conclusions drawn. The Socialist Party does its best to help draw these conclusions and to develop a Socialist awareness.

It was noteworthy that Mr. Fukuda was particularly alive to the dangers of the present slump. He was a young diplomat in London in 1933 at the time of the World Economic Conference which broke up solving nothing, to be followed by “beggar thy neighbour” policies which were already under way prior to the conference. One of the major factors preventing even formal agreement was America’s refusal to stabilize the dollar; Roosevelt having taken them off the Gold Standard with a view to raising US commodity prices as an inducement for investment by the industrialists. This caused the US dollar to fluctuate wildly in the foreign exchanges. The delegates from the other countries at the conference wanted America to stabilize back on the Gold Standard: this Roosevelt refused to do, being pre-occupied with the domestic effects of the Depression.

Crisis capitalism

This was and is crisis capitalism. Predicament—the conflict between national economic interests and the stability of the international trading and monetary systems. This was recognized well enough in 1933. 

The journal The Round Table declared, some months before the Conference at the time of the Imperial Economic Conference at Ottawa, that "within a few months, conclusions must be reached in the financial and economic field, the effect of which will probably be decisive for or against the happiness of at least one generation of human beings all over the world.”

In September 1933, two months after the conference broke up, the same journal commented: ‘‘The great international conferences have come to little. The pulse of the Disarmament Conference is beating feebly (which began in June 1932) . . . The World Economic Conference has failed to reduce the obstructions to international trade, or even to make a tentative approach to agreement upon a solution of the world’s monetary problems”.

In the Daily Telegraph of May 9th, 1977, the day after this year’s conference, in an Economic Commentary article ‘‘Best view of the summit in few months” the author, Rodney Lord, stated: ‘‘It is idle to expect any great progress on persuading countries to regulate their economies for the general benefit of international stability. Politicians look first to the interests of the people who elected them.” The latter part of that quotation cannot go unchallenged of course—but we know what he means.

Politicians are the custodians of nation-states in a competitive world—that is, custodians for the capitalist class of their particular countries. At the same time they depend on the working class to go along with the arrangement, and have to try to placate them when it is necessary.

Conflicts of ‘national interest’

This conflict of national interest and international stability, with its inherent dangers, was demonstrated in Tokyo only four days after the end of the Economic Summit.

There were reports of a fire in an oilfield in Saudi Arabia which supplies over 30 per cent. of Japan’s crude oil imports. Prices fell on the Tokyo stock market and the Ministry of International Trade and Industry assured the Press that the fire would probably not have a serious effect on Japan’s supplies in the long run.

At the same time Mr. Fukuda, the Prime Minister, told a meeting of business leaders that the government is to press the case for Japan to reprocess spent nuclear fuel. He said that at London he had the ‘‘strong impression” that it will be difficult to get America’s approval because of President Carter’s “deep-rooted opposition”. However, Mr. Fukuda assured the businessmen that he was “most determined” to negotiate the issue with the US independently of other countries. The Japanese, apparently, have been shocked by the American President’s nuclear energy policy (from a report in the Daily Telegraph, May 13th).

An indication of Japan’s problems—even though being currently the world’s most successful economy— is the news that from the end of 1971 to the end of 1976, 30,000 shipyard workers lost their jobs. It is estimated that another 25,000 will go before the end of 1978, which is nearly the total workforce in British yards. (From the AUEW journal for May 1977.)

On May 9th the Daily Telegraph reported that British TV manufacturers were protesting to the Government that Japanese TV manufacturers were “bent on destroying” the British industry. This was in response to the plans of the Hitachi Company to build a factory at Tyne and Wear.

Commercial ‘aggrandisement’

The British businessmen said that there was already over-capacity in the industry. 1,751,000 sets were made in 1976 as against 3,000,000 in 1973, and Hitachi’s arrival would increase to 400,000 the number of Japanese colour sets made in Britain. Two other Japanese companies are already established here. Many more jobs would be lost—up to 6,000—than would be created, it was claimed. Hitachi had already a 20 per cent. interest in a Finnish company which is expected to export to Britain for assembly a substantial part of 800,000 total output of colour tubes. It is part of a policy of “commercial aggrandisement” in Europe, say the British capitalists.

No wonder Mr. Fukuda and the other statesmen are worried.

Frank Simkins

To be concluded

Politics and You (1977)

From the July 1977 issue of the Socialist Standard

No doubt many of you are increasingly indifferent to politics and hold most politicians in contempt. This is understandable — the politicians make promises which they do not keep, and so more and more of the electorate adopt a cynical attitude to it all.

The Socialist Party of Great Britain do not blame the politicians for failing to “deliver the goods”; in fact our case is that they cannot. Surely if they could, they would, because this would be a certain recipe for retaining political power.

What we in the Socialist Party say, in other words, is that present-day society we live in cannot be shaped or directed at will. Merely because a politician pledges to reduce inflation, cure unemployment or solve the housing problem does not mean that this can be done. Most of you are becoming aware that far from governments controlling events, the reverse is true.

All right then! This calls for a basic examination of present-day society — which most people accept, and bemoan the inevitable consequences.

It calls for a recognition that in a world of competition turmoil is inevitable, stability impossible. In the existing economic system, which operates throughout the modern world regardless of political labels, goods and services are produced for a market, sale with profit being the only motive for production.

A rational and human attitude to resources, technology and the needs of mankind cannot be brought about within a society of money-dominated production and conflicting nation-states.

We all know that the British economy is facing the twin problems of inflation and slump. These problems are facing other industrial countries. The great argument and competition among them (USA, Germany, Japan, France, Italy, Britain and the emerging industrial countries, not to mention the Soviet Union etc.) is who are to be top rats in one gigantic rat-race.

In every country the workers are being told that they must work harder to make the national economy more competitive than its rivals.

The exhortations to work harder (to those in employment) are particularly prevalent in this country. Such is the nature of the capitalist system that the problems facing the successful economies like Japan are just as pressing. Their very growth of productive capacity means that they require a large slice of the world market (at the expense of the other industrial countries). Yet we are told that the only solution to British problems is “growth”.

The following figures demonstrate the irrational world of capitalist competition in (for instance) shipbuilding.

Japan cutting shipyard labour force by 25,000, France 6,000. West Germany 4,000, Sweden is cutting by 30 per cent, Holland’s shipbuilding is only at 10 per cent of full capacity. Australia is closing 3 of its 5 shipyards.

(Daily Telegraph, 8th December 1976)

It is interesting to note that these various countries have different political parties in power operating supposedly different economic policies (Australia replaced their Labour government last year with a Conservative one, likewise Sweden): but with the same result.

Going back to October 28th 1976, the Daily Telegraph (City page) had the following statement on shipbuilding:

The oil crisis has been merely the catalyst for the shipbuilding crisis, which has been looming since 1969-70. Any expansion beyond that date has been irresponsible.

It was forecast that shipbuilding world orders may drop to 13 million tons whilst the production capacity being worked now was 33 million tons. With the increasing development of shipbuilding in countries like South Korea, Taiwan and Brazil capacity could be raised to 53 million tons.

Against this background of so-called “overproduction” and the subsequent frenzy to survive, are the millions even in the advanced countries who live sub-standard lives and the teeming millions in the “Third World” who live in the direst poverty.

In this country the slump has hit the building industry. Side by side with homelessness and slum living are unemployed building workers. Likewise large classes in schools with poor facilities and unemployed teachers.

Then there is the obscenity of food surpluses in one part of the world and starvation in another part. Even in those countries where the mountains of food are stored there are many ill-fed people: look at the world’s richest country, the USA .

The Socialist Party of Great Britain does not seek votes in a futile attempt to administer the existing system. The problems facing mankind can only be solved on a global scale upon the basis of worldwide common ownership and production for use. This means the ending of the whole paraphernalia of wages, profits, taxes and money. The end of state coercion, of leaders and led (the blind leading the blind).

It requires the urgent marshalling of resources to meet human needs. The introduction of free access: “from each according to his (her) ability, to each according to his (her) needs”. A change of this magnitude can be brought about politically, through the ballot box and using Parliament to lay the foundation stone of Socialist society. At the same time breaking down centralized government and replacing it with real democracy. This form of decision-making can only be decided by the majority of the population.

The various Socialist administrations in the different countries would then have to co-ordinate their activities so as to have a world approach to world needs. No doubt many of the existing forms like the United Nations Food and Agriculture Organisation could be adapted to this end.

Too tall an order, too vast a dream, too naive a hope? We think not. There is no other way to safeguard mankind’s future survival. You know the problems are real enough. There never has been a period in man’s history where the survival of our species has been so thoroughly discussed and society’s contradictions so thoroughly exposed.

Men and women of the working class, YOU in conjunction with your fellows abroad are the ones who can change things. The politicians are caught up in the power struggle within the present system. The industrialists, the wealthy in general have a vested interest in capitalism.

The working class have to bear the brunt of today’s problems and they are the majority.

If you agree with the World Socialist position you will wish to join the Socialist Party of Great Britain. It would not want to have you for any other reason.

Frank Simkins

The Politicians and the crisis: Part 1 (1977)

From the July 1977 issue of the Socialist Standard

On Sunday May 8th, in London the seven-nation conference of heads of state ended. Present with their aides were the Prime Ministers of Canada, Italy, Japan, UK, the Presidents of USA and France, and the Chancellor of West Germany; and on the final day Roy Jenkins in his capacity as President of the EEC.

The Conference was the latest of a series of similar conferences to appraise and look for solutions to the very real and increasingly dangerous problems facing the West European industrial countries, North America and Japan, and the rest of the avowedly capitalist world, i.e. Australasia. Latin America and so on, plus and by no means least the primary producing countries of the “Third World”, who are themselves at various stages of industrialization.

The problems discussed were primarily the world trade recession, with its unemployment. particularly amongst the young, inflation, energy, imbalance in international payments, the expected $45,000 million surplus of the oil-producing countries grouped in OPEC, the debts of the developing (non-oil producing) states, the “necessary” increase in nuclear energy (and its attendant dangers, political and military), “aid” to developing countries in which the Eastern (Soviet) bloc trade organization Comecon was urged to follow suit.

Carter, the US President, also raised the question of illegalities which had hitherto been condoned in certain banking, multi-national business and political circles. (The former Japanese Prime Minister, Mr. Tanaka, in relation to bribes from the Lockheed Aircraft Corporation was very involved.) This latter matter was not mentioned in the final declaration of “7 Pledges” to revitalize capitalism’s ailing economies, possibly because although not unimportant, it was regarded as peripheral to the major problems. To raise it officially would have also meant an explicit reference to companies and individuals. But does the conference have any significance for the working class of the world?

It can be safely said that modern society rarely appears to have stability for more than about two consecutive fortnights at a time, and that countless conferences and meetings have come and gone. Like many things it is all relative . . . and yet the newspaper headlines must at least have indicated something of magnitude — e.g. “7 Pledges to stop chaos” (Daily Telegraph, 9th May) and the politicians’ view on what could happen if these problems are not solved, must mean something. Put it this way: Carter, Callaghan and the rest wish to present as good a face as possible on the existing system whether they choose to call it capitalism, the “mixed economy”, a “free market”, a “social market” economy, the “free world” (i.e. capitalism with some sort of parliamentary democracy), partly because they are obliged to continue with it and also perhaps because they like the trappings of political power. As Carter said at the end of the conference: “We have to remember that making decisions, even unanimously, is not a guarantee that our decisions will be consummated. In many ways our own reputations are at stake.” As an article in the Daily Telegraph on Friday 6th May (the day before the beginning of the heads-of-state meeting) under the heading “Outlook for the World Summit — Hidden Threats to the World Economy” stated in its opening paragraph:

Chancellor Schmidt probably expressed the inner thoughts of all the European leaders when he said on Wednesday that he was looking to the London summit this weekend, mainly to bolster confidence. By this he meant the leaders' self-confidence and their electorates’ confidence in them, both of which are indeed at a low ebb.

Why this dual lack of confidence then? Because the politicians always aim to convince themselves and in turn the electorate that the capitalist system has found a way of stabilizing itself, and that despite its many imperfections it could at least avoid a catastrophe of the 1930s’ slump dimensions. They imagined that with their versions of Keynesian economics they had eradicated the deeper troughs of the business cycle.

However, from the mid-sixties onwards their policies have been demonstrated to be futile and unsound. It has been a gradual process, this dawning on the part of capitalism’s politicians.

Perhaps more to the point, among their advisors in the corridors of power, the higher echelons of the Civil Service, this bewilderment was exemplified in an article entitled “Whitehall at its wits’ end” (Sunday Telegraph, 24th April):

‘Everyone is baffled’ confesses one Permanent Secretary. “The old levers just don’t do the trick any more. We’re living in a world we didn’t make and don’t understand’. The Treasury has according to one senior Labour Minister (unnamed) ‘a very marked loss of confidence’, which reveals itself ‘to the discerning eye’ by the presence of competing economic ideologies. Before the Treasury served up only the pure milk of Keynesianism; now Keynes and Friedman are both on offer.

Graham Turner, the author of the article, states that “Whitehall is at its wits’ end . . . like the rest of us — they have not the faintest idea where Britain is going”.

The British politicians, their advisors and their counterparts in other countries may not know where the British and world economies are heading, but they do know, from personal experience and from the reading of history, where the 1930s’ crisis led.

The fact that they spoke at the Summit conference as candidly as they did demonstrates the seriousness of capitalism’s present difficulties.

The Japanese Prime Minister said “the world economic situation was now as serious as that of the early 1930s when leading industrial nations failed to act in time to prevent a slide into the 1939-45 war. History should not be allowed to repeat itself. Western nations had to co-operate more energetically in tackling economic problems” (Sunday Telegraph, 8th May).

He also recalled the fiasco of the 1933 London Economic Conference when no agreement was reached and a communique not even issued. “The difficulties today are greater and are compounded by new problems”.

The French President, Giscard d’Estaing. recalled that the ending of the 1977 conference coincided with the anniversary of the end of the 1939-45 war! “Sombre and pessimistic pictures were sometimes drawn of the present state of the world, but the cooperation at such conferences make it possible to avoid the mistakes [!] that helped to bring on that war.”

Helmut Schmidt of West Germany spoke on similar lines and “thought that they had avoided the results of complete selfishness” — by avoiding the “traps of the 1930’s.” President Carter like the other heads of state was concerned that decisions reached should not be merely pious, but recognized that making decisions and implementing them was not one and the same thing. "Sometimes heads of State tend to over-emphasize their own importance,” he said.

Callaghan considered that continuing unemployment carried political risks, not merely by the replacement of one party by another (naturally he does not want to lose his job) in Parliament — but that political democracy could be threatened. He is obviously concerned regarding the growth of the National Front, with racialism as the main plank of its support, and it is obvious there is a parallel here with the Nazis’ anti-semitism, which was copied in this country by the pre-war British Union of Fascists (although in recent years Sir Oswald Mosley has tried to obscure his organization’s former position on this subject).

It would seem inconceivable that the British working class could en masse support an organization tainted with fascism. Some of NF’s leaders were given to dressing up in Nazi-style uniforms before the organization was formed, and their arguments for economic nationalism — “self-sufficiency” — were advocated by the Nazis. However, it seemed improbable at the time that the Nazis would make much headway.

It can be justifiably argued that Britain in the 1970s, even with inflation and high unemployment is not the same as Germany in the early 1930s at the height of the depression with 6 million unemployed and the dire poverty it meant. However, in spite of the lower percentage of unemployed compared with that period and the lesser relative hardship of today’s unemployed, there is apathy and cynicism to politics and politicians generally, which though understandable is far from healthy — and also a good deal of resentment on the part of some of the young. This is why the established politicians are concerned wondering whether, if the crisis continues irrespective of the party in power, some of the youngsters might transfer their violent support from football teams to organizations like National Front. After all most of the workers of today know little of the 1930s; they make comparisons within this period, and as to whether the politicians’ promises and policies ring true. Over 400,000 of the present unemployed in Britain are in the 16-to-25 age group. In the rest of Western Europe the percentage is a little lower, and in the USA it is higher than in this country.

The major parties of British capitalism are discredited and the growth of the National Front directly arises from this. It is a particular indictment of Labour-style reformism and its inability to deal with capitalism’s problems, heightened as they are in times of crises.

Frank Simkins

(To be continued)

York and Ottawa (1932)

From the November 1932 issue of the Socialist Standard

It is not often that one of the leading lights of science can be quoted as authority for what Socialists have been saying for years, but the speech of the President of the British Association, Sir Alfred Ewing, at their meeting at York, on August 31st, 1932, as reported in the Daily Herald of September 1st, certainly gives some colour to the view and contains food for thought. He says : —

“More and more does mechanical effort take the place of human effort, not only in manufacture, but even in the primitive task of tilling the ground.

Almost automatically the machine delivers a stream of goods in the creation of which the workman has taken little part. . . . He has lost the joy of craftsmanship and in many cases unemployment is thrust upon him more saddening than drudgery.

…. And the world finds itself glutted with competitive commodities produced in a quantity too great to be absorbed.”

This is what we of the Socialist Party have been saying for years. Capitalism has long since provided the means of solving the problems of production, and we can produce more than enough for all. Production is social, but ownership is not social—hence the “problems” that beset our masters and the miseries the workers endure. These will continue until the working class see the necessity of studying Socialism, the only remedy for these tilings, and then organising to obtain it. There is no hope in the present system. Let Sir Alfred Ewing speak again (ibid):

“The cornucopia of the engineer has been shaken all over the earth, scattering everywhere an endowment of previously unimagined and unpossessed powers and capacities, but we are aware that the engineer’s gifts have been, and may be, grievously abused. In some there is tragedy as well as present burden. Man was ethically unprepared for so great a bounty. . . . The command of Nature has been put into his hands before he knows how to command himself.”

Exactly. No doubt a great many workmen know of cases where “the engineer’s gifts” have been “grievously abused” in the interest of profit, and many are fully alive to the “present burden” of unemployment. But the sting is in the tail. “Man is not ready for the command of Nature,” Sir Alfred says. Just so. He has not set about studying his position in order to bring about social ownership. Our friend is in this position himself, for he asks: —

“Where does this tremendous procession tend ?” and “Where shall we look for a remedy?” And he answers: “I don’t know.”

Nor is he alone in this. Several English Cabinet Ministers have recently been across to Ottawa to try and find the same thing, but have returned empty handed. They have been wasting their time trying to find out how policies of reduced purchasing power (wages) can keep up with increased production. And we notice that Mr. J. Bromley (Secretary, Associated Society of Loco Engineers and Firemen) went along to Ottawa with them “in an advisory capacity,” in order to help them to find out how not to do it; and says : —

“He could not help it if they did not follow his advice” (Daily Herald, August 15th, 1932).

We would suggest that this paid official’s talents might be better used in the interests of his members on the railways, who look like having a wage cut, but apparently that is not of sufficient concern to this gentleman so long as he can offer himself “in an advisory capacity” to our masters and get a joy ride. Walter Citrine, of the T.U.C., was also there, helping to achieve the impossible.

Thus is shown the worthlessness of these leaders, and when the workers realise this, and set about organising for Socialism, these gentry will soon disappear—and the workers will find a ready solution to Sir Alfred Ewing’s problems, and their own.

C. V. R.

The crisis: an open letter to trade unionists (2009)

From the September 2009 issue of the Socialist Standard

Fellow Workers,

 Capitalism is once again in the middle of one of its periodic economic crises, this time a bigger one than in the recent past. And, as usual, we are the victims. This crisis has been caused, as all capitalist crises are, by the uncontrollable pursuit of profits that drives the capitalist economy.

 With all capitalist businesses chasing profits, one sector of the economy inevitably overexpands in relation to what it can sell. This time it was the US house-building sector. Its overexpansion had an immediate effect on the banking sector which, in its chase after profits, had been engaging in dubious practices. This in turn had a knock-on effect on other sectors and is still working its way through the economy. Which is where we are today, with closed factories and rising unemployment alongside unmet needs.

 Unemployment in Britain is expected to reach 3 million, maybe even before the end of the year. Faced with this economic tsunami, the government has been helpless. They have bailed-out the banks but, apart from that, all they have done is to print more money, but this won’t get production going again. It will just stoke up inflation for later. It looks as if this Labour government will end like all previous Labour governments – leaving office with more unemployed than when they took over. So showing once again that governments can’t control the way capitalism works.

 The capitalist economy will eventually recover but of its own accord, not because of anything the government might do. And not without first putting the working class through many more months of additional misery.

 Recovery will only come when the rate of profit is restored. Which employers are actively seeking to bring about by imposing wage freezes, even wage cuts, watering down pension schemes, and anything else they can think of to reduce their labour costs. Some have even had the cheek to ask their employees to work for nothing. Meanwhile both the Labour government and the Tory opposition are insisting that public sector workers will have to suffer too.

 Workers should fight back. But the crisis has shifted the balance of forces even more in favour of employers. In the best of circumstances, when production is expanding and there is a labour shortage, unions have to work hard to get wages to go up a bit more than inflation. Now, with falling production and rising unemployment, unions can only try to put a brake on the downward slide, only try to stop things getting worse, .

 Ask yourself this: Why should we have to fight the same battles over and over again? Is this the only future? Yes, within the context of the capitalist system of production for profit, it is. But capitalism is not the only possible way of organising the production and distribution of the things we need. There is an alternative.

 Workers can and should organise to end capitalism which forces them to work for wages to live. We should organise to replace it with a system based on producing the things we need simply because we need them and not to make a profit. Production for use, not production for profit. But we can’t control what is produced unless we also own and control the means of production. In short, we need socialism, the common ownership and democratic control of the means of production.

 To achieve this, workers need to take political action. We need to organise not just in trade unions but also as a political party with socialism as its aim and policy. This the Labour Party never was, even though it was originally set up and financed by the trade unions. Its policy was to work for reforms within capitalism. Labour governments did bring in some reforms, but they were never able to make capitalism work in the interests of workers. That’s just not possible. All of them ended up merely managing capitalism and in the only way it can ever be – as a profit-making system in the interests of those who live off profits extracted from the unpaid labour of wage and salary workers. Instead of Labour changing capitalism, capitalism has changed Labour into the miserable band of self-seeking apologists for capitalism that everybody today can see they are. It’s high time the unions stop financing this capitalist party, as some have already done.

 Some are suggesting that, now that existing Labour Party has failed, the unions should set up a new Labour party. That would be a mistake. Labour reformism has failed once and it would fail again. So, let’s not go down that road a second time. Let’s learn the lesson of history that no government can manipulate capitalism to ensure permanent full employment and steadily rising wages, the TUC’s illusion (and not only theirs) of a radiant future. Which, even if possible, would still leave the exploitation of wage-labour for profit on which capitalism is based.

 No, what is needed is, as we said, a party with socialism as its aim and policy, an instrument workers can use to win control of political power with a view to ending capitalist ownership and the wages system and to bring in the common ownership of the means of production so that these can be used to meet people’s needs in accordance with the principle “from each according to their abilities, to each according to their needs”.

Socialism is still the hope of humanity. Let’s work for it.

The Executive Committee,

The Socialist Party of Great Britain.

August 2009

Marx and Keynes (1972)

Book Review from issue number 2 (1972) of The Western Socialist

Marx & Keynes — The Limits of the Mixed Economy by Paul Mattick. Published by Extending Horizon Books, Boston. Mass. 364 Page, $6 95)

In the last quarter or the 19th Century capitalism went into one of its periodic "recessions,” affecting in different degrees all the world market countries. Unemployment rose to high levels, discontent and riots were rife and many Marxists were hopeful that this would be the end of capitalism and the triumph of socialism.

In Britain it was particularly acute and prolonged. Maurice Dobb in his "Studies in the Development of Capitalism" (1946) wrote of it: "What has become known as the Great Depression, which started in 1873 and, broken by bursts of recovery in 1880 and 1888, continued into the middle nineties." Frederick Engels, in his 1886 Preface to Capital put forward the view that capitalism was in a "permanent and chronic depression" and wondered just how soon the unemployed would "take their fate into their own hands.” In such circumstances, he wrote, surely the voice of Marx ought to be heard. And, indeed, the study of Marxian economics received great encouragement in working class circles. (Incidentally capitalism recovered from that depression without the help of Keynes.)

After the First World War the spread of Marxian ideas continued and, increasingly, political and industrial organizations of workers were looking to Marx for an explanation of crises and depressions. But then the interest in Marxian economics declined. The universities, while taking up to some extent Marx the philosopher, had no time at ail for Marx the economist. The British trade unions, following the lead of the Labor Party, (which had never been Marxist) swallowed whole the new conception that capitalism can be "managed" in such a way as to produce a continually rising standard of living, freedom from crises and a permanently very low level of unemployment. As the man responsible for this change of direction was J. M. Keynes, Marxists cannot afford not to know about Keynes' theories, especially now that, in Britain for example, the six-year rise of unemployment, first under the Labor Government and, since 1970, under the equally Keynesian Tories is bringing the whole body of doctrine into disrepute. Even dedicated Keynesians cannot just shrug off their fiasco of the past six years — production rising by barely 2 per cent a year; registered unemployment up from 383,000 to over a million (with perhaps another 500,000 not registered); and retail prices (including rents) up by 40 per cent.

Mattick's book is a Marxian criticism of Keynesian economics. Chapters 2-10 deal with Marxian economics. chapters 11-17 with the so-called mixed economy and chapters 18-22 with national state capitalism and the backward countries.

Mattick places the falling rate of profit at the center of his version of the Marxian theory of crises and the so-called collapse of capitalism.

Crises break out, he says, when the factors offsetting the latent tendency for the rate of profit to fall (due to the rising organic composition of capital) fail to prevent the rate from actually falling. Capitalism recovers from a crisis, he goes on, because the resulting devaluation of capital assets again raises the rate of profit. Accumulation proceeds until it is again checked, though at a higher level. As Mattick puts it:

“Despite intermittent periods of depression, each upswing brings capital production to a higher point and wider extension than its previous level of development. Capital develops in a manner that may be described as three steps forward and two steps backward. This type of locomotion does not hinder the general advance; it only slows it."

This is a good description of capitalist development, even though Mat- tick has little space for unbalanced growth arising out of the anarchy of capitalist production.

Marx, says Mattick, recognized that there were theoretical limits to capital accumulation. It can be demonstrated mathematically that it is physically impossible for a rising rate of surplus value (s/v) to forever prevent a declining rate of profit (s/c—v) given an ever-rising organic composition (c/v). But although Marx once or twice used the term "collapse" in this context, this is not really a theory of the collapse of capitalism because in practise the point of no accumulation is never likely to be reached. It would presuppose, for a start, a fantastically high degree of capital accumulation, automation and labor productivity (which would mean, as Marx once pointed out. that the price system would break down because commodities would be so cheap that they ought to be given away free). This theory was meant as Marx’s contribution to the problem of the threat of stagnation which had worried classical economists like Adam Smith. Ricardo and John Stuart Mill. Marx was pointing out that if this stage was ever reached it would be due to an economic factor like falling profits rather than a natural one like diminishing returns from agriculture.

Mattlck is undoubtedly right in stating that "Marx's theory is not a theory of underconsumption" and in placing profits rather than markets as capitalism's big problem.

Keynes, too, held a theory of capitalist stagnation. He felt that as capital became more and more abundant, the rate of profit (its “efficiency," as he called it) would fall, thus discouraging investment. His policies were meant to combat this state of stagnation towards which "mature" capitalism was tending.

Mattick’s criticism of the theory of Keynesianism is quite good. He points out that all government spending must be financed from the present and future profits of capitalist industry. Government spending to combat slumps would thus be a redistribution of profits from one section of capitalists to another (those who sold to the government or who received government subsidies). It would be a cost which, by maintaining what Mattick calls a "non-profit sector." reduces the overall rate of profit. The limits of Keynesian policies are the profits of private industry. If these are discouraged then more government spending would be needed to avoid the slump and so on, with full national state capitalism as the logical outcome. Since the capitalists do not want this, says Mattlck, they seek to keep government spending within limits.

Mattick does seem to imply that the "state of stagnation" of both Marx and Keynes had begun to appear and that government spending has been consciously undertaken to combat it. This is open to challenge on a number of counts.

First, Marx’s theoretical state of stagnation is nowhere near. Second, government spending has been undertaken not so much to avoid slumps as to provide essential services for the capitalist class as a whole (education. health, defence), though this has Incidentally affected the overall level of production and employment and has been financed out of profits and by inflation. Third, Mattick is saying in effect that Keynesian techniques have saved capitalism, at least temporarily. This is not true because hitherto they have never really been tried properly, except perhaps as inflation to reduce real wages; and the clearest conscious attempt to try them out — the experience of Britain in the present recession — has proved a failure.

Mattick also deals with economic development, the backward countries and Russia. Although he describes Russia as state-capitalist (because it is still based on wage-labor), he views the national state capitalism practised there and in a number of other countries as a quite different social system from Western-type capitalism.

Indeed, he sees it as more advanced and one towards which the West is heading, too, under the ideology of Keynianism. This does not mean that he supports it. National state capitalism. he says, is no solution to the problem of the backward countries, only world socialism is. And Mattick is quite clear that socialism means the end of money, wages, profits, interest, etc.

On a number of points Mattick come quite close to us and wrote for The Western Socialist during the fifties. In fact, parts of chapters 1, 2. and 12 of this book appeared in the WS article ‘Marx and Keynes' Mattick wrote in November-December, 1955. Unfortunately, his book assumes a high level of acquaintance with the theories of both Marx and Keynes which makes it difficult to follow for beginners.

50 Years Ago: Crisis and revolution (2023)

The 50 Years Ago column from the March 2023 issue of the Socialist Standard 

The Left is saying the crisis is coming; and from that crisis the workers will rise to overthrow, cast off the yoke, destroy the juggernaut of capital, et cetera. There comes to mind, irresistibly, the futile drama of all the times before. The Communist speaker of the ’thirties, proclaiming that civilisation now stood at the brink, imparting to his hearers that the capitalist system was tottering and all that was needed was a good push. Syndicalist doomster in the post-war years, impressively pointing to the approaching crisis as one of capitalism itself: the phrase conveying certainty that the machine would now grind to a halt, its cogs gummed-up with (probably) an excess of the seeds of its own decay.

This continual resurrection of old beliefs is one of the many chronic diseases of the Left. Each generation rediscovers the theories which proved sterile for its predecessors. The failure is never attributed to the error of the theory itself. Those who followed it were “betrayed”, or the time was unforeseeably not ripe; but now it will be written on banners to make the revolution. Yet this theory of the climacteric crisis—“the death agony of capitalism”—and its revolutionary consequence is perhaps the most hopeless of all. What is involved is dual misunderstanding: of the nature of economic crises and the nature of the socialist revolution.

The form of the argument today is as follows. Capitalism is now acutely pressed between a falling rate of profit and workers’ wage demands (…)

The easy assumption is that extreme poverty will make workers rebel against capitalism and flock to “revolutionary” leaders. All the evidence is against it. If it were true the Gorbals, Liverpool, Falls Road and the tied farm cottages of England would be full of revolutionaries. (…) Unpalatable as it may be, what the unemployed worker seeks is work and relief from his acute immediate problem, not to be assaulted further in an ideological battle. (…)

That does not mean conditions are irrelevant. Socialist consciousness starts from indignation at the consequences of capitalism; but until feeling has given way to understanding, consciousness does not exist. The aim of the crisis-struck Left is to foster blind revolt, from which not Socialism but only defeat and disillusionment can result. The real need is for working men and women to comprehend that, in or out of crisis, the capitalist system must always frustrate hopes of a satisfactory life.

[Socialist Standard, March 1973]

The best of times, the worst of times (2023)

From the February 2023 issue of the Socialist Standard

Perhaps it is the nature of ‘the news’ and its love of drama but most commentators seem to concur that we are living in the worst of times. The ‘obvious’ decline of this country parallels the disasters endured by many others of past and present. The anarchic reality of capitalism lies behind most of our contemporary problems but remains hidden beneath moral outrage and politically sectarian invective. There has never been a time when the NHS has not been in crisis and where a war has not raged somewhere on the planet; there has never been a time when a child is not dying for lack of clean water and an unpolluted environment; there has never been a time when the rich suffered and the poor did not – this is normal for all class-divided cultures. As the memories of an imaginary ‘golden age’ fade and are replaced by a shared sense of doom and despair for the future we might ask if our species has a predilection for self-destruction and somehow relishes the thought of disaster.

The Armageddon zeitgeist of popular culture has spawned numerous variations on how the world might end; from zombies and plagues to meteorite impacts and nuclear holocausts it’s hard to find an optimistic narrative when it comes to imagining humanity’s future. To some degree this reflects the failure of capitalism to deliver its promise of economic progress and security for all – the culture just seems to have run its course with nowhere else to go. After the Second World War there was an optimism that things would change and the baby-boomers of the 1960s were in the forefront of political activism that focused on reforming the economic system to bring some measure of equality and justice, at least in the West. Working-class culture blossomed with innovative forms of music, fashion, film and TV. This was all predicated on the belief that things would change for the better; when this proved to be an illusion and the forces of reaction were brought back to power as the result of reformist failure the road to disaster seemed almost inevitable. Thatcher and Reagan were symbols of this failure – theirs was the politics of atavistic hatred. The neo-con ideology took on the Orwellian role of turning facts into fiction and vice-versa. We still live with this legacy today only it has accelerated and evolved into the monster of ‘fake news’ fuelled by the global internet.

Propaganda has always taken advantage of whatever media are available. The Nazis were one of the first groups to see the potential of the mass media of radio and film – we still look back on Goebbels as the paradigm of propagandists. He would have adored the opportunities afforded by the internet. Unfortunately the online producers of ‘news’ are as in love with dramatic headlines as are the pulp mainstream media – of course many of them are sponsored and produced by the very same people. However if you have the patience you can find authentic voices of dissent who can provide a very different perspective. The world has become a smaller place where the suffering and conflicts everywhere are accessible in your home which only adds to the sense of unease and foreboding created by the tension of events in our everyday lives. Some embrace the cynicism of not believing in anything whilst others are caught up in the shifting sands of the impotent and meaningless debates between Left and Right. All too often these online arguments end up being merely egotistical slanging matches that produce much heat without any light. Is the internet just the latest example of a medium being used as a vehicle for ideological propaganda or has its very quantity of information changed its quality? Instead of relying on your favourite newspaper columnist or TV news show you have to make an effort to research alternative voices if your opinion is to have any value. The cultural zeitgeist has become irrevocably international.

The voice of doom has become universal and resonates in every corner of the globe. Betrayed hopes fuel the never-ending discovery of new reasons and causes of a seemingly inevitable end for our species. Will the children of today look back on their childhood fondly as a ‘golden age’ as many of the older generation do? Socialists have optimism built into their DNA but even we struggle to find an upbeat answer to Rosa Luxemburg’s question: ‘Is it to be socialism or barbarism?’ Of course it hasn’t come to that yet but we fear that time is running out. Many people in the past also felt an impending sense that ‘the end is nigh’ but this was based on the assumption that the battle between good and evil would be resolved one way or another. But instead of the dramatic human finale of Armageddon predicted by so many our species might just fade into oblivion within a sea of political cynicism and apathy leaving the rich to count their ever increasing wealth until one day they find they have nothing to buy with it.

The Dickens quote, part of which heads this article, seems to describe my life and times (born in the mid 1950s) as I suspect it would for many of my generation and is worth repeating in full:

‘It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair’ (A Tale of Two Cities).

Wez.

Boom and bust (2009)

Book Review from the November 2009 issue of the Socialist Standard

The Trouble with Capitalism.  By Harry Shutt, Zed books.

  It is easy to see why the publishers have re-issued this book that first came out in 1998 – in it Shutt argued that a devaluation of capital assets could not be avoided for ever and that when it eventually did happen it would take the form of a big crash.

  Mat Little, who interviewed Shutt for Red Pepper this January, summarised what Shutt sees as the contradiction of capitalism that leads to recurring business cycles of boom and bust:

“According to Marx, capitalism is a system of accumulation. Profits are made but can’t all be consumed by owners. Extra profits need to be recycled through the market. ‘The only way you can successfully recycle them is to either expand your existing business or diversify into another business,’ says Shutt. ‘It all depends on the ultimate consumer, consuming more and more. It has to grow, growth is built in.’ The problem is that as profits are invested into the market, generating more profits that in turn have to be reinvested, production expands until it reaches a level that can no longer be absorbed by consumers. The market is glutted, and recession results. But the destruction of capital and jobs creates pent-up demand for the whole process to begin again in time. That, in brief, is the business cycle.” (www.redpepper.org.uk/Prophet-of-doom)

Although Shutt does not write as a Marxist, this is one of the explanations of the capitalist business cycle put forward by some in the Marxist tradition. It implies that all capitalist crises are caused by the overexpansion (in relation to paying demand) of the sector producing consumer goods. But while the crash of 1929 can be explained in this way, the history of capitalism shows that the overexpansion of any key sector or industry can provoke a contraction of production through a knock-on effect on the rest of the economy.

  Shutt explains the 25-year period of expansion after the end of WW2 in terms of the satisfaction of the market for affordable consumer durables and the end of this post-war boom as a result of the slowing down of this market. Capitalist enterprises were thus, he says, left with a ‘mountain of cash’, profits which could not be re-invested in expanding production, which he also describes as a ‘capital glut’ in the sense of an oversupply of  investible funds.

  What would normally happen in  such a situation is that, in accordance with the law of supply and demand, capital would be devalued; which a crisis would bring about, so restoring the rate of profit (because this is calculated as profit divided by the value of capital). Only, according to Shutt, this did not happen on any large scale in 1974 because the authorities (governments and central banks) took steps to try to stop this, by facilitating the channelling of the surplus of investible funds into non-productive activities such as lending to consumers or speculation on the stock exchange or in property:

“This massive flow of funds – which is not being allowed, as would be dictated by traditional capitalist rationale, to self-destruct through the natural operation of the business cycle – has to find an outlet in more or less speculative forms of investment.” (p. 179)

Writing in 1998 Shutt saw the various financial crises till then – the stock market crash of 1987, the Mexican debt crisis of 1994-95, the financial problems of the Asian ‘tiger economies’ in 1997 – as signs that this was not sustainable and as harbingers of  the Big Crash to come. Now, with the bursting of the dotcom bubble in between, he sees the Crash of 2008 as the expected big one:

“What the prolonged amassing of this huge surplus of capital cum fraud-driven credit bubble, means, according to Shutt, is the inevitable crash – the inexorable end of the business cycle – is going to be far more severe that it would otherwise have been. ‘I think we are looking at negative growth, for an absolute minimum of two or three years and I wouldn’t be surprised if it’s five or ten. That would be a depression,’ he says.” (Red Pepper interview).

Since our failure to foresee the post-war boom with our prediction that WW2 would most likely be followed by a slump, just as after WW1, we have tended to be wary of making such predictions ourselves. So, we will just record this as the opinion of one person who has studied the matter.

Adam Buick

Material World: Sri Lanka – the limits of workers’ forbearance (2022)

The Material World column from the August 2022 issue of the Socialist Standard

Sri Lanka long had a stable economy but the Material World column in March drew attention to the economic chaos taking place there.

Since March the situation has spiralled even more out of control. Sri Lanka’s rupee has lost more than 80 percent of its value and is still falling. Its foreign exchange reserves for all practical purposes have been depleted. Without US dollars the country cannot afford to pay for imports. Petrol has run out for non-essential users and is rationed in favour of the emergency services. Without fuel for cars and public transport via buses and tuk-tuks not running people cannot go to work or operate their businesses. LPG gas for cooking is in short supply. Fishing boats can’t go to sea, because they don’t have diesel.

All attempts to find solutions have failed which has now culminated in political turmoil with the prime minister’s home being set alight by angry demonstrators and the president forced from office as protesters occupied the presidential palace.

The financial crisis is also a health crisis. Sri Lanka imports more than 80 percent of its medical supplies. Now medicines are in short supply, including essential, life-saving drugs. Only the most critical patients are being operated upon. Doctors who once could say that the country possessed very fine healthcare, now tell of people dying due to lack of resources. Sri Lanka’s hospitals now rely on what charity other nations can offer.

In May a $1.5 million donation came from Japan so that UNICEF could procure medicines for over 1.2 million people, among them 53,000 expectant mothers and nearly 122,000 children with immediate medical needs. Australia sent food plus essential medicines for women’s health, the equivalent of nearly $5 million.

In June the UN appealed to international donors for more than $47 million in ‘life-saving assistance’. To put it in perspective, the government at the time said $5 billion was required for the island’s economic survival primarily to pay for food, fuel and fertiliser.

Ordinary Sri Lankans continue to bear the brunt of the financial and food crises. Sri Lankans under normal conditions did not lack for food, but the UN World Food Programme reports nearly nine of 10 families are skipping and skimping on meals, with 3 million requiring emergency humanitarian aid. Inflation of food prices was 22 percent in December 2021, 30 percent in March, and 57 percent in June resulting in people unable to put enough food on the table for their families. Now inflation is expected to go higher to 70 percent in coming months. A kilo of rice now costs 500 Sri Lankan rupees when it previously cost less than 100 rupees. The price of essentials means they are beyond reach for many people. Once unthinkable, Sri Lanka may now be facing food insecurity, if not outright famine, in a few months’ time.

Fuel shortages mean electricity cuts, with transport and supply chains being disrupted. Factory closures and unreliable shipment of exports have led many global brands to turn to alternative suppliers, such as Bangladesh and India, leaving Sri Lankan workers without jobs and pay.

Discontent and unrest had been widespread for months across Sri Lanka but the magnitude of the protests that forced out the government, once more demonstrated the latent power of working people. What we witness in Sri Lanka arose to a degree from mismanagement and malfeasance yet it is not unique and similar situations will most likely occur in more and more countries. Global price rises have inflicted similar pain elsewhere.

Lebanon’s GDP halved, from $52 billion in 2019 to $21.8 billion in 2021. Foreign exchange reserves dropped from $30 billion in 2019 to $11 billion today. The Lebanese lira has lost much of its purchasing power with salaries no longer sufficient for employees to support their families. Workers are barely able to buy basic necessities. Lebanon’s poverty rate is now over 74 percent and nearly 2.2 million of the population are lacking food security. One third of the population in the country is unemployed and according to the International Labour Organization nearly all public sector employees are engaged in various levels of industrial action.

The UN warned that food scarcity and malnutrition in the country would intensify further in the coming months and its representative in Lebanon, Najat Rochdi, expressed concern that the grain and fuel shortages arising from the Ukraine conflict were already affecting the country.

Sri Lanka and Lebanon are not isolated examples of capitalism’s failures to maintain stable social safety nets. Global inflation is inflicting economic pain across all continents and we can expect similar civil strife to occur in many more countries, and more governments to topple.

Politicians and the capitalist class in other countries received a warning sign in Sri Lanka that there is always a limit to workers’ forbearance. Desperation can so easily turn into rage and revolt. If a country’s economy sinks, its working class will not willingly go down with it.

ALJO

Editorial: Will America be next? (1998)

Editorial from the October 1998 issue of the Socialist Standard

“Capitalism is falling apart at the seams”—this apocalyptic statement from no other than George Soros, the international financier who broke the pound in 1992. This is a relative piece of honesty from our ruling elite who have so far done their damnedest to play down the severity of the global economic crisis. From the “quality” broadsheets to the television news-you have to look long and hard to find any serious coverage of the most newsworthy story of the day.

South East Asia, Russia and now Latin America are all in trouble and the only thing keeping the world economy going has been the bull market in the US—or so the “experts” tell us. What is interesting is the way each country or region is treated separately from each other as if what we are really facing is an aggregate of “local” problems the sum total of which adds up to a “global” problem. It is precisely this, which makes Soros’s honesty so refreshing yet frightening at the same time.

America, which has been growing for most of this decade is set to slow down. The “new paradigm” theory which argued that the US could grow forever will soon be proved demonstrably false-the only question is to what extent will the US crash?

The US has been attempting to get Japan to reslate its economy because Japan is considered to be the “motor” economy of South East Asia. But as we know Japan’s banking system is very nearly insolvent and its room for manoeuvre is extremely restricted. If the crisis in this region pulls Hong Kong and China down—the US fears that the cheaper exports from a lower exchange rate will put intolerable pressure on the dollar and the already glutted markets of the world will have to deal with even more cheap produce seriously undermining the US balance of payments. Couple this with a financial meltdown, you will have not just the rise of protectionism but a potential global trade war.

Finally, the US dominated IMF has nearly run out of money so its capacity to act as “lender of the last resort” and bail out any more countries is almost at an end. Even if more funds are found to re-capitalise Russia, what about the next time or the time after that? What about if America’s stock market bubble bursts and this leads to what one US economist called “the biggest depression since 1945”! The British and US stock markets have both now fallen about 15 percent in recent weeks. Who could now take a bet on capitalism?

'Can we panic now, Captain Mainwaring?' (2021)

From the November 2021 issue of the Socialist Standard

In the halcyon summer days of 1914 when all was right with the world and God was in his place in the British empire, dependent upon your social status in the scheme of things of course, the shock caused by the assassination of some minor Austrian prince was seen as an opportunity to bare Albion’s teeth to Johnny Foreigner, and everywhere the cry echoed down the expansive avenues and the meanest back alleys: ‘It will all be over by Christmas!’ Plus ça change, plus c’est la meme chose. Isn’t it just?

We all know Marx’s remark that history repeats itself, the first time as tragedy and the second time as farce. Marx had in mind the tragedy of Napoleon’s regime and the later farcical reign of his nephew Napoleon III. Back in the 1960s, Herbert Marcuse remarked that the lesson of Nazism seemed to be the opposite way round: first as a farce (throughout the 1920s, Hitler and his gang were mostly taken as a bunch of marginal political clowns), then as a tragedy (when Hitler effectively took power). Unfortunately, Karl, old boy, history seems to be in a place whereby it’s repeating constantly, like a three-week-old pickled egg. It’s doesn’t feel the least bit humorous this time round.

Crystal balls are not de rigeur for writers in this journal, but, this from the Socialist Standard, December 2020, seems a little prescient: ‘Eat, drink’ depends on whether the supply chains are still intact and irrational locust behaviour hasn’t swept the shelves cleaner than vultures on a wildebeest carcass in the Serengeti. Be merry? The human spirit is always able to find something positive in the most dire of circumstances. Acceptance of a bad situation whilst saying, gosh it’s terrible but there’s nothing we can do about it, is not acceptable however. After one of the most dramatic years which continuing on may have profound negative societal changes in global society it is no longer good enough to complainingly accept what is being implemented. Contrary to what a Tory leader once said, there is an alternative’.

At present the supply chains seem to be under considerable strain and there are apocalyptic warnings that toys, electricals and luxury goods all the way from China may not be lining the shelves of those stores and outlets which rely on the Christmas period in a ‘normal’ year to provide them with a hefty addition to their annual turnover. Had they but known then, the Ypres Times would have been running op-eds on how much better off they all were stuck in the trenches at Christmas, rather than the terrible deprivation of not getting your overpriced disposable trash-trinkets delivered in time.

The Mail Online, September 2021 has: ‘Panic buying is back! Shoppers queue to fill up trolleys with toilet roll and other essentials after one in six couldn’t find what they wanted on the shelves as supermarket bosses are told to co-operate to save Christmas and petrol shortages continue’ and ‘Shelves empty across UK on sell-out Saturday as supply crisis leaves one in six Britons claiming they have been ‘unable to buy essential food’ – and a third start Christmas stockpiling – ahead of winter squeeze’.

The sense of déjà vu cannot have long left the memory. As the Institute of Economic Affairs noted in sanguine tones, in the days when we didn’t even need to wait until Christmas because this would all be well over within three weeks: ‘No-one can have failed to notice the half-empty supermarket shelves and long queues for essentials. Loo rolls even rivalled flowers as the Mother’s Day gift of choice. Fortunately, this is one phase of the coronavirus crisis which should be over soon' (March 2020). Up to a point, Lord Copper, up to a point. The IEA didn’t borrow the services of Corporal Jones in order to tell us all ‘Don’t panic! Don’t panic!’ A stiff-upper-lipped ‘Keep calm and carry on’ seemed to be their advice. What have we here? Were they employing the economic tenets of Adam Smith or Malthus? Panic buying? Fine chaps, no problem! Carry on, as you were.

The IEA: ‘To be fair, panic buying is not necessarily irrational, for two reasons. The first is that the fear of empty shelves may be correct because it is self-fulfilling. Panic buying is similar. It would be best if no-one does it. But if you are worried that supplies might run out because other people will beat you to it, then it makes sense for you to rush to the shops too… However, there is also a second factor to consider here: even if there are plenty of goods in the pipeline and shops will soon be well stocked, some people may be unable to get to them. As the new coronavirus spreads, any household in the UK could be obliged to self-isolate for a period of several weeks, or even longer, at a moment’s notice. It may then make sense for every household to buy several weeks of essentials, just in case.’

Hang on there Jack, as the economists have it, ‘ceteris paribus,’ we’re not on an equal and fair playing field here are we? If you’ve the sufficient disposable income, the transport, the freezer space, the storage space for your six months or more supplies, plus the utter contempt for the plight of others less fortunate, then good for you Jack. That’s a rational capitalist economic decision. Foxtrot Uniform, I’m alright. This form of economic selfishness no doubt has opponents of socialism (who generally misunderstand what that is anyway) leaping about like the ten lords in the Christmas carol, waving their fingers and chanting in E flat Major, human nature! human nature! The Socialist Party’s demolition of this spurious straw man is amply demonstrated elsewhere. 2021 was certainly another year seeing profound negative societal changes in global society. And as amply demonstrated by us, there is an alternative.

Dave Coggan