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New Phenomenon in the international framework.

Worsening national, social, environmental and inter imperialist contradictions and problems. The struggle for peace, democracy, sovereignty, progress and socialism and the unity of action of the Communist and Worker's Parties

Sitaram Yechury

Member Polit Bureau

Head International Department

Communist Party of India (Marxist)

Dear Comrades,

Let me congratulate the Communist Party of Brazil (PcdoB) on behalf of the Communist Party of India (Marxist) for organising the 10th International meeting of the Communist and Workers' Parties. We are very happy to note that the process that had started in Athens ten years ago, is continuing with fruitful interaction between the various parties taking part in these important meetings. The importance of this meeting has increased all the more this year because of the severe financial crisis that has been staring the entire world. Just few days back the heads of G- 20 countries sat together searching for ways to wade out of this crisis. But as has been increasingly becoming evident, more and more countries are sliding into recession with its effects being felt on the entire world.

The current crisis of international financial capital that spearheaded imperialist globalisation in the last two decades is, by much estimation, far graver than any other crisis in the history of capitalism. The crisis is still unfolding and its full ramifications will be realised only much later.

Many feel that we, as Marxists, must feel resoundingly vindicated that Karl Marx’s penetrative analysis of capitalism has, once again, proven itself to be true. Marxists do not derive satisfaction for the vindication of their world view and revolutionary analysis at the expense of the ruin and misery of millions of victims of this capitalist crisis. As Marx himself once said, “Nothing human is alien to me”. Marxists work to ensure that the common working people are not subjected to such inhuman trepidations being at the mercy of the rule of Capital. This shall happen only when we “change the world”, not remaining satisfied with the correctness of our “interpretation of the world”.

Marxism-Leninism is inherently materialistic, creative and intrinsically dialectical. It is hence supremely anti-dogmatic. It is a world-view that embraces the vision of liberation and expresses emancipatory ideals. It is a tool for understanding and analysing the multitude of phenomena that constitute changing historical situations. It is a guide to action that defines programmatic objectives for the people's struggle against all forms of exploitation, subject to the necessary adaptations as required by changing historical situations.

As a creative science, Marxism-Leninism identifies the tendencies and directions of development. In doing so it provides the possibilities for popular mass intervention in these developments in the pursuit of establishing an exploitation-free society.

It is, hence, incumbent upon all Marxist-Leninists to make a concrete analysis of the concrete conditions, both internationally and domestically, in each country and on that basis to chart out the course of human liberation. Capitalism, as Marx has shown, is a system that is based on the exploitation of man by man and nation by nation. It can never be a crisis-free system. Hence, the true emancipation of humanity from such miseries is possible only through a liberation from the capitalist system.

Two decades ago, the capitalist world was in a state of delirious euphoria in the build up to tearing down the Berlin Wall. This was accompanied by vituperative ideological offensive: End of History, End of Ideology etc. There was great delight at the collapse of this wall that symbolised, in many ways, the Cold War and world socialism’s power to confront imperialism in all respects. The collapse of the Berlin Wall has been eclipsed by the virtual deletion of capitalism’s so far considered impregnable wall – the Wall Street. The `big five’ global investment banks – Bear Sterns, Lehman Brothers, Merrill Lynch, Morgan Stanley and Goldman Sachs – that led and lorded over the world of imperialist globalisation have either been liquidated or severely emasculated.

Such has been the gravity of the crisis that the most unabashed votary of capitalism, The Economist describes it as “capitalism at bay”. Referring to the spate of bailout packages advanced in various western capitals, it says that the future points towards “a larger role for the State and a smaller and more constrained private sector” and hoping “profoundly that this will not happen”.

World capitalism has embarked on a spate of nationalisations that would have surprised the former socialist USSR. When the time to defend capitalism from such a crisis comes, all ideological attacks against State or public property and nationalisation with the accompanied extolling of the virtues of private capital and their laser beamed God - market – appear to be mercilessly abandoned.

Britain, that heralded modern privatisation, nationalised, today, most of its banking sector. Recollect that Margaret Thatcher once said, “It is not the business of the government to be in business”. USA is pumping in $ 2.5 trillion of tax payers’ money to shore up its financial system. France’s Nicholas Sarkozy, says, “Laissez-faire is finished”. There is a profound paradox here. Defending capitalism, in this present crisis, means greater State intervention. This may be a paradox for capitalism’s ideologues, but the fact remains that the State of the ruling classes has always defended and enlarged the avenues for super private profits. We, in India, have our own experience of the State establishing the public sector to promote private capitalism. At a later stage, with this objective largely achieved, the State embarks on large-scale privatisation, again to benefit private capital. All this is done behind the illusory mask of `States’ `neutrality’! These bailouts, as the future will testify, are designed precisely to first save and then to create new avenues for profit generation.

This crisis is an inevitable consequence of the path of globalisation that was unfolding in recent decades. In 1993, the CPI(M) had organised an international conference at Calcutta with the participation of 25 Communist and Workers Parties from all over the world to underline the continued relevance of Marxism in understanding contemporary world realities. At the first international meeting of communist and workers' parties organised in 1998 in Greece, discussing the role of the Communist Parties in the current conditions, we presented the following:

“The main new element in the present phase of capitalist development is the emergence of globalisation of finance capital. It has specific features, in our opinion, which distinguish it from the period when Lenin analysed imperialism. The present process is not a nation-state based finance capital engaged in struggle with rival imperialist nation-states. In a sense, it has transcended the nation-state. This, however, is not to suggest that the relevance of the nation-state and its sovereignty has ceased, as some seek to argue.

“It is, however, important to note that the present day finance capital is highly globally mobile sucking in finance capital from individual countries dominated by finance capital originating from the advanced countries. Further, this finance capital is more pre-occupied in its search for quick speculative gains rather than its amalgamation with industrial capital leading to economic development. It, therefore, truly represents the parasite that thrives at the expense of real economic growth.

“The emergence of this finance capital is an important factor that explains the relatively low growth rates accompanied by high unemployment rates in the advanced countries. This happens because in order to appease international speculators, there is a competitive reduction in tax rates and restrictions on the size of the fiscal deficit. In other words, governments are forced to cut back expenditures and thereby deflate both employment and domestic demand leading to lower rates of growth.

“This, in turn, leads to a situation where the advanced countries turn to the third world economies and intensify exploitation. The imposition of neo-liberal policies serves this purpose of removing obstacles to the free operation of internationally mobile finance capital. In addition, it seeks to impose a new form of international division of labour, this time not through direct colonial occupation but through coercing third world economies to dovetail to imperialist interests.” It is the consolidation of this process over the last decade that laid the basis for the current crisis.

Marx’s analysis of capitalism tells us that as capitalism develops, there is the tendency for concentration and centralisation of capital. As he said, over a period of time, there will be “fewer and fewer but larger and larger capitalists”. Accumulation under capitalism is, thus, a coercive process. So is the process of technological innovations. Without either of these, the capitalists cannot survive the rat race where the `big fish consumes the small fish’. It is this processes that has led to the internationalisation of finance capital to gigantic levels, hitherto unknown in capitalism’s history. It is this process of globalisation that imperialism utilises to seek its political objective of economically recolonising the developing countries.

Two important features of globalisation, however, require attention to understand the present crisis. First, this process has been accompanied by growing economic inequalities both within countries between the rich and poor and between the rich and the poor countries. The Human Development Report, 2007-2008 confirms this with indisputable statistics. Forty per cent of world’s population living on less than $2 a day accounts for 5 per cent of global income while the richest 20 per cent accounts for three quarters of world income. More than 80 per cent of the world’s population lives in countries where income differentials are widening. Secondly, globalisation has given rise to the phenomenon of `jobless growth’. This is so because the trajectory of profit-maximisation invariably replaces human labour by investing more in developing technology rather than developing human resource capacities. The growth of employment, during this period, has always been lower than the GDP growth rate globally.

Both these features put together mean that the purchasing power of the vast majority of the world’s population has been declining. Now, capitalism inevitably plunges into a crisis when what is produced is not sold. Under these circumstances, the only way that capitalism can sustain its levels of profits is by encouraging people to procure loans whose spending will maintain the levels of economic activity. However, when the time comes to repay these loans, there is the inevitable default.

This is precisely what happened in the USA in the current sub-prime (loans given at interest rates lower than the prime rates initially to lure borrowers, only to be re-set higher later or loans given to borrowers whose credit worthiness is suspect) crisis leading to large scale defaults.

Defaults should not have really come as a big surprise. The Wall Street Journal, reported on October 12, 2007 that the wealthiest one per cent of Americans reportedly earned 21.2 per cent of all income in 2005. This increased from 19 per cent in 2004 and exceeded the previous high of 20.8 per cent in 2000. In contrast, the bottom 50 per cent earned 12.8 per cent of all income which was less than 13.4 per cent in 2004 and 13 per cent in 2000. The consequence of such growing inequalities would lead, according to Merrill Lynch, to a fall of $360 billion in consumer spending during 2008-09. Obviously, Merrill Lynch, now emasculated, did not take its own assessment seriously.

Capital, in search of higher profits, continuously creates new commodities through which it expands its market operations. As Marx had said, `production not only creates objects for the subjects, but also creates subjects for the objects’. The present day advertising industry is testimony of this. Under the rule of international finance capital, capitalism creates new financial commodities. One of these that has played havoc and generated the current crisis is the trade in `derivatives’.

According to the Bank of International Settlements, as of September 2008, the total value of derivative trade stood at a staggering $ 600 plus trillions. This has grown from $ 100 trillion in 2002. Thus, this shadow economy is 12 times larger than global GDP ($ 50 trillion) and more than six times larger than the actual trading in shares in the world’s stock exchanges ($ 100 trillions). While these are the figures from the official commodity exchanges, it is variously estimated that the total value of financial exchanges including in derivatives, whose trade takes place even outside of the commodity exchanges, was a staggering 40 times the total global GDP. It is this speculative financial bubble, pumped to inflate to infinity, that had to burst, and, it did.

Reams of analysis seek an explanation for this crisis (obfuscating the systemically inherent dynamics of the capitalist system), in the greed of a few, a violation of some ethical norms, a la Nobel laureate Paul Krugman’s “moral hazard” or, the lack of transparency and the weakness of regulatory mechanisms and credit rating agencies.

Karl Marx’s penetrating analysis of capitalism is reportedly being sold much more in the western capitals today than any time in recent memory (profits are to be made through these sales too!). Marx shows that despite appearances of decisions and choices being taken or made by `free’ individuals, capitalism functions on the basis of laws that operate independently of the will or desire of individual capitalists. Take the issue of exploitation under capitalism. Exploitation takes place in the capitalist production process irrespective of the 'morality' of the capitalists as the value of the product produced by labour is always greater than the value this labour power (measured as wages) commands in the market. This surplus value generated by the labour process under capitalist production is the source of profit whose maximisation is the raison d’etre of capitalism.

Profits, thus, can be generated only through exploitation. The overthrow of capitalism is, therefore, not only a moral question, it is a scientific necessity if exploitation of man by man must end, if human emancipation has to be achieved.

In Das Kapital, Marx concluding his chapter on the genesis of the industrial capitalist states: “Capital comes dripping from head to foot, from every pore, with blood and dirt”. He buttresses this with a quote, in a footnote, from a worker and trade union leader (Marx consciously drew on the writings and experience of workers to validate his analysis) T. J. Dunning: “With adequate profit, capital is very bold. A certain 10 per cent will ensure its employment anywhere; 20 per cent will produce eagerness; 50 per cent, positive audacity; 100 per cent will make it ready to trample on all human laws; 300 per cent and there is not a crime at which it will scruple, nor a risk it will run, even to the chance of its owner being hanged.” It is this pathological drive to maximise profits at any cost, the inherent character of the capitalist system and not the individual greed of some or weakness of regulatory mechanisms that is the root cause for the present crisis.

Under globalisation, by arm twisting all independent countries to embrace financial liberalisation, the avenues for super profits were enlarged through hitherto unknown levels of speculation. Post crisis, this pressure is bound to intensify seeking greener pastures in the third world. Thus, this process of globalisation has, once again, shown itself to be simply unsustainable. Consequently, globalisation’s ideological mask – neo-liberalism – has shown its thorough bankruptcy.

If profits were reemployed into enlarging productive capacities, then through the consequent employment generation, the purchasing power of the people will grow leading to larger aggregate demand, which, in turn, would give a further impetus to industrialization and growth of the real economy. The gigantic accumulation of international finance capital, however, given the inherent laws of capitalism, supercedes this process, seeking predatory profits through speculation. It, in fact, decimates this process by enveloping it under the speculative financial bubble. This is similar to when monopoly capital emerging from free competition, decimates the latter completely.

To summarise: under globalization, with sharp decline in the purchasing power in the hands of the majority of the world’s population, finance capital, in its eagerness for quick profits, chooses the speculative route of artificially enlarging purchasing power by advancing cheap (subprime) loans. Profits are made while these loans are spent but when repayment is due comes default, ruining the loan taker, also crippling the system. To put it simply, as seen above, this is precisely what happened on a gigantic scale. Capitalism’s supreme diabolic irony lies in the fact that in the name of protecting those who have already been ruined, the banks and financial institutions are bailed out using tax payer’s resources! Indeed, privatization of profits and the nationalization of losses! In the process, intensifying exploitation further.

Marx summarises the inherent dynamics of capitalism and its historical direction: “The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralisation of the means of production and socialization of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.” In the absence of a powerful socialist political alternative, however, capitalism reemerges from every crisis, through new expropriators, by destroying a part of the productive forces, to keep intact, or, create new profit avenues rather than using these resources for people’s welfare. The true inhuman character of capitalism.

Clearly, therefore, the current phase of imperialist globalisation and its ideological construct – neo-liberalism – appears to have run its full course. Whatever be the form and content of its restructuring, capitalism is inherently an exploitative and a crisis-ridden system. This is engendered in its fundamental contradiction between its social nature of production and the individual nature of appropriation. As the CPI(M)'s Programme notes: “Despite the fact that the international correlation of forces favour imperialism at the end of the twentieth century and capitalism continues to develop productive forces with the application of new scientific and technological advances, it remains a crisis-ridden system apart from being a system of oppression, exploitation and injustice. The only system, which is an alternative to capitalism, is socialism.”

The inevitability of capitalism's collapse is not an automatic process. Capitalism has to be overthrown. An erroneous understanding only blunts the need to constantly sharpen and strengthen the revolutionary ideological struggle of the working class and its decisive intervention under the leadership of a party wedded to Marxism-Leninism -- the subjective factor without which no revolutionary transformation is possible. In those countries where this process is advancing, like in Latin America, we have already seen the electoral defeats of the neo-liberal forces.

In the absence of the advance of the revolutionary movement, capitalism will remerge, in a different form, to consolidate its predatory search for profits. As Marx and Engels said in the Communist Manifesto: "the bourgeoisie cannot exist without constantly revolutionising the instruments of production and thereby the relations of production and with that the whole relations of society". But such a reemergence of capitalism would be at a tremendous cost. Remember, the great depression of 1929 laid the foundations for the rise of fascism.

All the efforts that we are witnessing today-the bailout packages, fiscal policy measures etc as spelt by the G-20 summit are efforts by the capitalist class to 'reform the system' and retain their hegemony at any cost and ensure that people do not turn to a socialist alternative. Though there were statements made by France and Germany accusing US and Britain as responsible for the crisis, they are together in their efforts to save capitalism and prevent the advance of Left. The current capitalist crisis tellingly demonstrates the vacuity of the “eternality” of capitalism. No amount of reform of capitalism can make it an exploitation free system. The only way for humanities liberation from this exploitation is the establishment of a socialist system.

The objective conditions are opening up possibilities which we can utilise in strengthening the popular movements for ending a system based on exploitation of man by man. It is imperative to utilise the objective situation and intervene to advance the movement for social emancipation.

Only few days back the entire world had observed the 91st anniversary of the October Revolution. The experience of socialism in the 20th century demonstrates that the disintegration of the USSR and former socialist countries in Eastern Europe negates neither the revolutionary science of Marxism-Leninism nor the pursuit of the socialist ideal. Learning from its experiences and drawing the correct lessons from its disintegration, we have to carry forward the struggle for socialism. This requires, as noted above, the sharpening of class struggles to advance the popular revolutionary movement. This advance in the immediate context will have to be taken forward in each of our countries while working for the convergence of the worldwide anti-globalisation movements into a mighty anti-imperialist people’s movement.