http://www.communist-party.org.uk, mailto:office@communist-party.org.uk

‘The international capitalist crisis, the workers’ and peoples’ struggle, the alternatives and the role of the communist and working class movement’

ROBERT GRIFFITHS

Communist Party of Britain

The monopoly capitalists, their politicians and their intellectuals want the public to regard this crisis as entirely a financial one, flowing from the 'credit crunch': all the fault of reckless mortgage companies and banks; of low-paid workers who borrowed beyond their means; and of greedy bankers who should not have lent them the money in the first place.

What a convenient picture this paints on behalf of the capitalist system as a whole! The truth, of course, is that this is a systemic crisis, a crisis intrinsic to the system of capitalism itself, what Marx characterised as a periodic crisis of overproduction.

At the same time, I think we should also note a significant feature of the current crisis, namely the role of what Marx in Volume Three of Capital defined as 'fictitious capital'. By this he usually meant, according to a narrow definition, interest-bearing financial paper, in particular government bonds comprising the National Debt. But he also employed a broader definition which embraced bills of exchange, commodity contracts and all kinds of stocks and shares.

When traded on the financial markets, these instruments increase their money-value way beyond the reproduction and expansion of capital in the production of real commodities for real consumption.

They are still capital in the sense that they derive from real capital once invested in the production or circulation process. Like other forms of capital, their money-value also represents a future entitlement - when cashed in - to the product of labour.

But, Marx pointed out, this capital has become 'fictitious': it has been used up in its original form and now survives only nominally, on paper; its value has since been determined more or less independently of the reproduction of capital in the production process; it now bears no relation to the money-value of the original capital invested in the government or enterprise.

Marx called the process of forming fictitious capital 'capitalisation', although it does not correspond completely to the bourgeois category which can reflect the expansion of real capital as well as fictitious capital. For that reason, some Marxists prefer the term 'financialisation'.

According to the Bank for International Settlements, by June 2007, on the eve of the financial crisis, the nominal future value of all the financial instruments, physical assets, credit risks and betting slips (on future economic factors and indicators) being traded in world markets as financial derivatives - the main vehicle for fictitious capital - had reached $516 trillion. Share and bond market capitalisation totalled $111 trillion. The combined and largely fictitious value of $627 trillion was 13 times greater than the world's GDP of $48 trillion in 2006.

While world GDP grew annually from 2.7 per cent in 1995 and by up to 3.9 per cent in 2006, the notional amount of value in the derivatives market ballooned by 24 per cent a year, and in the equity and bond markets by 11 per cent and 9 per cent a year respectively.

Originating in the reproduction and then over-production of real capital, these fictitious capital values could never be realised upon maturity in the future. Sooner or later, realism would break out as nervousness and then panic stepped in. But in the meantime, this fictitious value enabled a massive extension of corporate, personal and government debt, which in turn further intensified and prolonged the boom in most leading capitalist economies.

Financialisation thereby ensured that when the crash came it would be severe. And by placing the banks, mortgage companies and the money and financial markets in mortal danger, it compelled governments and central banks to bail them out on an unprecedented scale, at the expense of support for productive industry, at the expense of public services, and to the cost of future generations forced to pay off additional public debt.

Although the financial crisis broke out shortly before the generalised economic recession began, it was a signal rather than the cause. There is a dialectical relationship between the two. The over-production of capital provides the basis for transforming a portion of real capital into fictitious capital. Fictitious capital values accelerate demand through credit and thus steepen the descent into recession, which the financial crisis then prolongs through mass redundancies in the financial sector and a credit strike by the banks and money markets.

But the surest sign of an impending cyclical crisis of over-production had already shown itself two years before the collapse of US and then other banks and financial institutions in summer 2007. From May 2005, year-on-year crude steel production had begun to drop significantly in the European Union and the USA, although it temporarily recovered in the latter the following year. Here is conclusive evidence that a cyclical crisis of over-production was on the way before the ‘credit crunch’ occurred.

Incidentally, Marx did not mince his words when referring to the agents of 'capitalisation' or financialisation. He called them 'gamblers', 'swindlers' and 'bandits'. They perform no socially useful function except to vindicate the demand of socialists and Communists that the whole financial sector be taken into democratic public ownership, under new management, pursuing very different policies and objectives.

This demand represents a qualitative advance from tighter national and international regulation or measures such as a Tobin tax on cross-border financial transactions. Democratic public ownership represents part of the transition to what we Communists used to call an advanced anti-monopoly democracy - the stage which sets the scene for the decisive, revolutionary struggle for state power.

Yet even if measures to regulate or nationalise the financial sector could be achieved under capitalism, periodic crises of overproduction would still exist for as long as capitalism exists.

Britain's Prime Minister Brown once claimed that he had abolished the cycle of 'boom and bust' in the British economy. An ancient English king, Canute, once claimed that he could sit on the sea shore - on his throne - and stop the waves from coming in. He got his feet wet.

In Britain the government, the Treasury and the Bank of England have so far allocated £1.35 trillion ($2.25 trillion) in public funds and guarantees to rescue the banks, financial institutions and money markets. That's equivalent to Britain's entire annual GDP, twice the annual total of public expenditure, ten times the National Health Service budget and 15 times government spending on education.

Less than £20 billion has been allocated to support manufacturing and other productive industry in Britain. That imbalance in government support reflects the peculiarities, priorities and contradictions of British monopoly capital.

Now the British ruling class has launched a fierce offensive against the jobs, wages, pensions, social benefits, public services and trade union rights of the working class and peoples of Britain.

Whichever government is elected next May, this offensive will intensify. Cuts in public spending will be deeper and quicker under a Tory government, whereas a Labour government might be more amenable to pressure – especially in relation to employment and trade union rights – from the trade unions.

The Communist Party is seeking to alert the labour movement and the people generally to the nature and scale of this offensive, especially through our work in the unions and through the Morning Star daily newspaper (which now enjoys substantial support from leading sections of the trade union movement).

We are calling for the formation of campaigning alliances of left, trade union and local community organisations to defend public services.

As an alternative to the offensive’s policies, we propose a Left-Wing Programme of immediate social, economic, environmental and foreign policy demands to counteract cut-backs, privatisations, militarism and environmental degradation.

Many of these demands are reflected in the People’s Charter, an initiative proposed by our party in July 2008 and adopted – after a struggle - by the Trades Union Congress last September. A People’s Charter convention this Saturday in London will launch the campaign for a million signatures across Britain. Our Charter for Women, which promotes the interests of women in work, in society and in the labour movement, is now supported by more than 13 national trade unions.

We are seeking united and popular fronts of struggle on all the main problems facing the working class and peoples of Britain, including against racism and the rise of the fascist right.

A new publishing house, Manifesto Press, has produced three new books to carry forward the battle of ideas on the left and in the trade union, peace and solidarity movements.

But what we believe is now required on the global level is closer, organised co-operation and co-ordination between the Communist and Workers Parties. The remit of the Working Group could be extended to promote links between leading comrades in different parties in each major field of political and trade union work. An international programme for Marxist-Leninist education could be established through the internet. And the extended work of the Working Group needs to be facilitated by a permanent office, with one or two full-time staff supplied by parties which have the necessary resources.

Our Communist and working class internationalism is one of our greatest potential strengths. As the monopoly capitalists and their state representatives meet, plan and take initiatives at the global level through a host of different institutions, we Communists have a responsibility to do likewise in the interests of workers and their families, humanity and our planet.