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Statement of the Communist Party of Sweden (SKP) at t

he International Meeting of Communist and Workers’ Parties

in New Delhi, 20-22 November 2009

The continuing crisis and the advance of the new Fascism

The socio-economic crisis that supposedly began with the financial meltdown in 2008 continues to intensify. Last year we pointed out that the crisis is rooted in the exploitation of the working class, and has been intensifying over the past 45 years.

We also pointed out that one of the main characteristics of Fascism is an intensified and widespread integration of the State with monopoly capital, often in the form of joint committees that make vital decisions and formulate strategy. This has been dramatically demonstrated by the enormous program for the purported rescue of banks, brokerage firms, insurance companies and other financial institutions, through cash injections and guarantees from the public treasury.

In the US alone, more than 23 trillion dollars has been committed to the financial sector. In Sweden, the government recently confirmed that its commitment amounts to half the country’s Gross Domestic Product, and that no time limit is in sight. Among other things, the commitment is being used to save two large Swedish banks that since the mid-1990s have dominated the economies of the Baltic countries, where they have generated huge speculative bubbles.

The Swedish government has not announced a similar commitment for securing pensions, unemployment compensation, sickness benefits or health-care facilities.

In a capitalist society, a provider of crucial financial aid normally demands at least majority ownership or control in the company being rescued. But in virtually all cases where State funds have been or are being injected into privately owned institutions, the government has abstained from assuming the role of owner. Private property is indeed sacred. The State and monopoly finance capital are now entwined like two snakes in the act of copulation - in full view of the public.

Occasional complaints arise about the banks being rewarded for irresponsible speculative activities. The standard response is a solemn assurance that regulatory action is being studied, and new rules will be established to avoid another unforeseen financial earthquake. Meanwhile, everyone should lean back and relax, because the State’s strenuous exertions have restored the financial sector to health and vigor, and the capitalist system has once again shown its amazing ability to recover from a crisis.

Repeated insistence on the strength and flexibility of the capitalist system is a major weapon in the ideological arsenal of the bourgeoisie. It is the obverse of the equally repeated insistence that the socialist economy in the Soviet Union and Eastern Europe was a failure, and collapsed of its own weight.

Signs of recovery are said to include stock-market rallies in many OECD countries. In reality, this is simply another speculative bubble that will burst in the not-too-distant future. It mirrors the pattern after the stock-market crash in 1929, when a collapse in prices was followed by an upswing that lasted about a year before the market collapsed again in 1930. In general, share prices did not return to 1929 levels until the early 1950s.

Small monthly increases in Gross Domestic Product have been greeted with cries of enthusiasm and relief. When the German GDP showed a monthly rise of 0.3% during the summer, the mass media announced that the so-called recession was finally over.

Signs that all is not well

Treatment of the crisis in the mass media has the objective function of obscuring its true nature in several ways. It is explicitly assumed that the health of the financial sector is a measure of the health of the economy. In effect, a schizophrenic virtual world has been created that consists of two economies – one is finance, the other is the production of goods and non-financial services.

For example, about six weeks ago one of Sweden’s leading dailies printed two articles side-by-side. The headline on one was “Central bank chief is cautiously optimistic”. The other headline announced that 400 employees had just been fired by the management of the Swedish Agricultural Federation. No indication was given as to the degree of optimism among the newly unemployed.

The contradiction between the so-called recovery and the dysfunctional real economy is difficult to ignore, even for bourgeois propagandists. In the summer of this year, an ingenious argument was devised to explain the discrepancy. The term “jobless recovery” was coined to explain that creation of new employment opportunities normally lags behind economic recovery. The unemployed have only to wait, and when the recovery gathers steam at an unspecified future date they will be offered well-paying jobs

This will undoubtedly comfort the members of the 3 million British households in which no one has a job, as reported by the UK’s Office for National Statistics.

The financial sector shows a number of signs which indicate that all is not well, to say the least. A significant portion of the assets reported by banks are virtually worthless, since they consist of loans which can never be repaid. These include large loans by Western European banks to the former socialist countries. Nevertheless, the big banks are allowed to include these assets at face value in their balance sheets, in order to avoid declaring themselves bankrupt.

Since the autumn of 2008 the mass media have been broadcasting the message that money must be pumped into the banks so that they can provide credit to privately owned companies, Helping the banks will enable them to start lending again. The problem according to the experts was liquidity, not solvency.

But the banks have not started lending again, despite all the money they have received. The reason is that the problem is not liquidity – it is solvency. The banks are bankrupt. They are hoarding money in an attempt to bolster their balance sheets. They are not interested in lending money to other banks which in all probability will not be able to repay it, or to companies which are themselves facing bankruptcy.

Last year we pointed out that the speculation which has been rampant in the capitalist system since the early 1980s has been fueled by the profits extracted from the working class, and the accompanying development of fictitious capital. The derivatives market is the emblem of speculation and the prime example of fictitious capital. It has grown exponentially, and dwarfs everything else in sight. It is in imminent danger of collapse. The size of the global derivatives market may appear difficult to grasp, but we can put it in perspective. The nominal value of this market is estimated at 1.5 quadrillion dollars, i.e. 1.5 thousand trillion dollars.

By way of comparison, the GDP of the US is about USD 14 trillion, or less than 1/10 of 1% of the derivatives market. The GDP of the entire world is about USD 50 trillion, or 3.3%. The real estate of the entire world is valued at about USD 20 trillion, or 1.3%. The world’s stock and bond markets are valued at about USD 100 trillion, or 6.6%.

The big secret is that the major financial institutions do not report the value of their derivative commitments in their balance sheets. If they did, they would be immediately declared insolvent. The Western banking system is in fact bankrupt.

Dark clouds over the real economy

In the real economy, there is no reason to rejoice. Despite the claims of recovery, all the indicators are negative. The persistent problems of debt and insufficient purchasing power have not been solved, primarily because they cannot be solved. Unemployment is at record highs, and rising. Personal bankruptcies and evictions from dispossessed homes continue to rise to record levels. Poverty is increasing globally. The number of starving people world-wide has risen to more than one billion for the first time.

Another, less well-known indicator also shows that economic activity is not on the increase. The Baltic Dry Index (BDI) measures shipping rates for large bulk carriers that transport commodities such as coal, various types of crucial metallic ores, cement, cocoa, grains, phosphates, fertilizers, and animal feed. As a measure, it is immune to speculation and is an accurate reflector of industrial activity world-wide. In contrast to many other types of important economic data, it is updated every day.

From June to December 2008 the BDI declined by 94%, because of a steep drop in demand for shipping. This in turn resulted from the global slowdown in economic activity as well as the unavailability of credit for the purchase of goods and payment of time charters on ships.

The BDI recovered somewhat in the late spring and early summer of 2009, almost exclusively on the basis of a temporary increase in demand for imports in China. Since then the index has been very volatile, and is now at about 30% of the level in June 2008. A steep collapse in demand for container ships also reflects the decline in the real economy. Earlier this year Moeller-Maersk of Denmark, the world's largest container-ship operator, laid up at least 25 big container vessels and announced that it expects lay-ups of container ships in the world market to increase by 66% by early 2010.

Preparing to contain revolt

At the more rarified levels of the ruling class there is evidence that a “return to normalcy” is not expected within the foreseeable future, and precautions are being taken to deal with the unrest that is anticipated. The prospects for generating substantial numbers of jobs are dim, and people without jobs, money or homes may become desperate. The reduction in public-sector spending that results from the so-called rescue of the financial sector is one of the factors that are expected to stimulate unrest. Expenditure for war is another. For example, the bulk of outlays by the Obama administration is for wars, rescuing the banks, and paying interest on the public debt. There is not much left over.

In June the World Bank reported that about 1 trillion dollars will be drained from the economies of the world's poorest countries this year as a result of the financial collapse. Debt-ridden countries will be subject to IMF and World Bank schemes for even more austerity in labor markets and he public sector.

Early this year IMF head Dominique Strauss-Kahn predicted increasing unrest, saying it could happen “almost everywhere. It may worsen in the coming months.” He was presumably upset by the widespread protests in the Baltics and former Eastern European socialist countries, as well as in Russia. The Royal Bank of Canada warned of “regime collapse and sudden movements to the left” in Eastern Europe and the former Soviet Union. In April the British police sealed off a large portion of London in order to protect the members of the G-20 group from angry protesters, many of whom were identified as middle-class by the police commissioner who is responsible for what is called “public safety”. Violent protests have occurred repeatedly in other Western European countries since the start of the year.

In February Dennis C. Blair, the US Director of National Intelligence, presented his annual report, which identified the global economic crisis as the greatest threat to America’s security. He said that the longer the crisis drags on, the greater the threat it will pose to political stability. “Economic crises increase the risk of regime-threatening instability if they are prolonged for a one- or two-year period. And instability can loosen the hold that many developing countries have on law and order, which can spill out in dangerous ways into the international community." Blair referred to “violent extremism” in Europe during the depression of the 1930s and warned that “about 25% of all countries have already experienced low-level instability”, mostly in Eastern Europe and the former Soviet Union, and that if the crisis continues there is a risk of regime change. He said this would make it more difficult to open national markets to international capital.

Blair’s warnings are reflected by the recall of at least two US army brigades from Iraq to the continental US, According to the newspaper Army Times, their task is to deal with emergencies traceable to natural or human causes, such as “civil unrest” and demonstrations.

According to a report by the Strategic Studies Institute of the US Army War College, in case of state- or nation-wide “dislocation of the social order” the Department of Defense will have to become an “enabling hub” to ensure authority. In other words, a military dictatorship would have to be established in Washington.

In Western Europe, special-forces units have received training in urban street fighting to combat “civil unrest” in a number of countries, including Sweden and France. The ultimate guarantor for the existing European social order is of course NATO. We pointed out in the early 1990s that NATO has two main tasks – to combat a possible resurgence of the Communist movement in the East, and a working-class revolt in the West.

At a previous conference we stated that the annulment of traditional bourgeois democracy is one of the prime characteristics of Fascism. The framework for the repressive measures that will be required to maintain the capitalist system exists already. The basic structure of the EU is a de jure refutation of traditional bourgeois democracy. The ratification of the Lisbon agreement is a major step toward even more authoritarian rule. In the US, representative democracy at the national level has been shredded to the point where it is unrecognizable.

Another prime component of Fascism involves continuous physical and legal attacks on labor unions. A recent report on trade union membership in the OECD countries 1960-2006 shows a considerable decline, with few exceptions. The report is available at www.oecd.org/dataoecd/25/42/39891561.xls

In conclusion I would like to cite one of the two best books I know of on Fascism: Behemoth, by Franz Neumann, written in English in 1944. The other book is Fascism and Dictatorship, by Nicos Poulantzas, first published in 1968.

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Neumann wrote that “The fundamental goal of National Socialism is the resolution by imperialistic war of the discrepancy between the potentialities of Germany’s industrial apparatus and the actuality that existed and continues to exist”, i.e. the potential for profit.

Neumann described the structure of German Fascist society as “A small group of powerful industrial, financial and agrarian monopolists tending to coalesce with a group of party hierarchs into a single bloc disposing of the means of production and the means of violence”, and “A large mass of workers and salaried employees without any kind of organization and without any means of articulating their views and sentiments.”

This is the future that awaits the world unless Communist and Workers’ parties can mobilize the working class – as fast as possible.