|A regime in crisis
The significance of the present crisis goes far beyond economics. It has
profound political and psychological implications. Even before the present
wave of scandals, many people in the USA were beginning to question the
validity of the present system. The unprecedented level of abstentions at
the last presidential election showed just how far ordinary Americans are
alienated from the political establishment. Last September we had the
spectacle of a President "elected" by fraud, declaring war against all and
sundry. The events of September 11 had the effect of temporarily boosting
Bush, but this process, as we predicted, was bound to turn into its
opposite. It may be that this has already begun.
In the past, Americans regarded the world of "private enterprise" rather as
the Jews of the Old Testament regarded the Holy of Holies. But now the
whole mood of society is beginning to change. There is a growing suspicion,
even outright hostility towards big business. Now this is extending to the
political establishment and the Presidency itself. This is the reason for
the unprecedentedly harsh attacks of both Republican and Democrat
politicians against corporate America. They have understood that if
something is not done (or, at least, the impression given that something
will not be done) the present scandals could lead to a crisis of the regime
As a result of these scandals serious questions are being asked: "America
rewarded hard work and smart people. But now Americans are asking just how
much of the great boom the country has gone through was real, or the result
of corrupt executives enriching themselves at shareholders' expense with
the help of complicit accountants and greedy bankers." (The Economist, July
All this is more than just an inconvenience. It is dangerous, because the
doubts and questioning in America are not confined to the business sector.
People do not believe that it is a question of just a few isolated cases.
That might have been believable after the Enron scandal, but not now. There
are too many scandals involving too many companies for that to be the case.
The crisis in America has already spread far beyond the boardrooms of Wall
Street. Like a shameful and highly contagious disease it has spread through
the body politic, reaching the uppermost echelons of the state. With
mid-term elections for Congress due in November, politicians in Washington
DC are falling over themselves, trying to see who can talk the toughest
over corporate wrongdoing.
In a speech to Wall Street on July 9, Mr Bush proposed creating a new
financial crimes "SWAT team" to catch and prosecute corporate wrongdoers.
But this is mere window-dressing. A number of the plans proposed by Bush
would require self-policing by companies and accountants. Needless to say,
none of them tackle the underlying problems.
Not to be outdone, the very next day, the US Senate proposed harsher
penalties. The result? Immediately the panic on the stock markets provoked
further falls. On Wednesday July 10, America's S&P index of leading stocks
fell to its lowest level in four years. The slump was infectious, and on
Thursday July 11 stocks experienced sharp falls across Asia and Europe.
The Democrats, with one eye on the elections, point the finger at the Bush
administration's close links to business. Both Mr Bush and his
vice-president, Dick Cheney, are having to defend themselves against
allegations of irregular dealings during their time as businessmen. The
dirty water is slopping against the walls of the White House itself.
Halliburton is an oil company that used to be chaired by Dick Cheney. The
SEC is looking into how this company handled cost overruns on construction
jobs. Judicial Watch, a conservative group, is suing both Halliburton and
Mr Cheney for allegedly deceiving investors.
Even more damaging is the issue of Harken Energy, a company in which George
W. Bush was a director. In 1990 he sold shares in the Texan firm just eight
days before it unveiled sharply-increased losses. As an insider, he ought
to have told the SEC immediately, but notice of his sales was not filed for
nine months. Mr Bush has blamed this on a "mix-up" by his lawyers. The SEC
investigated at the time, but - naturally enough - never took any action.
Bush himself is therefore in a highly vulnerable position. He has been
forced to defend himself over his own links to big business and allegations
of improper dealings. In the present climate, close links with big business
is the kiss of death, as the Economist points out:
"As the first American president with a masters degree in business
administration, Mr Bush was always expected to be more than a little
friendly towards corporate America and Wall Street. Unfortunately for him
and other members of his administration, friendliness to boardrooms and
financiers has become something of a political liability following the wave
of accounting scandals. Mr Bush is giving his support to the chairman of
the SEC, Harvey Pitt, who has come under fire from politicians on both
sides of Congress. A number of leading senators have called for Mr Pitt's
resignation as America's chief markets regulator. Ten months after being
appointed to the job by Mr Bush, he has been attacked for dragging his
feet. Mr Pitt, a former securities lawyer, is accused by his critics of
conflicts of interest which have led him to put his former private clients
- especially big accountancy firms - before the public interest." (The
Economist, July 11, 2002)
At present, financial crimes can be so difficult to prosecute that criminal
charges may never be filed. Wealthy businessmen with slick lawyers can
usually wriggle out of awkward situations. Patrick Leahy, a leading
Democrat and the chairman of the Senate Judiciary Committee, pointed out
that: "If you steal a $500 television set, you can go to jail. Apparently
if you steal $500 million from your corporation and your pension holders
and everyone else, then nothing happens."
This is only saying what everyone already knows. Long ago Anatole France
wrote about the "the majestic egalitarianism of the law, which forbids rich
and poor alike to sleep under bridges, to beg in the streets, and to steal
bread." Everybody knows that there is one law for the rich and another law
for the poor. However, the spectacular nature of the recent revelations
must have brought home to many millions of ordinary Americans the close
links between big business and the political and legal establishments.
One blow after another
On a world scale, capitalism is being shaken by one blow after another. New
crises and convulsions break out even before the previous ones have been
resolved. Slowly, a growing number of people are beginning to realise that
something is fundamentally wrong. Old beliefs are being called into
question. Old and deeply rooted faiths are being shaken. Old leaders are
being weighed in the balance and found wanting.
Those who conclude that the present crisis is merely of a transient nature
are mistaken. They have not understood the real nature of the present
epoch. It is asserted (even by people who have read at least a little Marx)
that the crisis we see before our eyes is merely cyclical in character, and
moreover, is superficial in character.
What is superficial is an analysis that cannot distinguish between a
cyclical economic crisis of capitalism and the organic sickness of a system
that has entered into a long-term decline. In itself, it is true, the
present crisis of the world economy is cyclical in character. But merely to
state this does not carry us very far. It is necessary to put the crisis in
its historical context.
The nature of capitalist crisis, its depth, duration and above all the
effects that it produces in the psychology of the different classes - all
these are variables that differ according to the historical context in
which they unfold. The cyclical crises of the period of capitalist upswing
from 1948 to 1974 were so shallow that they were scarcely noticed. But the
present situation is very different.
The present crisis, which is far from over, has not yet expressed itself in
massive unemployment. The measures adopted by Greenspan, which amounted to
an increase in credit, and other measures (discount selling, the rundown of
inventories, etc) plus the inevitable rebound of the economy after the
sharp fall that followed September 11, had the effect of buoying up demand
in the USA. This temporarily shored up the stock markets. But all this does
not amount to a serious recovery. That will not happen unless and until
corporate profitability is restored, and that is nowhere in sight.
Many bourgeois economists have pointed out that recent recessions have
usually followed the pattern of a "double-dip", where a temporary rally is
followed after a certain delay by an even steeper fall in production,
employment and share prices. That is quite a likely scenario at the present
However, that is not the point. The point is that even at the present time,
the recession has been the signal for an unprecedented crisis of
confidence, doubts, questioning and global instability, which, as we have
pointed out, is by no means confined to the economy.
Bush's military policy is an expression of the fact that America has had
the misfortune to have inherited the role of world hegemony at a time of
general crisis of capitalism. On a world scale, there are clear symptoms
that the capitalist system is suffering from an incurable sickness. The
lives of millions of people are being turned into a living hell. Beginning
with the weakest economies, which used to be called "emerging countries"
there are signs of disintegration and social and economic collapse. This
has nothing to do with the economic cycle!
The so-called War on Terror is a cloak that is meant to disguise America's
ambitions to tighten its grip on every continent. Yet despite all America's
power, it has yielded no positive results. Victory in Afghanistan remains
as elusive as ever. Instead of pacifying Afghanistan the USA has stirred up
a hornet's nest everywhere. Instead of eradicating terrorism, it is
creating the conditions for new and even worse monstrosities than September
11. New shocks are inevitable. The world crisis will have important
repercussions in the USA. The very things that helped Bush to gain an aura
of credibility will turn into their opposite.
Everywhere we look we see only instability, crises and convulsions. Only
the lack of the subjective factor is holding back the movement in the
direction of a decisive showdown between the classes. The existing
leadership everywhere is acting like a gigantic brake. But this cannot
continue indefinitely. The working class will move into struggle again and
again, in search of a way out of an impasse that has become intolerable.
In Latin America there is a deep crisis from Tierra del Fuego to the Rio
Grande. The mighty Brazilian economy is poised to follow Argentina into the
abyss. The revolutionary developments in Argentina have been followed by
social and political turbulence in Venezuela, Peru and other Latin American
countries, in which the working class is coming to the fore.
In Europe, after a period of quiescence, the workers are on the move in
Spain, France, Germany, Portugal, Greece and Italy. Once they move into
struggle, the new generation will learn quickly. Lenin said that for the
masses an ounce of practice is worth a ton of theory. The new layers of
workers and youth will be free of the scepticism and routinism of the old
generation. They will be open to the ideas of revolutionary Marxism. Great
events will provide them with a hard but effective school. Our task is to
help them to draw the necessary conclusions.
A decade ago the ruling class and its ideologists were full of confidence.
Now they look to the future with dread. The present crisis is just a little
warning of what the future holds. Those in the labour movement who, under
the pressure of bourgeois ideology, drew pessimistic conclusions have been
shown to be wrong. Far from the rosy picture of peace and plenty promised
ten years ago, we have now entered into the most turbulent period in human
The only thing that has saved capitalism, and which continues to save it,
is the extreme weakness of the subjective factor. As Leon Trotsky pointed
out on the eve of the second world war: "The world political situation as a
whole is chiefly characterised by a historical crisis of the leadership of
the proletariat." For a whole series of reasons, the forces of genuine
Marxism have been thrown back a long way. This is the decisive element in
the equation on a world scale.
The contradiction between the maturity of the objective situation and the
lag in consciousness has assumed an extreme character. It is the main
reason why the crisis of capitalism is assuming a long drawn-out character.
But this prolongation of the crisis does not mean that it will have a less
violent character, but the very opposite. To the degree that an outworn and
senile system still clings to life, it poses a deadly threat to human
culture and civilisation.
Despite everything, the new generation will learn. The youth is already
beginning to draw revolutionary and anti-capitalist conclusions. If a real
Leninist party and leadership existed, the process would be far quicker.
The absolute priority is therefore to build a strong Marxist tendency that
is able to give a conscious expression to the unconscious or semi-conscious
strivings of the workers and youth.
For a whole historical period the forces of Marxism were small and
isolated, battling against the stream. But now the tide of history has
begun to turn. In the coming period we will be swimming with the flow of
history, not against it. It is necessary to redouble our efforts to build
the Marxist tendency, to strengthen it, to educate the cadres and to build
bridges to the working class and its organisations everywhere.
In the next period, the mass organisations of the working class will be
shaken from top to bottom. Ideas that today are listened to by tiny
handfuls will be eagerly sought by thousands and millions. The stage is
being prepared for the greatest class battles in history. Upon the outcome
of this conflict the destiny of humanity depends.
July 13, 2002