An
evaluation of the present situation of the economy and recent developments
allows us to confirm without any doubts the existence, and deepening
progression, of the worldwide crisis of capitalism. This is a phenomenon
simultaneously threatening and hopeful, which the masses feel and are affected
by daily, and which only renegades, the sceptical and the naive can deny.
The
present crisis is an important historical conjunction. It consists of the
deepening of the self-destructive elements of bourgeois rule, in the midst of
a dangerous tendency towards the breaking of the unity of the imperialist market
and the creation of political and economic blocs which compete among themselves,
with the consequent accentuation of inter-imperialist tensions and conflicts and
of wars - without, however, us being able to predict exactly for the moment the
time or specific form of these developments and explosions.
The
present difficult situation of the bourgeoisie in the economic arena coincides
with the tendency towards the right of political regimes across the world and
with the still muted response on the part of the proletariat and peoples -a
situation, however, which gives indications of changing, through the occurrence
of objective factors, the deepening of social discontent, and through
revolutionary action.
The
former implies that we are entering a period of growing economic and political
instability, with ever deeper and more frequent crisis which bring with them
grave repercussions, above all in the neo-colonial countries (as in the
resurgence of the external debt crisis in the countries of Latin America). This
instability will express itself in the coming together of the financial and
monetary crisis of the world markets, simultaneously affecting the imperialist
countries. This will narrow the margin for manoeuvre for the bourgeoisie, and
will improve conditions for the recovery of the workers' movement and the
beginning of the revolutionary crisis.
Monetary disorders
The
most marked of the characteristics of the present crisis is that it tends to
express itself in acute monetary disorders which affect international currency
markets, and in particular hasten the sinking of the dollar as world money. In
this monetary and dollar crisis we find concentrated in one financial package
the severe financial traumas which are afflicting the world.
We
refer to the crisis of the external debt of the neo-colonial countries, the
commercial and fiscal failings in the more powerful countries, the upheavals in
well-established markets, the monetary turbulence in Europe, the serious falls
profit and even losses in the huge multinationals, especially in Japan, the
acute crisis of the banks which is shaking Japan, Mexico, Venezuela and
Argentina, the ups and downs of the stock exchanges, etc. The above factors add
up to raised levels of unemployment and inflation - masked by official
statistics- as well as constant occurrences of cash crises and high interest
rates which particularly affect the underdeveloped countries.
We
are entering a period of growing political and economic instability.
The impotence of the IMF
Key
to the present crisis is the upsetting of the imperialist economic order,
represented by the degeneration and loss of the leadership of the IMF. Up until
the `70s, the IMF functioned as the axis of the global financial system and as a
bank to put out fires internationally, with the aim of preventing the repetition
of the linked slumps of the `30s when massive insolvency in various countries
caused them to default on their debts and to cause the collapse of the banks.
Since
the financial collapse of 1971, , when president Nixon was obliged to devalue
the dollar and neo-liberal reforms were initiated, the IMF has begun to lose
authority in world financing. These neoliberal reforms, timid at the beginning
and accelerated from the beginning of the `80s, gave an unaccustomed spur to
finance capital which, while entering fabulous speculative profits, pushed
capitalism into a period of decline in industrial profits. Thus the crisis in
the productive sectors was accentuated, and enmeshed with the financial and
monetary crisis.
A
landmark in this direction was the first external debt crisis, begun with the
virtual collapse of the Mexican debt in 1982, which suspended the world
financial system, whose palliative measures only succeeded in accentuating the
weakening of the economies of the underdeveloped countries, a situation which
was aggravated by the neo-liberal policies of "rationalisation and
austerity", imposed on them by the IMF.
The
second Mexican debt crisis, which occurred at the end of 1994 and has still not
ended, left the IMF staggering and almost without reserves. The
"solution" to this crisis demanded from the IMF the handing over of a
"gigantic" credit of $17,800 million, as part of the $52,000 million
which it cost to "rescue" that economy. Since the beginning of the
`80s, the IMF has pleaded for an increase in its funds, to enable it to attend
to the constant and growing financial and monetary crises in the world -but the
main world powers are unable and do not wish to refinance it.
This
is due basically to three reasons. First, because of lack of capital in
countries such as those of the United States and England. Second, because that
would imply a change in the political and economic hegemony of the IMF in the
world, in favour of the new financial powers, Japan and Germany, and against the
old, the United States, England and France. Finally, to increase the credit
capacity of the IMF would reduce the room for expansion and profits of private
financial capital -in particular that of United States and England; a tendency
strengthened at the moment by neo-liberal policies.
Because
of this, IMF has decided to sell its gold reserves, in a complicated process of
international privatisation of its funds, linked to the growing need of
countries for emergency credit, intensified by the enormous hole in the world's
finances caused by the Mexican crisis.
That
is to say, the IMF is going to sell off the little that remains of any thing
solid belonging to this pillar of the "old world order". The once
"glorious" IMF is now sclerotic and reviled, as much by the masses
against whom it was established as merciless executioner, as by the private
finance magnates who besiege it, seeking to profit from their capital and impose
their onerous demands on the world markets without its unwanted interference.
The
present crisis demonstrates the inexorable advance towards the intensification
of inter-imperialist disputes, and the weakening of the apparently iron unity
and friendship between the world oligarchies, who in fact confront each other
with ever more irreconcilable economic interests. These growing
inter-imperialist fissures threaten to break the fragile consensus which allows
the continuation of capital's markets around the world.
Particularly
dramatic is the level of confrontation between the United States, Japan and
Germany, in spite of all efforts to moderate it; because avoidance of political
tensions is necessary to the achievement of speculative profits on the world
market. On the other hand there is the risk of a repetition of the havoc which
these confrontations may unleash, as happened with the stock-exchange collapses
of 1987 and `89, faced with virulent verbal conflicts between the leaders of the
above mentioned powers, for similar reasons.
This
time, in April 1995, in the face of the complacent and impotent attitude of the
American authorities towards the coming down of the dollar, the governments of
Japan and Europe, and the director of the IMF reacted angrily and fiercely
blamed the United States for "not having done anything to stop the collapse
of its currency in the international currency markets".
Each
party puts arguments in its defence and attacking its rivals. The Europeans and
Asians accuse the USA of being the cause of the world economic upheavals which
are seriously affecting their economies as a consequence of the fall of the
dollar, and they accuse North America of being lax in its management of the
economy and of avoiding the monetary and financial leadership which it undertook
in the agreements of Bretton Woods after the World War Two; furthermore, of not
realising the efforts required to reduce its enormous commercial and fiscal
deficits as well as its colossal indebtedness. They demonstrate with statistics
that the USA finances through its partners 40 per cent of the said deficits,
weakening the dollar and causing scarcity of capital in the world market.
The
USA replies that as a percentage of the GNP, it possesses fewer budget deficits
than those who accuse it of being dissolute; it even demonstrates coefficients
of the state debt to be less than stated by its accusers. The authorities of the
"colossus of the north" will admit only that with regard to its
commercial deficit the USA is in a worse condition than that of its rivals, as
is revealed in the large and chronic deficit in its commercial exchange with the
rest of the world, which today reaches $150,000 million.
But
the USA blames Japan for this imbalance, allegedly caused by its (Japan's)
disloyal commercial practices; since, according to the Americans, that country
has not liberalised its economy and thereby hinders external competition.
Moreover, the USA blames its European partners for the "excessive labour
regulations" carrying with them costs which, in America's opinion, distort
the markets and affect the world trade. The USA adds that it is untrue that the
fiscal component of the large deficit in the USA's balance of payments is the
key to the weakness of the dollar, and they add as proof that during the Reagan
administration, with its enormous budget deficits, there were huge rises in the
value of the dollar, which also caused protests among the USA's rivals and
critics.
They
also reject the arguments of their allies, according to which the situation of
the dollar is due to the low rates of interest in the USA, since, as from last
year, the Federal Reserve Bank of the USA has raised the rate 7 times without
having had an effect on the recovery or even a slowing down in the fall of the
dollar. They argue that any additional rise of interest rates, as demanded by
the other powers, would only cause an economic recession in the USA which would
have negative repercussions on the rest of the world.
Finally,
with regard to the present monetary crisis, the USA adds that what needs to be
demonstrated is whether what we are dealing with is a low dollar, or, rather, an
over-priced yen or mark - due, according to the Americans, to Japan's and
Germany's own economic problems. In order to sustain this thesis, the USA shows
that during the last decade the dollar has maintained itself on a level with the
price of gold in the market, fluctuating in a band between 380-390 dollars per
ounce.
In
contrast, there has been an enormous re-valuation of the yen and of the mark
in relation to gold. Thus, if in 1985 an ounce of gold cost 90,000 yen, today it
stands at 32,000. Equally, in relation to gold, the German mark sells at half of
what it did in 1985. And, finally, the American analysts declare that the dollar
has maintained its parity or has even increased its value in relation to the
greater part of the world's currencies.
The
present crisis shows an inexorable advance towards the intensification of
inter-imperialist disputes, and the weakening of the apparently iron unity and
friendship between the world's oligarchies, who confront each other with ever
more irreconcilable conflicts of interest.
Given
such a complex material base, it is not strange to see a permanent sharpening of
social contradictions of the epoch, of warlike outbreaks in different parts of
the world and of the constant development of the arms race, including nuclear
arms -all of which makes evident that on the order of the day is the danger of
wars on a wider scale, even between the world powers who are today adjusting
themselves to the world markets.
Moreover,
the present crisis and its developments in the last two decades show clearly
that each effort of the bourgeoisie to palliate them has done nothing but deepen
and widen the coming explosion, since these policies are narrowing the
bourgeoisie's room
for
manoeuvre and forcibly creating the conditions for an upsurge in the workers'
movement. Even more, the forms assumed by the present crisis are very similar to
those which preceded the great financial collapse of 1929, which brought the
world to the holocaust of fascism and the Second World War, as well as to great
an unforgettable struggles by the world proletariat.
The
immediate origin of the present crisis dates from the beginning of 1994, when
the financial authorities of the USA saw themselves obliged to reverse the
measures imposed after the two great stock-exchange crises of 1987 and 1989, and
to check the economic recession which was spreading worldwide. The Federal
Reserve Bank, in order to try to alleviate the disastrous financial situation
-(in each one of the above cited crises more than a billion and a half dollars
were lost)- decided from 1989 to lower to astonishing levels the rates of
interest. This measure helped the affected American banks and monopolies to
recuperate gradual -but at the cost of weakening the dollar and reducing the
investment of speculative capital into the country.
Speculative
capital, alienated by the low levels of interest in the USA, instead invested
massively in Latin American countries, which with their liberal financial
reforms offered greater rates of interest. Moreover, given that the low rates of
interest in the USA reduced their burden in financing their external debt, the
financial orgy was total, allowing fabulous profit-making and ensuring the
recuperation of those countries in a wave of speculation -which in the cases of
Venezuela, Mexico, Argentina and Brazil were described as economic
"miracles".
The
undoing of this began on 4 February 1994, when the Federal Bank felt obliged to
reverse the falling rates of interest, and to put into effect seven consecutive
increases in those rates, which gave a radical turn to the situation. The
neo-liberal "economic miracles" went up in smoke, and were transformed
into infernos with the flight of "names" and speculative capital,
native as well as foreign. The first serious case was Venezuela, which in 1994
saw its banking system plummet by 50 per cent.
The
flight of capital continued, and at the end of the year in Mexico had become a
general stampede, when on 10 December, the government felt obliged to devalue
its currency by 10 per cent, faced with a vertical fall in its reserves. The
abrupt end of the Mexican orgy also affected the majority of its neighbours,
among them Argentina, Brazil, Peru, Chile and Colombia, since, taking advantage
of the feast, they had accepted huge investments of fictitious capital which
swelled their stock exchanges.
The
effects on Latin America of the Mexican crisis are still not over. On the one
hand, they have forced, up to a point, a retreat on the "freeing up"
of the rates of exchange and on financial liberalisation, and the restoration of
some of the financial controls which had been removed, something which is viewed
with suspicion by the world bank. At the same time, they have re-imposed severe
policies of control against the working population, in order to increase
national savings, measures which are increasing social unrest and problems of
governability.
The
world economic situation demonstrates inescapably the failure of neo-liberal
policies, which were supposed to reduce inflation rates, to offer economic
stability, and bring about a leap forward in world development. In spite of a
certain reduction in rates of interest and the following fall in exchange rates
of interest and the following fall in exchange rates, the reality is that what
remains of these "shock tactics" and "neo-structuralist"
adjustments, shows that these measures are very far from being the wonderful
elixir which would enable capitalism to recover from its crisis and return to
youthful health.
The
present withdrawals from the currency markets have put the world economy in
jeopardy, since every movement up or down in the USA's rates of interest can
unleash a world financial crisis, and plunge the world into the nightmare of war
and fascist barbarism -although it can also create great possibilities of
generalised revolutionary situations.
The significance of the fall of the dollar
The
dollar crisis shows that the forces of the world capitalist markets are becoming
increasingly out of control, and that their repercussions can destroy entire
economies. In the first three months of 1995 alone, the central banks of the
three most powerful countries in the world were obliged to invest $30,000
million to try to stop the fall of the dollar; an exercise which was not only
useless, since the dollar still continued its vertical descent, but was also
costly, given that in these operations the banks lost $1,200 million.
One
of the main reasons for the impotence of the international monetary authorities
resides in the
Beyond
its appearances and the chronic weakness of the dollar in the world financial
markets, this crisis has demonstrated a serious and sharp anaemia in the
accumulation of national capital which supports the fragile American currency,
as a result of the growing breach between the diminishing treasury reserves of
the "great" power America (around 86,000 million dollars) in
comparison with its growing national debt of more than $15 billion -that is to
say, almost 20 times more.
In
1994 alone the American debt increased by 160,000 million dollars because of the
commercial deficit of the USA in relation to other countries, and by another
150, 000 million dollars because of a budget deficit, which is financed by the
world capital markets. Alongside this fictitious expansion goes an inevitable
increased indebtedness of the private sector of this country, which inflates by
up to 20 times the share value of its enterprises in the stock markets and the
huge volume of capital represented in the companies' shares. Equally there is a
growing spiral of fictitious financial offshoots, linked to the markers of raw
materials, of stocks and shares and innumerable airy forms which attach
themselves to finance capital, which is over-expanded in all the imperialist
powers, especially in the USA The monetarist and arbitrary management of the
dollar as world currency and of the American debt, which triggered the fabulous
financial orgies, allows the USA to be the principle expropriator of
international surplus value in conjunction with its multinationals and private
financial tentacles.
To
sum up, the problems caused by the overdose of American dollars, stocks and
shares in the world markets of capital, not only affect its rivals, but also
bring closer the moment when their devastating effects will be felt in the
economy of "Uncle Sam".
The theoretical exhaustion of neoliberalism
The
humiliating fall of the previously all-powerful dollar as a world currency
allows us to see the sharpening degree of inter-imperialist rivalry which, apart
from objective conflicts, is linked to the theoretical exhaustion of
neo-liberalism. The incapacity of the bourgeoisie to analyse the present crisis
is well-known, as is its evasiveness in putting forward any clear explanations
which could identify causes or propose solutions.
If
from the monetarists' point of view the main disruptive element in the economy
and the market in general has been the problem of inflation -whose fluctuations
determine present governmental management of rates of interest and the volume of
money and credit in circulation- then the present crisis of the dollar has
demonstrated to society the fallacy of the above "sacred" neo-liberal
policy, and the serious limitations of its analysis and methods.
The
reason is very simple. Neo-classical theory, on which it is based, leaves on one
side the principle categories of Marxism -alone objective and scientific- such
as production, surplus value, wages, social classes and production cycles. That
is to say, neo-classical analysis is empirical and unreal, and in moments of
sharp crisis totally loses its value, independently of the sophisticated
economic equations with which it is elaborated, the tons of statistics on which
it is based, and the powerful computers which process them.
To
sum up, we can say that in monetarist and neoliberal terms -under the
so-called concepts of macro and micro economy- nothing makes sense and there is
no possibility of seriously addressing these economic controversies -let alone
of finding a solution to the crisis of capitalism.