Behind all the optimistic talk about the health of world capitalism
from Bush, Blair etc, the more serious analysts are worried. In its
semi-annual report, the Organization for Economic Cooperation and
Development announced that it is cutting its forecasts for all leading
economies. It may not happen this year, but the huge imbalance in the
world economy is going to crack.
House price increases are slowing down in Britain. In June in London
prices actually fell. This is the beginning of the end of the house
price bubble and it will be very painful for many families who have
borrowed on the basis of the increased equity in their property. It
will have a knock-on effect on the whole economy as spending is already
Over the past couple of years the U.S. economy has gained some momentum
and avoided slipping back into recession, but this was based on the
increased squeezing of the U.S. and world working class, not job growth
or significant investment in productive capacity. Even if the U.S.
economy miraculously takes off in the second half of 2005, the damage
has already been done for millions of working Americans.
The world economy is being sustained by US consumer spending and
Chinese manufacturing. US consumer spending is based on the illusion of
growing property values, but these cannot keep going up forever. The
property bubble in the US will burst and when it does it will have
devastating effects on the whole of the world economy.
It has become fashionable among contemporary bourgeois historians and sociologists to belittle the role of the working class by claiming that it has been diminished in size and influence. Some even venture as far as declaring that the working class no longer exists. Nothing could be further from the truth. Mick Brooks answered these points in an article that was originally published in November 1996 in the British Socialist Appeal.
As the Chinese bureaucracy pushes the economy of China more and more along the capitalist road, more contradictions are appearing. The more the economy is integrated into the world market the more it will be prone to all the ups and downs of world capitalism. A serious slowdown on a world scale will have devastating effects.