The world of international finance has been shaken by the default in Dubai. Shares have taken a tumble all over the world. Commentators have suggested that this could be the cause of the recession moving into a double dip, of a further downturn in the world economy.

At the end of September 2000, tens of thousands have been trying to protest at the annual meeting of the World Bank and International Monetary Fund in Prague. They are right to protest. But what are they protesting about? The World Bank, IMF and the World Trade Organisation - that was stopped in its tracks in Seattle last December - are the three pillars of the global capitalist economic order. They argue that problems like world poverty, the destruction of the environment and poisoning of our food "just happen." Actually these things are imposed by the giant multinationals that control the world's economic resources. And these three institutions are their enforcers.

Further to the publication of the Introduction to debate between AG and MB on The tendency of the rate of profit to fall and post-war capitalism and A reply to AG by Mick Brooks, we are publishing this piece by Mick Brooks which puts that debate into the context of the decline of British capitalism after the Second World War. It highlights the crisis of bourgeois economic theory and also the limitations in the method of AG.

For the capitalists, this Great Recession could be more or less over, but the level of spare capacity in industry and construction together with the level of debt still owed by businesses, government and households alike mean that this recovery may be stunted. Every major capitalist economy now finds that it has more than 30% more capacity than it needs to meet demand. That is a record high of overcapacity in industry.

The capitalist system is passing through its deepest crisis since the 1930s and the Great Depression. The apologists of capitalism – including those in the labour movement – had completely ruled out such a scenario. After all, they explained, capitalism has changed and governments are now able to over-come any deficiencies experienced by the markets. They have learned the lessons of the 1930s.

Some economic commentators and financial journalists have divined the ‘green shoots’ of economic recovery’ growing out of the present crisis. Perhaps the wish is father to the thought. Are they right?

The knock-on effects of the crisis have already hit Hungary, Lithuania and Latvia. Other countries in the region are also in the firing line. Governments are going down like ninepins. There is no end in sight to the economic and political turmoil. The so called "emerging" economies have been brought to their knees.

It is the working class of the world who will really suffer from the present crisis. Globally, the UN estimates that unemployment will reach 220m this year. Out of a global workforce of about 3 billion, that’s "only" 7%. But this figure leaves out millions of hidden unemployed who just cannot even begin to look for work. And as a percentage of those working in sweat shop and factories around the globe, it is more like 20%.

The crisis in the auto industry has reached huge proportions and is now affecting nearly every country. Demand for vehicles has fallen sharply all over the globe, with sales reaching lows not seen for three decades. If the main auto manufacturing companies go under, there will be millions of jobs lost and a massive blow to the rest of the economy, which would have a disastrous effect on the living conditions of millions of workers around the globe. So what is the answer?

The crisis of world capitalism is unfolding relentlessly and with gathering speed. First came the financial crisis (the so-called credit crunch), but now the second phase has begun - the crisis of the real economy - and it is accelerating as each day goes by. This is leading to sharp changes in consciousness, rising working class militancy and the beginnings of polarisation within the labour movement itself.

Martin Wolf in the Financial Times today: “…this would be a recipe… for xenophobia, nationalism and revolution… Everything must be done to prevent the inescapable recession from turning into something worse… Deflation is a real danger… At stake could be the legitimacy of the open market economy itself… the danger remains huge and time is short.”

Over the past weeks, Britain, many other European countries and the US have announced plans to nationalise large chunks of the financial sector, thereby taking a good proportion of the commanding heights of the economy into public ownership. A step towards socialism one might wonder. Quite the opposite reassures us the Financial Times.

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