Neo-liberalism, globalisation and the response of the left

This is the transcript of a speech given by Jordi Martorell at the Rand Afrikaans University in South Africa on October 10, 2002. It sums up our understanding of the struggle against capitalism today and also provides many useful links to our articles on globalisation and the workers' movement internationally.

If we want to set a date for when the policies which are commonly known as "neo-liberalism" were launched then we could go back to the election victory of the Conservative Party in Britain in 1979, under the leadership of Thatcher. The economic policies applied by the Thatcher government in Britain, which then spread around the world, can be summarised in a number of key points:

- Privatisation of state assets and services
- Cuts in public spending, particularly through the dismantling of the welfare state
- "De-regulation" of the labour market, that is the abolition of all protective legislation the labour movement had won over a period of decades
- Liberalisation of trade, that is forcing countries to open up their markets to foreign competition

The basic aim of these policies is the increase or maintenance of capitalist profits through increased exploitation of the workers and the underdeveloped countries. We see how workers, even those in the advanced capitalist countries have suffered the lengthening of their working week, casualisation of labour, speed-ups in their work patterns, the abolition of trade union rights, etc. Underdeveloped countries have also suffered increased exploitation mainly through the fall in the prices of raw materials, which constitute their main source of income, but also through the mechanism of the foreign debt.

The prices of raw materials are controlled by a handful of multinationals worldwide, and these prices have been driven down consistently to a point where they are now at their lowest levels since the 1930s in real terms. The total amount of debt of the "Third World" countries has gone up from $600bn in 1980 to $1.4trn in 1990 and to a staggering $2.1trn in 1997. This despite the fact that the original amount owed has been paid many times over in the same period of time. For instance, between 1990 and 1997, "Third World" countries paid a total of $1.8trn just for the servicing of their debts (For a detailed analysis of the process of imperialist exploitation see: Marxism and the Struggle Against Imperialism, Alan Woods and Ted Grant, 1998).

There is a debate about whether these policies are the result of the subjective will of the capitalists or whether they are imposed on them by the economic circumstances. The answer to this question is that, to a large extent, governments around the world are forced to apply these kinds of policies if they want to maintain capitalist profitability in the current period of capitalist development. For a long period of time during the long capitalist upswing after the Second World War (from 1948 to 1973) (For an explanation of the reasons and dynamics of the post-war upswing see: Will There be a Slump?,Ted Grant, 1960), the ruling class in most countries applied policies of state intervention in the economy and Keynesianism. Under conditions of steady and sustained economic growth they could make important concessions to the labour movement, amongst others the creation of free universal health care systems, free education, unemployment benefits, trade union rights, etc. The ruling class could afford to make these concessions (under the pressure of the organised working class) because the economic conditions were right. When the economic cake was growing, a few more crumbs could be thrown to the workers from the capitalist banqueting table.

However, this period of upswing came to an end in 1974. After that a period of stagnation and crisis opened up for the capitalist economy worldwide. The result was that the policies of public spending, which had been applied until then were no longer working and in fact created massive public debts and inflation in most countries. In order to maintain their profits capitalists needed to cut back, and obviously they started to cut back on social spending and tried to squeeze more surplus value out of the workers, and also to increase the exploitation of "Third World" countries. This is the real meaning of these so-called "neo-liberal" policies. In fact there is a danger involved in the idea that we must fight against "neo-liberalism" or "globalisation", because one could draw the conclusion that there is a different, "nicer" way in which capitalism can rule in this period. In fact, what we should explain is that these policies are the direct result of the crisis of capitalism itself and therefore we must say clearly that the struggle must be against the capitalist system as a whole, not just one or other of its symptoms.

The implementation of such policies was also helped after 1989 by the collapse of Stalinism in the Soviet Union and the Eastern European countries. For Marxists it is clear that the fall of the Soviet Union was the direct consequence of Stalinism. A regime of nationalised planned economy cannot exist without full and genuine workers' democracy. The attempt of a bureaucratic caste to run industry and the state in the name of the workers, but without the direct participation of the majority of the population, was doomed to fail (For a balance sheet of the experience of the Russian Revolution and the USSR see: Russia: from Revolution to Counter-Revolution, Ted Grant, 1997). However, the fall of the Soviet Union allowed the ruling class in the West to launch an unprecedented propaganda campaign to say that "socialism had failed", that this was "the end of history", and that capitalism, whatever its faults, was the only system possible and that "There Is No Alternative".

Another effect of the fall of Stalinism was to reinforce the domination of US imperialism, which could now force its policies onto other countries more easily. The 1991 Gulf War was a demonstration of that, (although the might of Washington was riddled with contradictions that were to surface in the following years). Capital felt confident and there was certainly disorientation in the labour movement. A number of important defeats for the trade union movement also added to the situation, a clear example of that was the defeat of the year-long miners' strike in Britain in 1984/85.

All this coincided with the new capitalist upturn of the 1990s. However, this growth cycle was fraught with contradictions. For instance it relied heavily on speculation, the stock exchange bubble, etc. The massive increase in speculation is another indication of the parasitic nature of capitalism in its current phase, where capitalists can make fabulous profits just by moving their money around. But at the same time it did produce some real growth in the economy, particularly in the high tech sector (Internet revolution: a new paradigm or another bubble?, Michael Roberts, 2000, and On a Knife's Edge: Perspectives for the world economy, Alan Woods and Ted Grant, 1999).

However, the anarchic character of capitalist production reaffirmed itself in a number of crises that started in 1997 and which started to shatter the myth of the viability of these "neo-liberal" policies. Thus we saw the collapse of the South East Asian "tigers" (which had been presented as models of capitalist success) in 1997 (The First Tremors, Ted Grant, 1997), the collapse of the Russian economy in the summer of 1998, the collapse of the "new economy" stock exchange bubble in April 2001 (Bulls, bears and bust, Michael Roberts, 2000), the devaluation of the Brazilian real in 2000, which in turn led to the massive devaluation of the Turkish lira in February 2001, the collapse of the Argentinean economy in December 2001, which led to the revolutionary events currently taking place in that country (Argentina - The Revolution has Begun, Alan Woods, 2001), the biggest corporate bankruptcies in history (Enron and Worldcom - See: Enrongate, Mick Brooks, 2002), and so on and so forth...

In fact it is increasingly clear that these "neo-liberal" policies have failed to deliver what they promised. For instance privatisation of public services was supposed to bring about cheaper and more efficient service delivery. If we have a look at the results of the privatisation of the railways in Britain we can see that this has been an unmitigated disaster. Train services in Britain are now more expensive, less reliable, less safe and one of the private companies, Railtrack, has just gone bankrupt and the state has had to intervene to save it! No wonder that more than 75% of the population in Britain is now in favour of renationalising the railways (Rail privatisation in Britain - a warning, Socialist Appeal, 2001). Argentina was a country that was presented as one of the best "pupils of the IMF". The country's government followed faithfully all the advice coming from the IMF and the World Bank, privatising all public companies, opening up its trade barriers, reducing public spending and basically pursuing "sound economic policies" and "fiscal prudence". As a result, Argentina defaulted on its foreign debt, is suffering a massive economic depression and 40% of its population now live under the poverty line, all this in a country which used to compare itself to Europe and look down on its Latin American neighbours.

All the talk about trade liberalisation has also been exposed as a one-way effort on the part of imperialist countries to conquer markets while protecting their own. In July the United States approved a massive package of farm subsidies, while at the same time insisting that Third World countries end food subsidies. While Washington uses the WTO to "open up" other countries' markets, they are busy implementing protectionist tariffs on steel (A Global Steel War?, Michael Roberts, 2002) and fighting a whole series of trade wars with Europe.

In South Africa these policies were adopted wholeheartedly by the ANC government, particularly through the implementation of the mis-named Growth, Employment And Redistribution (GEAR) programme from 1996. The government lowered the country's import tariffs (even at a faster rate than what the IMF had recommended!), moved to privatise basic services and parastatal companies, and in general has pursued so-called "investor-friendly" economic policies aimed at attracting Foreign Direct Investment. The justification that was offered for these policies was that, in a globalised world, they were the only ones possible and that they would create the necessary economic growth which would make redistribution possible. Six years after we can say that GEAR has been an unmitigated disaster as measured against its initial promises and forecasts. Instead of job creation, nearly one million jobs have been destroyed (many of them as a direct result of a flood of cheap imports). Foreign Direct Investment has almost dried out. Inflation has gone through the roof and the value of the Rand has collapsed, as the country's economy has become more vulnerable to speculative movements of capital.

In the last few years we have seen the beginning of a backlash against neo-liberalism and globalisation. The masses of workers and poor around the world, having experienced directly the negative effects of these polices, are starting to fight back. Thus we saw the Indonesian Revolution in 1998 (Indonesia: the Asian revolution has begun, Alan Woods and Ted Grant, 1998), which toppled the hated Suharto dictatorship and the Ecuadorean revolutionary uprising in January 2000 (The uprising in Ecuador marks the beggining of the 21st century, Jorge Martin, 2000). More recently the whole of Latin America has been shaken by a wave of mass protests and mobilisations particularly against privatisation. In Peru a mass movement in the south of the country with insurrectionary characteristics defeated the planned privatisation of water and electricity in May-June of this year (Peru - Mass uprising defeats privatisation plans, Jordi Martorell, 2002). Last year a similar movement defeated privatisation of water in the Bolivian city of Cochabamba (Bolivia: state of emergency to crush anti-privatisation protests, Jorge Martin, 2000). In Paraguay a general strike combined with a mass movement of workers and peasants forced Parliament to withdraw all privatisation plans. Uruguay has seen a series of successful general strikes in the last few months. In Venezuela we saw the election of Chavez on the basis of a very radical programme of opposition to imperialism, maintenance of public ownership of the country's oil resources and land reform. His actions, though far from representing a genuine socialist alternative, soon came into conflict with the interests of local and international Capital, which started to organise a military coup. This took place on April 11 with the support of the most reactionary sections of society and the backing of the US embassy. The significant fact, though, is that the coup was defeated by the mass mobilisation of workers and the poor just 36 hours after having taken place! (Revolution and Counter-revolution in Venezuela, Alan Woods and Ted Grant, 2002) The Nigerian general strike last year and the general strikes in South Africa (General strike against capitalist policies , Jordi Martorell, 2000) can also be considered as part of this new wave of mobilisations.

These are not only taking place in backward or less developed capitalist countries, but also in the advanced capitalist countries of the West. After all the current wave of "anti-globalisation" demonstrations was initiated with the demonstration against the WTO meeting in Seattle (From Seattle to Nice, Roberto Sarti, 2001) with the participation of 100,000 American workers and youth. Mass anti-capitalist demonstrations have also taken place in Barcelona (500,000 people) (Mass Anti-Capitalist Mobilisation in Barcelona, Aniol Santo, 2002), against the war in London (400,000) (400,000 march in London against Blair's (and Bush's) plans to attack Iraq, Fred Weston, 2002), etc. This movement, which started mainly as a youth protest has now spread to the organised working class and we have seen mass general strikes in countries, like Greece (May 2001 Greek General Strike - a lesson for the workers of all Europe, Alan Woods, 2002), Italy (Italy: More than a general strike of 10 million workers, Roberto Cressatti, 2002 and Italy after the general strike - Heading for new explosions, Claudio Bellotti, 2002) and Spain (Three million march on Spanish general strike, El Militante, 2002).

All these movements and protests put together clearly show a growing mood of anger and rebellion against the conditions created by the capitalist crisis. The movement still has a confused character in the sense that it is not putting forward a clear alternative, but on the other hand it is very clear on what it is fighting against. The task of revolutionary Marxists is to help the movement draw clear conclusions, the problem is not merely the WTO or the IMF, the problem is not only "neo-liberalism" or "globalisation". These are just manifestations, symptoms of the current period of capitalist crisis. The conclusion therefore should be clear, we must fight against capitalism itself. Only by abolishing this system, which is based on maximum profit for the few, we can build a world free of poverty, hunger and exploitation. Only through the struggle for socialism can we take the movement forward and give it a clear perspective.

This should be even clearer in South Africa. After years of struggle, the national liberation movement brought about the end of apartheid and the introduction of formal democratic rights. However the fundamental structures of apartheid capitalism were left untouched. The economy, the wealth of the country remains under the control of a handful of (white owned) monopoly groups that dominate 90% of South Africa's economy. As long as this is the case there is no room for a substantial improvement of the living conditions of the majority of the people who fought hard for liberation. In order to provide the masses with access to housing, electricity, water, jobs and land massive resources are needed. These are in the hands of a few banks, mining companies and manufacturing corporations. They should be taken into public ownership under the control of the workers and used to improve the conditions of the majority. National liberation cannot be fulfilled outside of the struggle for socialism. The experience of South Africa in the last 8 years, and also the experience of Zimbabwe (Zimbabwe: The failure of 20 years of capitalist independence, Jordi Martorell, 2002) in the last 22 years, show this clearly. The current ANC leadership is firmly committed to capitalism, but under capitalism there can be no solution to the needs of the majority of the people who put the ANC in power. This is the contradiction that has led to the recent COSATU general strike against privatisation and against poverty (COSATU's 2-day general strike - ANC right wing launches attack , Jorge Martin, 2002). A clear revolutionary socialist perspective is needed (South African Communist Party Congress: Return to the ideas of Lenin!, Jordi Martorell, 2002).

We are at the beginning of a world-wide movement against capitalism. In the next few years the masses of the workers, youth and peasants will move once and again, in one country after another, to fundamentally transform society. In order for this movement to be successful and victorious we need to arm it with a revolutionary leadership which understands the experiences and mistakes of past struggles. The ideas of Marxism are now more relevant than ever and once they conquer the minds of the masses they will become an unstoppable force which will transform the face of the planet. We are faced once more with the choice between "socialism or barbarism". But we are confident in the ability of workers to transform the world and establish a society free of exploitation and violence, and where there is plenty for all.