Economy

In the past months, the world economy has been creeping towards a state of disarray. Shops have been running out of goods, gas stations have been running out of gas, energy prices have shot up and major western harbours have become completely clogged up with swarms of ships queuing up, sometimes having to wait weeks to unload. Just as we were told that the Covid crisis was over and that life was bouncing back to normal, the world market is feeling the drag of a series of converging crises.

A data leak containing millions of documents amounting to 2.94 terabytes of information has partially lifted the curtain on the offshore deals and assets of more than 100 billionaires, world leaders and public officials. This leak has exposed the tremendous parasitism of the ruling class, totalling anywhere from US$5.6 trillion to US$32 trillion in offshore wealth.

It is undeniable that the pandemic has hammered the final nail into the coffin of the previous epoch. But jubilant claims that austerity is a thing of the past have proved premature, as the ruling class begins to wind up its COVID spending spree and resume attacks on workers. The question is, what is the character of this new period, and what will it entail for the working class?

The 2008 crash and coronavirus crisis have revived interest in the theories of J.M. Keynes, the liberal English economist. But a look at Keynes’ life and ideas show that he was no friend of the working class. We need socialism, not Keynesianism.

A revealing new Credit Suisse report has exposed how in 2020 the ‘millionaire club’ grew dramatically, despite capitalism being on life support, as wealth inequality rose massively. The USA saw the creation of 1.73 million new millionaires; Germany, 633,000, and Australia over 300,000.

The pandemic has had the effect of intensifying the crisis of overproduction that began in 2008, further exacerbating the contradictions of the capitalist system. As a result, we are witnessing a sharp change in the policies being carried out by the ruling classes of the main imperialist countries. Austerity, the economic policy of the last few years, has been temporarily put to one side. It would have been economically and politically unsustainable to carry on with austerity policies under the current conditions.

Governments across the world have spent the last year propping up the capitalist system with unprecedented state support. But these desperate measures have built dynamite into the foundations of the world economy – which is now set to explode.

Draghi’s ‘Recovery Plan’ is being hailed as the saving grace of the beleaguered Italian economy. But this litany of half-measures comes nowhere close to resolving the dire crisis of Italian capitalism. And while ‘Super Mario’s’ plan might provide some short-term relief to the bosses – workers and youth will be left high and dry.

Earlier this month, the IMF and the World Bank held their second series of meetings since the outbreak of the pandemic. Despite the unspeakable horrors that millions are facing, here the mood was one of celebration and optimism. The world economy is moving again, and even faster than they had hoped for!

At a White House dinner on 24 February, Joe Biden held up a microchip and recalled a popular saying: “Remember that old proverb: for want of a nail, the shoe was lost; for want of a shoe the horse was lost.” And – as the proverb goes – without the horse, the messenger was lost; without his message, the battle was lost; and so on until, eventually, the empire itself was lost. For the empire which is the United States, that nail – according to Biden – is the microchip.

At the time of writing this article, the Ever Given container ship, owned by Shoei Kisen Kaisha and operated by Evergreen Marine, has finally been freed after running aground on the banks of the Suez Canal. The blockage had a major impact on the international economy: the price of crude oil rose, and there was a significant impact on the cost of transporting goods and their final prices. This event could have longer-term consequences, with a chain of effect that is difficult to calculate.

In the midst of the COVID-19 catastrophe, some parts of the economy are booming. Speculative investments are continuing in a frenzied fashion. The latest celebrity-driven fads, NFTs and SPACs, are among the insane expressions of this whirlpool of speculation.

The past few years of political turbulence have troubled the ruling class. They are facing unprecedented waves of protests and instability. They are now increasingly desperately trying to stabilise the situation using state expenditure and other concessions. This was seen at the World Economic Forum last month.

Argentina’s approval of a one-off wealth tax has been presented as a model by some on the left in Britain, as well as in other Latin American countries – where the idea is very popular. What is its real content, however, and is it a useful proposal to deal with the crisis of capitalism and the impact of the COVID-19 pandemic?