Economy

On the one hand, Blair prepares to send troops into Iraq behind the coattails of the Americans to overthrow Saddam. On the other hand, he and 'two Jags' Prescott prepare to send in troops to break the picket lines of the firefighters. If you adopt the policies of capitalism abroad, inevitably you will adopt them in domestic policy.

The mood of optimism about the world economy that arose during the summer months has now dissipated. The talk now is that there is a real risk of the US slipping back into an economic recession, taking the rest of the world with it. World stock markets are still pricing in the scenario of a quick victory in Iraq. But even if this were to happen, it might briefly improve "confidence" but it won't get businesses out of debt and it won't create jobs. Bush's Iraqi adventure is no way out for world capitalism at best, and it could be the tipping point for a world economic depression at worst.

Stock markets in the US and Europe have bounced up during August. Indeed, after reaching a new low on July 24, they've now recovered by 20%. It seems that there is some renewed optimism that capitalism is not going to slip into recession after all, but can make a steady recovery. But beneath all the hype the cruel realities of the economic data in America, Europe and Japan remain unchanged.

On Saturday, the Financial Times, a leading bourgeois publication, contained a prominent article entitled "Full Marx". Given the current crisis unfolding under their noses, bourgeois academics are once again forced to recognise the important contribution of Marx's analysis of capitalism.

After all the talk of an economic revival in the USA, the headlines are now dominated by an epidemic of financial scandals, steep falls on the stock markets, waning confidence and increasing uncertainty. In spite of attempts by the media to present all this as purely a question of a few "bad corporations" the nervousness on the stock markets is in reality the manifestation of a far deeper crisis that expresses itself in extreme instability at every level - ­economic, social, political and military - on a world scale.

This article deals with the scandalous so-called "Private Finance Initiative" in Britain. This process allows private companies to be involved in the building and running of what were formerly public services, such as hospitals, railways, and even schools. Mick Brooks shows quite clearly that the only people to benefit from PFI have been the fat cat capitalists who run the private firms.

In the six months to June 30, the US stock market had its biggest fall since 1970, down 14%. Following Enron, we have the WorldCom fiasco, which threatens to be the biggest bankruptcy in world history. Corporate executives lived off the fat of the boom, but now the tide has ebbed, the nasty rocks of failure, corruption and thievery are being revealed.

The capitalist pundits are worried that the US and world capitalist economy is not recovering as they expected. Stock markets around the world are plummeting, investment spending is unusually weak and consumer spending unusually strong. This current capitalist economic cycle has no precedent in the whole post-war period. Yet this pattern has at least one ominous parallel before the second world war: the US economy of 1926-29.

Our economics correspondent Michael Roberts looks at the British economy and the real situation facing workers in Britain today, which is somewhat different to the rosy picture painted by Tony Blair and his spin doctors.

Our economics correspondent Michael Roberts looks at the UK Finance Minister, Gordon Brown's budget, which was announced last week. He is going to raise taxes in order to spend more on the health service. But as he has no intention of changing the fundamental nature of the economy, a better health service must come from the pockets of the hardest-working labour force in Europe.

They think it's all over. The capitalist media is saying that the world capitalist economy, led by the US is recovering fast. Indeed, they say, there was no economic recession or downturn at all - or if there was, it was hardly noticeable. Michael Roberts investigates the truth of this idea.

Steel industry correspondent Miles Todd explains that industrial action is the only way to prevent massive job losses.

On Wednesday March 6, President Bush imposed tariffs as high as 30% on most steel imports coming to the US from Asia and Europe. This will hit European steel makers hard, especially in Britain where there is a slump already in the steel industry. In periods of capitalist economic downturn, national interests predominate over international. Bush is supposedly a supporter of the "free market". But the Wall Street Journalcalled the tariff "perhaps the most dramatically protectionist step of any president in decades."

The US has just suffered the steepest decline in economic growth ever - from a breakneck pace of 4.1% annually in the years 1998-2000 to a negative 1.1% in the third quarter of 2001. But now most capitalist economists forecast the US is on course for what they characterise as a V-shaped recovery, and along with it, the end of the world recession of 2001-02. Our Economics Correspondent Michael Roberts looks at this theory.

We are also publishing an article from the British Marxist magazine Socialist Appeal about the desperate plight of the steel industry in Britain and its workers.