Transcript of Alan Woods' speech on the world political and economic
perspectives for year 2008 at a meeting of the leadership of the
International Marxist Tendency on January 13, 2008. You can also listen to the speech here.
Everything now clearly indicates that the
advanced capitalist world is headed for recession. The only question is when
and how deep that recession will be. In fact Merrill Lynch says the US economy
is already in recession. And that’s bad news for all of us. Here Mick Brooks at
what is really going on in the world economy.
We have seen the sharpest falls in stock markets around the
world for almost a decade. Billions have been wiped off share prices worldwide.
As we have predicted, fear mounted among the financial authorities that the
panic could lead to a full-blown recession.
Panic! The world's stock markets had their sharpest fall
since 9/11 on Monday 21 January. It is supposed to be the most miserable day in
the year in the Northern hemisphere, where the daylight is short, the weather
is bad, people have colds and flu and they have run up debts from Christmas. But
this year, it really was a Black Monday for capitalism.
As the New Year begins Alan Woods comments on the state of world
affairs, highlighting the impasse facing humanity, a direct consequence of
capitalism in its phase of senile decay. At the root of the present world
turmoil is private property of the means of production, a system based on greed
for profit. In the next period the workers of the world are faced with the task
of removing the system.
the cry is: credit crunch! You can smell the sweat on the brows of bankers as
their necks are squeezed by the tightening credit noose. In all the offices of
the great investment banks of Wall Street, the City of London and gnomes of
Zurich, you can hear the hissing sound of the global financial bubble bursting
to a recent United Nations study, the richest 1% of adults in the world own 40%
of the planet's wealth. Europe, the US and some Asia Pacific nations
accounted for most of the extremely wealthy. More than one-third lives in the US, while Japan
accounts for 27%, the UK for
6% and France
for 5%. But bourgeois economists still insist Marx was wrong!
The bourgeois economists are incapable of understanding
crises, which are an inescapable result of capitalism. They look for subjective
factors such as “confidence”, even “human nature”. In reality what we are
witnessing are the real workings of the capitalist system in a period of
The recent chaos on world stock markets is a
manifestation of the general turbulence that is the most prominent feature of
the present epoch. The crisis that affected the Northern Rock bank in Britain
is but an indication of dramatic
events that are being prepared globally.
Over the past 15 years
production has risen at about 3% a year in the OECD countries, while money
supply, mortgage and company debt, personal borrowing and the massive so-called
derivatives market based on this credit has increased at over 25% a year!
Result? A huge bubble which is now bursting, starting with Northern Rock.
Recently, the Bank of England hiked its interest rates yet
again to 5.75%,the fifth rise since August 2005, and "further action" on
interest rates could be on its way. The interest rate may go to 6% or more by
the end of this year. The credit-led boom is now in jeopardy as central banks
raise interest rates everywhere.
The financial turbulence of recent days has
wiped billions off the price of shares all around the world. On Friday August
10th Londonâ€™s stock exchange, the FTSE 100, alone dropped Â£63
billion. What does this mean?