Economy

Under capitalism if there is no profit, there is no production even if people need things or services. Therefore, over the last 25 years there has been a massive expansion of the unproductive sectors of the capitalist economy, i.e. a massive increase in fictitious capital. This is now expressing itself in what may be the worst crisis for more than 30 years.

Last month 100,000 American private sector workers lost their jobs. This is the third monthly rise in the unemployment figures in a row. Everything indicates that the USA is now in recession. As it is the biggest single market in the world, this will inevitably have a big impact on the rest of the world.

Last Thursday it was Carlyle Capital Corporation. On Friday it was the turn of Bear Stearns, the fifth largest bank in the USA. The American Central Bank, the Fed, is due to meet this week to talk about interest rates. Most likely they will cut them again. The trouble is, the more they slash rates the more people can smell the fear.

Republication of the article is timely. In 2007 the sub-prime mortgage bubble finally burst. The financial crisis has already had a knock-on effect on the banks through the credit crunch. The capitalist world stands on the threshold of recession.

In 2006 the world's richest two percent of adults owned more than half the global wealth, while half the world's population own only one percent. In 2007 the World Wealth Report estimated the total wealth of rich individuals at $37.2 trillion! While this wealth accumulates for a small minority, the vast majority of humanity is seeing its living standards plummet. In these figures we see another picture: the growing tensions between the classes that will lead to social upheaval and revolution on an unprecedented scale.

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.

Everywhere 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 and deflating.

According 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 decline.

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.

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