Economy

Class struggle is alive and kicking, and it’s the working class that’s getting kicked. The Economist reports that in the four years leading up to 2012 wages in the USA grew at just 2.1% per year, whereas in the four years prior to that the figure was 3.4% per year.

It has often been noted that the serious bourgeois analysts frequently arrive at the same conclusion as the Marxists, albeit with a slight delay. Nowhere has this aphorism been more aptly demonstrated than in a recent article by Paul Krugman, the Nobel prize-winning economist, entitled “A Permanent Slump”.

Despite the international corporate media’s relentless propaganda, the gap between the haves and have nots is continuously increasing on a global scale. In spite of what they would like us to believe, what we have before us is a transfer of wealth from the poorer countries to the richer on a scale never seen before in history.

When the current crisis began, there were some who painted it as simply a Western crisis; a crisis that was unique to Europe – due to problems caused by its common currency – and America – due to its sub-prime mortgage scandal and ensuing credit crunch.

In the past week, the mood of the global financial markets has once again turned sour. The disastrous position in the Eurozone, coupled with a slow-down in China and poor figures from the United States has led to a new sell-off. All the indicators are now pointing at that we are entering into a new down-turn.

The world economic crisis has led to such a deterioration of the health of public finances worldwide that the recent World Economic Outlook (WEO) of the IMF has the apt title “Coping with High Debt and Sluggish Growth”. One chapter of the WEO is specifically dedicated to analysing examples from the past to see if there are lessons for today1. The results are quite interesting.

The latest “decisive” EU summit-to-end-all-EU-summits-and-fix-the-Eurozone-crisis-once-and-for-all has signally failed to do so – just like all the previous “decisive” and “final” summits. As in previous meetings, within days the results were declared completely unsatisfactory by the markets. These gatherings of EU heads of state are now a thoroughly debased currency. Nothing has changed except that the national contradictions are sharper and more insoluble than previously thought.

Another variation on the demand to “tax the rich” is the call for a tax on financial transactions, otherwise known as a “Financial Transactions Tax” (FTT), “Tobin Tax” (after the Nobel economics laureate, James Tobin, who first proposed the idea in 1972), or “Robin Hood Tax” (i.e. taking from the rich and giving to the poor). [Part 1]

The present economic crisis has been described in various ways by mainstream commentators. All manner of “solutions” have been posed, both by the bourgeois politicians and economists, and by the reformist leaderships of the working class. What these commentators and representatives cannot admit is that this crisis will not be solved by this or that reform. Society is living through a crisis of capitalism and the choice facing mankind is simple: socialism or barbarism.

The crisis of capitalism is accompanied by a crisis of bourgeois thought: philosophy, economics, morality – all are in a state of ferment. In place of the earlier optimism that stated confidently that capitalism had solved all its problems, there is an all-pervading mood of gloom. Not so long ago, Gordon Brown confidently proclaimed “the end of boom and bust”. After the crash of 2008 he was forced to eat his words.

The Eurozone is passing through the most serious crisis in its entire history. After Greece comes the Italian crisis. This places a big question mark over the future of the euro. We predicted long ago that in a serious crisis all the national contradictions come to the fore, as we now see with the fractious relations between Greece, France, Germany and Italy. The European Union is facing the day of reckoning.

In a scene reminiscent of the attempt to save the world by science fiction superhero Flash Gordon, the leaders of the European Union have given themselves a two-week deadline to resolve the eurozone crisis. While in the fantasy world Flash Gordon saved the world, in the real present-day crisis-ridden world the EU leaders are staring failure in the face, with all the consequences that this will mean in terms of growing political instability and, more importantly, of growing class struggle.

In an interview which shocked the BBC News presenter, “independent trader” Alessio Rastani gave a very frank appraisal of his perspectives for the world economy. "This economic crisis is like a cancer, if you just wait and wait hoping it is going to go away, just like a cancer it is going to grow and it will be too late,” he said, adding that governments would not be able to fix the economy.

Capitalism isn't working - Photo: Jeff Mcneill

Europe is standing on the edge of a precipice. This is the judgement, not just of the Marxists, but of the most serious strategists of Capital. Barely six weeks have passed since the latest Greek rescue package, and it is already unravelling. There is now a general crisis of confidence in the ranks of the bourgeoisie internationally. The panic, which is reflected in the wild gyrations of the stock exchanges, has spread rapidly from Europe to America. It is a kind of deadly contagion that has infected all the euro zone’s big countries.

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