The most significant development in the world capitalist economy, since the last meeting of our Conference is undoubtedly the intensification of the symptoms that prove the trend toward a new recession in all fields, after a certain rise in the second quarter of 2009, followed by a period of stagnation. Despite the trend towards a rise in the second quarter, world industrial production shrank 6.6% in 2009 and rose 10% in 2010. The industrial production of June 2010 exceeded its previous level before the crisis of 2008. But starting from the first quarter of 2011, the growth lost momentum and fell to 0.4% in the last quarter of that year. In 2011, world industrial production declined by half (5.4%) compared to the previous year. In the first quarter of 2012, after a weak rise, the growth declined. The growth was 1.8% in the first quarter, 0% in the second and 4% in the last quarter of 20l2. All the data show that, despite fluctuations, a decline persists that began in the first quarter of 2011, which led to zero level in the middle of this year [2012] and is heading for a new period of decline.
Industrial production in the European Union, which is a larger economic power than the U.S.; in Japan, which is third largest world economic power; in India, one of the largest economies in Asia, have had consecutive declines in the third quarter of 2011 and in the first two quarters of 2012 compared to the same period last year. Industrial production in Brazil, the largest economy in Latin America, has also entered into decline in the last two quarters. North African countries like Tunisia and Egypt, and other countries such as Argentina, Colombia and Peru, are in similar situations.
The rate of growth of industrial production in China, in the first and second quarters of 2012, was 11.6% and 9.5%, while it was 14.4% in 2010 and 13.8% in 2011. The downward trend continued in July, 9.2% and in August, 8.9%. China, which grew by 12.9% and 12.3% in the crisis years (2008 and 2009), was, along with India, one of the factors that prevented a further sharpening of the crisis and that allowed the world economy to enter into a new period of growth. The situation in that country has changed considerably. Now it is a country that is accumulating stockpiles in the steel industry, which is facing a slowdown in the construction sector, which has important holes in the financial sector. Those countries that saw lower growth rates despite the stimulus measures to revive the domestic market, are now unable to play the same role as before. The industrial production of Mexico and the Confederation of Independent States (CIS), including Russia, continues to grow. However, while the industrial production in the major countries and the volume of international trade are falling, for these countries also, a decrease is expected.
Unlike simple commodity production, a more rapid growth in the production of the means of production, compared to consumer goods, is a condition for expanded reproduction. But with the capitalist mode of production producing for an unknown market, with the sole purpose of obtaining profits, a consistent development of the two sectors is impossible and this is one of the factors that makes crises inevitable. In the last three years, as well as before, these two sectors have not developed consistently. In the first sector, demand has fallen, the volume of growth has fallen, stockpiles are accumulating and capacity utilization has fallen. In 2010 and 2011 the steel industry, an important component of the production of means of production, grew faster than the consumer goods sector. According to data from the World Steel Union, the growth rate in production was 15% in 2010 compared to the previous year, but in 2011 the figure fell to 6.2%. In January raw steel production saw a sharp drop to 8%, and it has stayed at 0.8% in the period from January to May of 2012. In August of 2012 raw steel production fell 1% in relation to 2011. In the same period, raw steel production rose 3.3% in Japan (a significant increase if one takes into account the major fall due to the tsunami) and 2.6% in India. It has fallen by 1.7% in China, 3.8% in the U.S., 4.4% in the EU, 7.1% in Germany, 15.5% in Italy and 3.8% in the Confederation of Independent States (CIS). The iron stockpiles in Chinese ports reached 98.15 million tons (an increase of 2.9%) belonging to the steel complexes. And stockpiles of Chinese coal are at their highest level in the last three years.
In manufacturing, a very important element of the production of the means of production, production and demand have declined in many countries. This decline has been one of the reasons for the cooling of industrial production in Germany, for example. In the capitalist mode of production, the agricultural sector, by its level of development and its technical basis, is always behind industry. Agricultural production is largely affected by the natural conditions, climate changes, droughts, storms and other natural catastrophes. Agricultural production is increasingly under the control of the monopolies and the speculative maneuvers of finance capital. In 2010 world agricultural production, including the production of cereals, has shrunk due to various factors such as bad weather or the expansion of plots reserved for bio-fuel production. On the other hand, in 2011, agricultural production has progressed thanks to better weather conditions, and also to increased demand and higher prices due to speculation. For example, wheat production increased by about 6%.
In 2009 the volume of world trade has declined 12.7%. According to data from the World Trade Organization (WTO), that volume registered a growth of 13.8% in 2010, and only 5% in 2011 (according to figures from the CPL, the growth was 15.2% in 2010, and 5.8% in 2011). The volume of world trade has grown by 0.5% in the final quarter of last year, and by 0.9% and 0.5% in the first and second quarter of 2012 respectively. During the first two months of the third quarter (June and July), the volume of world trade recorded a negative growth of -1.5% and -0.2% compared to the previous months.
World industrial production reached and surpassed the pre-crisis level of 2008, in June 2010, while the volume of international trade did not surpass this until November 2011. If we compare the data of July 2012 with the level reached before the crisis of 2008 (that is, April 2008), we see an increase of 9.5% in world industrial production and an increase of 5% in the total volume of growth in world trade.
The data on the increase of the volume of world trade is one of the most important that shows an evolutionary trend, although it does not exactly reflect the volume of growth of world trade. These data show that for the last three years, the world capitalist production has increased rapidly and that the capitalist world is once again facing the problem of overproduction, which is the source of all its crises. Decreased production, closing or reduction in work capacity of enterprises, rising unemployment and poverty; needs in abundance and the restriction of markets are the inevitable consequences of overproduction. The sharp slowdown in world industrial production has been shown above. The events in North Africa and the austerity measures taken in countries like Greece, Spain, Italy, Portugal, etc., are factors that are aggravating this process and its consequences.
Towards a New Financial Crisis
The crisis of 2008 broke out as a financial crisis, at the same time as the crisis deepened in other sectors, such as industry and trade, it developed with contacts in the finance sector with serious consequences for the following period. The most destructive consequences for the monopolies and the eventual collapse of the financial sector were avoided by transferring of billions of dollars into the coffers of the monopolies by the capitalist States. This rescue operation was only possible by accepting a debt to financial markets with very high interest rates, and the issuance of money into the markets. The end result is an extreme State debt, an increase in the debt and interest burden, a rise in the price of gold and the loss of value (devaluation) of almost all currencies.
Countries at different levels have entered a vicious circle that has elements of new currency and financial crises, in which they can finance their budget deficit, their debts and interests, having to borrow again. The capitalist world began a period of growth starting in the second quarter of 2009, with the weight inherited from the 2008 crisis. However, this period of growth has enabled recipient countries to breathe a little, turn the wheel that was on the verge of suffocating them. The growth of the world economy stopped and even lowered the price of gold for a moment. In some countries, such as China that had a significant growth rate, the ratio of the public debt to GDP decreased. But in other countries, such as Japan and the U.S., a substantial debt has continued, even during the period of growth of the capitalist world economy. The U.S. public debt represents the sum of $16 billion (the debt of Germany, which grew until the second half of this year, is 8 billion). Other capitalist countries are in a similar situation. The increasing debt is almost the condition of financial sustainability and economic growth. And this is the path that is leading directly to a new financial crisis that may profoundly affect all sectors of the economy.
The highly indebted countries have not been able to achieve a period of growth after the financial crisis and the fall in world industrial production that took place between the second quarter of 2008 and the second quarter of 2009; this period has led to a financial crisis that has affected the other sectors of the economy that has led them to bankruptcy. The first example of this process was in Greece, where the weakness was such that the industry, very weak, was largely liquidated when it joined the EU. After the 2008 crisis, in 2009, the economy of this country did not grow, and by the end of the year it was on the verge of bankruptcy. This country, followed by others such as Portugal, Spain, Hungary, etc., has not been able to get out of the crisis and stagnation. However, important differences should be noted in its debt in relation to the GDP.
Austerity measures never seen before, except in times of war or crisis as deep as 1929, have been imposed on the indebted countries. The result of these measures has been to impoverish the people, destroy the economy and reduce the internal market and foreign trade. These austerity plans have been applied (despite the opposition and struggle of the working class and peoples) under the control of the creditor imperialist powers, the international institutions such as the IMF, World Bank and European Union, and above all with the support of the collaborator monopoly bourgeoisie and its representatives, these enemies of the people. They have transferred billions of dollars to foreign banks, completely betraying the national interests. The national pride of the people, their right to sovereignty and independence have been trampled upon. A country like Britain that had a strong financial sector, but since mid-2011 has seen its industrial production and its economy reduced, has been forced to march along with the countries implementing austerity measures.
The significant decrease in the volume of growth of world industrial production, which began in the second quarter of 2011, is developing the elements of a new international financial crisis and is contributing to the degradation of the situation of the highly indebted countries. They failed to enter a period of growth parallel to the process of growth of the world capitalist economy following the crisis of 2008-2009. While the debate over the future of the Euro and the European Union is sharpening, the communiqués on the economic trends of the advanced capitalist countries and the indebted countries have sown confusion in the stock markets, barometers of the capitalist economy. Although world industrial and agricultural production and the volume of international -trade have exceeded the highest level before the crisis of 2008, the indices of the most influential stock markets remain below that level.
Although we are not yet experiencing the outbreak of a financial crisis of major proportions, everything makes it appear that the process is advancing towards such an eventuality. The U.S. Federal Reserve Bank (FED) has announced that it will not raise interest rates and that it will start a process of purchasing bonds for an amount of $2,000 billion dollars, at the rate of $40 billion per month. Japan has announced a similar measure and has begun a program of buying bonds to the tune of $695 billion.
Germany has had to relax its rigid policy towards the indebted countries and the European fund for the intervention in countries facing difficulties has increased. China, along with measures of revival that it has already applied, announced a new investment package to renovate its infrastructure. The price of gold is rising again. In 2008, the intense intervention of the capitalist States began after the outbreak of the crisis. Now, however, the capitalist States have gone into action before the shocks and bankruptcies at the same level as in 2008 start in the major capitalist countries and worldwide. However, these interventions, which can have some influence on the process of development, cannot change the orientation and the inevitable outcome.
The Sharpening of the Inter-Imperialist Contradictions and the Growing Danger of Conflicts
Uneven, unbalanced development is the absolute law of capitalist development. This process after the crisis of 2008 was not balanced, it deepened the antagonistic contradictions in the evolution and development of the relations between sectors, countries, regions, production and markets, etc. The industrial production of the advanced capitalist countries, including the U.S. and Japan, except Germany (ignoring the high level of 2008), did not reach the level of 2005. Germany, which has exceeded the pre-crisis level and has had a growth in industrial production of 11.5% in 2010 and 9% in 2011, has consolidated its position within the European Union and the Euro zone. Without separating itself from the bloc led by the United States, it has penetrated into new markets, new fields of investment, sources of raw materials, basing itself on its economic and financial strength, and above all, on its technical superiority in the industry of machine construction.
As in previous years, China, both because of its industrial production and its economy in general, was the country that had the most significant growth among major economies. It has modernized and increased the technical basis of its industry, and it continues to reduce the difference in its level of development with the other imperialist powers. Russia is going through a similar process. For the United States and its allies, these two countries, one considered as a vast market and production area with a trained and cheap work force, and the other a solid country, appear today as their main rivals to fight against.
The inevitable result of the change in the balance of power is the great demand for a piece of the pie by the emerging forces, using all means to get it and a new redivision of the world according the new balance of power. The recent development of the world economy is another factor that exacerbates the contradictions and the struggles among the major imperialist powers. Last year in the Middle East, in Africa and the whole world, the rivalry and struggle to expand their sphere of influence has accelerated. The production of weapons, the arms race is intensifying. China and Russia have renewed the technical basis of their arms industry. According to a report by the Congress of the United States, arms sales by these countries have tripled in 2011.
China, which increasingly needs more raw materials, energy and fields of investment for its growing economy, and Russia, which is slowly recovering, are intensifying their expansionist desires and their efforts to get their piece of the pie. Therefore, it is a top priority for the U.S. and its allies to prevent China, a young imperialist power in full development, and Russia, from achieving new markets in the field of energy and raw materials. When the Obama administration states that beginning next year the priority strategic objective for the United States will be Asia, and that the deployment of the U.S. military will be renewed according to the new situation, this is merely affirming that reality. The crisis of the archipelagos shows the level of tension between Japan and China; Japan has declared its intention to improve its military capability. The military maneuvers in the region have intensified.
The consequences of the change in the balance of power in the world have been clearly visible since last year. Russia and China were forced to accept Western imperialist intervention in Libya, even though that intervention was contrary to their interests. The intervention ended with the overthrow of the Gaddafi regime, the near collapse of the country, the destruction of its economy, the degradation of working and living conditions, the transfer of the country's wealth into the hands of the Western imperialist States, etc. Russia and China lost a good part of their positions, including their oil agreements. After the fall of the Gaddafi regime, Mali has been dragged into war and divided. But the main objective is Syria. The attempts by the Western imperialist powers to topple the Syrian regime and put in a puppet government to fully control the country are intensifying. The United States and its allies have mobilized all their forces within Syria and outside of it in Turkey, Jordan, Saudi Arabia and Qatar. They are stirring up the religious contradictions, they use and manipulate the popular discontent towards the regime and they try to prepare the ground for a military intervention as in Libya. Meanwhile Russia is arming Syria, strengthening its military base located in that country and sending more warships to the Mediterranean.
To bring down the Syrian regime, put in place a puppet government, dominate the oil-rich Middle East, control the eastern Mediterranean, block the expansion of China and Russia in the region and expel them as they did in Libya, to encircle Iran, weaken its influence and liquidate its closest allies, are very important objectives. Syria is the only country in the Middle East and the eastern Mediterranean where Russia has a military base. This small country has become a place of intense struggle between Russia and China on the one hand, and the United States and its allies on the other. The Middle East is a powder keg on the verge of religious conflicts.
Contrary to what they did in Libya, Russia and China are opposing a military intervention that would alter the balance in the Middle East and result in the domination of the United States and its allies over Syria. But they have left the door open for a possible compromise that would guarantee their interests and renew the Syrian regime which is having more and more difficulties to survive.
As the case of Afghanistan, former Yugoslavia, Iraq, Ivory Coast and Libya show, the imperialist interventions that have had the support of the liberal "defenders" of freedom and democracy, of the pseudo-socialist parties that emerged from the former revisionist parties, have resulted in increased military budgets at the expense of the workers, in the destruction of the productive forces of those countries, in many disasters, the impoverishment and decline in all social aspects. The aspiration of the peoples for the right to sovereignty and national independence, democracy and freedom has never been the concern of the occupiers. Their objective was to further prolong their system maintained by the defeat inflicted on the working class in the middle of the last century, a defeat that guaranteed their super-profits, the expansion of their spheres of influence and the weakening of their rivals. The imperialist powers, which are using all means to achieve this goal, do not lack in demagoguery and low maneuvers to disorient the people's anger.
Now a period of sharpening of inter-imperialist contradictions is beginning, which economic-financial and political-military interventions will multiply. It is increasingly important to fight against such intervention, to develop the united fight of the workers and peoples, in both the advanced and backward countries,.
Organize the Resistance of the Workers in the New Stormy Period
The army of unemployed is growing on the world level, especially in countries in total-debt crisis, in the countries in which the economy is declining, stagnating or is in crisis. In Greece and Spain, unemployment has reached 25%. In these countries, unemployment among the youths, including college graduates, reached 50%. In the Euro zone in the second quarter of 2012, the level of unemployment reached 11.2%, according to official figures. In countries such as Egypt and Tunisia, where manufacturing has fallen from 9.6% to 7.5% in the first quarter of this year (2012), the number of unemployed continues to grow. In South Africa, the most developed country on the continent, the unemployment rate exceeds 25%.
In the current period, in almost all fields, from education to health care, drastic measures have been taken, the retirement age has been delayed and pensions have fallen. The gains of the working class worldwide are targeted for cuts or elimination. While direct taxes on the workers are increasing, no measures are taken to disturb the local and international monopolies, when even within the framework of this system one could increase taxes on the banks and the local and foreign monopolies. Wages continue to fall, etc. Many countries are suffering from a process of absolute impoverishment.
In recent years practices have been imposed worldwide such as sub-contracting labor, precarious and part-time work, an increase in the age for retirement, etc. In Germany, for example, one of the most developed countries in the world that has had significant growth rates in industrial production, according to the Federal Administration of Statistics, 15.6% of the population lives below the poverty line, a figure that rises to 26% among the immigrant population.
Last year, on a world scale and in each country, the workers and peoples movement has developed with various demands, in different forms and also at different levels. The struggles carried out in those countries with a “debt crisis” have been outstanding for their broad social base, for their responses and the experiences gained. The miners' strike in South Africa, the youth movement and the strikes in Chile, the popular movements in Tunisia and Egypt, etc. are powerful examples of the workers and peoples struggles.
Starting with Greece, Spain and Italy, in various countries with a “debt crisis,” strikes, general strikes and huge demonstrations have taken place. In Greece and Spain, hundreds of thousands of people have expressed their anger in front of the parliaments on the days when these were voting for austerity measures. But the workers and peoples movement, despite some more advanced attempts, has remained within the framework of peaceful demonstrations, general strikes of one or two days and limited resistance. The strikes of long duration, the resistance or occupation of factories, have been limited to one enterprise or one sector.
The austerity measures have affected not only the proletariat and semi-proletarian masses of the cities and countryside; they have also affected the petty bourgeoisie and non-monopoly bourgeois strata. Even the less dynamic strata, the traditional base of the bourgeois parties, have been mobilized given the current situation. The social base of the struggle against the bourgeoisie in Power and against imperialism has expanded, to the point where in some dependent countries the mobilization has taken the character of a movement of the whole nation, except for a handful of monopolists. The conditions are maturing for the working class and its revolutionary parties, as representatives and the vanguard of the nation, to decide to organize and advance the movement and the united front of the people.
But despite the great movement, the groups of international finance capital and the local monopoly bourgeoisies have not given in (except in the recent delay of the austerity measures in Portugal). They have decided to implement these measures even at the cost of demeaning the image of the parliaments and weakening their social base. However, the masses are realizing through their own experience the impossibility of repelling the attacks with one or two day strikes or through peaceful demonstrations. Sharper forms of struggle and unlimited general strike are beginning to be considered by the more advanced strata.
It is clear that the bourgeoisie in Power, with their hostile character towards the people, is assuming a position of national betrayal. The traditional parties of the bourgeoisie and parliaments have lost credibility and the mass support for those parties is weakening (especially toward those in government that are implementing austerity measures). The social basis of monopoly capital is weakening. Among the masses who have felt their national pride hurt by the imperialists, the discontent, anger and will to struggle against the major imperialist powers, beginning with the United States and Germany, against institutions like the IMF or the EU, and against the local monopoly bourgeoisie that is collaborating with them, is developing.
The trade union bureaucracy and reformist parties and social trends are following a backward line of "least resistance," not only in their forms of organization and struggle, but also at the level of political demands and platform. Clearly, this attitude is contributing to weakening their influence among the workers. The attacks and harshness of the social conditions are also affecting the lower strata of the labor bureaucracy and aristocracy and are sharpening the contradictions within their ranks.
The struggles in the countries with “debt crisis” are being developed on a program of protest against the bourgeois governments and parties, against institutions such as the IMF and the EU that are imposing draconian measures and they are demanding their withdrawal. At first this was natural and understandable in the context of a spontaneous movement. But the inability to go beyond those narrow limits is one of the major weaknesses of the movement. This weakness can be overcome with the work of agitation that shows the masses the way out of this difficult situation in which the people and the country find themselves, denouncing the social forces that are an obstacle to that way out. This work of agitation is reinforced by putting forward appropriate demands, slogans and forms of struggle among the masses.
Especially in Greece, certain small groups (that also have weaknesses) have proposed relatively advanced demands and platforms. But the forces capable of influencing the movement are not even concerned with organizing the work necessary to promote the fight on all fronts. The absence or great weakness of a revolutionary class party, has been felt strongly, as it cannot influence the movement.
Linked to the evolution of the world economy, the period that is beginning will be one of further degradation of the living and working conditions for the workers and peoples, a period of intense economic and political attacks, of discontent, anger and militancy among workers, as well as sharpening of inter-imperialist contradictions and conflicts. We must draw lessons and conclusions from the recent developments and the historical experience of the working class and peoples; we must advance, renewing our work and reorganizing our parties.
Tunisia, November 2012
International Conference of Marxist-Leninist Parties and Organizations (ICMLPO)
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