SocialismToday           Socialist Party magazine

Socialism Today 127 - April 2009

A crumbling edifice

The world economic crisis and political perspectives for Europe

Not long ago, the capitalists thought they were invincible, free to exploit the world’s human and natural resources with impunity. Financial wheeler-dealers even called themselves the masters of the universe. Capitalism today looks more like Ozymandias, the mighty king reduced to dust in the famous poem by PB Shelley. PETER TAAFFE assesses the global situation in an edited version of a draft thesis being discussed at this month’s European Bureau of the Committee for a Workers’ International. The full version is available on the CWI website:

FOR THIRTY YEARS, but particularly since 1989 and the collapse of Stalinism, neo-liberal capitalism – summed up in the so-called ‘Washington Consensus’ – has held sway throughout world capitalism. Indeed, the capitalists and their ideologues, as well as the majority of trade union and ‘labour’ leaders, fell in behind the idea that deregulated capitalism was the most efficient system possible for distributing goods and services to the peoples of the world. However, the current devastating economic crisis has brought this seemingly mighty ideological edifice crashing to the ground. Capitalist economists and politicians are falling over one another to explain that their system has already gone or is about to teeter over into a depression, or at least into a "great recession", in the words of Dominique Strauss-Kahn, head of the International Monetary Fund (IMF).

This crisis has yet to run its full course but it has already led to an unprecedented destruction of wealth and resources throughout the world. One capitalist commentator in Britain, Hamish McRae, economics editor of The Independent newspaper, has written that one third of world gross domestic product (GDP) has been destroyed by the crisis. He forecasts that it will take ten years to overcome the destruction of wealth already experienced. The Asian Development Bank (ADB) went further when pointing out: "Falls in the value of financial assets worldwide could have reached more than $50,000 billion, equivalent to a year’s global economic output". This is probably an underestimate of the damage unleashed by this crisis as it does not seem to take into account the effects of the crash on the ‘real economy’.

The World Bank has also stated that "developing countries faced a financing gap of $270 billion to $700 billion a year as capital flows dried up. Only a quarter of vulnerable countries were able to cushion the blow of the economic downturn". The ADB estimates capital losses last year to Asia, excluding Japan, at $9,625 billion or 109% of GDP, compared with the global average of 80-85% of GDP. For Latin America the estimate of losses for 2008 is $2,119 billion or 57% of the continent’s GDP. Joseph Schumpeter, the well-known capitalist economic guru, once characterised capitalism as a process of ‘creative destruction’. There has been much destruction, as these figures indicate, and very little ‘creativity’ on the horizon for the mass of the working class and the poor throughout the planet. On top of this, the International Labour Organisation estimates that anything between 30 and 50 million workers will be made unemployed or cast into the grey whirlpool of underemployment in the next year. Additionally, the increase in the numbers of poor as a result of this crisis is forecast to be 90 million. Little wonder then that Martin Wolf in the Financial Times has written that the cost so far is equivalent to a war.

A series of crises

THESE FIGURES INDICATE the epic character of this crisis, which has thrown the bourgeois and their spokespersons into a panicky tailspin. Their mood borders on semi-demoralisation. This was summed up in a series of articles in the Financial Times, which has increasingly assumed the character of an internal bulletin for world, not just British, capitalism. These mapped out perspectives, in so far as they could, for the world bourgeoisie in the next period. Their conclusions? "Not only is the financial system plagued with losses of a scale that nobody foresaw but the pillars of faith on which this new financial capitalism was built have all but collapsed. That has left everyone from finance minister to central banker to small investor or pension holder bereft of an intellectual compass, dazed and confused".

The head of Merrill Lynch’s Moscow operations went further: "Our world is broken – and I honestly don’t know what is going to replace it. The compass by which we steered as Americans has gone... The last time I ever saw anything like this, in terms of the sense of disorientation and loss, was among my friends [in Russia] when the Soviet Union broke up". The collapse in Russia, the social counter-revolution, following 1989 was the greatest contraction of the productive forces in history in one country, exceeding even that of the US between 1929 and 1933.

So disorientated are the strategists of capital that they have even sought solace in the works of Karl Marx and even the formerly excoriated Vladimir Lenin. The latter’s famous dictum that capitalism can always find a way out was approvingly quoted by an ideologue of capitalism in the Financial Times! This commentator forgot to add that Lenin pointed out that this was only possible through unbearable, immense suffering of the working class, "on the bones" of the working class and its organisations, as Leon Trotsky wrote. Undoubtedly, if the working class does not seek a way out through socialist revolution, capitalism can always re-establish itself, albeit through an unstable equilibrium. But, as Trotsky remarked at the beginning of the 1930s, objectively the situation throughout the world – in terms of the depth and speed of the crisis – can already be termed as pre-revolutionary "with a certain degree of justification". This is on condition that this is defined as covering an era comprising several years of partial ebbs and tides which can elapse between a pre-revolutionary and a directly revolutionary situation.

In other words, this crisis will assume a drawn-out character. It is not just one crisis but a series of crises. It has already introduced extreme instability in currencies, a massive piling up of state debt – ‘generational theft’, as the right-wing, former Republican US presidential candidate John McCain described it – and huge problems for capitalism that can only be resolved ultimately by a direct assault on the living standards of the working class. However, the previous period of neo-liberal capitalism which developed over three decades determined, in the first instance, the processes not just in the economy but in politics and the consciousness of the working class.

Everything which guaranteed capitalism’s success is now turning into its opposite. Globalisation has ushered in a period of ‘de-globalisation’. The massive expansion of world trade, with a lowering of tariff barriers and a certain overcoming of the national state, itself fuelled the boom. Now, in a new economic setting, this has turned into protectionism and an incredible collapse in world trade on the back of a contraction of the world economy, estimated, or underestimated, by the IMF to be anything between 0.5% and 2% this year. This alone means that this crisis is worse than any since the 1930s. Only in the aftermath of the 1973-75 crisis were we able to see that the crisis then did not result in an actual drop in world production but rather a big slowdown in the rate of growth.

Despite all the pleading of the IMF and the pledges that were made at the last G20 summit or those that will be piously uttered in April, protectionism is inevitable. The capitalist "leaders speak globally [but] think national", was one economic ‘expert’s’ commentary on the upcoming G20 meeting. It may not be on the scale of that following the 1930 Smoot-Hawley Act that raised tariffs on over 20,000 items in the US alone, but it is already considerable. Led by Britain, European governments have competed against one another to bail out their own bank depositors, and to introduce subsidies for ailing industries, for instance the car industry. This has already had a catastrophic effect on those most reliant on world trade – particularly in manufacturing industry – such as Japan, Germany, China and the industrialised countries of Asia.

Can stimulus packages work?

HOW LONG CAN this crisis last and can the Obama regime with its stimulus packages ride to the rescue of world capitalism? World capitalism and its most serious representatives, so far as perspectives are concerned, openly confess their bewilderment, uncertainty and lack of foresight over what is likely to happen on the economic front. Therefore, at this stage, when everything is so fluid, Marxists cannot give definitive answers. The stimulus packages of various world capitalist governments are estimated at about 2% of world GDP. In Europe, at the moment, it is 0.85%, with a further 2.1% available in extended credit lines and other guarantees. In the US, the stimulus package passed by Congress was worth $787 billion (5.6% of GDP) and mortgage relief and guarantees to Fannie Mae and Freddie Mac total an extra $275 billion. These will contribute to a projected budget deficit figure of $1.75 trillion or 12.3% of GDP! In Britain, one of the biggest stimulus packages apart from China as a percentage of GDP – the latest ‘quantitative easing’ of the Bank of England – will amount, if it is implemented in full, to 10% of GDP, a total of £150 billion. This is a sign of the desperation of capitalism, its ideologues and parties to avoid or mitigate the effects of this crash.

The financial system, particularly the banks, is in ruin throughout the whole of world capitalism. Undoubtedly, its first and most visible expression was to strike at the Anglo-Saxon model of capitalism, particularly the US and Britain. In these countries the process of financialisation was taken furthest, with the most calamitous consequences now located there. The banks in Britain and the US – if not elsewhere – are technically insolvent at the present time. They are, in effect, zombie banks. This is despite the fact that majority control in most of the banking sector in Britain is exercised by the state as it also is, in effect, in the US. Yet both Gordon Brown and Barack Obama are resistant to the idea of ending the banks’ ‘zombiedom’, as Paul Krugman, the Keynesian economist put it, as full nationalisation will represent an open confession of the bankruptcy of private enterprise.

Yet even right-wing stalwarts of the system such as James Baker, Treasury Secretary to the first George Bush, and former economic guru, Alan Greenspan, now favour temporary nationalisation. Even the Keynesians see nationalisation as a short-term measure, regrettable but unavoidable, necessary to bail out the system, much as the Swedish government did on a smaller scale in the early 1990s. So eager are they to press this solution on the Obama regime that Keynesians, like Krugman, seek to abandon the term nationalisation and to describe it as pre-privatisation – first a state takeover then hand it back to the financial criminals who ruined it in the first place. Despite all their hesitations, as the crisis deepens – with 600,000 a month for three months added to the unemployment rolls in the US, the worst figures since 1945 – the pressure for a state takeover of the financial system could become irresistible for the capitalists.

Can Obama’s measures – and those of Brown and other capitalist governments – succeed in their aim of cushioning world capitalism first of all and then laying the basis for a revival? The priming of the state pump is designed to avoid a deflationary trap, what Keynes described as the "paradox of thrift". Interest rates are close to or effectively zero, which leads to the banks’ reluctance to lend, borrowers not to borrow, and depositors reluctant to deposit. The problem for capitalism in crisis is not so much credit – there is in effect a ‘credit strike’ by the banks – but a lack of demand, as many bourgeois economists point out. What is this but a manifestation of the phenomenon of overproduction – an absurdity in pre-capitalist epochs, as Marx stressed.

The bourgeois of Europe, Germany and Japan, in the first instance, attacked the Anglo-Saxon model of financialisation as responsible for the crisis – believing they were immune from the downturn. In reality, the crisis of overproduction we presently experience was inevitable irrespective of the financial crisis. The deadly combination of the financial crisis and that in the real economy has served only to reinforce, prolong and deepen this organic crisis of capitalism. Overproduction of capital, of the working class, and now increasingly of the middle class, is manifested in this crisis.

It is unlikely that the measures of capitalist governments to stimulate the economy will fully succeed, but it is not excluded, in fact it is likely, that Obama will be able to put a certain cushion under the US economy; likewise Brown in Britain. We have to add the caveat that the present situation is unique in its scale, depth and speed. The measures taken or proposed are unprecedented, even when judged by the yardstick of the 1930s. Never in history have the capitalists sought to desperately head off the crisis in the way they are attempting at present.

Effects on China

CHINA IS NOT capable, as we have argued in advance, of offering a lifeline for world capitalism. The relationship between the US and China on the economic level has been a variant of the Mutually Assured Destruction, which was used in the past to describe the military relationship between capitalism and Stalinism. The receipt of dollar assets as payment for Chinese exports to the US – the equivalent of $1,600 for every Chinese citizen – plugged the US’s balance of trade and guaranteed a market for Chinese goods. China now, however, according to The Independent, is "facing its worst financial crisis in a century". The IMF says that the Chinese economy will grow at well below the 8% projected by the Chinese authorities. Thousands of businesses have collapsed and direct foreign investment is falling, despite "government assurances that barriers for overseas cash are coming down" (International Herald Tribune). The amount of US capital put to work in China in January and February fell by a half. At the same time, China is using this crisis to invest abroad, taking over industries, particularly in Africa and other parts of the neo-colonial world.

Faced with its goods being shut out of the US and elsewhere, the regime has looked towards the development of the internal market. To this end is proposed a stimulus programme of at least $580 billion, the "biggest fiscal stimulus programme the world has ever seen". (The Independent) But this is on paper. It is not clear how much of what is promised is merely recycling old money and what is new. Nevertheless, there is a certain scope to call on its financial reserves and introduce quite a large infrastructure investment programme. While not saving world capitalism, it could have a certain effect in softening the downturn in China. This is made more likely because of the role of the state sector, which is still considerable. It is much greater than any comparable country, even in Asia where the state still exercises a certain control, such as in South Korea.

The question of the proportions of the economy which remain in the state or private sector is still an issue for discussion and debate, not only in the CWI but also amongst bourgeois commentators. For instance, in a sharply-written book based "on reams of newly uncovered financial data", Ya Shin Wang, one of the earliest critics of China’s ‘economic miracle’, argues that over the past ten years the country has actually become "less capitalist and less economically free": "In the early 1980s, the government essentially strangled emerging private entrepreneurs, who had to compete both with macro-state owned enterprises and giant multinationals".

This is still a controversial issue but what is indisputable is that the state has begun to assert itself under the immediate whip of this crisis, both internally and externally, while the private sector is dormant. The government and the privileged elites upon which it rests are attempting to prevent an outburst of popular anger at the rise in unemployment, the enormous and growing disparities in wealth, etc, with a mixture of ‘co-opting’ particularly the urban middle class, and of crackdowns. This is not likely to succeed, especially in the medium and long term.

Working class anger

SUCH IS THE plunge in the US economy that even Obama’s initial stratospheric standing in the opinion polls has begun to change. Within a matter of months of taking office, his standing on the economy is less than George W Bush at the same period in the latter’s term of office! This is an indication of the extreme volatility that marks out this crisis. It makes it difficult for the capitalists and Marxists to forecast accurately the likely march of events and the social and political effects of the crisis. In many countries, despite its severity, the crisis appears to be part of a phoney war. When the ‘bombs’ start dropping, through a precipitous rise in unemployment, it will be a different matter.

The capitalists have consciously sought to blunt the resistance of the working class by cutting wages and implementing short-time working rather than wholesale closure of factories, workplaces and industries. There is also the consciousness of the working class inherited from the previous period. Many believe that the present crisis and their travails are a ‘blip’, which will be over soon and followed by a return to ‘normality’.

However, the crisis has already provoked reflex actions on the part of the working class, particularly when the bourgeois have sought to attack past gains, as in Ireland, France, Italy and, on a smaller scale, other European countries like Belgium. It was the attempt to undermine health benefits, particularly of the old, that provoked mass demonstrations in Ireland at the end of last year, which has now been followed by an immense demonstration in February in Dublin and the threat of a general strike in March, although the trade union leaders are doing their best to derail this movement. We witnessed the same phenomenon in France with a colossal strike in January and on 19 March with over three million taking part in demonstrations. Nicolas Sarkozy, from jeering that France seemed to be immune from strikes, is in the first few months of this year once more speaking of the threat of ‘another 1968’. The occupation by the Sorbonne students could be a portent of what is to come, as is the general strike in Guadeloupe and Martinique and its effects on French Guiana.

There is also generalised bitter class hostility to those who are seen to be the main authors of the present crisis, the bankers and financiers. This has been enormously aggravated by the incredible arrogance of the banks and insurance companies such as AIG, which has been bailed out by the US government to the tune of $170 billion and yet still intended to pay out $175 million in bonuses! The uprising against AIG and the banks helped to push Obama into accepting a 90% tax on retention bonuses where the banks are receiving state aid. This provoked the banks into denouncing a ‘McCarthyite witch-hunt’ and the smell of the ‘tumbrils of the French revolution’! This is a reflection of the class polarisation which has already developed and a foretaste of a generalised feeling of opposition to the capitalist system, and not just a part of it, which will take shape in the next period.

Former Stalinist states collapse

THIS WILL ALSO be the case in the former Stalinist states of Russia and Eastern Europe. Paradoxically, the economic implosion is greater here than almost anywhere but mass consciousness still lags behind more than elsewhere. Gangster capitalism has failed but ‘real democratic capitalism’ has yet to be tried, reason many, even workers. These rosy illusions will be shattered by the tumultuous events that impend, not just in this region but elsewhere. The rise of mass workers’ parties and particularly powerful Marxist forces in Western Europe, the US, Japan and the neo-colonial world will exercise a decisive influence in changing the outlook of workers in this region.

At the same time, there have been spontaneous outbursts of anger on the streets of Eastern Europe and Russia, with governments falling in Hungary, Latvia and the Czech Republic. We have seen demonstrations in the Baltic states, in Vladivostok in Russia, and elsewhere, which presage an even greater mass movement given the catastrophic worsening of the position of the economies of Eastern Europe and Russia. A number of countries are on the edge of the cliff: Hungary, Romania, Ukraine and others as well as Russia itself. Unemployment in Russia, for instance, is expected to virtually double from 6.3% to 12% this year. This is on top of the fact that half a million Russians are owed unpaid wages and inflation is still in the teens.

The European and worldwide collapse of the automobile market will strike back with particular sharpness against the countries of Eastern Europe and Russia itself. The relocation of car factories by the multinationals in the region was with an eye to abundant cheap labour, consequently higher profits, and the export of cars to the countries of Western Europe, Japan and the US. Now that the market has collapsed, so will whole regions dependent upon car production. The Russian domestic industry will also be affected. For instance, Togliatti in the Volga has 60% of the population involved in Lada production, whose sales have collapsed. The majority of the population in the city will therefore be unemployed.

One Moscow commentator says that the current crisis will be much worse than 1998 and "the situation is worse than at the beginning of the 1990s". To top it all, the Forbes Rich List has shown that the number of Russian billionaires has fallen from 87 last year to 32 now. Little wonder that the former Soviet leader, Mikhail Gorbachev – who was himself the gateman for the introduction of capitalism to Russia – now declares that the "best of socialism and capitalism" is the way forward. In effect, this was his original programme when he came to power in 1985, for a reformed Stalinism. Eastern Europe and Russia will provide some of the worst examples of basket-cases for capitalism in the next period.

The repercussions of the collapse of a series of regimes in Eastern Europe, such as Hungary, are serious. Its possible effects on the banks of key countries of Western Europe are severe. For instance, Austria threatens to experience a similar collapse to 1931 if, as is possible, the countries of the Baltic and Eastern Europe go belly up in this crisis. Austria’s banks are highly leveraged, with massive outstanding debts, as also is the Swedish banking system. Austrian and Italian banks are the most exposed. Austrian bank loans to Eastern European countries are now almost equivalent to 70% of Austria’s GDP. This means that both Italy and Austria are not in a position to afford any bail-outs of their own banks and are desperately pleading for an EU package to bail them out. In fact, Europe is more exposed than even the US to a sub-prime crisis.

The situation in Russia is the same. Thirteen countries that were once part of the Soviet Union, by 2008, had accumulated a collective debt to foreign banks in foreign currencies of more than $1 trillion. Some of this, a miserly amount, went into investment but most of it, as in the US, went into consumption or real estate. The International Herald Tribune expressed the concern of the European bourgeois: "The debt crisis in Eastern Europe is much more than an economic problem. The wrench and decline in the standard of living caused by this crisis is provoking social unrest. American sub-prime borrowers who have had their homes foreclosed are not – at least not yet – rioting in the streets. Workers in Eastern Europe are. The roots of democracy in the region are not deep and the spectre of right-wing nationalism remains a threat".

This graphically underlines how the integration of capitalism – on a level unprecedented even in comparison to the pre-first world war period – means that the crisis in one sector or region can detonate a series of economic collapses in others. We saw this in the 1930s with the bankruptcy and defaulting or near-default of the debts of many countries in Europe and in the neo-colonial world, particularly Latin America, resulting from the fall-out from the slump. Something similar is likely in this period. GDP in Latvia shrank by 4.6% last year and is expected to drop a further 12% in 2009. Unemployment has exceeded 10% which presages a period of "instability" which will "certainly create room for a populist leader" (Financial Times). This is code for the parties of the far-right which have begun to grow in Hungary, Latvia and other Eastern European countries. These countries, together with Ireland, Spain, Greece and Portugal, will probably face the sharpest downturns in the next period.

Eurozone in crisis

ONE ESTIMATE IS that the Irish economy could contract by 20% over a few years which will produce social and political convulsions on a much bigger scale even than in Ireland’s tumultuous past. Moreover, the euro, which acted as a shield at the beginning of the crisis to economically exposed countries like Ireland, will become a huge straitjacket. No readjustment through currency devaluation is possible so long as they remain within the eurozone. Italy’s exchange rate, for instance, taking into account inflation, is estimated to be one third higher than required by the serious economic position facing the country. Spain has seen a colossal increase in unemployment – 3.3 million workers out of work. The budget deficit is at least 6.5% of GDP and the economy will plunge by 3% this year. Little wonder that one think tank has commented: "This is the perfect framework, together with the financial crisis, for a depression".

The eurozone could collapse, through an opt-out of its poorest, most beleaguered members. But the initiative for the shattering of the eurozone could also come from the richest countries. Germany, in particular, is reluctant to bail out the poorest nations and could refuse to pay for the maintenance of the eurozone.

Germany, the powerhouse of Europe, rather than facing the sunny economic prospect mapped out by Angela Merkel’s government, now faces another sudden economic implosion. Forced to introduce its own stimulus package after months of stubborn resistance, Merkel still warns of mounting public debt and excessive liquidity. An economic ‘expert’ declared: "The central banks in the US and the UK are now literally printing money. This creates an inflationary potential that is difficult to stop". Collectively, the capitalists have decided in the main that a mild bout of inflation is the only way to escape the deflationary trap which is engulfing world capitalism. But with memories of the hyperinflation of the Weimar republic, particularly 1923, the German ruling class fears going down this road. Yet the alternative to this on a capitalist basis is a huge rise in unemployment which is on the way in Germany.

The other powers of Europe are also being drawn into the downward economic whirlpool. In Belgium, workers face short-time working and significant cuts in pay. The Netherlands will also be drawn in, as will Scandinavia.

Sweden is fashionable at the present time in capitalist economic circles, because of the experience of the early 1990s. Its solution then is seen as a model for policies that could be taken up by bigger countries in the present crisis. Nouriel Roubini, the Dr Doom of world capitalism, has declared with many others: "We are all Swedes now". Nationalisation of at least some failing industries such as the banks is the path to go down, he says. What attracts the ruling class to the so-called ‘Swedish model’ is that the nationalisation was temporary – although it lasted a lot longer than a few months, for years in fact – and the government pursued an arms-length relationship with them as Brown is today. The Swedish crisis, however, evolved just before the beginning of the 1990s economic upswing. And the measures taken then will not prevent the country from facing a new social and economic challenge probably greater than the 1990s in the next period.

No such rosy scenario now looms for world capitalism, including European capitalism. This crisis, far from bottoming out, can go deeper and be more prolonged than even the most pessimistic capitalist commentator imagines. For instance, Philip Stevens, the political editor of the Financial Times, declared recently that Britain "has no money". This is an exaggeration. As the government has already demonstrated, it can resort to the printing presses – albeit of an electronic character today – in order to seek to prime the pump. But it does show the underlying uncertainty and confusion of the leading commentators of capitalism. The US has followed in Brown’s footsteps with a significant injection of cash. This cannot solve the crisis but may build a cushion which, together with other measures, could soften the impact.

But the colossal piling up of state debt means an inevitable collision between the classes in the future. The combined budget deficit of the eurozone’s four biggest countries – Germany, France, Italy and Spain – will hit 6.4% of GDP in 2010 which, in turn, is up from 5.8% this year. It was just 2% in 2008! Their public debt is forecast to climb to nearly 83% of GDP from 79% this year and 71% in 2008. The capitalists will attempt to claw this back either through tax increases – already mapped out by the Brown government for the future – or in direct assaults on employment, social benefits, etc. The EU will be torn apart by these developments. Already, the crisis has seen the revenge of the nation state, which both capitalist commentators and some forces on the left had prophesised had been buried by EU integration. Like criminals chained to a cart, the capitalists were forced to collaborate but the 27 members of the EU will not hesitate to strike blows on one another in order to protect their national interests. Sarkozy’s blatant featherbedding of the domestic car industry is tamely accepted by the EU commission with a minimum of grumbles. The collapse of the euro – a distinct possibility depending on how severe, deep and long this crisis is – would reinforce these divisions.

New workers’ parties

IN OPPOSING EUROPEAN capitalism, we do not fall back on narrow nationalism but counterpose a workers’ and a socialist alternative. To this end, the participation of a number of sections of the CWI in the forthcoming EU elections is important. In Sweden, Belgium, Ireland and Britain we have opportunities to present our programme, if not to get a significant vote. In Britain, the alliance with the Rail, Maritime and Transport workers union (RMT) and the Communist Party of Britain (CPB), despite the weaknesses sketched out in the Socialist Party statement, The European Elections and Working-Class Political Representation (, is nevertheless a significant step forward. Already in press conferences and comment, Bob Crow of the RMT has stressed the idea of ‘a workers’ Europe’ in opposition to the capitalist EU.

Undoubtedly, this advance towards an independent voice of the working class – despite the shrill objections of most far-left groups – has the possibility of registering a workers’ opposition to the EU. It is also a rallying point against the far-right BNP, which is within striking distance of winning seats in the European parliament. There is no guarantee of success, particularly in the electoral struggle, the lowest level of the class struggle. But despite the huge obstacles, this alliance has the possibility of registering with the best workers and young people, with us presenting elements of a socialist alternative. Moreover, it could lay the basis for a new mass workers’ party in Britain, which is posed by the whole situation.

The development of new mass workers’ parties is still a critical question for the working class in Europe and, for that matter, on a world scale. The emergence of Die Linke (The Left) in Germany, of SYRIZA in Greece and now the Nouveau Parti Anticapitaliste (NPA) in France is not at all accidental. The leader of the NPA, Olivier Besancenot, is already considered the most significant political figure in France after Sarkozy, according to a recent poll.

Despite the weakness of the NPA, both in programme and structure, it nevertheless represents a significant step forward. It is not at all clear, however, whether the NPA will grow in terms of numbers, attracting new layers or implanting itself in the working class. Electorally, it has also yet to be tested. But, given the explosive social situation in France – even Ségolène Royal, the defeated Parti Socialiste presidential candidate, recently declared "Don’t forget the French revolution" – and the lack of a viable electoral alternative on the left, the NPA could step into the vacuum and pick up significant support. This, however, would not guarantee its success. The question of programme, of intervention in industrial and social struggles, is vital in order for it to find a significant and lasting echo amongst new layers undoubtedly looking for an alternative.

A vital issue for the NPA is the programme of the party, particularly the question of a governmental alternative to Sarkozy. Because there is no mass workers’ party in France and the NPA has yet to be tested, we cannot specifically designate parties to form this governmental alternative. When the Parti Socialiste and Parti Communiste were bourgeois workers’ parties we could advance the slogan of a ‘socialist-communist government’. This, by the way, is only a variant of the approach of the Bolsheviks in 1917. Against the bourgeois coalition, the Bolsheviks proposed ‘All power to the soviets’ when the Mensheviks and Social Revolutionaries had a majority within the soviets. In practice, this was a call for a Menshevik-Social Revolutionary government, excluding the bourgeois parties and based upon the soviets, with the Bolsheviks in the position of a ‘loyal opposition’. In a sense, this was realised by the Kerensky coalition which preceded its overthrow and the taking of power by the Bolsheviks.

This issue, however, assumes a different character today, more of an algebraic form, because of the absence of such mass workers’ parties. But in the struggle against the Sarkozy government, workers will be looking towards some kind of government in opposition to that of Sarkozy. Alongside the abolition of the presidency, the Senate and for a unicameral assembly, we should raise the question of a workers’ government. What forces occupy such a position depends upon the struggle. This is an answer we give to workers who ask: who will be in this workers’ government?

Capitalism, including European capitalism, faces a drawn-out crisis which will result in huge social explosions. Inherent in this situation are the possibilities of mass demonstrations, occupations of factories, and general strikes. Events will further develop the consciousness of the working class, particularly when it is combined with the growth of socialist, Marxist ideas and organisations, including those of the CWI.


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