TONY SAUNOIS, secretary of the Committee for a Workers’ International (CWI), argues that the covid pandemic has inaugurated a new historical period of capitalist crises and class struggle.
The words of WB Yeats in his poem Easter1916 sum up the current world situation: “All is changed, changed utterly”. Fundamental changes are taking place in the world economy, geo-political relations, and in the colossal polarisation between the classes on a global scale, opening up a new era.
All of the trends we see developing today were present prior to the onset of the Covid-19 crisis. However, they have been razor-sharpened and accelerated at lightning speed. All of the consequences of the dramatic upheavals taking place are not yet fully clear. However, it is certain that capitalism will not be able to go back to the pre-corona situation, much less the situation which existed before the financial crisis of 2007-08.
A prolonged period of economic recession or depression will mark out the 2020s. Any ups and downs in the economy will not eradicate the poverty and pauperisation facing tens of millions, or the lack of job security for those in work. Social and political earthquakes not seen for decades, perhaps since the 1930s, are on the agenda, as recent social explosions in the US and other countries have shown. What was yesterday considered improbable, today can become probable or likely. We are faced with the prospect of revolution and counter-revolution confronting each other in the sharpest manner in decades. It is necessary to be alive to this and not lag behind by viewing developing events through the prism of yesterday.
The world situation is dominated by the ferocious struggle unfolding between US imperialism and China. This reflects the prolonged decline of US imperialism and the rapid rise of China as the second world power. The rise of China has accelerated dramatically in recent years. Whilst in 2000 it accounted for 3.5% of global GDP, by 2019 it had soared to 14.5%. It is now the world’s largest creditor – owed a staggering $5 trillion – and holds over $3 trillion in reserves. The steps taken to recentralise the economy even before the onset of this crisis have enabled the regime to act rapidly and quite effectively both economically and in management of the health crisis.
The growth of China and decline of the US is resulting in a major shift in the tectonic plates affecting geo-political relations and alliances. The US, despite remaining the largest global power, is unable to impose itself as the hegemonic power. It has been pushed back economically, and weakened in its spheres of influence. This decline is now reflected in the mass social explosion which has rocked the US in recent weeks. We should remember that the decline of British imperialism in the first half of the twentieth century provoked big class battles and revolutionary convulsions. This process is now developing in the US where events are developing at lightning speed and often in a violent manner. As Trotsky commented on a strike in the US, where the class divide is raw, mass struggles can often assume the character of a mini civil war.
Good bye to globalisation?
The 1990s, following the collapse of the ex-Stalinist states in the former Soviet Union and Eastern Europe, was marked by a phase of globalisation and integration of the world economy. This process went a long way, reflected in the further integration of the European Union (EU), the establishment of the eurozone, trade deals like the North American Free Trade Agreement (NAFTA), and growing integration of the world economy. China was a part of this process and saw a big expansion of trade, especially with the US, forming a crucial link in the supply chain for the US and Europe. This took place during a relatively stable period of growth in the capitalist economy despite some shocks and crises.
This process had its limits though and, as the CWI argued at the time, would go into reverse with the onset of a serious recession in the global economy. Others however, including some on the Marxist left, thought it irreversible and even spoke of the development of a single European capitalist class. Yet even at the height of the globalisation process, the limits imposed by the nation state under capitalism were not fully overcome. This prognosis was borne out following the crash of 2007-08 and a process of de-globalisation began to set in as the ruling classes sought to defend their own national interests.
The severity of the current recession or slump triggered by the Covid-19 crisis has rapidly accelerated this trend. It has driven the US and China to resume hostilities in their trade war after a truce was negotiated in January. Tariffs on Chinese imports to the US are the highest since 1993. Chinese venture capitalist investment in the US was down 60% on levels recorded two years ago. Export controls curbing semiconductor sales to China have been introduced, the door has been opened for the government’s pension fund to stop investing in some Chinese companies, and there have been moves to limit imports of electrical equipment used in the power grid.
Trump has railed that he will completely break links with China. There is a decoupling of the two economies taking place. How far this process will go is not clear at this stage and it has its limits – there are big risks for the US economy, hence sections of the US capitalist class are resisting it. However it can go a long way given the rivalry which now exists between these two global powers. Whilst the nationalist rhetoric of Trump against China and the steps he has already taken are driven by his almost psychopathic obsession with being re-elected, this conflict is also driven by US imperialism’s decline and China’s assent. China can also be rocked by economic and social upheavals which can check or cut across its growth.
Overall, US imperialism is caught in a ‘Thucydides trap’, named after the ancient Greek historian who wrote on the war between Sparta and Athens (from 431 to 404 BC), where a declining power when confronting a rising one is automatically driven to war. Whilst an all-out military war between China and the US is neither desired by either nation, nor possible because of nuclear weapons, they are driven to a trade war as US imperialism is compelled to take steps to protect itself.
In doing so they can inflict further damage on the US economy, which may limit how far Trump is prepared to go. Yet war is a continuation of politics by other means and a trade war is subject to much of the same logic as military warfare. Events have a momentum and dynamic of their own. There are some similarities in the clash between China and the US with the situation which existed in the run up to the 1914-1918 conflict, in the sense that a series of clashes and the formation of rival blocs took place before the outbreak of war. Sections of the ruling classes tried to avert war and mass protests against the looming conflict took place in many countries. Yet events, and the interests of the capitalist class in each country, had their own dynamic as one clash followed another, forcing a response. How far the process of decoupling goes is unclear and it will be difficult, but it is taking place and will have big repercussions on the world economy and world relations.
China has strengthened its position internationally as a consequence of the coronavirus crisis. It is using the current situation to assert control over Hong Kong and has been extremely bellicose in relation to Taiwan. What will ultimately be the exact correlation of forces between China and the US is unclear at this stage and it will be in flux. The prospects of social upheavals in China itself and the onset of a deep economic crisis there means that the unfolding clash between these two powers will probably not be in a straight line of ascent and descent but will fluctuate.
In the 1990s the CWI argued that a process of de-globalisation, protectionism and other steps would follow the globalisation and integration of the world economy with the onset of a serious recession or depression. Recently the Economist magazine carried a leader headlined, ‘Goodbye globalisation’, which concluded: “Wave goodbye to the greatest era of globalisation – and worry about what is going to take its place”.
This does not mean that an instant reversion behind national borders to the nation-state economy and a total collapse of the global economy is posed. It will mean, however, outbursts of clashes over trade, protectionism, tariff wars and the break-up of blocs such as the Eurozone or the EU as currently constituted, as the various capitalist powers take measures to defend their own interests.
Capitalist depression looms
All of these features of this new era flow from the catastrophic state of the global economy and the prospect of a prolonged period of recession or depression. The Covid-19 virus is not played out and a new spike in any country will have devastating consequences on health and also on the political and economic situation. Within this recession or depressionary period, small, ephemeral upturns will inevitably take place especially as the ‘lockdown’ is eased or ended. However, these will be followed by further recessions and slumps. The new period we have entered is likely to be marked by an increasing frequency of capitalist crises. This is important because it is not boom or recession that drives workers and the middle class to seek a revolutionary solution to the crisis. It is the rapid switch from recession to even a small upturn and back to recession that will have a dramatic effect on the class struggle, political polarisation, and consciousness.
Capitalist commentators, and some on the left, are desperately searching the store rooms for a way out of the cataclysm capitalism is confronting in the 2020s. Some think they have found one in ‘modern monetary theory’. Until recently this was side-lined to a few blog pages. Now it is being discussed in capitalist journals and is increasingly being advocated by some on the left like the US Democrat congresswomen Alexandria Ocasio-Cortez and Bernie Sanders’ former adviser Stephanie Kelton.
These ideas, advocated within the limits of capitalism, can get some traction amongst workers and young people. They can be seen as an ‘easier’ way to deal with the crisis than overthrowing capitalism. Sections of the capitalist class may also take them up in a desperate bid to try and find a way out of the crisis. Yet what do the ideas of modern monetary theory amount to? Its advocates describe themselves as ‘post-Keynesian’. However, having searched for something new, in essence they have simply donned the gown of Keynes. They argue that the piling up of debt indefinitely by governments which control their own currency is not a problem, and that it has no limits providing interest rates are low or zero. The only problem, they argue, is inflation. This, they claim, can be avoided as long as there are enough workers to meet growing demand.
Yet the central problem facing capitalism today is precisely the lack of a market and demand. This will be massively compounded by the tsunami of unemployment which is hitting country after country, and is coupled with declining incomes for those with jobs together with the accumulation of massive personal debt. Moreover, this policy would be inoperable within the eurozone where each country would inevitably want to adopt different levels of expenditure and debt levels, which is prohibited within the currency area.
A massive injection of government funding can avert a total collapse for a period. The capitalist class has been compelled to vomit out its neo-liberal programmes, and has injected trillions into the economy along with other measures of state intervention. This is likely to continue in order to try and avert a complete collapse of the economy. Such measures can lead to a certain increase in demand amongst a layer but not enough to resolve the underlying causes of the crisis. They are crisis management packages rather than a solution to the crisis. Such policies can continue for a period in the advanced capitalist countries, but this is not the case in the neo-colonial world where the coronavirus crisis is having devastating consequences for millions of workers and the poor.
Yet the indefinite pumping up of a debt bubble in the industrialised countries will cause it to burst at some point when hit by a shock in the global economy. Historically, the ratio of debt to GDP was much higher in the period following the second world war in the advanced capitalist countries including in the US. It was reduced over the protracted period of capitalist upswing following that war, based upon rebuilding war damage, especially in Europe; the creation of new markets and massive growth in world trade; and the application of Keynesian methods after the war. The situation today is exactly the opposite. The world is plunging into recession or even slump in some countries. The prospect for major, sustained growth is not in sight. Worsening conditions for workers and a drop in purchasing power will be reflected in the real economy as the underlying economic laws of capitalism assert themselves. Capitalism is in a systemic crisis and a cure within the system is not possible.
Japan as a model?
The example pointed to by Stephanie Kelton in order to justify modern monetary theory is Japan, which has tried every conceivable application of capitalist economic policies after the collapse of the bubble economy in 1991. Between 1992 and 2008 no less than 18 stimulus packages have been applied. None of them resulted in a return of significant economic growth. ‘Abenomics’, the policies pursued after 2012 named after the Japanese prime minister Shinzo Abe, has now made it easier for employers to fire workers and has led to a dramatic increase in irregular employment, which reached 37.5% of the workforce in 2015 and is substantially higher today.
Japan has a debt-to-GDP ratio of 240%, with most of the debt held by its own citizens rather than foreign creditors, reducing the likelihood of default. This has been sustained for approximately twenty years but with what result? An economic collapse was avoided but at the cost of more than two decades of stagnation with consequences for the working class. ‘Lifetime employment’, once held up as an exemplary feature of Japanese capitalism in the post-war period, is now a pipe dream for millions of workers trapped in irregular employment. The child poverty rate amongst single-parent households is 56%, the highest in the OECD prior to the Covid-19 crisis. Is this the best these new advocates of Keynes can offer as an alternative today? Japan is not an example of a success story; it is a dire warning of prolonged stagnation and worsening conditions.
Japan’s ability to sustain a high debt ratio for a lengthy period is due to it being the third largest imperialist country. Whilst the major advanced capitalist economies can sustain a high level of debt for a period, this is not the case for the neo-colonial world. The threat of debt default is ever-present in these countries. As the partial postponement of debt repayments in Argentina and Lebanon have shown, the debt crisis is likely to erupt in the coming period as a major issue. It could trigger another major global financial crisis and upheavals in the countries burdened with unsustainable debts.
The supporters of modern monetary theory often link it to the question of a ‘Green New Deal’ as a way out of the crisis. It is possible that in some countries there will be an investment in a more environmentally-friendly economy. However, the lurch back to nationalist protectionist measures globally will cut across any steps taken in this direction as each capitalist class acts to defend its own interests and reopens its economy as rapidly as it can. Already, air pollution levels in China have returned to the pre-pandemic levels as the economy is re-opened.
Social explosion rocks the US
The dramatic social eruption in the US and around the world following the brutal murder of George Floyd by the police in Minneapolis has shown that a new era of class struggle has begun. This is the biggest movement in the US since the civil rights struggles of the 1960s. A crucial difference today is that in the 1960s the white working class was still enjoying rising living standards and prosperity. Today, living standards have been slashed and mass unemployment threatens millions of white workers.
The movement in the US has triggered a marvellous wave of massive protests around the world, particularly of young people. The multiracial, multi-gender and class composition of these protests is a crushing refutation to those who capitulated to the ideas of identity politics, although these ideas will inevitably be present in these movements.
The events in the US represent a turning point in the most powerful imperialist power. They come after a revival of the movement in Ecuador, Lebanon and the first wave of small but significant protests in Chile. The protests of the Nissan workers in Barcelona, the Renault workers in France, and transport workers in Argentina and elsewhere, are a harbinger of what is going to erupt in many countries in the short term. These mass protests have taken place despite partial lockdowns remaining in place and the threat of contracting the virus. The loss of fear reflected in this illustrates the bitterness, anger and class polarisation which has exploded.
In an incredible turn of events curfews were imposed in more than forty cities in the US. Mass demonstrations took place in the big cities and small towns across the country with hundreds if not thousands arrested for defying the curfew. Brutal repression by the police has been used against those who have taken to the streets. In scenes almost reminiscent of some events in Latin America, military helicopters flew low over protesters in Washington, a classic use of counter-insurgency methods employed in other countries by military regimes, including the use of agent provocateurs. Military armoured cars were deployed on the streets of Washington around the White House and also in Minneapolis. The police in Iowa, on the fifty first anniversary of the Stonewall riots in New York, stormed into a gay bar brandishing weapons as it offered shelter to the protesters.
Trump clearly wanted to try and crush the movement which has erupted, using Bonapartist methods of repression if necessary. He would like to impose an authoritarian regime if he could. The mass movement and opposition from the capitalist class will prevent him from doing this, reflected in his humiliating withdrawal of active-duty troops from Washington. The repression already deployed has merely enraged people further and drawn wider layers into the movement. Yet the bellicosity of Trump is in reality a reflection of his weakness and falling levels of support. His erratic behaviour and the actions he has taken are an indication of his desperation. He is out of the control of the more far-sighted sections of the ruling class. All the main opinion polls now point to a substantial lead for the Democratic candidate in November’s presidential election, Joe Biden. Even the Republican senator and former presidential candidate Mitt Romney has said he won’t vote for Trump, as has George W Bush’s former secretary of state Colin Powell.
It is the scale of the movement, its multiracial character, and the bitterness reflected in the protests, that have provoked open and bitter divisions within the ruling class. Shakespeare warned in Hamlet, “madness in great ones must not unwatched go”. Sections of the ruling class, including the military, are in collision with him and his dynasty which has features of the decadent Czarist regime in pre-revolutionary Russia or Louis XVI in pre-revolutionary France. In an unprecedented move Trump’s own Defence Secretary, Mark Esper, having initially taken Trump’s line, then effectively repudiated him. The military chiefs have opposed him and have been in discussion with other leaders in Congress. Even George Bush came out against him.
Sections of the police in some cities and the National Guard have laid down riot shields and batons, and even joined the protesters in some cases. Outlines of a split in the state machine are evident in the situation. This confirms our analysis that elements of civil war and features of a revolution are present in the situation. The armed protests against lockdowns by the right – which were untouched by the police – and some exchange of gunfire during these protests, illustrate this.
At this stage however the working class as a class has not yet moved into action. Apart from some bus drivers refusing to transport arrested protesters to prisons – with the support of their union – in the main the trade unions have not moved into action and have been absent from the movement. This obstacle will need to be overcome by the working class in the coming period.
This has been a feature of all of the mass movements which erupted prior to the pandemic – in Lebanon, Chile, Iraq, and so on. This and the lack of organisation are obstacles which will need to be overcome if these struggles are to be successful. The demand for building democratic action committees in all of the local communities, which then join up together across towns and cities, linking together with local trade union organisations and elected committees in the workplaces, is a crucial question in the US. Faced with brutal repression the question of these bodies organising defence committees in the local areas and on protests is now an essential task for the movement.
The capitulation by Bernie Sanders in his refusal to break from the Democrats and form a new party has been shown starkly to be a criminal lost opportunity in the light of what has now taken place. Apart from a few statements Sanders and Ocasio-Cortez have played no role in the movement and raised nothing about how it should be taken forward.
These events have dramatically changed the situation in the US. Even should the movement pause for a period it has forced to the surface all of the underlying contradictions in US society and the class polarisation which exists. These are not going to be resolved. With 40 million losing their jobs and 54 million using food banks or going hungry, the scene is now set for increased polarisation and bitter struggles in the coming months and years, despite what is likely to be a limited ‘bounce back’ from the depths of the lockdown. The question of the need for a new party will be posed even more sharply should Joe Biden and the Democrats win the next election. Despite a significant layer that mistrusts or even hates Biden and the Democrats, the pressure to rally behind them in order to defeat Trump is certain to be a powerful mood in the run-up to the election in November. While the mood to ensure Trump is defeated is understandable, socialists will need to skilfully and patiently explain how Biden and the Democrats offer no alternative and what steps need to be taken to prepare for the next stage of the struggle following the election.
For a revolutionary socialist alternative
The failure of Sanders and Ocasio-Cortez to offer an alternative has been repeated internationally during the coronavirus crisis. Reminiscent of what the mass social-democratic parties did at the outbreak of the conflict in 1914 when they capitulated to their own capitalist classes and supported the war, today the ‘left’ has generally wrapped themselves in the flag of national unity during the crisis and argued that now is not the time to challenge their respective governments. Any criticism they have made has been weak and ephemeral.
Die Linke in Germany voted for the government’s coronavirus crisis programme. The Left Bloc in Portugal did the same and Podemos in Spain is in the government. None are prepared to put the system in the dock and pose the need for a radical socialist alternative. The cataclysm in Brazil under Jair Bolsonaro finds P-Sol (the Socialism and Liberty Party) joining a front – ‘Movimiento Estamos Juntos’ (We Are Together) – not only with the Workers’ Party (PT) but with parties of the capitalists and the right including the former president Fernado Henrique Cardoso. This classic popular front will fight for “life, liberty and democracy”, and “set aside old disputes in search for the common good. Left, centre and right united”, it proclaims, to defeat Bolsonaro.
As in 1914, those defending the genuine ideas of revolutionary socialism are relatively small in number. Yet those who stood out against the imperialist war were set to win massive support and were able to carry through the Russian revolution in November 1917. Although the situation is not exactly the same, as this crisis and class struggles unfold revolutionary socialists can win big support and grow in large numbers as a basis from which big revolutionary parties can be built in the coming years. The emergence of new broad mass workers’ parties, which the CWI supports, will also be an important part of this process.
The youth, especially the working-class youth who have taken to the streets in recent weeks, have brought with them the anger and bitterness against the system which has been accumulating in the run-up to the Covid-19 crisis. The crisis has concentrated this further. They have come onto the streets with an openness to the idea of socialism. This crisis is polarising and radicalising a whole layer of young people especially. As in war and revolution we need to be prepared for leaps forward in political consciousness as events unfold. This turning point in the US is set to be mirrored in other countries. Multiple uprisings and social explosions are placed on the order of the day.
The CWI and revolutionary socialists need to audaciously intervene in the movements currently taking place and be prepared for even greater social and political earthquakes. Many of the demands put forward in Trotsky’s Transitional Programme are extremely pertinent to the crisis currently unfolding. Where they are relevant we need to boldly take them up. By doing so, along with other aspects of our analysis and programme, even small revolutionary forces can make significant and major gains, and assist the working class in its struggles for an alternative to decadent capitalism in its death agony.