A new world historical situation - Resolution of the International Secretariat of the CRFI, November, 2008

Resolution of the International Secretariat of the CRFI

1.     The entire world historic landscape has changed. The exacerbation in September-October 2008 of the world capitalist crisis that exploded last year takes unprecedented dimensions driving to collapse the world stock markets, the international banking system, gigantic industries and a growing number of States on the edge of default.

         The global crash has already taken place. The capitalization of world stock markets has halved; losses on debt instruments now amount nearly $3 trillion, and debt destruction inexorably continues; there is a "near-disintegration of the western world's banking system" (Financial Times, 28/10/08) despite unprecedented State interventions.

         World economy is contracting; The IMF predicts for 2009 a generalized recession in the developed world as a whole and more than 20 million new losses of jobs. Conditions of starvation produce already hunger riots in the so-called "Third World" countries, and the falling of commodity prices will accelerate the bankruptcy of raw material exporting countries. Nothing can be the same anymore.     

       Nearly two decades ago the disintegration of the USSR was celebrated by capitalism as "the end of communism" and of History itself; now capitalism itself faces its own implosion in its metropolitan centers, in the United States, Europe and Japan. The post 1989/91 myth of an apparently triumphant liberal capitalist system, including the fantasy of a "uni-polar world" centered in the "unchallenged" American Empire has collapsed.

       The strongest capitalist superpower on the planet, capitalist America as a whole, not solely the evaporated US "sub-prime mortgage market", is transformed into the most "toxic asset" of the global system. Trotsky had predicted that America rising to world hegemony accumulates all the world contradictions as dynamite in its foundations. This dynamite, accumulated during a century of expansions and crises, of wars and revolutions, is now exploding changing the shape of the world in the 21st century.

       The current crisis is the culmination and supersession of all previous major systemic crises from the break up in 1971 of the Bretton Woods framework that attempted to avoid a relapse to the Great Depression pre-war years, to the financial shocks of the '80s and '90s (the 1984 Latin American ‘tequila crisis', the 1987 Crash, the 1997 Crash, centered in Asia and followed by Russia's default in 1998, the burst of the US ‘dot.com economy' in 2000, the recession of 2001-2002, Enron's debacle, Argentina's default etc) throughout the decades of finance globalization.

       In the period 2002-2006, the spiral of the crisis was deflected and the two interconnected engines of US credit expansion and China's industrial growth drove a relative upturn of world economy. But now, the two engines are stalling. The contraction of world economy tries to eliminate the enormous amounts of surplus capital both fictitious and productive that obstruct the process of capital accumulation

       Capital is not a thing but a social relation. The explosion in the foundations of the system is driving the tectonic plates of society changing all social relations and international relations. A way out from the impasse can be opened only through a series of historic confrontations between the conflicting social forces, first of all, between capital and labor. In other words, the solution of the crisis depends, at the last instance, from the confrontation between social revolution and counter-revolution on an international scale.  The central task of the international working class and of its vanguard is the urgent political, programmatic, organizational preparation by all theoretical and practical means for this confrontation.

       The new historical situation at the end of the first decade of the 21st century demands the mobilization of the oppressed and exploited masses under the banner of a revolutionary International of the 21st century- the refounded Fourth International!


From crisis to crash and slump


2.      America, the historically highest point of development of world capitalism, has been transformed into the center of world capitalism has become the center of its deepening crisis .

          The collapse of the US sub-prime market in 2007 unleashed an international financial avalanche of bankruptcies and a global credit crunch, followed by a skyrocketing rise and then a dramatic fall in oil and commodity prices, but, above all, an unstoppable slide to a synchronized world economic downturn and recession.

        The three decades-long finance capital globalization, after a series of shocks (1984, 1987, and 1997) ended into a catastrophe.  

       The outright failure of so-called ‘neo-liberalism', the economic dogma followed by almost every capitalist government, was epitomized by the dramatic actions taken urgently by the champions of privatizations, of Reaganomics and Thatcherism in the US and UK, themselves.

      The process of increasing State rescue operations started from the nationalization of Northern Rock Bank in Britain in September 2007, of Bear Sterns, one of the ‘Big Four' investment banks in the United States, in March 2008, and then reached a decisive turning point that precipitated the September-October maelstrom: the nationalization of the twin giants Fanny Mae and Freddie Mac controlling the four fifths of the collapsing US mortgage market, in September 2008.

        The US Administration, of course, had no other alternative but to transgress its own founding principles of capitalist fundamentalism. It could not allow two Government Sponsored Enterprises with a debt equal to 40% of the US GDP just to collapse by the blows of the ‘invisible hand". Such collapse meant chaos in the international financial system, a run on the dollar- and a declaration of default by the United States.

          There is no doubt that this gigantic bail-out put a tombstone not only to what misleadingly was named ‘neo-liberalism' but to an entire era dominated by the central capitalist illusion of a market economy self-regulated by an "invisible hand". It demonstrates that the law of value is exhausted as a regulative principle of the economy; abstract labor is too restricted as a measure of material social wealth; world capitalism, thus, in its advanced imperialist stage, has entered long ago an historical epoch of decline.

       Although the US government had no other alternative but to nationalize Fannie and Freddie, this rescue operation produced new problems. The funds expended for the rescue operation (about $200-300 billion) prevented its repetition to other financial institutions in distress. The biggest first casualty was the 158 years old, gigantic investment banks Lehman Brothers, which was left to collapse.

       The bankruptcy of Lehman Brothers became the catalyst for an avalanche of bankruptcies, an intensification of global credit crunch, and worldwide panic. Coinciding with the forced sale of Merrill Lynch, in the weekend of 13-14 September 2008, followed by the last minute rescue by Fed of the huge AIG insurance company showed clearly that the American-led global financial meltdown has not stopped.

        In six months the entire investment bank Wall Street establishment was dismantled: Bear Sterns was broken, Lehman Brothers was bankrupt, Goldman Sachs and Morgan Stanley had to be re-categorized and put under the authority of the Fed.

        A series of dramatic State interventions followed both in America and Europe superseding what happened after the eruption of the crisis in 2007.       

      During 2007-2008, the world had became already witness of continuous, unprecedented in scale and in nature but finally unsuccessful interventions by the State authorities and central banks of the most powerful capitalist economies and imperialist countries in the world, in North America, Europe and Asia, to halt the unfolding crisis and its systemic dangers. Hundreds of billions of dollars, euros and yens were injected in the banking system, an expansionary monetary policy of interest rates cuts was followed by the US Fed and other central banks, fiscal stimulus, i.e. tax cuts favoring the rich in trouble, were introduced but the spiral of the world crisis continued to unfold threatening the entire system.

     After the Lehman Brothers debacle, the Paulson $700 billion plan was urgently introduced to buy "toxic assets» relieves the financial system from their destructive burden. It was finally voted in Congress without avoiding a political crisis- and without convincing that the plan will be ultimately effective. Even from this sum, $250 billion had urgently to be re-directed to re-capitalize and partially nationalize the 9 strongest US banks. The Paulson Plan attacks as the main problem illiquidity while the true core problem is insolvency. Securitization dispersed globally the risks and made bankruptcy dangers opaque, destroying thus any creditworthiness and freezing the credit lines. Lending by banks was over-extended, sometimes 60 times more than their assets, making them now candidates to file for bankruptcy. The Paulson Plan gives some temporary relief to the Wall Street magnates while the taxpayer ‘Main Street' has to pay the bill. It transfers another part of the huge private debt to the public debt of an already over-indebted America.

       While, with the growth of US deficits, the need for foreign investors for financing it grows, US creditworthiness is rapidly deteriorating. The ratio of total US debt to GDP from 163 % in 1980 became 240% in 1990 and jumped to 346% in 2007.It is enormously aggravated with the dramatic developments of 2007-2008, including the addition to the public debt of $6 trillion liabilities of Fannie and Freddie and the $700 billion of the Paulson Plan. America has been transformed into a super-Argentina in a non-declared default. The problem of US over-indebtedness is transferred to the next Administration.

       Barak Obama's electoral victory expresses the need both of the rulers and the ruled to overcome an unbearable situation, inherited from the Bush Administrations years: deterioration of living conditions, growing unemployment, a ballooning consumer, corporate, and public debt, gigantic deficits, recession and a financial catastrophe - together with an equally catastrophic impasse in the international "war on terror" in the Middle East and Central/ South Asia.

       The new Obama Administration is an instrument at the hands of US imperialism to manage its crisis; its policies inescapably at some point will clash violently with the great expectations risen in the masses of workers and oppressed minorities mobilized for its victory.


        The UK government introduced the Gordon Brown plan on October 8 by nearly nationalizing eight big banks. Together UK, Germany and France announced on October 13 more than $ 222 billion of new bank liquidity and nearly $1 trillion in interbank loan guarantees.

      But these unprecedented measures did not dissipate the crisis. Recession expands in the US, in UK, in the Euro-zone and Japan. Stock markets, currency markets, banks and industries are in continuous turmoil under the shadow of a slump or of global stag-deflation (stagnation plus deflation) which is underway (See www.rgemonitor.com October 25, 2008).

        The interest rates cut by the Fed, twice in October 2008, to the lowest level reached after 9/11(and similar moves that followed by the ECB, the Bank of England, the Bank of Japan and other central banks in Asia) could have a very ephemeral effect in the volatile stock markets but are totally unable to reverse the contraction of world economy. As many analysts pointed out, these cuts are just a sign of desperation.


Enters the State

 

  3.  Any State intervention is totally inadequate to face the enormity of the problem produced by the over-accumulation of fictitious capital.

       The derivatives market expanded from a $100 trillion in 2002 to $516 trillion in BIS's estimation in 2007 or $585 trillion in other estimations!  Comparatively all the real goods and services produced by all economies in the world annually, the global annual gross domestic product is less than $50 trillion, and the US annual GDP of approximately $13 trillion. It becomes crystal clear that no intervention by the State, by a central bank or by all of them in the world put together could ever control the tempest of this ocean of derivatives.

        While the State is presented by right wing, liberal or left "experts" as the last resort to save the system, one State after another is queuing in the list of countries in default: Iceland, Hungary, Ukraine, Belarus, Kazakhstan, Romania, Bulgaria, Pakistan, Indonesia, Philippines et al. One State after another address desperate calls to the IMF, again. The IMF already has answered the calls of Hungary and Ukraine, and probably will intervene in other cases. But the ammunition of this institution is very limited, about $250 billion. It cannot play the role of the savior; rather it will exacerbate the social political problems by imposing its well-known draconian conditions to the countries that it "helps".

       The capitalist Nation/State is totally unable to face a globalized crisis, made possible by the capitalist globalization, which, in the last decades, has interconnected the national parts of world economy much deeper than ever before in the imperialist epoch.

       After the 1929 Crash, it was the link to the Gold Standard monetary system that internationalized the crisis, for this reason also it took some time, up to 1932-33, for the Great Depression to unfold all its destructive power; now, on the contrary, thanks to finance globalization, the financial turmoil immediately led into a banking crisis and precipitated a recession and State bankruptcies starting of Iceland's.

       The Nation/State is not the custodian of last economic resort that will save the global system of capital. On the contrary, because of the crisis of the global capitalist system, it succumbs under the crushing weight of over-indebtedness, the ruin of public finances and an inability to pay the debt leading to default.

      The currently unfolding world capitalist crisis demonstrated not solely the total failure of anti-Keynesian neo-liberalism but of any neo-Keynesian State interventionism as well.  

        But although the State cannot co-op with the task of the economic last resort, it remains the last political resort of the bourgeoisie, the site of its political power with the monopoly of force. Its growing role among conflicting capitalist interests and between capital as a whole and labor strengthens the tendency to take exceptional powers and rule by emergency measures, already seen as the crisis of capitalist globalization emerged in the turn of the century and the frenzy of the "war on terror" had started.

       As the State intrudes among conflicting interests, it becomes a focus of all social tensions, a mediator transforming the economic into a social crisis affecting all classes and spreading misery to the broadest masses, deepening a political crisis around the central question of political power itself.

       Both social economic strategies used by capital the last century to repel its historic decline and the threat of the working class- State interventionism and neo-liberalism- have both failed in the long run producing a crisis of governance: those on the top cannot any more govern in the old ways, those on below cannot afford to be governed and live in a miserable present without future. Thus, conditions are building up to the emergence of revolutionary situations.

     The "think tanks" of the ruling class recognize the threat. Martin Wolf in Financial Times (October 28, 2008) speaks about the political dangers arising by a global slump mentioning "xenophobia, nationalism and revolution" (emphasis added). It is the last one that drives the world capitalist leaders to an early G20 world summit after the US elections and it pushes Sarkozy and other European leaders to call for a "Bretton Woods II".

     In Bretton Woods in 1944, it was the new world hegemon, the United States, with two thirds of the world gold reserves in its Treasury and its powerful national currency taking the role of the world reserve currency in a fixed parity to gold, that it was able to sustain an international Keynesian New Deal, to reconstruct the ruined Europe and repel the revolutionary threat, with the crucial political help of Stalinism.

       Now, the world situation is entirely changed. America, not only is not in a position to re-stabilize Europe, and the capitalist world but it drives them into the abyss; there is no room to any historic concessions to the working class as after World War II, on the contrary  "generosity" to the bankers and financiers is compensated by the destruction of the remaining social services (in Education, Health, pensions etc.) and of the living standards of the impoverished population; and its is a bad time for class collaborators: social democracy is discredited and Stalinism, with its powerful bureaucratic  apparatuses, is no more here to help discipline the workers.

      A "Bretton Woods II" is a pipedream of Sarkozy and of other European leaders frightened by the coming social explosions, an illusion shared by the "neo-Keynesians" in the left and the so-called "far" left.


Europe in the zone of storms


4.     The current world capitalist crisis revealed the vulnerability of the system in its birthplace, the Old Continent, as well as the fragility of the European Union fuelling all the centrifugal forces turning it apart.

       As the crisis escalated in September-October 2008, one European government after another had to intervene with unprecedented measures to prevent the collapse of the biggest banks and companies and stop the financial meltdown. On 28 September the Belgian, Dutch and Luxemburg governments nationalized the bank Fortis, the biggest private employer in Belgium. On 29 September, the British Bradford and Bingley, which had the largest share of the buy-to-let market, was nationalized. On 5 October the German government bailed out the commercial property loan giant Hypo Real Estate and declared that it guarantee the deposits of all savers (the previous day it criticized the Irish government to do exactly the same). On 8 October, the British government re-capitalized and partially nationalized the 8 biggest banks of the country by buying preference shares.

       It became clear that despite all claims about European unity, the European capitalists reacted to the global crisis on national lines. It became obvious the absence in the EU of the equivalent of the US Fed able to impose an Eurozone plan. Despite the critics or the apologists that called the EU a "super-state", this union of European imperialists has a common currency among 15 from its 27members but lacks a European budget or taxation system. The European Central Bank is pre-occupied exclusively to keep inflation rate within the Maastricht treaty limits of 2%- although currently inflation runs more than 3, 6%. Another limit put by the same Treaty, to keep public deficit lower than 2%, is also abandoned for the time being because of the deepening recession. European capitalist leaders call for the imposition of new international regulations- a new "Bretton Woods"- and at the same time they totally ignore their own European regulations!  

       On October 12-13, the meeting of the Eurozone leaders plus Britain agreed to follow general guidelines by infusing liquidity directly into banks and/or setting up interbank loan guarantees. Germany, France, and Britain together announced more than 163 billion euros ($222 billion) of new bank liquidity and 700 billion euros (nearly $1 trillion) in interbank loan guarantees. But the proposed measures were simply guidelines and each member state has to develop its own independent, national "solution". The EU, in the moment of truth of a world crisis, demonstrates its structural weakness and the continuing fragmentation of Europe on national capitalist lines. Germany's government, for example refuses to give one euro for the sake of another European- but non German- bank or company, as the French President Sarkozy asks.

      Centrifugal forces are strengthened by differences on three key questions the government's share of the economy, the government budget deficit and the level of national indebtedness. The most seriously threatened European states are France, Italy, Greece and Hungary.  

      Hungary's declaration of default was postponed by getting urgently a $25.1 billion rescue package by the IMF, the European Central Bank and World Bank.

       Italy, the fourth biggest economy in Europe, bears the weight of the world's third largest public debt toppling $ 1trillion, which surpasses Frances' debt. High public debt, a big budget deficit and government expenditures that total almost 50% of GDP, one of the highest in the world revenue from taxes (43% of GDP) prevent the Italian government to provide any significant bailout to the Italian banking giants Intesa and UniCredit which have a huge exposure in Central Europe and the Balkans. " Italy therefore, could be the first major eurozone economy to get hammered by the global financial crisis...Italy's choice will come down to sticking it out through the crisis with outside help (and possibly facing a prolonged recession), or reconsidering its role as a eurozone country"(Stratfor, 28 October 2008). Pressures on the European Monetary Union are building up dangerously from every corner of the over-expanded EU threatening its integrity and the future of the euro itself.

      Greece, with a much weaker economy, a public deficit about 3,5% of GDP, a growing current payments deficit bigger than 15% of GDP, and a total public and private debt of half a trillion dollars, has its banking system overexposed in the Balkans, particularly in Bulgaria and Romania. Mass liquidation of Greek State bonds (more than 3 billion euros the last 10 days of October 2008) is continuing. Merrill Lynch in its last European report downgraded some of the biggest Greek banks (Alpha Bank, National Bank, Eurobank, and Bank of Piraeus) because the dangers facing in the Balkans.

       Bulgaria and Romania are virtually bankrupt threatening a domino effect on Greek, Italian, and French banks. Similar dangers face Austrian banks in Central Europe, and even Sweden in relation to the Baltic countries. All these banks used extensively carry trade with the low interest rate loans in yen and Swiss franc to invest in the East in local currencies with higher interest rates. As the deficits in the Eastern countries were growing and the weak national currents started to fall, EU banks found themselves sitting on moving sand.

      The collapse of the Stalinist regimes in Eastern Europe was initially seen as the great historic opportunity for European imperialism, first of all for the engine of its integration, the German-French axis. The Maastricht Treaty of 1992, as the basis of the European Union and the launching of the euro-currency, and latter on, for the expansion of the EU to the borders of Russia, was accompanied by a flood of credit and re-location of West European industries in Central Europe and the Balkans, nurturing the dreams of a European imperialist ascent in the post-Cold War conditions. The current world crisis demolishes the entire edifice: the Maastricht Treaty restrictions are overlooked, the euro is under enormous pressures, and the bonanza in the countries of the East under capitalist restorationist regimes turned into a nightmare for the European banks and their respective countries. East turned into a black hole threatening to absorb the West into its vacuum, to use George Soros's metaphor.

     A new social landscape is shaped in the entire Continent- a new arena for the class struggle, which is rising in new waves and ways. The current mass strikes, General Strikes, or mass youth mobilizations in Belgium, Greece, France, Italy and Germany are just a beginning.


Capitalist Crisis and Restoration


 5.   From the war of imperialist intervention after the October Revolution to the Nazi Operation Barbarossa against the Soviet Union to the Cold War, world capitalism had always the clear aim and expectation to overcome its decline by re-conquering the vast spaces, where capital was expropriated after 1917 and the Second World War.

       Thirty years after the turn to pro-market policies by China under Deng and, above all, nearly twenty years after the collapse of Stalinism in Eastern Europe, the implosion of the Soviet Union and the turn to capitalist restoration, it is more than obvious that world capitalism not only did not find a new youth but it faces, particularly now, its worst crisis.

   Despite a flood of foreign credit to the East- and a devastating NATO war that destroyed former Yugoslavia-capitalist restoration in Central Europe and the Balkans shows now its fragility, depending principally from the inflow of foreign capital than in locally deeply rooted capitalist structures.

 

Expectations that China's growth could provide a way out from the current slide to world recession are totally illusory. On the contrary, it is the transition from the international financial turmoil and credit crunch to recession or depression that exacerbate all accumulated contradictions in the Chinese economy and society with incalculable world implications.

       Chinese growth is export-led. It cannot trigger resurgences elsewhere; as global growth slows, demand for Chinese goods will tend to stagnate or fall. The main outlet of Chinese exports is the US consumer and now it is collapsing for the first time in two decades

       Already the growth rate is revised downwards from 11% to 9% or 7%, or even lower for 2009. Output cuts in aluminum and nickel production are announced after the escalation of the world crisis. The People's Bank of China predicted on October 31st that in the coming two years housing prices would slide by 10 to 30% marking the bursting of the real estate bubble; even more important the Bank revealed its worries about a liquidity crunch affecting severely not only real estate companies but also the commercial banks that have devoted from 20% to 40% of their total loans to the real estate sector. Cuts in the banking interest rates are also an indication of a rather rapid cooling of the Chinese growth rate under the new world conditions. Western analysts like N. Roubini predict the high possibility of a hard landing of the Chinese economy next year.

      The Chinese growth, which made it in the previous years "the workshop of the world", is based on the cannibalization of the sectors where the Chinese revolution had expropriated capital (State enterprises, state banking system) to propel an economy led by exports in the world market, not local demand or profit in the domestic market. Strong capitalist development is driven forward on non-capitalist premises (for ex. loans are provided by the State banks without capitalist criteria), and, at the last instance, on over-exploitation of a cheap and vast labor force, disciplined under a Stalinist regime, on behalf of global capital.

         Social inequalities between the industrial coastal zones open to the world market and the rural inlands, feed unstoppable waves of inner migration to the cities, rural unrest and continuous peasant rebellions, workers' wild strikes.

       China needs a growth rate of 9-10% to absorb every year about 24 million people joining the labor force, and 12-14 million poor rural farmers moving to the industrial urban sector. Any lowering of the growth rate below this mark adds millions of new unemployed and more explosive material for coming upheavals. In a hard landing of the Chinese economy from 12% down to the critical level of 6% (quite possible in the current conditions of the world crisis) amounts to a death blow to any legitimacy, and stability of the CPC bureaucratic restorationist regime.

       The CPC leadership is split by a kind of double bound: either they try to keep a high growth rate by concentrating their efforts to the coastal zones and facing all the consequences abroad of the contraction in the US and world market and at home of the disintegration of the inner agrarian heartland; or they cut their links to the world market and turn inwards to build an internal (capitalist) market. Both processes cannot but exacerbate the contradictions to the point of explosion.    

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      Putin's Russia is severely hit by the escalation of the world crisis, the credit crunch and the fall of oil and other commodity prices. Russia is facing its worst crisis since the August 1998 default.

       While in August 1998, during the international maelstrom after the Asian Crash, it was the Russian State after the "theft of the century" of the public property by the oligarchs in the '90s under Yeltsin, which was unable to face its debt obligations and declared default, now the situation is the opposite: while the capital reserves of the State are quite strong- the third in the world (because mainly of the skyrocketing rise of the oil price in the previous seven years up to July 2008)- the international credit crunch gave devastative blows to the oligarchs and the private sector, found suddenly unable to meet the margin calls for the loans taken for the ambitious projects, particularly in energy and raw materials.

      In September -October 2008 the two Russian stock markets have lost more than 75% of their capitalization from its high in May, and have to repetitively close for two or three days. The exodus of foreign capital, which had started before the Georgian war was, accelerates afterwards.      

        The State had to make huge liquidity injections (to the tune of roughly $90 billion since the crashes of the Russian stock markets on September 16 and October 6 and in response to concerns about the stability of Russian banks.       

      The Kremlin turned, first to the oligarchs forcing them to repatriate and inject between 10% and 30% of their total wealth into the markets and banks to shore up the financial system. The State consolidated further its control over the oligarchs' assets but this was far from enough to stop the crisis. The oligarchs, who are still very rich in assets, they are poor in cash; some of the most powerful of them, like Oleg Deripaska, the wealthiest man in Russia, had to liquidate parts of their empires to remain liquid.

        The film of the '90s is re-played in reverse: now it is the State that extends and consolidates its control over the oligarchs and over the private sector, while a middle class created the last decades and absolutely necessary for the restoration of capitalism is rapidly ruined.

        But the hypertrophic State builds up under Putin's Bonapartism finds its material bases shaken. After forcing the oligarchs to pay for the crisis, now has to pick up the slack with its own resources, namely, its cash reserves, which already have dropped from $ 600-650 billion in August to $ 515 billion on October 17, 2008. Capital flight is running at $12-$16 billion a week.

       Total Russian external debt as of June stood at $527.1 billion, of which banks, private or government owned owed $ 228.9 billion. Russian banks are relying upon access to foreign capital to fund everything, from car loans to Russian energy and mineral companies' capital expenditures. While the ruble depreciates against the US dollar, foreign debts made out in dollars begin to appreciate in value. Since September, the ruble has already dropped by a quarter, increasing the cost of servicing dollar-denominated debt by a like amount. For this reason, the Kremlin has to intervene fast.

       But the entire Russian economic re-stabilization under Putin's regime stood on one pillar: energy. With the fall of the oil and commodity prices the pillar is crumbling.  With crude prices down to around $65 a barrel, the Russian budget for 2009 barely breaks even.  And the worst with a world depression is not yet come.

       Growing inflation already fuels mass discontent. The popularity of the regime built up in the years 2000-2008 is undermined. The question for an independent mobilization of the working class in social struggle is on the agenda. Particularly those modernized sectors open to foreign capital are severely hit; strikes such as in Ford and other factories in Leningrad area, last year, are only the forerunners for new conflicts in the next period, and which will involve broader strata.

       The key question is the political independence and political leadership of the workers' movement. Stalinism had discredited Socialism and led its construction into a dead end and collapse. The workers have to overcome the atomization of the past, including of the period after 1991, and build new organizations. Most of the existing Left, Stalinist or not, either adapt itself to Putin /Medvedev's regime and its "Strong State patriotism" or to the liberals. Liberalism is bankrupt already from the '90s and the current world crisis will destroy even its remnants. The same crisis gives the kiss of death to Putin's era. A new, independent road for a socialist way out from the crisis, the expropriation of the oligarchs and their protectors in Kremlin, a national emergency program of socialist measures and for the re-birth of the USSR on renewed bases, ahs to be opened by the workers' vanguard, particularly by a new generation of fighters that comes forward, even in a small and dispersed manner, under the banner of an anti-bureaucratic and internationalist Communism.


Crisis and mass radicalization


6.     Current developments have given a devastative ideological blow to all apologists and skeptics, particularly on the Left, being always over-confident about the stability and the ability of the system to overcome its crises. Now, as they cannot deny the reality of the world crisis, they reject its revolutionary implications.

       The relation between the economic crisis and a revolutionary mobilization of the masses is, of course, not a linear but a dialectical one, through contradictions. Nevertheless, Marx and Marxism have demonstrated how the inner contradictions of capital exploding into recurrent, ever more catastrophic crises, create the conditions for its overthrow: "These contradictions lead to explosions, cataclysms, crises, in which by momentaneous suspension of labour and annihilation of a great portion of capital the latter is violently reduced to the point where it can go on fully employing its productive powers without committing suicide. Yet, these regularly recurring catastrophes lead to their repetition on a higher scale, and finally to its violent overthrow" (Grundrisse, in Marx-Engels Collected Works, Progress-Moscow 1987, vol. 29 p. 134).

      The "annihilation of great portion of capital" is going on with a tremendous destruction of mountains of debt, and bankruptcies of banks, companies, and states; "suspension of labour" produces already new legions of unemployed as the violent contraction of world economy develops; and last but not at all least, the specter of a ‘violent overthrow" of capitalism is haunting all the citadels of capital. Even the editorialist of Financial Times M. Wolf (28/10/08), in the list of the political consequences of a developing world slump, alongside with xenophobia and nationalism put revolution.

       Xenophobia is here many decades now and undoubtedly it will become even more barbaric, particularly in "post-colonial" Europe. The rise of economic nationalism exacerbates all kinds of national, ethnic and racial hatred. Nobody can underestimate the dangers of barbarism arising from an historic systemic crisis. But the prospect of social revolution is powerfully coming back as well.

       The impact of the crisis is not independent from the political situation as a whole, from the events that preceded it or accompany it, and the actual movement of the masses before and at the moment of the eruption of the crisis.

        In the last decades, there was certainly a reflux of the workers movement, and of class-consciousness, a strengthening of bourgeois ideological domination, particularly after the collapse of the Soviet Union. But no historic defeat, in the scale of the '20s and '30s, with the triumphs of fascism in imperialist countries like Germany or Italy, has occurred. On the contrary, what came to surface is the growing inability of the ruling class to rule amidst its insoluble economic and social political contradictions while the fighting capacity, the revolutionary potential of the proletariat is not destroyed. Already from the mid and late '90s a new, growing radicalization started to manifest itself from the 1995 mass strikes in France to the revolts against capitalist globalization from Seattle to Genoa, the second Palestinian Intifada, the Argentinazo, the mass demonstrations against the imperialist war in Iraq in 2003, the fiasco of the imperialist "war on terror" in Iraq and in Afghanistan, the defeat of the Zionist invasion in Lebanon in 2006.

       Latin America as a whole is in a pre- revolutionary situation, marked by a series of rebellions, from the Caracazo in 1989 to the 2001 Argentinazo, the insurrections in Bolivia and Ecuador in 2000-2003, and the defeat of the US led military coup and of the lock out of the bosses in Venezuela in 2002. The emerging revolution is not limited in the frontiers of the Continent but becomes a fundamental historic factor of the current world crisis. The processes of national autonomy against imperialism do not have a prominent protagonist in the national bourgeoisie or the upper strata of the civil or military petty bourgeoisie nor they have found a political expression adequate to the historical movement that represents. Latin America becomes the scene of a political experience unique in its history combining military or indigenous nationalist governments such as those in Venezuela of Hugo Chavez, in Bolivia of Evo Morales and up to a certain point in Ecuador of Correa, and from the other side, center left governments such as Lula's in Brazil and Frente Amplio's in Uruguay. While all kinds of opportunists adapt themselves to the actual Chavist regime and even to the pro-imperialist center left, sectarians lump together and condemn abstractly both categories of governments, while keeping the nationalist outlook (for example, the Morenoite PSTU in Brazil). Our revolutionary orientation, on the contrary, is the struggle against Yankee imperialism and for the unity of Latin America on the basis of revolutionary socialism counter-posed to bourgeois and petty bourgeois nationalism.

      In Europe, particularly in France, the social crisis, the growing de-legitimacy of the bourgeois parliamentary system and of the official bureaucratic Left joining center left governments, and the radicalization of the masses have put on the agenda the founding and building of a new Party combating capitalism. In France, the exhaustion of the experience of a series of the social-liberal governments of the Socialist Party (SP) and of the "plural Left", the crisis of the discredited and internally split SP and the near collapse of the Communist Party has posed to the new radicalized strata the question and the need of the Party to confront the new challenges. Lutte Ouvriere (LO) and the Ligue Communiste Revolutionnaire (LCR), the historic organizations coming from the Trotskyist tradition, have coming to the point to close their circle. The LCR abandons its historic references to Trotskyism and the Fourth International and launched a campaign for a New Anti-Capitalist Party (NPA). Although there is a real need and demand for a new combat Party by the fighters against capitalism turning to the NPA, the program and the perspectives advanced are not a real revolutionary alternative but a new envelop for the old reformist content that already failed.  

     The working class, the youth and all oppressed in rebellion, in France and everywhere need a combat Party of a new type able to open the road to the fighting masses for a socialist way out from the world capitalist crisis.

    Victory is not predetermined by the automatic evolution of events; it is a strategic task, as Trotsky rightly had emphasized. The responsibility of revolutionary leadership in such conditions becomes immense.

 

      The question of the Program of transitional demands systematically mobilizing and uniting the masses in a revolutionary struggle for the seizure of power is crucial today more than ever. Central demands that can articulate internationally the struggle are


The Fourth International, founded on the eve of the Second World War, advanced the fundamental lines of such a program, incorporating all the historical experiences of the October Revolution and after. It is the indispensable mediation between all the experiences of  confrontation of revolution and counter-revolution in the 20th century and the new stage of revolutionary upheavals of the 21st century. Its re-foundation and the building of revolutionary parties as its sections are the most urgent tasks in front.