Resolution on the crisis

1. In June 1979 the third congress of the ICC affirmed “in the coming period we are going to see a further deepening of the world crisis of capitalism, notably in the form of a new burst of inflation and a marked slowing down in production which threatens to go far beyond the 1974-75 recession and lead to a brutal increase in unemployment.” (‘Resolution on the International Situation’, IR18) This prediction -- in no way based on a mystical prophecy but on the application of Marxist theory to the present conditions of the life of society and on an analysis of the inevi­table failure of the palliatives used by capitalism to try to get out of the collapse of 1974-75 -- has been confirmed in the past two years. The present situation clearly illustrates what the ICC has always said about the nature of the crisis: that we are dealing with a general crisis of overproduction which in the capitalist metropoles takes the form of an overprod­uction of commodities, capital and labor power.

2. The overproduction of commodities is manifested in the fall of industrial pro­duction which has reached its depths in a country like Britain (minus 15% between 1979/80) but is also violently hitting countries like West Germany (where following the decline of steel and cars it’s now a sector like metal making, so decisive for this particular country, which is in decline), and America where the recession has illustrated the growing uselessness of the policies of recovery, leading to a decline in steel production to its 1967 level and in car production to an ever lower level. Only Japan, thanks to its exceptional productivity in these sectors, has for the moment escaped this fate, but only in a most tenuous way when we take into account the growth of protectionism towards Japanese goods and the narrowing of the market in Europe and America.

3. The fall in industrial production has resulted, and will tend to do so more and more, in a fall in investment and profits. In one year (1979/80) we have seen, with regard to expenditure on factories and in­dustrial equipment, a 3% fall in Germany, 7% in Italy, 10.2% in Britain. As for the fall in profit, it is illustrated in a spectacular way by the loss of 4 billion dollars in the American car industry in 1980.

The attempt, analyzed by Marx in Capital, to counteract the fall in the rate of profit by increasing the mass of surplus value is coming up against, the growing saturation of the market. Rather than investing in production which may not be able to acquire any solvable buyers, the existing capitals are engaging in speculation, which explains the sudden rise in gold prices, as well as the rise in oil prices at a time when the consumption of oil is declining. Thus over a thousand billion dollars in “floating capital” are moving around the world following the fluctuations in the price of raw materials. Used mere­ly in the daily search for profitable in­vestments, this capital is completely sterile as far as the development of production is concerned.

4. The overproduction of commodities and of capital is accompanied, especially in the western countries, by an overproduct­ion of the commodity labor power. In the last two years five million extra unemployed have, in the advanced countries in the OECD alone, joined the already gigan­tic army of the unemployed, which had reached 23 million by 1981. These figures already clearly refute the arguments of those who try to establish a fundamental difference between the crisis of the thirties and the present crisis: with 3 million unemployed in mid-1981, Britain has already gone beyond the figures of the pre-war period, and many other countries in Europe are also about to set new records, with rates of unemployment involving more than 10% of the active population.

5. Inflation, the result of the desperate attempt to counterbalance the lack of solvable demand through the creation of credit and through printing money, has remained at high levels despite the present recession, in contrast to 1967, ‘71, and ‘74/75 where the fall in pro­duction was accompanied by a certain fall in price levels. This confirms the in­creasing gravity of the crisis, which can no longer oscillate between inflation and recession but is manifested simultaneously in these two forms. This also confirms the patent failure of the policy which allowed for a certain ‘recovery’ after the 1974/75 recession: the resort to enormous budgetary and commercial deficits by the USA, which took the role of ‘locomotive’ of the world economy. Only America, because of its economic strength and because its currency is the main reserve currency, could play such a role. But this role could only be played for a short time. Based on the increasing use of printed money, the mechanism which allowed for the recovery ended up accelerating inflation both in America and in the rest of the world. This in turn threatened to lead to the explosion of the whole inter­national monetary structure and thus of the whole world economy.

6. This unprecedented aggravation of the economic crisis doesn’t only affect the most industrialized western countries. One of the most significant events in recent years has been the definitive down­fall of the myth of the so-called ‘socia­list’ countries, which were supposedly able to escape the general crisis of the system. The mass strikes in Poland have opened the eyes of the whole world to the economic bankruptcy and the capitalist nature of the eastern bloc countries. These countries -- which are dependent on an imperialist power (Russia) which arrived too late on the arena of a world market already dominated by capitalism in decline -- have for decades been burdened by an inability to compete with the most industrialized countries of the western bloc. Their only answer has been to com­mit themselves to the upbuilding of a war economy with a view to ensuring the military domination of conquered regions by the whole imperialist bloc. This situation has led to the sterilization of capital in unproductive or unprofitable sectors -- a phenomenon which expresses the same inability to utilize the productive forces as in the more industrialized countries, but with much more tragic con­sequences, since these countries always tend to lose out on the world market. During the 1970s, the Russian bloc, ham­pered by this relative scarcity of capital vis-a-vis the economically stronger coun­tries, was only able to respond to the fall in production caused by the world crisis by borrowing massively from the western banks and states. Thus these countries have only been able to stay afloat at the price of colossal indebtedness, which places them in a situation similar to that of the ‘third world’ countries:

-- the foreign debts of a country like Poland went from $800 million in 1971 to $23.5 billion in 1980 with a leap of nearly $10 billion in the last two years alone.

-- the overall annual deficit of the ‘third world’ countries went from $12 billion in 1973 to $83 billion in 1981, leaving the total debt of these coun­tries at $290 billion.

This indebtedness cannot continue at the present level because:

-- the commodities produced thanks to the investments realized in these countries are harder and harder to sell, and when they are sold it’s at the expense of the commodities produced by the countries who supply the funds.

-- the simple payment of interest ab­sorbs a growing part of the exports of these countries (often more than a half), and can only be met by incurring new debts. These in turn jeopardize the financial organisms which supply the loans, since they have less and less chance of getting reimbursed.

Despite the immense needs of these coun­tries their ability to absorb the commod­ities thrown onto the world market is thus going to diminish more and more, with the most catastrophic consequences. This is already illustrated by:

-- the fact that the IMF has had to take charge of the backward countries of the bloc, which tends to reduce their consumption even more (devaluation of their currencies, wages freezes).

-- the drastic reduction of state expen­diture in China (minus 13% in 1980), and the cancelling of orders worth more than $3.5 billion by this country.

-- the catastrophic economic problems of the countries of the Russian bloc (a general inability to reach even the most modest objectives of their economic plans). These countries now have less and less to exchange with the west.

7. Thus in a few years we have seen the using up of all the recipes (America as a locomotive, the indebtedness of the under­developed countries) which allowed a cer­tain revival of economic activity after 1976. These miracle recipes, which the bourgeoisie made so much noise about, have shown themselves to be worse than useless because they have only been an attempt to put off for the future the problems of today. And the new panacea known as ‘supply side economics’, so dear to Reagan and Thatcher, won’t be able to change any­thing either. Easing the tax burden on capital runs the risk of simply throwing the capital freed by this into speculative activity, rather than into productive in­vestment for which no market exists.

The only realistic objective such a policy could have is to massively reduce the cost of labor power through new lay­offs and wage cuts. This may improve the competiveness of the countries involved, but only at the expense of other countries, without benefit for a world market which is getting narrower all the time.

8. At the beginning of the 1980s then, world capital has reached a total economic impasse. The illusions which the bour­geoisie could have and propagate in the ‘70s about some kind of ‘recovery’ or ‘light at the end of the tunnel’ have now collapsed both for the bourgeoisie and for the rest of society. The ‘80s can thus be seen to be ‘years of truth’: years in which society will be faced, in the most acute way, with the historic alternative outlined by the Communist International: world imperialist war or class war.

The year 1980 contained a clear summary both of this alternative and of the tend­ency which dominates this alternative: the course towards the intensification of the class struggle, holding back the war-like tendencies of the bourgeoisie. While the first part of the year was dominated by a definite aggravation of imperialist tension following the Russian invasion of Afghanistan, the second part put these tensions into the background, and was dom­inated by the proletarian response to the growing misery imposed on it by the cap­italist crisis. The highest expression of this was the formidable struggles in Poland.

9. As long as it hasn’t been swept away by the proletarian revolution, capitalism won’t stop preparing itself for a new world holocaust. Thus we are now seeing a new escalation of these preparations, notably through a considerable increase of expenditure on arms. The function of this is not at all to boost the economy but purely and simply to strengthen the milit­ary positions of each bloc. In other words,

-- to prepare for war

-- to strengthen inter-imperialist rivalries

-- to subjugate the whole of society.

Although the deepening of the economic crisis can lead to political ructions within certain national bourgeoisies, weakening their participation in the unity and solidarity of the bloc, preparations are also going ahead with regard to the political strengthening of the blocs with a view to a future confrontation; the strivings for independence on the part of some countries based on particular political and economic interests (eg Germany’s trade with the Eastern bloc, Rumania's ‘independence’ from Russia) or reticence about being in the front line of a future conflict (reservations about Pershing II rockets), will more and more have to give way to an unquestioning solidarity with the leaders of the blocs, which alone have the capacity to guarantee their military security and economic survival.

10. The election of Reagan to the head of the world’s major power expresses this orientation of each bloc towards more and more political and military preparations for a generalized confrontation. But this isn’t its only significance. It can be seen even more clearly as an aspect of the bourgeoisie’s present offensive against the proletariat, which is being orchestrated by the ‘hard-line’, ‘strong-arm’ gov­ernments who have replaced the previous language of illusions with the ‘language of truth’. Because while on the one hand the crisis is more and more pushing the bourgeoisie towards war, it is also pushing its mortal enemy, the proletariat, towards the development of its class struggle.

The very fact that world war has not yet broken out, even though the objective conditions and the military/strategic preparations for it are more than ripe, demonstrates the size of the obstacle which the combativity of the proletariat represents to the designs of imperialism. While the aggravation of the crisis can only sharpen the antagonisms between cap­italist states, the development of the class struggle, as the events in Poland show, will more and more force these states to dedicate a growing part of their energies towards this main battlefield, which is one that threatens their very existence and which will compel them to show a level of solidarity unprecedented in history in their attempts to deal with the proletariat.