perspectives for wrold revolution 2014

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Written by International Marxist Tendency

Wednesday, 29 January 2014

Perspectives for World Revolution 2014 (Draft document)| Print |

Below we publish the IMT’s analysis of the world situation. This is a draft document that is the basis of a discussion

within the Tendency and which will be voted on with possible amendments at this year’s world congress of the IMT.

Index:

Part one:

The Long View - The crisis continues - The lifeblood of capitalism - Quantitative easing - Crisis in the USA

Part two:

The crisis of Europe - Germany - Britain - France - Italy - Spain - Greece

Part three:

The BRICS - China - Perspectives for class struggle - Russia - India and Pakistan - Afghanistan

Part four:

Latin America - Brazil - Venezuela - World Relations - Syria - The Egyptian Revolution - Iran

Part five:

Inequality and the concentration of capital - An abysm between the classes - “Concentrated economics” - The mass organizations - The unions -

The role of the youth - Are the conditions ripe for revolution?

Please send your comments and suggestions to [email protected]

The Long View

Marxism takes the long view of history. There are certain moments in history that are

decisive turning points. Such moments were 1789, 1917, 1929. At such times the

whole process is accelerated, and processes that seemed to be fixed for all time turn

into their opposite. To this list of great historical turning points we must now add the

year 2008. The new period that opened with the crisis of 2008 finds its reflection in

an intensification of the class struggle, and in relations between states, by wars and

international conflicts.

Dialectics deals with processes in their development through contradictions. The dialectical method enables us to look

beyond the immediately given (the “facts”) and observe the deep-seated processes that lie beneath the surface. The capitalist

system historically produces and destroys its internal equilibrium. This is manifested at intervals in the outbreak of crises. In

the economic sphere this is expressed in the alternation between booms and slumps, which are a fundamental characteristic

of the capitalist system for the last 200 years. Periods of prosperity and full employment are followed by periods of slump in

which investment falls off, factories are closed, unemployment soars and the productive forces stagnate.

Perspectives for World Revolution 2014 (Draft d... http://www.marxist.com/world-perspectives-201

of 39 Saturday 08 February 2014 03:29



Marx explains that the fundamental cause of all real capitalist crises is overproduction, or, in the jargon of the modern

economists, excess capacity (which is the result of overproduction of the means of production). The fact that society is

plunged into crisis because it produces too much is a feature of capitalism that was unknown in previous societies. It is the

fundamental contradiction of capitalism, which cannot be resolved within the limits of private property of the means of

production and the nation state. For what appeared to be a long period—approximately three decades, this seemed to have

been falsified by history.

The collapse of Stalinism was an important turning point. From a psychological point of view it gave the bourgeoisie and its

ideological defenders a new lease of life. It further impelled the Social Democracy towards the camp of capitalism, creating

new illusions in the “free market economy”. It set the final seal on the former Stalinist parties, which abandoned any

pretence of standing for socialism and became a pale reflection of the Social Democracy. The same process led to the virtual

collapse of left reformism as a definite tendency in the labour movement.

During the last boom, capitalism went beyond its natural limits through the unprecedented expansion of credit and the

intensification of the world division of labour through so-called globalization. The growth of world trade propelled the

system upwards in what appeared to be an unending spiral of growth. The expansion of credit temporarily increased demand.

In the case of Britain, the size of private credit, as a proportion of GDP, has doubled to 200% in the last 50 years. The USA

and other countries went down the same road.

The sun shone, the markets boomed and everybody was happy. Everything seemed to be for the best in the best of all

capitalist worlds. Then came the crash of 2008. With the collapse of Lehman Brothers, they came very close to a catastrophe

on the scale of 1929—or even greater. They were only saved by massive injection of public money. The whole burden of

debt accumulated by the private banks was placed on the shoulders of the taxpayers. The state—which the economists

insisted had no role to play in the economy—had to prop up the whole crumbling edifice of the “free market economy”.

The crisis continues

Since 2008, all the factors that drove the system upwards have combined to

drive it downwards. The massive increase in credit has become a huge

mountain of debt, a colossal burden on consumption, which is dragging the

economy down under its weight.

While the press and politicians talk about a recovery, the serious strategists

of capital are plunged into the blackest pessimism. The more far-sighted

economists are talking not of recovery but of the danger of a new and even

deeper crisis. The “recovery” is really a convenient fiction, calculated to

soothe the nerves of investors and restore “confidence”.

Insofar as it is possible to speak of it, the partial recovery in the USA is the weakest recovery from a slump in history.

Normally after a slump, the economy tends to rebound strongly on the basis of productive investment, which is the lifeblood

of the capitalist system. But this is not the case now. According to the IMF, the world economy is on track to grow just 2.9%,

which is roughly half its pre-crisis level.


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The irrational nature of capitalism, trapped in the vice of insoluble contradictions, has been given an even sharper and more

painful and destructive character through globalization. “National sovereignty” has become an empty word, as every

government is subjected to the vicissitudes of the world market.

Speculation flourishes despite all the talk about regulation. A vast amount of money is sloshing around the world, adding

hugely to the danger of an unprecedented economic collapse. The global derivatives market, which amounted to $59 trillion

in 2008, had risen to $67 trillion by 2012. This is a measure of the unbridled speculative frenzy that has gripped the

bourgeois in our times. The tangled interconnections of the derivatives market, which it seems nobody truly understands,

have introduced complex and new risks.

The nervousness of the bourgeois is mirrored in the feverish rise and fall of the markets. The slightest incident can cause a

panic: political tensions in Portugal; social unrest in Egypt; uncertainty over the outlook for China’s economy; the possibility

of military action in the Middle East leading to a sharp rise in oil prices; any of these things can cause a panic that can plunge

the world economy back into a deep recession. The yields on government debt play approximately the same role as the charts

on the bottom of a hospital bed that denote the rise and fall of a fever. Beyond a certain limit, the increase in the level of a

fever threatens the patient with death.

The lifeblood of capitalism

The most serious problem is the lack of productive investment. In the US, private investment remains below even its

long-term share of national output, while public investment peaked with the stimulus in 2010 and has been falling ever since.

The capitalists are not investing in the kind of productive activity that would lead to the hiring of American workers in

sufficient numbers to allow the economy to take off. The reason is because there is no market for their goods; that is to say,

there is no “effective demand”.

The economic outlook is dark and uncertain. Nobody wants to spend or invest because they cannot predict the future. The

number of jobs increased in 2013 but factory employment continued to decline. Initial forecasts that the US recovery would

be led by a manufacturing rebound have been comprehensively falsified. A healthy and sustainable recovery must be based

on productive investment, not a larger number flipping burgers in McDonald’s.

The costs of investment are actually far lower now than in 2008. Yet business investment in the US is running at only slightly

above its 2008 level. A recent survey of the 40 biggest publicly traded US companies recorded that roughly half of them

intended to curtail their capital expenditures in the course of 2013. What is the point in building new factories and investing

in costly new machinery and computers when they cannot use the productive capacity they already have?

In the UK, a mere 15% of total financial flows actually go into investment. The rest goes into supporting existing corporate

assets, real estate, or unsecured personal finance. Instead of investing in new plant and machinery, the big companies areborrowing large sums of money at negligible rates of interest in order to buy back their own shares. In the first nine months

of 2013 alone, $308 billion was spent for this purpose in the USA.

The problem is therefore not lack of liquidity. In the USA, businesses are awash with cash yet they do not invest in

productive activity. In the last four years vast sums of money have been pumped into the economy, particularly the banks.

The result has been to increase the public debt to alarming levels, without producing any economic recovery worthy of the





name. Yet Moody's estimate at the beginning of 2013 (reported by Forbes in March 2013) was of $1.45 trillion in cash

stashed away by US non-financial corporations. The increase for the year 2012 alone (included in the total) was of $130

billion. This is not a new phenomenon. In the late 1920s, there was a massive accumulation of unspent cash in the

economy—just before the crash.

The bourgeois economists have an aversion to pronouncing the word “overproduction” (strangely, some self-styled Marxist

economists suffer from the same affliction). But from a Marxist point of view the root cause of the crisis is very clear.

Surplus value is extracted in the process of production, but this does not exhaust the process of money-making. The ability of

the capitalist to realise the surplus value extracted from the labour of the workers ultimately depends on his ability to sell his

commodities on the market. But this possibility is limited by the level of effective demand in society, that is, by the ability to

ay.

The capitalists’ urge to produce in order to obtain profit is virtually unlimited, but his ability to find a market for his produce

has very definite limits. The world economy is perilously dependent upon the USA. In reality, the whole world now depends

on US consumption. But consumption in the USA is hardly in an ideal condition to act as the engine of world growth.

Median earnings have fallen by 5.4 per cent since the US recovery began. Unemployment hovers around 7 per cent.

Consumption accounts for roughly 70 per cent of US gross domestic product and about 16 per cent of global demand.

Exporters everywhere are thus hoping the US consumer will come to the rescue.

But this creates new contradictions. Last year, surging imports pushed the US trade deficit up by 12 per cent to $45bn per

month, which was the largest jump in five years. Imports from China accounted for almost two-thirds of that. If this

continues, the US-China deficit will exceed $300bn. On the other hand, US exports fell. Obama’s goal of doubling exports in

five years is a hopeless dream. The US recovery might peter out, dragging the global economy down with it.This resembles

the old Russian fairy tale of a hut supported by chickens’ legs.

Quantitative easing

The so-called recovery is based almost entirely on the injection of huge quantities of fictitious capital into the economy of

the United States and other countries. Like a terminally ill patient, capitalism is being kept alive by a continuous blood

transfusion of public money. The Central Banks are compelled to rely on so-called quantitative easing—or in plain language

—printing money. QE and zero interest rates have failed to produce serious results and have clearly inflationary implications.

The relative improvement of the US economy was due in no small measure to the loose monetary policies that were carried

out by the Federal Reserve. Since 2009, the Federal Reserve has been buying financial assets—US Treasury bonds and some

types of corporate debt. Through an expansion of the monetary base, they kept interest rates low, which served to prop up

indebted businesses and households. This has been the major factor in the so-called recovery, and it is propping up the

financial markets as crutches support a man with no legs.

The capitalist system is based on the economics of the madhouse. In their greed to make quick profits from speculation the

bourgeois only succeeded in creating gigantic asset price inflation in the twenty years prior to the crash of 2008. This was

brought about by the Federal Reserve’s policy of holding down interest rates. The same insane policy is now being pursued

in a desperate attempt to reflate the bubble. They seem to have forgotten that this very policy was what led to the collapse in

the first place. It seems as if the bourgeoisie has taken leave of its senses. But as Lenin once said: “A man on the edge of a





cliff does not reason.”

The Federal Reserve’s quantitative easing programme amounts to $85bn per month. The UK, the Eurozone and, most

particularly, Japan, are all slavishly copying Bernanke’s long-term promise of easy money. Paradoxically, this is just when he

is attempting to back away from it. Bernanke therefore found himself in a very delicate balance. He tried to signal the

beginning of the end of zero interest rates without triggering a panic.

Those who are engaged in this activity are well aware that they are performing a dangerous experiment. They have known

this for some time. Fred Neumann, chief Asia economist at HSBC explained that QE “buys us time but it does not solve

anything fundamentally.” (FT, 20/9/13) “The longer they continue in this process the worse it gets for our ability to pull out

of the slump”, said Mike Crapo, Republican on Senate banking committee.

Moreover, experience shows that this policy is subject to the law of diminishing returns: ever bigger quantities of money are

required to obtain ever more meagre results. Gillian Tett, Financial Times chief columnist states: “one way to interpret this

week's dance around QE is that policy makers are continuing to prop up a financial system that is (at best) peculiar and (at

worst) unstable”. We are “in a world where asset prices and animal spirits are now dependent on cheap money”.

The Financial Times pronounced its verdict on QE in the US in an editorial (21/9/13):

“Although QE has lifted spirits, its effect has been more muted than some had hoped. Despite low funding costs, investment is in the doldrums.

Governments are cutting deficits, households are repaying debt, and corporations are piling up cash. Consequently, the money created by the Fed

is not funding activity such as house building or capital investment, which would contribute directly to growth. Instead, it is lifting the value of

existing assets.”

The housing finance agencies Fannie Mae and Freddie Mac remain as before, pumping credit into the mortgage market. But

while before the crisis they controlled 60% on the mortgage market in the US, now they control 90%. This kind of thing was

what ended in the collapse of 2008. Conscious of the dangers involved, Bernanke, cautiously announced last June that the

Fed might be phasing out QE. The Keynesians, led by Paul Krugman, were horrified. They warned that it was a prematuremove that would send the wrong signal to the world economy, that the central banks would tighten before the private sector

recovery has achieved escape velocity. This is what happened in 1937-38.

Bernanke attempted to soften the blow by introducing all manner of “ifs” and “buts”. He stated that the Fed will end its asset

purchases only if unemployment falls below 7 per cent—which it now has—reducing the risk of tightening before the

economy can take it. Short-term interest rates would stay close to zero for a long time after that. Any rises would be gradual.

And so on and so forth.

It was all to no avail. The bourgeoisie has become dependent on QE and cheap credit, just like a junkie who has become

hooked on heroin and needs a regular dose to keep going. The announcement caused an immediate panic in the financialmarkets hedge funds began selling off bonds, causing a big drop in their prices. Borrowing costs (or “yields”) soared. By

mid-September the Fed was forced to retreat. The markets rose again on hearing the decision of the Fed to leave the QE3

“punch bowl” in place, although new Fed chief Janet Yellen has now announced plans to taper it off to nothing by the end of

2014.

Crisis in the USA





In 2009, two weeks after entering the White House, Obama made a speech in which he said: “We cannot rebuild this

economy on the same pile of sand. We must build our house upon a rock. We must lay a new foundation for growth and

prosperity—a foundation that will move us from an era of borrow and spend to one where we save and invest; where we

consume less at home and send more exports abroad”.

Four years later, the US is still building on foundations of sand, preparing the ground for a future crisis. This is reflected in

the staggering figure for the nation’s accumulated debts. The precarious nature of the situation was shown by the US

government shutdown, which threatened to drag the USA and the world economy as a whole into free-fall. US government

debt reached the astounding figure of $16.7 trillion, which is the limit agreed by Congress.

The severity of the crisis is shown by an open split in the US ruling class and its political representatives. In the boom period,

the two parties of capital, broadly representing two different wings of US capitalism, could bargain their way to a

compromise on most issues. Now, when the cupboard is bare, the old political set up becomes a complete fetter on the further

development of society and the capitalist system, with disastrous consequences.

The need to increase the US debt limit brought this split to a crisis point. Failure to do so would have meant pushing the USA

into default. This would have provoked an estimated 6.8 percent drop in US GDP and five million job losses in the OECD.Yet the right-wing “Tea Party” Republicans in Congress, propelled by their hatred of Obama, Obamacare, and their narrow-

minded obsession with deficit reduction, were quite prepared to bring the US and the world economy crashing down.

The Keynesians point out, that reducing living standards in the middle of a recession will only deepen and prolong the

slump. That is correct, as far as it goes. But the monetarists are equally correct in pointing out that the Keynesian policies of

deficit financing are a recipe for inflation and will ultimately make a bad situation worse still.

In a capitalist economy there are few levers to pull on private investment when interest rates are close to zero and there is a

massive public deficit. It is ironic that an economist like Jeff Sachs—the man who unleashed neo-liberalism onto East

Europe—is now calling for a worldwide version of the New Deal. This is a reflection of the desperation of the bourgeoisie,which feels it is in an impasse. The ruling class is split over what action to take over the huge debt that is hanging over the

US economy like a terrifying sword of Damocles.

The US government shutdown caused alarm in bourgeois circles internationally. The head of the World Bank, Jim Yong Kim,

called it “a very dangerous moment… Inaction could result in interest rates rising, confidence falling and growth slowing”.

The head of the IMF, Christine Lagarde, delivered an even clearer warning when she said that the stalemate in the US

Congress threatened tipping the word into a new recession. The dollar began to slide against other countries as investors lost

confidence.

The insane policy of sequestration led to cuts to investment in scientific research, education and infrastructure, actively

reducing the very things that America needs more of in order to achieve a minimal reduction to the budget deficit. The

Republican right demanded that Obama abandon his timid health reforms. The deadlock in Congress was a graphic

expression of the split in the ruling class, which has been papered over but not resolved.

Another section of the bourgeois economists are now speaking in favour of moderating or abandoning austerity, protecting

the poor, raising their skills, focusing the investment flow towards green energy, etc. This is intended to boost demand by





increasing consumption. But such proposals immediately clash with the bitter resistance of the bosses, the Republicans and

the monetarists.

This is a very risky policy, which some economists have compared with the situation facing Roosevelt in 1938, when

Congress forced him to rein in stimulus, prompting a new downturn. As a matter of fact, it was not Roosevelt’s New Deal

policies that ended the Great Depression but the Second World War. But this option is no longer possible at a time when the

American President cannot even order a bombing raid on Syria.

In his 2009 speech, Obama chose not to mention what becomes of the house built on sand: “And the rain descended, and the

floods came, and the winds blew, and beat upon that house; and it fell: and great was the fall of it”.

The crisis of Europe

The global nature of the crisis makes it impossible to “decouple” Europe

and America. The announcement that the USA was going to wind down

quantitative easing caused an immediate upheaval in the markets, which

pushed up interest rates across the eurozone. The effect was to tighten

monetary policy when the recession and rising unemployment required

precisely the opposite policy.

Nowhere is the crisis revealed in starker terms than in Europe. All the

dreams of the European bourgeoisie of a united capitalist Europe have rapidly been reduced to ashes. All the national

contradictions have come to the surface, threatening the very future, not only of the euro, but of the European Union itself.

The weight of debt is like a gigantic millstone round the neck of the European economy, dragging it down and preventing a

real recovery. Nobody knows the real extent of the debts of Europe’s banks. The bad loans of EU banks have reached at least

€1.05 trillion (twice as much as in 2008) according to the Wall Street Journal. But this is only an estimate (i.e., a guess) and

the real figure will be much greater. Most investment banks estimate that Europe’s banking sector must shrink by around €2

trillion to €2.5 trillion to reach a size that could be described as adequately capitalized.

There has been a sluggish recovery in Germany, but Italy and Spain remain in recession and Greece is in a deep slump. Italy

has lost 9% of its GDP since the beginning of the crisis and Greece at least 25%. Nor will it be possible for Germany to

maintain growth if there is no recovery in the eurozone as a whole, which is the main market for its exports. In 2012,

European car sales fell to their lowest level since records began 24 years ago, in 1990. Car sales in Europe continued to fall

in six of the first eight months of 2013.

The euro’s launch in 1999 was hailed as the key to a golden future of peace, prosperity and European integration. But as we

predicted, under conditions of crisis it has become the source of national conflict and disintegration.

Although the euro is not the cause of the problems of countries like Greece, Italy and Spain, as narrow-minded nationalists

imagine, it has undoubtedly exacerbated them to the nth degree.





In the past, these countries could find a solution to a crisis through devaluation. Now this is impossible. Instead of boosting

their share of markets at the expense of foreign competitors by devaluing the currency, they are compelled to resort to

“internal devaluation”, that is to say, savage austerity. But this only has the effect of deepening the slump and sharpening the

class divisions in society.

The immediate catalyst was the Greek crisis, which threatens the euro and the European Union itself. It was natural that the

crisis should emerge first in the weakest links in the chain of European capitalism. But the repercussions of the Greek crisis

affect the whole of Europe. During the upswing that followed the launch of the euro, Germany gained a lot from exporting to

the eurozone. What began as a tremendous plus has become a tremendous minus. When Mario Draghi, the European Central

Bank president, promised that he would use all the economic resources at his disposal to save the euro, he forgot to say

where these resources would come from.

In any fiscal transfer to save the eurozone, the transfer will always be of German taxpayers' money to somewhere else. This

poses some serious problems for Angela Merkel. Germany has adopted the position of an implacable defender of austerity

and fiscal restraint. It can afford to do so. It is the strongest of the European economies, and economic power must sooner or

later be expressed as political power. Despite the illusions of the French bourgeoisie in the past, it is Germany that decides

everything.

However, the politics of austerity has definite social and political limits. Countries like Greece and Portugal have already

reached these limits, and Spain and Italy are not far behind. Despite the recent optimism of the bourgeoisie, nothing has been

solved. The eurozone crisis can erupt again at any moment. The imposition of vicious austerity provoked a severe political

crisis in Portugal, where huge mass protests almost led to the collapse of the government. Portugal’s public debt is rising, and

is likely to be above 130 per cent of national output by 2015. So what was all the sacrifice and pain for?

Some sections of the "left" in Europe - for example Lafazanis, the leader of the left in SYRIZA - are calling for an exit from

the Euro, and even from the EU itself, as a solution to the crisis and the problems of the working class. However, as Marxists

we do not see the crisis as being due to the existence of the European Union. It is a crisis of the capitalist system.

The European Union is nothing more than a bosses' union aimed at bolstering the interests of the powerful European

capitalists. The EU is imposing anti-working class policies everywhere. And this body cannot be reformed into some kind of

“social Europe”. We are opposed to it, but the answer is not a series of little national capitalisms, but the unity of the workers

of Europe in the struggle for a United States of Socialist Europe.

The political instability, caused by the austerity measures, is reflected in a series of unstable coalition governments and

violent swings of public opinion. In Italy they only managed to put together a coalition of the Democratic Party with

Berlusconi with the greatest difficulty, and the leaders of the coalition spend most of their time attacking each other in public.

Berlusconi’s main concern is to keep out of gaol. The general interests of Italian capitalism must take a very poor secondplace to this overriding consideration.

The unedifying spectacle of squabbling and splits at the top, corruption scandals (as in Spain), not delivering on their

promises (France), and politicians filling their pockets (Greece), while inflicting severe pain on the rest of society has caused

a general backlash against all the existing parties and their leaders. This is an alarming development for the bourgeoisie,

which is using up the political reserve weapons it possesses to defend its system. A massive social and political crisis is





being prepared in Europe.

The bourgeoisie is staring into the abyss, and may well be forced to retreat. Apart from anything else, austerity has signally

failed to reactivate the economy. On the contrary, it has made a bad situation infinitely worse. But what is the alternative?

The bourgeoisie is caught between the devil and the deep blue sea. It is not clear whether the eurozone will break up

completely—a prospect that terrifies the bourgeoisie and not just in Europe. In order to prevent a complete breakdown, the

EU bosses will be forced to abandon some of their more stringent conditions. In the end very little will be left of the original

idea of European unification, which is impossible on a capitalist basis.

The problem of the European bourgeoisie is simply stated. The ruling class cannot afford to maintain the concessions that

were won by the working class over the last half century, but the working class cannot accept any further cuts in living

standards. Everywhere we see sharp falls in living standards; wage cuts; emigration is back as a phenomenon in countries of

southern Europe towards countries like Germany. But when Germany is also hit by recession, where will they emigrate to?

The working class has been enormously strengthened since the Second World War. The social reserves of reaction have been

sharply reduced. The peasantry, which was a very large proportion of society in the past, not only in Spain, Italy, France and

Greece, but also in Germany, has been reduced to a small minority. Sections like the teachers, civil servants and bankemployees, who in the past regarded themselves as middle class and would not dream of joining a union or going on strike,

are now among the most militant parts of the labour movement. The same is true of the students, who before 1945 were

mainly right-wing or even fascists, and are now firmly on the Left and in many cases open to revolutionary ideas.

The European workers have not suffered a decisive defeat for decades. It will not be easy to force them to give up what they

have conquered. That was shown in October 2013 by the Belgian firefighters who turned up outside the parliament with

thirty lorries, blocked all access, and sprayed the police with water and foam, demanding an extra €75 million to increase

staff to acceptable security levels. The government were forced to give in when the railway workers also offered to help

firefighters in blocking rail stations. This change in the balance of forces poses a serious dilemma for the bourgeoisie in

applying the necessary austerity measures. Nevertheless, the ruling class is compelled by the crisis to continue their attacks.

Germany

On the surface it would seem that Germany has escaped the worst of the crisis. But Germany’s turn will come. The Achilles

heel of German capitalism is its unprecedented dependence on exports: in 2012 German exports reached a record 44% of

GDP (€1.1 trillion). The reason for this apparent success was that the real wages of German workers have been held at the

same level that they were in1992. According to the FT: “Germany now has the highest proportion of low-paid workers

relative to national median income in western Europe”. One quarter of the workforce are on “low income” wages. The

number of temporary workers has trebled in ten years.

German exports, the sole source of growth in the last period, were thus based on low wages and high levels of investment.

The high levels of productivity squeezed from the German workers gave German industry a big advantage over its European

rivals, as we see from the following figures:

Performance of industrial production 2000-October 2011:





Germany + 19.7%

Portuga - 16.4%

Italy - 17.3%

Spain - 16.4%

Greece - 29.9%

The fact is that German capitalism gained at the expense of its weaker European rivals who could not compete with its

industries. Their loss was Germany’s gain. The euro then worked for the benefit of Germany above all. German banks were

quite happy to lend money to countries like Greece to enable them to buy German goods. But now this process has turned

into its opposite. Although they cannot admit it publicly, the leaked minutes of the first IMF bailout of Greece prove what we

have stated in the past, namely that the bailouts to Greece are above all needed to save German (and French) banks.

The right-wing demagogues now heap curses on Europe and the euro. But the more serious strategists of German capitalism

are filled with foreboding. They understand that Germany cannot restore its economic equilibrium as long as the rest of the

eurozone is immersed in crisis. Where will it export its goods?

Speaking during an important economic summit in the German city of Hamburg, the former leader of the German SPD,Helmut Schmidt warned that: “Public confidence in European governments and the European Union has been shattered and

Europe is on the verge of revolution”. He further stressed that major political and economic changes are necessary in Europe.

But what changes are needed? And who will ensure that they are carried out?

Britain

The former workshop of the world has lost its industrial base and is entirely dominated by parasitic finance Capital and

services. The UK has more bankers earning over a million pounds a year than the rest of the EU. Britain was claiming a

“recovery” but the underlying picture is one of decline.

The recent period has seen the biggest and most consistent fall in living standards in Britain since the 1860s—over 150 years

ago. There have been warnings of a new explosion amongst the youth along the lines of the riots that engulfed towns and

cities all over Britain a few years ago. It is estimated that two million children go to school hungry every morning in Britain.

This revelation so shocked the public that the government hastily announced the introduction of free meals for all primary

school children.

Social attitudes in Britain have seen a massive shift. The old attitudes of respect and deference towards the establishment

have turned into hatred. The people who were regarded with reverence in the past, Members of Parliament, the Press, the

Judiciary and the Police, are regarded with suspicion and contempt.

“The public seems to think there is something rotten in the establishment”, states John McDermott in the FT. “In 2010, a Policy Exchange poll

found that 81% of Britons agreed with the statement: ‘Politicians don’t understand the real world at all’. The British Social Attitude Survey

reported that only 18% trusted governments to put the nation’s needs above a party’s, down from 38% in 1986. Banks fare worse. In 1983, 90%

thought they were ‘well run’, compared with 19% today, perhaps the most dramatic attitudinal shift in the report’s 30-year history.

“Britain’s views of its institutions wax and wane—ask Her Majesty. But the successive scandals hitting banking, parliament and the media have

the feel of an almost operatic collapse of faith in those who exert power in the country… There is a profound ignorance among the powerful as to





the depth of anti-elite sentiment, in Britain and beyond.” (FT, 28/9/13)

Labour leader Ed Miliband was finally compelled to echo, even in the mildest way, the growing anger against big business

and the banks after mounting pressure from the ranks of the Labour movement. Despite its limited and feeble character, this

provoked an outburst of rage from the bourgeois press. The Financial Times accused Miliband of “trafficking in populist

gimmickry”. Here we already have an outline of the contradictory pressures that will be multiplied a thousand fold when

Labour enters government under conditions of crisis.

France

The EU was originally intended to be a condominium in which France would be the political leader of Europe and Germany

the economic engine. But now these plans of the French ruling class have been exposed as utopian dreams. Berlin decides

everything, Paris decides nothing.

At the last elections the Socialist Party won a sweeping victory at every level. But very quickly the support for Hollande has

evaporated. Like every other reformist leader he has accepted the role of managing the crisis of capitalism. As a result he

now has the worst ratings of any President since 1958. The latest polls register an increase in support for the rightist Marine

Le Pen, with Hollande trailing behind.

The media will try to present this as a swing to the right. Actually it expresses a general mood of frustration and discontent

with the existing parties and disillusionment with the “Left”, which promised much and has delivered little. It remains to be

seen whether the Communist Party with its reformist policies can win support from the Socialists or the Front de Gauche or

can recover its earlier electoral successes.

Partly in order to divert attention from his domestic troubles, Hollande has launched a series of foreign military adventures in

Africa (Mali and the CAR). Blocked by Germany in Europe, he is trying to revive France’s old role in Africa and the Middle

East. But in reality, French imperialism lacks the muscle to play an independent role on a world scale. These military

adventures will inevitably end in tears, adding fresh fuel to the flames of discontent at home.

France remains a key country for the class struggle in Europe. The French workers have shown time and time again that they

have never forgotten their revolutionary traditions. The masses are seeking a way out of the crisis. They put their trust in the

Socialist leaders, but the latter are organically linked to the capitalist system and the existing order. The “Left” dashes the

hopes of the masses. Already in the municipal elections, the leaders of the CP and the Parti de Gauche have broken the Left

Front. The CP is in alliance with the SP, a party of government, while the Parti de Gauche in some municipalities is in

alliance with the Greens, who also have two ministers in the present government. By breaking the Left Front – at least at

municipal level – they are disappointing those workers and youth who are seeking an alternative to the left of the SP. It is an

indication of the complete reformist blindness of the CP leaders that they are clinging to the SP precisely at a time when

Hollande and his government are discredited and deeply unpopular. Instead of maintaining a clear opposition to the

government, they are desperately trying to preserve their positions in local government. Marxists should demand the leaders

of the Left Front break with the Socialists and the Greens and strengthen the Left Front on the basis of genuine left and

socialist policies.

What we see is a clear process of polarisation between the classes that will be expressed in a social explosion at a certain





stage. Frustrated on the electoral plane, the workers and youth can take to the streets as they have done so often in the past. A

repetition of May 1968 is being prepared. But this time it will be on a higher plane, and the Stalinists no longer possess the

strength or authority to betray it.

Italy

Italy is teetering on the brink of a downward spiral of downgrades and rising bond yields. The consequences would bedisastrous, not just for Italy but for the eurozone. Its accumulated debts amount to around €2 trillion. The government's

borrowing costs threaten to strangle the Italian economy in the long run.

Unemployment is rising. In the last three years, one million people between the age of 25 and 34 have lost their jobs. Of

those, under age 35 only four out of ten are working. Officially, there are over three million unemployed in total, but many

people have given up on looking for a job because they have no confidence that they are going to find one. In 2012, more

than 9 million people were classed as poor, of which 4.4 million are living in absolute poverty conditions.

A recent survey carried out by Legacoop (the main supermarket chain) confirms in writing what has been obvious for some

time: three million households—12.3 percent of the population—cannot afford a high-protein meal every two days; 9 millionItalians would not be able to meet an unexpected expenditure of €800; Italians are increasingly giving up the use of a car (25

per cent of the population); they no longer go on holiday (4 million fewer people this summer); and they don’t buy new

clothes (23 per cent of the population). Spending on food in the past six years has fallen by 14 %, falling to the levels of 1971

(€2,400 per capita).

The Financial Times describes the tasks facing Italy as “economically painful and politically suicidal”. (7/10/13) Italian

capitalism cannot compete with Germany and France and is falling behind. In the past it would have devalued its currency,

but with the euro, that avenue is blocked. Instead it must resort to an “internal devaluation” (that is, deep cuts in living

standards). But for this, a strong government is needed. That, however, is not possible.

Every one of the parties in Italy is divided. In the PD there is a split between the old CP apparatus and the openly bourgeois

elements from the Christian Democracy. Monti's small party is riven with factions and is expected to fall from 10% down to

4% in the next elections. Even Grillo's Five Stars Movement is divided, with some clearly leaning in favour of collaboration

with the PD.

The union leaders have played a pernicious role in supporting the so-called national unity government, swallowing all the

anti-working class austerity measures. This particularly applies to the “left” leaders of the metalworkers’ union, the FIOM

who, having aroused the hopes of the workers, then dashed them by joining CGIL leader Camusso in signing a common

document for the CGIL congress. Here we see the precise role of left reformism in action. The right-wing trade union leaders

cling to the bourgeoisie and the left union leaders cling to the right wing. None of them have any faith in the working class,which is left leaderless at the critical moment.

The betrayal of the leaders can lead to temporary demoralization and apathy. But that will not be the end of the matter. The

Italian workers—like the Spanish, Greek and French—have a long tradition of spontaneous, insurrectionary movements.

Blocked by their traditional mass organizations, they will find a way of expressing their anger in an explosive fashion. That

was the meaning of the Hot Autumn of 1969. The five days of open-ended strike against privatisation of the Genoa transport





workers in November 2013 show the real mood developing in the Italian working class. Such developments are implicit in

the situation in Italy. And this is still truer in the case of the youth.

Spain

Five years after the start of the recession, Spain's economy will fall a further 1.4% in 2013. Unemployment is at a record high

of nearly 27% of the workforce, with youth unemployment at a painful 57%. Over 6 million jobs have been destroyed since2007, and hundreds of thousands of young people been forced to emigrate.

After several years of massive packages of austerity cuts, the budget deficit in 2013 is still expected to be a huge 6.5% of

GDP, while debt will approach 100% of GDP. Austerity cuts have been combined with sweeping counter-reforms in the

labour market which have allowed Spain to regain competitiveness in relation to her European neighbours. In other words,

workers have been made to pay the full price of the capitalist crisis. And after all this pain and suffering all that has been

achieved is vague talk of a mild recovery next year with growth rates being forecast of a mere 0.2% in 2014 and perhaps a

full 1% in 2015. On this basis, it would take until 2021 to even recover the pre-recession level, nearly 15 lost years!

The truth is that the enormous amount of corporate, household and now state debt which was accumulated during the longyears of the boom have not yet been absorbed fully by the system. Until that takes place, there can be no real sustainable

recovery for Spanish capitalism. The current “optimistic” forecasts are based on a recovery of exports, which is wholly

dependent on Europe coming out of recession—a very fragile basis for optimism.

The impact of the economic crisis on the consciousness of the masses has been profound and will be long-lasting. To the

economic recession we must add the accompanying corruption scandals affecting all institutions of bourgeois democracy (the

udiciary, the Monarchy, Congress, the ruling party). What we see in Spain is a crisis of the regime which is unravelling the

whole edifice on which the ruling class had built its legitimacy since the end of the Franco dictatorship. All the old ghosts of

the past are coming back to haunt the weak and retrograde Spanish bourgeoisie. The national question in Catalonia, fuelled

by the economic crisis, has revived. The struggle for justice for the victims of the Franco regime has come back to the fore

uncovering the reactionary character of the state apparatus and the ruling class under a thin veneer of democracy.

There has been a wave after another of mass mobilisations, particularly since 2011. The movement of the indignados, the

anti-evictions movement, the education strikes, the battle of the miners, the spontaneous movement of the civil servants, two

24h general strikes, etc. Of course, the masses cannot be in a state of permanent mobilisation and there will be ups and

downs, and periods of hiatus. However, the anger which has accumulated under the surface and that finds no channel of

expression, is still there and can give rise to explosions at any time.

Portugal

Portugal remains mired in recession, with forecasts for a 2013 GDP contraction of between 1.6% nd 2.7% and (perhaps) very

mild growth in 2014. Unemployment is at a record high of 16%, and the government will miss the deficit reduction targets

for this year (5.5% of GDP is the target, the real figure will be more like 6%), despite years of massive austerity cuts imposed

by the 2010 €78bn EU bailout.

The 2014 budget includes further cuts in public sector wages of between 2% and 12% per worker, and €728 million in





pension cuts. Yet a further €3.3bn cuts are needed in 2014, together with yet another bailout. This has led to a collapse of

support for the right-wing government. In the 2013 local elections the parties of the ruling coalition were heavily defeated.

“The political environment is deteriorating”, moans the Financial Times.

The Portuguese government, which has slavishly carried out all the austerity measures dictated by the EU, begs for patience:

“Please give us a little more time”. But the Money-men in Washington, Brussels and Frankfurt and the troika are not in a

mood for patience. As the price for a new bail-out they will demand cast-iron guarantees that the austerity programme will

continue to be implemented. The stage is set for even bigger mass protests.

Passos de Coelho, who boasted of being a strong man and a model pupil of the troika when he was elected in June 2011, is

now exposed as the weak leader of a divided coalition. His government, which has earned the hatred of the people of

Portugal, came very close to collapse after the general strike on June 27, 2013. This was the latest in a series of sustained

mass mobilisations against the right-wing coalition.

The Portuguese working class is rediscovering the traditions of the 1974-5 Revolution. One million people came to the

streets in September 2012, then one and a half million in March 2013. The problem is one of leadership. The “opposition”

Socialist Party is still discredited (it signed the bailout conditions just before being booted out of office) and only gains inpercentage terms because of the increased rate of abstention.

The Communist Party is the main beneficiary of this unprecedented wave of discontent. However, the two parties to the left

of the SP are afflicted by a lack of a serious alternative to the crisis, the Bloco de Esquerda espousing a reformist-Keynesian

“social Europe” and an “audit to the debt”, while the PCP advocates a semi-Stalinist “patriotic and democratic” economy

outside of the euro.

Greece

After five years of grim austerity the problems of Greece, far from being solved, are worse than ever. The slash-and-burnpolicies of the troika have plunged the country into a deep slump. 1.4 million people are unemployed, including two out of

every three youngsters. Levels of poverty that have not been seen since the war years have become the norm.

The government of Athens complains (with reason) that the cuts demanded by Brussels are pushing the economy further into

recession, pushing tax revenues down, increasing the deficit and forcing them to borrow yet more. But these appeals fall on

deaf ears. The Germans and other lenders reply that the southern Europeans have lived beyond their means for years and

must “learn discipline”.

Each successive rescue package has served merely to gain a little time. But the markets are not deceived. The final

denouement of the Greek crisis has only been postponed, but sooner or later it will become inevitable.

At the same time, Greece is a land of opportunity for financial speculators. The Financial Times published an article entitled

“Hedge funds profit in land of Greek opportunity” where we read:

“Greece’s banking sector has been the area of greatest interest. Paulson & Co, Baupost, Dromeus, York Capital, Eaglevale and OchZiff are among

those to have taken stakes in Alpha Bank and Piraeus Bank. All have profited handsomely. Frenzied trading in the warrants also means that hedge

funds could end up dominating Greek bank share registers”. (11/10/13, our emphasis)





This plundering of Greece, the vicious impositions of the troika, and the collapse of living standards have provoked a

massive wave of general strikes, demonstrations and mass protests. Two governments have already fallen, and a third is

about to fall. Samaras is struggling to hold together a fragile coalition that cannot last long. The main beneficiary will be

Syriza. But on the right the Golden Dawn has also grown.

Impressionistic elements have drawn the conclusion from the rise of Golden Dawn that there is an imminent danger of

fascism. But what has happened to Golden Dawn confirms our position on prospects for fascism in present epoch. The Greek

bourgeoisie is a vicious and reactionary ruling class, and a section of it would probably be prepared to hand power to the

Golden Dawn—if they could. In fact, the most reactionary sections of the ruling class (the shipbuilders) have openly backed

and financed it.

Unlike other right-wing political formations in Europe (Fini in Italy, Marine le Pen in France), who are striving to

disassociate themselves from their fascist past and present a “respectable” parliamentary image, Golden Dawn is an openly

fascist organization whose close links with the police and army officers have been exposed. These mad dogs had their own

agenda, which seems to have included the seizure of power.

The problem is that the Greek working class is powerful, militant and undefeated. The bourgeoisie fears that by takingpremature action, the fascists can provoke a mass movement that will be impossible to control. The Golden Dawn thugs went

too far when they murdered a well-known left-wing singer, provoking massive protests. The Greek bourgeoisie was

compelled to take some measures against them.

Of course, the bourgeoisie has no intention of wiping out the fascists. They have taken some measures for cosmetic purposes

to calm the anger of the masses. Later on, the fascists will regroup under another banner, probably as part of a right-wing

coalition with a more respectable (less Nazi) image. Meanwhile, the most rabid lumpenproletarian elements will remain as an

auxiliary to the repressive apparatus of the state (to which they are organically linked), acting as strike-breakers and thugs,

beating up immigrants and attacking left-wing people.

The immediate perspective for Greece is neither fascism nor Bonapartism but a further swing to the left. The inevitable

collapse of the Samaras government will pose the question of a Syriza government. But to the degree that Tsipras gets closer

to power, he moderates his language in the hope that he will get more votes. On the contrary, this provokes a mood of

scepticism on the part of the Greek people who have grown accustomed to leaders who promise much and deliver little when

they are elected.

The real mood of the masses was shown in an opinion poll that revealed that the workers of Greece are already drawing

revolutionary conclusions. It stated that 63% of Greek people want a “profound change” in society—which means a

revolution—while 23% say directly that they stand for revolution. The problem is not any lack of revolutionary maturity on

the part of the masses, but the fact that not one of the existing parties or leaders is prepared to give a conscious expression tothe burning desire of the masses to change society.

For the last four or five years the Greek workers have amply demonstrated their will to change society. They have staged one

general strike after another. But the seriousness of the crisis is such that even the stormiest strikes and demonstrations cannot

solve the problem. The call for more one-day strikes will meet with increased scepticism in the factories. Blocked on the

road of strikes and demonstrations, the workers will move onto the electoral plane. Sooner or later they will elect a Left





government, which will confront Syriza with a straight choice: either carry out a socialist policy or accept the role of

managing corrupt and degenerate Greek capitalism. This will mark a new stage in the Greek revolution, opening up

important possibilities for the Greek Marxists.

The BRICS

Since the end of the Second World War, the most important motor force forthe world economy has been the growth in world trade. However, the UN

agency UNCTAD now predicts that world trade is likely to remain sluggish

for many years, and this will have profound effects on emerging economies

that have depended on exports.

The exaggerated hopes that Asia could act as the motor force of the world

economy have been dashed. China’s growth is slowing and India is falling

still faster. The European economy remains stalled and Japan’s prospects

are already fading. The Japanese government has attempted to revive a stagnant economy by pumping in money. But this

policy is completely unsound. Japan’s government debt amounts to 250% of GDP. The BRICS are all in the same position

and even IMF predictions for the South East Asian economy have had to be scaled sharply downwards. The IMF now talks

of “a structural slow-down occurring” in emerging economies.

Growth in the so-called emerging markets has slowed. This is not difficult to understand. If Europe and the USA are not

consuming, China cannot produce. If China cannot produce, then countries like Brazil, Argentina and Australia will not be

able to export their commodities.

The speculative money that flowed into the BRICs in the last period is now flowing out, causing a steep fall in the value of

their currency. The Indian rupee, the Indonesian rupiah, the Argentinean peso, the Brazilian real and the South African rand

have all registered sharp falls. Nigeria’s finance minister warned that the end of US quantitative easing will rattle emerging

markets and lift their borrowing costs. The same point was made by Najib Razak, the Malaysian prime minister, who

predicted that money will flow back to the USA.

Strong economic growth and rising living standards blunted the class struggle for much of the past decade, but in both Brazil

and Turkey growth has plummeted. In fact, across the developing world growth has slowed markedly to levels that make it

difficult or impossible to permit the entry into the labour markets of the new generation of youth.

China

The crisis of the BRICS is organically related to the slowdown in China. The emergence of China, which was seen bysome—even some who called themselves “Marxists—as a guarantee of the future of world capitalism, has only served to

sharpen all the contradictions. For a period, the explosive growth of the Chinese economy provided oxygen to world

capitalism. Now this colossal advantage turns out to be a colossal problem. The massive investment in Chinese industry was

bound to express itself as a mass of cheap commodities, which had to find a market outside China. For global manufacturers,

the avalanche of cheap Chinese exports over the past decade has exacerbated the crisis of overproduction.





The combination of a vast supply of cheap labour from the countryside and modern machinery and technique fuelled by state

subsidies has enabled China swiftly to develop a powerful industrial base. It has destroyed jobs and capacity all over the

world, shuttering factories in competitor nations. Foreign companies learned to tremble at the flow of cheap goods from

China. Initially, there was a very high rate of profit, but as Marx explains, all that happens is that other capitalists pile into the

market and the rate of profit reaches more normal levels. We see this happening in China. The period of explosive growth

has reached its limits. Now China finds itself faced with the same problems that afflict every capitalist economy.

China's low-cost goods have come to dominate many sectors. But once the bulk of global manufacturing in a given industry

has moved to China, overcapacity quickly follows. Now they are increasingly worried about rising overproduction

(“overcapacity”) in the Chinese economy. This poses a significant risk to what is now the world’s second-biggest economy.

During the global financial crisis, China helped save the capitalist system by launching a colossal stimulus package that

provided a supply of oxygen to the world market. As a result, China's economy steamed along, growing 8.7 per cent and 10.3

per cent in 2009 and 2010. This was the biggest experiment in Keynesian economics in history. But now the contradictions

have become apparent. Now many of the industries that were beneficiaries of the stimulus—from steel to shipbuilding to

metals smelting—are paralysed by huge overcapacity, or, to give it its correct name, overproduction. The slowdown in

China's economic growth spells enormous losses and the necessity for a painful process of elimination.

The Financial Times (17/6/2013) comments: “From chemicals and cement to earthmovers and flat screen televisions,

Chinese industry is awash with excess capacity that is driving down profits inside and outside the country and threatens to

further destabilise China’s already shaky growth”.

China produces nearly half of the world’s aluminium and steel and about 60 per cent of the world’s cement, but new

productive capacity is being added rapidly, even as the economy slows down and export markets dwindle. Though China's

steel production is running at record levels, only about 80 per cent of the country's production capacity is being used.

Industry chiefs and government officials say more excess capacity needs to be shut down in order for the sector to come back

into balance.

Again:

“Only about two-thirds of cement capacity was used last year, according to a survey from the China Enterprise Confederation.

“Usha Haley writes: ‘There is enormous overcapacity and no gauging of supply and demand and we found that subsidies account for about 30 per

cent of industrial output. Most of the companies we looked at would probably be bankrupt without subsidies.’

“In almost every industry companies' investment and growth plans have been predicated on the belief that the government would never allow

growth to drop below 8 or 9 per cent. But that is no longer the case. China's growth fell to 7.5% and later increased to around 7.8 per cent. But

even this was its slowest pace in 13 years.

“Overcapacity in the auto industry is rampant and in the case of Geely, which bought Volvo in 2010, more than half of its net profits came directly

from subsidies in 2011. In fact, subsidy income for Geely that year was more than 15 times greater than the next biggest source of net profits

—‘sales of scrap metal’—according to analysis from Fathom China.” ( FT , 17/6/2013)

The scale of overcapacity and the slowdown in Chinese growth suggest many more firms will face bankruptcy. This will

have profound effects on the psychology of every class in China.





Perspectives for class struggle

All the successes of China’s economy were based ultimately on the labour of the Chinese workers, toiling for low wages in

conditions resembling those of Victorian England. Nowhere is inequality so resented as in China, which was supposed to be

a “socialist” country. A new class of Chinese bourgeois has emerged, revelling in luxuries unknown to the vast majority of

the population.

China is run by a tiny elite of super-rich oligarchs who have enriched themselves by plundering the state and brutally

exploiting the labour of the Chinese workers. But the base of the Chinese capitalist class is very narrow. Out of a population

of around 1.354 billion, there are only 1.2 million millionaires (in US dollars). That is: 0.1% of the population. The number

of dollar millionaires is rapidly growing but shows also how weak the capitalists are in China. 1.2 million Millionaires are

less than the absolute numbers of millionaires in Britain or Italy.

It is true that beneath them there is a layer of sub-exploiters and sub-sub-exploiters: factory managers, directors, foremen,

engineers, bureaucrats and officials in the State and Party institutions. Together with their families, they form part of the

establishment. But even after taking this into account, the overwhelming majority of the population is excluded from the

economic wealth and the power that comes with it. The obscene wealth of the ruling elite and their children (the

“Princelings”) is bitterly resented by the population. The all-pervasive corruption that flourishes at every level is an

additional cause of indignation.

The highly publicized trials that often lead to the death sentence for officials who have gone too far with their corrupt

practices are a way in which the ruling elite attempts to assuage the anger of ordinary Chinese, while at the same time trying

to prevent the corruption that is an inevitable concomitant of a bureaucratic and totalitarian regime from consuming an

excessive amount of the wealth created by the working class.

The new generation of young workers is not prepared to put up with the low wages and bad conditions that the older

generation of former peasants recently arrived from dirt-poor villages were willing to accept. The growing mood of

discontent in Chinese society is expressed by the rising number of strikes, demonstrations and suicides in the factories. In a

totalitarian society, where discontent is forcibly suppressed and there are few legal safety valves, explosions can occur

suddenly and without warning. It is no accident that for the first time in history the Chinese state spends more on internal

security than on defence.

Russia

Unlike the majority of European states, the Russian state does not yet have a serious debt problem. Thanks to oil and gas

exports and the growth of the economy in the last period, it has built up considerable financial reserves. But this has now

reached its limits. In common with the other BRIC countries, the Russian economy is also in decline, with an estimated rate

of growth of around 1%.

This is the background to a rising mood of discontent, not only among the working class but also in a wide layer of the petty

bourgeoisie, reflected in the rise of the anti-Putin opposition. As a result of the expansion of credit, the majority of workers

and young people now find themselves burdened with heavy debts. The same is true of companies and municipalities. The

result is falling investment and economic stagnation. For the first time, sectors of the economy like the automotive industry





are experiencing serious problems with sales.

The economy is being propped up by the state through Keynesian methods of direct state investment in infrastructure, or in

projects like the 2014 Sochi Winter Olympic Games and the FIFA World Cup in 2018. This modern equivalent of the

Egyptian Pharaohs' pyramid-building is possible only on the basis of the exploitation of low-paid workers and the high price

of oil and gas. However, a long period of high oil prices has had inevitable results in new technologies for oil and gas

production in the USA (“fracking”). Putin’s “imperial energy” project has turned into a farce. His hysterical reaction to the

antics of Greenpeace in the Barents Sea was a clear sign, not of strength, but of panic.

The growth of the economy in the last period enabled Putin to follow a kind of semi-paternalistic policy. That is what gave

his regime the appearance of stability. But this cannot continue for long. The majority of new workers are faced with low

wages and bad working conditions. There has been a steep increase in the numbers of illegal or semi-legal migrants from

Central Asia. Social and political stability is already showing signs of strain, and this determines Putin's policy—and also

that of the opposition.

The main aim of the liberal opposition is to wrest petty-bourgeois elements from the arms of Putin. The main figure in the

opposition is now Alexey Navalny. In the last election for Moscow's mayor in September 2013, he won 27.24%, as against51% for Putin's candidate, Sobyanin. The Communist Party candidate and leader of the “left” wing of the Party, Ivan

Melnikov, obtained only 10.69%.

A lawyer and small investor, Navalny was expelled from the Liberal Party Yabloko for nationalism. His programme includes

a struggle against corruption, “cheap government”, low taxation, the introduction of a visa regime for the countries of the

former Soviet Central Asia and the deportation of unemployed non-citizens.

The reintroduction of capitalism has led to an extreme polarisation of wealth. The latest Credit Suisse Wealth Report shows

graphically how much of world wealth is still concentrated in US hands in terms of absolute numbers of dollar millionaires,

and the amount of accumulated wealth that is concentrated in their hands.

But it also highlights the fact that Russia now has the highest level of wealth inequality in the world, apart from small

Caribbean nations with resident billionaires. Worldwide, billionaires collectively account for 1%–2% of total household

wealth; in Russia today, 110 billionaires own 35% of all wealth.

The increase in tension between the classes was partially and temporarily alleviated by economic growth. But now that has

slowed sharply, reflecting the general crisis of world capitalism. The IMF slashed its GDP growth forecast for Russia in 2013

to +1.5%, compared to 5% to 8% growth before the financial crisis. The situation in Russia is pointing towards a social

explosion, even in the short term.

Lenin said that the first condition for revolution is that the ruling stratum should be in crisis and unable to continue ruling in

the old way. There is a general mood of pessimism in the establishment, at times bordering on panic. Putin's main idea is to

build a strong police state before the crisis breaks.

Lenin’s second condition for revolution is a ferment in the middle layers of society, which swing between revolution and

counterrevolution. The mass demonstrations against electoral fraud, which were predominantly middle class in character,

indicate that this process has already begun.





The third condition, that the workers should be prepared to struggle and make sacrifices to change society, has not yet

matured in Russia. But the advent of economic crisis and growing disillusionment with Putin means that it is only a matter of

time before Russia experiences social explosions similar to what have taken place in Turkey and Brazil.

The problem is one of leadership. The complete inability of the so-called Communist Party to offer an alternative to the

masses means that the protests have been led by bourgeois Liberals and petty bourgeois democrats. But this movement is

only a symptom of a growing unrest, which sooner or later must be expressed in a social explosion. In time, the Russian

working class will rediscover in action the real traditions of the October Revolution and Bolshevism.

India and Pakistan

The Indian bourgeoisie had delusions of grandeur. Prime Minister Monamhan Singh claimed that India’s “cruising speed”

was 8-9%. Now it is about half that. Private investment has dried up. Inflation is more than 10% and rising. The rupee fell

13% in the space of three months in 2013. The Economist (24/8/13) warned: “Tycoons who used to cheer India’s rise as a

superpower now warn of civil unrest”.

This prediction is already becoming reality. The ferment in Indian society is reflected in a series of mass movements ondifferent issues. First there was the anti-corruption movement, which was followed by mass demonstrations against rape and

attacks on women. Both were largely petty-bourgeois in character but revealed an undercurrent of discontent with the

conservative Hindu-nationalist foundations of the Indian state.

These manifestations were like the froth on the waves of an ocean; that is to say, symptoms of far deeper and stronger

currents below the surface. The discontent of the masses, who have not benefitted from the growth in the Indian economy, is

turning into anger. That was shown by a series of peasant insurrections and above all by the two-day general strike in

February 2013.

On the other side of an artificial frontier, Pakistan has been reduced to a level of misery worse than anything it has seen sinceIndependence. Economic collapse, terrorist attacks, suicide bombings, power cuts, price hikes, suicides of impoverished

families, the selling of children and human organs, the torture and murder of women. All this brings to mind Lenin’s

statement: “Capitalism is horror without end”.

The masses’ hopes for improvement under a PPP government were cruelly betrayed. Now the right-wing government of the

Muslim League is carrying out further attacks. They are plundering the state through the privatizing of state-owned

enterprises like Pakistan International Airlines, the postal service, railways, WAPDA (Water and Power Development

Authority), and other companies.

As a result, there will be more sackings, more unemployment, more poverty and more economic dislocation. The misery of

the people is aggravated by the monstrous religious sectarianism, communal massacres, the bloody proxy wars in

Baluchistan, the drone attacks in Pukhtoonhua, etc. The Pakistani secret service (ISI) continues to operate like a state within

a state, stirring up conflicts, murder and violence to serve its dark intrigues. As a way of diverting attention from the terrible

suffering of the masses, the degenerate Pakistan ruling class is playing with fire in conflicts in Afghanistan and with India.

The conflict in Kashmir continues to poison relations between the two countries like an infectious ulcer.





On a capitalist basis there is no way out. Neither the Muslim League nor the PPP nor a military dictatorship can succeed.

Only the Socialist Revolution can show a way out of the hell in which millions of people are living in Pakistan, India,

Bangladesh, Nepal and Sri Lanka. The terrible conditions of life are becoming intolerable. The objective conditions are being

prepared for a revolutionary upsurge on the lines of the Revolution of 1968-69. That Revolution was derailed by the lack of

leadership. But the growing forces of the IMT in Pakistan, under the most difficult conditions imaginable, offer the hope of

future victory. We must redouble our efforts to strengthen the forces of the Pakistan Marxists to ensure that victory.

Afghanistan

After thirteen years of bloody fighting, the imperialists are striving to extricate themselves from the Afghan morass. When

the US-led coalition army went into Afghanistan, we predicted that their initial success would eventually end in failure. We

wrote at the time:

“The swiftness of the collapse of the Taliban's defence, and the ease with which the Northern Alliance entered Kabul, has led many to conclude

that the war is over and that the Taliban are finished. This is a serious misreading of the situation. […]

“The Taliban have lost their grip on power, but not their potential for making war. They are very used to fighting a guerrilla war in the mountains.

They did it before and can do it again. In the north, they were fighting in alien and hostile territory. But in the villages and mountains of the

Pushtoon area, they are in their own homeland. The prospect opens up of a protracted guerrilla campaign which can go on for years. The first part

of the allied war campaign was the easy bit. The second part will not be so easy. British and American troops will have to go into the Pushtoon

areas on search and destroy missions, where they will be sitting targets for the guerrillas. Casualties will be inevitable. At a certain stage this will

have an effect on public opinion in Britain and America.

“The Americans had hoped to be able to carry out a quick, surgical strike against bin Laden, relying mainly on air power. Instead, the conflict is

becoming ever more complicated and difficult, and the prospect of an end is postponed almost indefinitely. They will have to keep troops

stationed not only in Afghanistan but in Pakistan and other countries in order to prop them up. […]

“This is a far worse and more dangerous position than the one in which the Americans found themselves on September 11. Washington will now

be compelled to underwrite the bankrupt and unstable regime in Pakistan, as well as all the other ‘friendly’ states in the region, which are being

destabilized by its actions. If the aim of this exercise was to combat terrorism, they will find they have achieved the opposite. Before these events,

the imperialists could afford to maintain a relatively safe distance from the convulsions and wars of this part of the world, but now they are

completely entangled in it. By their actions since September 11, the USA and Britain has got themselves dragged into a quagmire, from which it

will be difficult to extricate themselves.”

This was written on November 15, 2001 ( Afghanistan after the fall of Kabul: Is the war over?). Twelve years later there is no

need to change a single word of what we wrote then.

With a per capita GDP of $528 in 2010/11, Afghanistan is among the 10 poorest countries in the world. In 2008, 36 percent

of the population lived below the poverty line; more than half of the population is considered vulnerable. At 134 per 1,000

live births, infant mortality is highest in the world. Life expectancy is 48.1 years. 75 percent of the population is illiterate. It

is also the world’s largest supplier of opium.

The vast amounts of money spent on a useless war would have been sufficient to transform the lives of the people. Instead,

the imperialists have devastated the country and are now compelled to leave, having solved nothing. They are negotiating

with the Taliban, who will inevitably have a big say in any future government in Kabul. Nothing has been achieved except to

further destabilise the entire region, starting with Pakistan.





Mass protests against the Morsi government, 30

June 2013

Latin America

The economies of a number of South American countries (including

Brazil, Chile, Peru, Bolivia, Ecuador and Colombia) which benefited from

exporting raw materials, commodities and energy sources to China, are

now suffering the knock-on effects of the slowdown of the Chinese

economy. This will have profound political and social implications in the

next period, as we have already seen with the big movements against fare

rises in Brazil.

After a period of rising class struggle throughout Latin America (most

notably in Venezuela, Bolivia and Ecuador), with right wing governments being overthrown in mass uprisings, the election

of presidents who took measures that pushed them into conflict with imperialism, regional uprisings, etc., the revolutionary

wave in the continent seemed to have reached a certain hiatus. There is a kind of deadlock in the struggle between the

classes, in which neither side has been able to win a decisive victory.

Attempted coups were defeated by the masses in Venezuela (on several occasions), Ecuador and Bolivia. The forces of

reaction and imperialism were not able to inflict a decisive defeat on any of these movements, with the exception of the

coups in Paraguay and Honduras, which nevertheless did not put an end to the revolutionary movement in those countries.

In Colombia, the beginning of peace negotiations between the government and the FARC, which shows the inability of the

guerrillas to win the war, have opened the way for the development of the class struggle along classical lines. The new

president Santos has seen his popularity collapse (from 46% down to 21% between June and August 2013) after a series of

strikes of the coffee growers, judiciary workers, students, and more recently, a national agrarian strike which put his

government against the ropes. The attempt of the Colombian ruling class to “normalise” its methods of rule (after having

relied heavily on the paramilitaries under Uribe), backfired as a wave of class struggle was unleashed.

With the return of the PRI to power, the Mexican ruling class has managed to get a relatively strong government which has

allowed it to carry out measures they had been planning for years. Even before Peña Nieto was sworn in, they had already

approved the labour reform. This eliminated a series of conquests, won at the time of the Mexican revolution, which would

make it easier to exploit the working class.

Another key step has been the energy counter-reform, which opens the door for multinational companies to invest in the

electricity and oil sectors. The nationalisation of oil, by the Lazaro Cardenas government in 1938, meant that, for many

decades, Mexico had relative economic and social stability. Now, that has come to an end. Before the energy reform, the oil

company Pemex was contributing up to 40% of the state budget. Now, a large part of those resources will be channelled into

the pockets of private capitalists. This will lead to a budget deficit, which will be balanced through increased taxation and

cuts in social spending.

The decay of Mexican capitalism is expressed by growing unemployment, the development of the informal economy and by

growing misery and social decomposition. This is most clearly expressed in the development of the drugs market and the

resulting war on drugs, which has meant increased pain for the masses. These reforms mark a turning point, and they will

lead to a worsening of the living conditions of the Mexican people, in the coming years.





The leadership of the unions and of Morena, with its reformist electoral outlook, has acted as a brake which has prevented a

unified fight-back based on the methods of revolutionary mass action. However, there is a growing mood of anger. This is

being expressed by the formation of Morena, in militant trade union struggles - like those of the teachers and electricity

workers - by the entry into the movement of a new generation of radicalised youth, and by the development of the many

community police and self-defence groups.

In the state of Guerrero there have been mass armed mobilisations, and in Michoacan there are municipalities, which are in a

state of open civil war. Though this process is riddled with contradictions, these are symptoms of the enormous pressure that

decomposing Mexican capitalism is exerting on the masses - which are beginning to draw revolutionary conclusions. The

government of Peña Nieto will continue its policy of attacks and counter-reforms, which are preparing a widespread

fight-back by the workers.

However, because of the lack of the subjective factor—a clear revolutionary leadership—the Latin American masses were

prevented from taking power into their hands and abolishing capitalism. This has led to an impasse and a temporary and

unstable equilibrium between the classes, a state of affairs that was prolonged by the economic boom. The world recession

which started in 2007-08 only partially affected South America, and the region recovered quickly from it, on the back of

resource-hungry China. But that is now coming to an end. That was revealed in a very dramatic way by events in Brazil.

Brazil

In the last period (until 2011), Brazil enjoyed high rates of growth, mainly because of exports to China. This enabled the

capitalists to concede wage demands when confronted with labour shortages and strikes. Wages rose by an average of 3.5%

between 2002 and 2013 in real, but in dollar terms, the increase was still higher (the real was overvalued). 95% of wage

negotiations ended in increases higher than the rate of inflation. This, and the achievements of Lula's welfare programme

“bolsa familia” aimed at supporting the livelihood of the poorest sections (25 million people), partly explain the stability of

the PT government for a whole period.

But now everything has changed. The sharp slowdown of the economy in 2011 (+2.7%) and 2012 (+0.9%) suddenly revealed

widespread frustration, culminating in the eruption of the mass movement in June 2013. The relatively low levels of

investment by the capitalists meant that rising wages have not been matched by increased productivity. Since 2003, Brazil's

unit labour costs have doubled, and in dollar terms they have even trebled.

The low levels of investment have led to a steep fall in productivity compared to the other big economies. The boom in

exports to China masked for a period the catastrophic position of Brazil. An Economist special report on Brazil (September

28, 2013) indicates that Brazil is moving towards a period of increased crisis and class struggle. Inflation, which is

approaching 6%, is driving down the living standards of ordinary people and fuelling the economic demands of the working

class. This fact explains the desire of a section of the Brazilian bourgeois to get rid of the PT. They don't feel the PT will be

able to wield the knife soon and deep enough. Another section is terrified at the prospect of dealing with the rising class

struggle without the aid of the PT leaders.

The movement against fare rises, which rapidly spread to the whole country, reflected a wider discontent which had

accumulated in society. It represented the arrival of the revolutionary wave of the Arab countries and Southern Europe to

Brazil. Although the movement was leaderless and inevitably had many confused elements, it represented a significant





turning point, and was followed by a series of national days of action by the trade union movement and a huge mobilisation

around the teachers’ strike. Dilma Roussef will certainly not enjoy the long economic boom which guaranteed the stability of

Lula in power. This will create exceptional conditions for the Brazilian Marxists in the next period.

Venezuela

In Venezuela, the narrow victory of Maduro in the April presidential elections, after the death of Chavez, represented aserious warning to the Bolivarian movement. However, the attempt of the oligarchy to use the close result to overthrow

Maduro backfired. Once again the masses came out on the streets and defeated the right-wing provocations through

revolutionary mobilisation.

The key factor is now that the economic dislocation caused by the attempt to regulate the capitalist economy, the deliberate

sabotage of the ruling class, and the investment strike on the part of the capitalists is seriously eroding the social basis of

support for the revolution. Scarcity of basic products is combined with rampant inflation, which has now reached 50%. This

situation cannot be sustained for a very long period of time. Either the revolution takes decisive steps in the direction of

abolishing capitalism, or the economic chaos will create the conditions for the bourgeoisie to come back to power and

attempt to smash the revolution.

The policy of the Maduro government after the April election was one of attacking the opposition in the political arena, while

at the same time attempting to reach a deal with the capitalists in the economic sphere. Concessions were offered to private

businesses regarding access to hard currency, including liberalisation of price controls, and the idea of creating Special

Economic Zones on the model of China was proposed. This was a utopian policy which could not resolve anything. Any

concessions made to the ruling class will undermine the social base of the revolution while not solving any of the

fundamental economic problems.

In the run up to the December 2013 municipal elections, the government took a different turn, striking blows against the

capitalists. These were still within the logic of regulating capitalism, but proved very popular with the working masses and

served to rekindle the revolutionary enthusiasm of the rank and file. It was these measures against speculation and

overpricing which guaranteed the victory in the municipal elections. Even if the oligarchy manages to come back to power,

that will not be the end of the revolution. It could have the salutary effect of radicalising the Bolivarian movement, as

happened with the defeat in Spain in October 1934 (the “bienio negro”), which was only a prelude for an even more decisive

battle between the classes. No leader of the Bolivarian movement commands the same authority that Chavez had, and

therefore criticism of the leadership, the bureaucrats and the reformists by the masses acquires a much sharper and more open

character.

The main task remains the building of a revolutionary leadership with roots in the working class vanguard, able to harness

the extraordinary energy which the revolutionary masses have shown over 15 years, and direct it towards the taking of power

and the abolition of capitalism.

World Relations

Lenin once wrote about “combustible material in world politics”, and there is no shortage of such material in the world

today. The aggressive actions of the imperialist powers give rise to internal opposition and can act as a further radicalising





factor. Revolutionary moods can arise not only from economic factors but also from wars, terrorist acts, natural disasters and

events on a world scale. We saw that in the past over the Vietnam War, and the same thing can happen again.

The revelations of Wikileaks and Snowden have exposed the real opinions, motives and interests of US imperialism, tearing

away the smiling mask of diplomacy to reveal the ugly face of cynical self-interest. They have also exposed the inability of

the US to keep other regimes' secrets. They have shown the extent to which the US is spying on its allies. And they have

revealed before the public opinion of the world the real nature of bourgeois diplomacy in general. In so doing they have

provided an important service to the international working class.

The fall of the USSR just over twenty years ago led to a major shift in world relations. The USA was now the only global

super power. With colossal power came colossal arrogance, as expressed most clearly in the so-called Bush Doctrine. US

imperialism proclaimed its right to intervene in any country, to depose governments and dictate its will everywhere. But two

decades later these delusions of grandeur are somewhat dented.

The rise of China as an economic and military power has fundamentally modified the balance of forces in Asia and the

Pacific. The Chinese ruling elite has ambitions to assert its political and military role in line with its growing economic

power. This increasingly brings it into conflict with other countries in this important region, in the first place Japan. Theconflict over disputed islands is only one manifestation of this. Washington is observing this phenomenon with growing

alarm. US imperialism has always regarded the Pacific as a pivotal element in its global strategy. The rise of China thus

poses a direct threat to its interests, which can lead to serious conflicts in the future.

Russia is playing a more independent role in world relations than in the past. Having suffered humiliation in Yugoslavia and

Iraq (both previously Russian spheres of influence), Russia is no longer prepared to accept the impositions of US imperialism

on a world scale. This was shown by its actions in Georgia, which the USA was attempting to draw into its orbit. Russia used

its armed power in 2008 to give Georgia a bloody nose and prevent it from joining NATO. In Syria, Moscow drew another

line in the sand, which the Americans dared not cross.

However, that it is not because of Russia’s strength, but because of the relative weakness and paralysis of US imperialism. In

the last ten years, the US imperialists have behaved like an elephant in a china shop. As a result they have almost no reliable

allies anywhere. The invasion of Iraq has been a disaster. Bush’s intention was to show America’s power. But the Iraq

adventure backfired badly, further destabilising what was already a highly volatile region. By destroying the Iraqi army, he

caused chaos in Iraq and tilted power in the region towards Iran.

All this has caused a sea-change in public opinion in the USA. After the evident failures in Iraq and Afghanistan, the

American public is tired of foreign military adventures, and a mood recalling the old American isolationism is beginning to

resurface in Congress and in the population. As a result, Obama was unable to carry out his declared intention of bombing

Syria. In a pathetic speech, in which he contradicted himself in every other sentence, Obama said that the USA could nolonger do what it liked in the world.

The Middle East is now a seething caldron of instability. This has been exacerbated by the clumsy and short-sighted policy of

US imperialism. The growth of Iranian power in the region has unnerved Saudi Arabia. Riyadh has had to resign itself to the

idea that Tehran now has a commanding influence over large parts of Iraq. The chaos in Iraq has given rise to a bloody

sectarian conflict between Sunnis and Shias with daily terrorist bombings and massacres. The Saudi royals fear that power





may be slipping from their grasp. These fears were underlined by the mass uprising in Bahrain in 2011.

In the Middle East we see the limits of US power. The manifest weakness of US imperialism has caused the traditional allies

of the US in the Middle East to follow their own interests to a far greater extent than in the past. In several instances this has

led to a clash of interests and open defiance of the US. This was shown by the Saudi promise to make up for any cut in US

aid to the Egyptian army. The Saudis were upset by the removal of Mubarak in Egypt, who was a reliable ally. Washington

managed to offend the Egyptian armed forces by reducing military aid following the overthrow of Morsi.

The Qatari ruling clique poured $8bn of financial support into Egypt, and was the main Gulf backer of the Morsi

government. They were betting that the vacuum left by ousted Arab autocracies would be filled by the Islamists, and they

were hoping to harness them in order to boost Qatar’s position in the region.

Qatar has burnt its fingers in Libya, then Syria, and also lost billions of dollars in Egypt. That money was meant to buy

political advantage, but they backed the wrong horse. The United Arab Emirates and the Saudis will step in to help keep the

Egyptian economy afloat. All this resembles the wars between rival “families” of the Mafiosi, which is what all these

pampered, oil-rich royal gangsters really are.

Syria

What began as a popular uprising against the Baathist regime in Syria has degenerated into a sectarian civil war. The Saudi

and Qatari ruling cliques intervened in order to crush the revolutionary elements and divert the struggle along sectarian lines.

Washington wanted to base itself on the bourgeois “democratic” elements of the so-called Free Syrian Army (FSA) but has

been completely outmanoeuvred by the Saudis and Qataris who have armed and supported the jihadi militias. However, the

Saudis and Qataris are supporting different wings of the Syrian militias. The Saudis are leaning on the salafists and

non-jihadist elements to try and undermine the predominance on the ground of Jabhat al-Nusra and al-Qaeda.

The Istanbul-based Western-backed National Coalition was formed in November 2012, and is recognised by more than 100

countries as a “legitimate” representative of the Syrian opposition. The USA and the EU would like to base themselves on

the “moderate” bourgeois elements in the opposition. But they have come up against an insurmountable problem. The NC

was publicly dismissed by eleven Islamist militias, including some that are formally part of the FSA, stating that they do not

recognise it.

It is well-known that the jihadi militias do most of the fighting, and they are not willing to subordinate themselves to the NC.

The result has been fighting between different opposition groups and a further fragmentation of the opposition. Taking

advantage of the weakening of the central power, the Kurds are now virtually independent in the Northeast, which means

there are now two more or less independent Kurdish states in the region. This adds to the instability and will encourage

Kurdish separatist sentiment in both Turkey and Iran.

The reactionary Islamist elements now have complete control of the armed rebellion. Now there is open fighting between the

ihadists and the FSA, and between the jihadists and the Kurds. There are also a number of militias fighting on the side of the

government that are outside Assad’s control. Syria is now heading in the same catastrophic direction as Iraq or Afghanistan,

with local warlords seizing power locally. The country is disintegrating before our eyes. What we now have in Syria is





counterrevolution on both sides.

The two sides had fought each other to a bloody stalemate but the intervention of Hezbollah and the Iranians changed the

balance of forces in the government’s favour in the summer of 2013. The Americans were looking for an excuse to intervene

in Syria to rectify the situation, but the weakness of US imperialism was shown by the fact that Obama could not even get a

vote to bomb Syria through Congress. As a result, he was completely outmanoeuvred by the Russians, who seized the

diplomatic initiative when John Kerry made what was probably an off-the-cuff remark to the effect that Syria could avoid

being attacked if it gave up its chemical weapons.

The issue of chemical weapons shows the nauseating hypocrisy of the imperialists. Let us leave aside the fact that the USA

itself holds the biggest stocks of chemical weapons in the world and that they used chemical weapons like Agent Orange

extensively against the people of Vietnam, as well as things like napalm. More recently they used white phosphorous bombs

in the bombing of Fallujah, provoking horrific consequences for the population. They had no objection to the use of chemical

weapons by Saddam Hussein when they were used against Iranian soldiers in the war between Iran and Iraq.

It is patently obvious that the question of chemical weapons was used as an excuse to attack Syria because the government

forces, aided by Iran and Hezbollah, were inflicting heavy defeats on the rebels. The intention of Washington was to deal ablow against Syria’s armed forces that would aid the rebels. That was not intended to allow the latter to win a military

victory, but only to restore a certain equilibrium between the two sides in order to allow room for diplomatic manoeuvring.

The interests of the unfortunate people of Syria and humanitarian considerations were very far from their minds.

This manoeuvre was cut across by the offer of the Syrian regime (prompted by Moscow) to hand over its entire chemical

arsenal. This act had no practical effect on the military capacity of the Syrian regime, which has used conventional weapons

very effectively to slaughter its enemies for the entire war. Having effectively outwitted the Americans on the issue of

chemical weapons, Assad has launched a major offensive against the rebels, inflicting heavy defeats on them. However, it

seems doubtful whether either side has enough strength to win a decisive military victory.

The Russians and Americans are manoeuvring with the other regional powers to organize some kind of “peace conference”

in Geneva. But even if this is held, the results will not serve the interests of the people of Syria. On the one side, the Saudis

and Qataris are backing the forces of black jihadi reaction. The Americans’ only interest is to maintain their control of the

region and resist the rise of Iranian influence. The Russians are likewise only concerned with maintaining their hold on Syria,

a traditional ally. Until now they have backed Assad, but they would be quite prepared to sacrifice him, on condition that

their basic interests in Syria were protected. After the debacle in Iraq, both the Russians and Americans (and their

“democratic” European allies) agree that the Syrian state must be maintained in the interest of upholding “law and order”.

The military stalemate provides an opportunity for the outside powers to intensify their search for a “negotiated settlement”.

The partial thaw in relations between Washington and Tehran may open the way to Iran’s participation in the Geneva peaceconference. This prospect has been greeted by jubilation in Damascus and Tehran, and by fury in Israel and Saudi Arabia.

What the ordinary people in Syria think about all this is not known. They will not be present in Geneva, and their opinions

are not a matter of any interest to any of the powers involved. The only way out of the mess in Syria is the victory of the

socialist revolution in a key country in the region, which would dramatically alter the class balance of forces. The future of

Syria now depends on events beyond its frontiers: i.e., on revolutionary developments in Turkey, Iran and above all, in





Egypt.

The Egyptian Revolution

The magnificent Arab Revolution, which has not yet finished, unleashed the colossal power of millions—what the bourgeois

press calls “the Arab street”. This was a turning point in world history. Events in the Middle East will have profound effects

both economic and political. Egypt is the key country in the Arab world. What happens there always has a knock-on effecton the entire Arab world and throughout the entire region. The Revolution entered a new stage with the mass upsurge that

overthrew Morsi and the Muslim Brotherhood.

The mass revolutionary movement that overthrew Morsi brought 17 million people onto the streets of Egypt. A movement of

such dimensions has no parallel in history. In reality, power was in the hands of the masses in June 2013, but they did not

realise this, and there was nobody to explain it to them. The central problem is easily stated: the masses were strong enough

to overthrow the government, but they were not sufficiently organized and conscious to take the power that they effectively

held in their hands. As a result, the opportunity was missed and the army chiefs were able to step in to fill the vacuum.

The actions of the army were roughly analogous to the actions of Napoleon on 5 October, 1795, when he dispersed a Royalistmob on the streets of Paris with a “whiff of grapeshot”. Then, as now, the reactionaries stirred up a movement on the streets

which, had it succeeded, would have signified the victory of the counterrevolution. In Egypt, the masses demonstrated their

enthusiastic support for the repression of the Brotherhood, which they correctly saw as the forces of black reaction. But this

historical analogy has its limits. Napoleon could succeed in imposing his counterrevolutionary dictatorship only because the

revolutionary masses had exhausted themselves. In Egypt, on the contrary, the Revolution has considerable reserves, which

assert themselves at every decisive stage.

The strength of the Revolution was shown by the weakness of the Brotherhood and its inability to organize an effective

response to the defeat of Morsi. Only in Cairo and Alexandria were they able to call big demonstrations, and even there, only

in the more affluent and middle-class suburbs. Everywhere else they were met with the fierce opposition of the revolutionary

masses, who kicked them out of one neighbourhood after another. Finally, they were easily dispersed and crushed by the

army.

In the absence of a genuine revolutionary Marxist party, the army chiefs were able to manoeuvre, Bonapartist-style, leaning

on the masses to strike blows against the Muslim Brotherhood, the next day arresting workers’ leaders and aborting strikes.

The revolution is a vast school for the masses who can only learn from experience. The second revolution was on a far higher

level than the first. Gone was all the softness and naivety represented in the slogans of “we are all Egyptians”, and instead,

there was a hard and uncompromising revolutionary will which meant that the whole process took only a fraction of the time

necessary for the 18 days of revolution in 2011. But the handing over of power to the SCAF meant handing back power tothe same old ruling class, albeit a different part of it than the one Morsi represented. This means that the masses will have to

go through another hard earned lesson.

It is true that Al-Sisi is a counter-revolutionary, just as the Bonapartist Kerensky was in Russia after the February Revolution.

But he is much more clever than Morsi. The counterrevolutionary nature of Morsi was clear, but Al-Sisi's role is not yet clear

in the eyes of the masses, who see him as their ally. They see the crackdowns of the army against the Brotherhood as a





revolutionary act. That is why they were prepared to give Al-Sisi time, but the patience of the masses will not last

indefinitely. Already, the Biblawi government, which was appointed by Al-Sisi, is very unpopular.

After the elections for parliament and for the presidency, criticism of the government will grow and the contradictions

between the revolution and the new rulers will become ever clearer. The bottom line is the economic crisis, which has caused

mass unemployment and poverty. The question of prices and jobs continue to be unresolved. If Al-Sisi stands in the next

election, he may be elected with a big majority. But once in power, he will be expected to deliver the things the workers,

peasants and unemployed want: jobs, bread and houses. But on a capitalist basis, this is not possible. The stage will be set for

a new and stormy period of revolutionary upheavals.

New, fresh layers are coming into the struggle all the time. The older, tired layers—including some who played a leading role

in the earlier stages—will tend to drop away, disappointed and disoriented by events which they did not foresee and which

they do not understand. They constantly complain about the alleged “low level” of the masses. But it is they who commit the

grievous crime of confusing revolution with counterrevolution.

Those misguided “Leftists”, who echo the propaganda of the bourgeois and the imperialists, and who dismiss the magnificent

mass movement that toppled Morsi as a “coup”, have understood nothing. The movement last June was in effect the SecondEgyptian Revolution. The masses who overthrew the hated regime of the reactionary Muslim Brothers got a sense of their

own collective power, which they have not lost, and which will provide the basis for a new revolutionary offensive in the

coming period. We must turn our backs on the old, demoralised elements and face to the youth, the new generation of

fighters who represent the revolutionary future.

Iran

The election of Rouhani marked the beginnings of a change in the situation. The elections were a clear sign that the regime

could not continue its previous course. The 2009 mass movement was suppressed violently and kept down by a constant

increase in internal pressure and removal of democratic rights. The crisis of the regime was reflected in the open conflict

between Ahmadinejad and Khamenei. The economy was in a deep crisis, greatly magnified by the imposition of sanctions by

the US and the EU. Unemployment, which was already high, reached new levels. The collapse of the rial meant that inflation

rates soared above 100 per cent. Industry, production and trade were grinding to a halt.

Millions of workers had to cope with the explosion of prices, while they had either been sacked or had not received wages

for months. For the middle classes it was no less disastrous. Families who had been used to relatively stable lives found

themselves bankrupted overnight, their savings devalued and their businesses ruined.

The presidential elections were supposed to have been planned and non-controversial. But during the campaign the different

candidates, who had been vetted thoroughly, attacked each other violently. The open split in the ruling class enabled themasses to force themselves onto the scene.

Hassan Rouhani's campaign meetings served as a focal point for mobilization. The entrance of the masses upset all of the

plans of the ruling clique. The Mullahs were forced to change course. Rouhani represents a wing of the regime that is arguing

for reforms from the top to prevent revolution from below. As a result, the regime has been forced to take some limited steps

to ease the pressure, especially on the youth and the middle class. This is the reason why there are at present massive





illusions in Rouhani. But with the easing of the democratic problems the economic ones will come to the fore.

The regime is trying to reach a deal with the Americans, in order to open up the market and also win some concessions,

especially in the weakened oil infrastructure. Such a deal, if it is concluded, will not change the general situation of the

masses. The only way for the Iranian bourgeoisie to get out of their crisis is through increased exploitation of the workers.

But this will only pour oil on the flames. Every step of opening up the atmosphere will only fuel the self-organisation of the

workers and the youth and will prepare for big revolutionary explosions in the future.

This “opening” provides new opportunities for the opposition and the Left. Some opposition (and even some leftist)

newspapers have begun to appear. Gradually the forces of the opposition are beginning to re-emerge. The youth is open to

socialist and revolutionary ideas. It is true that there are illusions in Rouhani, but these will not long survive the acid test of

experience. The masses will have to go through the school of bourgeois democracy in order to draw the necessary

conclusions, but draw them they will.

Inequality and the concentration of capital

Marx’s prediction that the development of capitalism would inevitably leadto the concentration of greater and greater wealth in fewer and fewer hands

has been entirely vindicated by events. “Accumulation of wealth at one pole

is, therefore, at the same time accumulation of misery at the opposite pole.”

he wrote in volume one of Capital. That is precisely the situation we now

find ourselves in. Everywhere there has been a sharp increase in inequality.

The sums involved are immense. Between 1993 and 2011, in the US,

average incomes grew a modest 13.1 percent in total. But the average

income of the poorest 99 percent—that is, everyone up to families making

about $370,000 a year—grew by only 5.8 percent. That gap is a measure of just how much the top 1 percent are making.

Workers’ share of US national income was 62 percent before the recession. It is now about 59 percent of GDP. Average

household incomes are lower than before the recession as inequality rises.

It is a glaring paradox that the US stock market has risen by more than 50 per cent since the crisis, while median earnings

have declined. Obscene wealth begets political power: plutocrats can buy up newspapers and television channels and fund

political campaigns, parties and lobbying. In the USA, one has to be a millionaire to be President, and in must addition have

the backing of many billionaires. Democracy can be bought and sold to the advantage of the highest bidder.

The myth of social mobility has been exposed for what it is: a cynical lie. Rich parents have rich children. The ruling class is

a self-perpetuating elite that is entirely divorced from the rest of society. Access to higher education is increasinglyexpensive. Graduates find themselves saddled with enormous debts averaging $25,000 per student and are often unable to

find jobs in the career of their choice—if they can find a job at all. The ladder to advancement has been kicked away.

Hundreds of thousands of university graduates are serving hamburgers in McDonald’s or stocking shelves in supermarkets.

The situation confronting US youth today is statistically similar to that faced by youth in the Arab world before the explosion

of the Tunisian and Egyptian Revolutions.





The American dream has turned into the American nightmare. 47 million Americans are forced to resort to food stamps in

order to have food for the end of the month. The growing sense of anger at this injustice was expressed in the slogan of the

Occupy Movement in the USA: “We are the 99%”. The dangers in this situation are clear to the more far-sighted strategists

of Capital.

An abysm between the classes

The masses are prepared to make sacrifices on condition that the cause is just and the sacrifices are the same for all. But

nobody is willing to make sacrifices to save the bankers, and there is no question of equality of sacrifice. The bankers pocket

the money generously doled out by the taxpayer (or rather, by the government, since nobody has asked the taxpayers’

opinion), paying themselves huge bonuses.

In the midst of a crisis, the rich get richer and the poor get poorer. Credit Suisse has published a chart showing the increase in

the number of dollar millionaires (based on total assets, mid-2012 to mid 2013).

Spain: 402,000 (+ 13.2%)

US: 13,210,000 (+ 14.6%)

France: 2,210,000 (+ 14.9%)

Germany: 1,730,000 (+ 14.6%)

UK: 1,520,000 (+ 8.2%)

Italy: 1,440,000 (+ 9.5%)

China: 1,120,000 (+ 8.7%)

Canada: 993,000 (+ 4.7%)

Another Credit Suisse report published some interesting figures on unequal distribution of wealth. It revealed that at the top

end, 32 million people control $98.7 trillion. That means that 41 percent of the world’s wealth is in the hands of 0.7 percent

of the total adult population. Those with a personal fortune of $100,000 to $1 million account for 7.7 percent of the

population, controlling some $101.8 trillion, representing 42.3 percent of the world’s wealth.

At the other extreme, 3.2 billion people control a mere $7.3 trillion. This means that 68.7 percent of the world’s adult

population control just 3 percent of its wealth. This means that the richest 0.7 percent of the world's adult population have a

combined personal wealth 14 times larger than the poorest 68 percent. These figures confirm Marx’s prediction concerning

the concentration of Capital:

“Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil slavery, ignorance, brutality, mental

degradation, at the opposite pole, i.e., on the side of the class that produces its own product in the form of capital.” (Capital vol.1, chapter 25)

“Concentrated economics”

Lenin pointed out that politics is concentrated economics. For a whole period, at least in the advanced capitalist countries,





capitalism seemed to be “delivering the goods”. The generation that grew up in the USA and Europe during the decades that

followed the Second World War enjoyed the benefits of an unparalleled economic upswing: full employment, rising living

standards and reforms.

This was the classical period of reformism in Europe. The capitalists could afford to permit reforms on the basis of an

expanding economy and big profits. But that is no longer the case. The real programme of the bourgeoisie is to abolish the

welfare state altogether, forcing the unemployed to work for any wages the employers choose to offer. That is to say, to go

back to the times of Marx and Dickens. Only the power of organised labour prevents them from fully carrying out this social

counter-revolution.

The perspective is one of years of cuts, austerity and falling living standards. This is a finished recipe for class struggle

everywhere. The bourgeoisie demands the liquidation of debt, balanced budgets, the slashing of “wasteful” social spending

(that is to say, spending on schools, hospitals and pensions, but not, of course, handouts to the banks). They argue, like true

sophists, that although “in the short run”, such measures must lead to a significant economic contraction and a sharp fall in

living standards (for some), in the long term, they would magically, create the foundation for “a sustainable recovery”. To

which old Keynes would have answered: “In the long run we are all dead”.

So precarious is the situation that anything could trigger a major crisis; this is true of the economy (see the government

shutdown in the USA and also growing debt in Europe) but also of society as a whole. Class struggle could also erupt

through some event or other (the Belgian firefighters).

The question is posed for the bourgeoisie: how to govern in such a crisis situation? In many countries of Europe, the political

impasse manifests itself in unstable coalitions and hung parliaments. The institutions of bourgeois parliamentary democracy

are being tested to their limits.

The growth of abstention is a phenomenon that indicates growing disaffection with all the existing parties. This is hardly

surprising, given the conduct of the labour leaders. Even when they are in opposition, the Social Democrats continue tosupport the general policy of cuts and austerity. This was shown clearly in the case of the Swedish SDP, the British Labour

Party, the German SPD, the Spanish PSOE and the Pasok in Greece. It is this that produces moods of disappointment and

apathy.

In Germany too there is a growing tendency towards abstentionism. Merkel won the elections, but even then she did not win

a majority, and needed the SPD for a “grand coalition” government. 40% of the German electorate is not represented by any

party in parliament; Die Linke's vote fell from its peak of around 12% to just below 9%. But nature abhors a vacuum, and the

formation of a SPD-CDU coalition means Die Linke is the only real opposition and can begin to pick up support.

As a result, in several countries we have seen the rise of new parties: Greens (in Sweden), populists in Iceland and Italy

(Grillo), “pirate parties” (Sweden, Germany, Iceland), and the rise of far-right parties (Greece, Sweden, Norway, France) and

the anti-EU UKIP in Britain. All this represents a ferment in society, a deep malaise and dissatisfaction with the existing

political order.

In Europe there is a growing discrediting of the institutions of bourgeois democracy, particularly in those countries which are

hardest hit by the crisis. The old established two-party system (right wing vs. Social Democracy) is in crisis. Some of that





discontent is being capitalised by parties to the left of Social Democracy, as witnessed by the growth of Syriza, IU and the

French FdG. In Italy, where such a thing did not exist, the “5 star movement” of Grillo (a confused petty-bourgeois protest

movement) has temporarily filled that void.

Still, even these parties do not offer a real alternative to the crisis of capitalism and are therefore not growing as fast as they

could do if they reflected even partially the mood of anger in society. However, finding no echo in the reformist parties, the

discontent of the masses is reflected in the political arena by an increase in abstention or spoilt ballots. In Spain, in 2008, the

PP and PSOE concentrated 83% of the votes on a 75% turnout. Today, opinion polls give them barely 50% on a much lower

turnout (around 50% now declare they will either not vote, or vote blank or don't know who will they vote—a record figure).

In Portugal we see a similar situation emerging from the recent municipal elections. Abstention increased by 550,000; spoilt

and blank ballots doubled, with an increase of 170,000. The ruling right-wing coalition lost 600,000 votes; the Social

Democratic PS in “opposition” lost 270,000; the Communist PCP gained barely 13,000 votes; while the left-wing BE lost

45,000 votes.

The mass organizations

The central problem is one of leadership. The labour leaders—both in the political parties and the unions, are living in the

past. They have not understood the nature of the present crisis and dream of the possibility of returning to the “good old

days”. They are organically incapable of breaking with the bourgeoisie and leading a serious struggle even to defend the

conquests of the past, still less to fight for an improvement in living standards.

There is a sharp contrast between the burning anger of the working class and the passivity and helplessness of its leaders.

The mass organisations, in general, are still on quite a low level of activity. Thus, there is no real pressure on the leaders to

prevent them going even further to the right. This has been the general tendency in the last period. The degeneration of all

the leaderships has reached unparalleled depths. It is a shocking fact that the very organizations that were created by the

working class to change society have become transformed into powerful obstacles in the path of social transformation.

Historically, it is the role of the Social Democrats to demoralise the workers and push the middle class into the arms of

reaction. Having long ago abandoned any pretence of standing for socialism, they address their speeches to the bankers and

capitalists, adopting a “moderate” and “respectable” tone. They try to persuade the ruling class that they are fit to assume

high office in the State. In order to prove their credentials to the bourgeoisie as reliable “statesmen” (and women), they are

even more zealous than the Conservatives in carrying out cuts and counter reforms (always under the flag of “reform”).

The left reformists, who dominated the Socialist parties in Europe in the 1970s, have been reduced to a shadow of their

former selves. Lacking a firm base in ideology or theory, they trail miserably behind the right wing. The latter are more

confident because they feel they have the support of big business. By contrast, the Lefts have no confidence either in theworking class or in themselves. The left-reformists in the unions are no better than their political counterparts. They stand

condemned and have failed even on the most elementary grounds of consistently struggling to defend wages, conditions and

trade union rights.

A whole series of “Left” governments have been ejected after carrying out cuts: Spain, Iceland, Norway, Greece and,

somewhat earlier, Italy. Others have seen their support collapse and are likely to lose power in the next election (Denmark,





France, Ireland). The Irish Labour Party was riding high in the opinion polls before it entered a bourgeois coalition that is

carrying out cuts. Its support has collapsed, falling from 24% to 4%.

In Greece, the socialist party, Pasok, which had a mass base and at times votes of close to 50%, has seen its vote collapse as a

result of carrying out the policies dictated by the ruling class and the EU. It was replaced first by the “national” government

of Papademos, then joined the coalition with the right-winger Samaras. But the most important factor has been the rapid rise

of Syriza, which originally struggled to obtain 4 or 5% and at one point reached 30% in the opinion polls.

However, the mass organizations, even the most degenerate, will at a certain stage inevitably reflect the pressure of the

masses. In the coming period there will be violent swings of public opinion to the left—and to the right. We must be prepared

for this and explain its real significance. In seeking a way out of the crisis, the masses will test—and discard—one party and

leader after another. But a constant feature is the rejection of whoever has been in government carrying out an austerity

programme.

In Britain, there are some indications that pressure from below (particularly from the unions) is forcing Miliband to distance

himself from the Tories and Liberals. Miliband, however timidly, is reflecting the growing public anger against big business

and the banks. Once in power the reformist leaders will be under extreme pressure from both the ruling class and the masses.They will be crushed between two millstones. There will be splits to the right and left. In some cases they can be destroyed

altogether (the PRC in Italy and possibly the Pasok in Greece). But in every case they will enter into crisis.

As the crisis deepens, left tendencies will begin to crystallize inside the mass workers’ parties and unions. The Marxist

Tendency must follow the internal life of the mass organizations closely and strive to reach and win over the leftward moving

workers and youth who are looking for an alternative.

However, our ability to intervene effectively in the future will be determined by our success in building the Marxist

Tendency today. It is not at all the same intervening in the mass movement with 20 or 50 cadres as with 500 or 1,000. Quality

must be transformed into quantity, so that quantity in turn can be transformed into a qualitatively higher level. In order tomove masses, it is necessary to possess a lever, and that lever can only be a strong and numerous Marxist tendency.

The unions

The unions are the most basic organizations of the class. In a crisis, the workers feel the need for the unions even more than

in “normal” periods. In the industrial field there have been some very radical struggles and conflicts and whenever the trade

union leaders have given a lead, in the form of general strikes, sectorial strikes, etc., the workers have responded massively.

The problem is that the trade union leaders are completely impotent when faced with the crisis of capitalism as they really

have no alternative (other than a mild form of Keynesian stimulus).

In Spain. there was an all-out strike of the teachers in the Balearic Islands which lasted for three weeks and attracted mass

popular support (with a demonstration in Palma of around 100,000 on an island with a total population of around 800,000!).

The strike was conducted with traditional class struggle methods which had been lost in the last period: mass assemblies,

elected delegates, support from parents and students and a strike fund. However, the trade union leaders left the Balearic

teachers on their own, refusing to spread the struggle beyond the teachers and to the mainland, and the movement had to

retreat, defeated by exhaustion.





One of the main features of the present situation is the persistence

of high levels of unemployment and under-employment, especially

among young people. This is not the reserve army of unemployed

of which Marx spoke. It is permanent, structural unemployment,

organic unemployment that is like a poisonous ulcer gnawing at

the entrails of society and corroding it from within.

The worst effects of unemployment are to be found in the youth,

which has to bear the heaviest burden of the capitalist crisis.

Youthful hopes and aspirations come up against an impenetrable

barrier. This is all the more intolerable when an increasing number

of the unemployed are highly educated. This creates a very

combustible and volatile mixture.

This is the first generation of young people who cannot expect a better standard of living than their parents. They have been

robbed of a future. A whole generation of youth is being sacrificed on the altar of Capital. Between Brazil and Turkey there

are, of course, differences. But there are also common features that helped fuel discontent. The same features will nurture

similar protests elsewhere. One important factor was youth unemployment.

This phenomenon is not confined to the poorer countries of Latin America, the Middle East and Asia. Unemployment and

poverty are an explosive combination that can ignite at any time, in any country. Youth unemployment was a big factor in the

so-called Arab Spring. High levels of youth unemployment in Europe can have a similar radicalising effect, Already, youth

radicalisation is a generalised phenomenon to one degree or another across Europe.

In Britain, a wave of radicalisation among the students was followed by an explosion of rioting by unemployed youth in all

the big cities that shook the establishment. In Greece, the big movements of the working class were preceded by a major

movement of the school students. In Spain and the USA we had the Occupy movement and indignados, which were

overwhelmingly composed of the youth. There are many historical precedents for this. The Russian Revolution of 1905 was

preceded by the student demonstrations of 1900 and 1901. The May Days in France in 1968 were sparked off by student

demonstrations that were brutally repressed by the police.

Lenin said: “He who has the youth has the future”. We must at all costs find a road to the revolutionary youth, giving a

conscious and organized expression to their instinctive desire to fight injustice and oppression and win a better world. The

success or failure of the IMT depends to a great extent on our ability to achieve this end.

Are the conditions ripe for revolution?

We are moving into an entirely new situation on a global scale. This is clear

from the events of the last 12 months alone. Clouds of tear gas fill the

streets of Istanbul. Police truncheons crack skulls in São Paolo and 17

million people overthrow an Egyptian president. Protests have erupted in

Bulgaria. This is only the start of a wave of political discontent in the

developing world, which is pregnant with revolutionary potential.





Dialectics teaches us that sooner or later everything turns into its opposite.

This dialectical law has been strikingly vindicated by the events of the last twelve months. Let us remind ourselves that

Turkey and Brazil were until recently two of the leading lights of the emerging economies. The possibility of a revolutionary

upsurge in those countries did not even enter the heads of the strategists of capital. But then, neither did the possibility of the

revolutionary overthrow of Mubarak in Egypt or of Ben Ali in Tunisia.

Cynics and sceptics are to be found everywhere in plentiful numbers. They are the flotsam and jetsam of the defeats of the

past, prematurely aged old men and women who have lost all confidence in the working class, socialism and themselves. The

professional cynics eke out a miserable existence on the fringes of the workers’ movement, and sometimes within it. Their

principal aim in life is to moan and grumble about the workers and youth, to belittle their achievements and exaggerate their

faults.

Such specimens are to be found above all in the ranks of the former Stalinists. Since they have long since abandoned all hope

in the socialist revolution, these wretched creatures are only concerned with one thing: to disseminate their toxic brand of

pessimism and scepticism among the youth, to demoralise them and discourage them from participating in the revolutionary

movement.

These, people who Trotsky correctly described as gangrenous sceptics, argue that the working class is not ready for

socialism, that the conditions are not ripe, etc. It goes without saying that for such individuals the conditions for socialism

will never be ripe. Having established in their own minds some impossible standard of revolutionary “maturity”, they can

then sit back comfortably in their armchairs and do—nothing.

It is necessary to underline the fundamental idea that the main feature of a revolution is the entry of the masses onto the stage

of history. In 1938, Trotsky wrote:

“All talk to the effect that historical conditions have not yet ‘ripened’ for socialism is the product of ignorance or conscious deception. The

objective prerequisites for the proletarian revolution have not only ‘ripened’; they have begun to get somewhat rotten. Without a socialist

revolution, in the next historical period at that, a catastrophe threatens the whole culture of mankind. The turn is now to the proletariat, i.e., chiefly

to its revolutionary vanguard. The historical crisis of mankind is reduced to the crisis of the revolutionary leadership”. (Trotsky, The Transitional

Program, May-June 1938)

These lines are completely relevant to the present situation on a world scale. Indeed, they seem as though they were written

only yesterday!

Against the cynics and sceptics who deny the revolutionary role of the proletariat, we will always bring to the fore the

revolutionary potential of the workers and youth, which is constantly reaffirmed by events. The marvellous revolutionary

movements in Turkey, Brazil and Egypt, the general strikes in Greece and Spain, the mass movement in Portugal that almost

led to the overthrow of the government, the general strikes in India and Indonesia, are all clear indications that the worldsocialist revolution has begun.

However, the fact that a revolution has begun does not mean that it will be immediately successful. That depends on many

factors, the most important of which is the quality of the leadership. Hegel wrote:

“When we want to see an oak with all its vigour of trunk, its spreading branches, and mass of foliage, we are not satisfied to be shown an acorn





instead.” (Hegel, The Phenomenology of Mind, Preface).

What we have here is only the early anticipation of socialist revolution. It is the first reawakening of the masses after a long

period in which the class struggle had been blunted in many countries. An athlete, after a long period of inactivity, needs

time to stretch his or her limbs, to “warm up” and acquire the necessary ability to engage in more serious activities.

Likewise, the working class needs time to acquire the necessary experience to raise itself to the level demanded by history.

As a general rule, the masses learn from experience. This is sometimes painful and always slow. This learning process would

be rendered both quicker and less painful if there existed a powerful Marxist party with a far-sighted leadership like that of

Lenin and Trotsky. If there had been the equivalent of the Bolshevik party in Egypt last June, who can doubt that the

revolutionary workers and youth could have taken power easily.

Peripheral European diplomats talk darkly of a potential “crisis of democracy”, and it is a fact that the institutions of

bourgeois democracy are being tested to breaking point. In the governments of Europe, above all in Berlin, there is a

persistent worry that the imposition of austerity will cause social conflict on such a scale as to represent a threat to the

existing social order.

The real reason why the bourgeois were so horrified by the overthrow of Morsi in Egypt, is that they fear that such things can

happen in Europe. The FT has drawn an uncomfortable parallel with the revolutionary year 1848: “It [...] reminds me—of

1848. Metternich sneering out of the window at the irrelevant mob, a few hours before his unceremonious overthrow, Guizot

unable to breathe with shock as he resigns his ministry, Thiers, prime minister for one day, suffering a bout of 19th Century

Tourette's in his carriage, hounded by the masses…”

The bourgeois economists admit that the perspective for capitalism is of twenty years of austerity. That means two decades of

heightened class struggle, with the inevitable ebbs and flows. Moments of great upsurge will be followed by periods of

exhaustion, disappointment and disorientation, defeats, even of reaction. But in the present climate, every lull will only be

the prelude to new and more explosive struggles. Sooner or later, in one country or another, the question of power will be

posed. The question is whether, in the decisive moment, the subjective factor will be sufficiently strong to provide the

necessary leadership.

Unbearable tensions are building up at all levels. The source of the general malaise in society is not only the economic

factors: unemployment and falling living standards. It reflects disenchantment with all the existing institutions of capitalist

society: politicians, the Church, the media, bankers, the police, the legal system etc. It is also affected by events on a world

scale (Iraq, Afghanistan, Syria, etc.)

The conditions are not the same everywhere. For instance, the situation in Greece is more advanced than in Germany. But

everywhere, not far beneath the surface, there is a seething discontent, a feeling that society is going badly wrong, that this is

intolerable and that the existing parties and leaders do not represent us. The objective conditions for socialist revolution are

either mature, or else are rapidly maturing. But the subjective factor is missing. As Trotsky said long ago, the problem is a

problem of leadership.

For a whole series of objective historical reasons, the movement has been thrown back; the forces of genuine Marxism have

been reduced to a small minority, isolated from the masses. That is the central problem, and the central contradiction that has





to be resolved. It is necessary to recruit the necessary cadres, to train and integrate them into the organization, and orient

them to the mass workers’ organizations.

This takes time. We will have some time because of the slowness of the process. But we do not have all the time in the world.

It is necessary to approach the task of building the forces of Marxism with a sense of urgency, to understand that the road to

big victories in the future is prepared by a series of small successes in the present. We have the necessary ideas. Our

perspectives have been brilliantly confirmed by the march of events. We must now carry these ideas into the working class

and the youth. The road to the workers and youth is wide open. Let us march forward with confidence.

Forward to the building of the International Marxist Tendency!

Long live the world socialist revolution!

London, 11th December.


perspectives for wrold revolution 2014

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