Venezuela press release

Written by Alan WoodsTuesday, 30 November 2010

As well as answering the attacks of the right wing in Venezuela extensively last week, Alan Woods issued a press release, which was published in full today in Spanish by Vea, one of the main Bolivarian daily papers. We publish it here in English for our readers.

Alan WoodsOn 4th November Ramón Muchacho held a press conference in which he referred to me as “and the main ideologue of the ruling party" and “the chief ideologue and adviser to the President”. These claims have been repeated in the media over recent weeks. There is not an atom of truth in these assertions. I am not, and never have been, an adviser, either formal or informal, to the President of the Bolivarian Republic. I do not advise President Chavez or anybody else. I merely express my opinions, which one may accept or reject. And I am as entitled to express an opinion about Venezuela as is Mr. Muchacho is to express an opinion about Alan Woods – which he has done, very imaginatively.

I have written extensively on Venezuela from a Marxist standpoint. I have consistently defended President Chavez against the spiteful and biased attacks of the imperialists and the counterrevolutionary opposition. I am a firm supporter of the Bolivarian Revolution, but I am entirely independent of the Bolivarian, or any other, government. The lies about “foreign advisers” is a clumsy attempt to draw attention away from the well documented links of the opposition to their advisers in Washington and Miami who decide everything they say and do. Mr. Muchacho is opposed to the Bolivarian Revolution and President Chavez, which he wishes to overthrow by any means possible. The latest orchestrated campaign in the media is the latest episode in a scandalous campaign to discredit the President and destabilize the democratically elected government of Venezuela. My only “crime”, from the standpoint of the opposition, is that I have consistently defended Chavez and the Bolivarian Revolution against imperialism and the counterrevolutionary oligarchy.

While disseminating the legend of “foreign advisers to Chavez”, they are silent on the role of the CNN and the bourgeois media internationally who every day for over a decade have been organizing a violent campaign of lies and vilification against President Chavez, including calls for his overthrow and assassination. This kind of foreign interference in the internal affairs of Venezuela meets with the enthusiastic approval of the opposition. I take the opportunity to point out that if any journalist in Britain or the United States called for the violent overthrow of their government and the assassination of the head of state he would soon find himself on trial. Mr. Muchacho claims that I wish to push Venezuela into “communism”, like in Russia. That is another lie. The people of Venezuela will adapt their model of socialism to their own wishes, traditions, history and national character. Moreover, it is a matter of record that I have always been opposed to the bureaucratic and totalitarian caricature of socialism that Mr. Muchacho (incorrectly) calls “communism”. I stand for democratic socialism, based on the democratic control and participation of the working people at all levels. But the attachment of Mr. Muchacho and the opposition to democracy is not so clear. They have never accepted the popular will, and still do not accept it.

The opposition pretends to “defend the Constitution”, but in April 2002 the first act of the counterrevolutionary coup was to abolish the Constitution and sack and arrest the ministers of the elected government. Everybody knows that this coup was actively backed by the opposition and FEDECAMARAS. The leader of Primero Justicia claims to be defending the middle class and says that the Marxists (and by implication Chavez) want the “nationalization of everything”. That is another lie. I call for the expropriation of the big landowners, banks and capitalists as the only way to defend the Revolution. But I am opposed to the expropriation of small businesses. I approve of the expropriations carried out by the Bolivarian government. But to approve of something does not necessarily mean that I am responsible for it. I approve of Darwin’s theory of evolution, but had no hand in the writing of The Origin of Species. Everybody knows that the main problem in the Venezuelan economy is the lack of private investment. This amounts to a strike of capital, which is having a most negative effect (falling investment, flight of capital, factory closures, inflation and unemployment). The nationalizations are a defensive measure to maintain production. What I have pointed out is that piecemeal nationalization cannot solve the fundamental problems of the Venezuelan economy because you cannot plan what you do not control. And you cannot control what you do not own. The opposition does not stand for the interests of the middle class. It stands for the interests of the big landowners, bankers and capitalists. That is the real reason for the furious attacks of the opposition against the Marxist tendency and myself. At the same time the capitalists are sabotaging the economy, their political representatives are trying to create an atmosphere of fear in order to destabilize the democratically elected government. The campaign against alleged “foreign advisers” is only a part of this strategy. I believe that the Bolivarian Revolution has now reached the critical point where it will be forced to take serious decisions. Either it will accelerate the revolutionary process, which means liquidating the economic power of the oligarchy once and for all, or it will face very serious dangers. The opposition is striving to sow alarm and panic. At the same time it is striving to push the Revolution off course, to force it to retreat. The reason the opposition is raising the spectre of “communism” and slandering the most consistent supporters of the Revolution is that it is trying to split the Movement. They know that if they can isolate and destroy left wing, they will deprive the Revolution of its most determined and militant wing. The aim of these intrigues is to divide the Movement, to make it abandon its socialist aspirations and enter into pacts with the counterrevolutionary bourgeoisie. If they succeed, the balance of the Bolivarian Revolution will tilt sharply to the right, leaving the road clear for the reformists, who have never been in favour of socialism and who dream of “Chavism without Chavez” to take control. The real target of these attacks is not Alan Woods and the International Marxist Tendency. It is Hugo Chavez and the Bolivarian Revolution. This would fatally weaken the Revolution and demoralize its real base, the workers and peasants. It would guarantee the victory of the opposition in 2012 and prepare the way for counterrevolution. Gentlemen, your manoeuvres are transparent. You will not succeed! As the President has said: "For this revolution there is no turning back, here there is no pact with the bourgeoisie, never again." "There should be no place in our military or civilian life for half measures. A single line: radicalize the revolution."

Europe in Crisis
Written by Alan WoodsThursday, 02 December 2010

The title of The Economist article said it all: “Europe: More pain, little gain”. All over Europe, governments are struggling to bring huge deficits under control. In order to do this, they pass the bill to the working class and the middle class. Gradually the truth is beginning to dawn on the workers. They are faced with a whole period of cuts and attacks on living standards. And they are reacting.

IMPACT plackards in Dublin on 27 November. Photo: William MurphyAs always, the French workers have been in the forefront of militant action, with general strikes and militant mass demonstrations. But the movement is beginning everywhere. On Saturday 27 November, there was a demonstration of 100,000 in Dublin. The recent general strike in Portugal was massively supported (80-85 percent, according to the union leaders – the biggest since the Revolution). In Spain there was a general strike on 26 September. In Italy there have been mass demonstrations called by the CGIL and FIOM. In Greece there have been eight or nine general strikes so far this year. In Britain there have been angry demonstrations of students in all the main cities to protest against the proposed increase in student fees.

This is only the beginning. It indicates that there is ferment at all levels of society and this must find its expression inside the ranks of the labour movement. The union leaders are desperate to reach a deal with the bourgeoisie but there is a problem: the bourgeoisie has nothing to offer. It is not just that they cannot offer any meaningful reforms. They cannot tolerate the continuation of those reforms that were conquered by the workers in the past. Therefore the union leaders have no alternative but to mobilize. However, in the present conditions, even general strikes are not sufficient. The ruling class has no alternative but to continue with their attacks. This is not a transient state of affairs. It is a turning point in the history of Europe. And it is a finished recipe for a revival of the class struggle.

The crisis continues
The boom years were largely based on a vast expansion of credit, which was reflected in a huge increase in privatedebt levels before the crisis, and unprecedented levels of public debt after it. After a drunken binge comes a severe hangover. Governments tried to get out of the slump by stimulating their economies, which only means that the rich world has lots of money to pay back. This is one of the reasons why any recovery will be delayed and there will be one crisis after another. As markets woke up to the real state of government finances in the developed world, there was increasing nervousness about the problem of sovereign debt. And the problem is set to get a lot worse. In 2011 the amounts of government debt maturing in America and the euro area will be even bigger than those in 2010. It will amount to some $3.5 trillion, compared with $3.1 trillion, according to Bloomberg. At the moment attention is focused on the peripheral euro-zone economies (Ireland, Portugal, and Greece). The chain of European capitalism is breaking at its weakest links. But with every new link that snaps the strength of the whole chain is tested to breaking point. Sooner or later this point will be reached. While the European Union and IMF were in Dublin haggling over the details of a bail-out for Ireland, officials in Portugal and Spain were attempting to sooth the nerves of investors with assurances that their economies and banks did not need a similar rescue. José Sócrates, Portugal’s prime minister, hoped that the help given to Ireland would calm the markets because his country was “clearly suffering from a contagion effect”.

The trouble is that nobody believes them. Worries about sovereign debt continued and the cost of borrowing for both Portugal and Spain rose sharply. The spread on Spain’s ten-year government bonds over that on German Bunds jumped to its highest since the introduction of the euro. This resembles the charts placed at the bottom of a critically sick patient in hospital. Ireland’s bailout is an even bigger blow to the euro than Greece because major European banks hold more of Ireland's debt. Portugal is next. From Portugal the contagion will spread to Spain. And after Spain comes Italy and Britain will not be far behind.

Where are the green shoots?
The crisis of the euro is attributed to “lack of confidence”. But this is an explanation that explains nothing. Why was there confidence before and why is there no confidence now? The answer is that the capitalists (aka the “investors” or “the market”) see no prospect of an early recovery of the world economy. Indeed, in many ways the international crisis of capitalism continues to worsen. Talk of “green shoots” is no longer heard. The mood is one of pessimism, punctuated by sudden bouts of panic. The key piece in the world economy remains the USA. Here the signs are at best mixed. The US economy grew faster in the third quarter than previously thought: by 2.5% at an annual rate, against an initial estimate of 2%. But the news was overshadowed by the Federal Reserve’s bleak assessment that the unemployment rate would remain high for longer than it had predicted, dropping to only about 9% by the end of 2011. The US housing market remains depressed. The number of previously owned homes sold in America was 2.2% lower in October than in September, and 25.9% lower than in October 2009. Sales of homes that are in foreclosure or other distressed financial situations accounted for 34% of the total for October, about the same proportion as in September. Some economists are comparing this to the situation in 1929-49 or in 1965-82. The realization is gradually dawning on the bourgeoisie that there will not be any serious recovery anytime soon. They hope that emerging markets will produce big enough profits to rescue them. But finally there is no real confidence in anything. The nervousness of the bourgeois finds its expression in the gyrations of the stock markets of the world. After the recovery in 2009, stock markets are faltering again. The bourgeoisie is suffering from a kind of collective schizophrenia. One minute they talk about deflation, the next minute they fret about the danger of inflation. The economists cannot make their mind up and are giving contradictory advice. The Economist recently gave a pessimistic appraisal of the situation:
“If the outlook is for years of low economic growth, then this gloomy dividend assessment will probably be correct. After all, the rebound in profits in 2009-10 owed much to an improvement in margins. Companies were able to shed staff while improving productivity in the remaining labour force. But this does not seem sustainable in the long term. Either the economy will recover, and labour costs will rise, or the high level of unemployment will weigh on demand and revenues will suffer.”

Protectionist tendencies
Contradictions are emerging at all levels. Government bonds have traditionally acted as the safe havens of financial markets. The doubts about the creditworthiness of Greek or Portuguese bonds only mean that investors will opt for the security of German government bonds or US Treasuries. But since even these are now regarded with suspicion, the bourgeois are increasingly resorting to an even older bolt-hole: gold. The irresistible rise of gold, which has reached an all-time high, is a graphic reflection of the fear of inflation among investors and their lack of confidence in the existing currencies. They know that in the past governments have used inflation as a way of dealing with a heavy debt burden, and they also know that such methods inevitably lead to an explosion of inflation further down the road. Suddenly currencies dominate the headlines. If they are not worrying about the euro or the dollar, they are complaining about the Yuan. China is being constantly criticized for its undervalued currency, especially in America. Under the pressure of such criticism, and in order to avoid protectionist measures, Beijing did allow the Yuan to rise against the dollar, but the increase was so small as to be meaningless. China’s current-account surplus rose to $102.3 billion in the third quarter, double the amount from a year earlier and about 7.2% of GDP. With Chinese exports soaring to new levels, Western governments are pressing China to do more to “address its trade imbalances”, that is, to export less and import more. But Beijing does not seem in any hurry to

From Ireland to Portugal… After Ireland the markets are now turning their attention to the Iberian countries. and in order for someone to devalue their currency. the markets calmed down for a while. Portugal is another weak European economy. This is a slippery path that can lead to a series of competitive devaluations as countries intervene to push down the value of their currencies to secure an advantage over their rivals. since a huge stand-by fund means that there is an investor of last resort in place for euro-zone debt. But this has its limits.to A. It is in this context of extreme global volatility that we must see the crisis of the euro. Let us recall that what transformed the 1929 Crash into the Great Depression was precisely protectionism and competitive devaluations. someone else must act as a net importer. In other words. On November 23rd Portugal was paying over four percentage points more than Germany to borrow money. It is clear that Portugal will be forced to follow Ireland’s path. particularly in Europe. the Chinese make use of currency depreciation as a way of cheapening their products. It is quite possible that the recovery will be undermined by the tightening of fiscal policy. If the Irish thought they would be rewarded by investors after agreeing to the deal. The markets took this as a sign that bond-holders would be made to pay for future bailouts of troubled euro-zone members. but later Standard & Poor’s promptly downgraded Irish government debt from AA. Within 24 hours. the austerity programmes in Europe will solve nothing but only make the crisis worse. But this is like trying to square the circle.follow this benign advice. and Moody’s promised a “multi-notch downgrade”. This is an extremely dangerous situation. On October 29th. the spreads of Irish. leaders of the European Union agreed that they should re-open the treaties “to establish a permanent crisis mechanism” that would include “the role of the private sector”. but also in those of Portugal and Spain. The reason is simply that international Moneybags do not believe that these countries will be able to repay their debts. the markets rallied. with Portugal next in line. when the frantic efforts to revive the American banks produced only temporary rallies. there was a slump not only in Irish assets. Whereas after the bail-out of Greece in May. In order to please the markets the Socialist-led government of José . but simply refinance them.93%. someone else must let their currency rise. and consequently has accumulated a substantial trade surplus. Who pays? Governments are walking a tightrope. It was similar to what happened in 2008. But this by no means guarantees the future of the euro. they were soon disabused. But there is a small problem with this: in order for somebody to export. They know that the latest deal will not eliminate Ireland’s debts. Immediately they began to unload the debt of the most exposed countries. trying to reassure the markets by carrying out brutal cuts in the name of “budget discipline”. In order to keep their exports attractive to American and European consumers. this means exporting unemployment. There is already talk of currency wars. Other countries are trying to follow the same road as China. When the Greek government obtained a €110 billion bail-out in May and a joint EU/IMF fund worth €750 billion was put in place to finance this. the bail-out had failed even before the ink was dry on the paper it was written on. Put in other words. On November 21st the Irish government finally yielded to pressure from the European Union to seek an emergency bail-out from the EU and the IMF in the region of €85 billion ($115 billion). Portuguese and Spanish government debt over German bonds had grown wider than before the deal was announced. suffering from slow growth and a big budget deficit. exporting their way to recovery. just weeks before its bail-out. When the deal was announced bond yields in Ireland initially fell to 7. The result could be increasing protectionism as countries accuse each other of “artificially” gaining market share. China is a very successful exporter. In the end. The bail-out packages for Greece and Ireland were meant to prove to the financial markets that the euro would be safe in 2011. while trying not to inflict irreparable damage on their economies. It was Germany that (reluctantly) put its hands in its pockets to bail out Greece and Ireland. This is similar to what Greece was paying in mid-April. After the rescue of Bear Stearns in March 2008 there was such an outcry that the American government was unwilling to save Lehman Brothers in September. namely Ireland and Portugal. The spread on Spanish bonds reached its highest since the euro’s launch in 1999. But this time the big credit-rating agencies reacted negatively. Now Germany faces the same dilemma. It is Germany that holds the purse strings of the EU.

That is to say. insisted that Brussels would not interfere in Irish politics. Fianna Fail. they cannot afford even to service their debts.000 newly built homes as part of €60 billion-worth of real estate taken in debt-forasset swaps with bankrupt developers. the EU rescue plan might work. In 2011. the socialist government must bring in austerity measures to cut the budget deficit. But it is not a question of if Lisbon will seek a bail-out but when. these countries are insolvent: that is. and that. As a result a general strike was called. They are therefore putting excruciating pressure on the Irish government to push through an austerity budget before a general election can be called. declared that it would walk out in January. Like Ireland. The markets fear that Spain’s economy will fail to grow. Thus. This has provoked a hue and cry in Ireland about “loss of sovereignty”. This is what we meant when we predicted that every attempt to restore the economic equilibrium will destroy the social and political equilibrium. against which it is pointless to protest. In Ireland Brian Cowen still has to pass the 2011 budget in early December. Olli Rehn. What happens in Spain will have a crucial effect on the future of the euro. And from Portugal to Spain Spain went up like a rocket and has come down like a stick. which has a poll rating of 17%. the dominant party in Ireland ever since the country’s independence in the 1920s. including for 2011 €6 billion in spending cuts. depressing house prices still further. it experienced a feverish housing boom that ended in collapse. while inflation is higher than in Germany. tax rises. Spain’s economy shrank. Zapatero is being forced to do the bidding of the . Like Portugal and Greece its growth is low and unemployment is over 20%. TheIrish Times openly wondered if the 1916 Easter rising had been in vain. Cowen’s Fianna Fail’s coalition partner. which was widely followed. Miguel Fernández Ordóñez. its lowest ever. The Economist put it bluntly in an editorial entitled: To stop the euro’s meltdown. Since he was finance minister while the Irish bubble inflated and prime minister when it burst. The current-account deficit is still over 4% of GDP. is heading for the greatest electoral defeat in its history. The men of money suspect that the debts of Irish banks are far worse than what has been hitherto admitted and are worried by the Dublin government’s decision in September 2008 to guarantee all the liabilities of these banks. savage welfare and public-sector pay cuts and a reduction in the minimum wage. as they are doing. forcing an early election. in plain language. But the markets are convinced that the problems go deeper. As recently as 2007 the Spanish economy had one of the highest growth rates in Europe. but added that “stability is important”. in fact. To begin with. where the government.21 points below the EU average – it is now firmly in the sights of the speculators. The OECD predicts that Spain’s GDP will shrink slightly this year and grow by just 0.” Although Spain’s national debt was only 53% of GDP last year . let alone repay them. Spain’s GDP is expected to expand by less than 1%. to a lesser degree. though not before they help to pass the 2011 budget on December 7th. India and Canada. That is why some of its parliamentary group have been calling for Cowen’s resignation. all these rescue plans and bailouts solve nothing. They do not seem to understand that real sovereignty lies with the almighty Market. After repeated denials that he was seeking a bail-out. In 2010. behind Russia. especially when bank deposits continue to flow out of the country. Thus. Even that may not be enough to get the budget through. the European economic commissioner. A few days ago the Bank of Spain’s governor. his credibility is now zero. When the construction bubble collapsed it dragged the whole economy down with it. In 2009 it was the world’s ninth-biggest economy. However. If it were the case that Ireland.Sócrates announced a package of cuts. Zapatero must revive Spanish reform. he then signed a humiliating deal that not only commits Ireland to pay a huge bill but gives EU commissioners powers to see that it keeps its word. Greece and Portugal only needed to borrow a certain amount of cash to help them solve their difficulties. to our own debt as well as Italy’s and even Belgium’s. Spanish banks are heavily exposed to Portugal and the debts of Spanish households and firms are far above the European average. Spanish banks hold up to 200. having carried through a severe policy of cuts. to Portuguese debt and. It will soon be twelfth. The deal has caused a crisis in Fianna Fail.9% next year. Those days are over. The budget will be yet another dose of austerity.Unemployment is over 20%. as other European economies began to experience some kind of sluggish growth. Many of these will be dumped on the market in 2011. This rash decision may end up costing even more than the promised EU/IMF loans of some €85 billion. they will be party to the four-year plan to cut the budget deficit to 3% of GDP by 2014 to comply with the terms of the EU/IMF rescue plan. The Green Party. The full extent of losses on property loans on the banks and the cajas de ahorro (savings banks) are unknown. The political crisis followed swiftly. Fianna Fail will probably be replaced by a Fine Gael/Labour coalition. The situation is similar in Greece. now finds that it cannot raise enough in taxes or grow fast enough to finance a huge amount of borrowing. admitted: “Contagion has spread to Greek debt. the economic crisis immediately becomes a national political crisis.

has even suggested that if the euro did not survive. then…will we end up having to pay for everyone in Europe?” Feeling the pressure. with a GDP and population bigger than these three countries together.8 trillion of debt in 2011. What he is doing satisfied nobody. But the markets are not satisfied. They complain that Zapatero is too soft and gives in to pressure. The markets cannot be controlled by legislation and they are determined to show who is boss. Wolfgang Schäuble. They now swear by all the Gods that the current bond-holders will not have to pay for the bailout for Ireland. It took a long time to get the European Constitution approved by national referenda. their creditworthiness is inextricably connected to the balance sheets of the latter. Zapatero finds himself between a rock and a hard place. Bild asked recently: “First the Greeks. and who is supposed to be consulting members on how to make the necessary treaty-change. Germany – the key to Europe Since governments have taken the decision to underwrite the losses of their big banks. To placate the German electorate. It is too little for the bosses and too much for the workers. He will increasingly have to depend on the Basque and Catalan bourgeois nationalist deputies. when it was set up. The problem is that nobody knows how much the bad debts of the banks are. The unions replied with a general strike. then the Irish. Suddenly Germany is keeping quiet about the need to “make the speculators pay”. but says nothing about it. Germany is now expected to use up all its money and its credit to prop up the entire euro area. the poll ratings of the Socialists have plunged and Zapatero is heading for an electoral humiliation.” The president of the European Council. not antagonize them. the president of the European Council. Schäuble added that “our common currency is at stake. The Market is demanding that Zapatero bends to its will and sacrifices himself on its altar.” Zapatero’s plans to raise the pension age from 65 to 67and to reform the labour market are regarded by the bourgeoisie as excessively timid. which will face huge refinancing in 2011. They complain that pension reform has been postponed until the first quarter of next year and discussions about collectivebargaining mechanism are going too slowly for the liking of the bourgeoisie. they could perhaps manage. Ireland and Portugal. Without this the rescue fund will expire in 2013. It seems certain the PSOE will lose the next general election in 2012. The €750 billion European Financial Stability Facility was not designed to cope with Spain as well as the other three weak euroarea countries. To this figure we need to add the banks that are not on Moody’s list. who not long ago warned that the euro was in “a survival crisis”.market. Similarly Herman Van Rompuy. there seemed little likelihood that it would have to do so. and then it failed. Merkel has said the euro is in an “exceptionally serious” situation. has fallen silent. But will it be prepared to pay for Spain? Merkel and her finance minister. Herman Van Rompuy. Back in May. it relaxes. This applies in particular to European banks. If it were just a question of Greece. He has carried out spending cuts and tax rises in an attempt to reduce the budget deficit from 11% of GDP in 2009 to 6% next year.” says Juan Rubio-Ramírez. are well aware that there is increasing resentment in Germany about euro bail-outs. So far. Nobody knows how much. Germany has backed the bail-outs. This modest proposal immediately set the investors’ nerves jangling. the Spanish government indicates it is going to do some reform. the Belgian foreign minister. they are demanding that the EU treaties must be amended to give permanent status to the European Financial Stability Facility. Thanks to a deal with the Basque Nationalist Party Zapatero’s minority government is able to push through a new austerity budget for 2011. As a result. and in order to combat the impression that they are too generous with German cash. But Spain is a different matter altogether. In any case they have not the slightest idea how such an “anti-speculator” rule would work. the institutions it rates globally will need to roll over $1. But treaty amendment is a complicated business. So the total amount will be much bigger. Steven Vanackere. It is the euro’s fourth-biggest economy. Everybody is trying to pacify the markets. “And as the pressure waters down. neither would the EU. The European Commission was asked to draw up proposals for this mechanism. They want to abolish the system of centralized wage bargaining altogether. they demanded that future bail-outs must include debt-restructuring provisions to impose some losses on investors. the credit agency. a fact to which the German Constitutional Court may draw their attention at some stage. According to Moody’s. preparing the victory of the right wing Popular Party. suggested that they should stop . who will demand a price for their support. They are also demanding reform of the healthcare system. They also know that the 1992 Maastricht treaty contains no-bail-out provisions. although constantly cursing. “Every time international markets put some pressure on our debt. And German insistence on this point is causing friction with other governments who are not keen on EU referenda because of the domestic political problems they cause. But the resources of central banks are not unlimited. Now they expect their losses to be made good by the central banks. a Spanish economist at Duke University. He has cut civil-service pay by 5% and raised VAT in the teeth of a general strike. The latter are seen as a kind of cornucopia – a magical horn of plenty that will supply all the liquidity needed. In the boom years these banks made vast amounts of money from speculation.

with low growth. Some estimate the euro could fall 15% or more against the dollar over the next six to 12 months. This is only the beginning of the beginning of a great historic drama. The immediate cause of both the English Revolution in the seventeenth century and the French Revolution in the eighteenth century was the huge deficits of public spending. Portugal and Spain. or because they are wicked people. When the euro was launched in December 1995 we pointed out that the member states had such fundamentally different economies that they would find it impossible to march to the same fiscal and monetary policies.calling it the “crisis-resolution” mechanism. It is a commonplace that history repeats itself. But now all has changed. Spain and Greece will be under pressure to further intensify the attacks on living standards. but because they have no alternative. Portugal. On the other hand. In both cases the bottom line was the same: who will pay? Everywhere the ruling class wants to put the full weight of its bankruptcy on the backs of the working class. like Japan over the past two decades. And we predicted that in a crisis the euro would collapse amidst mutual recriminations. precipitating a new and even steeper recession on a world scale. but rather a “stability mechanism”.” he said. The capitalists are attacking the workers not from choice. the health of the American finances is no better than those of Europe. Britain’s turn will come. Yesterday in the course of a student demonstration in the centre of London the word Revolution was painted on Nelson’s column. This point is rapidly being reached. In other words: “All roads lead to Ruin”. But Vanackere himself is clearly not convinced that this would work: “It’s like calling the minister of war the minister of peace or the minister of defence. On the basis of a general boom in world capitalism. And although nobody likes to mention it. and it is obliged to underwrite the losses of the entire euro zone. There are now real fears that the euro crisis will spread deeper into the European Union. and cannot be reduced any further. this burden is likely to be more than it can bear. The smiling mask of "capitalism with a human face" has slipped. But in and of themselves they will solve nothing. speculation and austerity. high unemployment and falling living standards. the attempts to bring down the deficit by cutting public spending will reduce demand and can precipitate a new recession. Interest rates are close to zero. The Economist recently warned: “When resources become scarce. Everywhere there is a growing questioning of capitalism and a growing interest in the ideas of socialism and Marxism. which is threatening the very existence of the euro. the collapse of the euro can trigger off a general financial crisis that can put an abrupt end to the present weak “recovery”. But this is now impossible.” That puts it in a nutshell. All the normal mechanisms for getting out of a slump have been already used up during the boom. The general strikes and demonstrations in France. Massive deficits rule out the possibility of large scale public works. The euro is therefore set to fall. Now the EU is desperately trying to halt the spread of the contagion. Europe at a turning-point The threat from the bond markets does not only hang over the heads of weak countries like Greece. the sick. For a while. the European capitalists were able to reach a gentlemen’s agreement. the quarrels about parcelling them out become that much more intense. We explained that it is impossible to unite economies that are pulling in different directions. Europe will be faced with a prolonged period of stagnation. it cannot stay out of the general European crisis. Europe faces a prolonged period of uncertainty. Germany is the strongest economy in Europe. The so-called quantitative easing is a desperate measure that threatens an explosion of inflation in the next period. However. But even in the best case scenario. and nobody knows how far. but nobody knows. crises. Countries like Ireland. but it shows how the situation is developing. not out of altruism but because of the exposure of British banks and other interests to the Irish economy. It hangs over the whole of Europe and threatens to bring the euro crashing down. middle class and the poor and vulnerable sectors of society: the unemployed. Although Britain is not part of the euro zone. It was forced to participate in the Irish bailout. Thus. . The strikes and demonstrations are important because they bring the masses into action and allow them to feel their power. It is only a word. it looked like the euro zone might succeed. As the dominoes fall. Ireland. The reformists believe it is possible to go back to a period when the economic boom that followed World War II allowed the bourgeoisie in Europe and the US to make big concessions to the working class to take the steam out of the class struggle. This is one possibility. The Irish bailout means that the writing is on the wall for the euro. the old and the disabled. Greece. The future of the euro depends exclusively on Germany and the European Central Bank—which are effectively the same thing. Spain and other countries are the first indications of a revival of the European labour movement. to reveal the real face of the bourgeoisie.

The ruling class has no alternative but to continue with their attacks. 2nd December 2010 Europe in Crisis Written by Alan WoodsThursday. After a drunken binge comes a severe hangover. London. Gradually the truth is beginning to dawn on the workers. Governments tried to get out of the slump by stimulating their economies. They are faced with a whole period of cuts and attacks on living standards. The only thing that is propping up the decrepit and diseased capitalist system is the temporary inertia of the masses. In Greece there have been eight or nine general strikes so far this year. the French workers have been in the forefront of militant action. there was a demonstration of 100. Therefore the union leaders have no alternative but to mobilize. However. governments are struggling to bring huge deficits under control. 02 December 2010 The title of The Economist article said it all: “Europe: More pain. They cannot tolerate the continuation of those reforms that were conquered by the workers in the past. All over Europe. The crisis continues The boom years were largely based on a vast expansion of credit. This is only the beginning. In Britain there have been angry demonstrations of students in all the main cities to protest against the proposed increase in student fees. But great events are on the order of the day. And they are reacting. On Saturday 27 November. It is not just that they cannot offer any meaningful reforms. In Spain there was a general strike on 26 September. It indicates that there is ferment at all levels of society and this must find its expression inside the ranks of the labour movement.000 in Dublin. The recent general strike in Portugal was massively supported (80-85 percent. Great events will be necessary to shake this inertia. This is not a transient state of affairs.We are in an entirely new period that will be more similar to the 1970s or the period between the world wars than the last three decades. they pass the bill to the working class and the middle class. The union leaders are desperate to reach a deal with the bourgeoisie but there is a problem: the bourgeoisie has nothing to offer. In order to do this. But the movement is beginning everywhere. And it is a finished recipe for a revival of the class struggle. little gain”. and unprecedented levels of public debt after it. Photo: William MurphyAs always. which was reflected in a huge increase in privatedebt levels before the crisis. even general strikes are not sufficient. in the present conditions. It is a turning point in the history of Europe. In Italy there have been mass demonstrations called by the CGIL and FIOM. IMPACT plackards in Dublin on 27 November. according to the union leaders – the biggest since the Revolution). which only means that the rich . with general strikes and militant mass demonstrations.

One minute they talk about deflation. The realization is gradually dawning on the bourgeoisie that there will not be any serious recovery anytime soon. Here the signs are at best mixed. Worries about sovereign debt continued and the cost of borrowing for both Portugal and Spain rose sharply. As markets woke up to the real state of government finances in the developed world. This resembles the charts placed at the bottom of a critically sick patient in hospital. officials in Portugal and Spain were attempting to sooth the nerves of investors with assurances that their economies and banks did not need a similar rescue. From Portugal the contagion will spread to Spain. Companies were able to shed staff while improving productivity in the remaining labour force. Sooner or later this point will be reached. The key piece in the world economy remains the USA. The chain of European capitalism is breaking at its weakest links. and labour costs will rise. hoped that the help given to Ireland would calm the markets because his country was “clearly suffering from a contagion effect”.5% at an annual rate. about the same proportion as in September. But the news was overshadowed by the Federal Reserve’s bleak assessment that the unemployment rate would remain high for longer than it had predicted.world has lots of money to pay back. punctuated by sudden bouts of panic.9% lower than in October 2009. They hope that emerging markets will produce big enough profits to rescue them. there was increasing nervousness about the problem of sovereign debt. The trouble is that nobody believes them. But finally there is no real confidence in anything. And after Spain comes Italy and Britain will not be far behind. In 2011 the amounts of government debt maturing in America and the euro area will be even bigger than those in 2010. Sales of homes that are in foreclosure or other distressed financial situations accounted for 34% of the total for October. The spread on Spain’s ten-year government bonds over that on German Bunds jumped to its highest since the introduction of the euro. Indeed. This is one of the reasons why any recovery will be delayed and there will be one crisis after another. But this does not seem sustainable in the long term. The mood is one of pessimism.5 trillion. And the problem is set to get a lot worse. It will amount to some $3. But this is an explanation that explains nothing. stock markets are faltering again.2% lower in October than in September. Some economists are comparing this to the situation in 1929-49 or in 1965-82. Talk of “green shoots” is no longer heard. Either the economy will recover. At the moment attention is focused on the peripheral euro-zone economies (Ireland. Ireland’s bailout is an even bigger blow to the euro than Greece because major European banks hold more of Ireland's debt. Portugal is next. dropping to only about 9% by the end of 2011.” . according to Bloomberg. compared with $3. The number of previously owned homes sold in America was 2. The US economy grew faster in the third quarter than previously thought: by 2. the rebound in profits in 2009-10 owed much to an improvement in margins. Portugal. in many ways the international crisis of capitalism continues to worsen. against an initial estimate of 2%. then this gloomy dividend assessment will probably be correct. the next minute they fret about the danger of inflation. Portugal’s prime minister. or the high level of unemployment will weigh on demand and revenues will suffer. After the recovery in 2009.1 trillion. Where are the green shoots? The crisis of the euro is attributed to “lack of confidence”. While the European Union and IMF were in Dublin haggling over the details of a bail-out for Ireland. After all. But with every new link that snaps the strength of the whole chain is tested to breaking point. José Sócrates. The bourgeoisie is suffering from a kind of collective schizophrenia. The US housing market remains depressed. The nervousness of the bourgeois finds its expression in the gyrations of the stock markets of the world. and 25. Why was there confidence before and why is there no confidence now? The answer is that the capitalists (aka the “investors” or “the market”) see no prospect of an early recovery of the world economy. The Economist recently gave a pessimistic appraisal of the situation: “If the outlook is for years of low economic growth. The economists cannot make their mind up and are giving contradictory advice. and Greece).

the austerity programmes in Europe will solve nothing but only make the crisis worse. but also in those of Portugal and Spain.3 billion in the third quarter. When the deal was announced bond yields in Ireland initially fell to 7. Under the pressure of such criticism. China is a very successful exporter. to export less and import more. someone else must act as a net importer. Immediately they began to unload the debt of the most exposed countries. and in order for someone to devalue their currency. someone else must let their currency rise. since a huge stand-by fund means that there is an investor of last resort in place for euro-zone debt. It is in this context of extreme global volatility that we must see the crisis of the euro. the Chinese make use of currency depreciation as a way of cheapening their products. Government bonds have traditionally acted as the safe havens of financial markets. the bourgeois are increasingly resorting to an even older bolt-hole: gold. This is a slippery path that can lead to a series of competitive devaluations as countries intervene to push down the value of their currencies to secure an advantage over their rivals. China’s current-account surplus rose to $102. they are complaining about the Yuan. but later Standard & Poor’s promptly downgraded Irish government debt from AA. But this time the big credit-rating agencies reacted negatively. This is an extremely dangerous situation. trying to reassure the markets by carrying out brutal cuts in the name of “budget discipline”. The result could be increasing protectionism as countries accuse each other of “artificially” gaining market share. particularly in Europe. and in order to avoid protectionist measures. leaders of the European Union agreed that they should re-open the treaties “to establish a permanent crisis mechanism” that would include “the role of the private sector”. double the amount from a year earlier and about 7. while trying not to inflict irreparable damage on their economies. exporting their way to recovery. especially in America. is a graphic reflection of the fear of inflation among investors and their lack of confidence in the existing currencies. and Moody’s promised a “multi-notch downgrade”. With Chinese exports soaring to new levels. the markets rallied. Suddenly currencies dominate the headlines. The doubts about the creditworthiness of Greek or Portuguese bonds only mean that investors will opt for the security of German government bonds or US Treasuries. It is quite possible that the recovery will be undermined by the tightening of fiscal policy. But this is like trying to square the circle. this means exporting unemployment.2% of GDP. and they also know that such methods inevitably lead to an explosion of inflation further down the road. Let us recall that what transformed the 1929 Crash into the Great Depression was precisely protectionism and competitive devaluations. But this by no means guarantees the future of the euro. they were soon disabused. China is being constantly criticized for its undervalued currency. In order to keep their exports attractive to American and European consumers. Who pays? Governments are walking a tightrope. On October 29th.Protectionist tendencies Contradictions are emerging at all levels. The bail-out packages for Greece and Ireland were meant to prove to the financial markets that the euro would be safe in 2011. but the increase was so small as to be meaningless. The irresistible rise of gold. There is already talk of currency wars. But Beijing does not seem in any hurry to follow this benign advice. Western governments are pressing China to do more to “address its trade imbalances”. namely Ireland and Portugal. which has reached an all-time high. In the end. that is.93%. On November 21st the Irish government finally yielded to pressure from the European Union to seek an emergency bail-out from the EU and the IMF in the region of €85 billion ($115 billion). If they are not worrying about the euro or the dollar. The markets took this as a sign that bond-holders would be made to pay for future bailouts of troubled euro-zone members. and consequently has accumulated a substantial trade surplus. Put in other words.to A. the markets calmed down for a while. there was a slump not only in Irish assets. But since even these are now regarded with suspicion. They know that in the past governments have used inflation as a way of dealing with a heavy debt burden. If the Irish thought they would be rewarded by investors after agreeing to the deal. Other countries are trying to follow the same road as China. Beijing did allow the Yuan to rise against the dollar. Whereas after the bail-out of Greece in May. When the Greek government obtained a €110 billion bail-out in May and a joint EU/IMF fund worth €750 billion was put in place to finance this. But there is a small problem with this: in order for somebody to export. .

the European economic commissioner. As recently as 2007 the Spanish economy had one of the highest growth rates in Europe. with Portugal next in line. The situation is similar in Greece. They know that the latest deal will not eliminate Ireland’s debts. the bail-out had failed even before the ink was dry on the paper it was written on. In Ireland Brian Cowen still has to pass the 2011 budget in early December. they will be party to the four-year plan to cut the budget deficit to 3% of GDP by 2014 to comply with the terms of the EU/IMF rescue plan. This is what we meant when we predicted that every attempt to restore the economic equilibrium will destroy the social and political equilibrium. which has a poll rating of 17%. where the government. As a result a general strike was called. these countries are insolvent: that is. Since he was finance minister while the Irish bubble inflated and prime minister when it burst. savage welfare and public-sector pay cuts and a reduction in the minimum wage. TheIrish Times openly wondered if the 1916 Easter rising had been in vain. This rash decision may end up costing even more than the promised EU/IMF loans of some €85 billion. It is Germany that holds the purse strings of the EU. It was Germany that (reluctantly) put its hands in its pockets to bail out Greece and Ireland. especially when bank deposits continue to flow out of the country. its lowest ever. And from Portugal to Spain Spain went up like a rocket and has come down like a stick. The reason is simply that international Moneybags do not believe that these countries will be able to repay their debts. he then signed a humiliating deal that not only commits Ireland to pay a huge bill but gives EU commissioners powers to see that it keeps its word. Thus. against which it is pointless to protest. From Ireland to Portugal… After Ireland the markets are now turning their attention to the Iberian countries. as they are doing. let alone repay them. The deal has caused a crisis in Fianna Fail. But the markets are convinced that the problems go deeper. which was widely followed. Like Ireland. in plain language.Within 24 hours. Now Germany faces the same dilemma. they cannot afford even to service their debts. forcing an early election. After the rescue of Bear Stearns in March 2008 there was such an outcry that the American government was unwilling to save Lehman Brothers in September. Even that may not be enough to get the budget through. tax rises. Fianna Fail. Portugal is another weak European economy. But this has its limits. declared that it would walk out in January. Greece and Portugal only needed to borrow a certain amount of cash to help them solve their difficulties. Fianna Fail will probably be replaced by a Fine Gael/Labour coalition. However. Those . This has provoked a hue and cry in Ireland about “loss of sovereignty”. insisted that Brussels would not interfere in Irish politics. That is why some of its parliamentary group have been calling for Cowen’s resignation. The budget will be yet another dose of austerity. and that. Olli Rehn. it experienced a feverish housing boom that ended in collapse. but simply refinance them. is heading for the greatest electoral defeat in its history. Portuguese and Spanish government debt over German bonds had grown wider than before the deal was announced. though not before they help to pass the 2011 budget on December 7th. the dominant party in Ireland ever since the country’s independence in the 1920s. In order to please the markets the Socialist-led government of José Sócrates announced a package of cuts. The men of money suspect that the debts of Irish banks are far worse than what has been hitherto admitted and are worried by the Dublin government’s decision in September 2008 to guarantee all the liabilities of these banks. If it were the case that Ireland. But it is not a question of if Lisbon will seek a bail-out but when. In other words. After repeated denials that he was seeking a bail-out. but added that “stability is important”. It was similar to what happened in 2008. It is clear that Portugal will be forced to follow Ireland’s path. Cowen’s Fianna Fail’s coalition partner. They are therefore putting excruciating pressure on the Irish government to push through an austerity budget before a general election can be called. including for 2011 €6 billion in spending cuts. They do not seem to understand that real sovereignty lies with the almighty Market. suffering from slow growth and a big budget deficit. the economic crisis immediately becomes a national political crisis. The spread on Spanish bonds reached its highest since the euro’s launch in 1999. in fact. The political crisis followed swiftly. all these rescue plans and bailouts solve nothing. his credibility is now zero. The Green Party. On November 23rd Portugal was paying over four percentage points more than Germany to borrow money. the EU rescue plan might work. Thus. just weeks before its bail-out. This is similar to what Greece was paying in mid-April. now finds that it cannot raise enough in taxes or grow fast enough to finance a huge amount of borrowing. when the frantic efforts to revive the American banks produced only temporary rallies. the spreads of Irish. having carried through a severe policy of cuts.

Wolfgang Schäuble. It will soon be twelfth. A few days ago the Bank of Spain’s governor. Ireland and Portugal. He has carried out spending cuts and tax rises in an attempt to reduce the budget deficit from 11% of GDP in 2009 to 6% next year. Zapatero is being forced to do the bidding of the market. As a result. But Spain is a different matter altogether. Germany is now expected to use up all its money and its credit to prop up the entire euro area. But will it be prepared to pay for Spain? Merkel and her finance minister. What he is doing satisfied nobody. It is the euro’s fourth-biggest economy. with a GDP and population bigger than these three countries together. To begin with. they could perhaps manage. when it was set up. there seemed little likelihood that it would have to do so. who will demand a price for their support. the institutions it rates globally will need to roll over $1. then…will we end up having to pay for everyone in Europe?” .” Although Spain’s national debt was only 53% of GDP last year . The unions replied with a general strike. Many of these will be dumped on the market in 2011. preparing the victory of the right wing Popular Party. He has cut civil-service pay by 5% and raised VAT in the teeth of a general strike. Germany has backed the bail-outs.000 newly built homes as part of €60 billion-worth of real estate taken in debt-forasset swaps with bankrupt developers. India and Canada. In the boom years these banks made vast amounts of money from speculation. a fact to which the German Constitutional Court may draw their attention at some stage. That is to say. But the resources of central banks are not unlimited. To this figure we need to add the banks that are not on Moody’s list.21 points below the EU average – it is now firmly in the sights of the speculators. They complain that Zapatero is too soft and gives in to pressure. In 2010. Spanish banks are heavily exposed to Portugal and the debts of Spanish households and firms are far above the European average. the Spanish government indicates it is going to do some reform. He will increasingly have to depend on the Basque and Catalan bourgeois nationalist deputies.Unemployment is over 20%. The €750 billion European Financial Stability Facility was not designed to cope with Spain as well as the other three weak euroarea countries. Bild asked recently: “First the Greeks. According to Moody’s. to our own debt as well as Italy’s and even Belgium’s. The Economist put it bluntly in an editorial entitled: To stop the euro’s meltdown. a Spanish economist at Duke University. behind Russia. They want to abolish the system of centralized wage bargaining altogether. So far. Spanish banks hold up to 200.9% next year. The latter are seen as a kind of cornucopia – a magical horn of plenty that will supply all the liquidity needed. Thanks to a deal with the Basque Nationalist Party Zapatero’s minority government is able to push through a new austerity budget for 2011. “And as the pressure waters down. This applies in particular to European banks. It is too little for the bosses and too much for the workers. In 2009 it was the world’s ninth-biggest economy. The current-account deficit is still over 4% of GDP. What happens in Spain will have a crucial effect on the future of the euro. So the total amount will be much bigger. Zapatero finds himself between a rock and a hard place. They also know that the 1992 Maastricht treaty contains no-bail-out provisions. The markets fear that Spain’s economy will fail to grow. But the markets are not satisfied. When the construction bubble collapsed it dragged the whole economy down with it. They are also demanding reform of the healthcare system. the credit agency. In 2011. The full extent of losses on property loans on the banks and the cajas de ahorro (savings banks) are unknown. are well aware that there is increasing resentment in Germany about euro bail-outs. The OECD predicts that Spain’s GDP will shrink slightly this year and grow by just 0. If it were just a question of Greece. as other European economies began to experience some kind of sluggish growth. the poll ratings of the Socialists have plunged and Zapatero is heading for an electoral humiliation. Spain’s GDP is expected to expand by less than 1%.8 trillion of debt in 2011. to a lesser degree. Germany – the key to Europe Since governments have taken the decision to underwrite the losses of their big banks. although constantly cursing. Zapatero must revive Spanish reform. the socialist government must bring in austerity measures to cut the budget deficit. The Market is demanding that Zapatero bends to its will and sacrifices himself on its altar. Like Portugal and Greece its growth is low and unemployment is over 20%. depressing house prices still further. Back in May. admitted: “Contagion has spread to Greek debt. to Portuguese debt and. while inflation is higher than in Germany. Spain’s economy shrank. Miguel Fernández Ordóñez. which will face huge refinancing in 2011. Now they expect their losses to be made good by the central banks.” says Juan Rubio-Ramírez.” Zapatero’s plans to raise the pension age from 65 to 67and to reform the labour market are regarded by the bourgeoisie as excessively timid. Nobody knows how much. their creditworthiness is inextricably connected to the balance sheets of the latter. it relaxes. It seems certain the PSOE will lose the next general election in 2012. “Every time international markets put some pressure on our debt. then the Irish.days are over. They complain that pension reform has been postponed until the first quarter of next year and discussions about collectivebargaining mechanism are going too slowly for the liking of the bourgeoisie. The problem is that nobody knows how much the bad debts of the banks are.

Portugal. This point is rapidly being reached. and it is obliged to underwrite the losses of the entire euro zone. And German insistence on this point is causing friction with other governments who are not keen on EU referenda because of the domestic political problems they cause. but rather a “stability mechanism”. The Economist recently warned: “When resources become scarce.” he said. but nobody knows. Britain’s turn will come. Portugal and Spain. and then it failed. They now swear by all the Gods that the current bond-holders will not have to pay for the bailout for Ireland. the health of the American finances is no better than those of Europe. Now the EU is desperately trying to halt the spread of the contagion. This modest proposal immediately set the investors’ nerves jangling.” The president of the European Council. Schäuble added that “our common currency is at stake. But this is now impossible. When the euro was launched in December 1995 we pointed out that the member states had such fundamentally different economies that they would find it impossible to march to the same fiscal and monetary policies. However. has even suggested that if the euro did not survive. Herman Van Rompuy. Suddenly Germany is keeping quiet about the need to “make the speculators pay”. Ireland. Steven Vanackere. On the basis of a general boom in world capitalism. The euro is therefore set to fall. It hangs over the whole of Europe and threatens to bring the euro crashing down. the president of the European Council. It was forced to participate in the Irish bailout. In any case they have not the slightest idea how such an “anti-speculator” rule would work. and in order to combat the impression that they are too generous with German cash. but says nothing about it. not out of altruism but because of the exposure of British banks and other interests to the Irish economy. crises. In other words: “All roads lead to Ruin”.” That puts it in a nutshell. Europe at a turning-point The threat from the bond markets does not only hang over the heads of weak countries like Greece. The so-called quantitative easing is a desperate measure that threatens an explosion of inflation in the next period. Massive deficits rule out the possibility of large scale public works. To placate the German electorate. Similarly Herman Van Rompuy. Although Britain is not part of the euro zone. Without this the rescue fund will expire in 2013. On the other hand. who not long ago warned that the euro was in “a survival crisis”. speculation and austerity. But now all has changed. But treaty amendment is a complicated business. this burden is likely to be more than it can bear. But Vanackere himself is clearly not convinced that this would work: “It’s like calling the minister of war the minister of peace or the minister of defence. has fallen silent. which is threatening the very existence of the euro. and cannot be reduced any further. And although nobody likes to mention it. and nobody knows how far. suggested that they should stop calling it the “crisis-resolution” mechanism. neither would the EU. the attempts to bring down the deficit by cutting public spending will reduce demand and can precipitate a new recession. Germany is the strongest economy in Europe. it cannot stay out of the general European crisis. . it looked like the euro zone might succeed. There are now real fears that the euro crisis will spread deeper into the European Union. The Irish bailout means that the writing is on the wall for the euro. All the normal mechanisms for getting out of a slump have been already used up during the boom. the quarrels about parcelling them out become that much more intense.Feeling the pressure. they demanded that future bail-outs must include debt-restructuring provisions to impose some losses on investors. the European capitalists were able to reach a gentlemen’s agreement. Everybody is trying to pacify the markets. Spain and Greece will be under pressure to further intensify the attacks on living standards. Europe faces a prolonged period of uncertainty. We explained that it is impossible to unite economies that are pulling in different directions. The future of the euro depends exclusively on Germany and the European Central Bank—which are effectively the same thing. And we predicted that in a crisis the euro would collapse amidst mutual recriminations. the Belgian foreign minister. Countries like Ireland. and who is supposed to be consulting members on how to make the necessary treaty-change. The European Commission was asked to draw up proposals for this mechanism. The reformists believe it is possible to go back to a period when the economic boom that followed World War II allowed the bourgeoisie in Europe and the US to make big concessions to the working class to take the steam out of the class struggle. As the dominoes fall. Some estimate the euro could fall 15% or more against the dollar over the next six to 12 months. Merkel has said the euro is in an “exceptionally serious” situation. The markets cannot be controlled by legislation and they are determined to show who is boss. It took a long time to get the European Constitution approved by national referenda. they are demanding that the EU treaties must be amended to give permanent status to the European Financial Stability Facility. For a while. Interest rates are close to zero. not antagonize them.

the collapse of the euro can trigger off a general financial crisis that can put an abrupt end to the present weak “recovery”. The smiling mask of "capitalism with a human face" has slipped. The capitalists are attacking the workers not from choice. the sick. Inside Venezuela. "more tolerant legislation". It is a commonplace that history repeats itself. the old and the disabled. with low growth. no matter how loud it shouts. 2nd December 2010 Where is the Venezuelan Revolution going? A contribution to the discussion on property and the tasks of the revolution Written by Alan WoodsFriday. Added to this we have the events in Ecuador with the attempted coup d'etat against Rafael Correa. If these criticisms have annoyed some people. The strikes and demonstrations are important because they bring the masses into action and allow them to feel their power. The opposition has organized a noisy campaign in the media to present themselves as "winners". The general strikes and demonstrations in France. Greece. But I have always spoken my mind honestly and made criticisms that I considered to be just. Yesterday in the course of a student demonstration in the centre of London the word Revolution was painted on Nelson’s column. In both cases the bottom line was the same: who will pay? Everywhere the ruling class wants to put the full weight of its bankruptcy on the backs of the working class.Thus. but because they have no alternative. Europe will be faced with a prolonged period of stagnation. This is only the beginning of the beginning of a great historic drama. but it shows how the situation is developing. to reveal the real face of the bourgeoisie. My personal loyalty to the Revolution cannot be doubted. like Japan over the past two decades. Foto: Que ComunismoIn the outside world. which is a direct warning to the Chavez government. the election has served to embolden the counterrevolutionaries. What is the purpose of this campaign? A minority cannot turn itself into a majority. the aim is to step up the campaign of disinformation about the situation in Venezuela that is being systematically organized by the imperialists and their hired media. the opposition wants to use the election result to influence public opinion. Spain and other countries are the first indications of a revival of the European labour movement. We are in an entirely new period that will be more similar to the 1970s or the period between the world wars than the last three decades. despite the fact that they lost. It is only a word. precipitating a new and even steeper recession on a world scale. who were elected to the National Assembly while in prison for corruption and murder. I am very sorry. Great events will be necessary to shake this inertia. But great events are on the order of the day. . The author of these lines has consistently supported the Bolivarian Revolution and defended it against its enemies. high unemployment and falling living standards. pressing for "pluralism". This is one possibility. The immediate cause of both the English Revolution in the seventeenth century and the French Revolution in the eighteenth century was the huge deficits of public spending. The fate of the Revolution is too important for it to be decided by diplomatic considerations. Biagio Pilieri and José "Mazuco" Sánchez. But I will not cease to defend my point of view in order to avoid treading on a few toes. Everywhere there is a growing questioning of capitalism and a growing interest in the ideas of socialism and Marxism. But in and of themselves they will solve nothing. But even in the best case scenario. London. They have even insolently demanded the "liberation” of two prisoners. middle class and the poor and vulnerable sectors of society: the unemployed. The only thing that is propping up the decrepit and diseased capitalist system is the temporary inertia of the masses. 29 October 2010 The September elections have posed some serious questions before the Bolivarian Revolution. As we predicted. But such a campaign can be advantageous to the counterrevolutionaries both inside and outside Venezuela. or because they are wicked people.

The reformists defend the existing bourgeois order. legal or illegal. In order to defend the Revolution. take a step back and arrive at a compromise with the bourgeoisie and the opposition in the “national interest”. In the course of his speech.” he said. is sabotaging production. The only difference between them is that the open counterrevolutionaries do not hide their hatred of the Revolution and their determination to overthrow it by every means at their disposal. It has saved the Revolution at every critical juncture. But there are also some false friends: people who originally showed no interest in the Bolivarian Revolution. Some. only to end up in the camp of the counterrevolution? A true friend is not somebody who constantly praises you and agrees with everything you say. following the recent elections to the Venezuelan National Assembly. President Chavez made a speech in the Teatro Teresa Carreño at a meeting with the newly elected PSUV members of the National Assembly. say that what the elections showed is a growing discontent and impatience among the masses with the slow pace of the Revolution. the revolutionary youth and the progressive intellectuals. will argue in the following way: the elections prove that we do not have sufficient support to press ahead with revolutionary policies and expropriations that will alienate the middle classes. but they conceal this fact under a hypocritical guise of “moderation”. How many flatterers have passed through Miraflores in the last eleven years. There is no doubt that the election result represented a victory in the sense that the Revolution successfully blocked the counterrevolution. the consequences for the Revolution will be very serious indeed. but in reality they show not the slightest interest in fighting for socialism. They applaud politely when Chavez makes a speech. What does this mean? The forces that support the Revolution are very clear: the workers. like Vice-president Elías Jaua. We must therefore slow down the pace of change. It is therefore necessary to arrive at a balanced appreciation of the elections that really takes into account the mood of the different classes in society. A true friend is somebody who is not afraid to look you straight in the eye and say: “My friend. the need “not to go too fast”. this shows that the Revolution still has important reserves of support in the masses. Ultimately. Chavez said that the causes for the loss of one million votes (since 2009) must be investigated and admitted that it might be a reflection of local or regional problems. The counterrevolutionaries are taking advantage of the economic sabotage to attack and undermine the Revolution. The bourgeoisie. without any doubt.The Bolivarian Revolution has many friends as well as enemies. They are honest and loyal friends. which they attempt to disguise with a false “democratic” rhetoric. revolutionary youths and progressive intellectuals.” The recent election results revealed both the strong and the weak points of the Bolivarian Revolution. The Marxists. and later jumped on the bandwagon. “not to alienate the middle class”. who represent the influence of bourgeois ideas within the Bolivarian Movement. It saved it again in the 26 September elections. They already represent a “popular bloc”. all the living forces of Venezuelan society. whether parliamentary or extra-parliamentary. advocate “a Great Patriotic Bloc”. will argue that it shows that the Revolution is in retreat and that the opposition is now in a position to win a majority in the Presidential elections of 2012. What conclusions should we draw from the election results? The answer to this question depends on one's point of view. who represent the most consistent revolutionary trend. The whole speech can be found online in sixteen parts: Chávez: "la extrema derecha nunca abandonará la carta del golpismo" The speech makes many correct points. But how long can this loyalty be maintained unless the Revolution is carried through in a determined manner? What conclusions should we draw? On October 2nd. that is to say. to end their power once and for all. I think you are making a mistake. it will depend on the interests of which class you defend. refusing to invest and closing factories. peasants. Unless we recognise these problems and take steps to correct them. It is easy to see that the first two trends are in fundamental agreement. the peasants. which was attempting to win a majority of the National Assembly. It showed the loyalty and determination of the workers and peasants to defend the Revolution and defeat the counterrevolution. This determination of the masses has been the motor force of the Revolution from the beginning. After eleven years. But it is equally undeniable that the opposition has advanced and is in a stronger position than it was before. What . peaceful or violent. The reformists. which still controls key points in the Venezuelan economy. The counterrevolutionaries who defend the interests of the oligarchy. The President emphasised the success of the PSUV in preventing the victory of the counterrevolutionary opposition. the urban poor. The vast majority of its friends are ordinary workers. it is necessary to take serious measures against the landlords and capitalists. “We defeated the counterrevolution. not to be “too extreme” and so on and so forth. Flatterers are not real friends but hypocritical mercenaries who will desert you in the hour of need.

the division Between Opposition and Revolution]. “To be a capitalist. Let us see. Capital is a collective product. self-earned property! Do you mean the property of the petty artisan and of the small peasant. It has never been the intention of the Marxists to expropriate the property of the middle classes.” And he warned: “There is no conciliation with the bourgeoisie and the counterrevolution. can it be set in motion. It creates capital. self-acquired. Let us examine both sides of this antagonism. Property. It is only the social character of the property that is changed. This is obviously true. because we have to expropriate all the banks and all the companies and I do not know how many other things. It is both possible and necessary to win over a large section of the middle class. which is a thorough transformation to the benefit of the workers and peasants. The next step will be to say: We cannot go too fast. “Or do you mean the modern bourgeois private property? “But does wage labour create any property for the labourer? Not a bit. This is a trap for the Revolution.e. But such a thing does not exist and has never existed. “Capital is therefore not only personal. it is important to note that although we accept and act within this reality. the President criticises what he refers to as “extremist” views expressed by some (unnamed) people: “There are other opinions. This morning in 'The Lines of Chavez' I have tried to get as close as possible to the truth.. and the President added: “There are not four or five million oligarchs”. “When. that kind of property which exploits wage labour. The question is: how is this to be achieved? The question of the middle class and how to win it is obviously a key issue. He stressed that there will be no reconciliation with the counterrevolutionary opposition and that there is no prospect of compromise with the bourgeoisie. is to have not only a purely personal. the President showed he was aware of this danger. which can only alienate the mass of the petty bourgeoisie and push them into the arms of the counterrevolution. Many middle class people and small proprietors have indeed been poisoned and deceived by the opposition. It loses its class character. Impatience is a mistake and to proceed too fast. In his speech the President says: "Within this bipolar Venezuelan reality [i. I think that nobody here. i. and not to get carried away either by one extreme or the other. in the last resort. It is necessary to win them away from the counterrevolution.. How to win the middle class An argument often used by the reformists is that it is necessary to win over the middle class and therefore we must not go too far in attacking capitalism. like those who say: 'We did not reach our goal' or 'they beat us because the revolution has not advanced. it is a trend that advocates expropriation of everything.” This will be welcomed by every genuine revolutionary. but a social status in production. in its present form. and only by the united action of many members. this is extremely dangerous because it will weaken the revolution and divert it from its real aim. therefore. but it directly contradicts the second half. and is still destroying it daily. Answering the reformists who advocate a “third way” between capitalism and socialism. it is a social power. etc. The first half of this statement is correct. too soon can be as dangerous as to do the opposite. but we will never succeed in doing this if we accept the policies of the reformists. nay. honestly. into the property of all members of society. an ultra-left policy that would alienate the middle class. capital is converted into common property. including small businesses. This was already explained in The Communist Manifesto where Marx and Engels speak on private property: “We Communists have been reproached with the desire of abolishing the right of personally acquiring property as the fruit of a man’s own labour. is based on the antagonism of capital and wage labour. But what does this extremism consist of? According to the President. a form of property that preceded the bourgeois form? There is no need to abolish that. only by the united action of all members of society. As we shall see. Chavez said: “There is no room in this Revolution for a third way.” These words of Marx and Engels adequately convey the position of the Marxists with regard to private property. activity and independence. But elsewhere in his speech. personal property is not thereby transformed into social property.e. It must strive to adopt a correct line that will enable it to defeat its enemies and advance to the attainment of its fundamental goals. we will not become a sectarian . “Hard-won.other forces do you want to include? This ambiguous language is intended as a screen to include the so-called progressive national bourgeoisie. We must take into consideration the views of our bourgeois “allies”! We must not alienate the middle class etc. and which cannot increase except upon condition of begetting a new supply of wage labour for fresh exploitation. the development of industry has to a great extent already destroyed it. should get carried away by their particular opinion or personal views. No conciliation with the bourgeoisie! In his speech.” It is self-evident that the Revolution must strive to avoid extremes. which property is alleged to be the groundwork of all personal freedom.

On the contrary. – stand closer to the working class and can be won over. that Fidel is unhappy. the way to win over the lower ranks of the petty bourgeoisie is not to make concessions to their leaders (really their political exploiters) but to take the offensive against the big bankers and capitalists. The nationalization of the big fertilizer plants will enable it to sell cheap fertilizer to the peasants. to show an attitude of absolute firmness and decision. They could not rule without the help of a large number of subexploiters and sub-sub exploiters. to be dismissed as enemies of the revolution. while reducing prices to the consumer. we can provide the peasants with a guaranteed market and a fair price for their products. fanatically opposed to the masses. but only against the one-tenth of the population who have the lion’s share of property in this society. The exploiting classes are a small minority of society. The way to win them over. There are contradictions within the middle class that can be expressed in splits in the opposition. However. is by carrying out measures to expropriate the big capitalists and adopting measures in the interests of the small shopkeepers and small businessmen. Under the false flag of “democracy” they have organized street riots and clashes. It would be madness!” To propose the expropriation of all small businesses and small industry would most certainly be madness. Neither are the small proprietors. are absolutely false. The measures taken by a revolutionary government are not aimed at the property of the workers and peasants or the small proprietors who make up nine-tenths of the population. We have no intention of nationalizing small businesses. The upper layers of the middle class are composed of privileged elements – prosperous lawyers. It must be made clear that these measures of nationalization are aimed only at the big capitalists. But in order to do this. etc. bank managers and politicians – who stand close to the oligarchy and are its willing servants. We will appeal to the small shopkeepers. to support the programme of nationalization. the petty bourgeoisie is not a homogeneous class. What we advocate is the expropriation of the property of the oligarchy: the big banks. And of course the rumours that imperialism has been circulating around. And there is something that we have to understand: the middle class is not an enemy of the revolution! “No. At one point he says: “Over there in Cuba they are making a profound self-criticism and taking bold decisions. which they see as a threat to their own privileges. Referring to the recent reforms announced by Raúl Castro he says: . the banks and industry. It is important to analyze what is happening in Cuba. but they are really just human dust. Someone told me long ago that we do not have a policy toward the middle class. This dictatorship oppresses not only the workers but also the middle class. distribution and transport companies. The lower layers – the small shopkeepers. university professors. on the contrary. The nationalization of the commanding heights of the economy is not an act of aggression or revenge but. However. based on the collective ownership of the land. It seems that we are handing the middle class over to the enemy. that there are differences between Raul and Fidel. and anyone who advocated such a thing would deserve to be referred to the nearest psychiatric clinic. But the Marxists have never advocated such a thing. small peasants. Neither do we consider the middle class as one reactionary mass. A section of the opposition consists of people who have been deceived by the counterrevolutionaries. they have mobilized the mass of middle class Venezuelans to oppose the revolution. a necessary means of defence of the revolution. since they are utterly dependent on the big banks. Cuba In his speech. which is in their interests. They can be won over to the side of the revolution. easily scattered to the wind when confronted with the movement of the masses. The nationalization of the banks will enable the government to grant small businesses cheap and easy credit. supermarkets. And by eliminating the middlemen and nationalizing the big supermarkets. No! I know them and know how they complement each other".extreme. The enraged petty bourgeois resent the concessions made to the poor. Just look at Cuba. we consider it essential to develop policies that are capable of winning over important sections of the middle class and breaking the hold of the oligarchy over them. etc.. we must have a correct understanding of the position of the middle class (the petty bourgeoisie) in capitalist society. They make a lot of noise when required. the President made a number of references to Cuba. Using their economic power and their control of the mass media. Their shock troops are the sons of the rich the “sifrinos” – wealthy parasites. These play no independent role in the economy. monopolies and latifundia. bank clerks. Especially when we consider the positions taken by some comrades and some revolutionary analysts who would be very happy if tomorrow I would sign a decree expropriating all small businesses and small industry. etc. bankers and landowners. What is needed is not the hollow fraud of formal bourgeois democracy – in which real power is in the hands of the big banks and monopolies – but a real democracy – a democracy of the working people. They must be convinced that the revolution is invincible and that their interests are best served by joining forces with the working class against the big banks and monopolies. however. The so-called bourgeois democracy is a gigantic fraud. farms or shops. behind which lurks the DICTATORSHIP OF BIG CAPITAL.

there is no argument against expropriating the banks and big monopolies. all were nationalized. advierte la ONU) If we wish to understand the reasons why people who support the Revolution abstain in elections (and this is a vital question for the future of the Revolution). because the richest 10% has 36. There is no such thing as a static model. when the economy was booming. whereas the rich are getting richer.000 small businesses. 2010) revealed that the private banks had obtained US$2. this is not the place to deal with this in detail. and therefore of socialism in Venezuela. we must begin here. Venezuela is the fourth most unequal country in Latin America. When a Bolivarian worker sees that his wage is not enough to last to the end of the month. Now they are opening up. many people in Cuba are very concerned about the impact of these measures and the danger of capitalist counterrevolution. But are we entitled to say that it has reached its fundamental goals? No. which only resulted in the creation of a further layer of bureaucracy to oversee and manage these really small productive units. And yet we ourselves are guilty. after eleven years in power. It means that eleven years later. particularly as it is a very widely discussed theme in Venezuela.. etc. as long as the state maintains firm control over the commanding heights of the economy. There is no argument in favour of expropriating small businesses in Venezuela..615 billions in profits in 2009.” (Sector privado aún controla dos tercios de la economía en Venezuela) This is not a question of barbers’ shops or small businesses in general. and was the basis on which the Revolution could break with capitalism and make important gains. This was always a Stalinist caricature. he begins to lose confidence in the Revolution.9%. the Bolivarian government has not yet taken the decisive step. shoe repair shops. Ice cream vendors. They're going to take everything away from us'. In Cuba for all these years. “They also note that state enterprises are still a relatively modest proportion of the economy. Can anyone think that the Bolivarian Revolution will nationalize the butcher shops. and only on that condition. it is inevitable that elements of capitalism will continue to exist alongside the elements of a socialist planned economy. and that's not a step back! It's like Raul said: 'The updating of socialism'. I think. But in the first place. and this fact was confirmed by the President in his speech at the Extraordinary Congress of the PSUV. who are determined to overthrow it by any means at their disposal.1% of its resources. a small private sector could and should be allowed. and that prices are rising. 19th July. when 58. . Certain things flow from this. the ice cream shops. In Cuba the Revolution nationalized the banks and other key sectors of the economy almost from the start. that should pose no threat to socialism. down to the last barber shop. Cuba or anywhere else. As long as this situation is allowed to continue. partly because the private sector grew faster than the public between 2003 and 2006. there is a big difference between the Cuban economy and the Venezuelan economy. according to estimates by the Central Bank of Venezuela. a measure that would allow 150 'self-employed'. we cannot. but of key parts of the Venezuelan economy. However. the Venezuelan oligarchy still exercises a stranglehold on key points of the Venezuelan economy. the private sector accounted for 70% of gross domestic product (GDP). According to a UN report. In the transition towards socialism. The public sector was 30%. while the poorest are forced to survive on 0. were expropriated. This was a completely unnecessary step. In Cuba the nationalization of all small and medium enterprises took place as part of the “Revolutionary Offensive” in 1968. But in Venezuela. as long as the key points of the economy remain in the hands of the state." It would be worth dealing with what is happening in Cuba. all shops in Caracas where people buy shoes and clothes? "Sometimes we ourselves are making people to naively think this is true.8% of the money and the richest 30% controls 65. On that condition. El Universal.."The Cuban government has authorized . That includes a certain number of small businesses. including 11% in taxes on products. the hairdressers. This policy – the policy of socialism – is neither extremist nor utopian but the only realistic way of defending the Revolution against the systematic sabotage of the bankers and capitalists. shops and small peasant plots. Venezuela has not yet carried out the expropriation of the big banks and monopolies that was achieved in Cuba decades ago. mainly in the cities. However. It is quite true that a planned economy does not need to nationalize everything. all this was owned by the state. 2010 stated: “A report by the Associated Press noted that a group of economists surveyed stated that the balance between public and private sectors is almost identical to when Chavez took office. “Last year. they are updating their model. a percentage slightly lower than when Chavez was elected in 2008. The nature of the Venezuelan economy In the past eleven years the Bolivarian Revolution has advanced in many ways. and the state and industry is in the hands of the working class. This is the fundamental question that needs to be addressed. We make speeches that do not relate to reality. They have just adopted. In the second place. the grocer’s shops. And that is what the enemy bases their campaign on: 'We are going towards communism. etc. But equally. (Fuerte concentración de la riqueza en Colombia y América Latina. there can be no question of a planned economy. In itself. the barbershops. An article in the bourgeois financial journal Reporte Diario de la Economía(February 5. barber shops. 83% of this amount came from fees alone. Many negative consequences flow from this. the carpenters.

56 billion. The 30% inflation in recent years has been driven partially by rising food prices on world markets. Finally the bureaucracy decided to become themselves the owners of the means of production. its development was distorted by a parasitic oligarchy that derived its wealth from the oil sector. We are rooting out the speculation problem and the capitalist robbery. 43% for 260 agrochemicals. to be administered by the state-owned Banco Agricola. oil corn. the purchasing power of wages decreases and everybody is aware of corruption and theft going on at the top of the state. soda. .000] for this purpose.000 employees who produce a long list of food products such as pasta. itself a consequence of the isolation of the revolution in a backward country. How is it possible to solve the problems of the food sector. The lack of genuine workers’ democracy. Fondo de Desarrollo Agrario Socialista (FONDAS). Lorenzo Mendoza. scepticism. This huge monopoly produces 4 percent of Venezuela's gross domestic product (excluding oil) and its beer division is the fourteenth biggest brewery worldwide. However. The government has taken some important steps in expropriating some banks and idle lands. These price reductions for producers “should be translated into good prices for the final consumer. while distribution of food remains in the hands of people like Mendoza and other big capitalists who are closely linked to big foreign food and drink monopolies? The expropriation of these big companies is not at all directed against the middle class. Agriculture The most serious failing is in the agricultural sector. candy and snacks of all kinds. and setting up a network of distributors and state-owned food markets. He approved 565 million strong bolivars [US$132.3% for 12 different fertilizers. Mendoza’s personal fortune is estimated at US$4.The superiority of a nationalised planned economy was demonstrated by the colossal successes of the USSR in the past. an agricultural supplies company that serves 70% of Venezuela’s producers. corn. The president assured supplies to all producers who contract with Agropatria. leaving the country reliant on oil exports and food imports. which is directly connected with the supply of basic necessities: food and clothing. expropriating the big landowners and gradually replacing capitalist agriculture by state-owned food producers and private food monopolies by a state-owned network of food distributors and local food markets that can sell the food at regulated prices that are sometimes as much as 40% below market prices. It was the parasitic existence of the bureaucracy. now at a rate of 8% interest. still presides over an empire composed of 40 companies with about 17. rice. demand for food has increased even more. This goal can only be achieved by carrying out an agrarian revolution. is one of the main threats to the revolution. the largest food and beverage company in Venezuela. If it is combined with a situation in which the basic needs are not met. and Fondo Bicentenario. mismanagement and corruption. swindling and mismanagement that are the inevitable consequence of a bureaucratic regime. the chief executive of Empresas Polar. which finally led to the restoration of capitalism with the catastrophic social collapse which accompanied it. who are exploited and robbed by these big monopolies just as much as the workers. was another step forward. financing producer cooperatives and state farms. Although Venezuela has a huge agricultural potential. These are steps in the right direction. but are slightly more than the cost of production. ice cream. The bureaucratic planning of the economy led to wastage. Over a long period these things cancelled out the gains of the planned economy and undermined it. wine.7% in the price of seeds for black beans. mineral water. and said all previously existing credits would be guaranteed. That is what led to the collapse of the USSR. then it becomes a real counter-revolutionary danger of the first order. and an average of 41. cynicism and generally undermines the revolutionary morale of the people. while the agricultural sector shrank. in which ordinary working people participate directly in managing the state and the economy. and rice. Food production has gone up as a result of the Chavez government’s increase in financing to the agricultural sector from less than half a billion bolivars in 1998 to 20 billion bolivars in 2009. These successes were undermined by the bureaucratic distortions that flowed from Stalinism and the corruption. but they are not sufficient to guarantee control over Venezuela’s food supply chain. He pointed out that these prices do not add up to a state subsidy. Chavez has stressed the need for Venezuela to reduce its dependence on multinational food companies and reduce its susceptibility to global food crises. It breeds demoralisation. The nationalization of Agroisleña.” said Chavez. This enabled President Chavez to announce an immediate reduction in the prices of the products of the nationalized company (now called Agropatria) by 49. not any inherent defect of central planning. The same reactionary oligarchy that was behind the 2002 lockout is now using the food scarcity/sabotage to undermine the Revolution.

irrespective of who was in Miraflores: the dictatorship of Capital. the United States' leading Spanish-language television network. The men of money have always been opposed to the Bolivarian Revolution. He is also the most powerful media baron of the continent. Everyone knows that the Venezuelan bosses are not responding to the repeated appeals to invest in Venezuela. the Venezuelan media mogul.” Chavez said recently. “The government appears to have assumed the strategy of corralling the productive sector. And together with this obscene wealth comes tremendous power. they have always exercised a dictatorship over Venezuela. the economy would be facing complete collapse.” (Venezuela's Murdoch) This multi billionaire has extended his empire across Latin America to include Chile’s Chilevisión and Colombia’s Caracol TV. He is also a rabid opponent of Chavez and the Bolivarian Revolution. For us.“We cannot hand [the food] over to the usury of the capitalist model. Galavisión and Play Boy Latin America. Since 1980 the Group has owned the Miss Venezuela contest and since 2001 also the Leonés del Caracas baseball team. a Cuban in Miami. The “patriotic” Cisneros is not only a citizen of Venezuela: he is equally a citizen of Spain (at the personal request of King Juan Carlos). which has already been in recession for six quarters. he is a striking illustration of why there is no national bourgeoisie in Venezuela. “Let the large estate owners know that the oligopoly from which they benefited so much is over.. Furthermore the group owns AOL Latin America. and has been handsomely repaid. without the state sector. We see here that Capital has no fatherland except Profit. Cisneros Rendiles. . Let us take another example of the sacred “right to private property”: Gustavo A. which estimated his fortune at US$10. and have always hankered after dictatorship. But this is a lie.. Cisneros was one of the biggest shareholders on the company.” Chavez said. with a major stake in DirecTV Latin America. which produces and distributes media and entertainment products throughout the world. and the nationalization of the agricultural services company Agroisleña. and a Dominican in the Dominican Republic. The “right to private property” Everybody knows what role was played by Fedecámaras in the coup of April 2002. the main commercial TV channel in Venezuela. We must turn Venezuela into an agro-industrial power. “We must pick up the pace.000 hectares (495.000 hectares (618. an American in New York. which is his principal base. whose satellite broadcasts rubbish to twenty Latin American countries. They have organized a strike of capital that is starving the economy of investment and this is the main reason why Venezuela is finding it hard to get out of recession.7 billion in 2010. Agricultural and Lands Minister Juan Carlos Loyo confirmed plans to nationalize 250. He played an active role in the 2002 coup. the right to private property of 98 percent of Venezuelans is untouchable.000 acres) of farmland in October and twice that amount in November. The New York Times calls Cisneros. Patricia Phelps de Cisneros. The leaders of the counterrevolutionary opposition have naturally reacted hysterically to the recent nationalizations. "one of Latin America’s most powerful figures" and says he and his wife.” said Noel Álvarez." Cisneros' wealth comes from his holdings in media. As Venezuelanalysis points out: “As one of the shadowy figures providing American capitalism with local muscle outside the United States. The fact is that.” In order to accelerate the land reform. entertainment. Now is the time the agrarian revolution is going to accelerate. the president of the nation’s largest private business chamber. The Cisneros Group of Companies is one of the largest Spanish-language privately-held media and entertainment companies. They say that these measures threaten to slow economic growth. the head of Fedecámaras proclaimed himself President. Fedecámaras. have a reputation for being "a Latin American power couple in business and the global social scene. Cisneros is bound hand and foot to the empire. He is among the world's richest men according to Forbes magazine. and has described the chavistas as ‘mobs’ and ‘monkeys’. when Carmona.” But it is difficult to see how either private agriculture or industry can be any worse in the hands of the state than they were in the hands of the landlords and capitalists.000 acres) of land that were owned by Compañía Inglesa. “This is a tremendous blow against agriculture. production will decrease. now we have to continue constructing the socialist system of distribution and marketing. Álvarez said Fedecámaras will file a case with the Supreme Court accusing the government of violating the right to private property. and Venevisión. But can the “the right to private property” of a handful of super-rich oligarchs be more important than the right of millions of ordinary Venezuelans to have a job. Gustavo Cisneros is one of the wealthiest men in Latin America. And in reality. telecommunications and consumer products companies. But the property of the oligarchy – that handful of parasites who have plundered the wealth of Venezuela for generations and bled the country white – that is another matter altogether. because the future of Venezuela depends on it. Until the buyout of Univision. and to be able to feed their families? What is necessary is to put an end to this dictatorship of Capital before it puts an end to the Revolution. He also owns Venevision International. a Venezuelan subsidiary of the Vestey Group. Chavez announced the nationalization of 200. The rich will protest that this is an attack against “the right to private property”.

This is not a question of small proprietors but of a key lever of the economy.8%. where they accounted for 22. It was an important step forward. as well as the suppression of the Constitution when Cisneros went to Miraflores to propose that the new government’s communications strategy should be left to him and his media friends. a name that it held until 1987 when it changed to Banco Financiero. The bank was renamed Banesco Financial Organization. In the ninth month of this year. they will try to do again as soon as the conditions are given. and Cisneros was one of the principal architects of the assault on democracy. However. Its main shareholder is Víctor Vargas. after having changed its name again to Bancentro. Banks also felt this year. If the 2002 coup d’état had succeeded. the impact of falling GDP.” Chavez declared in May 2004. Even three of the top 10 banks have also seen their profits fall. but a big part still remains in private hands. no less than 91.This monopolistic control of the media is known in the West as “freedom of the press” – that is.5% of the profits. Their earnings as of September have fell 54.7% of the profits of the banks as of September. After Chavez returned to power. the Capriles group also has an important stake in the institution. They accounted for 10. the golpistas remain at liberty. when that failed.” (Quién es quien en la banca venezolana). It had accumulated profits as of September amounting to 9. is its largest shareholder.2% of the earnings of the banks were concentrated in the top 10 banks in Venezuela. it would have led to the swift destruction of Venezuelan democracy. On the night of April 11th. With this acquisition. Its majority shareholder is the Spanish group BBVA. The expropriation of the property of the Cisneros family is therefore an essential measure to defend the Revolution and to safeguard the democratic rights of the overwhelming majority of the people. the recall referendum in August 2004. were more than 28. we must point out that 20 medium and small banks (all except the 10 top Venezuelan banks) have not been doing very well this year. Then there is Mercantil. Cisneros and other opposition supporters organized the oil sabotage and. Likewise. “The day will come.8% of total earnings of the banks in September. Its shareholders are an important part of the oligarchy. In 1992. We quote from cosumid. an institution that was created as a result of several mergers and today is one of the major banks. In 1997 it was transformed into a universal bank. the bank was acquired by the Banesco brokerage house owned by the current Chairman of the Board Juan Carlos Escotet. It is a direct threat to the Revolution and to democracy itself. Let us see who these banks are. Then there is Occidental de Descuento (BOD). It is true that the government has taken some steps. Let us take Provincial. Instead.” But after all this time. Accumulated profits of commercial and universal banks from 1999 to September of this year. from which they are extracting huge profits. with families like the Marturets and the Vollmers. or show pictures of the mass demonstrations demanding the return of the President. .3 billion strong Bolivars (more than 28. These were all attempts to overthrow the democratically elected government by extra-parliamentary means. the screens of Cisneros’s television were filled with old movies and cartoons. after Chavez had been removed from the Miraflores Palace at gunpoint.6% of total bank profits. Cisneros and his gang played a crucial role in the coup d’état of that year. We saw how all this power in the hands of a privileged minority could be used to overrule the democratic decision of the majority in April 2002. the time has now come to act? The banks The big banks still have a stranglehold over the Venezuelan economy. It accounts for 14. They have indicated their intention to continue operating in Venezuela. the banking business generated a profit that surpassed the expectations of many of the owners of banks and also the earnings growth has exceeded the rate of inflation. Juan Carlos Escotet.3 trillion old bolivars). was recently acquired by the Venezuelan government. Carmona had already announced the closure of the Congress and Supreme Court. “when we shall have a fearless team of judges who will act in line with the Constitution and imprison these mafia dons like Gustavo Cisneros. And what they did before. Everybody knows how the media was cynically used as a rallying point for the coup. which used to belong to the Spanish group Santander. and this represents a serious threat to the future of the Revolution and democracy. the leading golpistas met together in Cisneros’s suite at Venevisión. an offer that Carmona gratefully accepted.2% compared with the same period last year. at the start of the referendum campaign. Banesco is one of the first banks with Venezuelan national capital. one of the most important banks in the country. The Bank of Venezuela. the freedom of a handful of wealthy oligarchs to tell the people what to think and who to vote for. its president. Cisneros gave orders that his channels should carry no news of the overthrow of the coup.org: “From 1999 to date. Surely. Then there is Banesco. It emerged in 1977 with the name of Banco Agroindustrial Venezolano. Its market share in bank profits is 9. the state has strengthened its position in the Venezuelan banking system.

“We must see where we have made mistakes and where we must make corrections. For that reason it is not at all necessary to nationalize small businesses. they will use their economic power to sabotage the Revolution. he talks in vague terms about the “democratization” of the productive apparatus.7%. The great challenge At what pace should the Revolution advance? There is no revolutionary cookbook that can provide an answer to this question. to merge all the banks into a single state bank. Very good. reactivar y relanzar” (Revise.” He spoke of the “third cycle of the Revolution. Corp Banca. Finally there is Citibank. Venezolano de Crédito has profits amounting to 4. It has 6. That is precisely what is required. accounts for 4. but it is very necessary to nationalize the big banks and monopolies.” What is the goal. what is left of the slogan Patria. it will be impossible to introduce a genuine socialist plan of production to solve the problem of unemployment and achieve a rational distribution of goods and services and mobilize the full productive potential of Venezuela.9% of the system. Chavez says that he will act “with the maximum of audacity that is possible to accelerate the expansion of socialism and continue eliminating capitalism. stated the President. If this is explained properly. and the “realistic” vegetarian comes to a very bad end. “We have a gigantic challenge”.1% of the profits and with the merger will become the third largest bank in terms of earnings. “Realism” of the reformists The President has said that the revolutionary process would be “deeper every day”. we agree. Instead. What is really extraordinary is that the reformists regard themselves asrealists! I have pointed out more than once that this is the “realism” of a man who tries to persuade a tiger to eat lettuce instead of meat. reactivate and relaunch”). All the main decisions are taken by the boards of directors of the big banks and monopolies. stated that the recognition of private property was a basic principle of the Bolivarian Movement and that expropriations were “only for the monopolies and oligarchy”. The result of this “dialogue” is that the tiger’s carnivore tendencies remain unchanged. “We are in a state of constant dialogue with the private sector”. But in the same programme comrade Jaua denied any intention to nationalize Polar! Does anyone think that Polar is a “small or medium business”? If this is not a monopoly I do not know what a monopoly is! It would seem from this interview that comrade Jaua has no intention of nationalizing anything. socialismo o muerte? In a recent interview on Contragolpe. landlords and capitalists.” These words were a fitting answer to the reformists who argue that the Revolution has gone too far and it is necessary to slow down and make concessions to the opposition. Chavez warned the counterrevolution that their advance in these elections would “cost them dearly. credits to small farmers and other businesses will be in the hands of the enemies of the Revolution. then? Is it to continue to allow the oligarchy to dominate the economy? And if that is really the case. far from alienating the middle class. it would benefit the middle class and the small producers who would be guaranteed easy access to cheap credits.” But it is clear that time is not on our side. an institution acquired by Victor Vargas and merged with the BOD.Exterior is one of the strongest banks in the country. while Bancoex State Bank. which is part of Citibank. The great challenge will be in 2012 when the Presidential elections coincide with the elections for governors and mayors.1% of the profits of Venezuelan banking. In fact. Elias Jaua (the vice-president). represents 4. This has been dragged in by the hair to justify not carrying out the expropriation of the big banks and monopolies. from 2009 to 2020 and launched the slogan: “Revisar. This is not a measure directed against the middle classes but exclusively against the oligarchy. As long as private capital controls the lion’s share of the banks. Result? Private investment declines. But we fear that this proposal will meet resistance from the bureaucrats and reformists at every step. an economist and former Minister of Mines of the Chavez administration. USA. whatever that might mean. Victor Álvarez. The bourgeois do not invest but send their money abroad. this “dialogue” has been going on for a long time and we have seen the results of it. For every step back it . But the reformists bury their heads in the sand and talk about the need for “dialogue” and a “patriotic bloc” and the bourgeois laugh all the way to the bank. there must be a sense of urgency. Its earnings are equivalent to 3. The President calls the bosses to a meeting and appeals to them to invest. But he immediately confuses the issue by dragging in the question of small and medium family businesses etc. Yes. all the main decisions concerning productive investment. This line of argument is disastrous for the Revolution. Its main shareholder is the Spanish financial group IF.9% of the total. This is a strike of capital. It is an ABC proposition that small and medium companies have no independent role in the economy. was reported by El Universal to have said that the goal is really not “that the state should have the greatest weight in the economy. Therefore. based on September figures. it would attract them to the side of the Revolution. As long as key points of the economy remain in the hands of the bankers. Everybody knows it. the comrade informs us. Moreover. The first measure that would be required to create a socialist planned economy would be the nationalization of the banks.

com. you reproach us with intending to do away with your property. This fact shows that this is the way to breathe new life into the Revolution and weaken its enemies.) “Communism deprives no man of the power to appropriate the products of society. at the same time. We are publishing today the text submitted by comrade Woods to the conference. or those who prefer to shut their eyes. and allow the ship to sink? The International Marxist Tendency will continue to defend the Venezuelan Revolution against imperialism and the counterrevolutionary oligarchy. the huge landowning company. one side must win and the other side lose. October 29. it is the only way to put an end to sabotage and anarchy. These new expropriations are moves in the right direction. said Venoco regularly purchased basic production inputs at state-regulated prices from PDVSA. with intending to do away with a form of property. “In one word. Imagine that a small boy on board the Titanic sees a gigantic iceberg looming out of the darkness and begins to shout a warning. Such arguments raise in my mind the following image. In his speech. The measures of nationalization are aimed at guaranteeing food access. Alan Woods. has attracted a lot of interest in Cuba. we answer with the words of the Communist Manifesto: “You are horrified at our intending to do away with private property. every blow struck against the counterrevolution. the President said that they had until January 4 to push new laws through the National Assembly. ignore the danger. There is no “third way”. (. . but the very same argument can be made for taking over the other banks and big monopolies that are still in private hands. you are disturbing the passengers! Ask yourselves the question: who is being disloyal: the boy who is trying to warn the captain of imminent danger and get him to change course and so save the ship and all on board. the vice president of PDVSA.” London. the people will be able to receive supplies made by Venoco at just and reasonable prices that. and lowering prices: “Now. Asdrúbal Chávez. I have no doubt that some people in Miraflores will be telling the President that all this is “extremism” and “madness” caused by disloyal people who only want to cause problems. and begin to plan the Venezuelan economy and mobilize its full productive potential in the interests of the majority of producers. or There is nothing new under the sun Written by Alan WoodsMonday. a serious debate is opening up in the ranks of the Cuban Communists. He is immediately rebuked by a disapproving chorus: what are you shouting about? Be quiet. therefore.. But in your existing society. and marked up the prices of their manufactured products by as much as 50%. its existence for the few is solely due to its non-existence in the hands of those nine-tenths. help to promote industry. That is correct. the necessary condition for whose existence is the non-existence of any property for the immense majority of society.. This decree was signed by Chavez just a couple of days after the speech. Last week’s Marxist conference organised by the study group "Cuba: Theory and Society" under the auspices of the Instituto de Filosofia de La Habana in November 2010 to discuss Socialism in the XXI Century in the run-up to the forthcoming Party Congress therefore assumes a particular importance. But it will criticize every step back. Among the few foreign guests invited to address this event was the editor of Marxist. And he added that these laws would be “far more revolutionary than what have been approved up till now. It will enthusiastically support every step in the direction of the expropriation of the oligarchy. 2010 XXI Century Socialism. that is just what we intend. which shows how he is resisting the pressures of the bourgeoisie and the reformists. all that it does is to deprive him of the power to subjugate the labour of others by means of such appropriations. But words must be translated into deeds.takes the opposition will demand ten more. both having been involved in price speculation. Precisely so. The expropriation of the monopolies is a part of the PSUV programme. private property is already done away with for nine-tenths of the population. 08 November 2010 At a time when the Cuban Revolution is facing great dangers.” the vice president of PDVSA said. not a minority of wealthy parasites. In the end. whose latest book Reformism or Revolution. You reproach us.” Immediately afterwards Chavez announced the expropriation of Agroisleña. In addition there has been the nationalizations of chemical company Venoco and the fertilizer company Fertinitro. It will continue to fight against the corrupt bureaucracy and the reformist Fifth Column and to call for ever more energetic action to carry out the Revolution to the end. To the bourgeoisie and its reformist defenders who try to frighten people with the idea that socialism threatens the “right to private property”. More importantly. decreasing dependence on food imports. part of the multinational VESTEY group. They were greeted with huge enthusiasm on the part of the workers and peasants.

not in narrow intellectual circles. after the fall of the Berlin Wall. This fact in itself shows how far the deterioration of the Left has gone and the poverty of its theoretical level. Today not one stone upon another is left of the dreams of the bourgeoisie. there has been a persistent insistence on the need to get beyond Marxism and "adapt" to "the new circumstances" of the current historical moment. It is an empty bottle that can be filled with any content. Unfortunately. There are frontal attacks that come directly from the bourgeoisie and its ideologues. The defenders of capitalism saw the fall of the Soviet Union as the final proof that their system was the only one possible. we must face all kinds of attacks. At that time they promised a world of peace and prosperity. The fall of the Soviet Union gave the green light to an unprecedented ideological offensive against the ideas of socialism. in that no one has the slightest idea of what it means. On the one hand. The huge debts of banks have turned into huge government debts. all sorts of pseudo-intellectual reformists and academics were quick to rush in and try to confuse the issue. On the other hand. the advances in science. the ruling class was ecstatic. They figured that the current temporary economic boom meant not only a return to the days of their youth but also the abolition of all crises in general.The times we live in In the first decade of the century. called "XXI century socialism. All those promises have proven to be false. But there is another type of attack that is a bit more difficult to address because it appears disguised as a friendly criticism. . The fall of the USSR has had dire consequences. but at every bus stop. technology and industry open the way to a dazzling future of prosperity. The collapse of the USSR has led to a period of tremendous confusion and disorientation in the world communist movement. Since the collapse of the Soviet Union. the theoretical formulation of "XXI Century Socialism". Many former Communists abandoned Marxism. But as soon as Hugo Chavez raised the question of socialism. The future of the planet is threatened by global environmental degradation. of course. hanging on the brink of starvation. there has been a ferment of discussion within the Left worldwide. intended not to abolish Marxism but only introduce a few changes to "get it up to date". has promised us a brand new version of socialism. the abandonment of the nationalisation of the means of production. of the ideas of Marx. but only a rather poor repetition of the old unscientific ideas of the utopian socialists such as Proudhon and Robert Owen that were answered by Marx and Engels long ago. We do not find here a single new idea. preventing a recovery. outmoded and there was a burning need to develop "new ideas". the very existence of the human race is threatened by the devastation of the planet in the name of profit. For two decades. What we are confronted with is a modernised version of the old ideas of reformism. In my book Reformism or Revolution. The ignominious failure of Stalinism and the unprecedented ideological counteroffensive of the bourgeoisie against socialism has led some to conclude that the "old ideas” of Marxism (scientific socialism) are no longer valid." This idea has a great advantage over other ideas. In Venezuela. workers' control and workers' democracy have found some echo in the Left in Venezuela and other Latin American countries. Engels and Lenin were outdated. in every factory and market place. In country after country there are elements of barbarism. I have shown that there is nothing new in this so-called XXI century socialism. Incredibly. The dead weight of debt weighs heavily on the global economy. The current crisis of capitalism is probably the most serious in its history. the debate on socialism is taking place. Twenty years ago. the ideas advanced by Dietrich the need to form a new Latin American regional bloc to compete with the US. They dreamed of a New World Order based on peace and prosperity. Millions live in poverty. These elements fell over themselves in their haste to explain that the ideas of Marx. New ideas? In the ideological battle in defence of Marxism. Heinz Dietrich. this campaign of the bourgeoisie has found an echo in the ranks of the communist movement. These illusions were quickly shattered. humanity stands at the crossroads. The collapse of planned economies under bureaucratic control of the East was presented as the ultimate proof of the failure of "communism" and. and that there is a need to invent something new and original in its place. This kind of criticism is the easiest to detect and respond to. the most prominent representative of this trend. a new economic paradigm of uninterrupted growth. social welfare and cultural advancement without limits.

but precisely the opposite. industry and land. the revolution must stop halfway. Under a false flag All this chatter about "entirely new and original ideas" is superficially attractive." It is impossible to listen to these arguments without a sense of deep outrage. . In Venezuela during the last decade the masses have proven time and again their high level of consciousness. Unfortunately. The reformists say that the revolution must not overstep the limits of private ownership of the big bourgeoisie. after over 200 years of development of the working class movement. It is not the first time we have seen such things. To hide the purely reactionary character of these theories. The writings of Marx and Engels are so clear because they have a clear socialist message. in order to build a planned economy under workers' control. along with the reactionary generals. without direction or party. A good writer is one who knows how to turn complex ideas into simple ones. What is new is not necessarily better in all cases. they try to disguise them with academic verbiage and an obscurantist language as impenetrable as a tropical rainforest. there are communists who insist that Communism can be maintained while in practice what is being defended is capitalism. while a bad writer only knows how to make simple ideas complicated. or square? Whatever form it took. the analogy is false and contradicts our experience. In other words. But all history proves that it is not possible to carry out half a revolution. It was they who saved the revolution on 13 April 2002. One of the principal dangers currently facing the Venezuelan revolution is that it has not yet taken the decisive steps to carry out the revolutionary process to the end. expropriating the oligarchy and imperialism. nor is something necessarily bad for being old. when the masses came out. The XXI century revisionists merely repeat the same arguments championed by Bernstein and Kautsky long ago. The distortions and manipulations of socialist thought are carried out from different fronts.The writings of Dietrich simply repeat the old pre-Marxist ideas of the utopian socialists and present them as something new. This is not a coincidence." These words express all that is necessary to say on the subject. One word of Chavez and the expropriation of the ruling class could have been carried out in a peaceful manner. It is not possible to speak of socialism in Venezuela unless it puts an end the economic power of the oligarchy once and for all. this word never came. Their limitations were in not being able to understand the role of class struggle. The same was the case in the oil lockout and the recall referendum. the Church and imperialism. On April 13. but it must be kept in mind that mainly at that time the working class had scarcely developed. but after thousands of years still works fairly well. 2002. to defeat the reactionary coup organised by the owners of the banks. without class struggle. Of this kind of thing the old Hegel once said: "Just as there is a breadth that is empty. and instead of the planned economy the Keynesian model must be implemented. Marx and Engels wrote in a wonderfully simple language because they were writing for the workers and any worker of average intelligence can understand their writings. The reformists believe it is possible to reach socialism without nationalisation. But this is not a problem of lack of awareness of the people but the lack of a revolutionary party with a revolutionary leadership. A car or a new computer that does not work is worse than some old one that does. the reactionary oligarchy fled like rats and there was no force in Venezuela prepared to defend the old order. without revolution. there is a depth that is empty also. After all. who would not prefer a nice new car or latest model of a computer instead of last year's model? But in reality. The reason these books are so difficult to read is not because they have a profound content. we are convinced that it would not take us one step further. What should we think of someone who asks us to abandon the wheel because it is old and look for a wheel of the XXI century? What type of wheel would this be? Triangular perhaps. Venezuela and Cuba One of the arguments of Dietrich is the so-called "low consciousness of the working class. Instead of the expropriation of the commanding heights of the economy it should encourage small cooperatives. obscure vocabulary and a maze of tangled syntax. There is no excuse for people like Heinz Dietrich to repeat these ideas today. Incredibly. The wheel is a pretty old invention. a form of "socialism” without class struggle with no need to expropriate capitalism. The ideas of the utopian socialists were really ahead of their time and deserve all our respect. Here the absolute lack of content is generously compensated for by a wealth of complicated language. except that they did so in a much more interesting and intelligent way. This is a very dangerous idea.

an idea for which Che Guevara fought and died." (See The National Interest. Che Guevara pointed this out long ago. the immediate cause of both the English Revolution in the seventeenth century and the French Revolution in the eighteenth century was the huge deficits of public spending. There is no more change to be made: either socialist revolution or a caricature of revolution”. The same people who imagined that their elaborate models could predict with mathematical accuracy the behaviour of the global capitalist economy. Some say. it is impossible to tolerate the continuation of the reforms that were conquered by the workers during the past fifty years. when he wrote: "The indigenous bourgeoisie has lost its ability to oppose imperialism. Bolivia and the entire continent of Latin America. not only is it impossible to carry out further reforms. and predicted with absolute confidence the impossibility of a slump. an economic historian and prominent US economist at the University of California. to reveal the real face of the bourgeoisie." And both are right. Berkeley. or there is no solution to the crisis. The total incapacity of the bourgeois economists to explain anything is clear. and now just constitutes its tail. should never have happened. It would be doomed to failure. any attempt by the bourgeoisie to restore economic equilibrium would destroy the political and social equilibrium.Message to the peoples of the world through the Tricontinental) To refuse to carry out the socialist revolution in Venezuela. October 27. it is sufficient to note the despairing comments of the bourgeois economists in recent months. who received the Nobel Prize for Economics in 2008. Everywhere we see the awakening of the masses who are seeking a way out. "If we cut public spending. In both cases the bottom line was the same: who will pay? Everywhere the ruling class wants to put the full weight of its bankruptcy on the backs of the working class." Others say. In the final analysis. We can express the dilemma of capitalism as follows: a) the bourgeoisie cannot accept the existence of reforms. This is a sign of desperation. the old and the disabled. the sick. the only way to preserve the Cuban Revolution is by breaking the isolation of the revolution by extending the socialist revolution throughout Latin America. Spain and other European countries. From a capitalist standpoint. To indicate the total confusion of the bourgeois economists. The defeat of the Venezuelan revolution would have serious consequences for Latin America and to Cuba above all. middle class and the poor and vulnerable sectors of society: the unemployed. we will create a new slump. writes: “Thecrisis has cast into doubt much of what we thought about economics. "We must reduce the deficits. Everywhere there is a growing questioning of capitalism and a growing interest in the ideas of socialism and Marxism. Barry Eichengreen. The so-called national bourgeoisie in Cuba was incapable of playing a progressive role. The present events in France are an eloquent proof of this assertion. to refuse to expropriate the oligarchy would be precisely a caricature of a revolution. In Latin America the revolutionary trend has gone further than elsewhere. are now beating their breasts in public. Greece. and all that it has achieved is to waste the colossal productive potential of the continent. the alternative is either the victory of the revolution or the victory of the counterrevolution. But we also see a revival of the labour movement in France. Failure of bourgeois ideology All the theories of bourgeois political economy have been shattered following the 2007-08 crisis a crisis that. The smiling mask of "capitalism with a human face" has slipped. b) the workers cannot accept further cuts in their standard of living. according to these theories. 2010) Paul Krugman. and positively harmful at worst. . In other words. This is a finished recipe for the intensification of class struggle everywhere. But this is now impossible. "(Quoted in The Economist) The bourgeoisie does not understand what is happening and is in a state of panic. And the same is true of the bourgeoisie of Venezuela. The error of the reformists is that they believe it is possible to go back to a period when the economic boom that followed World War II allowed the bourgeoisie in Europe and the US to make big concessions to the working class to take the steam out of the class struggle. They say it themselves.The most important lesson of the Cuban Revolution is that the bourgeoisie and imperialism could only be defeated on the basis of the expropriation of the productive forces. in a speech at the London School of Economics in June. Ultimately. if it ever had it. 2010. macroeconomic theory has been spectacularly useless at best. (Ernesto" Che "Guevara. The bourgeoisie of Latin America has had two centuries to show what it can do. Without a nationalised planned economy the Cuban Revolution could never have achieved what it did. said: "Over the last thirty years. Interestingly. The ignominious failure of Obama in the US is an expression of this fact. It is the beginning of a new period of class struggle. That is why they are taking steps that are totally irresponsible from the standpoint of orthodox economics.

The relevance of Marxism today The critics of Marxism call into question the relevance of Marxism in all fields: philosophy and science. Here's a book written over 150 years. suffice it to mention chaos theory and its variants (complexity and ubiquity theory). No doubt the intentions of those proposing these measures are of the best. confuse and defeat the socialist revolution and undermine the ideas of Karl Marx. the writings of Stephen Jay Gould on the evolution of species. and the restoration of capitalism would be Hell for the people of Cuba. Of course. which has constantly supplied the factories of Guangdong with workers who work under virtual slave conditions for very low wages. Long ago. “The state should no longer plan the economy but regulate it”. which explains what is happening in the world now. including phenomena such as globalisation and concentration of capital in few hands. Lenin and Trotsky to be as valid and relevant as they ever were. in which he pays tribute to the role of Engels. My friend and comrade Fernando Buen Abad says that reformism is chameleon-like and slippery. Today more than ever. even if some do not yet recognise the fact. it seems to me that scientific socialism is an essential tool to carry out the struggle of the working class towards their emancipation. The only thing that a Cuban variant would share is the last: low wages. China is a vast territory with over a billion inhabitants. we can say without fear of contradiction. Engels already answered these critics in one of the finest works of Marxism: Anti-During. that the most modern book you can read is The Communist Manifesto written by Karl Marx and Frederick Engels. as we have seen. Some people are talking about a “Chinese way” or a “Vietnamese model” for Cuba. Quite the contrary. What is not so good is that some people should try to monopolise the interpretation of socialism of the XXI century. economics. We must demolish the fallacies of reformism. but its mission remains the same. Certainly. Fidel Castro rejected the “Chinese model” because it was just another name for the restoration of capitalism. In the field of political economy. the proposals are clear. The change of terminology is irrelevant. Reformist demagoguery can be disguised in many ways. we will have to make this or that change. Even worse is the attempt to present a kind of "socialism" that turns out to be exactly the same as capitalism. historical materialism. But even if we were to consider this option. the theory of the state. which retain their full validity and relevance. The huge Chinese peasantry has provided China’s capitalist enterprises with a vast reserve of cheap labour. It would be impossible to find any bourgeois book on political economy. many resources and a powerful industrial base. the basic ideas remain as valid as when they were written. I consider the ideas of Marx. etc. I am willing to change my mind. but what is surprising is how little needs to be altered. and in many cases are more relevant today than in the times of Marx and Engels. In the same way that we need not reinvent the wheel. Reformists and social democrats are committed to slow up. it would immediately become clear that it cannot apply to Cuba. . But the way to Hell is paved with good intentions. In fact they are more necessary and relevant now than at any other time. which represent a purely dialectical method. if someone can convince me that he possesses a body of ideas that is superior to Marxism and renders it obsolete. Regardless of how they want to describe their model. it is good to discuss the ideas of socialism. because Marxism is a set of ideas that cannot be regarded separately. For the present. things are clearer still. we need not reinvent the ideas of scientific socialism. but also a good number of their critics. Of course. I have not heard anything that is even remotely comparable with the depth and richness of Marxism. For my part. This is a scientific struggle without quarter. After carefully reading the writings of Dietrich and other revisionists I have not found any reason to change my ideas. and so on. Cuba is a small island with a small population and few resources. Instead. and we participate in this debate with the greatest of enthusiasm. But until today I have never encountered such an option. I am even firmer in my beliefs and convictions. history or sociology written in 1848 that has more than a mere historical interest. the discoveries of the human genome. For over half a century I not only have carefully studied all the works of the great Marxist writers. which has furnished us with examples of the correctness of the dialectic that are far more striking than those used by Engels in The Dialectics of Nature. And it must be so. Having heard many arguments from people who claimed to offer an alternative. to achieve the triumph of a conscious and free humanity. I have given a list of these examples in my book Reason in Revolt (published in Cuba by the Social Sciences Publishing House). The vast superiority of the Marxist method can be seen in the founding document of scientific socialism. Engels. The concrete conditions are completely different. “manufacturing and agriculture should be opened to foreign investment”. All this shows that "ultimately nature works in a dialectic" in the words of Engels. introducing confusion of all kinds. Marxism has been corroborated by advances in science. I have yet to see a body of ideas that comes anywhere near the heights of Marxism and that can replace it as a scientific tool for understanding the world in which we live. Naturally.

The restoration of capitalism in Cuba would be an even greater disaster. They dreamed of a New World Order based on peace and prosperity. We are publishing today the text submitted by comrade Woods to the conference. and once it starts it will be difficult to stop. October 29. In country after country there are elements of barbarism. whose latest book Reformism or Revolution. or There is nothing new under the sun Written by Alan WoodsMonday. 2010 XXI Century Socialism. the advances in science.A capitalist Cuba would resemble neither China nor Vietnam. degradation and semi-colonial dependence.com. to clarify ideas and mobilise our forces for concrete actions that are aimed at the overthrow of capitalism and its replacement by a qualitatively superior system: socialism. just when it is in a mess everywhere. The collapse of planned economies under bureaucratic control of the East was presented as the ultimate proof of the failure of "communism" and. of the ideas of Marx. The defenders of capitalism saw the fall of the Soviet Union as the final proof that their system was the only one possible. But it is important to note that what failed in the USSR was not the nationalised planned economy. What is necessary is a rationally planned economy where economic decisions are taken to satisfy the needs of the many. Last week’s Marxist conference organised by the study group "Cuba: Theory and Society" under the auspices of the Instituto de Filosofia de La Habana in November 2010 to discuss Socialism in the XXI Century in the run-up to the forthcoming Party Congress therefore assumes a particular importance. the danger is that market reforms can unleash powerful tendencies towards the restoration of capitalism. a serious debate is opening up in the ranks of the Cuban Communists. And irrespective of the intentions of those responsible. On the other hand. This debate has been initiated and is leading to the revival of communism worldwide. we must learn from the failure of the Soviet Union. but a bureaucratic caricature of socialism that stifled all initiative and creative thought and led to corruption and inefficiency on a vast scale. the revisionists want to abandon socialism and embrace the market economy. not just for the peoples of the former Soviet Union but for Cuba also. The crisis of the global capitalist system shows that it is unable to offer any prospect for most of the world's population. These things are not something inherent in a socialist planned economy but the product of the isolation of the Russian Revolution in conditions of frightful backwardness. It is ironic that precisely at this moment. the very existence of the human race is threatened by the devastation of the planet in the name of profit. after the fall of the Berlin Wall. Debate in the hands of revolutionaries should serve. the ruling class was ecstatic. Among the few foreign guests invited to address this event was the editor of Marxist. Of course. of course. humanity stands at the crossroads. Twenty years ago. The future of the planet is threatened by global environmental degradation. Millions live in poverty. The fall of the Soviet Union gave the green light to an unprecedented ideological offensive against the ideas of socialism. The capitalist road (even if it masquerades as the "Chinese road" or the "Vietnamese road") cannot provide any solution to the problems of the people of Cuba. 08 November 2010 At a time when the Cuban Revolution is facing great dangers. The times we live in In the first decade of the century. condemning millions of human beings to poverty and hunger. hanging on the brink of starvation. but rather El Salvador or Nicaragua after the victory of the counter-revolution. London. among other things. On the one hand. What failed in Russia was not socialism in the sense understood by Marx or Lenin. What was necessary was to combine the nationalised planned economy with the democratic control and administration of the workers. social welfare and cultural advancement without limits. The restoration of capitalism in Russia has had disastrous consequences. The fact is that the so-called free market economy has failed on a global scale. which gave astonishing results and transformed backward tsarist Russia into a powerful industrialised nation. It would soon revert to a similar situation that existed before 1959 – one of misery. as Lenin explained many times. What is needed is a fraternal debate between the various trends in the communist movement. Nothing and nobody must deviate from this goal. Marxism is perfectly suited to develop an alternative to the tactical and strategic problems of Cuba and the world revolution. which would eventually destroy all the conquests of the revolution. technology and industry open the way to a dazzling future of prosperity. Alan Woods. has attracted a lot of interest in Cuba. It is the entry to a very slippery slope. not the profits of the few. They figured that the current temporary economic boom meant not only a return to .

except that they did so in a much more interesting and intelligent way. and that there is a need to invent something new and original in its place. Heinz Dietrich. This fact in itself shows how far the deterioration of the Left has gone and the poverty of its theoretical level." This idea has a great advantage over other ideas. Incredibly. These elements fell over themselves in their haste to explain that the ideas of Marx. outmoded and there was a burning need to develop "new ideas". the theoretical formulation of "XXI Century Socialism". It is not the first time we have seen such things. In my book Reformism or Revolution. we must face all kinds of attacks. has promised us a brand new version of socialism. called "XXI century socialism. The writings of Dietrich simply repeat the old pre-Marxist ideas of the utopian socialists and present them as something new. The collapse of the USSR has led to a period of tremendous confusion and disorientation in the world communist movement. There are frontal attacks that come directly from the bourgeoisie and its ideologues. The ignominious failure of Stalinism and the unprecedented ideological counteroffensive of the bourgeoisie against socialism has led some to conclude that the "old ideas” of Marxism (scientific socialism) are no longer valid. In Venezuela. the analogy is false and contradicts . Their limitations were in not being able to understand the role of class struggle. For two decades. after over 200 years of development of the working class movement. The ideas of the utopian socialists were really ahead of their time and deserve all our respect. After all. not in narrow intellectual circles. preventing a recovery. who would not prefer a nice new car or latest model of a computer instead of last year's model? But in reality. Today not one stone upon another is left of the dreams of the bourgeoisie. the ideas advanced by Dietrich the need to form a new Latin American regional bloc to compete with the US. Unfortunately. there has been a persistent insistence on the need to get beyond Marxism and "adapt" to "the new circumstances" of the current historical moment. The current crisis of capitalism is probably the most serious in its history. These illusions were quickly shattered. This kind of criticism is the easiest to detect and respond to. All those promises have proven to be false. there has been a ferment of discussion within the Left worldwide. But there is another type of attack that is a bit more difficult to address because it appears disguised as a friendly criticism. in that no one has the slightest idea of what it means. What we are confronted with is a modernised version of the old ideas of reformism. The fall of the USSR has had dire consequences. Since the collapse of the Soviet Union. Engels and Lenin were outdated. But as soon as Hugo Chavez raised the question of socialism.the days of their youth but also the abolition of all crises in general. I have shown that there is nothing new in this so-called XXI century socialism. The XXI century revisionists merely repeat the same arguments championed by Bernstein and Kautsky long ago. At that time they promised a world of peace and prosperity. The huge debts of banks have turned into huge government debts. There is no excuse for people like Heinz Dietrich to repeat these ideas today. but it must be kept in mind that mainly at that time the working class had scarcely developed. all sorts of pseudo-intellectual reformists and academics were quick to rush in and try to confuse the issue. the debate on socialism is taking place. the most prominent representative of this trend. the abandonment of the nationalisation of the means of production. a form of "socialism” without class struggle with no need to expropriate capitalism. Many former Communists abandoned Marxism. intended not to abolish Marxism but only introduce a few changes to "get it up to date". workers' control and workers' democracy have found some echo in the Left in Venezuela and other Latin American countries. but only a rather poor repetition of the old unscientific ideas of the utopian socialists such as Proudhon and Robert Owen that were answered by Marx and Engels long ago. We do not find here a single new idea. this campaign of the bourgeoisie has found an echo in the ranks of the communist movement. It is an empty bottle that can be filled with any content. The dead weight of debt weighs heavily on the global economy. in every factory and market place. but at every bus stop. New ideas? In the ideological battle in defence of Marxism. Under a false flag All this chatter about "entirely new and original ideas" is superficially attractive. a new economic paradigm of uninterrupted growth.

In other words. There is no more change to be made: either socialist revolution or a caricature of revolution”. obscure vocabulary and a maze of tangled syntax. they try to disguise them with academic verbiage and an obscurantist language as impenetrable as a tropical rainforest. Marx and Engels wrote in a wonderfully simple language because they were writing for the workers and any worker of average intelligence can understand their writings. this word never came. And the same is true of the bourgeoisie of Venezuela. The reason these books are so difficult to read is not because they have a profound content. Of this kind of thing the old Hegel once said: "Just as there is a breadth that is empty." It is impossible to listen to these arguments without a sense of deep outrage. Unfortunately. the Church and imperialism. along with the reactionary generals. but precisely the opposite." These words express all that is necessary to say on the subject. Here the absolute lack of content is generously compensated for by a wealth of complicated language. The writings of Marx and Engels are so clear because they have a clear socialist message. What is new is not necessarily better in all cases. A good writer is one who knows how to turn complex ideas into simple ones. without revolution. A car or a new computer that does not work is worse than some old one that does. the only way to preserve the Cuban Revolution is . to refuse to expropriate the oligarchy would be precisely a caricature of a revolution. To hide the purely reactionary character of these theories. This is not a coincidence. in order to build a planned economy under workers' control. or square? Whatever form it took. when he wrote: "The indigenous bourgeoisie has lost its ability to oppose imperialism. But all history proves that it is not possible to carry out half a revolution. One of the principal dangers currently facing the Venezuelan revolution is that it has not yet taken the decisive steps to carry out the revolutionary process to the end. the reactionary oligarchy fled like rats and there was no force in Venezuela prepared to defend the old order. without class struggle. Ultimately. The wheel is a pretty old invention. nor is something necessarily bad for being old. and now just constitutes its tail. The bourgeoisie of Latin America has had two centuries to show what it can do. The reformists say that the revolution must not overstep the limits of private ownership of the big bourgeoisie. the alternative is either the victory of the revolution or the victory of the counterrevolution. In the final analysis. Che Guevara pointed this out long ago. (Ernesto" Che "Guevara. without direction or party. In Venezuela during the last decade the masses have proven time and again their high level of consciousness. industry and land. expropriating the oligarchy and imperialism. when the masses came out. and all that it has achieved is to waste the colossal productive potential of the continent. Bolivia and the entire continent of Latin America. The so-called national bourgeoisie in Cuba was incapable of playing a progressive role. Venezuela and Cuba One of the arguments of Dietrich is the so-called "low consciousness of the working class. The most important lesson of the Cuban Revolution is that the bourgeoisie and imperialism could only be defeated on the basis of the expropriation of the productive forces. One word of Chavez and the expropriation of the ruling class could have been carried out in a peaceful manner.our experience. the revolution must stop halfway. It is not possible to speak of socialism in Venezuela unless it puts an end the economic power of the oligarchy once and for all. we are convinced that it would not take us one step further. Without a nationalised planned economy the Cuban Revolution could never have achieved what it did. there are communists who insist that Communism can be maintained while in practice what is being defended is capitalism. Instead of the expropriation of the commanding heights of the economy it should encourage small cooperatives. to defeat the reactionary coup organised by the owners of the banks. 2002. while a bad writer only knows how to make simple ideas complicated. if it ever had it. But this is not a problem of lack of awareness of the people but the lack of a revolutionary party with a revolutionary leadership. It would be doomed to failure.Message to the peoples of the world through the Tricontinental) To refuse to carry out the socialist revolution in Venezuela. but after thousands of years still works fairly well. and instead of the planned economy the Keynesian model must be implemented. The defeat of the Venezuelan revolution would have serious consequences for Latin America and to Cuba above all. The reformists believe it is possible to reach socialism without nationalisation. This is a very dangerous idea. On April 13. It was they who saved the revolution on 13 April 2002. The distortions and manipulations of socialist thought are carried out from different fronts. The same was the case in the oil lockout and the recall referendum. there is a depth that is empty also. Incredibly. What should we think of someone who asks us to abandon the wheel because it is old and look for a wheel of the XXI century? What type of wheel would this be? Triangular perhaps.

any attempt by the bourgeoisie to restore economic equilibrium would destroy the political and social equilibrium. according to these theories. I have not heard anything that is even remotely comparable with the depth and richness of Marxism. economics. In both cases the bottom line was the same: who will pay? Everywhere the ruling class wants to put the full weight of its bankruptcy on the backs of the working class. The relevance of Marxism today The critics of Marxism call into question the relevance of Marxism in all fields: philosophy and science. if someone can convince me that he possesses a body of ideas that is superior to Marxism and renders it obsolete. We can express the dilemma of capitalism as follows: a) the bourgeoisie cannot accept the existence of reforms. we will create a new slump. should never have happened. or there is no solution to the crisis. in a speech at the London School of Economics in June. it seems to me that . are now beating their breasts in public. the theory of the state. the sick. middle class and the poor and vulnerable sectors of society: the unemployed. Today more than ever. Engels. From a capitalist standpoint. Greece. To indicate the total confusion of the bourgeois economists. Quite the contrary. it is sufficient to note the despairing comments of the bourgeois economists in recent months. an idea for which Che Guevara fought and died." (See The National Interest. In other words. It is the beginning of a new period of class struggle. For over half a century I not only have carefully studied all the works of the great Marxist writers. I am even firmer in my beliefs and convictions. I consider the ideas of Marx. The present events in France are an eloquent proof of this assertion.by breaking the isolation of the revolution by extending the socialist revolution throughout Latin America. After carefully reading the writings of Dietrich and other revisionists I have not found any reason to change my ideas. because Marxism is a set of ideas that cannot be regarded separately. And it must be so. who received the Nobel Prize for Economics in 2008. Spain and other European countries. to reveal the real face of the bourgeoisie. But until today I have never encountered such an option. and positively harmful at worst. "If we cut public spending. The ignominious failure of Obama in the US is an expression of this fact. October 27. In Latin America the revolutionary trend has gone further than elsewhere. macroeconomic theory has been spectacularly useless at best. the immediate cause of both the English Revolution in the seventeenth century and the French Revolution in the eighteenth century was the huge deficits of public spending. That is why they are taking steps that are totally irresponsible from the standpoint of orthodox economics. The error of the reformists is that they believe it is possible to go back to a period when the economic boom that followed World War II allowed the bourgeoisie in Europe and the US to make big concessions to the working class to take the steam out of the class struggle. Barry Eichengreen. not only is it impossible to carry out further reforms. historical materialism. 2010. I am willing to change my mind. This is a sign of desperation. This is a finished recipe for the intensification of class struggle everywhere. Interestingly. Everywhere we see the awakening of the masses who are seeking a way out. "We must reduce the deficits. The total incapacity of the bourgeois economists to explain anything is clear." Others say. For my part. Berkeley. Engels already answered these critics in one of the finest works of Marxism: Anti-During. In fact they are more necessary and relevant now than at any other time. The same people who imagined that their elaborate models could predict with mathematical accuracy the behaviour of the global capitalist economy. Having heard many arguments from people who claimed to offer an alternative. Naturally." And both are right. Lenin and Trotsky to be as valid and relevant as they ever were. But we also see a revival of the labour movement in France. an economic historian and prominent US economist at the University of California. "(Quoted in The Economist) The bourgeoisie does not understand what is happening and is in a state of panic. They say it themselves. But this is now impossible. 2010) Paul Krugman. Some say. Failure of bourgeois ideology All the theories of bourgeois political economy have been shattered following the 2007-08 crisis a crisis that. but also a good number of their critics. the old and the disabled. The smiling mask of "capitalism with a human face" has slipped. it is impossible to tolerate the continuation of the reforms that were conquered by the workers during the past fifty years. I have yet to see a body of ideas that comes anywhere near the heights of Marxism and that can replace it as a scientific tool for understanding the world in which we live. writes: “Thecrisis has cast into doubt much of what we thought about economics. and predicted with absolute confidence the impossibility of a slump. said: "Over the last thirty years. Everywhere there is a growing questioning of capitalism and a growing interest in the ideas of socialism and Marxism. b) the workers cannot accept further cuts in their standard of living.

Here's a book written over 150 years. Even worse is the attempt to present a kind of "socialism" that turns out to be exactly the same as capitalism. We must demolish the fallacies of reformism. It is ironic that precisely at this moment. But even if we were to consider this option. condemning millions of human beings to poverty and hunger. we will have to make this or that change. The vast superiority of the Marxist method can be seen in the founding document of scientific socialism. but what is surprising is how little needs to be altered. the discoveries of the human genome. Of course. The fact is that the so-called free market economy has failed on a global scale. the proposals are clear. My friend and comrade Fernando Buen Abad says that reformism is chameleon-like and slippery. What is necessary is a rationally planned economy where economic decisions are taken to satisfy the needs of the many. suffice it to mention chaos theory and its variants (complexity and ubiquity theory). Cuba is a small island with a small population and few resources. And irrespective of the intentions of those responsible. Fidel Castro rejected the “Chinese model” because it was just another name for the restoration of capitalism. degradation and semi-colonial dependence. we need not reinvent the ideas of scientific socialism. and the restoration of capitalism would be Hell for the people of Cuba. What is not so good is that some people should try to monopolise the interpretation of socialism of the XXI century. It would soon revert to a similar situation that existed before 1959 – one of misery. which has constantly supplied the factories of Guangdong with workers who work under virtual slave conditions for very low wages. The capitalist road (even if it masquerades as the "Chinese road" or the "Vietnamese road") cannot provide any solution to the problems of the people of Cuba. we must learn from the failure of the Soviet Union. we can say without fear of contradiction. many resources and a powerful industrial base. and in many cases are more relevant today than in the times of Marx and Engels. It is the entry to a very slippery slope. “The state should no longer plan the economy but regulate it”. Certainly. history or sociology written in 1848 that has more than a mere historical interest. the writings of Stephen Jay Gould on the evolution of species. which explains what is happening in the world now. it would immediately become clear that it cannot apply to Cuba. introducing confusion of all kinds. the revisionists want to abandon socialism and embrace the market economy. The change of terminology is irrelevant. All this shows that "ultimately nature works in a dialectic" in the words of Engels. etc. confuse and defeat the socialist revolution and undermine the ideas of Karl Marx. even if some do not yet recognise the fact.scientific socialism is an essential tool to carry out the struggle of the working class towards their emancipation. that the most modern book you can read is The Communist Manifesto written by Karl Marx and Frederick Engels. which would eventually destroy all the conquests of the revolution. The huge Chinese peasantry has provided China’s capitalist enterprises with a vast reserve of cheap labour. but rather El Salvador or Nicaragua after the victory of the counter-revolution. to achieve the triumph of a conscious and free humanity. For the present. in which he pays tribute to the role of Engels. Some people are talking about a “Chinese way” or a “Vietnamese model” for Cuba. Of course. which retain their full validity and relevance. the basic ideas remain as valid as when they were written. But it is important to note that what failed in the USSR . but its mission remains the same. including phenomena such as globalisation and concentration of capital in few hands. I have given a list of these examples in my book Reason in Revolt (published in Cuba by the Social Sciences Publishing House). it is good to discuss the ideas of socialism. This is a scientific struggle without quarter. things are clearer still. Of course. The restoration of capitalism in Russia has had disastrous consequences. Instead. No doubt the intentions of those proposing these measures are of the best. the danger is that market reforms can unleash powerful tendencies towards the restoration of capitalism. not the profits of the few. and we participate in this debate with the greatest of enthusiasm. In the field of political economy. which represent a purely dialectical method. not just for the peoples of the former Soviet Union but for Cuba also. which has furnished us with examples of the correctness of the dialectic that are far more striking than those used by Engels in The Dialectics of Nature. The restoration of capitalism in Cuba would be an even greater disaster. Long ago. The concrete conditions are completely different. A capitalist Cuba would resemble neither China nor Vietnam. Marxism has been corroborated by advances in science. as we have seen. just when it is in a mess everywhere. The only thing that a Cuban variant would share is the last: low wages. Reformist demagoguery can be disguised in many ways. and so on. China is a vast territory with over a billion inhabitants. “manufacturing and agriculture should be opened to foreign investment”. Regardless of how they want to describe their model. In the same way that we need not reinvent the wheel. The crisis of the global capitalist system shows that it is unable to offer any prospect for most of the world's population. It would be impossible to find any bourgeois book on political economy. Reformists and social democrats are committed to slow up. and once it starts it will be difficult to stop. But the way to Hell is paved with good intentions.

This is ironic.S. 2010 A new stage in the crisis of capitalism . But now sovereign default in one of the world's core economic areas has become a serious threat. Marxism is perfectly suited to develop an alternative to the tactical and strategic problems of Cuba and the world revolution. These things are not something inherent in a socialist planned economy but the product of the isolation of the Russian Revolution in conditions of frightful backwardness. among other things. October 29. What failed in Russia was not socialism in the sense understood by Marx or Lenin. which gave astonishing results and transformed backward tsarist Russia into a powerful industrialised nation. In the past. events in Greece caught the bourgeois commentators unaware. Only by injecting huge funds from an emergency fund can the European bourgeoisie shore up the shaky edifice. 26 May 2010 After talk of the so called "credit crunch" gave way to optimistic comments about the "green shoots" in the economy. The global financial crisis of 2008 was related to sub-prime mortgages. The Economist . The once prosperous euro zone is now teetering on the edge of a terminal crisis. What is needed is a fraternal debate between the various trends in the communist movement. the bonds of European countries were considered to carry virtually zero risk. All the lights are now flashing red. What was necessary was to combine the nationalised planned economy with the democratic control and administration of the workers. On the United states of Europe. London. Now the world economy has once again been plunged into chaos and uncertainty as the governments of Europe try to contain the fall-out from the near-default of Greece and it is the workers who will be presented with the bill.was not the nationalised planned economy. The fears over the Greek debt problems have rapidly turned into fears over Portugal and Spain. Now the convulsions of the euro are driving the world's stock markets down and raising fears that the world is about to fall back into slump. The immediate cause of the panic is the crisis of the euro. 1923) The stock markets of the world are in turmoil. but a bureaucratic caricature of socialism that stifled all initiative and creative thought and led to corruption and inefficiency on a vast scale.” (Trotsky. The falls on the stock exchanges are a warning that the economic revival is in danger. Debate in the hands of revolutionaries should serve. The markets believe that the weaker euro zone countries will not be able to take the necessary action to reduce their deficits. Nothing and nobody must deviate from this goal. The extreme volatility of the market over the past fortnight reflects a fundamental lack of confidence. as Lenin explained many times. “To the toiling masses of Europe it is becoming ever clearer that the bourgeoisie is incapable of solving the basic problems of restoring Europe’s economic life. but now the crisis is related to what one might call sub-prime government debt. to clarify ideas and mobilise our forces for concrete actions that are aimed at the overthrow of capitalism and its replacement by a qualitatively superior system: socialism. dollar as a global reserve currency.Part One Written by Alan WoodsWednesday. This debate has been initiated and is leading to the revival of communism worldwide. Not long ago they were talking about the euro as a rival to the U.

The situation is so fragile that any small incident: a missed budget projection by the Spanish government. The question is simply stated: will governments be able to force the workers to accept huge cuts in the public sector budgets in the interests of saving capitalism? The spectacle of workers taking to the streets in Greece. the chain of European capitalism has broken at its weakest link. The process has reached its limit. This is most revealing.” . Credit markets worldwide could suffer gridlock. Washington Post carried a very interesting headline: “One false move in Europe could set off global chain reaction”. In a sense.S. The factors that previously served to push the world economy up are now combining to push it onto a vicious downward spiral. though not part of the Euro Zone. Eastern Europe. but the hidden part is what is really deadly.’ with a default in one country weakening banks elsewhere. which finds its reflection in the extreme nervousness of global markets. and as with a real iceberg. Russia. In a distorted way. with a web of investments and cross-country bond holdings that could be a main vector for financial ‘contagion. and the increased participation of India. the bourgeoisie is the victim of its success. dialectically. will not be far behind. two billion people joined the capitalist world market. That adequately sums up the situation. Spain. It may be argued that Greece. Effects of globalization At bottom the crisis is a manifestation of the fact that the productive forces on a world scale are coming into contradiction with the narrow limits of private ownership and the nation state. investments and raw materials. everything is turning into its opposite. Portugal and Ireland represent only about four percent of world economic activity. the effect can pass rapidly from Greece to Portugal and Spain. the failure of Greece to hit a deficit-reduction target. banks are intimately linked. Ireland and Italy. the part you see is frightening enough. the nervousness of the markets is a reflection of the growing awareness of the bourgeois that the economic crisis will lead to a sharp revival of the class struggle everywhere. then to Ireland and Italy. Indonesia. causing chaos in world money markets that would end in a new crisis in Wall Street. a drop in Ireland's economic output – could set off a chain reaction that could lead to a global slump. We saw something similar in 1997 and 1998 when the East Asian financial crisis spread rapidly through Thailand. It shows the extremely fragile and unstable nature of the economic recovery. economic recovery in the hands of politicians in an assortment of European capitals”. Spain. After the collapse of the USSR. The capitalists attempted to overcome the limitations of the nation state by increased exploitation of the world market. The entry of China. Europe’s troubles can lead to a general crisis of world capitalism. On Monday May 24. South Korea and other nations. the bourgeoisie has conjured up forces it cannot control. provided them with vast new sources of markets. The conclusion of the article is striking: “the future of the U. Even if they find a temporary solution to the problems of Greece. Now Europe is facing the same prospect. then Britain. 2010 will be remembered as the year when governments defaulted. The euro crisis is only the tip of a very large iceberg. But there are several other very weak links. And Britain. The Washington Post continues: “Inside the euro zone. However. Like the Sorcerer’s Apprentice. But once the dominoes start to fall. Globalization now manifests itself as a global crisis of capitalism.put it like this: 2008 will be remembered as the year when the banks defaulted. Portugal and Spain has already given them an answer that they did not want to hear. In the words of Cornell University economist Eswar Prasad: "the debt crisis and its ripple effects are bad news for all corners of the world". Almost anything can cause a sudden collapse of “confidence”. In Greece. the fear that the contagion will spread to Portugal. throwing the world economy back into recession. The crisis in Greece is only the accident through which necessity reveals itself. Confidence in the euro would collapse.

and its nation states. Ireland and Italy. However. On May 2nd euro-zone governments and the IMF set out the terms of a €110 billion ($145 billion) rescue for Greece. How could the sharks not be euphoric at the prospect of further billions of taxpayers’ money being shoveled down their greedy gullets? Germany’s stock market closed more than 5% higher on May 10th. They are firm believers on the old Chinese proverb: “What do you do when you see a man falling? – Give him a shove!” It is true that all euro-area countries have an interest in avoiding a default. as the markets showed their muscle. Greek bonds continued to trade at the level of junk bonds. If that is not done. It will offer banks unlimited loans at a fixed interest rate. Confidence in the euro would plunge. worth up to €500 billion ($635 billion). meeting in Brussels. But in the first place. If Greece goes under. But in reality. so they also stand to benefit handsomely. The main element is a “stabilization fund”. into dangerous and uncharted waters. who will pay the bill for these huge sums? The financial markets’ initial reaction was naturally euphoric. whatever they did would be wrong. the markets’ attention would immediately pounce on Portugal. The package. France’s main index went up by almost 10%: big French banks are heavily exposed to Greece. there will be an even worse crisis in the euro zone in a few months. The policymakers have been accused of doing too little. In the end Germany and the European Union were forced to act to save the euro zone. The market knows that the whole thing has been hastily cobbled together. European governments would have been faced by the same fate that was suffered by Lehman Brothers. Spain. The bond markets’ nervousness indicates that the investors are quite prepared to see whole nation states go under. this euphoria soon gave way to a more somber view. €60 billion is to be financed by the sale of EU bonds. Stockmarkets in Europe and America slumped on May 4th and fell again the next day.The crisis is pushing Europe. only buys time for Greece and other vulnerable troubled governments to cut their budget deficits and to improve their lost export competitiveness. Yet again the governments are handing out billions to the banks to prevent a collapse. yields on the weaker euro-area countries’ government bonds rose sharply. Of this. Greece could be on an inexorable path towards default.Europe in crisis Drawing by Latuff. and there is no guarantee that it will work for long. there is no guarantee that there will not be such a collapse. The fund is to be supplemented by up to €250 billion more from the IMF. In addition. the European bourgeoisie did not know what to do. . Yet the German bourgeois do not like the idea of paying the debts of “profligate” countries. If nothing was done. There were growing fears about the exposure of banks to European governments and private borrowers. the European Central Bank (ECB) said it would purchase government bonds to restore calm to “dysfunctional” markets. too late. Caught on the horns of a dilemma. There is a real threat that foreign financing for these countries would cease altogether. and in the second. In the early hours of May 10th finance ministers. By May 7th. despite its impressive scale. agreed on an emergency plan to prop up the euro zone. That was far more than had previously been promised but it was not enough to settle investors’ nerves.

openly criticized the ECB’s conduct in the pages ofBörsen-Zeitung. Axel Weber. The parsimonious spirit that lies behind all the talk of an “international rescue” is shown by the long delays in approving the plan. was accused of “caving in to political pressure to help out spendthrift governments”. a German financial newspaper. They do not want huge amounts of money being handed out without close monitoring." and: “If the euro fails. M. In other words. Germany is insisting that the money will be raised and controlled by governments. Germany’s central bank. Trichet maintains that the central bank was “fiercely and totally independent”. The financial world is being shaken by rumors of the possible collapse of the euro zone. the central bank’s president. Jean-Claude Trichet. all the nation states jealously guarded control over their national interests and their national banking systems. All the official denials have not helped to calm the jittery nerves the markets. who had not been consulted.The appearance of European unity was in reality an illusion. In his defence. The opposition MPs and increasingly her own coalition members are becoming increasingly angry. the French finance minister. reflecting the completely parasitic character of British capitalism's reliance on finance capital. The Greeks blame the speculators. It infuriated Germany's European partners. . It has no chance of success. the money will be given to Greece with the strictest monitoring and control. the head of the Bundesbank. In this mood of panic. There were unprecedented public recriminations from Christine Lagarde.National conflicts A strained relationship. She was trying to show that Germany was taking steps to defend itself. the bourgeois seek to find someone to blame. which even then was further delayed by failure to agree on details such as the interest rate to be charged for access to funds. These divisions have been cruelly exposed by the present crisis. the conflicts between the national governments began. The move wiped billions of euros off the value of shares and drove the single currency down to a four year low. Hypocrisy of German capitalists The underlying sickness of European capitalism is reflected by the feverish movements of the stock exchanges. Photo by the office fo the Prime Minister of Greece. A speech made by Merkel during a rowdy session of the German federal parliament made matters worse. The already panicky markets plunged again. then Europe fails". The French blame the Germans. who may succeed Mr Trichet when he steps down next year. not bureaucrats in Brussels. This was no more than a mild attempt to control speculation. The move was taken because of the German Chancellor's increasing desperation ahead of last Friday's vote on the euro bailout. a statement that not many people believe these days. But the markets want complete freedom to pursue their predatory activities. Merkel had to do something to prove that Germany was not simply writing a multi-billion euro cheque from the taxpayer to bail out Greece and others. She said that "the current crisis facing the euro is the biggest test Europe has faced in decades. There were naturally loud protests from London (both Labour and Tories were agreed). Britain said it will not sign up to it. And immediately after the deal was signed. Behind the façade of unity and solidarity. The Germans blame the Greeks. Germany took a unilateral decision to ban the short selling of EU government debt and banks.

currently have a 3 trillion euro mountain of debt and their ability to service it is in doubt. Germany would have to reinstate the Bundesbank. If they refused. unit labor costs in Club Med have increased relative to Germany’s by approximately 25 percent. The Germans complain a lot. Germany. what is being discussed here is not aid to Greece. but not impossible. In order to revive the deutschmark. and damned if you don’t. This crisis was not brought about by the workers of Greece or any other country. The result has been a massive €110 billion (2007) current account surplus for Germany towards the rest of the Euro-zone. German capitalism benefited more than any other from the introduction of the Euro. we’re Europe’s fools” was how Bild. further improving Germany’s competitive advantage. Therefore. France and other countries who own most of the debts of Greek capitalism. At some point. The public displays of moral outrage in Germany reek of hypocrisy. would be paying for it this with the weakening of the euro and higher inflation. The other members of the euro zone would face far greater difficulties if they wished to return to their old currencies. which was the engine of growth for the whole EU. And the present “rescue plan” is a plan to rescue. known as the “Club Med” economies. The weaker members of the rich man’s club. Spain and Eastern Europe. In a crucial state-level election May 9 Merkel’s governing coalition was heavily defeated. Merkel managed to push through the euro zone-wide bail-out mechanism on May 21. From the point of view of German capitalism it was a case of “damned if you do. But opposition among German voters is growing and it is spreading to Merkel’s coalition partners and political allies. However. because they fear that they may not get their pound of flesh. taking advantage of the fact that weaker economies like Greece. Since the euro was adopted. in the end. including Germany.Increasingly. This is a sign of mounting dissatisfaction with her Christian Democratic Union and its coalition ally. the bankers are nervous. Thus. and German exports have benefited. in the first place. Germany may conclude that further bailouts are just throwing money into a bottomless pit. Why are the Germans so stingy? Why did Merkel not do more to help Greece earlier? At a recent meeting of European leaders it is said that President Sarkozy threatened to leave the euro zone if Berlin did not help Greece The criticisms of her neighbours do not go down well in with Berlin. the losses caused to Germany by a break with the euro zone would be far greater than remaining within the euro zone and financially supporting it. they would have trouble at home. but the bankers of Germany. since German banks own much of the debt issued by Club Med. Merkel was forced to swallow hard and approve a huge bailout. print its own currency and then re-denominate the country’s assets and liabilities in deutschmarks. withdraw its reserves from the ECB.” That is a lie. At that point. the influential German newspaper. The prostitute press in Germany and other countries are trying to portray the situation as “Europe helping lazy Greek workers. a Greek default would have a domino effect throughout Europe and on a world scale. but they overlook the fact that the euro zone provided Germany with considerable economic benefits. The German capitalists enjoyed a privileged position in the years of boom. not Greek workers. German banks were happy to make profits out of lending to Greece. at least for the time being. “Once again. could no longer devalue the currency to protect their national market. greeted news of the euro rescue plan. but they are not prepared to accept losses now. That means that Germany exports €110 billion more to the Euro-zone than it imports. but aid to the German bankers and their European partners in crime. despite all the huffing and puffing in Berlin. In the latest polls. This would be difficult. the Free Democratic Party. Spain and Portugal. the German bankers. That means. 47 percent of Germans are in favor of returning to the deutschmark. It was created by the voracious and reckless actions of the bankers and capitalists of both Greece and the rest of Europe. . the finger is being pointed at Berlin. For German capitalists this was of tremendous benefit in the short-run but in the long-run it is completely unsustainable. and anyway there is no guarantee it will succeed. somebody has to pay the bills. They made a lot of money then. Germany’s dilemma The problem is that. which is paid for by massive lending from German banks. The “markets” are nervous about this. its banker and de facto leader. The euro zone. which would pull Germany down with everyone else. Germany may decide to cut its losses. Exposure of German banks to Club Med debt may be as much as 500 billion euros. is now the target of all the pent-up anger and frustration of its partners. Their exports invaded every market.” If they provided Greece (and other weak euro zone economies) with money. Its neighbors are unable to undercut German exports with currency depreciation. That is to say. Germany may decide that the ECB should ignore its rules and purchase the debt of the weak euro zone governments by the simple device of printing money (“quantitative easing”).

which was only an extreme expression of a general discontent in Greek society. Karamanlis could comfortably maintain himself in power for four-and-a-half years. and then it exploded. which began with the Germaninspired intrigue to break up Yugoslavia. The unemployment rate for young graduates in Greece is 21%. The tourists were streaming in. The Greek economy appeared to be healthy. . The Greek bourgeoisie – one of the most corrupt and reactionary in Europe – thought that it was being very clever when it joined the European rich man’s club. These demonstrations were on an unprecedented scale. The protests quickly spilled into the main streets of Athens. the Greek economy has lost competitiveness. There were subsidies from the European Union. budget and public debt. However. Even in 2001. Throughout history. shouting “let parliament burn”. with a sharp rise in youth unemployment and a reduction of openings in education. At that time German capitalism was puffed up with its own importance following reunification. It was graphically expressed in the huge deficits in the current account. Hundreds of school students battled with police after the teenager’s funeral. Groups of youths burned cars. There were violent clashes with riot police and tear-gas filled Syntagma Square. As a direct result of the adoption of the euro. causing damage estimated at more than €100m ($130m). The murder triggered five nights of riots. compared with 8% for the population as a whole. This was already a warning to the ruling class. In both cases. But the global economic crisis cruelly exposed the underlying weakness of Greek capitalism. Greek membership of the Euro seemed a guarantee of future prosperity. who are a sensitive barometer that reflects the buildup of contradictions and tensions in society. Greek ship-owners were making record profits from China’s export boom. Many Greeks are underemployed. As long as the boom continued. Demonstrators attacked police stations and public offices in a dozen cities. the real weakness of Greek capitalism ought to have been clear to a blind man. This affects the youth in particular. it blew itself up to an enormous size. The moving of its political centre to Berlin in the heart of Europe symbolized its unlimited ambition to become the Master of Europe. broke shop windows decorated for Christmas and tossed in petrol bombs. with growth averaging over 4% a year up to 2007. It showed the pent-up anger of Greece’s youth. This was the case in Russia in 1901 and in Spain in 1930. resembling an uprising of the youth. Greek capitalism is the weakest of several weak links in European capitalism. was shot dead by a policeman in December 2008. Under these conditions the Imperial Master graciously accepted the accession of Greece as a further step towards consolidation of German domination of the Balkans. Last but not least. Others threw stones at policemen on guard outside parliament.Greece – the sick man of Europe Greece joined the Euro in 2001. The growing mood of discontent that was seething beneath the surface was shown by the violent youth protests after Alexandros Grigoropoulos. Russian oligarchs were buying expensive land on Aegean Islands. construction was booming as a result of the 2004 Olympics. a 15-year-old schoolboy. He easily won two elections. and thence across the country. the demonstrations of the student youth were a warning of the revolutions of 1905 and 1931. every revolution has been anticipated by a movement of the youth – particularly the students. Like the frog in Aesop’s fable.

On 11th December The Economist commented: “There is something weird and frightening about the sight of a modestly prosperous European country—assumed by most outsiders to have recovered from its rocky history of coups and civil strife—that is suddenly gripped by an urban uprising that the authorities cannot contain. Unlike his father. Papandreou admitted that this year’s budget deficit was not 6. terrified of provoking an even bigger movement. But these reformist dreams immediately evaporated like a drop of hot water on a hot stove. On December 10th there was a 24-hour strike by public-sector unions. Brought up in Sweden. was unable to impose a curfew or order mass arrests. It won only 33. harvested on sunny mountainsides and windy Aegean Islands. collapsing tax revenues and a soaring budget deficit. 43. The Karamanlis government admitted that Greece had manipulated its figures to qualify for the euro in 2001. and like Blair in Britain.6% and won 15 seats – at the cost of the ND. despite Karamanlis’s appeal for it to be cancelled. It was a clear vote for change. while Syriza.Kostas Karamanlis.7%. This was the biggest victory for Pasok since it first came to power in 1981. The Communist Party (KKE) took 7.” The events of December 2008 led inexorably to the fall of the Karamanlis government. The Pasok government The general election on October 4th 2009 resulted in a landslide victory for the Panhellenic Socialist Movement (Pasok) that surprised both the political observers and the Pasok leaders. Attempts to arrive at a consensus between political leaders on how to quell the unrest quickly broke down. increased its share of the vote to 5.5% and 91 seats—its worst-ever showing at the polls.6% and 13 seats. a far-right party. The right wing government of Costas Karamanlis. It goes against the trend Europe in the recent elections where social democratic parties have been defeated. giving it 160 seats in the 300-member parliament. and educated in the USA. took 4. a left-wing coalition that arose from a split from the CP. He also promised real rises in wages and pensions to encourage Greeks to spend again. They came into conflict with the harsh reality of economic crisis. The memory of the military dictatorship in the 1970s was too fresh in people’s minds. He talked of exporting renewable energy. . Laos. George Papandreou has worked to pull the party to the right. the Pasok leader.The protests caused paralysis of the authorities. George Papandreou. The centreright New Democracy party was shattered.9% of voters backing the party.4 billion) to accelerate economic recovery and above-inflation increases in wages and benefits for public-sector workers. and persuading Greek software developers abroad to set up companies at home.7% but 12. called for a general election. “Effectively there is no government…we claim power.5% and 21 seats. This was a clear reflection of growing popular discontent. Photo by New Democracy. These events caused alarm among the international strategists of Capital. Initially he promised stimulus of up to €3 billion ($4. Andreas Papandreou. he enjoys friendly relations with Obama. The Pasok gained in popularity as the support for the New Democracy melted away in a welter of financial scandals.” he said. and so on and so forth.

One bourgeois commentator in Britain described the situation in the following terms: “Greek workers against European bankers. The Economist remarked: “By Greek standards Mr Papandreou has been courageous. the IMF and the bourgeois leaders of the EU. but he should have been braver still. immediately reacted with mass street demonstrations. demolish houses and kill anyone who stands in their path. In the process. For every step back the reformist leaders take. but he has only two alternatives: either he defends the interests of the workers or those of the capitalists. incidentally. demand harsh measures. Feeling themselves betrayed by the government they hoped would defend jobs and living standards. and his successor will not end up any better as a result of his. And he has made his choice. The prime minister’s promises of fiscal austerity have not convinced the markets. But once the markets head downwards panic sets in and a stampede begins. and completely impervious to human suffering. All must be sacrificed on the altar of Capital! The austerity measures approved by the Athens government were too little for the bourgeoisie. however. Papandreou found himself ground between two millstones. tried to get round the problem by the simple expedient of falsifying the statistics to conceal the facts – something they are. Athens and other cities have been rocked by mass protest demonstrations. international investors were not impressed with Papandreou’s promises. was not in Athens and its faulty accounting. The source of the problem. The Greek premier is trying to hide behind the IMF and the anonymous “international speculators” that have brought Greece to its knees. Ireland set the pace on December 9th by producing a budget that sharply cut public-sector wages. Agamemnon ended up very badly as a result of his actions. . Photo by philippe grangeaud / solfé communications. But for the millions of Greek workers who are faced with savage cuts in their living standards.” Here is the real voice of the bourgeois: stonyfaced. they trample the crops. these arguments do not excuse the actions of the Pasok leaders. As long as the market was heading upwards. following their marvelous revolutionary traditions. For months. Spreads on Greek government bonds over German Bunds began to widen. unfortunately. has so readily bent the knee to the IMF and Brussels. The Greek workers hate the speculators. not alone in practicing. hard hearted. the workers of Greece have taken to the streets. and sent him a little message to convey their opinion. The Greek workers. they did not pay any attention to the niceties of economic and financial soundness. This is the financial equivalent of laying hold of a man’s genitals and exerting a gentle squeeze.George Papandreou. with the mentality of a petty haggler in the marketplace who wishes to sell rotten fish by placing fresh ones on the top. But sooner or later the facts become known. Nowadays it would be more correct to say: Man proposes but the Market disposes. Papandreou is compelled to cut living standards in order to placate the almighty Market. Papandreou wants social peace with fiscal austerity. The speculators rush blindly from one market to another in search of a safe haven. which operates with the same rationality as a herd of antelopes in the veldt. The markets decide There was an old saying: man proposes and God disposes.” That puts it very well. The problem is precisely with the mechanism of the “free market economy”.It is true that the Greek capitalists. With a budget deficit almost 13% and a public debt of 125% of GDP. but too much for the workers. Papandreou wants to avoid direct confrontation with the trade unions. the bourgeois will demand ten more. Now that the stampeded has begun. But they cannot forgive a government that. nothing can stop it.” And it added: “Hard times. just as Agamemnon was obliged to sacrifice his daughter Iphigenia in order to placate the Gods of Olympus. But the two things are incompatible. Immediately. while calling itself socialist. and have continued to widen ever since. However.

31 May 2010 In the second part of his article. Greece’s failure to comply with the Growth and Stability Pact is only the most blatant case. Now deep cracks have opened up which threaten to bring down the whole artificial construction and bury all the dreams of a united capitalist Europe. Alan Woods looks at the dire economic situation the European Union faces. The collapse of the USSR and the achievement of a unified Germany in 1989 gave a further impetus to European economic integration. loans. on the one hand. He also analyses the effects of the European crisis on the world economy. and therefore has only one monetary policy. But the working class cannot tolerate any further attacks on their living standards and conditions. and the others benefited from access to seemingly unlimited supplies of capital. every country had to agree to rigorous “convergence criteria”. The same can be said of Greece. The German bourgeoisie and its political representative Kohl. had big ambitions.Marx wrote that France was the country where the class struggle was always fought to the finish. But in reality.5 percentage points above the average of the lowest three members’ annual inflation. it was agreed that the euro zone should be modeled after the Bundesbank. Government debt levels were to be no more than 60 percent of GDP. and later of the Junta and the Polytechnic uprising of 1974 are burned on the consciousness of the masses. An annual inflation could be no higher than 1. it is impossible to achieve convergence criteria for economies that are moving in different directions. against the might of the USSR. Sarkozy at one point threatened to pull out of the single currency if Germany didn't agree to pay up. the European Central Bank (ECB). But the truth is that from the very beginning none of the euro zone member states — including France and Germany — have complied with the rules. As a condition for joining the euro zone. The workers of Europe will not stand with their arms folded while the conquests of the last fifty years are systematically destroyed. . Drawing by LatuffThe euro zone has a single central bank. Everything seemed to be for the best in the best of all capitalist worlds. The euro was in large part an attempt by Berlin to achieve by economic means what Hitler attempted to do by force – to unify Europe under German domination. A new stage in the crisis of capitalism . Initially. The developments in Greece therefore show what will happen in every country in Europe as the crisis unfolds. As we predicted more than ten years ago. investment. The question can be put very simply: the bourgeoisie cannot afford to maintain the concessions that were forced from them in the past. In order to convince Berlin to share its currency with the rest of Europe. The European Union During the Cold War European capitalists attempted to form a bloc to defend themselves.Part Two Written by Alan WoodsMonday. the whole project was dominated by German capital. on the other hand. regardless of whether it is located in Athens or Berlin. Germany benefited from free access to other European markets. grants and credits. The memories of the Civil War and the bitter divisions between Left and Right. These were intended to synchronize the economy of the member states with that of Germany. against the encroaching power of the USA. The divisions between the classes constitute a fault line running through Greek society that can explode at any time. The Euro itself was to be as strong as the deutschmark. Now all these plans lie in ruins. These criteria included a budget deficit of less than 3 percent of gross domestic product.

it came with central rules limiting budget deficits and banning bail-outs. were never likely to stick. This time. and even there it would not be accepted everywhere. It is therefore not at all ruled out that the present crisis will end with the “reconstitution” of the Euro zone. since they have lent most of the money. the bourgeoisie has tended to rely more and more on the parasitic service sector. as opposed to 26. It seeks to make money out of money without having to bother with the painful and risky process of production.6 percent of overall output. If Greece were to withdraw from the euro. it could possibly cause Germany to quit the euro zone altogether. which poses the intriguing question: why should Greece approve its own expulsion? Even if it could be arranged. France and the Benelux countries. this can no longer be taken for granted. With a few exceptions. despite the latest bailout. In any case. Germany has agreed to back a “rescue fund”. and that is not something the rest of Europe would be enthusiastic about. like China. That is why they always present the crisis as a crisis of credit. Now.8 percent of euro zone now. it is clear that Portugal. Germany’s economy would represent 45. But there are profound tensions in Germany. They are acting on the old thieves’ saying: either we hang together or we will hang separately. say. Spain and Ireland would not be very keen to vote for a measure that would provide a precedent for their own exclusion in the not-too-distant future. In effect. Such a step would eliminate one problem. and especially the financial sector. where huge profits can be made from the exploitation of a vast pool of labour from the countryside. But the crisis has revealed the underlying fault lines that threaten to break the euro zone apart and even pose a question mark over the future of the European Union itself. which theoretically included huge fines for excessive borrowing. Parasitism of capitalists The bourgeois has long ago lost all interest in productive activity and productive investment. Yet the rules. They could. It would also allow Athens to devalue. It would lead immediately to a black market. and were soon emasculated by France and Germany. Germany would greatly increase its power. . its central bank could print money and purchase government debt. The European bourgeois are striving with all their might to keep the currency union together. for instance. the expulsion of member states is illegal. particularly because it would be clear to everyone that the government would only be reintroducing it to devalue it. How can the present crisis be resolved? In theory. Will the euro zone break up? The trouble with the euro is that it attempts to unite economies that are pulling in different directions. the excluded states might take their revenge by defaulting on their debts. The idea is rapidly gathering ground in Germany that Greece and the euro zone’s other weaker economies should be excluded from the currency union if they do not pay their debts. The financial markets assumed that no euro-area country would ever be allowed to go bust: they assumed that the European Central Bank would always come to the rescue. it would have to be approved by of all 27 member states. The cost of exit would therefore be prohibitively high. which would have a devastating effect on the new euro zone. In a new euro zone composed of. the drachma would only be accepted within Greece. The problem is that no one would want this new currency.Big banks in France and Germany would be devastated if there was default in Greece or Portugal. When the euro was born a decade ago. which would have to be put down by force. but only at the cost of creating many new contradictions. set up a new European Union with a new “strong” euro zone. which would stimulate external demand for Greek exports and spur economic growth. the total breakup of the experiment. there are very clever people sitting in Brussels whose creative powers can surely enable them to think of some bureaucratic solution that would bend the rules to allow the European Union to get rid of undesirable members without formally breaking the treaties. bypassing the credit markets. At one point it seemed that Chancellor Merkel herself was in favour of this. It would plunge world currency markets into a deep crisis and wreck the weak economic revival. minus Greece (and any other awkward customers). If the crisis deepens and the national tensions increase. The tensions are increasing all the time. Moreover. Of course. either by the expulsion of Greece or the withdrawal of Germany. The alternative is to resort to a painful “internal devaluation” via austerity measures demanded by the International Monetary Fund (IMF) and the EU. But the latter variant would mean in effect.

Now nobody wants promissory notes. They do not want promises of any kind. The bankers said “thank you very much” and then proceeded to pocket the money. They want the real thing. when they already have too many factories and not enough paying customers? “The banks must be saved!” That is all. but pay me what you owe. Whenever these hoards are strikingly above their average level. The purely parasitic nature of modern capitalism is seen by the fact that when the banks ran up huge debts. In the past it was backed by gold and silver. either individual consumption of commodities. Time for sacrifice! Once the banks have pocketed the money of the state. They want cash in hand. it is. we never had the money to pay the bankers in the first place. credit was easy. Marx describes this tendency to hoard money in a crisis: “Countries in which the bourgeois form of production is developed to a certain extent. But in the age of the senile decay of capitalism the bourgeois imagined that it could do without gold altogether. Gold is a commodity. or pour it into a black hole (nobody knows how deep it is or where it leads). why should a nation state be any different? It is the business of Capital to make money.This is an entirely mystical way of presenting the question. but pay up! And if this absolute rule of Capital is appropriate in the case of individuals and businesses. Your business will have to close. like that of a miser who greedily hoards his loot and guards it jealously so that nobody will see how much he has got. having saved the bankers). and like all other commodities. raw materials and labour power by the capitalists themselves. Credit is only a way of expanding consumption beyond its natural limits. the markets (that is to say. well. businesses or governments. There is very little real gain to be shown for such a huge expenditure of public money. the state immediately stepped in to shower them with vast amounts of public money. And they want it now. There is one third excess capacity in the car industry on a world scale. Having “saved the banks” (that is. has an . there is a mean and grasping mentality. Here we enter the mysterious realm of banking secrets. And the Social Democrat politicians run faster than anybody else. or the consumption of machinery. The politicians immediately come running with an open cheque book. markets were booming. with some exceptions. What is the “credit crunch”? As long as the world capitalist economy was going forward. This is complete nonsense. and hundreds will lose their employment? Then close it. helping themselves to generous bonuses in the process. an indication of stagnation in the circulation of commodities. of an interruption in the even flow of their metamorphoses. profits were soaring. Economic life remains at a very low level and unemployment remains stubbornly high. and be damned. This meanness takes no account of the real problems faced by families. vol. In a crisis. which must be maintained as absolutely as the secrets of the confession box in church. Nobody looked too closely at the balance sheets of companies. like a man in the stage of decrepit senility who returns to a second childhood. On the contrary. The reason is not hard to explain. 1. the politicians then sadly inform a bewildered public that. they are all calling in their debts. Everybody was enjoying the merry carnival of money making. Instead of the former cheerful openhandedness. Credit can never play an independent role in the economy. The values on the stock exchange are soaring to heights that bear no relation to the real economy? Let them soar! The banks are lending money they do not have? Let them lend! Greece wants to borrow a billion or two? Let them have it! But when the day of reckoning comes (as it always does) the mood of the bourgeois changes abruptly. limit the hoards concentrated in the strong rooms of the banks to the minimum required for the proper performance of their peculiar functions. there is little or no incentive for the capitalists to spend large sums of money on productive investment. Money. the same bankers) suddenly begin to shout: “Look! There is an unsustainable level of public debt! This must be paid immediately!” In the midst of this unholy hullabaloo. actually. because they no longer trust anybody: creditors. Why should Ford and General Motors build new plants. Hoarding is a typical feature of primitive capitalism in its early stages. bankers or governments. Given the huge amount of excess capacity on a world scale. nobody asks the simple question: Why is there a high level of public debt? And nobody asks where all the money has gone to. Now nobody wants to lend money. There is no sign of all this massive injection of public funds into the banks having any serious effect on the real economy. Whatever problems may arise from this money-making activity is an irrelevant matter. banks or nations. it is as if the bourgeois have returned to their beginnings. c) Universal Money) The role of gold Paper money is only a promise to pay. You do not have enough food to eat? Then starve. Section 3. The bourgeois economists talked of the “demonetization of gold”.” (Capital. We had to borrow it in your name and now you must pay it all back.

Wrong right. established the dollar as the medium of world trade (with the pound sterling as a secondary currency). The flight into gold As the credit ratings of Greece. the equivalent commodity par excellence. and also serves as a universal measure of value. Instead. Gordon Brown sold off Britain’s substantial gold reserves between 1999 and 2002. Washington liquidated the Bretton Woods agreement that pegged currency to gold. Let the academics. Currencies were allowed to float. gold has historically evolved as “the commodity of commodities” – that commodity through which all other commodities express their values.. However. Gods. old young. they repeat the words of Shakespeare in Timon of Athens: “Gold? Yellow.” The bourgeois are anxious to get their hands on gold. The dollar was therefore “as good as gold”. She. place thieves And give them title. Thus. Spain and Portugal fall. In uncertain times. are unimpressed by such lectures. in this case. Some of the more obtuse politicians actually believed the nonsense of the bourgeois economists about the “demonetization of gold”. that is. Long before the crisis of 2007 many financial speculators were . that is. determined by the amount of socially necessary labour power expended on its production. while Europe and Japan were devastated. bless the accursed. the financial gamblers of yesterday suddenly lose their taste for risky operations. or promises of any sort. which. This little detail reveals at once the intellectual bankruptcy of bourgeois political economists and reformist politicians. It is a standard of price. They want only the real thing: cash in hand.. This always happens in a crisis. . When the United States abandoned the gold standard in 1971. Therefore they hold no value except the political decision to make them the legal tender of commercial activity. Indeed. damned earth.S. ready money – real money. Those who really hold our economic destinies in the palm of their hand. Its value as a commodity is high because it is relatively rare and there are high costs involved in its discovery and exploitation. The paper currencies in use throughout the world today are no longer backed by gold. bankers or Greek Prime Ministers. glittering. gold. to use Marx’s expression. within limitations. this embalms and spices To the April day again. the productive apparatus of the USA was intact. the bourgeoisie created the conditions for the kind of currency competition and beggar-my-neighbour devaluations that was one of the main factors that transformed the crisis of 1929 into the Great Depression of the 1930s. After the War. In reality. base noble. punishable by law. Pluck stout men’s pillows from below their heads: This yellow slave Will knit and break religions. whom the spital-house and ulcerous sores Would cast the gorge at. which only confirm them in their instinctive belief that the most ignorant people in society are to be found between the four walls of universities. I am no idle votarist! . the professors of economics with long lists of letters after their name. the deutschmark began to emerge as a strong contender for this role. however. Thus much of this will make black white. deliver lectures on the demonetization of gold. and in the process obtained a mere $4bn for what today would be worth more than $15bn.objective value.. money. Refusal to accept paper currency is. which set up the international monetary regime that prevailed from the end of World War II until the early 1970s. At that time the USA could dictate terms to the rest of the world. coward valiant.. contributed directly to national bankruptcy. The hard-headed men of money are no longer interested in paper money. knee and approbation With senators on the bench: This is it That makes the wappen’d widow wed again. currencies were still pegged to gold at a value fixed in dollar terms. In the last few years the US authorities were content to see the dollar slide against the euro and other currencies in order to boost its exports to the rest of the world. Why. While the U. foul fair. Make the hoar leprosy adored. precious gold? No. But what happens if a government has such a high level of debt that it is unable to meet its liabilities? By abandoning the link to gold. Two thirds of all the gold stocks in the world were in Fort Knox. hoping its glitter will defy the laws of economics and maintain their fortunes until the dawn of better times. dollar was still regarded as the world currency. so the world market price of gold is soaring far more than most other commodities. this Will lug your priests and servants from your sides. Thou common whore of mankind. when the capitalists look for a safe harbour to shelter from the storm. But this means governments must be willing and able to enforce the currency as a legal form of debt settlement. The Bretton Woods agreement of 1944. that put’st odds Among the rout of nations. whether from private individuals. Come.

with the financial system. This fact reflects the fundamental sickness of capitalism in the epoch of its senile decay. the bourgeoisie and its political representatives must constantly look over their shoulders to see how the working class is reacting. The economic recovery has a very fragile character. Merkel was not to blame for the euro crisis but when it came she delayed taking measures. Germany The European bourgeois are looking to the future with dread. The “speculators” (read. To enact most money bills the government will now have to co-operate with the opposition. With every step they take. The defeat in NRW has deprived the Merkel government of its majority in the Bundesrat. capitalists) do not have any faith in the euro. as the price of an ounce of gold passed through the €1. Instead of “green shoots”. Health-care is another candidate for “reform” – that is. with the distinct possibility of a double-dip recession. To solve this dilemma is only slightly more difficult than trying to square the circle. we are looking at a potentially much more negative picture. The seriousness of the economic crisis means that they will have to inflict deep cuts on the workers and the middle class. The crisis of the bourgeoisie is shown in the contradictory advice given to Merkel: “Be bold”. They must tread carefully. when she suffered her worst political defeat in more than five years in office. as always. The dollar has risen recently. That is the main problem. The pressure will mount. Everyone is in favour of deficit reduction in principle but in practice it is another matter. the working class will not allow their living standards to be destroyed without a fight. pushing the price of gold to astronomic levels. and are now being followed by everyone else. And that is just as true of the German workers as it is in Greece. which represents the states. It is certainly not justified by the strength of the US economy or the state of its finances. And that is just what we are seeing. Every attempt to restore the economic equilibrium will destroy the social and political equilibrium. . “but do not offend the voters”. The bourgeoisie faces a dilemma. fearful about the euro’s stability and increasingly unwilling to identify Germany’s interests with those of Europe. Germany’s most populous state. Under these conditions one would expect to see a flight from paper money into gold and other things that may hold or increase their value (works of art)." This will have profound effects on the entire world.000 barrier for the first time. and could be derailed by events that began in one small corner of Europe. but this is a sign of desperation and the weakness of alternative currencies. On the one hand she wanted to exert extra pressure on Greece. This indicates that ordinary people are buying gold. the upper house of the legislature. On the other she was hoping that bail-outs of Greece and other weak euro-zone members could be put off until after NRW’s election. respected commentators are beginning to talk ominously about another Great Recession. This is a far cry from the grandiloquent speeches of Kohl about European unity and Germany’s role at the centre of it. But who will decide where the axe will fall? Some suggest cuts to education and child care. In Germany memories of hyperinflation in the 1920s still survive. The big-time investors. not just in Germany but in all Europe. ejected the chancellor’s allies from office. but the social and political consequences of such actions will completely undermine them. The economic crisis is causing divisions at the top that sooner or later must lead to an open split in the government. at the centre. savvy shoppers followed. But the delay only made matters worse. The Austrian mint says it ran out of its stock of similar coins last week. Deutsche Bank analysts have warned clients that if the one trillion dollar EU rescue package fails to calm markets US GDP growth could be reduced by half to one percent over the next couple of years. Merkel paid the price on May 9th. she is told. As soon as that happened. World stock markets have given way to scarcely concealed panic. The German bourgeoisie is resentful of bail-outs. Merkel now presents herself as the guardian of economic stability. World economy The looming crisis looks very similar to the last. Italy and Portugal to introduce draconian austerity packages. "If the rescue program fails altogether. not just professional investors. voters in North Rhine-Westphalia (NRW). How this miracle is to be accomplished we are not informed. What is now being presented as a monetary crisis will become a prolonged economic and political crisis affecting every country in Europe. led the way. After decades of relative prosperity. The very evening when European finance ministers were meeting in Brussels to defend the stability of the euro. the axe. Voters unseated a coalition between her Christian Democratic Union (CDU) and the liberal Free Democratic Party (FDP) similar to the one in Berlin. and banks in particular. but also Spain. because they are walking on a minefield. and still less in the pound sterling. Refineries in South Africa say they are overwhelmed by orders from Germany for Krugerrand gold coins.already getting rid of paper money and building up their stock of bullion.

The U.S. capitalists were hoping that they could dramatically increase exports to Europe. But the steep drop in the value of the euro (about $1.25, down from more than $1.50 in November 2009) makes American goods more expensive compared with those produced in Europe. The American economy will be hard hit by a new banking crisis and a fall in exports to Europe. It would be harder to borrow money or raise finance for businesses. In a crisis the banks stop lending to each other and begin closing down credit lines, sparking a chain reaction throughout the financial system. The banking systems in Europe and the United States are closely interconnected and European banks must have serious repercussions in the USA. Daniel Tarullo, a member of the Federal Reserve's board, recently warned that a repeat of the 2008 crisis which saw the near collapse of the US financial sector was "not out of the question." He told Congress last week that banks were going through spasms that "brought back memories of developments during the recent global financial crisis." The decline in the common European currency also makes it less likely that China will accept with U.S. demands to raise the value of their money, making it easier for U.S. products to compete.

A new stage in the crisis of capitalism - Part Three
Written by Alan WoodsMonday, 07 June 2010

Europe faces a protracted period of austerity, with major contractions in output, consumption and employment. The crisis has started with the smaller, more vulnerable economies like Greece, Portugal and Ireland. But the others will follow, starting with Britain. [Part one]

Europe faced with a downward spiral
Some crises can be solved with reforms, which do not go beyond the established limits. This is above all the case after a long period of economic growth when capitalism has accumulated a layer of fat. It can use its accumulated reserves to prevent the crisis from developing into a deep slump. In the recent crisis, the ruling classes of the world, beginning with the USA, was frightened at the social and political effects of a slump, and took extraordinary measures to prevent it. From the standpoint of orthodox capitalist economics these measures were completely irresponsible. These measures had a certain effect, but did not solve anything fundamental. On the contrary, the huge levels of government debt caused by the bail-outs are a finished recipe for new and even more severe crises of an economic, social and political character. Long ago Ted Grant predicted that in the event of a deep crisis, the bourgeoisie would use their accumulated reserves, and this is just what has happened. Over a period of more than half a century the capitalists have accumulated a layer of fat that could be used to prevent a deep slump from taking hold. But these reserves are rapidly being used up, and now the governments of the western world have been obliged to resort to the policy of deficit financing to prevent a total collapse. The result has been the creation of new and insoluble contradictions in the form of deficits that have no historic precedent in peacetime. In the period following World War Two, in 1945-7, the USA financed European capitalism to the tune of $200 billion (in modern money). But in the first two years of the present crisis, the US government underwrote the banking system by $800 billion, and Britain (a far smaller economy) handed over $400 billion – twice the total amount of Marshall Aid. This situation cannot be sustained. The options of the ruling class are severely limited. Interest rates are close to zero, and cannot be further reduced to stimulate borrowing. The huge debts left over from the previous period still have to be repaid, which will inhibit consumption and slow the recovery in Europe and worldwide. The recourse to “quantitative easing” is a desperate measure, which, if it continues, will lead to a combination of stagnation and inflation (“stagflation”). Thus, the capitalists will end up with the worst of all worlds. The viability of the “rescue” package launched by the bourgeoisie in Europe depends on the implementation of brutal austerity measures. Failure to carry these out could lead to cutting off the cash, which is approximately the same as cutting off the vital supply lines that keep a critically sick patient alive. Even if it the plan were to “succeed” it would leave Greece with an intolerable public-debt burden. This so-called rescue means years of painful austerity for the people of Greece, without giving other countries any relief. If there is a default in Europe, it will be accompanied by a massive contraction of consumption, which can drag the whole world economy back into recession. It will affect the USA and Asia. None of the contradictions has been

eliminated. A new commercial real estate crisis is being prepared in the USA. Some say it might be due this autumn. This involves 6.7 trillion dollar, whereas the last sub prime crisis "only" involved 1.3 trillion. It could drag the whole financial system down into a complete collapse. Fears are growing of a double-dip recession. The Chinese leaders are also worried. The Chinese spent massively to avoid recession but this has created new and insoluble contradictions. China has built up a colossal productive power, which cannot be absorbed by its internal market. If demand shrinks in Europe and the USA, where are they going to export? And since China has been the main engine of global growth as the world struggled to emerge from recession, a sharp slowdown in China could deal a heavy blow to the world economic recovery.

What future for Europe?
The euro and the European Union will probably survive this crisis because the consequences of a break-up would be very serious for all. Nevertheless, the crisis is so deep, and the confidence of the bourgeois so shaken, that some of the bourgeois strategists are beginning to contemplate the unthinkable. George Friedman wrote on the intelligence website Stratfor on May 25, 2010:
“We return to the question that has defined Europe since 1871, namely, the status of Germany in Europe. As we have seen during the current crisis, Germany is clearly the economic center of gravity in Europe, and this crisis has shown that the economic and the political issues are very much one and the same. Unless Germany agrees, nothing can be done, and if Germany so wishes, something will be done. Germany has tremendous power in Europe, even if it is confined largely to economic matters. But just as Germany is the blocker and enabler of Europe, over time that makes Germany the central problem of Europe.”

If the EU were to break up, where could Germany look? The obvious answer would seem to be France. But historically, France and Germany have been rivals, and even in the context of the EU this rivalry continued, with France aspiring to the political and military leadership of Europe, consigning to Germany the economic primacy. Unfortunately for France, economic power is always decisive in the last analysis. France’s interests look southwards – towards the Mediterranean, the Middle East and North Africa. Germany, by contrast, looks east – to Central and Eastern Europe, the Balkans – and Russia. That is where Hitler looked forLebensraum. What he failed to do by military means, the German capitalists hope to do by economic means. It is not ruled out that Germany in the future will expand its contacts with Russia, which represents a vast potential field for markets and investments, raw materials and cheap labour. But this could only be achieved by subordinating Germany to Russian interests. This would be bitterly resented by Washington and the rest of Europe, especially Poland. The unification of Europe is a necessary task if Europe is not to enter into a path of slow and inglorious decline, as happened to imperial Spain from the 17thcentury onwards. It is a historically inevitable task, which capitalism has posed but is totally incapable of solving. Only the Socialist United States of Europe could succeed in radically abolishing the old frontiers and unite all of Europe, include Russia, the Ukraine and Turkey. It would be able to mobilize the colossal productive potential of what is, in fact, Eurasia, uniting the vast natural resources and agriculture of Russia and the Ukraine with the industries of Europe.

Robbing the poor to pay the rich
In 1939 the capitalists found a way out of the crisis through war. But this avenue is now closed. There is no question of Europe waging war against the USA, for example, or of conquering Russia (as Hitler attempted), still less of conquering China. Europe, despite its colossal potential, remains weak and divided, as the tiny Greek city states were divided in Antiquity, when they ended up under the domination of Rome. The Marxist tendency pointed out long ago that the coming period will be a period of wars, revolution and counterrevolution. The recent upheavals in Iran, Kirghizstan, and Thailand, on the one hand, and Iraq, Afghanistan and Gaza, on the other, show the correctness of this assertion. There is colossal instability at all levels: economic, financial, social, political and military. For reasons we have explained, a world war is ruled out at the present time. But there will be many small wars: wars over markets and natural resources, especially oil. This can be a source of international or national conflict, which inevitably leads to higher military spending. The bourgeoisie of all nations are preparing for the future by arming to the teeth. Under these circumstances, the ruling classes of Europe have no alternative but to attack the working class. For the last half century, they bought social peace by granting reforms. But this option is no longer available to them. From the standpoint of the capitalists, not only can they not afford any new reforms: they cannot afford to maintain the reforms that were won by the working class over the last fifty years. In order to maintain their profits, they must destroy all these reforms, which the workers have come to regard as natural.

In reality they are not natural, but the product of decades of class struggle. It is worth remembering that democracy itself was only achieved through a long and bitter struggle. The ruling class, which now often speaks of its commitment to democracy, was opposed to each and every democratic advance. And like every other gain that was won through struggle, the democratic rights of the workers are under threat, beginning with the most important rights: the right to strike and demonstrate. In the last period the capitalist system went beyond its limits. The unbridled expansion of credit (and consequently, of debt) has pushed world capitalism into an abyss of debt from which it is now striving to extricate itself. But in so doing, it has created new and indissoluble contradictions. The central contradiction is that the European working class is now a thousand times stronger than it was in the 1930s. The peasantry, the main social reserve of reaction, has been practically eliminated. In Italy, Spain and Greece, the peasants were a majority and even in France and Germany they were a sizeable force not so long ago. Now they are a tiny minority and the working class is a decisive majority. The workers’ organizations are intact and have not suffered a decisive defeat since 1945. The students, who in the 1930s were a recruiting ground for fascism, have moved to the Left and are a now a recruiting ground for revolution, as they were in Tsarist Russia. Given this correlation of class forces, the bourgeoisie regards the prospect of an all-out conflict between the classes with dread. But they have no alternative. The perspective is of a weak recovery, accompanied by high levels of unemployment and ferocious attacks on the living standards of the workers and middle class, the unemployed, the old and the sick. The poorest sections of society will be compelled to pay the bill for the crisis of capitalism. This fact, in itself, will have profound consequences. For a whole historical period the bourgeoisie has had to base itself on the support of the reformist leaders of the unions and mass workers’ parties. But in the end, this basis will not be reliable. The crisis of capitalism is also the crisis of reformism. For decades the social base of reformism in the labour movement has been strengthened at the cost of the revolutionary wing, which has been weakened and isolated. Workers are practical people. If, as the reformists assured them, it was possible to achieve what they wanted under capitalism, then why go to all the pain and trouble of revolution? These arguments carried weight as long as the reformists delivered the promised results. Reformism with reforms makes sense. But reformism without reforms, reformism with counter reforms, makes no sense at all. This is the lesson that the Greek Prime Minister Papandreou is learning, to his cost. The Greek workers voted massively for the Pasok in the last elections, because they hoped that the Socialists would protect their living standards. But the depth of the crisis of Greek capitalism ruled this out.

Greece
Despite their intentions, Papandreou and the other leaders were compelled to take drastic measures, not to protect the living standards of the Greek workers and middle class, but to save Greek capitalism. The two things are mutually exclusive. Papandreou has promised to push through cuts totaling 45 billion Euros to reduce the budget deficit by an unprecedented 11 percentage points of GDP, to below the EU ceiling of 3 percent. But already there are suggestions that the planned deficit cut of more than 20 billion Euros in 2010 is too ambitious. In the context of an economic contraction of about 4 percent, this is the country's deepest recession since 1974. Deep cuts in public spending will make things worse by reducing demand and causing a fall in tax returns. The increase in VAT and public sector pay cuts adds up to an estimated 10 percent loss in purchasing power. This hits small businesses hardest. About 60,000 small businesses are expected to shut down by the end of the year - around a third of the total. This will mean less income from taxes, not more, as the government claims. Fuel tax increases, which have boosted the price of unleaded gasoline by 36 percent to 1.52 Euros a liter since February, have shrunk sales volume by up to 15 percent. On the other hand, with the collapse of construction, Greek unemployment rose to 12.1 percent in February, the highest monthly level on record and above an average 2010 estimate of 11.8 percent envisaged by the bailout plan. Higher unemployment will force the government to spend more on benefits than expected. And earnings from tourism receipts, Greece's biggest source of foreign currency, are set to shrink for a second consecutive year, by up to 15 percent. Papandreou’s chances of actually implementing his austerity policy are therefore close to zero. In the end, no matter how much pressure is applied on the people of Greece, they will never be able to pay their debts. The so-called “aid” can only postpone the Day of Judgment. And the merciless pressure from Brussels to slash living standards, and

therefore reduce demand, will only succeed in pushing Greece further along the road to national bankruptcy and default. The threat of a chain reaction, beginning in Greece, that could drag the whole of Europe into a downward spiral, still hangs over Europe. One country after another will be pushed over the precipice, starting with the weakest ones. The rest, with a greater or lesser delay, will follow. The strategists of Capital are aware of the danger. An article by Thomas F. Cooley, professor of economics and dean of the NYU Stern School of Business, on 2nd June bore the title: This Greek Tragedy Is Only Beginning. In it he writes:
“For the next several years Greece will face a huge drop in output and consumption. The magnitude of the drop in Greece will dwarf the U.S.'s experience in its recent recession. It will take years for consumption levels to return to anything close to pre-crisis levels. Wages will fall, and access to capital markets will be limited. Greece will be forced to restructure its debt. Several of the other debt-burdened economies in Southern Europe will face similar, painful adjustments.” (This Greek tragedy is only beginning, Forbes.com)

Portugal
Portugal is a small economy, accounting for only 2% of euro-zone output and public debt. Before they turned their attention to Spain, the bond markets seemed to judge Portugal as the next weakest link in the euro zone chain. Portugal’s bond yields jumped to 5.7% on May 5th, an increase of 1.6 percentage points since the start of the year. Its public debt reached 77% of GDP last year. This is about average for Europe, but its budget deficit was 9.4% of GDP – a very high figure. Portugal relies heavily on foreign capital and so is vulnerable to market bullying. Its net international debt rose to 112% of GDP in 2009, after a run of huge current-account deficits. About half of this is public debt; part of it is direct investment in big firms; but a large portion, some 46% of GDP, is channeled through the banking system. Lisbon protests that Portugal has scrupulously observed the euro-zone’s fiscal rules, cutting its budget deficit from 6.1% of GDP in 2005 to 2.8% by 2008. Public-sector jobs have been cut by 10%. In 2006 the Portuguese held down real increases in pensions at a time when the economy was still growing rapidly, and relaxed the rules on hiring and firing. These are the same kind of policies that the markets are demanding in Spain and Greece. But this was all to no avail. For every step Portugal takes to satisfy the markets, the latter demand three more. Portugal has been warned that if it is to refinance its existing debts at tolerable interest rates, it must lower the cost of public borrowing. That means it must undertake far more drastic action to cut the budget deficit. The fall in the euro as a result of the crisis ought to help Portugal sell more in Angola, Brazil, China and America. But a rise in Portugal’s exports can only be at the cost of other capitalist economies. In the end, the government will have no alternative but to launch an attack on living standards. It has already pledged to cut unemployment benefit. Public pay could be frozen. Big transport projects could be scrapped and state-owned firms can be sold off to satisfy the implacable demands of the Men of Money. This means that all the gains of the Portuguese Revolution of 1974-5 will be liquidated. But such a counterrevolution cannot take place without arousing fierce resistance from the Portuguese working class, which has never forgotten the revolutionary traditions that burst to the surface in those glorious days. At that time it would have been possible to have carried through the socialist revolution in Portugal, and this could have been accomplished peacefully. The London Times in 1975 published an editorial with the title: “Capitalism in Portugal is dead.” This ought to have been the case. If it was not, the fault was not of the Portuguese working class, which behaved admirably. The fault was with the leaders of the Socialist and Communist Parties who were not prepared to take power when they could have done so. As a result, the bourgeoisie succeeded in containing the movement and reasserting its power. For three decades the movement in Portugal has been pushed back. But as Marx explained, the Revolution requires the whip of the Counterrevolution. The attempt by the bourgeoisie to liquidate all the gains of 1974-5 will arouse the Portuguese workers and youth. Already there have been mass demonstrations on the streets. The minority Socialist government has passed its economic programme (the PEC), but it needs the support of the right wing PSD and CDS to carry out an austerity policy. The working class has already reacted with mass demonstrations, beginning with May Day, when 130,000 demonstrators came onto the streets of Lisbon. This was followed up by another mass demonstration of 300,000 against austerity 29th May, mainly organized by the Communist Party, but also Bloco de Esquerda and the trade unions, above all the Communist-controlled CGT-In.

president of the CCOO. a former leader of the PSOE. "the pillars of the welfare state will remain untouched". the right wing PP is attacking the PSOE and voted against its economic package. said that the measures "seem to go in the right direction" and that he expected similar announcements soon from Portugal. EU Competition Commissioner Joaquin Almunia. Therefore. imagined that the economic crisis would lead immediately to a wave of strikes and general strikes. called the cuts "a logical step" that is necessary "to avoid greater evils in the financial markets and emerge from the crisis sooner". The plan also includes cuts to regional governments. They are putting party interests before that of the general interests of the bourgeoisie. . the Socialist Prime Minister stressed that despite the new austerity measures. The deficit soared to 11. and there will be cuts to state medical expenditure. Despite this. Now a general strike is on the order of the day. payments to people caring for elderly parents. The fact that the American President had to ring Madrid shows the deep concern in Washington over the parlous state of the European economy.500 (£2. This fact is a reflection of the deep gulf between the classes in Spain. announcing a programme of painful measures which are supposed to save €15bn over two years. In an attempt to placate his base. the right wing had taken to the streets under the banner of the Church. the Spanish capitalists threw themselves into the orgy of speculation with merry abandon. grew by only 0.The crisis in Spain Spain is a much bigger problem for Europe than Greece. As a result." Ignacio Fernandez Toxo. The PP leaders have attacked Zapatero for letting the economy deteriorate to the point that Washington and Brussels had to push him into action. the austerity package has angered the unions. Until now there has been a low level of strikes because the suddenness of the economic collapse and the onset of high unemployment temporarily shocked the workers. Spaniards living on the minimum pension have seen their cost-of-living increases cancelled. Brussels welcomed the cuts promised by the PSOE government. Olli Rehn. A national strike of civil servants has been called for 8 June and there is talk of a general strike. but under pressure from Brussels and the White House.. which was papered over by the Transition.2 per cent of GDP. The European Commissioner for Economic and Monetary Affairs. and in the first quarter of 2010. which stands (officially) at 20 per cent – the highest in Europe (except Latvia) and one of the highest of any developed capitalist country. We had to explain this to the ultra left sectarians who. "We need to make a singular.100) "baby cheque" for new mothers and a €6bn cut in public investment. The Spanish economy had the fastest growth rate in the EU. scrapping the €2. not only in Spain but in other European countries. This was entirely logical and was foreseen by the Marxists in advance. and if it follows Greece into a debt crisis the effects will be felt throughout Europe and beyond. It is Europe's fifth-largest economy. but [Zapatero's] announcement is a turning point. but which has emerged once more. Even before the economy collapsed. the union leaders are compelled to mobilize. Zapatero wanted to avoid a clash with the unions. Zapatero wishes to reduce it to 9. but has been in recession for nearly two years." he said. The union leaders were desperate to avoid a confrontation with the government. Washington and Brussels loudly applaud the fact that a “socialist” government is prepared to do the dirty work for them. using the kind of language not heard since the days of the Franco dictatorship. "The behaviour of the trade unions has been and is impeccable during these times of crisis and will continue to be so. More than any other country in Europe.3 per cent this year. the collapse of the housing market has hit Spain harder than anywhere else. Thus. 6 per cent next year and 3 per cent by 2013. exceptional and extraordinary effort to cut our public deficit. The economic collapse is reflected in the frightful level of unemployment. however. But the union leaders can only keep the unions in check if the government and the bosses offer them something in return. The International Monetary Fund has warned that the Spanish economy needs "far-reaching and comprehensive reforms" of its labour market and banking sector. However.” This “exceptional and extraordinary effort” includes a 5 per cent pay cut for Spain's 2. and the fears that the crisis in Europe will have the most serious consequences for the United States.5 million public sector workers this year. In the last few years Spanish capitalism went up like a rocket and is now falling like a stick.1 per cent. in Spain as everywhere else. But it does not make any sense. has said. But nothing is being offered except cuts. he has made an about-turn. Barack Obama made a personal telephone call to Zapatero the day before his announcement to discuss the importance of "Spain taking resolute action as part of Europe's effort to strengthen its economy and build market confidence. Up till now Zapatero has avoided the type of unrest that has brought thousands on to the streets of Athens because he managed to preserve social benefits and protections in the face of repeated calls by economists and business leaders for “labour reform”. This is the same song that is being sung by governments all over Europe.

despite a corruption scandal involving opposition leaders. According to the polls. In the next period these fault lines will open into an unbridgeable abyss between the classes. Portugal and Ireland. which will transform the whole situation. Europe faces a protracted period of austerity. more vulnerable economies like Greece. The audience for genuine Marxist ideas will grow irresistibly. by the so-called “Transition” from the Franco dictatorship to “democracy”. The PSOE is losing ground in polls against the conservative Popular Party. are no more inclined to conduct a serious struggle than the leaders of the political “opposition”. This is an early anticipation of how things will develop. which will force local councils to carry out deep cuts in social spending: schools. But the others will follow. The crisis has started with the smaller. consumption and employment. [Part one] . the IU will increase its vote and begin to pick up new members from the most radicalized layers of society. The pressure from Confindustria is aggravating the splits within the ruling coalition. Spain faces a period of heightened class struggle in which the workers will rediscover the traditions of the 1930s and 1970s. Zapatero has capitulated to the bourgeoisie. The Democratic Party shows itself to be completely impotent to take advantage of the crisis of the Berlusconi government. health etc. At its national congress. Through experience. But this mood will not last long. But they were forced by pressure from below to call a four hour general strike in June. with major contractions in output. Italy In Italy Berlusconi has just passed an austerity bill off 24 billion euros of cuts over two years. By implementing a policy of cuts. but not abolished. It would be a government of crisis. there will be a series of strikes and demonstrations. Berlusconi won the elections thanks to the bankruptcy of the Centre Left and only maintains itself in power for the same reason. But the latter now has to preside over a programme of vicious cuts. Beginning in the public sector. and radicalized youth will look for the banner of Communism. The union leaders. the reformists are preparing the victory of the right wing. Ten billion Euros will be cut from the local administration. as in other countries. which were papered over. in order to block the advance of the right wing and because the IU leaders were offering no serious alternative. This is producing a mood of disillusionment among those workers who had changed their vote from the United Left (IU) to the PSOE in the last period. The defeat of the Centre Left Coalition caused disappointment and disorientation in the working class. the CGIL decided that it was not the moment to lead an offensive against the government. The ruling right wing coalition plans to freeze the wages of public sector workers. The impotence of the “Left” opposition and the vacillations of the union leaders will not prevent the radicalization of the Italian workers. The Italian capitalists are supporting the present package but want the government to go much further. Despite all its deficiencies. The crisis has exposed the deep fault lines that underlie Spanish society and politics. Now that process will go into reverse. starting with Britain. which probably would not last long and would only serve to deepen the polarization between the classes. the People’s Party would win an outright majority in parliament if elections were held now. militant workers will come to understand the limitations of economic strikes and turn to politics. But a PP government would face a radicalized labour movement.As always. The age of retirement for women workers in the public sector will be raised to 65. The whole situation is beginning to change. The impotence of the Left means that all the attention of the working class is concentrated on the unions.

The insistence with which Paris pressurized Berlin to pay the Greeks indicated the precarious state of French capitalism. His tactic is to cut.. This is no way to improve efficiency and create wealth (for the capitalists)! The French bourgeoisie is inclined to agree. although it never succeeded in winning ist goal of achieving political domination. has so far not made any major commitments on spending cuts. People are entitled to reasonable free health care and pensions. They have gradually succeeded in whittling away the gains of the past. Finally. But he is compelled to proceed slowly. The French banks are almost as exposed as those of Germany to the Greek economy. consensus and so on. Photo by Andrew Parsons. They have on several occasions forced governments to retreat and even overthrown them.The French bourgeoisie did very well out of the EU. such as the 30 hour week. The government in Paris. with the average French worker spending 24 years in retirement. He has pledged to cut France's deficit to 3 per cent of GDP by 2013. But the general advance of European capitalism gave it a level of prosperity that enabled it to grant important concessions to satisfy the powerful and militant French working class. where it is held up as the worst example of the “wasteful European model”.e. currently 60. had an uneasy meeting. but slowly. Thanks to the militant tradition of the French workers. they have achieved a welfare state far superior to Britain and many other countries in Europe. but now France is faced by a serious dilemma. The French workers have a very irritating habit of going on strike and taking to the streets when they are attacked. for fear of arousing the powerful French working class. What a scandal! The defenders of the “Anglo-Saxon (i. However. All that has changed. A Greek default would bring the financial sector of France to its knees. inch by inch. well aware of the militant traditions of the working class. . The breaking point will probably be over the pensions issue. only small savings have been announced.France and Germany David Cameron and Nicolas Sarkozy. That is why the French capitalists protested more loudly than anyone else at the hesitations of Merkel. the Germans paid up. But so far. Charles Maurice de Talleyrand said that speech was given to man to disguise his thoughts. And the French workers will be on the streets once again. provoking a deep crisis. But there is a problem. at a certain point this gradualism will break down. well above average for a developed nation. barbarous) model” shake their heads in disbelief. The fact that the French have achieved something resembling a civilized mode of existence is a source of deep resentment in London and Washington. such as not replacing all retiring civil servants. Nicolas Sarkozy is keen to push through a major “reform” that would raise the retirement age. while all the time making comforting noises about protecting social values. This is very applicable to the French President Nicolas Sarkozy. in spite of appearances. But the main problem facing the bourgeoisie is the unfortunate fact that people are living too long. The inexorable rise of Germany has pushed it into second place.

On 6 November. tabled at meeting of finance minister on Friday. The class struggle is growing in Ireland. This actually revealed the weakness of British capitalism. But this argument will have no effect on the powerful German trade unions. The British capitalists did not join the Euro. a period of rapid economic growth and feverish speculation has ended in complete collapse. to demonstrate their opposition to the government's decision to impose a pension levy on 300. As Parliament reconvened on 19 January. Sligo. In February 2009 some 200. A major union SIPTU voted massively to join the public sector strikes on November 24th. including the UK. and the British bourgeois was forced to crawl on its knees to get into the EU. Iceland and Ireland The inevitability of sharp and sudden changes in the situation is shown by events in Iceland. But he immediately proceeded to throw a spanner in the machinery: "Britain is not in the euro and is not going to be joining the euro. It allowed them to devalue the pound sterling. they were initially prevented from meeting. "Britain wants a strong and stable euro zone." he said. who will not take long to follow the example of the Greek workers. London was subordinated to Washington (this is what is known humorously as “the Special Relationship”) – a fact that did not pass unnoticed in Berlin.000 demonstrators blocked the parliament building. There were violent clashes between police and young demonstrators. which of course has a veto. Limerick. Even so. when well over 250. and. Any treaty – even one that just applied to the euro area – needs unanimous agreement of all 27 member states. When the Conservative leader Cameron went to Paris for talks with Nicolas Sarkozy. Cork. giving British exports an advantage over the Euro countries. 2009 tens of thousands of people have participated in demonstrations in Dublin. to give the EU new economic powers to police the budgets of single-currency member states. “contagion” applies not only to the financial markets but also to the class struggle." . There was a factory occupation of workers by Waterford Crystal. This foolish dream was soon reduced to ashes.000 Irish workers in the public sector were on strike. as 2. These harsh measures are intended to set an example to the rest of Europe. as in Iceland and Spain. The following day.000 workers and their families took to the streets in Dublin. Devaluation of the currency was the method traditionally used by the weaker European economies to compete. The British are not popular in Europe. Paris. where they are regarded with suspicion. Galway. the coalition government between the Samfylkingin (Social Democrats) and the Conservative Independence Party has broken up. In January 2009 protests in the capital Reykjavik brought thousands of people on to the streets in the biggest demonstrations the country has ever seen. with the delusion that it could still maintain an important independent role in world affairs. The government of Iceland was thus the first to fall as a consequence of the present economic crisis. the British bourgeoisie is merely advertising its own bankruptcy. It will not be the last. not strength. This is the shape of things to come. but that he would block German proposals. Waterford. The excuse is that Germany has to comply with rules on dealing with debt written into its constitution. which visibly irritated the French President. This is provoking a mood of anger. By presenting the falling value of the pound sterling as an act of supreme judgment.Tullamore and Dundalk. and there will be tax rises and departmental spending cuts.Germany itself will begin a spending squeeze from next year and is expected to cut at least €10bn every year until 2016. Subsidies will be targeted. and this now appears as an act of supreme judgment. As a result. above all. a country that had enjoyed high living standards and political stability. the British Prime Minister told Ms Merkel that not only was Britain outside the euro. he could not resist making a smug comment about the euro.000 public sector workers. not without reason. because of their dependence on the USA. In this way. Britain stayed out of the European Union (the EEC as it was then called). Britain and Europe Of the major European powers. where. So Britain would not agree to any arrangement or treaty that drew us further into supporting the euro area.

partially eroding the competitive achieved by the depreciation of sterling. and demanded that they participate. Britain will not escape the general ruin because it is not a member of the Euro zone. described Europe as a “madhouse”. The bosses want to see real cuts – not a manicure. But the markets are unimpressed. which in any case is very weak." it said. But this is only a temporary respite. It is a measure of the seriousness of the situation is that the new government expressed relief that increased tax receipts meant that the deficit was £7bn less than expected.This is what someone called the gentle art of winning friends and influencing people. which will provoke an overwhelming response from the trade unions. Britain’s European partners. Britain will be affected by the crisis in the euro zone. It warned that these measures would cut borrowing by only £5bn this year. The government in London is now a shaky coalition between the Tories. and the pro-European Liberals. watching cautiously as the euro agonizes. to the rescue plan. But the markets could target the UK at any time. The Institute for Fiscal Studies (IFS) warned of more pain to come. Fearing that the markets will begin to attack the pound. the British bourgeois are obliged to put their hand into their pocket. irritated by the British airs of superiority and angry at the “unfair” advantage obtained by the devaluation of sterling. Cameron’s smug sense of superiority in the face of the Euro’s difficulties is out of place. and therefore “only” £156bn. Trotsky remarked that Britain was only the last ward in the European madhouse. At present. The first wave of cuts amounts to only 1 per cent of total government spending and a fraction of the £156bn deficit in the public finances. just at the time when the Conservative-Liberal coalition is hoping for an export-led recovery. For the time being the wave of panic that swept across the euro zone countries has not spread directly to Britain. Without growth in Europe. Stanley Baldwin. as a prime candidate for contagion if market panic over Greece. "This is less than a tenth of the fiscal repair job that Alistair Darling's 2010 Budget forecast suggested will be needed over the next few years. despite its huge deficit. The crisis in the euro zone (Britain's biggest export market) will undermine Britain’s recovery. in the 1930s. The question of Europe is a very sore point. In the 1970s Britain was notorious as the country in Europe with the biggest strike movement. have sharply reminded them of their responsibility to Europe. And the markets decide. Grumbling and cursing under their breath. with money on the table. but the amputation of arms and legs. and the last ward was usually reserved for particularly violent patients.2bn package of immediate savings was "only the start" of a huge programme of cuts. where most of the world's currency traders and debt investors are based. as it admitted that its £6. It reminds one of the attitudes of another Conservative prime minister. most of which are sold in Europe. The coalition Government declared that the "years of plenty" for public spending were over yesterday. who. Cameron was told in no uncertain terms that Germany sees Britain (which has the EU's highest budget deficit). In Europe a lot of the anger at the financial system is directed towards London and New York. there will be little demand there for Britain's exports. The next period will see a far more serious attack on living standards. But ever since . The crisis in Europe will be expressed in falling demand and therefore a shrinking market for Britain’s exports. Portugal and Spain spreads. Investors are waiting to see if the UK Government possesses the will and the ability to make the deep cuts they consider necessary. Answering Baldwin. the Tories have begun to slash public spending. in whose ranks the anti-European chauvinists are the majority. it was only because they expected nothing else from the political representatives of the British ruling class. The euro is already weakening against the pound. which can later provide the spark that ignites a crisis in the coalition. Britain is waiting on the sidelines. If the Germans did not express their indignation openly at this arrogant stupidity. The Tory right wing is seething with resentment at what they see as the excessive influence of the Liberals in the government.

the latter will be pushed to the left. We see the outline of the future transformation of the American trade unions in the election of Richard Trumka. In 1950.S. we have shipped millions upon millions of middle class jobs overseas. Already there are the first signs of a political rebellion against the Democrats. and the vast majority of Americans are totally oblivious. poorer. but what most Americans don't know is how truly desperate the financial situation of the United States really is. this was a de facto recognition of the umbilical chord that connects the crisis in Europe to the crisis in the USA itself.the Thatcher government defeated the miners.6 percent in the first quarter of 2010. Two-thirds of income increases in the U. a critical mood already exists.S. . 4 June. Now frustrated with the results. between “haves” and “haves-not” in the “land of the free”. insofar as it expressed a deep desire for a change – a desire that has not been satisfied by Obama and the Democrats. we have lived far beyond our means for decades and we have created the biggest debt bubble in the history of the world. Less than two years ago North Carolina was one of the centres of the grass-roots army that propelled Barack Obama to victory in what was a conservative state. As a result. North Carolina First. Now an unbridgeable abyss is opening up between rich and poor. Even before the economic collapse. which was not there before. 2010) When Obama rang Zaptero to urge him to carry out cuts. at the end of 2009 only 26 percent of American teenagers between the ages of 16 and 19 had jobs. pushing out the old conservative leaders and replacing them with others who are more responsive to the wishes of the rank and file. Given the organic connection between the unions and the Labour Party. Even the election of Obama reflected this mood. In the USA the ground is being prepared for a break with the Democratic party and a Campaign for a Mass Party of Labour. The whole situation in Britain and the rest of Europe will be transformed. According to a new report based on U. but is under pressure. banks climbed to a record 4. We have nearly totally dismantled our once colossal manufacturing base. former Obama supporters have linked up with labour organizers to gather signatures to start a third party. The present generation of American youth will be the first since the Great Depression that cannot look forward to better living standards than their parents. which represents a record low since statistics began to be kept in 1948. not just in the USA but in all countries. which is far higher than it ever reached during the Great Depression era. There will be strikes and demonstrations not seen since the 1970s. between 2002 and 2007 went to the wealthiest 1% of all Americans. Our greed and our debt are literally eating our economy alive. Total government. especially among the youth in the USA. the miners’ leader. More than 24% of all homes with mortgages in the United States had defaulted as of the end of 2009. Defaults on apartment building mortgages held by U. that ratio has soared to between 300 and 500 to one. The truth is that what we are experiencing is not simply a "downturn" or a "recession". the rich were getting ever richer and the poor. Obama’s approval ratings have already collapsed. What we are witnessing is the beginning of the end for the greatest economic machine that the world has ever seen. The above lines express the fact that the American dream is a thing of the past. There is a questioning of the existing order and its values.S. The article quoted above listed fifty facts that underlined the seriousness of the crisis facing the USA. The USA “Most Americans know that the U. as happened in the 1970s. This mood will be strengthened and generalized in the next period. the ratio of the average executive's pay to the average worker's pay was about 30 to 1. the unions will be under tremendous pressure to put words into practice. corporate and personal debt has now reached 360 percent of GDP. The mood of militancy will shake up the unions from top to bottom. A great day of financial reckoning is fast approaching. Census Bureau data. That was almost twice the level of a year earlier. Americans have seen the re-emergence of the tent cities and soup kitchens not seen since the 1930s. Trumka does not want to mobilize the workers. Since the year 2000. economy is in bad shape.S.” (Global Research. the unions have been on the defensive. The bottom 40 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth. Now all that will change. In the next period.

Now all that has turned into its opposite. dropped 6% against the dollar after comments of a representative of the new government." Chuck Stone. But what the British workers took generations to achieve. mainly on the strength of its huge oil and gas reserves. This is a slump on the lines of the Great Depression. and immediately after it was announced. Very quickly. In turn.The prime movers in this initiative is the SEANC and its parent group. Latvia has suffered a fiscal crisis that saw its debt rated as junk. the restoration of capitalism in Eastern Europe and the former USSR has solved nothing. 'No more are we going to blindly support you because you're a Democrat. the forint. A number of countries in Eastern Europe are faced with the specter of crisis and bankruptcy. Eastern Europe and Russia Twenty years after the fall of Stalinism. we're going to remove you from office. the youth etc. but on the basis of the devaluation of the ruble. Hungary is not far behind Latvia. The migrant workers have returned home to swell the ranks of the unemployed. They exported their surplus workforce to Western Europe. They are funding the effort. "We're going to support you because you're right on the issues and if you're not right on the issues. which benefitted from this pool of cheap labour. This means that it will be more expensive for the country to borrow money in the international markets.000-member State Employees Association of North Carolina (SEANC). the Russian economy soon recovered and grew. Now Hungary faces a Greek-style financial crisis.8%. which is leading the effort. on the basis of the world capitalist economic boom. the women. the remittances sent home by the migrant workers provided an additional source of capital for Eastern Europe. and unemployment has reached more than 22%. "Our whole agenda is to turn that apple cart around and say. when they broke with the Liberals to form the Labour Party. possibly the nation's most politically powerful trade union.' " said Dana S. the Native Americans. a longtime SEANC leader who is chairman of North Carolina First. Latinos. they hired more than 100 canvassers who are rounding up the signatures needed to qualify as a third party on the general election ballot. In October 2008 Hungary was forced to seek a $25bn rescue package from the International Monetary Fund and the EU. For a while. the American working class can accomplish far more quickly. . Cope. A Labour Party in the USA will attract to its banner all the most oppressed and revolutionary layers of society: African Americans. The cost of insuring the country's debt jumped by one percentage point. executive director of the 55. Like Greece. This reflects the same process that the British workers experienced a hundred years ago. Wages have fallen by an average of 8. asked: "Does it really matter if you put a Democratic label or a Republican label on them when they go up there and support big companies and big insurance?" These comments are highly significant because they show the early beginnings of s shift in consciousness. The same enthusiasm that we saw in Obama’s electoral campaign will be reproduced on a higher plane and with even greater intensity. In the fourth quarter of 2009 Latvia's GDP contracted by 18%. The economies of Eastern Europe benefitted from their connection with the EU. an American Labour Party will pass from the timid reformist policies advocated by the conservative union leaders to a very radical socialist policy. The Asian crisis of 1998 caused shock waves. The country's currency. the Service Employees International Union. the realization of the need to establish a political party that does not represent “big companies and big insurance” but the needs of ordinary working class people. Probably the movement for a third party in North Carolina will be merely an episode. But it is an episode that anticipates what will occur in the future. the new capitalist classes of the former Stalinist states could establish something resembling stability. and it has fallen a further 10% in the first quarter of 2010.

the mood of popular discontent has taken to the streets. with 56% saying that under the “communist” regime ordinary people were treated with more respect. but have never disappeared from the collective consciousness of the Russian proletariat ten by Alan WoodsWednesday. with the aim of reducing the budget deficit to 6. The idea that all problems can be settled by reforms is deep-seated in the population because it corresponds with past experience. These events show how quickly the Russian workers can move once they enter the road of struggle. Gradually. its institutions. they will rediscover the old traditions and ideas of Leninism.8% of GDP. According to a poll by the Bureau of Social Research. on condition that it carried out a savage policy of cuts. and 60% of Romanians think that politicians are more corrupt today than before 1989. . Naturally.4 million in the state sector will be sacked. which have lain dormant for a long time.9% in January 2009 to 8. They hope that the crisis will only be temporary.000 workers out of a total of 1.’s expenses has led to a widespread questioning of organized politics and its institutions. This includes a reduction of public sector wages by 25% and pensions and unemployment benefits by 15%. too. Unemployment jumped from 4. the feeling grows that “something is not right” with society. It is true that the mass of workers of Europe and the United States have not yet grasped the real seriousness of the situation. that some kind of change is necessary. On May 31 tens of thousands of public sector workers went on strike against the government’s austerity plan.This leaves markets and economists fearful that Hungarians will default on their home loans. A similar position undoubtedly exists in other countries of Eastern Europe and above all in Russia itself. the scandal over M. accompanied by a deep-seated desire for change.1% in January 2010. is a prior condition for revolution.P.In Britain. Photo by Grégoire Lannoy. The recent movement of the miners indicates that the Russian working class is beginning to recover from the psychological effects of the collapse of the USSR and capitalist restoration. This will affect the economies of Germany and particularly Austria. However. In the USA there is a burning anger against the bankers and Wall Street.000 and 300. to the degree that the given socio-economic system begins to fail. In most countries of Western Europe the working class has experienced almost five decades of relative improvement in living standards. 09 June 2010 The loss of belief in the existing society. the reformist leaders (both political and trade union) strive with all their might to reinforce this idea. All government spending will be cut by 20% and anywhere between 80. In Russia. But such a change does not happen all at once. and shrank by 7. where a semi-insurrectionary situation is developing. and that after a time things will return to normal. the capitalist country where the idea of bourgeois parliamentary democracy has sunk the deepest roots in the popular psyche. [Part one] The “New Normality” Workers in France protesting in January 2009.The government had to go to the IMF for help and got a €20bn rescue loan. sparking a banking crisis in the country. On the basis of struggle. In Greece. which includes cuts in pay and pensions. This has aroused the Romanian workers. half of the people think that Romania is worse off today than under Ceausescu. the present situation is rooted in the whole of the previous period.1 per cent in 2009. the economic crisis acted as a shock that is having profound political and social effects. But it is a profoundly mistaken idea. laws and morality. Romania's economy was severely hit by the recession.

The bad old days of the 1930s seemed like a bad dream. given and transmitted from the past. what is needed is a root-and-branch change in society. The tradition of all dead generations weighs like an Alp on the brains of the living. Therefore. employment will initially fall yet further. The report continues: “For the next few years. Gradually. Great events will be needed to shake up the masses to the point where they are ready to break with the old ideas and embrace new ones. But that is the slogan of the day in every crisis of capitalism. deceitful and reactionary as the slogan of national unity. but this is only a way of expressing the transitional nature of the period. One might argue that the consciousness of the masses and the mass organizations is lagging far behind the objective situation. before it undertakes more strenuous and serious activities. and constant attacks on consumption. As a general rule. The old ideas and prejudices will not easily be eliminated.” (The Eighteenth Brumaire of Louis Napoleon) It will take time for the workers of Europe to shake off the old habits and psychology shaped by the last period. The present situation is complex and contradictory. But the period we have now entered into has an entirely different character. The bourgeois of every country in Europe is following the same path. Martin Gilles.One far-sighted bourgeois commentator. Capitalism is faced with the most serious crisis in the last 70 years – possibly the most serious in its whole history. “However. living standards improved and the class struggle was muted. and this is correct. on the basis of a long period of economic growth. like an athlete after a long period of inactivity. WestLB's Head Equity Strategist. But the most important thing to note is that the serious strategists of Capital have concluded that there is no possibility of returning to the “good old days” for the foreseeable future. But it does not go far enough. hollow. What now? There have been periods of capitalist upswing when the capitalists were able to make concessions to sections of the working class and concede reforms.6%. Marx explained: “Men make their own history. It will be essential to overcome the country's extreme dependency on consumption and develop a new. and average economic growth in the industrialized nations will be no more than 1.” (WestLB Report. The idea gradually crystallized in their minds: today we are better off than yesterday and tomorrow we will be better off than today. They are tenacious and deeply rooted in the psychology of the masses. Holger Fahrinkrug. and the period from 1945 to 1973. It is a long period of low growth. For over half a century the workers of Europe have been accustomed to economic growth. has said that we can expect to return to normality – but it will be a "new normality". viable growth model. WestLB does not expect to see a self-sustaining upswing with strong capital expenditure and significant increases in employment. According to WestLB's Head Economist. private consumption and investment activity. requires a period of “limbering up”. high unemployment. “National unity” There is no political slogan so false. In reality the outlook is even worse. November 26.” This is the reality of the crisis of capitalism. a path dictated not by the caprice of individual governments or politicians but by the gravity of the economic crisis. It will see a long-term decline in living standards for entire populations. Such a period was the period before the First World War. “We must all pull together in the National Interest!” This is the fighting . full employment and steadily improving living standards. the US economy will display much weaker growth than is usual in the aftermath of a recession. But on the basis of events it will be burned into the consciousness of millions. which are struggling with elements of the new period. global economic growth is expected to be only 3% this year. similar conditions will tend to produce similar results. The repercussions of the financial crisis on the real economy are likely to be with us for some time to come and bear down upon public finances. This was the material base upon which reformism was strengthened. but under circumstances existing already. 2009) These forecasts were made before the start of the Greek crisis. which contains elements from the past. On the contrary. but they do not make it as they please. The period we are now entering will be far more similar to the 1970s and 1930s than to the last thirty years. It will have a profound effect on the class struggle everywhere. the working class. This interesting expression contains a profound truth concerning the nature of the new period we are now entering into. and therefore a root-andbranch change in the political and trade union organizations of the working class. Now all this has reached its limits. as far as it goes. The consciousness of all classes is conditioned by the previous period. This fact has not yet been understood by the majority of the working class. But after a long period in which the class struggle has been somewhat muted in many countries. they do not make it under self-selected circumstances.

Some people on the Left have argued that it is necessary to support the “solidarity plan” as a lesser evil. This argument is both false and dangerous. One can say that this is only a struggle between rival bureaucrats. taking advantage of the more general mood and make an example of them. The worst aspect of the present situation is that the harsh measures adopted will prove useless in practice. There will be violent swings of public opinion to the left and the right. Under conditions of capitalist crisis there is no alternative but to fight. as in Spain. conditions and livelihoods of millions of workers in every country and continent. The bourgeoisie tells the Greek workers that they must accept wage cuts and work harder to compete with the German workers. digs in his spurs and shouts: forward! But when the rider is too heavy and the spurs dig in too deeply. That is the kind of “solidarity” we are talking about here. if the workers receive less. Now all that has been consigned to the dustbin of history. On that occasion. the union leaders found an excuse and backed off. it may have been possible to win concessions without a fight.slogan of all the bourgeois and reactionary parties. They wish to use the idea of national unity in order to convince the workers that they must accept sacrifice and austerity to “save the nation”. This is similar to the struggle of the Mexican electricians. starting with the unions. will be shaken from top to bottom. for the simple reason that the capitalists have nothing to offer them. At a time when order books were full and the bosses were making fat profits. On the contrary. In Greece. They tell the German workers that they must accept wage cuts and work harder to compete with the French and British. the bankers and capitalist will get more profits. The period that now opens up before the European working class will bear a far closer resemblance to the 1930s than to the 1990s. The intention was to take them on. of class collaboration and the alleged identity of interest of Wage Labour and Capital. The latter sits on his back. The idea was put about of so-called New Realism: that is. It is the “solidarity” between the exploiter and the exploited. cozy relationship with the union leaders is no longer possible. Europe will enter a downward spiral that has no ending. while the rich continue to fill their pockets. The only road open to the bourgeoisie is to attack the living standards of the workers and the middle class. they might have been willing to arrive at concessions for the sake of peace. That is why all the governments in Europe. a spirited horse will rear up and throw the rider to the ground. Zapatero and others will not solve the crisis. but the problem remains. The refuse collectors’ strike in Denmark was very militant. Under the hammer blows of events the consciousness of the masses will be transformed. The bosses have a strategy of taking on some key militant sections and defeating them in order to send out a message to the rest of the class. But in reality they have nothing else to offer. In the past. All the cuts introduced by Papandreou. There is no way out on a capitalist basis. The mass organizations. It is not a matter of personal caprice of this or that politician or government. The postal workers’ strikes in Britain had a similar aspect. It will be a period of storm and stress without parallel in history. All the attempts of the union leaders to arrive at a deal with the bourgeoisie in these circumstances are doomed to fail. by slashing public spending. The trade union leaders everywhere attempt to hold the workers back on the same basis. but even to preserve the gains of the past. and so on. It is a matter of life and death for capitalism. and in a . the cuts will reduce demand and deepen the crisis. The management seemed prepared to take on the workers. In Britain. the right wing New Democracy has opposed the austerity measures taken by the Pasok government for the sake of electoral popularity. there is no way forward for the workers of Europe except a future of constantly decreasing living standards and increased exploitation. The seriousness of the crisis is forcing the bourgeois to take up an intransigent attitude in relation to the trade unions. although it took place in the midst of a general collapse of strike activity in the country. The old. The struggle attracted the attention of the whole labour movement. Conservatives and Liberals unite in a coalition government in the name of the National Interest. They are also taking advantage of the recession to go onto the offensive. To this we answer: the unity you are talking about is the unity of the horse and its rider. whether “Centre-Left” or “Centre-Right”. The trade unions The crisis of capitalism threatens the jobs. use any means possible to smash them and then move on. In the end. are pursuing more or less the same policies. Under the dictatorship of the big banks and monopolies. Under such conditions the leaders of the unions had an easy life. not just to obtain concessions. It is natural that under conditions of crisis there will be a ferment in the unions and divisions will open up between different layers of the union bureaucracy.

A combination of the two will get the worst of all worlds. although the conditions for their success were apparently ideal. In Greece. We have seen this many times in the history of the last 100 years. the reformists were able to grant reforms. In reality. Now. But it is a superficial view that does not take into account the fact that such struggles in the bureaucracy are a reflection of powerful pressures that are building up under the surface. confusions and vacillations. We cannot run too far ahead of the working class. The frustration of the youth is understandable. The public debt has soared. The reformist leaders (including the ex-Stalinists) usually confine themselves to parliamentary or electoral activity. Sectarianism – a dead end All the attempts of the sects to build phantom “revolutionary parties” outside the existing mass organizations are doomed to ignominious failure. which indicate a complete collapse of the votes for the sectarian groups. But this will not work. the policies of reformism are revealed as bankrupt in the most literal sense of the word. but such acts of petty violence lead nowhere. they always express themselves in the first case through the existing mass organizations. As always. All the old recipes have failed. The crisis of capitalism is also the crisis of reformism. the mass organizations will be under intense pressure from the bourgeoisie and the working class. In the long years of capitalist upswing that followed the Second World War. This was revealed graphically in the recent British elections. the bourgeois and the reformist politicians are trapped. Impatience and frustration are always bad councilors. with the developing crisis of world capitalism. There are dangers in this situation. The bourgeois will face an explosion of the class struggle. On the fringes of the movement frustrated youths throw rocks and petrol bombs and attack property. The attempt to return to the old discredited policies of Keynesianism will only make things worse. which will be shaken to the foundations by the crisis. They learn to be “respectable” and “statesmanlike”. undermining and destroying the reforms of the past. This is a measure of desperation.sense that is true. The European bourgeois tried to get balanced budgets through the Maastricht Treaty but now this idea has been thrown out of the window. anarchist elements take advantage of this to spread confusion. no matter how right wing. they learn to take upon their shoulders the responsibility for carrying out the dirty work of the bankers and capitalists. the masses are being mobilized through the trade unions. Pasok. But in the last period the Social Democratic governments have been carrying out a policy of counter reforms. but must patiently go through the experience with them. . and win them to the policies and programme of Marxism. If the workers’ organizations do not give a lead. it can lead to terrorism. which is rapidly moving in the direction of a pre-revolutionary situation. but it will mean a long period of austerity and attacks on living standards. while a minority leans towards the Communist Party of Greece (KKE). This is particularly the case in a crisis. The unprecedented levels of public borrowing will not succeed in getting Spain or any other country out of the crisis. That is. Crisis of reformism All history shows that when the mass of the class moves into action. bureaucratic and reactionary the leaders may be. The policies of laissez-faire capitalism (“neo-liberalism”) have collapsed. The formation of Die Linke in Germany was already an anticipation of a process that will take place in one European country after another. The period we are in will see movements involving millions. The aim is to solve the crisis of capitalism by driving down the living standards of the working class and place it at the mercy of Capital. This will inevitably result in a whole series of internal crises and splits. which in turn can easily be manipulated by the state security forces and infiltrated by provocateurs. They have exhausted the old tricks of the past. Our task is to penetrate the mass organizations. They fall over one another to defend the system. We must establish friendly relations with these currents and assist them to overcome their limitations. In the course of these struggles. At a certain stage the emergence of mass left wing and centrist currents is inevitable. The largest confederations have ties with the ruling Socialist party. The policies of monetarism and unrestricted market economics have landed them in a mess. In the hothouse atmosphere of parliament they become divorced from the lives and conditions of the masses and lose whatever revolutionary ideas they may have once had.

the union bureaucrats called many general strikes of one day. becomes ever deeper. but a one-day general strike is a demonstration of strength. in order to channel the militancy of the rank and file and wear the workers out. In Italy in the past. Drastic problems require drastic solutions. Half measures are of no use. increasing militancy and raising consciousness. There has even been some talk about an all-European strike or day of action. The depth of the present crisis places on the order of the day a fundamental transformation of society. Surely. Greece and France also the union leaders have called general strikes. slogans – are extraordinarily behind the tasks of the movement – and it is this backwardness that constitutes the main danger today. as some ultra left sectarians believe. A transitional programme needed The relation between economic crisis and the class struggle is not automatic. In essence. but dialectical and contradictory. For the question involved is nothing less than the seizure of power. Through the medium of these strikes. the capitalists are not in a position to grant serious and lasting concessions. For it is not the cream of the workers who take part in the movement. it is only a repetition of the old arguments of the anarcho-syndicalists before 1914. can be a step forward in giving the workers a sense of their power. Marxists will agitate in favour of a general strike as a means of mobilizing the maximum numbers of workers in struggle. To assume that the movement also in the future will be left to itself without a clear programme. far from improving. the class begins to feel itself as a class. the question is posed: what now? Do we call for another 24 hour general strike? Or a two day stoppage? Under certain conditions. Not only do factory workers strike. beginning with the most advanced elements. They cannot believe that the crisis is so serious. you cannot cure cancer with an aspirin.” (The Spanish Revolution. However. Moreover. he wrote the following: “In reality. and the crisis. and so on. threatening to destroy all social stability. can only have a temporary effect. At first the masses are in a state of shock. is an absolutely unavoidable stage of the revolution. The reforms and concessions conquered over half a century are under threat. accept a temporary reduction in living standards. Under such circumstances the idea that the workers can “force” the capitalists onto a different road by mass pressure is a delusion. four hours. The masses are threatened with a systematic destruction of their lives. it can serve to give the workers a sense of their power and raise their fighting spirit. in spite of the mighty sweep of the struggle. who regarded the general strike with the same kind of awe that fervent Catholics regard the Immaculate Conception. everything will come right in the end? But time passes. Wage increases will be cancelled out by inflation etc. and with them the semi-civilized conditions of life. especially the youth. The veterans mould the limbs. the new recruits learn. allowing the workers to express their anger for a few hours on the streets and then afterwards merely returned to “business as usual. “The semi-spontaneous spread of strikes. and. when Spain was in the grip of a widespread strike movement. in the present situation. But as Largo Caballero once remarked. It can play an important role as a means of mobilizing the workers (even for one day) and. but also artisans. construction. the spontaneity – which at the present stage constitutes the strength of the movement – may in the future become the source of Its weakness. one hour. Society is threatened with disintegration and barbarism.The slogan of the general strike In more than one country the idea of a general strike is beginning to occupy a central role. if we take the necessary steps. 1931). but the masses as a whole. . without its own leadership. the organization of the masses. the period of the awakening of the masses. or less. In Spain. Particularly where there has not been a general strike for a long time. An indefinite strike can pose the question of power. Marxists will make use of such actions to raise class consciousness and extend our influence and authority among the workers. Where a 24 hour strike has taken place. the capitalists may make concessions under pressure. In an article written in 1931. in the best case. But what is proposed is not an indefinite general strike.” Naturally. The middle class is threatened with ruin. Such tactics will only serve to miseducate and confuse the advanced workers and our own comrades. The entire situation compels them on pain of extinction to liquidate the concessions they have made over the last fifty years. “However. but a limited general strike of 24 hours. their mobilization and their entry into struggle. they will later take back with the right hand what they have given with the left. January. if it is successful. But even then. Even the most stormy strikes – all the more so the scattered ones – do not solve this problem. would mean to assume a perspective of hopelessness. which have brought victims and defeats or have ended with nothing. we must also understand that on many occasions the trade union leaders have used one day general strikes as a safety valve – a convenient method of blowing off steam. However. we do not make a fetish of the idea of general strikes. Trotsky answered this false idea in advance. or present them as a panacea. irrigation and finally agricultural workers. chauffeurs and bakers. the subjective factors of the revolution – the party.

” These lines could have been written yesterday! But the power of the bureaucratic apparatus is not absolute. But events are already delivering one shock after another. The ideas we defend do not represent the present consciousness of the masses. The workers will turn repeatedly to the old traditional organizations. What is needed is a serious plan of action. The mass organizations are subject to the pressures of society. to hell with them and their system! For the expropriation of the banks and big monopolies under workers’ control and management! No to the Europe of the big banks and monopolies! For the Socialist United States of Europe! The beginnings of the European revolution What we see unfolding before us is not the Greek. Trotsky wrote in 1938: “The economy. starting out from the existing conditions and consciousness. Lenin once said that politics is concentrated economics. The words of Leon Trotsky have never been more relevant: “The world political situation as a whole is chiefly characterized by a historical crisis of the leadership of the proletariat.Under such conditions. who will find their lives turned upside down. It would de swiftly resolved either by the victory of the revolution or the counterrevolution. the old institutions shaken to the foundations. which is rooted in a past that has already receded into history. It is one single. On the one hand. the state. for the simple reason that there is no alternative. the existing consciousness will be shaken to the foundations. with sudden swings to the left and right. At a time when governments are asking people to sacrifice while pouring public money into the banks. Already we see the early beginnings of an anti-capitalist mood developing. Not a single penny to the bankers and capitalists! Let the bosses pay for their crisis! We demand decent conditions and wages! If the bosses cannot guarantee these things. In order to assist this development. never mind the mass of politically untutored workers.” In the past a prerevolutionary situation would not last for long. The old routines are violently upset. People are compelled to reconsider their most cherished beliefs and their most deeply-held dogmas. What is required is a socialist policy. indissoluble process. As Trotsky pointed out in the above quotation. for a socialist plan of production. But each time they are blocked by their own conservative bureaucratic machines. bank profits are booming and bankers’ bonuses have again reached record levels. the old ideas and prejudices challenged at every step. or Italian revolution. preparing the way for a revolutionary transformation. The economic crisis must eventually find a reflection in the minds of millions of men and women. the bourgeois cannot move immediately in the direction of reaction. Our ideas are a faithful reflection of the present and the future. especially among the youth. On the other hand. a fighting policy to defend jobs and living standards. But now things are different. The capitalist system is in crisis everywhere. it is necessary to work out a programme of demands that will enable us to move from A to B. Great events will be needed to convince them of the need for a radical change. but the early stages of the European revolution. the working class is being held back by its leadership. Things begin to turn into their opposite. This must insist on the central idea of the expropriation of the big banks and monopolies. for workers’ control. “In all countries the proletariat is racked by a deep disquiet. the innate conservatism of human beings is shaken to the core. The chief obstacle in the path of transforming the prerevolutionary into a revolutionary state is the opportunist character of proletarian leadership: its petty bourgeois cowardice before the big bourgeoisie and its perfidious connection with it even in its death agony. In the coming period. This universal turbulence can last for years. They will put them to the test time and again. Under the hammer blows . the only real solution for the problems faced by the working class is that the proletariat must take power into its own hands. which is a vital link in the chain of the world revolution. This inevitable process of learning by successive approximations will be expressed in the rise and fall of leaders and currents. Even the most formerly inert and “nonpolitical” layers begin to move into action. where the turbulence in one part of the globe swiftly communicates itself to every other part. The multimillion masses again and again enter the road of revolution. But this idea has not yet been grasped by even the most advanced workers. Many people are therefore questioning the role that bankers have played in this crisis. peeling off one layer after another of the old leadership. characteristic of a prerevolutionary state of society. It is a world crisis of capitalism. Spanish. the politics of the bourgeoisie and its international relations are completely blighted by a social crisis.

has said that we can expect to return to normality – but it will be a "new normality".In Britain. One far-sighted bourgeois commentator. 2009) These forecasts were made before the start of the Greek crisis. viable growth model. But such a change does not happen all at once.” (WestLB Report. that we build the forces of Marxism. In the USA there is a burning anger against the bankers and Wall Street. The idea that all problems can be settled by reforms is deep-seated in the population because it corresponds with past experience. “However. from which eventually. Photo by Grégoire Lannoy. It is true that the mass of workers of Europe and the United States have not yet grasped the real seriousness of the situation. There is no other way. the present situation is rooted in the whole of the previous period. There will be a whole series of crises and splits. that some kind of change is necessary. winning new adherents. where a semi-insurrectionary situation is developing. ten by Alan WoodsWednesday. educating cadres. its institutions. the feeling grows that “something is not right” with society. laws and morality. to the degree that the given socio-economic system begins to fail. The report continues: “For the next few years. According to WestLB's Head Economist. [Part one] The “New Normality” Workers in France protesting in January 2009. the capitalist country where the idea of bourgeois parliamentary democracy has sunk the deepest roots in the popular psyche. the scandal over M. November 26. WestLB does not expect to see a self-sustaining upswing with strong capital expenditure and significant increases in employment. the reformist leaders (both political and trade union) strive with all their might to reinforce this idea. But the most important thing to note is that the serious strategists of Capital have concluded that there is no possibility of returning to the “good old days” for the foreseeable future. a genuine mass revolutionary tendency will emerge. and average economic growth in the industrialized nations will be no more than 1. There are no short cuts. who aspire to the leadership of the working class. and that after a time things will return to normal. WestLB's Head Equity Strategist.’s expenses has led to a widespread questioning of organized politics and its institutions. The repercussions of the financial crisis on the real economy are likely to be with us for some time to come and bear down upon public finances. will have no shortage of possibilities in the coming period. Holger Fahrinkrug.P. However. 2010. and gathering the forces we need to build a genuinely mass Marxist International.of events. a period of war. London. On the contrary.6%. the mood of popular discontent has taken to the streets. 09 June 2010 The loss of belief in the existing society. is a prior condition for revolution. The Marxists. Gradually. But it is a profoundly mistaken idea. Naturally. revolution and counterrevolution.” . We must find a road to the workers and youth. the US economy will display much weaker growth than is usual in the aftermath of a recession. accompanied by a deep-seated desire for change. employment will initially fall yet further. In reality the outlook is even worse. Martin Gilles. This interesting expression contains a profound truth concerning the nature of the new period we are now entering into. In Greece. In most countries of Western Europe the working class has experienced almost five decades of relative improvement in living standards. It will be essential to overcome the country's extreme dependency on consumption and develop a new. 9th June. But we must ensure that in the turbulent period that we have entered. private consumption and investment activity. They hope that the crisis will only be temporary. the masses will learn to distinguish between what is true and what is false. global economic growth is expected to be only 3% this year.

The worst aspect of the present situation is that the harsh measures adopted will prove useless in practice. Now all this has reached its limits. Some people on the Left have argued that it is necessary to support the “solidarity plan” as a lesser evil. To this we answer: the unity you are talking about is the unity of the horse and its rider. But that is the slogan of the day in every crisis of capitalism. a spirited horse will rear up and throw the rider to the ground. The bad old days of the 1930s seemed like a bad dream. Capitalism is faced with the most serious crisis in the last 70 years – possibly the most serious in its whole history. on the basis of a long period of economic growth. This argument is both false and dangerous. before it undertakes more strenuous and serious activities. Marx explained: “Men make their own history. Great events will be needed to shake up the masses to the point where they are ready to break with the old ideas and embrace new ones. In Britain. and this is correct. Gradually. but they do not make it as they please. Zapatero and others will not solve the crisis. like an athlete after a long period of inactivity. The latter sits on his back. but under circumstances existing already. while the rich continue to fill their pockets. The trade union leaders everywhere attempt to hold the workers back on the same basis. What now? There have been periods of capitalist upswing when the capitalists were able to make concessions to sections of the working class and concede reforms. But the period we have now entered into has an entirely different character. hollow. “National unity” There is no political slogan so false. On the contrary. The old ideas and prejudices will not easily be eliminated. All the cuts introduced by Papandreou. It will have a profound effect on the class struggle everywhere. living standards improved and the class struggle was muted. digs in his spurs and shouts: forward! But when the rider is too heavy and the spurs dig in too deeply. For over half a century the workers of Europe have been accustomed to economic growth. and the period from 1945 to 1973. they do not make it under self-selected circumstances. high unemployment. This was the material base upon which reformism was strengthened. Europe will enter a downward spiral that has no ending. Conservatives and Liberals unite in a coalition government in the name of the National Interest. but this is only a way of expressing the transitional nature of the period. the working class. They wish to use the idea of national unity in order to convince the workers that they must accept sacrifice and austerity to “save the nation”. given and transmitted from the past. which contains elements from the past. by slashing public spending. which are struggling with elements of the new period. It will see a long-term decline in living standards for entire populations. One might argue that the consciousness of the masses and the mass organizations is lagging far behind the objective situation. This fact has not yet been understood by the majority of the working class. But it does not go far enough. the cuts will reduce demand and deepen the crisis. The period we are now entering will be far more similar to the 1970s and 1930s than to the last thirty years. The idea gradually crystallized in their minds: today we are better off than yesterday and tomorrow we will be better off than today. “We must all pull together in the National Interest!” This is the fighting slogan of all the bourgeois and reactionary parties. what is needed is a root-and-branch change in society. Therefore. as far as it goes. .This is the reality of the crisis of capitalism. The tradition of all dead generations weighs like an Alp on the brains of the living. and therefore a root-andbranch change in the political and trade union organizations of the working class. But after a long period in which the class struggle has been somewhat muted in many countries. The bourgeois of every country in Europe is following the same path. a path dictated not by the caprice of individual governments or politicians but by the gravity of the economic crisis. similar conditions will tend to produce similar results.” (The Eighteenth Brumaire of Louis Napoleon) It will take time for the workers of Europe to shake off the old habits and psychology shaped by the last period. requires a period of “limbering up”. The consciousness of all classes is conditioned by the previous period. They are tenacious and deeply rooted in the psychology of the masses. Such a period was the period before the First World War. But on the basis of events it will be burned into the consciousness of millions. full employment and steadily improving living standards. As a general rule. and constant attacks on consumption. The present situation is complex and contradictory. deceitful and reactionary as the slogan of national unity. It is a long period of low growth.

and in a sense that is true. In the long years of capitalist upswing that followed the Second World War. One can say that this is only a struggle between rival bureaucrats. The postal workers’ strikes in Britain had a similar aspect. But in the last period the Social Democratic governments have been carrying out a policy of counter reforms. taking advantage of the more general mood and make an example of them. The idea was put about of so-called New Realism: that is. That is why all the governments in Europe. starting with the unions. The period that now opens up before the European working class will bear a far closer resemblance to the 1930s than to the 1990s. with the developing crisis of world capitalism. the union leaders found an excuse and backed off. But it is a superficial view that does not take into account the fact that such struggles in the bureaucracy are a reflection of powerful pressures that are building up under the surface. although it took place in the midst of a general collapse of strike activity in the country. The management seemed prepared to take on the workers. Now all that has been consigned to the dustbin of history. There will be violent swings of public opinion to the left and the right. no matter how right wing. Now. The struggle attracted the attention of the whole labour movement. will be shaken from top to bottom. But in reality they have nothing else to offer. The refuse collectors’ strike in Denmark was very militant. there is no way forward for the workers of Europe except a future of constantly decreasing living standards and increased exploitation. In the past. of class collaboration and the alleged identity of interest of Wage Labour and Capital. The bosses have a strategy of taking on some key militant sections and defeating them in order to send out a message to the rest of the class. but the problem remains. They are also taking advantage of the recession to go onto the offensive. not just to obtain concessions. undermining and destroying the reforms of the past. The only road open to the bourgeoisie is to attack the living standards of the workers and the middle class. They tell the German workers that they must accept wage cuts and work harder to compete with the French and British. Crisis of reformism All history shows that when the mass of the class moves into action. That is the kind of “solidarity” we are talking about here. the policies of reformism are revealed as bankrupt in the most literal sense of the word. At a time when order books were full and the bosses were making fat profits. the reformists were able to grant reforms. are pursuing more or less the same policies. It is the “solidarity” between the exploiter and the exploited. they might have been willing to arrive at concessions for the sake of peace. There is no way out on a capitalist basis. for the simple reason that the capitalists have nothing to offer them. but even to preserve the gains of the past. if the workers receive less. the bankers and capitalist will get more profits. It is not a matter of personal caprice of this or that politician or government. It is a matter of life and death for capitalism. it may have been possible to win concessions without a fight. It is natural that under conditions of crisis there will be a ferment in the unions and divisions will open up between different layers of the union bureaucracy. as in Spain. The bourgeoisie tells the Greek workers that they must accept wage cuts and work harder to compete with the German workers. The mass organizations. Under conditions of capitalist crisis there is no alternative but to fight. It will be a period of storm and stress without parallel in history. Under the dictatorship of the big banks and monopolies. use any means possible to smash them and then move on. . Under such conditions the leaders of the unions had an easy life. The old. We have seen this many times in the history of the last 100 years. conditions and livelihoods of millions of workers in every country and continent. In the end. Under the hammer blows of events the consciousness of the masses will be transformed. The crisis of capitalism is also the crisis of reformism. the right wing New Democracy has opposed the austerity measures taken by the Pasok government for the sake of electoral popularity. whether “Centre-Left” or “Centre-Right”. The seriousness of the crisis is forcing the bourgeois to take up an intransigent attitude in relation to the trade unions.In Greece. All the attempts of the union leaders to arrive at a deal with the bourgeoisie in these circumstances are doomed to fail. bureaucratic and reactionary the leaders may be. The trade unions The crisis of capitalism threatens the jobs. On that occasion. and so on. cozy relationship with the union leaders is no longer possible. they always express themselves in the first case through the existing mass organizations. The intention was to take them on. This is similar to the struggle of the Mexican electricians.

confusions and vacillations. Marxists will agitate in favour of a general strike as a means of mobilizing the maximum numbers of workers in struggle. But this will not work. The public debt has soared. but it will mean a long period of austerity and attacks on living standards. four hours. but must patiently go through the experience with them. The bourgeois will face an explosion of the class struggle. the union bureaucrats called many general strikes of one day. or less. increasing militancy and raising consciousness. An indefinite strike can pose the question of power. On the fringes of the movement frustrated youths throw rocks and petrol bombs and attack property. At a certain stage the emergence of mass left wing and centrist currents is inevitable. Our task is to penetrate the mass organizations. The aim is to solve the crisis of capitalism by driving down the living standards of the working class and place it at the mercy of Capital. can be a step forward in giving the workers a sense of their power. Sectarianism – a dead end All the attempts of the sects to build phantom “revolutionary parties” outside the existing mass organizations are doomed to ignominious failure.The reformist leaders (including the ex-Stalinists) usually confine themselves to parliamentary or electoral activity. They fall over one another to defend the system. In Italy in the past. it can lead to terrorism. In Spain. in order to channel the militancy of the rank and file and wear the workers out. We must establish friendly relations with these currents and assist them to overcome their limitations. The formation of Die Linke in Germany was already an anticipation of a process that will take place in one European country after another. we must also understand that on many occasions the trade union leaders have used one day general strikes as a safety valve – a convenient method of blowing off steam. In Greece. one hour. The largest confederations have ties with the ruling Socialist party. There has even been some talk about an all-European strike or day of action. There are dangers in this situation. They learn to be “respectable” and “statesmanlike”. although the conditions for their success were apparently ideal. This is a measure of desperation. which in turn can easily be manipulated by the state security forces and infiltrated by provocateurs. All the old recipes have failed. The attempt to return to the old discredited policies of Keynesianism will only make things worse. In the course of these struggles. but a one-day general strike is a demonstration of strength.” Naturally. and so on. That is. The European bourgeois tried to get balanced budgets through the Maastricht Treaty but now this idea has been thrown out of the window. Pasok. The frustration of the youth is understandable. The period we are in will see movements involving millions. This will inevitably result in a whole series of internal crises and splits. Greece and France also the union leaders have called general strikes. but such acts of petty violence lead nowhere. which will be shaken to the foundations by the crisis. which indicate a complete collapse of the votes for the sectarian groups. the bourgeois and the reformist politicians are trapped. if it is successful. But what is proposed is not an indefinite general strike. and win them to the policies and programme of Marxism. anarchist elements take advantage of this to spread confusion. A combination of the two will get the worst of all worlds. In the hothouse atmosphere of parliament they become divorced from the lives and conditions of the masses and lose whatever revolutionary ideas they may have once had. This was revealed graphically in the recent British elections. while a minority leans towards the Communist Party of Greece (KKE). the mass organizations will be under intense pressure from the bourgeoisie and the working class. Impatience and frustration are always bad councilors. As always. it can serve to give the . they learn to take upon their shoulders the responsibility for carrying out the dirty work of the bankers and capitalists. which is rapidly moving in the direction of a pre-revolutionary situation. They have exhausted the old tricks of the past. We cannot run too far ahead of the working class. This is particularly the case in a crisis. but a limited general strike of 24 hours. The slogan of the general strike In more than one country the idea of a general strike is beginning to occupy a central role. If the workers’ organizations do not give a lead. Particularly where there has not been a general strike for a long time. The policies of monetarism and unrestricted market economics have landed them in a mess. the masses are being mobilized through the trade unions. allowing the workers to express their anger for a few hours on the streets and then afterwards merely returned to “business as usual. In reality. The policies of laissez-faire capitalism (“neo-liberalism”) have collapsed. The unprecedented levels of public borrowing will not succeed in getting Spain or any other country out of the crisis. It can play an important role as a means of mobilizing the workers (even for one day) and. However.

But events are already delivering one shock after another. would mean to assume a perspective of hopelessness. In essence. But this idea has not yet been grasped by even the most advanced workers. the capitalists may make concessions under pressure. For the question involved is nothing less than the seizure of power. in the best case. the only real solution for the problems faced by the working class is that the proletariat must take power into its own hands. In the coming period. Even the most formerly inert and “nonpolitical” layers begin to move into action. “However. Trotsky answered this false idea in advance. But as Largo Caballero once remarked. can only have a temporary effect. Surely. and. when Spain was in the grip of a widespread strike movement. Drastic problems require drastic solutions. we do not make a fetish of the idea of general strikes. the period of the awakening of the masses. for workers’ control. becomes ever deeper. The masses are threatened with a systematic destruction of their lives. Half measures are of no use. but dialectical and contradictory. everything will come right in the end? But time passes. which have brought victims and defeats or have ended with nothing. if we take the necessary steps. The veterans mould the limbs. . without its own leadership. or present them as a panacea. January. he wrote the following: “In reality. and with them the semi-civilized conditions of life. As Trotsky pointed out in the above quotation. far from improving. In an article written in 1931. slogans – are extraordinarily behind the tasks of the movement – and it is this backwardness that constitutes the main danger today. their mobilization and their entry into struggle. the class begins to feel itself as a class. “The semi-spontaneous spread of strikes. the spontaneity – which at the present stage constitutes the strength of the movement – may in the future become the source of Its weakness. At first the masses are in a state of shock. The middle class is threatened with ruin. Not only do factory workers strike. accept a temporary reduction in living standards. it is only a repetition of the old arguments of the anarcho-syndicalists before 1914. Marxists will make use of such actions to raise class consciousness and extend our influence and authority among the workers. starting out from the existing conditions and consciousness.” (The Spanish Revolution. However. A transitional programme needed The relation between economic crisis and the class struggle is not automatic. Things begin to turn into their opposite. In order to assist this development. The reforms and concessions conquered over half a century are under threat. especially the youth. preparing the way for a revolutionary transformation. the subjective factors of the revolution – the party. 1931). The depth of the present crisis places on the order of the day a fundamental transformation of society. the organization of the masses. What is needed is a serious plan of action. who regarded the general strike with the same kind of awe that fervent Catholics regard the Immaculate Conception. Moreover. Great events will be needed to convince them of the need for a radical change. they will later take back with the right hand what they have given with the left. The entire situation compels them on pain of extinction to liquidate the concessions they have made over the last fifty years. Through the medium of these strikes. is an absolutely unavoidable stage of the revolution. the new recruits learn. the question is posed: what now? Do we call for another 24 hour general strike? Or a two day stoppage? Under certain conditions. Such tactics will only serve to miseducate and confuse the advanced workers and our own comrades. But even then. the capitalists are not in a position to grant serious and lasting concessions. the innate conservatism of human beings is shaken to the core. as some ultra left sectarians believe. in the present situation. Where a 24 hour strike has taken place. you cannot cure cancer with an aspirin. This must insist on the central idea of the expropriation of the big banks and monopolies. it is necessary to work out a programme of demands that will enable us to move from A to B. but also artisans. Society is threatened with disintegration and barbarism.workers a sense of their power and raise their fighting spirit. People are compelled to reconsider their most cherished beliefs and their most deeply-held dogmas. never mind the mass of politically untutored workers. Even the most stormy strikes – all the more so the scattered ones – do not solve this problem. construction. For it is not the cream of the workers who take part in the movement. for a socialist plan of production. and the crisis. threatening to destroy all social stability. Under such conditions. Wage increases will be cancelled out by inflation etc. chauffeurs and bakers. irrigation and finally agricultural workers. To assume that the movement also in the future will be left to itself without a clear programme. but the masses as a whole. They cannot believe that the crisis is so serious. the existing consciousness will be shaken to the foundations. Under such circumstances the idea that the workers can “force” the capitalists onto a different road by mass pressure is a delusion. beginning with the most advanced elements. in spite of the mighty sweep of the struggle.

the politics of the bourgeoisie and its international relations are completely blighted by a social crisis. to hell with them and their system! For the expropriation of the banks and big monopolies under workers’ control and management! No to the Europe of the big banks and monopolies! For the Socialist United States of Europe! The beginnings of the European revolution What we see unfolding before us is not the Greek. The economic crisis must eventually find a reflection in the minds of millions of men and women. There will be a whole series of crises and splits. The workers will turn repeatedly to the old traditional organizations. This inevitable process of learning by successive approximations will be expressed in the rise and fall of leaders and currents. 9th June. It would de swiftly resolved either by the victory of the revolution or the counterrevolution. will have no shortage of possibilities in the coming period. This universal turbulence can last for years. the state. “In all countries the proletariat is racked by a deep disquiet. where the turbulence in one part of the globe swiftly communicates itself to every other part. Spanish. On the other hand. But we must ensure that in the turbulent period that we have entered. The old routines are violently upset. a fighting policy to defend jobs and living standards. educating cadres. There are no short cuts.Already we see the early beginnings of an anti-capitalist mood developing. or Italian revolution. At a time when governments are asking people to sacrifice while pouring public money into the banks. from which eventually. It is a world crisis of capitalism. Many people are therefore questioning the role that bankers have played in this crisis. that we build the forces of Marxism. London. But now things are different. Not a single penny to the bankers and capitalists! Let the bosses pay for their crisis! We demand decent conditions and wages! If the bosses cannot guarantee these things. Under the hammer blows of events. winning new adherents. Trotsky wrote in 1938: “The economy. which is a vital link in the chain of the world revolution. the working class is being held back by its leadership. but the early stages of the European revolution. Lenin once said that politics is concentrated economics. the bourgeois cannot move immediately in the direction of reaction. and gathering the forces we need to build a genuinely mass Marxist International. It is one single. a period of war. especially among the youth. The chief obstacle in the path of transforming the prerevolutionary into a revolutionary state is the opportunist character of proletarian leadership: its petty bourgeois cowardice before the big bourgeoisie and its perfidious connection with it even in its death agony. But each time they are blocked by their own conservative bureaucratic machines. We must find a road to the workers and youth. What is required is a socialist policy. The multimillion masses again and again enter the road of revolution. 2010. peeling off one layer after another of the old leadership. who will find their lives turned upside down. the old ideas and prejudices challenged at every step. The words of Leon Trotsky have never been more relevant: “The world political situation as a whole is chiefly characterized by a historical crisis of the leadership of the proletariat. Our ideas are a faithful reflection of the present and the future. the masses will learn to distinguish between what is true and what is false. They will put them to the test time and again. The capitalist system is in crisis everywhere. a genuine mass revolutionary tendency will emerge. characteristic of a prerevolutionary state of society. the old institutions shaken to the foundations. revolution and counterrevolution. 09 June 2010 . On the one hand. bank profits are booming and bankers’ bonuses have again reached record levels. The Marxists. who aspire to the leadership of the working class. There is no other way. which is rooted in a past that has already receded into history. ten by Alan WoodsWednesday.” In the past a prerevolutionary situation would not last for long. indissoluble process.” These lines could have been written yesterday! But the power of the bureaucratic apparatus is not absolute. with sudden swings to the left and right. The mass organizations are subject to the pressures of society. The ideas we defend do not represent the present consciousness of the masses. for the simple reason that there is no alternative.

and constant attacks on consumption. [Part one] The “New Normality” Workers in France protesting in January 2009. In reality the outlook is even worse. that some kind of change is necessary. But the most important thing to note is that the serious strategists of Capital have concluded that there is no possibility of returning to the “good old days” for the foreseeable future. But such a change does not happen all at once. .P.6%. global economic growth is expected to be only 3% this year. Martin Gilles. Such a period was the period before the First World War. However.” (WestLB Report. private consumption and investment activity. WestLB's Head Equity Strategist. It is a long period of low growth. the mood of popular discontent has taken to the streets. the capitalist country where the idea of bourgeois parliamentary democracy has sunk the deepest roots in the popular psyche. In Greece. It will see a long-term decline in living standards for entire populations. This fact has not yet been understood by the majority of the working class.” This is the reality of the crisis of capitalism. is a prior condition for revolution. They hope that the crisis will only be temporary. and the period from 1945 to 1973. The repercussions of the financial crisis on the real economy are likely to be with us for some time to come and bear down upon public finances. and that after a time things will return to normal. On the contrary. Naturally. the US economy will display much weaker growth than is usual in the aftermath of a recession. the present situation is rooted in the whole of the previous period. high unemployment. But it is a profoundly mistaken idea. Photo by Grégoire Lannoy. the scandal over M. WestLB does not expect to see a self-sustaining upswing with strong capital expenditure and significant increases in employment. and average economic growth in the industrialized nations will be no more than 1. viable growth model. has said that we can expect to return to normality – but it will be a "new normality". its institutions. 2009) These forecasts were made before the start of the Greek crisis. “However. This interesting expression contains a profound truth concerning the nature of the new period we are now entering into.’s expenses has led to a widespread questioning of organized politics and its institutions. It will have a profound effect on the class struggle everywhere. But the period we have now entered into has an entirely different character. Gradually. One far-sighted bourgeois commentator. and therefore a root-andbranch change in the political and trade union organizations of the working class. The idea that all problems can be settled by reforms is deep-seated in the population because it corresponds with past experience.The loss of belief in the existing society. to the degree that the given socio-economic system begins to fail. In the USA there is a burning anger against the bankers and Wall Street. It is true that the mass of workers of Europe and the United States have not yet grasped the real seriousness of the situation. what is needed is a root-and-branch change in society. the reformist leaders (both political and trade union) strive with all their might to reinforce this idea. Holger Fahrinkrug. Therefore. What now? There have been periods of capitalist upswing when the capitalists were able to make concessions to sections of the working class and concede reforms. According to WestLB's Head Economist. laws and morality. But on the basis of events it will be burned into the consciousness of millions. The report continues: “For the next few years. It will be essential to overcome the country's extreme dependency on consumption and develop a new. the feeling grows that “something is not right” with society. In most countries of Western Europe the working class has experienced almost five decades of relative improvement in living standards. where a semi-insurrectionary situation is developing. accompanied by a deep-seated desire for change. employment will initially fall yet further. November 26.In Britain.

The consciousness of all classes is conditioned by the previous period. Zapatero and others will not solve the crisis. while the rich continue to fill their pockets. But it does not go far enough. They tell the German workers that they must accept wage cuts and work harder to compete with the French and British. In Britain. a spirited horse will rear up and throw the rider to the ground. The latter sits on his back. Some people on the Left have argued that it is necessary to support the “solidarity plan” as a lesser evil. In Greece. It is a matter of life and death for capitalism. before it undertakes more strenuous and serious activities. That is why all the governments in Europe. This was the material base upon which reformism was strengthened. . which contains elements from the past. On the contrary. Marx explained: “Men make their own history. and so on. “We must all pull together in the National Interest!” This is the fighting slogan of all the bourgeois and reactionary parties. The tradition of all dead generations weighs like an Alp on the brains of the living. the cuts will reduce demand and deepen the crisis. full employment and steadily improving living standards. are pursuing more or less the same policies. a path dictated not by the caprice of individual governments or politicians but by the gravity of the economic crisis. It is not a matter of personal caprice of this or that politician or government. The period we are now entering will be far more similar to the 1970s and 1930s than to the last thirty years. as in Spain. But after a long period in which the class struggle has been somewhat muted in many countries. As a general rule. The only road open to the bourgeoisie is to attack the living standards of the workers and the middle class. but this is only a way of expressing the transitional nature of the period. Now all this has reached its limits. They are tenacious and deeply rooted in the psychology of the masses. The worst aspect of the present situation is that the harsh measures adopted will prove useless in practice. Gradually. The trade union leaders everywhere attempt to hold the workers back on the same basis. digs in his spurs and shouts: forward! But when the rider is too heavy and the spurs dig in too deeply. by slashing public spending. The old ideas and prejudices will not easily be eliminated. given and transmitted from the past. To this we answer: the unity you are talking about is the unity of the horse and its rider. Conservatives and Liberals unite in a coalition government in the name of the National Interest. They wish to use the idea of national unity in order to convince the workers that they must accept sacrifice and austerity to “save the nation”. they do not make it under self-selected circumstances. Europe will enter a downward spiral that has no ending. That is the kind of “solidarity” we are talking about here. similar conditions will tend to produce similar results. The bourgeoisie tells the Greek workers that they must accept wage cuts and work harder to compete with the German workers. but under circumstances existing already. In the end. “National unity” There is no political slogan so false. on the basis of a long period of economic growth. The present situation is complex and contradictory. For over half a century the workers of Europe have been accustomed to economic growth. This argument is both false and dangerous. living standards improved and the class struggle was muted. whether “Centre-Left” or “Centre-Right”. But that is the slogan of the day in every crisis of capitalism. The idea gradually crystallized in their minds: today we are better off than yesterday and tomorrow we will be better off than today. hollow. Capitalism is faced with the most serious crisis in the last 70 years – possibly the most serious in its whole history. the right wing New Democracy has opposed the austerity measures taken by the Pasok government for the sake of electoral popularity. One might argue that the consciousness of the masses and the mass organizations is lagging far behind the objective situation. deceitful and reactionary as the slogan of national unity. like an athlete after a long period of inactivity. which are struggling with elements of the new period. It is the “solidarity” between the exploiter and the exploited. All the cuts introduced by Papandreou. the working class. as far as it goes.” (The Eighteenth Brumaire of Louis Napoleon) It will take time for the workers of Europe to shake off the old habits and psychology shaped by the last period. The bad old days of the 1930s seemed like a bad dream. if the workers receive less. and this is correct. But in reality they have nothing else to offer. the bankers and capitalist will get more profits. but they do not make it as they please. requires a period of “limbering up”. Great events will be needed to shake up the masses to the point where they are ready to break with the old ideas and embrace new ones.The bourgeois of every country in Europe is following the same path.

they learn to take upon their shoulders the responsibility for carrying out the dirty work of the bankers and capitalists. We have seen this many times in the history of the last 100 years. The seriousness of the crisis is forcing the bourgeois to take up an intransigent attitude in relation to the trade unions. The reformist leaders (including the ex-Stalinists) usually confine themselves to parliamentary or electoral activity. On that occasion. This is particularly the case in a crisis. Under the hammer blows of events the consciousness of the masses will be transformed. At a time when order books were full and the bosses were making fat profits. The policies of laissez-faire capitalism (“neo-liberalism”) have collapsed. and in a sense that is true. The refuse collectors’ strike in Denmark was very militant. it may have been possible to win concessions without a fight. The attempt to return to the old discredited policies of Keynesianism will only make things worse. taking advantage of the more general mood and make an example of them. The crisis of capitalism is also the crisis of reformism. The policies of monetarism and unrestricted market economics have landed them in a mess. of class collaboration and the alleged identity of interest of Wage Labour and Capital. The bosses have a strategy of taking on some key militant sections and defeating them in order to send out a message to the rest of the class. the union leaders found an excuse and backed off. cozy relationship with the union leaders is no longer possible. Now all that has been consigned to the dustbin of history. That is. they always express themselves in the first case through the existing mass organizations. The management seemed prepared to take on the workers. The idea was put about of so-called New Realism: that is. but the problem remains. There will be violent swings of public opinion to the left and the right. The old. It is natural that under conditions of crisis there will be a ferment in the unions and divisions will open up between different layers of the union bureaucracy.The trade unions The crisis of capitalism threatens the jobs. will be shaken from top to bottom. There is no way out on a capitalist basis. undermining and destroying the reforms of the past. but even to preserve the gains of the past. In the hothouse atmosphere of parliament they become divorced from the lives and conditions of the masses and lose whatever revolutionary ideas they may have once had. The period that now opens up before the European working class will bear a far closer resemblance to the 1930s than to the 1990s. In the long years of capitalist upswing that followed the Second World War. bureaucratic and reactionary the leaders may be. conditions and livelihoods of millions of workers in every country and continent. Crisis of reformism All history shows that when the mass of the class moves into action. not just to obtain concessions. no matter how right wing. The intention was to take them on. A combination of the two will get the worst of all worlds. Under the dictatorship of the big banks and monopolies. Under such conditions the leaders of the unions had an easy life. But in the last period the Social Democratic governments have been carrying out a policy of counter reforms. The postal workers’ strikes in Britain had a similar aspect. the reformists were able to grant reforms. . there is no way forward for the workers of Europe except a future of constantly decreasing living standards and increased exploitation. although it took place in the midst of a general collapse of strike activity in the country. All the attempts of the union leaders to arrive at a deal with the bourgeoisie in these circumstances are doomed to fail. The struggle attracted the attention of the whole labour movement. In the past. they might have been willing to arrive at concessions for the sake of peace. This is similar to the struggle of the Mexican electricians. It will be a period of storm and stress without parallel in history. In reality. with the developing crisis of world capitalism. use any means possible to smash them and then move on. for the simple reason that the capitalists have nothing to offer them. the bourgeois and the reformist politicians are trapped. Now. One can say that this is only a struggle between rival bureaucrats. Under conditions of capitalist crisis there is no alternative but to fight. They fall over one another to defend the system. the policies of reformism are revealed as bankrupt in the most literal sense of the word. They learn to be “respectable” and “statesmanlike”. starting with the unions. But it is a superficial view that does not take into account the fact that such struggles in the bureaucracy are a reflection of powerful pressures that are building up under the surface. All the old recipes have failed. They are also taking advantage of the recession to go onto the offensive. They have exhausted the old tricks of the past. The mass organizations.

On the fringes of the movement frustrated youths throw rocks and petrol bombs and attack property. it can lead to terrorism. beginning with the most advanced elements. Sectarianism – a dead end All the attempts of the sects to build phantom “revolutionary parties” outside the existing mass organizations are doomed to ignominious failure. . Particularly where there has not been a general strike for a long time. the masses are being mobilized through the trade unions. Our task is to penetrate the mass organizations. allowing the workers to express their anger for a few hours on the streets and then afterwards merely returned to “business as usual. which is rapidly moving in the direction of a pre-revolutionary situation. the capitalists may make concessions under pressure. This is a measure of desperation. Impatience and frustration are always bad councilors. increasing militancy and raising consciousness. The largest confederations have ties with the ruling Socialist party. it can serve to give the workers a sense of their power and raise their fighting spirit. If the workers’ organizations do not give a lead. they will later take back with the right hand what they have given with the left. But even then. In the course of these struggles. The formation of Die Linke in Germany was already an anticipation of a process that will take place in one European country after another. Greece and France also the union leaders have called general strikes.” Naturally. and win them to the policies and programme of Marxism. confusions and vacillations. In Spain. It can play an important role as a means of mobilizing the workers (even for one day) and. We cannot run too far ahead of the working class. However. but must patiently go through the experience with them. But what is proposed is not an indefinite general strike. but a limited general strike of 24 hours. This will inevitably result in a whole series of internal crises and splits. especially the youth. but a one-day general strike is a demonstration of strength.The European bourgeois tried to get balanced budgets through the Maastricht Treaty but now this idea has been thrown out of the window. In Italy in the past. and so on. The frustration of the youth is understandable. In Greece. the union bureaucrats called many general strikes of one day. The aim is to solve the crisis of capitalism by driving down the living standards of the working class and place it at the mercy of Capital. which in turn can easily be manipulated by the state security forces and infiltrated by provocateurs. Where a 24 hour strike has taken place. However. At a certain stage the emergence of mass left wing and centrist currents is inevitable. We must establish friendly relations with these currents and assist them to overcome their limitations. There has even been some talk about an all-European strike or day of action. in order to channel the militancy of the rank and file and wear the workers out. we do not make a fetish of the idea of general strikes. There are dangers in this situation. which will be shaken to the foundations by the crisis. Marxists will make use of such actions to raise class consciousness and extend our influence and authority among the workers. but such acts of petty violence lead nowhere. An indefinite strike can pose the question of power. we must also understand that on many occasions the trade union leaders have used one day general strikes as a safety valve – a convenient method of blowing off steam. while a minority leans towards the Communist Party of Greece (KKE). anarchist elements take advantage of this to spread confusion. four hours. although the conditions for their success were apparently ideal. if it is successful. The bourgeois will face an explosion of the class struggle. The slogan of the general strike In more than one country the idea of a general strike is beginning to occupy a central role. The unprecedented levels of public borrowing will not succeed in getting Spain or any other country out of the crisis. which indicate a complete collapse of the votes for the sectarian groups. Pasok. or present them as a panacea. can be a step forward in giving the workers a sense of their power. Such tactics will only serve to miseducate and confuse the advanced workers and our own comrades. But this will not work. The period we are in will see movements involving millions. one hour. but it will mean a long period of austerity and attacks on living standards. This was revealed graphically in the recent British elections. the mass organizations will be under intense pressure from the bourgeoisie and the working class. As always. The public debt has soared. the question is posed: what now? Do we call for another 24 hour general strike? Or a two day stoppage? Under certain conditions. Wage increases will be cancelled out by inflation etc. Marxists will agitate in favour of a general strike as a means of mobilizing the maximum numbers of workers in struggle. or less.

In an article written in 1931. preparing the way for a revolutionary transformation. and the crisis. everything will come right in the end? But time passes. bank profits are booming and bankers’ bonuses have again reached record levels. without its own leadership. especially among the youth. irrigation and finally agricultural workers. 1931). becomes ever deeper. They cannot believe that the crisis is so serious. would mean to assume a perspective of hopelessness. if we take the necessary steps. but also artisans. Great events will be needed to convince them of the need for a radical change. Under such conditions. What is needed is a serious plan of action. What is required is a socialist policy. But events are already delivering one shock after another. The masses are threatened with a systematic destruction of their lives. in the present situation. accept a temporary reduction in living standards. the class begins to feel itself as a class. which have brought victims and defeats or have ended with nothing. The entire situation compels them on pain of extinction to liquidate the concessions they have made over the last fifty years. in the best case. the organization of the masses. But this idea has not yet been grasped by even the most advanced workers. The veterans mould the limbs. a fighting policy to defend jobs and living standards. Under such circumstances the idea that the workers can “force” the capitalists onto a different road by mass pressure is a delusion. Not only do factory workers strike. At first the masses are in a state of shock. “However. starting out from the existing conditions and consciousness. the period of the awakening of the masses. it is only a repetition of the old arguments of the anarcho-syndicalists before 1914.” (The Spanish Revolution. the new recruits learn. In order to assist this development. Even the most formerly inert and “nonpolitical” layers begin to move into action. in spite of the mighty sweep of the struggle. At a time when governments are asking people to sacrifice while pouring public money into the banks. Drastic problems require drastic solutions. Half measures are of no use. never mind the mass of politically untutored workers.Moreover. when Spain was in the grip of a widespread strike movement. Surely. you cannot cure cancer with an aspirin. but dialectical and contradictory. who regarded the general strike with the same kind of awe that fervent Catholics regard the Immaculate Conception. for workers’ control. January. Society is threatened with disintegration and barbarism. For it is not the cream of the workers who take part in the movement. This must insist on the central idea of the expropriation of the big banks and monopolies. For the question involved is nothing less than the seizure of power. The middle class is threatened with ruin. the subjective factors of the revolution – the party. is an absolutely unavoidable stage of the revolution. the spontaneity – which at the present stage constitutes the strength of the movement – may in the future become the source of Its weakness. he wrote the following: “In reality. Already we see the early beginnings of an anti-capitalist mood developing. Through the medium of these strikes. The reforms and concessions conquered over half a century are under threat. chauffeurs and bakers. the existing consciousness will be shaken to the foundations. “The semi-spontaneous spread of strikes. and. In the coming period. The depth of the present crisis places on the order of the day a fundamental transformation of society. but the masses as a whole. In essence. far from improving. Not a single penny to the bankers and capitalists! Let the bosses pay for their crisis! We demand decent conditions and wages! If the bosses cannot guarantee these things. can only have a temporary effect. to hell with them and their system! For the expropriation of the banks and big monopolies under workers’ control and management! No to the Europe of the big banks and monopolies! For the Socialist United States of Europe! . To assume that the movement also in the future will be left to itself without a clear programme. But as Largo Caballero once remarked. A transitional programme needed The relation between economic crisis and the class struggle is not automatic. As Trotsky pointed out in the above quotation. the capitalists are not in a position to grant serious and lasting concessions. as some ultra left sectarians believe. Even the most stormy strikes – all the more so the scattered ones – do not solve this problem. their mobilization and their entry into struggle. the only real solution for the problems faced by the working class is that the proletariat must take power into its own hands. slogans – are extraordinarily behind the tasks of the movement – and it is this backwardness that constitutes the main danger today. Things begin to turn into their opposite. threatening to destroy all social stability. construction. Many people are therefore questioning the role that bankers have played in this crisis. the innate conservatism of human beings is shaken to the core. Trotsky answered this false idea in advance. and with them the semi-civilized conditions of life. for a socialist plan of production. it is necessary to work out a programme of demands that will enable us to move from A to B. People are compelled to reconsider their most cherished beliefs and their most deeply-held dogmas.

The Marxists. The words of Leon Trotsky have never been more relevant: “The world political situation as a whole is chiefly characterized by a historical crisis of the leadership of the proletariat. 2010. This time. with sudden swings to the left and right. and carrying Russian-made AK-47s. or Italian revolution. Trotsky wrote in 1938: “The economy. the old institutions shaken to the foundations.” These lines could have been written yesterday! But the power of the bureaucratic apparatus is not absolute.The beginnings of the European revolution What we see unfolding before us is not the Greek. but the early stages of the European revolution. Our ideas are a faithful reflection of the present and the future. The mass organizations are subject to the pressures of society. The economic crisis must eventually find a reflection in the minds of millions of men and women. This universal turbulence can last for years. On the one hand. the bourgeois cannot move immediately in the direction of reaction. It would de swiftly resolved either by the victory of the revolution or the counterrevolution. indissoluble process. the working class is being held back by its leadership. The multimillion masses again and again enter the road of revolution. revolution and counterrevolution. But now things are different. The chief obstacle in the path of transforming the prerevolutionary into a revolutionary state is the opportunist character of proletarian leadership: its petty bourgeois cowardice before the big bourgeoisie and its perfidious connection with it even in its death agony. There will be a whole series of crises and splits. there was a massive display of the people’s militia clad in camouflage green. Under the hammer blows of events. which is a vital link in the chain of the world revolution. the masses will learn to distinguish between what is true and what is false. a genuine mass revolutionary tendency will emerge. where the turbulence in one part of the globe swiftly communicates itself to every other part. winning new adherents. 15 April 2010 Alan Woods in Caracas describes the mood of the masses on the April 13 celebrations of the 8th anniversary of the failed right-wing coup. It is one single. The workers will turn repeatedly to the old traditional organizations. which is rooted in a past that has already receded into history. 9th June. as well as the usual red shirts. They will put them to the test time and again. who will find their lives turned upside down. Spanish. But we must ensure that in the turbulent period that we have entered. will have no shortage of possibilities in the coming period. characteristic of a prerevolutionary state of society. . a period of war. Venezuela: The People in arms Written by Alan Woods in CaracasThursday. Lenin once said that politics is concentrated economics. The ideas we defend do not represent the present consciousness of the masses. The capitalist system is in crisis everywhere. The old routines are violently upset. “In all countries the proletariat is racked by a deep disquiet. a clear warning to the reactionary oligarchy that the masses are prepared to fight any attempt to turn the clock back. educating cadres. It is a world crisis of capitalism. peeling off one layer after another of the old leadership. for the simple reason that there is no alternative. who aspire to the leadership of the working class.” In the past a prerevolutionary situation would not last for long. This inevitable process of learning by successive approximations will be expressed in the rise and fall of leaders and currents. On the other hand. from which eventually. There is no other way. the old ideas and prejudices challenged at every step. There are no short cuts. and gathering the forces we need to build a genuinely mass Marxist International. the politics of the bourgeoisie and its international relations are completely blighted by a social crisis. We must find a road to the workers and youth. London. that we build the forces of Marxism. But each time they are blocked by their own conservative bureaucratic machines. the state.

arms in hand. There was a deafening roar of music – Latin American rhythms with revolutionary words. peasants. But now there was a different element. interrupted by chants and slogans. Ordinary men and women came onto the streets. peasants from the villages. in which the Venezuelan oligarchy. armed with old hunting rifles. and revolutionary youth. With no party. was defeated by a spontaneous uprising of the masses. As you walked along the Avenue the files of militiamen and militiawomen (there were many women also in uniform) seemed to have no end. marched in their thousands to the gates of the Miraflores Palace to demand the release of President Chávez. for the Revolution. The soldiers went over to the side of the people. for socialism. Here once again one could sense the unconquerable power of the masses. Alan Woods and Lal Khan and other bystanders celebrating the revolutionIn past years these events have been turned into a celebration of the Revolution. clubs and anything they could lay their hands on. These heroic events can only be compared to Barcelona in July 1936. to defend the Revolution against enemies – both external and internal. young and old. but now the People have arms! Long live the Bolivarian Revolution! Long live the Armed People! Long live President Chávez!” People climbed trees and lampposts to get a better view and to display placards with militant slogans. overthrew the democratically elected government. If anybody doubts that this was a genuine revolution. risking their lives to defend the Bolivarian Revolution. against the bourgeoisie. This was the Day of the People’s Militia – a demonstration of the power of a people in arms. while some made a quick profit selling hats. Under a blazing sun. the people massed – the usual red shirts of the chavistas alongside the green-clad militia. and young kids from the schools and colleges. expressing their willingness to fight. the workers. Here were thousands upon thousands of workers from the factories. Along the Avenue the loudspeakers blared out revolutionary slogans: against imperialism. they have only to study the events of April 2002. Instead of a sea of red Bolivar Avenue was filled to overflowing with a sea of camouflage green. On that day history was made. The Bolivar Avenue in downtown Caracas was a sea of red shirts and waving banners. tee-shirts and cold drinks (which were much in demand). The militia was organized by groups that showed their origins: young teenagers from the schools and peasants with straw hats and tractors with Belarus written on the side. and for Chávez: “The Right is still preparing another 11 April. But this year the scene was quite different to what I remember. and the coup collapsed. women and men. stormed the barracks and smashed the fascist reactionaries.Eight years ago something occurred that has no precedent in the history of Latin America.Photo by ABN. . when the workers. in collaboration with the US Embassy and the CIA. no leadership and no clear perspectives other than to defeat the coup. The reactionary coup of 11 April.

looking at these half-trained civilians with guns. Chávez appears. Photo by Prensa PresidencialHis speech was shorter than in the past. holding their rifles in the air. with a massacre of unarmed civilians. alleging that these guns are destined for the FARC guerrillas in Colombia. a mood of expectancy can be noticed. Washington and its hired media have made a tremendous fuss. and the People is the militia. “I have been thinking a lot about this.” he says. In fact a professional drill sergeant would doubtless have a heart attack. Some rest on their rifles. “Ever since the 1970s. from the fascist coup of 11 April to the popular-military uprising of 13 April. but as one approached the head of the demonstration. The crowd on the pavements pushes forward to catch a glimpse of their hero. he makes the people swear a sacred oath: that they will never rest until this task is accomplished.” Chávez then recalled how he and a group of progressive army officers tried to stage a rebellion in 1992: “We failed because this was a military uprising without the People. Now everyone can see what they are really intended for. In recent years Chávez has bought large quantities of these weapons from Russia. It is the sword of Simon Bolivar – El Libertador (The Liberator).” he concluded. Recalling the dramatic events of April 2002. that most versatile and effective weapon. As they wait for the arrival of the President. and if we go even further back in history. but went straight to the point. of the militias that fought Franco in the Spanish Civil War. he pulls out a magnificent sword and shows it to the multitude. “The militia is the People. of the armies of the French Revolution and the militias of the American Revolution in the 18th century. some people have been dreaming of a popular-military rebellion. None of these were professional forces and they did not conform to the standards of a professional bourgeois standing army. or sit on the ground to eat a sandwich. The militias repeat the words loudly. riding on the back of an open vehicle – an ordinary army truck – saluting and waving to the militia and the crowd. In the kind of dramatic gesture that is characteristic of him. the militias stand listlessly.” he proclaims. But they did not fight any the less well for that. The militia marches forward towards the tribune where Chávez is to deliver his speech. He tells the people that the liberation of Latin America has not been achieved for 200 years and can only be achieved through socialist revolution. and one or two even had the muzzle of their AK-47s resting on their boot – a somewhat risky practice. light and easy to use. The 1980s was a black period that ended in the Caracazo of 1989. But it never occurred. dressed in army uniform. the militia was unarmed. These militias are the lineal descendants of the Cuban guerrillas. The militia begins to form ranks. he recalled the . everyone was holding a Russian-made AK-47. and in more than one case (Spain comes to mind) the attempt to force them into the format of a professional army had the most negative effects on their fighting spirit. But this impression would be entirely false. After a spell in prison. Late in the afternoon. one would have thought. of the workers´ militias that overthrew the Tsar in Russia in 1917.To the rear. Then Chávez recounts the events of April 2002.

” he said. 17 March 2010 The call issued by President Chavez to set up a new revolutionary international. Ever since then the bourgeois media have tried to wipe that date out of the calendar. because the people were now armed and would crush any counterrevolutionary attempt. has provoked a passionate discussion in the ranks of the workers’ movement in Latin America and on a world scale. the industries. Contrary to the myth so assiduously spread by the media in the West about the allegedly repressive and dictatorial regime in Venezuela. as there has been impunity for so many other massacres in our history!” he said. or it is nothing. it would have dealt a heavy blow against the revolutionary movement throughout Latin America.” Chávez observed that. keep calm. socialism o muerte! Caracas. he appealed for patience. and the many more who were wounded. “This gave rise to the greatest rebellion in our history – the popular uprising we had waited so long to see. If they do. the Revolution has hardly begun. or the result of sentimental considerations. . But the movement of the masses forced them to withdraw. It flowed from the fact that capitalism develops as a world system—out of the different national economies and markets there arises one single. 2010 Written by International Marxist TendencyWednesday. “They cannot wipe April from the calendar. a US submarine and an aircraft carrier were in Venezuelan waters waiting to intervene.” Chávez pointed out that US imperialism was actively involved in the coup. February or any other month. But this aroused all the latent pent-up power of the masses that had been suppressed for so long. But our soldiers not only refused to fire on the People.” he said. and eight years later the judicial investigations are still dragging on: “Let there be no impunity for this massacre. “On our shoulders a heavy responsibility lies.” The internationalism of Marx and Engels was not a caprice. Already at the dawn of our movement.” Turning to the September elections he warned: “We cannot allow the bourgeoisie to take control of the National Assembly. You know what you have to do: take the power into your own hands – ALL the power! Expropriate the banks. the Fifth International. But the latter had calculated that such an uprising would be put down in blood by the army. But the oligarchy lost no time in preparing the coup of 2002. It is impossible for Marxists to remain indifferent to this question. but the masses have kept it alive. What attitude should we take towards it? The first question that needs to be answered is: do we need an International? Marxism is internationalist. The bourgeoisie and the imperialists had the surprise of their lives. He said that if this occurred: “Do not lose your heads.” Admitting that the Revolution was far from completed and that there was a colossal amount still to be done.” he said. the threats on television and the other media.formation of a mass movement: the Bolivarian Movement. We must win two thirds of the seats in order to press on with our programme.” He warned the bourgeoisie that it was not possible to repeat what happened in April 2002. but went over to the side of the People. in the pages of the Communist Manifesto. “Immediately after the 11 April there began the arrests and manhunts. which swept to power in the 1998 elections. and that there were conspiracies to assassinate him. 13 April. if they had succeeded in crushing the Venezuelan Revolution.” “This was an uprising against the bourgeoisie and imperialism. He then went on to say that the blood of these martyrs of the Revolution acted as a spur to the Revolution. any more than they can wipe out January. “After its first decade. US helicopters and spy planes were flying over Venezuelan air space. Marx and Engels wrote: “The workers have no country. Chávez then warned that the threat of counterrevolution had not gone away. the monopolies that remain in the hands of the bourgeoisie. nobody is in prison for these crimes. they will use it to destabilize the country and create the conditions for another 11 April. He finished with the words: Long live the National Militia!” Long live the People in Arms! Long Live the Socialist Revolution! Patria. indivisible and interdependent whole—the world market. “The peoples of Latin America are looking to us for their salvation. as happened in the Caracazo. Chávez recalled the men and women who died in the coup.

began where the First International had left off. the Second International began as a mass International which gathered and organised millions of workers. On the basis of a long period of economic growth. not Russia—can stand apart from the mighty pull of the world market. . more correctly. at least in words. It had mass parties and trade unions in Germany. However. However. By combining firmness on principles with great tactical flexibility. The formation of a numerous caste of trade union officials. the revolutionary aims were lost sight of. etc. which was cruelly exposed in 1914. This set its stamp on the mentality of the leading layer of the Social Democratic parties and trade unions. But it never was a real mass workers’ International. Britain. not China. French Proudhonists. the IWA was not a Marxist International. on the basis of revolutionary Marxism. The leaders became absorbed in the daily routine of parliamentary or trade union activity. gradually Marx and Engels won over the majority. However. France. it stood. or. Italian followers of Mazzini. The historical task of the First International was to establish the main principles. launched in 1889. it was possible for capitalism to give concessions to the working class. but an extremely heterogeneous organisation. Party bureaucrats and parliamentary careerists led to a process of degeneration. This was. to its upper layer. when the leaders of the International voted for the war credits and supported “their” bourgeoisie in the imperialist slaughter of the First World War. and the like.Today this prediction of the founders of Marxism has been brilliantly demonstrated. Gradually. theories were found to justify this abandonment of principle.The Communist League was. Belgium. which was an anticipation for the future. an international organisation. in almost laboratory fashion. almost imperceptibly. The crushing domination of the world market is the most decisive fact of our epoch. Unlike the latter. from the beginning. at its inception. Eventually. no matter how big and powerful—not the USA. programme. The Socialist International (Second International). Moreover. anarchists. in fact. part of the reason for the collapse of the USSR. The future of world socialism appeared to be guaranteed. The period of 1871-1914 was the classical period of Social Democracy. It was really an anticipation of the future. strategy and tactics of revolutionary Marxism on a world scale. The First and Second Internationals Marx and Engels took part in the founding of the First International. in which the bureaucracy increasingly divorced itself from the masses and the party rankand-file. Not a single country. The IWA succeeded in laying the theoretical foundations for a genuine revolutionary International. the misfortune of the Second International was to be formed during a long period of capitalist upswing. This was the material basis for the national-reformist degeneration of the Second (Socialist) International. the formation of the International Workingman’s Association (the First International) in 1864 represented a qualitative step forward. composed of British reformist trade unionists.

With every defeat of the international revolution. Trotsky drew the conclusion that an international which . it had a mass base of millions. Trotsky called for a united front of Communist and Social Democratic workers to fight the Nazi menace. Stalin drew a line of blood between the bureaucracy that usurped and betrayed the October revolution and the Trotskyists who fought to defend the real ideas of Bolshevism-Leninism. Stalin having burnt his fingers with the pro-Kulak policy broke with Bukharin and swung to an ultra-left position of forced collectivisation inside Russia and simultaneously foisted upon the International (the Comintern) the insane policy of the “Third Period”. Whereas Lenin and Trotsky looked to the international workers’ revolution as the only safeguard for the future of the Russian revolution and the Soviet state. Then they were slandered. in Germany in 1923. The Stalinist degeneration of the Soviet Union played havoc with the still immature leaderships of the Communist Parties abroad. the Communist International maintained a correct line. more importantly. and the bureaucracy and the Stalinist faction in the Party acquired new strength and confidence. The defeat of the German working class in 1933. the Bolshevik-Leninists were expelled from the Communist Party and the International. and striving for a bloc with the so-called progressive bourgeois elements in the colonial countries (Chiang Kai Shek in China) and the Labour bureaucracy in the West (the Anglo-Soviet Committee). the bureaucracy felt increasingly confident. With Lenin’s final illness and death. On the other hand. and allowed Hitler to come to power in 1933. internationalist programme. the bureaucracy steered a right-wing course. The insane policy of “social fascism” split and paralysed the powerful German labour movement. The German working class was split down the middle. This opportunist policy led to the bloody defeat of the Chinese revolution and the missing of an opportunity in Britain in 1926 and. The International Left Opposition The tremendous potential of the Third International was destroyed by the rise of Stalinism in Russia. revolution and Civil War.The Third International Lenin and Trotsky led the Third International before it degenerated. the Soviet workers were more disappointed and demoralised. especially after Lenin’s death in 1924. Stalin and his supporters were indifferent to the world revolution. under Stalin and Bukharin. was a turning-point. pushed the workers to one side and took over the Party. However. But they were fighting against the tide. persecuted.The Third (Communist) International stood on a qualitatively higher level than either of its two predecessors. The Russian workers were exhausted by years of war. imprisoned and murdered. conciliating the kulaks and other capitalist elements within Russia. Trotsky and his followers. Like the IWA. the isolation of the Russian Revolution under conditions of frightful material and cultural backwardness caused the bureaucratic degeneration of the Revolution. Like the Second International. Leon Trotsky and the Left Opposition attempted to defend the spotless traditions of October against Stalinist reaction —the Leninist traditions of workers’ democracy and proletarian internationalism. After the defeat of Trotsky’s Left Opposition (1927). The bureaucratic faction led by Stalin gained the upper hand. it appeared that the fate of the world revolution was in good hands. at the high-point of its development. The “theory” of socialism in one country expressed the national limitedness of the outlook of the bureaucracy. arising from the refusal of the Communist Party to offer a united front to the Social Democratic workers. Once again. Under the leadership of Lenin and Trotsky. which looked on the Communist International merely as an instrument of the foreign policy of Moscow. But the warnings of Trotsky to the members of the Communist Parties fell on deaf ears. The worst result was in Germany. the Third International stood for a clear revolutionary.

. As a result. Trotsky attempted to re-group the small forces that remained loyal to the traditions of Bolshevism and the October revolution. in addition to the smallness of their forces. This reflected in part the isolation of the Trotskyists from the mass movement. but at least they had the masses. but it is sufficient to say that Mandel. He was respected by workers all over the world and his ideas were listened to. The Second and Third Internationals degenerated into reformist organisations. was dead and a new revolutionary international needed to be forged. The collapse of the Soviet Union has served to sow confusion and disorientation in the movement. but we need to state the truth always. All talk of resurrecting the IV International on this basis is absolutely excluded. the Communist International was ignominiously buried. which everywhere has been reduced to a small minority. particularly of a sectarian character. Today the so-called Fourth International does not exist as an organisation. nor even a clean banner. Sometimes the truth is unpalatable. without even calling a congress. The truth is that. Decades of economic growth in the advanced capitalist countries have given rise to an unprecedented degeneration of the mass organizations of the working class. The Fourth International Trotsky founded the Fourth International after the failures of the Third in many countries. having been cynically used by Stalin as an instrument of Moscow’s foreign policy. slandered by the Stalinists and persecuted by the GPU. but he had a correct programme and policy and a clean banner.Under the most difficult conditions in exile. and whoever denies it is merely deceiving himself and deceiving others. The movement has been thrown back Lenin was always honest. did not have a mass organization. but have failed to grasp the most elementary ideas that Trotsky defended. It is not possible here to go into more detail about the mistakes of the then leadership of the Fourth International. Unfortunately. In 1943. The so-called Fourth International degenerated after the death of Trotsky into an organically petit-bourgeois sect. for a combination of circumstances. lost their bearings after the war and this led to a complete abandonment of genuine Marxism. they made serious errors which led to the shipwreck of the Fourth. and set the final seal on the degeneration of the former Stalinist leaders. History proved him right. Many have drawn pessimistic conclusions from this. Trotsky. The leadership of the Fourth International was totally incapable of understanding the new situation that arose after 1945. It has isolated the revolutionary current. The other leaders of the Fourth International proved to be completely unequal to the tasks posed by history.was incapable of reacting in the face of such a defeat. this perspective was falsified by history. This sectarianism is present today in most of the groups that claim to represent Trotskyism. and we are not in the least frightened by such difficulties. That is the truth. and the forces of genuine Marxism reduced to a small minority. Trotsky launched the Fourth International in 1938 on the basis of a definite perspective. Those who speak in its name (and there are a few of them) have neither the masses. many of the adherents of the Opposition were confused and disoriented. in exile. To those people we say: it is not the first time we have faced difficulties. They repeated the words of Trotsky without understanding Trotsky’s method. many of whom have passed over to the camp of capitalist reaction. the revolutionary movement has been thrown back. It has nothing in common with the ideas of its founder or with the genuine tendency of Bolshevism-Leninism. The break-up and splintering of the Trotskyist movement is rooted in that period. His slogan was: always say what is. The political and organisational heritage of Lenin was dealt a heavy blow for a whole historical period. Cannon and co. The sectarian attitude of the pseudo-Trotskyist sects towards the Bolivarian Revolution is a particularly crass example of this. We retain unshakable confidence in the . nor the correct ideas. The murder of Trotsky by one of Stalin’s assassins in 1940 struck a mortal blow against the movement. and many mistakes were made. However. objective and subjective.

Events. as the Communist International was built on the basis of the experience of the masses in the stormy period of 1914-1920. and especially in Venezuela.correctness of Marxism. 2. they have over the great mass of the proletariat the advantage of clearly understanding the line of march. practically. The International will not be built by merely proclaiming it. that organization was not homogeneous but composed of many different tendencies. events are what are necessary to educate the masses in the necessity of a revolutionary transformation of society. What sets the International Marxist Tendency (IMT) apart from all the other tendencies that claim to be Trotskyists is. However. on the other. the revolution in Latin America has gone further than anywhere else in the world. our painstaking attitude to theory. on the one hand. “They do not set up any sectarian principles of their own. and the ultimate general results of the proletarian movement. leader of the Venezuelan Revolution. is now proposing the setting up the Fifth International. The dilemma of the epoch is that the Social democratic leadership of the workers’ movement has capitulated to bourgeois policies stifling the aspirations of the workers. Marx and Engels were not deterred by this. The task we are confronted with is roughly analogous to that which confronted Marx and Engels at the time of the founding of the First International. in the revolutionary potential of the working class and in the final victory of socialism. In the various stages of development which the struggle of the working class against the bourgeoisie has to pass through. and it has been amply confirmed by events. . Hugo Chavez pointed out that all previous Internationals were originally based in Europe. the most advanced and resolute section of the working-class parties of every country. they always and everywhere represent the interests of the movement as a whole. As we explained above. The IMT explained this perspective ten years ago. “They have no interests separate and apart from those of the proletariat as a whole. by which to shape and mould the proletarian movement. Photo by Uh Ah. The present crisis exposes the reactionary role of capitalism. There are the beginnings of a regroupment of forces internationally. on the other hand. The Communist Manifesto. How to defend the Venezuelan revolution Hugo Chávez. However. the task is to build up an alternative. What is required is to give that regroupment an organized expression and a clear programme. at least for the present. we need to create an organization with clear ideas and solid roots in the masses on a world scale. Proletarians and Communists) What conclusion do we draw from this? Only this: that genuine Marxists must not separate themselves from the mass organisations. they will not go towards some small grouping on the fringes of the Labour movement. As opposed to all the other groups we take as our starting point the fact that when the workers move into action. our approach towards the mass organisations. are on the one hand. reflecting the class battles in Europe at that time. that section which pushes forward all others. and places on the order of the day the revival of international socialism. theoretically. ¡Chavez no se va!In his Caracas speech.” (Marx and Engels. In the national struggles of the proletarians of the different countries. the conditions. but still retains mass support in many countries. It is an undeniable fact that. events. “The Communists. therefore. independently of all nationality. It will only be built on the basis of events. but that today the epicentre of world revolution was in Latin America. In the founding document of our movement Marx and Engels explained: “In what relation do the Communists stand to the proletarians as a whole? “The Communists do not form a separate party opposed to the other working-class parties. But in addition to events. they point out and bring to the front the common interests of the entire proletariat. It is very easy to declare the official leadership degenerate. They joined the general movement for a working class International and worked patiently to provide it with a scientific ideology and programme. “The Communists are distinguished from the other working-class parties by this only: 1. perspective and policy.

S. including Europe and North America. The repeated meetings of the “Sao Paulo Forum” have clearly exposed the limitations of such gatherings. It has naturally caused divisions – but these divisions already existed. the coup d'etat in Honduras and last but not least the agreement for setting up new military bases in Panama. We have to our credit the passing of a unanimous resolution of the British trade unions in defence of the Venezuelan Revolution. for socialism. who is formally a member of the FMLN. In El Salvador for instance. Chavez said that the appeal is made to left parties. but it is a thousand times more important to build it north of the Rio Grande. They are the divisions that have always existed within the movement: the division between those who wish merely to introduce a few reforms. Imperialism has taken new steps to control the situation: the installation of seven military bases in Colombia. every tendency will have to take a position on this. That is why Chavez has proposed the formation of the Fifth International. the only way to paralyze the hand of US imperialism is to build a powerful mass movement on a world scale in defence of the Revolution. was not to save capitalism but to destroy it. Reformism or revolution? The Caracas Agreement (El Compromiso de Caracas) was based on the idea of a worldwide fight against imperialism and capitalism. has opposed the Fifth International and said he has nothing to do with socialism. President Funes. he condemned the attempts of western governments to save the system with lavish state bailouts. He has appealed directly to the workers. That is why the IMT has launched and consistently supported the international campaign Hands Off Venezuela. This ruffled a few feathers. It is important to build this movement in Latin America. among others. which have turned out to be nothing more than a mere talking shop: a place where all kinds of reformists can gather to complain about the injustices of capitalism. he has made repeated appeals to the workers and youth of these countries to join the movement for socialist revolution. The HOV campaign has a proud record in mobilizing the public opinion of the world in support of the Venezuelan Revolution. That is a sufficient basis to unite the most militant sections of the international labour movement. Sooner or later. However. Chavez by no means denied the existence of a revolutionary potential in the rest of the world. he said. to prettify capitalism. In his speech Chavez said that the real threat to the future of the human race was capitalism itself. What attitude should Marxists take? What position should the Marxists take? As Marxists we are unconditionally in favour of the setting up of mass international organisation of the working class. which do not change anything substantial. the poor and the Afro-Americans of the USA to support the Venezuelan Revolution. we note that this appeal has met with a mixed response. In the last analysis. That is why the international organs of imperialism. internationalism is not a secondary consideration but a life and death question.000 young people and trade unionists in Vienna to hear President Chavez speak. Organizations like the “Sao Paulo Forum” and the World Social Forum do not carry the world struggle against capitalism a single step forward.In stating this undeniable fact. which is a radical break with such movements. This has nothing in common with the reactionary demagogy of “Third Worldism” that tries to counterpose “Latin America” with the “gringos”. On the contrary. Yet the FMLN has officially come out in favour of the Fifth International. root and branch. and in the Left in general. No genuine mass International exists at present. which will effectively surround Venezuela with a U. for socialism and in defence of the Venezuelan Revolution. such as the World Bank. organisations and currents. Military presence. Referring to the world capitalist crisis. What is needed is a genuine worldwide revolutionary International. and those who wish to abolish capitalism. Some of the representatives present at the Gathering of Left Parties in Caracas opposed this call with the argument that we already have the “Sao Paulo Forum” and that such an international did not need to be openly anticapitalist. even among some of the leaders that were present in the PSUV Congress. the mass meeting of 5. The Venezuelan revolution represents a mortal danger for the ruling classes throughout the Americas. This is a great achievement but it is only the beginning. For the Venezuelan Revolution. look with favour on this kind of thing and actively encourage and finance the NGOs as a means of diverting attention away from the revolutionary struggle to change society. but who never offer a revolutionary perspective and do not stand for socialism. The appeal has opened a mass debate in Venezuela and also a debate within many left wing parties and organisations throughout Latin America and beyond. The reformists and Social Democrats did not like the President’s insistence that the Fifth International should not be merely anti-imperialist but also anti-capitalist and socialist. This explains why U. In Mexico the idea has been taken up by sections of the PRD and other mass organisations. What is needed is something more than a solidarity campaign. Venezuela is the undisputed vanguard of this process and the internationalist policies of Chávez and his continued calls for world revolution is a beacon of light to all anti-imperialist fighters throughout the world. which long ago launched the inspiring slogan: “workers of all countries unite!” Imperialism is hell-bent on putting an end to the revolutionary process that is taking place in Latin America.S. From small beginnings we are now present in more than 40 countries. they advocate the reformist method of partial reforms. What is needed is a revolutionary international against imperialism and capitalism. Our task. It is the voice of true Internationalism. What was the IV . Rather. In Europe this will be surely discussed in the Communist Parties and ex-Communist Parties.

At a meeting of the International Executive Committee in the first week of March. the IMT voted unanimously in favour of participating in the building of the Fifth International. • For a worldwide anti-imperialist and anti-capitalist united front! • For the international socialist revolution! • For a Marxist programme! • Long live the Fifth International! • Workers of the world unite! . It is too early to say whether the appeal for a Fifth International will actually lead to the formation of a genuine International. The IMT defends the ideas of Marxism in the mass organisations of the working class in all countries. Europe and America (including Canada and the USA). This is a debate in which the Marxists have a duty to participate actively. and in effect is only alive in the ideas. which is already recognised widely for its role in building solidarity with and providing Marxist analysis about the Venezuelan Revolution. This appeal will raise many questions in the minds of workers and youth about the programme such an international should have and about the history of the previous internationals. must take a clear position. through a democratic debate and also on the basis of common experience. And we have taken a position.International was destroyed by the mistakes of the leaders after Trotsky’s assassination. That depends on many things. it is clear that the fact that this appeal comes from Venezuela and President Chavez means that it will get an echo among many people in Latin America to start with. It is within these organisations that a discussion around the proposal of the Fifth International should be promoted with urgency. We declare our full support for the setting up of a mass based revolutionary international. with the presence of more than 40 comrades representing more than 30 different countries in Asia. the reasons for their rise and fall. The International. However. We do not seek to impose our views on anybody. methods and programme defended by the IMT. and will make clear proposals of what we think the programme and ideas of the new International should be. will work out its political positions over a period. The IMT. and its component parts.

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