AMIDST THE STORMS OF WORLDWIDE CAPITAL
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Amidst the storms of worldwide capital
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In reading the astonishing comments appearing in the bourgeois press between October and November (1997) and in noting the impotence expressed by the lackeys in the think tanks of international organizations, one cannot help note the sense of terror that underlies the grimace of international capital: will the $57 billion bailout for South Korea and the more than $110 billion for the other States of southeast Asia be enough? (without counting the renewal and the forced rescheduling of payments on private debts generously conceded, although not without a price, by the assemblies of bankers from the central and commercial banks convoked in haste before the end of the year, the American being the first in line - a grouping the Federal Reserve Board did not have to labor to convince that a hands off liberal approach would not do: hence the need in this case for pragmatic, coordinated intervention).
The urgency and importance of the intervention had been dictated by the gravity of the situation and the need to stop a recessive domino effect on the entire world economy, an outcome that would have had a multiplying impact risking the stability of the credit and financial markets and coinvolving Japan, first, and then the US.
As indicated in another article, Japan represents the epicenter of this world crisis, the cause of which is not to be found in the virulence of speculation, which is itself more the result of a pre-existing condition, nor in the absence of regulatory bodies in the Asian economies (a view dear to the «progressive» intelligentsia of the «Le Monde Diplomatique» trend), but in overproduction that for a period has gripped the entire capitalist world with the axis of this condition being the mature imperialist countries. And this condition underlies the increasing «financialization» of the world economy. According to a recent estimate only a fraction, between 2 and 8 percent, of international transactions of capital, which run from $1.3 to $1.5 trillion daily, constitutes the real base on which the remainder of the world's «riches» stands; a confirmation that parasitism is the direct consequence of the economics of imperialism, of the financial capitalism resulting from the fusion of industrial and bank capital and its export. Fictitious capital (productive capital that changes itself into a value capable of conserving itself), which has a life of its own, has grown immeasurably in recent years fed by a surplus capital that does not find investment in production: for example, one notes that derivatives on credit fictitious capital to the nth power in the last two years alone have grown 29 times, from $5 billion to $150 billion, whilst the international exchange of bonds and shares has reached 151.4 percent of GNP in the US, 197 in Germany, and 182.8 percent in Japan.
Speculation, Marx recalls, develops in the prosperity of a preceding period. It
«arises and presents itself during a time when overproduction is in full swing. Overproduction finds temporary outlet channels, and for that reason accelerates the bursting of the crisis and augments its virulence. The crisis explodes initially in speculation and then passes to overproduction. Not overproduction but overspeculation which is in turn a mere symptom of overproduction appears to the eyes of the official beholder to be the cause of the crisis. The subsequent collapse of production does not seem to be the consequence of its earlier excessive production, but as a simple repercussion of the collapse of speculation» (1).
In recent years, the nations of southeast Asia made use of the huge inflow of investment into productive and financial activities drawn there by the low cost and tight social control on labor. With funds almost always tied to the dollar, advantage was taken of the competitive differential created by the yen's reevaluation, which lasted until 1995, and the crisis began when the possibilities of exports (an average of 43 percent of GNP for SE Asian nations and 36 for Korea) came to a clash with the increased competition from the low wage economy of China and the impetus given Japanese exports by the reevaluation of the yen (from last October to October the year before, Japanese accounts more than tripled).
In the new conditions, the anchor to the dollar became a hindrance and had of necessity to be in some way removed. Hence, the series of devaluations that followed from last summer to now: 50 percent for Korea, 75 for Indonesia, 30 for the Philippines, 33 for Malaysia, and 42 for Thailand; and the drying up of foreign reserves in countries whose internal and foreign debt represented the principal lever of accumulation. The exception was China whose position remained relatively secure due to the highest in the world reserve holdings of $231 billion dollars, inclusive of Hong Kong, and to the non convertibility of its money. Much of the capital that will «fly» there from the ex Tigers will descend in all probability on the attractive morsels being provided with the privatization and sell off of state industry in China to the tune of some $ 100 billion dollars. Along with this errant capital will come the accompanying contradictions borne with it, determining an increase in opening of the Chinese market, deepening the imbalances of the banking system, and bringing in the same causes of crises, although it is probable that the latter will remain for a time hidden from view.
Japan is certainly the most vulnerable nation of the region; it correlates 30-40 percent of its exports (the figure is 10 percent for the USA and 7 for the Europeans) with a major share of foreign investment (many enterprises in Thailand and Malaysia may be considered Japanese affiliates) and banking credit ($118.6 billion by the end of 1996 with its second commercial partner, Korea, in contrast to $41.7 billion for Germany and $34.2 for the USA); the consequences of the present crisis add to the difficulties of the Japanese banking system, with the latter already in the red for $223 billions, according to official statistics, and its nominal ability would be severely compromised if the index of its stock market were to fall below 12000; add, too, the impelling necessity to throw onto the foreign market production that is ever more excessive for domestic consumption, a market that remains glutted notwithstanding the massive stimuli to spur demand, with the latest injection amounting to $461 billion.
Since Japan holds some 30-40 percent of the American national debt, the full involvement of Japan in the Asian financial crisis would signify its immediate transmission to the USA and the beginning of a recession on a larger scale. The goal of international capital was to block this deepening involvement, but it comes at the cost of transmitting to the future the elements of a more powerful crisis, to the degree that
«every element that brakes the repetition of old crises contains in itself the seeds of a much graver future crisis» (2).
But bourgeois economists can only attempt to exorcize the crisis or, at their best the so called pessimists are able to grasp only partial aspects. It falls to Marxism to demonstrate the proofs, to give a scientific explanation of the economic crises, and its imminence in the mode of production founded on capital. These crises are precisely the product of capital itself, and the key to their understanding is found in the organic composition of capital: the growth of the productive forces of labor that is realized through the continuous relative increase of dead capital (machines, raw materials) as compared to live labor, the only force capable of valorizing the capital anticipated. An outcome of this growing productivity is the tendency for the average rate of profit to fall, which is the obverse of the process of accumulation, a law that Marx defines as historically the most important; this law demonstrates and reveals the failure of the capitalist mode of production, characterized by contradictions between the social character of production and the private and individual mode of appropriation, which tend to explosive outcomes. The necessity of a superior form of production thus becomes impellent. The violent destruction of capitals brought on, an outcome of the internal circumstances of capital's development, are increasingly needed for its own salvation; since capital is a unity of production and circulation, these crises are born and have their basis in production and manifest themselves in the market with overproduction of goods and capital (which are the same thing and represent a relative overproduction, not in relation to absolute needs, of means of production and of subsistence) or goods «capitalistically» understood, and able to function like capital.
The financial crisis will be followed by a crisis in production (already indicated by the growth of inventory and the degree 'of under utilization of productive capacity) and by the sharpening of commercial contrasts sure to be exacerbated by credit crises and money devaluations. The concentration of capital will increase with the merger and absorption of enterprises in the search for economies of scale and a stronger competitive arrangement in the international arena. The conflict for control of international markets will sharpen amongst the various national capitalisms,
«as the degree of concentration achieved will force them along this road if they wish to attain profits» (3).
This process, starting from the bank insurance sector and aerospace industry (having given rise on a world scale to the «universal bank», that is, the typical institute of finance capital, the mixed bank), will make use of both the «opportunity» offered by the Asian crisis (4) as well as the recent liberalization of the world markets and financial services to the tune of $68 billion (WTO sources). The struggle for the redivision of markets and spheres of influence will take a qualitative leap forward and will affect the role of the dollar as an international currency, even eroding the basis of the alliance between the US and Japan.
For the working class (in the first place the Asian, but not only), in terms of work force and wages, these developments will translate into a net worsening of the quality of life. In Korea alone, unemployment is expected to rise by an additional one million in the new year, and to control the foreseeable rise of problems with the populace the government has quietly decided to reintroduce the death penalty as of December 30. Indonesia is at the point of proclaiming martial law.
On the basis of data we possess, we see no need to anticipate a deep and general deflationary phase (i.e. a depression), unless in the near future insolvencies occur in the Japanese or Chinese bank systems, or Latin America is suddenly overtaken by a crisis; more likely, the chronic overproduction will deepen the intervals of recession between the brief upturns. But this would be nothing other than the repeated confirmation of the historical dialectic at work; that the basis for the replacement of capitalism, of the putrescent mode of production that can only react to its own transitory nature with new and more destructive depreciations, has been laid. The bourgeois class, wrote Marx in the «1848 Manifesto» overcomes its crises with the forced destruction of a mass of productive forces, on the one hand, and with the seizure of new markets and the more intensive exploitation of old ones, on the other. In short,
«by preparing more extensive and violent crises and limiting the means to prevent them» (5).
By creating a world market, capitalism has long since fulfilled the last of its historic tasks. Its survival continues to be associated with the destruction and the exhaustion of human and natural resources, particularly in its peak moments which culminate in imperialistic wars, the historic bourgeois answer to its crises. But the manifestation and clash of these contradictions may raise and bring onto the field the proletariat of the world. From a defense of its material conditions, under the leadership of the Party it could undertake its final and historic emancipation.
Looking at things realistically and keeping in mind the many objective factors weighing on that class, we believe it will take a number of years before it moves to a stance of class consciousness and autonomous action - the result of the declining consciousness that has dipped below the minimum of trade unionism. A cause for this may be traced to the longest counterrevolutionary period known to modern history, that is, since the ebbing of the revolutionary wave of the 1 920s, with the material base for this stagnation being the social reserves and protections extended to the major part of the Western proletariat thanks to the massive extraction of surplus value drawn from the colonies and continents of color. It was inevitable in these circumstances that the major task facing the Party would be one of study and defense of Marxist theory (understood both as knowledge of the entire historical development of the modes of production underlying past, present, and the future classless society, and as a weapon for future action); further, of preparing revolutionary cadres, and of laying claim on and to carry out all activities possible, given the Party's resources and the conditions in which it works. We know that numerically its following will remain small. We leave to others the belief that voluntarist agitations can artificially create, from the outside, a class movement.
The proletariat will be compelled to return to a fighting defense of its living conditions by the growth of material uncertainty and insecurity that capital will have forced upon it.
The initial awakening of the proletariat to a defense of its own economic conditions is, if we have to label it, an «unconscious» act. By contrast, revolutionary action and the leadership of the proletariat by the Party, the pushing of social forces towards a revolutionary dénouement of the regime's social crisis, are «conscious» elements, precisely because they are based on preparation, on organization and centralization of the political organ of the class. These matters cannot be left to mere improvisations, must be based on the work of today, however improbable that may seem at a first glance, work resting on the indissoluble link that is the synthesis between Marxism, the revolutionary program, and the consequent action of the Party.
The depth, the duration, and the character of the crises of capitalism will determine the nature of the social tension and the forms of the reprise undertaken by proletarian initiative, including the ripping away of the collar of the «generalized psychology of social peace», which has so crippled the Western working classes especially.
It is this process that will shape the active intervention of the Party in a period marked by the need to enlarge working-class actions and their interrelation with the Party; by the recruitment from within the class and the growth of the Party's influence to counterpoise bourgeois and opportunist views in an ongoing struggle with all those tendencies that seek to embellish and reform capitalism, and in so doing contribute to the subordination and disarming of the proletariat.
This process will not be simple, linear, and without setbacks. It is essentially the dialectical process of bringing Party and class to unison, as well as of the return of the class to its historic stance. The class will have to counterpose to imperialist wars (which at a certain point will be needed by the international bourgeoisie, if it is to maintain its dominion and production based on profit and the uninterrupted flow of capital) the proletariat's historic response: the turn to class war and revolutionary defeatism to violently overthrow the bourgeois regime and the state apparatus in which the bourgeois class centers its control; to install the proletarian dictatorship, led by the Communist Party, and set the foundations of a new mode of production at the heart of which lies a conscious and rational administration based on an arrangement to satisfy human want, protect nature, and lay the groundwork of a classless society open to the harmonious development of the human species (6).
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Source: «Internationalist Papers», N.7, May 1998
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