Expropriate the Banks Under a Workers Government!
From Wall Street Crisis to
International Socialist Revolution
Frenzy on New York Mercantile Exchange, March 2008. (Photo: Reuters)
Break with the Democrats and All the Bosses’ Parties!
Build a Revolutionary Workers Party!
OCTOBER 2 – Over the last 15 years, there have been financial crises in a number of countries around the world: the collapse of the banking system in Mexico in 1994-95; the collapse of the currency of Thailand in 1997, touching off a wave of devaluations and stock market crises in all of Southeast Asia; the ruble crisis in Russia in 1998, due to a fall in the price of oil; the devaluation of the real in Brazil in 1999, which unleashed a flight of short-term investments; the economic crisis of Argentina from 2000 to 2002, which resulted in the fall of a succession of presidents; the implosion of the information technology bubble in the United States in 2000-01 with the bankruptcy of many Internet-based “dot-com” companies and a nosedive of share prices on the New York Stock Exchange; and now, from 2007 on, the credit crisis in the U.S. and around the world that began with subprime mortgages.
Yet this is not only a financial crisis: the entire capitalist system is at risk. It has already set off a wave of sharp falls in stock market prices worldwide. The rulers of the United States, who brag that they are the only and “indispensable” superpower, say that if not resolved, the present crisis could have “catastrophic” consequences. The kings of Wall Street, the center of international finance capital, who have dubbed themselves “masters of the universe,” say the same. The stock market panic can end up in a full-fledged crash, as in 1929, and meanwhile the lack of credit is threatening to produce a new Great Depression. Even though they have already pumped more than $500 billion into U.S. banks, the credit system is still frozen. The economists and politicians who in the past acted as prophets of the religion of free markets are now nationalizing one financial institution after another. And the crisis continues.
In Latin America, there is a widespread sentiment of Schadenfreude, of satisfaction in seeing the difficulties of the arrogant Yankee imperialists who used to try to discipline their subjects with the whip of “neo-liberalism,” the doctrine that calls for the elimination of all state interference in the economy. What a surprise! At the moment of truth, Washington and Wall Street don’t want to drink their own bitter medicine. Some “center-left” analysts like the Brazilian Emil Sader ask, “Is Neo-Liberalism Over?” (La Jornada, 29 September). (Sader’s conclusion is that the model has run out of gas, but it hasn’t ended.) Among “far left” groups analyses are proliferating that foretell a total if not terminal “capitalist collapse.” But neither the “moderate” nor the supposedly “far” left put forward a program for revolutionary action.
In the United States, the ruling class was shaken by the unexpected failure of its bank bailout plan in the House of Representatives on September 29. Congressmen received an avalanche of phone calls, letters and e-mails against it, running at a rate of 200 to 400 to 1 opposed to shelling out astronomical payoffs to the financiers who produced the crisis with their boundless “greed.” The same day as the vote in Congress, the New York Stock Exchange suffered its biggest fall since 1987. In one day more than a trillion dollars of what Karl Marx called “fictitious capital” were wiped out. Terrified investors are putting their money in U.S. Treasury bonds at an interest rate of practically 0, while overnight dollar deposit loans among banks, the most secure in the commercial market, went up to 7 percent per day, the highest figure in history.
Meanwhile, in the real economy, hundreds of thousands of families are losing their homes because of mortgage defaults. Companies cannot obtain funds to finance investments or even to carry out their day-to-day operations. Workers’ wages and even middle-class incomes have been hard-hit by the rise in prices of food and fuel. Real inflation is over 14 percent annually, according to the methods used to calculate the rate in 1980, before the government decided to falsify the figures by eliminating the cost of gasoline and food! The real unemployment rate is also already in double digits (over 10 percent) when you include the categories of “discouraged workers” who are not actively looking for work, and others who the government has simply eliminated from the workforce altogether because there are no jobs for them. Both are not counted in the government’s phony official jobless statistics. For the U.S. working class, whose wages have steadily fallen since the 1970s, the crisis is not new but has been going on for years.
In Latin America, the effects of the Great Depression of the 1930s in Europe and North America were partially offset by the relative isolation of their national economies, which made possible a certain process of industrialization by “import substitution.” Today the effect of the capitalist crisis is immediate. The panic on the New York Stock Exchange has spread and intensified on the stock markets of Mexico, São Paulo and Buenos Aires. The crisis in Detroit due to falling automobile sales has led to layoffs in the maquiladoras (free trade zone plants) in the north of Mexico, which produce exclusively for the U.S. market. If in recent years the mounting demand for raw materials has produced a boom in oil and mineral producing countries, now a crash is looming as a result of the plummeting prices and falling exports. In the era of “globalization” there will be no safe harbor from the devastation of a world capitalist crisis.
It’s not a matter of choosing one “model” or another of capitalist economy: it is the system itself that is in crisis. “Neo-liberalism” spread in the 1980s due to the exhaustion of the Keynesian policies which sought to regulate crises through government spending – policies which in the 1970s led to the phenomenon of “stagflation,” when inflation surged while the economy stagnated. This was intensified due to the decision of the U.S. government, under the Democrats as well as the Republicans, to finance the Vietnam War with a policy of “guns and butter” (i.e., budgeting increased spending for the military and for social programs). How did they do it? By printing greenbacks. Similarly, today the war on Iraq and Afghanistan is being financed entirely by borrowed money: the trillion-dollar (so far) bill will come due later. And if in 1971, Washington’s answer to the economic crisis was to declare that the U.S. currency was no longer backed by gold, today the dollar’s value and its function as the world’s reserve currency is based exclusively on confidence in the stability of the American economy. Once that confidence has gone up in smoke…
But the dire straits in which the masters of the U.S. economy find themselves will not by itself lead to a positive outcome for the international working class. In the 1960s and ’70s as well, the American empire was bogged down in a losing colonial war, along with great social unrest in Latin America, and a large-scale capitalist economic crisis. But nowhere was capitalism overthrown in the region after the Cuban Revolution. Why? The absence of victorious proletarian revolutions in the Western Hemisphere is entirely due to the lack of a revolutionary internationalist leadership. The Latin American left was dominated by the line of Castro- and Mao-style guerrilla struggle, both variants of Stalinism, based on the nationalist and anti-Marxist policy of building “socialism in one country.” The failure of these struggles, based not on the proletariat but on the petty-bourgeois peasantry, led to the destruction of an entire generation of leftist would-be revolutionaries.
Today, the theories of an imminent final collapse of capitalism have gained new currency. Quite awhile ago, Lenin underscored the falseness of such concepts. In his report on the international situation to the Second Congress of the Communist International (1920), he insisted:
“[For the bourgeoisie] there is no such thing as an absolutely hopeless situation. The bourgeoisie are behaving like barefaced plunderers who have lost their heads; they are committing folly after folly, thus aggravating the situation and hastening their doom. All that is true. But nobody can ‘prove’ that it is absolutely impossible for them to pacify a minority of the exploited with some petty concessions, and suppress some movement or uprising of some section of the oppressed and exploited. To try to ‘prove’ in advance that there is ‘absolutely’ no way out of the situation would be sheer pedantry, or playing with concepts and catchwords…. The revolutionary parties must now ‘prove’ in practice that they have sufficient understanding and organization, contact with the exploited masses, and determination and skill to utilize this crisis for a successful, a victorious revolution.”
At the end of the 1920s, when Stalin revived the theory of a final crisis of capitalism, Trotsky responded: “Will the bourgeoisie be able to secure for itself a new epoch of capitalist growth and power? Merely to deny such a possibility, counting on the ‘hopeless position’ in which capitalism finds itself would be mere revolutionary verbiage.” (The Third International After Lenin ).
Some social democrats also adopted the theory of an automatic collapse of capitalism, basing themselves on a book by the Polish economist Henryk Grossman, The Law of Accumulation and Breakdown of the Capitalist System, published shortly before the 1929 stock market crash. What characterizes the “theory of collapse” (Zusammenbruchstheorie) is that it is deeply objectivist and passive, whether in its Stalinist or social-democratic versions, or any of the variants put forward by groups claiming to be Trotskyist, such as the “International Committee of the Fourth International” of the late British pseudo-Trotskyist Gerry Healy in the 1970s. If it was true that the capitalist system was about to fall on its own, it would negate the urgent need to organize a revolutionary vanguard to win the leadership of the working class.
It should be noted that various Latin American groups who today call themselves Trotskyists – including both the Trotskyist Faction led by the Argentine Partido de Trabajadores por el Socialismo (PTS – Party of Workers for Socialism) and the Coordinating Committee for Refounding the Fourth International led by the Argentine Partido Obrero (PO – Workers Party) – produce endless analyses of the economic crisis without putting forward a class-struggle program leading to revolution. They proclaim the crisis and that’s the end of it.
Another tendency, the International Workers League led by the Brazilian Partido Socialista dos Trabalhadores Unificado (PSTU – United Socialist Workers Party), the direct descendants of the late Nahuel Moreno, present “A Workers Program to Combat the Crisis” (Opinião Socialista, 25 September), but this program is limited to the capitalist framework. Instead of Trotsky’s call in the Transitional Program for an agrarian revolution they want a “radical agrarian reform” carried out by action of the (capitalist) state. They seek “state ownership of the financial system,” which in Latin America could be a pro-capitalist measure to save insolvent banks, as was the case in Mexico with the nationalization of the banks by President José López Portillo in 1982. And if they call for a “wage trigger” or COLA (cost-of-living allowance), namely an “automatic wage increase taking account of inflation,” they do not link this to the struggle to sweep away the capitalist state and install a workers and peasants government to expropriate the bourgeoisie and extend the revolution internationally.
The League for the Fourth International insists, along with the great Russian revolutionaries Lenin and Trotsky, that the capitalist system will not definitively collapse by itself. Despite its many crises, as deep as they may be, capitalism will not disappear due to its own internal dynamic. The working class has to give it a shove to get rid of this system of exploitation and poverty in order to be able to erect on its remains an egalitarian society in which production is for human needs rather than for the exploiters’ profits. We reprint here the leaflet of the Internationalist Group distributed at Wall Street protests, calling for working-class mobilization against the bank bailout and for a program of transitional demands pointing to the only solution in favor of the exploited and oppressed, international socialist revolution. ■
The above article was translated from a supplement to El Internacionalista (October 2008), Spanish-language organ of the League for the Fourth International.
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