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Current crisis of overproduction – worse than the 1929 crash

A presentation to the International Communist Seminar delivered by Harpal Brar, on behalf of the CPGB-ML, Brussels, 15 May 2009.

Watch a video presentation of this material on YouTube

The world capitalist system is in the midst of a deep recession, threatening to turn into an unprecedented slump, compared with which the 1929 depression, which lasted more than 10 years, would look almost mild.

Unprecedented crisis

All around us is the spectacle of saturated markets, rising unemployment, plunging stock markets, collapsing giants of finance capital, real-estate prices in free fall, cascading corporate bankruptcies, freezing credit, a shrinking world economy, contracting world trade, and ever-increasing misery and destitution heaped upon scores of millions of workers across the globe.

Whatever its appearance, this is, at bottom, a veritable crisis of overproduction. At times like this, one is forcefully reminded of the following never-to-be-forgotten words of Engels:

Commerce is at a standstill, the markets are glutted, products accumulate, as multitudinous as they are unsaleable, hard cash disappears, credit vanishes, factories are closed, the mass of workers are in want of the means of subsistence because they have produced too much of the means of subsistence, bankruptcy follows upon bankruptcy, execution upon execution. (Anti-Dühring, 1877, Foreign Languages Publishing House, Moscow, 1962, p377)

Written 133 years ago, the above observation of Engels’ has a remarkably topical ring to it; it is as though he were writing about the present crisis. The Marxian analysis, encapsulated in succinct form in the preceding words of Engels, alone presents us with the key to an understanding of this crisis, as well as the way out.

Bourgeois economic science has little to offer in the way of an explanation of, let alone a solution to, this crisis - not because bourgeois economists are unintelligent, but because of their narrow outlook, hemmed in as it is by their faith in the eternity of the capitalist system of production, supplemented by the imperialist loot, a portion of which stuffs their wallets by way of bribery, a continuing incentive against recognition of the obvious reality. Even when brutal reality brings them close to grasping the underlying cause of the crisis, they shy away from it, often ending up by confusing symptoms and their causes, appearances and reality. One has to indulge in archaeological exercises, as it were, to dig and drag the truth out into the light of day.

As in 1877, so today, Engels’ concise and clear words contain the secret to an understanding of this, as indeed of every past and future, capitalist crisis: “The workers are in want of the means of subsistence because they have produced too much of the means of subsistence” (our emphasis), ie, these devastating crises are caused by overproduction.

The crisis that presently confronts us is of truly gargantuan proportions; prominent monopoly capitalists, as well as the ideologues of finance capital, openly admit to its ferocity, depth and scale. The economy has fallen off a cliff“, says Warren Buffet, the multibillionaire investor. Bourgeois analysts and commentators routinely and variously characterise this crisis as the world’s deepest economic downturn since the Great Depression, a once-in-a-century tsunami, and a natural disaster. There is no doubting that the world capitalist economy has
stumbled, as it was bound to, over the edge of the ravine with great speed and alarming global synchronicity. [1]

Faith in market shaken

The unfolding crisis has turned all the bourgeois economic dogmas upside down and shaken the faith of even a section of the capitalists and their ideologues in the ability of the market to work miracles. When, over a year ago, Joseph Ackerman, the Chief Executive Officer of Deutsche Bank, said that he no longer believed in “the market’s self-regulating power”, everyone in the world of high finance and industry was startled. Now such assertions are commonplace.

The former chief of the Federal Reserve, Alan Greenspan, a proponent of financial innovation and deregulation, and who played such a crucial role in the creation of the most recent bubble, has confessed that the financial system was flawed. Jack Welch, the former CEO of General Electric, has described the shareholder value movement, which especially characterised Anglo-American finance capital, as “the dumbest idea in the world”. Lawrence Summers, former US Treasury Secretary, and now heading the Obama economic team, says: “The view that the market economy is inherently self-stabilising, always, has been dealt a fatal blow.”

No-one batted an eyelid when, at the recently-held G20 Summit, Gordon Brown, Britain’s prime minister, declared the gathering a requiem for laisser-faire capitalism. The destructive force of this crisis has well and truly rubbished the market fundamentalism of the Davos man, which only recently bestrode the world like a colossus.

State intervention, only yesterday scoffed at, has been restored to respectability. “Paulson [Bush's Treasury Secretary] is the champion nationaliser of all times. He managed more nationalisation than any man on the planet.” So said Fred Bergsten, director of the Peterson Institute for International Economics. Mr Bergsten ‘forgot’ to add that Paulson’s nationalisation was merely the nationalisation of the debt and losses of finance capital for the sole purpose of saving this historically outmoded system at the cost of billions of US taxpayer dollars.

Wouter Bos, Dutch finance minister and leader of the Labour Party, says that the present crisis has killed the myth of “happy globalisation” and called for the “visible fist” of the government to supplement the “invisible hand” of the market in order to maintain support for the open markets and free trade.

Continuation of earlier crises

The present industrial, commercial and banking crisis is actually a continuation, only much more virulent in its intensity, of the crisis of overproduction that appeared in the middle of 1997 in the form of a currency collapse in the Far East, beginning with Thailand and spreading like wildfire to Indonesia, Malaysia, the Philippines and South Korea, before jumping continents a year later to overwhelm Russia, and through it the US and Europe, in the process wreaking havoc, causing big business failures, throwing millions of workers out of work, and helping to sharpen inter-imperialist contradictions.

For a while, as the economies in the Far East suffered under the devastating blows of a thorough and deep recession, and Russian capitalism came close to collapse, strangely the US and European imperialist countries managed to stay out of harm’s way. As a matter of fact, despite an unprecedentedly high US trade deficit, the stock markets of the US and Europe soared ahead. This, however, was only an apparent paradox - not a real one. At the time, we wrote this by way of an explanation of this apparent paradox:

As Marx explained long ago, the fever of speculation is only a measure of the shortage of outlets for productive investment: the depressed state of industry is reflected by an expansion of speculative loans and speculative driving up of share prices. The crisis of overproduction is a reflection of the over-accumulation of capital which, unable to find profitable opportunities for productive investment, seeks a way out in stock market and other speculative activity in an endeavour to make a profit. The tendency for the mass of surplus value to increase at a slower rate, as Marx showed, than the total capital employed is expressed in the tendency of the rate of profit to fall, which only goes to show that production for profit is an inadequate basis for the constant development of society’s material conditions of existence.
(’Indonesia - a harbinger of revolutionary upheavals’, Lalkar, July 1998, reproduced in Harpal Brar, Imperialism - The Eve of the Social Revolution of the Proletariat, London, 2007)

The demand for the products of industry fell in one sector after another owing to overproduction (’too much capacity’, as the bourgeois commentators express it, fearing like the plague the correct Marxist terminology). This shrinkage of demand, combined with the crisis in the Far East, which had temporarily ceased to be a profitable avenue of investment, resulted in the flight of $109bn of capital from the five affected far eastern countries to the centres of imperialism.

All these massive sums and more were pumped into the US and European stock markets, which rose 52 percent between the start of 1997 and the middle of 1998. Since the buoyancy of the stock market bore little relation to the productive base, which continued to limp far behind, it was only a question of time before this speculative bubble burst, with all the inevitable horrendous effects on the economy - from manufacturing to financial institutions.

By the end of August 1998, following the Russian default, and in response to it, events moved with bewildering speed, with the world stock markets taking a pasting. Shares in London experienced their biggest fall since the crash of 1987. On Friday 28 August 1998, the FTSE 100 stood 1,000 points below its all-time high of 6,179, reached only a few weeks earlier. On 2 October, it closed at 4,750 - 23 percent below its peak of 17 July 1998.

The Dow fell dramatically from its peak of 9,337 on 17 July to 7,286 by the end of August - approximately 20 percent below its mid-July peak, losing all the gains it had made since the beginning of 1998.

The Nikkei average fell to a 12-year low. Some European equity markets suffered falls of 20 percent from their July peaks.

On 23 September 1998, Long-Term Capital Management (LTCM), one of the largest hedge funds in the US, with a total market exposure of $200bn, went bust, forcing the Federal Reserve to arrange its rescue, for its failure would have meant a meltdown of the financial system in the US and beyond.

The plunging stock markets, in the wake of the Russian default, and the near-collapse of LTCM, obliged Philip Coggan of the Financial Times to describe their fallout in these colourful military terms:

The market is feeling as battered as wartime Berlin at the hands of the Red Army. At times this week, it has seemed as if the entire Red Army had been marching on the stock market. (’Red Army sings the blues’, Financial Times, 3 October 1998)

The entire global capitalist economy was peering into the abyss. To prevent a plunge to the bottom, the US Treasury, in cooperation with the Federal Reserve, coordinated an international response of cuts in interest rates aimed at sustaining artificially high equity prices, and thus keep US growth and the world capitalist economy afloat - temporarily at least. The Fed’s three interest rate cuts in quick succession, followed by similar cuts by central banks in 22 countries, served as a stimulus to arrest, and then to reverse, the slide in equities in the US, across Europe and other parts of the globe. On 16 March 1999, the Dow broke through the 10,000 barrier, with the FTSE also clocking up significant, and equally unsustainable, rises.

The trick worked for a while because of a remarkable coincidence of events, namely, the recession in the world’s then-largest creditor nation, Japan, and five other Asian economies, on the one hand, and the exuberant expansion in the largest debtor nation, the US, on the other, which served to complement each other perfectly, thus temporarily preventing world capitalism from stepping over the precipice.

In other circumstances, US expansion would have been inflationary enough to undermine the dollar and cause a flight of capital from the US - with all the disastrous consequences resulting from such a flight. Instead, investment flowed into the US, which strengthened the dollar. The strengthened dollar, in turn, enabled the US to play the dual role of an engine of global growth and an importer of last resort for the world economy. US consumers, buoyed by cascading paper wealth, were able to indulge in a spending binge without bothering to save since foreigners were willing to step in with the necessary capital for US investment.

Strong capital inflows helped finance a stock-market and corporate investment boom, enabling US households to spend in excess of their income, and the US economy to grow, despite a growing US trade deficit. While unprecedentedly high stock-market valuations became the driving force behind the spending binge in the US, the latter, in turn, temporarily to be sure, drove equity prices up further still.

The moral hazard factor - the belief that the Federal Reserve was putting a safety net under the market following the 0.75 percent cut in interest rates in 1998, that it would not allow the stock market correction to go so far as to push the US economy into recession, and that it would come to the market’s rescue by opening the monetary sluice gates - helped to sustain high valuations on Wall Street.

The actions of the Fed resulted, as they were bound to, in exacerbating the huge imbalances in the US economy - an unsustainable asset-price bubble, hand in hand with an unsustainable current account deficit. By March 1999, the ratio of the US stock market value to GDP had reached 150 percent.

The US stock market is crucial to the growth of the global economy, furnishing the confidence and collateral for American consumers’ borrowing and spending, which means that US equities cannot stand still. They have to be on a rising trajectory if the US economy is not to come to a grinding halt - and with it, capitalist economies all over the world. But reason suggests that, over time, equities cannot rise at a rate faster than that of the nominal Gross National Product, for the price of shares is based on dividends, which depend on profits; and profits cannot indefinitely increase their share of the economy.

The truth, however, is that the world capitalist economy has for decades been suffering incurably from a crisis of overproduction. No amount of tinkering with interest rates, or any other fine tuning of the economy by the central banks, can get rid of the inherent problem of capitalism. Even bourgeois economists come pretty close to accepting this truth from time to time.

Thus, in February 1999, a whole year before the crazy boom set in motion by the interest rate cuts of 1998 came to a rude halt, Andrew Smith wrote inThe Times: The world has too much industrial capacity, a situation worsened by Asia’s crisis, and it will take years of savage rationalisation [ie, recession] to bring capacity into line with demand.” (’Deflation is a debt trap’, The Times, 14 February 1999)

Logically, if there is a mismatch between demand and capacity, that is, if there is far less demand than capacity, there are only two ways out of the situation: first, reduce capacity and bring on an immediate recession; second, increase demand through the implementation of Keynesian measures, which in turn create even bigger problems, preparing the way for a far more devastating crash and crisis of overproduction.

Within the bounds of capitalism, there is no cure for crises of overproduction, which are merely an expression of the contradiction between social productive forces and private appropriation (see below).

Bursting of the dotcom bubble

Wheels began to come off with the bursting of the dotcom bubble, when the Nasdaq plunged from its peak of more than 5,000 in the spring of 2000 to 2,332 on 20 December, reaching a low of 1,725 on 12 April 2001.

Only a few months prior to the Nasdaq’s downward plunge, the global equity markets were on cloud nine, fully convinced that the US economy was set to grow at an ever-increasing rate, hand in hand with low inflation and low unemployment, thanks to the technological miracle. But, as Mr Philip Coggan, with the benefit of hindsight, was ruefully to remark, “there’s a problem with living on Cloud Nine: it is a long way down if you fall off“. (’A long way to fall’, Financial Times, 2 January 2001)

The Fed’s interest rate cuts had, not unexpectedly, failed to solve the problem, for consumers continued to be heavily indebted as companies grappled with unsold inventories. With a quarter of US production capacity lying idle, companies embarked on a programme of aggressive job cuts.

Global industrial production fell at an annual rate of 6 percent in the first half of 2001, as overproduction overwhelmed one sector after another.
From telecoms to chemicals and engineering, from services to manufacturing, the news was dismal. Faced with this harsh economic reality, theEconomist of 23 August 2001 was obliged to admit the arrival of the first economic recession of the new century with the words: ” Welcome to the first global recession of the 21st century. (’A global game of dominoes’)

In October 2001, US manufacturing output was 7 percent below its peak in June 2000. Production in the 30 richest countries belonging to the OECD grew by a mere 1 percent, compared with 4.2 percent in 2000 - notwithstanding interest rate cuts by the Federal Reserve from 6.5 percent to 1.75 percent in less than 12 months.

In October 2001 alone, US businesses slashed payrolls by 415,000 - the largest one-month drop in 20 years. In the two months of October-November 2001, the increase in the number of unemployed in the US totalled 800,000, taking the increase for the year 2001 as a whole to 2.2 million, the biggest annual increase in the jobless up to that time. The picture in Europe and Japan was similarly bleak. Thus, the three principal centres of monopoly capitalism found themselves in synchronised recession.

On 22 July 2002, the Dow Jones fell 3 percent to 7,785 - a level 33 percent below its January 2000 peak. The FTSE went down as low as 3,600 before closing at 4,051 on 5 October 2001. European stock markets, too, experienced sharp falls.

Climb out of recession

Since the second world war, the recession that set in in the aftermath of the bursting of the dotcom bubble was the longest. After three years of destruction of the productive forces and products alike, the world capitalist economy began its temporary climb out of the recession.

One of the factors that helped recovery was the state of the housing market, which remained buoyant throughout this period. And this for the reason that, while business investment collapsed and equities plunged, investors shifted to the property sector, thus engineering a housing-market bubble.

Rapidly rising house prices enabled consumers in the US to transfer their equity-extracting tactics to the housing market and merrily carry on spending. A crash in the property market, which was certain to arrive, as it did in the summer of 2007, was bound (as it already has), while burying house owners and other investors in real estate under a mountain of debt, to leave many a financial institution badly burnt. A collapse of the property market was only too likely to trigger a banking crisis of systemic proportions - and it has.

Besides, the three years of recession, as always, became the occasion for further concentration of capital, for further intensification of the exploitation of the working class, through savage rationalisation, increased productivity, cuts in healthcare and pension provision, a reduction in wages and the lengthening of working hours.

Thus it was that, according to official data, the profits of US companies rose from 7 in 2001 to 12.2 percent at the start of 2006 - climbing 123 percent over the same period. During that period, the share of national income going to the workers declined from 58.6 percent to 56.2 percent. Such a state of affairs, while affording temporary relief to capitalism, is not sustainable, for profits cannot indefinitely increase their share of the economy.

The continuing impoverishment of the masses, notwithstanding the real-estate bubble, was bound to undermine consumer spending and economic growth, thus bringing to a grinding halt the post-2002 recovery and precipitating yet another recession, only this time more horrendous, for, the ” last cause of real crises always remains the poverty and restricted consumption of the masses as compared to the tendency of capitalist production to develop the productive forces as if only the absolute power of consumption of the entire society would be their limit . (Karl Marx, Capital, Vol III, 1885, p484)

In the middle of March 2007, Harpal Brar published a collection of essays entitled Imperialism - the Eve of the Social Revolution of the Proletariat. In the preface to that collection, while alluding to the recovery following three years of recession, he wrote, ” One does not have to be a prophet to be able to foretell the inevitable and fairly sharp crash that is bound to follow this short period of industrial and commercial prosperity and stock market buoyancy, for the very means which capitalism uses to overcome the barriers inherent to it ‘again place these barriers in its way and on a more formidable scale’ (K Marx, Capital, Vol III, p250). The bourgeoisie gets over these crises through ‘enforced destruction of a mass of productive forces’ … on the one hand, and ‘by the conquest of new markets, and by the more thorough exploitation of the old ones’, on the other - that is by ‘paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented’ (K Marx and F Engels, The Communist Manifesto, p38).”

He also mentioned in the same preface that the stock market was beginning its downward spiral due, inter alia, to concerns over growing problems in the subprime mortgage sector (loans to uncreditworthy persons), unprecedented levels of debt and the likelihood of the US housing market crashing. Between 2000 and 2005, US house prices rose by 60 percent. Many other countries, including the UK, experienced even higher house price inflation. “The end of the US property boom”, continued Harpal Brar, “which is inevitable, will force US households to tighten their belts, start building up their savings, and thereby put an end to the US’s role as the world’s buyer of last resort.

The present crisis

Less than three months after the above lines were written, the present crisis of overproduction broke out with a virulence hitherto unknown, not even in the 1929 crash.

According to the latest analysis from the International Monetary Fund (IMF), world output is expected to shrink by between 0.5-1 percent this year for the first time since the second world war, with the economies of advanced capitalist countries expected to contract by between 3-3.5 percent. (Note on ‘Global economic policies and prospects’, 13-14 March 2009)

This latest forecast by the IMF tears up its earlier forecasts, made only a few weeks previously, in January, and predicts a far more severe slump this year and next. No region or country in the world is expected to emerge unscathed from this slump, according to the IMF. The World Trade Organisation (WTO) forecasts a decline of 9 percent in the volume of world trade. This free fall will take place despite the enormous monetary and fiscal stimuli (see below) already put in place.

The Eurozone economy is forecast to contract by 4 percent, Germany by 5 percent, Japan by a huge 6.6 percent, Italy by 4.3 percent, France by 3.3 percent, and the British economy by 3.7 percent. This contraction of the British economy will be a well-deserved economic lesson for Britain’s former Chancellor of the Exchequer (now Prime Minister), Gordon Brown, who foolishly boasted not so long ago that he had “eliminated boom and bust” and ensured a continuously upward trajectory for the British economy.

The reality is much harsher than the fantasies of a Gordon Brown. Consequent upon the present recession, the financial crunch, the collapse or near-collapse of most of the major British banks, the seizing up of credit, and Britain’s fast-declining GDP, the City of London faces the prospect of losing its status as a major financial centre, with devastating effects on the livelihoods of Londoners, for almost one third of London’s 4.2m jobs are supplied by finance and business services, with a mere 3.7 percent by manufacturing, excluding publishing.

Europe’s economy has been shrinking at a dizzying speed, losing 1.5 percent of production in the last quarter of 2008 alone. (See Financial Times, 11 March 2009)

In the largest European economy, that of Germany, GDP fell by 2.1 percent (an annualised rate of over 8 percent) in the last quarter of 2008 - the worst quarterly result since German reunification in 1990. The first quarter of 2009 is expected to witness an even faster decline. This January’s industrial orders were 37.9 percent lower than a year before, with overseas orders down by 42.5 percent. German exports in January were 20.7 percent below those of January 2008 and 4.4 percent below those of December 2008. Industrial output tumbled by 7 percent in the last two months of 2008.

French industrial production was down 13.8 percent year-on-year in January.

The UK reported a 5.6 percent fall in industrial production in the three months to the end of January 2009, compared with a 4.6 percent decline in the three months to December 2008.

From a peak in October 2007, manufacturing output had fallen in December 2008 by 10 percent in the US and the UK, 13 percent in Germany, nearly 15 percent in France, 17 percent in Italy, and 23 percent in Japan.

According to an IMF report, disclosed on 4 April 2009, in central and eastern Europe (including Turkey), GDP will plunge 2.5 percent, as opposed to the 4.25 percent growth forecast last autumn.

This region must roll over $413bn (€306bn/£279bn) in maturing external debt this year and finance $84bn in current account deficit. As a result, the region’s financing gap could be $123bn in 2009 and $63bn next year - $186bn altogether.

The Japanese economy declined more than 3 percent in the fourth quarter of last year and is forecast to decline a further 6.6 percent this year - the highest for any of the imperialist countries. In January, Japan suffered a 10 percent month-to-month drop in industrial production, with a sharp rise in unemployment to 4.4 percent of the labour force. Japan’s stock market tumbled to a 26-year low on 9 March in response to a record current account deficit of $1.75bn in January - the first such deficit since 1996.

These falling corporate earnings, unprecedented in their ferocity, are clearly indicative of the vulnerability of Japan’s high value-added manufacturing sector to an external demand shock, according to Mr Peter Tasker at Dresdner Kleinwort, a leading German investment bank. Mr Tasker added: “It seems so unfair. Those who partied hardest should get the worst hangovers. Japan stayed in its boom sipping mineral water. Yet it is now suffering from a humdinger of a headache.” (’Something must work’ by Ralph Atkins, David Pilling and Krishna Guha, Financial Times, 7 February 2009)

Japanese exports fell a horrifying 35 percent in December 2008 as compared to a year earlier, as demand for cars, electronics and precision equipment crumbled across the world.

What is true of Japan is equally true of much of Asia. The non-involvement of most Asian banks in the subprime mortgage fiasco has not done much to protect Asia’s economies from a severe downturn, transmitted by trade to a collapse in industrial production and consumer demand. The IMF has halved its 2009 forecast for Asian GDP growth to 2.7 percent from the 4.9 percent it was estimating barely two months ago.

Economies that once seemed have been brought to their knees. Singapore’s economy is expected to shrink by 9 percent this year, and South Korea’s by 3 percent. This is a revised figure after the release of statistics showing that in the first quarter of 2009, Singapore’s trade-dependent economy contracted by 11.5 percent, forcing the government to cut its GDP forecast from -6 percent to -9 percent. This is a sharp deterioration in Singapore’s economy since the last quarter of 2008, during which its economy contracted by 4.2 percent. The country’s manufacturing, which accounts for a quarter of its GDP, was worst affected, suffering a decline of 29 percent from a year ago because of a steep fall in the export of electronics, pharmaceuticals and chemicals. (See ‘Singapore suffers 11 percent contraction’ by John Burton, Financial Times, 15 April 2009)

India, whose economy grew by 9 percent last year, is expected by the IMF to grow this year only 4.3 percent. Even China, with a phenomenal rate of growth over the last three decades, and which grew by 13 percent last year, is forecast by the IMF to grow a mere 6.3 percent. The IMF estimates the whole of Asia’s growth this year to be just 2.7 percent - a fraction of the 9 percent attained in 2007.

The reason for this decline is the increased trade integration of Asia with the rest of the world, and its heavy reliance on external demand. At the time of the previous crisis in the late 1990s, exports accounted for 37 percent of developing Asia’s output; today they account for 47 percent. The ratio of China’s exports to its GDP rose from 38 percent at the beginning of 2002 to 67 percent in 2007. Thus, since the last crisis, Asia has swapped its dependence on external financing for dependence on external demand, 60 percent of which comes from the rich imperialist countries of America and Europe. As the latter themselves are in the grip of deep and enduring crisis, they are buying far less from Asia - and thus are exporting economic contraction via trade.

The global economy is experiencing a dramatic shrinkage and causing world trade flows to evaporate at an even faster rate than the shrinkage in global output. As a result, the hardest-hit are the export powerhouses of Asia. Exports from Japan, Taiwan and the Philippines are barely above half the levels they were at a year ago.

China’s exports fell by a fifth over the last year, its imports by even more. In February this year, China’s exports tumbled by more than a quarter, as it took the full impact of a collapse in global demand for manufactured goods. Weakness in consumer demand all over the world, especially in Europe and America, has fed through the Asian supply chain and is now having its full impact on China. As for Chinese imports, after dropping 43 percent in January, they fell another 24 percent in February.

In addition to problems on the export front, poor countries of Asia and elsewhere are being hit by a decline in revenues from tourism and a fall in the demand for labour in the Gulf region and elsewhere, resulting in a decrease in the remittances sent by workers abroad to their home countries, causing considerable hardship to millions of families.

The car industry

Every sector of the economy - from automobiles to aircraft, electronics to consumer durables, footwear to clothing; in the centres of imperialism as well as in the non-imperialist countries - has become, to a larger or lesser degree, the victim of this crisis of overproduction. We shall illustrate this crisis by reference to the car industry, which is such an important component of the world capitalist economy.

Faced with worsening unemployment and remuneration, car owners everywhere are replacing their vehicles far less frequently. In the US, the average age of trade-ins soared to 75 months at the end of 2008, from 62 months in the final quarter of 2006.

Since October 2008, US car sales have been lower than the annual scrappage rate of 12.4m vehicles; that is, the number of cars on the roads in the world’s largest car market is declining. “Frugalism is the new cool” in the US. Before the credit crunch, in a normal year 16-17m new cars were sold, with some expecting the number of new units sold to reach 20m over the next few years. Now, however, sales are running at an annual rate of little more than 10m - the lowest number since 1982, when the US had a smaller population.

Globally, car production declined to 66.2m units in 2008, from 68.9m in 2007. It is expected to fall further in 2009 to 59.3m - a reduction of nearly 10m units in a matter of two years. This cannot fail to have a depressing effect on the manufacturers and workers alike in the car industry, with wide-ranging ramifications in the many other sectors of the economy that by innumerable threads are linked with, and dependent on, the car industry. (See ‘The thrill has gone’ by John Reed and Bernard Simon, Financial Times, 3 February 2009)

And just the same conditions are staring every other industry in the face. It is clear that industrial production and merchandise exports are in free fall. The reality could be even worse than the forecasts made by the IMF and other bodies, considering the rate at which the figures regarding the deterioration in global output have had to be downgraded.

Crisis reveals the contradictions of capitalism

Like every preceding crisis of overproduction, the current crisis is a damning indictment of capitalism, bringing society as it does “face to face with the absurd contradiction that producers have nothing to consume, because consumers are wanting“. (Engels, Anti-Dühring, p387)

Even the realisation, no matter how vague, of this truth does not prevent the lucratively-rewarded analysts and commentators who write in the economic pages of prestigious organs of finance capital from asserting, in the face of massive contrary evidence, that capitalism, with all its faults, is better than any alternative.

Nothing could be further from the truth. Today, as has been the case for over a century, capitalism alone is responsible for so much misery, starvation and downright degradation, for it alone prevents the means of production functioning unless they have first been converted into capital; into the means of exploiting human labour-power.

In capitalist society, production does not take place unless the capitalist owners of the means of production and subsistence can make a profit, which in turn can only come about if they are successful in selling the commodities they produce. And herein lies the rub. Capitalism, having at its disposal
the modern means of production, is able to expand production in a manner that “laughs at all resistance. (Engels, Anti-Dühring, p377)

However, such resistance is offered by the market. The methods employed by capital (unlimited development of the productive forces of society) for its preservation and self-expansion - the sole raison d’être of production under capitalism - which drive towards unlimited expansion of production, continually come into conflict with the narrow limits within which this self-expansion, resting on the expropriation and pauperisation of the labouring masses, takes place and can alone take place.

Capitalism forces the consumption of the masses to the levels of starvation, and thus destroys the market for the commodities it produces. This conflict between the methods and purpose of capitalist production finds its expression in periodic capitalist crises which ” are always but momentary and forcible solutions of existing contradictions. They are violent eruptions which for a short time restore the disturbed equilibrium.” (Marx, Capital, Vol III, p249)

In the words of Engels, ” The enormous expansive force of modern industry appears to us now as a necessity for expansion, both qualitative and quantitative, that laughs at all resistance. Such resistance is offered by consumption, by sales, by the markets for the products of modern industry. But the capacity for extension, extensive and intensive, of markets, is primarily governed by quite different laws that work much less energetically. The extension of the markets cannot keep pace with the extension of production. The collision becomes inevitable, and as this cannot produce any real solution so long as it does not break in pieces the capitalist mode of production, the collisions become periodic. (Anti-Dühring, p377)

As a matter of fact, continued Engels, ” since 1825, when the first general crisis broke out, the whole industrial and commercial world, production and exchange among all civilised peoples and their more or less barbaric hangers-on, are thrown out of joint every ten years …” During these crises, commerce comes to a grinding halt, the markets are saturated, a multitude of products accumulates, credit and cash vanish, factories are closed, bankruptcies follow in quick succession, the mass of workers are bereft of the means of subsistence - because they have produced too much of the means of subsistence.

There was a time when humanity starved because it did not possess in sufficient quantity the means of subsistence. Under the conditions of the capitalist system of production, the mass of workers starve because they have produced too much of the means of subsistence. We have reached a stage of development at which the capitalist system is an anachronism - an absurd obscenity. And yet we are daily told by the hirelings of capitalism that there is no better alternative to this system; that capitalism is the final destination of humanity, and that Marxism is a failed system.

No, the truth is that, compared with the absurdity of capitalist economics, voodoo magic and a belief in virgin birth represent the highest achievements of scientific thought. The truth is that, as someone remarked a few years ago, bourgeois economics is no more than a modern form of alchemy, with the practitioners of its black arts being nothing more than highly-paid witch doctors.

The stagnation” produced by these periodically recurring breakdowns “lasts for years, during which time ” productive forces and products are wasted and destroyed wholesale until the accumulated mass of commodities finally filters off, more or less depreciated in value, until production and exchange gradually begin to move again. Little by little the pace quickens. It becomes a trot. The industrial trot breaks into a canter, the canter in turn grows into the headlong gallop of a perfect steeplechase of industry, commercial credit and speculation, which finally, after break-neck leaps, ends where it began - in the ditch of crisis. And so over and over again. (Ibid, p382)

Continued Engels: ” In these crises, the contradiction between socialised production and capitalist appropriation ends in a violent explosion. The circulation of commodities is, for the time being, stopped. Money, the means of circulation, becomes a hindrance to circulation. All the laws of production and circulation of commodities are turned upside down. The economic collision has reached its apogee. The mode of production is in rebellion against the mode of exchange, the productive forces are in rebellion against the mode of production which they have outgrown.

During these crises, the ” whole mechanism of the capitalist mode of production breaks down under the pressure of the productive forces, its own creations. It is no longer able to turn this mass of means of production into capital … Means of production, means of subsistence, available labourers, all the elements of production and general wealth, are present in abundance. But ‘abundance becomes a source of distress and want’ (Fourier), because it is the very thing that prevents the transformation of the means of production and subsistence into capital. For in capitalistic society the means of production can only function when they have undergone a preliminary transformation into capital, into the means of exploiting human labour-power. The necessity of this transformation into capital of the means of production and subsistence stands like a ghost between these and the workers. It alone prevents the coming together of the material and personal levers of production; it alone forbids the means of production to function, the workers to work and live .” (Ibid, pp378-9)

Unemployment and misery

The recession is wreaking havoc on working people all over the world. With millions of jobs already lost, unemployment is set to rise inexorably as the recession bites deeper still. In 2008, the figure of global unemployment stood at 190 million. According to the International Labour Organisation (ILO), more than 50 million more are expected join the ranks of these Lazarus layers.

In the EU, 17.5 million people are presently unemployed - 1.6 million more than a year ago. On 30 March, Angel Gurría, the head of the Organisation for Economic Cooperation and Development (OECD), stated that one in ten workers in the advanced economies will be without a job next year (2010) “practically with no exceptions”, warning that the number of the unemployed in the 30 rich OECD countries would swell “by about 25 million people, by far the largest and most rapid increase in OECD unemployment in the postwar period”.

This, he said, would happen as the OECD expected advanced economies to shrink by 4.3 percent in 2009 - with little or no growth expected in 2010. This forecast is far worse that the IMF’s most recent (January 2009) estimate of a 3-3.5 percent contraction for 2009. (See ‘Forecast of 25 million rise in unemployment’, Financial Times, 31 March 2009)

In the US, more than 4 million people have lost their jobs in the past 12 months, nearly half of those in the last three months alone. In February, the US private sector shed 697,000 jobs. This was the third consecutive month in which more than 600,000 jobs had been slashed - a sequence last recorded in 1939.

The US construction industry has cut more than 1 million jobs since January 2007, as construction work shrank at an accelerated pace following the collapse in the housing market. During this recession, the rate of unemployment in the US has nearly doubled from 4.4 percent to 8.5 percent in February this year, the highest since 1992. The US manufacturing sector has experienced three years of consecutive monthly declines in employment, losing 219,000 jobs this February alone. The number of workers out of work in the US now officially stands at 13.2 million.

In addition, the number of part-time workers in the US has risen nearly 80 percent over the last 12 months, to 8.6 million in February - the highest since records began to be kept over half a century ago. If those forced to work part-time, along with those who have given up actively searching for work but are still wanting a job (2.1 million) are included, the real unemployment rate stands at 14.8 percent.

In Germany, the largest European economy, unemployment rose from 7.6 percent last September to 8.1 percent in March this year.

In Britain, the number of people out of work stands at 2.1 million, with unemployment expected to be at 3 million by the end of this year. Presently, official unemployment stands at 6.7 percent of the workforce. In the three months to the end of February 2009, 177,000 British workers lost their jobs. Young people are especially hit by unemployment, with people under the age of 25 accounting for almost 40 percent of the total unemployed in Britain, and an unemployment rate of 15.1 percent in the 18-24 age group - more than twice that in the population generally.

The swelling of this reserve army of labour is, not unexpectedly, accompanied by a dramatic downward impact on the wages of working people, as workers have been compelled to worry about retaining their jobs rather than boosting their wages. As the recession becomes longer and deeper, this downward movement of wages will assume the proportions of a slump.

Unemployment in Spain has risen above 4 million for the first time and stands at 17.4 percent of the workforce - double the average for the EU. Half of the EU jobs lost in this crisis have been in Spain. Spaniards have been losing jobs at the rate of 9,000 a day. Alarmingly, unemployment is likely to top 20 percent and may well reach 5 million. In the past three decades, the rate of unemployment in Spain has only once been below 8 percent, and it exceeded 20 percent in the mid-1980s as well as the mid-1990s.

When the economy was growing, Spain absorbed 5 million immigrants from Latin America, North Africa and eastern Europe, providing employment to a new generation. (See ‘Spain needs to find permanent solutions to its temp problem’ by Victor Mallet, Financial Times, 30 April 2009)

Karl-Theodor zu Guttenberg, economics minister, said on 29 April that close to 1.5 million workers would lose their jobs this year and next in Germany.

In India, more than half a million jobs were lost in the Indian export sectors in the final quarter of 2008, with many more job losses expected this year. In China, a huge 20 million of the 130 million rural migrant workers have lost their jobs and returned to their home towns and villages - representing a 15.3 percent unemployment rate among migrant workers. This is in addition to the 8.86 million officially unemployed, accounting for 4.2 percent of the urban workforce - the highest unemployment rate for at least a decade.

The above figures tell us of hopes destroyed and lives blighted across the world and are a damning indictment of capitalism and the market economy.

Financial meltdown

Just as an opera is not over till the fat lady sings, likewise a capitalist recession does not end before a big banking failure. The present crisis is remarkable for the fact that it is accompanied by the near collapse of the entire banking system in the US, Britain, and a number of other countries. In the words of Chrystia Freeland, ” The global economic crisis has bankrupted centuries-old institutions, brought down once-mighty industrial brands and shattered a generation’s worth of assumptions about how capitalism ought to operate. Now is the time to declare another casualty of the crash - the imperial style of leadership. ” (’Calmer Obama ushers out the age of the imperial chief’, Financial Times, 11 April 2009)

Not only have financial giants in the US and elsewhere bitten the dust, so has US hegemony of the world capitalist economy and politics.

When, back in the summer of 2007, it became clear that the imperialist financial system was in trouble, the authoritative representatives of finance capital, as well as economic commentators, believed that the losses of the big banks from bad loans would total about $100bn - at the time considered a huge sum. However, the bad loan total has been a moving target; as the economy has continued to weaken, and confidence in the banks to crumble, more bad loans have been the result.

In its latest Global Financial Stability Report (GFSR), released on 21 April 2009, the IMF said that financial institutions across the world face losses of $4,400bn as the world recession erodes the value of their loans and other assets. For over a year, the IMF’s estimates of losses facing the financial sector have swollen with each update. Total writedowns on US assets are now estimated to reach $2,700bn (€2,082bn/£1,837bn) according to the IMF report, up from the $2,200bn it forecast in January, almost double its forecast of last October ($1,405bn), and three times the mere $945bn it forecast last April.

Including loans originating in Japan and Europe, the writedowns are now expected to reach $4,054bn. Of the $1,342bn losses facing European and Japanese institutions, $1,193bn will fall to the former and $149bn to the latter, while the writedowns on emerging market assets held by banks in the imperialist countries are forecast at $340bn - bringing the grand total to $4,394bn. Estimated writedowns on US and European assets, mainly held by financial institutions in these regions, account for 13 percent of their aggregate GDP.

Banks will bear two thirds of these losses, while the remaining one third will fall on insurance companies, pension funds, hedge funds and others.

Even with the IMF’s latest forecast of mind-boggling losses facing the financial sector, there is no certainty whatsoever as to the eventual extent of the losses - except that they keep getting worse, with the past year’s gloomy forecasts turning out to have been overly optimistic.

The crisis of overproduction, and the resultant financial crisis, are mutually reinforcing, with the losses and bankruptcies in the non-financial sector compounding the losses of the financial sector and vice versa. Conventional loans, not just toxic subprime securities (now rechristened ‘legacy assets’) account for half of the estimated writedowns. The IMF’s latest report is likely to cause further disarray among investors, even if its estimates are smaller than those of some private economists.

The IMF expects US institutions to write down $550bn in 2009-10, in addition to the $510bn they had already written down by the end of 2008, while the euro area and the UK stand to lose about $750bn and $200bn respectively, in addition to the $154bn and $110bn already respectively written down up to the end of 2008.

US banks have thus far taken approximately half of the writedowns facing them, while European banks have taken merely a fifth. Since the banks in the US and Europe have hitherto recognised less than half their losses, they will collectively have to write off $1,500bn this year and next. If the US and European banks took immediately all the writedowns facing them, the result, says the IMF, would be a complete wipeout of their equity.

Hence the importance of injecting more capital into the banks and other institutions. To restore their balance sheets to the level at which they were before the present crisis (defined by the IMF as a tangible common equity to tangible asset ratio of 4 percent), US banks require $275bn in capital infusion, euro area banks $375bn and UK banks $125bn. And bringing the banking system back to the leverage ratios of the mid-1990s (equity to assets ratio of 6 percent) would need huge recapitalisation: $500bn in the US, $725bn in the euro area and $250bn in the UK, says the IMF.

To achieve this level of recapitalisation, emphasises the IMF, governments would need to take bolder steps, such as converting preference stock into common equity and enforcing debt-to-equity swap - that is, nationalisation of the banks: ” The current inability to attract private money suggests the crisis has deepened to the point where governments need to take bolder steps and not shrink from capital injections in the form of common shares even if it means taking majority, or even complete, control of institutions.

As far as Europe is concerned, it would appear that the worst is still to come. In this regard, the large external financing requirements of the central and eastern European countries, and the exposure of the western European banks to these countries, are of particular concern.

By the end of December 2008, global banks had written off about $1,000bn (€752bn/£699bn) in bad assets, with half those written off in the US. The problem, however, is that, since the onset of the crisis, the provision of new capital has failed to keep up with the writedown of assets.

The US government has already put in place a stimulus package of $787bn (£527bn), the $700bn bank recapitalisation plan, a $70bn housing scheme and additional federal aid to car manufacturers, but, contrary to President Obama’s claims, none of these measures is showing any sign of being effective. Much larger sums than those already earmarked are needed to keep the banks from going under, let alone enabling them to start lending again.

According to Michael Pomerleano of the World Bank, if the rates of default in this crisis are similar to those of the 1982 recession, US banks will require more than $1,500bn of capital just to stay afloat, while new lending will require additional capital. These sums are far in excess of those the US Treasury is presently authorised to spend on bank rescues. With only $32bn left from the $700bn Trouble Assets Relief Program (TARP) funds, the Obama administration is bereft of funds to recapitalise bank balance sheets. It will have no option but to return to Congress with a request for yet further funds, with no guarantee that Congress would be prepared to grant such a request, as most American taxpayers detest bailing out Wall Street.

Reflecting this sentiment, Mr Obama is reported to have warned senior bankers at a private meeting that he was the only thing standing between them and the pitchforks. This being the case, his administration may be forced by politics, as much as by economics, to conclude that nationalisation of the banks is the best of all options.

Since, in the present desperate conditions, the chances of raising the vast sums needed for bank capitalisation are close to zero, it is the governments that are being forced to step in. However, the governments are struggling to keep pace with the daily deterioration in the banks’ balance sheets. So far, governments have provided up to $8,900bn in financing for banks, through lending facilities, asset purchase schemes and guarantees. But all this represents merely a third of their needs, for the IMF estimates that the ” refinancing gap of the banks - the rollover of short-term wholesale funding, plus the maturing long-term debt - will rise from $20,700bn in late 2008 to $25,600bn in late 2011, or just over 60 percent of their total assets .

This will call for a huge shrinkage of balance sheets. The balance sheets of the banks are still far too large. According to estimates by analysts of Morgan Stanley, the 15 largest banks, which have shrunk their balance sheets by a combined $3,600bn since the beginning of the crisis, will shed an additional $2,000bn in assets this year alone. And this does not even take account of the disappearance of securitised lending by the so-called ’shadow banking system’, which played such an important role in the US.

Market capitalisation of the banks

Not surprisingly, the meltdown of the financial system is reflected in the precipitous fall in the market capitalisation of the giants of finance capital in the centres of imperialism during the period between 1 March 2007 and 21 January 2009.

Citigroup, once the largest banking group, valued at $225bn at the beginning of March 2007, saw its market capitalisation dwindle to $17.2bn by the end of January this year, and presently it stands at a derisory $13.7bn. During the same period, the market capitalisation of Bank of America dropped from £225.3bn to $36.7bn; JP Morgan Chase from $170.9bn to $74.8bn; Goldman Sachs from $82.1bn to $25.4bn; HSBC from $200.5bn to $86bn (presently it stands at $78.3bn); Barclays from $91bn to $14.4bn; RBS from $120bn to $7.5bn; Lloyds TSB from $246bn to $14bn; Deutsche Bank from $67.8bn to $13.1bn; UBS from $123bn to $32.8bn; and BNP Paribas from $96.3bn to $28.2bn.

A decade ago, Banc One, Chase Manhattan, JP Morgan and Washington Mutual had a combined value of around $175bn. Today, JP Morgan Chase, which has
absorbed all these banks (as well as many others, such as Bear Stearns) is worth only $94.5bn. [2]

AIG, at one time the world’s largest insurance company, now 80 percent government-owned after suffering the largest-ever loss ($617bn) in corporate history, is worth only $1.2bn (42 cents a share) as against $131bn a year ago, when its shares sold at $46 each. AIG has operations in 130 countries and a customer base of 74 million, insuring financial products to the tune of $2tr, half of these for 12 imperialist banks. Doubtless it was considered too big to fail.

No recovery in sight

According to the latest IMF estimates, the fiscal costs of the government’s rescue efforts will, at the high end, amount to 13 percent of US GDP over the next five years, while the cost to the UK will be 9 percent of GDP over the same period. The efforts to stabilise the financial system could end up costing us taxpayers $6,200 (€4,650/£4,200) per head of population.

Most of the giant financial institutions in the centres of imperialism, especially in the US and Britain, are bankrupt and entirely reliant on the direct or indirect, explicit or implicit, support of governments and central banks for securing financing hitherto provided by institutional investors. A major financial crisis or a deep economic recession on their own would be bad news for capitalism, but the present crisis, characterised as it is by the potent mix of an unprecedented global economic slump with a financial meltdown emanating from the major imperialist countries that constitute the core of the world capitalist economy, is nothing short of catastrophic. It is the harbinger of a deep recession lasting many years followed by a mild recovery at some time in the future.

For the moment, the governments in the imperialist countries have stepped in to bail out the bankers with taxpayers’ money in an effort to restore the financial system, gasping for breath, to health (to resuscitate back to life would be a more apposite expression). But this will by no means prove sufficient for a return to sturdy economic health. Those who, like Chancellor Alistair Darling, are predicting a return to robust growth in the near future are deluding themselves.

In the US, with the deepening of the crisis of overproduction, $50,000bn of perceived wealth in the US (stocks and real estate) has declined to below $30,000bn, leaving the original $25,000bn of private debt stranded. With brutal speed, Americans have been forced to learn that they are not so rich after all. Although the Japanese had to adjust to a loss in perceived wealth of three times Japan’s GDP, all the same the US adjustment, amounting to 1.5 times US GDP, is still by far greater than any in US history. Even the crash of 1929 forced the US to write down only 75 percent of a year’s GDP. (See ‘Rebalancing the books’ by Jeremy Grantham, Financial Times, 11 March 2009)

On 11 March this year, in a Financial Times article entitled ‘If this is the Great Depression we are now in 1938′, John Kay said that, by 1933, US equities had lost three quarters of their 1929 value and the US monetary system reached the point of collapse - a trend only ameliorated by
the onset of the war. “Perhaps the clearest lesson,” remarked Mr Kay ominously, ” is that war is good for output, employment and corporate profits. Yes indeed! For imperialism, war, far from being an aberration, is normal business.

Drawing historical parallels with the 1929 crash, Mr Kay stated that, presently, the world economy is not at the beginning of the crisis but several years into it: the ” analogue of the 1929 Wall Street Crash is not the 2007 credit crunch but the busting of the New Economy bubble in 2000 … The follies of the 1990s resembled those of the 1920s … The underlying structural weaknesses of the world economy - the US budget deficits and trade deficits financed by Asian surplus - re-emerged in 2000 after being disguised by the imaginary wealth of the New Economy.”

All that the expansionary measures taken by the Federal Reserve and other central banks had done was create a wide boom in asset prices, extend credit to ever more unsustainable levels and help further the growth of the basically flawed financial infrastructure on which the 1990s boom had rested.

The last short-lived period of recovery (2003 to June 2007) did nothing, and could do nothing, to solve the fundamental problem of overproduction inherent to capitalism. It merely managed to prepare the ground for a far worse, far more powerful and more enduring crisis than the last one.

The US economy shrank in the fourth quarter of last year at its fastest rate since 1982, with GDP contracting at an annualised rate of 6.3 percent. In the first quarter of 2009, it shrank at an annualised rate of 6.1 percent. In the same quarter, corporate profits were down by 15.6 percent, or $250bn, from the third quarter. According to the IMF, the US economy is forecast to decline by 4 percent during 2009.

US house prices have declined by more than 25 percent (in California by 40 percent) from their peak, with huge numbers of people, saddled with mortgages worth more than their houses, facing foreclosures that appear in self-reinforcing spirals, as repossessed homes sold on the cheap further push down the value of other properties. The US scenario finds its equivalent in Britain and a number of other countries. In Britain, house prices have declined by 18 percent.

Risk dispersion or disaster in waiting

As a result of tumbling assets prices, millions of households are groaning under the burden of unbearable and unrepayable debt, while the financial system, the brain of imperialist economy, encumbered with losses of colossal proportions, is in a state of meltdown and has ceased to function.

What is more, the pillars of faith on which the new financial capitalism was built have crumbled like a house of cards, revealing it to have been nothing but a bubble emanating from the speculative frenzy that arose from the lack of profitable opportunities for investment in the productive sphere.

All those new devices, invented by statistical geeks so that the high rollers of finance capital could make a fast buck, which were supposed, and believed until the summer of 2007 by the bankers, investors and regulators alike, to disperse credit risk, make the world safer and the financial system more robust and resilient, have turned out to be so many toxicants that have contributed to the near-collapse of the financial architecture of monopoly capitalism.

Gillian Tett, writing in the Financial Times of 10 March 2009, described this allegedly risk-free process thus: “Bankers … repackaged loans for sale to outside investors, garnering fees “at almost every stage of the ’slicing and dicing’ chain.” As banks shed credit risk, ” regulators permitted them to make more loans - enabling more credit to be pumped into the economy, creating even more fees“. By turning their mortgages into bonds, banks were able to meet regulatory guidelines in a more ‘efficient’ way.

This was portrayed by the financiers as a step towards “a superior form of free-market capitalism“. These obscure instruments, with their “alphabet soup of abbreviations“, which were as baffling as the products the acronyms represented, produced “in 2006 and early 2007 no less than $450bn worth of ‘CDOs of ABS’ securities“. [3]

Ms Tett added: ”
Instead of being traded, most were sold to the banks’ off-balance-sheet entities such as SIVs [4] - or simply left on the books

, thus “making a mockery of the idea that innovation helped to disperse credit risk, and creating ” an opaque world in which risk was being concentrated” in ways hardly anybody understood. (’Lost through destructive creation’)

The narrative that the new-fangled financial innovations, with their slicing and dicing, served to spread risk around the world to those best able to bear it was promoted by the banks with great assiduity and eagerly accepted by the governments, central banks, regulators and rating agencies. In its (April) 2006 annual report, the IMF made the bold assertion that: ” the dispersion of credit risk by banks to a broader and more diverse set of investors … has helped to make the banking and overall financial system more resilient … improved resilience may be seen in fewer bank failures “.

This foolish assertion has come to haunt the IMF as it bears witness to the catastrophic collapse of the entire financial system of imperialism.

Far from being instruments of risk dispersion, these abstruse devices proved to be lethal explosives. Sliced and diced, insured by monoclines, highly marked by rating agencies, hidden away in SIVs, they were presented as being as safe as houses. “As indeed they were“, to quote the words of Howard Davies, director of the London School of Economics, ” except that the houses concerned were falling sharply in value, and their over-geared occupants were non-status borrowers. Many of the investors, including titans such as Merrill, Citi and UBS, had not understood the risks and lost their shirts (and red braces too). ” (’The architects of financial crisis, a review of Gillian Tett’s book Fool’s Gold‘, Financial Times, 25 April 2009)

By July 2007, as defaults on US subprime mortgages began to pile up, blind faith in the latest products of speculative capitalism began to unravel. Being forced to admit that their models were seriously flawed, rating agencies such as S&P downgraded ratings for mortgage-linked financial instruments, causing shockwaves that led investors (such as money market funds) to stop buying notes issued by shady entities such as SIVs.

As the realisation dawned that the banks were heavily exposed to these shadowy vehicles, panic gripped the robber barons of finance capital. With the rise in subprime defaults, the banks were obliged by their accountants to revalue their instruments. By the spring of 2008, Citigroup, Merrill and UBS had collectively written down $53bn, a horrifying two thirds of which came from the allegedly triple A-rated CDOs, which were, by early 2008, deemed to be worth no more than half of their face value.

Banks attempted to fill the gap by raising new capital in excess of $200bn, but the hole kept getting deeper. As it did so, trust in the ability of regulating authorities to monitor the banks, as well as faith in the banks themselves, collapsed. With the supposedly risk-free new models having been exposed as chimerical, investors walked away from every type of complex financial instrument.

On top of all this came the mother of all shocks last September - the bankruptcy of Lehman Brothers. Hitherto, it had been an article of faith with investors that the US would never allow a large financial institution to go to the wall. But when the US government did nothing to prevent Lehman going bankrupt, it caused distrust, disorientation and terror. Funding markets seized up. Banks and fund managers found to their horror that all their trading and hedging models had crumbled. The capital markets stopped functioning.

Money, the means of circulation“, had become, just as Engels had explained, “a hindrance to circulation“, and all ” the laws of production and circulation … turned upside down” in a dramatic demonstration of the rebellion of the mode of production against the mode of exchange. No wonder, then, that Mervyn King, governor of the Bank of England, was forced to say that the system was “on the precipice”.

By the beginning of this year, the writedowns of the big western banks were running at $1,000bn (€795bn/£725bn), according to the Institute for International Finance. On 9 March, the Asian Development Bank estimated that global financial assets could now have lost more than $50,000bn - the equivalent of a year’s global output.

Part-nationalisation of banks

The present crisis, unprecedented in its depth, scale and devastating effects, has delivered shattering blows to the economic orthodoxies practised during the last three decades in all the imperialist countries and, through the IMF, the World Bank and the WTO, forced on practically all the rest of the world.

Governments have been forced to step in to replace many market functions. Long-held beliefs in such things as prudence and balanced budgets have made way for huge deficits and the pumping of colossal amounts of money into a terminally-ill financial system through quantitative easing (a modern buzz word for printing money), which might even have horrified Keynes. Gone, too, is Europe’s stability and growth pact, which prohibited members of the eurozone from incurring deficits in excess of 3 percent of the national income and national debt above 60 percent of GDP. Huge amounts of public funds are being deployed to purchase and insure billions of dollars’ worth of toxic assets held by the major imperialist banks.

Governments, in particular the US and British, have been compelled to acquire huge stakes in some of the largest banks. The US government, just like the British government, has been transformed into a huge investment bank, robbing the state treasury and the taxpayers to transfer huge funds into private banks. The US government has injected $52bn into Citigroup, $45bn into Bank of America, $25bn into JP Morgan Chase, and $10bn into Goldman Sachs. On top of this, it has taken over the world’s largest insurance company, AIG.

The French government has a stake of $3.9bn in BNP Paribas, while the Swiss government’s stake in UBS is to the tune of $5.3bn.

On 10 February, the US Senate passed a $838bn stimulus package, accounting for 5.9 percent of GDP. Action taken by the German government so far to boost demand is the equivalent of 4.7 percent of German GDP over two years ($130.4bn). Japan has put in place a stimulus package of $104.4bn (2.2 percent of GDP); the UK $40.8bn (1.5 percent); and France $20.5bn (0.7 percent).

Germany has a €500bn ($660bn) bank reserve fund, known as Soffin, to support banks with a mix of guarantees and fresh capital. Of this sum, €210bn has already been tapped by banks. Another scheme, agreed on 21 April 2009 at a meeting between Angela Merkel (the German Chancellor), her Finance Minister, Frank-Walter Steinmeier, and the president of the Bundesbank, Axel Weber, is in the offing to enable German banks to offload toxic assets, which could leave German taxpayers with a bill of up to €1,000bn. German banks have already written down $72bn on their balance sheets.

Monetary loosening and fiscal expansion

All the imperialist countries, and some others, have undertaken monetary loosening and record-breaking fiscal expansions. A year ago, the Federal Reserve started to prime the monetary pump, which is now in full swing. Within a year, it has moved from 3 percent interest rates to quantitative easing.

The Bank of England has pushed through interest-rate cuts of 450 basis points in the last six months and the interest rate stands at an unprecedented 0.5 percent today. The European Central Bank’s interest rate has been brought down to 1 percent.

The Bank of England’s quantitative easing exercise (commenced on 5 March 2009) involves initially the creation of £75bn of new money in an effort to get the economy moving. The idea is to use this amount (representing 5 percent of Britain’s GDP) to purchase assets, especially government bonds, from banks and other financial institutions, in the hope that the sellers of these assets might use the funds thus made available to invest or lend to
households and businesses. If this initial sum proves insufficient, a further £75bn will be provided. [5]

This measure is a last desperate throw of the dice by the authorities and is fraught with dire consequences - not least on the inflation front. All in all, things are not looking too good in the centre of British usury - the City of London - and for the British ruling class, with its heavy reliance on banking and financial services for its profitability.

The resort to this unconventional measure, quantitative easing, came in the aftermath of the near-collapse of several of Britain’s banks in 2008, the exhaustion of monetary policy as a tool of economic management, and the part-nationalisation of the Royal Bank of Scotland and Lloyds TSB Banking Group, whose toxic assets, to the tune of £585bn, have been insured by the government.

Budget deficits and national debts

Consequent upon the recession, and the thousands of billions of dollars spent by governments in the centres of imperialism to douse the financial conflagration that threatened to bring the leading capitalist economies, especially the US and British, to their knees, all these countries are headed for huge rises in budget deficits and national debt.

The US budget deficit for 2009 stands and the frighteningly high figure of $1,750bn - a staggering 12 percent of GDP, while its national debt is forecast to rise from 66 percent at present ($10bn) to 97 percent of GDP in 2012.

The combined budget deficit of the eurozone’s four biggest countries - Germany, France, Italy and Spain - will reach 6.4 percent of their GDP in 2010. Their public debt is forecast to reach 83 percent of GDP from 79 percent this year - all this beyond the limits agreed in the 1990s to guarantee eurozone stability. Greece, Portugal and Ireland are in an even worse condition than that. The eurozone’s collective budget deficit will rise to 5.7 percent of GDP this year and 7.1 percent in 2010. Its collective public debt is expected to reach 75.7 percent of GDP this year and 81.4 percent in 2010.

Japan’s national debt, already very high, will this year be 224 percent of Japanese national output.

Britain’s position is worse than that of all the other imperialist countries, with the possible exception of the US. The British government is set to borrow as much in the next two years as the total borrowing Labour inherited on coming to office in 1997, that is, £348bn - dating back to 1691 (£41bn from 1691 to 1974 and £307bn from 1975 to 1997).

Presenting his budget to the House of Commons on Wednesday 22 April, Chancellor Alistair Darling said that net public borrowing this year will rise to a postwar high of £175bn - 12.4 percent of GDP - before dropping to £173bn next year (11.9 percent of GDP) and £140bn the year after that. The government will contract £700bn of new debt over the coming five years.

As a result, Britain’s debt is on course to smash the £1tr barrier for the first time. Presently, the national debt stands at £717bn (49 percent of GDP). It is set to rise to 59 percent this year, 68 percent next year and 74 percent of GDP the year after (last year, Britain’s GDP was £1.4tr). Although by no means a record, as Britain’s debt was more than 200 percent after the Napoleonic wars, hit 250 percent of income during the second world war, and still stood at 100 percent as late as 1963, it will still be the highest peacetime debt level. The fiscal gap will be larger still if the recession is deeper and longer than envisaged by the present forecasts of the Bank of England and the Chancellor, both of which are optimistic to the point of fantasy.

At the present level of low interest rates, the Treasury can continue to service the huge sums it has borrowed. The risk, however, is that if interest rates move upwards, the government will have to make drastic cuts in its spending or raise taxes, or both. Failing that, the moneylenders will vote with their feet and refuse to buy government securities.

In an editorial on 18 April, entitled ‘Labour pains’, the Financial Times gave this warning: ” The UK is not as rich as it thought it was just a few months ago. It needs to change course. Its golden goose - the financial sector - has been plucked. Public services must be pruned while the tax burden will certainly rise. This will entail painful trade-offs.

Two days later, the Financial Times stated that this crisis would “cost as much as a big war” and that ” while not unprecedented, such debt would leave the country dangerously vulnerable to a loss of confidence [ie, no one will lend it money].” (Editorial, ‘The folly of hoping for the fiscal best’, 20 April 2009)

It added that “Fiscal austerities will be the dominant feature of UK politics for a decade.

In view of the underlying weakness of the UK’s public finances, consequent upon the costs of the recession and the billions doled out in bank rescue packages, economic experts are all agreed that it will take two full parliaments of increasing austerity to get borrowing back under control. The Treasury’s own assessment is that four fifths of the borrowing this year and next will be ’structural’ - that is, impervious to economic recovery.

The chancellor has already announced cuts in capital spending, cuts in other government spending and tax increases to the tune of 1.6 percent of GDP. Whichever government is in office after next year’s election will need to find an additional £45bn a year in today’s money by the end of its parliament to get rid of this deficit.

Even if the authorities somehow manage to avoid a sterling collapse and complete meltdown, the end of the recession will bring in no new dawn, for the overhang of debt is only too likely to result in lower growth, unremittingly higher unemployment, lower house prices and stock-market valuations, savage cuts in public expenditure, higher taxes, higher costs of borrowing, declining living standards, and the destruction of the prosperity of the middle and better-off sections of the working class. Fewer and fewer resources will be available for education and health, while child poverty, homelessness and destitution will spread their tentacles further into the lives of working people.

What is true of Britain is equally true of the US and other leading capitalist countries.

Public anger

The current slump has dealt a devastating blow to market fundamentalism and brought into the open the reason for the political acquiescence of the stagnant middle class. Cheap credit allowed families to consume in excess of their income, as home-equity loans, vendor-financed car deals and credit car purchases served to hide the reality of falling real incomes. Now, the meltdown of the imperialist financial system, the deepening recession,
collapsing equity and house prices, falling employment, have combined to rudely awaken middle America from the dream that ” it too was partaking in the prosperity of the Second Gilded Age“.

As a result, according to Chrystia Freeland of the Financial Times, ” class and redistribution issues are no longer dirty words in American politics“. Ms Freeland goes on to record the visible and rising public anger towards Wall Street as the recession bites deeper, with “late night comedians … calling for public executions” of bankers. This public anger has overnight, as it were, “transformed the Masters of the Universe from heroes to villains. (’The audacity of help’, 12 March 2009)

In the US, it was an article of faith that people were free to succeed or fail, without any assistance. Now, however, in the name of preventing a systemic failure, hundreds of billions of dollars have been injected into failed institutions that made gargantuan profits while the going was good, and which exacerbated the crisis of overproduction with their speculative frenzy.

Since its eruption in the summer of 2007, the crisis has spread from the suburbs of the US to Europe and beyond, presaging a turbulent period of instability which could pose a serious threat to the very existence of the EU, as its member countries resort to nationalism and protectionism in an effort to ward off the devastating effects of the crisis at the cost of fellow members.

Rising unemployment, falls in house prices and in the value of pensions, and pay curbs on the workers, combined with bailouts for the banks costing taxpayers trillions of dollars, are causing seething anger among the masses - who are told that there is no money left to keep them in their jobs and houses. This anger was clearly evident in France, where, in March, a million workers staged western Europe’s biggest protests since the start of the crisis.

Governments have fallen in Iceland and Latvia. Greece, Ireland, France, Germany, Britain, Ukraine, Bulgaria and Lithuania have witnessed strikes and protests. The effects of the crisis have been felt even in far-flung outposts of the continent: the French Caribbean island of Guadeloupe saw violent strikes, while Russia flew riot police into icebound Vladivostock to suppress street protests.

Respectable bourgeois economists and commentators are openly critical of the US treasury’s bailouts, which amount to a huge transfer of wealth from US
taxpayers to the Wall Street bankers. Jeffrey Sachs has called them “a thinly-veiled attempt to transfer hundreds of billions of dollars to the commercial banks. The Obama plan to bail out banks ” amounts to robbery of the American people, said Joseph Stilgitz. Robert Reich, Labour Secretary in the Clinton administration, said that Tim Geithner, the US Treasury Secretary, is “a prisoner of Wall Street“, while Paul Krugman has complained that the US government is giving “cash for trash.

Martin Wolf, writing two days after the US treasury secretary came up with his latest racket - the so-called Public-Private Investment Program (PPIP) - to enable banks to rid themselves of their toxic assets,[6] correctly called it
the ‘Vulture fund relief scheme’, saying said that the scheme was unlikely to work. If, however, it were to work, “a number of fund managers are going to make vast returns, convincing “ordinary Americans that their government is a racket run for the benefit of Wall Street. This, he said, would make it difficult to get US Congress to sanction additional funds for the badly needed recapitalisation of the banks, because the provision of public money to the banks was “unacceptable to an increasingly outraged public“.

The conclusion, alas, is depressing. Nobody can be confident that the US yet has a workable solution to its banking disaster”, stated Mr Wolf, adding: ” On the contrary, with the public enraged, Congress on the war-path, the president timid and a policy that depends on the government’s ability to pour public funds into undercapitalised institutions, the US is at an impasse. ” He concluded that if the US’s ability to find its way through this crisis “is not frightening, I do not know what it is. (’Why a successful US bank rescue is still far away’, Financial Times, 25 March 2009)

Effect on eastern Europe and on Africa

The Washington-based Institute for International Finance has forecasted a steep decline in net private capital flows to emerging countries - from $929bn in 2007 and $466bn in 2008 to a mere $165bn this year, equal to 6 percent of these countries’ GDP - and much worse than the decrease of 3.5 percent that took place during the Asian crisis of 1997-8, with its horrendous social and economic consequences in that region.

$1,440bn-worth of debts of the less developed countries are due in 2009. Central and eastern Europe, owing $1,656bn, principally to western European banks, will experience a GDP decline for the first time in 10 years. Without an injection of international funds, several of these countries could be heading for sovereign defaults.

According to the IMF, central and eastern European countries (excluding Russia, but including Turkey) must roll over $413bn (€311bn/£281bn) in maturing external debt this year and finance $85bn in current account deficits. In the best possible scenario, the region’s financing gap - the money that cannot be accessed through the market - could be $123bn in 2009 and $63bn in 2010 -$186bn in total.

In addition, the region’s banks, largely owned by western European banks, could be sitting on non-performing loans to the tune of 20 percent of total loans. West European parent banks, with a regional exposure totalling $1,600bn, could face losses of $160bn. They might be in need of $100bn in new capital - even $300bn if the crisis deepens further, as is only too likely. Austria, having lent a total of $300bn (£210bn/€235bn) to clients in the region, has an exposure equal to 68 percent of GDP. If Bank Austria, owned by Italy’s Unicredit, is included, Austria’s exposure would rise to 100 percent - the highest of any western European country.

An economic collapse in eastern Europe, which is not that far-fetched a possibility, could bankrupt Austria’s banks and oblige the government to undertake a prohibitively costly bailout. On top of badly mauling hundreds of industrial groups, retail businesses and service companies, ie, those that rely on investment in, and trade with, the region, such a collapse could conceivably bankrupt Austria in the same way as Iceland has been bankrupted. As one bourgeois commentator put it, the governments in eastern Europe at least got one thing right, namely, they made sure their banks were owned by foreigners. If Hungarian households default, it is not Hungary that will go down, but Austria.

What is more, to the horror of imperialism, which not so long ago celebrated the triumph of counter-revolution in central and eastern Europe and the absorption of many of these countries into the warmongering neo-Nazi Nato or the imperialist EU bloc, the stability of this entire region hangs in the balance. Consequent upon the present economic crash, with the resultant rise in unemployment, poverty and debt, there is mounting anger, which is fuelling popular movements with unpredictable consequences. Counter-revolutionary semi-fascistic regimes in the region are increasingly becoming targets of the wrath of the popular masses, who feel duped and betrayed.

At the end of January, Latvia’s government collapsed over its IMF-mandated austerity programme, after pitched battles in the streets of Riga between angry demonstrators and the police. The fear of imperialism and its ideological representatives is that a prolonged crisis could end up totally undermining support for capitalism, the EU and Nato in these countries. Martin Wolf expressed well-founded fears that the crisis would ” undermine confidence in local and global élites, in the market, and even in the possibility of material progress … with potentially devastating social and political consequences “. (’Seeds of its own destruction, Financial Times, 9 March 2007)

Meanwhile, according to UN Educational, Scientific and Cultural Organisation’s (Unesco) forecasts, 390 million of the poorest people in Africa are likely to experience a 20 percent decline in their existing meagre incomes. Declining commodity prices and reduced flow of investments will see to it that sub-Saharan Africa loses $18bn ($46 per person), causing starvation on a large scale.

On 6 May 2009, the UN’s Food and Agriculture Organisation (FAO) revealed that the present crisis will add an additional 100 million to the 900 million people already suffering from hunger, adding that there have never been so many hungry people around the world - and this despite the fact that, over the past year, food prices have come down considerably. With so much surplus food lying in warehouses around the world, there could be no greater indictment of this criminal system, which we are repeatedly told by the defenders of capitalism is the final destination of humanity.

In the run up to the G-20 summit of 2 April this year, the World Bank issued a warning that an avalanche of social and political unrest could be unleashed in the poorest regions of the globe if the leaders at the summit failed to come up with a plan to aid them. There was not much chance of that happening, as the major powers were more concerned with protecting their respective national interests at the expense of everyone else.

The summit merely managed to expose the divide between the US and Europe. While the former advocated yet another large, coordinated stimulus package to boost demand as a way out of the recession, France and Germany, fearing potentially damaging budget deficits with inflationary effects, called for greater regulation of banks, restrictions on executive bonuses and the banning of tax havens.

While talking of free trade and open markets, the principal imperialist powers are resorting to measures of protectionism at an increasing tempo, especially since October 2008.

No wonder, then, that Mr Wolf, drawing parallels with the Great Depression of the 20s and 30s of the last century, should be worried about this crisis undermining free trade, reversing the whole process of globalisation, strengthening the role of government and the credibility of socialism and
communism. No wonder, then, that he should make veiled references to the crisis unleashing civil wars and wars between countries. ” Frightened people, he says, “become tribal: dividing lines open within and between societies.” (Ibid)

As for Britain, its banks have written off only a third of the losses they will eventually face, and they will be compelled to raise at least $125bn (£85bn) in extra capital to rebuild their balance sheets. Although UK banks have already written off $110bn on complex debt securities and other assets on their balance sheets, the IMF estimates that they have another $200bn in losses over the next two years as more loans to companies and consumers go sour.

The government then faces the long-term task of clawing back the scores of billions of pounds that the exchequer has been compelled to dole out to save the rickety banking system from complete collapse - either through spending cuts, or increased taxes, or both.

By 2017/18, the fiscal impact of the crisis will have cost each UK family approximately £2,840, mostly through lost public services and tax increases. Not just the poorest sections of the population, but also the middle class and the better-off sections of the working class are bound to be badly hit. While bringing misery to vast numbers, the crisis presents an opportunity for forging an alliance between the poor and sections of the petty bourgeoisie facing, for them, the dreadful prospect of being thrust into the ranks of the proletariat. The authorities are deeply worried that people rendered homeless and jobless by the crisis might turn to violent protest.

Not for decades has there been such an opportunity to build a truly proletarian, anti-imperialist, revolutionary movement to give direction to the all-too-likely spontaneous movement of the masses against the ravages of capitalism. The time is ripe, for the combination of an unprecedented crisis of overproduction and a near-collapse of the financial system of imperialism have weakened the legitimacy of the market - especially of the Anglo-Saxon variety, with its emphasis on shareholder value.

By contrast, the credibility of Marxism - of socialism and communism - is on the rise. Bourgeois commentators, such as Martin Wolf of theFinancial Times, take comfort in the fact that “unlike in the 1930s, no credible alternative to the market economy exists“. ( Ibid)

Of course, it is too much to expect that people of Mr Wolf’s ilk would understand the movement of history dialectically and grasp that ” in developments of such magnitude twenty years are no more than a day - though later on days may come again in which twenty years are comprised “. (Letter to F Engels from K Marx, 9 April 1863)

Yes, the loss of the Soviet Union and eastern European socialist countries was a tremendous blow to the proletarian and national-liberation movements. Yes, the two decades since then have been a period of unprecedented reaction and stagnation in the working-class movement. But it requires an incurable reactionary to take this period of reaction and stagnation as a guide to the future. We are once again on the threshold of a period in which 20 years may well be embodied in days - provided the revolutionary parties get their act together and work systematically to prepare the working class for the coming conflicts.

Political and ideological representatives of imperialism blame the present crisis on naked greed, excessively lax regulation, loose monetary policy, fraudulent borrowing, high levels of leverage, animal spirits, and managerial failures, the implication being that with better regulation etc, there would be no capitalist crisis.

Nothing could be further from the truth. The truth is that these crises are systemic to capitalism - they recur because of the contradiction inherent to capitalism, namely, the contradiction “between socialised production and capitalist appropriation. It is this contradiction that, during the crises, “ends in a violent explosion“. These are, in other words, crises of overproduction, which capitalism is powerless to prevent.

There is but one cure for these crises - for society to take over the productive forces and use them to organise production on a definite plan to serve the needs of the community.

In the words of Engels: “the solution [to the constant recurrence of economic crises] can only consist in the practical recognition of the social nature of the modern forces of production, and therefore in the harmonising of the modes of production, appropriation, and exchange with the socialised character of the means of production. And this can only come about by society openly and directly taking possession of the productive forces which have outgrown all control except that of society as a whole. The social character of the means of production and of the products today reacts against the producers, periodically disrupts all production and exchange, acts only like a law of Nature working blindly, forcibly, destructively. But with the taking over by society of the productive forces, the social character of the means of production and of the products will be utilised by the producers with a perfect understanding of its nature, and instead of being a source of disturbance and periodical collapse, will become the most powerful lever of production itself. (Anti-Dühring, pp382-3)

In other words, the crises of capitalism can only be got rid of through the proletariat seizing state power, transforming the socialised means of production into public property, and organising production “upon a predetermined plan” for the benefit of society as a whole.

To accomplish this act of universal emancipation is the historical mission of the proletariat,” said Engels, adding: ” To thoroughly comprehend the historical conditions and thus the very nature of this act, to impart to the now oppressed proletarian class a full knowledge of the conditions and meaning of the momentous act it is called upon to accomplish - this is the task of the theoretical expression of the proletarian movement, scientific socialism.” (Ibid, p391)

Our tasks

In the light of the above, the tasks of any party claiming to represent the interests of the proletariat are as follows:

If it is going to succeed at the appropriate time in fighting for the interests of the working class, the following basic understandings must be made to permeate the working-class movement:

1. That capitalism is a transitional stage in the long march of humanity from primitive communism to the higher stage of socialism - communism.

2. That capitalism long ago became a historically outmoded system, owing to the conflict between the productive forces (which are social) and the relations of production (private appropriation); this basic conflict lies at the heart of the recurrent crises of overproduction and the resultant misery of the working class.

3. That under the conditions of monopoly capitalism, capitalism has grown into a monstrous system of domination and exploitation by a handful of monopolist concerns within each of the imperialist countries and on a world scale by a tiny group of imperialist countries, which exploit, dominate and oppress the overwhelming majority of humanity inhabiting the vast continents of Asia, Africa and Latin America.

4. That, for reasons of the conditions peculiar to this stage of capitalism, imperialism cannot but result in incessant warfare waged by imperialist countries against the oppressed peoples (for instance, the current predatory war of Anglo-American imperialism against the people of Iraq) and inter-imperialist wars, which have claimed the lives of 100 million people during the 20th century.

5. That socialism alone offers the way out of the contradictions of capitalism; it alone is able to offer humanity a world without the crises of overproduction, without unemployment, poverty and wars. Socialism alone is able to provide the conditions for a limitless increase in production, unending prosperity, fraternal cooperation and peace among peoples and nations.

6. That capitalism itself creates the power, namely, the proletariat, which alone is capable of putting an end to the anarchy of production and all other horrors of the capitalist system of production, for ” of all classes that stand face to face with the bourgeoisie today, the proletariat alone is a really revolutionary class. The other classes decay and finally disappear in the face of modern industry, the proletariat is its special and essential product.

7. That the struggle of the proletariat for the overthrow of capitalism must be led by a vanguard revolutionary party of the proletariat.

8. That the state is nothing but an instrument in the hands of one class for the suppression of another class; that the proletariat too needs a state of its own; that the struggle of the proletariat for socialism must lead to the establishment of the dictatorship of the proletariat, which lasts for a whole historical period, and is the instrument of the proletariat for suppressing any attempts of the bourgeoisie at the restoration of capitalism, on the one hand, and for creating the material and social conditions for the transition to the next, the higher, stage of communism, in which the state
withers away and society is able to move from the formula “From each according to his ability, to each according to his work” to ” From each according to his ability, to each according to his needs“. (K Marx and F Engels, The Communist Manifesto)

9. In the words of Lenin, ” If we translate the Latin, scientific historical-philosophical term ‘dictatorship of the proletariat’ into more simple language, it means the following: only a definite class, namely that of the urban workers and industrial workers in general, is able to lead the whole mass of the toilers and exploited in the struggle for the overthrow, in the struggle to maintain and consolidate the victory, in the work of creating the new socialist system, in the whole struggle for the complete abolition of classes. (V I Lenin, ‘A great beginning’, June 1919)

10. That commodity production and socialism are incompatible and it is the function of socialism to eliminate commodity production and the market and make way for planned production, which, instead of being regulated by profit, is guided by the principle of the maximum satisfaction of the constantly rising material and spiritual needs of the people.

11. That all bourgeois prejudices against the Soviet Union of the period of J V Stalin’s leadership must be dropped. During that time, the Soviet Union made earthshaking achievements in every field - from socialist construction, through collectivisation, to victory in the anti-fascist war - of which the proletarians and oppressed peoples of the world have every right and duty to be proud. Negating that important period in the history of the international working-class movement has only served to negate the most glorious achievements of the working class to date, to defame the dictatorship of the proletariat and the international communist movement and to sully the banner of Marxism Leninism. Our movement must understand that anti-Stalinism always was, and is now, a cover for attacking Marxism Leninism in general, and the dictatorship of the proletariat in particular, the purpose being ” to kill in the working class the faith in its own strength, faith in the possibility and inevitability of its victory, and thus to perpetuate capitalist slavery “. (J V Stalin, Report to the 18th Congress of the Communist Party of the Soviet Union, 1938)

12. That the guard and fight against all forms of opportunism - social democracy, Trotskyism and revisionism - must never lessen, for “the fight against imperialism is a sham and humbug unless it is inseparably bound up with the fight against opportunism“. (V I Lenin, Imperialism - the Highest Stage of Capitalism)

13. That in its struggle for power, the proletariat in the centres of imperialism must wholeheartedly support the national liberation struggles of the oppressed peoples against imperialism, for the ” revolutionary movement in the advanced countries would actually be a sheer fraud if, in their struggle against capital, the workers of Europe and America were not closely and completely united with hundreds upon hundreds of millions of ‘colonial’ slaves who are oppressed by capital “. (’The Second Congress of the Communist International’ by V I Lenin, 1920)


[1] Synchronicity: the simultaneous occurrence of events with no discernible causal connection.

[2] In the last few weeks, there has been an upward movement in the price of shares of some of these banks. However, in view of their continuing volatility, we have decided not to change these figures.

[3] Collateral Debt Obligations of Asset Based Securities.

[4] Structured Investment Vehicles.

[5] In fact, on 7 May 2009, the Bank of England announced that it was pumping an additional £50bn into the economy through quantitative easing.

[6] Toxic assets are now rechristened ‘legacy assets’ - a polite expression for a “pile of poop” of around $1,000bn sitting on the banks’ balance sheets masquerading as an ‘asset’, as Steve Palmer writing in FRFI of April 2009, wittily and correctly characterised them.

October Revolution rally: speech by Giles Shorter (CPGB-ML)

Comrades and friends, since we are all here tonight to celebrate the Bolshevik revolution of October 1917, it seems like a good moment to look back at the roots of Bolshevism, and the organisational principles which Comrade Lenin and the Bolsheviks espoused.

1898 Founding of the party – Economism – What Is To Be Done

The Russian Social Democratic Labour Party (RSDLP) was founded officially in 1898, but its first stumbling steps were dogged by police suppression, ideological muddle and poor organisation. Things were made worse by the influence of the Russian opportunist trend known as ‘Economism’.

In the name of standing up for the interests of the working class, the Economists insisted on limiting the class struggle to purely ‘bread-and-butter’ industrial issues. They saw Lenin’s plans for a united and centralised political party of the working class as an unnecessary and artificial intrusion upon workers’ spontaneous industrial skirmishes. Their influence helped to perpetuate ideological muddle and lax organisation.

Under these circumstances, Lenin and his comrades – we cannot yet call them Bolsheviks – used the columns of the party paper, Iskra (Spark) to wage a relentless struggle against the disorganising ideas of Economism. By this means, the ground was prepared for the ideological and organisational consolidation of the party.

A key moment in this struggle came in March 1902, with the publication of Lenin’s What Is To Be Done? This work not only delivered a great blow against Economism, it also laid the foundations for the whole future Bolshevik approach to ideology and organisation.

Against the blind worship of spontaneity which characterised the Economists, Lenin asserted the vanguard role of the proletarian party. The party’s role was not to follow but to lead. And key to the development of this leadership role was the central, all-Russian party newspaper.

The purpose of the paper was not simply to comment and analyse but to organise. It was the paper’s job not only to weld the party ideologically, but also to unite local bodies within the party organisationally, as Lenin wrote that such a paper “is not only a collective propagandist and collective agitator, but also a collective organiser”.

These were not just very clever ideas on how to run a political newspaper, but an assertion of the indissoluble bond between the ideological and organisational make-up of the party – the unity of its theory and its practice. And the battle was not just against the Russian Economists, with their exclusive fixation on narrow trade-union struggles. Lenin makes it clear that these gentry were no more than a pale local variant of a virulent strain of opportunism which was international in scope.

There can be no better proof of the continued relevance of the organisational principles advocated by Lenin than the fact that they continue to provoke today’s opportunists just as badly as they did 100 years ago!

Lenin was clear that for the revolutionary movement to hold out, it needed a stable organisation of leaders to maintain continuity; and the bigger the movement grew, the more crucial would such an organisation be. The vanguard organisation would need to consist first and foremost of professional revolutionaries, trained in the art of outfoxing the political police. Far from limiting the scope of the movement, argued Lenin, such an approach to leadership would offer the best prospect of drawing the masses in ever greater numbers into working for the revolution.

It is legitimate for us to ask how much relevance these organisational tactics have for communists today. After all, we are not living in an autocratic state, we do not live under Tsarism, and perhaps we do not require a party leadership that has professional training in the art of combating the political police – yet.

However, as degenerate British imperialist society moves deeper into crisis, the retreat from bourgeois democratic forms is becoming daily more pronounced. Wars of national oppression abroad, erosion of civil liberties at home, cuts in public services, attacks on the pay and pensions of workers, the dismantling of the ‘welfare state’ and the spread of anti-immigrant propaganda – all these combine to create a harsher political climate for dissent of any kind.

The plunge into financial crisis and slump can be expected to intensify this process, precisely in the degree to which the bourgeoisie feel it more urgent to safeguard the exploited workers from the growth of communist influence.

This period of renewed crisis presents the proletariat with an immense historical responsibility, which it cannot hope to shoulder without the guidance and leadership of a party that has learnt to match ideological with organisational strength.

The working class may not yet require a party ‘professionally trained in the art of combating the political police’ – but we certainly do need a party that is no less professional in its approach to organisation than it is in its approach to ideology.

Second Congress of the RSDLP

In 1902, Lenin explained these organisational principles in his work, What Is To Be Done? In July 1903, the ideas advanced were tested out in political struggle at the Second Congress of the RSDLP.

Lenin and his comrades at Iskra submitted a maximum and a minimum programme for the party. The maximum programme dealt with the ultimate goal: socialist revolution and proletarian dictatorship. The minimum programme dealt with the bourgeois democratic phase of the revolution: getting rid of the Tsar, securing a democratic republic, limiting the working day and giving land to the tiller.

Mention of proletarian dictatorship ruffled some opportunist feathers, as did the prospect of an alliance with the peasantry and recognition of the right of nations to self-determination. But on all these issues, the Iskra view prevailed.

However, having failed in a direct assault on the Leninist programme, opportunism now turned its attention to the rules. Having failed to undermine the party’s ideology, opportunism now set its sights on the party’s organisation.

The opportunity for this mischief-making arose around the very basic question: what determines who is a member of the party? Martov could hardly disagree with the common-sense stipulations that party members had to stick to the party line and pay their subs. Where he got cold feet was over Lenin’s insistence that every member should submit to party discipline by working within one of the party’s organisations. The Short History of the CPSU(B) puts it in a nutshell.

Martov regarded the party as something organisationally amorphous, whose members enrol themselves in the party and are therefore not obliged to submit to party discipline, inasmuch as they do not belong to a party organisation.” (Short History, p36)

To the untutored ear, the Martov approach to party building could sound very bold and revolutionary. Why not have done with it and say that every worker who downs tools and goes on strike demonstrates by his actions that he has the right to be in the party? But such phoney rank-and-file fervour conveniently forgets that it takes all sorts to make a strike, including non-socialists and anarchists.

And in any case, the real intended beneficiaries of Martov’s ‘come all ye’ approach to party membership were not workers at all, but unreliable bourgeois intellectuals eager to parade as progressive leaders but not prepared to “join an organisation, submit to party discipline, carry out party tasks and run the accompanying risks”. (Short History, pp36-37)

Even on the Iskra side of the argument, not all were wholeheartedly behind Lenin. Thanks to some of these wavering elements, Martov’s views on party rules were for the moment tolerated, and this was a temporary setback for the party. What was established at the Second Congress, however, was a clear distinction between the Menshevik and the Bolshevik positions on both ideological and organisational questions, a distinction which proved to be of great political value to the Bolshevik cause in the struggles to come.

It was in the elections at the conclusion of this Second Congress, in which Lenin and his followers secured a majority of the votes, that the two trends within the RSDLP started to be identified as Bolshevik (majority) and Menshevik (minority).

One Step Forward, Two Steps Back

In May 1904, the essence of this key struggle over organisational principles was crystallised in Lenin’s work, One Step Forward, Two Steps Back.

1. Lenin insisted that what was required was a vanguard party, arguing that “To forget the distinction between the vanguard and the whole of the masses which gravitate towards it, to forget the constant duty of the vanguard to raise ever wider strata to this most advanced level, means merely to deceive oneself, to shut one’s eyes to the immensity of our tasks, and to narrow down these tasks.” (Short History, p41)

The very word ‘vanguard’ has become anathema within the reformist left, drawing knee-jerk accusations of elitism and arrogance. Yet such accusations are no more than a smokescreen to cover the left’s abdication of responsibility towards the class they purport to champion.

2. Every member had to be working for a specific organisation of the party. “If the party were not an organised detachment of the class, not a system of organisation, but a mere agglomeration of persons who declare themselves to be party members but do not belong to any party organisation and therefore are not organised, hence not obliged to obey party decisions, the party would never have a united will, it could never achieve the united action of its members, and, consequently, it would be unable to direct the struggle of the working class.” (Short History, p41)

3. The party must struggle to guide all other organisations of the working class, not hiding behind a cloak of false modesty like the Mensheviks. To belittle the leading role of the party is, in fact, to weaken and disarm the proletariat.

Comrades here present know from experience that it is not always easy to combat Labour party influence in the unions. It is tempting to declare the struggle unnecessary (because ‘eventually the crisis will in any case loosen the ties that bind organised labour to social democracy’). It is tempting to declare the struggle impossible (because ‘social democracy is so ingrained in the trade unions – why waste the effort?’). It is not so unusual even to hear both optimistic and pessimistic versions expressed in one and the same breath!

But however the issue may be fudged, the fact remains: no matter how weak we may judge communist influence to be at present within the unions, the task remains to build a party that can guide all the other organisations of the working class.

4. The party must multiply and strengthen connections with the non-party masses.

For example, this is the light in which communists should see work with the anti-war and international solidarity movements, as well as with organised labour, however grandiose the term ‘masses’ may sound at this early stage of development.

5. The party will be a party of democratic centralism, with election from below and leadership from the centre. As Lenin puts it, “Now we have become an organised party, and this implies the establishment of authority, the transformation of the power of ideas into the power of authority, the subordination of lower party bodies to higher party bodies.” (Short History, p43)

The working class is not best served by a loose association of study and agitation groups, but by a party of democratic centralism, with a central committee, regions and branches.

6. All the comrades in the party must share a common proletarian discipline, binding upon all. And it is the duty of everyone to make sure this happens. The “class-conscious worker”, says Lenin, “must learn to demand that the duties of a party member be fulfilled not only by the rank-and-filers, but by the ‘people at the top’ as well.” (Short History, p44)

In short, the Mensheviks of yesterday and today want a party as a kind of club for ‘great thinkers’, unburdened with a lot of tiresome rules binding upon all without exception.

The Bolsheviks of yesterday and today demand a party that not only seeks ideological unity but also learns to consolidate that ideological unity by the material unity of organisation of the proletariat.

Lenin rubs this home in the final paragraph of One Step Forward.

In its struggle for power, the proletariat has no other weapon but organisation. Disunited by the rule of anarchic competition in the bourgeois world, ground down by forced labour for capital … the proletariat can become, and inevitably will become, an invincible force only when its ideological unification by the principles of Marxism is consolidated by the material unity of an organisation which will weld millions of toilers into an army of the working class.

1905 and the Third Congress

The eruption of revolution in 1905 created a new situation for the party. The divisions over organisational questions were now supplemented by open splits over questions of political tactics.

Where the Bolsheviks insisted that the bourgeois democratic struggle against Tsarist autocracy must not be left to the gutless bourgeoisie to lead, but must be conducted in a revolutionary manner under the leadership of the advanced proletariat and its party, the Mensheviks took the position that workers should leave leadership in the hands of the liberal bourgeoisie. The revolution was not socialist, so why should the workers get involved in leading it? This left-sounding posture merely served as a cover for the Mensheviks’ own inaction.

If the party was not to betray the trust of the masses, it had to resolve these differences without delay. This required the convening of a Third Congress, but when the Bolsheviks proposed this, the Mensheviks declined, preferring to sit on their hands.

The Bolsheviks then convened the Third Congress unilaterally, in April 1905. Sooner than attend, the Mensheviks responded by calling a congress of their own. The splitters’ congress duly committed the Mensheviks to the tactics of tucking in behind the liberal bourgeoisie, whilst the Third Congress of the RSDLP took on the burden of leadership which the Mensheviks insisted upon shirking.

When the Moscow proletariat began the armed uprising of December 1905, it was no accident that, out of a fighting organisation of about 1,000 combatants, over half were Bolsheviks.

It was not until 1912 that Menshevism was finally so discredited within the party that the Bolsheviks could finally release the party from the sapping influence of their opportunism and indiscipline. However, the lessons learned in those struggles proved invaluable to Bolshevism in the trials that lay ahead, both in making revolution and in defending proletarian dictatorship.

In that crucial year of 1905, when what some had belittled as ‘just’ organisational disagreements erupted into fundamental disagreement as to the whole character of the revolutionary development and the role to be played in it by the proletariat, another influential figure on the revolutionary left was to be found energetically taking the wrong side.

Insofar as he consented to being organised by anybody between 1903 and 1917 (the year which saw him jump ship into the Bolshevik ranks), Leon Trotsky was identified with the Mensheviks. So it was that, whilst the Bolsheviks were leading the Moscow proletariat in revolt in 1905, Trotsky and his fellow-Mensheviks, Khrustalev and Parvus, were using their ascendancy within the St Petersburg Soviet to obstruct plans for the uprising, refusing to arm the workers or bring them into contact with the soldiers of the St Petersburg garrison.

Trotsky and 1917

In fact, one way to gauge the organisational maturity of Bolshevism in finally leading the masses to seize the power in October 1917 is by negative reference to the shallowness of Trotsky’s ‘Lessons of October’. Such is the very revealing approach adopted by Comrade Stalin in his 1924 work, ‘The October Revolution and the tactics of the Russian Bolsheviks’.

Though Trotsky finally joined the Bolsheviks in 1917, it is clear from his analysis of the events of that world-shaking year (in his ‘Lessons of October’) just how poorly he grasped the complex character of Bolshevik leadership.

Having himself, for all those years, resisted being organised within the discipline of a communist party – feeling more at home in the world of cabals, factions and conspiracies – he now proved incapable of understanding how such a party could take on the task of organising the vast revolutionary masses of mother Russia.

Leadership, for Trotsky, was either a question of dazzling an audience with brilliant words, or of issuing military-style orders to the obedient ranks.

Comrade Stalin poured scorn on Trotsky’s ‘explanation’ of Bolshevik tactics as they evolved between April and October 1917. Trotsky talked as if, right from the word go, the Bolsheviks had a ready-made political army – as if it were only a question of conducting a few reconnaissance missions before sending in the masses to bring home the revolutionary victory.

If one were to listen to Trotsky, one would think that there were only two periods in the history of the preparation for October: the period of reconnaissance and the period of uprising, and that all else comes from the evil one. What was the April demonstration of 1917? ‘The April demonstration, which went more to the ‘Left’ than it should have, was a reconnoitring sortie for the purpose of probing the disposition of the masses and the relations between them and the majority in the Soviets.’ And what was the July demonstration of 1917? In Trotsky’s opinion, ‘this, too, was in fact another, more extensive, reconnaissance at a new and higher phase of the movement.’ Needless to say, the June demonstration of 1917, which was organised at the demand of our party, should, according to Trotsky’s idea, all the more be termed a ‘reconnaissance’.

This would seem to imply that as early as March 1917 the Bolsheviks had ready a political army of workers and peasants, and that if they did not bring this army into action for an uprising in April, or in June, or in July, but engaged merely in ‘reconnaissance’, it was because, and only because, ‘the information obtained from the reconnaissance’ at the time was unfavourable.

Needless to say, this oversimplified notion of the political tactics of our party is nothing but a confusion of ordinary military tactics with the revolutionary tactics of the Bolsheviks.

Actually, all these demonstrations were primarily the result of the spontaneous pressure of the masses, the result of the fact that the indignation of the masses against the war had boiled over and sought an outlet in the streets.

Actually, the task of the party at that time was to shape and to guide the spontaneously arising demonstrations of the masses along the line of the revolutionary slogans of the Bolsheviks.

Actually, the Bolsheviks had no political army ready in March 1917, nor could they have had one. The Bolsheviks built up such an army (and had finally built it up by October 1917) only in the course of the struggle and conflicts of the classes between April and October 1917, through the April demonstration, the June and July demonstrations, the elections to the district and city Dumas, the struggle against the Kornilov revolt, and the winning over of the Soviets. A political army is not like a military army. A military command begins a war with an army ready to hand, whereas the party has to create its army in the course of the struggle itself, in the course of class conflicts, as the masses themselves become convinced through their own experience of the correctness of the party’s slogans and policy.

Conclusion

Comrades and friends, how much less is that ‘political army’ of the revolution ‘ready to hand’ in Britain today – to the dismay of all the would-be drill-sergeants of the revisionist and Trotskyite ‘left’? Where is it to be found?

Let us leave it up to these gentry to search for their ready-made army in the dwindling ranks of the imperialist Labour party. We will do better to recall those prophetic words of Lenin, way back in 1904, in One Step Forward.

In its struggle for power, the proletariat has no other weapon but organisation. Disunited by the rule of anarchic competition in the bourgeois world, ground down by forced labour for capital … the proletariat can become, and inevitably will become, an invincible force only when its ideological unification by the principles of Marxism is consolidated by the material unity of an  organisation which will weld millions of toilers into an army of the working class.”

There can be no better way to celebrate the proletarian revolution of October 1917 than to study for ourselves the real lessons of October, the heroism of the revolutionary masses and the revolutionary maturity of the Bolshevik party that led them.

The firmer these lessons are grasped, the surer can we be that our celebration of Bolshevik history tonight is but a foretaste of the communist future for which we struggle.

Long live October 1917!

October revolution rally: speech by Mohammed Hassan (PTB)

Thank you very much. This is the third time I was invited here and the second time to celebrate and be with you on this special day of the October Revolution. I am honoured and am very happy.

The first time, I was a bit depressed. But for the third time, the second time of the October Revolution, I’m very happy. Happy for the simple reason that capitalism, imperialism, is in a serious general crisis. [Laughter and applause]

I live in a very small country, a small imperialist country. It’s called Belgium. I do remember, and I was watching, the day the Soviet Union was overthrown and the counter-revolution over the Soviet Union [took place]. The news: chancellor of Germany Helmut Kohl comes with two books. One, in the left hand, the book of Lenin – Imperialism – and in the right hand, Das Kapital, and then he was laughing and he said ‘The day of Karl Marx and Lenin is finished!’

I knew he was attacking me, he was trying to make me depressed, to take some medicine or whatever [Laughter], but I knew that capitalism cannot survive.
But a lot of people believed it. It is very difficult to teach and to explain to young workers – every  worker – women and men in the imperialist countries, about the Soviet Union.

I would like to share with you one aspect which was not mentioned: the achievements of the Soviet Union that were realised after the October Revolution, particularly under the leadership of Lenin and specifically comrade Stalin.
Stalin came from a very small, minute, nationality – Georgia. Is it possible for me to be a prime minister of this country? [Chair interjects: I don’t know, after Obama! Laughter]

The Soviet Union had a huge number of different nationalities. The Tsar, Russian imperialism and colonialism had abused and colonised, killed, eliminated, destroyed a lot of colonised nationalities within the Russian empire. But the Soviet Union could build and solve, for the first time in the history of humanity, the equality, the fraternity of all nationalities to live under one home with a new civilisation which is called the Soviet Union. [Applause] It never had been achieved [before].

We know that nationalism is a creation of the bourgeoisie and the bourgeoisie looks for the market and it fights for the money. That great home, that great civilisation [the Soviet Union] was not right [to the bourgeoisie]. The enemy is not only the one who is outside standing with a gun. The enemy also plays a lot of ideological enemies, infiltrators.

The Soviet Union, after the Bolshevik revolution, the October Revolution, everybody ganged up on the Soviet Union. Fifteen countries, including the United States, invaded the Soviet Union, destroyed everything that had existed there, and killed 10 million Soviet people, which later on, even, they used that killing and famine as if it was Comrade Stalin that had destroyed Ukraine in 1932.

Lenin says in his marvellous work, One Step Forward, Two Steps Back, ‘This happens to an individual: you make in life one step forward, you get drunk and you gamble, lose all your money, you divorce, you think too much, then you take two steps backward in order to come back. It happens to a nation, it does happen also to the class.’

The Soviets were invaded. All modern things were destroyed by the counter-revolution. Lenin says: ‘If there is no industry, there is no proletariat, let us concede.’ And that is Leninism, is Marxism, in the era of imperialism.

The tactic of Lenin, by introducing the New Economic Policy, NEP, was a temporary strategic withdrawal. But some crazy ones who are not really correct communists and Bolshevised in the party, believed that the NEP, the New Economic Policy, was in fact the policy forever.

Once Italian fascism took over in 1923/24, German Nazism was menacing, imperialism was in a crisis already by 1929, Comrade Stalin, he said: ‘If we don’t catch up, the gap between us and them is one hundred years, this beast will destroy us. Collectivisation and industrialisation [are what we need].’

When you just take one work of Lenin and you compare in his work, ‘Shame on America for the plight of the negroes’, in that wonderful work of comrade Lenin, the Afro-Americans today, the ex-slaves in the south, their literacy grade was higher than the Russian peasantry in 1918. When you compare Russia, the Soviet Union, in 1918, there was a 400-year gap between Great Britain and the Soviet Union. Have you ever seen a civilisation who closed the gap in eight years’ time? [Applause]

The Soviet people, they don’t exist anymore. Now they have become Chechens, Georgians, fighting one another one – tribes.

The richest man in Belgium is not a Belgian today; he’s a thief from Kazakhstan. [Laughter] Somalis, who speak one language, have one psychological make-up, one geographical territory, one religion, Islam, and even from Islam, sunni, and from sunni, one line, Maliki – they are now, today, clans and warlords, according to the imperialist media.

My country, Ethiopia, a poor country, or a country with a poor people but rich resources, sent troops when I was a young boy going to school. There was an Ethiopian musician who was singing about Ethiopian soldiers who were being brought in a train to go and fight on the American side in Korea. They died for nothing.
The nationality issues, the equality of people, it can only be solved under the Soviet type of system.

We know that most of our countries are multinational. Today, when you look in Africa, the imperialist media will tell you tribe X against Z, Z against W, W against this, while inciting and creating a proxy war. But one thing: they [the Africans] like a resistance that can shatter the American imperialist dream.

Afghani people resisting the unity of Nato provided the Pakistani people with the correct anti-imperialist leadership against these puppets who are trying to drag 140 million people of Pakistan into a serious problem.

Imperialism is seriously wounded. Comrade Harpal Brar is one of my teachers in one of his eloquent, wonderful works on ‘Capitalism and immigration’ in imperialist countries.

They don’t have children. In the city where I live, 100,000 people live, 30 percent of the population are pensioners. There are no children. In Spain, Italy [the same], by 2040, Russia’s [population] will be 30 percent reduced, Ukraine 40 percent. Not because people don’t won’t to have children, but because it has become impossible for young people to have a job, to have a decent shelter, they have to work flexible hours, they have temporary contracts.

I think that it’s not difficult; I wish I knew Russian to study. They have already now 18 years, the imperialist bourgeoisie, they have all the finest Soviet history, [but] they couldn’t even publish where are the 30 million gulags; they couldn’t produce even a film about it.

They used to inculcate us day and night that there was a famine in Ukraine, a deliberate famine and 10 million Ukrainians dead. There is no [evidence] today [of] that.

Young people in the imperialist countries have to be educated. I am happy for the young one, when she spoke, honest and decent. We, the older ones, we have to have the patience and we have to do all the maximum to win our young generation to realise our defeat and bring, as the Arabs say, for every oppressor class there is a day, and that day is the October Revolution. [Applause]

October Revolution rally: speech by Taimur Rahman (CMKP)

Thank you Comrade Harpal, and I’d like to thank the CPGB-ML for organising this great event.

People have stopped celebrating October it seems to me, and I think it very important to do so. And the best way to do so is to try and understand what socialism is about.

You hear this over and over again: Marxism is ‘economic reductionism’, Marxism is ‘economic determinism’, but actually, Marxism points to the one thing that is extremely important, which is that the economy really does determine and condition a lot of what goes on in society. Which is why today, to celebrate October, I’ve decided to talk a little bit about socialist economics in comparison with capitalist economics.

Now, the minute you mention socialism, you hear this tape running in your mind like Joti said, especially for our generation: socialism is equal to government, which is equal to lack of incentive, which is equal to inefficient; capitalism is equal to greed, profit motive, selfish motive and therefore it creates incentives for growth and it is equal to innovation.

This is the standard formula you get when you begin to study economics in O-levels and A-levels and it continues through university on to your PhD and so on and so forth. But in fact this is a load of, pardon the expression, BS. [Laughter]

The fact of the matter is that innovation, which is the bedrock of what drives the economy, does not occur because somebody or other sitting in their backyard decides to split an atom; clearly, you’d recognise that an atom cannot be split in your backyard!

Scientific innovation is really the product of research and development organisations, and the dominant research and development organisations in the world today, whether you look at the most advanced capitalist society or you look in the Soviet Union or anywhere else, you will discover that they are all funded by the government. None of them are under private control, whether you look at Nasa or anything else.

And the enormous spin-off of what we call the second scientific and technical revolution, the second industrial revolution, the creation of satellite technology, fibre-optics, [micro]chips, etc, etc that are used in computers and so many other things that we use in consumer electronics and so on today – those are all spin-offs of science technology that was created through Nasa and through other government-sponsored research and development organisations.

So this great worship at the altar of innovation is actually all occurring through government spending anyway. And this is something that is just obscured from everyone’s view.

The thing about socialist and capitalist economics is that there’s an interesting paradox. Everyone knows that the Soviet Union managed to defeat the largest army assembled in its day, which had the combined economic power of all of continental Europe behind it; that is, the fascist armies Germany, Italy and so many other countries. They defeated them all – one single country, one socialist economy with several republics within it – and then after that, and the devastation caused, in which 20-25 million people lost their lives in the Soviet Union and something like 70 percent of industry was wiped out, they rebuilt it all and became another superpower.

If I go back into history, they went through World War I, they went through a civil war, and each time, that society was entirely destroyed and then once again they were a superpower. How did they accomplish these fabulous miracles?

And then, suddenly we discover, in the 1970s and 80s, Gorbachev comes along and says ‘The Soviet Union is in crisis’. Why was the Soviet Union in crisis? Because, according to Gorbachev, it was no longer catching up with the West at the same rate as it was doing. It’s still catching up with the West, but it’s just not catching up with the West as fast as it was catching up with the West before. That was the big crisis.

Let’s accept Gorbachev for now. Why did the Soviet Union gradually slow down in terms of its economic development and growth?

For this, we have to go back to the reason why it grew so rapidly.

There was a time when the bourgeoisie required the mobilisation of workers and peasants; they made everything quite simple and said: ‘This is what we need; we need to get rid of that king, so come join us, we’ll get freedom, we’ll get democracy, come join us.’

Now is not that time. Now is the time that the bourgeoisie wants to make everything complicated. They don’t want to explain things to workers and peasants because they don’t want workers and peasants to be mobilised, and I can find no better example of this than in the field of economics, in which every little thing is completely obscured, abstracted into various mathematical formulas from which you can’t get your head out of [Laughter], so you don’t understand anything that’s going on.

Actual economics is really simple, and people just like making it very complicated. Even Marx’s Capital is actually very easy to understand. The language is difficult; he writes in German, his sentences go on for three pages [Laughter] – that’s what makes it hard! – but the concepts themselves are actually not hard at all to understand.

What drives growth? That’s the central thing that I want to get at today. What drives growth, ie, productivity, the capacity of society to produce more and more, is the fact that humanity creates, through social labour (all labour is social) implements, tools and machines that help humanity mobilise nature in a manner that is beneficial to humanity. That’s economic growth in a nutshell.

It’s not very complicated, is it? It’s just tools. It’s just machines. The development of tools and machines is economic development.
Now the thing about capitalism is that the very process that develops tools and machines and introduces them into the economy simultaneously displaces scores and scores, sometimes millions of workers from the economy, because machines take the place of workers, and unless new investment comes in, more and more workers will be displaced by machines.

So this means that the very process which increases the capacity of society to grow simultaneously decreases the capacity of society to purchase on the market what has been produced. And this causes a recurrent economic crisis.

Every time you go through the introduction of new machines into society, new technology into society, and you displace hundreds and thousands of people from the market, what is the result? There is a slump in demand and capitalists can’t sell their commodities, and as a result, you see economic crisis such as the one you’re witnessing today.

So how does socialism work? In socialism, in fact in every society, whether it’s capitalism or socialism, a certain percentage of your revenue or your ability to work (which is one and the same thing), is reserved for reinvestment into the creation of machines.

So, for instance, if we were one society [indicates audience in hall], we could say that these 10 people will be responsible for producing new machines that the other 90 people will be using.

In capitalism, the way that we determine whether it’s going to be 10 people or 20 or 50 that are going to be producing these machines is through the market mechanism of profit. And that is, that all the capitalists want to earn as much profit as they want to, so they will only build machines, and they will only build the type of machines, which earn them profit. That’s the bottom line. They will not build machines that will help people; they will build machines that will earn them profit.

So it is what Marx called the normalisation of the rate of profit (the equalisation of the rate of profit Adam Smith also talked about), which determines where that savings and reinvestment is going to go.

But in socialism, you don’t have to do it through the market; you can do it through a central plan. We can all get together and we can decide: ‘Ok, what we want to do, friends, in order to develop our society, is to increase the number of enterprises that are producing machines that are going to boost the productivity of our society.’

This is what Stalin called, very briefly and simply, the production of the means of production.

So the purpose of a planned economy is to increase the production of the means of production. Just think about it, it’s actually quite intuitive. Let’s say that these 10 people here were producing tractors and the rest of us were all peasants and were working the fields. Now, in a capitalist economy those 10 people would only produce enough tractors that they can sell them at a profit and that is what is going to determine how many tractors are going to be produced, when they are produced and how they are sold.

If we now suddenly overthrow the capitalist government and we have a socialist society, we can decide it’s not going to be 10 people that are going to be producing tractors, why not get all these 50 people on this side of the room to produce tractors. In fact, let’s forget about producing these tractors for a profit, for a profit we could maybe produce 50 tractors a year, now we are going to produce 150 tractors a year. Moreover, we are just going to give them out for free. Anyone that organises a collective farm can get a tractor.

Now, for all the capitalist economists, that doesn’t make any sense, they’re asking: ‘Why are you running all your tractor factories at a loss? You’re not making a profit! There’s no incentive, it’s all coming apart! Ah, the world is falling!’ [Laughter]

But think about it from the view of the entire economy. When there were only 50 tractors produced, or whatever the number it was that I spoke about earlier, the growth out of 50 tractors was going to be, say, 100 percent. Now that there are going to be 150 or 200 tractors, the growth is going to be three or four times that amount. Because the tractors are going into the fields and they are going to produce that much more. It’s really that simple.

So, what may be an economic loss to the individual enterprise producing the means of production is in fact of enormous economic benefit to the economy as a whole. That is why, during times of war, even capitalist governments decide to take industries, nationalise them, run them at a loss and ensure that thing is produced, that the thing that is required is produced in sufficient quantity. Mostly I am referring to the war industry, which is never run at a profit but run under a planned economy.

So, this is how the Soviet Union managed to perform its economic miracles. If you read Stalin’s great book Economic Problems of Socialism in the USSR, he says that the way to build socialism is to take those industries that are producing consumer items, take the extra revenue from those and cross-subsidise those industries that are producing machines, producing the means of production. And when those means of production go back to the consumer industries, everything is just going to grow.

And that is exactly how it performed their economic miracles.

In other words, sector A industries, the ones that are producing consumer goods, cross-subsidise the sector B industries, the ones that are producing the means of production. It’s just that simple, comrades.

With respect to China, Vietnam, Pakistan, India, the third world, there is a consistent problem of underdevelopment. It could be just that simple as well, if we could understand that we need to cross-subsidise those industries that have positive growth. In order to do that, you need a planned economy.

What happened in the Soviet Union with the rise of opportunism, what Mao Zedong calls modern revisionism, was that, somehow or other, these really important aspects of a socialist planned economy were thrown overboard. Instead, in their place was introduced the notion that every individual enterprise, not the economy as a whole but every individual enterprise, must run at a profit.

These were called the Lieberman reforms in 1965. Ninety thousand industrial units of the Soviet Union from the main industrial units, with the exception of the military, were under this plan reorganised. They were separated from the central plan, and the principles upon which they were reorganised were that the enterprise, instead of the plan, which was the case previously, would be the basic unit of the socialist economy.

In this, they said, in the new economy, the increased the role of profits increased the ‘real incentives’, which basically amounted to nothing other than increasing the incentives of mangers, middle men and technical managerial intelligentsia.

They said that development funds would no longer be supplied by the Gosplan, by the central bank, by this method of cross-subsidisation, but should be supplied either through loans, credit, or should be generated by the enterprises themselves. They thought that by increasing the rights of factory managers, they could somehow incentivise these factories to produce more.

In fact, they did the very opposite. They slowed down their own economic growth, gradually, even though the Soviet Union still grew at a phenomenal rate, but they slowed it down. They fractured up their social revenue into 90,000 little parts instead of centralising it all and utilising economies of scale, centralising all that scientific knowledge, centralising that revenue, utilising economies of scale to build bigger and better things.

They fractured their social revenue into 90,000 units, which is the number of enterprises that they had at that time, and, as a result, the economy slowed down. And when the economy slowed down, that slowing down of the economy ironically was used by what I would call liquidationists within the party, trying to destroy the party, to further justify the break-up of the Soviet Union, the break-up of socialism, the destruction of the planned economy and the eventual destruction of the soviet state.

The lesson to be learnt is, well, first of all, let’s call things by their right names. The Lieberman reforms were a step back toward capitalism, although they were at the time called a step toward socialism.

Every single step back from socialism since the 1950s has been covered up as a step forward towards socialism. Whether that is the new left, the Frankfurt school of thought, whether that is within the communist party, whether it is post-modernism, post-structuralism, all these things, all this ‘great advance’ is actually a step backwards. It’s always undertaken, because of the dominance of Marxism over the entire intellectual world, it’s always been justified as an ‘advance’.

This retreat, which caused the slow-down in the economy, was used as further justification for the complete break-up of the Soviet Union in 1991.
We must learn from this history and we must conduct a ruthless ideological war against those people, those trends, those political ideas that pretend to be part of the working-class movement, but are actually representatives of ruling-class ideas within the working class.

Thank you very much. [Applause]

Reply to Taimur’s speech by Harpal Brar (CPGB-ML)

Precisely because these reforms were a step backwards to capitalism, rather than a step forward in the direction of what Khrushchev used to call the ‘higher stage of communism’, which they were going to achieve within 15 years, that’s why they malign the central planning during Stalin’s period of time by some lured stories.

If you read those stories, it sounded as though Stalin had steel for breakfast, more steel for lunch and even more steel for evening meals. And this because he was the evil-minded dictator who wanted to starve Soviet people of articles of consumption.

What people don’t realise is, as Taimur has told us, you can’t even actually expand on a large scale the production of the articles of consumption unless you’ve got the means of production to produce it. What’s more, the machines that produce those means of production, particularly machine-building industry, metallurgical industries, chemical industries, etc. You need all those.

Everything was on track in the Soviet Union, which is precisely why, between 1928 and 1941, June 1941, when the Soviet Union was attacked, her economy has actually gone up by ten times. After the devastating war, the Soviet Union rehabilitated its economy by 1948. From the middle of 1945 to the end of 1948 they had rehabilitated production to the pre-war level.

Then from 1948-51, the Soviet Economy had doubled in size again. Now, the stupid idea is that innovation took place in the Soviet Union because Stalin took a gun and said to their scientist: ‘You will produce this.’ Try and take a gun elsewhere! Everyone knows that Tsarist Russia was not bad at using guns. Why did innovation not come to Tsarist Russia and why to Soviet Russia? Precisely because of the collective efforts where people helped each other in solving the problems.

October Revolution rally: solidarity message from Vietnamese embassy, Nguyen Chinh Phong

The video of this speech can be found at the CPGB-ML YouTube page.

Dear comrades, our ambassador to the UK was very happy to receive the invitation to this meeting to celebrate the October Revolution organised by the Communist Party of Great Britain (Marxist-Leninist), and he asked me to be here on his behalf.

We are very happy to have a meeting with our beloved comrades today. This is the first time that I have joined a meeting like this in London. I’ve stayed in London for three years, but we didn’t have much chance to get in touch with each other, so I’m very happy to be here with all of you. [Applause]

The Vietnamese people, under the leadership of the Communist Party of Vietnam, at this moment are carrying out the policies of Doi Moi, which means ‘change’, in order to build up the country after a very long war.

Now we have achieved quite a lot of development, economically as well as socially. We have worked with many countries in order to attract foreign investment into the country in order to build up a strong economy and satisfy the needs of our people.

Some of you may know that in March this year Prime Minister Nguyen Tan Dung paid a visit to the UK, as well as Germany and Ireland. The connection between the UK and Vietnam is going well and is very active.

The October Revolution was, as Harpal just said, a unique revolution in the world. It opened a new era for the working class. Every year in our country, we always organise celebrations of the October Revolution and working people join in, in order to remember that very special revolution that opened a new era for our time; that opened the way for the working class to grow up and take the power and to build up an ideal society all over the world.

Thank you very much. [Applause]

Reply to Vietnamese comrade by Harpal Brar (CPGB-ML)

Thank you very much for coming and delivering this message on behalf of his Excellency the Ambassador for the Socialist Republic of Vietnam. We are very pleased to see you.

I am, perhaps, too young to remember anything about the Chinese Revolution, but I am old enough to remember about the Vietnamese Revolution.

When I came to this country, the Vietnam war was at its height, and I gained my political education to your country’s heroic efforts in defending your sovereignty and fighting for an advance forward. I was very much impressed, as indeed were all the comrades in our party, by what you have contributed by way of the defeat of Japanese imperialism, French imperialism and American imperialism, and we grew up shouting the name of Uncle Ho all over the place, and I want you to remember that. [Applause. Comrade Phong stands up to shake Comrade Brar’s hand]

Whether we have met before or not, I want you to take this message: we have always been friends of the Vietnamese people, and of their revolutionary struggle. We wish you well in improving the lives of your people, who fought for 40-odd years against various imperialisms, and perhaps much longer, ever since the colonisation of Indochina.

What you are doing for your people has our support; we hope that you are able to build a very prosperous society for the Vietnamese people, where every man and woman can stand with his or her head held high and be the members of a free society, rather than being subjected to oppression and exploitation by imperialism.

We are very, very pleased [to see you here]; Vietnam for us – at least for me – has a very special place, so let us not lose this contact; I hope we will be meeting each other again soon.

Thank you very much. [Applause]

October Revolution rally: solidarity message from DPRK embassy, Song Chol Jang

Transcribed from the rally held in Southall, London on 8 November 2008 to celebrate the 91st anniversary of the October Revolution. The video of this speech can be found at the CPGB-ML YouTube page.

Thank you, Harpal, for your wonderful and inspiring speech about the October Revolution and our Korean achievements.

As always, on behalf of my ambassador and all the other staff, I would like to express my sincere thanks to all the members and activists of the CPGB-ML on your support for our Korean revolution and the solidarity you’ve shown in our difficult times. Thank you very much.

On this occasion, also, I would like to congratulate all the members of the CPGB-ML on this very auspicious occasion of the [anniversary of the] October Revolution.

The great October Revolution in Russia, nearly a century ago, opened a new age for revolutionaries, for the working-class and progressive people all over the world, and gave them a bright hope. I think we can still hear the guns and cheers and see the red flags flying in the sky and feel the enchanted moment of that day, November 7th, 1917. [Applause]

The great October Revolution proved that the working class, when guided by correct and just ideology, and the wise leadership of their outstanding leader, could defeat the reactionaries of history – anti-revolutionaries – and thus build a new society and a new world.

The justness and vitality of the October Revolution has been proven throughout history. Comrade Harpal explained that very well in his speech: the socialist revolution and construction of socialist society in the Soviet Union, the defeat of fascism in World War II and the consequent victories of the socialist and people’s democratic revolutions and anti-imperialist national-liberation struggles throughout the world – Asia, Latin America, Europe and Africa.

And the Workers’ Party of Korea and the DPR of Korea have always regarded the October Revolution as an immortal achievement of not only the Russian communists and revolutionaries, but also of the Korean and world progressives and revolutionaries. [Applause]

Our party and government does continually safeguard the spirit and the principles of the October Revolution, through ups and downs, and, I think, will do the same in the future too.

Let me finish my short speech by reading an excerpt from a great work by Comrade Kim Jong Il, with a very touching anecdote from 2001 by him. You may all remember the work, but I will just repeat. It is a work written by him in 1996: ‘Respecting the forerunners of the revolution is a noble moral obligation of revolutionaries’.

“The cause of independence for the popular masses, the cause of socialism, is a national, and at the same time an international, cause. The Korean revolutionaries are genuine internationalists; they respect the revolutionaries, anti-imperialist fighters, anti-fascist fighters, progressive figures and revolutionary people of all countries, irrespective of their nationality, and duly appreciate their achievements.

“Our party and people respect Marx, Engels, Lenin and Stalin as the leaders of the working class and speak highly of their distinguished services. Reflecting the demands and aspirations of the working class, Marx and Engels, the first leaders of the working class, developed socialism from a utopian concept to a science and started the socialist and communist movement.

“Lenin inherited and developed Marxism to meet the change in the times and won the victory of the October Socialist Revolution by organising and mobilising the working class.

“Stalin, succeeding to the cause of Lenin, built the first young socialist state into a world power and defended the socialist fatherland from the fascist invasion, leading the army and the people. In their days, Marx, Engels, Lenin and Stalin represented the aspirations and demands of the exploited working masses, and the cause of socialism was inseparably linked with their names.

“The fact that imperialists and the traitors to the revolution viciously defame the leaders of the working class and abuse their leadership as ‘dictatorship’ or ‘infringement on human rights’ only proves that the leaders of the working class were zealous champions of the people’s interests and enjoyed their trust and support.” [Applause]

“Although the opportunists and the socialist renegades defaced the honour of the leaders of the working class and the revolutionary pioneers, they can never wipe out their names and their worthy achievements from history.

“Just as socialism is alive in people’s minds and is opening up the path to a new victory in spite of temporary twists and turns, so the honour and accomplishments of the leaders of the working class and the revolutionary forefathers be respected forever by the people as the socialist movement advances.

“Our party and people treasure friendship and solidarity with the peoples of various countries around the world and have given active support and encouragement to people who are fighting for socialism and for the cause of anti-imperialist independence.

“We have invariably been true to the internationalist principle and revolutionary obligation, both in the party and state relations with the socialist countries and in our relations with all the friendly countries and friendly people” like Britain.

“We remember our revolutionary comrades-in-arms and fraternal people who gave our people unconditional help and support in the hard times of our revolution and construction of socialism, and also people of all countries who support and encourage the just cause of our national reunification.” Thank you. [Applause]

And one last anecdote to prove this theory and principle. When our respected general visited Russia in 2001, he visited Red Square to pay a tribute to Vladimir Lenin, the leader of the Great Socialist October Revolution. I think this anecdote will tell everything about his work and his ideology – everything. Thank you very much. [Applause]

October Revolution rally: speech by Joti Brar (CPGB-ML)

Transcribed from the rally held in Southall, London on 8 November 2008 to celebrate the 91st anniversary of the October Revolution. The video of this speech can be found at the CPGB-ML YouTube page.

I’m going to talk a little bit more from the perspective of someone of my generation: what does October mean to me, and why do I think it should matter to other people like me?

You know, I’m a pretty normal(ish) middle-class, mother of one – perfectly good job, got a house, got a family – so why is it, living in the imperialist heartlands, that I should give a monkeys about the socialist revolution, and about standing here today to celebrate the 91st anniversary of the October Revolution, something that happened thousands of miles away, 90 years ago to people very far removed from the kind of life that I’m living? [From the floor: I quite agree with you!] (Someone agrees: why do I?!)

Now, I grew up at a time of rampant anticommunism; I grew up in Thatcher’s heartlands, one of ‘Thatcher’s children’, as our generation were called. We were taught to be selfish, we were taught to believe that it’s the law of the jungle, it’s a dog-eat-dog world, and that capitalism really is the ultimate expression of ‘human nature’, and that by being selfish, by thinking only of yourselves, by just fighting for you – and maybe your offspring – you are just reflecting reality, and that if society teaches you to be that way, it’s because that’s how people are.

Bourgeois ideology was truly in the ascendant when I was growing up, and there was no-one really countering this barrage of propaganda.

We had English literature lessons where we read Animal Farm and learned to repeat that Stalin was a crazy, murdering, stupid butcher and Trotsky was the true leader of the revolution. We had history lessons where we learned that Trotsky led the Red Army to victory and Stalin somehow hoodwinked and then later personally bullied the Soviet people into following him.

What was the aim of all of this? The aim was to teach us that revolution is pointless; that, no matter what your intentions, if you try to change society, it will go wrong; and to negate the real building of socialism in the Soviet Union by slandering the leader of that building. By slandering Stalin, by telling you that Stalin was an evil murderer, they basically say that everything that was achieved in the Soviet Union wasn’t achieved; it didn’t happen; it wasn’t true.

We were taught all sorts of stupid truisms that we just learned to repeat. These things become axioms because people say them often enough: ‘power corrupts; absolute power corrupts absolutely’. They’re the kind of things people say to you and they think they’ve clinched the argument; they don’t have a clue what they’re talking about, but they’ve learned to say them over and over again, and whenever you talk about socialism to people, they come out with the same things: ‘It’s a nice idea in theory, it could never work in practice’; ‘It’s never been done, has it?’

And people can say ‘It’s never been done, socialism’s never been built’ because we’ve been taught all these lies about the Soviet Union and about Stalin’s leadership of the Soviet Union.

Anti-Soviet slanders are in every field of life. I did a music degree and it’s amazing how it creeps in. You wouldn’t think you could go and study music at university and several times a week get some kind of anticommunist slander, but we did.

The great music of Stravinsky and Shostakovich was produced at the barrel of Stalin’s gun! [Laughter] Somehow or other, they made great music – it would have been much better if Stalin hadn’t been there, obviously; if they’d managed to escape to the West, which was obviously what really wanted to do, everything would have been much better for them!

The fabulous child care and maternity provision provided by the Soviet Union? The children were treated like automatons! Their mothers were forced to work! The profession care was impersonal and uncaring!

All the artists, musicians, dancers, gymnasts, athletes that were produced in such amazing quality by the Soviet Union? They were coerced! They were overtrained! It’s not really human to be so good at things … [Laughter]

The victory of the Red Army over fascism? The soldiers were starving! They were forced to fight! Their best commanders had all been shot by Stalin, probably personally! [Laughter]

And to cap all of this hostility from the official sources – from the press, from the school curriculum, from the media – we grew up with a left-wing movement that was pretty much saying the same thing – denouncing and disowning Stalin and all the achievements of socialism.

People in the trade unions, people in the Labour party, the Socialist Workers’ Party, the Communist Party – these were the people who you came up against, who told you they were socialists; that they believed in the working class – they all agreed. When I was growing up, whichever one of these shades of ‘left’ you cared to talk to, they would all tell you: Stalin was a mass murderer, probably Mao was too, and Kim Il Sung the same; socialism has never been put into practice anywhere; Marx wouldn’t have approved of Lenin’s revolution; Lenin wouldn’t have approved of Stalin’s building of socialism.

So essentially, every step of the way, our generation – and probably several before and several after – have been demoralised; they’ve been cut off from their own heritage; cut off from the knowledge that another world is possible and that they’re capable of building it. [Applause]

They’ve been cut off from the science of revolution and from the ideology that offers them hope for a future free from war, poverty, unemployment, homelessness, degradation and disease.

Such has been the success of this sustained propaganda campaign, that even the few socialists that did defend the Soviet Union when I was young didn’t do a very good job of it. We’ve been taught to feel so culturally alienated [from the Soviet Union] that it’s hard to bring it to life; it’s hard to believe it’s really as good as we wanted to say it was.

The repeated assertions that I talked about earlier create an atmosphere of overwhelming associations about what life in the Soviet Union and eastern Europe was like: inhospitable, joyless, we think of gulags in Siberia, everything was grey, everybody was a bit of an automaton, there was no choice, there was no inspiration, there was no magic to life.

Stalin’s name is a swear word; you can’t use it, it’s synonymous with fear and loss of liberty, with the evil KGB, and with a Big Brother culture, so that even those who’d understood in theory that yes, socialism is a good thing, and think that probably what happened in the Soviet Union might have been alright, they couldn’t find the enthusiasm, they couldn’t overcome this barrage of propaganda that had been instilled into them – all this prejudice – to find out for themselves, and to actually stand up proudly and say ‘You know what? This is nonsense! This is not the truth about socialism; this is not the truth about the Soviet Union.’

But we do need to understand the significance of the Soviet Union. We need to read works of literature produced in the Soviet Union. They bring to life life under socialism like nothing else can. And we should read books about the years when socialism was being constructed in the Soviet Union. Novels like How the Steel Was Tempered by Nikolai Ostrovsky, The Zhurbins, Ivan Ivanovich, or books like Soviet Democracy or The Stalin Era; books that describe the life of ordinary people at a time when the Soviet Union was going from strength to strength.

From the time of the revolution up until the time of Stalin’s death, if you read these works of literature, if you read the works of eye witnesses, [you find out that] the Soviet Union was the most incredible place to live, and the Soviet novels illustrate really beautifully how socialism can unlock the tremendous creative powers of working people, imbue them with a spirit of enthusiasm for their work and with a feeling that they really can achieve anything that they put their minds to.

We need to disseminate these works and ideas; there’s a much bigger audience for them than you might think, especially now.

At this moment now, the crisis of capitalism is really providing the best opportunity that I’ve seen in my lifetime to talk to people. Suddenly all sorts of people who wouldn’t have been able to get past the word ‘socialism’ and hear anything else that came out of your mouth – today you can talk to them about child care in the DPRK; you can talk to them about the building of socialism in the Soviet Union and they’ll listen to you; they want to hear; they’re interested in answers now.

For a long time, people here haven’t had such bad lives, and when things were getting worse for them, they believed what they were told. Comrade Brar referred to it earlier – when Gordon Brown, Tony Blair, Margaret Thatcher turned around and said, ‘Well, you know, of course, we’d like to provide you with a perfect education system, perfect health care, but these systems are under strain, we just don’t have enough resources to go around; we can’t just be giving things out willy nilly; we can’t just provide houses to everybody – where will the money come from?’

Where will the money come from? That’s what we’re always told. And it’s an unanswerable question. Where will the money come from? Oh, well, ok, fair enough, there’s not enough money, so that’s just the way things are, right? And people have swallowed that.

But it’s very hard to swallow that when suddenly £500bn is found for the banks – out of nowhere, apparently! [Applause] And I think that’s been the most incredible wake-up call for everybody. While they see that their pensions, their health care, their education are all under threat, that they cannot rely on their pay packet being there next month, that they cannot rely on their house being there next year, but that actually money can be found for the things that matter to the ruling class – and suddenly you see what are the things that matter to the ruling class and what aren’t.

My generation was taught to be nihilistic and cynical, and yet, however much we’re told that that’s the normal way to be, we fight it! If human nature is to be selfish and greedy, why doesn’t being selfish and greedy make us happy? Why doesn’t it make us feel good about ourselves? Why is it that we search for some other meaning in our lives? [Chair interjects: That’s also part of human nature! Laughter]

Why is it that our grandparents look back so fondly on the second world war, a time of such hardship? They talk about the ‘war spirit’. What was the war spirit? It was the collective spirit.

The reality is that people are collective animals; we feel best when we are contributing to something that isn’t just yourselves, our own little lives in our own little boxes. We feel happiest when we are working for something that feels like it means something bigger; we feel happiest contributing to society.

But we don’t get that opportunity. We look for it; we try to find it; we try to tell ourselves that our jobs are meaningful and we feel bad if we can’t find a way to believe that.

Even those who are comparatively wealthy in our society don’t feel it. They don’t feel it because there’s constant insecurity. Even quite well off middle-class people are only a couple of pay packets away from destitution, from defaulting on the mortgage, from losing out on their pensions, from not being able to provide their children with what they need for a decent life.

And that’s in the good times! And as we see now, you can’t rely on the good times. You play the game according every way you’ve been taught and you win, you’re one of the lucky few who does everything you’re told and it works out for you – you’ve got your savings pot, you think you’ve got what you need for your pension, you’ve invested in a few properties.

But tomorrow, maybe the properties aren’t worth anything, maybe the money in the bank isn’t there any more, or it isn’t worth anything any more; maybe suddenly tomorrow you have to pay for health care you didn’t have to pay for before, or your pension’s taken away from you.

You can’t rely on anything under capitalism; there’s no such thing as security no matter how hard you work, no matter how much you accumulate. And that’s why, no matter how much people do accumulate in this society, as they’ve been taught to – accumulate to find happiness – they don’t feel happy; they don’t feel comfortable.

It’s the secret of middle-class whinging – all these well-off people who always have something to moan about! Everybody thinks if they had ten grand a year more, they’d be happy. But the people the next ten grand up, they’re not so happy either – they think they need another ten grand!

And then we compare that with the picture of life in a socialist country. Can you imagine living in a world where every job makes a contribution to building a better life for people? That in itself would be such a great motivator and inspirer! That in itself would unleash the creativity of so many people, bring out people’s natural collective spirit.

It’s very interesting to me; I recently spotted a bit of a pattern. We met a comrade from China and he was talking about life in China and achievements of the Chinese people in the last 50-60 years, and he said to me, ‘You know, we Chinese, we like to do things for ourselves; we don’t like to rely on others, we don’t like to exploit others, we like to build things ourselves – it’s just what we’re like. It’s because we’re Chinese.’

And we were watching a film about the Cuban revolution, and there was a Cuban bus driver, and the interviewer was asking him about the problems with the transport in Cuba because of the blockade, lack of petrol, lack of spare parts, and he said, ‘You know, we’re Cubans, problems are to be solved! It’s because we’re Cuban – we find solutions to our problems, we don’t moan about them, we get on with it, we fix things.’

And I bet if you’d gone to the Soviet Union, you’d have heard something very similar. North Koreans will talk about their self-reliance, their pride in being Korean and achieving things by themselves for themselves.

Now I hope our comrades from these countries won’t take it amiss when I say to them that my belief is that it’s not because they’re Korean or Chinese or Cuban that they feel this way about their people, about their country, about their lives; I think it’s because they live under socialism. [Applause]

I think a socialist society inspires them to build and to achieve; it makes them feel valued, it makes them feel part of something, it makes them feel that their work is useful. They can see the fruits of their labour in front of them and it comes back to them and to their neighbours a hundred fold.

Imagine never having to worry about paying the rent; never having to worry about health care, education provision for your children, university fees.

Imagine never having to worry about whether or not you’ll still have a job tomorrow; never having to worry about whether there’s going to be food on your table or your children’s table today or tomorrow.

Cuba’s achievements in the fields of health and education are relatively widely known now, but it’s not so well understood that it was the Soviet Union that pioneered all of that.

It was the Soviet Union that was the first to provide these kind of things – and that at a time, not only when they had just fought a very debilitating war – first the revolution, then the civil war, then the war of intervention – but when the rest of the world was going through the great depression – the mirror of the crisis we’re having now.

The rest of the world was plunged into total poverty, but the Soviet Union was going from strength to strength; they were providing facilities – first class, world class facilities – for ordinary working-class people of the kind that before then had only ever been dreamed about.

Like the Soviet Union before it, if you go to the DPRK today, something that hits people when they go there (and I’m sorry to say I never have yet, but it’s something that’s always related to me when I talk to people who have been) is that there are no advertisements on the streets. Can you imagine a life free from that bombardment of rubbish?

You don’t appreciate how much it oppresses you and weighs down on your mentality – all the time, in your face – you have to learn not to look around you; learn to walk around in your own little bubble to keep it out, blaring out at you. You’re not even free from it in a petrol station forecourt, in Sainsbury’s – they’re advertising at you non-stop, all the time.

To live in a place where not only do you not have that, but instead you have people’s art in the streets; celebrations – statues and posters – artwork celebrating the achievements of you and your fellow people.

Ordinary people’s buildings made beautiful – turned into palaces. They have children’s palaces in Korea, and the Soviet Union did just that sort of thing, constructing the most incredible, artistic buildings where ordinary people were every day, like the underground system in Moscow; places where ordinary people go made beautiful, to uplift them, to make them feel respected, valued; to make them care about their society and feel that they in turn were cared about.

Comrade Brar’s already talked about how the Soviet Union provided for mothers and children. It’s something you can’t underestimate the impact of – and so far in advance of the rest of the world. It’s the first place where they really showed that the liberation of women is about practical things – it’s not just about allowing women to take part in jobs, but freeing them to do so: providing the best possible child care, where you feel happy to leave your children; providing huge amounts of paid maternity leave, both before and after the baby’s birth, for the optimum health of the mother and the baby. I was reading recently how as soon as they knew a woman was pregnant, they’d move her into easier physical work if she was in something that was quite taxing. The day the baby and the mother came home from the hospital, who came to see them? Not just the nurse – an obstetrician! In the house!

They really, really cared about the health of women and of children. They set up crèches, laundries, kindergartens, public dining rooms – all the services that Comrade Harpal talked about before – to free women and allow them to really take their place in society, and to give children an equal start in life.

There was recently a report published by the World Health Organisation. It talked about health inequality in the world, and the conclusion that they [the authors] came to – well, the conclusion between the lines was, we need socialism! [Laughter] – they said: people need jobs, they need decent housing, people need access to culture.

They talked about illness prevention, which of course was the core principal tenet of the Soviet medical system, and they talked about children needing an equal start from the beginning.

They talked about the importance of pre-school education; they talked about the importance of involving the whole community in that type of pre-school education – it’s not just a question of sending them off to a kindergarten for a couple of hours and bringing them back again, but a whole community really needs to take part in that.

But you need to have a community to do something like that; people need to be organised as a community in order to implement those kind of programmes. There are only socialist countries in the world today that do that – it’s only in Cuba, it’s only in the DPRK where you see those kind of programmes in action – and it was in the Soviet Union that you saw them first.

Imagine living in a world where education throughout life was the norm; where opportunities to develop your potential are provided as a matter of course to everyone, at no cost, with no penalty to your family if you decide to take them up or to have a change of career – where you don’t have to worry whether your children are going to eat if you need to retrain.

We live in a society that criminally squanders and suppresses the creative and productive potential of the vast masses of humanity. Even the best off workers often feel isolated and insecure, and the vast majority are only ever one or two pay packets away from destitution.

None of the main contradictions of imperialism can be solved without proletarian revolution. We will never have job or housing security or secure pensions as long as imperialism exists.

Our job as socialists under capitalism is to use the daily and hourly crises of imperialism to expose the system and explain to workers that as long as this system continues the rich will get richer, the poor will get poorer, the crises will get deeper, the wars will become bigger and bloodier.

October showed us we have nothing to lose and everything to gain from the socialist revolution, which will free us all from poverty and insecurity. [Applause]

October proved that work under socialism is transformed from meaningless drudgery into a vehicle for unlocking the potential and creativity of the working class.

And it was October that proved that while imperialism continues to oppress and plunder and drench the world in blood, there is only one thing that can usefully be done with your life, with my life, with anybody’s life, and that is to join the fight against imperialism, to join the fight for more Octobers. [Applause]

Reply to Joti’s speech, Harpal Brar

Thank you very much Joti, but you were quite wrong in saying that I’d spoke your speech earlier; it’s quite different. And to the extent that there is some repetition, then I think it’s perfectly alright. As the old Latin saying goes: Repetition is the key to learning!

You have talked of the power of advertisements. We must advertise our ideology – the more often we speak about it, the better. I hope each speaker will be able to repeat some of the things, because they are essential.

We are in a minority and we’ll never become a majority unless and until we actually continue to insist on speaking the truth, whatever the cost.

We’ve somehow been thrown back in the imperialist centres to being in a similar position to that of the early christians – you know, you’re hounded from place to place, but you’re nevertheless able to convey what they used to call ‘the lord’s message’. [Laughter] In our case, it is the message of the working class.

We are the majority. Why are we such fools that we accept the propaganda of the tiny minority that actually keeps us in subjugation? We shall not accept that as being the fate of humanity.

October Revolution rally: solidarity message from the Marxist-Leninist Communist Party of Turkey and Northern Kurdistan

Transcribed from the rally held in Southall, London on 8 November 2008 to celebrate the 91st anniversary of the October Revolution. .

Thank you very much. It’s a great honour to be with you today delivering the message of the Marxist-Leninist Communist Party of Turkey and Northern Kurdistan.

October is the future of humanity. It has been said that we have called the 21st century with the defeat of socialism, but yet we are here again, discussing socialism and wanting socialism. Because the world today needs socialism, humanity today needs socialism more than ever and more than everything. [Applause]

Look at the world roughly: imperialism’s financial crisis; wars in Iraq and Afghanistan; hunger, poverty and death in Africa; racism in Europe. Alongside this, we see mass unemployment all over the world. Capitalism is unable to solve these problems.

Through looking at the successes of the October Revolution, we can understand why humanity needs socialism, but looking at the countries of the destroyed Soviet bloc – Russia, Romania, East Germany, Poland – will give us the same result. We have all seen how the mafia, unlawful living and working, sex slavery, begging, homelessness and national conflicts have rapidly grown and are continuing to grow in these countries.

This is the general look of the capitalist world, but it is obviously not limited to only this.

However, there are enough resources in the world, enough machines, labour power and factories. All the labourers, all the oppressed people in the world, could live in healthy homes that see the sun; their children could be educated in high quality schools; they could live without the hospital queues which they have to live with today.

We can see that the oppressed people of the world cannot find these conditions in the current society under capitalism.

October brought the world which the oppressed people wanted, because it was directly formed through the will, power and struggle of the oppressed people. October brought peace to humanity, national freedom and equality; it became the name that suits humanity in production to have an education.

October is the future of humanity. [Applause]

The October Revolution clearly shows that the bourgeoisie is extra in this world; it is a weight on the shoulders of humanity; it is unneeded. October showed us that we can get rid of it.

October has shown us that the only way to get rid of the bourgeoisie as a social class is through removing the private ownership of production vehicles.

Palestine, Iraq and Kurdistan are places where the national problems are still continuing, which capitalism is unable to solve. October had the best solution to these types of problems.

The bourgeoisie has a wide propaganda about the violence of the October Revolution and Soviet socialism. What we have to say about this is very short and very clear: if we are to talk of violence and barbarism, the violence October used against its class enemies looks very tiny when opposed to the violence used by the USA against black people in history. [Applause]

If we are to talk about brutality, we should see the 150 wars that have been caused by the bourgeoisie in the 20th century, which have killed more than 250 million people. Unless we take into account the budget put into arms and relate this to the budget put into health and education, we will not be able to understand the real barbarism of the bourgeoisie.

Violence and barbarism are both caused by the bourgeoisie. The violence of October against its class enemies was very innocent compared with the violence and barbarism of the bourgeoisie against the oppressed people. [Applause]

Another world is possible. A world free from wars, occupation, imperialist plunder, racism, and all else that humanity wants to get rid of. This world will be socialism.

October is the future of humanity. We salute this event of the Communist Party of Great Britain (Marxist-Leninist) and look forward to working together for another world.

October Revolution rally: Chair’s introduction, Harpal Brar

Transcribed from the rally held in Southall, London on 8 November 2008 to celebrate the 91st anniversary of the October Revolution. The video of this speech can be found at the CPGB-ML YouTube page.

Comrades, we’re celebrating the historic October Revolution. There have been many revolutions around the world, but the October Revolution is a revolution that changed the world in a way that previous revolutions have never changed it.

The great revolution before that, probably the greatest one, was the French bourgeois revolution of 1789, but, historic though it was, it was not in the same mould as the October Revolution, because the French revolution got rid of one system of exploitation and replaced it by another; got rid of feudal exploitation and instituted bourgeois exploitation.

What the October Revolution did was, it finished all exploitation; it created a country where there was no person exploiting another person, where there was no nation oppressing or exploiting another one.

That is the historic significance of the October revolution.

It changed the world in a way that cannot be undone, notwithstanding the reverses that we have undoubtedly suffered ever since the collapse of the Soviet Union in 1991. The world cannot be put back to what it was prior to the October Revolution in 1917.

Thanks to the October Revolution we have had tremendous advances. The October Revolution, for the first time, taught the working class that it could not only destroy the old society, but it could also build a new one.

Within a very short space of time, a socialist industry was built, agriculture was collectivised, the culture of the people, their level of scientific attainment, was raised to unprecedented levels.

Russia’s per capita income in 1917 was one tenth of that of the United States of America. By the time the Soviet Union collapsed, its per capita income was half that of the United States of America.

But that doesn’t really tell you the whole story, because what the Russian people had was not just per capita income, but the facilities that they got socially – free childcare, free nurseries, free education, a free health system and very cheap housing.

One of the joys of the old Soviet Union was that as soon as the schools shut, millions of children all around the Soviet Union queued at railway stations, airports, bus stops in order to be taken away to pioneer camps for their holiday.

Parents didn’t have to worry whether their children would be bored during the holidays; they were looked after by trained staff and taken to the best places, which in our part of the world are reserved for the very rich. Soviet children could have the facilities that are only available to the very rich in West European and imperialist countries.

The Soviet Union didn’t stop at that. The Soviet Union built her defence industry and defence capability to a point whereby the Soviet Union was able to make the single most important contribution to the defeat of the allegedly invincible fascist war machine, and saved humanity from the scourge of fascism. [Applause]

The fascists had expected to rule the world for a thousand years in the name of the master race, but the so-called ‘slave nations’ – the Russians and the people of the Soviet Union – defeated that by almost single-handedly fighting against them.

France, of course, was finished within three weeks. France’s army was supposed to be the most important and powerful in western Europe; they had the Maginot Line, but the Nazis finished them off in three weeks’ time.

When the Soviet Union was attacked, they [bourgeois commentators] gave the Soviet Union three weeks. Three weeks became three months; three months became three years; and at the end of for years of gruelling war, the Soviet Union had chased the Nazis over the Polish border and pursued them all the way to Berlin.

And as the Soviet flag was proudly being flaunted on the Reichstag building, the Fuehrer was committing suicide. Isn’t that a wonderful achievement for the working class? [Applause]

The Soviet Union was the only country in 1935 – and from ‘35 onwards, right up to its collapse – which had no unemployment.

Now, if you live in western Europe, if you live in capitalist countries, it’s considered a law of nature, like the law of gravity – you must have unemployment. A society cannot function without unemployment; a society cannot function without homelessness; a society cannot function without destitution, without prostitution, without gangsterism, without drug trafficking.

But all these ills were eliminated in the Soviet Union and other socialist countries, and that was the achievement of the Soviet Union, which we miss dearly now.

For the first time, the Soviet Union provided the facilities necessary for the elimination of discrimination against women. Women cannot become equal with men unless and until two things take place – that they are introduced on a mass scale into social production, and that there are facilities for the looking after of children, the cooking of food and laundry.

The Soviet Union created crèches, kindergartens, nurseries and dining facilities for working people on a mass scale. You didn’t have to eat in a dining room if you didn’t want to, you could cook at home, but the thing was that the choice was there should you not wish to cook. Women would only be able to get that equality if those facilities were there, and the Soviet Union actually set the standards.

If women in western Europe have the rights that today they have, they owe it to the Soviet Union because the Soviet Union was the first and showed it as an example.

It was only a few years before the first world war that property qualifications had been eliminated before people could have the right to vote. Women were not allowed to vote until after the first world war. The Soviet Union, the moment it was established, straight away gave the right to vote to every person over the age of 18, whether they were men or women.

For the first time, you could see women doing the jobs that you thought they were never capable of doing – driving trains, flying aeroplanes, becoming doctors, becoming everything. And that, of course, again set the example, whereby women in western Europe were able to catch up.

Such was the effect of the Soviet republic, that in order to avoid a repetition of what had happened in Russia, namely a socialist revolution, the bourgeoisie had to institute reforms to ease the conditions of living of the working class – even more so after the victory of the Red Army in the second world war.

Sometimes, the working class here, led by imperialist propaganda, talks as though the Soviet Union was nothing and everything here is wonderful, but they owe the better conditions they have, partly at least, to the victories of the Soviet Union and other socialist countries in providing those facilities. [Applause]

The Soviet Union, by liberating all the ex-Tsarist colonies, and then, on the basis of voluntary union, bringing them into the USSR, and providing them with equal rights, set the standard for the people of the world.

Paul Roberson, whose songs you’ve been listening to earlier, said: ‘I went to the Soviet Union. They used to say to us that black people in Africa or elsewhere will not be capable of self-government for a thousand years. I realised in the Soviet Union that within ten years, the most backward people had been brought to a position where they were the equal of the Russians.’

Colonialism plunders colonies, takes the wealth from poor countries and takes it to rich areas, just as within each rich imperialist country, it takes the wealth from the poor people and gives it to the rich. You know, [we are told that] the rich will only work if there are ‘incentives’ and you give them more money; but the poor will only work if you take away even their last crust of bread, because that’s their only incentive – otherwise they’ll never come to work.

The Soviet Union did the opposite. The Soviet Union put huge amounts of resources into developing backward areas and the former colonies of Tsarist Russia in order to bring them to the same level of development that was available in the central regions of Russia and in important centres like Moscow and Leningrad.

For the first time, people could use their languages – their theatre, their arts, their sciences, their administration could be conducted in their own languages.

For the first time, even, they could repair their mosques – mosques were repaired. You say: is that because they were trying to propagate religion?

No. Propaganda in favour of materialism, in favour of atheism, was accompanied by giving people the right, should they wish to do so, to believe in claptrap – as long as religion did not interfere with state matters, as long as it did not put its foot into educational institutions, as long as it kept to just praying.

If you wanted to pray, you could go to a church or a mosque or a synagogue or wherever you wanted to. In spite of all the stories that are told that they [the communists] destroyed every church, this is total rubbish; you only had to go into the former Soviet Union to see that.

Loss of the USSR; era of reaction

When the Soviet Union collapsed in 1991, the bourgeoisie was cock-a-hoop; they were triumphalist, and the reactionary American professor of Japanese origin Fukuyama even said that it was the end of world history.

It just shows you what the best brains of the bourgeoisie are like. A long while ago, in Capital Volume 1, Marx, and he was really commenting on Mill, but compared with these intellectuals, Mill was almost a giant! Marx put a footnote, having discussed Mill, in which he said: ‘On a level plain, small mounds look like hills, and the flatness of the present bourgeoisie may be measured by the altitude of its intellects.’

Now, in my view, in Marx’s days, even though they were flat, the bourgeois intellectuals were still, compared with our intellectuals, giants. Today, they have just become mercenary salesmen for a system which is 150 years at least out of date, and which only lives by devouring living human beings, not only through the extraction of surplus value, but wars – inter-imperialist wars and wars against oppressed people.

We were told that, once the Soviet Union collapsed, there would be a peace dividend; everything would be fine because the Soviet Union was the cause of all war and danger and now there would be peace.

As the Soviet Union was collapsing, the first Gulf war was being waged against Iraq.

Since then, we have had the second Gulf war, which in the last five years has consumed 1 million Iraqis and displaced 4 million others – half of them abroad and half of them internally.

Tens of thousands of Afghan people are being murdered in the name of ‘humanitarianism’, but the only humanitarianism imperialism has is how to exploit and how to oppress. Imperialism seeks domination; it does not stand for freedom anywhere, either in its internal policy or in its external policy.

We celebrate this victory because we think it’s significant, and we will also, having learned from the reverses that socialism has suffered, go forward and be able to achieve victories. Not ignoring the Soviet republic, not ignoring the Soviet Union, but building on the basis of that, we would be that much better because we have learned so much – positive as well as negative – from what happened in the Soviet Union.

A lot of people have been disheartened. The bourgeois propaganda is incessant. They keep on saying communism is dead. Well if it’s dead, what’s the point in going on about it? [Laughter]

I mean, if somebody stood up outside and said “Napoleon is dead”, you’d think he was a lunatic. Well everybody knows Napoleon is dead; he died in 1821 or something like that. So what’s the point in going around saying so?

If Marxism is dead, why do you have to say every morning like a prayer: “Marxism is dead”? [Laughter] Well it’s clear to me that Marxism is not dead.

Far from being dead, Marxism is very much alive, and the bourgeoisie cannot sleep because Marxism can only be dead if there’s no working class. Marxism is the ideology of the modern proletariat, and it can no more be destroyed than can the proletariat. [Applause]

The proletariat cannot be destroyed under the conditions of capitalism because there would be nobody to exploit and the bourgeoisie could not live. The only way it can be destroyed is that the proletariat becomes the ruling class, in which case it would cease to be a proletariat; it would cease to be a proletariat because its role as being the exploitable material would cease to exist.

The reason they keep on saying it [Marxism] is dead, is that they want to demoralise every one of us.

Stalin a long while ago pointed out that the chief endeavour of the bourgeoisie of all countries, and of its reformist hangers-on, and this is very important to remember, is to kill in the working class faith in its own strength, faith in the possibility and the inevitability of victory, and thus to perpetuate capitalist slavery.

And that’s really what they’re trying to do.

And Stalin was absolutely also right when he was having an argument in the executive committee of the Communist International against the Soviet opposition, the Bukharinites and Trotskyites, who were saying that the Soviet Union was using other peoples, that it was nationalistic and was not promoting world revolution.

And Stalin’s answer was that the very existence of the Soviet Union was a tremendous help to peoples abroad; that the Soviet Union was the base of the world proletariat; it was really a base from which the revolution could spread.

Stalin asked the question: “What would happen if capital succeeded in smashing the Republic of the Soviets?” And he went on to answer: “There would set in an era of the blackest reaction in all the capitalist and colonial countries, the working class and the oppressed people would be seized by the throat, the positions of international communism would be lost.”

Looking back at the last 18/19 years, don’t you think that that remark was truly prophetic? Not prophetic in the sense that the victory of capitalism over the Soviet republic was inevitable, but prophetic in the sense that those consequences are being realised.

Imperialism is not very much frightened of the Soviet Union now, so it attacks oppressed peoples abroad; it wages innumerable wars – wars against Yugoslavia, wars against the Sierra Leones people, wars against the Colombian people, wars against the Palestinian people, wars against the Iraqi people, wars against the Afghan people, and now they are actually trying to wage a war against the people of Pakistan as well.

Since August this year, the United States has, on 17 occasions, bombed villages and places in the border areas of Pakistan, and killed several dozen people. It’s only a question of time before the Pakistani army begins to shoot back, because there’s mass pressure in Pakistan that Pakistani sovereignty is not to be violated, and if the Americans continue, they are really going to stir a hornets’ nest in that part of the world.

Our day will come

And at the same time, imperialism is attacking working people at home. There are attacks on the National Health Service, which is becoming a two-tier system is already penetrated by market reforms, education is becoming increasingly more of a two-tier system (it was never one-tier, but it’s become even more so), and various public facilities are being taken away.

They tell you there is no money. Public-sector workers are getting pay increases which are below the rise in prices, ie, below the inflation level, and when they ask for money, Gordon Brown says, ‘We must be prudent, there’s no money.’

Lo and behold, there’s a credit crunch, and the giants of finance are falling like ninepins. And suddenly, Britain is able to find several hundred billion pounds in order to shore up the banks. The Unites States of America, the land of the free and the land of the free market, suddenly is able to find $700bn in order to shore up their banking industry.

Now people in the left-wing movement have said: ‘This is socialism.’ [Laughter] No. It’s socialism, yes, but for the bourgeoisie. You and I are going to pay taxes in order to shore up the very people who brought us to this crisis – they run with their money, and if, tomorrow, the banks become profitable again, as, if capitalism is not overthrown, they must after two, three, four years, then all the shares that the state has bought will be sold back to them so they can start again their merry-go-round of speculation and chasing after more and more profit.

But what it does show is this: every crisis is an indication, as Engels said; every crisis shows that the bourgeoisie is incapable of managing the economic affairs of society. [Applause] It is incapable of doing so because long ago, the productive forces of society became far too powerful to be contained within the shell of capitalist relations of production.

And at every crisis, the productive forces break through those barriers and bring the ruin of a lot of capitalists, but even more misery to millions and millions of people around the world.

There is only one way that we can get rid of that, and that is: the working class takes over these means of production in the name of society and organises production on a planned basis, to satisfy the ever-rising cultural, educational and material needs of all the people, rather than to cater to the greed of a few people. This is the only way that society can go forward.

It is out function to inform the working class of this. Marxism is nothing but the theoretical expression of that understanding, and to bring to the working class the idea that there is a liberation for you, but not within this system; there is a liberation for you, but by breaking that particular system. Only then can society be rid of discrimination; be rid of sex discrimination, race discrimination, oppression of some nations by a few powerful nations, and wars and unemployment and hunger and poverty.

I’m sorry if I’m bragging about it: I took part in a debate at the Oxford Union, and the motion there was: ‘Capitalism can save the world.’ We lost the motion. Of course, in Oxford Union, you don’t easily win. [Interjection from the floor: ‘Only just!’] Yes, only just.

Madeleine tells me – she phoned them – that the people who won the motion for the proposition got 140 votes. We lost it but we gained 130 votes. [Applause] To actually go to the enemy’s camp and lose by 10 votes – and two of them foolishly because we went to the wrong side! [Laughter] (The working class must learn from its own mistakes!) So had we been on the right side, we would have lost by only six votes, if you like. But it doesn’t matter, because, as I said in my contribution there: ‘Comrades and friends and students, this issue is not going to be decided through a debate at the Oxford Union, nor anywhere else. It’s going to be decided in the arena of class struggle throughout the world, and I haven’t got the slightest doubt which side will win.’ [Applause]

So comrades, to conclude my rather lengthy introduction, for which many apologies (and you can attack me after the meeting), I would simply say that our day will come, and in the words of the great Russian writer N G Chernyshevsky, there will be joys and festivities in our streets.

We have no reason, despite the reverses, to feel sad; we have no reason to feel downhearted, because the future is ours. No matter how much the removal of this horrible system is delayed – 10 years, 20 years, 50 years – in terms of individuals’ lives, it’s terrible; I shall not live to see it; some of you might be able to live and see it; but humanity at large will see this present system fall and a new society being born on the basis of the road of the October Revolution.

Where the October Revolution left off, humanity is taking up. There are other socialist societies in existence. We have here two perfectly good examples – we’ve got representatives of two socialist countries here; from the Socialist Republic of Vietnam and from the Democratic People’s Republic of Korea. And there is also China, there is Cuba, and there are other places which are trying to move in that direction, and we are very, very sure of the future.

All I want from our members and our supporters is to redouble their efforts, or rather, increase their efforts a hundred fold, to build a powerful voice of the working class. In this country – and I don’t mean to be arrogant – there’s only one party that represents it [the working class], small though it may be, and that’s the Communist Party of Great Britain (Marxist-Leninist). Please support us in our endeavours. Thank you very much. [Applause]