Prolonged crisis – no way out?

spain demoLeading members of the European sections of the Fourth International met recently to discuss the economic crisis and its political ramifications in Europe. . KLAUS ENGERT gave this introduction to the discussion.

The economic and ecological situation has reached a decisive point globally as well as in Europe. The prolonged crisis of recent years is yet to be overcome and the ruling class is desperate to avoid a giant crash threatening the whole structure of the capitalist world economy.

In this context revolutionaries have three tasks:

– To analyse the present situation;

– To anticipate ruling class strategies in order to be prepared and to react.

– To develop a transitional strategy and program to combat the attempt to overcome the crisis on the backs of the working class.

This crisis is not simply cyclical, of the type produced periodically by capitalism from its very beginning. Nor did it start with the “debt crisis”. The latter is merely a temporary consequence of the underlying cause – a problem of capital realization (the inability of accumulated capital to realize itself in the real economic sphere with appropriate profit rates) that started more than thirty years ago. Speculation (a massive growth in so-called financial capital) was a secondary and logical consequence of this problem.

The debt was caused by the political servants of the ruling class in the governments attempting to resolve this problem by providing money to stimulate the lacking demand whilst keeping a minimum of social coherence. Underlying this overall Neo-Keynesianism a variety of different approaches have co-existed in different parts of the world over the past 30 years.

The ruling class on a global scale has therefore had no coherent overall strategy. However since the 1990s there has been slow attempt at a type of synchronisation, through the many G8/G20 meetings.

Additionally emerging countries, especially China, have attenuated the effects of the realization crisis by opening new spaces for demand and investment.

This phase has come to a (temporary) halt and has been followed by a massive attack on the working class: neo-liberal measures aimed at improving the conditions for capital realization through reducing the “unnecessary” secondary costs and lowering wages. Additionally governments are opening new sectors for profit making for private capital by selling off public property.

However these measures failed to solve the realization crisis. The mountain of debt grew and the so-called “fictitious capital” reached an unprecedented huge volume. According to the World Bank, in 2011 out of a daily circulation of 1,000 billion dollars in the financial markets, only 13% related to the real economy.

The factors driving this have included:

– The accumulation of capital and its organic composition reaching a stage in which, in some branches, the amount of necessary human work is reduced to a minimum. You can call that an over-accumulation in the sense that the possibility of mass production is passing the possibility of consumption.

– Due to 200 years of unsustainable exploitation of the globe the secondary costs for raw materials and their extraction have reached an unprecedented high. This means that to realize the ground rent, an ever higher input of capital is necessary. This includes the growing secondary costs due to worldwide competition for shrinking resources like oil, rare minerals etc., with the consequence of open and hidden wars.

– Debt control measures resulting in a constant decrease in demand.

– That part of the globe which is still living (in Rosa Luxembourg’s formulation) under conditions of primary accumulation, has shrunk marginally and this source of profits is also running dry.

The measures taken by the bourgeoisie to fight the crisis are exacerbating the deepening ecological crisis, particularly climate change and its consequences. The struggle to lift growth rates has escalated destruction of the natural environment and is undermining the conditions of human existence on the planet. Only a mode of production and distribution strictly based on sustainability and production on the basis of use-value – abandoning the capitalist mode of production – could solve the ecological crisis.

Bourgeois proposals to solve the problem (the so-called “green economy” and its modifications, monster technologies like Desertec etc.) are not answers to environmental problems, but economic ones. “Green technologies” are seen as a new motor for growth within the capitalist mode of production. This just leads to an additional industry, not to a substitutive instrument. We see this in the recycling industry, which is not a reaction to ecological problems, but to the lack of certain raw materials.

The situation in Europe

The European Union was and is a project of the leading capital fractions in Europe (mainly German, French, British and Italian), providing them with a protected inner market and enabling them to compete globally.

Up to a point, this was a classical imperialist project. But its hopes were pinned on the introduction of a common currency. And this is turning out to be disastrous. In a framework of economically and socially very unequal countries, a common currency entailed long-predicted risks.

The disproportions between the countries of EU and their capital fractions led first to the consequences seen in Greece, Italy, Spain, and Ireland. Similar problems will follow in the short to medium term even in core countries like Germany, due to their considerable integration into the EU economy and the common currency.

The subjective factor

The main problem faced by revolutionaries is the wide gap between the seriousness of the objective situation (necessitating a fast and radical change of the system for social and ecological reasons) and present mass consciousness. This gap is one cause of the disastrous and counter-productive atomisation of anti-capitalist forces in innumerable small groups, circles and sects.

Although there is a diffuse anti-capitalist sentiment growing (especially among young people), a credible anti-capitalist vision and a consistent and credible transitional program is lacking.

In recent elections, in countries like France and Greece, there has been an increased vote for parties opposing austerity policies. But the consciousness of the majority still remains within the framework of the capitalist mode of production. This sentiment was recently typified by a ridiculous Der Spiegel headline “We need another kind of capitalism.”

The result has been formations like the Left Front in France or Syriza in Greece, which are arguing on the basis of the present system – but at the same time presenting certain demands which are not compatible with the overall capitalist framework. The program of Syriza, for example, is oscillating between transitional and clearly reformist demands.

In the 17th June Greek election, New Democracy won a narrow victory ahead of Syriza. But this does not mean that the Greek people endorse the Troika-imposed austerity policies. On the contrary the result was a reaffirmation of the previous election. The ND votes should be interpreted as a reaction to the policy of fear rather than support for the ND program. Additionally ND’s united front policy was more successful than that of the Left. Despite many voters of other left organizations switching to Syriza, the political stance of KKE (mainly) blocked a left majority in the parliament. Without having illusions in Syriza, in some respects a victory for them would have opened space for further mobilizations and could have changed the whole political framework in the EU.

At the same time space has opened for the radical right wing forces gathering strength in most European countries. They stand for a return to classical nationalist policies and are a real threat, particularly where there is a combination of a very weak or divided anti-capitalist left with social problems of such an extent that they call for a mass response. These factors urgently pose the need for a united front approach. In Hungary these right wing and even fascist forces are a real option for the national bourgeoisie.

Finally there is a very uneven development of resistance across different parts of Europe, depending on the differential impact of the crisis. This adds further difficulty to the urgent need for a European-wide response of the working class and the social movements.

The strategy of the ruling class

Some analysts have concluded that a giant and final crash is unavoidable. But, as Marx said, there is no unsolvable situation for capital. Of course a major crash is a probable outcome. But the question is: who will have to pay the price?

One temporary solution could be a massive devaluation or destruction of capital, particularly of fictitious capital. A fraction of bourgeois economists favour that perspective, imagining that “planned moderate inflation” would eliminate a part of the present debt. Until now the inflation rate has been relatively moderate on the EU level, but there are also huge disproportions (for instance compared with Greece).

But this would be unprecedented, most probably leading to an uncontrolled process of inflation with unforeseeable consequences, in turn leading to higher interest rates in the financial sector that would partly neutralize the effect of the strategy.

Even if it worked, this would only be a temporary solution, as it cannot solve the central problem of the stage of development of the productive forces, let alone the environmental problem.

Another perspective (taken by the USA and Japan) ignores the growing debt, seeking to stimulate the economy through even more debt. Up to now this has only worked due to the economic and (especially) military weight of the USA. It will inevitably lead to future financial market breakdown. And, particularly as the USA is the second biggest polluter worldwide, it completely ignores the urgent environmental problems.

The third strategy is the one taken (until now) by the EU under German leadership. This abandons Neo-Keynesian strategies – with strict austerity measures and the sell-off of remaining public property. The aim is to solve the problem of state debt and satisfy capital’s need for new and profitable investments. European states have been politically consistent in this direction. Everywhere there has been a constant process of deregulation in health-services, pension-funds, water-supply, transport, etc., including so-called PPP. Additionally we have the deregulation of the labour market with an incredible increase of precarious and part-time jobs, growing unemployment and forced national and international mobility.

This, in turn, has increasingly divided the working class, particularly between workers with a regular contract and the growing number in precarious, temporary and part time jobs. Unfortunately the majority of the trade unions in the core countries of the EU have either made insufficient efforts to block this or, as in Germany, supported it.

In the history of capitalism neither of the main strategic alternatives has been able to prevent major economic breakdowns. With the additional ecological problem, both are obsolete as they rely on a strategy of constant growth.

The ruling class and its servants in the think-tanks don’t know how to overcome this crisis of perspective. Germany, for instance, at first strongly opposed any “solidarity” with the suffering economies in the EU; then agreed to the ESM/ESFS; then again strictly opposed a fiscal union and now has agreed to an increasing fiscal union. This ensures that this crisis has an eminently political dimension.

A further obstacle for the European bourgeoisie is the growing resistance to austerity. Fear of a mass popular reaction, and not just strategic economic differences, have stirred up the debate between Hollande and Merkel over the need for a European growth program in addition to austerity. This struggle reflects the different degree of political stability in the respective countries.

The deepening of crisis on the European level is accelerating the tendency of the ruling class to get rid of the burden of democracy, particularly through the fiscal union giving the EU bureaucracy more rights. This is aimed at reducing democratic accountability and transferring sovereignty from the national states to the EU. The example of Iceland showed who pays the bill if the population is asked to vote. German chancellor Merkel was recently quite open about this, saying, “We have to deepen European integration, because the financial markets are expecting that from us.”

The international pressure on the Greek people how to vote and the rise of fascist powers in Hungary show in which direction the situation can develop.

Social and ecological consequences

As indicated at the outset, we have to anticipate what will happen in order to counteract it. This is our first task.

The consequences of the European bourgeoisie’s current strategy are apparent in the countries first hit. For example, in Greece there has been an almost complete breakdown of public services like healthcare, an income reduction of 30% and more. And in Spain youth unemployment is up to 50% and homelessness is rising.

The aims of the present policies are to:

– Reduce costs. This means, lowering wages, cutting pensions, increasing the number of precarious workplaces and even establishing “free economic zones” in Europe, following the example of China.

– Open space for private investors. This means the sell-off of public property. Privatising healthcare, water-supply, post and telecommunication, infrastructure in general, including railway and highways.

– Invest in giant (and ecologically counterproductive) projects. This includes new long-distance connections (highways, railways, tunnels, airports), for the benefit of long distance trade and transportation to lift the speed of turnover of capital.

The social consequences are already apparent. In all countries unemployment and the number of the poor are increasing. Where wage increases have occurred they are more than counterbalanced by the austerity measures mentioned and the gap between rich and poor is becoming deeper.

Furthermore indiscriminate growth policies make the necessary reduction of greenhouse gases almost impossible to achieve, let alone tackling other ecological effects.


Resistance is growing. The Indignados-movement and the recent strike of mineworkers in Spain; general strikes, mass demonstrations and struggles in Greece; discussions about the legitimacy of the debt, strikes and demonstrations in France, Italy and Portugal – all show the basis for a mass movement.

There has also recently been a growing sectoral resistance to specific government projects. Mobilisations against the privatisation of public hospitals at a communal, regional and national level; against new highways, airport runways; and against nuclear power have reached an unprecedented high.

Despite this, levels of resistance are very uneven. There have been substantial movements and mass actions in the most affected countries, to a considerable degree independent from pre-existing organized political forces. But in most European countries a clear majority of the population is still committed to the parliamentary system and its traditional parties.

But the change of political landscape in a couple of countries is nonetheless significant. Social democracy – as exemplified in Britain and Germany – has mutated into a force in competition with conservative parties over which is the best at rescuing the existing system.

New formations have emerged, like the Pirates Party, which is (at least in Germany) more a socio-cultural than a political phenomenon and Neo-social-democratic or centrist ones, as in France. Green parties are now established almost everywhere. All these changes are a more or less filtered or distorted expression of a growing discontent, of a search for alternatives. In countries where a more credible left force exists, this is gaining space.

On the other hand the spontaneous riots across England showed what happens in the absence of a political force or movement able to provide the furore of the oppressed with a perspective.

The examples of Greece and Spain show how fast the picture can change when the full consequences of the crisis hits the people. This is what we have to prepare for. Spain and Greece also show a developing a new solidarity between people, in struggle and at the concrete level of community networks and means of subsistence on the basis of non-capitalist exchange.

These experiences all have to be understood and incorporated in our outlook. The response to the crisis of capitalism should be based on the self organization of the people at communal and workplace levels. A radical break from capitalism requires a self confidence of the masses shown through the practice of self-administration where possible, thus anticipating our conception of socialist democracy.

The European days of action and the demonstration in Frankfurt on 19th May, despite being relatively succcessful, showed a low level of consciousness regarding the need for an internationalist approach that combines the national struggles. Despite this, massive repression by governments in response, constantly breaking their own laws, revealed a growing ruling class fear that local struggles will combine.

What to do?

We are at a decisive point. If we are unable to resist the present assault on the social, political and environmental rights of the working class, the consequences will be disastrous.

So we have to work on four levels:

– Developing a credible, comprehensive and attractive action-program, to intervene in the ongoing and increasing struggles.

– Taking part everywhere in the mobilisations and struggles on every level and organising political solidarity with the suffering people in the most affected countries.

– Struggling for a united-front policy on European, national and local level, to overcome the atomisation of the left and any nationalist approach.

– Building up a revolutionary pole able to present a credible and attractive alternative to the existing capitalist system, which is on the way to ruining the globe.


  1. I find this report raises many more questions than it provides answers. Was the discussion following this presentation at the same abstract and platitudinous level, or did the four points outlined at the end deal with specific and concrete situations.

    For example, around the question of “struggling for a united-front policy…” was the situation of the Greek section and its secterian attitude towards SYRIZA discussed?

    In a similar vein, was the orientation of the leadership of the NPA towards the Front of the Left, which is highly confusing and problematic at best, examined?

    Or was the old standard-“too early to draw conclusions”- dragged out to avoid a serious look at what “the building of mass, anti-capitalist parties” means within the present conjuncture, and especially given the present relationship of forces actually extant?

    Can someone from SR fill in the blanks?

  2. Why don’t you develop a programme instead of an `action-programme’ whatever the hell that is? If the Fourth International cannot present a programme that addresses the most immediate and transitional needs of the class then what the bloody hell is the point of it except as an excuse for continental holidays and windbaggery.

  3. I suspect by `action-programme’ you mean things that you think the working class can do which in the end will be reduced to `general strike’ which is not a programme but an empty mantra of those who have nothing political to say and no actual policies.

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