Critical Times

Contribution to the Forum on Global Financial Crisis,
Third International Assembly, Hong Kong, 19 June 2008

By Prof. Jose Maria Sison
Chairperson, International Coordinating Committee
International League of Peoples’ Struggle

I wish to comment on the gravity of the current financial crisis of the
world capitalist system and on the impact of this in the various major
contradictions in the world, with special attention to the people’s
resistance in Asia, Africa and Latin America and in the imperialist
countries.

Gravity of the Global Financial Crisis

The economic and financial crisis of the US and world capitalist system
has worsened to a new and unprecedented level since the Great
Depression. This signifies the utter failure of the attempt of the US
and other imperialist powers to overcome the problem of stagflation
under Keynesianism with the policy shift to neoliberalism. Instead, the
latter policy has aggravated and deepened the crisis of overproduction
in the real economy and has given free rein to the abuses of finance
capitalism.

The states of imperialist and other countries have adopted the policy to
press down wage levels and cut back social spending. They have allowed
the monopoly bourgeoisie to accelerate the concentration and
centralization of productive and finance capital in its hands through
the denationalization of underdeveloped economies, privatization of
public assets, liberalization of investments and trade and deregulation
at the expense of the working people, women, children and the
environment—all in the name of “free market” globalization.

The consistent result has been the actual contraction of the world
market, as the purchasing power of the working people has declined and
has limited the demand for the products of expanded production. Ever
intent on maximizing profits by raising the organic composition of
capital (constant capital over variable capital), the monopoly
bourgeoisie has reduced industrial employment and regular employment in
imperialist countries by shifting production to a few other countries,
like China, India and the Southeast Asian countries, in order to avail
of cheap labor.

The illusion of economic growth has been conjured for the entire world
capitalist system through the wanton expansion of money supply and
credit. The imperialist states and nearly all other states have gone
into unrestrained local and foreign borrowing to cover trade and
budgetary deficits. The state and private banks have expanded credit and
the private corporations have gone into heavy indebtedness by getting
bank loans and issuing corporate bonds. To maintain the US as the
biggest consumer market, US households have been given a seemingly
endless flow of credit, culminating in the housing bubble and ending in
the ongoing mortgage meltdown.

The truth about the US economy is now out. The sordid facts about the
con game of the lead economy of the world capitalist system are being
exposed. The debts of the US federal government, the private
corporations and households are unsustainable and cannot be paid back.
And yet the US policy makers continue to expand the money supply and
lower the interest rates. The industrial decline and the runaway federal
debt of the US have undermined the long-touted role of the US as the
engine of global economic growth and the global market of last resort as
well as the value of the US dollar as the reserve currency of the world.

The US economy has become dependent on credit provided by certain oil
producing countries and by countries supplying consumer goods. It has
fallen into a prolonged state of camouflaged recession since 1999 when
the high tech bubble was about to burst. Some US economists now describe
the US economy as being in a state of inflationary recession and is
halfway into an hyper-inflationary Weimar Republic-type of depression
that has a high potential of leaping into Great Depression II. The other
industrial capitalist economies are being pulled into the vortex of the
global financial crisis that the US chiefly has stirred up.

The few other countries from which the US imports cheap consumer goods
face decreasing orders, a credit crunch and the declining value of the
US dollar. The chronically depressed underdeveloped countries in the
third world find themselves in a far worse situation than before. The
overwhelming majority of them have become net fuel and food importers.
Their peoples are grievously victimized by the manipulated shortages and
price gouging by the global and regional cartels directed by the
monopoly capitalists in the US and other imperialist powers. The entire
world capitalist system can be summed up as being in a state of
depression, especially if we fully take into account the actual social
and economic conditions of the oppressed peoples and nations.

Consequences of the Global Financial Crisis

The gravity of the economic and financial crisis of the world capitalist
system is such that we can expect the worsening and sharpening of
contradictions between the imperialist countries and the oppressed
peoples and nations, between the imperialist countries and certain
countries that invoke national independence, among the imperialist
powers themselves and between the monopoly bourgeoisie and the working
class in the imperialist countries.

The crisis of the world capitalist system inflicts social devastation at
its worst and suffering at its most painful on the oppressed peoples and
nations in Asia, Africa and Latin America. It is therefore
understandable why we see here the most widespread spontaneous and
organized actions of mass protest and the revolutionary armed struggles
that seek to end imperialist domination and overthrow the puppet
regimes. The main contradiction in the world is that between the
imperialist powers and the oppressed peoples and nations.

The extent of existing revolutionary armed struggles is already
formidable, as we observe those in Iraq, Afghanistan, Colombia, Peru,
Brazil, Nigeria, Philippines, Turkey, India and other South Asian
countries. The potential is high for the revolutionary armed struggles
to arise in more countries in several continents. The crisis of the
world capitalist system generates the favorable objective conditions for
the further spread of people’s wars for national liberation and democracy.

Since the end of World War II, many new national states have arisen from
the colonies and semi-colonies either as a result of the revolutionary
movements for national liberation or as a result of neocolonial
compromise. Most of them are now in the clutches of neocolonialism and
neoliberalism. But there are some states which invoke bourgeois
nationalism or socialism and assert national independence against the
imperialists and their agents. Those states born from successful
national liberation movements, such as China, North Korea and Cuba, have
been the most effective in asserting national independence and
preventing US aggression.

We have also seen the Yugoslavia of Milosevic and Iraq of Saddam
resisting the worst of imperialist impositions and being subjected to
wars of aggression launched by the US. Currently, there are other
countries whose governments stand up to imperialist domination and move
to nationalize imperialist enterprises. Venezuela of Hugo Chavez is a
prime example. As the crisis of the world capitalist system worsens, we
are going to see more dramatic events in the contradictions between the
imperialist countries and the countries that assert national independence.

The imperialist powers collude with each other against the oppressed
peoples and nations in general. But they compete with each other for
sources of cheap raw materials, markets, fields of investment and
spheres of influence. As a result of the full restoration of capitalism
in former revisionist-ruled countries, imperialist countries competing
with each other and seeking to redivide the world have increased in
number. The world has become more cramped than ever for the competitions
and rivalries of the imperialist powers.

The US is increasingly resented by other imperialist powers for
presuming to have sole hegemony over the whole world and for trying to
grab the lion’s share of spoils in every continent. At the same time, it
is already overextended and weakening in certain parts of the world.
Contradictions are developing between the US and Russia and China
jointly or separately. So are those between the US and the European
Union. These contradictions involve economic, financial, political,
security and other issues. As the crisis of the world capitalist system
worsens, the contradictions among the imperialist powers will sharpen
and generate conditions favorable for the rise of revolutionary movements.

Within imperialist countries, contradictions are surfacing between the
monopoly bourgeoisie and the working class. Under the auspices of
neoliberalism, the wage and living conditions of the working class have
deteriorated drastically. Job security for most workers has evaporated.
Worker youth, women and immigrants are discriminated against, exploited
and oppressed. Social benefits won over a long period of time have been
gravely eroded. Trade union and other democratic rights have been
undermined and curtailed.

As the crisis of the world capitalist system worsens, the monopoly
bourgeoisie will try to further exploit and oppress the workers. It will
pit one section of the working class against another. For the purpose,
it will use chauvinism, racism, religious bigotry and fascism. But it is
precisely the escalating exploitative and oppressive acts of the
monopoly bourgeoisie that will drive the workers to fight back and wage
revolutionary struggle. The class struggle in the imperialist countries
has never been eliminated. It has only been suppressed for quite a long
while. It is now resurgent.