Ted Grant

World Perspectives, 1979

Written: August 1979
Source: The Unbroken Thread
Transcription/Markup: Emil 1998/2006
Proofread: Emil 1998

A new world recession is developing at the present time. This marks the definitive end of the world economic upswing. It expresses the twilight of world capitalism and shows that the economic system internationally has reached an impasse. The mightiest power, American capitalism, finds itself in serious economic difficulties. As a consequence of a large balance of payments deficit and the deficit financing in the budget, she is faced with 12 per cent to 15 per cent inflation. This has caused the collapse of the dollar. Gold, from being $34 an ounce - which American imperialism artifically kept as the exchange rate for a whole historical period - is now over $300 an ounce. American imperialism finds itself with the two evils of capitalism in the present epoch - inflation and stagnation - at one and the same time.

The recession in the biggest market in the world, that of American capitalism, will in its turn have a chain reaction on the EEC and on the smaller powers. But the recession will be of a peculiar character, it will be 'a small recession'. It is projected by bourgeois statisticians and economists that there will be an actual fall in industrial production only in Britain and the United States. In Japan and the EEC countries there will be a fall in the rate of growth of production. 'Small' recessions of this character, following upon 'small' booms, will have more explosive political consequences than even a deep recession.

This recession has followed the shaky boom which in its turn followed the recession of 1975. In that recovery, what marked a new crisis for capitalism was that there was hardly a single capitalist country using more than 80 per cent of productive capacity. This in its turn meant a fall in the rate of investment. With this very shaky recovery from the first simultaneous world slump since the second world war, the capitalists are already faced with a new recession.

As we predicted, the new recession has come swiftly on the heels of the last one. It is roughly three to four years since the last slump or small recession and we are now back to what will possibly be a somewhat deeper recession than that of 1975.

However, we must view cautiously the economic processes. The slump in 1975 only meant, so far as the OECD countries together were concerned, a fall in production of 0.5 per cent. But it also meant unemployment of 16-20 millions.

Unemployment will now increase in all the main capitalist countries of the world. It no longer merely forms a reserve army of labour but indicates an organic sickness of capitalism as it did in the inter-war period.

This new recession, which might last anything from 9 months to 18 months - possibly more possibly less - will in its turn be followed by a new shaky boom. This in turn will be followed at a faster or slower rate, by a new recession. We are in a cycle of booms and slumps moving far faster than at any other time in the history of capitalism.

It means that we are now in the epoch of the death agony of capitalism. There will be a tendency for living standards to fall in all the countries of capitalism, including the industrial countries, with only temporary exceptions.

This rapid succession of booms and slumps is precisely a period in which revolutionary conclusions can be drawn by the masses. In a sense, small changes leading to minor booms and then to minor slumps mean the worst of all possible outcomes for capitalism.

As Trotsky explained, the constant change from one economic situation to another produces uncertainty which in its turn has a political effect on the masses. Thus, a period of political explosions opens up - in Spain, Italy and France, West Germany, Japan, the USA and even Scandinavia - as the case of Denmark shows. This formerly placid country has had a whole series of general strikes in the past half decade or so. Now in certain 'backwaters' of capitalism, such as formerly prosperous Australia, Canada and New Zealand, we see a whole series of struggles on the part of the working class leading to a situation of virtual general strike.

This instability of capitalism in its turn has an effect on the outlook of the bourgeoisie in all countries of the world. There has been an outbreak of pessimism, gloom and fear as to the economic future. The decay of capitalism is reflected in its representatives becoming totally perplexed.

Meanwhile, in the traditional organisations of the working class, the Stalinists and reformists are reflecting the previous period of capitalism in its economic upswing. They are utterly incapable of evaluating the new stage in the development of world history. The objective conditions for socialist revolution exist in all the countries of capitalism at the present time.

The impasse of capitalism is reflected in the aggravation of the contradictions between social production on the one hand and national states and private ownership on the other. The latter becomes an enormous drain and fetter on the development of the productive forces (in which Marxists find the key to history). Capitalism is no longer capable of fulfilling this task as it succeeded in doing for a period of two to three decades after the war.

The capitalist countries partially overcame the contradictions for a time by the development of world trade and the lowering of tariff and other barriers between the capitalist nations. The domination of American imperialism was sufficient to dictate this policy to her rivals, and that was a means of partially overcoming the limits of capitalism - the nation state and private ownership. World trade increased about six times in the period from 1947-75.

Through GATT (General Agreements on Tariff and Trade) and other measures we had the internationalisation of markets. There was a deepening of the world division of labour and an extension of the integration of the world economy into one indivisible whole.

The internationalisation of capital took place through the multi-nationals. Perhaps for the last time an impetus was given to the development of productive forces in the industrialised countries and partly even in the undeveloped countries of the world as well.

But in the partial overcoming of these contradictions, greater contradictions have been created by capitalism. The economy, in reality, has developed beyond the limits provided by the capitalist system. That is why we are in the twilight of world capitalism - an epoch of revolutions and of minor 'secondary wars'. ('Secondary' is in quotation marks because even in the Arab-Israeli war enormous resources were squandered.)

However, the death throes of capitalism will not appear in one simultaneous sweep. In the period of the economic upswing capitalism has created enormous resources which can, and will, be used for the purpose of propping up capitalism when its life is in danger. At a time of mass upsurge the capitalists will give concessions in order to gain a breathing space. They will take them back as soon as the situation has changed and the mass movement of the working class has ebbed. This, of course, is inevitable, given the conditions under which the masses live in capitalist society.

That is why under modern conditions the subjective factor is perhaps the most important factor of all. Time and again, the role of the leadership of the workers' organisations has been to save capitalism from destruction at the hands of the working class. However, there will be not just one revolutionary crisis but a whole series of revolutionary crises in one country after another in the period that lies ahead. Again, capitalism has changed from being a relative fetter holding up the development of productive forces into being an absolute fetter. As Marxism teaches us, this is the epoch of social revolution.

If we take even the strongest capitalist power, America, we can see the perplexity of the ruling class. With this goes a corresponding perplexity of the masses of the people. There is an unprecedented disgust with both political parties - with the Democrats, to which the trade union leaders have attached the trade unions merely as a tail, and with the Republicans as virtually open representatives of big business.

The reason for this is that during the course of the past 12 years there has not been an actual increase in workers' real incomes before tax. After tax there has even been a fall in the living standards of the American working class. In the last seven years there has actually been a decline in real incomes before tax.

That explains the attitude of the masses towards the bourgeois parties - the repulsion, the scepticism and the cynicism towards the Democrats, towards President Carter and towards the Republicans.

In the blind alley of American capitalism the government threshes about from one economic policy to the opposite one. This in turn adds to the instability of the economy.

Very rapidly the American workers can come to the conclusion that they need to organise an independent party of Labour. If the Democrats win the election through adopting Edward Kennedy as their candidate (as seems most likely) a big blow will be dealt to any illusions which remain in that party.(1) The working class blacks and other oppressed layers would be pushed into industrial and political action.

The organised workers would exert pressure for an independent proletarian organisation of labour and the exploited masses. With the sluggish nature of the boom in America, and following it, the effects of stagflation, political conclusions can be rapidly drawn by the American workers. The tempo of American life is different from that in Europe. The American workers can achieve in seven years what has taken the British workers 70 years to achieve - the creation of a mass party of labour.

The economic upswing had the effect of powerfully reinforcing support for capitalism. Skilled sections of the workers gained high standards of living. They would have two cars, a boat, a shotgun, good holidays and so on, and quite a comfortable level of existence.

Now that has ended. Even when the recession is followed by a further period of anaemic boom, it will require enormous efforts on the part of the American workers to win back what they have lost through the inflation of the last few years. It will require strenuous battles and strike struggles, probably on a considerably higher level than the impressive strikes of the past two years. The fact that a minimum of 10 million workers in the USA are unemployed, and 16 to 20 million in the OECD countries as a whole, shows that economically, world capitalism cannot repeat the balmy experience of 1950-75.

There will be periods of upsurge, periods of revolution, periods of struggles, by workers in every capitalist country. They will be succeeded by new periods of bafflement, despair and indifference, stemming from the frustration of the movement of the workers by the policies of the socialist and communist parties. But over a period of 10 to 15 years, the masses will rapidly come to the conclusion that there is no other road than that of the socialist revolution.

It is significent in this respect that both in Holland and in Australia the workers in the more dynamic unions are coming to the conclusion that there has to be a root-and-branch transformation of society. Tinkering with capitalism, they recognise, cannot solve the problems of the working people. And this objective process as far as the unions are concerned indicates the possibilities that lie ahead for a Marxist tendency.

Even on the basis of the situation that exists at the present time, such a tendency can grow by leaps and bounds. Workers will continue as they have done over a period of decades to turn to the traditional organisations of the working class. But as we already see in relation to the Labour Party, a differentiation will begin within the framework of the social democracy and also within the Communist parties (where they are a mass force, and even in countries where they are weak).

More and more, the active layers of the working class will be demanding policies in the interests of the workers. They will see that these interests can only be served by a transformation of society. In this atmosphere, it is entirely possible for the ideas of Marxism to secure a powerful hold within the traditional organisations of the class at a time when the crisis of capitalism is deepening.

This mood will not be changed by shaky booms of a few years' duration which do not fundamentally enhance the working class's standard of living as it was enhanced during the course of the, '50s, '60s, and '70s. As a consequence, the climate will be there for the ideas of Marxism and Leninism to gather enormous support in the mass organisations of the working class.

The growth of contradictions in the capitalist world is matched by the contradictions developing in the Soviet bloc and China. In Eastern Europe and Russia, from being a relative fetter the bureaucracy is becoming an absolute fetter on the development of the forces of production.

For a whole historical period most of the countries of Eastern Europe and especially Russia have had a lower rate of the development of the productive forces than capitalist Japan. This is because the productive forces are snared in a mesh of bureaucratic mismanagement, chaos, waste and corruption which partially cancel out the advantages of state ownership and a plan of production. Where there is no workers' democracy and no check on production it leads to a chaotic situation. The working masses are used merely as another factor in production. New contradictions have developed.

The bureaucracy has raised itself as a privileged caste, separate and above the mass of the population. Productive forces are going ahead at a snail's pace for a state-owned, planned economy - slower than capitalist development in Western Europe during the boom.

The bureaucracy tends to try to find a way out of the contradictions in the economy which it has itself produced by an increased participation on the world market. The illusions of building socialism in one country are at an end in China where Mao's ideas of autarky have been overthrown.

Also in the Soviet Union, autarky is now seen as an entirely impractical policy. It restricted productive forces and prevented the development of the economy to the maximum extent. That wing of the bureaucracy which wanted to continue Stalinist policies in this respect has been utterly defeated. In the new Russian constitution, which Brezhnev for his own reasons has had adopted, 'participation in the world market' is put as one of the fundamental aims of the state. That is intended as a warning to those sections of the bureaucracy who still hanker for an autarkic policy.

This is confirmation of Trotsky's brilliant prediction that, with the growth of productive forces in Russia, she would be compelled more and more to move into the world market. The persistence of the idea of autarky in such a situation is an indication of the reactionary and nationalist character of the bureaucracies of all the Stalinist states. Even with the expansion of world trade links they cannot regain the growth rates of the past. That constitutes a death sentence for these bureaucracies. China remains probably one of the few deformed workers' states which is still relatively progressive in her development of productive forces.

The crisis in Vietnam, which caused anyone of Chinese ethnic origin to flee, is just one indication of the horrors of Stalinist totalitarian rule. The unfortunate plight of the so-called 'boat people' has given a magnificent opportunity to capitalism for propaganda against the ideas of 'Communism'. The limited war between China and Vietnam served to smear the ideas of communism. The crimes of the Vietnamese Stalinists as well as of the Chinese Stalinists stink to high heaven, perpetrated as they are in the name of Marxism.

In Vietnam and China, in Ethiopia and the other deformed workers' states that have been set up in the former colonial world, there is a relatively progressive role for the bureaucracies. They can develop the productive forces faster than capitalism. Consequently there will be relative stability for these Stalinist regimes in the coming period.

In Eastern Europe and Russia, on the other hand, beneath the official mask, enormous discontent has been gathering. The decay of official 'Marxism' is expressed in Poland in the gigantic demonstration in favour of the Pope's visit. The masses are opposed to bureaucratic misrule. However, there is not the slightest ripple of a movement by the masses in the direction of accepting capitalism as an alternative. In Eastern Europe, new Hungarian revolutions are inevitable.

In Russia too, all the elements of discontent have been gathering up for decades. The oppression of the nationalities, the oppression of the peasants, the differentiation of standards between the workers and the bureaucrats have produced explosive contradictions. Over a period of two generations an hereditary bureaucracy has been created to which access on the part of the talented workers has gradually been closed. That is an indication of the ossification of the regime.

In every layer of the population, hatred for the bureaucracy is accumulating. The masses are well aware of the inefficiencies, the waste, and the inability of the bureaucracy to develop the productive forces. According to the capitalist press and the economists, it is expected that this year the growth of industry in Russia will only be about 3 per cent, which again is lower than the extremely low figures to which Japan's growth has dropped in the last few years, and way below the previous rates of 12-14 per cent per annum achieved by capitalist Japan. It means the bureaucracy is no longer capable of fulfilling the role of developing the productive forces.

Like the bourgeoisie of the West they have become a drag on society. They were always parasites on the masses, but had a relatively progressive role to play - now they are only parasites. This means that at any time there could be an explosion in Russia like that of Hungary in 1956.

It is still a race as to which will come first, a social revolution in the West, or the political revolution in the East. Either would have a tremendous social effect on the other. A victory for the workers in any important country of the West would sound the death knell of the bureaucracy in the whole of Eastern Europe and in Russia. This in turn would lead very rapidly to a collapse of the bureaucracy in China and the other countries of proletarian Bonapartism.

On the other hand, political revolutions in the East would restore the methods and ideas of the revolution - of workers' democracy - as in the days of Lenin and Trotsky. All that would flow as a consequence both in social and political terms would have a cataclysmic effect on the countries of the West. A political revolution in Russia or in Eastern Europe would rapidly spread.

That is one of the reasons for the detente between American imperialism and the Russian bureaucracy. The military situation is one where there is a virtual stalemate in nuclear arms. As far as conventional weapons are concerned, the Russian bureaucracy has an overwhelming superiority.

In these circumstances, the fears shared by the bureaucracy and the bourgeoisie for their continued existence in the face of political revolution in the East and social revolution in the West, create a common basis for agreement and detente between the powers.

In Eastern Europe and in Russia the bureaucracy has succeeded to a certain extent in erasing the traditions and the social achievements of the revolution of the first period of 1917-23 with an overlay of bureaucratic excrescence. Because of the weakness of Marxism in the West, and because of the purges and the massacre of an entire generation of revolutionaries in Russia and the long period of five or six decades of bureaucratic, totalitarian misrule, it will require events themselves to re-educate the masses. Explosions are inevitable in Russia and in Eastern Europe in the period that lies ahead. What we saw in Hungary in 1956 will be repeated in Russia and the other countries of Eastern Europe.

Capitalism and Stalinism have before them a period of prolonged death agony, the accumulation of contradictions within Eastern Europe and Russia will result in outbursts and explosions. There will be a quantative change into qualitatively different movements of the masses.

The very weakness of capitalism has meant it has not been possible to maintain authoritarian or totalitarian regimes anywhere in Western Europe. This is not because the bourgeoisie has been converted to democracy. As events have demonstrated they can switch from totalitarian regime and back again to 'democracy', so long as their rule is preserved. The decay of capitalism and the difficulty of holding down the masses in any other way except through deceit and parliamentary methods of deception, lies and distortion indicates their weakness. However we must not be caught by surprise by events in the East or in the West. 1968 in France was not at all accidental, but was an indication of the processes that will take place.

In one country after another, the masses will take the road of struggle: in Britain, France, Germany, Italy, Sweden, or any of the smaller countries of capitalism. The United States and Japan also cannot escape from the new period which is opening up. This is the outlook for the developed countries of the capitalist West and also the developed Stalinist totalitarian states. But the upheavals and social explosions that have taken place even in the last three decades, in particular in the underdeveloped countries, are a pale foreshadowing of the future movements in these countries.

One of the reasons for the rise of productive forces in the West and the increases in the standards of living has been the exploitation of the colonial people in the post-war period. The EEC, Japan, the United States and the other industrialised capitalist powers have organised the collective exploitation of the colonial peoples. This is not directly by military domination but by economic domination. Due to the unfavourable terms of trade for the underdeveloped countries, the prices of food and raw materials have not increased to the same extent as the price of industrial goods and capital goods.

There has been a super-exploitation of the colonial peoples. Whereas up to the recession of 1975, the standards of living in the West had generally increased, the two-thirds living in the underdeveloped world have experienced an absolute fall in living standards, apart from a few exceptions. There has been a very partial development of industry, uneven at that, in certain countries such as Brazil, Argentina, Taiwan, South Korea, Nigeria, India and other countries of Africa, Asia and Latin America. But the very partial development of industry in its turn has increased the strength of the working class. This increase in industry creates new problems for the hundreds of millions of under-employed, unemployed and pauperised peasants of Africa, Asia and Latin America. There has been a gigantic increase in landless, jobless and shelterless peasants streaming to the slums around the cities. This in turn has increased the contradictions in each country. All are entirely dependent on world markets and dependent economically on the big imperialist powers.

The whole of the post-war period has been rent with explosion and upheaval in Asia, in Africa and Latin America. The economic basis for this is the impossiblity of developing productive forces harmoniously and at a high rhythm when imperialism dominates these areas. The economic upswing between 1950 and 1975, provided the most favourable conditions that could be expected under capitalism in the underdeveloped countries. Because this led to stunted and limited growth of productive forces and low living standards in these countries we have had the biggest period of upheaval in the history of mankind in Asia, Africa and Latin America.

Now that the economic upswing is at an end and capitalism will move in a cycle of small booms and of small slumps following each other, imperialism will attempt to load the burdens of capitalist crisis on the underdeveloped world. Then the conditions of the colonial masses will become much worse. At their expense, the big powers will attempt to solve the contradictions of their system. The increase in the price of oil has been passed on to the non-oil or underdeveloped countries. In addition, they will have to pay more for the products of industry and capital goods. That means that the development of productive forces, even to the extent of 1947-75 in a number of countries, cannot take place, at least at the same pace. Already in the post-1975 period there has been a fall in the rate of increase of industrial development and production in the underdeveloped world mirroring the process taking place in the industrialised countries. Industrial development looks to export markets in the West because of the weak home markets and the poverty of the masses. Meanwhile the ruin and impoverishment of the peasant masses is intensified.

The crisis of capitalism bears down more harshly on the underdeveloped world than on the capitalist countries. This in its turn is preparing greater explosions and new movements in the 'Third World'. In the front line will be Brazil, Argentina, Indonesia, Nigeria, Ghana. What we have seen in the Central American republic of Nicaragua can tomorrow be repeated not only in Central America, but especially in the countries where bourgeois military police Bonapartist regimes have been established. These dictatorships were engineered when the ruling class found itself in a cul-de-sac, and yet this was the most favourable period economically that could be expected as long as market forces dominate.

Now with the crisis that is developing in the industrialised world, the problems will bear even more harshly on the peoples of the underdeveloped world. This sets the stage for revolution in all the three continents concerned.

In Latin America and in some parts of Asia such as Pakistan we have seen swings by the ruling class from one regime to another, from democracy to dictatorship and back again in the endeavour to escape from the contradictions with which they are faced. In every case - either of dictatorship or uneasy 'democracy' they have failed to stabilise the social and economic situation.

In India we saw the collapse of the semi-Bonapartist government of Mrs Gandhi. Now the Janata Party - a rag-bag coalition of differing elements - has fallen to pieces as a consequence of the instability of the situation that exists. India will take its place with Brazil, Argentina, Indonesia, Nigeria and the other main countries of the underdeveloped world as being an unstable country. This will prepare the way for big social explosions.

In the case of such countries as India, unless there is a socialist revolution, then it is possible that there will be a break-up and 'Balkanisation'. (This can come after a period of military-police dictatorship. Pakistan was an earlier example of such a process).

Africa is Balkanised. Latin America is Balkanised. Even the Indian sub-continent can find itself in the same position unless Marxism finds the road to the working class. On the road of capitalism there is no way out. As a consequence of the impasse of the system there will be movements of tens and hundreds of millions of peasants and of the working class.

In the underdeveloped countries, as in the developed world, events will not proceed in a straight line. There will be ups and downs of the economy which will be followed by movements of the masses, not necessarily in consonance. In the underdeveloped countries, more than any other area the capitalists are absolutely incapable of developing productive forces except to a very limited extent. As in the Western capitalist countries, the improvements in the economy which will take place from time to time can only encourage the masses and the demands of the working class in particular.

Private ownership and landlordism and capitalism are utterly incapable of playing a consistently progressive role under the modern conditions of imperialism in the underdeveloped world. The psychology of the masses, particularly in the underdeveloped world, is changing. The perplexity of the bourgeoisie and the failure of the ruling class to show a way forward for society, has revolutionary consequences in colonial countries. There the bourgeoisie is utterly incapable of playing the role which was played by the bourgeoisie in the West in the past. The paralysis of the bourgeoisie will be reflected in the anger of the masses.

The blind alley that imperialism and semi-feudal, semi-landlord capitalist states find themselves in has been responsible for the revolution in Iran and the revolution in Ethiopia. A new period is opening up, when there will be one convulsion after another in the economically backward continents of the world.

Marxism must find a way of reaching the masses, particularly in countries that have a developed labour and trade union movement. Only on this road can there be a healthy development of the revolution. Such a possibility existed in the Chinese revolution of 1925-7 when the working class was the spearhead and the dominant force in the revolution.

In India, Argentina, Brazil, Nigeria and, in fact, in most of the countries of Asia, Africa and Latin America there is now a numerically important proletariat which is even more decisive in its social weight in society. It could play the role of rallying the mass of the nation if it had the necessary leadership and gained the necessary understanding. The subjective factor is decisive.

It is only the impasse of capitalism in the colonial countries that has resulted in the development of proletarian Bonapartist, totalitarian states such as in China, Ethiopia, and other countries. They partially solved the problems, in the sense that landlordism and capitalism are eliminated. But they pave the way for a new revolution - a political revolution - without which the masses could not even begin the construction of socialism or establish a healthy workers' democracy. A political revolution is necessary in these states for the control of industry, the state and the whole of society to pass into the hands of the workers and peasants.


(1) In the event, Jimmy Carter was the Democratic Party candidate tor the presidential election in 1980, supported by Walter Mondale. The Republican Party candidate, Ronald Reagan, won an overwhelming victory.