The Crisis is not an Abnormality of Capitalism

The crisis is just beginning, and no one can predict with certainty its duration or intensity.  We are facing something more than a mere financial crisis: it is a global economic crisis that affects not only international finances but also the real economy.  Because of the high degree of development of speculation and financial capital in recent years, the extent of the breakdown in the financial sector, and the high degree of globalization of the world economy, we can confidently conclude that the present crisis will be the worst since the Great Depression that occurred in the 30s.

What has been happening since August 2008 is the burst of the speculative financial bubble caused essentially by neoliberal policies.  At this point the crisis is beginning to affect the real economy, that is, the economy that produces real goods and services, development of technology, and use values that can be used to satisfy needs.  How much more will it affect the real economy?  It is hard to say.  There are many opinions on this subject.  Some suggest that the crisis may last between two and five years.  If we use historical references, we see that the crisis of the 30s started in October 1929, developed at full speed until 1933, and the economies had not fully recovered their previous levels of activity when the Second World War started in 1939.

What finally solved that crisis — and I put “solve” between quotation marks because I’m referring to how capitalism solves a crisis — was precisely the Second World War; it was the destruction of productive forces as a result of the war that allowed post-1945 capitalism to initiate a new growth stage based on the reconstruction of everything that had been destroyed by the war.  Every crisis, whether or not linked to a war, is above all a process of destruction of the productive forces.

Turning to the current situation, I would not presume to make a precise forecast on the duration of the crisis, but I will say that it is far from having hit bottom.

The burst of the financial bubble has caused the collapse of stock markets and the bankruptcy of large corporate speculators (the so-called investment banks, which in fact are not productive investors but speculative investors).  Large banks have become bankrupt and credit at a global level has become scarce and expensive.  The prices of raw materials and oil have plunged.  Sectors of the real economy, such as the automobile industry in the USA, are beginning to be affected by the crisis: the three largest companies, General Motors, Ford, and Chrysler, are receiving support from the government to avoid bankruptcy.  Several airlines have closed down, and flights have been reduced.  Unemployment is on the rise, tourism is also affected.  It is a cascading process, which can lead to a much deeper crisis in 2009.

I think that the current crisis is, without doubt, another cyclical crisis of capitalism.  It is one more in the sense that the system that has been in place since 1825, the date of the first crisis identified by Marx, has suffered hundreds of similar crises.  A crisis is not an abnormality of capitalism; rather, it is a regular feature and is even necessary to the system.  Capitalism follows a particular logic, since it needs to destroy productive forces in order to pave the way for another stage of economic growth.  However, the current crisis is undoubtedly the mark of a very profound deterioration within the capitalist system.

I believe the crisis can reach very serious dimensions, but I do not think that, on its own, it represents the end of the capitalist system or its definitive destruction.  One of the things that Marx argued with great lucidity was that capitalism does not collapse through an economic crisis.  Capitalism has to be brought down, through political actions.

Of course I do.  To think that capitalism will collapse on its own, due to a spontaneous force like an economic crisis, is to believe in utopia.  The crisis may create conditions that promote large anti-capitalist political movements.  A capable leadership of the masses that is adept at the art of politics can take advantage of the favorable conditions created by the greater poverty, unemployment, large-scale bankruptcy, and desperation of the masses generated by the crisis.

Throughout history, major economic crises have been linked to revolutionary movements.  For example, during the First World War there was a profound capitalist crisis, and the success of the first socialist revolution in Russia was linked to this.  The crisis of the 1930s, however, was linked to the rise of fascism because in Germany and Italy the right successfully capitalized on the desperation of the masses as a result of the crisis and led them toward far-right, fascist, chauvinist, and ultranationalist positions.

What I want to stress is that nothing is set in stone in history.  It all depends on the skill and expertise of the contending political forces.  In the present situation, I think that it is possible to think about change: we are in a situation that in my view is quite likely to result in a radicalization of anti-capitalist movements.

I think the differences lie especially in the context.  The present crisis is particularly complicated because the global economy is much more complicated than it was in 1929.  In the first place, the level of economic globalization is vastly greater.  The degree of interconnectedness of national economies back in 1929 was still incipient, corresponding to the technologies available at the time, especially in transportation and communications.  In 1929 there was no internet, no email, no jet planes; they depended on telegraph communications, telephones were still quite underdeveloped, and planes were just starting to take to the skies.

Today the situation is very different.  Globalization ensures that whatever happens in a powerful economy has an impact, within minutes, on the rest of the world.  Markets are greatly interconnected, especially global financial markets, and that means that the world economy is like a spider web in which we are all trapped.  A movement in any part of the spider web is felt everywhere else.  Therefore, the crisis’s capacity to spread is infinitely greater today than in 1929.  That is the first difference.

Secondly, the level of financialization of the global economy is also vastly greater.  Speculative capital and its operations play a much greater role than in 1929.  Back then there were stock markets, but their functioning was much more simple.  Today, financial speculation has achieved immense sophistication, and this sophistication is at the same time one of its weak points.  That is, the speculative operations are so sophisticated, risky, unreal, and fraudulent that they have been at the basis of the global financial explosion.

In essence that is what they are trying to do: to apply neo-Keynesian methods in a very diffused manner.  We can see this in what Barack Obama has announced in connection with a major public works program including the reconstruction of the highway system (roads, bridges, etc).  That is a typical Keynesian method of generating employment and income and stimulating demand.  But at the same time, measures like this are being combined with others that are contradictory, such as rescuing bankrupt speculators and allocating huge amounts of money to reconstitute the speculative structure which has failed and collapsed.

This is in contradiction to classic Keynesianism, and a clear expression that the neoliberals continue to hold some key positions of power; in fact, they have not been removed.  We are witnessing a battle between a neo-liberalism that is unwilling to die and a neo-Keynesianism that is supposedly being established.

I very much doubt that neo-Keynesianism, even if it is strictly applied, can be the solution to this crisis, because the current crisis has new components.  The crisis combines elements of over- and under-production simultaneously; it is also a crisis that coincides with an attack on the environment so massive that it is not only an economic but also environmental crisis, jeopardizing the survival of human beings and the conditions for human life on this planet.

Of course.  It is inconceivable that Keynesianism and neo-Keynesianism can be an infallible recipe to resolve the economic problems of capitalism.  Capitalism has suffered major crises with both neoliberal and Keynesian policies.  Between 1973 and 1975 there was a severe capitalist crisis that occurred under Keynesian policies, and that was precisely a factor that brought about the substitution of neoliberal policy for Keynesian policy.

We should put no credence in the false dichotomy according to which neoliberalism provokes the crisis and Keynesianism resolves it.  Simply put, the system is contradictory and has a tendency to develop periodic economic crises.  Whether they are neoliberal or Keynesian, economic policies can facilitate, postpone, or stimulate, but are not able to eliminate, capitalist crises.

Without a doubt.  I am more convinced of this than ever before and I believe that we are very clearly faced today with the dilemma posed by Rosa Luxemburg: “Socialism or barbarism.”  I do not believe that humanity will regress to barbarism, if only because our survival instinct is the strongest of all.

I believe the rational position will prevail, and the rational position implies a sense of social justice.  I think we will overcome capitalism, and we will come to implement a creative socialism, socialism as a permanent search, which is not to deny that the system has certain common general basic principles that apply to all socialisms.  However, based on these principles, there are immense possibilities for experimentation, controversy, and creativity.

I think so.

Correa raised a good point.  The socialism practiced by the countries of the Socialist Camp replicated the development model of capitalism, in the sense that socialism was conceived as a quantitative result of growth in productive forces.  It thus established a purely quantitative competition with capitalism, and development consisted in achieving this without taking into account that the capitalist model of development means the structuring of a consumer society that is inconceivable for humanity as a whole.

The planet would not survive.  It is impossible to replicate the model of one car for each family — the model of the idyllic North American society, Hollywood, etc. — that’s absolutely impossible.  It is also impossible for this to continue to be the reality for the 250 million inhabitants of the United States, with a huge rearguard of poverty in the rest of the world.  It is therefore necessary to come up with another model of development that is compatible with the environment and has a much more collective way of functioning.

Although I heard Correa say many correct things, there was one that seems incorrect to me.  In his TV interview, when he was talking about this socialism of the 21st century, with which I am in full agreement, he referred to things that would be obsolete and would have to be done away with.  Amongst them, he mentioned the class struggle, but I think that what he was explaining in his lecture in the main assembly hall about the political struggles that confront him in Ecuador, what he was describing, is nothing more than an episode of the class struggle in which the project he represents is immersed.

Who opposes this agenda?  It is undoubtedly the oligarchy, the bourgeoisie.  Who can he rely on to support him against those enemies?  The workers, the peasants, the indigenous peoples.  What I have in mind is not a narrow classic definition of “class,” but the unquestionable existence of social classes, broadly speaking, and the struggle of those classes is undeniable and evident.  If we renounce the class struggle, what would we be left with?  Class collaboration?  I do not think Ecuador can proceed to 21st century socialism with the cooperation of people like Gustavo Novoa or that sector of the Catholic church and all those who are now trying to overthrow Correa.

I do not have high hopes of change.  I believe that Obama’s government may represent a certain change in US politics that is more cosmetic than substantive.  In my opinion, he represents the position of a certain political sector in the United States which understood that it was impossible to continue with a regime that was as unpopular, worn out, and disagreeable as that of George Bush.  However, there is a factor we must take into account, giving him at least the benefit of the doubt: Obama’s ideas are one thing, and where the deepening economic crisis may take him is another thing.  And once again I have to use the thirties as an example.

In 1932, when the crisis was full-blown, Franklin D. Roosevelt was elected president.  His ideas were nothing extraordinary, there was nothing in his election platform that would suggest what would happen next: his policy of active state intervention in the economy, of basing himself on the trade unions, or regulating the private US economy along the lines of a national economy.

All those measures were taken more as the result of what the crisis forced him to do than as a result of a pre-existing political philosophy.  Something similar could happen with Obama; we must give him the benefit of the doubt to see where the crisis might take him.

I think that the integration of Latin America and the Caribbean will be a key strategic factor in the future of the region, of course, and I do not mean integration as an appendage of the United States.  For decades, the priority of Latin American integration has been all rhetoric and no practice.  But now we are seeing the beginning of a new period, characterized in particular by the Summit of Salvador de Bahía, held last December, when Cuba joined the Rio Group.  We also have the ALBA (Bolivarian Alternative for the Americas), a new model of integration based on solidarity and cooperation, not on the market.

This situation coincides with the big crisis that is forcing Latin America to rethink her position in the global economy.  This also coincides with the profound crisis in the neoliberal policy that dominated the region during the last 30 years.  It is a great moment, and I think that there is a real possibility that true Latin American and Caribbean integration is beginning to take firm steps.

Some commentators are arguing that in the wake of the current crisis the world economy will be structured in large regional blocs: one in Asia, another that will continue to exist in North America, and a new one taking shape in Latin America.  This is a very interesting possibility.

 

1  Former president of Ecuador (2000-2003), now living in exile in the Dominican Republic. — RF.