[FONT=arial]WHAT CAUSED THE ECONOMIC CRISIS?[/FONT]
[FONT=arial](The following article is from the March 1-15, 2009, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $25/year, or $12 low income rate; for U.S. readers - $25 US per year; other overseas readers - $25 US or $35 CDN per year. Send to: People's Voice, c/o PV Business Manager, 133 Herkimer St., Unit 502, Hamilton, ON, L8P 2H3.) [/FONT]
[FONT=arial]Excerpts from the report of the Central Committee of the Communist Party of Canada, Jan. 31-Feb. 1, 2009. [/FONT]
[FONT=arial]The most significant development since our last meeting in August 2008 is the deepening global economic crisis that had been maturing for several years, but which erupted in force with the stock market crashes in early October and which has been unfolding in the material (goods and services) economy with ever-greater intensity and rapidity since. The early signs of the impending crisis emerged in the US financial sector in August 2007, but as predicted at our December 2007 CC meeting, it soon grew to encompass the entire US and world capitalist economies. At latest count, most of the leading capitalist countries - the U.S., Germany, Japan and Canada among them - are now `officially' in recession, but even these statistics mask the universal breadth of the global crisis. [/FONT]
[FONT=arial] No domestic economy will be spared its devastating impact. Even the humming Chinese economy is now sliding into a major downturn as exports plummet and factories have begun laying off workers in the millions. The latest International Labour Organization report has recently predicted global job losses this year alone will exceed 50 million, but even this is likely a conservative estimate. Third world economies will be especially hard-hit as commodity prices plunge, global demand for manufactured goods slumps, and as advanced capitalist countries cut back on foreign aid and direct foreign investment. [/FONT]
[FONT=arial] In such a situation all of the contradictions plaguing the global economy, and social disparities within each of the countries, will be further exacerbated. The working class, peasantry and the marginalized in the poorer countries will be hardest hit because the `social safety net' in such countries is much weaker or virtually nonexistent.... [/FONT]
[FONT=arial] The manifestations of the crisis are readily apparent everywhere; what is critically important for the working class and for our Party however is an understanding of its basic causes, its roots. Big Business interests and their governments, and even reformists from the camp of social democracy, have vested interests in keeping the real nature of the crisis well hidden, because bringing the truth to light would lead working people and other oppressed and exploited segments of the people to question the very nature of the dominant system, and ultimately to organize and fight for a fundamental socialist alternative to monopoly capitalism, to imperialism. [/FONT]
[FONT=arial] If one were to listen and believe the recent comments of, for instance, British (Labour) Prime Minister Gordon Brown or U.S. President Barack Obama, one would be led to conclude that the real culprits responsible for the current economic meltdown are a handful of `irresponsible' bankers and investment brokers. Naming a `fall guy' is a tried-and-true method to steer the working class away from making a systemic critique of the inner `boom and bust' workings of capitalism. [/FONT]
[FONT=arial] Cyclical crises under capitalism are nothing new - they are in fact an inherent and recurring feature of the capitalist mode of production. What distinguishes the current crisis from previous ones are those features which have come to play a dominant role in the process of capital accumulation, in particular the role of speculative capital...[/FONT]
[FONT=arial] Governments are not the only victims of spiralling debt. As we noted in December 2007, the prolongation of the `growth phase' leading up to the current meltdown was achieved by maintaining mass consumption at artificially high levels for a protracted period through the extension of more and more paper credit. "What is new in the current situation is not the extension of credit per se, but rather the scale of that credit extension. This development reflects the increasingly parasitical character of finance capitalism in today's world," our Central Committee concluded. [/FONT]
[FONT=arial] Such objective dynamics in the development of monopoly capitalism have been in turn spurred on and exacerbated by the neoliberal policies pursued by all the leading imperialist states. While they succeeded in the short run in accelerating the accumulation of capital and overcoming the general tendency, as Marx and Engels noted, for the rate of profit to decline, the `debt bubble' and the growing gap between real and paper wealth eventually had to give way. Other structural contradictions of the systemic crisis of capitalism, such as increasing and permanent militarization and the impact of environmental degradation have combined to give rise to a `perfect storm,' as even some bourgeois economists have come to describe it. [/FONT]
[FONT=arial] These structural aspects of the systemic crisis of global capitalism are staggering. Take the impact of growing militarization, for instance. According to a report issued by the Stockholm International Peace Research Institute, by 2006 world military expenditures had reached $1,204 billion, a 37 per cent increase over the 10-year period since 1997. The USA was responsible for about 80 per cent of the increase and its military expenditure now accounts for almost half of the world total. [/FONT]
[FONT=arial] Add to this the cost effect of environmental devastation. A recent World Wildlife Fund study, The Living Planet, reports that every year 30% more resources are being consumed than the Earth can replenish, which is leading to deforestation, degraded soils, polluted air and water, and dramatic declines in numbers of fish and other species. As a result, we are running up an ecological debt of $4 - $4.5 trillion dollars every year - double the estimated losses made by the world's financial institutions as a result of the credit crisis. The figure is based on a UN report which calculated the economic value of services provided by ecosystems destroyed annually, such as diminished rainfall for crops or reduced flood protection. [/FONT]
[FONT=arial] It is therefore important to emphasize that the current crisis is not the result of the implementation of neoliberal policies such as free trade, deregulation, privatization, and anti-labour employment policies, etc.; rather, it is the inevitable outcome of the systemic crisis of capitalism itself. That said, distortions wrought by neoliberal policy have certainly intensified the reach and severity of the global crisis. [/FONT]
[FONT=arial] (Next issue: different approaches to addressing the crisis.)[/FONT]
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