Notes on the international economic situation

* All sources consulted (OECD, WB, IMF reports, JP Morgan forecasts), affirm -with some variations and a logical political “filter”- a common forecast: 2019 initiates an inflection of the world economy, which slows down and tends to accumulate tensions, preparing a new recession for 2020-2021. The hard data and statistics confirm this forecast, and we should review them to make a political interpretation of them and arm ourselves in our intervention, program and tasks.

The forecasts of the capitalists themselves

* The last semi-annual report of the WB indicates a general decline in the economy from the peak of 2017-2018, progressively until 2021. The fall is concentrated in the so-called “advanced economies”: the US, the Eurozone and China.

* The IMF indicates that “70% of the global economy” slows down and points out factors of uncertainty:

– The China-US trade war, which affects international trade, slowing it down and provoking operations of speculative withdrawal from the economy (speculation).

– The retraction of the automotive industry in Germany, and the symptoms of recession in France. 

 – Three weak links in the so-called emerging economies: Turkey, Argentina and Pakistan. The 3 devalued their currencies, the 3 suffered financial runs and flight of foreign currency, Argentina and Pakistan agreed to agreements with the IMF, Erdogan has not yet.

The panorama by regions, is also one of decline

* Taken by regions, the world economy, we have:

– China, deceleration, fall of industrial activity, and accumulated overproduction.

– The EU, elements of collapse, with Brexit as a key point of uncertainty, and a jump in the debts of countries, companies and people, which reaches historical levels in relation to GDP.

– Latin America, global decline of activity, fall in international prices of commodities and bloated external debt in Argentina and Brazil.

– USA, stagnates in 2019, after a rebound in 2018, though this was caused by the policy of repatriation of companies with tax subsidies, now accumulates tensions by the massive debts of more than 50% of the working class with loans for purchasing cars -with those potentially explosive “toxic” assets spread throughout the world. 

The variables that anticipate new inflections of the crisis

* The key indicators of the world economy and, at the same time, of what is coming are the following variables:

– Declining productive investment in favor of financialization or short-term speculation.

– Decline of the absolute volume of international trade (general GDP decline).

– Low capitalist rate of profit (RP), lower than the levels prior to 2008 and well behind the percentage of the second postwar period of the last century, in the period known as the “economic boom”.

* These are the keys of the general economic situation with a fundamental knot: the world bourgeoisie is not able to reverse the declining tendency of the RP on a global scale. It is what we could call a long post-crisis of 2008 depression.

* The result is obviously a general increase in poverty, especially in children and young people; record levels of unemployment in those under 25 and a growing level of socio-ecological depredation.

* The flip side is a huge increase in the concentration of wealth. Just to take the case of the richest continent in the world: in Europe, the balance sheet of a decade of crisis widened the gap between the richest 20% of the population and the poorest 20%, and multiplied by 5 the income of that segment of higher income per capita.

Two historical references to take into account

* More than ten years after the outbreak of the crisis in 2008, the world economy has not recovered the levels prior to its outbreak. The evolution of this decade is only comparable to the periods of prolonged depression that occurred at the end of the 19th century, between the years 1873-1897, and the decade of the 30s, between 1929 and 1942. From those prolonged periods, capitalism managed to get out towards a new cycle of growth after two world wars, tens of millions of deaths and a massive destruction of productive forces.   

* All the symptoms of the economy add tensions, contradictions, and seem to prepare a new breaking point towards another recession, even sharper than in 2008.

Tension and polarization emerge from the economy in crisis

* This general picture of the economy is behind all social and political tensions: the US-China dispute is over the distribution of the declining world surplus, in particular to avoid the penetration of China in 5G technology; the Brexit crisis has the same motives, because the British bourgeoisie loses more than it gains with the “divorce”; the reboot of what could be a new chapter of the “Arab revolutions” also has as its trigger in a jump in inflation, scarcity and social crisis; and in Latin America, short-term speculation and exponential growth of debt are reinforced by the fall of the regional RP.

* Therefore, this is the basis for a general understanding of the political process, of a polarization that expresses the imperialist and bourgeois need to increase the levels of exploitation and productivity, and the mass response to that orientation: against the capitalist agenda of “structural reforms” (labor and social security), the masses react and mobilize, despite the role of traitor union and political leaders.

* The retreat of reformist formations by becoming managers of this perspective of austerity is understandable because they also propose themselves as administrators of the capitalist agenda, and the loss of the social base when they fail to apply austerity measures, feeds the crisis and polarization.

* The emergence of right wing forces must be placed in this context: they are the “project” of bourgeois fractions to change the relation of forces in the class struggle, and increase the levels of surplus value and exploitation with the so-called “structural reforms” that are still pending on a global scale. They made progress in the EU -with flexibilization, precarization and attack on pensions- but have not yet managed to pulverize the social rights won during the second post-war period.

* The response is more struggles and, therefore, the emergence of new activism, new vanguard and high opportunities for revolutionaries to build in this general situation.

The tendencies we identify

* Therefore we must prepare for a tendency toward more tensions, processes in the class struggle, political crises and opportunities. At the same time, we can not rule out tactical triumphs of the bourgeoisie and imperialism in this dynamic (we have to follow Venezuela, for example). Without falling into excessive optimism of economic catastrophism, these are the general tendencies.

* There are strong ideological-political debates in the field of economics, in the struggle of ideas over the prognosis and the course. Stiglitz, the neo-Keynesian Nobel in economics, has recently published an article in the New York Times called “Progressive Capitalism” as a response to the advance of “socialist” ideas in the US. This character is upheld by all the Latin American progressives and is also a man of reference of Podemos, the Left Bloco in Portugal and other reformist formations. In Latin America it is the reference to the “Portuguese” model, the false ideology that it is possible to “negotiate with the IMF in a position of favorable strength without breaking”, and of course, the return to 200 years ago, to neoclassical theories or their later vulgar versions, with the neoliberal right wing.

* Along with deepening the analysis to arm ourselves in hypothesis and tendencies, and define politics, orientation and tasks to build our organizations, the ideological struggle against the political and trade union apparatuses, disseminators of neo-reformism, neo-Keynesianism, and also of false polemics about “artificial intelligence”, the fetish of robotization and the “end of the working class”, poses a theoretical-political battle for the ideas of revolutionary Marxism, the Theory of Permanent Revolution, the law of unequal and combined development, and the Transitional Program, as a basis for the construction of revolutionary parties and the international.

In short: productive investment falls due to the uncertainty of the RP, this intensifies speculation, “protectionist” retreat and commercial tensions, it stagnates the world economy, makes demand fall -for example- of commodities, increases the weight of the public debt, the private corporate debt (of the companies), and also people´s individual debts. All this anticipates new crisis inflections, due to the irreversible bourgeois necessity to intensify the offensive on the masses, who prepare new movements of struggle, crisis and opportunities.

Some points of reference on slogans and our program

* With this general panorama, the emergency and transitional slogans in response for the capitalists to pay for the crisis, become of key importance both for agitation, propagandist agitation and propaganda for the formation of our cadre. We mention some as a reference:

* In defense of the social right to work, occupation of any company that closes or lays off. Expropriation and workers´ control.

* To guarantee full employment, distribution and reduction of working hours.

* Against the high cost of living, general wage increase, equivalent to the real cost of living and indexed to real inflation.

* In defense of a social security system of solidarity, and pensions, not as “old age subsidies”, but as deferred salary, equivalent to 82% mobile of the best wage of the workers belonging to the same activity.

* To guarantee access to general mass consumption, price control, against raises and capitalist speculation, controlled by workers and consumers’ organizations, including expropriatory sanctions.

* To guarantee public services such as social rights, nationalization of all privatized companies of energy, transportation, telecommunications, running water and others, without compensation, under the social control of workers and consumers. 

* To strengthen the state budget and its reorientation toward education, health, infrastructure and a general reactivation of the economy, suspension of payments of external debt, nationalization of banking and foreign trade.

* Opposed to the capitalist anarchy of production, democratic planning with direct intervention of the working class in the entire circuit of the economy, including distribution and general marketing.