The neoliberalism debate in the ISA – Majority positions of May 2020

World Perspectives Update

This statement was drafted at the beginning of May 2020 by ISA’s International Full Time Sub-Commission (EB, SB, DB, TC, CG, SG, AMox, PAW), then discussed and amended by the International Executive and International Committee, and agreed with 5 IC members (AP (Greece), EM (Greece), NK (Greece), NA (Greece) and AK (Cyprus) abstaining. 

1. No-one can say for sure how long the pandemic will last, or predict the lasting health effects of this new virus. We are only at the beginning of an entirely new and unprecedented process. For Marxists, however, it is clear that the key features of the recent period remain present, and have been qualitatively strengthened and accelerated – class conflict, record inequality, destruction of the environment, sexism, racism and right-wing nationalism. The pandemic has deepened the horrors already existing, proving capitalism to be a failed system, which has facilitated and aided the spread of the coronavirus.

2. Today, fear of the pandemic is mixed with anxiety about the effects on jobs, wages, housing and health. Workers around the world accepted or voluntarily implemented social distancing. Moreover, it was most often workers who were to the fore in demanding measures to combat the virus, for greater protection or for workplaces to be closed, in opposition to managers and shareholders who themselves had already gone into hiding. The global working class, in its response to the pandemic, has begun to demonstrate that it is capable of leading humanity to a new stage of development, once the current parasitic, inefficient and degenerate ruling class is forced off the scene of history. 

3. Already, in the initial stages of this new period, governments, ruling parties and presidents fear the anger from below. Who was responsible for not preparing the healthcare system for the pandemic which experts had been warning would come? In almost all countries, the standard of healthcare has fallen over many years due to austerity, privatisation and a shift to precarious working conditions for health workers. This, in contrast to excesses on stock markets, military spending and luxury goods for the super-rich. Today’s capitalist political establishment implemented these, their favoured policies, unfortunately usually meeting with little resistance from the official leaders of the labour movement. 

4. The new global Great Depression is speeding up the tensions, contradictions and crises that ISA analysed at our World Congress in January, where we also began a discussion about the possible effects of the new coronavirus, which was beginning to spread globally at the time. 

The pandemic

5. At the time of writing (6 May), the official number of Covid-19 dead globally is 259,496, with 3.7 million confirmed cases. These figures, of course, are severe underestimations. Many deaths and in some regions the majority are not reported. This is partly because Covid-19 cases and deaths are consciously under-reported in some sectors, such as in elderly care in European countries, but mainly because many have died at home. In many neocolonial countries,there is simply often no system in place to test and/or register cases and deaths. The lack of systematic mass testing makes the data for registered infected people of limited meaning. As importantly, the severe lack of proper healthcare resources means that other treatments are being delayed as the hospitals are crowded out by Coronavirus patients: in the developed world cancer and heart treatments are being postponed, whilst health organisations warn of setbacks in the treatment of TB, AIDS and malaria in the poorer countries, which will lead to hundreds of thousands more unnecessary deaths. 

6. The fact that this is a new virus (SARS-CoV-2) makes all predictions difficult. The World Health Organisation, the international body responsible for coordinating public health responses, which is failing and disintegrating due to imperialist in-fighting, has declared that it’s not clear whether those who recover are immune. A high number of infected, around two thirds, show little or no symptoms. Regarding a vaccine, most estimates are that it will take eighteen months to develop. The R0 (how many people each infected person in turn will infect) when no counter-measures are taken seems to be around 2 or 2.5 for Covid-19, although some recent research suggests it may be as high as 6.6. For seasonal flu it is 1.3.

7. One of many reports, from the Center for Infectious Disease Research and Policy in Minnesota, US, gives three different scenarios. In their most likely scenario, the outbreak will last 18 to 24 months, similar to the Spanish flu of 100 years ago. That prognosis includes a long, and larger, wave later this year. They also discuss a less likely scenario, where the current wave is the only one, underlining how unsure any prognoses are.

Ending the lockdown

8. A classic prognosis of the effects of a pandemic (Mckibbin & Sidorenko, Australian National University 2006) predicted 71 million dead in their “severe” scenario and 1.4 million in the “mild” variant. It is clear that the massive lockdowns have so far lowered the number of casualties. On the other hand, the economic effects are much worse than that predicted in this 2006 scenario, which predicted a global slump of -4.5%.

9. The struggle between health and profits is shown in the debate whether and how lockdowns and social distancing should end. In many countries, however, this is mixed up with anxiety among millions of workers and poor, especially in the neocolonial world and for workers with precarious jobs, whom the lockdowns have simply deprived of money and food. For this reason, a distinction has to be made between the protests by Coronavirus-deniers provoked into action by the reactionary ravings of Trump and Bolsonaro, and the hunger protests by desperate masses in the less-developed world. 

10. Lockdowns have been used to limit the spread, but are not enough to eradicate the virus. Vulnerable, old and sick people need special protection and with the absence of sufficient testing and protection, the only proposal to them from the ruling class is to stay in quarantine until there is a vaccine. Premature and reckless lifting of lockdown and loosening of social distancing rules – such as in Texas or Georgia in the US, or in Lagos in Nigeria – will most likely pave the way for serious new waves of infections. Our demand must be for food and healthcare for everyone to avoid workers and the poor being forced back to work while there is still high danger of being infected. No one should have to choose between dying of a virus, or dying of hunger. 

11. The effects of the lockdown in relation to violence against women, and mental health are also significant issues for us to take up. We stand for the maximum possible individual freedom, within what is necessary to ensure health and safety, and for all necessary resources to be put in place via free public health and safety programmes to address these issues. Crucially, we also demand mass testing and democratically controlled tracing programmes, the free provision of all necessary PPE and democratic working class and community control over what businesses open and when, as well as over the details and duration of any necessary lockdown measures. This aspect of our programme will be of fundamental importance in the next weeks and months

Increased global cold war

12. The increased inter-imperialist conflict between the US and China, which preceded the Corona Depression, has reached a new level. The “phase one” trade deal from January has of course ended in failure, with Chinese imports collapsing instead of increasing. Moreover, as we have analysed, the conflict is about much more than trade, from technology and military capability to strategic global interests and power. It is a cold war between the dominant capitalist power of the post-war period and its rising challenger, although not between different social systems as was the case with the cold war between the US and the Soviet Union.

13. The Trump administration now talks about the “China virus”, attacks the WHO for being “China-centric” and encourages both US states and other countries to demand “reparations” from China. Secretary of state, Mike Pompeo, has named China “the central threat of our times”, and the Republican Party advises its electoral candidates to attack China. Leading Democrats, in turn, are criticising Trump for being not hard enough against China.

14. This reflects a change among US capitalists, who have become increasingly supportive of protectionism and more aggressive measures against China. Their propaganda has also affected US public opinion, with record numbers being wary of China. Other Western powers point in the same direction, with British Foreign Secretary, Dominic Raab (who was standing in for Boris Johnson as acting Prime Minister at the time) stating that Britain would not “go back to normal” in its relations with China following the pandemic. The offensive from Chinese imperialism in Southern and Eastern Europe clearly worries the dominant European powers.

15. Some of the propaganda even points towards US imperialism considering “regime change” in China, something that was not part of the plan before. Beijing, on the other hand, is taking an increasingly hard line, naming Pompeo a “political virus”. Propaganda from the Chinese regime stresses its “success” with Covid-19 and its assistance with medical supplies to other countries. Undoubtedly, there will be politicians and capitalists, and even some sections of the population who, compared with their own governments’ failures, are impressed by the Chinese dictatorship. In truth, of course, the CCP regime’s (mis) handling of the epidemic was anything but exemplary.

16. The process of decoupling – the development of two parallel spheres of influence, led by the US and China respectively – which we have pointed towards, is increasing in tempo. Companies are moving out of China and the US campaign against Huawei is being ramped up. None of this, however, points to any clear winners, but rather the collapse of a crucial economic de-facto alliance that for more than two decades benefited the ruling classes in both countries. How far the conflict will develop remains to be seen, but sharper conflict, including possible military incidents (more likely of an indirect or proxy character) are not excluded. The conflict between Washington and Beijing will affect both their spheres of influence and make space for some regimes – not least Russia – to balance between them and seize opportunities.

Politics – 2019 continues

17. In the first stages of wars and big crises, governments normally get increased support. It has also been so this time, in most cases. The built-up frustration and anger shown in revolts and struggles many times since the 2008-09 recession, however, has not disappeared. Already, we have seen protests of healthcare workers and new protests in Lebanon, Sudan and elsewhere. Politically, the support for Bernie Sanders, which he scandalously threw away, was an example of both the anger at neoliberalism and the search for an alternative with growing support for “democratic socialism”. 

18. The main feature in the world situation in the last half of 2019 and early 2020 was the huge global wave of mass struggles. Haiti, Puerto Rico, Hong Kong, Sudan, Algeria, Ecuador, Chile, Lebanon, Iraq, Iran, and France all saw millions on the streets and the working class moving into action against those in power, meeting severe repression. The climate movement among mainly young people was a global phenomenon, and so were the women’s and feminist movements. This process has been halted by the pandemic, but will return, potentially on a higher level. 

19. Politicians initially showing higher popularity ratings will meet with resistance, intertwined with a growing criticism of the capitalist system. The complications which have featured up until now, fundamentally of political leadership, consciousness and organisation are still there, but events, together with the experience of the masses in struggle and the conscious intervention of Marxists, can quickly lead to transformations in these fields.

20. Despite a low starting point in terms of consciousness, the reaction to the Great Recession was, in its first phase, primarily expressed in a shift towards the left, in a basic anticapitalist direction, and openness to socialist ideas. This was despite the fact that the trade union leaders failed to adequately organise and lead the fightback against austerity. This development of consciousness did not go further and deepen for a number of reasons, including the weak response from the union leadership, and that various mass left forces (the worst case being Syriza) failed the test of the moment and bent to the pressure of the ruling class and a huge propaganda offensive by the capitalist establishment and their media. It was only after all of this that the space opened up for right-wing forces to make gains on a bigger scale. This, combined with the fact that since the Great Recession women and young people have become vital elements in the class struggle and political situation, is an important lesson and points to the enormous responsibility of the left, labour movement and organised revolutionary socialists in the coming period.

World Economy Headed for a ‘Greater Depression’?

21. The most significant economic crisis since the 1930s has hit the world economy at an unprecedented speed. The impact of the Covid-19 pandemic has condensed what happened over two – three years in the 1930s economic depression into a matter of weeks. This is a global economic crisis like we have never seen before.

22. Thirty million jobs have already been officially lost in the US (in reality an underestimate), with 59 million job losses predicted for Europe.There was an estimated 4.8% fall in US GDP for the first quarter of 2020, which only covers two weeks of the lockdown. Predictions are for a 25 – 30% drop in the second quarter. The Bank of England forecasts that the UK economy has entered into its deepest recession in 300 years, with output plunging almost 30% in the first half of the year.

23. Yet Covid-19 is not the only reason for this economic meltdown, the conditions already existed prior to the emergence of the pandemic for a new world recession. As we have analysed, while the pandemic has acted as a trigger and accelerating factor, it is underlying weaknesses and vulnerabilities in the world economy, stored up since the 2007/8 Great Recession, which are now being brutally exposed, driving the world economy into depression. 

24. In an article entitled “Ten reasons why a ‘Greater Depression’ for the 2020s is inevitable” (The UK Guardian 29 April 2020) by the renowned economist, Nouriel Roubini, he argues: “These 10 risks, already looming large before Covid-19 struck, now threaten to fuel a perfect storm that sweeps the entire global economy into a decade of despair. By the 2030s, technology and more competent political leadership may be able to reduce, resolve, or minimise many of these problems, giving rise to a more inclusive, cooperative, and stable international order. But any happy ending assumes that we find a way to survive the coming Greater Depression.”

25. Roubini’s pessimism is shared by many other leading economists including Martin Wolf, Chief Economics Commentator for the Financial Times, who said in a video interview: “If you think we are now in 1930, as it were, we’re going over a cliff faster than in 1930. It’s more global than in 1930. And if it goes like this for two or three years, then I think political consequences which, ultimately, will feed back into the economy are just wildly unpredictable and could be devastating. Without the Great Depression, Adolf Hitler would never have been elected to power in Germany….

26. “We will have to consider whether we can continue with gig working, precarious working. We will have to rethink how we relate the winners to the losers in our economic system. Otherwise, I don’t believe our democratic systems will survive.”

27. The unfolding new world recession, which seems certain to assume the form of a depression (a sustained long-term downturn in the global economy) is creating the conditions that will reshape the world politically. The potential is now inherent in this situation for mass struggles by the working class on every continent and a radical shift in the consciousness of hundreds of millions of working class people to search for an alternative to capitalism and towards the need for a socialist transformation of society. While events will not proceed in a straight line, and the dramatic economic collapse and growth of mass unemployment can produce an important “stunning effect” among sections of the population for a period, ultimately this crisis will lead to protests, class struggles, revolts and revolutions, as well as counter revolutionary attempts by the ruling class to use draconian measures including military dictatorships to try to maintain themselves in power.

28. A prerequisite for the rebooting of the global economy without risking countless unnecessary deaths lies in mass testing, tracing and protection but most importantly in finding treatment and a vaccine for Covid-19. Scientists estimate that it may be 12- 18 months before there is a vaccine, if there is one at all. Yet in the meantime, capitalist governments are rushing to reopen their economies.

29. This crisis is far deeper than the Great Recession of 2007 – 2008, which was the defining event of the last decade, and itself opened up an epoch of revolution and counter revolution. Then, China still had the ability to act as a force which assisted in dragging the world economy out of an even worse quagmire. However, China’s economy shrank by 6.8% in the first three months of 2020, its first contraction in 28 years, signalling gloom for the country and also for the global economy. 

30. JP Morgan (US multinational investment bank) predicts that the pandemic could cost $5.5 trillion in lost economic output, the equivalent of the annual output of the Japanese economy. Oxford Economics predict that global GDP may decline in 2020 by 9.3%, which is more than twice the decline of 4% that occurred during the Great Recession. Anything under 2.5% growth in global GDP is deemed to be a world recession.

31. The weak economic conditions that existed prior to this crisis will hamper the ability of the capitalist class to create the conditions for economic growth. Chief among them is the debt crisis. Falls in GDP have a long lasting impact on the working class. It is estimated that despite the US going through its longest period of economic growth in the last ten years, everyone in the US has suffered a permanent loss in income of $10,200 per person since the Great Recession. Global debt has doubled since the Great Recession and The Economist predicts global government debt will now increase by $6 trillion to $66 trillion, from 105% of global GDP to 122%. Debt creates fragility and weakens demand as consumers, companies and governments struggle to repay their debts and the interest. 

32. The debt crisis is a direct result of capitalist globalisation and neoliberalism. In many of the advanced capitalist economies, these processes have seen the shrinking of the manufacturing industry, to be replaced by lower paid, insecure service sector jobs. In all recent economic crises the tactic of the bourgeoisie has been to inject trillions in liquidity into the economy via the banks and cheap loans and bailouts to multinational companies, furthering the dominance of finance capital even more. On top of this colossal crisis of corporate debt, which is possibly the biggest single underlying weakness in the world economy, household debt remains a ticking time bomb. Historically low interest rates have been used to “encourage” working class and middle class people to borrow more and more to buy commodities, whilst housing price bubbles created the illusion that borrowing against the equity of your home was a sure bet. Declining wages have created a dependency on debt. This debt overhang is millstone around the neck not just of economies but individual households as was the case before 2007

Central Banks in denial about 2021 “bounce back”

33. Central bank predictions of significant drops in GDP in 2020 to be followed by a spike in growth in 2021 are deeply flawed as they are based on the false premise that the pandemic will be brought under control in the near future and that society will just return to a form of “normality”. This will not happen. They are also based on the false premise that the pandemic and lockdowns are the organic cause of the coming global depression.

34. Before the “Great Lockdown”, up to 20% of companies in the US and Europe were barely making enough profit to cover running costs and service their debts. For many of these “zombie companies” the lockdown will be the nail in their coffins. Already major manufacturers such as Boeing in the US, Bayer in Germany and Rolls Royce in Britain, as well as multiple big aviation companies are announcing tens of thousands job losses. 

35. Mass unemployment and lost household income during the lockdown will shrink demand. The uncertainty of the next period will impact consumer spending as many fear the impact of a second wave of the virus and further lockdown measures as well as whether immunity endures. New knowledge about the character and health effects of the virus can also increase nervousness and have an economic impact. 

36. Although some have profited from the situation – like Amazon, Netflix etc – for most businesses, the situation is a catastrophe. Many businesses will emerge from the lockdown short of money and facing weak demand, on top of enduring supply chain shocks due to the uneven reopening of national industry and general disruption of international production and trade. There are also serious problems with food supply chains. A Goldman Sachs survey estimates that two-thirds of US small businesses will run out of cash within three months. 

37. In addition, numerous companies, including in finance, advertising and tech, will view the pandemic as an opportunity, through the use of remote working and automating technologies to cut costs, reduce their workforces which will further reduce demand. This also points to an enormous reduction in business travel, conferences, etc with further long term consequences for airlines, hotels, restaurants and other related sectors. Research shows that such structural changes during recent recessions have often contributed to the joblessness of the recoveries historically.

Impact of Stimulus Measures

38. Yet surely the injection of massive amounts of cash into the economy will result in economic growth? The massive injections of credit and loans – fiscal stimuli from central banks and governments amount to 9% of global GDP – is twice as much as during the Great Recession, so far. However, neoliberalism has created a form of “vampire capitalism”, with the capitalist class less focused on direct investment in the wealth-creating manufacturing industry and more focused on short-term profit making on the global stock markets. 

39. The economist Michael Pettis explained (Carnegie Endowment For International Peace, 11 October 2019), “Creating or borrowing money does not increase a country’s wealth unless doing so results directly or indirectly in productive investment. If US companies are reluctant to invest not because the cost of capital is high but rather because expected profitability is low, they are unlikely to respond to the trade-off between cheaper capital and lower demand by investing more.” The underlying structural problems of capitalism for which neoliberalism was a temporary fix are reasserting themselves with a vengeance.

40. Just as in the aftermath of the Great Recession much of the fiscal stimulus will end up being invested not in wealth production (manufacturing industry), but instead in the unproductive and largely fictitious financial assets of the stock market.

41. Deflation now stalks the global economy. It will be a long time before service industries such as tourism, which makes up a major part of many economies, including in the West, and the hospitality sector recover as continuing social distancing and travel bans will greatly impact on these sectors. Mass unemployment and the collapse in demand will drive deflation, which is a major problem for capitalism as it further cuts profits and makes debt (especially foreign debt) repayments even harder and results in more business closures. 

42. Prior to the pandemic global relations were seriously strained with the above mentioned Cold War between the US and China and trade tensions, even between the US and the EU. This crisis has added fuel to the fire and has exposed the limitations of the nation state once again. Rather than cooperate to tackle this humanitarian crisis, each individual capitalist government has put their own interests first in order to protect national big business and their political dominance in society. Bourgeois nationalism will increase as will tensions resulting in new trade wars, protectionism and even wars or proxy wars between major imperialist powers.

Move Away from Neoliberalism?

43. Neoliberalism was launched in the early 1980s as the capitalist class sought to restore profitability by eliminating many of the gains won by the working class in the post-war period, especially the welfare state, where it existed. With the global economic crisis in the mid-1970s, the capitalists left the Keynesianism of the 1950 and1960s behind.

44. In terms of economic policy neoliberalism is characterized first and foremost by monetarism and relentless promotion of “free markets” as well as removing obstacles to the movement of capital. Finance – the banks, central banks, stock markets and a lot of new innovations since – became more and more dominant. Privatisation (hardly heard of in the decades before) and public sector budget surpluses (debts had actually been key to the post-war upswing) became standard policies. Capitalist globalisation accelerated, and leaped further forward when capitalism was restored in Russia, China and Eastern Europe. However, the capitalist class never became truly international, still relying on their own national state for support and for a repressive apparatus, in a period which also featured increased military spending.

45. Now, capitalist governments are forced to introduce “unthinkable” measures – sick pay, cash to the unemployed, more money to health care, nationalisations,and even elements of “helicopter money” (direct cash payments to the population) in the US and Spain. To some extent, this was also the case after the crisis of 2008-09, but then the bourgeoisie quickly turned back to austerity and privatisations. And that is still a condition for governments borrowing from the IMF and World Bank today, for example. 

46. This time, however, stimulus measures are on a much greater scale than a decade ago, while demand, as well as trade and supply chains are collapsing. A bourgeois turn away from neo-liberal globalisation and towards nationalism is not “progressive” or the beginning of a more “humane” capitalism. Any money to workers or unemployed is something the capitalists are forced to do to save themselves. Ultimately they will seek to make the working class pay. New “national austerity”, could be on the agenda, instead of austerity demanded by the EU or the IMF. In the US we already see the threat of massive cuts to the public sector at the state level.

47. Neither does the current situation mean a return to the structural Keynesianism of the great post-war boom. This will more resemble the state capitalist measures, also often referred to as Keynesianism, of the 1930s when the capitalists were forced to take measures to defend their system under pressure from the masses but this was combined with savage attacks on working people. 

48. However, the fact that the ruling class is turning away from important parts of neo-liberalism is still an important change we should take note of. Mass anger and struggles from below, alongside the memory of the suffering following the Great Recession and fear of an even deeper crisis make it harder for capitalism to go back to the policies of the previous decades. The strongest example is the unprecedented pressure for more resources for health care, which will be central to politics and the class struggle in the next period. 

49. The previous “model” of neo-liberalism has no basis in the current situation. The new variant of “Keynesianism” will not correspond to the expectations of the masses, but rather raise further demands from below. While the term neoliberalism has become synonymous with anti-worker measures among some circles, partially due to modern day reformists who promote the dead end of nostalgia for a return to post-war Keynesianism, it is not the case that neoliberal capitalism has a monopoly on cutbacks, austerity and other attacks on the rights and conditions of the working class. This will become increasingly clear going forward.

50. The capitalist class is confronted with contradicting factors: they fear the political consequences of mass unemployment and mass poverty. Sooner or later this will lead to mass resistance, revolts, revolutions and a general political radicalisation. In addition, the rivalry between the imperialist countries will continue to increase. These factors will lead to more state intervention and an increasing search for national solutions. At the same time, the scale of the production of even minor companies goes far beyond the narrow borders of the nation state. Even more importantly, the problem of over-accumulation (essentially of fewer profitable investments) is bigger than ever before. Of course, objectively, capitalism will still need the free flow of capital across borders; the search for new fields of investment through further privatisation; the cutting of wages to maintain profits; cutbacks to public services, and other anti-working class measures. However, how far they can go in pursuing these aims, and when, depends on the resistance from the working class, with political factors playing an important role.

51. This will lead to contradictory phenomena: companies being (temporarily) taken into state ownership, while at the same time attempts being made to privatize public assets and services. Social benefits may be conceded to one part of the working class and taken back later, or simultaneously from other parts of the working class. International treaties could be cancelled and replaced by bi- or multilateral treaties, dissolving old alliances and potentially forming new ones. One important result of this crisis will be the change in the balance of forces between the different imperialist powers, who have been hit by, and have dealt with the coronavirus and the onset of the economic depression differently. First and foremost between the US and China, but not only between them. This is a recipe for growing tensions, politically, economically and militarily.

No Green Reinvention for Capitalism

52. The hopes that have been raised among some climate activists that the crisis will push capitalism to “reinvent” itself in a “greener” direction, will also be put to shame. While some structural changes may begin to take shape, such as reshuffled supply chains and decreased reliance on oil and other fossil fuels, and increased state intervention in the economy will in some cases be geared towards promoting renewable energy, this will be far from enough to combat climate change. The strongest urge of the capitalists will be to rapidly restart production, transport, travel and thereby emissions. The crisis is also already providing cover for offensives in the devastation of critical ecosystems, as seen in the 55% increase in destruction of the Amazon between January and April, compared with the same period last year. 

53. In order for the world to have a chance at not exceeding 1.5 degrees Celsius, carbon emissions need to fall by at least 7.6% every year this decade. Global emissions are expected to fall by between 5.5 and 8% this year, according to Carbon Brief, up to six times the drop which took place during the Great Recession. This temporary effect, mainly due to drastically reduced flying and transport, and at a price of global economic meltdown, contrasts with the immediate need for a sustained reduction without job losses and deaths, as proposed by socialists. These processes provide Marxists with clear examples of how changes to individual consumption are not enough, but also of how, if crises are met with decisive action – change is possible. This issue will continue to have a powerful impact on the consciousness of the radicalised layers of young climate activists.

Catastrophe Unfolding in Neocolonial World

54. A truly global, and volatile crisis, the pandemic’s epicentre of suffering and devastation has shifted rapidly across oceans and continents. Among the most significant developments of recent weeks has been the opening up of a new, especially catastrophic chapter in this crisis, as the virus begins to decisively hit the neocolonial world.

55. Most neo-colonial and semi-colonial countries have not yet experienced an explosive growth of the pandemic. Yet with overcrowded cities, widespread slum-like housing conditions, low living standards, a large percentage of pre-existing health problems, poor access to basic sanitation and dilapidated medical infrastructure, the neo-colonial world is inevitably heading for further waves of devastation. 

56. In Brazil, the utter debacle of Bolsonaro’s handling of the pandemic has acted as a decisive factor in precipitating his regime into its most severe political crisis yet. Meanwhile, a silent and invisible spread of the virus is already underway in many other countries, while not being reflected in official figures because of abysmally low levels of testing.

57. The UN Economic Commission for Africa (UNECA) warned in April that the pandemic was likely to kill at least 300,000 African people and risked pushing nearly 30 million into extreme poverty. In war-zones, in refugee camps, in territories under military siege and occupation like in Kashmir, Yemen or Gaza, conditions are most conducive to new humanitarian disasters. Indigeneous communities, like in the Amazon region and elsewhere, are facing the danger of being virtually wiped out by this pandemic.

58. But even countries which have hardly been touched by Covid-19 so far are facing the combined effects of the lockdowns and of the rapidly developing global recession. Unlike in 2008 when the crisis took a while to fully reach many neo-colonial countries, the effects of the global recession are this time immediate and brutal. 

59. According to the International Labour Organization, 1.6 billion workers in the informal economy – nearly half of the global workforce – stand in immediate danger of having their livelihoods destroyed. Capital flight from the so-called “emerging economies” is already four times greater than in the crisis of 2008-09; local currencies, investment, trade, global tourism and remittances from abroad are all collapsing.

60. Neo-colonial countries are heavily dependent on the fluctuation of prices of raw materials, the export of which constitute a primary source of income. The severe contraction in the world economy and the shutdowns in the advanced capitalist countries have depressed demand and prices alike, driving many countries on the verge of financial collapse, with local capitalist governments already unloading the costs on the shoulders of workers and poor via new austerity measures. Faced with the crash in oil prices, the Nigerian government has removed the oil subsidy while the Algerian government has slashed this year’s budget by 50%.

61. Governments have contracted new loans to the IMF, which will have to be repaid via similar measures later. The debt of neo-colonial countries had already built into a gigantic time-bomb in the period before the pandemic. Over the last decade, the total debts of the 30 largest so-called emerging markets alone rose from 28 trillion $ to 71 trillion. This could explode into an avalanche of debt defaults in the coming period, provoking new shocks in the world financial system. Perhaps most prominent among these is the prospect of a new, mega default by Argentina.

62. This explains the limited “concessions” imperialist powers and institutional creditors have been ready to accept, such as the decision of the G20 meeting to suspend debt service payments of the world’s poorest countries for one year. However, the scale of these debts, the growing nationalism and tensions between imperialist countries, as well as the profound internal crisis they are themselves grappling with, are all likely to make any coordinated response aimed at defusing this bomb much more difficult than in the past. 

63. Before the pandemic, 46 low income countries were spending more on servicing their debt every year than on their public health systems. Socialists should campaign for these debts to be repudiated immediately, for capital controls to be introduced, and for the commanding levers of the economy on a national and regional basis to be put under public ownership and democratic planning to ensure that resources are used for people’s needs. 

64. With informal work and the lack of social safety nets being the norm, and most people being incapable of saving money or stockpiling food, the lack of mobility resulting from the lockdowns and the lack of serious relief plans from capitalist governments have aggravated a hunger crisis for millions of people. The UN has warned that the world is facing “multiple famines of biblical proportions”, despite having the productive capacities to feed at least 10 billion people. Meanwhile, health organisations are warning of a new flaring up of already existing deadly infections because of the reduction in vaccination campaigns and depleted health resources in many parts of Africa, the Middle East, Asia and Latin America. Capitalism is exposed more irrefutably than ever as a parasitic system throwing humanity backwards.

65. The massive distress facing hundreds of millions of working people and poor because of the reckless and often brutal way with which lockdowns have been imposed (over 200 people died due to lockdown measures in India for example), is now cynically weaponised to justify the reopening of economies as recklessly as they were shut down in the first place, in absolute disregard for the health and lives of ordinary people. Workers and the poor should not have to be forced to choose between their health and their livelihoods. They should fight for a society that can guarantee both. 

66. To head off growing anger at their incapacity to respond to people’s needs, the ruling elites are using the crisis to boost their state apparatuses. They are resorting to ‘emergency’ procedures, bypassing parliaments, broadening state surveillance, sending the army onto the streets, unleashing increased violence and repression against dissenters as well as scapegoating racial, sexual and religious minorities.

67. However, a fightback has already begun. If the Covid-19 pandemic initially allowed the ruling classes to weather the revolutionary storms they were facing last year, this won’t be a lasting phenomenon. 

68. From the healthcare staff striking for protective equipments in many parts of Africa to the female textile workers blocking roads to demand unpaid wages in Bangladesh; from the Brazilian people banging pots against Bolsonaro to the youth expressing their rage against the banks in Lebanon’ streets, the masses are showing everywhere that they are not ready to take this new crisis lying down. 

United States at the Epicentre

69. In April, the United States became the epicentre of the pandemic, with the highest numbers of dead and confirmed cases. In reality, several Northeastern states, especially New York, New Jersey and Massachusetts accounted for 40% of total reported cases and nearly 50% of deaths to date. But while the curve has been flattened in these states, the peak is far off in many other areas with new outbreaks in rural areas as well. All this will be aggravated by the chaotic reopening underway.

70. Trump went from a Bolsonaro-type negligence – “everything is under control” – to an almost-total lock down. Analysts say that up to 90% of deaths could have been prevented if social distancing had been introduced two weeks earlier.

71. At the same time, a big section of US capitalists and the Trump administration have been pushing to limit the length of the lock down period, especially with China seeming to “restart” its economy. Tesla owner, Elon Musk, launched the slogan “Free America now”, the CEO of Wells Fargo bank argued that deaths would be a “price worth paying” and Trump himself encouraged the right-wing protests for the reopening of the economy in different states. This created a sharp conflict between state governors and the White House, particularly Andrew Cuomo, governor of New York, the state with the highest number of dead and infected, but also even with some Republican governors.

72. The situation facing ordinary people has been made far worse by the chaos and massive corruption in the process of delivering assistance. Millions of workers have not received a penny. Many never will. Hundreds of thousands of small businesses have seen none of the promised money. A measure of the social devastation underway is the growth of hunger. There are miles-long lines outside food banks. A new study by the Brookings Institution reports that “among mothers with young children, nearly one-fifth say their children are not getting enough to eat, a rate three times as high as in 2008, during the height of the Great Recession.” (New York Times, May 7). All of these problems are many times worse for the heavily black and brown poorer sections of the working class who also suffer far higher rates of infection and death from the virus.

73. The pandemic has put the US profit-driven health care system in focus, with the 30 million without health insurance now more than doubled. The demand for “Medicare for all” was a main reason for the strong support for Bernie Sanders, alongside his sharp criticism of the “billionaire class” and stronger emphasis of the working class, compared with 2016. The Democratic Party establishment did everything they could to prevent Sanders from becoming the candidate, but polls showed that Medicare for all, still had majority support even in the states where he lost.

74. In mid-May, Trump now seems to be going “all in” for reopening the economy – “the biggest gamble in American history” according to a CNN commentator. The administration is clearly shaken by the volatile stock market, always regarded as Trump’s biggest success, and the overall developing economic depression.Though this is far from certain, a new wave of the pandemic could spell the end of Trump’s possibility of re-election, even with an opponent as weak and right-wing as Biden, now facing a serious allegation of sexual assault. The fact that this remains an open question speaks volumes as to the crisis of the Democratic establishment, and it is not ruled out that they may feel obliged to cast Biden aside in the runup to the Democratic convention.

75. Protests and struggles can be held back by the severity of the economic crisis and mass unemployment, but most likely not as long as the interval between the 1929 crash and the huge strike wave that started in 1934. Even under the pandemic, the strikes by essential workers, while limited in scale, alongside the potential for mass tenants organising and resistance to a wave of evictions which will come later this year, points to the potential for struggle by the increasingly combative and radicalised American proletariat, especially its younger generation. Another arena of struggle will be against looming cuts, including mass layoffs in the public sector and likely attempts to further privatise public education and the Post Office.

76. While in the short term, mass unemployment — likely to reach 30% or more — will have a stunning effect, over the coming several years, events point to enormous opportunities to build a fighting labor movement. And while Sanders’ capitulation is a major blow, creating a real vacuum of leadership on the left, the best layer, seeing the political road blocked, will turn to the road of struggle. Under a weak Democratic administration, the question of serious initiatives pointing towards a new party, could rapidly develop. The DSA will also be a factor in these developments and we will need to continue to take this into account in our tactical approach.

77. Events in US history, especially radicalisation and new movements, tend to have an explosive character, such as the movements in the 1930s and 1960s. This in turn will have major international repercussions.

The end of the EU as we know it?

78. Nearly 70 years after the project was initiated, the EU seems to be entering its biggest crisis ever. Former President of the EU Commission, Jacques Delors, spoke in March about a “deadly danger to the European Union”. This is expressed in the closure of borders, the battle over resources like masks and ventilators and the struggle about how to handle the economic crisis. But the reasons for it are rooted in the contradictions inherent in the concept of the EU itself, which we have previously identified and discussed.

79. The EU crisis is not new. On the contrary, it has stumbled from one crisis into another. In previous years, this was reflected in an increasingly sceptical and critical mood towards the EU in several countries, especially among older layers, in low turnouts in EU elections and, more dramatically, in the 2016 Brexit vote. But in reality, the Great Recession, which was followed by a series of “near death experiences” for the EU and Eurozone coming in quick succession, had already laid bare the inability of the project to overcome its central contradiction, in conditions of a major economic crisis the fundamental capitalist contradiction between the development of the productive forces and the nation state, which puts objective limits on international integration and cooperation.

80. In the aftermath of the Great Recession, an unprecedented level of Quantitative Easing was introduced by the European Central Bank. However, the colossal public debt time bomb was merely kicked down the road. Before the pandemic struck, public debt in the Eurozone amounted to 84% of GDP.

81. The economic crisis that was triggered and intensified by the Coronavirus served to turbo charge the centrifugal forces that always existed in the EU. In a matter of weeks, key parts of the Maastricht Treaty (related to public spending and balanced budgets) and the Schengen agreement of more or less open borders were smashed to pieces. Just as following the Great Recession, demands arose from the devastated EU periphery, with Italy and Spain to the fore, for debt mutualisation, this time in the form of “Coronabonds”, only to be quickly dismissed by the “core” central powers, led by German capitalism.

82. The EU powers have presented an impressive-sounding arsenal of stimulus plans: €540 billion in European Investment Bank and European Stability Mechanism credit lines announced in early April; the ECB’s Pandemic Emergency Purchase Program worth at least €750 billion; and the cleverly-named European Recovery Fund (evoking the post-war European Recovery Programme – better known today as the Marshall Plan), worth over €1 trillion! 

83. However, looking deeper into the content of these initiatives, there is a lot of smoke and mirrors, and very little in the way of real new money. Much of what is pledged appears to be money relabeled from existing budgets and ECB funds. While the “success” of the Marshall Plan, which they seek to evoke, was based on the existence of a mighty “external source” of finance in the form of US imperialism, and implemented in the context of a long economic boom, the modern EU’s plans will flounder, as national ruling classes resist contributing enough, in the context of a continuing economic recession/depression.

84. The conflict over the policies of the European Central Bank dramatically escalated with the decision of the German constitutional court that the Quantitative Easing of the ECB, buying of bonds and securities, is unlawful. This decision is a sharp challenge in two ways. It attempts to overrule a previous decision of the EU’s Court of Justice, which all member states are supposed to follow, thereby challenging the entire legal system of the EU. Secondly, if implemented, Germany could break with the ECB, demolishing its QE programme.

85. There is also an increased possibility that important states could quickly be pushed into taking the Brexit road, such as Italy. The failure and refusal by other member states to assist Italy during the pandemic has increased the already growing opposition to the EU in Italy, which has been fuelled by leading politicians, from Berlusconi to Salvini to the Five Star movement. Among Italians, in an opinion poll in April, 42% supported Italy leaving the EU, up from 26% eighteen months ago. With an economy in deep crisis and sky high public debt, Italian politicians and some capitalists will be increasingly tempted to leave the EU and could spur others to follow.

86. This deep crisis can shake the foundations of the EU as we know it, even if it’s total collapse in the short term is not the most likely scenario. Several of the project’s previous pillars – the treaties of Schengen and Maastricht, and more – lie in ruins already, and its authority over member states such as Poland and Hungary is undermined. Growing tensions between France and Germany at the core of the project could also lead to the emergence of rival blocs, or of two “tiers” within the Union and Eurozone. There are also the tensions and new offers of bilateral cooperation with the US, China and Russia that will inevitably change the EU.

A Turning Point for Class Consciousness

87. The pandemic and lockdowns have had a profound impact on consciousness. For tens of millions of working class people, it has become abundantly clear that it is they who really make the economy run. There is not one country that has not had the inadequacies of its health service exposed and any government which tries to impose cuts or refuses to increase public health spending will face mass opposition, especially from health workers themselves 

88. The abhorrent mantra “We are all in this together” is now burned as the lie it is, into the psyche of the masses. Covid-19 has permanently changed the world and acts as a catalyst that exposes all of the contradictions and flaws in the capitalist system. It comes on top of the climate crisis, an even greater threat to humanity than Covid-19, which has exposed both the inability of capitalism to solve the problem and the need to act in an internationally coordinated manner.

89. It has also put the movements mentioned above which developed last year — characterized by new inventive methods, decisiveness, longevity and in some cases, the working class beginning to come to the fore — on temporary halt. But it has not reversed the anger, nor the willingness to fight as has already been demonstrated in Somalia, Iraq and especially in Lebanon, where the movement has again erupted under lockdown conditions. 

90. On the contrary, the brutal exposure of global capitalism, along with national ruling classes and oligarchies, together with the onset of economic depression, lays the basis for movements to continue, and new movements to erupt, on a higher level.

91. One of the features of the 2010s that we have identified and analysed, is the explosion of a mass feminist movement. The movement has increasingly taken up working class methods of struggle: mass movements, occupations and most significantly the strike and general strike on questions of bodily autonomy, freedom from violence, as well as low wages and poverty. Capitalism’s decades-long neoliberal drive has especially targeted poor and working class women both as workers over-represented in aspects of the economy most under attack, and as a source of unpaid labour for capitalism. Capitalism’s neoliberal onslaught against public healthcare and elderly care represents a contradiction for capitalism today, as it faces into the ravages of a global pandemic ill-equipped. 

92. Furthermore, developments are placing women workers on the frontline of what will emerge as key battlefields in the class struggle with women representing the majority in many, or most of the essential workplaces, from healthcare, to cleaning, to food production and retail. Furthermore, the increasing levels of intimate partner violence that have accompanied prolonged ‘lockdowns’, as well as the use of the crisis to further attack abortion and lgbtq rights by the hard and religious right, for example in Poland, Hungary and the US, all further point to the likelihood of the continuation of mass feminist radicalisation and struggle. In fact, these factors can also lead to the working class element of this movement being strengthened, with the potential especially for further links and ties between the labour and social struggles emerging. 

93. The impact of this crisis on consciousness is already rapidly developing. The unpreparedness, even in the most advanced capitalist countries, of healthcare systems following cutbacks, privatizations and liquidation of stocks for decades have been exposed. There were insufficient masks, sanitisers, ventilators, and PPE and governments, together with the private sector and supposedly all-powerful “market” have proved incapable of providing them even after more than a month in lockdown. 

94. The workers’ movement, almost always as a result of initiatives from below, had to step in where the capitalists and their governments failed. Underpaid and understaffed health workers had to save the situation, as did other low paid workers, for example in cleaning and sanitation. Even in a situation of, often voluntary, social distancing, expressions of solidarity found their way to windows and balconies, and in several cases developed into forms of protest. Health workers, now considered heroes, have gained enormous public support, and often had to take action or threaten it, to get basic equipment. This sector was growing in combativity even before the pandemic, but now these workers will not be prepared to go back to ‘normal’. They will demand better conditions, pay rises, extra staff and more resources for healthcare, and it will be very difficult for any bosses or authorities to go against them, given their enormous authority in society. They could be catapulted into the vanguard of the global labour movement soon after the lockdowns are lifted.

95. Even the lockdowns themselves were often imposed on the bosses and local and national authorities by workers who understood the danger of infection. It was striking car workers who forced the bosses to stop production in the Spanish state, Italy and elsewhere, bus drivers in Belgium, Britain, Sweden and beyond who imposed extra safety measures which they are now demanding to make more permanent , shop workers, call-centre workers and delivery workers in the United States who have taken strike action to demand protection alongside many other examples, sometimes taking the form of spontaneous strikes and walkouts. During the reopening of economies it is workers again who will expose the many bosses who don’t respect safety measures.

96. These experiences and processes have posed the potential for a strengthening of the power and weight of the Trade Union and wider workers’ movement in several countries, which can emerge strengthened from the lockdowns if they respond and organise as the situation demands. The existing trade union leaderships remain, in almost all cases, an enormous brake on the potential for struggle. However, while, largely speaking, the Great Recession and its aftermath did not lead to a significant international process of filling out, internal differentiation and leftward shifts or splits in the trade union movement, the coming period could be wholly different in this respect. The current situation shows the need for revolutionary socialists’ strategic orientation to building in the labour movement. 

97. However,it is also likely that the leadership of the movement in some countries will fail this test or sell out the potential posed in the situation. However, this will not mean that such potential will inevitably be lost. Marxists need to be prepared for movements, struggle and even elements of new organisations involving important sections of workers, developing outside the official and formal structures of existing trade unions and social movements, which can open up the prospect of breakthroughs for the class struggle.

98. A defining moment in the crisis so far, was when workers in General Electric in the US mobilised in order to shift production to ventilators. Since then, Ford Motors was forced to join in. Breweries shifted production to hand gel, textile companies to the production of masks etc. All of this has been very limited, far less than would have been possible if a workers’ government would have taken over the main production sites and geared them towards needs, but it nevertheless gives a glimpse of what would be possible if the workers themselves could decide what to produce and when. Even in Gaza, where no such gigantic production units exist, workers found a way to produce their own basic ventilators and garment factories shifted to massive production of masks for the local market but also for export to Israel! In Ghana, local residents created their own solutions to curb the spread of the virus where the state failed. In Nigeria tailors handmade face masks and medical overalls. 

99. These are only some of the many initiatives taken by workers and poor all over the world. Their significance is obvious, but they can also have a profound impact on mass consciousness. There has been a generalised change in consciousness throughout society, marked by a greater appreciation of the role of “key workers”, which represents, in an incipient form, a qualitative step forward in class consciousness. This will soon leave its mark on politics and the class struggle internationally.

100. Imagine the possibilities if research towards developing a vaccine was freely exchanged and if the pharmaceutical production units were geared for massive production of resources with free access to all. This, of course, is totally excluded under capitalism as all pharmaceutical companies are competing to market their blockbuster vaccine, to bring in massive profits. The prices of masks have quintupled. While workers are getting back to work, many bosses continue to work safely from home. When business results are published, no doubt, billions will be handed over to shareholders. At the same time, corporations will demand from governments and local authorities tax rebates and other advantages in exchange for maintaining activity, and workers will be sacked, or pressurized to accept worse pay and working conditions. If a second wave of the virus develops, workers will feel less restrained from taking the initiative where bosses and authorities fail. The basic bourgeois idea that the top of society is there because they have skills normal people don’t possess, has been dealt a solid blow. 

101. For months, Coronavirus has been at the centre of attention. It has been the main issue in public debates, at work and in households. This will continue, and will spill over into debates the economic and social fallout. The impact of the virus and the resulting lockdowns has been so abrupt and impacting, that it will have shaken the view of many millions and radicalized them. The failure of the ruling elites has been extraordinarily exposed, while workers, especially essential workers have gained gigantic respect and many other workers showed their capacity to take crucial initiatives. 

102. The vastly expanded army of unemployed will see its future perspectives under capitalism dashed and could be won to a strategy of collective action if it is on offer. If not, mass unemployment of course carries the danger of demoralisation and demobilisation, for example as trade union ranks risk being hollowed out. Many students and school students have been brutally confronted with the new reality which might be a glimpse of their future under capitalism. As mentioned previously, while many workers will understand that their future is far from guaranteed, a short term “stunning” effect could dominate over an immediate combative response among some sectors initially. A second wave of the pandemic could also have an impact on temporarily postponing struggle. However, on the other hand, many will have seen and felt the strength of collective action during the pandemic and feel this is a better way to protect their conditions.

103. Of course, events will not develop in a straight line, nor will mass consciousness. Radicalisation and new shifts to the Left will take place in the context of a deepening of already existing polarisation. While far right governments are entering crises in a number of countries, reactionary ideas will retain a base and be expressed in different existing and new phenomena in the 2020s, not least expressed by established and ruling parties.. The reversal of globalisation and turn towards economic and political nationalism among the bourgeoisie will further nourish the forces of reactionary nationalism, racism and xenophobia and general backwardness. The weakness of the Left in most countries – with the recent defeat and capitulation of new reformist figures such as Corbyn and Sanders – is also an important factor. 

104. However, which tendency dominates the 2020s will be determined by a process of living struggle, and what is certain is that the working class will be presented with revolutionary opportunities. Many will be looking for alternatives worth fighting for. Revolutionary socialists must work to reach them by raising bold transitional demands, for example: shorter working hours without loss of pay, massive investment in public services, the takeover of the commanding heights of the economy under workers control and democratic planning, and, in particular in neo-colonial countries, for the cancellation of the debts, capital controls and the public ownership and democratic control of natural resources in the interests of the majority.

105. International Socialist Alternative (formerly known as the CWI) aims to increase its visibility in order to attract the attention of those attracted to this type of demands, and open to building a revolutionary socialist force that can put them into practice. We are entering a period in which significant growth of our numerical forces can be fought for, and achieved, as experience in some countries is beginning to demonstrate. In the United States, China/Hong Kong/Taiwan and Britain, our sections have had considerable success with recruitment in the conditions of the pandemic. Moreover, in this situation, relatively small forces can have an impact way above their numerical strength. 

106. A force that succeeds in connecting broader demands and a socialist programme to the concrete struggles at hand and can pull people into activity, can capture the imagination of much broader layers and become a real pole of attraction. Such opportunities for our forces will undoubtedly be posed everywhere. In the US, Socialist Alternative, has built invaluable connections with workers in struggle under the pandemic and is engaged in the movement for a rent strike and the tax-Amazon campaign. In Ireland, the Socialist Party has had a big impact in the “Cancel the Leaving Cert” campaign and is building connections with workers in struggle to resist layoffs at Debenhams. Similar opportunities will be posed in many corners of the world. As soon as the lockdowns open up and public activity resumes, revolutionary socialists must mobilize all their forces to meet this newly radicalized layer and boldly present them with our ideas in action. The building of bigger and more powerful revolutionary parties and a revolutionary international is not an end in itself, but a necessary element for the coming class battles, in a new epoch of revolution and counter revolution, which can prove the difference between victories and defeats.

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