Prospects for the world revolution

The document which we publish below puts forward the position of the Marxist tendency on the perspectives for the world revolution in a comprehensive way. It analyses the global crisis of world capitalism, economic perspectives and the stage reached by the class struggle in the developed capitalist countries, and also the revolutionary developments in the former colonial countries, the worldwide struggle against imperialism, the attitude of Marxists to war, the situation inside the mass parties and trade unions of the working class, and the tasks of the revolutionary tendency.

This document represents a finished programmatic statement of the followers of Marxist.com internationally. It is the ideological basis on which we carry on our fight for the creation of a mass Marxist movement on a world scale.

We ask all the readers and supporters of Marxist.com to translate it, publish it and give it the widest possible circulation among workers and youth. We welcome your comments and questions about our ideas. Finally, we appeal to all those who agree with these ideas to join us in the struggle to build the forces of Marxism and further the cause of the world socialist revolution.

On the current situation and our tasks

The world situation is characterised by increasing volatility at every level. The revolt of the productive forces against the straitjackets of private ownership and the national state is indicated by the present global crisis. Unable to deny the facts any longer, the bourgeois economists have admitted that the US economy is in recession. The fears of the strategists of capital are expressed in one article after another. This represents a turning point in the whole situation.

Marxism explains the historical process ultimately in terms of the development of the productive forces. The motor-force of capitalism is the production of commodities, and especially capital goods. In the last boom, the bourgeois of America and all other countries invested colossal amounts on new technology, new plant and machinery. Now there is massive overproduction ("over capacity") on a world scale. In Asia alone there is a huge productive capacity, which cannot be used. Even when this is mopped up, it will not be possible to go back to the type of feverish growth of the previous period. A period of sluggish growth, accompanied by high unemployment in all countries, will follow.

Nothing comparable to the present situation of global instability - a combination of war and slump - has been seen since 1945. For a long time the capitalist system experienced a powerful upswing, with full employment and rising living standards in the advanced capitalist countries, and relative stability in the relations between states. Now the world economy is entering into the first simultaneous slump since 1974. This is an unprecedented situation which is provoking deep concern among the strategists of capital.

Even after the crash of 1929, the slump did not affect all the main capitalist countries simultaneously. America went first, followed by Germany and Austria, then Britain, whilst France only really went down in 1934, when the USA was already coming out of the slump. These are uncharted waters, and the capitalists do not know what to expect. This is the reason for the growing alarm of the ruling class, reflected in the constant reduction of interest rates.

The present crisis represents a turning point in the historical process. After the collapse of the USSR ten years ago, the bourgeois felt that they were no longer threatened by "Communism". The capitalist system (the "free market economy") ruled supreme. The ruling class felt confident. They dreamed of an economic boom that would last forever. The economists wrote about a "new economic paradigm".

This situation affected the psychology of all classes. The middle class (including the Labour bureaucracy) followed the bourgeoisie and its "market" ideology. The working class saw no alternative and sought individual solutions to its problems. Despite the extreme pressure on the workers, the debt, the long hours of toil, the stress and exhaustion, it was possible for a temporary period to obtain a relative amelioration of living standards. The strength of reformism and particularly its right wing (Blair, etc.) and the isolation and weakness of the forces of Marxism were both predicated on this.

In a period where the workers were not participating in struggle, the pressures of capitalism on the workers' organisations, and especially the tops, were increased tenfold. The reformist leaders and the apparatus of the unions and the Social Democracy, liberated from the pressure of the class, acquired an unprecedented level of "independence" - that is, dependence on the bourgeoisie and its ideology. The degeneration of the mass workers' organisations reached extremes. But now this process has reached its limits. Over a period, major events will shake up the mass organisations. The whole process will be thrown into reverse.

World economic crisis

Faced with the crude reality of economic recession, the spokesperson of the bourgeoisie are striving to put the most optimistic interpretation on the situation. Alan Greenspan asserts that: "the mildness and brevity of the downturn are a testament to the notable improvement in the resilience and the flexibility of the economy. The fundamentals are in place for a return to sustained healthy growth: imbalances in inventories and capital goods appear largely to have been worked off; inflation is quite low and is expected to remain so; and productivity growth has been remarkably strong, implying considerable underlying support to household and business spending as well as potential relief from cost and price pressures." This is just wishful thinking.

The temporary rallies in the first quarter of 2002 and in Stock markets in the US and Europe in the month of August were merely episodic developments. After recovering by 20% in August, the world's stock markets fell sharply again in the beginning of September. In Japan the Nikkei index fell to its lowest level since 1983. In New York, the Dow Jones Industrial Average fell by more than 350 points. Similar negative results were posted in London and other stock exchanges.

Most economists now agree that the United States faces a so-called "double dip" recession. This confirms what we have consistently maintained: the rally that occurred earlier this year was only the prelude to a further and steeper decline in the world economy. The present falls on the world stock markets are merely the tip of the iceberg. The world economy is still slipping downhill.

Throughout July and August, every new figure on the US economy was worse than before. The net wealth held by American households (including shares, bonds and property) has fallen over 20% in the last two years, since the "bear market" in world stocks started in March 2000. The US Conference Board's July index of consumer confidence fell from 106.4 to 97.1, its lowest level since February. Consumers' expectations about the future took an even steeper turn for the worse. The future expectations reading plummeted to 95.7 from 107.2. If we bear in mind that the world economy is extremely dependent on consumption in the USA, these figures point to a serious downturn.

Sales in the shops are falling off. Indexes that measure confidence among US manufacturers have also weakened and manufacturing output is dropping back towards recession levels after a limited revival in the early part of this year. Most significant, the figures for real gross domestic product in the US for the second quarter of this year showed a rise of just 1.1% and previous quarters were revised down to confirm that indeed in 2001 the US economy had fallen into recession and only recovered briefly in the first quarter of this year.

Business investment has fallen for the seventh straight quarter. On the other hand, the pace of consumer spending slowed to a crawl, advancing just 1.9% after growing 3.1% in the first quarter. Only government spending shot up. And of course, at least for the moment, with interest rates so low the property boom continues, as it does in the UK, Australia and many other OECD countries.

There can be no real recovery for US capitalism until the level of profits recover. The top 500 US companies recently reported their second quarter earnings. These show that profits were up just 1% compared to the same time last year, when they were at very low levels. In the last year over 2 million American jobs have been lost. Unless profits improve significantly, there is no realistic prospect of an increase in investments - the real motor-force of any boom.

Things are no better in Europe. Most of European countries have reported economic growth figures for the second quarter of this year. In fact, there was almost no growth. Germany was up 0.3% and Italy was up 0.1%. Britain was best at just 0.7%. In Japan, output is falling by 0.5-1.0% a year. Deflation remains the order of the day with prices falling. The government is paralysed about what to do after 12 years of recession. Even the services sector is continuing to slide as unemployment hits post-war highs. Public debt is still relentlessly increasing.

The economic and political chaos in Argentina continues with no sign of escape. Now Brazil is also threatened with collapse. Similarly, despite huge injections of IMF money, the Turkish capitalist politicians continue to squabble, threatening to drive this key ally for the US in its so-called War on Terror into economic depression.

World capitalism is also threatened by two bubbles. The first is the strength of the US dollar. It has weakened a little in the last year but it will go down further in the next period. Since the US is running a trade deficit of $37 billion per month, the present level of the US currency is not sustainable. At a certain point the $9 trillion of dollar assets held by foreign capitalists will be unloaded, provoking a sharp fall in the value of the dollar. The second great bubble still to burst is the property sector. The present price rises of 10% a year in America and 20% in Britain are not sustainable. A fall in the housing market will have a negative effect on spending, dragging down the economy still further.

And hanging like a black cloud over the world economy is the threat of war in Iraq. Leaving aside the explosive political consequences, a US military adventure in the Middle East will inevitably result in a steep increase in oil prices. This will be the case even if the war goes well for America. If, as is more likely, it is prolonged, it could seriously damage the world economy.

Despite the exaggerated claims of the bourgeois economists, economic growth in the last period has been much weaker than in the immediate post-war decades. In the US, from 1942 to 1966, the average annual real GDP growth rate was 4.5%. From 1975 through 1999, it was only 3.2%. The average annual gain in industrial production from 1942 to 1966 was 5.3%. From 1975 through 1999 it was only 3.4%. At same time, consumer debt rose from 64% of annual disposable personal income in 1966 to 97% in 1999.

The Federal Reserve, caught between fear of a world slump and fear of inflation, has evidently decided to throw caution to the wind. The Reserve has carried out eleven reductions in interest rates in less than twelve months - an unprecedented situation. Interest rates in America now stand at 1.75 percent - the lowest level since 1961. But there are limits to how far this can go - and what it can achieve. It is clear that the rate of interest cannot be less than zero - although, when measured against the consumer-price index, real rates of interest are negative in the USA - a situation not seen since the Great Depression of the 1930s.

Marx explains that credit is a means by which the capitalist system goes beyond its normal limits. The market is artificially expanded for a time, but only at the cost of reducing future demand, since credit must eventually be repaid - with interest. Huge debts have been accumulated during the boom years of the 1990s, especially in the USA. The actions of Greenspan and the Federal Reserve in drastically cutting interest rates are panic measures, motivated by fear of a global economic collapse. But they are not having the desired effect. Given the overhang of debt, it will not help matters to incur new debts and deficits. They will get the worst of all worlds if they go down this road - ending up with a mixture of stagnation and inflation which can act as a drag on the US economy for a long time. Furthermore, corporate earnings are in a freefall. They are 44.9% lower than one year earlier. The last time earnings plunged this much was in the third quarter of 1938 and the fourth quarter of 1932 (the Great Depression).

In practice they will all have high state deficits in the next period, anyway. But this will solve nothing and only exacerbate the crisis. In 1939 they "resolved" the contradiction through a world war. But this avenue now seems closed to them. Under these conditions, no amount of deficit financing will help. It will only make things worse - as the example of Japan shows.

In Japan, the interest rate is really zero, but this has had no effect, other than to increase the public debt to an unprecedented and unsustainable limit. And in America the high levels of private debt means that individuals and companies will not be eager to take on new credit, even where the interest rates are so low.

That does not mean that the bourgeois will not use Keynesian policies in an attempt to drag themselves out of the crisis. However, the Japanese experience shows that under present conditions Keynesian methods would not solve the fundamental problem, but only lead to severe distortions, ending in stagflation - a mixture of stagnation and inflation - the worst of all worlds.

In effect, Japan - once the former star performer of the world economy - has passed from one recession to another without ever experiencing a boom. A similar situation can be created in the USA, affecting the entire global economy for a protracted period. Japan is now in a state of outright deflation, after being stuck in recession for a decade. There are clear parallels with the situation in Japan ten years ago. The decisive factor is the unprecedented level of indebtedness that Japan inherited from the last boom in the 1980s. This has prevented the recovery of the Japanese economy for a period of ten years. Over the last two years the Japanese government has invested a sum of money equivalent to the total GDP of France, to no avail.

The exact nature of the slump - its depth and duration - is difficult to determine. But in all probability it will be the most serious since 1974, and possibly since the Second World War. It is not excluded that it could turn into a depression like the one that followed 1929. If the intensity of the slump and the struggle for markets that will result from it leads to generalised protectionism, that is even a likely perspective. But even if this is not the case, it is probable that the USA will only get out of the slump with great difficulty and then enter into a period of extremely low growth, like Japan after the recession of 1990-91. The reasons are similar: the colossal hangover of debts accumulated in the previous period. This is precisely an expression of the fact that capitalism went beyond its normal limits in the previous period.

Despite the obvious seriousness of the situation, the bourgeois economists persist in putting the most optimistic gloss on the picture. There is a constant campaign in the press to keep up the spirits of investors. Every bit of positive information is presented as light at the end of the tunnel. Impressionable investors are deceived by this, not realising that the light which they perceive may be that of a train coming in the opposite direction. The violent swings of the stock exchange up and down are an indication of a general nervousness and volatility among the stock market investors (among whom there are always a number of gamblers willing to take a risk). This perfectly mirrors the general situation and mood that is developing in society, and which tomorrow will find a political expression.

However, the movements on the stock market, as is well known, do not mirror the movement of the real economy, which is stubbornly downwards. At the same time that Wall Street was registering a relative recovery, after the immediate shock of September 11 and the Afghan war had worn off, Fords was warning that losses in the fourth quarter would be four times higher than even the earlier gloomy estimates of analysts. The Detroit company is due to make a new restructuring plan that will undoubtedly mean more factory closures and sackings.

There has been an avalanche of company profit warnings. Even the biggest companies are threatened with bankruptcy. On December 2nd, 2001, Enron, America's seventh biggest company, filed for chapter 11 bankruptcy. Its shares collapsed from $89 to just one dollar and were already classified as "junk" before the company went under. Since most workers held shares, thousands of workers will lose both their jobs and retirement savings. This was followed by a whole series of bankruptcies and scandals, including the giant WorldCom company, that involved unprecedented financial scandals. These scandals have created a general backlash and a questioning of the whole system of corporate capitalism in the USA.

Overproduction

As Marx explains, the final cause of every real crisis of capitalism is overproduction: the contradiction between the unlimited greed of the capitalists for surplus value and the limited consuming power of the masses. The present crisis is no exception. The massive overproduction of high-technology products, particularly computers and memory chips, is the main cause of the crisis in the USA and Asia. There is a limit to the amount of new technology which people can buy. But the anarchic, unplanned nature of capitalist production takes no account of this.

This also applies to other commodities. Overproduction in the car industry has led to a ferocious price war, with Fords and other big companies furiously discounting in order to get rid of their surplus products. This has led to a temporary rise in car sales. The increase in US retail sales, which rose by a record 7.1 percent in one month (October, 2001) was driven mainly by car sales (26.4 percent). This is part of the "Keep America Rolling" campaign, which offers discounts and interest-free loans. But this boom in car sales has only been achieved at the cost of reducing future sales and cutting profit margins to a point that is unsustainable - thus deepening the crisis of the car industry on a world scale.

Companies are compelled to write off assets acquired during the boom, retrench, cut costs, and sack workers, in a desperate attempt to maintain profit margins. The same is true of debt. Big companies like Hynix Semi-conductors in South Korea find themselves unable to sell their products and heavily in debt. The credit which the big banks extended so merrily in the period of rapid expansion is now being called in. Now everybody wants ready cash. This forces a company like Hynix to merge with Micron Technology, the big US firm, in the hope of getting access to the US market and more funds. If it goes through, this merger will create the world's biggest memory-chip company. Thus, the process of concentration of capital and monopolisation which reached unheard-of limits in the boom, continues unabated during the slump.

The crisis in manufacturing inevitably affects the service sector sooner or later. The shock of September 11 undoubtedly contributed to the crisis in sectors like air travel, hotels and tourism. In the USA alone, over 100,000 workers were laid off in the air line industry alone. This does not express the real depth of the crisis, since many other industries depend on the air line sector. In Belgium the crisis of Sabena caused sharp labour conflicts.

WalMart, the big US cut-price retail chain has announced a record sales increase of 15.5 percent in the third quarter of 2001, pushing profits up to $1.5 billion. But this reflects the fact that more Americans are reacting to the crisis by buying more cheaply. This tendency will further depress profit margins in the long run, as other retailers are forced to cut prices. On the other hand, the luxury-goods companies are suffering losses, as happens early on in every slump.

Despite the official mythology, September 11 was not the cause of the crisis in the service sector, which is part of the general crisis. A further 220,000 jobs were lost in businesses unrelated with airlines or tourism. Workers clocked in fewer hours on average, and weekly earnings fell.

The dire state of the economy is reflected in a slump in advertising. The British advertising company Cordiant Communications announced its third profit warning in four months in December 2001 and predicted the situation would get worse still. It announced further job losses, bringing the total to 1,100 in the course of the year: one tenth of the workforce. Lloyds of London, the huge insurance company, announced losses (after reinsurance) of £1.7 billion ($2.7 billion). This was $600 million more than originally forecast, and represents the biggest loss in Lloyd's 300 year history. For the first time in years, London has been officially declared to be in recession. This reflects a crisis in the service sector, which is only a manifestation of the general reduction in economic activity.

Confirmation of the seriousness of the situation can be seen in the price of oil. Normally when there is instability and the threat of war in the Middle East, the price of oil rises sharply because of the fear of disruption to oil supplies. But since September 11 the price of oil has fallen well below the preferred price of OPEC - which is between $22 and $28 a barrel. Now, despite the efforts of OPEC to restrict production, the price of a barrel of oil dropped to below $20, before recovering slightly. That is a measure of the fall in global demand.

Despite the propaganda emanating from the USA to the effect that the recession will be short, an increasing number of economists are now pessimistic about the future. The Economist warned at the close of 2001: "Unfortunately, the case for optimism is less than solid. There are few signs that corporate America is nearing the end of its retrenchment. Despite the collapse in capital spending - it fell by an annualised 12 percent in the third quarter, after an annualised 14.6 percent drop in the second - firms still have a lot of excess capacity and big financing gaps. The excesses of the late 1990s investment binge will take time to work off. Meanwhile, the world environment continues to grow greyer. Europe is stagnant, while Japan is in its fourth recession in a decade."

Protectionism

The main danger for the capitalist system is not the prospect of slump. The boom-slump cycle has been a constant feature of capitalism for the last 200 years. They know that sooner or later, they can get out of even the deepest slump. The real danger is the threat of the unravelling of free trade and the rise of protectionism as a result of the slump. This is what turned the slump of 1929-33 into a world depression which lasted until the Second World War. The expansion of world trade has played a vital role in the last half century, and particularly the last twenty years. It has enabled the capitalists, partially at least and for a temporary period, to overcome the limitations of the nation state. But the basis on which this rests is quite fragile and can easily be destroyed, especially under conditions of world slump in which they are all fighting for limited markets.

Already there are tensions between Europe and America over trade which led to the breakdown of the Seattle talks. Although some issues have been resolved, new conflicts are emerging all the time. Particularly in the USA, protectionist tendencies are building up. America is the biggest economy in the world and is prepared to use its muscle to gain access to foreign markets, while protecting its own. It has benefited from lower trade barriers more than any other country, hence its public enthusiasm for free trade. But the Republicans in Congress (and the Democrats also) are ready to sacrifice the principle of free trade in order to protect American agricultural and manufacturing interests. We already see this with the introduction of protectionist measures in relation to steel, agricultural produce, textiles, softwoods and other areas of the US economy.

At the moment the capitalists are driving on with "free trade" by proposing a new round of reductions in trade restrictions at the WTO meeting in Dohar. The last Uruguay Round took a decade to achieve. This one will be still born. The development of world recession will inevitably lead to an increase in protectionist tendencies which will threaten the fragile structure of world trade so carefully constructed over the past half century. This is the main fear of the strategists of capital. They have understood what the Marxists have long ago explained: namely, that the main motor-force of the world economy has been the growth of world trade ("globalisation").

Even in the period of the boom there has been a tendency for the world to fragment into rival blocs. US imperialism has created Nafta, including Canada and Mexico, which aspires to control the whole American continent, north and south of the Rio Grande. Europe has created the EU which strives to control North Africa, the Balkans and Eastern Europe. In Asia, Japan has created a weaker yen bloc. As the slump deepens, the contradictions between these rival trading blocs will increase. The tensions between Europe and America, and between America and Japan, will intensify under these conditions. America will attempt to export unemployment to Europe and Japan, provoking retaliation. The prospect opens up of trade wars and competitive devaluations which will deepen and prolong the crisis.

The European Union

The European capitalists, only a year ago, were boasting that they would avoid the recession. Now these boasts are shown to be hollow. Ironically, the worst affected sector is the communications industry (mobile phones), which was supposed to be the main motor of a new period of expansion for European capitalism.

Vodafone, the big British mobile phone company, announced pre-tax losses of £8.4 billion ($12 billion) in the six months to the beginning of December 2001. Profits at Siemens, the German engineering giant, fell by 76 percent to the end of September, including restructuring charges and a write-down of assets in its mobile and fixed-line telephone divisions. German unemployment now stands officially at 8 percent of the workforce.

We have already dealt with the reasons why the EU was formed in earlier documents. It is true that we underestimated the degree to which the European capitalists could arrive at a compromise and push towards greater economic and monetary unification. We did not think that the Euro would succeed to the degree that it has. This was only possible on the basis of the prolonged world boom, which benefited Europe and enabled the different capitalists to put aside their differences (temporarily).

Now the Euro has been introduced as a common currency in 12 of the EU states. This is an important development. A common currency is the first condition towards European integration. It ought to boost internal trade and thus act as a powerful stimulus to the development of the productive forces. But the Euro has been launched at the worst possible moment. Under conditions of world crisis, rising unemployment and a struggle for markets, the rigid framework of the Maastricht agreement will aggravate the crisis and increase the contradictions between the states of the EU.

The Economist drew a negative balance of the Euro's achievements: "When the Euro was conceived a decade ago, there was much heady talk of how it would boost competition in Europe, of all the structural reforms it would promote, even of how Europe would displace America as the world's economic dynamo. Yet, as a recent report by the European Commission concluded, the gap between Europe and America in both productivity and GDP per head has widened rather than narrowed over the past decade. This year's theory that, thanks to the Euro, Europe would largely escape the effect of a global recession has also proved false, as its biggest economy, Germany, has shuddered to a halt. As if to trumpet Europe's failings, the Euro has spent most of its first three years of ethereal life testing new lows against the dollar." (The Economist, 1/12/2001) The recent improvement of the euro in relation to the dollar is more a reflection of the weakness of the latter than the strength of the former.

Contrary to the hopes of the European bourgeois, the Euro has been a weak currency from birth. The need to maintain its level is one of the reasons why interest rates in Europe have not been reduced as fast as in America. This will aggravate the crisis in Europe and increase unemployment in the coming months. Paradoxically, the Germans, who were the most adamant in demanding strict adherence to the Maastricht rules, are now suffering the consequences in the shape of four million unemployed. The German economy, which ought to act as the main motor-force for Europe, is stalled.

The stubborn refusal of Duisenberg and the European Bank to lower interest rates has set the stage for conflict between the Bank and the European governments. They would like to see a further fall in the Euro to boost exports - the main reason for the relative success of the countries of the Euro zone in the last period. But despite this success, the performance of the core countries, especially Germany and Italy has been miserable, and their problems will now increase. Unemployment is beginning to climb again.

One effect of the introduction of a common currency will be to increase cross-border competition. The aim is to increase productivity by eliminating weak companies. But this places countries like Italy, Greece, Spain and Portugal at a disadvantage. Increased competition spells more bankruptcies, factory closures and unemployment. From this, new contradictions arise. In the past, Italy got out of difficulties by devaluing the currency. But this is now ruled out by the Maastricht agreement. Devaluations by nation states are not allowed, and neither is any other state permitted to help Italy. Therefore, the full weight of the crisis will be placed on the shoulders of the working class. The Italian employers are already putting pressure on Berlusconi to take action. The stage is thus being set for an explosion of the class struggle in one European country after another.

This will lead, not to European integration, but to increased tensions and antagonisms between the national states. In the end, it is probable that the Euro experiment will break down amidst mutual recriminations. Already there are indications of conflict between the states in the Euro zone, as each government tries to protect its own capitalists against foreign competition. Of course, if the perspective was one of uninterrupted capitalist upswing for the next 20 years, it would be possible for European capitalists to obtain further economic integration. But this is not our perspective.

Two years ago, at the Lisbon Summit, the EU heads of government agreed to a programme of further liberalisation with the aim of making the EU the world's most competitive economy by 2010. What has happened? France has implemented only minimal energy liberalisation and blocked the setting of any deadline for a total opening-up of the market. Full competition in the postal services has been delayed. Germany has put its boot through an EU directive on take-overs that took 12 years to work out and then introduced new rules to protect German owners. The Lamfalussy Plan to liberalise wholesale financial services has been sabotaged by procedural manoeuvring in the European parliament, even though it was unanimously endorsed in Stockholm in March. An agreement on a EU-wide patent regime has been prevented by disagreements on language policy. And so on and so forth.

53. What this shows is that each national government, while paying lip service to the "ideal of European integration", is mainly concerned with the defence of "national interests" - that is to say, the interests of its own bourgeoisie. Thus, Germany's decision to sabotage the law on take-overs was dictated by its desire to protect its domestic companies against foreign take-overs - such as Vodafone's bid for Mannesmann. The French opposition to energy liberalisation has been designed to support its state-owned giant, Electricité de France. The French government protects its national monopoly, which is meanwhile pursuing an aggressive policy of taking over the companies of states with more open markets.

Behind the "European" rhetoric stands the interests and ambitions of the most powerful European states, especially Germany and France, which seek to dominate Europe. Only the smaller countries take the rhetoric about the European ideal seriously, since they are too weak to stand on their own and foolishly imagine that they can be important players on the European scene. In addition, they have their own selfish interests to defend.

Belgium benefits from being the main seat of the "European institutions" - which brings in a tidy sum to the national exchequer. They are therefore the most convinced "Europeans". The weaker economies like Greece, Portugal, Ireland and Spain are enthusiastic "Europeans" only to the extent that they have done very well out of European subsidies. But when these are sharply reduced or abolished, which is already happening, their enthusiasm will cool rapidly. And that is inevitable in the next period when the economic crisis begins to bite and Germany, which pays most of the bills, gets tired of this role.

The truth is that the smaller states of Europe count for very little. This was shown recently in the aftermath of September 11. Britain (a semi-satellite of America) decided everything together with France and Germany. The others were not even invited to dinner in London. The Italians protested loudly. The others grumbled also: "We are being treated like candidates to join the EU. Decisions are made and then we are just informed." But that is just the real state of affairs. Only it is not supposed to be made public. Only Blair's characteristic crudity made it too obvious. The recent row at Laeken over the distribution of secondary EU institutions led to Berlusconi vetoing all decisions. When the Swedish Prime Minister complained that his country had got no institution, Chirac said maybe they "would like the headquarters for EU model agencies as they had such "pretty girls"! Such is the contempt shown for the smaller EU countries by the big Four.

A further expansion of the EU will exacerbate the problem. Does anyone seriously believe that Germany, France and Britain will accept that they cannot have a discussion without inviting 22 other European leaders? The German capitalists are pushing for the entry of their client states in Eastern Europe: Poland and the Czech Republic. France, which is opposed to this, proposes the entry of Romania. This is yet another example of the conflict of interests between Germany and France. In the end, it is likely that the expansion will go ahead. But in that case, the bigger EU states will find a way of dominating the show anyway.

The ambiguous attitude of the British bourgeoisie to Europe and the Euro is explained by several factors. There is a sharp division between the manufacturing sector which trades with Europe and does not want a continuation of the high pound, and the parasitic finance sector based on the City that has grown immensely in power in recent years. Having lost its empire and being reduced to a second-rate power off the coast of Europe, the British ruling class is reluctant to relinquish its dreams of being a world power, and is hesitating between a role in Europe and that of a satellite of US imperialism. But the weakness of the Euro and doubts about its future are undoubtedly important factors in its calculations.

The developing crisis will intensify the contradictions between the nation states of Europe, and particularly between Germany and France, with Britain manoeuvring between them. But it is unlikely that the EU will break up, because of the need to compete with the USA. The European capitalists must hang together, for fear of hanging separately. But the dream of a united Europe on a capitalist basis remains what Lenin said it was: a reactionary utopia.

War and the world economy

After the fall of the Berlin Wall there was a lot of talk in the West of a "Peace Dividend". The perspective was put forward of a new world order in which the whole world would enter a long period of peace and prosperity under the aegis of the USA. But things worked out very differently. In fact, there was some reduction in arms spending in the USA as a result of the disappearance of the Soviet Union. Under Clinton, US defence outlay fell from 6.2 percent of GDP to 3.8 percent, although in absolute terms, the US arms budget remained huge. Now all that is bound to change. American commentators are already talking of a probable increase by at least one percent of US GDP. Given the fact that the US is once more in deficit, this money will have to be found at the expense of other, less necessary, items, like schools and hospitals.

US imperialism is in the process of arming itself to the teeth. Even before the present crisis, the United States spent every year for every American citizen $804 on arms. France is next in line, with an annual expenditure of $642 per head on arms. Britain, which despite its total loss of economic and industrial power, likes to pretend that it is still mighty, spends $484 - an absurd figure for a country which long ago lost its empire and industrial superiority. These figures reflect the real situation of the epoch in which we now live: a period of crises, wars, revolution and counter-revolution. The consequence of this will be a general tendency towards the militarisation of the planet. Once again, the refrain of all governments will be "guns before butter".

Some have argued that the world will escape recession because of the huge increase in military spending in the USA. The historical examples cited are the Second World War, the Korean War and the Vietnam War. But in reality, such historical parallels prove nothing. It is true that American imperialism is using the present crisis to push through big increases in arms expenditure. This was already its intention before September 11, but the Republicans had to proceed cautiously for fear of opposition. Now they have what amounts to a blank cheque.

As soon as he was elected, Bush began to beat the drum for rearmament. In a speech he made in September 1999 - that is, before the US economy went into recession - Bush blamed Clinton for the "weakness" of America's armed forces and demanded a programme of re-armament: "The last seven years have been wasted in inertia and idle talk," he declared. "Now we must shape the future with new concepts, new strategies, new resolve." (BusinessWeek, December 24, 2001).

Even before September 11, the Pentagon had plans to spend no less a sum than $340 billion on 3,700 manned fighters: Lockheed Martin Corp's F-22 Raptor and Joint Strike Fighter and Boeing's Superhornet. But these are really antiquated toys in comparison to the new weapons of mass destruction that are being developed all the time. BusinessWeek (December 24, 2001) reports:

"Precision-guided munitions will be a priority as well. In addition to laser-guided bombs, which clouds can blind, the US is deploying the Joint Direct Attack Munitions (JDAMs) which use global-positioning systems (GPS) to find their targets in any weather." Boeing have recently created a unit to start making unmanned combat aircraft like the Predator, which, in addition to reconnaissance, can also fire missiles.

The disappearance of the USSR has created a new situation on a world scale that has compelled the US military planners to develop new strategies. Instead of an army intended to confront massive Soviet conventional forces in Europe, they are developing smaller, more flexible forces that can be deployed rapidly anywhere in the world, and also smaller, technologically advanced, "smart" weapons. The development of precision-guided bombs and unmanned areal vehicles (UAVs) has given such terrifying firepower to the USA that some defence analysts like Alexander Saevliev of the Russian Academy of Sciences have argued that "the character of war has changed".

However, history shows that the character of war has been constantly changing for over 2,000 years. What is different here is not the new technology, but the balance of forces on a world scale. The fall of the USSR has meant that there is only one super-power. Yet despite its colossal military might, the character of war has not fundamentally changed. In the last analysis, wars are won or lost, not by bombing alone but by soldiers fighting on the ground. It is an astonishing fact that a handful of men armed with knives and cardboard cutters could inflict such terrible damage on the world's greatest super power, and the war in Afghanistan, which is being fought with decidedly low-tech methods (the most efficient method of transportation is the donkey) is still far from being successfully resolved.

The defence spending policies of the USA are thus determined not mainly by economics but by political and strategic considerations. This is not a branch of the Fed, to be manipulated for the benefit of the economy, but an expression of the requirements of the US military establishment and the world role of US imperialism. Although military expenditure can assist a section of the economy (the so-called military economic complex), and partially alleviate the crisis in that sector, it merely diverts capital and resources from other sectors of the economy. It will do nothing to restore the general level of corporate profitability, without which no real economic recovery is possible. In the long run it will have inflationary consequences and make the situation worse. In any case, the effect will not be what some people imagine.

The present world situation is quite different to that of 1941, 1952 or 1964. In 1941, America was already coming out of recession, and the vast arms programme of the War played a decisive effect in mopping up unemployment and boosting production. At present, the US economy has just entered into recession after a long boom. The perspectives for the world economy do not suggest a quick recovery. On August 7, 1964, when Congress passed the Gulf of Tonkin resolution, backing increased US involvement in Vietnam, the economy had already recovered from a 10-month recession that ended in early 1961. Military spending during the Vietnam War helped to keep this expansion going (and in the process fuelled inflation), but did not cause the recovery.

On the other hand the scale of military spending is not at all comparable to the situation in 1939-45. During World War Two, spending on arms in the USA peaked in 1944, when it accounted for an incredible 60-70 percent of America's pre-war GDP. At the peak of the Korean War in 1952, US military spending accounted for 11 percent of America's GDP. At the peak of the Vietnam War, it stood at 2 percent of GDP. But during the Gulf War ten years ago, it was only 0.3 percent of US GDP, and most economists agree that this expenditure played little or no role in the economic recovery that started one year later, which, in any case, had an extremely sluggish character.

On August 7, 1990, when Iraq invaded Kuwait, the US economy fell into an eight month recession. The USA was badly affected by rising oil prices, and the modest and temporary increase in military spending was not enough to provide a serious boost to the economy. Only the stimulus provided by the rest of the world, particularly the Asian "tigers" which were then experiencing rapid growth, prevented the recession from turning into a depression. Robert J. Barro, writing in the BusinessWeek (5/11/01) comments: "The analysis from the other three wars suggests that little of the recovery stemmed from the Gulf War."

The situation now is more similar to that of ten years ago than to the cases of World War Two, Vietnam or Korea. Except that the world economic context is far worse. Already before September 11, it was clear that the United States was enduring a sharp downturn, and that the longest period of expansion in history had already come to an end. The attack on the World Trade Centre merely acted as a catalyst to accelerate and exacerbate these recessionary tendencies.

The present "war against terrorism" is a most peculiar kind of "war". Whereas the Second World War, and to a lesser degree the Korean and Vietnam wars, involved the destruction of a lot of tanks and other equipment that had to be replaced, the only items that have so far been used up in Afghanistan are bombs. This is not likely to act as much of a stimulus to production, even in military terms. And certainly not enough to offset the effects of a general world crisis of overproduction. The measures taken by Bush may look spectacular on paper, but fall far short of the massive sums pumped into the US economy by general mobilisation in 1941, and will not even reach the level of the Vietnam War.

The results will be correspondingly limited. In the words of Harvard university economics professor N. Gregory Mankiw, quoted by the Moscow Times (October 10, 2001): "My guess is that this is not going to be all that similar to previous wartime economies. Unless the fiscal stimulus ends up being a lot bigger than I expect, the differences will be greater than the similarities to the past."

World relations

The long period of economic upswing, together with the division of the world between US imperialism and the USSR, provided the material basis for this relative stability in world relations. The reason why they could get this so-called peace was because the balance of terror between mighty Stalinist Russia on the one hand and mighty American imperialism on the other. But now everything has changed. The emergence of US imperialism as the sole major world power has created an unprecedented world situation.

As we have explained in previous documents a new balance of forces has been developing over the past decade. Prior to the collapse of the Soviet Union the two super powers, the USA and the USSR balanced each other out and this provided a relative stability to the world situation. There could have been no question of the USA daring to attack Iraq or bomb Yugoslavia. The disappearance of the Soviet Union as a super power has allowed the United States to emerge as the sole world power and given it the confidence to develop a more aggressive foreign policy.

Now this imperialist arrogance has been increased to the nth degree. The war in Afghanistan represents a new twist in the world crisis of capitalism. The chief concern of US imperialism is to use the terrorist outrage in America as a pretext for strengthening its position on a world scale. This involves a reminder to the world of its military power. After the attack on Afghanistan will come other "reprisals" against Iraq, and maybe Sudan and Somalia.

America is the mightiest imperialist power in world history. It holds in its hands the most diabolical and sophisticated means of destruction. Yet it stands on feet of clay. After September 11, US imperialism blundered into a war with no clear strategy or aim. Of course, the most fundamental questions are determined by objective factors and broad historical processes, not individual personalities. However, in wars and revolutions, the role of the individual (the leadership) is by no means unimportant. It can, and does, exert a powerful influence in the short term, producing all kinds of distortions and cross-currents that affect the context in which the class struggle unfolds. At the present moment, the leadership of the most powerful country on earth is the most stupid and short-sighted in history. Bush intended to display the might of American imperialism, but has only succeeded in aggravating all the contradictions. In reality what the Afghan adventure showed was the limitations of American power.

It is always impossible to calculate accurately the bloody equation of war and to predict precisely the outcome. Trotsky thought that the Second World War would be over quickly. But war has its own logic which is impossible to determine beforehand. The same is true of the war in Afghanistan. In Afghanistan - despite all their military might - the American imperialists are in a no-win situation. Even if they achieve their formally declared war aims, they will ultimately lose, because by their actions they have destabilised the whole region and other parts of the world.

The struggle against imperialism

Capitalism has revealed its reactionary nature on a world scale. This is most strikingly revealed in the so-called Third World. The last period has seen an unprecedented intensification of the world division of labour ("globalisation"). But the ex-colonial countries have not benefited from this. On the contrary, the exploitation of the so-called Third World by the advanced capitalist countries has increased enormously in the past period.

Despite having achieved formal independence, the ex-colonial countries find themselves even more dependent on imperialism than fifty years ago. For special reasons South East Asia succeeded in developing the means of production, but that has now collapsed. The crisis in the USA and their extreme dependence on exports has dragged them down.

The super-exploitation of the ex-colonial countries can be seen in the unfavourable terms of trade. The prices of raw materials (excepting oil) have fallen to record lows. The Economist Index of world commodity prices stands at its lowest level for 150 years. On a capitalist basis, no way out is possible. In most of these countries the standard of living of the masses has not gone up and is even declining. Half the population of the world now lives on two dollars a day or less.

Even sections of the imperialists are beginning to realise the dangerous consequences of this situation, and are calling for measures to cut the debts of the ex-colonial countries and increase aid. But these measures will be a drop in the ocean. The sentimental nonsense about the plight of the poor countries amounts to crocodile tears. The debts continue to mount up relentlessly. As the crisis unfolds the imperialist countries will lose their enthusiasm for trade liberalisation (which was always very relative, as far as the poor countries were concerned) and resort to protectionist measures against the exports from Africa, Asia and Latin America. This will have serious effects on these economies, which are already suffering disproportionately from the world recession.

The real programme of US imperialism is the further super-exploitation of Asia, Africa, the Middle East and Latin America. The civilisation and "democracy" of America, Japan and Western Europe depends in no small degree upon this slavery, which condemns half the population of the world to live on less than two dollars a day. But this is a finished recipe for a new upsurge of the revolution in the former colonial countries. Explosions are being prepared everywhere. The potential for revolutionary developments is shown everywhere in the ex-colonial countries: in Ecuador, Colombia, Peru, Venezuela, Argentina, Iran, Indonesia, Palestine, South Korea, Zimbabwe, Algeria, even Saudi Arabia.

New upheavals are inevitable. After the collapse of the USSR, the whole of Central Asia is extremely unstable. American imperialism, by its clumsy intervention in Afghanistan, has further aggravated this instability. The Financial Times (30/10/01) described Central Asia as "a region plagued by poverty, deteriorating health care and social services, serious environmental degradation and authoritarian governments."

There are explosive contradictions everywhere which act as the seeds for future wars and conflicts. Islam Karimov, the dictator of Uzbekistan, is authoritarian and corrupt, and very unpopular. The opposition Islamic Movement of Uzbekistan was linked to Afghanistan, where their guerrillas had bases. But by, in effect, supporting him, the Americans have added to the internal contradictions. Karimov has ambitions to dominate the whole region. There are 25 million Uzbeks out of the total population of 57 million in Central Asia.

In particular, there are tensions between Uzbekistan and Tajikistan, which are mirrored inside Afghanistan in the conflicts between Dostum and the Tajiks within the Northern Alliance that surfaced even during the recent fighting. Together with the greed of the imperialists to possess the oil and gas of Central Asia and the Caspian, this is an explosive mixture.

Everywhere one looks it is the same story. Africa is a mess from the Sahara to the Cape. The multinationals, through the different imperialist powers, are still fighting each other, using different stooges, for the control of the main agricultural and mineral recourses. In the last few years we have seen turbulent events: the massacres in Rwanda and Burundi; the Congo descending into chaos; and the triangle between Sierra Leone, Liberia and Guinea enmeshed in episodic wars for more than a decade. In Nigeria, there are continual outbreaks of inter-ethnic and religious conflict. Everywhere the elements of barbarism threaten to engulf the people.

Latin America is in the deepest economic crisis since the War. There is not a single stable bourgeois regime from Tierra del Fuego to the Rio Grande. The objective conditions for socialist revolution have been ripe in the ex-colonial countries for at least half a century. In fact, they are rotten ripe for revolution. Decaying capitalism threatens to plunge one country after another into barbarism. There is no way the imperialists can stop this, no matter how many bombs they drop. The reason why the revolution has not succeeded so far is not the strength of imperialism but the weakness of the subjective factor: the absence of a real revolutionary party and a leadership.

The case of Algeria is very significant, since the mass uprising took place in a country, which had been ravaged by ten years of the most vicious and bloody civil war between the fundamentalist guerrillas and the military regime which left thousands of victims. Out of a situation of apparently unrelieved black reaction a massive explosion of anger erupted. The situation in Algeria is very important, since many bourgeois thinkers presented the rise of the FIS, together with the regime in Iran, as a paradigm of the rise of fundamentalism, which was presented as something eternal and inherent to countries with a Muslim tradition. Now in both countries we see the workers, and particularly the youth, leading the revolts aimed in the last instance against the existing social order. The masses in these countries, in different ways, have reached the conclusion that these reactionary movements offered no alternative. In the past the Marxists analysed the victory of Khomeini in Iran and the election victory of the FIS in Algeria as a result of the lack of the alternatives on the part of the traditional left organisations and their mistaken political strategy. The madness of fundamentalism loses its power of attraction for the masses to the degree that they experience it in power, as in Iran. And in Algeria, the most revolutionary sections of the youth are not attracted by fundamentalism and are seeking another road in their struggle against the pro-capitalist generals. The revolt of the youth spread to the whole of the population, from the Amzight (Berber) areas to the rest of the country. Committees were set up which were co-ordinated nationally. These committees have assumed functions of the state (transport, media, law and order, etc.) and led the struggle. In other words, they were the embryos of soviets.

The formation of these popular committees reflect the very advanced character of these movements, but at the same time underline the crucial role of a revolutionary leadership. In Ecuador or Algeria, a Marxist tendency of just a few hundred cadres with roots amongst the workers, peasants and youth, could have changed the whole course of events and guaranteed a victorious outcome of the revolutionary process. The objective conditions which led to this mass explosion in Algeria are no different from the conditions in most Arab countries (Morocco, Tunisia, Egypt, etc.), where movements of a similar type are inevitable in the coming period. A victory of the workers and peasants in just one country would transform the whole of the situation.

The main reason why the imperialist powers are arming to the teeth is to prepare for a new phase in the revolt of the ex-colonial peoples. In the last period, US imperialism has waged more wars than anyone else - mainly against small weak countries that cannot fight back: Libya, Grenada, Lebanon, Somalia, Haiti, Panama, Nicaragua. They waged a bloody and destructive war against Vietnam for 13 years, which they lost through the opposition of the masses in the USA and the collapse of the US army in Vietnam.

Ever since Vietnam, the Pentagon has been opposed to committing American troops to a ground war. But sooner or later this will be inevitable. Colin Powell, who is a former general and a bit more perceptive than George W. Bush, believes that America should only intervene when it has overwhelming force and an exit strategy. Given the colossal firepower of US imperialism, this is an extraordinarily timid position. That it should be put forward by a man like Powell - who is obviously grooming himself for the White House - reveals the deep fears of the strategists of US imperialism of the consequences of future American involvement in foreign adventures. It shows an awareness of the limits of the power of US imperialism.

Nevertheless, US imperialism is preparing to intervene everywhere. Having given the government of Colombia $1.3 billion to fight the guerrillas, it has now increased its military aid to the government of the Philippines from $2 million a year to over $100 million. President Bush represents that section of the US administration which thinks the Powell doctrine is too timid and that it is time that the US committed ground troops in foreign conflicts. They have been reinforced by what they see as "victories" in the Gulf War, Kosovo and Afghanistan. Bush, who ironically came to power on an isolationist programme, now talks about intervening against Iraq, Sudan, and Somalia. Although the Pentagon is still terrified of any US involvement in a ground war, the logic of events is pulling America irresistibly in that direction. New convulsions are being prepared, each one of which can cause massive destabilisation of the ex-colonial countries and enormous repercussions in America and the other advanced countries at a certain stage.

Marxism and war

We have lived through a prolonged period of boom and relative stability, which in some respects resembled the period before 1914. Now it is all breaking down. But whereas in 1914 the imperialists could easily dominate the world, this is no longer the case now. Everywhere the productive forces are in an impasse. Of course, this does not mean that there will be no further development of the productive forces (the productive forces even grew to a certain extent in the Great Depression of the 1930s). Nor does it preclude the possibility of temporary booms. But the kind of growth experienced by capitalism in the long upswing after 1945 is no longer on the agenda. The temporary boom of the second half of the 1990s has ended in a global crisis of capitalism, expressed by economic crisis, increasing contradictions, and constant wars. This means that we have entered a new period, a period of storm and stress on a world scale. The epoch of the world revolution. This is not a period of peace and stability but the opposite. Wars are inevitable in this period, and under certain circumstances revolutions can come from war. The old stability has been replaced with instability at all levels, which at a certain stage must find its expression in the consciousness of the working class.

All important issues are settled by war - whether the war between nations or the class war (revolution). In the present epoch, as in the period when Lenin wrote his book Imperialism, the purpose of war from a capitalist point of view is the conquest of markets, raw materials and spheres of influence. In the coming period there will be many wars - not a world war as in the past, but "small" wars like the Gulf War and the war in Afghanistan. Under conditions of economic crisis and global instability, the contradictions between the imperialist powers will increase enormously. There will be a ferocious struggle for even the smallest markets. The imperialists will not hesitate to launch vicious proxy wars, utilising their local agents to do the fighting for them. We see this, not only in Afghanistan, but in Africa (Congo, Sierra Leone, Liberia) and Iraq. Such conflicts can extend over whole regions, creating a nightmare for millions of people. Our attitude towards war is not determined by the horrors of war, but by the horrors of capitalism. We take a class position, not a sentimental position like the pacifists and the "Lefts". Our main task is to patiently explain to the advanced workers and the youth the real meaning of the war, to unmask the hypocritical propaganda and to expose the class interests behind the war - "the continuation of politics by other means".

War puts every tendency to the test. The reformists always reveal their hopelessness in times of war. The right wing reformists openly support imperialism - especially the strongest imperialism (America). The Lefts adopt the standpoint of tearful pacifism and call on the United Nations to intervene. In the past, the UN was only a forum for settling secondary issues and allowing the ex-colonial nations to blow off steam. Now it is not even that. It is completely dominated by US imperialism. The demand always raised by the "Lefts" that the UN should intervene, is both utopian and reactionary. Both in the Gulf War and Afghanistan, the UN provided a fig-leaf of "legality" for the aggression of US imperialism, just as it did previously in Korea and the Belgian Congo.

The main thing is to maintain an implacable opposition to imperialist wars. On the other hand, we are fundamentally opposed to bourgeois pacifism. There is no question of our advocating either conscientious objection or desertion, as some ultra left groups do. Such positions have nothing in common with Leninist revolutionary defeatism. We do not have a moralistic position on war. Our policy is determined by the class interests involved. It is not determined by the crimes of the Taliban, any more than it was by the crimes of Saddam Hussein, or Vargas or Haili Selassie before the War.

Confusion of the sects

Before the Second World War, when the possibility arose of war between Brazil and Britain, Trotsky pointed out that in a war between a semi-colonial country and an imperialist state, the Marxists would be bound to support the former against the latter. The character of the government was not the decisive factor. Thus, even though the Vargas regime in Brazil was of an extremely reactionary - even semi-fascist - character, in the event of war with "democratic" Britain, one would have to support Brazil.

Though Trotsky did not develop this idea, the crux of the matter is very simple: that it is necessary to oppose all imperialist wars against colonial and semi-colonial nations, irrespective of which kind of government holds power in the latter. For a Marxist, this is an ABC proposition, which it is hardly necessary to insist upon. However, the sectarians, as usual, make a caricature out of Trotsky’s argument. It is always possible to turn a correct argument into an incorrect one simply by carrying it to an absurd extreme.

While defending a firm anti-imperialist line, at no time did Trotsky ever suggest that one had to defend Varga, or to drop our opposition to his regime. On the contrary. Both Lenin and Trotsky criticised the colonial bourgeoisie implacably for their inability to wage a successful struggle against imperialism. Our position on Afghanistan is based on the classical position of Lenin and Trotsky. We fight against the imperialist aggression against Afghanistan. The reactionary character of the Taliban regime does not affect this position in the slightest degree. But that does not at all signify that we side with the Taliban or bin Laden, or that we cease to condemn their reactionary policies.

The sectarians always make every imaginable mistake and some that are unimaginable. This is particularly true in time of war. People who have read a couple of lines of Lenin or Trotsky - without understanding or digesting them - imagine themselves to be great theoreticians. Thus, we had the spectacle in Yugoslavia of every imaginable permutation, from supporting the Croats (CWI), to supporting the Serbs, the Bosnians, the KLA etc. Not one of them maintained a class or internationalist position. Now we have the ultimate lunacy of so-called Trotskyists supporting - the Taliban and Islam. This is not just wrong, but monstrous from a Marxist point of view.

By their peculiar twists and contortions, the sects always land themselves in the most absurd positions, especially on the national question and the struggle against imperialism. They always end up capitulating to the bourgeoisie and petty bourgeoisie and abandoning the class position. Defence of the right of self determination and the struggle against imperialism does not mean that we have to support every reactionary nationalist tendency that has accidentally entered into conflict with imperialism. Let us remember that both bin Laden and the Taliban were the creatures of imperialism not long ago, and worked together to destroy the pro-Moscow regime in Kabul. To overlook this fact would be light-minded in the extreme.

The Taliban (and their ally in crime, bin Laden) are the most monstrous counter-revolutionaries. And though this cannot determine our attitude to the war in Afghanistan (which is an imperialist war of aggression of the world’s strongest imperialist state against one of the world’s poorest countries), it must not be lost sight of. We fight against imperialism, and that is quite sufficient. We are under no obligation to identify ourselves with the Taliban who, by the way, have shown their total incapacity to wage a successful war against the imperialists. If - as is most likely - the war continues as a guerrilla struggle of the Afghan people against a foreign invader, that is no thanks to the Taliban, who have led the Afghan people from one calamity to another.

As usual, the logic of these people is "we must do something". But what is needed is to do something positive - like raising the level of political consciousness of the workers of the West. By their shrill and hysterical propaganda, they only help to lower the consciousness of the few people who bother to listen to them, while simultaneously discrediting the very name of Trotskyism. They argue that the Taliban (despite some minor faults in the past) are now "fighting imperialism", so it is now necessary to let bye-gones be bye-gones and form a united front of "struggle". In actual fact, the Taliban is no more able to struggle successfully against US imperialism than Noriega was in Panama. In order to inflict a serious defeat on imperialism other - revolutionary - policies are required. As for the "struggle" waged every day by the sectarians in the coffee bars of London, Paris and New York, the less said, the better.

Our tendency can be proud of its record of defending a class position on war. We must know how to build the revolutionary party in fact, not in the empty phrases of the sects. At he beginning of the war, it is normal that the mass of the working class should have a pro-war position, on the grounds that we must support "our boys", etc. We must have a patient attitude towards workers who back the war, not the shrill ultra-leftism of the sects. The attitude of the workers will change in the course of experience of the war itself. In the meantime we must not cut ourselves off by stupid ultra left slogans and gestures, but try to develop slogans that will get an echo in the class. We must develop appropriate transitional demands. For example, the confiscation of war profits of the big companies and the use of these funds for hospitals and schools, etc.

While opposing imperialist wars by all means at our disposal, we must at all times maintain a consistent class position. We will oppose the war, but under our own banners and with our own methods and slogans. By contrast, the petty bourgeois sectarians with their hysterical flag-waving, immediately capitulate to reactionary ideas, mixing up banners and substituting the red flag of proletarian revolution for the black flag of reaction and fundamentalism. This is the opposite of a revolutionary position. We have explained how the US imperialists built up bin Laden and the Taliban, just as they had built up Saddam Hussein. Our aim is to undermine the confidence of the working class in the bourgeoisie and their governments.

War is very often the prelude to revolution. In 1915, when the world was plunged in a bloody imperialist war, with workers killing workers, and Europe was in the grip of militarism and black reaction, Lenin was confidently predicting revolution. Events showed that he was correct. It is necessary to fight against the stream, and at a certain point, the tide will turn. The progress of the war will open up deep fault lines and exacerbate all the contradictions on a world scale. The events which impend will have an effect on the conscience of the world - including the USA. Questions will be asked. Minds, attitudes and opinions will begin to change. This will open up tremendous possibilities for a Marxist tendency which has maintained a firm and principled position.

Afghanistan

Despite the overthrow of the Taliban regime, the Americans still face considerable difficulties both inside Afghanistan and on a world scale, especially the Middle East, which has been destabilised by their actions. They have solved nothing and only created new problems.

Thus far the Americans gave achieved the following:

1. Overthrown the Taliban regime, without putting anything more stable in its place.
2. Unsettled Pakistan and brought nearer the possibility of the Afghan conflict spilling over the frontier.
3. Alienated India and aggravated the conflict between India and Pakistan over Kashmir, which could lead to a new war.
4. Created serious instability in Saudi Arabia, which puts in danger the future of the Saudi royal family.
5. Undermined and weakened "moderate" Arab regimes everywhere.
6. Alienated both the Israelis and Palestinians and increased the tensions between them.
7. Threatened Iraq, Sudan, Somalia and even Iran, increasing instability on a world scale and especially in the Middle East.
8. Provoked a wave of anti-American feeling throughout the Moslem world and thus strengthened Islamic fundamentalism.
9. Increased the risk of new terrorist attacks on the USA and its citizens and property outside its borders.

And finally:

10. Allowed the Russians to get back into Kabul.

Inside Afghanistan there is no stability. The so-called broad based government cobbled together under American pressure will not last long. Already the Uzbek leader Dostum and other warlords are strengthening their own positions at the expense of the central government. There is no possibility of such a ramshackle coalition establishing its rule over all Afghanistan. It will have enough problems maintaining itself in power. That can only be done on the basis of outside military support. That means that the USA and its allies (mainly Britain and Turkey) will be left holding the baby.

So far the Americans have managed to avoid getting involved in a war on the ground - something they fear as much as the Devil fears holy water. They have let others do their fighting for them. But this strategy has its own problems. The Northern Alliance will take money from the Americans, but will not necessarily do what the Americans want. In addition, the Taliban, although wounded, has not been destroyed, and can make a comeback later on, as disillusionment with the new government in Kabul sets in - as it inevitably will.

No amount of American aid will serve to stabilise the situation. Afghanistan, in its ruined state, is a bottomless pit into which billions of dollars could be poured with little or no effect. Moreover, since the "broad-based" government contains many different groups and individuals, everyone will extend an open palm, expecting to see it full. Not very much will ever be seen by the poor people of Afghanistan, who will soon learn to hate the government and its foreign backers. And in Afghanistan, political opposition swiftly expresses itself in the language of Kalashnikovs.

The stage is thus set for a conflict that can drag on for years. This perspective will not be substantially changed even if bin Laden and mullah Omar are captured or killed.

It is inevitable that the ruling clique and the military elite of Pakistan will soon be manoeuvring to get back their lost positions in Afghanistan, posing as the champions of the Pashtuns. But by interfering in the affairs of their neighbour they will further destabilise the situation and create the conditions for the war to spread to Pakistan itself. Meanwhile, the events in Afghanistan are having an unsettling effect on the Middle East - a vital area for the interests of US imperialism.

Pakistan

The situation in Pakistan - already extremely fragile before the recent events - has been further undermined by the war in Afghanistan. The fall of the Taliban represented a humiliating defeat for Pakistan and its military clique. The regime in Pakistan is weak and rotten and might even be overthrown. It is only being propped up by US imperialism. The US is partially relieving the regime of its debt burden in order to pay it off for supporting their war. Washington has given Pakistan 600 million dollars in debt rescheduling, while lifting the sanctions imposed three years ago on India and Pakistan for their testing of nuclear weapons. But this is a trivial quantity compared with Pakistan's huge external debt.

Thirty four per cent of the population is officially described as living below the poverty line. 60 per cent of the budget is spent on the repayment of interest on the external debt, a further 40 per cent goes to the military. Only 2 per cent is spent on education. Health spending amounts to two US cents per person per day. And yet imperialism through the IMF and the World Bank are constantly pressurising Pakistan for budget cuts. Liberalisation has had a disastrous effect on Pakistan's economy. When tariffs were reduced to 64 per cent, 3,462 factories were closed. In addition, there is remorseless pressure to privatise, leading to closures and mass unemployment. The closure of schools and clinics affect the poor, because the rich have access to private health and education.

The war has further unsettled the masses and added to the already existing instability. Initially, the fundamentalists made a lot of noise, but in fact, they do not have deep roots in the masses. They can be swept to one side once the working class begins to move. What is required is an independent class programme. The Pakistan Marxists can play a decisive role in this.

For more than fifty years, Pakistan has alternated between unstable and corrupt "democracies" and even more unstable and corrupt military dictatorships. The present regime is very shaky. It is possible that the US imperialists will soon be thinking about recalling Benazir Bhutto from London and sending the masses back to the school of the PPP. Under conditions of deep social crisis, the ground will be prepared for a sharp polarisation to the right and left and a crisis in the PPP. This will open up big possibilities for the Pakistan Marxists. The perspectives for the Pakistan revolution must be placed on the agenda of Marxists throughout the world. We must pay careful attention to the tactics, slogans and programme of the Pakistani Marxists.

Turkey

Situated in a key geographical area, straddling Europe and Asia, Turkey occupies a strategic position, not only for imperialism, but also for the world proletarian revolution. With its powerful and militant working class, Turkey has passed through periods of colossal class struggle that could have ended in the victory of the revolution. But the false policies of the Stalinists, following the line of the Moscow bureaucracy, led to the most bloody defeat for the working class in 1980.

Although the bloody military dictatorship of September 12 - which was portrayed as a mild military regime in the West - has begun to dissolve, its legacy continues to the present time. However, the rotten and corrupt Turkish bourgeoisie has not been able to solve any of the fundamental problems of society. Despite important economic and industrial development, which has enormously strengthened the proletariat, the basis of Turkish capitalism remains relatively weak and unstable. This is reflected on the one side in constant political instability, on the other hand by financial and economic crisis.

Turkey is now in an economic crisis never seen before. Unemployment is growing at an incredible rate, and because this crisis has broken out at a time when the capitalist world economy is in a recession, it is not easy for Turkish capitalism to overcome the crisis in the short term. The repercussions of the continuation of the crisis in the social and political spheres will be more political instability and bitter class struggles.

In many respects Turkey resembles tsarist Russia, except that the specific weight of the Turkish proletariat is a thousand times greater. The underlying weakness of Turkish capitalism is reflected in its foreign debt, which amount to US$150 billion, while its GDP in 2001only amounted to $145 billion. The Turkish lira is strongly dependent on the dollar and in a weak position against it. As with other similar countries, the convulsions in world markets affect Turkey in a catastrophic way, as shown by the collapse at the end of 2000.

Desperate to find a way out of the impasse, the pro-European section of the bourgeoisie sees joining the EU as the only solution. Although this approach is correct from the point of view of the bourgeois, it has proven to be extremely difficult to achieve. Moreover, the region in which Turkey is situated is pregnant with new and explosive developments.

The general world situation affects the fate of Turkey in a very direct way. Turkey is itself a weak imperialist power, but it is a super-power on a regional scale, where it acts as an agent of US imperialism, along with Israel. As part of its plans for the Middle East and Afghanistan, Washington is trying to use Turkey as a cat’s paw for its military adventures, especially in relation to Iraq. It is probable that the American imperialists have promised Turkey a slice of Iraq, for example the Mosul and Kirkuk oil fields in Northern Iraq, in exchange for supporting a military adventure.

There is no doubt that Turkey has strengthened its hand in the post-September 11 international conjuncture thanks to the US. As a powerful NATO member in this region, Turkey cannot be ignored by West European countries, a position which the US is trying to reinforce politically by means of the EU and economically by means of the IMF.

Whatever the designs and expectations of the big imperialist powers have about the region, events have their own logic. The strategists of imperialism, who are busy working out their plans concerning the Balkans, the Middle East and Eurasia, are unaware of the profound repercussions these developments abroad will have internally, and the effect they will have on the class struggle, especially in Turkey, where relations between the classes are extremely unstable. The working class has not moved in a decisive way since the terrible defeat of 1980. But this temporary inertia will not last. The crisis of the political regime is just an expression of the deep and insoluble crisis of Turkish capitalism, which sooner or later must be expressed in a movement of the masses.

The Turkish proletariat is very powerful and has revolutionary traditions. After years of vicious persecution and prohibitions, the working class is still disorganised even at the trade union level and also it has not overcome its fear of what is still essentially a military-police regime with a parliamentary fig-leaf. Due to the aggressive anti-trade-union policy of the bourgeoisie, the level of trade union membership has declined to around 7%. Nevertheless, the working class is slowly recovering from the past defeats, a new generation of class fighters is emerging. At a certain stage there will be a renewal of the class struggle, which can transform the entire situation, not only in Turkey, but throughout the region.

The shock waves of a revolution in Turkey would have an immediate effect in Iran, Iraq, Greece, Cyprus, Russia, the Middle East and the Balkans. Given the enormous power of the Turkish working class, the revolution could easily take the form of a classical proletarian revolution on the lines of Russia in 1917, but on a far higher level. This would be guaranteed if there existed a genuine Marxist-Leninist party, rooted in the proletariat, which would make an internationalist appeal to the workers and peasants of other countries to follow their example.

Cyprus

The USA is once again trying to put pressure on the EU to broker some kind of an agreement between Turkey and Greece on the question of Cyprus. However, this is easier said than done. It goes without saying that we stand for the reunification of Cyprus. But after over a quarter of a century of partition, the question remains unsolved. In Cyprus both the Greek and the Turkish speaking communities want to live in peace, without the interference and provocations of Turkey and Greece. The majority of people in Turkey also are tired of the Cyprus problem. The Turkish people are in favour of a peaceful solution and against the provocations of the government and the fascist parties like the MHP. The liberal bourgeoisie, which is anxious to get Turkey into the EU, stresses, the idea that joint entrance of the Northern and Southern parts of Cyprus will be beneficial for Turkey.

The workers in Northern Cyprus would undoubtedly prefer a united Cyprus, even on the basis of EU, rather than remain under the boot of Turkey. The Turkish occupation has brought nothing but oppression and poverty to them. The proclamation of "Northern Cyprus Turkish Republic" on November 15, 1983 has done nothing but place Northern Cyprus completely at the mercy of Turkey. This part of the island has been degraded to a level in which Mafia and black money hold sway and the means of subsistence of the people has dried up.

However, there are powerful interests opposed to reunification. The memories of past oppression of the Turkish Cypriots under Greek rule have not disappeared. Denktas, with the support of the most reactionary wing of the Turkish ruling class, is implacably opposed to unification. This man, who had formerly been the deputy prosecutor of the British colonial rule, has been playing the role of governor of a colony of Turkey on the island for some 27 years and resorting to intrigues to silence his opponents. Every time they move towards some kind of deal, it is eventually sabotaged and the hopes of the people dashed.

Because important interests are at stake, it is not theoretically excluded that they may arrive at some kind of shaky deal. But this is not at all certain. Denktas will only tolerate some kind of loose confederation, which will leave him in effective control. This is not what the Greek Cypriots want. On the other hand, there is the question of the right of return, property rights, the Turkish settlers and above all the question of the presence of the Turkish army. The question of Turkish membership of the EU is also far from being solved. And the Turkish reactionaries have accused those who are standing for a softening of Turkey's position of "selling out Cyprus" and have advocated the annexation of the Turkish part of Cyprus.

Ultimately, the fate of Cyprus will be determined by the fate of the revolution in Greece and Turkey. The only realistic solution for the working class is the establishment of a socialist federation embracing the whole of the island. But because the fate of the Cypriot revolution depends on the revolutions in Greece and Turkey, our aim should be that of building a wider socialist federation including Turkey and Greece.

The Middle East

The situation in the Middle East is extremely fragile, and likely to be further destabilised by US military actions. Not satisfied with attacking Afghanistan, US imperialism is already casting its eye around for another victim. A section of the ruling circle would like to attack Iraq. However, a new onslaught against Iraq would plunge the whole of the Middle East into turmoil. The price of oil would rise again, further exacerbating the world economic crisis. The enraged Arab masses would take to the streets, threatening to destabilise one Arab regime after another. American embassies and economic interests would be open to attack everywhere. It is not excluded that even the pro-American Saudi regime might be overthrown. The USA would be sucked inexorably into an even greater military involvement.

To the instability caused by the war in Afghanistan and the running sore of the Israeli-Palestine problem, is now added the falling price of oil. This is a vital question for Saudi Arabia, which has external debts of up to 300 billion dollars. The Saudis looked to Russia to support OPEC's policy of cutting oil production to bolster the price of oil. But Russia prefers to pursue its own interests and refuses to collaborate. The falling price of oil will affect all the oil producing countries, not just Saudi Arabia but Venezuela, Iran, Ecuador, Algeria, Mexico, Indonesia - all of which are faced with revolutionary developments.

Particularly alarming from the standpoint of US imperialism is the situation in Saudi Arabia. The Saudi regime, under heavy pressure from Washington, has broken off diplomatic relations with its Taliban friends, and generally done all the Americans have asked for. But there are limits even for Washington's Saudi stooges. The situation in Saudi Arabia is far from stable. Despite its big oil earnings, the regime is no longer in a position to grant the same lavish concessions to its citizens as in the past. There is growing unrest and criticism of the corrupt ruling clique. The splits and quarrels inside the royal family are a reflection of this ferment in society. For the regime to be seen as openly supporting US military action against a Moslem state might be the last straw. As usual, the American imperialists have acted with incredible clumsiness. The very fact of stationing US troops in Saudi Arabia (the land where Islam was born, and the site of its most holy places) was an act of sheer stupidity, and quite unnecessary. Now they are compounding the original error by putting pressure on the Saudis to let them use the country’s air bases to attack Iraq - which is very much like asking them to commit suicide. By their blundering, they may well succeed in pushing the Saudi regime over the precipice.

The Saudi royal family is a reactionary clique that combines a western lifestyle, complete with whisky, fast cars and expensive prostitutes with a public image of religious Puritanism, partly derived from its adherence to the strict Wahhabi sect. Whenever they felt threatened by popular unrest, they would either play the religious card, leaning on the most conservative sections of the clergy for support, or else they would start beating the drum on the Palestinian issue which they have shamelessly exploited for decades in their own selfish interests, while all the time supporting American imperialism. The immense power of the most reactionary wing of the clergy in Saudi Arabia is the direct result of these unscrupulous manoeuvres by the royal family. It played a most active role in "fighting Communism" in Afghanistan and the Gulf - in close alliance with the Americans - and until recently financed and backed the Taliban. Osama bin Laden, the Saudi millionaire who has family ties to the royal elite, is the product of this milieu. Now all this has come back to haunt them. Pressurised on the one hand by Washington and on the other by the Islamic reactionaries, the Saudi regime is caught between a rock and a very hard place. Its future is now in the balance as never before.

The Palestinian problem

The whole of the Middle East is thus in a state of ferment. The national oppression of the Palestinians by Israel has sown the winds and reaped a tempest that nobody can control. The ruling clique in Tel Aviv continues to pursue its vicious policy of repression, murder and destruction. The cruel fraud of the Oslo and Madrid Agreements has been exposed for what it is.

The interests of US imperialism in the Middle East are not confined to Israel. Far more important for its calculations is the oil that lies in Arab territories and is as vital for the US economy as life-blood for the human body. Therefore, after the fall of the Soviet Union, Washington began to apply pressure on Tel Aviv to make concessions to the Palestinians. However, in the last analysis, Israel is the USA’s only reliable ally in the Middle East, and when forced to choose, it has come down unambiguously on the side of Israel against the Palestinians.

In his haste to put together the celebrated "anti-terrorist coalition" President Bush seemed willing to twist arms in Tel Aviv. Certainly, the statement that Washington would be prepared to contemplate a Palestinian state must have infuriated Sharon. Of course, words are cheap, and no details of the hypothetical "Palestinian state" were ever provided. It therefore remains in the realm of propaganda, intended to calm the jangling nerves of government circles in Cairo, Riyadh and Amman.

The American imperialists have a cynical attitude to the Palestinian problem. They are not interested in the fate of either Israelis or Palestinians, but only their own interests. Because Washington needed to get the backing of Jordan, Egypt and Saudi Arabia for its "war on terrorism", it tried to put pressure on Sharon. The Americans cannot afford to allow the Israelis to carry on battering the Palestinians, for fear of the effects on the "moderate" Arab states they need to support their coalition. The Israelis reluctantly agreed, but immediately the "cease-fire" was disrupted by new killings, provocations and counter-provocations. Finally, the wave of suicide bombings launched by Hamas has given Sharon the excuse he needed to crack down hard. The Americans have remained silent.

Despite the terrible punishment meted out by Israel every day, the turbulence on the West Bank and Gaza shows no sign of dying down. But the present movement cannot last forever. If there was a genuinely Marxist leadership, the Intifada could have led to a revolution which would have linked the national liberation struggle to the idea of a socialist federation of Israel and Palestine. While using revolutionary and proletarian military methods to defend the Palestinian areas, they would have conducted propaganda directed at the ordinary Israeli soldiers and the workers and youth of Israel. Instead of this, the movement has been diverted along the lines of suicide bombings and senseless attacks against Israeli civilians.

The main responsibility for the outbreak of terrorist attacks lies with Israeli imperialism which has pursued a policy of expansionism, backed by the use of massive force, including indiscriminate attacks on Palestinian civilians. The daily routine of repression in the occupied territories (and the West Bank and Gaza are now virtually occupied by Israel) has driven the Palestinian youth to the desperate recourse of individual terrorism. This is a catastrophe for the Palestinians. If it ends in a war of attrition, the Palestinians stand to lose far more than the Israelis. So far they have lost about 800 people, while Israeli losses have been far fewer. On this basis, the Intifada is doomed. The only hope would be to drive a wedge between the reactionary Zionists and the masses in Israel. By treating all Israelis as one reactionary mass, the defeat of the Intifada is guaranteed.

Instead of the counterproductive and futile methods of individual terrorism, the mass of the population should be armed - not only the militias from the different political groups and the police of the Palestinian Authority. We advocate the formation of armed self defence groups in schools, factories, neighbourhoods, villages etc. controlled democratically by elected committees based by workers, students, shopkeepers, poor peasants etc. with the aim to protect the Palestinians against armed aggression by the Tsahal and other Israeli state agencies but also to protect the demonstrations and other mass actions of the Palestinian resistance. But none of these measures can be successful unless the Palestinians manage to establish firm points of support inside Israel itself. An internationalist class policy is the only way forward for the Intifada.

On the present basis, no way out is possible. Every time the American imperialists think they have reached a deal, it blows up in their faces. The conflict will continue, with temporary agreements that will eventually break down into new and bloody upheavals that constantly threaten the stability of the Middle East and drag it into war. There is no solution to this problem on a capitalist basis. The stage is set for new upheavals, especially when America begins its military offensive against Iraq.

In an attempt to pacify the Palestinians, the Americans have hinted that they would be prepared to see the establishment of a Palestinian state. But this is a trap. If a Palestinian state were ever established on a capitalist basis, it could only be a puppet state of Israel. This would solve nothing, but would represent a continuation of the present vicious cycle of violence. No lasting solution is possible without a revolution throughout the Middle East, leading to the establishment of a socialist federation of the Middle East, with full autonomy for the Palestinians, Jews, Druzes, Copts, Kurds, Armenians, and other national groups.

East Asia

One of the front lines of "the war on terror" is East Asia. Using the 11th September as a pretext, Bush wishes to expand America’s sphere of military activities in East Asia, not only in the Philippines but in Malaysia and Indonesia. Philippine President Macapagal-Arroyo offered the U.S. use of Philippine airspace and access to the former U.S. Subic and Clark air and naval bases. Washington announced an increase in the number of U.S. combat troops and military advisors assigned to train elite Philippine units for this "second front in the U.S.-led war on terrorism".

Washington has promised President Macapagal-Arroyo $100 million in assistance. In the same manner they promised Indonesian President Megawati a total of $ 657.4 million and restoration of military ties, which were severed following mayhem in East Timor in September 1999. Malaysian Prime Minister Mahathir too has discussed military collaboration during his U.S. visit May 13-16. In this way, the whole region is being sucked into the conflict. This will have a destabilising effect everywhere, preparing the way for new upheavals.

The activities of fundamentalist groups, often using terrorist tactics like Abu Sayyaf in the Philippines and Laskar Jihad in Indonesia, provide the excuse for greater imperialist involvement. Singapore too has suffered terrorist attacks by Muslim extremists. Although there is no direct threat of the fundamentalists taking power in any of these countries, Washington is concerned that these groups will add to the instability in the region and threaten American businesses interests. Even more important are the countries’ location along the shipping lanes that link the Pacific with the Indian Ocean and the Middle East. If Indonesia and the Philippines further disintegrate this would pose a major threat to the ailing economies of Japan, South Korea, Singapore and Taiwan, prime U.S. allies against China.

All American manoeuvring should be seen in the light of their attempt to contain China. The U.S. sees its hegemony in the Pacific challenged by China. As a consequence Bush relabelled China from a "strategic partner" to a "strategic competitor". Washington wants the ability to counter Beijing by tightening its hold over the region's major powers. U.S. Defence Secretary Donald Rumsfeld and Secretary of State Colin Powell are trying to establish a multilateral security relationship between the United States and its three main Pacific allies: Australia, South Korea and Japan. The American initiatives towards the Philippines, Malaysia and Indonesia (all part of ASEAN) form part of the same plan.

In the last period, having burnt its fingers with unstable dictatorial regfimes, US imperialism shifted its support to "reform-minded democrats", that is, to weak democracies that could be pressurised by imperialism to carry out pro-imperialist reform of national industry (the conglomerates), privatisations, opening up of the economy, etc. Today we observe a gradual return to support for the military, using the "war on terror" as an alibi. This policy will inevitably result in a violent backlash against imperialism, which will open up new revolutionary possibilities in one country after another.

The general instability in the region is a reflection of the protracted crisis of "Asian capitalism". The former Tiger economies are still deeply mired in crisis. Their hopes of attaining the status of highly industrialised countries evaporated with the 1997-98 Asian crisis, in essence a crisis of overinvestment (overproduction) sponsored by Japanese surplus capital. Some economies like Taiwan and Singapore managed to recover briefly because of the boom in the IT sector at the end of the 1990s, but took a severe dip with the coming of the world recession in 2001. The discontent of the population is growing, at a time when the proletariat - as a result of the industrialisation of the past period - has never been stronger.

South Korea

South Korea seemed to have recovered quickly from the 6.7 % fall of GDP in 1998. In 1999 it recorded a high growth rate of 10.7 percent, followed by 8.8 percent the next year. In 2000, however, this growth was reduced to a mere 3 percent. Despite the brief economic recovery, the average income of the poorest 20 percent dropped 5.3 percent from 1997 to 2000 while that of the richest 20 percent increased by 11 percent. In October 2000, the minimum wage covered only 53.1% of the "basic cost of living" of a household of a 29 year old single person. Industrial accidents and work-related illnesses climbed from 55,405 in 1999 to 68,976 in 2000, that is according to official figures by the Ministry of Labour (always an underestimation). The public sector was the direct target of the government’s policy of structural adjustment. From 1998 to 2000 a total of 131,000 workers (18.7 percent) in the public sector lost their jobs as a result. All this is part of the imperialist "structural adjustment program" dictated by the IMF.

These figures represent the situation at the height of the boom. With the advent of the new world recession, unemployment has already increased and the position of capital and the state has become more uncompromising. The regime of Kim Dae Jung has set out to destroy the militant unions. As a result of strikes and mass mobilisations of the KCTU, its leader, Dan Byung-ho, has been imprisoned.

The plans of big business have run up against the resistance of the masses. The most important element in the equation is the leading role of the proletariat. The Korean workers have waged a heroic struggle in the last few years, with strikes, general strikes and clashes with the police. The car workers, the electrical workers, the rail and gas workers, have all been involved in militant strike action. The mood of society is becoming increasingly radicalised. A survey showed 86 percent of Koreans are against privatisation. Many of these strikes were directed against the government’s privatisation plans.

The pressure from below forced the KCTU to call a general strike in solidarity with the electrical workers and against privatisation and repression by the state, which was frustrated by the leadership. However, there is a ferment inside the unions, with the more moderate leaders being pushed out, thus preparing the way for the transformation of the unions and a new upheaval of the class struggle.

The high level of consciousness and militancy of the Korean workers is reflected in the fact that the KCTU is raising political demands, such as opposition to the war against Afghanistan and the need for a workers’ party (the Democratic Labour Party). This has enabled it to become one of the strongest unions in the so-called Third World. The enormous fighting spirit and élan of the rank-and-file shows the colossal revolutionary potential that exists in the working class, not only in South Korea, but all over Asia, once it is organised in struggle. These workers are fresh and untainted with the opportunist habits and routinism of the Labour movement in Europe. They are open to revolutionary ideas. What is required is the formation of an organised Marxist current, rooted in the working class and the unions. Armed with the Marxist programme for the socialist transformation of society, no force on earth could halt the movement of the Korean proletariat.

Since the revolutionary overthrow of the military dictatorship of Chun Doo Hwan, the Korean workers and students have gone through a protracted period of revolution and counter-revolution. The revolutionary years of 1987-89 are comparable to the Russian Revolution of 1905. If the Korean workers and students carefully study the methods of Bolshevism and apply them to their situation, then the Korean working class can succeed in a classic workers revolution like the one of 1917, in a not so distant future. Such a genuine socialist revolution would have a profound impact on their comrades in the North and the resilient working class of China, Indonesia and the other Asian countries. South Korea is a key country in the region. Armed with a Bolshevik program, the Korean workers would lead the Asian working class to victory.

Indonesia

Three years after the overthrow of the brutal dictatorship of Suharto in May 1998 the revolutionary process seems to have lost its momentum. The new Megawati government, the third in three years, represents a shaky coalition between her party, the Indonesian Democratic Party, and old business cronies of the dying Suharto, bureaucrats of the old regime and the powerful military faction. Megawati's presidency is the direct consequence of a deep political crisis at the top of the state, which led to the ousting of Wahid; the so-called reform minded cleric.

The Megawati government represents a very temporary stabilisation and equilibrium at the top of society, with the help of the military who are trying to regain the position they lost with the fall of the New Order. It is a new attempt at finding a way for the bourgeois to rule the country, as it can no longer rule in the old way.

The façade of stability of the Megawati government will rapidly crumble as it is incapable of finding unity on any of the major problems posed by an economy in shambles, the burning national question and, most importantly, by a young and still untested working class.

The Megawati government, despite strong military backing, is not a remake of the Suharto dictatorship. In the present conditions it is not possible for the bourgeois to go back to an open military dictatorship. Any attempt to go along that road now would galvanise the disorientated masses and lead to a potential break up of the country. Such a scenario would whip up the revolutionary process.

The Wahid government was riddled with incessant reshuffling, divisions and different factions pushing in opposite directions. Wahid's erratic leadership at the top of the state was explained by his personal handicaps as a blind, physically weak man who had suffered several strokes. But his physical condition was a mirror image of the state of the bourgeois class in Indonesia. It reflected the general impasse of capitalism in Indonesia and its incapacity to carry society forward.

Within Southern Asia, Indonesia deserves the title of the weakest link of capitalism. The tug of war between different factions in the state apparatus provoked a dangerous deadlock at the head of the state leading to new levels of instability and, more dangerously for the bourgeois, the growing involvement of the masses in this conflict.

The majority of the left, the NGOs, and the PRD in particular, have given support to the Wahid faction, which they shamefully consider a reform- minded and "progressive" bourgeois element. This is the same old Menshevik-Stalinist position. In reality the PRD served as a left cover for a cynical and cunning bourgeois politician who was advancing the interests of his clan of cronies inside the state apparatus and in the business world. The criminal policy of the PRD leadership went so far as to support the declaration of the state of emergency (which gives the military and the police full powers to restore order) against the rebellious parliament which wanted to impeach him. This policy has led to the general disorientation and demoralisation of the left.

An important opportunity to build the PRD as a mass independent revolutionary socialist force amongst the student youth and the working class has been squandered in the last three years. Instead, the PRD leadership followed a fatal course of "clever tactics and coalition building" with all kinds of factions of the bourgeois class in a quest for the non-existing progressive capitalist, which would bring "real democracy". It has succeeded neither in building its own forces, nor in advancing the working class movement. From the tragic experience of the PRD policy the genuine revolutionary youth will have to learn and build the forces of genuine Marxism in Indonesia.

Despite the ongoing slump, which has not really stopped since 1997, the working class has started to assert itself. The June 2001 labour protest against an IMF austerity package is a good example of this process.

Nevertheless it is still in its early days, despite its convulsive character. In reality the whole process of the Indonesian revolution is still in its early stages. The revolutionary process will be protracted. This does not give the Marxists endless time to build their forces. The ugly face of barbarism and ethnic cleansing in East Timor, Maluku and other regions of the archipelago shows what will happen if revolutionary socialism does not succeed in becoming the dominant force in Indonesia.

Africa

The whole of Africa is in turmoil. Terrible social conditions exist throughout the continent. Just one example illustrates the situation. In sub-Saharan Africa only 2% of the population has access to a telephone, and half of this is in South Africa. The national question is erupting everywhere. The key to the situation is the working class, mainly concentrated in a few more industrialised countries. In Nigeria last year we saw the enormous strength of the working class during the 5-day general strike that forced the government to back down on fuel prices.

However, as a result of the extremely underdeveloped nature of most of the African economy, the real key to the whole continent is to be found in South Africa, where there is a strong working class.

The movement of the black proletariat of South Africa under the most difficult conditions was an inspiration to the workers of the whole world. This could have led to a socialist revolution in South Africa. But Mandela and the others reached a deal with the white ruling clique. In effect they capitulated. With the fall of the reactionary Apartheid regime, the masses voted massively for an ANC government. They were voting for a fundamental change. But their hopes for a change have been swiftly dashed.

In the past the ANC stood, at least in words, for a "socialist" policy. Now, like the "socialist" leaders everywhere, they have capitulated to capitalism and accepted market economics and privatisation. Discontent with the government is growing. The ANC did not even deliver on things like providing clean water to the townships. In many ways the conditions of the masses are even worse than before: the wave of privatisations, the introduction of individual metering for water supply (which means that poor families have their water cut off, and has already caused a colera epidemic in KwaZulu Natal), the growth of unemployment etc.

Some ANC councils are even trying to make people pay for electricity bills they owe from the time when non-payment of service charges was a common tactic of the anti-apartheid movement! As people in the townships are unable to pay these debts, they are disconnected from the electricity service. This has already led to clashes in townships up and down the country, including Soweto.

The capitulation by Mandela and the other leaders of the ANC was the logical product of their false theories of stages which they took over from the Stalinists. They are attempting to create a black bourgeoisie, although only a small number of blacks have actually joined the capitalist class. All the so-called Black Economic Empowerment programmes have achieved is the appointing of token blacks to the administration boards of some companies. The handful of monopolies which dominate the highly concentrated South African economy remain firmly in the hands of the same white capitalists which run the country during the apartheid years. Now the country is faced with the effects of world recession. The rand, the South African currency, has collapsed from R7.50/$ at the beginning of the year to over R12/$ now.

The leadership of the ANC represents a clique of black careerists which is determined to enrich itself at the expense of the masses. The ANC and COSATU leaders have been absorbed by the state. Cyril Ramaphosa, the former union leader, has become a millionaire. Despite all the rhetoric about democracy, the country is really ruled by an unelected clique around Thabo Mbeki, which follows loyally the policies pro-capitalist policies of the IMF and the World Bank. All decisions are taken by this clique and no questions are allowed.

But this situation has opened up rifts inside the ANC which in the future can lead to an open split along class lines. The rank and file are discontented and restless. The SACP is also in ferment, with a section demanding a break with the bourgeois leaders of the ANC. A growing number of workers and youths are shocked and disgusted by the corruption of the leadership and its open espousal of pro-bourgeois policies. Above all, a gulf will open up between the ANC leadership and COSATU. Union members are being hit by the privatisation of public and municipal services. Now the world economic crisis will mean more sackings and rising unemployment. The discontent of the workers with the government will grow and lead to an intensification of the class struggle.

There have already been a number of very radical strikes of the municipal workers and COSATU was forced to call a three-day general strike in August 2001. Big possibilities will present themselves for the formation of a genuine Marxist tendency in the ANC and especially in the SACP.

The ANC is largely empty except for civil servants and other functionaries. Its leaders are leaning on the SACP leadership as a left cover. The presence of SACP ministers in the government will inevitably lead to questioning and criticism. Already there have been demands in COSATU that the SACP break with the ANC government. But despite the policies of the ANC the masses still have no alternative. At a later stage splits will occur in the ANC and also the SACP.

The most immediate and urgent task is to establish the first group of Marxist cadres in South Africa, fighting for a genuine revolutionary policy inside the mass organisations - the ANC and SACP and, of course, COSATU. We must demand that the ANC break with capitalist policies and that the SACP must defend a genuine Communist programme. We must raise the question concretely of the need for the working class to take power, drawing behind it the unemployed and semi-proletarian layers. The black proletariat of South Africa is the biggest working class in Sub-Saharan Africa. COSATU is a formidable force with 1.8 million members. With the correct leadership, they could easily take power and begin the socialist transformation of society.

The permanent revolution is now the only way forward for South Africa, and for all Africa. If South Africa goes, all Africa will go. A socialist revolution in South Africa would immediately transform the whole situation. It would provoke a whole series of revolutions, starting with Zimbabwe, Angola and Mozambique, and spreading to Nigeria, Congo and the rest.

The Revolution in Asia, Africa and Latin America

The last period saw the crisis of proletarian Bonapartist regimes. Mozambique and Angola were wrecked by South Africa which backed and armed bandits. Afghanistan did not even succeed in establishing a stable state before it was engulfed in a reactionary guerrilla war. In Ethiopia, the regime was destroyed by its failure to solve the national question. Now Cuba, deprived of Russian subsidies, is hanging by a thread.

The struggle against imperialism cannot be understood unless it is linked to the processes in the advanced capitalist countries. It is the delay in the revolution in the West which has created the strange aberrations in the ex-colonial countries - such as fundamentalism and proletarian Bonapartism (deformed workers' states). A deep crisis is being prepared everywhere, which will have revolutionary consequences. However, the central question is the subjective factor. If the working class does not succeed in taking power under the leadership of a Marxist party, all kinds of peculiar and monstrous distortions are possible.

Is it possible that there can be new regimes of proletarian Bonapartism? After the fall of the Soviet Union there is no model in the old sense. That is an important point, but in itself it is not decisive. The model is the past experience of "socialism" in the USSR and China, which can still be attractive for the leaders of guerrilla movements in Latin America, for example. More importantly, there is Cuba, China and Vietnam.

Theoretically, it could not be excluded that new proletarian bonapartist states will emerge in the next period. It depends on circumstances. Especially in the event of a slump, there can be a movement in the direction of proletarian Bonapartism in certain countries. The American imperialists are concerned about this, and they are right. Of course, we are not talking about countries like Argentina and Brazil, where there is a powerful working class. But in more backward countries like Colombia it is a possibility.

In the case of Venezuela, if a genuine revolutionary party and leadership had existed, the working class could have taken power after the movement towards reaction had been defeated by the uprising of the masses. But such a leadership did not exist. If Chavez had been a Marxist, and not a utopian reformist, power would have passed painlessly into the hands of the workers, without a civil war. But the opportunity has been lost: the initiative has passed to the bourgeois counterrevolution, aided and encouraged by US imperialism. New coup attempts are inevitable, which may end in bourgeois Bonapartism with an extremely repressive character. This perspective depends on the outcome of the class struggle, which is difficult to predict in advance. The masses are roused and ready to fight. But the subjective factor remains decisive. Although Chavez is an admirer of Castro, he did not do what the latter did in 1960, when he leaned on the working class to strike blows against imperialism and capitalism, expropriating the Cuban capitalists and establishing a regime of proletarian Bonapartism.

However, such a development was entirely possible and may take place in the future in countries like Venezuela, Colombia, Peru or Ecuador. We must be prepared for such developments, which arise, on the one hand, from the impasse of the capitalist system, which assumes a particularly acute form in the underdeveloped capitalist countries, and on the other hand, from the weakness or the absence of the subjective factor (the party and the leadership) and the delay of the socialist revolution in the advanced capitalist countries.

This would not be socialism, but a deformed workers' state, a regime of proletarian Bonapartism. We would have to give it critical support against imperialism, since it would be progressive in relation to capitalism - as China and Cuba were. But we would have to explain that it had nothing in common with socialism. Our main task is to explain the leading role of the proletariat, as the only class that can bring about the socialist transformation of society.

One of the main weaknesses of the Stalinist and other petty bourgeois guerrillaist movements is their national limitedness and lack of an internationalist perspective. The idea of socialism in one country is now exposed as a reactionary utopia. The Stalinist bureaucracy in Russia had the delusion of “building socialism” in a backward country, cut off from the world economy. This led to the monstrous totalitarian degeneration of the regime, and in the end to capitalist restoration. The same was true of China. If gigantic countries like Russia And China could not solve their problems in this way, how could small and weak economies like Colombia or Venezuela, or even Argentina or Brazil?

The revolutions in El Salvador and Nicaragua had the potential to end as healthy workers' states, but they were hijacked by the guerrillaists who led them into a blind alley. But even if they had ended as healthy workers' states, they could never have succeeded in solving the problems of the masses within their own frontiers. Only by spreading the revolution, first to the whole of Central America and then to the rest of Latin America, could they have begun to solve the problem.

It is impossible to solve the problems of Latin America, or even Central America, without an internationalist perspective. Even if the guerrillas take power and establish new proletarian bonapartist states, it would solve very little. The crushing weight of the world economy in the present epoch rules this out. The narrow nationalism of the petty bourgeois guerrilla leaders runs counter to the objective demands of the economies of these countries which are too weak to offer a solution.

Because of the weakness of the forces of Marxism, it is possible that there will be a revival of the ideas of guerrillaism. This is inevitable if the guerrillas come to power in Colombia. The sects with their usual empiricism and lack of principle, will give uncritical support and spread illusions among the students. This can do a lot of damage especially in Latin America. This is a bad thing and will complicate matters for a time.

If the revolution in Latin America had developed on a Marxist basis, the process would have taken an entirely different road. Instead, it was diverted along the road of guerrillaism, thanks to the influence of petty bourgeois elements, aided and abetted by the so-called Trotskyists like Mandel. Therefore it is essential that genuine Marxists take an implacable stand on guerrillaism and terrorism or "urban guerrillaism" - which is a contradiction in terms and means individual terrorism under a different name. An indication of the potential for a classical revolutionary process even in countries where the peasantry represents a big percentage of the population was the Ecuadorean revolution.

We must be prepared for a new resurgence of guerrillaist tendencies in Latin America and other parts of the world. We must explain the limitations of these petty bourgeois movements and counterpose the revolutionary movement of the proletariat and the goal of a workers' democracy and a socialist federation of Central and South America, as a first step towards the socialist world federation as the only solution. The Mexican comrades have done excellent work in this respect, combating the nonsensical ideas of the Zapatistas. It is necessary to draw out the real lessons of history which are a closed book for these people.

The revolution in the former colonial countries can give a tremendous impetus to the socialist revolution in Europe, north America and Japan, especially if it takes a classical form, under the leadership of the working class and the proletariat. This is entirely possible in countries like Argentina and Brazil with their powerful proletariat. Given proper leadership, there is no reason why the working class of these countries should not take power into its hands on the lines of 1917. This would transform the entire situation.

The main factor is the colossal degeneration of Stalinism and the weakness of the subjective factor. The real reason is the weakness of genuine Marxism, and the absence of a model in the form of a classical proletarian revolution like the October revolution. The Stalinist theory of two stages has failed everywhere, and led to terrible disasters. However, just one success would transform the whole situation. A healthy workers' revolution in Pakistan, for example, would cut across the tendency towards proletarian Bonapartism. Above all, the marvellous movement of the Argentine workers places on the agenda the possibility of a classical proletarian revolution in a developed country which would transform the entire situation in South and North America and on a world scale.

A global crisis of capitalism

The main fear of the bourgeois is that the crisis is unfolding simultaneously in every sector of the world economy. The word "contagion" is being used to describe this phenomenon. This is the other face of globalisation. In economics, as in politics, US imperialism is faced with the equivalent of bushfires everywhere. No sooner do they put out one fire, than another one flares up with even greater intensity. This is in itself a graphic expression of the nature of the present epoch.

The crisis in Argentina did not originate there. It reflects the global instability of world capitalism. The collapse in Turkey at the start of 2001 immediately affected the Polish zloty and the Brazilian real, which suffered a devaluation of about 30 percent in the course of the year. This placed unbearable pressure on Argentina, its most important trading partner, whose exports were rendered completely uncompetitive.

Since the Argentinean peso was tied to the US dollar, devaluation was (theoretically) ruled out. Thus, the whole weight of the crisis was placed firmly on the shoulders of the Argentinean workers and the middle class. This had serious social and political repercussions. There had already been a number of militant general strikes in the course of 2001. There was a massive protest vote in the general elections, and even an insurrection in the northern town of General Mosconi where the unemployed and the workers took the running of all public affairs into their own hands.

This was causing concern in Washington, where the IMF initially provided funds to help to prop up the Argentinean economy. But now events have moved far beyond that. The decision to introduce dramatic bank controls led to a run on the banks. In one day the country's banks lost $1.3 billion. The central bank's net reserves slumped by $1.7 billion. Overnight, the country, which was one of the richest in the world, was bankrupted. Finance minister Domingo Cavallo once more went with his begging bowl to the IMF but was received in Washington with stony faces. The IMF, having already provided Argentina loan arrangements amounting to $48 billion in the last year, had no intention of throwing good money after bad. Argentina was left to sink under the weight of its own debts.

The Argentine revolution can have serious effects throughout Latin America, and on a world scale. The crisis in Argentina has already sent tremors through the international markets. Markets across the world are watching to see whether the crisis would have a domino effect in other economies in Latin America and further afield.

This can be seen clearly in the mass revolutionary movements which have already taken place in a number of countries in the last few years, for example: Indonesia 1998, the Ecuadorian revolutions of 2000 and 2001, the movement against water privatisation in Cochabamba, Bolivia, in 2000, the uprising in General Mosconi, Argentina, in 2001, and the heroic Algerian insurrection. A common feature in most of these movements have been the setting up of popular committees representing the different sections of the oppressed which have challenged state power and started to replace it.

In the case of the Ecuadorian revolution, the People's Parliaments won over a section of the Army to their side (including some officers) and actually took power for a few hours. Only the lack of leadership prevented the extension and generalisation of this movement and thus frustrated the revolution. Now the revolution has burst out again - but this time in the second biggest economy in Latin America. The size of the Argentine proletariat and its militant traditions means that the class balance of forces is qualitatively different to that in Ecuador or Peru. Argentina is now the key to the revolution in all Latin America.

The Argentinean working class is the most powerful in Latin America after the Brazilian working class. It has a tremendous revolutionary tradition. Armed with a real revolutionary programme, it could easily take power and commence the socialist transformation of society. Such a development would instantly transform the situation in the whole of Latin America. It would have an even greater effect than the Bolshevik revolution in 1917. Its repercussions would be felt in the USA, and on a world scale. Instead of preparing new military interventions against the peoples of Asia, Africa and Latin America, but would be faced with revolutions everywhere. Only a radical reconstruction of society from top to bottom can show a way out of the impasse.

Argentina - The revolution has begun

The events of last December are a warning of what will happen in one country after another in the coming period. The Argentine revolution is a complete answer to all the faint-hearts, cowards, sceptics and cynics who doubted the ability of the working people to change society. It deserves the most careful study by all workers. It is a laboratory of revolution - or of counter-revolution.

The revolution began with the overthrow of the government of Fernando de la Rua was forced to resign after thousands of angry and impoverished protesters took to the streets of Buenos Aires. This was the first stage of the revolution. It reflects the deep crisis that has engulfed Argentina, but which affects the whole of Latin America.

At bottom, the problem of the Argentinean ruling class is the colossal power of the proletariat, which prevents them from carrying out the vicious austerity policies dictated by the IMF to the end. The potential power of the masses was immediately revealed in the December days. Neither the declaration of a state of emergency, nor the bullets and tear gas of the police served to intimidate the masses. United in action, they developed a sense of their own collective might. Power was slipping out of the hands of the state and passing to the streets.

This was a movement that included every section of the oppressed layers of society: not just the workers, but the unemployed and the middle class also. This fact has led some to question the class basis of the movement and to deny the role of the proletariat. But this is to misunderstand the dynamics of the Argentine revolution. The seriousness of the crisis - which has ruined large numbers of small business people and pensioners - has aroused the broadest layers of the masses to struggle and awakened even the most backward and formerly inert layers. This is both a strength and a weakness. The presence of other classes in the movement obscures its real character. But only under the leadership of the proletariat can the movement triumph.

The revolution that began with the popular uprising last December is continuing. All the efforts of the ruling class and the regime to control it have failed. With every passing day the mass movement grows in strength and sweep. Argentina has decisively entered the road of revolution. Over the next months and years, the central contradiction will have to be resolved. The present "transitional" regime will solve none of the fundamental problems, but only lend them a more feverish and explosive character.

The masses are seeking a way out of the crisis through direct action. Strikes, demonstrations, "cacerolazos", factory occupations and road blocks are occurring on an almost daily bases. In the school of direct action the masses are discovering their strength and the power of collective action. It is like the warming-up exercises of an athlete who is summoning up all his strength for the final test of strength and will power. However, the decisive test has not yet arrived.

The highest expression of the movement is the popular assemblies, the local and factory committees, the organisations of the "piqueteros" and other forms of the self-organisation of the masses. An important step forward was the convening of the national assembly of workers in February. This gave an opportunity for the representatives of different regions, districts and factories to understand the need for co-ordinated action on a national scale, and to debate the slogans and tactics of the struggle and lay down the priorities for the immediate period. The ruling class have grasped the real significance of the popular assemblies and the other forms of popular power. They are embryonic soviets.

The depth of the crisis, which threatens a large section of the middle class with ruin, has given the movement its massive character. This is at the same time both a strength and a weakness. The explosion of anger among the middle class and other non-proletarian elements deprives the ruling class of its mass base and cuts the ground from beneath the feet of the reaction, which TEMPORARILY has been taken off balance and paralysed. This creates an exceptionally favourable class balance of forces. But this situation cannot last. If the working class does not take power into its hands and show the middle class a way out along revolutionary lines, the mood of the middle class can change and the initiative can pas to the reaction.

The main weakness of the situation is the lack of a generalised movement of the working class. The majority of the organised workers are under the control of the official (Peronist) CGT. The union bureaucracy is doing everything in its power to hold the workers back. The CGT apparatus has considerable power and huge resources. It has the backing of the bourgeoisie and the state. In fact, the Argentine bourgeoisie could not maintain its rule for 24 hours without their support.

The class struggle in Argentina is posed in the starkest terms. Already there are rumours of a conspiracy and coups in the ruling class. There can be absolutely no doubt that this is the case. The representatives of big business, the bankers, the tops of the army, the reactionary circles of the Church - all will be conspiring to destroy the revolution.

But the problem for the ruling class is that conditions do not favour such a move - yet. The movement is still in the ascent. Its forces are intact and undefeated. The middle class is full of hatred and resentment against the big bankers and capitalists and their backers in Washington. Any attempt to use violence to crush the movement at this stage would have the opposite effect. Just one bloody clash, and the whole country would erupt.

The ruling class is therefore obliged to play a waiting game. They will wait until the movement begins to show signs of exhaustion. This is inevitable at a certain stage, if the masses do not see a clear perspective of a way out of the present mess. The crisis is getting deeper every day, with more sackings, factory closures, rising prices and falling living standards. The political crisis is only a superficial and tardy reflection of the depth of the economic crisis - a crisis that cannot be solved on a capitalist basis, unless by an even more savage reduction of living standards. But this can only be achieved by first breaking the resistance of the working class. In the Argentine context, that means all-out class war, which must be fought to the finish.

The revolution in Argentina can develop over a period of months, if not years, before a decisive settlement is reached - one way or the other. There will be periods of ebbs and flows, of tiredness, of defeats, and even reaction, which can provoke new outbreaks. But sooner or later, the question of power will be posed, and must be solved. Either a dictatorship of Capital or the dictatorship of the proletariat. There can be no third way.

Russia

Russia remains a key country for the world revolution. The prolongation of the world boom and the delay of the movement of the Russian proletariat have meant that market relations have crystallised and the restoration of capitalism has taken place.

We have to admit that things have not turned out as we expected a few years ago. We did not expect that the crisis of world capitalism would be postponed for as long as it has been. This has given Russian capitalism sufficient time to establish itself. The movement towards capitalism has lasted for ten years. The new productive system and its property relations have had time to penetrate the consciousness of the masses. This process has lasted much longer than we expected. The main responsibility lies with the Stalinists who have capitulated on everything.

Six years ago the process of privatisation was not yet complete, and it was still possible for it to be reversed. This is now no longer the case. The decisive sectors of the economy are in private hands. Large sections of the former nomenclature have a vested interest in maintaining this position. Moreover, it has created a mass base in the petty bourgeois layers of the population, especially in Moscow and Saint Petersburg. Therefore, to undo the situation will require a social revolution.

Ten years is sufficient time to judge. We have to say that the Rubicon has now been passed. The movement towards capitalism has been contradictory, with many cross-currents, but after every crisis the process has continued with renewed force. The last crisis was in 1998, when the economy collapsed. This was a decisive turning-point. Up to this point, Russian capitalism had proved incapable of developing the productive forces. The economy experienced the biggest collapse of any economy in peacetime. As we predicted, the abolition of the state monopoly of foreign trade was a disaster for Russia. Russian industry was decimated by a flood of cheap foreign imports. The result was the collapse of the Summer of 1998.

The economic situation - especially since the crisis of 1998 - has played a very important role. The collapse of the Russian economy at that time was the last possibility to turn the clock back. There was a strong reaction against the market economy, and even large sections of the petty bourgeoisie in Moscow and Saint Petersburg had lost their jobs and were criticising the system. The "reformers" were demoralised and on the defensive. But the subjective factor was decisive. The so-called Communist Party made no attempt to support re-nationalisation. We over-estimated the strength of the wing of the bureaucracy which wanted to return to a centralised, nationalised economy and underestimated the rottenness and degeneration of the Stalinists.

If the “Communist Party” had wanted to lead a movement back to a nationalised planned economy, this was the moment to do so. But the ex-Stalinist leaders of the CPRF are terrified of any movement of the working class. They have shown themselves to be incapable even of fighting for a return to the system of Brezhnev, which most of their supporters would probably support. They have made their peace with capitalism.

The other decisive element in the situation has been the absence of a movement of the masses. Three generations of Stalinism has had an effect on the consciousness of the working class. The composition of the class has also changed. Millions of peasants entered the factories in the 1930s and 40s. The old generation which had experienced the October revolution was diluted to some extent. The active layer was entirely decimated. Those who survived the years of war, revolution and civil war, were exterminated by Stalin.

Stalin succeeded better than he could have expected in destroying the last vestiges of the real tradition of Bolshevism. The new generation has no understanding of the ideas of Lenin. There is general disorientation. The masses are discontented but lack a revolutionary perspective. This has enabled the nascent bourgeoisie to consolidate its hold on power. The process of privatisation has been completed. We must now take stock of the position and draw the necessary conclusions.

As long as the economy was in a state of collapse, the future of the system was not guaranteed. But no economy can be in a permanent state of collapse. Either the capitalist property relations would be overthrown, or else, at a certain point, the economy would eventually find a point of equilibrium and begin to grow. This occurred in a very peculiar way, as the result of a crisis. The steep devaluation of the rouble and the rising price of oil created the conditions for a partial revival of the Russian economy. The initiative passed again to the "reformers".

The transition towards capitalism has been developing at different tempos and with different success rates throughout Eastern Europe and the other ex-Soviet Republics. Countries such as Poland and Hungary had obviously achieved a successful transition earlier than most of the other ex-Stalinist regimes. This was aided both by their geographic position (proximity to Germany and the EU) and by the extension of the boom in the West. However, other regimes such as the Serbian and Romanian, have not had the same degree of success in developing a viable capitalist economy. The fate of these regimes is inextricably linked to developments on a world scale, and especially to what happens in Russia. A reversal of the process in Russia would have had an immediate effect in slowing down the transition and even in reversing it in these countries. The consolidation of capitalism in Russia will have the effect of strengthening the hold of the pro-capitalists in these countries also.

The decisive sections of the bureaucracy in Russia and Eastern Europe have gone over to capitalism. That includes not just the managerial section and those who have become billionaires, but also the majority of the tops of the army, the police and the state bureaucracy. This is a devastating comment on the rottenness of the Stalinist bureaucracy. Compared to this, the betrayal of the leaders of the Social Democracy in 1914 was child's play.

Putin, a bourgeois bonapartist

Despite everything, the roots of Russian capitalism remain shallow. The Russian bourgeoisie is corrupt and rotten. The relative stability which has been established as a result of the relative economic stabilisation in the last two years, is still fragile and will not last long. The reduction of unemployment will strengthen the working class. It will halt the process of lumpenisation that had affected a layer of the youth. This is a positive development from our point of view.

The regime is based on the temporary inertia of the masses. But this cannot last. A new outbreak of the class struggle in Russia is inevitable at a certain stage. The economic growth has not meant that the problems of the working class are solved. There has been an increase in inflation as a result of devaluation. The government is introducing new legislation to attack living standards, for example in relation to housing and taxation. This has set the stage for a revival of the working class, in the form of the economic struggle.

Putin is a bourgeois bonapartist who seeks to consolidate the market economy. He has acted against individual tycoons (Guzinsky, Berezovsky), but only in order to strengthen capitalism by limiting the unbridled looting and corruption of the Yeltsin period, and at the same time to eliminate all opposition and strengthen his own position.

Putin has restricted democratic rights through the law on trade unions (Kzot) and the law on political parties. He has brought the media under his control, and concentrated power into his own hands to an even greater degree than Yeltsin. He would like to rule by decree, but has not yet reached that stage. He still has to conciliate different groups within the bureaucracy and the bourgeoisie. More importantly, he could come into collision with the working class.

In order to institute a real bourgeois bonapartist regime, Putin would need the backing of the army. But this is not so simple. The upper layers of the army are pro-bourgeois and just as corrupt as the bourgeoisie itself. But the lower echelons are discontented and badly organised. The Russian army would not be a reliable instrument of repression against the workers. a serious clash could end in an Albanian variant. But Russia is not Albania. Such a situation could easily end in the working class taking power. Therefore, Putin has to proceed cautiously.

Despite the economic recovery - which will not last - most of Russia remains a picture of sordidness and misery. This is especially the case in the provinces. The rising inflation will make things worse still for millions of people. Now Putin is moving to privatise the land. If he succeeds, he will press on with the reform of state-owned housing and heating. But this can provoke massive opposition.

Russia and America

Putin appears as the Russian strong man, but in reality he is a pigmy, just as short-sighted as Yeltsin, if not more so. This is shown clearly in the field of foreign policy. Russia is still a superpower. In absolute terms she has overtaken Germany. Yet the Russians do not appear as an independent force on a world scale. In international affairs, Putin is attempting to conciliate the American imperialists, in the hope of getting economic concessions, which he may or may not succeed in doing. Sooner or later, however, Russia will come into conflict with America because their interests are antagonistic, above all in Central Asia and the Caucasus, where both sides want to control the oil and natural gas.

Bush and Putin now appear as "good friends" - which is very short-sighted from Russia's point of view because in practice there is a sharp division of interests between Russia and America on a world scale. Despite all the nice words, the Americans will not hesitate to undermine Russia in Eastern Europe and in Asia. Russia had an interest in helping America to overthrow the Taliban, but no interest in letting US imperialism dominate Afghanistan or strengthen its position in Central Asia. Sooner or later, this trend will have to be reversed. Behind all the smiles and handshakes, there are powerful conflicts of interest between Russia and America on a world scale which must come to the surface. Putin's conciliatory policy will be discredited, and may even lead to his removal at a certain stage.

In Chechnya, Russia continues to pursue an imperialist war, with no end in sight. The lamentable showing of the Russian army is a symptom of the shocking corruption and degeneration of Russian capitalism. Trotsky explains that the army is always a reflection of society. The Soviet army was able to defeat Hitler and conquer a quarter of Europe. Now the Russian army cannot even subdue the Chechens.

An unstable regime

Despite its apparent successes, the present regime is quite unstable. Its successes are the result, not of internal strength, but of the lack of a serious opposition. The future for Russian capitalism is not rosy. Russian capitalism begins as monopoly capitalism, and monopolies always have a tendency to fix prices. But these big monopoly groups are an argument in favour of nationalisation. The rule of capital will become intolerable to the people.

Around 40 percent of Russian businesses make a loss (The Economist, 1/12/01). This is after the two best years in the history of the last two decades. Imports are again rising rapidly, as the effects of the devaluation wear off. If we leave aside raw materials like oil and gas, exports are still very few. Most Russian industry is not capable of competing on world markets. Machinery is on average 16 years old and wearing out. Management is mostly primitive and corrupt. Billions of dollars have been stolen.

The decisive question is Russia's relation to the world economy. It was the development of the world market that spelled doom for the Russian Bureaucracy. Now Russia is participating on world markets to an unparalleled degree. But this means that it will be hit hard by the next slump. This will throw everything back into the melting pot. Particularly a fall in the price of oil on world markets will have a serious effect. By meshing Russia ever more firmly to the world economy, they are preparing new disasters. The world crisis of capitalism will have a big effect on Russia, which will shake everything up again. In the long run, it will become clear that some kind of a plan will be necessary to hold Russia together. The demand for a return to a planned economy will gather strength to the degree that the crisis bites and reduces Russia once more to chaos.

Already there are clear indications that the growth of the economy as a result of devaluation and high oil prices has reached its limits. Analysts predict growth of between 3 and 4 per cent in 2002, down from 5.1 per cent in 2001 and 9 per cent in 2000. This is partly because high inflation - 18.6 per cent last year - has pushed up the exchange rate of the rouble. The effects of the 1998 devaluation are now wearing off. By the spring of 2002 that Russian industry had already lost about three-quarters of the cost advantages it had gained from the crash of the currency. On the other hand, capital investment - the real lifeblood of the capitalist economy - remains stubbornly low. The figures for recent months have shown investment to be weakening sharply - from 10.5 per cent year-on-year growth in December 2001 to 7 per cent in January and 4 per cent in February 2002. This is the Achilles' heel of Russian capitalism. On the other hand, inflation is rising. The conditions are beginning to mature for an upswing of the economic struggle.

At present, the masses seem apathetic and indifferent to politics. This is hardly surprising. Decades of Stalinist totalitarianism has thrown the consciousness of the working class back. At present the workers see no alternative. The youth are confused and alienated. The heritage of Stalinism has had a profound psychological effect, especially in the younger generation. The CPRF has a pro-capitalist policy. It has capitulated all along the line. The same is true of the leadership of the FNPR. Thus, there is no real opposition. But this will not last. The unbearable contradictions produced by capitalism will force the working class into struggle time and time again. Ten years ago there were some illusions in capitalism even among workers. No more. On the basis of experience, the workers have understood that privatisation is theft and on the basis of so-called market economics, no way out is possible. Eventually, the working class will begin to draw revolutionary conclusions. In the course of the class struggle, the young generation will rediscover the real traditions of the Russian working class - the traditions of 1905 and 1917, the soviets, Bolshevism.

Because of the weakness of the subjective factor, this will take time. A swift resolution of the contradictions is not possible. The struggle will proceed over a number of years, with ebbs and flows. But the situation remains potentially explosive. We must be prepared for sudden and sharp changes also in Russia. The main problem is the lack of perspectives and preparedness of the Russian working class. But that can change quickly. Once the log-jam is removed, things can move quickly. Within the next ten years we could be facing a new Russian October that will transform the world.

The Russian working class has a different history and tradition to that of the proletariat in the West. Its consciousness has been shaped by the experience of the October revolution and a nationalised planned economy. It therefore considers privatisation to be theft, and the nationalised means of production as a natural alternative.

The main thing is to build the subjective factor. At present the forces of Marxism are weak. But there are possibilities. All the Stalinist parties are in crisis. The ideas of Trotskyism are arousing a growing interest in the ranks of the CPs and in the youth. Our paper is well known among the activists. Our web site has been a big success. These are important conquests which we can build on.

The task of Marxists is, as Lenin said, to "patiently explain". We must patiently explain the programme, policies and theory of genuine Marxism-Leninism (Trotskyism). We must win over the advanced guard of the workers' and Communist movement to the programme of genuine Marxism. In all the Communist Parties, there is discontent with the Stalinist leadership, and the best elements are looking for an alternative. There is a growing interest in the ideas of Trotskyism.

Eastern Europe

Eastern Europe - or at least the most developed parts of it - Poland, Hungary and the Czech Republic - moved towards capitalism faster than Russia. East Germany was a special case, since here the counter-revolution was carried out by means of its absorption into West Germany. In effect, the others have also become satellites of Germany. No fewer than 27 countries (28 if Montenegro splits away from Yugoslavia; 29 or 30 if Kosovo and Chechnya are included) have emerged out of the eight that previously existed.

The imperialists have encouraged this tendency in order to facilitate their control over Eastern Europe. German imperialism has led the way in pursuing the Balkanisation of Eastern Europe. The splitting of Czechoslovakia was a reactionary act, which benefited neither Czechs nor Slovaks. The people were not consulted. This was a manoeuvre on the part of German imperialism, of which Klaus was an agent. The worst results of this policy was the brutal dismemberment of Yugoslavia which has led to wars and unprecedented mayhem.

The experience of "market economics" has had an effect on the psychology of the masses. In areas like east Poland, unemployment is already over 20 per cent and the economy is slowing. There is huge and growing inequality. Entry in the EU - if it happens - will solve nothing. At least one fifth of the population earn at least part of their living from the land. The EU proposes to give Polish farmers only 25 per cent of the level of subsidy given to western farmers in the transition period. This will mean that Polish agriculture will be decimated by heavily subsidised western imports. To make matters worse, the imposition of EU quotas on the production of milk and other items will make it even harder for Polish farmers to make a living.

There is a ferment in the population. Many people now look back to the "Communist" era with nostalgia. At the last elections in Poland, the ex-"Communist" Party swept the board, while Solidarity and the other bourgeois parties were virtually wiped out. This was a decisive vote of no confidence in the market and all its works. But the discontent of the masses has been blocked by the ex-Stalinists who have diverted it into safe channels. The leaders of the former "Communist" Party have completely capitulated to capitalism. And not only in Poland. Everywhere when they come to power, they act exactly in the same way as the bourgeois parties.

The "Communists" thus offer no solutions. We spoke of the counter-revolutionary role of the Stalinists in the past, but that was nothing compared to this. By refusing to take action to re-nationalise the economy, they will provoke the disillusionment of the masses, and drive sections of the population into the arms of the counter-revolutionary forces. The defeat of the Socialist Party in Hungary in 1998 was caused by a wave of popular anger against its pro-market austerity policies. The right wing government of Viktor Orban was the result. In this way they are preparing the way for open reaction in the future.

However, the victory of the right wing bourgeois parties can itself only be a passing phase. The extreme weakness of capitalism in all these countries will be cruelly exposed by the next world slump, preparing the way for a general upswing in the class struggle throughout Eastern Europe. In countries like Romania, Bulgaria and Serbia, the roots of capitalism are even more shallow, the bourgeoisie even more corrupt, rotten and criminal, than in Poland, Hungary and the Czech Republic. Here the crisis is deeper and the regimes even more unstable.

In Bulgaria, the desperation of the masses and the lack of an alternative on the part of the ex-Stalinists of the BSP led to the victory of ex-King Simeon. But this is a temporary aberration. Unemployment stands officially at 18 per cent, living standards have plummeted and corruption universal. The illusions in the King will not be long-lasting. They reflect a growing desperation and a frantic search for a way out of the crisis. But Simeon is an emperor with no clothes. The illusions will rapidly turn into disillusionment - and then fury. Bulgaria and in the neighbouring states face a turbulent future. A deep slump will start a chain reaction of crises, which can place revolutionary developments on the order of the day in one country after another.

The Balkans

Since the break-up of Yugoslavia there has not been a single day of stability in the Balkans. The crisis moves like a black wave from one country to another. The fate of every state is intimately linked to every other state. All of them are weak and fragile, and many are completely unviable.

The dismemberment of Yugoslavia was a criminal act with not an atom of progressive content. We explained this at the time - unlike the degenerate pseudo-Trotskyist sects who monstrously supported it on the grounds of "self-determination". Actually, by further deepening the Balkanisation of the region, the control of the peoples over their own lives and destinies has not increased but decreased, while the imperialists have intervened brutally to extend their power and influence. The fact that the Euro (previously the D-mark) is virtually a common currency is an indication of the real state of affairs that masquerades behind the façade of "self-determination" and "independence".

The failure to carry through the revolution in Albania after the fall of Berisha led to a catastrophe of misery and ultimately to the war in Kosovo. Here too nothing has been solved. All the promises of the imperialists turned out to be empty. The high rate of growth (7 per cent) is deceptive because it sets out from a very low base. The infrastructure is crumbling, especially the roads and electricity supply. There are daily power cuts of up to 18 hours, which also affects water supplies. The regime is thoroughly corrupt and the country is a haven for illegal immigrants, drug and arms smuggling and prostitution. The "Socialist" government is carrying out privatisations, which means that the country is once more being handed over to foreign owners. But there is a ferment of discontent inside the Party, which may even split.

The intervention of imperialism has greatly increased the instability of the whole region and sowed the seeds for new and even more bloody conflicts and wars in the future. The Kosovo war solved absolutely nothing but only exacerbated all the contradictions. After Kosovo, it was the turn of Macedonia, which still remains in a very explosive situation. Only the presence of foreign troops prevents a blow-up. The collection of arms by NATO forces has, as predicted, proved to be a meaningless exercise. The rebels merely hide and bury most of their weapons and wait for a favourable moment to use them.

The provocations of chauvinist and fascist elements on both sides are rapidly undermining the attempts of NATO to shore up the Trajanovsky government. Sooner or later, a new conflict will flare up, which can easily spread with unforeseen consequences. Yet the American imperialists in their blindness have not only got themselves embroiled in Afghanistan but are preparing to attack Iraq! While their gaze is averted, they can be faced with a nasty surprise in the Balkans.

There cannot be a solution for the national question in the Balkans on a capitalist basis. The only way to halt the madness of expansionist wars and ethnic cleansing is by turning the war into a socialist revolution, which was possible on at least occasions in the last period - in Albania and in Serbia. We saw the revolutionary potential of the masses in Serbia after the end of the Kosovo war. But because of the absence of the subjective factor, the exertions of the masses at that time led to the coming to power of the pro-bourgeois elements. But these people are now being put to the test. The next offensive of the masses will be directed against them. The working people must take power into their own hands, and expropriate the corrupt and reactionary oligarchies that enslave them. On the basis of a Socialist Federation of the Balkans the working people could easily settle the problems in a fraternal manner, within the framework of a workers' democracy and the widest possible autonomy for all nationalities.

China

China has had greater success than Russia in developing the productive forces, while moving towards capitalism, but the bureaucracy has maintained firm control of the state. The Chinese leadership was alarmed by the fate of Russia and Eastern Europe and determined not to go the same way. Although the Chinese bureaucracy has gone a long way in moving towards capitalism, the nature of the regime has not yet been resolved in a decisive way. Important elements of a nationalised planned economy co-exist uneasily with the rising capitalist sector. Even though a large part of the economy is now privately owned, there is still a large section of the bureaucracy which is linked to the state owned sector. (In Vietnam, the process of capitalist restoration is still in an embryonic state).

If the perspective on a world scale were one of sustained economic growth over a long period, then, at a certain stage, capitalism would eventually triumph. But that is not at all certain. In order to maintain a stable regime, China must achieve growth rates of at least 8 percent per year. With the slowdown on a world scale this will prove impossible to maintain. This opens up the prospect of social conflicts on a massive scale, which sooner or later must produce splits within the bureaucracy. Some sections have already successfully transformed themselves into capitalists, i.e. the owners of the means of production. But there is also a large layer whose power and privileges are still based on their position in the state owned sector. Thus, in spite of the fact that the Chinese bureaucracy has been more successful in introducing market methods, the potential for a major conflict within the state apparatus is even greater than in Russia.

For a time the policy of a "controlled" movement in the direction of capitalism ("market socialism") achieved good results. China's growth rates were among the highest in the world. In effect, China occupied the position which western investors originally had envisaged for Russia. But now the perspective of a world slump places a big question mark on the future of China. The abandonment of Mao's policy of autarchy and the integration of China into the world economy have merely created new and insoluble contradictions. China is tied to the world market in a way that was not the case in the past. The destiny of China depends upon the vagaries of the world economy.

The present crisis has been accompanied by a big contraction of demand in both America and Asia - China's main markets. And the domestic market is insufficient to absorb the vast quantity of commodities being produced by China's industries. Thus, the very successes of the Chinese economy are preparing a serious crisis.

If it wishes to continue to move towards the consolidation of capitalism, the Beijing government will have to close down a large part of state-owned factories. But this would produce the risk of a social explosion which terrifies a bureaucracy which is well aware of the revolutionary traditions of the Chinese workers and peasants. The bureaucracy is therefore moving very cautiously.

China has combined the worst features of a Stalinist regime with the worst features of Asian capitalism. Although the economy has grown rapidly, it has created an economic and social disaster of huge proportions. There are at least 120 million urban unemployed, and a similar number in the countryside. The cities cannot absorb such huge numbers without creating explosive conditions like those that existed in tsarist Russia on the eve of the 1905 revolution.

As long as the bureaucracy is able to deliver good economic growth, and therefore hold out the prospect of better living conditions in the future, the masses are prepared to tolerate its rule. But there is increasing discontent with the growing corruption, inequality and misuse of power by the privileged caste of officials. Already there has been a spate of workers' strikes and peasant disturbances. The persecution of the Falun Gong sect is a symptom of the unease of the ruling elite, which is bracing itself for the inevitable social consequences of economic depression. In such a situation even innocuous cults can quickly get out of hand. Therefore the bureaucracy wants to assert its control. The attacks on this strange sect can only be explained as a manifestation of extreme nervousness. The bureaucracy, terrified of the prospect of social explosion, cannot tolerate the existence of any movement that is not under its control.

The Chinese working class is one of the biggest in the world. Marxists must follow events in China carefully and make every effort to establish links with those elements who are drawing revolutionary conclusions. There is growing interest in our ideas and the web site. We have plans to translate our books into Chinese. In the next period, China will assume a burning importance.

The molecular process of revolution

The collapse of Stalinism was not the end of history, but only the first act in a drama which must end in a general crisis of world capitalism. It did not take long to prick the bubble of euphoria that grew after the fall of the Berlin Wall. Ten years later, the bourgeoisie finds itself in an impasse on a world scale. Its plans are unravelling on all fronts. In place of the former euphoria we have a general sense of foreboding and uncertainty. In retrospect, the fall of Stalinism will be seen to have been only the prelude to a far greater drama - the general crisis of world capitalism.

The long period of relative stability that characterised the world situation since 1945 has definitely ended. In retrospect, it will be seen to have been an historical exception, which in all likelihood will never be repeated. A new and convulsive period now opens up, which will be far more similar to the period of the 1920s and '30s: a period of slumps and wars, of revolution and counter-revolution on an international scale.

The period of boom lasted longer than we had expected, but has ended in collapse as we predicted. Now they will have to face the consequences on a world scale. All the factors that made for the upswing will now propel the downswing. Everything will be turned into its opposite. One blow will follow another. As Bush correctly remarked on September 12, the world will never be the same again.

The main feature of the situation is a growing volatility at every level. The general instability is expressed in an increasing volatility in public opinion, shown by the result of the last US Presidential election. The Democrat candidate should have won easily after a long period of boom, but was defeated (although the election was rigged, as later figures have shown). This already showed the existence of a strong subterranean current of discontent even in the richest country on earth.

True, the process is as yet in its early beginnings. In many of the industrialised capitalist countries, the heavy battalions of labour have not yet begun to move. This has had an effect inside the labour movement and in society. However, there are indications that this is already beginning to change. Following the general strikes in Greece, we saw the magnificent general strikes and mass demonstrations in Italy and Spain. This represents the beginnings of a turn in the situation in Europe. In France, there is a ferment in the working class, with teachers, train drivers, customs officers, prison guards and even gendarmes all threatening to strike. Significantly, in France, Greece, Britain and Germany, the strike movement has developed under “Socialist” governments. The workers are growing impatient with the failure of the governments they voted into power to carry out policies in their interest and are beginning to move from below.

In Britain there have been big strikes in the public sector, and a sharp turn to the left in the unions, reflected in the defeat of the right wing general secretaries and the election of left candidates in every one of the main unions. In Germany, there was the clash between the Schroeder government and the powerful metal workers’ union. IG Metal. It is clear that the pressure from below is building up. After years of boom, full order books and fat profits, the workers will demand their share. Such outbreaks of strikes normally take place just before a slump. This reflects the lag in consciousness. Only slowly do the workers adapt to new conditions. But now, any attempt to make them pay for the crisis will meet with fierce resistance.

The delay in the movement of the proletariat has been the decisive element in the equation. After a long period, in which there has been nothing but defeats, the active layer of the working class has its head down. But that will change. Of course, this process is still in its early beginnings. But once the fresh winds of class struggle begin to blow, there will be a change in the psychology of the working class. New layers are being involved in struggle, like the workers in call centres - a particularly oppressed layer of mainly young workers. These fresh young layers will be militant and open to revolutionary ideas. Marxists should take steps to establish links with them and win the best of them to the revolutionary tendency.

In many ways, the situation resembles the eve of May 1968. The working class in France seemed to many to be completely inert, or, in the words of Ernest Mandel, "bourgeoisified and Americanised". But beneath the surface there was a seething discontent. The bosses were applying heavy pressure on the workers, with all kinds of speed-ups, productivity deals etc. The movement, which initially began with student demonstrations, exploded without warning in the biggest revolutionary general strike in history. This occurred when it was least expected, after a long period of economic boom.

Now too, sudden and sharp changes - like September 11 - are rooted in the situation. The economic, political and military situation are all characterised by extreme instability. This must reflect itself at a certain stage in sudden changes in consciousness. Once they start to move, the new generation of young workers will be more militant than the old generation. It is a priority for Marxists to reach this layer. We must be prepared for this, both politically and organisationally. There is no room for complacency or routinism. The biggest danger is in looking backwards and dwelling in the past when conditions have changed completely. In all countries an absolute abysm will open up between the classes. Yet precisely at this time, the labour and trade union leaders have gone far to the right.

The contradictory nature of the situation is an expression of the fact that this is a transitional stage between one period and another. The main problem is the weakness of the subjective factor and the horrendous degeneration of the workers' leaders everywhere. Trotsky pointed out that the crisis of humanity could be reduced to the crisis of leadership of the proletariat. These lines are more true today than ever before.

The last period was characterised by a mild reaction in the advanced capitalist countries. But this is now approaching its limits. All the plans of the bourgeoisie and the reformists will be reduced to ashes. Even in this period we saw explosions of the class struggle, such as the mass strikes in France in November and December 1995, which will pale into insignificance when compared to what is going to happen in the future. The main thing to see is the complete impasse of capitalism on a world scale. Above all it is necessary to grasp the inevitability of sharp turns and sudden changes. Events like September 11 are rooted in the situation. Events, events, events, are necessary to transform the outlook of the working class.

Degeneration of Social Democracy and Stalinism

The last twenty, and especially the last ten years, have set the seal on the final degeneration of all the socialist and communist parties. They have abandoned any pretence to stand for socialism and revolution. The union leaders, as Trotsky predicted, have become increasingly enmeshed in the bourgeois state. Now all these dreams have been dissipated in the air. The capitalists face the deepest crisis on a world scale since 1945. The secret lies in the world economy and world trade itself. The integration of the world economy (globalisation) has developed the productive forces to an unprecedented degree. But, as we predicted, at a certain point it has come up against the fundamental contradictions of capitalism. Globalisation manifests itself as a global crisis of capitalism.

A world slump will undoubtedly shake things up. But for Marxists, a slump is not a panacea. We have explained repeatedly that the continuation of the boom, far from being negative, will lay the basis for an explosion of militancy on the industrial front. The whole situation is characterised by extreme volatility.

It is a dialectical contradiction that precisely in this period, the Social Democrats and Stalinists have reached the nadir of their degeneration. So long as the boom lasted, elements like Blair could maintain themselves. Under conditions of crisis, however, they will stand exposed. Reformism is only attractive to the masses when it gives reforms. But reformism without reforms, or reformism with counter-reforms makes no sense to anyone.

Capitalism can no longer afford to grant concessions as it did in the past. The bourgeoisie will put pressure on the Social Democratic leaders to make deep cuts in living standards and public spending. But the working class will press for more reforms. This contradiction must express itself at a certain stage in crises and splits within the mass organisations. The crisis of capitalism therefore signifies the crisis of reformism.

In the last period, there was a certain softness in the working class of the advanced capitalist countries. They forgot the lessons of the past. But now capitalism is returning to its more classical model - that of raw class oppression. The rolling back of the state, privatisation and the constant attacks on public spending, are all expressions of this. A gulf of bitterness will open up between the classes. The mood of the working class will harden. This is the objective basis for a growth of the Left in the mass organisations and a recovery of Marxism.

Left reformism

The working class did not move in a decisive way for a whole period. That is the decisive question. This explains the apparent victory of the right wing and pro-bourgeois elements in the labour leadership. But it is not the only explanation. The left reformists have revealed themselves to be utterly incapable of offering any alternative to the right wing. They are completely spineless. This is a reflection of their absolute lack of perspectives. They have no vision and no faith in the working class, and therefore continually capitulate to the right wing.

In the past they tail-ended the Stalinists. After the fall of Stalinism, they are all at sea. Many have abandoned politics altogether, while others have capitulated to the right wing in order to secure a career. Thus, the working class has no point of reference in the labour movement. This is a big part of the reason why there has been little or no opposition to the right wing and why the latter could go so far to the right.

However, this does not mean that left reformism has disappeared. On the contrary. It will inevitably regain its former strength in the next period, as opposition grows. The next period will see the emergence of mass left reformist or even centrist currents in the mass organisations. Our attitude to this phenomenon will assume a decisive importance if we are to gain the ear of leftward moving workers and youth. We must combine a friendly attitude to the Lefts with an implacable criticism of their political and organisational shortcomings.

The reformists - both the right and especially the lefts - have no understanding of the situation. They are living in the past. They do not understand that this crisis is different to the relatively minor crises we have seen since the Second World War. The bourgeoisie is faced with war and slump at the same time. The governments will attempt to make deep cuts in public spending to balance the budget. Despite this, the reformists of all kinds imagine that it is possible to solve the problems of the working class on the basis of capitalism. But the crisis of capitalism is cutting the ground from under their feet. The conditions are being prepared for an explosion of the class struggle.

The left reformists fear the Marxists, because they rightly understand the danger our ideas pose to their position. They see us as rivals - which is just what we are. In the final analysis they are closer to the right reformists than they will ever be to us. In addition, a muddlehead always hates a person with clear ideas. In the end, matters will be resolved by a struggle of Marxism and left reformism for control of the labour organisations.

Ferment in the youth

In the present period, the importance of tactics is even greater than normal. By their very nature tactics must be flexible. The tactical orientation of the tendency at any given moment cannot be determined by general considerations, but only by concrete conditions and possibilities. In the Third World, the situation is ripe for winning large numbers of youth direct to Marxism. There is a revolutionary or pre-revolutionary ferment in one country after another. There is no stability anywhere. But now the situation of the youth in the advanced capitalist countries is changing also. The underlying instability is reflected in the wave of "anti-capitalist" demonstrations that accompany every meeting of the IMF and other institutions.

In the last two years at least one million people have participated in the anti-globalisation demonstrations. This shows the existence of a ferment among the youth - even before the slump. At this stage, it is mainly the petit bourgeois youth that is affected. But it is always the case at the beginning of the movement. The students and similar layers are a sensitive barometer of developing contradictions in society. The present demonstrations are the heat lightening that presages a storm. The prevailing mood is one of extreme volatility. This was expressed even before the onset of recession and September 11 by the so-called anti-globalisation movement. In essence, despite its confused ideas and heterogeneous composition, this was an anti-capitalist movement.

It is true that the majority of these people were students, although there was a significant presence of workers and trade unionists in Seattle, Nice, Genoa and Brussels. It goes without saying that the students and the intelligentsia in general cannot play an independent role in the class struggle, as petty bourgeois sects like the Mandelites imagined in the past. But they are an extremely sensitive barometer of the mood of society, and can express very early on the unbearable contradictions and tensions that are building up beneath the surface of society.

The university students of today are more in contact with social reality than for instance their counterparts in 1968. This is in part the result of a slightly higher percentage of students from working class families, but it also reflects the general impoverishment of the lower strata of the middle classes and the proletarisation of intellectual work, which brings the white collar workers closer to the industrial working class. In France, for instance, 800.000 students have to find jobs - mainly in the most flexibilised and precarious sectors of fast food, shops and call centres - to be able to finance their studies.

The Russian revolution was preceded and heralded one hundred years ago by big demonstrations of students (who at that time were drawn overwhelmingly from the upper layers of society). Then the workers burst onto the scene in the 1905 revolution. A similar process occurred with the Spanish students in 1930, which Trotsky commented on: “During the development of the first Russian revolution [1905], we observed this phenomenon more than once, and we have always appreciated its symptomatic significance. Such revolutionary or semi-revolutionary student activity means that bourgeois society is going through a profound crisis. The petty-bourgeois youth, sensing that an explosive force is building up among the masses, try in their own way to find a way out of the impasse and to push the political developments forward.”

Trotsky stressed that the workers should support the students, but must not make concessions to the latter’s middle class prejudices, but should maintain an independent class position and that the communists must fight for a correct policy: “By backing up the student movement, the Spanish workers have shown an entirely correct revolutionary instinct. Of course, they must act under their own banner and under the leadership of their own proletarian organisation. It is Spanish communism that must guarantee this process and for that a correct policy is indispensable.”

Likewise, the mobilisation of the student youth in the anti-globalisation protests is a symptom of the developing crisis of society which at a certain stage must manifest itself as a mass revolutionary movement of the working class. We must understand its symptomatic significance and revolutionary potential. We must support it and strive to connect it with the workers’ movement. But, while maintaining a friendly approach, we must make no concessions to petty bourgeois, reformist and anarchist ideas, but subject them to an implacable criticism, posing the revolutionary Marxist alternative in order to win the best elements.

The experience of the mass demonstrations is providing an education for many young people who have no knowledge of Marxism as to the real nature of the bourgeois state. The attempts in the main European countries and in the USA to strengthen the repressive arsenal (lately in the name of struggling against international terrorism) against the anti globalisation movement (Genova in July 2001) and the most radical workers action is a sign that the bourgeoisie is preparing for serious class battles which it fears it will not be able to contain or diffuse fully with the usual methods. Those methods consisted essentially in relying on the help of the TU leaders and the tops of the Socialist Parties and Communist parties to save the system from an upsurge of the working class and youth movement.

The confused ideas of the anti-globalisation movement are the result of the collapse of the moral and political authority of Marxism as a consequence of the crimes of Stalinism. Repelled by the opportunism of labour leaders, and lacking a Marxist perspective and understanding, a section of the youth has veered towards the outdated ideas of anarchism and even terrorism. Of course, the movement is still in its early beginning. But the main thing is that it has begun. Marxists must seek out those layers of the youth that are moving in a revolutionary direction wherever they are and win them to the Marxist movement. At the present time the process of radicalisation within the mass organizations is only in its early beginnings.

The trade unions

The most important area of work for us at the present time is the youth. However, the trade union work also assumes a burning importance.

The weakness of the ruling class is shown by the fact that everywhere it is obliged to rule through the labour and trade union leaders. Without the support of the workers' leaders, the rule of the capitalists would not last for a single day. But under conditions of deep crisis, the bourgeois will not be able to maintain the policy of class peace. We see in Germany how the old policy of Mittbestimmung is breaking down. Everywhere the bosses will be forced to go onto the offensive. This will have profound consequences for the trade union and labour movement.

In his article, Trade Unions in the Epoch of Imperialist Decay, Trotsky explains that there is an organic tendency of the tops of the unions to fuse with the bourgeois state. This tendency still exists, but now it will be difficult for the bureaucracy to continue along this road.

The objective conditions are not at all favourable for class collaboration, which presupposes that the bosses are able to buy off the workers with concessions. On the contrary, under conditions of crisis, the employers will move to take back even those concessions they have made in the past.

In the past, it was easy to go on strike, and win concessions. Now it will be very difficult. Strikes will be increasingly hard, bitter and protracted. The relations between the classes will also become more antagonistic, the contradictions far sharper than they have been in the period since 1945. This will lead to a ferment of discontent and opposition inside the unions - even the most right wing and bureaucratised ones where change appears impossible.

Sooner or later the process will be reflected inside the mass organisations of the working class. The leadership will find itself under increasing pressure of the workers. They will either begin to reflect this pressure and give a lead, or be swept aside and replaced with younger, more determined elements. The swing to the left in the trade union elections in Britain is an early indication of a process that will take place at all levels of the movement in the next period.

In the period of the long economic upswing that followed the Second World War, the mere threat of a strike was often sufficient to avoid a strike in the advanced capitalist countries. At that time it was easy to be a shop steward. But now all that has changed. This was rooted in the objective conditions. In times of boom the capitalists do not want any interruption of production, and therefore can make concessions to the workers, sacrificing a part of the surplus value to avoid strikes. This is the economic basis of class collaboration and "social partnership". But, as we have explained, the last boom has been based to a large extent on the super-exploitation of the working class. The results are entirely different. Even at the height of the boom there have been counter-reforms and attacks. Things will be even worse in the coming slump.

In the next period it will be difficult to be a shop steward. Only the most militant and courageous elements will be prepared to stand for election. Strikes will be bitter and it will not be easy to obtain concessions. In these changed objective conditions we can find the basis for a transformation of the trade unions. In the heat of events, the labour organisations will be transformed from top to bottom. The unions are a crucial field for genuine Marxists in this period.

The unions are the embryo of the new society within the old. Lenin described them as a "school of Communism". This is the school where hundreds of thousands - even millions - of proletarians will get the necessary training and experience that will enable them to take the running of society into their hands in the future.

The aim of the Marxists is to win new members, spread our ideas, sell the paper, and extend and deepen our influence. Under the changed conditions, this will be a most fruitful area of work. The crisis will express itself first in the trade unions. There are limits to the policy of class collaboration pursued by the leaders of the unions. At this stage, trade union work is an uphill struggle, with a lot of work and only modest results. But it is a necessary investment and a preparation for the future.

At a certain stage, the unions will be pushed into semi-opposition, or even outright opposition, to the regime. There is nothing more pernicious as the idea peddled by ultra lefts that we must not work in the unions. Even when the bureaucratic apparatus is holding back the movement and playing a reactionary role, and the workers resort to unofficial action, they will always return to the unions. Ad hoc rank-and-file organisations can play a role but can never substitute themselves for the permanent organisations of the unions.

The Stalinists have collapsed everywhere and are a shadow of their former selves. They have lost any connection they might have had with the ideas of Marxism Leninism and become ordinary reformist politicians. This also affects their organisational capabilities. They do not have the same grip on the unions as they did in the past. At the same time the sects have no idea of how to conduct real union work. The road is therefore open to our tendency to establish a serious base in the unions, provided we do the work.

The advanced workers are looking for serious explanations and analysis, not just slogans and agitation. Our books have had considerable success among this layer, especially Reason in Revolt. This shows that there is a growing thirst for theory, not just among the youth, but among the workers. It is a serious mistake to underestimate this or reduce our public written material to the lowest common denominator. Our aim is to raise the level of the workers, beginning with the advanced layer.

The growing crisis has shaken things up and compelled people to think more deeply about things. There is a general tendency to question the existing order of society, and to inquire about the causes of the present world situation. That tendency that can provide the answers to these questions will win the ear of the workers and youth. Here we have an immeasurable advantage over all our rivals!

A section of the advanced guard have been influenced by the long period of lull in the class struggle and the unprecedented degeneration of the union leadership in this period and have drawn entirely false conclusions from it. They do not see the process dialectically and therefore have become pessimistic, reflecting the prevailing scepticism of a layer of union activists who have lost confidence in the class.

We must base ourselves, not on ephemeral moods among the activists, but on the deep crisis of capitalism - the deepest crisis for half a century. We must see the fundamental processes in society and understand the inevitability of a confrontation between the classes. Everywhere the ruling class is demanding deep cuts and "sacrifices" - from the workers. This is a finished recipe for the class struggle. The union leaders are blind to this. They are living in the past. They think that by making concessions they can return to the earlier cosy relations with the bosses and the government. They do not understand that weakness invites aggression. After every step backwards, the bosses will demand two more.

This process has its limits. Sooner or later the workers will say: "Enough!" This was clearly shown by the magnificent general strikes and demonstrations in Italy and Spain, and earlier in Greece. At a certain stage, the slogan of action committees will become appropriate, as a means of generalising the struggle, as in May 1968 in France. This slogan is not counterposed to the mass organisations of the class, as the sectarians imagine. Under certain conditions, the trade unions themselves can act as soviets, as in the British general strike of 1926. In Germany, at one stage, Trotsky advanced the slogan of all power to the shop stewards committees.

Fascism and Bonapartism

Of course, the movement will not take place in a straight line. There will inevitably be ups and downs. Periods of stormy advance will be followed by periods of tiredness, lulls, defeats, even periods of reaction. There will be violent swings to the left and right. But every move towards reaction will only prepare even bigger swings to the left. At the present time there is no danger of fascism or even bonapartist reaction in any developed capitalist country. But that can change in the period that opens up.

There are nascent bonapartist tendencies within every one of the right wing bourgeois parties: in the British Conservatives, in Forza Italia, even in the US Republicans. But they are an insignificant minority at present. The bourgeois in Europe burnt their fingers badly with fascism in the past, and are not likely to hand power again to fascist madmen like Hitler and Mussolini. Moreover, the class balance of forces is in no way comparable to the situation before the War, when there was a very large peasantry in Italy and Germany. Now everywhere the working class is in a big majority.

The spread of racism is one of the signs of the sickness of capitalism in the present period. In Europe and other advanced capitalist countries, the growth of unemployment produces a mood of fear and insecurity that can be played upon by reactionary right wing demagogues. The reformist leaders of the Social Democracy have no answer to this phenomenon. In fact, they are partly responsible for it. The right wing policies pursued by “socialist” governments that accept capitalism, the market, privatisation etc., only serve to sow disillusionment and despair in the masses, and inevitably lead to a reactionary backlash, as we saw in France with the increase in support for Le Pen.

In the absence of the subjective factor, it is inevitable that some backward layers of the working class can be infected by reactionary moods and tendencies. This was the case in Russia even in the course of the revolution. It is the result of the contradictions of capitalism, and the general mood of insecurity and fear produced by the lack of jobs, houses, schools etc.

While it is necessary to fight against racism and fascism, it is necessary to maintain a sense of proportion and also to understand how this is to be done. The hysterical reaction of the sects and the petty bourgeois “lefts”, who are always shouting about the alleged danger of fascism only serve to confuse and disorient all who come into contact with them.

It is also necessary to put the blame for the recent turn to the right in France, the Netherlands and Denmark firmly where it belongs: with the false policies of the Social Democracy, which led the movement to defeat. These leaders, who have completely capitulated to capitalism, now try to hide their responsibility by joining in the noisy chorus about “fascism”. In fact, it is the capitalist system itself that has created the conditions for the growth of racist and reactionary moods among a layer of the population, and this can only be eliminated by the adoption of a real socialist policy and an all-out fight against capitalism. All the rest is just empty demagogy aimed at throwing dust in the eyes of the masses.

Racism cannot be eradicated on the basis of pious appeals to morality, “brotherly love” and so on. It can only be fought on a class basis and the fight for socialist policies that would guarantee jobs, homes and decent wages and conditions for all. It is necessary to conduct a campaign of agitation and propaganda in the mass organisations of the workers, especially the unions, explaining the need to combat racism and fascism - but with the methods of the working class, not the mindless petty bourgeois.

In the last period the Social Democracy has been in government in 11 of the 15 EU countries. Yet the masses saw no fundamental change in their conditions. It is this that has produced the present backlash. Even so, it is entirely incorect to present this as a general “turn to the right” in society, still less a danger of “fascism”. To begin with, le Pen is no more a fascist than Fini in Italy. He is rabid reactionary and racist demagogue and a pace-maker for a more extreme form of reaction in the future. But the reality of the situation was shown in the second round of the election, where he suffered a severe defeat. More importantly, the Socialist and Communist Party were also heavily defeated, and power passed to the right wing bourgeois coalition. This was a vote of no-confidence in the pro-bourgeois policies of Jospin and co., and their “Communist” allies.

What the French elections showed was not the danger of fascism, but a polarisation of French society to the right and the left. The fall of the Jospin government opens up a new period of social and political instability in France, which will be characterised by violent swings to the left and right. Blocked on the parliamentary front, the French workers will take to the streets as they did at the time of the Juppe government in 1992-5.

This extremely volatile mood exists not just in France , but all over Europe at the present time. The victory of right wing governments in Spain and Italy did not prevent the massive general strikes and demonstrations organised by the union leaders under pressure from below. Tomorrow we will see similar developments in Britain, Germany, Belgium, Holland and Denmark. The pendulum will swing far to the left, preparing the way for a process of ferment and radicalisation in the mass organisations of the working class. The perspective is therefore not one of reaction but of revolutionary developments in one country after another.

The sects and petty bourgeois lefts and radicals understand nothing of all this. They shout “fascism” at the slightest pretext and imagine that this makes them great revolutionaries. They have not understood the elementary truth that the bourgeoisie will only resort to dictatorship when all other means are exhausted and they are threatened with overthrow. This means precisely that, given the present class balance of forces in Europe, long before the question of reaction would be posed, the working class will have had many opportunities to take power.

Only after the proletariat has suffered a series of defeats would the conditions emerge for some kind of Bonapartist dictatorship in France, Spain, Italy or Britain. But at the present time that is by no means the case. The organisations of the working class are intact. We are not in a period of great defeats of the working class. On the contrary, the European workers are only just beginning to move into action after a long period of relative “class peace”. On the other hand, is it correct to say that the bourgeois of France, Holland and Denmark are so terrified of revolution that they are contemplating abolishing parliamentary rule and placing themselves under the protection of fascist adventurers? It is sufficient to pose the question concretely to see how ridiculous it is.

The ruling class of France was not at all pleased by the electoral advance of Le Pen. In common with the capitalist classes of every other European country at the present time, they are perfectly happy with the regime of formal bourgeois democracy, which creates the illusion that “the majority decides”, while leaving all the real levers of power in their hands. From a capitalist point of view, such a regime is by far the most economical, effective and reliable of all. “Power” alternates every five years or so between their direct parliamentary representatives (Chirac, Aznar...) and those most respectable defenders of private property and the existing order, the right wing Social Democrats (the “Left”). Where is the problem?

The problem is that people like Le Pen can stir things up and cause unnecessary problems, provoking the workers and youth - which is what actually occurred. What all this showed was the colossal underlying volatility and instability that now affects the whole of Europe. In the absence of a strong revolutionary party, this will inevitably express itself in all kinds of peculiar ways - including reactionary phenomena, as in France and the Netherlands. But these are unstable and ephemeral phenomena, the importance of which is more symptomatic than anything else.

It is therefore entirely incorrect to exaggerate the significance of such developments at this stage. In the future, however, the situation will be different. If the working class fails to carry out the socialist transformation of society, then over a period, the conditions for reaction will develop. The ruling class in even the most developed and “democratic” countries will decide that the right to strike, demonstrate and vote, are all unnecessary and harmful luxuries. When that stage is reached (and it is still some way off), they will not hesitate to use the fascist gangs to assault and murder people, in order to intimidate the working class.

However, having burnt their fingers in the past with Hitler and Mussolini, it is highly unlikely that the bourgeoisie of any European country will hand over power to the fascist madmen. More likely, they will resort to the army generals, to whom they are linked by family and other ties and over whom they can hope to exercise some degree of control. The fascist gangs would operate as the auxiliaries of the regime, but not given power. Such a regime, however, would be a ferocious dictatorship - like the regime of Pinochet in Chile or the monstrous dictatorship of the Turkish generals after 1980.

For the last fifty years, the European and American workers have been taught to believe that “democracy” is a normal and even inevitable condition of existence. As a matter of fact, it is a relatively recent innovation that has been adopted in those wealthy capitalist countries that were able to give certain concessions to the working class in order to keep the class struggle within certain limits. To the degree that this regime of “class peace” begins to break down, the bourgeois will change from democracy to dictatorship with the ease of a man moving to a non-smoking to a smoking compartment on a train.

It must never be forgotten that the democratic rights that exist today were all conquered by the working class against the fierce resistance of the capitalists. The roots of democracy are very shallow and can easily be uprooted, once the bourgeois decides that it is impossible to control the working class by “normal” means. In any case, what is called “democracy” is really only a fig-leaf that conceals the dictatorship of big business. What is necessary is to overthrow the dictatorship of the banks and big monopolies and introduce a regime of workers’ democracy as the first step in the movement towards socialism, and the Socialist United States of Europe.

In the long run, there will be splits in all the bourgeois parties, resulting in the formation of openly bonapartist parties, and a polarisation of society to the right and left, preparing the way for all kinds of right wing conspiracies like the Gladio conspiracy of the 1970s. But given the strength of the working class and its organisations, this can pave the way for an explosion of the class struggle and even open civil war.

But the bourgeoisie will not resort to open reaction until all other possibilities have been exhausted. Long before we reach this stage, the workers will have had many possibilities of taking power in one country after another. Only after a series of serious defeats of the working class would the danger of bonapartist dictatorship be posed.

Perspectives

The present situation is similar to the period 1912-14, at the end of the long period of class peace that preceded the outbreak of the First World War. That opened up a new period of wars and revolutions, which lasted until 1923. Then there was a period of relative stabilisation, based on the boom of the 1920s - a period very similar to the last ten years. That ended with the collapse of 1929-33, which opened up a new period of instability, revolution and counter-revolution, which only ended with the outbreak of the Second World War (1939-45)

For peculiar reasons which we have explained in previous documents, the period after 1945 was characterised by a long period of capitalist upswing, based mainly on the expansion of world trade. This period came to an end with the first world recession since the War in 1973-5. This opened the way to a new period which was different to that of the post-war upswing. This was a period characterised by low growth rates, high unemployment, reduction of state expenditure and counter-reforms.

Although the boom of the last period lasted longer than we anticipated, it was in no way similar to the post-war upswing. In fact, none of the basic economic indicators of that period have been matched since. In retrospect, the boom of the 1990s will be seen as more similar to the shaky boom of the 1920s, which paved the way for a period of decline. Of course, history never repeats itself exactly in the same way. There are always cross-currents and variants. The revolutionary process does not proceed in a straight line. Periods of upswing will be followed by periods of calm. But in every period, it is necessary to build and consolidate the organisation.

In the long period of capitalist upswing after 1945, there was a relative stability in the relations between the classes - and also between nations. Now all that has dissolved. Instead of stability, there is universal instability. This can be seen even in the USA - indeed, particularly in the USA. With the events of September 11 the myth of American invulnerability has been shattered forever. America has joined the rest of the world in the present chaotic, explosive, bloody mess that capitalism has prepared so thoroughly.

Trotsky explained in The History of the Russian Revolution that the first indication of a revolution is that the masses begin to participate in politics. This is now the case in the USA and all other countries. People who took no interest in politics have suddenly become interested. People who never read a newspaper, except to study the sports pages, now avidly devour the latest news from Afghanistan, and strive to understand the complexities of world politics and the conduct of military affairs.

The immediate effects of September 11 have a reactionary character, as we predicted. President Bush gets a high rate of approval in the polls. But this is a very superficial mood and can easily change into its opposite. Let us not forget that the father of the present President also got a high rate of approval during the Gulf War, which did not prevent him being beaten in the Presidential elections the following year. The mood in America is far more unstable now than ten years ago. George W Bush will end up as the most hated and despised politician in American history. And his faithful ally Tony Blair will face a similar fate in Britain.

The main thing to understand is the impasse of capitalism on a world scale. Contradictions are being piled upon contradictions, to prepare a most explosive situation. The mood of the masses can change rapidly, swinging violently to the left at a given moment, as the crisis unfolds. The contradictory mood of the American masses was shown by the movement of the New York fire fighters in the aftermath of September 11, when the mayor ordered them to halt their search for the bodies of their comrades. They marched on City Hall and fought a pitched battle with the police in riot gear. And in all this, they carried the American flag. This is a dialectical contradiction! The actions of the American workers are more advanced than their understanding. In all probability, they will still carry the flag when they carry out the final storming of power. That will make no difference to the outcome!

In the short term, there is no doubt that the effect of the war is to paralyse or at least postpone the class struggle in many countries, not just the USA. But this will be temporary. All the contradictions remain and are growing in intensity. By holding back the flood waters, the leadership will only make it more uncontrollable when it finally breaks through - which it will do eventually.

Even during the boom of the past ten years, there have been constant cuts in state expenditure. In a slump this will continue, causing even greater hardship. The fall in production and employment will mean a corresponding fall in the revenues of the state, rendering serious reforms and concessions to the working class and the unemployed impossible. We will support the demands for increased public spending on schools and hospitals put forward by the trade union leaders, but we will point out that on the basis of capitalism this is impossible. What is required is the nationalisation of the commanding heights of the economy and a socialist plan of production, under democratic workers' control and management, as the only way out of the crisis.

A recent study by the International Labour Office in Geneva revealed how the degree of pressure on working people has been increased during the boom. It shows that in countries like Britain, the USA, Finland, Germany and Poland, the incidence of mental health problems is increasing, with as many as one in ten workers suffering from depression, anxiety, stress or burnout, leading, in many cases, to unemployment and hospitalisation. The report estimates that anywhere from 3-4 percent of GDP is spent on mental health problems in the EU, while in the USA the national spending associated with the treatment of depression ranges from US $30 billion to US $44 billion. In the USA, clinical depression has now become one of the most common illnesses, affecting one in ten working age adults every year, resulting in a loss of approximately 200 million working days each year.

These figures, which probably understate the gravity of the situation, show how even in the advanced countries, capitalism has become an unbearable system for the mass of the population. The inhuman pressures, the authoritarianism in the workplace, the long hours of drudgery which have taken all the pleasure away from work - have created a nightmare situation for millions. This finds its expression in the breakdown of the family, the abuse of women and children, mindless crime and violence, drugs and alcoholism. If this is the situation during a boom, what will be the position in a slump?

Already at the present time there is a growing questioning of the market economy, even among the middle classes. The burden of overwork, performance targets, just-in-time production, the pressure, the anxiety, the insecurity, the inequality - all these things are creating an increasingly critical mood, especially among the youth, but not only.

The events after September 11 have not fundamentally changed the situation in this respect. The mood of patriotism and flag-waving in the USA was superficial and will soon wear off as the crisis develops. There was never any real enthusiasm for war even in the USA, where the mood of the majority could be described as reluctant acquiescence. The idea of Bush and the right wing that they could base themselves on this mood was a serious mistake, as they will soon discover when they get involved in an adventure in Iraq.

The polarisation of society to the right and the left will be replicated at a certain point within the labour and trade union organisations. At the moment there seems little evidence of this. The workers' organisations are largely empty, and the leadership has swung far to the right - so far that some people have even written them off altogether. This is foolish in the extreme. The reason that the leadership has gone far to the right is that the class has not yet begun to move in a decisive way.

To the degree that the leaders are not under the direct pressure of the working class, the pressure of the ruling class is redoubled. But once the class begins to move they will inevitably move through the mass organisations, BECAUSE THERE IS NO ALTERNATIVE. It is essential that we do not lose sight of this fact.

At the present, the pressures of capitalism on the labour organisations are particularly intense because of the war. There is heavy pressure to fall into line, to accept "national unity" on the war question, to put aside "divisive issues" and so on. However, as time goes on, there will be pressure from below to address the burning problems of the masses. The mood of the masses can be held down for a time by the dead weight of the labour and trade union apparatus. But there are limits to this. The longer that the process is held back, the more violent will the explosion be when it comes. Big surprises are in store for the ruling class and the reformist and trade union leaders.

In the developed capitalist countries the influence of Marxism is just inching forward. This is a dialectical contradiction. The objective situation is contradictory. For a whole historical period, the forces of genuine Marxism have been isolated from the masses in the advanced countries. We have been fighting against the stream. Our ideas did not correspond to the experience of the workers. But now this is already beginning to change. The working class in general does not learn from books but from its own experience.

The developing crisis of world capitalism, which will unfold over the next decade or more, with ups and downs, is preparing a series of violent tremors which will shake the masses out of their inertia and apathy and propel them on the road to struggle. Under these conditions, ideas which have had an echo in small circles will gain an audience of thousands and tens of thousands. We will no longer have to fight against the stream, but will be moving together with the flow of history. Revolutionary Marxism will occupy its rightful place, at the head of the working class in its struggle for the socialist reconstruction of society.