January 2009 NC: Capitalist crises and mass resistance

By Stuart Munckton
                                                                                                                                                                                 [The following report and summary by Stuart Munckton on behalf of the DSP National Executive was adopted unanimously by the DSP National Committee at its January 10-11, 2009 meeting]

There can be little doubt that 2008 was a year for the history books. While many took heart at the result of the US elections, the most decisive points about 2008 are the unprecedented combination of crises facing the world. Never before has such a combination struck the world, and any doubts about the dead-end nature of capitalism as a social system should have been dispelled.

First, humanity faces a dire environmental crisis, of the sort humans have never had to confront before. In 2008, it became disturbingly clear that the affects of global warming were not only kicking in, but that the planet either passed or is in the process of passing, key tipping points set out by scientists as likely to trigger runaway climate change. The melting of the icecaps is a crucial one, with unpredictable results. We know that this will greatly increase climate change, due to the release of methane below the surface plus the impact of the Albedo Flip (the fact that ice reflects the sun).

Climate change is no longer something to prevent, although ceasing to do more damage and seeking to reverse the damage is crucial. But we are now in the stage of seeking to deal with and minimise its consequences as best we can. There is no task more urgent for humanity, or less able to be done within the framework of capitalism.

Never has there been a greater objective necessity for social revolution.

The second crisis which has dominated the media since the full extent of it began to unfold in September is the near total collapse of the financial system and the ensuing economic crisis that threatens to be as severe as the Great Depression.

The third crisis is the crisis of war. The fact that the system of imperialism is fundamentally a bloody system that cannot survive without war has never been more revealed than in the last two weeks with Israel’s genocidal bloodshed in Gaza.

For capitalism, we could add a fourth crisis and one that is hardly surprising: a crisis of political legitimacy. This is a slow-burning crisis, often low level, and uneven globally. Obviously, it is much more advanced in Venezuela, or even Greece and a number of other European countries, than it is in Australia.

This crisis refers to the lack of faith or trust in the system and its key institutions, in particular a mistrust and hostility towards corporations and corporate politicians. This underlying sentiment, bred by the experience of the effects of neoliberalism especially, can break out onto the surface when it finds a focus (such as the anti-corporate globalisation movement that rose around the turn of the century, the process for change in Latin America, or more recently in the revolt in Greece).

Part of the problem for capital is that this crisis predates the current crises of war, economic collapse and – to a degree – climate change. It is a crisis that can be expected to be greatly deepened in the current situation.

On the other side of the equation are the struggles and the beginnings of concrete alternative examples emerging in Latin America — most decisively with the Venezuelan revolution.

This connects with the beacon of resistance to imperialism that is Cuba, which this year celebrates a remarkable 50 years of its revolution.

However, the economic crisis poses serious challenges to movements in Latin America, hitting the economies hard and undermining their ability to advance along the path of integration, even while making such a path more important than ever. As we noted in the international report to the 2008 DSP Congress, Latin America remains bound up with imperialism, and dependent still on the US economy, the moves towards integration notwithstanding.

Latin America remains dependent on exports of raw materials, and often remittances sent back from migrants in the West — both of which have been hit hard. In Venezuela, the price of oil has dropped, in a matter of months, by 75%.

The fact that, for all the significant moves made, it is clear that Latin America had barely begun to make integration a serious phenomenon is exposed at the same time as the only alternative to survive is to take much more drastic and radical steps along those lines.

In that sense, the centrality of Latin America and its resistance is again proven: the fate of the powerful movements that have risen and, in some cases, conquered government will determine the fate of Latin America. The choice to retreat from challenging imperialism, or dramatically deepen that challenge (the only two paths available, the middle ground having just disappeared) will be resolved by class struggle.

Environmental crisis

The greatest of the crises is environmental, as there is no going back. The key thing to emphasise here is that 2008 revealed, and this will increasingly be the case, is that the climate crisis is manifesting itself not in scientific figures or in predictions but as a concrete social crisis.

We saw the food crisis in 2008, with rioting in dozens of places. In a December 28 Links article, Filipino Marxist Reihana Mohideen noted: “According to recent Food and Agriculture Organisation (FAO) figures, another 40 million people have been pushed into poverty and hunger so far this year as a result of spiraling food prices, and the total number of people suffering hunger and malnutrition has reached 963 million worldwide.”

We see the changes in climate spreading drought. We also see the beginnings of the refugee crisis that will result from the disappearance of entire countries with rising sea levels. The Carteret Islanders became the world’s first climate refugees, seeking to re-settle in Bougainville. Also, the government of the Maldives announced its intention to use tourist revenue to buy new lands to settle on, as rising sea levels will soon make the Maldives uninhabitable.

Oscar Reyes reported in Red Pepper that the December Poznan United Nations climate talksfailed to achieve any breakthrough towards a global climate deal – a sign not merely of bad timing, but of a fundamentally flawed system that takes no account of climate justice”.

“It’s going to take at least a riot to make any difference to the extraordinarily slow progress”, joked Henry Derwent, CEO of the International Emissions Trading Association (IETA) at one side event in the conference venue.

“If things carry on at this pace, he should be careful what he wishes for”, Reyes commented.

Western countries, with Australia in the lead, helped scuttle any proposals for serious action. The UN’s adaptation fund secured US$80 million. That’s million, not billion or even trillion.

Economic crisis

While governments can find trillions of dollars to bailout banks, investment companies and corporations (with the costs of the US government’s bailout expected to reach $8 trillion), there is next to nothing for the climate.

Neither is there much in the way of compensation for ordinary people hit by the consequences of the economic crisis, whether through the loss of shares, superannuation, as homeowners or as victims of “cost cutting”. Not only is there not much in the way of assistance, it is the working people and the world’s poor that the ruling class will seek to carry the burden of the crisis they caused. As Lenin commented, there is no crisis capitalism cannot survive if the working class are prepared to pay for it.

We know that the nationalisations, partial or otherwise and state interventions carried out were in order to save their own system and therefore have nothing in common with the sort of pro-people policies socialists advocate, but we can go even further. Much has been made of breaking the rules of the free market, but the free market was always largely a myth for big capital.

The death of neoliberalism has been spoken of. However, the situation is more complex than this. No doubt, the ruling classes will have to, as they have already begun, to change their economic policies to meet the situation, including greater state intervention and stimulus packages.

However, if we understand neoliberalism not simply as a set of policies but as the offensive, begun from the mid-1970s, to free up capital from restraint from its ability to make a profit, to drive down wages and seek to shift as much wealth from the poor to the rich, then we can expect to see more of it.

It isn’t even just socialism for the rich, capitalism for the poor. We can expect “keynsianism for the rich” and “neoliberliasm for the poor”. Capital will seek a way out of the crisis by attempting to impose the greatest possible burden of payment on working people and the poor globally.

Mohideen pointed out: “According to the World Bank prescription for governments, the only choices are job losses or wage reductions. The World Bank argues for the reduction of wages as its preference, as ‘the burden of adjustment will be spread more evenly’...”

The corporate elite are facing a serious problem. The crisis is a severe one, without any easy solutions. How deep it will go and how long it can last cannot be predicted, but will depend on a range of factors, including how free capital’s hand is, but it clearly won’t be over soon.

A December 28, 2008 Associated Press report noted that 2008 was “a year in which Wall Street has logged its worst performance since Herbert Hoover was president”.

“The ongoing recession and global economic shock pummeled stocks this year, with the Dow Jones industrial average slumping 36.2%. That’s the biggest drop since 1931 when the Great Depression sent stocks reeling 40.6% ... The index of America’s biggest companies is down 40.9% for the year.”

What began as a crisis in finance hit the “real economy” quickly, which isn’t surprising given the dependence much of the capitalist economy has on access to credit.

A January 3 Wall Street Journal article reported: Manufacturing activity around the world fell sharply in December, suggesting that the US recession will extend well into 2009, if not longer, and that unemployment will rise globally.

A broad index of change in U.S. manufacturing activity fell to its lowest level since June 1980 ... Not one of the 18 industries surveyed reported growth ...

New orders, a gauge of future activity, sank to the lowest index level since records began 60 years ago. Exports and production also sank, and employment levels declined ...

The article also notes: “Manufacturing is a key component of a country’s gross domestic product, and the data often serve as a barometer of future economic growth.”

Given this, it is disturbing that the article continues like this: “Manufacturing activity contracted in Germany, France, Italy and Spain, pushing the Market Economics survey of euro-zone manufacturing last month to the lowest level in its 11-year history. In Russia, the VTB Bank Europe manufacturing index fell to its lowest level since it began in September 1997.

“The data from Asia also looked grim. A survey by brokerage firm CLSA showed employment and output fell at a record clip in Chinese factories in December. Indian manufacturers cut jobs for the first time in the history of a survey by ABN AMRO Bank.

“The simultaneous woes of manufacturing in rich countries and poor countries are something new in the global economy. In the past, weaknesses in U.S. and European manufacturing meant a windfall for developing economies, which took up the slack.

“Earlier this week, Japan’s Nomura/JMMA index of manufacturing sank to a new low, due to a reduction in overseas demand and the deteriorating global economy.”

The article reported that:

"Job cuts are coming across industries and borders.

"The US shed some 1.9 million jobs in 2008, through November, and the unemployment rate, currently 6.7%, is expected to rise when the government reports December figures …

"Unemployment across the Euro zone hit 7.7% in October, its highest level in nearly two years. The rate is expected to continue rising this year. In December, European Central Bank staffers forecast the euro-zone economy will contract by about 0.5% in 2009. Many private-sector economists contend that prediction is too optimistic, arguing that the bloc could face its sharpest recession since World War II.

"Sentiment is similar in Asia. Countries such as India and China, heralded for their rapid growth, are cooling as demand for their goods weakens. Chinese manufacturing activity in December posted its second lowest reading since 2004 ... Both new orders and employment in China fell for the fifth month in a row. Indian employment and manufacturing activity in December fell to their lowest levels since the survey began in 2005."

In Japan, the January 2 Sydney Morning Herald commented on “the economic crisis battering the Japanese economy and pushing household names such as Toyota and Sony to cut costs and slash jobs”.

A December 23 AFP article reported that “the IMF’s top economist warned of a second Great Depression”.

In a December 27 SMH article entitled “Frightening plunge into the unknown still has no end”, Ian Verrender wrote on the impact on Australia:

"Still, as our business and political masters reassured us, we had China. And the emerging economies of China and India had almost limitless potential. The meltdown in the developed world would barely raise a blip in China, we were assured.

"As the year draws to a close, those assurances are starting to have a depressingly hollow ring to them. China’s export base has been hit hard, its internal growth has slowed alarmingly and it has slashed its spending on the raw materials that have formed the basis of Australia’s recent prosperity surge. The resources boom has come to a shuddering halt.

"The malaise in China has added to the woes in Japan and South Korea, the economies of which were already in serious meltdown as a result of the rapid decline in the US and Europe.

"The global and interconnected nature of the capitalist system is revealed, the Chinese economy is not immune because it operates as one part of a global chain, often one part of a chain of specific multinationals. It is the place where cheap consumer goods are manufactured the Western markets — operations controlled by big capital."

Third World to be hit hard

Mohideen wrote:

"Remittances from overseas migrant workers, key to [Third World] economies are expected to decline steeply as factories close and workers are sent home. According to Philippines newspaper reports almost half a million overseas-based Filipino workers are due to return as a result of the economic crisis. According to the International Organisation for Migration the flow of remittances to developing nations – currently about US$283 billion could decline by up to 9 per cent because of the global slowdown.

A recent study by the International Food Policy Research Institute estimates that if world economic growth declines by 2 to 3 points and investment in pro-poor agricultural growth is neglected, as has been the case for the past several decades due to the imposition of structural adjustment programs, the number of malnourished children will increase by 16 million in 2020, with Sub-Saharan Africa’s share of malnourished children increasing to 25 per cent of the world’s total."

In a November 27 article at Socialist Resistance, British Marxist Phil Hearse described the current crisis as capitalism’s “third slump”, after the Great Depression and the economic crisis of the mid 1970s. He points out that capitalism has failed to overcome its fundamental problems, and the big problem it faces now is: “The problem is that the bourgeoisie internationally has already tried a more regulated form of capitalism, Keynesianism. Both Keynesianism and neoliberalism have failed to sustain growing profit without going into periodic crisis.”

He explains the way capitalism has come to depend on easy access to credit for day to day functioning, which is why the financial crisis spread so quickly into the real economy. The fundamental problem is the declining rate of profit and the crisis of overproduction, which helped fuel the financial bubble that has just burst.

Blowing bubbles was a way out of the lack of profitable investment in the real economy. By the time it burst, the size of speculative, “fictitious capital” was three times larger than the real economy.

In terms of immediate consequences, Hearse makes some predictions:

"1) A wave of bankruptcies and job cuts, with huge rises in unemployment;

"2) A major reduction in tax revenues, leading to huge cuts in the public

"3) A fall in all revenues based on share and stock prices, in particular the income of pension funds and the loss of a major part of people’s savings in stock market funds;

"4) A continued decline in house prices, itself destroying a major part of the savings of millions of workers

"5) Newly unemployed workers or small enterprise owners recently gone bankrupt will be unable to meet their credit repayments, pushing up the numbers of the homeless;

"6) A refusal by the banks to lend money except on ultra-secure conditions. This will plunging many small enterprises into bankruptcy and undermining any attempt to refloat the economy on the basis of credit and massive levels of domestic debt."

Hearse also stated:

"The worst-case scenario would be a ‘global Argentina’: in 2000-1 the Argentinean banking system and currency collapsed, destroying the jobs and saving of millions of workers and much of the middle class. If this happened on a world scale it is almost impossible to imagine the consequences; the ensuing social dislocation would probably put bourgeois democracy under threat with the danger of either right-wing authoritarian governments or revolution. While this does not appear to be the most likely scenario, the fact we even discuss it shows the extent of the coming slump."

One thing that has been widely noted is the absence any serious solutions. Measures previously considered extreme are being tested. For instance the US Federal Reserve has slashed interests to as almost zero. No unified solutions came from the G20 summit, partly because the imperialist are hamstrung by their own rivalries.

A way out of the crisis for the corporate elite involves the destruction of significant amounts of capital, in order that the remaining capital becomes profitable again. Every ruling class wants the others to pay, wants someone else’s interests to go to the wall to save them.

The IMF has recommended public investment, and Barack Obama has spoken of a significant public works project. However, none of this gets to the heart of the problem, the long-term crisis of the capitalist economy that was gotten around by the blowing of bubbles that have now burst.

Nonetheless, capitalism will stagger on even if no way out is on the horizon if it isn’t overthrown. The extent will depend on what it can get away with — will capital’s hands be free enough to implement the policies needed. This goes beyond inter-capital rivalry to a bigger problem: can the working class be forced to accept the measures capital seeks that will result in their widespread impoverishment?

For instance, allowing unprofitable sectors of capital to go to the wall brings potential political problems. In Japan during 1990s, the government wouldn’t let the banks collapse because of the consequences in a society where the workers had massive savings, resulting in Japan’s prolonged downturn.

Lenin commented that there is no crisis capitalism cannot survive – if the working class is willing to pay for it. This frames the response from capital today. Its choices are conditioned by the relationship of class forces. It is no coincidence that the US went much further down the neoliberal path, with all of its consequences, than, for instance, France. This was determined by the relative level of working class organisation and resistance in those countries.

The task for the left in this situation is to develop a plan that proceeds first of all from what is needed for ordinary people, rather than what will salvage the interests of the corporate elite. A plan that puts the interests of people first and is capable of appealing to, and mobilising, working people — a transitional program to suit the times.

Fighting back

So those are the crises we face. What is the situation in terms of resistance by working people and the oppressed? What can we see in terms of mass consciousness and prospects and early signs for a fight back?

Here, we should emphasise the crisis of legitimacy for the system as a wild card. It was this that underpinned the rise of the anti-corporate globalisation movement that dramatically made itself known the WTO meeting in Seattle in 1999. Its danger was the sympathy for the protests and their demands among the broader working class. At its pinnacle, when 300,000 protested against the G8 meeting at Genoa, polls indicated two thirds of Italians supported the protests.

This movement was sidelined following the 9/11 terrorist attacks and the advent of the “war on terror”. Some elements of the movement rightly refocused as the anti-war movement, some broader sections sympathetic to the movement succumbed to the “us against them” racism.

However, this does not mean the underpinning sentiments disappeared into thin air and as the system stands more exposed than ever, such sentiments pose a problem for the ruling class.

The combination of these crises, the weakening of imperialism militarily and economically leaves the system increasingly ideologically exposed. More and more people globally will search for solutions to the increasingly obvious decay of capitalism.

There are two points of caution to raise. First, there is no guarantee that a severe economic crisis automatically and immediately results in an increase of working class struggle. In fact, the early stages of such a crisis can have the opposite effect, as it did in the first years of the Great Depression. The fear of unemployment and greater poverty can make workers less willing to struggle. In the US, the upswing in labour militancy occurred from around 1934, when workers began to feel more secure.

However, we shouldn’t assume this will automatically be the case because of the extra three crises mentioned to add to the economic crisis which operate as wild cards. The world has never witnessed such a conjuncture as this before. This means we should keep our eyes open for all signs, one way or another, and take advantage of every opportunity to test out prospects for mass struggle.

The second point is that there is more than one direction the inevitable dissatisfaction and anger can go in. It can also go the far right, with the elite seeking to use racism as a scapegoat. We can see this already in Italy with the terrifying rise of the right, with Prime Minister Berlosconi in the lead. The British National Party claims it has 100 councilors (the BBC claims it is 56).

And anyone who witnessed the display of hatred among the baying crowd at the rallies for McCain and Palin in the lead-up to the November 2008 US presidential vote could not doubt the danger of the rise of the racist right in the US.

We know that in times of crisis, important sections of the ruling class can throw their significant weight behind promoting the far right as a counter-weight to the left.

However, there is no question that the ruling class is beginning to worry about the increasing rejection of neoliberal and pro-rich policies. In Europe, there has been a rise in new parties to the left of the traditional social democrats that have based themselves on social movements and class struggle.

A December 4 New Statesman article entitled “Socialism’s comeback”, writes:

"At the beginning of the century, the chances of socialism making a return looked close to zero. Yet now, all around Europe, the red flag is flying again

"'...I think it is safe to say the likelihood of [socialism] making a comeback any time in the next generation is close to zero', wrote Francis Fukuyama, author of The End of History, in Time magazine in 2000.

"He should take a trip around Europe today”, the New Statesman continues.

"Make no mistake, socialism – pure, unadulterated socialism, an ideology that was taken for dead by liberal capitalists – is making a strong comeback. Across the continent, there is a definite trend in which long-established parties of the centre left that bought in to globalisation and neoliberalism are seeing their electoral dominance challenged by unequivocally socialist parties which have not.

"The parties in question offer policies which mark a clean break from the Thatcherist agenda that many of Europe’s centre-left parties have embraced over the past 20 years. They advocate renationalisation of privatised state enterprises and a halt to further liberalisation of the public sector. They call for new wealth taxes to be imposed and for a radical redistribution of wealth. They defend the welfare state and the rights of all citizens to a decent pension and free health care. They strongly oppose war – and any further expansion of NATO.

"Most fundamentally of all, they challenge an economic system in which the interests of ordinary working people are subordinated to those of capital.”

In particular, the article highlights to growing strength of Die Linke in Germany, as well the Socialist Party in the Netherlands and the Coalition of the Radical Left (SYRIZA) in Greece. The article noted that similar sentiments existed in Britain, but that the left was too divided to take advantage of the situation.

The article didn’t even mention France, which has seen a general high level of social struggle over an extended period of time, from the mid 90s on.

There, the Revolutionary Communist League (LCR) have emerged as force that has been capable of tapping into the discontent, with LCR presidential candidate Olivier Besancenot, a postie, one of the country’s most popular politicians, with polls showing his is viewed as the second most credible alternative to President Nicholas Sarkozy.

The LCR has sought to take advantage of the openings to the left by launching the New Anti-Capitalist Party (NAP) as a broad left initiative to unite all who are looking for an alternative to the system. The NAP is in the process of forming now, with the LCR dissolving itself into. NAP has around 10,000 potential members at the moment, with LCR membership a third of that.

In the Third World, Mohideen wrote: “A key concern for the keepers of the system, such as the World Bank, is ‘political instability’, i.e. a rise in the class struggle as workers and the poor resist being made to pay, even at the expense of their own lives and that of their families, for the crisis of the capitalist system. The World Bank thus proposes a host of ‘social protection’ measures to ‘mitigate’ increasing poverty levels.

“Underlying these skimpy measures is the concern to ‘mitigate’ increasing political ‘unrest’ by the workers and the poor, by maintaining some minimal legitimacy for the capitalist system.”

We can also see the desire for change from the status quo in the election of Obama in which significant sections of white US workers overcame unsubtle appeals to racism to join with near total support from African Americans to give Obama a victory: a rejection of Bush’s economic as well as pro-war policies was crucial. That Obama represents the same fundamental interests doesn’t change the fact that for millions in the US, his election represents a break with Bush’s hated policies and is a popular victory in favour of progress.

The most significant representation since the economic collapse of the desire for change, and the potential rise of mass struggle as a result of the crises, came in Greece in the aftermath of the police murder of a 15-year-old Alexandros Grigoropoulos on December 6. The Greek Socialist Worker wrote on January 5 that the revolt, which is “still in the streets”, has been “justly characterised as a social rebellion by youth in Greece”.

"Thousands upon thousands of young people – high school and university students, and young workers – have taken over the streets of all the important cities in the country, sending a loud message: “We are not going to take it no more!”

In the aftermath, students occupied a number of schools and universities, with the law school at Athens University being transformed into an organising centre for the revolt. The youth had to withstand severe repression, with hundreds of arrests. In the end, the government was forced to appeal to other governments to send them tear gas after they ran out. With general strike by workers, the upsurge became a serious revolt is threatening the government’s survival. SW argued: “We are now entering a critical phase. The international crisis is going to sharpen the confrontations.”

The police killing was merely the spark. The revolt is that of the so-called “600 euro generation” – the average monthly wage of young workers in Greece. The revolt is against neoliberalism and exploitation as well as state repression. It is an explosion of bottled up anger and it is terrifying the ruling class across Europe. A December 20 British Independent article revealed the international dimension, with student protests in Italy, France, Spain and even an occupation of a New York campus explicitly inspired by the Greek students, in an article called “‘Greek Syndrome’ is catching as youth take to the streets”.

Europe exists, it appears. If Greek students sneeze, or catch a whiff of tear-gas, young people take to the streets in France and now Sweden.

“French lycee (sixth-form) students took to the street in their tens of thousands this week and last to protest against modest, proposed changes in the school system.”

In Sweden, “young people threw stones at police and set fire to cars and rubbish bins. This appears to have been mostly a local revolt by disaffected immigrant and second-generation immigrant youths, joined by leftist white youths, against the closure of an Islamic cultural centre.”

“The French President, Nicolas Sarkozy, forced his education minister, Xavier Darcos, to delay, then abandon his planned reform of the lycee system this week. Why the change? Largely because of the events in Greece, French officials say ... With the Greek riots on the TV every night, and the French economy heading into freefall, the officials feared the lycee protests could spark something much wider and more violent.”

The article concluded: “The Greek, French and Swedish protests do have common characteristics: a contempt for governments and business institutions, deepened by the greed-fired meltdown of the banks; a loose, uneasy alliance between mostly, white left-wing students and young second-generation immigrants; the sense of being part of a ‘sacrificed generation’.”

Another example is the struggle of the successful Chicago Republic Window workers, who occupied their plant after it was shut down and the company sought to avoid paying the 60 days pay legally required with Bank of America refusing to provide the necessary credit.

The fact that BoA had been a recipient of the billions in bail-out cash helped fuel popular fury. Not only is the example of direct action by the workers a powerful symbol, a sign of how concerned the ruling class is about the impact of the crisis on consciousness, that, realising how bad it looked, significant section of the ruling class backed the workers, including Obama.

There is more that can be said about global struggle than there is space to go into here, such as the mass democracy movement in Zimbabwe with the mass suffering and elite maneuvers in response, and the pro-democracy movement in near-by Swaziland, the anti-government movement in Malaysia and many more.

However, I will note one other example that arose in 2008 — the astonishing victory of the Maoists in Nepal in April’s constituent assembly elections rocked the world and came against all predictions by mainstream commentators. It resulted in the final victory of the anti-monarchy struggle, the culmination of the people’s war and popular uprising.

While Nepal remains extremely poor and the Maoists are in a coalition and forced to make a number of compromises, it is nonetheless an extremely significant situation, with deep debates among the Maoists over how fast they can advance their revolutionary program. If the revolution is able to deepen in Nepal, it could have significant consequences for the region.


One sign of the bankruptcy of the social system is that there have now been eight straight years of imperialist war, with no end in sight.

On one hand, it is clear that US imperialism is bogged down in both Iraq and Afghanistan, having failed in their objectives and weakened US power in the process. However, this also doesn’t mean they are about to accept defeat and withdraw, rather the continue to seek a way to best impose domination on the region, and this potentially includes moves to try and fight their way out of the hole they are in by significantly expanding the war — increasingly into Pakistan and possibly into Syria and Iran as well.

The extent of the economic crisis heightens the stakes for control of the region.

There is no doubt the failure of the war drive has weakened US imperialism. This can be seen not just in the stalling of its war drive against Iran, but also by the rise of forces seeking to take advantage of this relative weakening, notable in Russia, as well as Iran and to a certain degree China, significantly increasing its engagement with and interests in Latin America. Similar tensions can be seen between the US and Western Europe on one hand and Russia on the other around Georgia’s invasion of South Ossetia.

This is not to place China and Russia on the same level as the US as imperialist powers, but to note the relative weakening of the US has created more space for nation’s under the thumb of imperialism to exercise greater independence and expand trading partners. There is clearly no genuine independence of China, for instance, from the US and European economies. Chinese capitalism is bound up, with and dominated by, the interests of Western corporations.

In terms of the election of Obama, on the basis of a strong desire for change by many people in the US from the warmongering of Bush, Obama has made it clear with his appointments (Robert Gates to continue as defence secretary, Hilary Clinton to become secretary of state) that he represents ruling class continuity.

However, this doesn’t mean Obama represents no change at all; he represents an opportunity for the ruling class to leave behind the failed policies and approach of the discredited Bush administration, and seek to clean up the mess left by it. Both sides need to be understood, the fundamental continuity, in the sense that Obama represents the ruling class, but also the attempt by the ruling class to rebuild its power weakened by the disastrous policies pursued by Bush.

One example of this is the decision to close to torture camp Guantanamo Bay, a sign of the discrediting of Bush’s policies. It doesn’t represent any fundamental shift, the secret torture chambers and horrendous prison at Baghram and others still remain, but a symbolic shift. Similarly with Obama’s stated willingness to use diplomacy, a shift in rhetoric and tactics that represents the needs of the ruling class in the wake of the failure of the policy of relying overwhelmingly on military force.

We can also expect a refocus on Latin America, to seek to reverse the lost ground in recent years as Latin American nations have exercised greater independence from US imperialism and pursued, to greater or lesser degrees, policies aimed at strengthening their integration.

This shift was already underway under Bush. However the Bush regime was too discredited and weak to be able to make decisive headway. A new regime so far untainted by Bush’s hated policies (both war in the Middle East but also support for the coup against Chavez and other anti-people measures in the region) will be in a better position to seek to use divide and rule tactics to undermine the push for integration, to try and use the carrot on the so-called “reasonable left” like Brazil, Chile and Uruguay to try and isolate the “extremists” led by Venezuela, Cuba, Bolivia and Ecuador.


Despite loud claims of progress, the situation in Iraq remains to a large degree intractable for imperialism. The situation was aptly summed up by Iraqi journalist Muntadhar al-Zeidi, who threw his shoe at Bush in press conference shouting “It’s the farewell goodbye kiss, you dog. That’s for all the widows and children killed” during Bush’s farewell visit to Iraq — becoming an instant global hero.

The position of the US government is that the Iraq war is entering its “endgame”, signaled by the signing of the Status of Forces Agreement in November, by which US troops are supposed to leave by 2011. This came after months of intense wrangling, as the Iraqi government was caught between the pressure of the Iraqi people who want the occupation to end, not be re-legitimised (which found expression in the Sadrist mass demonstrations and opposition in parliament) and the pressure from the US, which blackmailed the government by threatening to withdraw security and leave it to the mercy of its people.

The pact envisages US combat troops leaving Iraq by the end of 2011 and departing from all urban areas by June 30 this year, but the top US commander in Iraq, General Raymond Odierno has said troops will stay in Iraqi cities in a support and training role after June.

Shiite cleric Moqtada al-Sadr said Odierno’s remarks showed that Washington had no intention of sticking by the deadlines and continued to call mobilisation on the streets.

A December 22 NYT article revealed the truth, pointing out that US troops after June 30 “will still be engaged in combat, just called something else”.

So much for Obama’s May 2010 deadline by which he promised to end the occupation. A November 10 report by Institute for War and Peace Reporting posted at Electronic Iraq noted that Iraqi political leaders “do not see substantial near-term changes in United States policies toward Iraq despite president-elect Barack Obama’s pledge to withdraw American forces and curb development assistance”.


In Afghanistan, the US/NATO occupation is going badly, with 2008 seeing a strengthening of the anti-coccupation resistance led by the Taliban. In particular, the band of warlords, thieves and drug barons that make up the puppet government are near powerless.

Robert Fisk claims it is only a matter of time before Karzai government collapses — outside Kabul, the Taliban are in control. Their checkpoints are on the immediate outskirts, and truck drivers carry passes granted to them by the Taliban. They defacto govern huge swathes, and are in total control of Kandahar. No one wants the Taliban, Fisk reports, but the current government is hated.

A sign of how badly this “wretched war” is going, Fisk argued, is that Karzai attempted to meet Taliban leader Mullah Omar to negotiate, and Mullah Omar refused

Other commentators have looked at the nature of the Taliban-led resistance and noted the transformation of the Taliban into an umbrella group of resistance, downplaying some of its extreme Islamic fundamentalism and taking on a more nationalist hue — being less extreme in its general enforcement of its medievalist take on Islamic law. The exact strength of the Taliban and its role is hard to determine, especially in a context in which all anti-occupation action is presented as the work of the Taliban for propaganda reasons.

In 2008, more U.S. troops (151), died in Afghanistan than in any other year since the 2001 invasion to oust the Taliban. Then you have the uncounted by drastically mounting number of civilian casualties, with a series of scandals involving US air-strikes massacring large numbers of civilians.

It is clear the war is going badly. High-profile figures in the British establishment, including in the military, have stated that the war is being lost. The US is sending an extra 20,000 troops to Afghanistan, however military analysts don’t seriously expect this to be enough to defeat resistance to the occupation.

Retired Australian general and “counter-insurgency expert” Jim Molan told the December 20 SMH that Afghanistan was fast on track to be a lost cause. He argued a much greater number of troops were needed to win the war, and argued that for its part, Australia should increase its contribution from 1000 to 6000.

Molan revealed the block for governments participating in the occupation preventing the sort of troop increase he insists is needed. Western governments he said “seem ashamed of their commitment”. In other words, the problem for imperialism is political, the problem of the lack of support for the war among ordinary people.

The actual consciousness of ordinary people, and the potential for this to shift into action, is objectively holding back imperialism. It is not operating with free hands, but is restrained. Even without significant anti-war protests, sentiment among the working class in the imperialist countries is playing an important role, and is a contributing factor to the occupiers losing in Afghanistan.

Australia is reluctant to send more troops due to the potential political price. Already this year, the eighth Australian soldier was killed. In another sign of the potential political price the Rudd government may have to pay, the SMH reported on January 9 that Australian troops were being investigated over civilian casualties caused during a clash in western Afghanistan.

A dangerous sign is the extension of the war into Pakistan, with incursions and predator drone bombings in the northwest region, where the Taliban are active — although the imperialists are also killing tribespeople. As insane as it sounds, a more serious push to extend the war across the border and into Pakistan, through a ground invasion of more sustained bombing, cannot be ruled out. After all, US imperialism did exactly that when its war in Vietnam was going badly, extending it into Cambodia and Laos.

This would be an act of desperation that sought to turn the tide of a war the occupiers are losing by taking the offensive, and it could have serious destablising consequences in the region, especially in already volatile Pakistan.

Obama has signaled out Pakistan, as has Bush’s national security advisor Stephen Hadley, who said in a January 7 WSJ article, that Pakistan’s “turbulent border region poses threats not just to the US mission in Afghanistan, but also to neighbouring India, as evidenced by the recent Mumbai terrorist attacks, as well as to urban areas of Pakistan itself – and the world beyond.”

US general David Petraeus, in charge of the Iraq and now Afghan occupation, commented: “Afghanistan and Pakistan have, in many ways, merged into a single problem set”. In other words, look out Pakistan, you are in the US’s gun sights.

An extra destablising factor that has ramped up threats of war between India and Pakistan (both nuclear armed) was the terrorist attacks in Mumbai and the war of words in the aftermath between India and Pakistan, where the attackers are believed to have come from. The mutual recriminations, with both sides insisting they do not want war, has included mobilisation of troops.

We have also seen the extension of the Iraq war into Syria, with a cross border attack by US troops that supposedly killed terrorists, but in fact killed civilians.

To this we can add the war drive against Iran, with rhetoric based on both Iran’s nuclear program and its supposed role in promoting violence in Iraq. While the US war drive has stalled, with the occupations of Iraq and Afghanistan going badly, the Israeli drive for war against Iran increased last year with threats of a pre-emptive nuclear strike. In the case of both the US and Israel, we cannot rule anything out, however neither is in a strong position to attack Iran and any such attack would be an extreme move in the current situation.

What is clear is that more than seven years on since the beginning if US imperialism’s current war, there is no end in sight


The most dramatic dimension of the crisis of war has come in Palestine with Israel’s bloody assault on the Gaza Strip, already starved by a near-total siege.

Having repeatedly violated the ceasefire negotiated mid-year, Israel decisively broke it on November 4 with an incursion that killed six people and kidnapped six more. On December 27, the bombing began.

According to December 30 SMH: Deputy Prime Minister Haim Ramon said the goal of the Israeli offensive “is to topple Hamas”.

“After this operation there will not be a single Hamas building left standing in Gaza, and we plan to change the rules of the game”, said armed forces deputy chief of staff Brigadier General Dan Harel, quoted by the YNet News website.

On December 27, the day it started, Israel deliberately waited until the middle of the day when the casualties would be the highest, and in one day they massacred more than 200 people. As the bombing continued, the death toll mounted relentlessly. On January 3, Israel began its ground invasion.

One third of all the dead have been children. On January 6, Norwegian medics in Gaza had claimed that they had found traces of depleted uranium among victims of Israeli bombings they had treated. On January 7, 40 people were killed when Israel deliberately bombed a UN school. John Ging told the January 8 SMH that, “We have established beyond any doubt that the school was not being used by any militants”, Ging told the Herald. “They were innocent people.”

“The reason they were in the school is because the Israelis had told them to go there”, Ging said. He explained that to ensure that there was no confusion about the school’s location, the UN had given specific GPS co-ordinates to Israeli commanders. On January 8, Israel bombed a truck carrying humanitarian aid and killed a UN aid worker, resulting in the UN suspended its provision of humanitarian aid to Gaza.

The outrage caused by such atrocities ramped up pressure on Israel as it became harder and harder for Western allies to not be seen to be taking a tougher stance on Israel to halt its murderous offensive.

Mousa Abu Marzook, deputy of the political bureau of Hamas, pointed out:

"Palestinians have been dying from bombardments for many weeks. On November 4, when the Israeli-Palestinian truce was still in effect but global attention was turned to the US elections, Israel launched a ‘preemptive’ airstrike on Gaza, alleging intelligence about an imminent operation to capture Israeli soldiers; more assaults took place throughout the month.

"In the six-month period preceding this week’s bombardment, one Israeli was killed, while dozens of Palestinians lost their lives to Israeli military and police actions, and numerous others died for want of medical care.

"This week’s war is not an attack on the Izzidin al-Qassam units – our movement’s military wing – but is simply aggression targeting the people, infrastructure and economic life of Gaza, designed to sow terror and loose anarchy; it aims to establish new `facts on the ground'– that is heaps of rubble with bodies trapped beneath – in advance of the coming American administration."

Global protests began immediately after the bombing started and have been inspiring for the breadth, occurring on all continents. Those in the Arab world were the largest – 150,000 inside Israel itself, hundreds of thousands in Egypt. Organisers of the Istanbul claimed 700,000 came out. The largest in the West so far, as far as I know, was London with 150,000 on January 10.

There are reports circulating that trade unions in Norway have provided an example of workers’ solidarity: On January 8, there were strikes in Norway: “All trains in the whole of Norway, and all trams and subways in Oslo, will stand still for two minutes as a result of a political strike organised by the Norwegian Locomotive Union and the Oslo Tram Workers Union in protest of the Israeli invasion of Gaza.

“A large selection of Norwegian trade unions and organisations has endorsed a new campaign for the withdrawal of all state investments in Israel. The call is endorsed by so far six of the largest national trade unions.

“The Union of Trade and Office Workers calls on all members to ask their employers to remove Israeli products from stores. The union is the by far largest union of workers in all types of private and public stores in Norway.”

The horror of Israel’s attacks, and the absurdity of their political defence, has seen significant numbers around the world reject Israel’s assault and blame them for the carnage. This builds on the similar horror and repudiation of Israel’s claim to be able to kill whoever they like whenever they like under the pretext of self defence that spread in 2006, which of course itself built on the Israel’s crimes especially since the start of the second intifada in 2000.

A January 8 AFP report noted: “Israel has taken a battering in the global propaganda battle over its war with Hamas, despite deploying all the latest weaponry from YouTube videos to Twitter blogs and an overworked spokeswoman ... The European Union External Relations Commissioner, Benita Ferrero-Waldner, told the Israeli President, Shimon Peres, that Israel’s image was ‘being destroyed’ by its refusal to heed appeals for a ceasefire.”

Even in the US, opposition to Israel is growing. According to a July 2008 report by the University of Maryland’s Program on International Policy Attitudes: “A new WorldPublicOpinion.org poll of 18 countries finds that in 14 of them people mostly say their government should not take sides in the Israeli-Palestinian conflict. Just three countries favor taking the Palestinian side (Egypt, Iran, and Turkey) and one is divided (India). No country favors taking Israel’s side, including the United States, where 71 percent favor taking neither side.”

A December 31 Rasmussen poll found that those favouring Israel’s assault had a very narrow lead among US people – 44% to 41% with the remainder undecided. The most dramatic figure is that among Democrat voters, those opposing the attack are 24 points higher than for it. This is in the context of an incoming Democrat president and Democrat control of parliament. This is a further contradiction for Obama, who went out of his way to court the pro-Israel lobby in the lead up to the vote.

The role of Western and other governments stands in stark contrast to the stance taken by ordinary people from all corners of the globe. The US placed the blame entirely on Hamas and engaged in ridiculous double speak, accusing Hamas of “holding the Gaza people hostage”. Obama drew criticism for remaining silent as the violence escalated, claiming he didn’t want to encroach on Bush, despite the fact he had no problem condemning the Mumbai terrorist attack.

Other governments, such as in France, expressed criticism of Israel and pushed for a ceasefire, while still seeking to blame Hamas and demanding a unilateral end to rockets from Gaza.

The UN Security Council proved again how useless it is, unable through nearly two weeks of ceaseless killing to even pass a resolution, the US vetoing any criticism of Israel. Finally on January 9, a ceasefire resolution was passed, calling with Israel to withdraw. The US abstained.

The resolution “came on the same day Israelis were accused of killing more than 30 Palestinians after telling them to take shelter in a house that was later shelled”, the SMH reported. “Arab and Western diplomats seemed unconvinced that their handiwork would silence Israeli guns”, the article continued. I guess it is hard for Israel to take too seriously demands from a body unable to utter a word of protest for two weeks while the death toll pushes a thousand.

Meanwhile, the president of the general assembly, which has passed hundreds of resolutions criticising Israel and demanding it obey international law, Miguel d’Escoto Brockmann, the former Nicaraguan foreign minister in the revolutionary Sandinista government in the 1980s, slammed it as a “monstrosity” and demanded justice for Palestine.

Venezuela expelled the Israeli ambassador on January 6 and began organising for a humanitarian airlift into besieged Gaza — harking back to similar action against Israel’s war on Lebanon. Cuba, which has never recognised Israel and still only recognises historic Palestine, also condemned Israel and demanded action through the UN to force Israel to stop, as did Bolivia.

Standing in stark contrast to imperialist and pro-imperialist government’s around the world, this shows the significance of liberating governments from imperialism, from having anti-imperialist movements win government.

On January 8, as the carnage in Gaza continued unabated, four rockets hit northern Israel from Lebanon, raising the prospect of a new front being opened. However, it could also be a largely symbolic warning by Hezbollah or even rouge elements outside Hezbollah, so we will have to see what happens.

Israel’s war has not come out of the blue, it was clearly premeditated, seeking to take advantage of the gap between the outgoing Bush presidency and the incoming Obama one to change the “facts on the ground”.

A few homemade rockets have nothing to do with it. It has everything to do with seeking to either destroy or severely undermine the Hamas government, and demoralise the Palestinian people. It seeks to destroy the tunnels constructed between Gaza and Egypt that, however slightly, undermine the effectiveness of the siege. Israel is seeking a totally demoralised and destroyed population — to the greatest extent it can get away with it.

The ultimate aim of Israel is ethnic cleansing, a final solution to the Palestinian problem, whatever exact form it takes It has made a genuine two state solution impossible, meaning the questions that remain are over whether it seeks to control those that remain in the post 1967 occupied territories in ghettos or seek their eventual expulsion.

David Blair, in the January 8 London Telegraph wrote that “two very different timetables will decide when [Israel’s] onslaught on Hamas in Gaza comes to an end. One is set by the military commanders who will want to continue until all their objectives are met. But another ticking clock might carry the label ‘international pressure’.”

He argues: “Diplomatic reality will eventually render the assault on Gaza untenable, regardless of the military situation. Tuesday’s killing of scores of Palestinian civilians who were sheltering inside a United Nations school may advance this moment.”

What he doesn’t say is it what pressure will drive these governments, who previously had no problem with mass slaughter to start raising their voices. That is, the growing pressure from ordinary people.

It is a class equation, enough outrage and even motion from working people can shift the situation. This is never stated explicitly in the bourgeois media, but it underpins all weighing up of the forces.

Otherwise, what else shifts it? Certainly we cannot be expected to believe imperialist governments suddenly develop a conscience at the moment the crimes become too explicit and indefensible.

But former British PM, now “Middle East peace envoy” Tony Blair does reveal the hypocrisy of European government’s calling for a ceasefire, arguing that before the bombing of the UN school, “Israeli officials had judged that the international pressure was nowhere near the level required to force a ceasefire. Diplomacy is conducted in code and Israeli officials monitor every signal.

“When the European Union unanimously urged an ‘immediate ceasefire’ it also refrained from explicitly condemning Israel’s actions. Moreover, the EU’s position was conveyed to Israel by a relatively low-level delegation led by three foreign ministers.

“In a situation where every signal counts, Israeli officials decided that pressure from Its call for a ceasefire had been ‘expected’ and factored into Israel’s calculations.

“More than anything else, Israel’s planning rests on the assumption of American support. So far, Washington has kept a protective arm around its ally.”

Israelis are aware this could all change quickly, Blair notes. Such are the cynical calculations of mass murderers.

But it does indicate that international solidarity, the mobilisation of ordinary people who have no vested interest in Israel’s slaughter and who are outraged by it, is a real factor.

Another factor, of course, with more immediate effect, is the degree of Palestinian resistance. There has been heavy fighting, and Israel has been reluctant to get drawn into the centre of Gaza City, where resistance fighters will be at an advantage. The greater the toll the Palestinian people in their resistance can levy on the Israeli military, the harder it will be for Israel, as the successful resistance by Hezbollah to Israeli forces in 2006 revealed dramatically.

On Hamas, Abu Marzook’s description is worthwhile noting: “We are, simply put, a homegrown national liberation resistance movement, with millions of people who support our struggle for freedom and justice.”

For sometime now, Hamas have not in any way focused on the “Islamist” aspect of their program, but their role as a nationalist resistance force.

Israel has indicated it may accept a ceasefire: the question is the terms. It would not be a ceasefire with Hamas, “but against Hamas” is how Israel has described it. That is, a ceasing of its war on terms as favourable as possible to Israel, where not only does it not give anything up, but in fact the Palestinians are left in a worse position than before the start of the fighting.

In particular, Israel may seek an expansionist land grab in Gaza’s north, with land annexed under the pretext of creating a “security zone”.

Certainly, Israel is seeking to destroy the tunnels into Egypt, by which Gaza is able to circumvent the siege. “Israel believes the current invasion will have achieved nothing unless this time it regains absolute control of the Rafah border, undercutting Hamas’s claims to be running the Strip”, Jonathon Cook wrote in a January 7 Electronic Intifada article.

The aim is firstly political, but there is also an economic dimension to this. Israel actually profits every time it lets aid from the UN or other bodies into Gaza by charging a custom tax. This revenue is significant enough to be a major factor boosting Israel’s economy, revenue that is undermined via any loss of exclusive control over Gaza’s borders. This is not to place this as the first-concern for Israel, but it is one more factor.

One other question that has been speculated on, which time will tell, is whether or not this attack is a “dress rehearsal” for a fresh assault on Lebanon.

An important factor here is the role of the collaborationist, quisling forces of Mahmud Abbas’s Fatah. Its role, of criticising Israel while also criticising Hamas and seeking to undermine its position, is helping divide the Palestinian people and their ability to resist. However, the combination of the complete failure of the Fatah strategy of negotiations to get any concessions at all from Israel with the anger at Israel’s crimes in Gaza is creating fury at Fatah in the West Bank.

A January 6 New York Times article reported from Nabuls: “Fury is rising here over the war in Gaza, as are support for Hamas and anger with the Palestinian Authority in this city, which has long been the beating heart of opposition to Israeli occupation of the West Bank … Fatah leaders are growing deeply worried over popular reaction and support for its rival, Hamas, to the point of crushing recent demonstrations.”

We can also add the disgraceful role of other Arabic regimes, especially in Egypt, that have been complicit in Israel’s crimes, or at the least refrained from taking strong action against it. Egypt, of course, has collaborated with the maintenance of the total siege that has inflicted such horrors on the Gazan people and made the affect of the current assault many times worse.

We can’t predict how this conflict will resolve itself, and here we can’t narrowly refer to the precise time at which Israel “accepts” a ceasefire and halts its offensive. What we can say is that the international solidarity movement, which seeks to mobilise and give expression to the widespread rejection of Israel’s crimes is a factor.

We must add one more point quickly on the crisis of war, and that is Sri Lanka’s full-scale and genocidal war against the Tamil people which continued escalating through the last part of 2008. As well as the slaughter of large numbers of people, hundreds of thousands have had to flee their home.

Latin America

The most important centre of resistance remains Latin America. The NE report from October 2008, published in The Activist Vol 18,#3 has more detailed analysis of the dynamics.

This struggle has seen a series of advances and breakthroughs that have weakened the position of US imperialism, although many remain symbolic indications of potential future gains or are limited. The process towards regional integration at the expense of imperialism involves contradictory forces, with the national capitalist classes of Brazil, Argentina and smaller countries such as Uruguay pushing certain integration measures to win badly needed breathing space from imperialist interests. The governments of other countries, in an uneven way, such as Cuba, Venezuela, Bolivia and to a varying extent Ecuador, are pushing for a more radical, anti-imperialist transformation that is driven by mass movements of the oppressed.

The significance of the struggle in Latin America in the current context can be see simply if we consider that, in the Venezuelan November 23 regional elections, the United Socialist Party of Venezuela (PSUV), only properly form in March, in its first electoral battle, received almost 5 million votes. Its nearest competitor was the opposition A New Time party (UNT), which received a little over 1 million.

The PSUV is a party that, for all its significant contradictions and limitations, was formed for the purposes of helping make a socialist revolution and whose provisional program stands for a thorough revolutionising of society. Such a party had 2.5 million people participate in its primary elections for candidates, and up to 1.5 million people participating in the party in a regular fashion.

The 5.5 million votes, including other pro-Chavez candidates, for the project of the Bolivarian revolution is, leaving aside the specifics of the current stage of the revolution and its challenges, a remarkable achievement — a sign of the deep going radicalisation through the decade of the government of President Hugo Chavez and the revolutionary process.

And the importance is not so much the raw number of votes, but the mass movement that is behind it. The fact that, in the face of the weight of the corporate media, such a result can be achieved, is itself remarkable, but all the more so when you consider all the forces weighing the revolution and PSUV down — the weight of the bureaucracy, the often terrible record of a number of Chavista mayor and governors, the corruption etc.

The Chavistas won 17 out of 22 governorships, more than 80% of all muncipalities. The gains made reflect some of the gains on the ground throughout the year, such as the round of nationalisations, Chavez’s radical July decrees, the work on the ground to overcome food shortages and also the use of the PSUV as a mobilising tool during the elections. The last one is a new factor for the revolution, and clearly crucial to the gains made.

However, there were also particular setbacks with the elections, the loss of Miranda and Greater Caracas in particular. This reflects some of the weaknesses, because it appears abstention in impoverished barrio of Petare was an important factor.

Also, the gains made his year are still relatively modest when considering the tasks facing the revolution and when you consider the sort of radical projections set out at the start of 2007. The gains exist alongside great contradictions and negative features.

We have noted, and the NE report spent some time delving into this, the unresolved nature of the class struggle in Venezuela.

The fact despite all the gains that are widely noted, Venezuela remains capitalist, that, while weakened, the dictatorship of capital has not been overthrown. The mass movement has not been strong enough, the organisation and consciousness too low for the advances needed, has increasingly weighed down on the process. Many of the gains have been undermined, rhetoric and reality diverged.

For a process that began with its main social base among the informal workers and urban poor, the organisation and consciousness of the formal working class, with its greater social weight tied to its position in production, has been too low for decisive advances. While the formal workers have helped mobilise to save the revolution from counter-revolutionary offensives, and significant sections have at various times shown enormous enthusiasm, it hasn’t been able to intervene decisively to drive the process forward to resolve the question of which class, or bloc of classes, decisively exercises political power.

The ensuing vacuum is often filled by a mix of opportunists, corrupt bureaucrats, a layer of “new rich” that have ties to or emerged from within Chavismo in the political sphere (within the state especially), and much of the same old economic elites in the economic sphere. This exists along side the increasing political power of the great mass of people, and the moves against capital in the economy.

The result is a schizophrenic society — a society where the government is leading a movement seeking a socialist revolution and which also has the highest percentage of breast enhancement procedures anywhere in the world. It is a society where social solidarity is taken as the starting point for government policy, with violent crime reaching record levels (although this is beginning to be tackled).

It is a society where the president repeats his government is for the workers, and implements many pro-worker measures, and in a number of cases striking workers face repression from police and national guards, backed by the courts that side with the bosses. It is a society where public sector workers struggle to sign decent contracts in the state sector, and where “revolutionary” officials sign preferential contacts with favoured capitalist at the expense of the people.

And, where the organised people achieve miracles — as the Sidor steel workers did last year, for instance, and as the ongoing social missions are a testament too.

Venezuelan-based Marxist economist Michael Lebowitz summed this up by saying that Venezuela is not a place for sufferers of bipolar disorder. There are exhilarating highs followed by devastating lows, as the pendulum of class struggle swings with incredibly high stakes.

In some ways, it is a sign of how bankrupt the system of imperialism is, how little appeal it holds and how weakened it has become, as well as the determination of the mass of poor, that the revolution has survived this long and continues to advance despite the extent of the contradictions and problems facing the process, despite still dominating the economy, as well as the media on top of which you can add a powerful bureaucracy.

The unresolved nature of the revolutionary struggle for power is beginning to bite. The class struggle is increasing. The questions that have not been resolved, that have been able to be put off are beginning to bite, and will do so increasingly with the price of Venezuelan oil hovering at $32 per barrel.

The question as always is the degree of organisation and consciousness of the oppressed. How do you advance in a context of the revolution’s base being built on millions unorganised informal workers, with the organised working class is weak and divided?

How do you advance with a legacy of decades of depoliticisation and a corrupt clientalist culture have seeped deep into society, while you have a significant middle class, with needed professional skills, organised against you.

The formulation that we have used to describe the current situation in Venezuela is the existence of a workers and farmers government — whereby a government resting on the working people exists, but has yet to decisively overthrow capitalism. This formulation, explained in greater detail in the October 2008 NE report and the February 2007 NE report before it, remains the best way to conceive of the situation, but it needs to understood fully.

It refers to an inherently unstable situation that must go forwards of backwards.

In The Revolution Betrayed, Leon Trotsky’s masterpiece on the degeneration of the Russian Revolution, he makes a point when arguing that the social revolution carried out post 1917 had not been reversed, despite the seizure of power by a counter-revolutionary bureaucracy. He commented that it is not enough for the bureaucracy to simply betray the revolution and raise a counter-revolutionary program and banner. What is necessary is for such forces to overturn the existing social relations, and this will be the product of class struggle.

This can be used in reverse as a reasonable explanation for the situation in Venezuela. Coming to head a government resting on a capitalist state and economy, Chavez has certainly betrayed capital. From this position, he has raised a socialist banner and program. And not just Chavez, but a mass movement has raised such a banner — repeatedly turning the centre of Caracas into seas of red.

The task, however, remains to overturn capitalist social relations. That is extremely difficult, especially when you operate out of the old structures to seek to construct new ones from scratch, with a weak vanguard, with the formal workers weak and with a powerful bureaucracy.

However, revolution means to do the impossible. For the process led by Chavez to have survived as long as it has in this type of situation would have been said, in advance, to be impossible.

One of the big contradictions the revolution faces is the contradictions of the position of an oppressed nation and its impacts on the economic and social structures.

The Venezuelan nation is distorted and held back. History shows this leads to all sorts of revolts, manoeuvres, seeking to create space in order to allow development from various sectors. Such revolts are right across Latin America, in different forms, with different forces involved and at very different stages from country to country.

To seek greater space from imperialism does not equal seeking to overturn capitalism. If you think of the trade union bureaucracy, it is their job to push for things that are against economic interests of capital without ever being anti-capitalist in the sense of opposition to capitalism as a system. They seek to carve out the greatest space from within the system.

This dynamic is crucial to understanding Latin America and, within that, the Venezuelan revolution.

The Venezuelan revolution started as a very broad, heterogenous revolt with a range of forces, resting on a social base on the largely disorganised urban poor. It sought development and overcome the degeneration of the state. This brought it into conflict with imperialism, and greater battles developed, especially over control of the oil.

It is a mistake to assume that to support any conflict with imperialism automatically equals being on the side in any consistent way of the working class and being or moving towards anti-capitalism. That is only one dynamic, although it has been the dynamic represented and pushed by Chavez.

But that does not automatically apply to the pro-Chavez camp as a whole, and it is clear that very powerful sectors within Chavismo, while they might pay lip service to socialism and tail end the process’s radical trajectory, actually have different interests.

Control of the state in Venezuela, which means access to oil money, is an important source of wealth accumulation. To win space from imperialism does not automatically mean power to the workers and oppressed, it is space that can also be taken by a new elite that successfully takes advantage of the driving back of imperialist interests.

It is obvious that sections of Chavismo, including some powerful forces, have ties with sections of capital, even if such interests at work often work below the surface.

The oil wealth has created a situation where the economic growth and extra state revenue from anti-imperialist government policy can be used to both raise up the poor and fund experiments seeking to advance a social revolution and the facilitate the accumulation of wealth by forces within the state.

And to be in the state often means to be with Chavez, due to the strength of the revolutionary movement and the weakness of imperialist-backed opposition. Within both the state and the Chavista movement there are various power blocs that use control of position to accumulate influence and wealth. This is why we say the increase in class struggle will increasingly cut deep into the Chavista camp.

Of course, the contradiction for the right wing of Chavismo (the “endogenous right”) is not just that they owe their positions to Chavez, but they owe it to the movement of the oppressed, which saved the Chavez government and process of change from the imperialist-backed attempts to destroy it.

The endogenous right both need the oppressed to save them from imperialist-backed counterrevolution — which could seek to take back lost political and economic power — and they need to control the movement of the oppressed, to prevent it from becoming an independent force capable of threatening their interests. It is a balancing act and their contradiction is the more they act to undermine the self-organisation of the mass of people, the more they demoralise and disorganise the forces they also lean on for survival A mass movement cannot be simply turned on and off like a tap.

In light of all this, and especially the obvious fact that the dictatorship of capital has been weakened but not overthrown, we should clarify that our description of Venezuela as an embryonic workers and peasants state, that we first adopted in 2004, is not one that is at all useful or accurate.

At best, it is a confusing and extremely imprecise formulation that can be given any content you want. At it is worst it leads to the position of the comrades in the Revolutionary Socialist Party that in April 2002, the capitalist state was overthrown. The formulation of workers and farmers government is better. The state remains capitalist, although a severely weakened and undermined capitalist state, with the government seeking work towards its undermining and destruction to be replaced with a new state based on the organisation of working people

Deepening class struggle

The coming year will be important. The oil wealth that has enabled the policies of lifting up the poor without decisively confronting the wealth and privileges of the rich will no longer suffice in a context of much lower oil prices. There will have to be choices.

The counter-revolutionary opposition immediately sought to use its newly won positions to attack the popular movements. This was met by a powerful response by the mass movement, which drove this offensive back and showed the power contained in the revolution.

However, the opposition could seek to continue and escalate such attacks in the coming year, potentially in the lead up to the February referendum to remove term limits for elected officials (which would allow Chavez to run again in 2012).

The government has said it will not revise the 2009 budget, based on the US$60 per barrel mark, until after the first quarter. Venezuela has more than US$37 billion in international reserves plus US$9.6 billion from the off-budget National Development Fund.

Venezuela is better protected than many other countries, and can benefit by gains made under Chavez government that have expanded other sectors of the economy. However, these fall well short of what would be required for Venezuela not to be badly hit. While the reserves give small breathing space, they can’t alter the fundamental problem.

Who will be made to pay? This can only be resolved politically, through struggle. This is a major reason to expect that the class struggle in Venezuela will be on the rise next year. It will occur also in the state sector, control over which is contested and often dominated by a pro-capitalist bureaucracy.

Chavez has stated his position. According to a December 26, 2008 Business Week article, “Chavez acknowledges that oil prices – down  70%since topping $147 a barrel in July – will affect Venezuela, but he insists the wealthy will suffer more than the country’s poor, who benefit from social spending programs that he vows to continue.

“Social investment will not be halted”, Chavez said. “This, for us, is sacred.”

The article reported a plan to take over gold concessions to compensate in part for drop of oil prices.

However, the problem will not be resolved by speeches by Chavez, but actual struggle.

The significance of Venezuela’s revolutionary breakthrough, where the movement of the oppressed has taken and still holds government, and especially its role as part of the vanguard in the regional struggle against imperialism, was reaffirmed when, in response to the breaking of the economic crisis, it convened a conference of left-wing political economists to formulate a radical response. The conference drew up a radical program for the region, including nationalisation of the banking system.

The broader significance of the anti-imperialist wing of Latin American governments was also clear when in November, around the same time the G20 met, a Boliviarian Alternative of the Americas (made up of Cuba, Venezuela, Bolivia, Nicaragua, Dominica, Honduras and with Ecuador as an associate member) meeting was also convened to formulate a response The initiative was taken to launch a new currency called the Sucre.

On the other hand, Argentina and Brazil travelled to the G20 summit to take their seats at imperialism’s conference.

This is a sign of the way that the economic crisis is threatening to drive a wedge in the process of Latin American integration.

The year ends with a mixed record for the struggle for integration and against imperialism.

This struggle has seen certain advances this year — one being the election of the pro-poor priest Lugo in Paraguay, breaking six decades of right-wing rule.

We can also include on the positive side of the ledger the heroic victory of the Bolivian people against the US-backed fascist coup in September. The mobilisation of the Bolivian people not just drove back the fascist offensive aimed at destroying the Evo Morales government, it also succeeded if securing the January referendum on the new constitution, certain to be passed. This constitution, based on indigenous justice and ending neoliberalism, is a key goal of the struggle that has included three popular insurrections.

All governments of South America rejected the US-backed coup attempt, and the instrument used to do this was the Union of South American Nations (Unasur), a body that advances political integration formally launched last year.

In Ecuador, the new constitution, which contained a number of social gains as well as seeking to strengthen the position of the Ecuadorian state against imperialism, was adopted by a large majority. Ecuador has also announced its intention to default on much of its foreign debt, after a commission established by the government decreed significant amounts accrued by previous corrupt governments illegal. The default is set to be larger than the one carried out by Argentina after its 2001 economic collapse.

Other Latin American countries, such as Paraguay and Venezuela, could follow suit.

Peru, with one of the two remaining governments firmly in the pro-US orbit, has been rocked by an ongoing mass revolt that has called into question that government’s survival.

We can also look ahead to the likely victory of the FMLN in El Salvador, 15 points ahead in the polls, while noting that is far from certain due the power of the right and their potential to steal the elections.

Also, the impact of the financial crisis is an unknown, as in 2004 the lie was spread that the US would cut off remittances if the FMLN won – something it has no power to do.

Nonetheless not everything has gone forward. There have been big battles, such as that involving Colombia and its victories against the FARC and the reactivation of the US Navy Fourth fleet. The latter resulted in the counter-mobilisation of Russian warships in Venezuelan territorial waters. In Nicaragua, the US is on an offensive against the government of Sandinista leader Daniel Ortega, seeking to cancel aid over supposedly unfair municipal elections won by the Sandinistas.

In Argentina, the government of Christina Fernandez has been badly weakened by a revolt by the rural oligarchy, based on agribusiness. The hand of the oligarchy and through it imperialism, has been greatly strengthened.

Going into 2009, the severity of the global economic crisis conditions the struggle. It has hit hard, and could do more so given how much of the integration measures rely on utilising Venezuelan oil revenues now under threat.

ALBA projects have stalled or not gotten off the ground. The Bank of the South is “on ice”, according to Chavez. The trend towards integration has been threatened by the crisis, with Brazil and Argentina responding by moving into the imperialist orbit and attending the G20.

Argentinean Marxist Luis Bilbao, working as an advisor to Chavez, has pointed out that besides ALBA (which always carried mostly symbolic value, given the main economic weight in the region lies with Brazil, Argentina and Mexico), none of the institutions created to promote integration have met to respond to the economic crisis. There hasn’t been a united response.

Brazil, in particular, is concerned by the rise of anti-imperialist movements and governments across the region that threatens its interests. Brazil has always sought to advance integration under its hegemony. Yet, the governments in Bolivia, Ecuador and Paraguay have all taken, or are threatening to take, moves that threaten Brazil’s capitalist class. (Brazil even withdrew its ambassador from Ecuador after the debt default that will affect Brazilian banks.)

Bilbao, however, has made a very important point. While ALBA does not have the economic weight, it has something potentially much more powerful: the response of ALBA to the crisis — promoting greater, radical anti-imperialist and pro-people measures — is the right, in fact the only, response.

That gives it real weight. The crisis is too deep for any other response to mean anything other than subjugation. ALBA has raised the banner of the only alternative facing the millions in the region.

However, this requires class struggle to advance. This struggle is a major one in world history, it occurs at a decisive moment for humanity. But it does not exist in isolation. The Latin American revolt is an advanced guard of the global struggle. It is integrated into the struggle against a bankrupt system — not just morally, but literally.


The coming year we will see how bad this crisis is for capitalism. How far can the ruling class go in shifting the burden on the workers and poor? What are the signs of potential to fight back and what forms does it take, around what issues?

This year looks to be an extremely important one in world history. Capitalism is facing an unprecedented series of crises that bring into question not only the ability of capitalism to survive but life on Earth.

We also see important, however limited, breaks in the struggle of ordinary people. From the streets of Greece, to the Himalayas, to the Arab world expressing its fury over the genocide in Gaza, to Latin America, we can see important struggles that show the potential for a series challenge to global capitalism.

However, there are powerful counterweights in the still too-low level of organisation and consciousness of working people globally, and the desperation of capital to save itself at any cost, including human survival.

What happens this year may prove decisive to which of the two roads, socialism or barbarism, humanity takes.
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