Unsustainability of Neo-Liberal Globalization and the Capitalist Crisis: Draft Ideological Resolution of the Communist Party of India (Marxist)

3.1   Such unfolding of imperialist globalization is, as we had analysed in our Party resolutions, unsustainable. Further, the 14th Congress resolution understanding that was reiterated in our Party Programme establishes the validity of Marx’s analysis of capitalism as a system that can never be either exploitation-free, or crisis-free. No amount of reform of capitalism can eliminate either or both of these fundamental characteristics as these are inextricably located in the very production process of capitalism generating its basic contradiction – between its social nature of production and individual nature of appropriation. This, in itself, negates all illusions spread by social democracy of reforming capitalism to have a ‘human face’.

 

3.2   The character and composition of labour – manual or mental (intellectual) – makes little difference to this process of exploitation. This exposes the fallacy of the argument that since the character of the working class (manual labour) has significantly altered in modern times from that of Marx’s time, and also, as the proportion of manual labour has significantly declined since Marx’s time, Marx’s analysis is no longer valid. As long as labour power produces in the capitalist production process, it is exploited and that is the source of surplus value and hence profit – the raison d’tre of capitalism.

3.3   However, as the proportion of mental (intellectual) labour grows, it generates illusions amongst sections of them that they are no longer exploited but are now ‘partners’ of capitalism. Lenin spoke of the ‘labour aristocracy’. While disrupting the class unity of the exploited, some of these sections tend to fall prey to such illusions, thus buttressing neo-liberalism. This tendency needs to be ideologically challenged and combated.

3.4   The current neo-liberal offensive, however, has generated tendencies that make it unsustainable. Two important features of globalisation need to be reiterated to establish this. First, this process has been accompanied by growing economic inequalities both within countries between the rich and poor, and between the advanced and the developing countries. [6] Secondly, globalisation has given rise to the phenomenon of ‘jobless growth’. This is so because the trajectory of profit maximisation invariably replaces human labour by investing more in developing technology rather than developing human resource capabilities. The growth of employment, during this period, has always been lower than the GDP growth rate globally. [7] Both these features put together mean that the purchasing power in the hands of the vast majority of the world’s population has been declining.

3.5   Capitalism inevitably plunges into a crisis when what is produced is not sold because surplus value cannot be transformed into profit. Such a crisis will continue to recur in different forms under this globalization phase of imperialism [8] making it unsustainable. As is the character of capitalism when confronted with a crisis situation, it seeks to overcome this through various ways. In the process, capitalism may temporarily ride over a current crisis but it, inevitably, lays the foundation for a deeper crisis in the future.

3.6   Under these circumstances, capitalism chose one way to sustain and expand its levels of profits – increasing people’s purchasing power by enticing them to procure loans whose spending will maintain the levels of profit generation. However, when the time comes to repay these loans, there is the inevitable default, given the declining economic status of the vast majority of the borrowers. This is precisely what happened in the USA, engulfing the world capitalist system in the recent sub-prime loan crisis leading to large-scale financial defaults. [9]

3.7   Further, capital, in search of higher profits, continuously creates new commodities through which it expands its market operations. As Marx had said, ‘production not only creates objects for the subjects, but also creates subjects for the objects’. [10] Under the rule of international finance capital, capitalism creates new financial commodities to vastly enlarge speculative avenues for profit maximisation. One of these that has played havoc and generated the current crisis is the trade in ‘derivatives’. [11]

3.8   It is this pathological drive to maximise profits at any cost, the inherent character of the capitalist system – and not the individual greed of some or weakness of regulatory mechanisms – that is the root cause of the present crisis.

3.9   If profits were reemployed into enlarging productive capacities, then through the consequent employment generation, the purchasing power of the people would grow leading to larger aggregate demand, which, in turn, would give a further impetus to industrialization and growth of the real economy, i.e., accumulation through expansion and, thus, appropriation. The gigantic accumulation of international finance capital, however, in its search for super profits continuously seeks new speculative avenues for profit maximization beyond this process.

3.10   Therefore, under globalization, with sharp decline in the purchasing power in the hands of the majority of the world’s population, finance capital, in its eagerness for quick profits, chooses the speculative route of artificially enlarging purchasing power by advancing cheap (subprime) loans and creating speculative ‘bubbles’. Profits are made while these loans are spent but when repayment is due comes default, ruining the loan taker and also crippling the system. This is precisely what happened on a gigantic scale resulting in the current global capitalist crisis.

3.11   In the absence of a powerful political alternative, capitalism will emerge from this crisis but at the expense of further intensifying exploitation and through the process of intensifying primitive accumulation. This manifests in the current imperialist aggressiveness in all spheres.

3.12   It is precisely such a process of recurring crises that is unfolding. As is the nature of the capitalist State, it sought to overcome this crisis by giving bailout packages of staggering amounts to those very financial giants who, in the first place, caused this crisis. This inevitably permitted these financial giants to stage a resurrection and massive profit generation [12] while imposing crippling burdens on the governments of capitalist countries who had to resort to large-scale borrowings to finance such bailout packages. True to its character, capitalism has safeguarded, in fact expanded, its avenues of profit generation while creating huge sovereign debt. Corporate insolvencies, thus, have been converted into sovereign insolvencies, affecting many countries of the European Union as well as the USA itself.

3.13   The burden of these sovereign insolvencies, again true to the nature of capitalism, is being passed on as unprecedented burdens on to the working class and working people. [13] In the name of reducing expenditures to meet the repayment of this debt, ‘austerity packages’ that drastically cut the existing benefits and rights of the working class and the working people are being imposed. Thus, once again, capitalism is seeking to emerge from this crisis by intensifying the exploitation of the people.

3.14   This very effort by global capitalism, in itself, is laying the seeds for a much deeper crisis that has already set in. With such austerity measures which sharply increase unemployment and drastically reduce the purchasing power of the people, recessionary conditions are getting intensified. [14]

3.15   However, as noted earlier, irrespective of the severity of the crisis, capitalism never collapses automatically. Recollect Marx’s analysis that capitalism emerges from every crisis stronger by destroying a part of the productive forces to restore the balance between the development of productive forces and the existing production relations under capitalism. This is a process that further intensifies exploitation.

3.16   Capitalism, therefore, requires to be overthrown which decisively depends on the strengthening of that material force in society led by the working class which can mount, through popular struggles, the intensification of the class struggle to launch the political offensive against the Rule of Capital. The building of this material force and its strength is the ‘subjective factor’, the strengthening of which is an essential imperative. The objective factor – the concrete situation of the crisis – however conducive it may be for a revolutionary advance, cannot be transformed into a revolutionary assault against the Rule of Capital without the strengthening of this ‘subjective factor’.

3.17   Various intermediary slogans, measures and tactics will have to be employed by the working class to sharpen class struggles and to meet the challenges of these real conditions in order to strengthen the ‘subjective factor’ and, thus, advance the process of revolutionary transformation in their respective countries.

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