PHIL HEARSE looks at prospects for the next year and argues that among the main factors determining world politics will not just be the coming war on Iraq, but the accelerating slide of the world economy from recession to slump. This is creating desperate battles over living standards worldwide.
The Wall Street stock market crash T nine se pared it has e
minor blip compared with what is happening in the world economy now. By late 1988 share prices were back to their 1987 level. The present crisis of the world's stock markets has lasted already two and a half years with no end in sight. It could be another decade before market prices reach their year 2000 levels; for certain it won't be in the next couple of years. This is already having dramatic effects on the level of world economic activity.
A vivid example of what's happening is California. The collapse of the Dot.Com economic bubble has ravaged the state's tax revenue. Tax revenue on capital gains and stock options have gone down from $1 7billion to $6 billion in two years. The result is public sector catastrophe. Plans are being made to fire 35,000 teachers; hospitals are
We're STILL waiting
NUT for our Not what ministers wanted: firefighters and London teachers linking up on pay already closing in poor areas and schools will follow. Funds for the University of California are being cut by $75million, and public schools by $2 billion.
The effects of recession are leading to attemps by governments and
the dominant sections of finance capital to turn the screw on workers by deepening neoliberal reforms. This in turn is leading to a wave of working class strike struggles across Europe, of which the UK firefighters' battle is just one example
Bankruptcies in Britain increased by seven percent last year as company profit levels wavered. Christmas consumer spending is likely to show a decline of 5-7%. Even rises in house prices are levelling off.
Over the next year the decline in economic activity and profits will put pressure on two things the government has so far held the line on: public spending and unemployment.
Gordon Brown says taxes will rise, and doubtless they will, but with company profits falling tax rises won't cover the gap; the scene is being set for a freeze on public sector pay, yet more privatisation and accelerating cuts. Over the last year employers have held the line on private sector pay; now the government is certain to try to do the same in the public sector, leading to more clashes like the firefighters' strike.
As its profits are squeezed, finance capital tries to defend itself through more and ... • The scene is being set for a freeze on public sector pay, yet more privatisation and accelerating cuts. ..... ... more open robbery. Over Christmas banks and building societies raided the accounts of millions of customers, slashing their interest on savings accounts without even telling them in advance!
Workers' pension funds are being devalued, closed down or stolen. This is yet another nasty import from Bush-era America. The spivs of finance capital are not just Enron and WorldCom, but a host of 'respectable' British companies like financial giant Prudential which are closing their pension funds to new entrants, or others which are revoking the final salary provisions, impoverishing millions of soon-to-beretired workers at a stroke.
Neoliberal capitalism wants to privatise risk. Workers will have to pay in more for pensions, health and social security, with no guarantee of what those payments will bring in the future.
Workers are told: pay more, but it's all a gamble. At the same time, bosses of major companies are giving themselves not only massive pay increases but substantially boosting their pensions packages to ensure Fiat empire. Their resistance may have prompted the Berlusconi government to mount some form of rescue package. themselves against future turbulence in the world economy.
And why shouldn't they? After all, just four months ago the House of Commons voted for a major refinancing package to protect the pensions of MPs!
At last the issue of pensions is being taken up by trade unions. Together with battles over pay and conditions, this is another issue which will help undermine support for Blairism in the coming period. Labour retains its position in the opinion polls because the Tories are even more discredited and the Liberals politically weak and indecisive.
Hints of corruption also damage the Blairites. The 'Cheriegate' affair at the end of last year was not a diversion or apolitical, it represented the infatuation of the central Labour leadership with wealth and luxury, an inevitable spin-off from their pro-business positions and their gormless infatuation with wealthy business people and celebrities who make up their chosen milieu. Danger of Racism
Economic recession, disillusionment Tand the crisis of the main political parties is, together with the incredible racist campaign over asylum seekers, creating a fertile ground in some sections of the middle class and among sections of marginalised workers for racism and the fascist BP. A sense of proportion has to be kept about this.
We are not anywhere near the same level of influence of the far right as in France or Italy, but there are dangerous signs in the electoral scores of the BP, especially in some Lancashire towns.
In 2003 this is going to impose important responsibilities on the left. In the last analysis only the building of a socialist alternative, together with class struggle, is going to act as an alternative pole of attraction to the fascists.
This is not just a question of the building of socialist organisation, but also of the abiliSE ty of the most radical wing of the working class to exert its political weight in society through mass social struggles over living conditions. Imperialist frenzy
It is likely that nothing can stop the
unleashing of war against Iraq in early
12003. It is impossible to predict whether a new range of rumoured science fiction-like superweapons is going to give the US a very rapid victory, or whether there will be a prolonged and bloody house-to-house battle in Baghdad
What is more certain is that this war will mark a turning point in world politics in a way the last Gulf War did not. While Gulf War I could be presented as an attempt to "liberate' Kuwait, the new war is not just about regime change, it is the first step on a new crusade of open imperialist war and occupation on a scale not seen in 60 years.
America wants to occupy Iraq for at least five years with a military governor. This is the new era of open imperialism. The whole verdict of the post-second world war de-colonisation and national liberation struggle is being put in question.
The present US administration has aban doned the idea that American hegemony can be sustained by 'soft' power alone - the power of business, of Hollywood, of the attraction of the American 'model'. 'Hard power, military power, is in charge. The Cheney-Bush-Rumsfeld-Rice-Wolfowitz. Perle leadership team is making an enormous gamble by adopting the philosophy of Millwall football supporters and East End gangsters - "Everybody hates us, we don't care".
This philosophy says military power determines everything and can always turn the political relationship of forces in your favour by using military power. Not a single lesson of history sustains this view in the long term.
Now a prolonged battle against imperi alism and militarism is being opened uf
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