Inflation, Instability, and Insurrectionary Movements: The “New Normal” for World Capitalism

The pandemic has sharpened and deepened what was an already existing crisis of capitalism. We are now facing the deepest social, economic and political crisis in decades. Despite a certain recovery, the measures the capitalists were forced to take in the last period (i.e. massive amounts of state spending) are now being felt in rising inflation, resulting in a growing cost of living crisis that is provoking resentment and instability all over the world.

People are angry, and the rotten establishment is discredited at every level. Class struggle and radicalization are on the order of the day. The following is a transcription of a speech delivered in February 2022 to the leadership of the International Marxist Tendency, outlining the main perspectives in world politics.

We’re living in truly interesting times. We’re living in a world in turmoil. It seems to be chaotic. People look around and ask: where is this leading to? No matter who you talk to, there is a sense of deep concern about what’s coming next. Some people think this is an indication that the end of the world is coming. But the truth is, that it’s not the end of the world. What is happening is that we are moving towards the end of the present form of society. It’s going to be a very turbulent end, and drawn out over a long period of time.

It’s a privilege to be a Marxist today, to be a Marxist in these interesting times. They’re not just interesting times, however. We can say that our time is coming. This is a period of history in which the ideas that we struggled to defend against the stream in the previous decades will become the most logical ideas. Everywhere you look, you see the impact of the crisis of capitalism, at every level of society, in all countries. We are fortunate to have this marvelous tool called Marxism that gives us the ability to understand why this is happening, and explain it to others.

We must begin by saying that the system didn’t enter into crisis because of the pandemic. Prior to the pandemic, in our articles, we were analyzing a system that was already entering into a serious crisis. What the pandemic has done is to accelerate, deepen, and sharpen the basic contradictions in society, producing a steep downturn in the economy. Of course, after every crisis there is always a recovery. There’s no such thing as a permanent recession. That’s not the point, however, for what we have to look at is the general health of the system as a whole even when it’s going through a recovery. Inevitably, once the last of the lockdown conditions start to be lifted there will be recovery in the economy to a certain degree. In Italy they had 6% growth last year—Chinese levels! You’d think from this that Italy has solved all its problems now. But it’s the exact opposite, it is in a deep crisis in spite of the growth.

marx Image Dirk Liesch Wikimedia Commons
We are fortunate to have this marvelous tool called Marxism that gives us the ability to understand why this is happening, and explain it to others. / Image: Dirk Liesch, Wikimedia Commons

What goes up must come down, and inversely, in economic terms, when things go down they must come up. This is normal and to be expected. But what is this recovery bringing? Apart from the fact—all the available figures show it—that it’s already slowing again, we already see this new element which the younger generation isn’t used to, inflation, which is taking off everywhere, together with a reversal of economic policy in the increase in the interest rates, and an explosion of debt. The fact is that a lot of countries, although they have technically recovered, are not yet back to their pre-crisis levels.

For the past 20 years, global debt has been growing at twice the rate of world GDP. We’ve now reached a situation where global debt is 355% of world GDP. Such is the situation that, last year alone, $11 trillion was paid in interest on the debt, which is the equivalent of four or five times the GDP of a country like Italy. Now, all this happened on the back of very cheap credit. In effect, capitalism has been living on borrowed time for the last two decades or more. The cheap credit was fueling booms. Now the epoch of cheap credit is about to end. And the capitalists are facing a huge dilemma.

All the predictions of the World Bank and IMF indicate that, over the next two to three years, although they predict growth, the rate of growth will be slowing down year on year. So precisely at the moment when they need policies to stimulate growth, because of inflation, because of the “solutions” adopted in the previous period, they have to follow a policy that could slow down the economy even further. China, for example, is expected to grow at 5%, which is bad news for the Chinese regime. A World Bank report on the general state of the world economy, published in January, says “social tensions may heighten as a result of the increase in inequality caused by the pandemic.”

“Recovery,” but at what price?

Now, with this so-called recovery, in many countries there has been a certain fall in unemployment. But, for example, in Italy, the huge majority of these jobs are temporary or on short-term contracts. However, the main point is this: when workers are getting jobs, when there’s an increase in job availability, as we’ve seen in the USA, it’s not necessarily a negative thing from the point of view of the class struggle. Trotsky explained this, and this has a bearing on the preparedness of the working class to enter into struggle in the coming period. When you have inflation putting pressure on the purchasing power of wages, with the workers feeling stronger, it’s a finished recipe for class conflict.

As Lenin explained, capitalism can always find a way out of a crisis, but the question is: at what price? The capitalist system is emerging from the crisis of the pandemic, but with massively increased debt, particularly public debt which has grown massively everywhere, and inflation. These are the consequences of their “solution” to the crisis they were in.

istanbul strike Image Disk Twitter
When you have inflation putting pressure on the purchasing power of wages, with the workers feeling stronger, it’s a finished recipe for class conflict. / Image: Disk, Twitter

When I was preparing this lead off the level of Turkish inflation was 36%. Today, in the FT they pointed out it has reached almost 50%; in Russia, 9%; Spain, 7%. In Britain it’s over 5% and at the highest level for the last 30 years. But if we look beyond the advanced countries, in Nigeria it’s almost 16%, in Pakistan it’s 13%. And they’re expecting this level of inflation to stay high at least for the next couple of years. In reality, they don’t know how long it’s going to last.

The ruling class is sitting on a time bomb with this. I’ll touch briefly on the events in Kazakhstan. Kazakhstan came as a warning earlier in the year. In all countries, you will find interviews with working-class families who will explain how difficult it is to get to the end of the month. And it’s not just the poorest, or the lowest levels, the whole of the working class is suffering. In Britain, they’ve calculated an average family will lose £1,200 of purchasing power due to inflation. You can find similar figures in all countries.

There is food price inflation, which is particularly severe. Let’s not forget that a strong factor in the Arab Spring of 2011 was precisely massive increases in food prices. And again in 2019, we had a wave of protests in many countries precisely over this question.

To conclude on the general economic situation, I can quote the director of the ILO, Guy Ryder who said: “The growth in inequality created by the COVID-19 crisis, threatens a legacy of poverty, economic and social instability that will be devastating.” That is what is coming!

It is in this context that we have to view the events in Kazakhstan. (We have some excellent articles on those events, so there is no need to go into detail). What triggered the movement was the increase in the price of gas and energy. This came off the back of 9% inflation and the increase in the price of food of between 13-18%.

The factors that provoked the movement in Kazakhstan exist in every country in the world. See what happened! It began in one region and spread across the whole country becoming a powerful movement, with street battles with the police and military. This was a genuine movement of the working masses. We had oil and gas workers participating; miners and metalworkers. The oil workers were demanding a 100% increase in wages. Classical demands of the working class came to the surface. In the region of Mangystau, there was a general strike.

What we saw in Kazakhstan was the power of the working class. It really posed a crisis for the regime. It was of a semi-insurrectionary character, taking over airports and police stations. But there was no leadership and we see what happens when this is the case. The regime initially made some concessions and then hit hard. They called in the help of the Russians also to suppress the movement. But the problems that provoked that movement have not been solved. The situation should be used as an example to highlight two important points: one, the power of the working class, but also what happens when there is no leadership. The serious analysts of the bourgeois were very worried when they saw these events as they understood what we Marxists understand—but from the point of view of their own class interests.

Class struggle and conflict

The perspective, however, is not just one of intensified class struggle everywhere, but also of growing conflicts between the different capitalist powers. It is logical: every capitalist power, in order to solve their own crisis, must export their problems. The tendency towards growing protectionism means each national capitalist class is trying to protect jobs in their country at the expense of jobs elsewhere, and more importantly, to protect their markets, while conquering other markets for their exports.

The present situation explains why all the powers are developing a more aggressive foreign policy. This must bring them into conflict at different points around the globe. The Ukraine crisis highlights that. We’ve seen NATO, which has slowly been encroaching on Russia’s historical sphere of influence ever since the collapse of the Soviet Union, getting closer and closer to Russia’s borders. If Ukraine joins, that means a border right on Russia’s western flank.

map ukraine biden putin Image In Defence of Marxism
The present situation explains why all the powers are developing a more aggressive foreign policy. / Image: In Defence of Marxism

This comes at a time when Russia has regained its feet, regained its balance. I was reading a report that outlines how the Russian military apparatus has been massively modernized, and has become far more efficient in recent years. Putin is now using the muscle he has built up. He wants to push NATO back, and Ukraine is the place where this is happening. The propaganda in the west is that NATO spreads democracy and human rights. Marxists are not fooled by the propaganda of the bourgeoisie who are always shifting the blame. From a Russian perspective, there is this massive NATO alliance that is threatening them in their own backyard. ‘Who is to blame’ is a silly question that we’re not interested in.

The most likely perspective is that Putin, while he is upping the stakes, and pushing to the limit, he is doing so in order to negotiate. However, it is not completely excluded that he could carry out a short, limited intervention. It’s not the most likely outcome, but it could happen. However, Putin has other cards up his sleeves. Russia supplies to the European Union 40% of its gas. This is particularly important to Germany, which also explains why Germany is not so keen on US foreign policy in Europe.

Putin can see the divisions inside Europe. Boris Johnson, who also needs something to distract attention from his domestic problems, flies off to the Ukraine and makes a big show of support, whereas Italian premier Draghi calls Putin on the phone to be reassured that Italy’s gas supplies will not be cut off. I suppose that’s the difference between the brain of a banker and the brain of a buffoon. Nonetheless, there is a real conflict here. But the consequences of outright war would be an absolute disaster for the world economy. There are plenty of articles in the serious bourgeois press that comrades could read about the economic consequences of such a war.

The severe sanctions the Americans are threatening to impose would have a huge impact on the world economy, and would add to the factors that would slow the world economy to a degree. The crisis in the Ukraine is a reflection of the global crisis of capitalism. It’s an indication of the growing tensions between the powers. It reveals the growing divisions between the European Union itself. It underlines the increasing divergence between the USA and Europe. It is also a reflection of the relative weakening of US imperialism globally. But it’s also an indication of Putin’s internal crisis in Russia itself. His popularity ratings are falling. Inflation is high and poverty is growing in Russia.

Persistent pandemic and polarisation

I don’t want to spend too much time on the COVID pandemic, although it’s an important element in the situation. Many countries are lifting their restrictions, but the WHO has issued a warning that the pandemic is “nowhere near over.” In just one week, Omicron led to 18 million new infections globally. They are hoping that Omicron, seemingly less aggressive, will be less of a problem. However it’s also more contagious, and now there is Omicron 2, which is even more contagious.

It may well be that the virus is transforming, and becoming more and more endemic, a kind of new strain of flu as people are hoping. However, it is still early days and nobody can guarantee that what the world has suffered in the last two years couldn’t happen again, given the conditions of capitalism.

Wanted An honest weeks pay Image brewbooks Wikimedia Commons
In the US we’ve seen precisely what I said before: with the pandemic there is huge demand for wage increases in many sectors. / Image: brewbooks, Wikimedia Commons

The effects of Covid, however, go beyond the immediate impact on people’s lives. It has created problems for the system, not just in terms of the economic dislocation. It has exposed the system in the eyes of the masses. Large layers of the masses no longer trust the governments and the establishment and what they are doing.

For example, the present crisis in the British government stems directly from how the people at the top behaved during the lockdown. While people couldn’t visit their elderly relatives who were in homes or hospitals, Boris was having parties in Downing Street. Every now and then of course some Tory who decides to film these events leaks them to the press, with the clear aim of discrediting Boris Johnson for their internal factional purposes. The image of the government now is that while they told people to stay at home they themselves were having a good time, and they don’t care about ordinary people. That is the message that is getting to the masses.

Now of course there is the added problem of who is going to pay for the economic consequences of the pandemic. There’s huge growth in public debt, and someone is going to have to pay for it, and that is going to be the working class. We see it in the nurses’ protest for example. Nurses are saying that, “during the pandemic they were applauding us, but when it comes to asking for wage increases, the government is offering miserable wage increases to the health workers.” This is an element that will continue to play a role in the growing conflict.

We cannot deal here with all the countries of the world, but we can look at a few to underline the general processes taking place. In the US we’ve seen precisely what I said before: with the pandemic there is huge demand for wage increases in many sectors. In the private industrial sector we saw wage increases of 4% last year, which were the highest in 20 years. The problem is that inflation in the US is at 7%, not 4%. The rate of inflation is at the highest it has been for the last 40 years. This is a recipe for class struggle. We saw that in this wave of strikes in the US last year.

We’re seeing this in one country after another—something similar is brewing in Britain. It is worth noting that in the US only 11% of the workforce is unionized. I saw an article in the FT analyzing the British trade union situation. The conclusion of the article is that because trade union membership is about half of what it was in the 1970s, we’re not going to have the same level of strike activity as we saw in the ‘70s. They should remember that May ‘68 took place in France with an even-lower level of trade union membership. It doesn’t depend on how many people are in a union. It depends on the anger of the working class and its preparedness to fight. In America, in one opinion poll I saw, 65% of Americans approve of trade unions. That’s the highest figure on that question since 1965. The youth are even more radical on this question. In the age bracket between 18 and 29 years of age, 78% approve of trade unions in the US. That highlights what is happening in the working class.

I’d like to finish on the USA with an interesting comment. Barbara Walter, a professor at the University of California, has written a book about how civil wars start. She analyses the experiences of Burma, Northern Ireland, Rwanda, Sri Lanka, Syria, Yugoslavia, and she finds the common elements. And the interesting point is that she finds the same elements in the US today. Of course, she offers no solution to the problem. What she is actually talking about is the intensifying class struggle in the US.

China is the second power behind the USA and the expected 5% growth is a significant slowdown compared to what it used to be. And this is leading to serious commentators talking about the growing threat of internal instability in China. This concern about China’s internal problems has led to the centralizing of power in the hands of Xi Jinping, combined with a much more aggressive foreign policy. China has clashed with Australia, and has claims over the South China Sea. It has had conflicts with Japan, and with India in the Himalayas. They are constantly threatening Taiwan and they have taken a very aggressive stance on Hong Kong, which they are absorbing into China.

It is precisely the huge economic development in China over decades that has led it into conflict on a global level with the USA. Xi Jinping is concerned about global issues but he’s also concerned about internal problems. The growing wealth gap in China is actually one of the most extreme in the world. Xi Jinping is very aware of this. He is very concerned about what the social polarization in China can lead to. And he’s also looking at a severe financial crisis. We see that for instance in the example of Evergrande. The housing industry in China represents 30% of GDP. Evergrande is one of the biggest property developers in the world. And with its $300 billion debt, it’s a threat to the Chinese economy and therefore to the world economy.

I’ll just quote the report I found from the Atlantic Council, produced in December. Referring to China it said this:

“It could face substantial social unrest that would undermine the government’s hold on power. How China manages these sweeping challenges will also affect how it deals with the world and whether its economy is a driver or a drag on future global growth.”

Here we see how China, from being a locomotive, has become another factor which could drag down the world economy.

Us and them

Going back to Russia and the problems Putin is facing: unemployment in Russia is growing. It’s at the highest in 8 years. Real incomes are falling, inflation is at 9%, and Putin’s popularity ratings are at the lowest level since 2012. As we have seen, that is an important element in explaining Putin’s foreign policy. Thus, both Russia and China, which are important powers, are elements for greater instability. They are not elements for greater stability on a global scale. And both countries could contribute to putting a brake on the global recovery.

While America puts pressure on Russia, China is supporting Russia over the Ukraine. It has the same enemy: the USA. China has its conflicts in the Pacific with the USA. It has its aggressive stance towards Taiwan, and therefore it has, on this question, similar interests to Russia.

Il Presidente del Consiglio incaricato, Prof Mario Draghi al termine del colloqui con il Presidente Sergio Mattarella,al Quirinale,comunica la lista dei Ministri del nuovo Governo.(foto di Francesco Ammendola - Ufficio per la Stampa e la Comunicazione della Presidenza della Repubblica)
The question is: How do you govern a country like Italy, apply these policies and at the same time avoid the class struggle? / Image: Presidenza della Repubblica, Wikimedia Commons

In Europe, Italy we’ve always said is the weakest link in the EU. It’s the third economy in the Eurozone, after Germany and France. When I was in Italy recently, the running joke was “we just have to do what we’re told now,” because the “Europeans”—which means the Germans and the French—have given us billions of euros, they decide what our country does. As part of the so-called EU Recovery Plan, which is injecting billions into the EU economy, Italy is getting nearly 200 billion Euros. Of course, the ex-governor of the ECB is the Prime Minister of Italy, and he is there to make sure that the policies are carried out. The problem is that there is a growing, massive distance between the world of politics and the conditions of millions of people.

What we have in Italy is a government of national unity. Everybody is in there apart from the far-right Brothers of Italy. The farce over the election of the new President is emblematic of the situation. For a whole week members of Parliament and Senators abstained day after day. This was actually a huge political crisis because they need a man of authority, who can hold the whole situation together as they apply the program of the EU to Italy. The authority of all these politicians has not been increased by these events.

This is a common element in many countries: that the people “up there” don’t represent us. The question is: How do you govern a country like Italy, apply these policies and at the same time avoid the class struggle? I heard comments during the Kazakhstan events such as “They know how to fight!” I heard similar comments during the Gilets Jaunes movement in France: “The French, they really know how to fight!” Kazakhstan exploded in a situation very similar to what we have in Italy. Italy will be hit extremely hard by the increase in energy prices. It’s not by chance that Draghi rang Putin more concerned about the gas supply than the situation in Ukraine.

Germany, according to the FT, from being the economic locomotive of Europe could become Europe’s laggard. Germany is suffering from weaker household spending, and industrial production is still well below what it was before the crisis. China is Germany’s second export market after the US and a slowdown in China would have serious consequences for Germany. And a slowdown in Germany would have huge consequences for the rest of Europe. One can see how all of this is coming together in a general crisis.

What’s happening in Britain highlights the same process you see in all other countries. We saw the biggest collapse in the economy for 300 years, aggravated by Brexit, with shortages of truck drivers and care workers, and shortages of food items in the shops. There is also the unresolved problem of Northern Ireland. A Northern Ireland minister has recommended blocking checks on imports of agricultural products from the rest of Great Britain, which breaks the deal made with the EU. In Britain we have a government in crisis.

There is one thing Boris Johnson is really good at—brazen lying in front of millions. He can’t even remember if he attended a party in his own flat. And this is being observed by millions of people in Britain. The mood is an angry one, and millions are thinking “this is how they behave when millions are in serious trouble.”

He’s living on borrowed time now, and hasn’t got much left. The tragedy is that Labour is behaving truly like her majesty’s loyal opposition. When you have a Tory who can cross the chamber and go from being a Tory to Labour, after voting for hundreds of measures of this Tory government, and Starmer welcomes him in, it goes to show how far right Starmer has shifted the party.

While all this is happening at the top, we need to look at what is happening in the working class in Britain. We have a new General Secretary in Unite: Sharon Graham. She published an article in Tribune on December 30, in which she said: “we must build popular, working-class power.” How often do you hear a trade union leader talking about “popular working-class power?” In what other country can you find a trade union leader who has said this in the recent period? This is an expression of the anger from below, in the working class. This union is involved now in more industrial disputes than in any time in its history. And she said: “there is no Westminster hero coming to save us”—I suppose that means Corbyn is no longer there—and then adds, “we must do it ourselves.”

Workers on the move

Here we see the working class passing from the political front to the trade union front. In the last period the working class in Britain tried to express itself through the Labour Party and through Corbyn. Half a million people joined, many of whom have now left. But they haven’t disappeared! The anger and radicalization that was expressed through Corbyn is now being expressed on the industrial front.

In MoneyWeek, a financial magazine, a humorous article was published in January. It had a title: “Ask for a pay rise: Everyone else is!” There was a photograph of a demonstration, of workers holding a banner with the words “We can’t afford to strike,” then underneath “We can’t afford NOT to strike.” The whole article was about joining unions, and the growing militancy that is emerging. This is now being expressed in strike ballots in many, many sectors in Britain which will lead to a wave of strikes at a certain stage.

we cant afford Image UCU Twitter
The anger and radicalization that was expressed through Corbyn is now being expressed on the industrial front. / Image: UCU, Twitter

What would be pointless at a moment like this would be a discussion on where the left wing is going to appear in the mass parties. We saw Podemos, we saw Syriza, we saw Melenchon in the past giving a partial expression to the radicalization to the left affecting millions of workers and youth. But because they all had a perspective of attempting to reform the system, of applying policies that are compatible with the capitalist system, all of them were forced to shift back and abandon their previous militant rhetoric. This means that in the coming period we will see the anger of the workers and youth expressed in strikes, demonstrations, street protests and so on.

The bourgeois, however, would like to go back to normality. But what kind of normality is waiting for them? It’s going to be: inflation, slowly pushing up the rate of interest everywhere, which in turn would have the effect of slowing down growth. There are other factors on a global scale that could put a further brake on economic growth, from a slowdown in China to the impact of possible sanctions on Russia, and so on.

The deepening crisis of the economy everywhere is also producing a crisis of the regime. This is the case in practically every country. In Italy this was very clear during the crisis that the parliament faced in electing the president. They just couldn’t come to an agreement and this has exposed the state institutions in the eyes of the masses. In Britain we have the crisis of the monarchy with Prince Andrew facing trial, not long after Prince Harry had earlier left for America, accusing the rest of the royal family of racism. The police in Britain have been involved in one scandal after another. In the United States we saw the recent inflammatory speeches of Trump, where he said he’d pardon the people that attacked the Capitol building in Washington, D.C last year, which further underlines the crisis that is going on there.

The lifting of the Covid restrictions is going to be like taking the lid off a pressure cooker. The working class is going to put its stamp on the scene, and the youth will be in the lead. In Italy we have the school student movement taking place, which has been brutally baton charged by the police in Rome and in Turin and this is going to have a radicalizing effect on the masses. This movement of the youth is simply an anticipation of a bigger movement by the working class.

Our perspectives are full of optimism, comrades, because we can see what is being prepared in the depths of society. If one looks at the rest of the left, the reformists and so on, one sees how they are so pessimistic. There seems to be no way out for them and that is because they are completely out of touch with the real processes taking place. We are not pessimistic because we can see what is being prepared and we understand where all this is leading, to a movement of the working class and youth globally that we have not seen for decades.

We have clear perspectives.But clear and correct perspectives by themselves don’t solve the question of building the Marxist tendency. Perspectives are a guide to action, a compass, that can help us to understand where the process is heading. But we must also highlight what our tasks are in these times.

Everywhere you can touch it with your hands, extreme radicalization. In Italy right now, for example, there is a layer of young people that have decided they are for revolution and they are looking for a revolutionary organization. With our theory, we can win the best of these youth, organize them and turn them towards the working class as a whole. If we do our work properly and build up our forces sufficiently, then the times we live in will become truly interesting. We must imbue every comrade with a sense of urgency, and an understanding of the role the Marxists can play in history if we build our forces, if we prepare before the big events unfold.


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