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From The Socialist newspaper, 10 January 2003

TONY BLAIR'S gloomy New Year forecast of 'war, terrorism and a faltering world economy' is a ringing indictment of the capitalist system he supports. He concedes that resolving this "insecurity" depends on his government's policies.

But as HANNAH SELL, BILL MULLINS, JANE JAMES and DAVE CARR show in the following articles, Blair and the ruling classes of the major powers are instead driving the world to disaster.

Only a socialist alternative can avert Blair's doom laden scenario.

World Economy: The Crisis Deepens

IN THE 1990s the capitalists believed they'd reached nirvana. Rolling in unimaginable amounts of wealth, they thought it would carry on for ever. Now reality has shattered their illusions. Capitalism remains a blind, crisis-ridden system.

Britain won't escape unscathed. New Labour claimed they'd eliminated 'the boom and bust' cycle of capitalism. Now Brown has had to eat his words, admitting that the world is suffering the worst downturn since 1974 and that workers in Britain are going to suffer the consequences.

The economist John Gray wrote recently: "The bone-shaking volatility of market capitalism - has not changed. On the contrary, it has returned with a vengeance. Global capitalism is probably as fragile today as it has been since the 1930s." As a result Bill Gates alone has lost $42 billion over the last three years. Nonetheless, with $43 billion left, Bill is still the richest person in the US!

It's a very different story for 1.4 million US workers who've lost their jobs since March 2001. Or for the Argentinian masses who have seen their economy contract by over 15% during the last two years in a catastrophic economic collapse.

In a previously relatively wealthy country half of its 36 million population can no longer afford basic food and household supplies. And Argentina's crisis may not be exceptional. Other countries facing the possibility of a virtual meltdown include Brazil, Latin America's largest economy. On average, Latin American countries' economies contracted by an estimated 1.1% in 2002.

This economic crisis in the major imperialist powers is far from over, but as the last two years have shown, the heaviest price of all will be paid by the oppressed of the neo-colonial world.

Multinationals are never motivated by philanthropy when they invest in the world's oppressed countries. In the last decade the major powers, in particular US imperialism and its tools - the World Bank and IMF - brutally tightened their screws on the neo-colonial world.

However, there has been some investment in a few neo-colonial countries, although largely of a speculative character. In the last two years even this is drying up. In 2001 there was a 40% collapse of capital flows from the advanced capitalist countries to the so-called 'emerging markets'.


THREE MAJOR world players - the US, the European Union and Japan - are responsible for 72% of world output. They are all in a sorry state.

The Organisation for Economic Co-operation and Development (OECD) estimates that total domestic demand will grow next year by only 2.8 % in the US. This compares favourably, however, with the Eurozone's 0.4% growth and with Japan's 1.4% contraction of demand.

Martin Wolf in the Financial Times, commenting on prospects for a world recovery, said: "Nothing can be expected from Japan, even in the medium term." Japan has suffered a decade of stagnation interspersed with recession.

In recent weeks commentators had begun speculating listlessly that maybe Japan was crawling back from recession to stagnation. Those hopes are now dashed. Peter Morgan, economist for HSBC in Tokyo explained: "We believe the latest recovery has already ended, making it the shortest on record."

Nor could the Eurozone kick-start the world economy. Germany, responsible for 35% of economic activity in the zone, contracted by 0.8% last year and is expected by the OECD to contract by a further 1.1% this year. The recession in Germany and weak growth in the other Eurozone countries will inevitably put the Euro currency under pressure.

For the second half of the 1990s the US, an economic giant responsible for over a third of world production, was a massive prop for the world economy. Early in 2002 it seemed that the US economy was recovering from recession and might once again prop up the world.

However, The Socialist argued that this was likely to be a 'dead-cat bounce' and that the economy would lapse back into recession. Economic commentators are now forced to the same conclusions. As Larry Elliot explained in The Guardian:

"The US - linchpin of the world economy - had a storming start to 2002, but gradually the impetus has petered out as the legacy of the bubble economy of the late 1990s - over-investment, weak profitability and an overhang of debt - has put the brake on growth. Unemployment is rising, the manufacturing sector is contracting and, despite its recent strong rally, the stock market has taken a fearful hammering."

Intractable problems

GEORGE W Bush, desperate to prevent the economic situation getting worse, has fired the Treasury secretary, Paul O'Neill, vainly hoping that a new face would find a new solution to his problems.

The memory of Bush's father, who won the last Gulf War only to lose the presidential election, largely because of the state of the economy, is burned on his brain. However, Bush's room to manoeuvre is limited. The economic problems today are far more intractable than those of the 1990-92 recession, which his father failed to prevent.

The US economy has only been rescued by continued consumer spending. This has been based on debt and is unsustainable. Personal debt is now at a record level of 131% of disposal income. There now seem to be signs that consumer spending is slowing down.

The US preaches neo-liberal orthodoxy to the rest of the world but shamelessly ignore it themselves. The Bush government's response to the crisis has been to pump liquidity into the economy by cutting taxes, lowering interest rates, increasing military spending etc.

However, as Japan so graphically shows, these measures are not guaranteed to succeed. Japan has been pump-priming its economy for a decade without success.

It's not possible to say how deep or long-lasting this recession will be. Events such as war in Iraq resulting in an oil-price spike and huge political instability; further dramatic declines on the world stock markets; or the dollar going into freefall could precipitate a devastating crisis.

The best that capitalism can hope for in the foreseeable period is one of stagnation, rising unemployment, and worsening living standards for much of the world's population.

But the attempt of the capitalist class to off-load the burden of their failed system onto the backs of the working class will provoke a mighty fightback. The recent industrial struggles and general strikes in Europe, Latin America etc, are a foretaste of things to come.

Mass Opposition To War On Iraq

WE ARE faced this year with the likelihood of a war against Iraq. Thousands of US troops already stationed in the area are soon to be joined by British forces. Meanwhile, the bombing of Iraqi air defence systems is increasing.

The consequences of such a war would be horrendous with thousands of Iraqis being killed and injured, the surrounding Middle East states in turmoil, resulting in more terrorist attacks and growing support for right-wing Islamist groups.

Tony Blair is proud to be seen as George Bush's closest ally in the United States so-called 'war against terrorism' even though the US calls all the shots. Since 11 September 2001 the US has gone on the offensive in proving its military, economic and political power in the world.

Nevertheless, both Bush and Blair have faced difficulties in pursuing their aims not least from the huge anti-war protests worldwide.


THE US ruling class will attempt to dominate any state that won't comply with its imperialist agenda. Iraq as a 'rogue state' is therefore likely to face a terrible onslaught.

A 'regime change' would also allow the giant US energy corporations that bankrolled Bush's presidential campaign to exploit Iraq's vast oil reserves.

However, lesser rivals to the US 'mega-power' such as France, Russia and China - who have already agreed oil and trade deals with Iraq - are opposed to US unilateral military action against Saddam. They fear the loss of important economic interests and political influence in the region.

So, while the more hawkish wing of the US administration wants immediate unilateral action against Iraq, Bush appears to have accepted the advice of Colin Powell (secretary of state) to 'legitimise' a war through the United Nations (UN). However, the agreed UN security council resolution 1441 (which allows weapons inspectors back into Iraq) contains so many 'trip-wires' to trigger a "material breach of Iraq's obligations" that an eventual US-led war seems extremely likely.

But the capitalist classes face huge risks in attacking Iraq. Not least, the repercussions on US and Western interests throughout the Middle East and the Muslim world.

The poor masses of the region, already seething over US backing of Israeli prime minister Ariel Sharon's repression of the Palestinians, could easily rise up and overthrow the weak and rotten pro-Western Arab regimes. However, in the absence of a mass workers' alternative fighting for socialism, such uprisings could easily result in even more reactionary, clerical regimes.

The world economy, already fragile, could be thrown into recession with oil prices initially soaring. In addition, there is the huge costs of the war and keeping up to 300,000 US and allied troops in Iraq for many years - given the warring factions that comprise the Iraqi opposition to Saddam and the country's ethnic and religious divisions.

System change

THE SOCIALIST Party has consistently opposed Saddam's dictatorship.

(It was the Western powers and the former Soviet Union that armed and financed Saddam's regime during the 1980s Iran-Iraq war when he gassed Iraqi Kurds.) However, it is the task of the Iraqi people themselves to overthrow Saddam.

Instead of a 'regime change' to oust Saddam Hussein and replace him with a US-stooge, we call for a 'system' change; to rid Iraq and the region of capitalism and its dictatorships.

Only a democratic workers' and peasants' government which nationalises the oil industry could alleviate poverty and rebuild the country's shattered infrastructure.

That requires overthrowing capitalism and landlordism and implementing a socialist transformation of society. It also requires an internationalist programme to unite the poor and oppressed of the region to similarly transform their countries and to prevent imperialist retaliation by appealing to workers worldwide.


THERE IS a growing mass anti-war movement across the world before war has even started. The warmongering of Blair - Bush's most ardent supporter - undoubtedly led to the 400,000-strong anti-war demo in London on 28 September last year.

Following the London demo, 200,000 marched in Washington and 100,000 in San Francisco on 26 September along with tens of thousands across Europe. Up to one million protested in Florence, Italy, on 9 November and on 30 November 15,000 marched in Sydney, Australia. These numbers could be surpassed if military action against Iraq begins.

Like Bush, Blair has had to soften his approach to war because of both domestic and international opposition. The TUC has condemned a US-led unilateral war and some opposition was even expressed at last year's Labour Party conference.

However, on 25 November only 32 Labour MPs voted with Lib Dem MPs calling for the UN to pass a second resolution before going to war with Iraq. (We oppose all military action by imperialist powers against Iraq whether carried out in the name of the UN or the US.) If Blair goes to war the decline in Labour Party membership will rapidly accelerate and the party could fracture.

Even if this war doesn't take place, the aggressive role of US imperialism will continue to be a threat to the working class and oppressed on this planet. This perspective reaffirms our commitment to struggle for a socialist society without war, terror, poverty and oppression.

A Rising Tide Of Workplace Militancy

"IF THE Prime Minister were offered a choice between a dinner with three trade union general secretaries or a dinner with President Bush, Henry Kissinger and Rupert Murdoch, he would not even regard it as a choice. He has far more social empathy with the average global billionaire than he does with the average trade unionist." (Bruce Anderson, writing in The Independent, 2 December 2002)

2002 ended as 2003 is beginning, with the firefighters' dispute unresolved and likely to blow up again. The intransigence and arrogance of New Labour is pitted against the firefighters' determination.

The firefighters' struggle has marked an important turning point in the life of Blair's government. Whatever happens, the firefighters' strike is not the end of increased militancy amongst the working class but a beginning.

The public sector has been the centre of strikes and trade union struggle for the last year or more. Blair promised the capitalist class to 'reform' the public sector. What he meant was to reduce the state's role in providing services and open them up to the private sector profiteers.

Teachers, council workers, tube workers, rail workers and many others have taken strike action in the last year. Workers are regaining their confidence to take collective action.

There were 525,000 days lost in strike action last year, the highest since 1996. Many other disputes have taken place but are not recorded. Strike ballots have often had a majority for action, which often forces more concessions, even without a strike.

The threat of action by firefighters and other workers at major airports gained concessions, though much more could have been won. But Bill Morris, the transport union leader, intervened on the eve of the planned strikes and called them off to save New Labour's embarrassment.

Overtime bans, work-to-rule and other forms of industrial action often take place without entering official government statistics. The Department of Employment only count days lost in strike action if they last for one day or more and involve not less than 25 workers.

The brutal neo-liberal policies of Blair have led to a nightmare for millions of workers. The weakening of trade unions in the workplace has also played a large part in the continual pressure to work harder and longer.

Days lost due to workplace stress have nearly doubled from 18 million in 1995 to 33 million in 2001. Now, after a decade or more, workers are regaining confidence and have started to fight back.

Those union leaders who have not woken up to this new mood are being booted out and replaced by a new generation of left-leaning leaders.

Bob Crow and Mick Rix in the rail unions RMT and ASLEF, Billy Hayes in the postal union CWU and Andy Gilchrist in the Fire Brigades Union are seen by many union members as a refreshing change to the right-wing, old guard leaders. The new period opening up will test this new generation again and again. And the task for the rank and file will be to build broad Left organisations in the trade unions to organise support for fighting Left policies.

The recent strike wave raised a new layer of class fighters to the fore. They were often not involved before in the union branches and therefore not considered part of the 'activist' layer that has held the unions together over the last decade.

But this new layer is often well to the Left of the old activists. Members of the Socialist Party visiting the firefighters' and council workers' picket lines report the same thing - the absolute hatred for Blair and New Labour.

Many of these workers are outraged that their union subs are still financing the Labour Party. Firefighters do not accept the FBU leadership's argument that the union needs 'friends' in the party, they are well past that stage. Firefighters were not only ripping up their Labour Party cards but also demanding forms to opt out of the political fund.

It is time for bold action, to break with Labour and for the unions to launch a new mass workers' party. The role of conscious Marxists in the unions will be crucial. The need to build a strong base for Marxism in the unions has never been more urgent.

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Coronavirus crisis - Finance appeal

The coronavirus crisis has laid bare the class character of society in numerous ways. It is making clear to many that it is the working class that keeps society running, not the CEOs of major corporations.

The results of austerity have been graphically demonstrated as public services strain to cope with the crisis.

The government has now ripped up its 'austerity' mantra and turned to policies that not long ago were denounced as socialist. But after the corona crisis, it will try to make the working class pay for it, by trying to claw back what has been given.

  • The Socialist Party's material is more vital than ever, so we can continue to report from workers who are fighting for better health and safety measures, against layoffs, for adequate staffing levels, etc.
  • Our 'fighting coronavirus workers' charter', outlines a programme to combat the virus and protect workers' living conditions.
  • When the health crisis subsides, we must be ready for the stormy events ahead and the need to arm workers' movements with a socialist programme - one which puts the health and needs of humanity before the profits of a few.
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In The Socialist 10 January 2003:

Economic crisis, war, attacks on public services

No to war with Iraq

Support the firefighters

Venezuela: Why The Oil Bosses Are 'Striking'

World Economy: The Crisis Deepens

USDAW executive elections

New Labour Claims We Live Too Long


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