History of the world economy|
Financial crisis: a symptom of the global crisis of capitalism
By Victor Perlo, in People's Weekly World
20 December 1997
The deepening world financial crisis and crisis of
overproduction is currently centered in Asia, but it is
already spreading to Africa, Latin America, Europe and yes,
even the United States.
The long boom in Thailand, the first of the "Asian Tigers"
to collapse, brought wealth and extravagant living to the
capitalists who exploited Thai workers and to the
compradores who acted as go-betweens and enforcers for the
Japanese, American and other foreign investors who reaped
the largest part of the plunder from the poverty-level
wages and inhuman working conditions of Thai laborers.
Now, as overproduction forces the closing of scores of Thai
factories, the first wave of laid-off workers has no place
to go: 449 of them from the bankrupt PAR Garment factory
are sleeping on straw mats outside the plant gate, with no
hope for the future. Thai economists fear an additional two
million impoverished workers will lose their jobs by the
end of 1998. In relation to population, that's equivalent
to eight million U.S. workers. Throughout Southeast Asia,
governments are being forced by the U.S.-controlled
International Monetary Fund (IMF) to slash social and
public benefits of all kinds, including education and
Asian countries were prevailed upon to get large loans at
very high interest rates from U.S., Japanese and European
banks. The scale of this international borrowing went far
beyond their base in real production. As a consequence,
there was a drastic drop in the exchange rate of their
currencies. Combined with widespread bankruptcy of Asian
companies, U.S. transnationals are quick to buy up
properties at bargain prices. With real wages of Asian
workers cut in half, the profits of the transnationals are
soaring as the movement of U.S. production to Asia
accelerates - and will continue to accelerate.
U.S. workers are, of course, losing as a result of these
and other measures, with more yet to come. The vicious
welfare/workfare law, immigration laws, attacks on
affirmative action and persecution of militant trade union
leaders are just the start, even as official reports show
employment and wage levels are rising. As a London
Financial Times headline put it, "Asian woes cool U.S. pay
pressure," reflecting the upper hand given employers to
renew the downturn in real wages that prevailed through
most of the past 25 years.
U.S. imperialism is using the financial crisis to further
its long-sought goal of world domination, a fact
underscored by a New York Times headline, "Asia's
surrender: reeling from blows to their economies, countries
agree to financial concessions."
But the concessions were not solely by Asian countries: 102
countries have agreed to remove most controls and
restrictions on the intrusion of foreign capital, while
there were absolutely no U.S. concessions in return.
Although it is true that while Wall Street will be free to
invest in Myanmar (Burma) without restrictions, Myanmar is
free also to invest in the United States. But with what
capital? With what ability to compete with U.S. power?
The world crisis is, in part, a manifestation of capitalist
contradictions. But it is mainly part of the process of
struggles which, in some respects, precipitated the crisis
and which have sharpened in the course of the crisis.
One struggle is that between capital and labor,
particularly in Asia where the crisis so far is deepest and
where the capitalists use the situation to increase the
exploitation of labor. But the workers are resisting this
and, especially, the IMF dictates directed against workers.
A second struggle is between capitalist countries.
Imperialism, be it U.S. or Japanese, uses the crisis to
reinstate full neo-colonial subjection on its debtors,
cutting short their attempts to develop economic
independence and jacking up the scale of plunder available
to transnational corporations. It is the workers who most
strongly uphold the national integrity of the victim
countries, who strike and demonstrate to prevent or delay
implementation of IMF prescriptions.
This fightback has been especially noteworthy in South
Korea, where the working class has a tradition of
Communist-influenced trade unionism that has won
significant gains in recent years including a level of real
wages equaling that of some western European countries.
The third struggle is between capitalist powers for
redivision of the world - most apparent between the U.S.
and Japan. Japan's aim was to achieve parity with - and
supremacy over - U.S. capitalism in overall economic
strength and control of Asia. These pretensions were partly
smashed by the prolonged Japanese crisis and depression
starting in 1990. The severity of the present financial
crisis has further weakened Japan's influence. The losses
involved in the actual and threatened bankruptcies have
brought bailout costs to half a trillion dollars - and
It is far from certain whether Japan's treasury has the
reserves to handle that amount, or whether Japan can avoid
surrender to the IMF and acceptance of its humiliating
U.S. and European capitalists are using the crisis to
increase their global domination. At the same time, they
hope to contain the crisis before economic life in the
smitten countries collapses absolutely. And, above all,
before political opposition becomes sufficiently organized
and unified to threaten anti-imperialist revolutions.
There is an historical parallel: the strategy used by
President Herbert Hoover and the Wall Street manipulators
to deal with the crisis of overproduction in 1929-32. They
continued the tactics they had used during the previous
inflationary period in the new deflationary period, which
made everything worse and brought the country to the brink
of a complete economic standstill.
-The second installment will appear in our issue of Jan.
10, 1998. Vic Perlo has asked that we extend holiday
greetings from him and his wife Ellen.
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