By Chris Harman
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Global Faultlines

This article is over 16 years, 11 months old
Chris Harman identifies three problems facing global capitalism.
Issue 299

The ruling classes of mainland Europe are now trying to recover from the shock which hit them in the early summer. Their central project of pushing through neo-liberalism was thrown into crisis by the No vote in the French and Dutch referendums.

Since the referendum all leaders of the European Union’s mainstream parties have repeated the same refrain. Europe’s economies, they say, have no future unless the mass of people are prepared to work harder, and for lower wages and pensions in order to cope with ‘the challenge from India and China’.

Blair makes no secret of his hope that elections in Germany (this month) and France (in 2007) produce hard right wing governments under Merkel and Sarkozy. He would then be able to present himself as the leader of a neo-liberal bloc that pushed the whole of European capitalism onto a new path. But things are unlikely to become as easy as he believes. The precondition for the neo-liberal counter-reforms begun under Thatcher and continued by Blair in Britain was the devastating defeat for the strongest sections of workers – the miners, then the printers and finally the dockers – suffered in the 1980s. Workers’ organisations in mainland western Europe suffered several partial defeats and demoralisation in the 1980s and 1990s, but nothing on the British scale. Hence the tendency for German and French governments to temporise in the face of working class resistance, because they know that putting the boot in can produce opposition powerful enough to defeat them.

They also face powerful arguments against the old Thatcher claim that ‘there is no alternative’, even from politicians and economists who do not believe in a complete break from capitalism. European capitalism is still far from being destroyed by Asian competition. China overtook Japan to account for 6 percent of world exports last year, but this was still only half of the European Union’s exports to non-EU countries. Meanwhile, India’s exports are less than 1 percent of the world total. And 90 percent of goods and services consumed within Europe are produced within Europe.

Productivity per hour in France and Germany is actually higher than in the US, where only long working hours keep annual productivity ahead – and is a good 25 percent higher than in Britain. There seems no obvious reason why European workers should have to toil ever harder in the face of competition that only affects a tenth of what they consume.

Also it is not Chinese workers, still less Indian ones, who are benefiting from the breakthrough into western markets. The new ‘prosperity’ is confined to no more than about 10 percent of the people in both countries.

The race to the bottom threatens the future of Europe’s workers, and also means continual poverty and insecurity for workers in the big Asian economies.

The first electoral challenge to face the proponents of neo-liberalism in Germany comes this month from the new party formed by dissident trade union activists, the former Social Democrat finance minister Oscar Lafontaine, and the heir to the old East German Stalinist Party, the PDS.

What they put forward is the idea, derived from the British economist of the inter-war years, Keynes, that state intervention can tame capitalism in a way that allows workers’ conditions to improve.

It is a mistaken idea. Keynesianism was an ideology which suited capitalism at a time when most major firms operated within the confines of the national economy and so were prepared to tolerate certain controls that seemed able to keep the national economy expanding. Even then, however, the other side of state intervention in the national economy was massive military expenditure (culminating in the Second World War and the Cold War) connected to struggles within the global system.

Today all the major firms see their competitive struggle as a global one. So not only are the big German, French, Dutch, Italian or British firms no longer happy with the confines of their national markets. They are not happy with being confined to a European sphere of operation either. French industrial firms have spent the last decade buying up subsidiaries in the US, French and Spanish banks have been buying up huge chunks of the Latin American banking system, the German manufacturing giant Daimler Benz has bought up Chrysler, and the European Skybus consortium is competing with America’s Boeing in every market in the world. All of them look to expanding their operations in east Asia (and in the German case, eastern Europe) as a way of increasing profits. But all of them are also aware that it would take decades rather than years for them to move more than a small portion of their operations out of Europe. And so they see the neo-liberal attacks on workers’ conditions as a central strategic goal.

It is not a goal they are going to be deflected from by the Euro-Keynesian arguments of those who are anti-neoliberal but not anti-capitalist. And so at some point, sooner or later, the Euro-Keynesians are going to have either to abandon their commitment to defending workers’ conditions or their ideas about making the present system work.

Revolutionary socialists cannot just sit back and wait to see what happens. The endemic confusions of many of the leaders of the anti-neoliberal movements correspond to the contradictions in the minds of very large numbers of workers as they begin to see the need for some sort of political alternative to the present system. Socialists have to be struggling alongside them, fighting to give expression to the anti-neoliberal demands in such a way that they cannot be watered down through attempts to conciliate with capital.

We can see three great faultlines for the world system this autumn. There is the enormous difficulty confronting US imperialism and its British ally in Iraq. There is the rising tide of insurgency in Latin America. And there is the battle of European capitalism to do to its working class what Thatcher and Reagan did to theirs.

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