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Engraving of Lenin busy studying

Economic and Philosophic Science Review

Only he is a Marxist who extends the recognition of the class struggle to the recognition of the dictatorship of the proletariat. This is the touchstone on which the real understanding and recognition of Marxism is to be tested. V. I. Lenin

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No 1278 October 6th 2005

New slump collapse signs confirm that capitalist economic crisis has not “gone away” or been dealt with but grows ever more serious and unstable. The rapid “fascist-isation” of society; elimination of complacently-assumed eternal “freedoms” and rights and the aggressive stepping up of warmongering provocations by the leading imperialists (USA and stooge lapdog the UK) is the only method this historically defunct profit-grubbing exploitation has to stay in charge and it will use every barabarity to do it — justified by lies to make Goebbels blush. The crucial need for Leninism grows.


The complete collapse of the threadbare fraud of parliamentary “democracy” is getting ever closer, signalled by the laughable pantomime antics of the Tory’s endless “leadership” campaign - desperate to create some “in touch with ordinary people” credentials and the Mosleyite “blackshirt” thuggery of the New Labourites, rapidly losing any “ordinary people” credentials they had managed to fool people with by public relations lies and glitzy advertising “spin”.

It is a measure of how deep the capitalist crisis has become that both games are so desperately thin and the “police state” dictatorship of the bourgeoisie - eagerly being imposed by the craven opportunists of New Labour to demonstrate their “loyalty” and “usefulness” to the ruling class - is so close to the surface.

And it is a measure of the crisis’ deepening that despite the almost total collapse in a dismayed, and shocked New Labour support and membership, the Blair leadership remains hell-bent on carrying through the imperialist warmongering schemes of the US imperialists’ neocon Dr Strangeloves - the only “solution” the capitalist system has ever had to its intractable problems of accumulating “overproduction”.

Eventually nothing else will do but to take “market competition” into total destruction of “surplus” capital, hated imperialist rivals and as much of the “spare” working class as required in the mayhem.

The world has already seen two world wars (plus the 1870 Franco_Prussian inter-imperialist war) and the masses of the planet have learned huge lessons about imperialist destruction in the process, from death camps to city wide firestorms, starvation and millions strong massacres. It will be harder than ever to persuade them to do it all over again as the inevitable slump and chaos of the crisis finally breaks into the open across the world.

But all history and Marxist understanding shows that capitalism can do nothing else - and nothing except the total ending of this historically outmoded profit grubbing system will prevent it going there.

Only destruction of the “surplus” - unsellable at the necessary profit - can restore the “margins” (see economic quotes on EPSR joining box).

Or the complete replacement of this mindless and inhuman system by socialist cooperation and planning on a world scale.

Fake-”left” led protest and middle class and intellectual dismay in plenty has not stopped the three “warm-up” wars against Yugoslavia, Afghanistan and Iraq from imposing their bloody misery, civilian slaughter and widespread destruction (following initial “democrat” Clinton forays in Sudan, Somalia and Afghanistan).

And it is not stopping the latest “accusations” against Iran that it is “responsible” for the killing of British soldiers (rather than the quite understandable and justified Iraqi resistance to foreign occupation) - an imperialist sabre-rattling provocation on a par with any of the strutting and blaming that aggressive capitalism (which happened to be German and Italian but could equally have been any of the others) - used to ferment the warmongering atmosphere in the 1930s, the last great slump and war “solution”.

The trumpeted claims by the British establishment on behalf of their American masters, pile on the aggression already ratcheted up by the monstrous hypocrisy and sanctimonious arrogance of the imperialism in general “demanding” that Iran give up any nuclear power plans even as the same powers contemplate expanding their own nuclear supplies and, more importantly, as the decades long silence continues over the Zionist’s nuclear arsenal (funded and technically sponsored by the West - particularly the UK) - subject of numerous United Nations bans, motions and investigations, all completely ignored.

It remains to be seen if Iran - much bigger and more populous than the already disastrous and indigestible Iraq and the equally sticky quagmire of Afghanistan - will be the next victim for the “Shock and Awe” fascist programme in winding up towards World War Three.

But capitalism is facing the biggest melt down and collapse in its entire 800 year long history, an inevitable and intractable result of the contradictions built-in to the system of exploitation and profit grabbing, as Marx explained initially and Lenin developed further - page 6).

And despite the difficulties of understanding the ever-more complex detail of the ever-more widely globalised capitalist system the collapse is not far off, as the EPSR has, alone from the supposed “left”, been urgently warning the working class.

Last resort stretching of the credit system (printing billions more inflationary dollars) has bought imperialism a few more years of superficial “progress” since the dramatic Stock Exchange collapse in 2000, at least giving it time to warm up the warmongering (itself a key signal of collapse and crisis, notching up the inter-imperialist antagonism just as in the late 1930s).

But it is lightminded philistinism to believe that simply printing billions more dollars will endlessly get capitalism off the hook - airily dismissing the New Orleans disaster for example as something “the Americans will just rebuild again”.

This kind of complacency - awe struck by the supposed overwhelming, and endless power and strength of the capitalist ruling class - is due for a titanic shock.

Capitalism has reached the end of the road historically and cannot last. The light-minded philistine sneers of the Trotskyists about “catastrophism” will stick in their throats, along with the middle-class complacency.

But there is no need for the Marxists to say it - just look at the capitalist press:

[Hurricane] Katrina and Rita in the US...swept away illusions about American society...Third World scenes of starvation, looting and rampage have emphasised the fine line between ordered society and the law of the jungle.

The same is true of financial markets. Although a natural optimist, I am going to make a prediction that is almost apocalyptic. In a short time - a few years at most - the rich West and Japan will have a terrible shock. Living standards will fall precipitously, companies will fail en masse and established institutions will find themselves in financial peril. Asset prices - particularly those of houses - will fall dramatically in some countries, notably the US and UK, and world trade conditions will deteriorate significantly.

Worse, global tensions will rise and China will not only be a threat to Italian sock and bra manufacturers, but a potential military threat to the Pax Americana.

There will be no warning of the arrival of this downturn, but the early signs are clear. Simplistically, I distil these threats into five categories, A, B, C, D and E. All of them represent confluent trends that herald the end of a long period of human advancement in the rich world. Six decades of technological advance, growth in material output, extension of human longevity, and unbroken peace in our cosseted part of the world, is coming to a conclusion.

The five trends are: · Anti-Americanism and the beginning of the end of US hegemony. · Balances - trade, fiscal and societal - which are out of kilter as never before. · China’s growth which has put it on the way to being the world’s largest economy and the main Pacific power. · Debts run up by consumers, companies and governments are at all-time peaks, and a dramatic and painful correction is the only remedy.· Environmental: even ardent Bushites must be beginning to think man is having some effect on the planet’s climate. The world’s population has quadrupled in 60 years, and the problems of waste and consumption, as well as of pollution, are not going to get any better.

Anti-Americanism - Since two-thirds of the world’s population - the part that is young and growing - live in relative poverty, there will be frustration about and antipathy towards the Big Brother of the affluent world. The US policy of acting as a roving cop has added to Second and Third World disaffection, and fundamentalism and terrorism are the children of disaffection. Efforts to help the poor world with rock concerts and debt cancellations are...insufficient, especially as Western farm subsidies do more harm to developing countries than our aid does good.

...Balances - the B on my list - are glaringly awful. The US imports half as much again as it exports, and it pays for the deficiency in its own, self-printed currency. Trade’s obese twin deficit - the fiscal one - is largely paid for by Asian central banks recycling surplus dollars they receive for selling goods to America, through the acquisition of US government debt.

These negative balances - which apply to the UK as well - have been around for a long time, but we are close to the limits of their expansion. Any refusal by the Asians to keep on funding US profligacy, or any serious moves to protectionism by the major Western nations, will tip us into a rerun of the 1929 Wall Street crash.

There is only one way out for the US, and it involves pain. I forecast that a deflationary period of adjustment is imminent and that while, confusingly, we are in a short period of commodity-induced price inflation, ultimately asset prices will fall.

The Anglo-Saxon housing bubbles are close to popping, and that will drag down consumption - the great driver of the world’s economy - by more than anyone now imagines.

And that brings me to China. Its growth and ambitions are well known. Nearly a quarter of the world’s population are prepared to work for wages which are on average one-hundredth of those in Germany. Whatever Germany, or the US or Italy, try to do, they cannot compete with that. More and more production will go to China, protectionist pressures will intensify and diplomatic tensions will grow with them.

...In a way, we are in 1912 again. British supremacy was waning then and a new military power rising, one based on economic achievement. Then, of course, it was Germany. We have to hope a similar conflict doesn’t result with China.

The first problem with debt is that US and UK consumers have been using rising house prices as a kind of ATM machine to take out equity to spend, often on imported goods. When the merry-go-round stops - as is beginning to happen - the consumption stops too. A slump in consumption lasting a decade or more, as happened in Japan, is possible for both nations. American debt is higher today relative to the size of the US economy than it was in 1929, and all the monetary and fiscal tinkering in the world can’t cure its pernicious effects.

Last there are environmental issues. Wind farms, solar power and carbon credits will be nowhere near enough to combat the effects of population growth, China’s higher consumption of commodities and the obliteration of the rainforests. Less consumption and more nuclear power are the only solutions.

In short, within three years the world economy will be in a significant downturn, and the correction process for the Anglo-Saxon economies will last as long as a decade.

Pay, and therefore living standards, will have to adjust to the effect of Chinese competition. Stock markets will collapse, house prices in the over-extended markets of the UK and the US will fall by up to 50 per cent, and major investment banks and other financial institutions will go bust.

Wake Up! Survive and Prosper in the Coming Economic Turmoil’ by Jim Mellon and Al Chalabi, is published by Capstone at £12.99

Just in case this should be deemed “sensationalism” just consider some of the other signs and signals in the wind:

An unenviable array of “worst since” will greet the nine members of the Bank of England’s monetary policy committee as they gather this morning for the start of their two-day meeting to decide the level of interest rates. Plenty has happened since they met in early September: trading conditions in the high street are at their weakest for 22 years, according to the CBI, oil prices are at their highest in real terms for quarter of a century, and house prices are growing at their slowest for nine years.

The economy as a whole has not been this sluggish since the immediate aftermath of Black Wednesday 13 years ago. Even the ever-upbeat Gordon Brown has been forced to admit that the UK is no longer on course to meet his ambitious 3%-3.5% growth forecast for this year.

The two members of the MPC who have gone public in the past month with their views both sounded notes of concern. Steve Nickell said there was a “serious risk” that the Bank’s growth forecast would be undershot, while Richard Lambert said that for it to be hit, consumer spending would have to pick up “quite quickly, quite soon”.

...MPC is anxious not to repeat the policy mistakes of the 1970s, when attempts to shield consumers from the effects of higher oil prices allowed inflation to take root. Dearer energy has already pushed inflation, as measured by the consumer prices index, above its 2% target, but the Bank is not especially concerned by this. Instead, it is on the look out for evidence that consumers are seeking to make good the losses they are suffering to their disposable incomes by securing higher wage awards, or that businesses are managing to pass on higher costs of production to customers.

The combination of inflation above target and growth below its long-term trend has prompted talk of a return of stagflation, but the economy is still expanding and the cost of living is rising only a 10th as quickly as it was in 1975.

..However, there have been downward revisions to growth over the past year, and recent data has been weaker than the MPC thought probable. The profile of growth between now and late 2007 will be lower, resulting in inflation being lower as well. If inflation is predicted to be under 2%, the Bank may be obliged to cut interest rates whatever its misgivings.

Stephen Lewis, of Monument Securities, said: In retrospect, the Brown ‘economic miracle’ is likely to appear to have been little more than a housing bubble.”

Michael Dicks, chief European economist for Lehman Brothers, believes there will need to be an aggressive period of rate-cutting to stimulate the economy. He predicts at least two years of sluggish growth.

The fragile state of consumer spending was underlined yesterday as the CBI’s latest survey of the retail sector showed sales volumes falling at their fastest rate in the report’s 22-year history.

The survey will worry the Bank of England, which cut interest rates last month and has said it expects consumer spending - which accounts for two-thirds of the economy and has been its main driver for several years - to recover in the second half of the year.

But the CBI survey, which covers about half of the retail sector, showed the gloom is unremitting: 50% of shops said their sales were lower this month than last September, while only 26% said they were up. The resultant balance of -24% is the worst the employers’ body has ever released. September was the seventh month in a row of falling sales. The underlying, three-monthly sales balance fell to a record low of -20%.

...Several retailers have collapsed, including the department store chain Allders, Furnitureland, the fashion chains Pilot and Ciro Citterio and this week Allsports. The CBI said that apart from grocers and specialist food retailers, all sectors were weaker than a year ago.

Mr Brown will flesh out his gloomier view about the economy in a statement today to the main policy committee of the IMF, which he chairs. A weakening housing market and slower exports to a struggling eurozone have amplified the impact of higher oil prices on the economy, he will say. “With European activity much lower and oil prices much higher, there has been an impact on growth right across the continent, including the UK.”

Mr Brown said he would not be giving precise figures for UK growth until the pre-budget report later in the autumn, but made it clear that his new forecast will be lower. Trends so far this year suggested that the economy had been growing at or slightly below the Treasury’s cautious 2.5% assessment of the potential growth rate.

The switch in the Treasury view was last night seized on by Mr Brown’s political opponents, who have been saying for months that his view of the economy’s prospects has been far too rosy.

And the same underlies the bourgeois confusions and semi-paralysis elsewhere - like Germany:

Germany’s postwar economic miracle is a distant memory. Its unquestioned economic, educational and sporting superiority over Britain, and so many other countries, belongs to a previous, more confident generation of Germans...

When I asked a publishing executive in Munich — still so overwhelmingly clean, so rich, so shiny! — what the feeling was in Germany before the election, she said: “Everyone is afraid.” Afraid, that is, for their jobs, for their future; so afraid that they are hoarding money at an extraordinarily high rate. “Fear” was one word I kept hearing; another was “honesty”, the idea that for years politicians on all sides have refused to say honestly to Germans how radically the country needs to change.

“At the moment, you have a situation where things are getting worse, little by little, and no political party in Germany has the courage to make a hard and painful cut, to say, ‘We don’t live in the world of the 80s, we have to adapt to new conditions’,” said Thomas Brussig, a novelist and screenwriter living in Berlin. “So a reform solves a problem for two years, or for a year, or for half a year, and then you realise it’s not enough, and that new cuts are necessary.”

The spirit of Margaret Thatcher is abroad in Germany, wafting in from the sink-or-swim business cauldron of neighbouring Poland as much as from Britain. Dirk Grosse-Leege, the corporate voice of Volkswagen, told me about the book he had on his desk: Margaret Thatcher’s Shock Cure — A Recipe for Germany, by the German writer Dominik Geppert. “ . . . I think the country is ready for unpopular decisions.”

...In the 1990s, when the extent of Germany’s current economic slump first became clear, Germans blamed the problem on the reunification of the old West and communist East Germany, which began with the fall of the Berlin wall in 1989. More recently, gloom merchants have pointed to the introduction of the euro. Birgit, who volunteered to act as my interpreter on part of my journey through her country, had a different take. The trouble was that Germany didn’t feel special any more; Germans could no longer feel superior to the new Europe.

“Everybody’s confused, I think,” she said. “It’s Europeanisation. Europe’s coming into Germany from all sides. When the European Union began it was like, ‘We’re making the union, we’re the big donors,’ and now we are trying to cope with the problems other countries went through before. It’s hard. We were so used to having this comfortable, luxurious lifestyle, where you never had to pay for the doctor.”

Germany recently introduced a GP system, with a small quarterly fee that everyone, even the unemployed, must pay. There is talk of charging tuition fees at universities, of later retirement, of pension cuts. The truth is that, though it may be news to Britons who don’t read the business pages, Germany has not only been in relative economic decline for some time, but has for years been taking previously unthinkable steps to curb its munificent public spending.

The fact that both Schröder and Merkel believe Germany won’t have more jobs until the state spends less money and it gets easier to hire and fire people explains why the elections inspire a sense of dread which seems independent of who might actually win. The changes might come more quickly and harshly with Merkel, more slowly and hypocritically under Schröder, but they will come, and they have already started. If the Germans suspect they may get a Thatcher in Merkel, they know they already have a secret Blair in Schröder.

One day, sitting in the light, high-ceilinged corner office of Gabor Steingart, Berlin bureau chief of the German weekly news magazine Der Spiegel, I asked about something that confused me. If Germany was doing so badly, and Britain was doing so well, how come Britain still looked so scruffy and run-down, while Germany looked so smart and prosperous?

“I think the performance of the British economy is better than Germany’s, but you can’t see it on the streets,” he said. “What you see here in Germany is the accumulated capital not of the past year but of our economic miracle. It’s a snapshot of the miracle in the 50s, the 60s and the beginning of the 70s.”

Steingart is the author of a book popular among Germany’s pessimists, called Germany: Decline of a Superstar. In his office he grabbed a piece of paper and,wrote a short series of numbers for me. Annual income of the German federal government, €190bn. Spending on pensions, €80bn. Spending on unemployment, €40bn. Debt servicing, another €40bn. Amount left over for everything else, from autobahns to German troops in Afghanistan: a mere €30bn. It was more than four decades ago that Germans last had enough babies to renew the population, so the number of pensioners is increasing, and the number of working-age taxpayers is falling. Yet the price of German labour — such as the 20,000 Volkswagen production workers in Wolfsburg — remains far higher than that of VW workers in the Czech Republic or Mexico.

Once, Wolfsburg was a proud emblem of the then West Germany’s extraordinary rebirth out of the ruins of 1945...They seemed to be communities of the future, envied by the British left and provoking the annoyance of the British right, where workers and bosses cooperated with goodwill, were paid handsomely, enjoyed the consumer good life and gladly paid hefty taxes so that their children would be superbly educated in state schools, their health cared for by the finest state hospitals and their old age looked after by generous pensions. I needed to go to a town like Wolfsburg to see how a happy community of West Germany’s future had, by all accounts, become an unhappy community of the reunited Germany’s past.

“A trip to Wolfsburg is a journey to our history,” said Steingart. “It’s not our future you see there. The jobs in the Czech Republic are subsidising the jobs in Wolfsburg.”

Wolfsburg owes its survival after the war to a British army officer from Lancashire, Ivan Hirst, who put the bombed-out Volkswagen plant back on its feet with an order for thousands of Beetles for Allied occupation forces.

Impending doom

For those who have simply come to gawp, however, Autostadt is the hors-d’oeuvre. For Volkswagen’s roofed-over factory space here spreads across an area the size of Monaco..You cannot understand how this vast carousel of consumer goods whose income feeds Wolfsburg could ever stop.

Yet ask around, and a sense of impending doom hangs over the town. “The biggest problem is pessimism,” said Rippert. “Volkswagen employees earn more than almost any normal worker in Germany. But they don’t spend it, they’re just saving it, because of the feeling ‘I don’t know how long I’ll have my job, I don’t know what will happen in Germany, maybe Volkswagen will be sold to Toyota.’ How is a big economy like Wolfsburg going to survive when nobody spends money? We’ve got the biggest savings rate in Wolfsburg now since the second world war.”

Yet Rippert went on to admit the pessimism was justified, for VW manual workers at any rate. “You can be unable to write your name, get a job putting windscreen wipers on a car and still earn four times as much as a baker or a hairdresser. Now the management is beginning to cut this difference.”

Wolfsburg is, in a literal sense, Germany in miniature. It was here that the notorious Peter Hartz made his name when, as Volkswagen’s personnel director over the last decade, he introduced a series of radical changes in working practices. These had the overall effect of paying VW production workers less money for the same amount of work.

Naturally, it was never sold to the workforce this way; the changes were promoted as the salvation of threatened jobs. Hartz then did a similar task for Chancellor Schröder when he rewrote Germany’s welfare system, paying the unemployed less money and trying harder to prod them into low-paid work.

The reforms still carry Hartz’s name — dole money is known as “Hartz Four” — which makes Germany now the only country in Europe where unemployment benefit has the same name as a character in a tabloid sex scandal.

...Whether the allegations are true or not, the affair seemed to crystallise the German public’s doubts over the lack of straight-talking by their political and business establishment. Hartz and Volkert, manager and union leader, had cosily got together to promote a supposedly German solution to VW’s high labour costs which was, in fact, little more than an American-style exercise in cost-cutting. Hartz and Schröder had introduced a preliminary exercise in Thatcher-style benefit cutting but didn’t have the courage to say so or to say that worse was to come.

The day I toured the VW factory, the management was putting the screws on the Wolfsburg workforce again: warning that its new 4x4, the Marrakesh, would be built in Portugal unless the union accepted lower wages on that production line. The next day, I went to see Wolfgang Schulz, one of the union leaders struggling to restore his organisation’s credibility with the workers. He was gruff and evasive but defended the union’s deals with management over the past decade. “It’s logical to find a collective decision that suits everybody,” he said. “What was the alternative? We don’t want it to be like what Maggie Thatcher did with the coal miners.” A week later, VW announced it was making 10,000 people redundant, a tenth of its workforce. Most of them would be in Wolfsburg. Those robots on the production line could work just as well in Portugal, or Mongolia, or anywhere with water and power and a few cheap bodies to oil their joints.

One warm evening, at a table outside a bar near the plant, I talked with Carmelo Allegrino, a 44-year-old quality control worker at VW who immigrated to Wolfsburg from southern Italy as a teenager. “I’m earning half the money I was 12 years ago,” he said. “As employees, we can’t afford to buy our own cars any more. We went to the bosses and told them and they said, ‘We don’t depend on you to buy our cars. We’re a global company.’”

...Many Germans accept that it is globalisation, rather than reunification, which is at the root of their present troubles...[but] see the extent of change in the east.

In Weisswasser, people and homes are vanishing, like a film being run backwards. When the Wall fell, the town had a population of 37,400, mainly employed in the local glass factories and in opencast mining. Most of the glass factories have since shut down, and the newly mechanised mining operations have shrunk their payroll. The town has lost 8,000 jobs; 15,000 people have moved away. Five schools have closed. One by one, the ugly six-storey apartment blocks thrown up in the 60s by communist planners are being pulled down. Hartwig Rauh, the non-aligned mayor of Weisswasser since 2003, said the town had already destroyed 5,000 flats, and would go on destroying them for another seven years. The proportion of elderly people in Weisswasser has shot up; unemployment is running at 23%.

“If you’ve lived in a city with 37,000 people and then it shrinks, morale goes down,” said Rauh. “Low morale, that’s what I’m fighting every day.

“Unemployment is a chronic condition, not necessarily for the next 50 years, but for the next 20. We will have an unemployment rate of 15-20%. That’s not the bad thing. The bad thing is if people can’t live with it. That’s something we have to work on, by giving people a meaning in life.”

The proximity of Poland, a few minutes’ drive, is both worry and boon. Worry because its workers are cheaper than German workers; boon because Germans can slip across the border to buy food, petrol and cigarettes at a fraction of the German price.

On the Polish side of the bridge over the river Neisse an ad-hoc bazaar fashioned of corrugated steel, two-by-fours and tarpaulin has arisen, with twisting alleys demarcated by DVD hawkers, fag-packet mosaics and sheaves of blouses in every colour of the synthetic Chinese rainbow. I sat for a time with an unemployed 41-year-old German mother in a café — she declined to give her name — while she told me about life on Hartz Four. Mayor Rauh had already told me about one of the harshest changes Hartz and Schröder introduced, which forces unemployed homeowners to sell their house and live off the proceeds before they become eligible for benefit.

“We’re not starving,” the woman said. “You can pay the rent, you can pay the health insurance. But a car’s a luxury already.”

Another feature of Hartz Four is that, if you live in the east, you get less benefit than in the west. “It’s different for every family. But an adult in the east gets €290 a month. In the west, they get €345. I’ve got three kids. Since they left school, none of them have had a job. I know that in East Germany my children and I lived better than now.”

Not all the Germans shopping in the Polish bazaar are unemployed, of course. In a restaurant, I talked to two waged couples from another east German town. They had decent jobs — one was a truck driver, another a bricklayer. They took it in turns to complain about how terrible life was. The prices. The bureaucracy. The fact the children had to go to the ends of the earth — to Munich! — to find work. Generally speaking, things weren’t what they used to be, that was for sure.

“I’ve never had so much money,” said Helge Schramek, the bricklayer, with bitterness, “but I’ve never had to give so much away.”

Rauh — an architect who moved to Weisswasser from the Ruhr and married a local girl — is an optimist. Yet he does feel that the town has touched bottom. It is the former West Germany that may now have further to fall. I asked him, a rare westerner-turned-easterner, what he thought about the future of Germany as a whole.

“I think that we lack honesty,” he said. “We have to say that we can’t go on like before, where we could take on new debts every year and think we could afford it. We can’t have all these expectations, that we go on having three vacations every year, a house for everybody, that we can study at university for free and so on. We can’t afford that any longer, and the sooner honest words are spoken from on high, the better.”

A few months ago, Arno Widmann, an editor, translator and journalist, wrote an article for the Berliner Zeitung about the new Germany — after the Weimar republic and the Bonn republic, the Berlin republic.

“No sooner had they made their peace with the Bonn republic than it lay down and died . . . With the Berlin republic, our country has reached normality: the rich get richer and the poor poorer.”

Though historical conditions are never directly comparable it was the paralysis of the Weimar Republic which preceded the devastating slump and parallel Nazi warmongering epoch of the 1930s (equally “undemocratic” in Mosley-producing Britain with its class collaborating stooge “national” governments, rampant nationalism and eventually the tearing up of all democratic rights under the excuse of “national priorities and war emergency”.)

And slump collapse is the terrifying prospect that the ruling class is now planning for - and the reason why it is once more doing away with the niceties of “democratic rights” and habeas corpus etc. This time the excuse is the utterly fraudulent and meaningless “war on terror”, and the underlying reason the need to get back into the warmongering mayhem which is the NORMAL condition of capitalism.

The most appalling conditions are going to have to be imposed on the working class, all the more difficult after sixty years of giving way to the revolutionary class struggle spirit which underlies all the major battles fought by the working class for better standards and conditions. Disgust for for the 1939-45 capitalist-caused turmoil, and inspiration from the hugely sacrificing and eventually successful Red Army Soviet Union - which virtually alone did the fighting which destroyed imperialist aggression - took that struggle to unprecedented heights, threatening to transform ALL of Europe to communism, west and east.

Only the most dramatic ruling class concessions of welfarism (National Health Service etch), growing employment, and so forth contained the struggle within the reformism cul-de-sac in the more crucial major imperialist western states, using the Labour Party (in the UK) as the instrument to prevent further revolutionary understanding.

Elsewhere communism was smashed down with as much brutality as any Nazi had managed; e.g. in Greece where the British and later US intervention was barbaric - using Napalm for the first time for example.

But even that pale reformist imitation of the completely new way of living being built by the Soviet Union and other socialist camp states, (for the first time in history, without a capitalist ruling class and without the societal antagonisms that turn everyday life in capitalism into a stress ridden competitive hellhole - even in boom times) cannot be maintained.

The renewed signs of the growing crisis in the 1980s led to the first attempts to smash back the working class under Reagan and Thatcher, though even that could not be maintained as upheavals like the Poll Tax riots showed.

The historical stupidity into which Soviet Revisionist leadership finally descended after the long slow philosophical decline from living revolutionary debate and understanding in Lenin’s time, gave capitalism a breathing space in the early 1990s after the deluded brainrot of Gorbachevism simply liquidated the planned economy and more importantly its proletarian dictatorship defence from 1989 onwards.

The supposed “magic” of market forces was to “revitalise” the chugging progress of the Soviet economic system (perfectly satisfactory in its growth if a little pedestrian) but has led to the exact opposite - the dismantling of the all the massive social gains of the working class and the carpet bagging plundering of the economy, leaving a small layer of fat cats, middle class “sophisticates” and bizarre semi-gangster tycoons - while the aged, the young and the ordinary workers suffer the greatest plunge in living conditions in modern times, still going on despite supposed “oil and gas” deals.

But the setback to revolutionary understanding worldwide from this liquidation of an otherwise unbroken and steadily growing Soviet system (still making some of the greatest scientific and cultural advances in world history and streets ahead of anything ever achieved by capitalism, however rough the edges might have seemed at times) - this setback cannot last.

Leninism will revive.

And it will do so all the more quickly that the parliamentary reformist game is finally exposed for the lying racket it is - the greatest con-trick ever devised in history to keep the working class in its place.

The New Labourite spin racket - making things “better” by sleight of hand spin and public relations when the reality is just more corruption, sleaze and cynical fire-sales of hard built state and publicly owned assets to the “private sector” (i.e. otherwise bankrupt capitalist enterprise) was a last ditch rescue for the system, with a few determinedly anti-revolutionary opportunist souls helping create a few more illusions to help stretch the ever thinner parliamentary control over a few more years.

But the smoke and mirrors nonsense of Blairism was already clear before it was elected and by 1998 subject to major exposés by the capitalist press (see EPSR issue 958 for example) - as well as increasing distrust from the working population:

Before Blair was elected, the EPS Review explained that his New Labour regime would have to be WORSE than the hated Tories even, because it would have to impose much worsened conditions of imperialist economic crisis, being merely a stooge of the ruling class.

But how quickly the Blairites would reveal all their true rotten colours has come dramatically early.

No sooner has the shock of immediately resumed privatisation handouts to the capitalist class been digested than news now pours out that corporate lobbyists,grabbing wealth and influence for their voracious monopoly clients, virtually run the government.

Having now fully and openly embraced the capitalist system not only as “better in practice” for running the bulk of economic activities in Britain (as Labour always believed and acted upon) - but as “a better idea of society altogether than socialism” as well, - then using the power of government to help the capitalist, class to do better is the next obvious step.

And so another huge list of cheap sell-offs is now being pushed private capitalism’s way from long-fought-for and hard-won public assets which really are priceless, - and all DELIBERATELY so that ‘clever entrepreneurs’ can ‘turn them round’, - i.e. quickly make vast profits out of them by asset-stripping, viciously truncating them, or turning them into sweated-labour hellholes, - and all eventually ending up as far WORSE public services than when they started.’

This was followed by revelations about the most astonishing levels of influence peddling in the government which goes on to this day - with the National Health Service and the Post Office among the latest targets.

But the capitalist crisis has now deepened into open warmongering with US imperialism playing the lead aggressive role.

And the panicky and historically bankrupt British ruling class is dragging along behind with Blairism playing the central role behind Bush; making untenable even the comfortable psychological and political opportunist niches occupied by the most die-hard blinkered New Labour supporters - which includes the victimised Walter Wolfgang himself and his relentless “Old Labour” reformism.

Old Labour has not been “betrayed” but exposed for the capitalist collaborating chicanery it always was.

But the stunned hurt from the likes of New Labour luvvy Polly Toynbee in the Guardian and other media types is still telling:

The symbolism was too good to be true. No screenwriter could have devised so apt an image as the rough handling of an 82-year-old party member out of the Labour conference for shouting “That’s a lie!” Some New Labour enthusiasts have scoffed at such a triviality getting front page display, but they deliberately ignore its graphic significance. This old man perfectly embodied a weak and depleted party that was not even allowed to debate the war it has been dragged into.

It hasn’t been necessary yet to forcibly eject all members from the party: half have already stomped off of their own accord. The hall in Brighton was emptier than for years: two thirds of MPs did not bother to attend and a third of constituencies failed to send any delegates. Regional officers sent favourite sons to fill seats for the rotten boroughs without genuine members. Election campaign reports reveal a party hollowed out, often a near empty shell where even “activists” remain angrily inactive at home.

Who cares about the state of parties? Certainly not the 40% of the public who didn’t vote. Manufactured applause, archaic speeches and arcane composite motions make conferences look like some obscure religious rite behind an altar screen. Political parties are dying on their feet. The weird and eccentric remnant of the Conservative party which is now to choose yet another leader is in a far worse state. But Labour’s troubles also look endemic. Thousands join protest movements or single-issue lobbies, but why would anyone with passionate views newly sign up with the ruling party? Trust and enthusiasm are hard to rekindle under a leader grudgingly accepted as competent, but hardly a stirring idealist.

Consider just how empty Labour is now that it has lost control of heartland cities. In conference fringe meetings, fallen councillors plaintively lamented how they once had a Labour council and MP, and now have neither. With few councillors, local parties lose their roots and their reason for existing. Newcastle, Bristol, Birmingham, Bradford, Liverpool and even Doncaster, these bare, ruined Labour choirs will be joined in May by Camden, Hammersmith and Fulham, and other London boroughs once forever Labour. Lambeth, Islington and Southwark have already gone. Labour is disappearing in the real world.

The trade unions, once the backbone of TGMOO (this great movement of ours) may have had their last hurrah in Brighton. Their might alone voted down Labour’s health and pensions policies and worked in favour of legalising secondary strikes. Set aside the rights and wrongs of these issues: a handful of union barons out-voting constituency parties was hardly democratic. The unions themselves are hollowed out, emptied partly by years of devoting more resources to baronial priorities than to recruiting the lowest paid and most vulnerable.

...Democracy cannot survive on virtual parties, manufactured by professionals, devoid of roots. Labour is in danger of becoming a phantom party - a self-perpetuating oligarchy given absolute power by only 25% of the electorate through a perverted voting system that will, with a swing of the pendulum, deliver the same power to an equally unrepresentative Tory clique.

Dear Tony,

I’m writing to you as the leader of the party from which I am now resigning. I joined the Labour party in 1964 but this week is the first time I have felt ashamed of my membership. You will say it was an accident that two men were viciously bundled from the conference hall on Wednesday. But then you lie as you breathe. It is impossible that you do not know that when you took power as Labour leader you were determined to stamp out all public dissent and discussion within the party. It is impossible, in a more recent time frame, that you did not know and approve of the decision that there would be no debate on Iraq.

Even as I write this phrase, its absurdity, its grotesqueness hits me again. No debate on Iraq, no debate on the most important foreign policy issue that has confronted Britain since World War Two. No debate on Iraq, which has brought such a fear of violence to London. No debate on Iraq - on the national disaster with which the names of Guantanamo and Britain will be linked in infamy for our generation and probably beyond.

It is unthinkable that the Labour party could not debate the Iraqi war. But, of course, it is equally unthinkable that it could. For the situation there is so dire, the peril in which you have placed the nation is so acute that if even the smallest murmurs of evidence and argument were to be heard they would soon become a gale that would sweep you from office. It was telling that you did not even dare to speak to the old geezer they roughed up...

You presided over a government which suborned its security services to provide false headlines for you to mislead the Commons into voting for the war. Worse, you ignored every lesson of our last imperial disaster in Mesopotamia - a campaign which became a byword for our soldiers being slaughtered to satisfy the vanity of politicians.

Political parties are institutions which allow debate to be turned into action; they allow people from different class backgrounds, from different regions, from different races to debate policy knowing that the conclusion of the debate will be the determination of a particular course of action. There are no debates now because there is no question about what action will be taken. The Chancellor’s peculiarly Presbyterian form of neo-liberalism is absolutely not open for debate. If it were, then the scandal of PFI, which represents a continuous tax on the poor by the rich, would be common knowledge. Worse in the short term, this lack of debate has allowed no political dissent from the disastrous economic policy of running deficits to fund unproductive investment.

Old Labour used to run deficits to employ low-paid workers in the unproductive old public sector; New Labour runs deficits to employ highly-paid consultants in the even more unproductive new public sector. In the only industry that I know at first hand, the scale of government handouts is jawdropping. New Labour has created a new film body, the Film Council, whose overheads now exceed the production budgets of the very efficient bodies that it replaced. There is enormously wasteful duplication of government resources. Friends from every sector report the same story.

It is true that your news management is breathtakingly effective but I do not think this is cause for congratulation. You have produced systems of Treasury funding in which there’s always a government nark in the room and you have backed it up with a relentless use of patronage which would make an 18th-century Whig blush. ...

Last week a woman broke down in tears at one of the fringe meetings when she recounted how she couldn’t talk about Iraq in her constituency. Looking at Wolfgang being manhandled from the hall, I was reminded of that chilling footage when Saddam staged his coup in the Ba'ath party at a meeting of the central committee and pointed out the individuals who were to be frogmarched from the room. This is Britain, so what awaited Walter Wolfgang outside the conference doors was not a bullet in the head. The lady’s tears were caused by her fear of expulsion, not of imprisonment. If the method is soft, however, the totalitarian desire to crush debate is hard. If Nazi Germany was fascism by radio, New Labour is the corporate state by television. The determination to control the party’s image on television is incompatible with a democratic party and, indeed, with democracy.

.... I have remained a member of the Labour party, however, because it still seemed to me to be a way of connecting at the national level with people who shared my beliefs in the possibility of a fairer and more equal society. Last week has made clear what I’ve known but not wanted to admit for at least six years: that you have made it impossible for me to enjoy any such connection. is clear that you yourself have no belief in any goal of real equality - the New Labour aim, Brown as well as Blair, is just to manage the underclass. Of course, there can be no debate.

When I joined the Labour party I was a schoolboy and I remember learning Kipling’s poem ‘Mesopotamia’ by heart. It is a savage attack on the politicians who had sent young men to die pointlessly in what is now Iraq. In a Labour party defined by its opposition to Suez and opposed to all imperial adventure, it seemed a poem about a far distant past. But when I remember it now under a Labour government in the 21st century, it seems directly contemporary. You have told the world, to this country’s enduring risk and shame, that Britain will back any American government, no matter how dangerous, in pursuing reckless schemes of military adventure. ...

Yours truly

Colin MacCabe

The ruling class is reluctant to give up completely on the the 400 year old parliamentary freedom racket and the continued circus in Blackpool with Tory toffs desperately pretending to be “in touch with ordinary people” and concerned about “social issues” may yet be used to try and give it some more life.

But it is thin stuff especially as everyone knows these are the same people up to their necks in City finance rackets, and the ever more grotesque greed of “bonuses”, and “share options” and “golden handshakes” - including the supposedly most populist of all, Kenneth Clarke up to his neck running in BAT which specialises in running killer cigarettes into the Third World countries under heavy advertising persuasion, part of the cynical colonialist exploitation by imperialism which is becoming less and less tolerable to the masses of the planet; however inarticulately they may express it.

The world is heading for the greatest upheaval in all history as imperialism has already found out to its cost in Iraq and Afghanistan, both now running defeats for the imperialist plans to “shock and awe” the planet as a warning both to rogue states and upstart oppositions everywhere, as well as, most importantly of all, rival imperialist powers.

These disasters are increasingly undermining the confidence and coherence of imperialism, making the desperate straits of its crisis ten or a hundred times worse than before. Its desperate efforts to maintain the “war on terrorism” nonsense with draconian attacks on all opposition thought – are making things ten times worse and drawing ridicule and dismay:

The home secretary has promised the prime minister that he will lock away for five years anyone who “glorifies, exalts or celebrates” a terrorist act committed in the past 20 years. He does not care if glorification was not meant. If someone, somewhere takes anything that I say or write as encouraging to terror, even if they do not act on it, I have committed a criminal act.

This extension of censorship renders any apologist for any liberation struggle vulnerable to prosecution. I find it astounding that people such as Falconer, Clarke and the rest of the cabinet can sit round a cabinet table and pass a measure worthy of Joseph Goebbels.

Clarke is preparing a list of earlier terrorist acts that also render their celebrants criminals. After “listed” historic buildings we have “listed” historic terrorisms. ..They may include any acts of violence against people, property or, bizarrely, electronic systems anywhere in the world if intended to advance a political, religious or ideological cause or to influence a government.

I am told that this astonishing bill was cobbled together not by Clarke or the lord chancellor, Charles Falconer, who were both away at the time. The author was a No 10 wonk who was trying to think up “12 points” to put in Blair’s holiday press conference pack on August 5. The wording recalls the remit of the old House n-American Activities Committee in Washington...

Terrorism as defined in law more or less covers the story of the human race. Half of Churchill’s History of the English-Speaking Peoples must qualify as a listed event. The Crown Prosecution Service must be staffed with experts in William the Conqueror, the Black Prince, the New Model Army, the Gordon rioters, the Puddler's Martyrs. Spin doctors must cut their teeth on Alexander the Great, Vlad the Impaler, Innocent III and the Counter-Reformation in Latin America. They must burn midnight oil over the Albigensian crusade. Blair will be heard screaming in his attic: “Beware the Da Vinci Code.”

This is government by trivia and whim. Already we are told that Clarke’s listed events will not include anything Irish. Why? King William’s campaign is life and breath to loyalist militants, as is the 1916 Easter Rising to Blair’s pet insurrectionists, the IRA. Why should these groups be excused the law? Soon anyone who visits terror on the British people will negotiate a “listed events exclusion clause” as part of their final settlement.

Even without the cliché that one man’s listed event is another’s act of heroism, this is a can of worms. Bomber Harris’s flattening of German cities in the second world war was specifically described by Churchill as “simply for the sake of increasing terror”. The bombing of Hiroshima was, to put it mildly, a politically motivated assault on people and property. Last month it was not glorified, but it was certainly celebrated.

... The issue is not mens rea or intention to glorify. To convict, there need only be someone who confesses to being “encouraged” by the glorification. It is a stooge’s charter.

Ministers may yet be hoist with their own petard. I might draw a moral distinction between Blair’s crusade against certain Muslim states and, say, publicity for al-Qaida violence against me. I might feel that my war is in a good cause and theirs an evil one.

The courts are not free to make that distinction. Any act with terrorist connotations puts not just its perpetrator but any contributory publicity at risk. Operation Shock and Awe against Baghdad in March 2003, in which Britain participated, was intended to terrify the civilian population to the political end of toppling Saddam. The name boasted it.

Government lawyers may argue that states cannot be terrorists, yet those same lawyers apply the phrase “state terrorism” to others. Besides, the bill offers no defence of “good cause”. The Crown Prosecution Service must surely apply the law impartially.

The government’s defenders will argue of terror-bombing from the air that there are distinctions in targeting and collateral damage. But any self-respecting terrorist can find similar excuses for horror. At very least Downing Street is vulnerable to hypocrisy. Its crude attempt to stoke war fever in the winter of 2002/3 with briefings of “new smallpox/ricin/anthrax threat to London” was no less political. It was meant to frighten the public into supporting the rush to war. The effect was to disseminate the same fear as did the supposed terrorists. Bluntly, the government was doing the terrorists’ job for them...

Downing Street is not alone in playing this tune. This week Brussels joined in the New Orwellianism. In a document called Terrorist Recruitment: Addressing the Factors Contributing to Violent Radicalisation, the European Commission warns the media not to take a “reductionist and conspiratorial world view where inequity and oppression are dominant”. It singles out journalism as offering a “specific risk” in the fight against terrorism - the risk of “oversimplification”. Journalists should apparently watch themselves. The edict is the work of the commission’s vice-president and ally of Silvio Berlusconi, Franco Frattini. Berlusconi is no friend of the press.

And increasingly around events such as the latest Bali bombing, despite the carnage, there are more thoughtful voices suggesting why such struggles are happening – the very kind of comment that the New Labourites want to lock people up for:

Bali may indeed be paradise for over 1 million foreign holidaymakers who travel there every year. But for ordinary Balinese, and the economic migrants who flock there from other poorer parts of predominantly Muslim Indonesia, life is far less benign.

Indonesians also know that the Islamisation of this huge country is just one of a patchwork of reasons why holidaymakers in Bali have been targeted for a second time - just as resorts have been attacked in other parts of the developing world.

Often dubbed a “paradise” in holiday brochures, the small Hindu island is a microcosm of the impact of global tourism and the inequalities enshrined in its inexorable consumption of culture, people and environments. However repugnant such attacks, it would be naive for holidaymakers to ignore the fact that north-south tourism has a powerful political undercurrent - as the bombers clearly realised.

Tourism is trumpeted by governments in the global south as a quick-fix means of generating the much-needed foreign exchange demanded by the IMF and the World Bank. But there is rarely any consultation with ordinary people whose lives are irrevocably affected by the influx of wealthy foreigners, and little regard to the environmental, social and cultural impacts at the sharp end.

When we holiday in the developing world, we are engaged in more than a spot of much-needed R & R. Many in the global south regard tourism as a new form of colonialism and cultural imperialism. While that may be hard for the suntanned holidaymaker to take on board, for the millions of ordinary people servicing their needs - the waiting staff, room cleaners, receptionists, shop workers, guides, massage ladies and taxi drivers - the linkage is clearer.

Tourism is a huge industry - the third largest globally after oil and narcotics - employing hundreds of millions of people worldwide. While it benefits some, its impact on local economies and the social and environmental fabric is often disastrous...The trickle-down effect mostly fails to trickle down - the bulk of tourist profits in many developing nations ends up leaving the country. And while corporations like KFC, Starbucks and McDonald’s colonise Kuta’s main drag, how can local restaurants compete with the pull of multimillion-dollar ad spends and brand recognition? Local businesses go broke and families fall into poverty.

In Sri Lanka, the aftermath of the tsunami is being used as an opportunity to push through plans for luxury resorts, while locals are still housed in temporary camps. The government has announced a 200m to 1km coastal development zone that excludes locals from the beach on grounds of safety - but five-star resorts are allowed within the zone.

There is far worse in the relentless exploitation and suppression of the planet imposed by imperialism to explain why the Third World is increasingly in turmoil - some 400 wars, blitzings, coups, CIA plots, and sponsored anti-communist “revolts” since the Second World War, to install compliant pro-US stooge regimes.

The casual arrogance of the west, and the background assumption of its right to exploit and to “take out” whoever it believes to be getting in the way (by leading or standing up for the oppressed masses), is no better illustrated than in the recent “off the cuff” remarks by a US senator, calling for elected president Chavez to be assassinated in Venezuela if the US cannot manage a CIA conspiracy to overturn his popular rule:

Venezuela said yesterday that it might ask the US to extradite the tele-evangelist Pat Robertson for suggesting American agents should kill its president, Hugo Chávez.

Speaking at a meeting of the Organisation of American States, Mr Chávez said Venezuela would “exercise legal action in the US” against Mr Robertson.

The broadcaster’s comments last week have increased the tension between Caracas and Washington. He called for Mr Chávez’s assassination on his television show, The 700 Club, saying the US should “take him out” because he posed a danger to the region.

Mr Robertson, the founder of the Christian Coalition of America, later apologised.

“Calling for the assassination of a head of state is a terrorist act,” said Mr Chávez, an outspoken critic of George Bush. “We could even request his extradition.”

Request it they could and pointing up the monstrous hypocrisy of imperialism’s bloody brutal domination of the planet is all grist to the mill of struggle against it.

But only complete revolutionary struggle to finally end this system is going to stop its insane plunge in to world war destruction.

The increasingly obvious fascist tone to Blairism, domestically and internationally, and behind it the far more significant and sinister Washington agenda is not some figment of an overheated and exaggerated polemic but the increasingly daily reality of late imperialism which will tear up all the “freedoms” and “rules of justice” if necessary.

The aim is to crush every possible worldwide opposition and challenge that must arise as the unwinnable (for debt ridden US imperialism) trade war intensifies into slump collapse conditions.

Just how far that might go is already being hinted:

The Pentagon has just removed from its website a document outlining a new doctrine for joint nuclear operations for the US chiefs of staff. For the first time it sets out specific guidance for US commanders reflecting the Bush administration’s doctrine of pre-emptive strikes. It envisages the use of nuclear weapons to pre-empt a possible attack by a country, terrorist or criminal group with “weapons of mass destruction”.

It states: “To maximise deterrence of WMD use, it is essential US forces prepare to use nuclear weapons effectively and that US forces are determined to employ nuclear weapons if necessary to prevent or retaliate against WMD use.”

The document lists examples of when nuclear weapons could be used. The first is against an enemy using or “intending to use” WMD against the US or its allies. American military commanders could ask the president to use nuclear weapons when there is the threat of an “imminent attack from adversary biological weapons that only effects from nuclear weapons can safely destroy”, to attack “deep, hardened bunkers containing chemical or biological weapons”, or to attack the command-and-control “infrastructure” an enemy would use to attack the US or its allies with WMD.

The proposed new doctrine significantly lowers the threshold for triggering the use of nuclear weapons, notably America’s 480 tactical nuclear bombs in Europe, including the 110 at the US base at Lakenheath in East Anglia.

According to Hans Kristensen, a consultant to the US Natural Resources Defence Council, who first noticed the document on the Pentagon website, the doctrine envisages the use of US nuclear weapons in conflicts where they would previously have been considered illegal.

No level of destructive barbarity is “unthinkable” by imperialism and once the real hatreds, despair and hostilities of the fullscale slump hit home it will be using every barbaric blitzkrieg trick in the book to remain on top.

Only defeat for the system will hamper it and eventually stop its bullying tyranny - as already clear from the anti-imperialist struggles in Iraq and Afghanistan.

But no-one is saying any of this, least of all the fake-”left” of 57 varieties of anti-communist Trotskyites and revisionist Stalinists.

The world’s masses are stirring but what is urgently needed is a clear revolutionary perspective which ultimately is crucial for ending the capitalist system, the great obstacle to all rational and human civilised development.

Don Hoskins

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