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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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Recent paper

No 1329 20th March 2008

As Great Depression implications of capitalist economic turmoil begin to bite on tens of millions, imperialism’s stunt provocations against workers states like China (over Tibet) or Cuba, will get tougher for CIA etc. to provoke. Raging unemployment, bank failures and inflation will show even shallow petty bourgeois the true nature of the “glitzy” West – a sordid dictatorship of incompetent Nazi warmongering with police state repression of the laughable cosmetic joke “freedom and democracy” and spiralling turmoil and chaos. Leninism alone consistently warned of this catastrophe, the world war plans of the ruling class to escape it and the rebellious world upheaval and potential revolution it is generating. Leninist revolutionary leadership is way out, to overturn stinking monopoly capitalism and establish planned socialism. Fake-“left” derision of such perspectives and refusal to tackle past errors and misleadership rightly being left high and dry by crisis. Building Leninist party is crucial task

Anti-communist provocateurs and reactionary anarchic nationalist elements in Tibet have barely bothered with the usual pretence of “peaceful demonstrations” and “reasonable” demands in the latest round of Western-orchestrated “protest” stunts against China’s revisionist workers state.

They cut straight to destruction.

Maybe there is no time for the usual “democracy” game playing when China is on the home run to its magnificent Olympic Games this summer, promising to demonstrate to the world the astonishing progress its communist party controlled economy has made from rural backwardness to futuristic powerhouse.

The West hates the idea of such a powerful worldwide demonstration of the benefits of a planned economy, even one using capitalist economic methodology and with a weak revisionist leadership allowing sometimes under-controlled capitalist ideological tendencies to remain partially unchallenged by revolutionary clarity.

It is a showcase the West is all the more impatient to sabotage as its own “free market” monopoly capitalist economy finally demonstrates with a vengeance its total bankruptcy and collapse, a perspective which is no longer mocked as “old hat Marxism” (misplaced derision the EPSR has long been subjected to) because the evidence of imminent failure and utter catastrophic disintegration is becoming overwhelming.

On top of that China is anyway becoming a major rival in its own right for resources and markets, drawing double venom from the disastrously declining imperialist powers, and most of all the USA, as their onrushing crisis pushes trade war conflict and hostility to the top of the agenda again.

Eventually as in 1914-18 and 1939-45, this will heat up all the way to open inter-imperialist shooting war, already well rehearsed in the Serbian, Iraq and Afghanistan wars, which have been setting the tone for the Third World War degeneration to come, re-establishing war, torture and blitzing as “normal”.

The hatred and chauvinism must be stacked up, to create the conditions of destruction and “sacrifice” that capitalism needs to solve its intractable and disastrous “overproduction” and “credit-crunch” crisis, plunging millions once again into conflict.

So, precisely timed at the point for maximum disruption just months before the event, the West has prodded into action the remnants of degenerate feudal backwardness and religious mystic confusion which it keeps constantly funded as a “government in exile” and bolstered by official White House receptions and reactionary monied Hollywood glitz (when it would fizzle out and disappear otherwise).

But in their in desperation to get something going, the Western-intelligence-orchestrated gangs of rioters and anarcho-individualists in Lhasa and outside, have prematurely moved directly to monstrous racist beating and killings of “Chinese looking” passers-by and pointless street violence and harassment.

Bourgeois press reports have made it clear that the violence has been entirely generated by a tiny minority of more extreme nationalist elements stimulated and led by the supposedly “pacifist” Buddhist monks at the heart of the disruption. It is clear from the TV film footage that the supposed “mass support” is totally non-existent. None of the scenes shown ever have more than a few dozen “demonstrators” at most.

But the aim is to create maximum confusion and mayhem on the streets in front of the conveniently alerted TV crews, hoping either to spark further violence and retaliation, or a firm response from the Chinese state forces which in the ensuing smoke and chaos can be presented as state brutality, with the important questions of “who started all the murder and destruction” conveniently brushed under the carpet.

A few snips of film left on the cutting room floor, or in the digital editor and it can all be converted into the latest round of propaganda about supposed “state intimidation, violence and repression” – with a suitable number of hysterical young “martyrs” to pour out their anti-communist bile for interminable weeks of press coverage to come (unlike that of the constantly oppressed and struggling Palestinians for example who are almost totally ignored over decades after the virtually daily fascist strafings by Zionists fighter planes and tanks on the benighted Gaza strip).

The same CIA-style stunts have been organised a thousand times before, most notably in Burma recently (EPSR No1321) and attempted in numerous other places, such as the slick public relations saturated “colour revolutions” set up by the CIA on the fringes of the former Soviet Union and Yugoslavia, each one pushed towards mass confrontation by a few provocateurs either to create hoped-for state responses which can be portrayed as scenes of “repression”, or to force capitulation to Western stooges by revisionist or post-revisionist leaderships too fearful of “bad publicity”.

It is part of the routine armoury of imperialist subversion and manipulation as detailed by Philip Agee in his “Inside the Company” CIA revelations for example, and used for the last six decades to install western stooge regimes and topple the less compliant, or pro-communist, like Allende in Chile (de-stablised by lorry driver “strikes” and demonstrations), Aristide in Haiti or Nikolae Ceau?escu in Romania among many others.

It was used with maximum impact against China itself in the giant 3-month long 1989 Tiananmen stunt, culminating in the alleged “massacre” in the Square.

The entire racket was generated from the beginning with non-stop Western propaganda, subversion and provocation to try and get a repeat of the insane liquidation of the workers state which had just been achieved in the Soviet Union, where weak-headed revisionism, in its Gorbachevite final manifestation, had given way to the lies of “bourgeois pluralistic democracy” and its supposed capacity to tap the “logic of the ‘free market’” and bring faster economic development, instead of the steady if sometimes unexciting progress made by the crisis-free Soviet economy.

It meant dismantling the workers state forces like the KGB, the heart of the dictatorship of the proletariat.

The result was immediate re-imposition of the dictatorship of capital, the actual and only reality of all bourgeois “freedom and democracy” and the only alternative to firm workers rule for as long as class society exists or its influence continues to persist in human society (for generations, even after the working class has taken power, as Marx, Engels and Lenin clearly and repeatedly spelt out.)

Precipitate decline in ordinary people’s living standards followed and the carpet-bagging gangster plunder of the USSR’s enormous resources built by 70 years of working class effort and cooperation.

It continues in the obscene class divisions and disgusting self-indulgent wealth of the bonapartist Putin’s oligarch dominated Russia, while life outside Moscow festers and declines.

After some revisionist hesitation the Chinese workers state held firm against this deluded perspective and correctly and firmly put down the mixture of gilded youth, petty bourgeois individualism and student anarchy which the West’s influence had succeeded in stirring up (because of the weakness and unrevolutionary ideological vacuum of revisionist leadership), into a campaign around an ideologically loaded model of the Statue of Liberty (US imperialism’s symbol!!) and glitzy pop songs of local rich Hong Kong stars, to try and overturn the workers state.

The firm and necessary state control was calmly carried out to defend the workers state, established in 1949 under Leninist revolutionary leadership at enormous cost in struggle and worker and peasant lives.

But this was immediately twisted by bourgeois propaganda into an alleged “atrocity”, the deliberately created lie of the Tiananmen “massacre”.

Ludicrous assertions were made that 10,000 students and protesters had been mown down overnight. But not a single picture or tape recording, let alone film, ever appeared of either the events or of any aftermath like bodies, despite the presence in Beijing over the whole period (and two months previously) of virtually the entire Western world’s press and TV lie machine.

Experienced reporters and film crews fresh from civil war conflicts and the like elsewhere in the world who knew exactly how to get footage, got nothing, unsurprisingly considering the practical and physical impossibility of such a massacre and cover-up anyway (leaving not one single bloodstain for example the morning after).

It did not happen in other words, as the EPSR explained in a dissection of the Western press’s own (buried) admissions at the time (see China book Volume 16).

The phrase “Tiananmen massacre” is routinely rolled out ever since on the “mud sticks” principle, despite all the capitalist lie-machine press knowing full well it is a vile lie as even the BBC’s key frontman John Simpson conceded recently while chatting about his latest pre-Olympic return visit to China again (to rubbish it some more).

“Well yes” he admitted on Radio 4's Loose Ends a few weeks ago “there were no actual killings in the Square, but some in the streets around. But that is just a matter of geography.”

It is “just” no such thing, as Simpson is well aware. The Chinese authorities stated that there were fights after the Square was cleared peacefully, and after some more provocative hyped-up elements, fearful that it was all ending without incident, attacked and killed Chinese soldiers and police first, outside Tiananmen.

The necessary assertion of state control sadly then involved a few hundred deaths in an outbreak of anarchic civil war provocation caused and initiated by the demonstrators.

Crucial (and if anything overdue) imposition of workers’ state authority had to prevent further deliberate disruption of working class authority.

But this was a million miles from any “massacre” in the square which was central to the Western propaganda, predicated around the emotion-ripping idea of an unprovoked mass slaughter of thousands of innocents.

It never happened, like much of the supposed “oppression” in East Europe, the hundreds-of-millions totals of supposedly slaughtered “victims of communism” which capitalism pretends happened entirely without cause except for the allegedly insanely arbitrary brutality of “totalitarian” rule (see archive section below).

For all the mistakes of revisionist rule, the reality of violence and oppression on the planet is that of capitalism, imposing over 400 coups, putches, assassinations, seizures of power and outright bloody war since 1945 alone, to maintain its rule and with it the endless wage slavery exploitation of hundreds of billions around the planet, driven into starvation, pitiful insanitary living conditions, backbreaking drudgery, sweat shop exhaustion and constant humiliation in order to generate the surplus value that the tiny minority capitalist ruling class seizes to feed its grotesque indolence and luxury, and maintain its power.

Any resistance has met brutal intervention to put down workers revolts and communist uprising, beginning with the slaughter of tens of thousands of workers after the 1871 Paris Commune was overthrown by the bourgeoisie, and continued ever since, not least in the three year wars of intervention against the young Soviet Union by nearly 20 Western countries, the 25 million killed by Western spurred German Nazism in the Soviet Union in 1941-45, and the carpet bombing total destruction of the Korean and Vietnam wars, and the million-strong massacre of Indonesian communists by General Suharto’s 1965 takeover, fed by CIA “suspect lists”, are some of the foulest but no means all the endless violence carried out by imperialism.

Anywhere where workers have been able to take power and start on the long road to building a fairer communist society, they have suffered constant subversion and attacks, dressed up with the capitalist lies that they are pursuing “freedom and democracy” or “the wishes of the ordinary people for national liberation” etc.”

The entire planet lives in conditions of international class war, and nothing else.

There is no easy route to transforming the millions of ordinary people in any particular state into the cultured, self-disciplined, educated, confident all-rounders that will eventually exist as the norm in a completely cooperative and mutually reinforcing society in a future communist world, free of the antagonisms and backbiting competition of the capitalist rat-race struggle for “success”, or in most cases just sheer survival.

It takes decades and even generations of building socialist planned economy and the gradual development of society, which can only be done under the firm guidance of conscious communist leadership protected by the dictatorship of the proletariat, the majority, against the constant revival of the old capitalist order from both outside and within.

The Tibetan stunt now in process is yet another version of the same trickery, whipping up violence with rumour and hearsay and wildly exaggerating the supposed “popularity” of the events in Western press reports.

Even the capitalist press reports make it clear that the violence has been instigated from the beginning by the anarchists and backward feudal monks:

Hundreds of monks and lay people were said to have taken to the streets again in Machu county, Gansu, with protesters setting fire to shops and the security headquarters. Unrest was also said to have flared again in Aba, Sichuan, where there are claims that police shot between 13 and 30 protesters after a police station was set on fire. Like Tibetan exiles’ claims that at least 80 have died in Lhasa, the reports of deaths are impossible to verify because of the restrictions on journalists.

China says 13 “innocent civilians” were killed in the riots in Lhasa. Shops, cars and government related buildings such as the Bank of China and the Tibetan News offices were gutted by fire.

Tibet’s governor, Qiangba Puncog, said that protesters who turned themselves in would be “treated with leniency within the framework of the law ... Otherwise, we will deal with them harshly.”

Hong Kong journalists were ordered to leave Lhasa, and foreign reporters have been turned away or ordered to leave Tibetan areas in the Qinghai, Sichuan and Gansu provinces in the past two days.

Officials said 13 “innocent civilians” died last week, adding that three rioters were killed when they jumped off a roof to escape police.

In Aba county, Sichuan province, protesters attacked a police station with petrol bombs and fought street battles with riot police. There were unconfirmed reports of fatal shootings.

“It’s chaos out there. I am too afraid to leave my home,” a resident told the Guardian. “They have been burning, smashing, looting and beating.”

A police officer said the mob had burned down a market, a police station, two police cars and a fire engine. “They’ve gone crazy,” he told the Reuters news agency.

“The Tibet nation is facing serious danger. Whether China’s government admits or not, there is a problem,” the Dalai Lama told reporters in Dharamsala.

Tibet’s spiritual leader - who fled into exile after a failed uprising in 1959 - accused Beijing of a “rule of terror” and called for an international investigation into whether cultural genocide was taking place in his homeland.

The United Nations has called for an end to the violence. The US secretary of state, Condoleezza Rice, in a statement, urged Beijing to “release monks and others who have been detained solely for the peaceful expression of their views”.

Against a background of rising ethnic tension, in some cities as well as in the countryside, Wen blamed the Dalai Lama “clique” for masterminding the riots, which went through Lhasa on Friday and have since spread to at least three provinces neighbouring Tibet.

“By staging that incident they want to undermine the Beijing Olympic games, and they also try to serve their hidden agenda,” the premier said at his annual press conference.

Riot police are spread across swaths of Tibet, Sichuan, Gansu and Qinghai trying to quell the unrest, which comes fewer than six months before the opening ceremony and weeks before the Olympic torch relay is due to pass through the Himalayas.

Reports of fresh uprisings continue to emerge. Although more than 30 foreign journalists have been turned away or detained to prevent them reaching areas of unrest, two Canadian TV reporters sneaked past 10 police roadblocks to film a riot yesterday near Hezuo in Gansu.

Dozens of Tibetan horsemen galloped down from the mountain slopes to lead the protest, according to Steve Chao and Sean Chang of CTV News. The horsemen rode around Bora monastery, whipping up a crowd, with chants of “Free Tibet” and “End Oppression”.

Monks and motorbike riders joined the throng, which, more than a thousand strong, attempted to storm the government office. They ripped up a Chinese flag and replaced it with a Tibetan flag, before clashing with paramilitary police, who repelled them with batons, shields and teargas.

The Chinese premier, Wen Jiabao, today ramped up government attacks on the Dalai Lama, accusing followers of the exiled Tibetan spiritual leader of orchestrating riots in Lhasa in order to sabotage the Beijing Olympics.

His comments prompted the Dalai Lama to say he would resign if the unrest, which has spread to other provinces, spiralled out of control.

Speaking at a press conference, Wen told reporters that the situation was “basically” returning to normal.

However, he added: “There is ample fact and plenty of evidence proving this incident was organised, premeditated, masterminded and incited by the Dalai clique.

“This has all the more revealed [that] the consistent claims by the Dalai clique that they pursue not independence but peaceful dialogue are nothing but lies.”

Wen said the protesters “wanted to incite the sabotage of the Olympic games in order to achieve their unspeakable goal”.

In a separate press conference, the foreign ministry spokesman, Qin Gang, dismissed the Dalai Lama’s calls for an investigation into the Chinese crackdown on the demonstrations.

“The one who should be tried and investigated is the Dalai Lama himself,” he said. “I feel at least he should be put under moral trial.”

Wen told reporters the authorities had responded to the protests with “extreme restraint”.

As always with the Western press stories of such counter-revolutionary events, unsubstantiated claims by mysterious “human rights organisations”, “diplomatic sources” or “unconfirmed reports” are simply repeated to feed the rumour mill and help induce further trouble.

Small wonder the Chinese state has imposed restrictions exactly as Western police forces do when trying to contain demonstrations and upheavals.

As usual the fake- “left” is bound to be caught out by this latest eruption, the Trotskyists hoist by their own petty bourgeois individualism to support the “self-determination” of the backward anti-communists and “resist” supposed restrictions in favour of “freedom” – meaning the “freedom” of the petty bourgeoisie to do whatever they want without any sense of collective responsibility and struggle, the basic motivation of all their politics and its fundamental hatred of working class and socialist state discipline.

Freedom for all humans to develop their individual capacities and talents can only come when they live in a society which no longer deprives the great majority of opportunity, and actively encourages and provides for education, health, welfare and culture and – namely socialism, exactly as the Soviet Union did for example, over 70 years.

The same blinkered petty bourgeois small-mindedness dressed up as a “fight for freedom” leads the Trots into supporting the new campaign for “journalistic rights” in Cuba, another suspiciously timed provocation launched just as Fidel Castro’s leadership is ending and the West can see an opportunity to put the boot into the dogged and heroic survival of the workers state there, to cause uncertainty and dismay.

The Trot ridden Guardian ran a letter initiating a “freedom” campaign signed by a collection of luvvie liberal writers like Hanif Kureishi and Philip Pullman and outright reactionaries such as the “dissident” Czech playwright Tom Stoppard. But it was immediately countered by a few facts on this occasion:

Cuban side of the jailed writers story

..However, the cause of the writers for whom they are campaigning is not as clearcut as they suggest. Those imprisoned in 2003 were convicted of being paid agents of the US, and the evidence against them was convincing.

The Cuban government made a huge effort to show exactly what these people were up to, and yet its side of the story is ignored. The writers were convicted under laws brought in after the Helms-Burton law in the US was passed in 1996. This gives millions of dollars (this year $45m) to groups that foster opposition in Cuba. This money goes to pay people to write hostile stories that are then posted on websites sited in the US.

To combat this the Cuban government passed laws to prohibit people from taking money and aid from the US in order to subvert the political process. The people jailed were even going so far as to entering the US Interests Section to use computers inside. Some were appearing regularly on radio programmes beamed from Miami. It is hard to believe that any government would tolerate such a level of interference in its internal affairs by a foreign power.

To protest the plight of these prisoners while ignoring the role they were playing in this ongoing confrontation between Washington and Havana is disingenuous and does not serve the purpose of trying to reach a peaceful resolution that will see all political prisoners eventually released.

Professor Patrick Pietroni International Institute for the Study of Cuba, London Metropolitan University

The revisionist fake-“left” will superficially handle itself slightly less cravenly than the Trots, almost certainly posturing around in supposed “principled” defence of China (though with hesitations), substituting either slavish repetition of the Beijing line (as was done for so many decades with Moscow) or covering over their revolutionary shortcomings with loud “solidarity” and “victory” shouting as the Proletarian does.

But the revisionists will equally fail miserably to give any revolutionary leadership as always doing nothing to challenge the failings, insensitivities and weakness of Beijing’s leadership which leave it vulnerable to just such provocations, and more clumsy than it need be in handling residual nationalisms and minority populations, because of the complete vacuum of revolutionary perspectives left in the whole 1.2 billion strong population.

Both China and Cuba are still able to make relatively firm actions when it comes to the immediate defence of their own workers states, understanding and pointing to the outside subversion and constant attacks and vicious sabotage by imperialism.

The Chinese in Tibet have already quelled the worst of this shallow rebellion, correctly identifying the backward feudal ideology of the Dalai Lama as a prime cause of the shallow frenzy.

But it would be an even firmer move to identify the whole Western imperialism and its universal anti-working class tyranny and subversion as the prime culprit, and especially to point to the enormous pressures of the now terrifying economic crisis unravelling with accelerating speed.

It is not just the reactionary Buddhists who are conspiring but the whole of imperialism which uses this backwardness constantly as a lever to try and break up the Chinese state, exactly as it has leveraged and fragmented the former Yugoslavian workers state over a decade of conspiracy and invasion.

The remnants of the once-spirited revolutionary partisan Yugoslav confederation have been torn to shreds, literally once more Balkanising it as imperialist intrigue has done in the past, to prevent any kind of unity and coherence of struggle against imperialism; continuing even now in the latest outrage of forced “independence” of Kosovo and of its thuggish mafia-style KLA leadership, backed by the US and Britain without any figleaf international legality or covering UN pretences even, (but gone along with by the more demented fake-”lefts” and their academic, contextless and perspectiveless “self-determination” theories – demonstrating again how their petty bourgeois instincts always line them up with imperialism’s critical needs, with so-called socialist “theory” bent completely backwards to justify their cowardice and betrayal.)

Buddhist religion and its monks have been given an extraordinary positive image in constant western public relations exercises for just this destructive reason, in complete contrast to other religions like Muslimism, which currently temporarily carries massive worldwide anti-imperialist sentiment and is therefore relentlessly demonised and abused.

Half a millennium ago pressure from the powerful new merchant bourgeoisie in London pushed Henry VIII to dissolve the monasteries in a precursor to the English Revolution because such backward feudal social structures already stifled the forward development of production and economy – for the next 400 years British imperialism has relentlessly blitzed and slaughtered “primitives” like the Tibetans, and the Tibetans themselves in its rampaging heyday (in 1904 e.g.), to impose “modernity”. The rule of capital has torn up all old traditions by force to impose the necessary workshop and plantation discipline needed for profit making exploitation.

So why does the West suddenly think it is such a good idea to re-establish Lama-ism?

For anti-communism purposes only is the answer.

Half clear hints in the Western press of Chinese government comments indicate that Beijing comprehends these deeper dangers – but totally defensively and like all revisionism failing to spell out the world revolutionary perspective.

Such “provocative” comments are avoided by Beijing as much as any other section of the “communist” leadership of the Third International legacy, still saturated by “No to war”, and “Everything through democracy and negotiations” delusions of post-war soft-brained “peaceful coexistence” theories (for all the differences that China had with Stalinism).

But a (Leninist) revolutionary perspective would be ten thousand times clearer for the hundreds of millions in China, the Tibetans and the entire world proletariat, and for Beijing's leadership itself, guiding even better action in Tibet and China, rather than the technocratic woodenness now seen.

The best and most positive defence for the masses in Cuba or China, is the overthrow of the now degenerate world system of capitalism.

Diplomacy, trade relations and international coexistence are obviously major factors in judging what to say about the world and it would be foolish to suggest some sudden launching of international “revolutionary war now” demands, even by such a growing power as the enormous Chinese workers state, nor of giving imperialism any excuse at all to launch its warmongering.

But properly judged tactical considerations and assessment of the balance of class forces on the planet are a million miles away from the abandonment of revolutionary perspectives altogether which Stalinism led to, justifying its position with a strategic philosophical view that “pressure” and “marches” and “rationality” and “parliamentary struggle”, will win the day.

War is coming anyway, and is unstoppable by reason and rationality and the illusory lies of representative democracy just as it has been unstoppable in two world wars in the twentieth century.

The ruling class is driven by relentless capitalist crisis and has only one single answer to its contradictions; to fight it out for top dog capitalist position, and destroy in the process the mountains of “surplus” capital clogging the system, preventing it from making profit and bringing it to the point of precipitous collapse – any moment.

Blame the Dalai Lama’s backwardness by all means but blame imperialism and its raging crisis first and foremost.

And the evidence for that crisis is now overwhelming.

In just a few weeks words such as “disaster”, “precipice”, “catastrophic failure”, “systemic international banking collapse”, “Great Depression”, “Slump” and “soup kitchen” have gone from the realms of mockery and knowing nods about “those crazy people” to the centre of all the serious news discussions, where cold panic has become the order of the day.

The bourgeois press has been full of it:

Financial meltdown, in the end, didn’t happen yesterday. That was welcome but also underlined the truly worrying aspect of this crisis. There has been no cathartic blowout, no single dramatic event that might serve to clear the air. The 1987 crash looks like a two-day affair in retrospect. Black Wednesday for sterling in 1992 looked like a reason to be cheerful by Friday of the same week. In this crisis, it is the steady drip of worries that hurts. Here are eight reasons why it could get worse.

1. If Bear Stearns can be sold at $2 a share, what does it mean for the values of other banks? The take-out price for Bear was 2.5% of stated book value. JP Morgan may have bagged a bargain, but it still required $30bn of financing from the US Federal Reserve. Even allowing for JP Morgan’s negotiating skill, the bald arithmetic suggests Bear’s balance sheet was full of holes.

2. Banks command as much credibility as a football club chairman expressing support for a struggling manager. The louder they protest their own health, the more outsiders conclude the patient fears severe pain. That was the plot at Bear, which a week ago was telling the world that rumours about its lack of liquidity were “totally ridiculous”.

Lehman Brothers yesterday felt the force of this thinking. Its share price had fallen by 46% by lunchtime in New York despite a concerted effort by the bank to talk up prospects. The danger is that share price falls themselves trigger a crisis - they become a reason for risk-averse depositors to pull funds. Lehman Brothers reports figures today: it is no exaggeration to say the market’s reaction will determine the next chapter of the financial crisis.

3. The Fed’s credibility is on the line. It was applauded yesterday for clearing up the mess at Bear Stearns so swiftly. What a contrast to Britain’s agonies over Northern Rock, said fans. But the applause will fade if the US finds itself with two Wall Street banking crises.

4. There aren’t many JP Morgans around. If another US bank needs rescuing, who could the Fed enrol as a partner? Bank of America, another powerhouse, has already been roped in to rescue Countrywide, the largest US mortgage lender. Other members of the Wall Street inner sanctum - Merrill Lynch, Citigroup and Morgan Stanley - have suffered big sub-prime write-downs. None has spare capital to act as a credible rescuer.

5. Sovereign wealth funds are losing their appetite for bailing out Wall Street. Who can blame them? Citic, the Chinese securities firm, almost killed itself by agreeing a tie-up with Bear Stearns before Christmas. Luckily for Citic, the deal has unravelled with Bear’s collapse.

China Development Bank, among others, now looks dumb for investing £1.5bn in Barclays at 720p-a-share - its investment is showing a 45% loss. Viewed from abroad, these examples are powerful reasons to stay away from western banks. So, too, is the apparent indifference of the Fed to the decline of the dollar. Why take a currency risk on top of an equity risk?

6. The Fed is running out of ammunition - or, rather, it is running out of conventional weapons. US interest rates will be cut today, probably by a full percentage point to 2%, but there isn’t much further to go. 1% is a floor in practice.

What about unconventional weapons? The problem with those is that the Fed risks provoking panic. Last week’s $200bn injection of liquidity and decision to broaden the range of acceptable collateral now looks like a last-gasp attempt to save Bear Stearns.

More measures of the same sort might be counter-productive next time if they heighten fears that another big Wall Street firm is on the brink of collapse.

7. Leveraged loans are suddenly a big problem. These loans were the fuel of the private equity buyout boom and their value has plunged - average prices are said to be 85p in the pound, even though defaults are still at low levels. But banks who hold these loans are obliged to value them in their accounts at the market price. The effect at Goldman Sachs today is likely to be a write-down of $1bn. Given that banks in aggregate are reckoned to be holding $200bn of leveraged loans, an across-the-board writedown of 15% would equate to $30bn - a big figure.

8. There is no easy way out of the dollar crisis. In theory, we have reached the point where central banks would look to intervene to stabilise currencies. A month ago, the dollar at $1.50 against the euro would have been seen as dangerous.

Indeed, politicians in the eurozone were fretting about the effect on exporters. Yesterday the dollar fell as far as $1.59 to the euro. The first rule of interventions is to ensure that the action works. In the current climate of concern about the US banking system, success is hard to guarantee.

The ideal time to support the dollar may have passed already.

And so on – all papers as Private Eye puts it. Here is some more:

We are facing a global financial crisis and last week it got a whole lot worse, with US banks being bailed out, markets in panic and millions losing their homes.

While the Chancellor nipped and tucked his economic forecasts, distracted investors in the Square Mile were working themselves into yet another spasm of panic; and by Friday, when America was bailing out Bear Stearns, all thoughts of the Budget had been blown away by the financial tornado roaring in from across the Atlantic.

This was America’s Northern Rock moment. Bear Stearns was one of the first banks to admit to losses on sub-prime mortgages last summer and had already sacrificed one chief executive to the credit crunch. But on Friday, just days before it was due to report financial results, it was forced to turn to the Federal Reserve for emergency funding, delivered via its fellow bank JP Morgan.

The two Wall Street giants have offices directly opposite each other, and Morgan’s involvement evoked echoes of the Great Crash in 1929, when the bank’s headquarters was the venue for the crucial meeting to organise a bailout of tottering financial institutions.

Bear’s travails were the final act in a catastrophic week for the world’s financial markets, in which every day brought a new, dismal record. The dollar plumbed new depths against the euro and fell below 100 yen for the first time since 1995; the price of gold - traditionally a haven for investors in difficult times - soared through $1,000 an ounce to hit its highest ever level; and several hedge funds stumbled towards insolvency, as banks hit by losses in the sub-prime markets threatened to call in their loans.

From Darling’s calm demeanour, it would be easy to imagine all this was a little local difficulty, caused by a shortage of Gordon Brown’s favourite virtue, prudence, and that the UK can power on regardless...

On Tuesday, when the Federal Reserve promised a new $200bn package of funding to the markets, offering to let banks swap hard-to-sell assets, including the mortgage-backed securities at the heart of the credit crunch, for more easily-tradable US Treasury bills, it was widely seen as a desperate measure. As one senior London-based banker put it: ‘When the US government basically props up the housing market by taking collateral debt, you think: “What the fuck?”’

Paul Krugman, an economist and commentator for the New York Times, said the Fed was effectively delivering a ‘slap in the face’ in a desperate attempt to calm markets seized by nothing less than hysteria.

But for Bear Stearns, the Fed’s lifeline, which will not be available until after Easter, was too little too late. As one investor after another refused to take its business, essentially questioning the bank’s solvency, the Fed called an emergency board meeting to authorise a bailout. For a bank without retail customers, this is as close as it gets to the queues of anxious customers standing outside Northern Rock last September.

Since Bear has no direct access to emergency funds, the Fed used a Depression-era provision allowing it to access credit through a depository bank - in this case Morgan, which has so far come through the credit crisis relatively unscathed. The Fed agreed to provide credit for one month, while a more permanent solution is sought.

‘We have tried to confront and dispel these rumours and parse fact from fiction,’ said a chastened Schwartz. ‘Nevertheless, amid this market chatter, our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations.’

Bear’s share price halved, from $70 to $35.

Wall Street is divided on whether the government-sponsored bailout can secure Bear Stearns’ future as an independent, if diminished, bank, or whether the institution will ultimately prove to be so badly damaged that it will need to be broken up.

Whatever Bear’s long-term future, analysts believe the rescue is the clearest evidence yet of the spread of the rot in America’s banks. ‘This is a new level of seriousness,’ says Paul Ashworth, US economist at consultancy Capital Economics. ‘We have seen a few individual funds go down, but Bear Stearns is a major financial institution. If someone of the size of Bear Stearns is in difficulties, then that’s a reflection of the general problems facing the financial system.’

Lenders on both sides of the Atlantic face their deepest crisis for a generation, as they struggle to recover from the shock of the losses incurred on toxic sub-prime loans.

As well as rippling out through the financial markets, the effects are beginning to feed through to ordinary consumers and businesses, who are discovering that borrowing money has suddenly become noticeably more expensive. For an economy such as Britain’s, which is heavily dependent on debt, that could be serious...

Frazzled global investors have lurched from one sell-off to another since last summer, and just a day before the Bear Stearns rescue, hedge fund Carlyle Capital Corporation admitted that it was on the brink of collapse.

In the calmer atmosphere of the Commons, however, Darling struck a soothing tone, impressing on the voters Labour’s strong economic record, and repeatedly returning to his mantra that Britain was ‘resilient’ and ‘better placed than other economies to withstand the slowdown in the global economy’. His aim, in what he called a ‘responsible’ Budget, was to ‘secure stability in these times of global economic uncertainty’.

...fear - that the banks’ travails will start to hit ordinary borrowers - that makes most economists more pessimistic about the outlook than the Chancellor.

‘Our whole economy is propped up on borrowing,’ says Peter Spencer, economic adviser to the Ernst and Young Item Club. ‘If you can’t free up the lending routes, it’s not just the housing market and the public finances that will take the hit - it’s sterling and the rest of the economy. And in that sense, we are very, very badly placed. We have all gone out and borrowed a huge dollop of money.’

‘Darling should be very worried,’ says Richard McGuire, economist at RBC Capital Markets. ‘Of all the markets that we cover, the UK is the most similar to the US: it’s most vulnerable to weakness in the housing market and financial sector.’

Like American households, Britain’s consumers have been ratcheting up their borrowing as house prices have risen. In the UK, the house-price boom has actually been larger. If hard-hit lenders start to tighten their terms and conditions, it could hit house prices, consumer spending, and, as in the US, eventually jobs.

McGuire believes that as the banking crisis worsens, London’s fast-growing financial services sector, a powerful engine of economic growth and a source of immense pride for the government since 1997, will become another source of concern. Bear Stearns alone employs 1,500 staff in London.

‘Financial and business services make up half of the output from the service sector - that’s the City, lawyers, accountants and so on. They’re all feeding from the same trough,’ he says.

With many markets effectively closed and the days of mega-mergers - and the bumper fees they bring in - at an end for the time being at least, there are likely to be layoffs, less generous bonuses and badly shaken confidence. A number of hedge funds are under severe pressure, and the spectre of huge job cuts haunts dealing rooms.

International Financial Services, the trade body that promotes the City overseas, predicts there will be 10,000 job losses in 2008. Many fear the final number could be much larger. Quietly, 2,500 jobs have disappeared from payrolls this year already.

...banks’ bad debts are normally quite low at this stage of the economic cycle - the end of a period of strong growth and the beginning of a slowdown. The big write-offs usually come as the economy slows and unemployment, bankruptcies, defaults and repossessions rise: ‘To have such huge bad debts even before the economic slowdown has taken hold is unusual in the extreme,’ he says.

He predicts bad debts in the US markets will rise to between $350bn and $450bn, possibly even $500bn. The total combined capital of the top 100 banks is only $800bn, so losses on that scale would wipe out more than 60 per cent of the capital, meaning some would go to the wall.

In the UK, the commercial property sector is already feeling the squeeze. ...For 15 years, real estate has enjoyed a phenomenal rise, but as the credit crunch tightens its grip, deals are falling apart. Banks will now only lend money if buyers stump up at least 30 per cent of the property’s price. Values have plummeted.

Senior property figures warn a new round of panic sales is around the corner, precipitating a possible crash...

Concern is also growing that, after Northern Rock and Bear Stearns, another bank casualty is looming on this side of the Atlantic. Many are now focusing on Irish banks, which have lent aggressively during the property boom. Irish Nationwide, which was recently given a ‘C’ rating from Moody’s - not a ringing endorsement - is at the centre of rumours. The bank, with assets of €16bn, had a reputation for offering 100 per cent loans on property, and took equity stakes in many deals.

Until the US economy is stabilised, the risks to the rest of the world will continue to intensify. The Federal Reserve looks certain to cut rates again this week as it struggles to put a floor under the housing market and calm investors. But for some, its apparent impotence so far is chillingly reminiscent of the failure of the Japanese authorities to halt the catastrophic slide in property prices that dragged the country into a decade-long recession in the 1990s.

‘It really smacks of what Japan did,’ says Graham Turner of GFC Economics. ‘They focused on dealing with the problems the banks had, rather than dealing with the housing market. In many respects, they’ve made a lot of the mistakes that Japan made.’

He says the Fed is not addressing the underlying problem - the plunging American housing market and proliferating repossessions. As many as 2 million American families are expected to lose their homes this year. And as British homeowners with long memories can testify, repossession is not only devastating for the families affected, but also damaging to prices across a neighbourhood, as properties are resold cheaply to recoup at least some losses.

...Andrew Clare, an expert in asset management at the Cass Business School, says things will get worse before they get better. ‘The bottom line is, the macro-economy is worsening. And while the housing market is still worsening, there’s going to be this constant reassessment of the banks’ position. It’s not going to work itself out until at least the summer. I suspect we’ll see new 2008 lows on pretty much all the markets.’

But McGuire says it’s hardly surprising Darling was wary of using his first Budget to admit just how vulnerable we may be. ‘They’ve been in power for over a decade now. They can’t say, “We’re going to hell in a handbasket,” because people will say: “Who’s responsible?”’

Who is responsible for deliberately misleading the working class would be a better question to ask – knowingly feeding them the lie (still being pumped out by New Labour) that “everything is basically sound” and leading them along by the nose to take on mountains of additional debt individually and by the state, and taxing them, to feed the lucrative state agreed contracts and deals of “privatisation” which are the only means by which supposedly efficient capitalism has been able to make any kind of a profit at all for the last 30 years, because the declining rate of profit (an irreversible tendency of capitalism as Marx explained) had already brought “competitive” capitalism to the point of failure, when the general profit rate was no longer far above zero and only government deals have artificially maintained moribund companies and the fat cats that own them or benefit from them through the banks.

Only plundering the state by “selling the family silver” as Tory Harold MacMillan famously and contemptuously declared of Thatcherism, (and the New Labourite fat-cat-loving essentially Thatcherite echo ever since) and using mountains of additional paper dollars to stave of bankruptcy has kept the long overdue Crash away. Even more so in the US, pumping out dollars into the entire world trading economy.

Now, the staggering dishonesty, hypocrisy, arrogance and sheer Goebbels lies of capitalism are thrown into even starker light by the ruling class’s bare-faced demands for “state support” to prop up their total shaming humiliation of the entire economic system after decades of declaring that “only the rigorous processes of the market to weed out badly run enterprises and properly reward the efficient – however painful that might be – can guarantee prosperity.”

Prosperity for the tiny minority stuffing their boots with anything they can get their hands on while the pain is borne by the working class and Third World proletariat.

Plenty more lessons will pour out as crisis slides downwards. But the fake-“left” will not help understand any of it.

They have gone along with the entire notion that “talk of revolution is premature and we have to tactically support Labourites” (or “left”-Labourites, or new versions of reformist Labour like the SLP or Respect) which has meant covering up capitalism’s onrushing failure.

Every single fake-“left” group (however revolutionary the pretences of their papers) has failed across the board to tell the working class that the total historical collapse of the entire monopoly capitalist-imperialist class-dominated epoch is inevitable, and that its descent into chaos and war is equally inevitable, unless stopped by total revolutionary transformation, led by a conscious revolutionary (Leninist) leadership which urgently needs to be built.

The iron laws of capitalist production cannot be pushed aside forever, however much debt can be used to make the wheel spin a little longer, and the crisis must eventually return but ten times, a hundred times, a thousand times, worse.

Some of them are desperately rushing out “theoretical” articles on Marx’s Capital now, or stirring themselves to talk about “recession” (recession!!!) but without remotely linking it to a fundamental understanding of the US warmongering and the huge waves of Third World rebellion spreading across the planet.

Such dry and tardy explanations have got nothing to do with a revolutionary perspective which should be the foundation informing all understanding and analysis.

The EPSR has insisted on warning the working class of such total oncoming economic failure (and linked social, cultural, political and warmongering disintegration) for the entire period of its existence since it was founded just under 30 years ago, and makes the point once again that it is being proved totally correct.

To do so is not to assert some clever-clever superiority – there is none – but to demonstrate that basic Marxist science remains the most powerful tool of understanding for the working class that human reason has yet devised, an all-sided scientific method a million light years in front of “rigorous” bourgeois science, forging a leadership and motivating strength (because true) for the class through rationality that is far beyond the “instincts” or “will” of heroic individuals and “natural leaders”, or the grip of professors and economists or the promises of religion.

Marxism no more dismisses bourgeois science and critical realist philosophy than it would dismiss the achievement of the bourgeois epoch in technology or art.

Just the opposite. Marxism has to absorb and take on board all progress in human philosophy, including the strides of the capitalist era.

But its dialectical materialist and historical method – and the constant constructive conflict of emerging opposites in the struggle for understanding (which demands a party) goes way beyond the one-sided grasp of the world class society can achieve.

Predictions of the capitalist epoch’s collapse are based on an enormous body of past Marxist science – and not least the titanic dissection of the profit system and its contradictions by Karl Marx’s life work in Capital and much else – and the constant development of such understanding in depth and breadth to constantly confirm the revolutionary nature of existence and human society, and lead it in practice as the Bolsheviks did (another profoundly important body of knowledge and most particularly Lenin’s writings).

Small philistine minds may sneer that “well – if you predict doom for long enough it’s bound to happen eventually” but thereby demonstrate only their own idiocy. It is not true of course; only in 1990 the bourgeoisie (in the form of Francis Fukayama and numerous press articles) was predicting the “end of history” and the finish with the “communist threat” as we entered the golden uplands of permanent “democracy” with no more threats to the world and growing prosperity forever.

You can predict that until you are blue in the face and it will not happen.

And if disaster is “bound to happen eventually” would not the rational human start making preparations?

The best preparation would be to deepen understanding of the revolutionary nature of the world and the necessity of a revolutionary solution to the chaos that capitalism is driving the planet into.

It demands that a party be built for just such conscious struggle.

But, the mockery usually goes on, “there is no chance of revolution right now, comrade - haha.”

Perhaps one reason is your fake-“left” cynicism and imperialist colluding poison which leaves the working class and world proletariat bereft of decent understanding, should be the first reply.

But the deeper answer is that a conscious revolutionary perspective is essential if all the struggles of the working class, however limited or partial, or defensive against slump, or reformist for the time being, are to make sense and ultimately bring the class to the only solution which can stop disaster – the building of planned socialism, for the whole planet in which all the dire problems of hunger, deprivation, ignorance, crime, drugs violence and environmental disaster can be tackled by the full resources of the whole of humanity working cooperatively and rationally.

It is the only perspective by which the moment when revolution is ripe can be judged, by which time it is a bit late to start talking about it.

The revolutionary perspective also warns the working class that the warmongering fascist dictatorial path that imperialism is already well down, is utterly part of its desperate crisis.

The turn to warmongering which sputtered in the 1990s in the first Iraq war, Somalia, Sudan cruise missiling and Afghanistan raids, began with full force against Yugoslavia and the blitzing of tiny Serbia, and immediately on into the Iraq and Afghanistan wars, as the ruling class realised the full stomach churning extent of its problems.

The US neo-con plan was to get in first on the unstoppable conflicts to come to stun the world with “shock and awe” and hold back both any anti-imperialist and rebellious masses. Even more it was warning the major capitalist rivals of the ruthless destruction they were to expect if they should challenge the post-war prime monopoly power of the US.

Bankrupt imperialism is insisting that the rest of the world continue to soak up its valueless dollar credit with no redress, or means of obtaining the real value in exchange for the goods, resources and services which continue to pour into America.

But the warmongering is a disaster as the numerous five year anniversary press accounts of the Iraq war and the foul mess of Afghanistan make clear (no room for cuttings but next time). The world is not cowed but stirred into hatred and rebellion on an unprecedented scale.

Conscious leadership is the missing ingredient. Build Leninism. Don Hoskins

 

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