Hitherto philosophers have interpreted the world in various ways. The point however is to change it. Karl Marx
Economic & Philosophic Science Review
(Weekly.  Subscriptions £10/3 months;  £10/p.a.) [P&P Bulletin Publications PO Box 50, London SW17  9NL]  [Post  Office  Regd)
No 928 Tuesday November 25 1997                                                                                                                    10p

World slump closer as the bogus benefits of 'free-market competition and democracy' crash in ruins. The fraud of 'free world cooperation' under murderous chauvinistic attack already. The whole historic position of all anti-communism is now undermined. Contempt for theory can no longer survive. The world-shaping decisiveness of imperialist crisis, - and how to prepare to deal with it,- will now have to be recognised. Collapse of capitalist 'democracy' will remove the main prop under Trotskyite 'democratic' individualism. Stalin's revisionist confusion must now be cleared up. Workers states achievements will shine through.

The capitalist press itself is not stinting on doomsday scenarios for global economic collapse as a result of stock market crashes, currency turmoil, and Far East bankruptcies.

The panic is there, as well as very grave real difficulties, and piecemeal analysis is offered on which details have gone wrong, and who is responsible, and also who could be hurt next.

But what all this frankness hopes to get away with is to avoid any philosophical/historical discussion of whether the world needs such a disaster-prone system, of how destructive this crisis could become, and of how its potential barbarism reflects on the very nature of capitalism.

So far, media predictions go no further than saying that a new 1930s world-depression catastrophe could happen. What they leave out is the really important bit, - that the Great Depression was merely the popular-suffering backdrop to ferocious inter-imperialist conflict over who should bear the greatest burdens of the slump, or who should trample on who in order to get out of it, - leading indirectly to World War II. A quarter of a century earlier, World War I broke out for similar reasons.

The imperialist economies are still competing with each other to colonise the world in exactly the same way as then, only without the direct political colonisation under the imperial flag. 

Under this 'open market' imperialism, the conflict is fought out through driving each other into bankruptcy. The world-dominant US imperialists and their stooge organisations, - the UN, the IMF, and the World Bank, - all pretend that everyone is out to help each other NOT collapse, - offering loans, advice, and individual or collective support, etc. 

But this is solely done for the purposes of capitalism's general framework surviving.

Inside that framework, the knives are out. The long postwar boom is finally busting, and everyone knows it. And the deluded dominant mentality is that the boat of prosperity is now leaking badly, and that if some markets are not abandoned now and thrown overboard, then the whole system will sink, drowning everyone.

'Controlled' bankruptcies in all directions will now be the order of the day so that capitalism itself can survive.

But the reality is that it will get far, far worse than the 1930s Depression could ever have been in its worst aspects, - and the continuity of civilisation in general, looking on, will conclude that this is a corrupt, degenerate system that there is no more living with.

This world slump will be by far the greatest in history because the capitalist system has expanded to an incomparably greater extent than ever before. It really is globalisation.

The seemingly never-ending postwar boom finally goes bust exactly as Marxist science originally described must repeatedly, systematically happen:

"The last cause of all real crises always remains the poverty and restricted consumption of the masses as compared to the tendency of capitalist production to develop the productive forces as if only the absolute power of consumption of the entire society would be their limit." (Capital, Vol III, p.568).

Remarkably, the capitalist press itself is in places currently echoing Marx almost word-for-word:

The danger is that at some point this house of cards must tumble down. In an open-border global economy, nearly every car manufacturer, for example, is trying to have a presence in every market. But when all the factories crank out more cars than people can buy, car prices come tumbling down, as do carmakers' profits, and out go the workers.

And this same New York Times piece goes on to describe some of the deadly trade-war and slump implications of this anarchy of 'surplus' capital, forever increasing its monopoly size through profiteering and exploitation, then becoming too vast for the given levels of exploitation on the planet to support any longer:

There is something to worry about. The Asian financial turmoil may be the first stage of a developing worldwide crisis driven mainly by a phenomenon called overcapacity: the tendency of the unfettered global economy to produce more cars, toys, shoes, airplanes, steel, paper, appliances, film, clothing and electronic devices than people will buy at prevailing prices.

"There is excess global capacity in almost every industry," Jack Welch, chairman of General Electric Co., said recently.

The problem arises because the global economy tends to make businesses build too many factories. Allied Signal Inc., for example, a multinational corporation based in New Jersey, built a polyester plant in France in 1993 and expanded it last year. The polyester, used in nylon carpets and tire cords, is sold in France and shipped across open borders to customers everywhere in the region.

But a group in South Korea, an emerging industrial nation seeking to be a big player in many major industries, opened a polyester plant there recently. Taking advantage of open borders, the South Koreans are shipping their polyester into Europe and elsewhere, grabbing customers and market share by offering lower prices. The customers, offered more polyester than they need, have encouraged a price war.

Price wars, up to a point, are good for consumers. The inflation rate in the United States has fallen in part because of global overcapacity, and business people everywhere complain that they cannot raise prices. The danger is that at some point this house of cards must tumble down. In an open-border global economy, nearly every car manufacturer, for example, is trying to have a presence in every market. But when all the factories crank out more cars than people can buy, car prices come tumbling down, as do carmakers' profits, and out go the workers.                  

Down, too, go the number of people who can afford to buy cars. Economies can spiral toward recession, or worse. That is what is beginning to happen in Asia now.

East Asia has been the main source of the world's overcapacity in recent years. Since 1991, countries such as Thailand, South Korea, Indonesia, Malaysia and the Philippines have accounted for half of the growth in world output, primarily in manufacturing, according to David Hale, chief global economist for Zurich Insurance Group.

The financing for this new production often came from international investors moving huge sums across borders. They frequently borrowed the money at low interest rates in Japan and the United States and then invested in booming Asia in expectation of earning a high return. Chunks of this money inevitably went not into factories but into speculation. Borrowers defaulted. As the big returns failed to materialize, fear grew, first in Thailand, that money invested in that country's currency, the baht, would not earn enough to pay debts incurred in dollars or yen. A run on the baht last summer spread to stock prices and to other: Asian financial markets.

The factories remained intact, but the millions of Asians counted on to be customers pulled back. In their place, consumers in the United States have become the targeted buyers for much of the unsold Asian output. As imports from the region rise, there is downward pressure on prices in the United States and on the wages of workers who make products that compete with the imports.

The global economy appears, in effect, to be capable of self-destruction. That is the view of William Greider, author most recently of One World, Ready or Not: The Manic Logic of Global Capitalism, who points to the dangers of an unregulated global economy.

"It produces more and more goods even as it suppresses wages at both ends of the world, in industrial as well as developing countries," he wrote. "You cannot do that forever — producing more and cutting the wages of those who buy — without some collapse."

So what then happens? Increased rates of exploitation of the masses,- for those capitals still surviving in the crash, - is the only way 'forward'. As mass unemployment grows, and as more and more capitals go bankrupt, - the wage rates and living standards are cut for those still in work, and the welfare payments for those out of work are cut as well, as is their social support in general, in hospitals and education services, etc.

What happens then? The slump spiral still continues downward. The more that living standards are cut, the less goods are sold, the tighter the cut-throat competition becomes, and the more bankruptcies there are, - leading in turn to further cuts in living standards, etc, etc.

But at the same time, the masses have started fighting back, and trade-war chauvinism is simultaneously unleashed. Communist revolution starts to revive, and fascist reaction rears its ugly head at the same time.

This pattern is already visible in South Korea, as today's capitalist press reports reveal:

Its banking system is creaking, many of its industrial giants — the mighty chaebols — are borrowed to the hilt and struggling to meet their commitments.

The stock market has crashed, falling a record 7.17 per cent yesterday. The currency has collapsed too. Foreign investors, for whom South Korea was the Asian tiger par excellence and big with it, ranking just outside the world's top 10, have taken fright.

The South Koreans are not happy and it shows. The bars and clubs of Seoul are empty well before midnight. "The entertainment industry is in tears," according to one European businessman. 

The purse strings are being pulled tighter in other areas too. Sales of foreign luxury goods are down. So-called frugality squads, with an interesting sense of civic duty, have taken to publicly incinerating foreign cigarettes.

Inchcape, the British trading combine, which represented Rolls-Royce, Jaguar and General Motors, announced in September it was withdrawing from the car import business in South Korea.

The government, worried about the balance of payments and the dollar drain, is cracking down. The authorities are said to be investigating any Koreans who run up more than $5,000 (£3,125) on their credit cards while abroad on holiday, to make sure it has all been spent on direct travelling expenses.

Anyone clocking up $10,000 will be referred to the prosecution service and could face action for "excessive spending".

If the IMF has its way, things will get worse before they get better. In exchange for support, its negotiators are expected to demand financial and labour market deregulation, higher taxes, reform of the financial system and the removal of trade barriers. They will want to see South Korea cut its inflation rate, its trade deficit and its heady growth rate — the IMF will want to cage the tiger.

The message will not play well to South Korean workers, who took to the streets earlier this year when the government tried to make it easier for firms to lay-off employees. The trade unions are already limbering up for another bout of industrial unrest if an IMF-imposed package forces companies into a job-shedding round of restructuring — South Korean labour disputes are not for the faint-hearted.

More recent efforts to reform the financial system did not even get as far as the statute book, while industrialists are gunning for the one big financial reform of the administration — the real name rules which ban South Koreans using aliases to open bank accounts. Critics say it has led to a drop in savings, supporters say it has made political pay-offs harder.

The looming presidential election will not make South Korea's politicians keen to take the painful measures prescribed by the IMF, a fact underlined by the reluctance with which they turned to it last week.

It was only after South Korea had failed to get aid directly from Japan and the US — can't pay, won't pay respectively — that they admitted the IMF was the only game in town.

If the South Koreans and the IMF fail to agree or if they succeed but the aid package does not stem the haemorrhaging of cash and confidence, the consequences could reverberate around the world.

Take South Korea's near neighbour, Japan. It has its own domestic worries. Yamaichi's failure will dent confidence in Asia even further and put more demands on Japan's financial system. Its bankers are already into South Korea for about $24 billion, out of the country's total foreign debt of some $100 billion. Getting more, or even persuading the banks to "roll over", their loans will be tricky.

That leaves South Korea eyeball to eyeball with the IMF. The government's negotiators will not be comfortable. The prime minister, Kim Young-sam, in Vancouver for the Asia Pacific Economic Co-operation conference of international leaders, is talking of "bone carving pain". The pain is not just economic. Koreans do not like foreigners interfering in their affairs.

Nor will they relish changing the very economic system which brought unparalleled success, from poverty to industrial modernity, in record time.

Seoul itself shows plenty of evidence of the pace of change. Huge skyscrapers dominate the city's furiously busy streets but in between are streets and squares of tiny buildings, overtaken and apparently forgotten in the dash for growth.

The snag is the system was designed only for success. The government encouraged the growth of the big chaebol and the bank lending that fuelled it. Both sides pressed ahead with ever more asset purchases, ever more lending — confident the government would never allow the system to fail. Because it couldn't fail there was no need to make contingency plans.

Unfortunately, the ever more ponderous edifice needed to keep growing very fast. 

Time was running out, even before the summer of discontent. One chaebol went spectacularly bust, another had to go to the courts to get protection from its creditors. Yet another had to be bailed out by the government.

Predictable it may have been but the crisis has struck at a difficult time. The forthcoming battle for the presidency has made reform problematical. Analysts say it has also come as South Korea's voters, especially the younger ones, are looking for a more open, less corrupt (the last two presidents are in jail) and less authoritarian system.

The chances are that South Korea will cut a deal with the IMF. Hank Morris, at Corya Securities in Seoul, reckons the government would not have called in the IMF at all if it was not prepared to reach an agreement. An interim deal with the IMF could see an initial $5.5 billion package in place within the next 10 days.

Selling it to the South Koreans themselves will be tough. In a system with little by way of a social security net, large scale lay-offs would mean tremendous hardship.

Mr Morris acknowledges the possibility of industrial unrest if the IMF forces South Korea to wield the jobs axe. "This time, rather than taking action against the government, we might well see the labour activists carrying banners saying "Down with the IMF".

It would not be the first time. The problem, however, is not simply one for South Korea. Even if a deal is agreed, the IMF comes up with sufficient funds to stabilise the country's financial system and both sides of industry knuckle down to the painful remedies that will, inevitably, be prescribed, the fall out from the crisis will spread.

Few doubt that South Korea will try to export its way out of trouble, while keeping the lid on domestic demand and foreign imports. "No foreign cigarettes, no foreign clothes, no foreign cars," observed one pessimistic businessman this week. "Maybe even no foreign underpants," he added, in a tongue-in-cheek reference to the presence of Marks & Spencer in Seoul. 

He is not alone in his forebodings. South Korea's economic growth is forecast to fall to 6 per cent this year but next year could see the first contraction in the economy for nearly 20 years. Given the size of the South Korean economy, that will hit exporters from other countries. At the same time, the South Koreans will battle ferociously to export, putting pressure on prices round the world.

Meanwhile, countries, including Britain, which have seen large-scale Korean investment, may find the flow of funds slows as companies try to repair their domestic bases.

And that is just if the bailout works and a resolution of the South Korean crisis draws a line under this year's tarnishing of the tigers.

The alternative, failure and the risk of the contagion spreading to Japan, is incalculable. Suffice it to say some are already drawing comparisons with the great depression of the 1930s.

But what happens then? The ugly aggression in South Korea has been earmarked to be turned against North Korea as a classic jingoist nationalist diversion. To draw attention away from the South Korean crisis, the CIA-controlled world capitalist news agencies have been pumping out nonsense for months about an imaginary 'starvation collapse' of North Korea, preparing world opinion psychologically for another huge lying stunt of the "North Korea attacks South Korea" variety, just like the CIA's "Gulf of Tonkin incident" when entirely fictional stories of an attack on the US Navy by a lone North Vietnamese torpedo boat were spread round the world by the CIA's news agencies to provide US imperialism with an 'excuse' for fullscale war against the Vietnamese national-liberation movement.

But that would only provide one small diversion for South Korea's imminent political crisis, - and that could be very short-lived if China decided to intervene.

But what about a hundred other countries which could soon be drawn into this uncontrollable world crisis of collapsing currencies, banking systems, and trading markets, with hundreds of millions of seething unemployed everywhere?

Scarcely believably, in the light of the capitalist system's inhuman and intolerable warmongering record in the 20th century, - the only 'preparations' capitalist regimes are making anywhere is to join in the imperialist arms race, - as the Wall Street Journal has described:

Such neglect, officials here say, is a legacy of dependence on the U.S.: The Philippines was left seriously exposed when the relationship ended abruptly six years ago. So Manila is slowly modernizing its military. And the rest of Asia, after watching the U.S. security arrangement with Manila dissolve, is latching onto some sophisticated weaponry that could reset the regional balance of power. 

Military Outlays Surge

Although Pentagon officials say the huge number of US. troops in Asia - about 100,000, mostly in Japan and South Korea - makes such a buildup unnecessary, it is well under way. Military spending by China and other East Asian countries totalled $165 billion last year, the U.S. Arms Control and Disarmament Agency says. That is nearly double 1990 spending and equal to 20% of global defense outlays. Last year, Asians accounted for 48% of world-wide purchases of large conventional weapons, such as warplanes, submarines and tanks. That's up from 28% in 1990, according to the Stockholm lnternational Peace Research Institute.

With this rapid rearmament, Asia, which is scarred by ancient rivalries and territorial disputes and lacks a multilateral defense group such as the North Atlantic Treaty Organisation to deal with them, is likely to become a much more dangerous place. The U.S. is expected to remain the region's most powerful player, but the arms proliferation may make Washington hesitate to flash its military might in Asia. So Manila plans to buy new warships and is shopping for long-range fighter jets, from either the U.S. or Russia, to replace its aging F-5s. 

Other Asian nations also began several years ago to upgrade their forces. Malaysia is buying Russian MiG-29 fighters. Indonesia recently announced it would buy Russian Su-30 fighters and helicopters.

Thailand is expanding its naval reach from coastal defense to sea-lane patrol with six frigates and a small aircraft carrier that can accommodate jumpjets bought from Spain. It also will soon take delivery of 28 Russian fighters, six U.S. attack helicopters and F-18 Hornets to upgrade an air force that now consists largely of F-5s and old model F-16s. And the Thais are being wooed with cheap tanks and artillery by China, which is trying to buy support for its territorial claims in Southeast Asian waters.

In Northeast Asia, the concern is as much about Japan as about China. South Korea, which last year deployed three destroyers to contest Tokyo's claims on a chain of islands in the Sea of Japan, is developing a deep-water navy; its obsolete fleet now is primarily limited to coastal defense. South Korea also wants to replace its F-4 Phantoms with long-range jet fighters Despite its alliance with the U.S., which the U.S. State Department estimates costs American taxpayers $20 billion a year. Seoul is stockpiling weaponry that would be more useful in a war against Japan, its ancient enemy, than against North Korea.

"They know what they're doing," says the regional director for a major U.S. defense contractor. "Sooner or later, the U.S. will have to withdraw, and there are a lot of contentious issues for these countries to resolve until then." Asia's financial turmoil also could temporarily hobble the buildup. Already, the Thai government has deferred a decision to buy an armored vehicle from France, largely because of the economic problems stemming from the collapse of the baht.

Some deals are propelled by far baser motives: Many Asian defense purchases are laced with kickbacks equal to 30% to 40% of the transaction, according to a recent study by the Institute for International Policy Studies in Tokyo.

But the trend is clear. For the Philippines, the need for military modernization became brutally obvious in February 1995, when the Chinese navy planted its flag on Mischief Reef in the Spratlys Islands, a small but strategically located and resource- rich archipelago claimed by Vietnam, Taiwan, Malaysia. Brunei and China as well as the Philippines. Mischief Reef lies only 240 kilometers from Philippine waters but more than 1,100 kilometers from China.

A month later, the Philippine navy ferried reporters to the reef to underscore the seriousness of Manila's claim. Along the way, the ship full of reporters broke down; it was towed back to Manila with a frayed rope tied to a Philippine patrol boat. The .50-caliber machine guns perched on the bow of the lame vessel, recalls one reporter, were useless, ossified by years of neglect, and its decks were crawling with rats. Shortly before the media trip, two gunboats ran out of fuel while chasing Chinese pirates from local waters.

Modernization Plans

Reacting to such debacles, the Philippine government approved a $5 billion naval-modernization program. Over 15 years, the navy plans to acquire six missile-equipped corvettes and three frigates and to bolster its capabilities for submarine detection and mine sweeping and laying. 

A senior U.S. military officer says the U.S. has a plan to occupy the Spratlys if China takes a provocative step there - and to police the area until the issue is resolved. Philippine officials say they know nothing of such a plan and aren't counting on U.S. political support for it. Another reason Asian nations can't afford to rely on the U.S. in regional disputes, military analysts say: The age of gunboat diplomacy may be ending, with the proliferation of cheap but deadly guided missiles that threaten to render ineffective the aircraft carrier, the spine of America's naval presence in the Pacific.

Pentagon and State Department officials say Beijing is expected to purchase Russian-made SS-N-22 antiship missiles, known as Sunburns, which can be fired from a warship and cruise at 2.5 times the speed of sound. In August, Russia unveiled another, more powerful, supersonic missile, the Yakhont, that it hopes to sell in the Mideast and Asia. 

Serious Naval Threat

Either missile could pose a serious threat to carrier battle groups operating in coastal areas such as the Spratlys and Taiwan, despite the sophisticated antimissile systems on U.S. ships. 

"At Mach 2.5, in littoral- warfare conditions,  the reaction time from launch to detection is cut to seconds," says George Friedman, chairman of Strategic Forecasting of Austin, Texas, an intelligence software and consulting company. "What China is doing is reducing the willingness of the U.S. to deploy its carriers by increasing the probability of damage to them."

China isn't the only major weaponry buyer that bridles at U.S. export restrictions. South Korea, America's closest ally in the Far East and the world's fourth-largest buyer of foreign arms, is developing a satellite that would free it from dependence on the U.S. for spy photos. That capability, some U.S. officials worry, could provide Seoul with battle-management technology that Washington couldn't control. Seoul also is negotiating with Boeing Co. for Awacs early-warning aircraft and is mulling a long-range-missile program despite quiet U.S. protests. South Korean military officials lean toward the Israeli-developed Arrow network, which they say can be adapted for both antimissile and anti-aircraft operations more easily than the Patriot.

"We're considering the Arrow for our long-term threats," says a senior fellow at Seoul's Korean Institute for Defense Analysis. "When the U.S. withdraws, we want to play a balancing role between China and Japan."

But what of the major powers? As discussed subsequently, this imperialist crisis is essentially theirs. The smaller nations are really only bit-part players. It is the conflict for world economic domination,- as inherently implied in Marx's 19th century scientific paragraph quoted above, - which governs the character of the whole epoch for civilisation.

How far will they push their conflict for domination/survival? They have no choice. There is only one capitalist market place. They will have to push their conflict all the way. Economic imperialism is an anarchic jungle: - swallow, or be swallowed up. Kill, or be killed. 

The sobbing humiliation of the Yamaichi president, and the panicking scramble today in Japan by terrified investors, shows how real the crisis is, and how there is no way out.

The capitalist press itself has been noting some of the antagonistic connections and contradictions linking the major powers, showing that all attempted 'solutions' can only deepen the disaster:

The importance of Yamaichi is what it tells us about the broader vulnerability of the Japanese banking system. It has already taken a hammering as a result of the domino collapses of currencies and asset values in Thailand, Indonesia and Malaysia. 

Japanese banks are also the prime lenders to Hong Kong where share prices have fallen 40 per cent this year. But its biggest exposure in the Far East is through South Korea. The Koreans may not like to acknowledge it, but their banking system is an extension of that of Japan, and if South Korea's system is insolvent (as banking experts believe it is) this will be a further enormous blow to banking structures in Japan.

To raise the unsecured loans it needs to support Yamaichi's balance sheet, the Bank of Japan has raised funds through the other commercial banks, which in turn may have to sell assets including US Treasury bonds and, no doubt on a much smaller scale, some bonds and equities in the City. The result will be a cascade of selling which could gather momentum, especially if it is discovered that other Japanese institutions are in a similar position to Yamaichi. 

INVESTORS will be on high alert today for any sign that Japanese banks and investors are repatriating money to prop up the ailing financial system in Tokyo. The eyes of the world's financial markets will be on the huge US treasury bond market, where Japanese investors have large holdings.

Investors worldwide are still reeling from the currency and stock market crises which have swept across South-east Asia from Thailand in the summer, cracking sentiment in Hong Kong this month and culminating in the proposed $20 billion bail-out of South Korea by the International Monetary Fund.

Meanwhile, regulators are attempting the orderly closure of Yamaichi, Japan's fourth-largest brokerage house and one of the world's top 10 securities firms.

In New York, however, Yamaichi — with most other large Japanese institutions — is thought to have large holdings of US government debt.

Such US treasury bills have traded at record levels in recent months, helping to sustain the strength of stock markets in the US and Europe. But there are now worries that the repatriation of Japanese money will hit Western financial markets.

"The big question is over the level of Yamaichi's exposure and where exactly this lies," explained the head of one British stockbroker. 

"On one level it is no real surprise. We have known for a long time that many Japanese banks have simply been run for the benefit of the bank managers' mates. The uncertainty now is over how it is dealt with. This is a big unknown." he added.

By some estimates, more than 90 per cent of the £450 billion worth of US treasury bonds in issue are held by Far Eastern investors, banks and Asian central banks. 

To date, there is little evidence that the financial turmoil at home has translated into sales of US assets by Asian banks, with some commentators arguing that the reverse is happening in a so-called "flight to quality".

But concerns are growing that the liquidity squeeze in Tokyo will prove so great that Japanese financial institutions will be forced to take their profits in the American bond markets to cover domestic losses — a move which threatens to knock away a key prop of Western stock and bond markets.

An emergency board meeting late last night determined Yamaichi had no chance of surviving a credit crunch and high-profile scandals and should be closed down voluntarily.

With the debts of the broker and its international group companies at £14 billion or more, the reverberations of the collapse are likely to be felt around the world.

The brokerage has been brought to its knees at a staggering speed. At the start of the year, Yamaichi's share price stood at 525 yen; by Wednesday, it had plunged to 58 yen. with investors and customers selling as a result of bad loans, a "sokaiya" corporate racketeer scandal and a general lack of confidence in the Japanese economy.

The body blows have come in the past few days' is the brokerage's main lender, Fuji Bank, refused to provide rescue funds and US credit agency Moody's downgraded Yamaichi's stock to "junk bond" level.

Voluntary closure will entail returning customers' cash and securities, before liquidating its assets. This would mean the loss of 7,500 jobs, including those at Yamaichi's 33 overseas units.

The collapse will be a crushing blow to the prestige of Japan's financial sector. Yamaichi, which is in its centenary year, is the oldest of the nation's "Big Four" brokerages. Its collapse will be the third big failure this month, following the bankruptcies of Sanyo Securities, a second-tier brokerage, on November 3, and Hokkaido Takushoku Bank, the country's 10th largest commercial bank, on November 17.

Bank of Japan executive director Tadayo Honma said the central bank will "take the necessary steps to help stabilise both domestic and overseas financial markets". 

However, analysts claim the existing protective framework — the Deposit Insurance Corporation — has been stretched by the recent rush of large bankruptcies and will be unable to meet the scale of the Yamaichi problem.

John Gariano, vice-president of the Sumitomo Bank New York, summed up the feelings of many. "This is it. The Japanese government has to take action now. There is no tomorrow."

The South Korean finance, minister, Lim Chang-yuel, warned that the economic restructuring demanded by the IMF in return for the cash would be painful.

"To overcome the current difficulties and future challenges, the full co-operation of the people of South Korea is called for" he said.

South Korea, the world's 11th largest economy, which has about £3.8 billion worth of capital investment in the UK supporting 18,000 jobs, is the third of the once vaunted Asian tigers to be bailed out by the IMF this year. Thailand and Indonesia received loans worth $14 billion (£9 billion) from the IMF this summer, and billions more from individual countries.

Under a ferocious onslaught from speculators, all three countries have been forced to abandon unsustainable currency pegs against the US dollar. On Monday, the Bank of Korea stopped pouring foreign currency reserves into defending the won, which then shot through the 1,000 level against the dollar.

This added to the woes of the country's debt-burdened corporate sector, which borrowed heavily in foreign currencies when times were good and the economy was growing rapidly. Now that growth has slowed, some companies owe more than 400 per cent of their capital.

Nearly all the big companies have borrowed several times more than what they are worth.

Two years after the first Korean joined the county's American, European and Japanese companies, Samsung is closing the £10,000,000 plant on Flaxby Moor.

In 1995, Samsung had talked buoyantly of 600 staff by the year 2000. Now the 86 jobs there are to go. Britain is not alone. Samsung announced yesterday that it is abandoning most of a planned $800 million factory in Brazil.

With the crisis that is now threatening to envelop the Korean economy there are fears that the 18,000 other jobs created by the Asian state's investment in the UK could also be in danger.

The ailing country, the latest in the Asia Pacific region to be hit by financial turmoil, is negotiating for emergency credit which, economists say, may eventually total as much as $100 billion. This would make Korea's one of the largest IMF bail-outs since the end of the second world war.

The reverberations from Korea's deepening economic crisis, the linked banking problems in Japan and the concurrent decline in the entire region could be felt far from the Pacific. 

Since the 1970s, Japan has led a veritable invasion from the Asian Pacific, with firms hurrying to take advantage of cheap, deregulated labour, access to continental Europe and the low tax regime. There are also the cultural advantages of language.

Foreign investment in the UK currently stands at around £160 billion. As well as creating thousands of jobs in Wales, the North-east and Scotland, the plants opened by firms such as Samsung, Toyota, Nissan and LG have introduced management and production techniques which have boosted productivity.

According to Ray Barrell and Nigel Pain at the National Institute of Economic and Social Research the gain has been as much as 1 per cent a year since 1985.

It is not only the manufacturing sector which has felt the force of the invasion.

The majority of Britain's 20 million households light their homes and cook their food using electricity bought from an American owned power company. In the City many famous former British names, such as Barings, James Capel, Kleinwort Benson and Warburg are now owned by foreign companies.

The Koreans alone have invested around £3.8 billion in the British economy.

Now, however, there are fears that some of this inward investment could begin to dry up, or begin to reverse if Korean multinationals run into financial difficulty.

David Bowles, director of operations at the Northern Development Company, says: "Korea really is a problem for us at the moment, and we are waiting to see with trepidation where the situation might go."

Barrell, an acknowledged expert on foreign investment, says: "The collapse of the stock markets in East Asia and the effect oh the Japanese banks will be to reduce the liquidity of major companies significantly."

Experience has shown that when liquidity dries up, so does investment.

"We saw it happen with the Japanese in the early 1990s," says Barrell.

The bursting of the Japanese asset-price bubble at the beginning of the decade led to a sharp drop in outward investment from that country.

In 1990, outward investment totalled $48 billion, dropping to $35.1 billion in 1991, $17.4 billion in 1992 and just $13.8 billion in 1993.

Says Barrell: "We may be about to see a similar set of events in Korea."

All of this depends on the magnitude of the Tiger crisis fall-out's effect on the global economy.

Something worse than a cyclical downturn in the region, like global deflation, as some economists fear, could radically alter the outlook for inward investment.

When global profits are squeezed, as they will be by the credit-crunch back home and the knock-on effects elsewhere, it may be that it is the branch offices abroad that they find easier to close than those in their own country.

The grief of the sacked employees — no matter which country they are in — will be the same, but that of the management at the head office considerably less.

As East Asia sputters, it is becoming clear that a decade of roaring economic growth concealed appallingly sloppy banking practices. Until now, against a background of strong regional growth, lending of dubious quality could be accommodated and disguised. But all the while the banks were growing increasingly vulnerable to an adverse turn of events—which is exactly what has happened in recent months.

On one estimate, the bad loans of East Asian banks now account for between 10% and 20% of their total loans, compared with a mere 1% in America (see chart 1), and that estimate may rise. The danger now, in South Korea and elsewhere in the region, is that a vicious circle of slowing growth, railing banks and contracting credit will cause not merely a brief and shallow recession but a deep and prolonged slump.

Most of the financial mess is of Asians' own making, and nowhere is this clearer than in South Korea. For years, the government has treated the banks as tools of state industrial policy, ordering them to make loans to uncreditworthy companies and industries. This has backfired. In recent months several of the country's biggest companies, including Hanbo, a steel group, and Kia, a car manufacturer, have gone bankrupt, leaving banks with enormous bad debts. Official figures put these bad loans at the end of June at only 6.1% of total loans outstanding. But Merrill Lynch, an American investment bank, reckons that, if international provisioning norms were applied, the figure would be more than 15%.

Each new corporate collapse gnaws at the banks' dwindling finances. Raising interest rates to defend the won will add to the banks' agony. At the nine largest institutions, bad loans already range from 94% to 376% of the banks' capital. Most of these banks, in other words, are already technically insolvent. On November 8th the central bank pumped 5 trillion won ($5.1 billion) into the financial system to shore it up. More cash may soon be needed.

South Korea's problems are affecting Hong Kong. Anticipating a renewed assault on the Hong Kong dollar, after that on the won, investors have already claimed a victim among Hong Kong's banks. On November 10th, and again the following day, depositors rushed to withdraw a total of HKS1.5 billion ($194m) from the International Bank of Asia, a middling institution, forcing regulators to say they would support it if necessary. The danger is that a run on one bank could quickly trigger a loss of confidence in others. It is this "contagion effect" that worries the IMF and rich-country governments, battling to avoid a financial meltdown across the region.

Bailing out East Asia's banks, it must be made clear, will be neither easy nor cheap. Robert Zielinski of Jardine Fleming, an investment bank, estimates that the non-performing loans of South-East Asian banks alone will peak at $73 billion. That may not be vast in absolute terms when compared with, say, Japan's bad-loan problem. But it represents over 13% of South-East Asian GDP, a gulp-making figure. By comparison, America's savings-and-loans crisis cost only about 2-3% of GDP to resolve. Mexico's banking crisis cost about 10-12%. No wonder the Asia region's bank shares have tumbled since last year (see chart 2).

How did East Asian banks get in such a state? The answer is that too many of them committed the same basic sins.

First, they took stable exchange rates for granted, failing to consider—and thus guard against—the possibility of currency devaluation. So bankers assumed they would forever be able to make an easy baht or rupiah by borrowing in dollars to buy local-currency assets. Now, however, borrowers are repaying loans in plummeting local currencies, making the banks dig into their own pockets to meet their dollar liabilities. According to the Bank for International Settlements, at the end of 1996 foreign-currency debt with a maturity of less than two years was equal to about 120% of foreign-exchange reserves in Thailand and nearly 200% of reserves in both Indonesia and Korea. The figures have almost certainly risen further since then.

The bankers' second error was to lend recklessly on property. Convinced that demand for offices, hotels and luxury homes would continue to soar, they threw money at grandiose construction projects. But overcapacity has caused rents and prices to fall sharply in many Asian cities. That, in turn, has squeezed some of the biggest banks, which now typically have between 10% and 35% of their loans committed to bricks and mortar. Political meddling made matters worse. Often, to curry favour, financial institutions have financed politicians' pet projects and allies. Some, especially in Thailand and Indonesia, have been little better than political piggy-banks. 

But perhaps the most important error was caused by a mixture of hubris and inexperience. Convinced that rapid economic growth would forever rescue them from bad lending judgements, bankers failed to examine the financial risks they were undertaking: a lunch or a round of golf would do more to inform their credit decisions than spreadsheets of financial data. This "Asian way" of vetting borrowers has proved costly indeed.

It is not only bankers who are to blame. With a few praiseworthy exceptions, such as Hong Kong and Singapore, regulators have failed to check bankers' bad habits. Consider Thailand, which received a S17.2 billion bail-out from the IMF in August. For the past year, the country has provided an object lesson in how not to deal with a banking system in distress. For a long time, the government and regulators turned a blind eye to growing evidence that lending to a property bubble had contributed to a dangerous level of bad debts. In 1996, one of the country's 15 commercial banks, Bangkok Bank of Commerce, went bust. The government rescued it. The bank had lent large sums to corrupt politicians, provoking accusations of a stitch-up between the institution and its supervisors.

Thailand's central bank has also blessed the banking sector with lenient disclosure rules. Until recently, these allowed banks to regard a secured loan as "performing" even if no interest had been paid for a year. As the property glut grew worse, the value of assets held as security by lenders became a matter of guesswork. Earlier this year the government had to suspend 58 finance companies, or specialist lenders. But it has not yet suspended any of the country's commercial banks. That may have to change as more loans turn sour. The central bank is said to be spending 100 billion baht ($2.6 billion) a month to keep the financial system going. Taxpayers' total exposure to insolvent banks may have reached 750-800 billion baht, equal to a sixth of GDP.

Lax supervision has hobbled Indonesia, too. Thanks to deregulation in the past few years, the number of commercial banks exploded. But the country's central bank failed to step up its monitoring of the risks involved. Last year Moody's, a credit-rating agency, gave warning of a "post-liberalisation frenzy". The closure last week of a number of banks is a sign that the country's regulators may at last be bolting the stable door.

Latin lessons
The cost of bailing out distressed banks has been upwards of $250 billion in emerging markets since 1980, but the problem has by no means been limited to the developing countries. Over the past decade, America, Britain, Japan and a number of other rich countries have all fallen victim, to a greater or lesser extent, to economic instability generated and then amplified by the banks. Let East Asian policymakers wondering what to do about their troubled financial sectors examine these earlier experiences.

The best source of advice may well be those who witnessed Latin America's banking crisis of 1994-95. This had many features similar to those at work in Asia today: economies leveraged to the hilt with short-term, foreign debt; meddlesome politicians; currency devaluations; flighty foreign portfolio investors; imprudent and inexperienced banks; and, to cap it all, regional contagion. As Mexico's bad loans ballooned to a quarter of all loans outstanding, the illness spread to Argentina, where panicky bank customers withdrew 40% of their deposits in early 1995.

The cost of clearing up that mess was huge. In Mexico alone, the final bill for repairing the financial system is likely to top $30 billion.

Already, the tone of some of the capitalist press comment is distinctly hostile and chauvinistic, and as the crisis deepens, this note of everyone blaming everybody else for the problem will strengthen.

Trade war is inevitable. Details thereafter are hard to predict, but the overwhelming character of the whole 20th century is one of inter-imperialist economic conflict, and inter-imperialist war. This monstrous perspective will put the skids under every shade of 'free world' anti-communist ideology, from Thatcherism to Trotskyism. What price the stable, democratic, and steadily-developing economies of the planned workers states now?

The accelerating crisis of the imperialist system, - whether or not it collapses completely immediately, - will force a reconsideration of all political positions.

It will not be enough to merely nod in the direction of the EPSR's Leninist analysis of the epoch as having always been "dominated deep-down by emerging and insoluble imperialist crisis".

This characterisation needs understanding in all its present and future implications, and in all its past implications as well.

It will be decisive in the kind of socialist movement that will be successfully built, and how it should train itself,- guided by all the lessons of the past now correctly graspable in the light of imperialist reality.

There is only one dominant pattern of modern history, and this should always govern working-class political programme, no matter how flexibly strategy and tactics can be interpreted in intervening periods.

All kinds of chaos have been inflicted by Stalinist confusion and Trotskyite opportunism on the workers movement internationally out of retreats from this understanding.

For a peaceful life, the most grotesque illusions were spread by Moscow postwar, - that the imperialist economies could never attain massive expansion again; that peaceful roads to socialism were opening up; that peaceful coexistence should become the highest aspiration of international workers struggle; that the socialist camp would always find more 'good' imperialists than 'bad' imperialists: that the world socialist camp economy could overtake the international imperialist exploitation economy; etc; etc.

The revolutionary overthrow of imperialism was no longer the emphasis, - and this eventually led to notions that a 'new 1917' was no longer relevant, and that the dictatorship of the proletariat was not now necessarily needed.

This was all totally disorienting gibberish, as the EPSR has always consistently explained. 

The opportunist Trots succeeded in being even more disarming of the workers movement.

The practical state-security realities of the dictatorship of the proletariat throughout the socialist camp were simply endlessly slandered and ridiculed, helping generations of workers in the West to be duped into anti-communist vilification of the workers states.

The CIA's Vatican-financed Solidarnosc counter—revolution was eagerly embraced, and many more such bogus 'rank-and-file socialist' stunts.

Trot entryists grafted utterly academic 'Marxism' onto bourgeois reformist opportunism such as the Labour Party, and helped create just as sickly illusions (as Stalinist revisionism was responsible for) with its backing of 'Left Labourism'. The only possible nature of historical socialist transformation, completely governed by all-dominant imperialist crisis, - was totally lost sight of.

To this day, the 'left' revisionist majority and the 'left' Trotskyite minority on the 'left' of the workers movement 'compete' with each other to 'educate' the working class that voting Labour at the May 1 General Election made sense, with or without illusions. It made total utter nonsense either way. The crisis of the imperialist system will marginally afflict workers worse under Labour than under the Tories, as it happens, because of the obviously greater cowardly stupidity of the Labourites in dealing with world imperialist cut-throat competition than some Tories might show, but it is merely the marginal difference of being hammered to death while geriatrically crawling round in circles, lost, or while on the knees brown—nosing some imperialist 'authority' or other, equally lost.

It was crucial to agitate at the last election, - and every other day of every year, - against all illusions in capitalism, past present and future, and likewise in the 'free world', 'parliamentary democracy', and every other racket with which postwar imperialism has bamboozled the international working class.

In the light of the imminent collapse of the 'free world' system, everything needs re-examining.

Pathetically, it will variously be argued that no one knew that a collapse was coming, or when it was coming, or what the next developments in the crash will be. But this is exactly the appalling apology for leadership which is precisely the issue with various posturing 'lefts' who are all anti-Marxist in reality.

The point about Marxist scientific socialism of the party of a new type, as built by Leninism, is precisely to analyse and give leadership for the broad plan of crucial historical development in advance of it being generally understood. That is exactly what a party of revolutionary theory, a party of a new type, is all about. Fail to analyse events correctly, and fail to give leadership to the working class in time and in the right direction, - and there is no leadership there at all.

There were illusions in the outlook of all those 'lefts' who said 'vote Labour' at the last election, however often they declared 'no illusions'. They believed that the Labourites could not act quite as badly as the Tories - because they were Labourites.

This is infantile naïve impressionism and nothing whatever to do with a Marxist scientific analysis of the class struggle and what makes it develop the way it does.

The stage of imperialist crisis reached, dictates how bourgeois governments behave, running capitalism. If the crisis worsens, then the treatment of the working class by the government will worsen, - Tory, Liberal, or Labour.

In the long run, this is all that history teaches about Labour's participation in the never-ending merry-go-round of capitalist parliamentary government. The best international interests of the bourgeois ruling class are what will always prevail under capitalism, - whatever the government 'in charge'.

So why teach the working class anything else?

The fake-'left' teaches illusions because the fake-'left' always 'forgets' about imperialist crisis being the only longterm dominant reality about capitalism. That is the difference between fake-'left' posturing and serious Marxist science.

The anti-theory 'left' will claim that its history is one of dealing 'logically' with the immediate situation in hand, - relating to Labour governments; relating to the overwhelmingly dominant Labour Party and TUC; relating to all the 'normal free-world expectations'; etc, etc but not shouting 'revolution' all the time, or indulging in 'hysterical speculation' about 'world crashes' and the like.

But building a movement of revolutionary theory is nothing to do with shouting 'revolution' all the time, or apocalyptic visions.

What being guided by Marxist-Leninist revolutionary theory does is to alert serious-minded socialists to the need to build a cadre party to lead the working class in the only conditions which will eventually make the building of socialism possible, - the conditions of revolutionary crisis when the old society is breaking down entirely, and there is mass ideological confusion everywhere.

If a rigorously well-trained party of revolutionary theory is not in place, - a Bolshevik Party, - the mass of ideological confusion will easily bamboozle the working class, and the socialist revolution will be lost.

This confusion is spread by reformists, by class-collaborating revisionists, by anarchists, and by a mass of other ultra-left petty-bourgeois sects claiming to be 'Marxist', - the 57 varieties (and more) of Trotskyism included.

Building a cadre party capable of mass allegiance and mass leadership is the great subjective requirement of history, ready to meet the objective conditions which will be unalterably governed by the iron laws of capitalist development, only the mere details of which will be decided by capricious local ruling-class chaos and class-struggle lurches.

Of course there is still time to attend to all this, and there always will be in one sense, - but such complacency simply avoids addressing the real problem of what perspectives to train the working class towards.

It certainly makes no sense to keep shouting 'revolution' all the time, but it makes even less sense to avoid telling the working class that the imperialist system is heading for a revolutionary crisis. Leaving out an explanation of the real pattern of history is simply to deceive and disarm the working class; - utterly stupid.

And the explanation that "no one can be sure" is just a confession of alarming naïveté and of utter philistinism.

The EPS Review has been waging a lengthy polemic against the Trotskyite swamp of fake-'left' entryists gathered around the Weekly Worker rag, trying to sabotage the building of the SLP.

Apart from their endless daft lying slanders about the EPSR which become more paranoid with each issue, the main CPGB line in attempted confusion and demoralisation of the working class is their defeatist drivel about the US imperialist 'new world order' supposedly being in total dominating control of the planet this decade, crushing every 'hot spot' of anti-imperialist struggle effortlessly. Sinn Féin and the IRA have allegedly been forced by Washington to capitulate to a new imperialist-imposed settlement which will mean defeat for Irish nationalist aspirations, and Saddam Hussein and every other Middle Eastern revolt against Western domination, are allegedly having 'peace processes' imposed on them too, which likewise really only amount to defeat.

In reality of course, the real history of the last years of the 1990s is going in exactly the opposite direction. US imperialism is being daily humiliated by its lack of control over events in the Middle East, and its sidekick British imperialism has long been searching for a way to get out of Ireland and to concede snail's-pace reunification without it appearing too blatant that it has capitulated to armed revolutionary national-liberation struggle.

And doesn't this latest markets-crash humiliation for the 'free-world' system to demonstrate this LACK of control by the imperialist bourgeoisie to the full. They are sitting on a corrupt rotten powder keg of exploitation and injustice which could blow them to kingdom come at any moment, and most sensible people either know this, or feel this instinctively.

It is only the inexhaustible conceited subjectivism of tiny handfuls of bogus middle-class armchair-'revolutionaries' which cannot drop its suspicions (i.e. cowardly fear) of big bourgeois invincibility.

Once again, any attempt to offer the 'excuse' that this terrifying international economic turmoil has all 'blown up suddenly' and now 'changes everything' should be treated with total derision.

What it changes is the now unconcealed public face of Western humiliation and the obscene opportunistic scrambling of the entire 'left' swamp to try to pretend they have been crisis-focused all along. But to suggest that the underlying class-struggle historic realities have only NOW undergone a sea-change internationally is just imbecile.

Not only has it been the relentless irreconcilable contradictions of the cut-throat competitive imperialist system which have made US imperialist 'control' inescapably weaker this decade, leading to the observable growing strength of anti-imperialist struggle. But this long-developing inter-imperialist CRISIS is the only possible perspective within which to correctly understand ALL events in the world since World War II, - misunderstood by every ideology except genuine consistent LENINISM (which must be systematically studied to have any grasp of politics).

Only Marxist-Leninist science can sensibly explain the bizarre self-liquidation by the Soviet revisionist bureaucracy at the end of the 1980s which flowed from complex historic class-war developments in insolubly contradictory inter-imperialist relationships. 

Gorbachevism was deluded (by shallow Western 'affluent' appearances combined with established Stalinist revisionist nonsense that monopoly-imperialism's serious economic expansion-possibilities came to an end in 1945), into believing that planned Soviet economic development must have gone seriously off the rails, since it seemed further than ever from 'catching up with' what Gorbachev took naïvely to be solid sustainable Western economic 'achievements'.

Only Leninism could have told him that the expansion was real enough, - spectacularly so, making gibberish of Stalin's daft predictions and revisionist nonsense, - but that it was also an unsustainable façade, masking real insoluble contradictions, and liable to collapse again at any moment, in the mother of all revolutionary crises, - again a grasp of Leninist theory which revisionist complacency had lost all ability and appetite for.

More by luck than judgement, the world crisis of the imperialist system cashed in dramatically on this revisionist philistinism.

First, the ludicrously shallow Reagan regime, backed by Thatcherism, relaunched a ferocious period of Cold War arms-race and anti-communist hysteria to suit their own domestic political needs of emphasising reactionary imperialist backlash as the way to win electoral office and economic transformation, and at the same time as the way to win the Cold War arms race through Star Wars, or to bankrupt the Soviet economy in the chase.

The grim realities of inter-imperialist economic conflict and trade-war crisis in which Japan and Germany were beginning to totally undermine America's leading world position in finance, science, technology, industry, political influence, and all sorts of other things, - called a halt to this flamboyant Cold War spending spree which was threatening to bankrupt Washington (and in hindsight may yet prove to have done so, a decade later, by charging on with more and more unwise credit-creation, unwisely bought by Japanese exchange-brokers (as will be seen), and which the US government could no longer really fund (as will also be seen).)

Gorbachevism could hardly believe its luck at suddenly being offered international economic cooperation by Reaganism where previously only Cold War destruction of the 'evil empire' was on offer.

Agreeing to limit Cold War arms bills and join building "our common European home" was relatively unthreatening if naïve, but pressing on with the glasnost and perestroika gimmicks Gorbachev was committed to in his pre-existing daft rhetoric about 'catching up with Western production' (an insane dream for an egalitarian non-exploitative planned welfare state with universal social and living standards, throughout not only the whole giant USSR but the entire vast socialist camp) - when being unfairly compared to the phony 'world capitalism' living standards as seen on 5th Avenue or Oxford Street, (where the slave-labour of Bangkok garment factories and Sri Lanka tea plantations cannot be seen), - that unnecessary 'transformation' stunt by the philistine bureaucracy proved one revisionist nonsense too many.

Guided by Khrushchev's earlier 'state of all the people' boastful nonsense, the dictatorship of the proletariat was systematically dismantled, - in favour of 'parliamentary democracy' which Leninist science correctly ridiculed as parliamentary cretinism decades earlier.

That fake 'democracy' without which 'true economic flourishing' is supposedly impossible (in Trotskyite and Thatcherite make-believe alike) has since collapsed the old Soviet output figures to just half of what they were. Social welfare has collapsed, living standards have collapsed, and mass unemployment and mass ill-health rules.

And now 'democracy' is about to inflict the same fraudulent wonders on the capitalist world itself.

And once the imperialist economies start to collapse, how long before the next Russian Revolution and the resumption of proletarian dictatorship's steady and democratic economic and social development??

Hopefully, the 'democratic' Western economic collapse will have degenerated enough, - and the Chinese proletarian dictatorship survived healthily enough, - for Beijing revisionist instability not to have caused irreparable damage to the Chinese workers state before the full fraud of 'capitalist democratic civilisation' has been grasped.

The threatened crash of capitalist 'free market' lifestyles, - to be replaced by slump, permanent mass unemployment, inter-imperialist trade war, and then inter-imperialist shooting war, - should also help dispel nonsense, endlessly spouted by Trots and other demented anti-communists, about 'democratic socialism' being the only acceptable alternative to 'capitalist democracy'.

Both are totally fraudulent concepts uttered only by complete crooks (i.e. all parliamentarians under capitalism) or by completely naïve armchair socialists whose only real ideology is the most wretched petty-bourgeois anti-communism.

The building of socialism itself is the only 'democracy' because until there is enough to reward everyone FAIRLY, each according to his contribution to society, then unequal 'right' must prevail, which is hardly 'democratic'. The dictatorship of the proletariat which is organisationally impossible without an accepted party of leadership, is the only, and the best, and the REAL democracy available during the development of socialism.

All armchair-socialist talk within capitalist society about "individual democratic rights to challenge the leadership party during the building of socialism" is always a lying fraud and is really only talking about counter-revolutionary agitation.

Serious and constructive debate in and around the leadership party and mass organisations is as natural as breathing, and historical 'evidence' that no one ever said anything that was not strict regurgitated party-leader speak in Cuba from 1959 to the present day, in China from 1949 to the present day, and in the Soviet workers state from 1923 to 1990 is just a silly philistine joke.

The 'problem' remains the obvious one of the temporary all-powerful influence of the leading revolutionary figures as socialist development proceeds (aside from the nightmare of actual or suspected counter-revolutionary disruption in an epoch of total imperialist encirclement and non-stop sabotage, giving rise to unmistakable and serious counter-revolutionary agitation), - but even this is hardly higher than an academic concern until bad leadership mistakes begin to get made.

The idea, however, that severely wrong turns by a revolutionary leadership in an epoch of total imperialist encirclement and conspiracy, will all somehow be corrected by mere 'democratic' trappings in the period of proletarian dictatorship, is simply not credible.

The giant historical forces of the overall class-war conditions are almost certainly going to be decisive here in how well a given revolutionary leadership in specific national circumstances (and international circumstances) is able to perform and then to learn from its mistakes. Scarcely a scrap of historic 'democratic rights' agitation against hitherto-existing workers states has been separable from the terrifying reality of counter-revolutionary agitation and attempts to split the leadership party. Every single Trotskyite 'historical version' disputing this is a calculated reactionary pack of lies.

The 'problem' remains one for further developments of actual history to resolve. Imperialist crisis is now deepening sickeningly, worldwide. There will be further communist revolutions. There will be lots and lots of further proletarian dictatorships. Confidence and abilities in socialist construction will steadily progress. The Cuban workers state seems already to have flourished successfully enough to have avoided the worst pitfalls of paranoid suspicion despite being under permanent and monstrously-invasive counter revolutionary siege from surrounding US imperialist hegemony. Future workers states will do as well or better.

The Trot extremists of academic sectarian anti-communism are a disgusting degenerate throwback to a nearly extinct past. The onward avalanche of imperialist crisis could sweep these reactionary remnants of armchair subjective-idealism away.

More than 75 years of international Trotskyite petty-bourgeois hysteria has only produced the brief nonsense of the Militant Labour Liverpool council on behalf of the working class and world socialism. This armchair anti-communism is a failed and doomed disaster, soon to be brushed aside by resumed communist revolutionary advance.

At the same time, the Blairite last gasp of 'reformist' posturing is also well and truly in the dock.

With slogans like "all for healthy competition" and "no one seriously questions the capitalist social market any more" around their necks, it should not be too difficult to rapidly see the end of Blairism almost immediately after its obscene launch. Only the most spineless and philistine idiots will continue to go along with the notions of 'consensus' and 'partnership' with a raging capitalist slump, permanent mass unemployment, and inter-imperialist war.

Blairism's degenerately-shallow advertising and PR gimmickry will sink closer and closer towards utterly discredited Goebbelsian propaganda. And what will the cowardly TUC's class-collaborative petty-bourgeois ideology make of things then?

This humiliating crisis for capitalism is another excellent opportunity for Socialist Labour to strengthen its political agitation for utterly destroying New Labour posturing in the eyes of the working class. RB