People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 50

December 12, 2010


CPI(M) Intervention at the Twelfth IMCWP



The following is the text of the intervention of  Sitaram Yechury, Polit Bureau member and head of the International Department of the Communist Party of India (Marxist) at the twelfth international meeting of the Communist and Workers' Parties, held at  Johannesburg, South Africa from  December 3-5, 2010 on the deepening systemic crisis of capitalism, the tasks of Communists in defence of sovereignty, deepening social alliances, strengthening the anti-imperialist front in the struggle for peace, progress and Socialism.


IN the eleventh IMCWP held in New Delhi, India, we had characterised the current global recession as a 'systemic crisis of capitalism demonstrating its historic limits' and 'no amount of reform could rid the world of this crisis'. The ensuing period has vindicated this understanding. In spite of the brave claims by many countries that the 'worst part of the crisis is past them', each coming day is exposing the shallowness of this claim.


The world so far was familiar with bailout packages for resurrecting financial giants that collapsed in the wake of their own making. The reckless creation of new financial animals and mind boggling intermeshing of these to generate higher profits led to large scale bankruptcies. As is the logic of capitalism, the governments rescued the corporate giants by building up a mounting debt of their own. Washington Post states, “The problem is not official profligacy but private bank lending to fuel a burst housing bubble; bailing out those banks is what broke the Irish government”. The governments that bailed out these corporates are now caught in the vortex of mounting debt. If corporate insolvency heralded the global meltdown and recession in 2008, in 2010 it is this sovereign insolvency that is threatening to snowball a deeper crisis. Thus, what had started as the crisis due to the insolvency of some corporates has now emerged as full fledged sovereign insolvency.




Sovereign insolvencies were bound to occur given the manner in which capitalism chose to recover from the current recession. The bailout packages – conservatively estimated over $10 trillion – came from the taxpayers. While they suffered, the governments also became bankrupt.


This global crisis has sharply brought forth the main contradiction of capitalism – between its social nature of production and individual capitalist appropriation. Nothing explains this phenomenon more succinctly than the rising corporate profits on one hand and poverty, hunger and destitution on the other. It is reported that in the United States, the epicentre of the crisis, corporates recorded a 11.2 per cent growth in their profits, which is the highest figure recorded since the government began keeping track over 60 years ago. On the other hand, poverty rate in the US rose to 14.3 per cent last year, the highest level in more than 50 years.


This indeed is a worldwide phenomenon. Inequalities have increased both between countries and within the countries. Globally, 200 more people entered the billionaires' list. The figure now stands at 1,011 and their aggregate capital has expanded by over 50 per cent, $3.6 trillion during this crisis. On the other hand, millions have lost their jobs, their livelihoods and joined the billions in poverty. Around one billion people are suffering from hunger. The ILO estimates that worldwide, unemployment reached 210 millions in mid-2010, which is 70 per cent above its pre-crisis level in high income countries (excluding Europe), and 30 per cent higher in Europe. The Millennium Development Goals Report 2010, released recently by the UNDP states, “Newly updated estimates from the World Bank suggest that the global economic crisis will leave an additional 50 million people in extreme poverty in 2009 and some 64 million by the end of 2010 relative to a no-crisis scenario, principally in sub- Saharan Africa and Eastern and South-Eastern Asia. Moreover, the effects of the crisis are likely to persist: poverty rates will be slightly higher in 2015 and even beyond, to 2020, than they would have been had the world economy grown steadily at its pre-crisis pace”.


Instead of undertaking poverty alleviation measures and increasing the purchasing power of people, the governments are trying to manage their finances and prevent insolvencies by drastically cutting down on expenditures and significantly increasing their revenues. The former means that the livelihood standards of the majority of the working people is bound to deteriorate because there will be more cuts in the social benefit expenditures.


The IMF sponsored 'austerity' packages introduced in many of the European countries are part of these efforts and these have resulted in drastic cuts to the social welfare budgets. IMF, which has given loans to many countries, imposed several conditions and had directed the governments to rein in their fiscal deficit. It had urged the governments not to succumb to the protests demanding the reversal of austerity measures. Moreover, it had asked them to get the annual budget approved by it before introducing it in their respective parliaments. This is nothing but a brazen attack on the sovereignty of the respective countries. The proposal to impose sanctions on countries that breached the 1997 Stability and Growth Pact by the unelected EU commission is also part of this design.




Such deflationary policies are also required to be followed by these governments in order to stabilise currencies and consequent potential inflation. This is absolutely necessary to satisfy the confidence of the FIIs, which in turn is absolutely necessary for these countries in order to prevent imminent sovereign insolvencies. This is capitalism’s most familiar story. In order to retain, if not enhance profits, the degree of exploitation of the working people is intensified.


In the Delhi Declaration, we have stated, “dominant imperialist powers would seek their way out of the crisis by putting greater burdens on the working people” and “by seeking to penetrate and dominate the markets of developing countries”. Similarly, efforts are on to coerce the developing countries to accept the various conditions and agreements that are detrimental to their interests. The Doha round of WTO negotiations, various free trade agreements between the imperialist powers and the third world countries, the ongoing negotiations at the climate change summit, are all attempts to prise open the markets of the third world countries. As a result, various sectors like agriculture, banks, insurance, education, industries, retail trade are sought to be opened up to serve the interests of the multinational corporates. These measures would ruin the lives of the toiling people, adversely affect the economies of the developing countries and spiral them into further deep crisis.


That imperialism is not averse to use even the military option to ensure its economic domination is made clear through the recent NATO summit held in Lisbon. The US had increased its defence budget even during this crisis – though dithering to allocate money for job creation – and is pressurising its allies not to cut their defence expenditure. Across the world, the US is increasing its military bases, reactivating its navy fleets and increasing its arms sales. It continues to flex its military muscle. It has increased its military presence in Afghanistan and thanks to its new Af-Pak policy, the war is spilling to the entire region. US is going to retain significant personnel in Iraq, despite its commitment to troops withdrawal. It continues to meddle in the affairs of the Middle-East in order to ensure its control over the resource rich region. The sword of Damocles thus continues to hang over world peace.


There is a catch 22 situation for global capitalism today. In order to appease finance capital by stabilising the currency and preventing inflation, countries are forced to reduce deficits and impose higher taxes. This in turn means lower governmental expenditures (as higher tax revenue goes to finance deficit) depressing domestic demand and consequently depressing growth. This also means lesser resources in the hands of the governments to continue with stimulus packages. This further adds to depressing economic growth. Such economic slow down further discourages finance capital. This is the vicious cycle of capitalism and its crisis. The only way out is to struggle for a systemic change.


A positive feature today is, people are seeing through the neo-liberal ideology and are not taking things lying down, but coming out in struggles. Many countries in Europe have witnessed huge protest demonstrations. Most of these struggles are of course defensive in nature and to safeguard their hard won benefits. It is the duty of the communist and workers' parties to give a political character to these basically economic struggles and convert them into a political offensive against the capitalist system.


The political representatives of Capital try to conceal the irresolvable contradiction between capital and labour that lies at the heart of the crisis. This contradiction has to be exposed and brought to the fore. An extensive ideological campaign exposing the limits of capitalist system and its inherent crisis ridden character has to be carried out. Along with it, the struggle for political alternative to capitalism, socialism has to be strengthened. A broad alliance of all the exploited led by the working class has to be built. Communist and Workers' parties guided by the principles of scientific-socialism – Marxism-Leninism – and with a 'concrete understanding of the concrete conditions' should lead these efforts. Socialism is the only way out of the crisis ridden, inequality prone, inhuman capitalist system.


Long live Marxism-Leninism

Socialism is the future and the future is ours