People's Democracy

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


No. 27

July 03, 2011




Left Alternative to Global Capitalist Crisis


M K Pandhe


Arise in Unity: The International Crisis and Alternatives from the Left, People’s Democracy Publications, 340 pages, Price: Rs 250, Euro 20.


THE present global economic crisis can be scientifically explained only by the Marxian method of analysis. The bourgeois economists are trying to explain the cause of the crisis as the greed of some selfish corporate executives, financial bungling by some CEOs, or absence of some regulatory mechanism. They explain that the crisis can be overcome by lucrative bailout packages by putting the burden exclusively on the common people in the country. They argue that all the measures taken by the capitalist governments have resulted in the crisis coming to an end, and it would not recur again if there is a proper regulatory mechanism.


The Marxist economists and the Left movement all over the world have clearly pointed out that the global financial crisis was due to the capitalist system itself. Its cyclic character was noted by Marxian economists long ago. They also noted that so long the capitalist system is in existence in the world, such crisis of overproduction is bound to occur again and again.


An illuminating international seminar on “The Global Crisis” was held in Sao Paulo during June 20-21, 2009 which was jointly organised by the Communist Party of Brazil, Workers Party of Brazil and their respective foundations, viz Mauricio Grabois and Pereseu Abramo, International Correspondence, and Institute of Social and Political Studies (France). About 300 participants from Brazil and other Latin American countries attended the seminar, along with delegates from other continents.


Though it took over two years to publish the papers submitted in the seminar, the conclusions are still relevant.


In the opening speech of the seminar, Jose Renaldo Coarvatho, International Relations Secretary of the Communist Party of Brazil, said, “This debate will give rise to a convergence of ideas – not necessarily a unified set of ideas – which will grant more clarity to the Left forces.”


Twenty-six papers have been published in this volume, which deal with various aspects of the present global economic crisis. Sitaram Yechuri has written a foreword to the volume and has also contributed an article, elucidating Marxian understanding of the crisis. Robert Griffiths, general secretary of the Communist Party of Britain, has written an editorial preface to the book, giving the background of the subject.




Six papers analyse the current financial crisis from the point of view of Marxist political economy. The global economy declined in 2009 by three per cent, trapping over 90 million people in poverty and adding 50 million to the unemployed.


Karl Marx’s analysis of capitalist society noted how a society based on generation of surplus value is bound to ultimately face a crisis of overproduction. The papers noted how the present phase of globalisation has vindicated Marxian analysis and how capitalism is trying to overcome it by putting all burdens on the shoulders of the working class and the toiling people. They noted how huge bailout packages involving billions of dollars at the cost of common people have helped capitalism to partially come out of the crisis. However, large scale unemployment of the workers was generated due to the global crisis but they got no relief from the capitalist governments.


The paper on China by a leading economist of the country gave an indepth analysis of the impact of the global financial crisis on the Chinese economy. He noted how the Chinese economy, influenced by the international financial crisis, experienced a slowdown in growth, reduction in fiscal revenue and noticeable rise in unemployment. He explained how the Chinese economy experienced, “disparities of income, large scale growth, the dependence on international markets, insufficient ability to innovate internally institutional problems, etc.” He further noted, “The crisis obliges us to have a clearer vision and requires us to adopt more precise measures.” The Communist Party of China has decided to lay more emphasis on domestic market and increased social spending in order to reduce economic inequality.


The French paper, however, concluded with a different perspective.  It noted, “We would seem increasingly to push back the hold of multinationals. This would constitute reversal of the traditional order of revolutionary transformations, by starting on the basis of social needs, powers, operations and their rules up to the control of shared means.”


In his paper, Fidel Castro, the legendry Cuban leader, pointed out how a former US president, Richard Nixon, defrauded the world by unilaterally suspending the gold standard on August 15, 1971, which converted US dollar into a hard currency that could be printed by the US government at will, without any backing of the constant value. He noted how the price of one troy ounce  of gold was 25 dollars in 1971 but went up to more than 1,000 dollars in 2009, indicating a rise of 30 times in a period of 38 years! “If this is not taken into account,” Fidel Castro observed, “the new generations will have no idea of the imperialist barbarity.”




The seminar further considered the character of the economic crisis in different countries. Papers dealing with the USA, Britain, Russia, Poland, India, China and Africa have explained the impact of the crisis in these countries and how it affected the working class.


Though the paper on Russia was prepared by a leader of the Communist Party of Hungary, it has given exhaustive details of the nature of the economic crisis in Russia. According to the IMF, the GDP in Russia declined by 4.9 per cent during 2009, while industrial production since the advent of globalisation declined by 33 per cent. In 2000, foreign capital produced 12.4 per cent of the GDP which went up to 25.1 per cent in 2007. During 2009, five per cent of the population enjoyed a majority of the nation’s wealth. There were 100 billionaires in that year. Out of the 30 crore population, the unemployed number more than one crore! In 1998, the population of the poor people was 24.9 per cent, which went up to 37.7 per cent by 2009! Over the past eight years, more than 3,000 hospitals and 2,500 polyclinics were shut down. The rate of inflation is as high as 13.3 per cent. In 1991, 6.1 per cent of the people lived below the subsistence level while in 2009 the number increased to 49.9 per cent.


The data are indeed revealing and highlight how the conditions have considerably deteriorated after the dismantling of socialism in the USSR. The working class is realising these dangerous consequences, as is seen by growing strikes in the country against the exploitation of the capitalist class.


The conditions in Poland also reflect the same trend. Over 46 per cent of the workers work more than eight hours while the official rate of unemployment is 10.9 per cent.


The paper on India was submitted by a Brazilian academician but the entire material in the paper is based on the published sources.  Similarly, a paper on China was prepared by an activist of the Workers Party of Brazil who relied on data from the published sources.


Seven papers submitted in the seminar discuss at length the alternative path of development. They succinctly demolish the myth propagated by bourgeois economists that the global economy is now on the path of recovery, heralding the exit of the crisis soon. They strongly stress that by some regulatory mechanism the capitalist society can avoid recurrence of such a crisis in future. The euphoria created by the boom in the stock market is sought to be explained as the beginning of the end of the ongoing financial crisis. The papers clearly note that the speculative gains cannot be considered as an indication of the health of the economy. They note how the stock markets are manipulated by speculative operators for selfish gains, at the cost of ordinary shareholders.


These authors point out that the global capitalist system has entered into a period of zero, negative or low growth of economy, despite the rise in the profits of a section of the capitalist class. They also note that the intensification of exploitation of the toiling masses is increasingly evoking resistance all over the world. “Barbarism is on the march, so is the insurrection of the oppressed,” one paper from Argentina notes.


The papers, presented two years ago, visualised that the then ongoing crisis would soon be followed by another crisis of capitalism. Slow growth of GDP and mounting debts of leading capitalist countries have clearly proved that there is no more sign of capitalist crisis coming to an end. High unemployment figures point to the deterioration in the world situation.


The papers note that the concept of welfare state has been given a go-by by the globalisation phase of capitalist development. Even the tall talks of reforming capitalism or democratisation of World Bank, IMF, WTO, etc have proved to be mere illusions. The attempt to try the Keynesian model has come to a naught and monopoly capital has come before the world in the most naked form.


In the spirit of Marxist philosophy, the papers argue that capitalist society is only a passing phase of human development. They argue that the next phase of social development is bound to be of socialism. The global economic crisis can be permanently ended only by a socialist alternative. All the papers pointed to that direction, though the viewpoints are expressed from different angles.




An interesting feature of the seminar was the review of the resistance struggles launched by the working class and the toiling masses all over the world against the globalising capital.


Latin America, which was once considered as the backyard of US imperialism, is today in the forefront of these struggles. It was pointed out that anti-US imperialist struggles have intensified in most of the countries, resulting in the formation of Leftist governments in several countries, many of whom are now friendly to Cuba. The formation of an alliance called ALBA has “the privilege of already having a modest framework of integration built on the basis of principles of equality, which is the negation of the practices that have caused this crisis.”


US imperialists are still trying to dominate and interfere in the Latin American countries, which is still posing problems in this continent.  As one of the papers notes, “It is foreseeable that the hegemonistic crisis on the Latin American continent will be prolonged, as it wavers between and old and the outdated world of neo-liberalism that is attempting to survive, and the fledging new world, also trying to survive.”


In his paper, Fidel Castro points out the declining influence of US dollar as a world currency. It notes that the value of the US dollar has declined by 30 times in the last three decades.


In South Africa, where the Communist Party is in the government run by the Africa National Congress in a capitalist system, it is trying to implement defensive measures to mitigate the effects of the crisis. It emphasises the need to “boldly implement transformational measures to place the economy on a worker and poor friendly growth path.”


As the paper on China points out, the global capitalist crisis has had a negative impact on the Chinese economy. Chinese exports declined by nearly 22 per cent and the government had to spend four trillion yuans to boost the domestic demand and maintain the economic growth rate as far as possible. But the important thing to note is that the socialist oriented market economy effectively faced the impact of the economic crisis by strengthening the directing role of the public sector and taking steps to “ensure the defence of working people’s interests and those of the nation.”


The paper from Greece gives details of the series of strike struggles organised by the working class under the leaderships of PALME, a leading militant trade union, against austerity measures and imposition of the burden on the shoulders of the working class. It highlights that “the majority of workers, self-employed people and poor farmers are against the barbaric measures of the government, the European Union and the IMF.”


The publication of the volume helps to have an understanding of the global capitalist crisis from the Marxist perspective and emphasises the need for further studies to evolve a common approach among the Marxist thinkers all over the world.