Central Committee Communist Party of the Philippines
March 28, 2024
We extend greetings of proletarian solidarity to all participants of the Second Theoretical Conference sponsored by the National Democratic Front of the Philippines (NDFP). We are building on the successes of the first Theoretical Conference held last October 2023, in which we conducted critical discussions and exchange of opinion to help further sharpen our Marxist-Leninist-Maoist analyses. We look forward to our discussions and exchanges over the coming days. We are ready to listen and learn, as well as impart our views with regard the matter on hand.
Our conference topic, Imperialist Economic Crisis, is a relevant follow-up to the discussions of the first theoretical conference on Imperialism and War. The phenomenon of imperialist wars is closely linked to the question of capitalist economic crises. We can say that all the major wars of the last 125 years are inextricably linked to imperialist economic crises.
There is a profound and urgent need for proletarian revolutionary forces to have a comprehensive and firm grasp of the nature of the economic crisis afflicting imperialism or monopoly capitalism. We must do so in order to fully expose the moribund system, take advantage of the objective conditions being generated by the crisis to militate the working class and other oppressed classes; build their organized, political and military strength to advance the revolutionary cause of overthrowing monopoly capitalism; and assert the necessity and viability of replacing the system through socialist revolution and construction.
In this keynote article, we hope to provide an overall theoretical framework for grasping the factors that underlie the imperialist economic crisis, and how this forms part of the general crisis of capitalism, which Lenin described as the period of the transition to socialism. We will start by presenting in broad strokes a Marxist-Leninist understanding of the nature and history of capitalist economic crisis; and the history of economic crisis under imperialism or monopoly
capitalism. We will then proceed to concentrate on the imperialist economic crises of the past four decades of neoliberal economic policies under imperialist globalization, as monopoly capitalism operates in survival mode to perpetuate the system amid perpetual crisis.
We aver that capitalist and monopoly capitalist economic crises stem from the capitalist epidemic of overproduction, which leads to the “enforced destruction of a mass of productive forces…, the conquest of new markets, and by the more thorough exploitation of the old ones.” The persistent and ever deepening economic crisis under monopoly capitalism is generating constant conditions favorable for advancing the democratic mass struggles of workers and toiling people, and waging proletarian-led revolutionary struggles across the world, in both the semicolonial and semifeudal countries, as well as in the capitalist countries.
We hope that by providing the framework, participants in this theoretical conference can proceed to identify the crucial aspects of the crisis which proletarian revolutionary forces must be keen at taking advantage of in order to carry forward the revolutionary struggles with the ultimate aim of overthrowing the bourgeois and reactionary states in as many countries possible, in order to break the chain of imperialist rule, and establish people’s democracies and proletarian dictatorships.
A general review of the history of capitalist economic crises
In his Theories of Surplus Value, Karl Marx extensively discussed the phenomenon of capitalist crises, and described how the capitalist system is disposed to crisis. He declares that: “The very nature of capital leads to crises,” explaining that “the bourgeois mode of production contains within itself a barrier to the free development of the productive forces, a barrier which comes to the surface in crises and, in particular, in overproduction—the basic phenomenon in crises.”
Capitalist crises are a “violent explosion” of the basic contradiction of the capitalist system between the social character of production and the private ownership of the means of production and appropriation of accumulated surplus value by the capitalist class. While capitalist production is organized at the level of the factory and enterprise, there is anarchy at the level of society (in one country or in the entire globe), as capitalists compete against one another in the
race to produce more and sell more, in order to accumulate the biggest surplus- value, and further expand their capital.
Driven by competition to push down the cost of commodity production, capitalists invest more and more into constant capital in the form of labor-saving machines and technology, absolutely and relative to that part that goes to variable capital in the form of wages for value-producing labor power. Marx said: “The higher the development of production, the greater will be that part of surplus-value which is transformed into constant capital, compared with that part of the surplus-value which is transformed into variable capital.”
Compelled by competition and the necessity of accumulating an ever increasing surplus value, the capitalist must constantly raise efficiency of production by replacing labor with machines. The constant drive to improve the means of production enables the worker to work on a greater amount of raw materials, and produce greater quantities of commodities in a given period of time, while receiving the same amount of wages.
Amid ceaseless competition, the proportion in the total capital invested as constant capital (factory, machines, equipment, raw materials) increases while that of variable capital (wage fund) decreases in time. This results in the increase in the organic composition of capital expressed as the proportion between the means of production or constant capital and labor power or variable capital. This results in lowering the proportion of new value created by labor, stored in every item of a commodity. Thus, there is the tendency of the rate of profit to fall, to counter which, the capitalist is obliged to sell more commodities than ever before.
Marx said capitalist competition is marked by the “contradiction between the impetuous development of the productive powers and the limitations of consumption” which inevitably leads to over-production and crises. He described the 1848 European crisis in its most basic form: “… finished commodities could not be sold, and a so-called commercial crisis broke out. Factories had to be closed, their owners went bankrupt, and the workers were without bread.
Deepest misery reigned everywhere.”
In more theoretical form, Marx described capitalist crisis as the “phase of disturbance and interruption of the process of reproduction” (p. 503) in which commodities are not transformed into money, and the performance of money as a means of payment is disrupted. In terms of dialectics, Marx described the periods of expansion as corresponding to a unity between the two distinct phases
of reproduction (that of production, and that of circulation or consumption); while periods of crisis corresponds to a break, the resolution of which would lead to the resumption of reproduction at a higher level.
Engels pointed out that the capitalist drive to expand production, “by the anarchy of social production, turned into a compulsory law that forces the individual industrial capitalist always to improve his machinery, always to increase its productive force.” This capacity to extend, however, is not matched by the capacity of markets to expand which is “primarily governed by quite different laws that work much less energetically.”
Private ownership of the means of production and capitalist competition prevent the organization and planning of production at the level of society. It is “in the nature of capitalist production, to produce without regard to the limits of the market,” Marx said. “Over-production is specifically conditioned by the general law of the production of capital: to produce to the limit set by the productive forces, that is to say, to exploit the maximum amount of labour with the given amount of capital, without any consideration for the actual limits of the market or the needs backed by the ability to pay.”
Production is carried out as a race among capitalists which ultimately leads to an overabundance of unsaleable commodities–a crisis of overproduction. Disruption in commerce and production leads to factory closures and an increase in the army of unemployed workers, and a loss of income of the great numbers of workers and toiling people. Thus, widespread conditions of misery, hunger and want prevail among the great masses of people, amid conditions of superabundance of commodities. This situation is further worsened as wages are pulled down exacerbating the inability of the working class and toiling people to consume even the required minimum of their necessities.
Lenin said the crisis of overproduction “is an inevitable consequence of the development of the productive forces in bourgeois society.” It is insoluble as it is unavoidable since it arises from the basic contradiction at the level of the mode of production, between the social character of the forces of production which rebels against the capitalist relations of production.
Capitalist crises are marked by the widespread destruction of capital which includes idled machinery, unsold inventories, unused raw materials, and unemployed labor. The moribund state of the capitalist system is clearly exposed as the mass of workers and toiling people go hungry, while overproduced grains, fruits, and other food commodities are destroyed. Stalin pointed out to how
capitalists “are compelled to burn products, destroy manufactured goods, suspend production, and destroy productive forces at a time when millions of people are forced to suffer unemployment and starvation, not because there are not enough goods, but because there is an over-production of goods.”
The crisis of overproduction leads to a general capitalist crisis when overproduction in principal consumer goods becomes general overproduction, causing widespread disruptions in commerce and finance (unpaid loans leading to unavailability of credit). These disruptions and upheavals in production and circulation, lead to bankruptcies of smaller capitalists and the constant movement towards the concentration of capital through mergers and takeovers, which in turn lead to further raising the organic composition of capital.
In the United States, crisis periods erupted in 1819 (a period of economic depression following the war of 1812); in 1837, a period of severe depression that lasted seven years; in 1839 or the Bank Wars that saw a sharp decline in the value of stocks and bonds; in 1858, in 1873 (the first Great Depression which saw two decades of economic stagnation), and 1893, which all saw periods of economic depression and financial crisis in the US and Europe. These periods of economic crisis and depression took the form of stock market crashes, trade and commercial disruptions, and financial turmoil, bankruptcies and shuttering of factories which all followed periods of rapid investments in constant capital leading to commodity overproduction.
In 1844, Marx observed that since the beginning of the 19th century, conditions of the industrial economy were going through fluctuations between five to seven- year periods of prosperity or expansion of industrial production with the introduction of machines that sped up production; and periods of crisis which brought the greatest hardships to workers, accompanied by general revolutionary stirrings threatening the entire existing order of things.
Writing in 1878, Engels observed that the entire industrial and commercial world “are thrown out of joint about once every ten years.” In 1894, he wrote, the former ten-year period process “appears to have given way to a more chronic, long drawn out, alternation between a relatively short and slight business improvement and a relatively long, indecisive depression.” He cited the expansion of the world market with improved communications and transportation, expansion of fields for investment of surplus European capital, and other factors which “eliminated or strongly reduced” the conditions for crisis, but also which carry the germs of “a far more powerful future crisis.”
These periods of capitalist crises presented favorable conditions for working class struggles. Writing after the October 1917 revolution, Lenin said: “Engels realized full well that every war, even in an advanced society, would create not only devastation, barbarity, torment, calamities for the masses, who would drown in blood, and that there could be no guarantee that it would lead to the victory of socialism, he said it would be ‘either the victory of the working class or the creation of conditions that would make that victory possible and necessary’, i.e., that there was, consequently, the possibility of a number of difficult stages of transition in view of the tremendous destruction of culture and the means of production, but that the result could be only the rise of the working class, the vanguard of all working people, and the beginning of its taking over power into its own hands for the creation of a socialist society.”
Imperialist economic crisis
Imperialism, or monopoly capitalism, itself arose from capitalist crisis. Successive capitalist crises have consistently led to the concentration of capital and to monopolies or cartels since the 1860s. In “Imperialism, the Highest Stage of Capitalism,” Lenin traced the emergence of imperialism from the growth of monopolies from its embryonic stage in the 1860-1870, through the lengthy period of development of cartels from 1873, and its full development towards the end of the 19th century. The period of crisis of 1900-1903 saw the intensified process of concentration of industry and banking, and the emergence of cartels serving as foundation of the capitalist economic life. Lenin took notice how these cartels consumed an increasingly large part of the total energy for production, employed the vast majority of wage-earners, and whose output comprised the great part of values produced. “Cartels become one of the foundations of the whole of economic life. Capitalism has been transformed into imperialism.”
Monopoly capitalism, declared Lenin, is the “economic essence of imperialism.” He cited the principal facets of monopoly capitalism, in which monopolies “arose out of the concentration of production at a very high stage;” “stimulated the seizure of the most important sources of raw materials;” “sprung from the banks” and developed into monopoly of finance capital; and took “monopoly possession of colonies, and consequently, of particularly intense struggles for the division and redivision of the world.”
Monopoly capitalism “intensified all the contradictions of capitalism.” Further technical progress allowed the division of labor into more minute details, drawing in a greater reserve army of labor, which in turn further enhanced the
social character of production. While the social character of production was enhanced, private accumulation of surplus value intensified, with the further concentration of wealth and capital in the hands of the financial oligarchy. Still, despite the control of cartels of the commanding heights of the economy, competition and anarchy continued to intensify within and among cartels. Rival monopoly capitalists continue to race against one another in investing in labor- saving new technologies, resulting in endless cycles of overproduction and further concentration of capital.
“Crises of every kind—economic crises most frequently, but not only these—in their turn increase very considerably the tendency towards concentration and towards monopoly.” “(The) yoke of a few monopolists on the rest of the population becomes a hundred times heavier, more burdensome and intolerable.” Imperialism has exposed capitalism as moribund and parasitic, with the tendency to create a “usurer state” under which the bourgeoisie to an ever increasing degree lives on the proceeds of exporting capital. The period since the turn of the 20th century has been the most violent and exploitative in the history of humankind, with monopoly capitalism resorting to the most aggressive and rapacious policies, and waging wars to control sources of raw materials, markets and spheres of investment.
By bringing the entire world under its power, imperialism created conditions from which the proletariat could emerge and break free from the imperialist chains to spread and multiply. Under imperialism, the intermittent economic crisis of the capitalist system evolved into a general crisis of capitalism engulfing the entire world in which every corner has been pulled into the oppressive control of the monopoly capitalist system. For more than a century now, the general crisis of capitalism has been marked by an all-round economic and political crisis, endless wars for territories, rising people’s resistance and revolutions, and the intensifying struggle between the old moribund monopoly capitalist system and the emerging and expanding socialist system.
The general crisis of capitalism has since gone through three stages, and is currently going through a fourth stage, with every stage serving as preparation for more intense conflicts in the following stage. At every stage, the capitalist system was confronted with one degree of economic crisis higher than the previous, brought about by even higher productive capacity, limited capacity of market expansion, social and political upheavals and wars; and ending on a “happy note” for the proletariat with world-shaking revolutionary victories that brought the proletarian revolution to a higher stage.
The first stage of the general crisis of capitalism corresponds with the financial and economic crisis of 1914 leading to World War I, which allowed the proletariat to breach the capitalist front in Russia with the victory of the October 1917 Revolution, paving the way for establishment of first socialist state, the Union of Soviet Socialist Republics.
The second stage corresponds with the period of the Great Depression of 1929- 1940, leading to World War II, which created conditions for the victory of the proletarian-led people’s democratic and socialist revolutions, principally in China in 1949, as well as people’s democracies in Europe.
The third stage corresponds to period of crises of overproduction following the revival of the Japanese and European industrial production, intensified neocolonial extraction of wealth and resources to offset wage increases in imperialist countries, heightened inter-imperialist rivalry in the form of the Cold War, arms race and US overseas wars, victorious struggles for national liberation and people’s democracy in Vietnam, Korea, Cuba and other countries, and the inception of the struggle against modern revisionism and against capitalist restoration in China reaching its apex in the Great Proletarian Cultural Revolution of 1966-1976.
We have since been in the fourth stage of the general crisis of capitalism, which for the most part has been marked by prolonged economic stagnation, with short bursts of growth and intermittent crises. So far, the fourth stage has spanned the longest time, due to setbacks, defeats and reversals in the socialist camp caused by modern revisionist betrayal.
The roughly 125 year history of monopoly capitalism is a history of one economic crisis after another. Each crisis is invariably deeper and more protracted than the previous one, even if these are interspersed with brief periods of expansion and growth, that follow wars and conflicts. Monopoly capitalists, wielding vast financial, industrial, commercial, political and military powers, have adopted one policy regime or another (Keynesian or market economics during the 1950s and 1960s, or neoliberal or supply-side economics since the 1970s) in a self-defeating effort (both economic and political) to counter the factors that lead to the inevitability of crises, but succeeding only in attaining temporary relief or delaying its explosion.
In the late 19th century, major advances in productive capacity, as well as rapid growth in utilities such as gas, electricity and communications, led to growth in agricultural production, as well as steel and iron production. A series of
recessions hit the US and other leading capitalist countries in the first decade of the 20th century leading to the financial crisis of 1914 in the United States, Britain and other main capitalist countries. Europe saw the emergence and rapid expansion of Germany as an industrial power. By the early 1900s, Germany had surpassed Britain and France in industrial production, specifically in steel and machine building and appliances, and was challenging the world markets dominated by the old imperialist powers. With the aim of redividing the world, Germany allied with Austria-Hungary and Italy (Central Powers) and waged war against Britain, France and Tsarist Russia (Triple Entente), to seize territories, particularly in Eastern Europe, leading to the inter-imperialist World War I of 1914-1918.
The inter-imperialist war exposed the moribund state of capitalism and created conditions for the Bolsheviks, the revolutionary proletarian forces in Russia, to lead the workers and peasant masses, in a successful revolution which overthrew tsarism and broke the chain of imperialist oppression. With the victory of the 1917 October Revolution and the subsequent establishment of the Soviet Union, one-sixth of the earth was liberated from the exploitative rule of monopoly capital and split the world between two paths: capitalism and socialism. After carrying out efforts to build its productive capacity, the Soviet Union embarked on a series of five-year economic plans to expand socialist production and carry out the socialist transformation of the relations of production. In a short period, the Soviet Union made historic advances in economic capacity and living standards. Industrial production grew at unprecedented rates, with the surplus accruing to the working class through the expansion of public health and education, child care, and so on.
The rapid socialist growth in the Soviet Union stood in stark contrast to the economic decay of the capitalist system. After World War I and before World War II, the capitalist world suffered three economic crisis: the economic crisis and recession of 1920-21, 1929-1933, and 1937-1938. The capitalist world entered a period of economic stabilization between 1924-1929, which was achieved through the intensification of labor exploitation and repression (fascism and anticommunism), and heightened oppression and export of capital and extraction of resources from colonies. But even during the stable period of 1924- 1929 prior to the Great Depression, factories were working only at 80% of capacity; and at 60% in the 1930-34 period. This, however, did not prevent overproduction of wheat, cotton, corn, hogs, rice, tobacco, milk and others which resulted in plummeting prices and depression of land value, especially in the US. The Great Depression of 1929-1940 was marked by stock market crashes, chronic
undercapacity of enterprises, factory closures, arms production, massive unemployment, fall in wage levels, widespread agrarian crisis, and a general decline in living standards.
The economic depression had repercussions in Europe, which was gripped by high inflation, widespread unemployment and overproduction. Fascism emerged as an ideological and political weapon of the monopoly capitalists wielded against the proletariat. Soon after the revival of its industrial capacity following World War I, Germany–which had lost its colonial possessions under the Treaty of Versailles–joined Italy in demanding a new division of the world. Together with Japan, they attacked neighboring France and Britain, the US, including the colonies of these imperialist rivals, and subsequently trained their weapons on the Soviet Union. The anti-fascist united front, especially the Patriotic War in the Soviet Union, succeeded in repelling the fascist onslaught. This created the conditions for more countries to leave the capitalist system, establish people’s democracies and socialism from Europe to Asia, advance proletarian-led national liberation movements that spread later to Latin America and Africa, further reducing the market under capitalist control, and widening the socialist camp.
By the end of the World War II, the imperialist US had become the leading capitalist power. The outcome of the war allowed the US to expand its markets, colonies and spheres of influence. Its share of the world market rose from 41% in 1937 to 56.4% in 1948. With its national territory mostly unaffected by war hostilities, its economic infrastructure and productive capacity remained largely intact. During the war, US industrial production increased with output in 1943 more than double that of 1939. After the war, the US increased the use of monopoly-state export of capital and control of the global financial system with the creation of the World Bank and International Monetary Fund at the Bretton Woods conference in 1944. The Marshall Plan or the European Recovery Plan (1948-1952) provided financial aid to rebuild the productive capacity of countries affected by the war, made Western European countries dependent on US monopolies and gave the US greater access to markets.
Bourgeois economists portray the period after World War II up to 1970 as one of steady growth and stability of the capitalist system, particularly in the US. The bourgeois state appropriated some of the declared principles of socialist economy, such as state planning, aiming for full employment, raising wages, and allotting public funds for spending on social services, and promoting the supposed “middle class” standards for American workers. This was an attempt to counter the attraction and influence of the Soviet Union and China, obscuring the
essential difference between private and public ownership of the means of production under the capitalist and socialist system, respectively. The big bourgeoisie promoted so-called social democracy or “Christian socialism” to draw away the workers and toiling people from the path of class struggle and into the path of bourgeois reformism, class collaboration and capitulation.
The productive capacity of the US continued to expand after World War II. This made it even more vulnerable to crises of overproduction in the face of substantial reduction of markets, sources of raw materials and spheres of influence, especially during the period 1949-1957, when one-fourth of humanity were freed from the yoke of imperialist oppression and lived under socialist and people’s democratic governments. The US also needed to accommodate commodity imports from Japan in order to support its reconstruction under US direction, as well as from Taiwan, South Korea and Singapore, in order to serve as buffer against growing influence of China and North Korea.
To counter or delay this tendency, US monopoly capitalists and financial oligarchy resorted to Keynesian state measures to expand the domestic market raise wages and provide credit to increase household spending, and spent heavily on military production, wage foreign wars in Korea (1950-1953) and Vietnam (1955-1973), engage the USSR in an arms race, and maintain a large contingent of overseas troops and overseas military camps. To finance these measures, the US monopoly capitalists intensified the extraction of wealth from its semicolonies through unequal trade (to acquire cheap raw materials and dump surplus commodities), and extraction of surplus value, aka profit repatriation, from cheap and “docile” labor in the ever-expanding international assembly line of multinational and transnational corporations. The leading imperialist powers also employed foreign loans to subject these countries to economic and financial influence or control (mainly through the IMF-WB).
Bourgeois economists describe this period after World War II as a “long boom,” although, in fact, the US economy went into recession several times and suffered economic contractions of different durations: 1948-1949, 1953-1954, 1957-1958, 1960-1961 and 1969-1970. These recessions were triggered by various factors, including the sharp decline in weapons sale after World War II and after the Korean War, drop in demand for vehicles by the 1960s, sharp rise in military expenditures related to the Vietnam war, and so on.
While the US fell from one recession to another, socialist construction went on full swing in the USSR, achieving rapid unprecedented industrial growth and surpassing the standards of living of working people in the US and other leading
capitalist countries with full employment and accomplishing great achievements in the scientific, medicine and health, education, cultural, and military fields.
Alongside socialist construction in the USSR was the expansion of the economic capacity and raising of people’s living standards in China following the completion of land reform (1949-1953), and subsequent rapid industrialization and step-by-step socialist transformation of agricultural cooperatives into communes.
The struggle between the dictatorship of the proletariat and modern revisionists emerged and sharpened within the socialist system in the mid-1950s with the modern revisionists led by Khrushchev seizing political power during the 20th Congress of the CPSU in 1956, three years after Stalin’s death. This paved the way for the transformation of the CPSU and overthrow of the proletarian dictatorship, leading to the break-up of the socialist system, the usurpation of economic power and bourgeois privilege by the state bureaucrats, the disempowerment of workers and the eventual process of restoring capitalism in the Soviet Union, and transformation of the country into a social-imperialist power. The successive modern revisionist rulers took over the state and claimed the achievements and wealth of the working class as their own private property.
Learning from the negative experience of the Soviet Union, the proletariat and people of China under the leadership of Mao Zedong, carried out rectification and socialist education movements to expose and resist the modern revisionists led by Liu Shaoqi, in order to steadily carry forward the country’s socialist transformation. For ten years starting 1966, the Great Proletarian Cultural Revolution roused and mobilized the Chinese people in their millions to overthrow the modern revisionists from their privileged position in the Party, which proved to be the key to raising production and transforming social relations to empower the proletariat and working people.
The GPCR was carried out under Mao’s theory of continuing socialist revolution under proletarian dictatorship to fight modern revisionism and prevent capitalist restoration. Through the GPCR, revolutionary China was able to make great achievements which opened a new chapter in the history of the world proletarian revolution. It shifted the center of the world proletarian revolution to China, brought the world proletarian revolution to a higher level, and marked another stage in the general crisis of capitalism. This period of great economic and political achievements in socialist construction and revolution in China, however, overlapped with revisionist betrayals and reversals in the Soviet Union.
Despite having opened a new chapter in the history of proletarian revolution, the GPCR ultimately failed to see the complete fruition of the socialist process. After the death of Mao Zedong, the modern revisionists in China, led by Deng Xiaoping, violently seized leadership of the Communist Party of China in 1978, and led the step by step restoration of capitalism.
The GPCR’s historical significance is comparable to the Paris Commune of 1871. Despite its weaknesses and ultimate defeat, the Paris Commune proved the viability and necessity of the proletariat seizing state power, the lessons from which guided the October Revolution 46 years later, and all succeeding successful socialist and democratic revolutions of the 20th century. Similarly, despite its shortcomings, the GPCR proved the viability and necessity of waging continuing socialist revolution under proletarian dictatorship. The gigantic demonstrations of the Chinese people during the GPCR inspired proletarian revolutionaries and democratic forces around the world to wage revolution in their countries to fight imperialism and modern revisionism. The lessons of the GPCR will certainly guide the proletariat in the inevitable resurgence of socialist revolutions, and as they carry out socialist revolution and construction to a higher level in the future.
Today we stand on the shoulders of all the heroes of the proletariat, from the Paris Commune, to the October Revolution and the Great Proletarian Cultural Revolution, and all the victorious revolutions in between, giving us a long and profound view of the history of the capitalist economic crisis, the general crisis of capitalism and the transition to socialism, as well as the enduring energy and determination to tread the long road ahead towards resurgence of the world proletarian revolution.
Neoliberalism bares the face and essence of monopoly capitalism
Despite the reversals suffered by the proletariat over the past half century, and the reintegration of former socialist countries into the world capitalist system, monopoly capitalism has continued to stagger from one economic crisis to another. As countries become more tightly integrated into the capitalist system, through greater international division of labor (global assembly line, or global value chains), bound by higher levels of technology, communication and transportation, imperialist economic crises spread more rapidly, subjecting great numbers of people to worsening oppression and social hardships at every turn.
The collapse of the Soviet Union in 1991 and the full entry of China into the World Trade Organization in 2001 completed the reintegration of one fourth of the globe into the global capitalist system. This gave the dominant imperialist countries some breathing space to carry out the expansion of their spheres of influence and fields of investment. This, however, did not last a long time and failed to fundamentally change the dynamics of capitalist economic crisis, leading to deeper inter-imperialist conflicts in just a few decades.
Since the mid-1990s, the US led the pack of imperialist allies under the North Atlantic Treaty Organization to expand into Eastern Europe, which the Russian financial oligarchy, debilitated by crisis, failed to effectively resist.
After the assumption into power of the modern revisionists in China, the US invested heavily in China to take advantage of cheap labor, granting it the status of “most favored nation” starting in 1980. From the 1990s onwards, the US allowed China to take advantage of imperialist neoliberal globalization to promote the export of cheap Chinese commodities and the further rapid expansion of Chinese manufacturing.
The global capitalist system took a sharp turn towards neoliberal policies since the late 1970s, marked by a strong push of state deregulation, privatization of key state enterprises, and liberalization of trade and investment policies. Over four to five decades of neoliberalism has increasingly bared the face and essence of monopoly capitalism. It discarded all pretenses of social guarantees, “class compromise,” full employment, “peace and tranquility” that form the rhetoric of the Keynesian period.
In the name of promoting economic growth and preventing inflation, monopoly capitalism has used its imperialist state to trample upon the hard-won rights of the proletariat, bring down the wage and living conditions of the people, provide tax cuts to the monopoly firms but raise the tax on basic consumer goods and services and cut down government spending for social benefits and social services. The shift of economic policy to neoliberalism aims to remove all barriers to accumulation of capital and give the monopoly capitalists all the freedom to exploit labor both in the capitalist countries and the neocolonies.
The neoliberal package of policies was first promoted by the “Chicago boys,” a group of academics from the University of Chicago, appointed after the 1973 US- sponsored Pinochet coup in Chile. The fascist regime denationalized and privatized state assets, allowed the unregulated exploitation of natural resources, privatized social security, liberalized foreign direct investments and foreign
trade, and guaranteed foreign companies full right to repatriate their profits from Chilean operations. These policies would serve as the template of the structural adjustment programs which the World Bank and International Monetary Fund imposed on debtor countries since the 1980s.
Neoliberal policies were first systematically carried out under the Thatcher regime in the United Kingdom starting with the denationalization of the iron mines in 1979, which stripped workers of all their social and political rights, the privatization of housing which subjected homeowners to profit-hungry speculators, and the dismantling of social services, which were all once under law guaranteed by the state and private companies.
The same vigorous neoliberal push started in 1980 under the Reagan government which accelerated the shift to monetarism in the desperate attempt to end the decade long stagflation of the 1970s. Interest rates were raised high with complete disregard for the resulting business closures, widespread unemployment, and global currency devaluation. Reagan carried out an all-out attack against trade unions, starting with the clampdown against the air traffic controller’s union in 1981. The attacks on organized labor in the US was the key factor behind the downward pull of real wages over the following decades.
Between 1975 and 2017, the share of wages to GDP fell by 5% in the US, and even more significant in Germany, Japan, France and Canada. Reagan vigorously pushed deregulation in all social and economic fields. He did away with environmental regulation, occupational safety, regulation of health, education, and telecommunications in an effort to dismantle the so-called “big government.”
Liberalization, privatization and deregulation policies of the past four to five decades gave monopoly capitalists even greater control of the world’s natural resources and markets, and allowed them to subject labor to unmitigated exploitation.
Under the neoliberal policy regime, “structural adjustment programs” were imposed on semicolonial and economically backward countries by the IMF and World Bank throughout the 1980s and 1990s. In exchange for rescheduling payments and new loans, debtor nations were compelled to reduce public spending for social services (“belt-tightening” or “austerity measures”), keep wages low, privatize public companies, allow greater freedom for foreign investments and profit repatriation and so on. These policies were further reinforced through the General Agreement on Tariffs and Trade (GATT) which paved the way for the establishment of the World Trade Organization in 1995 and the offensive of imperialist globalization.
Neoliberal policies have proven to be the worst form of neocolonialism since the end of World War II. These were implemented most aggressively on the hundred- plus countries, which deepened their neocolonial status, as well as former socialist countries, which were drastically opened to imperialist plunder and oppression. Since the 1980s, the imperialists have chosen a handful of countries to become so-called emerging markets which served as adjuncts of the financial operations of big banks and dumping ground of speculative capital and surplus goods; and as centers for semiprocessing, which destroyed independent national industries, and resulted in the further compradorization of these economies.
Neoliberalism has condemned these countries to serve as suppliers of raw materials and cheap labor for assembly and semi-processing, putting them in a permanent state of economic backwardness, and subjecting hundreds of millions of people to a state of economic dependence and ruin.
Deregulation further deepened the rural crisis in the neocolonial economies. Under international agricultural agreements (which imperialist powers routinely violated), agricultural subsidies for agriculture were reduced or removed. Over the past twenty years, these subsidies were reduced by as much as 1.25% share of gross domestic product of so-called emerging economies which further weighed down on small peasant producers. Increasing financial burdens and overwhelming commercial pressures by big agribusiness corporations pushed the peasant masses to losses and bankruptcy. This has put food production in a precarious state, especially in countries where deregulation and liberalization policies in agriculture were carried out blindly.
Big bourgeois compradors in partnership with multinational corporations and big finance made massive incursions to take over and transform agricultural land into large mono-crop plantations for export (fruit, rubber, oil palm, etc.), mining operations, commercial and residential real estate, energy projects, ecotourism areas, massive infrastructure projects, economic zones, and others. Without industrial development to absorb surplus labor, large-scale land-use conversion has resulted in the displacement of hundreds of thousands of peasants and indigenous minority peoples who are either thrown into the fringes of the rural areas, forced into quasi-urban areas, or pushed deeper into mountainous areas.
Neoliberal economic policies have been imposed over neo-colonies through imperialist economic and financial agencies such as the IMF and World Bank, the Asian Development Bank, Inter-American Development Bank, as well as through multilateral agreements since the 1990s including the GATT/WTO, free trade agreements, the Asia-Pacific Economic Cooperation, and others. Also used were
inter-governmental mechanisms (G7, G20, OECD), financial institutions, such as the Bank of International Settlements owned by the biggest central banks, the G7’s Financial Action Task Force, and the influence of major private entities (credit ratings agencies, International Chamber of Commerce). These are aside from the military- and security-focused groupings – NATO, QSD, AUKUS etc.
The neoliberal policy regime has also reinforced the ties between the military- industrial complex and the imperialist states. The imperialist US, especially, sought to amplify its military power in order to secure and extend its dominance and enforce trade agreements across the world. This opened opportunities for defense companies to profit from government contracts, and international arms sales. Military spending by the US has continually risen over the past decades, despite the initial global downtrend after the collapse of the Soviet Union in 1991. Defense contractors of the US are also interlocked with big finance and are hold interests in the oil industry, construction, and others.
While pushing its neocolonies to liberalize foreign trade and investments policies under the so-called “free trade” and rules of the World Trade Organization, the US and other leading countries have been the first to protect their own economies in violation of the very same rules. The US continues to subsidize exports of wheat, corn, soybeans, cotton and rice. The US has also unilaterally imposed trade and economic sanctions as means to counter imperialist rivals, and inducements to favor allies. In recent years, it has employed trade sanctions against China and promoted the in-shoring of US manufacturing companies through tax incentives and other measures.
Finance, financial markets and financial institutions have become much more prominent and powerful in the global economy. Capital flows and exports have greatly increased in scale and speed to virtually every country in the world.
These investments and loans have taken increasingly complex forms and have been mobilized and channeled through increasingly sophisticated financial mechanisms and markets. This includes massive foreign loans to the neocolonies at grossly usurious terms. Moreover, more and more profits are derived from financial mechanisms than from actual commodity production and trade.
These factors also greatly enhance the power and control of finance capital over vast economic resources. Growing financialization has, however, led to more speculative bubbles, financial crises and state-subsidized bail-outs amounting to trillions of dollars. Big finance systematically prioritizes bloated short-term profits over long-term investment in productive industries. The relative size of capital being invested in production (measured in terms of share in gross
domestic product), as opposed to that flowing into financial speculation, has been on a downtrend since the 1970s.
Significant technological progress over the past two or three decades has greatly impacted entire economies. Rapid developments in computing power, internet connectivity, wireless technologies, robotics, biotechnology, nanotechnology, 3D- printing and in artificial intelligence have resulted in quantitative and qualitative progress in production, communication and transportation, commerce, financial operation, service industries, consumer behavior and so on.
More fundamentally, such technologies serve to simplify labor, increase the available pool of surplus labor, thus becoming a major factor in wage repression. Neoliberal policies which deregulated labor relations allowed capitalists to put into place a myriad forms of flexibilization and informalization of labor which intensify labor absolutely (making labor work beyond the typical 8-hour working day such as through work-from-home arrangements, freelancing, gig economy) and relatively (making labor work more hours in fewer week days with no overtime or night differential pay, to complete work typical for an 8-hour 5-day work week, such as forms of quota system, compressed work week, and so on).
Along with policies that removed job security, e.g. labor-only contracting, these created conditions which made it more difficult to organize workers.
Combined with liberalization of trade and investment laws, rapid improvements in the forces (of production during the past decades have allowed the monopoly capitalists to further expand their global production lines (in the so-called just-in- time production global value chain), induce backward countries to engage in a race to the bottom in terms of workers wages, exert even greater control over vast resources and labor.
The crisis spawned by neoliberal policies and the suppression of progressive and revolutionary movements have allowed anti-worker and anti-democratic cultural and ideological influences to thrive. The broad masses of workers and toiling people, the youth, especially, are being being paralyzed by capitalist consumerism, narcissism and individualism, racism, fascism, bigotry, and other anti-social ideas and practices promoted by monopoly capitalist-owned media and social media. They lack awareness of their democratic rights and of their rights as a class.
Forty-five years under the neoliberal policy regime have not changed the fundamental laws and basic contradictions of the capitalist system, nor the inevitability of economic crises. On the contrary, neoliberalism has greatly
exposed the parasitic and moribund nature of monopoly capitalism. The neoliberal globalization era has correspondingly seen more frequent episodes of financial and economic crises, including the US recessions from 1980 to 1982, the US recession following the 1990-1991 Gulf War, the 1997 Asian financial turmoil, the 2000-2002 bursting of the dot-com bubble, the 2007 bursting of the US housing bubble, and the so-called Great Recession of 2008-2009, to cite a few. The Great Recession, in particular, has been followed by a prolonged period of economic stagnation that has now lasted around 15 years, interrupted only by the deep recessions during the Covid-19 pandemic in 2020 and short-lived “economic recovery” in 2021-2022.
Deregulation under neoliberal economic policy have heightened capitalist anarchy in production, leading to the accelerated destruction of the environment. It is estimated that half of total global CO2 emissions causing the climate crisis have been produced in the last 40 years of neoliberal globalization. This has resulted in increasingly frequent extreme climate phenomena. Deforestation, which peaked in the 1980s with the removal of environmental regulations, have resulted in unprecedented flooding across the world. Mining have intensified with unprecedented demands for nickel and iron for steel production. Hundreds of new sites are being opened to mine lithium, cobalt, manganese, nickel, and graphite, as well as rare earth elements used for the production of more sophisticated consumer goods, new technological materials, and defense applications.
Underpinning all these episodes of capitalist economic turmoil is capitalist overproduction in practically almost all major commodities from oil, petroleum products, natural gas, vehicles, wheat and different types of grain and commercial fruits, to semiconductors, computers, smartphones and all types of consumer electronics, as well as office buildings, home appliances, housing and so on. Overproduction crises have resulted in production disruptions, job losses, bankruptcies, mergers and acquisitions, and further concentration of capital in the hands of financial oligarchs.
Persistent imperialist economic crises over the past four and a half decades under neoliberalism are clear manifestations that it is a dying system, desperately being kept alive by financial and industrial magnates at the great expense of the working class and toiling people, and the great ruin of the majority of neocolonies, semifeudal and backward countries.
In the course of the past decades under the neoliberal policy regime, there have been waves of mass protests, popular risings and anti-government upheavals by
workers, peasants and other toiling people, in both capitalist countries and in semicolonial and semifeudal countries. These protests have been ignited by people’s anger over corporate greed, onerous state impositions, corruption, social spending cuts, widespread land and economic dispossession, wage repression, worsening socioeconomic conditions, as well as by imperialist wars. Most of these are spontaneous expressions of mass outrage. While progressive, anti-imperialist, revolutionary and communist forces have actively taken part in these mass actions, these are mostly dominated by reformist forces, as well as by anarchist groups. In a number of cases, US-supported or US-funded groups (through the US Endowment Fund for Democracy and similar agencies) have actively initiated these “regime-change” protest movements, taking advantage of legitimate grievances of the people, but directed against governments seen as independent, uncooperative to the US, or actively working with US imperialist rivals.
In some countries assertive of national independence and economic freedom, governments have also resisted imperialist demand to liberalize trade and investment policies and deregulate national industries and resources. These contradictions are ultimately entwined with rising inter-imperialist rivalries.
These contradictions of the capitalist system demand a revolutionary resolution which can only be accomplished through class struggle waged by the proletariat allied with the peasant masses and other toiling and oppressed people. The proletariat must turn itself into a force capable of accomplishing this task. At present, proletarian leadership is markedly absent or weak in majority of the countries despite favorable conditions and the desire of the oppressed and exploited classes for revolutionary change. Proletarian revolutionary forces must exert their utmost to forming a communist party as its advanced detachment that is capable of striking deep and wide roots among the masses, in order to lead their various mass movements and firmly link these with revolutionary struggle.
Summary and prospects
Economic recessions, prolonged stagnation and depressions, wars of aggression, proxy wars and regional wars, intensification of imperialist rivalries and bellicosity, and heightening war preparations, are all manifestations of the continuing aggravation of the general crisis of capitalism in its present fourth stage. The completion of the current stage of the general crisis of capitalism has been delayed by modern revisionist betrayals and capitalist restoration in the Soviet Union since 1956 and complete capitalist restoration since 1991, and in
China since the late 1970s, and complete integration into the capitalist system since 2000.
The fourth stage of the general crisis of capitalism has proved to be the most protracted so far. While the first three stages spanned around 20 years each, the current stage has now protracted to more than 45 years, due to the setbacks suffered by the proletariat, which took away the momentum of the world proletarian revolution, and allowed monopoly capitalism to intensify the exploitation of labor.
Despite the grave setbacks suffered by the socialist revolution and proletarian forces, the monopoly bourgeoisie failed to prevent the further spread and worsening of the general crisis of capitalism, especially from the 2008-2009 onwards (Great Recession which has preceded a period of prolonged stagnation now spanning more than 15 years); the general crisis of capitalism continues to worsen and is generating conditions to allow the proletariat to rebuild its strength and advance rapidly across different parts of the world. Amid the imperialist economic crisis, wars and upheavals, revolutionary proletarian forces affirm the historical certainty of the resurgence of the socialist and democratic revolutions, at the same time, even as they shoulder the nitty-gritty tasks, and accumulate victories by the day, months and years.
Imperialist economic crises necessitate socialist revolution. The first 70 years under imperialism saw the rapid advance of socialist revolutions; followed by half a century of reversals, retreats and losses. Marxist historical materialism teaches us to grasp the uneven development of revolution and the non-linear progress of history. Just as the period of transition from feudalism to capitalism did not pass through a straight line, and was characterized by periods of defeats and feudal counter-revolutions, so has the period of the transition from the moribund imperialism to the future vibrant socialist system been characterized by modern revisionist class betrayals, bourgeois counter-revolution and capitalist restoration.
The defeats suffered by the socialist revolution are temporary, and have not altered the moribund state of monopoly capitalism. We remain in the era of imperialism and proletarian revolution, the era of the transition to socialism or the general crisis of capitalism. As Lenin wrote in 1917: “whatever may be the future complications of the revolution, the objective situation of the imperialist countries embroiled in a war that has reduced the most advanced countries to starvation, ruin and barbarity… is hopeless.”
However long it may seem from the point of view of an individual’s lifetimes, the past century and a quarter of the transition to socialism is still short in terms of the epochal history of the transition from one mode of production to another.
Marx pointed out that the transition from capitalism to socialism spans an entire historical epoch. It will continue until private property is completely abolished and the transition to communism becomes complete.
