International Situation
The spur of the economic crisis

The last weeks were marked, at the level of the imperialist conflicts, by the continuation and aggravation of the difficulties of the troops of the coalition in Iraq, by the "revelation" and the setting in show of the tortures of the Iraqis prisoners roughneck soldiers of this coalition.

A part of these difficulties by of the USA and their allies in the country are related to the fact that increasingly significant sectors of the local bourgeoisie are violently and openly opposed to them. It is firstly for the defence of their own economic and political interests and, above all, because these local bourgeois fractions know that they can rely, to defend their interests, on the anger of the immense majority of the Iraqi population who directly suffers, since more than a year, the wild military occupation which brought only more misery, more oppression, more slaughters and permanent persecutions.

It is clear, furthermore, that these fractions of the local bourgeoisie couldn’t, by themselves, offer an opposition ever so slightly solid to the roadroller of the US armies without the discreet but effective support of all those which, on a world level, seek to oppose to the first world power and amongst which, we can seen in good place the main imperialist rivals of the USA (Germany, France, Russia, etc.).

But, these last weeks, it is on another ground that the situation developed : the economic crisis came to remember itself to the attention of the bourgeoisie.

Explosion of the cost of the raw materials

The bourgeois media speak mainly of the increase of the oil price. The barrel exceeded 40$ and nothing seems to indicate, for the moment, an inversion of the tendency. The OPEC countries can proclaim the development of the extraction, Saudi Arabia can increase its production of 2 millions barrel per day, Libya – recently became flexible to the US pressures – can make all the efforts it wants, nothing is effective, oil price increases.

Apparent paradox, stocks are not particularly low, far from it ! And, if we have to take in account the difficulties – and it is an euphemism ! – to extract the ‘black gold’ from Iraq, the increase of the insurance premium related to the risks in the main production area, it’s not enough to explain the phenomenon. Let us repeat that stocks available are sufficient and that the production is at least equal to that it was only 2 or 3 years ago. But above all, it’s not only the price of the oil which soars up ; most of the other raw materials are in the same situation (1). It is the case of almost all metals (except iron) : aluminium, tin copper, etc. This phenomenon of the rise of the prices of raw materials has quite a specific meaning for the Marxism since it indicates a crucial moment in the evolution of the economic crisis.

We will linger, this time, over this aspect of the question, while knowing that we will have to reconsider the more political and "diplomatic" aspects, the imperialist relations of forces, in a next bulletin.

End of the effects of an economic recovery

As we had the occasion to say it in this bulletin (see, for example, the n° 14, 22 or 24) the change in the international situation, consecutive to the attacks of September 11, 2001, did nothing but express the need, for capitalism as a whole, to react to the economic crisis which, after the burspur of the bubble known as of "the technological values" made a thundering reappearance on the front of the scene. As we also said, the measures of recovery, initiated by the USA, have concerned almost exclusively the military sector.

Unlike what one could observe in the similar situations which occurred in the former decades, European countries (at least the principal ones : Germany, France, etc.) did not run themselves in North-American logic but, on the contrary, adopted measures of the same order (and in competition with it, this time), endeavoring to integrate the military sectors of the various countries of the European continent and engaging in their turn, to do so, in a policy of debt concurrent to the US rival one Thus, the policies set by the bourgeoisie to answer the effects of the crisis are henceforth marked under the seal of the opposition between the two groups of powers which are increasingly facing more obviously; the seal of bipolarisation.

The economic crisis which brought to the engagement of the USA in a forced march warlike policy in Afghanistan, then in Iraq, led to a differentiation by the main imperialist rivals in front of the first world power. Germany, France in a first time, then a growing number of other powers, were brought to oppose to the US boss on the military level and, logically, on the economic one. The US recovery plan aborted because the imperialist front resulting of the end of the Second World War is broken. Two facts, two situations illustrate that explicitly : the question of the Euro/dollar "competition" and the attitude toward China (and, in a less way, India).

Delocalizations and regional control

The delocalizations (i.e. the transfer of certain productions in the areas with a lowest cost of labour) are not something new. Since many years, the large capitalist companies became multinational and tend, logically, to set their production units in areas of the world where the profits are more important. What has change is that the amount of reserves of certain countries, made out on US treasury bills let these countries (China or India, for example) in a position of relative force in front of the USA. At the same time as the US capital needs to appropriate living work force, to exploit the local labour, these countries have a mean to negotiate their alliance. If part of the US debt owned by these countries had to transfer to the concurrent currency, the Euro, the American power would be, then, largely reduced. One thus see the convergence between the strictly economic aspects, and the imperialist - in the military meaning – one. The European powers more and more openly opposed to their former American boss need, them too, the cheap work force of these countries so as to stay competitive on the world market meanwhile they have to develop their imperialist seizure to be able to claim to play a role today and, moreover, tomorrow. It is, from now on, an open competition between the two "poles", US on one side and European (2) on the other, which gives the opportunity to certain countries to defend their interests as well as possible, in the very way where this competition and this bipolarisation constrained each national bourgeoisie to situate itself relatively to one and the other. Thus, one of the causes of the explosion of the price of the raw materials are related to the enormous requirements in energy, metals, etc, which are arising in countries called emergent up to that point and which, today, are at the same time zones of expansion and delocalization of the capitalist production and at the same time of geostrategic and imperialists stakes of foreground. It is still the bipolarisation which gives a particularly acute characteristic to the crisis which, in this meaning, "comes back by Asia".

The limits of King dollar

The crisis of raw materials is presented as a crisis of oil. While it is terribly reducing, this presentation has something true. Even if the rise of the price of raw materials doesn’t concern only oil and affect also number of other products, a thing is particularly significant in this situation ; the countries of the Euro zone are, relatively and for the moment, less affected than the USA and the countries depending on the dollar. The oil market, among other, being based on the US currency and this one seeing its rate dropping compared to the European currency, the effects of oil increase are less important in the countries under Euro. That can last a certain time but must find an exit in a way or another. It is the USA interest that their currency remains dominant and stay the reference for the energy exchanges. Europeans do not see disadvantages that their oil bill is lighter because the exchange advantage. But the producer countries, in the long term, cannot agree to be paid in a currency which, on the world market, is crumbling vis-a-vis the concurrent currency. Firstly because their assets in dollars lose their value and, then, because the goods which they want and must get on the market and in European currency cost them more. Without taking in account that, as long as oil is sold and bought in dollars – and only in dollars – they are prisoners of US power. It is, so, more than likely that some of the oil-producing countries will have to make so that their oil sales are made out in Euros, which will imply, by the European countries, increased requirements concerning the influence they exert on the local markets. Once again one finds at the base of these questions the opposition between the imperialist interests of the various countries and, in the last analysis, the increasing bipolarisation of the capitalist world.

Useless to say that these tendencies, this dynamic, are yet only one line of force, not very visible and dependent on many factors still not succeeded. However, the situation in Asia comes to give body to these tendencies since, there too, the tensions between rival imperialisms are exacerbated.

The Chinese and Indian stakes

These two large countries of Asia represent about a third of the world population at the same time as they are, until now, second and even third order powers at the economic and political level on the world scene. However, the "universalization", the "globalization", the "delocalizations" of companies of the central countries of capitalism in these areas, if they could, during a time, delay and soften the most terrible effects of the economic crisis for the dominant powers, arrive today to a breaking point. Not only the fact that industries of these countries, running at maximum revs, exert a pressure to the rise of the raw materials prices for which they have an imperative need so as to be able to continue to turn, not only the beginning of modernization of the structure of these companies already implies a local unemployment concerning tens of million proletarians, not only the fact that the ` delocalizations' of the European and North-American factories towards these countries lead to dry up the economic demand and the markets of the developed countries already suffering mass and permanent unemployment, but still the reorganization and redeployment of the capital in which the bourgeoisie saw with hope the slowing down (if not the stop) of the fall of the rate of profit, this redeployment and this reorganization get to their limit (3). The enormous demand for raw materials and energy by countries like China or India – demand which is one of the fundamental causes of food products growing prices – is the harbinger that the productive apparatuses of these countries are approaching those of the central countries of Europe or North America capitalisms. It is the sign which the next episode of the crisis will affect also this area of the world. And that the expiry date approaches.

But that doesn’t take anything off to the fact that the logic of the capitalist mode of production can only involve the capitals to be invested in these areas, the firms to ‘delocalize’ their production to Asia and, thus, the contradiction to sharpen.

Ifwe add to that the fact the imperialist logic compels the first and second order powers to take position in these areas for motives which are at the same time directly economic and, at the same time more clearly strategic, one cannot have any illusion on the future relations between China and India, between this latest and Pakistan, between the republics of the South of the former Soviet Union (Afghanistan, Uzbekistan, Kazakstan, Kirghistan, etc.) and Russia, etc. All the play of the main world powers consists, like at the chess game (or, in this case, at the Go game), in occupying local positions and in reducing the room to manoeuvre of the adversaries. Of course, some countries can claim a role of regional power (China or Pakistan, for example) but only very few have a sufficient scale so as to be able to accede to a world role at the imperialist level. The ‘regional’ powers have no choice but to fall under the play of these ‘global’ powers, even if it means to haggle over their participation according to their real control, to their capacity to master an area.

Paroxysm of contradictions

Until now (since the collapse of the Soviet block, in fact) the USA were the only country to be able to claim a global role at the imperialist level. But since more than a year and half now, Germany and France openly took the head of an imperialist ` pole' whose ambitions are too global and in contradiction with those of the USA (see our text A New Period Opens, in the bulletin n°14, November 2002). The aggravation of the tensions between the USA and some their former European allies, the tendency towards the bipolarization of the world which results from this, the obligation for each national bourgeoisie to situate itself in this imperialist configuration, all that could only be carried on an even more acute level with the worsening of the economic crisis.

The economic crisis, whose re-emergence at the beginning of the year 2001 had caused the commitment of the great and medium imperialist powers in warlike logic, thus makes its reappearance after two or three years of military higher overbids and escape ahead in the debt. But, according to the dialectic logic advanced by Marx and Engels, it appears on a higher level vis-a-vis a bourgeoisie entangled in contradictions increasingly insurmountable. Because, if the crisis comes back in force, the warlike tensions which it had caused do not decrease therefore, quite the contrary!

Economic crisis every day more profound and without solution, imperialist tensions and warlike chain in Africa (Ivory Cost), in Iraq and, in a threatening way, in several countries of the Middle East, in South Asia, the capitalist world of this beginning of 21st century offers a forceful image of its deep reality.

The escape ahead in the sector of armament

This profound reality is quite as visible if one looks a little into the evolution of the military expenditures of the main countries during these 2 or 3 last years. The few elements which we give hereafter do not require long developments. They are in themselves sufficiently explicit. We pick them up, just as they are dispatched bythe AFP (Agence France Presse) of June 11, 2004 :

"The military expenditures in the world increased by 11% in 2003, caused by the American war effort, according to the last report, published Wednesday, of the International Institute of Research on the Peace of Stockholm (IIRPS).
The world military expenditures, which had strongly dropped in the decade 1989-1998 after the end of the Cold war, increased in 2003 for the 5th consecutive year, invoices growing heavily quicker and quicker.

They have, according to the estimations' of the IIRPS, progressed – in real terms – of 11% in 2003, to 956 billion dollars (777 billion Euros), that is 2,7% of gross domestic product world, and 152 dollars per capita. Taking into account the weakening of the dollar, the rise is 3,5% in rough terms "

Thus, the world spent in 2003 18% more for its weapons that two years earlier, 2002 having already been a "good year" as regards to armament (+6,5% this year), note finally the Stockholm’s Institute.

"And if one takes into account thechanging rate of the dollar on the market, the United States alone represented, last year, 47% of the world military expenditures. The first five extravagant countries – in order, United States, Japan, Great Britain, France and China – arrive together at 65% of the total.
If on the other hand the purchasing power of the local currencies is taken into account and not their only conversion rate vis-a-vis the green bill, the United States remains number one for the military budget in front of China, India and Russia.
It is, like the previous years, in addition to the United States, the Central and Eastern Europe (within the framework of integration with NATO), Russia (+14%) and Asia which increased the most their efforts as regards armament last year.
In the Middle East, the budgets increased by 10% last year: the war in Iraq pushed its neighbours to rearm, in particular Iran and Kuwait.
The military expenditure on the other hand remained stable in Western Europe, even if increases were noted in Great Britain and France ".

Each information quoted here contributes to give a clear and explicit image of the ‘march toward war’ that our fraction analyzed since nearly two years. Always according to the AFP, the counterpart of these "efforts of war" and of this take-off of the military budgets are the "difficult structural reforms" whose our class knows what they mean as attacks against its living conditions, employment and clear cuts in the social budgets, etc.

"Savannah (USA), June 11
The leaders of G8 greeted the strong world growth at the time of their summit of Sea Island but, to coddle it, they promised difficult structural reforms in order to prevent that, like too often in the past, it does not fall down like a soufflé.

In the absence of a major or imminent crisis, the economic file was one of the least thorny of that summit".

That the measures against the working class, prudishely baptised "structural reforms", do not constitute a ‘thorny file’ for the bourgeoisie, we suspected it. It has always been clear, for the Marxists, that the various national sectors of the bourgeoisie know perfectly how to link themselves to fight our class whatever are, otherwise, the conflicts of interest which divide them. Nevertheless, we thank these Sir to put the points on the “i” !

The fraction, 09/06/04


1. We refer here to the industrial raw materials, like metals, for example. The agricultural produce is not, for the moment, prone to the same logic.

2. Let us repeat that, when we say, to shorten, European, we mean, initially, the German-French couple that we do not compare to the European Union ; a structure referring to the period of before 1989 and who, today, tends not to be any more but one closed field than dispute the two main imperialist poles.

3. Without developing here on the subject, let us note just that, if the delocalization of manufacturing units in areas where the cost of the labour is lower makes it possible to capitalism to produce at lower cost, that is only anecdotal from a strict Marxist point of view. Indeed, what is important, from this point of view, it is that in zones where means of production (machines, etc.) are relatively archaic, the relations between the constant capital and the variable capital (C/V) is weak and the organic composition of the capital too. I.e. that in a quantity of goods produced with a given capital, the share of alive work (wages) is proportionally more significant than the share of constant capital (machines, raw materials, etc), and the rate of surplus-value, as well as the rate of profit, more significant. See on this subject the demonstrations of Marx in "Capital", first book, chap. 4, 5 and 6 and third book, chap. 6. Marx also shows that the equalisation of the rate of profit regulates, in the long term, the difference between the more ' modern' capital and the more 'archaic' ones, by the game of the mass of profits generated by a broader production.

Internal Fraction of ICC -- Bulletin 26