Why anti-capitalists should welcome a capitalist recovery

by Stephen Morgan in Brussels, Belgium.

Statistics are being trotted out, speeches are being made and champagne corks are popping these days as capitalists confidently predict the beginning of an economic recovery. In times like these, some comrades could feel somewhat downhearted, thinking that the end of the Great Recession means revolution is off the agenda for many years to come. However, it would be wrong to do so. A capitalist recovery may, in fact, help the revolutionary processes, not undermine them.

The first big question is; is there a recovery at all? The economic data is far from convincing. The Marxist economist, Michael Roberts has pointed to many factors which suggest that the bourgeoisie may be jumping the gun. In many articles on his blog, Michael has pointed out many contradictory facts and trends which could counteract a recovery or make one so negligible that ordinary people would have difficulty recognizing any real improvement in their lifestyles.

He has explained that despite some positive reports, profitability is still below pre-crisis levels, productivity hasn't improved, investment is low and real GDP growth in most of the advanced capitalist countries is anaemic. European countries are only showing growth rates in the range of 0.1 to 0.7 percent and there remains a pervasive fear among economists of deflationary pressures, which could condemn Europe to a decade of Japanese-style stagnation. Furthermore, mass unemployment remains stubbornly high and buying power doesn't appear to be increasing outside of the pockets of the very wealthy. Indeed, Michael goes so far as to predict that the recovery in the US could run out of steam by the end of this year.

As far as ordinary people are concerned, its all change, no change. A huge section of the working class is stuck in the poverty trap of joblessness, part-time work and low wages. Living standards are still below the levels before the 2007-8 crisis, indeed, a big proportion of people have never been so badly off in their lives. This cuts potential profits and is another key factor, which decreases the motivation needed for capitalists to reinvest in productive capacity, which is the foundation of any real economic recovery. Therefore, there are quite sufficient indicators and countervailing tendencies to suggest that the so-called recovery could even be stillborn or die prematurely.

However, as Marxists will tell you, all processes develop through the working out of contradictions and the interaction and interpenetration of opposite forces. Anything, including the economy, progresses by way of combined and uneven development. Therefore, it is perfectly natural that current economic indicators should be contradictory. What we have to do is to discern what is the dominant process and in which direction the arrow of change is pointing. I don't, at all, pretend to be a good economist, but it appears to me that the factors suggesting a recovery are now stronger than those which would imply a continued recession.

We can downtalk these figures, but they do suggest that recovery is the most likely perspective. World productivity growth is predicted to climb to 2% per annum and employment growth by 1%. The economic powerhouses like America, China and Germany are expanding quickly and so is the UK. The US is forecast to grow by 3% this year and Germany by 2%. Continued strong growth is expected for China in 2014 at around 7.5%. Overall global growth is predicted to reach 3.4% and growth in world trade is forecast to expand to 4.5%. Even in Europe, the periphery economies of Spain, Portugal, Ireland and incredibly Greece are now expanding again. Not mind-blowing stuff, but significant.

Any recovery, however, will most likely be racked by severe problems in particular countries, currency and stock market crises and continuing countervailing tendencies which will tend to undermine it. Fundamental problems of falling profitability, deflationary pressures, reluctance to invest and speculation on financial markets, plus doggedly high unemployment, will all serve to weigh down the take off and limit what altitude the recovery can attain. The flight, therefore, is likely to be turbulent, less elevated and shorter in duration than other recoveries.

What contribution factors like shale and biotech advances will make isn't clear, but they seem unlikely to have the same effect which the IT revolution had on the previous boom. So, overall the arrow of development seems to be upward, despite the extenuating counter-pressures.

So why should socialists welcome this? The answer has to do with the stage we are at in the class struggle and the interaction of mass psychology with developments in the economy, society and politics. To get the consequences of a capitalist recovery in perspective, we therefore have to firstly summarize the current level of consciousness and organization among workers in different parts of the world. 

The Advanced Capitalist Countries

We would all have liked for the 2007-8 recession to have led to socialist revolution worldwide, but that wasn't going to happen. The events of the preceding 20 years has thrown back class consciousness and political understanding. The two-decade-long economic boom and the collapse of planned economies in the old Stalinist states created illusions in capitalism and a reluctant acceptance that it seemed to be the only viable economic system.

This was compounded by the degeneration of the traditional parties of the working class, with the jettisoning of all socialist principals and the leadership's use of their positions to reinforce illusions in private enterprise and the market economy. Coupled with that was the de-industrialization process in the old advanced capitalist countries and the erosion of traditional working class communities, although to different degrees in different countries.

These effects weren't to be overcome by one recession and one new wave of class struggle. In a sense, these factors meant that the working class in the older capitalist countries forgot much of their identity and traditions. It remains buried in the subconsciousness of the working class, but this “amnesia” will only be overcome by a series of shocks in the form of severe economic crises and through the reliving of the experiences of class conflict. Only then will the workers draw new conclusions over what has to be done and what has to be fought for. In certain circumstances that can happen at lightening speed. To use a hackneyed phrase, the “hammer blow of events” can suddenly knock some sense into the working class.

But it is most likely to be a more protracted and complicated process, in which there will be leaps forward and steps backward. The waves of mass protests, especially by public sector workers in many European countries, represented the beginnings of this process and the level of the struggle waged by the Greek workers, with over 30 general strikes, is a harbinger of what heights the movement can rise to in the next stage of its reawakening.

This will also involve the creation of new and the rebuilding of old working class organizations, depending on the concrete circumstances in different countries. There has also been a fall in trade union membership nearly everywhere, though fundamentally these organizations remain in tact. It will also mean the testing out of leaders and programmes before political clarity emerges. In some countries - like we've seen with PASOK in Greece - the old parties will become entirely discredited as a result of their viscous attacks on the working class. At the same time, entirely new and unexpected formations can spring up, such as the Occupy movement, which can gather behind them broader layers of the masses, including disaffected youth, sections of the middle classes and revolutionary workers impatient with the rate of change.

The ex-Stalinist States

Generally speaking it will be a similar process in the ex-Stalinist states, but with certain differences and nuances. In Eastern Europe, the percentage of industrial workers in the labour force is far higher than in the West. A lot of the old industries persist and foreign capitalists have relocated many of their production facilities from the West to the much cheaper workforces in the region. Therefore, these countries are far more proletarian in character, the traditional, working class communities remain more intact and the concentration of wealth in the hands of a small number of super rich oligarchs means class relations are more polarized.  

However, unlike the West, the decades of dictatorship atomized all independent organizations of the working class and expunged the accumulated experiences of class struggle which existed before the abolition of capitalism. In some countries, new independent organizations are being created, but in most places the majority of the workers are still in the old Stalinist trade unions and it will have to be seen whether the workers will try to transform them or eventually bypass them altogether.

Living standards in the East are much lower than in the West and this makes the situation far more volatile. Austerity measures have had a much harder impact and this has meant that major movements of the working class, plus generalized opposition protests are continuing to rock the regimes. But consciousness is still confused and contradictory. There is great anger and disappointment over the failure of capitalism to deliver on the anticipated improvements in living standards, yet not all illusions in the capitalist system have been overcome, as we have witnessed in the misconceptions about the EU in the Ukraine or in Bosnia where fury over the effects of privatization have led to calls for the formation of a “technocratic government of experts.”

Added to this are the authoritarian tendencies and endemic corruption which continues to flourish, often under the governance of former Stalinist bureaucrats. This repels people and leads them to associate this with socialism, therefore increasing illusions in Western-style democracy. Even so, after decades of official propaganda, a residue of socialist consciousness remains, regardless of its cynical manipulation by Stalinists and its disconnection from reality under the previous regimes. In terms of the revolutionary movement, this might mean that the workers in the East could jump over the heads of those in the West at some point.

The Newly-Industrialised World

In the underdeveloped world another process is taking place which illustrates the combined and

Chinese women workers

uneven development of economics, politics and class consciousness on a global scale. Here, a virgin proletariat has emerged fighting the super-exploitation of multinational corporations and native managers, which is beginning to find its identity for the first time. In dozens of these countries, the industrial working class represents a far higher proportion of the population than in the advanced capitalist countries. They are thrown together in massive industrial units, working in highly dangerous conditions for poverty wages. They live in huge working class communities, which form sprawling ghettoes on the outskirts of ultramodern cities, where the glittering wealth a nouveau riche bourgeoisie stands in stark contrast to their conditions of misery and despair.

Women, who often make up the majority of the workforces, are triply oppressed compared to their counterparts in the West, as a result of their working conditions, the weight of family responsibilities and the norms of more backward traditional societies. This, in turn, makes them one of the most combatitive and radical sections of the working class, who are often taking the lead in the battles against the bosses. Massive inequalities of wealth and social injustice are giving rise to waves of strikes from Columbia to Cambodia, Egypt to Indonesia and South Africa to Bangladesh.

The character of their struggles and the level of class consciousness are similar to those of the 19^th Europe, when the proletariat was first beginning to emerge and organize itself as an anti-capitalist force. Unlike their counterparts in the West, the workers of the developing countries are not so much restoring their identity as discovering it for the first time. The end of the 19^th century in Europe was the period of the formation of the mass workers' organizations, the trade unions and mass worker's parties and this is principally the task now facing the workers in the newly industrialized world.

It is a process of differentiating the working class from other classes and gaining understanding of irreconcilably opposed interests between them and sections of the bourgeoisie, especially in the political sphere, where all sorts of confused class collaborationist ideas persist. The working class in the newly industrialized world is at the point of learning the importance of solidarity. Many of the come from the peasantry and retain backward ideas of a communal, ethnic, religious and tribal and nature and are therefore are just discovering the need for common organization of struggle, in then form of trade unions and workers' parties based on their common class interests.

China is the key. Which forms the class struggle and political battles will take will be interesting to see and it really deserves an article in itself. Important strike movements have already taken place in recent years, in what is now the largest and most concentrated working class in the world. There are many similarities to the situation in the ex-Stalinst, European states, but important differences exist as a result of the increased living standards achieved under the state capitalist economy, although huge inequalities continue to exist. This will give rise to reformist trends and new union organizations aimed at wrestling concessions from the ruling elite and the still booming capitalist economy.

On the political level, the bureaucracy has recently split into “left” and right camps, with the left bureaucrats posing as Maoists. This probably reflects stronger nostalgia and illusions in socialist ideas among the masses, mixed up with misconceptions about Mao's Stalinism than is the case with Stalinism in E.Europe. Indeed, a mass opposition or revolutionary movement could take on a Maoist form in China.

However, throughout the developing world, the process of class consciousness and organization doesn't have to take decades, but can proceed in giant leaps and bounds like it did with the working class in Russia in 1905. The battle for reforms and world crises could well push the workers of the underdeveloped world into first place in the international struggle to overthrow capitalism.

How revolutionary consciousness develops.

Broadly speaking this is the state of class consciousness, self-organization and political understanding among the masses around the world, which has to be taken into account when considering the likely effects of a new capitalist boom. We see a number of contradictions and different levels of development between the different regions of the world. This is the result of the combined and uneven development of the historical processes over the last twenty years. The working through of these contradictions will condition the character of the class struggle in the coming period.

The main contradiction arising out of the last world boom is that, while there has been an enormous strengthening of the working class in objective terms, it has been massively weakened on the subjective level. Because of the industrialization of the underdeveloped world, the balance of forces in class relations on an international scale is now weighted decisively in favour of the working class. It has the industrial muscle to paralyse the planet. However, subjectively, class consciousness and political understanding hasn't been as low, since the inception of the labour movement over 150 years ago. Socialist ideas, in particular, have been marginalized and are not seen as a viable alternative at this moment.

Marx once said that when an idea is taken up by the masses it acquires an objective force which can shape events. However, we could say today that the inverse is also true. The current political vacuum, manifested in the virtually absence of mass socialist ideas, has itself become an objective barrier to the development of the revolution. Overcoming this will likely be a protracted process, but at some point in the future, the flashpoint where the objective and subjective conditions temporarily converge, will definitely arise.

However, this wont necessarily come about as a result of a long economic recession. Trotsky once explained that it wasn't simply recessions which caused revolution, but also the interaction of political, moral, and religious factors, as well as wars. We saw this in the Arab Spring, when the coming together of a mixture of ingredients beginning with the effects of the world recession followed by austerity measures, privatizations and job losses, culminating in severe economic hardship, gross inequalities in wealth, together with the existence of hundreds of thousands of educated but unemployed youth, all interacted with the desire for democracy, an end to corruption, demands for dignity and hatred for the dictatorship, to eventually cause an explosion of monumental proportions.

In past history, it also wasn't only economic hardship which was the key factor, even in the most famous working class uprisings. War is also often the midwife of revolution. The war between France and Germany was a key reason behind the Paris Commune. Defeat in the Russo-Japanese war contributed to the 1905 workers' revolution in Russia and the horrors of the 1^st World War had a huge effect on the revolution there in 1917. Similarly, the revolutionary crises in Germany between 1918-23 were also heavily influenced by the psychological effect of defeat in the war and the huge burden of reparations under the Versailles Treaty.  

Moreover, severe recessions don't automatically cause revolution. They can, in fact, demoralize workers and undermine a revolt. People can become so physically and psychologically weakened by their conditions, that they have no fightback left in them and they turn away from politics to concentrate on the day-to-day struggle to keep themselves and their families alive.

For example, in the 1990's, following the restoration of capitalism and widespread privatization in Russia, the country experienced an economic crisis considered to have been worse than the Great Depression of 1929. People's savings were wiped out as banks collapsed and workers were owed some $12.5 billion in unpaid salaries. One staggering figure, which reflected the blind alley into which society fell, was that more than half the deaths among Russians aged 15 to 54, between 1990 and 2001, were caused by alcohol abuse.

In fact, reflecting back on it, which revolutions broke out at the time of the 1929-33 Great Depression – none! The main consequence wasn't international revolution, but the single greatest defeat for the working class in history with the victory of Hitler in Germany. Even the socialist civil war in Spain during the period resulted in the victory of Franco's fascist forces.

Therefore, Trotsky explained that it was more likely to be the constant insecurity and uncertainty created by oscillating periods of booms and slumps which would revolutionize the consciousness of workers. The inability to plan ahead, the uncertainty of whether you will have a job or a home within a few years, whether you will be able to send your kids to college, whether your savings will evaporate in hyperinflation, etc, can have more effect in breaking down confidence in capitalism and focusing minds on the need to transform society than a single plunge into economic Armageddon.

Trotsky also hypothesized that revolution could be more likely to take place when an economy enters recovery rather than recession. This could happen today in fact. Once workers see the new figures for growth, notice a reduction in unemployment and take account of the increased profits the bosses are making, it can encourage workers to take more industrial action, in order to try to reclaim some of the losses they suffered during the recession. Such struggles have the potential to turn into revolutionary crises, especially in the underdeveloped world where exploitation and inequalities are more pronounced or in a country which has suffered like Greece.

As Marxists have frequently explained, consciousness always tends to lag behind reality. Trotsky pointed out that to catch up, the masses learn from events in “wide sweeps of the brush,” through which they make successive approximations about the situation and what needs to be done.

The awakening of the labour movement following the Great Recession has been a terrific beginning after a long period of unfavourable conditions. In some ways, it has been more than we could have expected or wished for, with mass labour protests, the tremendous battles of the Greek workers and the revolutions in the Arab world, plus the formation of groups like the Occupy movement and the growth of anti-capitalist sentiments expressed in the mass hatred towards the banks.

But it is still the first stage towards world revolution, before which practical tasks in terms of rebuilding and reorganizing the labour movement are on the order of the day. A capitalist recovery can offer a “space,” a sort of pause, which can be a positive opportunity to carry this out. Workers confidence will rise. Union membership and organization is already picking up worldwide, including the most exploited and previously unorganized workers like those in the fast food industry and Walmart in the US and the garment workers in the underdeveloped world.

Therefore, a short, unstable and shallow recovery, or a rapid succession of boom and slumps, could be more beneficial at this point than a prolonged and deep recession. An upturn can give the workers more confidence to engage in class struggle and get organized. Moreover, when a new recession breaks out, the bitterness towards capitalism and the conclusions which will be drawn, will be even more profound than after 2007.

Of course, the great danger is that objective events unfold more quickly than consciousness can keep pace and, therefore, the possibility for serious defeats becomes greater, which will then throw back the development of the workers' movement even further. That is always a possibility and, therefore, it is also true that this is a race against time. But, it would be wrong to search for short cuts for building a revolutionary movement.

Currently, the revolutionary forces for socialist change are tiny and divided. This state of affairs itself contributes to the retardation of the revolution. Most are little more than cult-like sects, who live in a world of make-believe and memories of bygone eras. They imagine themselves to be the vanguard elite of the working class and consequently put the building their own group above the interests of the labour movement as a whole. They hope to transform themselves into mass organisations in the shortest possible time, but this only leads them into ultra-left, opportunist and adventurist failures from which they gain little. This has been underlined by the fact that despite one of the worst recessions in history, the existence of wide scale anti-capitalist sentiments, mass movements and the revolutions in the Arab world, none of these groups have been able to make any important gains or achieve any substantial growth.

But, at this point, the working class still has to go through a steep learning curve. Given the current state of consciousness and organization in the different regions of the world, the main task at the moment is not the building of mass revolutionary parties, even if circumstances arise which demand their existence. It is about rebuilding and organizing the labour movement and gathering all the forces on the left together to cooperate on this project. Only this will open up an arena to reach wider layers of the working class with the genuine ideas of socialism.