Economic Meltdown: Capitalism’s Death Agony; In Search of Socialist Way Out

 Economic Meltdown: Capitalism’s Death Agony; In Search of Socialist Way Out

Written in October, 2008

 

Introduction

That the world financial system is in a serious dire crisis is no more news both on the basis of news reeling out daily on the billions of dollars lost at the stock markets across the world, and the history of cyclical collapse of capitalist system. Also, that various critical analyses have been given by various, mostly bourgeois, commentators the world over on the current world economic crisis, who condemn the free market-induced financial/economic crisis and in some cases call for another Keynesian pill to safe capitalism is not new. However, what has clearly manifested from these analyses is the pro-capitalist approach which tend to portray the situation as a structural or managerial fault, which can be corrected by taking the 'correct' methodology to market system – governmental oversight control or responsible management practices. Most commentators have refused to see or pretended not to see the link between the current financial crisis and the inherent contradiction in capitalism as a profit-oriented system which socializes production but privatizes profit.

 

What most bourgeois commentators try to do is to criticize the system from inside the temple before the 'enemies' of the system exploit the situation. Therefore, you find those same commentators (and journalists) especially in our third world countries, who sometime ago praised neo-liberal programmes of privatization, commercialization, trade liberalization, labour flexibility, cut in social spending, etc - all of which are meant to hand over public resources to the ‘almighty’ private sector, now criticizing free market capitalism. To these latter day preachers of regulated market, anybody who questioned these policies was an advocate of big government, who wanted to throw the society backward. What this set of commentators are now advocating is government intervention in the financial sector while also supporting neo-liberal policies – another euphemism for free-market capitalism - a case of eating one’s cake and wanting it back. The end result of this is the open robbery of the working poor in order to guarantee mega-profit of the super-rich few.

 

What this write-up then tries to achieve is to show that the current financial crisis is nothing but a clear expression of the inherent contradictions within the capitalist system which cannot be resolved by the so-called responsible management or governmental oversight but by total dethronement of the capitalist system by working poor themselves, in order to build a society on behalf of the majority. Furthermore, as against what has been portrayed to be the era of Africa, the current financial crisis will show that Africa and indeed the third world can never got out of the seemingly perpetual under-development. It will also be vital to show the link between the future of world capitalist economic system at this crisis period and political development and the fate of the world working class in the coming period. Finally, it will be vital to draw a political task for the labour and working class movement in Nigeria and the Africa.

 

The Sins of Free Market Capitalism – The Mega Robbery of the Poor for the Rich

 

Barrage of information have revealed that, as a result of the financial crisis, over $65 billion has been withdrawn from the mutual fund (a sort of capitalist moneybags’ investment association, that collect money from member to invest in the juicy and most profitable, mostly short-term, investment) while most banks in US, Europe and Asia have declared huge losses in their balance-sheets. Several mortgage organizations and hedge funds have collapsed while many banks in the US, Europe and Asia have declared themselves bankrupt. As at now, three GCE executive, a big French bank, including the chairman have resigned over the failure of the bank.  Of course, in defence of the free market capitalist system, the Western governments have spent nothing less than $2.5 trillion – an amount that can provide water, education, public housing, electricity, good transport for majority of the poor countries – to bail out handful of banks and financial institutions. The British government was the first to start what is being termed “financial socialism” by bailing out Northern Rock Bank late last year. The US government has dumped $250billion into 9 major banks to shore up their liquidity base while several other billions are being budgeted to save stock market. Currently, the Dutch government is injecting over $13.4billion into one of its biggest bank, ING that is already in financial mess. Virtually everyday, horrible news continue to emerge from stock exchanges. According to data reeled out from government sources, US investors which gained over 25% in $500 billion investment in equity throughout the world in 2007 has already lost 60 percent in these investments, which clearly shows the depth of  the crisis in the capital market. Despite recent gains in the stock markets around the world, the monthly and yearly analyses continue to reflect deep crisis for quoted companies. The global financial crisis in the world has impacted on the commodity markets with prices of many commodities running down.

 

Many commentators have placed the cause of the crisis in the financial sector on rabid quest for profit by business people and lack of regulation by governments. While this might have actually contributed to the crisis as big businesses are made more powerful than ever; actually the foundation of the world economy itself is fundamentally flawed. In the real sense, free market capitalism is generally senseless in all ramifications. The business class is allowed to make as much profits as they can from any business, no matter how messy, inasmuch as big profits are declared on the stocks. Capitalist governments make the world to believe that generalized prosperity depend on profits from the corporate world. To this end, public resources are used to develop private business under the guise of incentive for business. In the Western World, governments give extensive tax cut to the rich while working class are asked to pay more; public utilities and social services like public housing, health, education, pension, etc, are privatized while workers’ future is damned. In the third world countries, the International Monetary Fund (IMF) and World Bank always rate countries’ economies – as AA, AA+, AAA, AAA+, etc – based on their abilities to privatize public institutions to private hands (both local and foreign), commercialize and under fund social services, reduce labour power of bargaining, deregulate major stake of the economy like oil and gas sector so as to give unprecedented wealth to the already rich few, among others.

 

In Nigeria, we witness how Nigerian government that refused to utilize public resources for social services and infrastructural development every other day give Nigerian and foreign banks access to make huge profits from foreign reserves and issuance of treasury bills. When workers and the poor people cry out, they are asked to tighten their belts in the short terms for the elusive economic prosperity on the long term; they are told government cannot do everything, yet the government continue to subsidize big private business. In most African countries where economies have been declared sound and healthy, there has been increased decline in the living standards while poverty and unemployment continue, leading to social disintegration. For instance, despite the so-called emerging market status given to countries like South Africa, there has been increased misery with over 40 percent officially in poverty and over 25 percent jobless, while a tiny clique are more prosperous, which has led to growing social crisis as witnessed in increased crime and recent racial bigotry (itself a product of the lack of a viable working class political alternative). Even in China where there has been unprecedented economic growth, there has also been class polarization leading to over 83, 000 (mostly localized) protests last year alone.

 

How Current Crisis Emerged

 

The immediate result of these neo-liberal policies is the massive exploitation of the working class and expansion of the horizon for big business profit. More money are now available to the big business, which are channeled to financial speculations. It is more ridiculous that while there are less capital investment in the energy (oil and gas) industry which has led to increase in crude oil prices, oil corporations and oil speculators have seen exceptional increase in profits. Added to this is the wealth of the third world oil producing countries in the Middle East, Asia and Africa, that goes to the pockets of the rapaciously corrupt ruling and business classes in these countries. These wealth are put in the equity markets and mutual funds. More of these profits are invested in the financial markets, especially in US and Europe. In the US, as a result of the growing housing need, these huge wealth are invested in mortgage business with credit and loans given to the many Americans even at very ridiculous interest rates. The result of this is the increase in prices of these houses which by beginning of 2007 had increased by over 70 percent on average and over 100 percent in some big cities. Mortgage funds, hedge funds; construction companies and banks relied on this to speculate with mortgage houses buying up houses, construction companies embarking on ambitious construction of houses, while hedge funds, banks and insurance companies speculate in loans credits using various complex financial instruments like collateralized debt obligation.

 

However, with increasing prices of fuel and food, coupled with neo-liberal policies, more people, especially the middle class found it difficult to observe their debt obligations and this sparked off the current financial mess as many hedge funds and mortgage firms that borrowed from banks were finding it difficult to pay up while the banks in response, were requesting for more collateral. The end result is the bankruptcies of not only hedge funds and mortgage firms, but also banks and insurance companies across the US and Europe. Responding to this are speculators who withdrew money from the capital markets which led to liquidity crisis while banks stopped lending even to themselves on hourly basis. This had ripples across the world as most companies having connections with US and Europe suffered confidence and thus stock markets – the volatile and parasitic sub-structure of capital – collapsed. Responses of governments are already known.

 

Beyond Free Market Madness – Exploitation of Labour for Capital is the Basis of Current Capitalism Crisis

 

But the current crisis is actually a product of the unfolding events since the early 80’s when free market/neo-liberalism was accepted as a replacement to Keynesian economic doctrine by most western leaders and subsequently, third world nations. The neo-liberal economic doctrine meant breaking the power of the working class and thus reducing the share of the working class in the world profits while increasing the power of capital. With governments’ efforts, working class power was weakened and capitalists given more power to increase workers’ exploitation. Furthermore, with the collapse of the Stalinist Soviet Union and Stalinism – a distortion of genuine idea of Marxism – the capitalist class and governments used unparalleled propaganda to increase workers’ exploitation; while most working class organizations and social democratic parties (though with pro-capitalist leaders but were previously  at least sympathetic to the idea of government’s intervention in the economy) swung fully to the right thus denying workers the fighting power to restore post-War World II living standards. This process led to increasing wealth for the big business while the living standards of the working class that constituted a huge population in the Western World plummeted. In G7 plus (including Japan, Euro-12, Britain, US and Canada) countries, between 2001 and 2006 alone, workers’ share of the world GDI (Gross Domestic Income) reduced to 53.7% from 56% (which implied that workers’ wages have drastically reduced while new workers, most from third world countries, are being paid peanuts).

 

This led to reduced purchasing power, reduction in industrial capacity of the manufacturing sector and consequently lower capital expenditure by firms. Rather than invest in capital expenditure to boost production and purchase in especially third world countries, most of these firms diverted their profits and wealth (gotten from massive exploitation of the working class as explained above) to the financial sector investing in stocks and speculative businesses like hedge funds, while others are kept in tax havens by billionaires. In US, between 1973 and 2008, manufacturing share of GDP fell from 25% to 12% while financial share increased from 12% to 20.5% (with 5% of the increase accounted for by mortgage boom). Similar situation occurred in Britain and other European countries. This is not unexpected as firstly, capitalism means profit maximization at any rate and secondly investing in backward economies like Africa will require huge investments including development of huge middle class and relatively averagely-paid working class base. This is too expensive for the capitalist class that is looking for short term profits to offset profit lost to the welfare state during the Keynesian era. But, financial business does not create new wealth rather it redistributes already made wealth in the manufacturing sector, which underscores the name 'real economy'. The over-capitalization of the company stocks without corresponding real economic value led to the roguish dotcom crash of the 2000’s.

 

The collapse of the dotcom boom, as is being witnessed now saw governments’ direct interventions in rescuing the financial market and the world economy. This is despite the fact that working class purchasing power and living standards were being squeezed around the world under the excuse that governments must balance the economy in order to avoid inflation. This action of governments was repeated in post-September 11, 2001 credit crisis when there was rundown on stocks as a result of the anxiety that the terror attack will affect the world economy.  All this provided some more money for the capitalist class to gamble upon. Furthermore, since the 1990’s, there has been increased investment in the Chinese economy when China opened its economy (and later Indian, Russian, Vietnamese and Brazilian economies, among others) but this investment was based on the already made infrastructures that were the legacies of nationalized economy under Maoism. Moreover, these investment were based on cheap labour power available in China as the Chinese government subsidized foreign big business with 20 percent labour cost cut, meaning increased profits. While over 900 million workers have been added to the world labour force, it is also a reality these workers are paid fraction of what is paid in US, Europe and Japan. Thus, as workers in the so-called emerging markets continue to make more values for capitalism, they only get lesser which means production in these economies could not be consumed by the producers in those countries; therefore, it had to be exported back to the US economy which consuming market itself is shrinking as a result of the effect of neo-liberal economic policies that had eroded public purchasing power. With huge wealth still available, especially in the financial sector, issuance of credits of minimized rate was used to boost the consuming market, which again recycled maddening speculation of stocks and debts. This led to huge debt for the US economy as the general debt increased from $11 trillion in 1987 to $44 trillion in 2007.

 

With huge profit coming from these emerging markets, coupled with huge surplus wealth from China, oil-producing countries of Middle East, Africa, etc and Japan (through trading in US dollar) being stored in US, there was huge money for the US economy to provide credits for US consumers. It is this debt-financed but unsustainable consumption that is providing the fake and abstract resources for speculation and gambling at the stock, commodity, money and equity markets not only in the US but throughout the world. While China and other South East Asia depend on US consuming markets, it is the same wealth realised from the US that is borrowed to the US citizens and governments to buoy the production. The European economies also depended on the Chinese (and other economies like India’s and Russia’s) economy as they not only utilized the cheap labour but also export capital goods, including motor cars, to these emerging markets. The third world economies like Africa have also depended on the world economy as supplier of primary goods like oil, minerals and agricultural goods. It is this fragile, speculative and unsustainable economic system that produced the exceptionally irrational financial system where everything including agricultural goods is gambled upon. Therefore, a crisis in any part or section of the world economy, especially in major economies will rebound on not only other sections of the world but also every other sector of the world economy.

 

Impact of the Economic Meltdown on Third World Poor

 

It is worth stating that, the financial meltdown has resulted in many financial corporations declaring unprecedented losses, which reflected in the finances of manufacturing sectors that depend on the financial sector either to increase their stock values or to borrow money to undertake long term projects. Even when they earn exceptional profits, they hardly invest in new capital expenditures. It is even ridiculous that financial (and some manufacturing) organizations that claim to use stock values to know the health of their businesses bought back their stocks, mostly with borrowed funds (estimated by Dow Jones Industrial Average at over $370 billion in 2006) so as to increase their face values in order to give unprecedented profits to big investors of these corporations. This is coming even at a time when production and consumption are shrinking and sustained by credit! It is also worth mentioning that the value of commodities and even currencies are not sometimes determined by their demands but by the speculative markets that utilize dealing in expected future contracts to hiked the values of these commodities. At various times, crude oil and gas prices and agricultural goods get unwarranted hike in prices as a result of stock gambling. The immediate effect is that most common people especially in the third world countries could not afford the cost of energy and food, while millions of small farmers, as a result of neo-liberal policies that had privatized public institutions and social services, rather than gaining from the hiked commodity prices, are worse off. The huge wealth accruing to third world governments rather than being used to fund social services and develop the economic through direct governments’ investment in capital and industrial projects, are handed over to the private sector both locally and internationally through various guises – Public/Private Partnership, treasury bill issuance, storage of money in foreign accounts, over-bloated contracting and patronage, ridiculously inflated salaries and allowances for corrupt political class, dubious and fraudulent pension policies, and through direct looting of the public treasury by politicians.

 

The effect of the financial crisis is being felt by third world countries which produced primary commodities. Prices of mineral commodities like Diamond, Nickel, Iron are plummeting as a result of the shrinking market for capital and industrial goods. This is as a result of declining market in US in reaction to the credit crunch which has led to collapse of over 3,400 small and medium scale industries in China and huge sale reduction for major corporations. Expectedly, this will mean retrenchment and huge unemployment in China and thus a declining living standard. The end result is the fall in economic growth in China which as at today is estimated at around 9.8 percent as against 10 percent some months ago. Also, in South East Asia, Russia and India, the economies growth will fall drastically. Of course, G7 economies and Japan hold over 60 percent of world’s stocks, their economic survival in terms of markets, cheap labour sources, cheap credit and wealth, depend on emerging and third world markets, more than ever before. With declining prices of commodities in the world, most third world economies are in deep crisis. Even when there are huge surpluses, poor people hardly get anything.

 

The use of bio-fuel may reduce as a result of the meltdown in production but food prices will still be high as a result of declining production and the need for major food producing countries like Vietnam to protect prices and income (of farmers and government). If on the other hand, bio-fuel use increase in attempt to reduce higher cost of fossil fuel, it will accentuate the food price crisis while only the rich farmers will benefit. However, prices of other agricultural goods, especially those used for industrial production will reduce as production worldwide plummets. The over 50% cut in crude oil prices will seriously hit the oil producing countries as there will be serious austerity measure against the poor people as social services will be seriously under funded while salaries will freeze; unemployment will rise as many local companies and banks will cut cost while many foreign companies will either close shop or embark on serious redundancies. Already, many billion-dollar bank-financed projects already planned by big corporations and subsidised by governments in many third world economies like Nigeria are being put on hold which will foreclose the elusive possibility of any development in these economies in the coming period. The reduction in crude oil prices will not reduce fuel prices in oil-importing third world economies, as further austerity measures to stay afloat will annul any fuel prices reduction. With many advanced economies already officially declaring recession, regular financial support to poor countries will cease our at least fall drastically  while many creditor corporations and nations that lend to third world economies through multilateral organizations will demand for more collateral, increase rates and even recall some credits in order to stay afloat. The summary of this is: 1) there will be increase in poverty and falling living standards; 2) there will be increased social tension and working poor struggles and 3) the already elusive short or long term development in the third world economies will further accentuate as multinational companies will be more ferocious in quest for profit and liquidity. *In mid-2009, the IMF reported that over 100 million people, mostly from third world countries, have been added to the impoverished population.

 

And in Nigeria: Crude Capitalism Prevails

 

In Nigeria, the financial sector, despite all the lies and propaganda of banks, are in deep shit. They have been gainers in the ridiculous gambling at the stock and equity markets, despite crude underdevelopment in the country. Governments (both federal and state) deliberately supported this madness by not only providing banks with public finances to gamble with but by also being the major borrowers from and market for the banks. For instance, while workers are extorted through the dubious pension policy, the banks, through their mutual funds and hurriedly set-up pension managing firms, have had access to this huge wealth, running to over N1 trillion as at September, 2008, not to invest in productive business but gambling at the stocks. As government provided wealth for these sharks, it also provided markets through issuance of treasury bills at very costly rates –a deliberate attempt to hand over public resources to private hands fraudulently. Furthermore, many of the privatizations and oil well sales carried out are funded by banks at exorbitant rates though with direct connivance of buyers of these privatized corporations who buy these corporations at rock-bottom prices and sell them in parts to realize immediate profit from where bank loans and interests are paid. The so-called bank consolidation is nothing short of brazen fraud.

 

While failed banks’ managers who lent over N53 billion to themselves are investing the monies in the newly consolidated banks, small shareholders, whose monies were looted could not get their refund, in addition to the over 33, 000 workers thrown out to labour market through the so-called consolidation. In summary, while government squeeze the poor working people, public monies are handed over to the private business sharks who  gamble from all fronts to gain unmerited profit. It should be noted that virtually all manufacturing and non-financial companies in Nigeria  have direct link with the banking frauds and gambling through stock markets, investment in banks, insider borrowing (as exemplified in the Spring and Wema Banks’ cases where business people use their positions as banks’ big shareholders to get favourable credits to run their business without collateral or recognized agreements), etc. It is the availability of huge funds realized from exploitation of the working people by governments and business class, and the above noted official fraudulent practices that buoyed the maddening gambling at the stock markets in the past one year; and like every other delicate capitalist arrangement, the withdrawal of foreign funds invested in marginal businesses disoriented the whole stock market, which has lost over N2.4 trillion within six months, (though the lost value is itself abstract/unreal) while the rest of the financial system, despite their criminal silence, will face unprecedented problems in the coming period.

 

The end result will be the collapse of big banks and associated companies (either in the real or financial sector). This collapse may not be total but it will impact seriously on their profits (which they may falsify anyway) as already their real stock value is serious taking a free fall. These banks have been lying about their losses at the foreign markets, but we will not be surprised when any of those very close to foreign funding collapses. This will lead to further private sector retrenchment as many medium scale factories that depend (many of which also invest in stocks) will face serious crisis – as energy cost will not abate. Also, suspension of many big capital projects like West African gas project will lead to further crisis for the working people as most companies that were salivating for these projects will have to cut cost. Already, over 25% of pension funds were invested in stock markets while banks hold major portion of this amount; which in the coming period will lead to serious battle with pensioners who will find their pension seized. In 2007, out of over N6.7 trillion shareholder funds in banks’ accounts, about N2.5trillion was used for marginal trading, i.e. gambling by banks. International financial crisis (a direct result of the capitalist system) coupled with the crass opportunism of the Nigerian ruling and business class will stall, in the long term, any attempt at developing of Nigeria.

 

Governments’ Interventions and Bail Out: Not a Way out

It is pertinent to know whether the intervention of advanced countries governments (of US, Europe, Japan and South East Asia), both monetary and managerial will resolve the impasse. This is necessary because many Nigerian and African commentators have started using this as excuse to compel governments to commit public resources to bail out rapacious private business. In the first instance, governments of these advanced capitalist economies do not even have any trust in actions they have taken. The British prime minister just few days ago stated that European and American economies will recede completely come next year, after his government committed over $400 billion to clear the financial mess. The stock markets have also been responding to this in negative terms. Analytically, the over $2.5 trillion being spent by advanced capitalist economies – an amount that can provide water, education, public housing, electricity, good transport for majority of the poor countries – can not in any sense resolve the fundamental problem of the world economy. In the first instance, the money was lodged in private banks, most of which either suffered losses or almost lost their feat in the financial hurricane. Thus, part of these funds will be used to resolve some of the debt obligations of these banks and restore profitability. This means that lending will still be restricted to lucrative businesses (despite reduction in lending rates by central banks) that will yield short-term profits.

 

Even, if these monies are lent to the manufacturing sector, it will never spur medium term production or consumption increase as most of these corporations will rather shrink their businesses and concentrate on lucrative businesses that will make them find their feet. This will not solve any of the impending job losses estimated at over 35, 000 this year and 165, 000 in the next two years in New York alone. Already, many companies have started declaring their job loss forecasts for 2009, as companies such as Nissan, Merrill Lynch, etc are cutting their labour force. Moreover, governments’ bailout will definitely have consequences in the public sectors, as there will be chronic under funding of social services while governments’ employment will slowdown, as governments will try to balance budgets in an attempt to avoid more deficits. Already, New York governor, in a televised interview in CNBC has proposed almost $2 billion deficit which he wants to wipe out of the next year budget, after serious cut have already being made. No matter who emerges as president in US presidential election or which party controls the congress, the over $1.2 trillion being spent by Bush government will lead to squeeze in social funding. Already in Europe, since last two years, there has been deep cut in social funding while job losses had increased seriously, therefore, the current bail out, even if it has any effect (which is not possible anyway), it will not obliterate the effect of past social cuts.

 

Internationally, trade is falling which is having serious impact on transportation as shipping cost has drastically fallen by more than 60 percent. The overall effect of this is that there will not be any way out in the next few years, while the working people will be worse off. Even if the world come out of the present quagmire, it will take few years before another crisis erupt in the world capitalist relation. Already there is a growing interest of capitalist financial sharks to shift from stock markets to treasury bills (over 40% of which is held by governments) and possibly commodities (especially agricultural commodities, as industrial production plummets) which again will recycle the crisis in another, if not worse dimension. Despite billions of dollar declared by some companies especially in the oil and energy sector, the coming period will see worse situation of falling income and unprecedented job loss cum attack on workers’ and poor people’s economic rights.

 

Return of Keynesianism? – Politics of Capitalist Imperialism

 

The European governments, led by French’s Nicholas Sarkozy are already mouthing the possibility of regulating free market capitalism while some emerging markets like India are thinking of decoupling – disassociating from world economic relation. These developments have both economic and political tunings. In the first instance, there is no regulation that can safe capitalism, it has reached its peak. It should be necessary to recall that the shift from Keynesian model to free market in the late 1970’s is not accidental; it is a product of the assertion of capitalist contradiction between capital and labour. Then, governments’ massive funding of social services and intervention in economy boosted purchasing power and expanded markets for capitalism. But there was a problem: government is using part of surplus wealth produced by workers but held as profits by private business, gotten in form of taxes to subsidize markets for private business while governments’ intervention in economy provided private business opportunity to shift risk on governments and consequently on labour.  Inasmuch as this was progressive then, it was not sustainable on the basis of capitalism as the law of demand and supply led to inflation which governments covered with deficits while private businesses made huge profit until the last straw of oil embargo of the late 1970’s broke the Keynesian capitalist back. Of course, introduction of Keynesian doctrine as was introduced since 1950’s, in contradistinction to the present bizarre free market, would be progressive as it will bring back living standards of millions of poor people; but the contradiction between capital and labour will still assert itself – socialization of production and privatization of wealth leading to over production and recession.

 

However, what the European governments want is not real Keynesianism, but a regulated free market where government will have management control over financial business. If truly, European governments want Keynesianism, the trillions wasted to bail out private business would have been invested in social infrastructures, especially in third world countries which would have increased labour purchasing power and thus reinvigorate capitalism. But they do not want this and in fact, it is not practicable. Even, those banks that were nationalized like Northern Rock were still being run by their former managements while hundreds of millions were given to the rapaciously fraudulent big shareholders and managements that mismanaged these banks, as bonuses. Furthermore, the current world economic relation cannot allow Keynesianism unless there is an upheaval from below that threatens to uproot capitalism. Introducing Keynesianism will mean cutting corporate profits drastically to provide social infrastructure in the first, second and third worlds. But any attempt at even small cut in unprecedented corporate wealth will lead to economic sabotage through capital flight and withdrawal. Furthermore, introduction of Keynesian economic doctrine will mean re-arranging the world division of production – a situation where third world provide either cheap labour or primary commodities while rich countries control capital, production and consumption, which capitalism is not prepared to allow. How do we resolve the debt-driven consumption in US and even the US unsustainable debt to the world – cancel them? That is death sentence to the rest of the world capitalism and even US capitalism itself. How do we spur world consumption in third world which is possible by increasing workers’ salaries substantially, without affecting foreign investment in emerging and developed economies? Despite huge environmental calamity facing humanity, big corporation find it impossible to spend a vital part of their wealth on sustainable energy and production. The reality is that, none of these issues can be resolved without uprooting capitalism and enthroning a worldwide democratic socialist economic planning where vast resources of the world – mineral, monetary, human, material and technological will be used on a planned and environmentally-sustainable basis for the benefit of humanity. Sarkozy clearly understood this, that is why he limited himself to mere financial regulation – another euphemism for “Robbing the poor to pay the rich”.   

 

The reality is that Sarkozy and Europe’s proposal is a political gimmick, and not only Europe is involved. Since the September 11, 2001 attack, US imperialism has gained momentum thus making the rest of the world especially Europe, Russia and Asia to be more reliant on US imperialism and militarism. The current crisis, having weakened US morally and to some extent politically, has emboldened other sections of world capitalist imperialism especially Russia and Europe. It is this that Sarkozy wants to exploit. While Russia is taking the road of crude nationalism to assert itself as shown in its adventure in Georgia, Europe and China wants to use integration to gain some power from US. But, while US may be weakened to some degree, it has not reached a point of surrendering power to Europe. The world capitalist relation still depend on US authority to politically maintain world capitalist relation and struggle for control as it still has the political, military, financial and strategic power to defend capitalism. Furthermore, the fate of most of other imperialist nations depends on US, even the rash Russia. But, one thing is certain, there is going to be growth in nationalism as nations try to wriggle out of the crisis. Moreover, struggles are going to break out internationally by the working and poor people in response to the parasitic capitalist malady, with more anti-capitalist trends growing. Nationalism and racism will be veritable instruments for capitalist states to use to divert attention. Moreover, no matter who comes to power in US, there will be increase in militarism in an attempt to assert power of capital and secure sources of capitalist profit upon which the US imperialist state is based. In this sense, the possibility of fascism may not be ruled out, but even in the absence of this, strong states will develop in order to curtail the growing anger of the world’s poor. But all this will also depend on strength of the working class and poor people to enter the political arena to assert its power and demand fundamental change.

 

For a socialist revolution

 

Unfortunately, leadership of labour movement and working class organizations throughout the world are in neck-deep relationship with capitalism. While just 8.3 million millionaires and billionaires (less than 0.14% of world population) control over $35 trillion of humanity wealth (according to Forbes’s 2008 report of the world’s richest), less than half of this is needed to improve the living standard of over 2.5 billion people who live on less than $2 a day, while the whole wealth itself can develop humanity technologically, economically, socially and spiritually on an environmentally sustainable basis. But the capitalist ruling class around the world is only in power to maintain the status quo. Labour movements will be forced to struggle, but as usual, the struggle will be organized by labour leaderships in order to save capitalism. Unless genuine working class organizations, in Nigeria, Africa and the world start building political structures from grass root to national levels and link the struggle for basic living standards of the people, which will plummet seriously in the coming months, with the need to build independent political alternative of the working people - which will have on its front burner, a socialist transformation of the society on the basis planning and working class democracy - the coming period will witness worse crises than we are presently going through.

 

The failure of capitalism in Nigeria is too visible. Despite billions of dollar at nation’s purse, Nigerian ruling class are not prepared to develop the country, yet majority continue to wallow in penury. As against the propaganda that government will not bail out the stock market, it is clear that government's policies, as has been analyzed above will see the vast majority of public resources finding their way back to the private pockets; and thus to banks and stock market. This will see the already super-rich 1% of Nigerians already controlling over 80% of oil wealth being given more money while the poor will be further squeezed. Nigerian governments, at all levels, despite all grandstanding will hand over more of public resources to the private hands in the coming period. Already, over N1.2 trillion would have been spent by this December on all the political officers this year alone as official salaries and allowances, yet workers and the poor people are being daily shortchanged. While the working people continue to subsidize the rich, the poor continue to suffer. Also, over N17 billion has been handed over to the voracious oil marketers, who are the agents of diesel-run, costly and environmentally dangerous energy system. Furthermore, despite the fact that less than 30 percent of the population has access to the erratic power supply with several companies closing as a result of acute electricity supply, the federal government is planning to hike electricity tariff come next year. This is in addition to the planned fuel prices hike and ever-ballooning inflation. Social services are in their worst state has virtually all tertiary institutions are hiking fees. Despite the so-called Universal Basic Education Policy which has gulped hundreds of billions of naira, most poor children has no access to functional education while those going to schools are only receiving half baked education. Unemployment is rife in the land as many school aged youth, already discouraged about the lack of jobs in the country, have dumped education for motorcycle riding and phone call business while others are looking for illegitimate shortcut method. This gruesome situation will only worsen in the coming period.

 

The planned N600 billion bail out planned by some private banks is a ruse as banks in Nigeria are already trying to save their already diminishing liquidity; and if at all they spend this money, it will only be to buy back their shares in order to shore up their value so as to give more dividend and gains to the big investors and shareholders, while small shareholders, who were thrown to the capital market in the first instance by the failure of neo-liberalism to resolve their immediate social and economic needs, will little or nothing for the poor. Overall, more bank workers will join the over 30, 000 already retrenched ones in the labour markets while there will be more attacks on economic and democratic rights of the remaining ones. But the huge resources of the country (monetary, natural, mineral and human) are enough to provide better living for every Nigerian if the wealth is democratically nationalized under the working people's democratic control. But the current capitalist ruling class will never allow this unless pushed out by the working people. This is why the labour leadership must wake up and build a working class political alternative now that will serve as beckon of hope for the oppressed. Working people in Nigeria, nay Africa and the world over, have shown, through massive struggles that they can change the world; it is their leadership that is drawing them back. From the Himalayas to the thick Amazons, to the jungles of Africa to the polished cities of the West to the windy Middle East, the working people have shown their enormous potential to struggle for a better society, they are being held down by their own leadership – the working class organizations’ bureaucratic leaderships - which have become the prison warders of capitalism to imprison the working people. But capitalism has exhausted its potential; it can only lead the world to ruins. Even, if capitalism gets out of the current crisis, it is only a short while that another, if not worse, crisis will engulf the world – all of which will show the limit of capitalist system and the viciousness of its crisis cycles. The death agony of capitalism as exemplified by current economic crisis calls for socialist revolution, otherwise barbarism, as Rosa Luxembourg once said will prevail.