Nick Beams addresses 70th anniversary meeting

Capitalist breakdown and the revolutionary perspective of the Fourth International—Part 1

By Nick Beams
4 October 2008


Published below is the first part of a report delivered on September 28, by Nick Beams to a public meeting in Sydney on the 70th anniversary of the founding of the Fourth International. Beams is a member of the WSWS International Editorial Board and National Secretary of the Socialist Equality Party (Australia). The WSWS will be publishing Beams's report in four parts.

The historical significance of the founding of the Fourth International in 1938 and the 70-year struggle to defend and develop the program of Trotskyism, led since 1953 by the International Committee of the Fourth International, is being underscored by the tumultuous events now unfolding in the world economy.

Every day brings fresh news of disasters and crises within the financial system. It becomes almost impossible to keep track of the hundreds of billions of dollars, running into trillions, being thrown this way and that by central banks and financial authorities to try to keep to the global financial system in operation.

In the past two weeks we have seen the bankruptcy of Lehman Brothers, a 158-year-old finance house, the takeover of the stock-broking firm and investment bank Merrill Lynch, and the move by Goldman Sachs and Morgan Stanley to seek banking status in order to receive protection from bankruptcy. In the same period, the remaining four investment banks on Wall Street, following the demise of Bear Stearns in March, have all gone under in one way or another. Furthermore, the insurance giant AIG has had to be bailed out to the tune of $85 billion. Last Thursday, with $307 billion in assets, $188 billion in deposits and more than 220 branches, Washington Mutual collapsed--the biggest banking collapse in history.

The Bush administration, with key support from the Democrats, is putting in place a $700 billion bailout operation for Wall Street by buying up the worthless financial assets it has on its books.

It has now become a commonplace for commentators and economic pundits to remark that the world capitalist system has entered its most severe financial crisis since the events of 1929, which led to the Great Depression.

And people all over the world are starting to recall what followed: the coming to power of the Nazis in Germany in 1933, mass unemployment, the division of the world into rival blocs and empires, and--a decade after the Wall Street crash--the eruption of World War II, and the deaths of tens of millions.

Pundits, journalists and politicians alike offer reassurances that the world has not ended, that there will be no repeat of the 1930s, because governments and financial authorities are aware of the problems and have the means to resolve them.

Such reassurances might carry a little more weight if they were not being issued by the same people who, only yesterday, were extolling the virtues of the new financial system.

For the Marxist movement, this crisis has not come out of the blue. It is the outcome of deep-seated contradictions which, as our movement has explained, lead inexorably to the breakdown of the capitalist system.

When we speak of a "breakdown" we are not pointing to a single event--a point at which capitalism suddenly freezes up and ceases to function--but rather to an historical process. The vast shifts in the structures of global capitalism--the implosion of the financial system, the collapse of credit and financial markets, and the bankruptcy of major banks and investment houses--are the outcome of changes that have been taking place beneath the surface of economic life over years and even decades.

A breakdown does not mean that capitalism comes to a halt. It signifies the opening of a new period of history, in which old structures, both economic and political, as well as ideologies and ways of thinking, give way, and new forms of political struggle develop in which the fate of society itself is up for decision.

Marx referred to the class struggle "now open, now concealed." For the past period it has been somewhat concealed, in the sense that the working class has been unable to develop a response to the unending attacks on its living standards and social conditions. But now, in the United States, it has burst to the surface, with an immense eruption of anger against the Wall Street bailout plan. This anger signifies the start of a new political era.

The unfolding disintegration of the world capitalist order means that the working class is going to be confronted with the necessity of taking political power and re-organising society on new social, economic, political and also moral foundations. As the bloody history of the twentieth century so clearly demonstrates, nothing less than the future of humanity itself depends upon the accomplishment of this task.

Part 1

The necessity for a fundamental re-organisation of society arises out of the present crisis, quite independently of the demands or agitation of socialists. It is posed quite objectively.

The American financial oligarchy, and their political representatives in both parties of big business, has an economic plan that it is working to impose: the resources of society, created by the labour of millions of working people, must be mobilised to maintain the wealth of the rich and super-rich. This layer has profited from the speculative and highly dubious financial operations which, under the banner of the "free market", have seen a vast re-distribution of wealth up the income scale over the past 25 years.

Notwithstanding the political confusion so assiduously created by all the arms of the mass media, this plan is being recognised for what it really is: the bailout of Wall Street, of the tiny minority of the wealthiest strata of society at the expense of the overwhelming majority.

The 2008 US presidential election has already been rendered meaningless before it has even been held, because any prospect of social programs is now to be shelved. Rather, an amount equivalent to $2,300 for every man, woman and child in the US is to be transferred to the wealthy. One of the first questions asked by the moderator in the first presidential debate was: which government programs are you advocating be cut back in view of the bailout plan? All were agreed there would have to be cuts--that was accepted, a given.

The American ruling class cannot carry out its program democratically, and therefore we see, in the measures proposed by Treasury Secretary Paulson, the sinews of a dictatorship.

The initial text sent to the Congress, supposedly the legislative body with oversight over expenditures, was barely three pages long--less paperwork, one commentator noted in the New York Times, than was required for a subprime mortgage!

According to the initial text, among the powers available to the Treasury secretary, "without limitation," will be "designating financial institutions as financial agents of the government" able to perform "all such reasonable duties related to this Act." This means that the same financial institutions that engaged in the speculative and, in some cases, outright criminal activities that led to the crisis, are to be called on to help the Treasury organise the bailout. As a recent article on the WSWS noted, the term "conflict of interest" does not even begin to cover what is taking place.

Moreover, the plan provides for legal immunity for the Treasury. "Decisions by the secretary pursuant to the authority are non-reviewable ... and may not be reviewed by any court of law or any administrative agency."

As an article in the New York Times of September 23 pointed out, with these words "the Treasury secretary--whoever that may be in a few months--would be vested with the most incredible powers ever bestowed on one person over the economic and financial life of the United States. It is the financial equivalent of the Patriot Act, after 9/11." The Times described Paulson's proposed legislation as "the most amazing power grab in the history of the American economy."

A long established axiom of economics and politics holds that in a crisis, real relations are laid bare, as the accidental and the inessential are stripped away. And this is the case in this crisis. Not government of the people, by the people and for the people; not the "free market" in which the decisions of millions of people determine economic outcomes; but government of, by, and for the wealthy. Not democracy and a land of laws, but a dictatorship of finance capital.

The wars of plunder launched by American imperialism in Afghanistan and Iraq, the aim of which is to control oil and other resources in the interests of US finance capital, are now being openly fought on the home front. They will be accompanied by a deepening of the assault on democratic rights, initiated in the so-called "war on terror."

To be continued

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