Communist Worker

Archive of Communist Workers Group of Aoteaora/New Zealand up to 2006

Archive for the ‘Asian crisis’ Category

Imperialism: policy option or death drive?

with one comment

When anti-war activists blame US imperialism or ‘globalisation’ as the cause of wars they usually mean the ‘power elite’ – the ‘neo-cons’ etc who are backed by the oil and arms industry. Imperialism and its wars are ‘bad’ policy options on the part of the US as a ‘world power’ which can be countered by world public opinion – the ‘second world power’’, or the ‘movement of movements’ as the World Social Forum has been called. For Marxists this conception of imperialism as ‘bad policy’ open to reform by an electoral alliance of workers, peasants and ‘good’ capitalists is a reactionary utopia. It is a utopia because imperialism needs wars to survive. It’s on a death drive and cannot be pacified. It is reactionary because it disarms the masses in the face of inevitable destruction and dooms the struggle for socialism. Real anti-imperialism for us does not mean making ‘good’ ‘bad policy’, but terminating the terminator.

There are a number of theories that have arisen in recent years claiming that the Marxist/Leninist concept of imperialism as the highest and final stage of capitalism is wrong.

They argue that the main forces that Lenin saw as driving imperialism to inevitable wars, revolutions and counter-revolutions, do not exist. The rise of finance capital, capital export, the growth of monopolies etc that doomed capitalism to destruction, have been surpassed by new developments such as the new economy that have rescued capitalism and made unlimited growth and the sharing of wealth possible. If this were true, then Marxism would cease to be relevant. Lenin’s theory that class politics is the extension of class economics would be empty phrases. Social classes would not longer exist and socialism as a post-capitalist dream would be made redundant by a just and benign capitalism.

These theorists say that globalisation has replaced imperialist contest between rival capitalist powers. Multilateral agreements between imperialist powers subordinate national interests to the global market and make national conflicts a thing of the past. It was easier to argue this during the 1980’s when the major powers were all allied to the US led ‘cold-war’, and the 1990’s when the UN and NATO officially fronted the wars against Iraq and Serbia. Whatever word is used to describe this ‘consensus’, national differences are now all accommodated under a US global hegemony where all states, including the US as the world’s biggest debtor, are dependent upon one another. Indeed some radicals, like Hardt and Negri in their book Empire published in 2000, say that the US is now so economically weak that it is no longer ‘hegemonic’.[1]

But what if the underlying strength of the US economy is in terminal decline?

What if to survive the US needs to turn its back on international agreements and attack its former allies? What if the US economy is in such a deep crisis that it is forced to revert to naked imperialist aggression on any state that threatens its ‘national interests’. A reversion to unilateral aggression is exactly what has happened since 9-11 under the Bush regime when the ‘world changed’. So the question must be asked: is this reversion an aberration? An aggressive militarist policy option driven by the narrow interests of one section of the US ruling class, the oil barons and arms industries? Or is this return to military occupations and recolonisations driven by a more deep-seated desperation on the part of US capital to survive at all costs? The answer to this question is critical because the solutions offered to this post 9-11 crisis depends on the perceived causes.

The globalisation theorists explain post-9-11 as an aberration. Already they say, the world has passed on. The new knowledge economy has created more wealth across national borders that can be redistributed in rising living standards in the developing world. The new capitalism in the US, Japan and EU does not need wars to make profits, but rather new technology and increasing labour productivity. The dynamic growth areas of the world economy are driven by multinational firms that invest, produce and sell in an integrated world market.

This ‘aberration’ must therefore be caused by a rogue element of the US ruling class that has taken power and used the military to grab scarce resources such as oil and natural gas to make big profits. For example, Chalmers Johnson’s recent book the Sorrows of Empire argues that the military have taken over the US state for this purpose. Chomsky’s analysis of US power is similar; the power elite uses its control of the media to manipulate public opinion to accept an aggressive foreign policy. If these arguments about the US as a ‘rogue state’ are correct, then mass mobilisations that reclaim control of the media and democratic institutions can theoretically regain control of the state for the people. But what if these arguments are not correct and imperialism is not a policy option but a death drive.

The reality is that imperialism is in a life or death crisis.

In the 1970s the world economy experienced a classic crisis of overproduction due to falling profits. Profits fell not because they were squeezed by rising wages but because the corporates could not increase the rate of exploitation fast enough to return a profit on the massive investments that went into plant, machinery and raw materials.[2] To restore profits it was necessary to drastically cut the price of wages (variable capital) and raw materials and machines (constant capital) by whatever means. In the 1890s and 1930s the world economy revived only because depressions and wars drastically cut the costs of plant and machinery and of labour.[3]

In the years since the 1970s ‘crash’, the US economy has failed to revive its economy to outcompete its rivals. The new economy has seen some increases in output and profits, but not sufficient to outperform Japan in cars and China in consumer goods. The recent ‘jobless’ upturn is less to do with new technology replacing jobs than with fewer workers working harder and longer (i.e. increased hours and intensity of work). There has been no massive reduction in the costs of wages or raw materials and the economy has been kept afloat by state borrowing and spending. The money borrowed from its rivals, particularly Japan, means that the US is now heavily in debt. Therefore the US economy is experiencing a deepening crisis of insufficient profits from which it can only survive by embarking on open imperialist wars to recolonise other nations, plundering their raw materials and attacking workers wages and rights at home and abroad to reduce labour costs. As Marxists say, the bosses’ crisis is being solved on the backs of the world’s workers.

It is not the policy of a militarist fraction of the US ruling class that causes war, but that of the whole US ruling class. Imperialism is not an aberration but a necessary result of capitalist crisis today.

So how does the whole ruling class benefit from war? Some corporates benefit directly, while others benefit from the flow-on effects. Of course the military and war industries do gain directly from imperialist wars, but production of arms and munitions is consumed unproductively (apart from R&D spin-offs in other sectors e.g. satellites, jeeps etc) and cannot revive the US economy as a whole. The Bush family and prominent members of the cabinet like Dick Cheney and Condoleeza Rice profit as shareholders of corporations that supply the military, and the workers in the arms industry earn wages that enter into the GDP – a sort of ‘military Keynesianism’.[4] But military expenditure does not otherwise add value to the economy. A good analogy would be to say that war benefits some bosses like the production of luxury items such as fast cars and jewelry. Theories such as the Permanent Arms Economy promoted by the Cliffites to account for the post-war long boom are fundamentally flawed in failing to recognise this fact.[5]

However unlike luxury cars, planes and tanks can be used to invade and occupy other countries and expropriate their resources and labour supply. The US has seized Iraq’s oil wealth and created hundreds of military bases in the Middle East and central Asia to oversee the plunder of natural resources. In its own poodle-like fashion, the UK has rechristened Gaddafi the former ‘terrorist fiend’ as the west’s ‘loyal friend’ in order to get access to Libya’s oil and gas fields.[6] While the military and oil magnates get the biggest share of this colonial bounty, the flow on effect of the war to the whole US and UK economies will be a vital supply of oil and gas at cheap prices that will lower the price of constant capital (fuel for industry) as well as variable capital (gas for workers cars) not available to their EU and Japanese rivals.[7] At the same time the US can create client states like Bolivia, or protectorates like Bosnia, Kosovo[8] and Iraq, impose the US dollar as the main currency, and threaten to bomb any state that wants to switch from the dollar to the Euro or yen as a rival to the ‘petrodollar’.[9]

We see that the imperialist states’ militarist policies are dictated by the interests of all capitalists.

The big banks and corporations all benefit from imperialist wars and plunder. What Lenin identified as finance capital was the big banks fusing their interests with the big corporations, and becoming monopolies, that is, combines or cartels that dominated whole industries. The monopolies were vertical (like Rockefellers Standard Oil or Carnegie’s Steel Corporation in the US) or horizontal (like the big German cartels) conglomerates that bought up their rivals and set the prices of production in that industry. Because they were national monopolies they had to compete with their rivals in other nations backed by their states. It was this rivalry that led to the export of capital to colonies to gain cheap raw materials and labour and the inevitable wars to divide and rule the whole world market. In what sense do today’s multinational corporations remain monopolies dominated by finance capital which look to their nation states to go to war in their interests as the ‘national interest’?

Monopoly finance capital is now centralised mainly in the hegemonic imperialist power, the USA.

First to the question of finance capital, then that of monopoly, then the question of national interest to show that state monopoly capitalism is alive, but not well.

At the heart of monopoly is finance capital. After Lenin’s death 20th imperialism created state capitalism to survive. Private banks became regulated by the central banks which took over the management of money capital to rescue the corporate sector. Without massive state intervention and ‘military Keynesianism’ after WW1, the big US corporations would have collapsed. The ‘new deal’ like the Keynesian welfare state’ was mainly about benefits to business.[10] Therefore we can say that far from being outdated, finance capital is even more concentrated and centralised today than it was in Lenin’s day.

Today the giant US Federal Bank along with World Bank and International Monetary Fund monopolises global finance capital through the bond market and international credit. The ‘Fed’ creates dollars which are pumped into US business which it then borrows from its rival EU and Japanese money markets in the form of US bonds. But the cost of its debt is offset by the advantages of the dollar as the main international currency. Private monopoly banks, such as Morgan/Chase, BOA and Citibank, are the biggest shareholders in the World Bank and IMF and dominate the loans made to the ‘‘third world’. But such is the crisis of overproduction, most ‘capital’ today is not invested in production but in speculation as ‘fictitious capital. Not only is finance capital concentrated into giant monopolies in the form of central banks and a few giant corporate banks they are all centralised in heart of the US imperialist state. Therefore what became known as ‘state monopoly capitalism’ in Lenin’s day is still the dominant reality in the global economy.

The crisis of overproduction manifests itself as the ‘risks’ associated with anarchic capitalism destroying the forces of production. Capitalism’s quest to plunder the third world is now in its final phase of world domination –exhausting the resources of the former soviet bloc. The end of the Soviet Union has opened up central Asia. There and elsewhere, the race for scarce resources is hotting up the competition between the imperialist powers.

Today capitalist production is highly dependent on non-renewable resources, notably oil, whose supply is rapidly running out. The big corporations are oil pushers, enforcers, or oil junkies.[11] Those who control these scarce resources benefit from ‘rent’ i.e. that is the premium that can be extracted from those who do not own this resource. Capitalism today is an asset-stripping death machine. The risks associated with this drive to survive explains the behavior of all the players.

The US finances its military machine and arms industry to win control in the rent-seeking war game. This is the case in Iraq, Central Asia and Latin America. These are all military fronts in the war for oil, gas or other vital resources. But even such looting of vital resources and the massive military subsidies of the imperialist states, does not make them cheap enough to restore rising rates of surplus value and return acceptable profits on the vast capital stockpile awaiting investment in production. As capitalism drives down its path of destruction it cannot save itself.

There are inherent limits to the gains from capitalist production which is simultaneously destroying the forces of production.

The recent controversy about the US ‘jobless recovery’ illustrates this point. While thousands of migrants flood into the US to fill menial service jobs, productive industry shifts over to ‘lean production’ by exporting jobs to cheap labour countries. In Mexico or China, wage goods (clothes, white goods, electronic goods, cars etc) are produced more cheaply because of low wage costs combined with global lean production methods (cast-off production lines e.g. Korean or Indian cars). This is the same export of capital recognised by Lenin. But now it is up against more fundamental limits set by rock bottom wages as well as productivity caps.

The crisis of the period from 1914 to 1945 was hugely destructive in terms of the devaluation of variable and constant capital. Only out of such a destructive firestorm could the post-war boom emerge. But that boom was limited to the imperialist world and did not extend to the third world and the gap between ‘north and south’ widened dramatically. The accumulation of capital at the centre is now so huge that only a massive destruction of capital on a world scale will restore a return to profitable production. Windfalls like the collapse of the Soviet world extended the capitalist market to its full global reach. But while it created huge chunks of ‘new capital’ to add the world supply, it did not create sufficient means of making sufficient profits on that capital.

Thus early 21st century imperialism is unable to generate enough super-profits to keep pace with its rising capital stock. All the ‘t-shirts in China’ cannot sustain sufficient profits in the US let alone rising living standards of labour in the US. With the decline in new surplus-value from production, potential money capital becomes merely footloose money that devalues unless new sources of ‘value’ can be found. Increasingly finance capital ceases to be the productive investment that drives the development of industry and instead becomes ‘fictitious’ capital which is valueless because it cannot exchanged for commodities and must be gambled away on the prices of commodities. Take the derivatives market of ‘casino capitalism’.
Morgan/Chase the biggest international bank now has 84 times its real capital assets (stockholders funds) gambled on ‘derivatives’.

‘Derivatives’ are bets on future prices. Derivatives are a form of insurance to cover risks of production in a high-risk, unstable, crisis-prone anarchic market. That’s why 80% of such bets are on future interest rates (the price of money). For example futures brokers ‘borrow’ company shares for a fee, sell them to create cash and agree to sell the shares back at a given price. They use the money to speculate on currencies etc, and hope that the shares will be worth less when they buy them back so they can make a profit. This creates huge amounts of debt with no share asset backing. The instability in the market is itself greatly increased by the billions of hot money gambled on future prices every day.

Moreover it is workers that stand to lose most in the casino economy. For every George Soros who may lose billions of fictitious capital there are millions who lose their life savings. The finance mafia bets the savings of the ‘new middle class’ held in pension funds and bank shares. Marx talked about joint stock companies borrowing from small savers as a form of ‘socialising the costs’ of capital. Small savers would always be wiped out in any credit crash. Soros lost millions in 1998 when Russia defaulted on its debt. Morgan/Chase was similarly exposed to the Argentina collapse in 2001 even though the government froze the accounts of small savers (ahoristas) while at the same time allowed the big banks to take their money out of the country.

Such financial crashes destroy the jobs and savings of those workers who have savings. 19th and 20th century imperialist powers justified their smash and grab expansionism by selling it to their working class as a defence of the national interest. Britain had its ‘civilising mission’ and the US had its defence of the ‘free world’. All used ‘international relations’ to pacify and buy off the rising working class challenge to the power of capital. Marx, Engels and Lenin recognised the importance of colonial super-profits, which when trickled down to the ‘new middle class’ bribed it to support imperialism and to turn organised labour into cheerleaders for imperialist wars. Now 21st century imperialism cannot afford to buy off its workers and runs the ultimate risk of eliminating its support base in the ‘labour aristocracy’.

21st century imperialism cannot afford political buyouts so funds patriotic panics.

While it can’t afford to buy patriotism anymore imperialist states appeal to ‘national values’. Foreigners are blamed for taking jobs and cutting wages so that the labour movement becomes geared up to support wars against enemy aliens at home and abroad. As imperialist rivalry hots up trade protection becomes national protectionism in which workers are enlisted to fight the ‘enemy’. But as the costs of imperialist crises and wars become thrust onto the backs of workers (workers welfare axed while corporate welfare – especially oil and war industries – climbs, jobs and wages lost, workers in uniform lose their lives in the war for oil etc) the political class consensus that drove the post-war boom and which has been kept intact from the victory of capitalism over ‘communism, now becomes fractured at home and abroad. Workers and peasants see themselves as pawns in a US corporate war game for world domination. The level of anti-US sentiment outside the US is rising to massive proportions. And the class conflicts in the outside world are now being reproduced inside the US and the other imperialist powers.

This means that resistance in many forms is beginning to emerge. The WSF is a sort of ‘good cop’ imperialism that promotes the illusion that imperialism as a bad policy option that can be globally challenged and reformed. Hardt and Negri’s concept of Empire provides a popular version of this ideological position. There is a reformist labour international around Castro, including Chavez and Lula that promotes social democratic regimes coming together as an international counter-weight to US rogue imperialism. But the severity of the crisis imposed on the masses is rapidly surpassing the capacity of the reformists and their leftwing cheerleaders in the WSF to strangle the exploding resistance movements. Castro, Lula and Chavez attempts to negotiate with imperialism can only be at the expense of their worker and peasant supporters. Once we can see that 21st century imperialism is on the road to destruction, then we understand that only a world working class mobilisation for a global socialist society can offer an alternative. The cost of anarchic date-expired capitalism in the 21st century will be more wars and destruction unless it is replaced by socialism! 

From Class Struggle 55 April-May 2004

Written by raved

January 6, 2010 at 8:06 pm

The Wall St Virus and the Crisis of Overproduction [September 1998]

leave a comment »

It is obvious to most people that the world economy is in trouble. And it is not just an ‘Asian’ problem. Instead of the Asian ‘virus’ spreading across the world, it is clear that the real source of the Asian crisis is not an Asian but a Wall St. Virus. What is it? As we explain below, it is speculation based on a surplus of capital that can find no outlet in profitable production – i.e. the classic Marxist explanation of capitalist crisis, overproduction of capital!

Recently some of the most true blue bourgeois mouthpieces such as the New York Times started paying homage to Marx as “maybe” right after all! They suspect that the system has a profound flaw – an inability to regulate the monetary system and prevent a ‘meltdown’ similar to 1929, though they don’t really know why. Increasingly, the current period is seen as following the lines of the great depression, and a new depression is all the talk. We say – we told you so! Marxism is not dead! It is capitalism that is in its death throes!

The bourgeois gurus are very confused about the causes of the current economic situation. The monetarists claim that only the US economy is healthy and that is because the market has replaced state spending as the driving force. This overlooks that the 1980’s recovery under the right-wing Reagan was fuelled by massive government spending on armaments! Even Chile, the first neo-liberal ‘experiment’, requires foreign investors to give monetary guarantees that they will not speculate in the Chilian economy. Never mind these facts, now that the Asian miracle is over, the monetarists like Friedman call for getting the state out of business, balancing the budget, and allowing banks and firms to go broke.

Neo-liberal hypocrisy.

This neo-liberal prescription is what underlies the role played by the IMF which is imposing severe cuts on state spending, and forcing insolvent banks and bankrupt firms to go to the wall. But this policy of “slash and burn” is compromised as the Asian states are expected to pay back foreign investors instead of allowing them to go broke. The Economist – conscience of the neo-liberals – opposes this as “immoral” because it does not punish investors from making bad investments. Clearly, such rescue operations, modelled on that of Mexico a few years ago, show that the neo-liberals hypocritically preach free market for others, but demand state rescue packages for themselves!

This is not surprising. The neo-liberals are starting to panic about a world economic collapse. Prominent speculators like George Soros and and right wing gurus like John Gray, former advocates of free market forces, now call for moderation and international controls on the movement of capital. Soros now recognises that the free rule of the market generates social chaos, and ultimately a threat to his immense wealth. Gray, now claims that the free market is itself the result of a strong state, and calls for the return of a new international keynesian type economic policy capable of keeping and rogue capitalist states in line.

Into the ‘third way’ camp.

These former more market advocates now find themselves in the same camp as long-time social democrats like Galbraith and Robert Reich, or NGO operatives like Walden Bello, who today argue for a “third way” between capitalism and communism based on the “smart state”. The smart state is not the protectionist, social democratic state of the past, but a state which is geared to international economic institutions such as a revamped IMF and World Bank capable of coordinating the world economy. Even supposedly ‘socialist’ commentators like Robert Slade and Frank Venuto in the New Left Review No 228, call for a ‘new Bretton Woods’ to regulate the international monetary system. Socialist Appeal newspaper of the former Militant tendency, also pipes up with its underconsumptionist, Keynesian analysis. [See their website].

This confusion is based on a totally wrong understanding of what makes capitalism go into periodic crises. Different bourgeois schools of thought all focus upon one or other symptom of crisis without understanding its real cause. It has nothing to do with too much or too little state interference, or lack of controls on the movement of capital, or underconsumption brought on by neo-liberal policies, or the dangers of ‘hot money’ or speculative finance capital. These are all symptoms of crisis and not their causes. Therefore attacking one of many symptoms of crisis will not solve crisis and overcome capitalism’s tendency towards chaos and destruction.

The Cause of the Current Crisis.

The cause of crisis is the overproduction of capital which cannot be invested to create sufficient surplus to return an average profit. This creates a surplus of capital which looks for some other means of getting a return. Speculation in commodities or exchange rates becomes the usual outlet. Attempts by the state to attempt to offset this diversion of capital from productive investment, by means of state investment and state spending, must fail. They do not overcome the root problem of overproduction of capital. Value becomes devalued by inflation and profits fall further. Similarly, attempts to regulate capital movements, or outlaw speculation, may slow down the worst effects of excess capital, but do not prevent its ultimate destruction. Calls for a new “Bretton Woods” are misplaced because such an international agreement will not hold in the free-for-all of dog-eat-dog rivalry among the imperialist powers to re-partition the world market.

Crises therefore are the normal means by which an excess of capital is devalued (destroyed) so that the remaining capital can be re-invested at a profit. Devaluation takes two forms; (1) devaluation of constant capital – i.e. firms go bankrupt, old technology is written off, and the stronger, more competitive firms stay in business with lower fixed costs and new technolgy; (2) devaluation of variable capital – i.e. lowering of the wage bill by destruction of jobs and real wage cuts. What makes this process a normal and natural part of capitalism?

The answer is the law of value. Capitalism runs on the ex-traction of value from the labour-time of productive workers. This is because labour-power is the active ingredient which creates value out of the raw materials of nature. Capitalists own the means of production and so can force workers who do not, to work for a longer period than is necessary to pay for their wage. Workers produce enough value for the capitalist to pay them enough to buy the commodities necessary to reproduce their labour-power. Over and above that necessary labour-time, workers work for a surplus period of time in which they produce surplus-value which is the basis of capitalist profits. The ratio of necessary value to surplus value is the rate of exploitation.

However, in order to increase their surplus-value and profits in competition with other capitalists, each employer must drive up the rate of exploitation by introducing new machines or techniques to increase the productivity of labour. This means more an more capital is invested in machines which do not increase value, compared with labour-power which does produce value. When employers can no longer increase the rate of exploitation fast enough to get a return on their increased investment, the rate of profit begins to fall. Capitalists look for new outlets to increase their profits.

Typically, the search for new investment opportunities has been to export capital to countries with lower wages and lower technology costs, or to take advantage of access to markets. This ‘foreign investment’ of capital from the imperialist countries to the ‘developing countries’ which began late last century is now expressed by the term ‘globalisation’ to mean the movement of capital throughout the globe looking for cheaper costs of production and access to markets.

Capital Speculation.

Today, however, such is the excess capital searching for profits, demanding the right to move in and out of countries at will, this means that the international economy is inherently unstable. This instability is expressed at the centre of the global economy, Wall St. where capital values cannot escape the axe of the law of value. Despite the 1980’s devaluation of US industry and cuts in jobs and wages, US business cannot return sufficient profits to the excess capital accumuated in banks and other institutions.

In the 1980’s excess capital has flooded out of the US and Japan into East and South-East Asia where profit rates were much higher. However, even these dynamic, youthful capitalist economies were not immune to falling profits. Therefore, the so-called ‘Asian crisis’ was not caused by heavy handed state intervention, bad banks, cronyism, or corruption, but by falling profits. The collapse of these economies resulted from the flight of speculative capital out of Asia. And because there are not yet sufficient outlets for excess capital in the former Soviet Union or China, excess capital is driving up US stock and share values beyond the real value of US business where profits and returns to shareholders are falling. In Japan, the long-delayed restructuring of capital is about to see a massive destruction of constant and variable capital, exposing that economy to the entry of rival US capital.

So the Wall St. virus which is in danger of spreading round the world can be seen as a delilberate policy by the US state to transfer its own imperialist crisis onto weaker countries in the world economy. This is why the US wants to impose free trade and capital mobility on other states, but not itself. That’s why it uses the IMF and the World Bank to impose tough conditions on foreign states to force them to pay their debts to US banks by cutting social spending programmes and forcing the cost of their crisis onto the backs of the workers and poor peasants of the ‘third world”, and the newly capitalist former USSR and the almost-capitalist China.

The payoff for the most powerful US capitalists is that they can buyup bankrupt semi-colonial firms, takeover banks and concentrate and centralise the forces of production into their hands at the expense of semi-colonial capitalism and the mass of the world’s workers and poor peasants. But even as they do that, they can’t get over the fact that this does not get them out of crisis. To return to profitable accumulation, the strongest capitals must destroy the weakest to survive.

In the process, whole countries like the former USSR and China must be turned into sources of cheap labour and super-profits. The US will not be without rivals in this struggle. Both Japan and the EU are competing for access to new investment outlets for their excess capital. But they are nowhere in the same league as the US and will both suffer from US capital inroads. The social chaos that results will threaten to explode the flimsly hold that US imperialism has on the world economy.

From Class Struggle No 23, August-September 1998

Written by raved

August 26, 2007 at 10:30 pm

Indonesia: Where to now? [May 1998]

leave a comment »

Asia/Pacific economic turmoil

The so-called “Asian crisis” is as really a capitalist crisis where the blame is being shifted from capitalist exploitation onto Asian “values”. (see Class Struggle # 20). Indonesia is usually given as the worst example of what the West sees is wrong with Asia. They say the country is run by an aging dictator, whose family controls the state and owns a large chunk of the economy, and who is stubbornly opposing the IMF’s rescue package for restoring the economy. We reject this argument. We oppose Suharto’s dictatorship, and we do not trust him to fight the IMF’s medicine which will make Indonesian workers and peasants pay a terrible price for economic stability. We make the case for a socialist plan run by and for workers and peasants as the only alternative that meets the needs of the vast majority of the 200 million Indonesians.

The phoney battle over the terms of the IMF’s US$40 billion rescue package for Indonesia has been won by international capitalism. There is no way that the international banks who have $130 billion invested in Indonesia will walk away from this kind of money without a showdown. So from a position of mock defiance, Suharto has now been worn down to accept most of the IMF’s terms.

These include austerity measures to balance the budget which means real impoverishment for millions of working people. It means opening up the ownership of Indonesia’s state corporations to foreign investment. Suharto has agree to allow foreign shareholding in 4 out of 5 of the major state combines. It is clear that despite a great show of opposition, this was only an attempt to keep his share of the booty intact. Now Suharto has no option but to comply with the demands of international capital. The question is why?

Indonesia : a US client state

We don’t have to look very hard to see why. The Indonesian economy is bankrupt. Prices have risen 400% in a few months; the rupiah is worth less than 25% of its value one year ago; 90% of companies are technically insolvent leaving 10s of millions unemployed. Neighbouring states such as Thailand and Malaysia are rounding up and repatriating Indonesian migrant workers in their thousands. Protests, rioting and unrest have reached crisis proportions. Despite an army of 300,000 soldiers, 20,000 deployed on the streets alongside 20,000 police, there is no way that Suhato can keep the lid on a mass uprising unless he deploys the aid of his main allies, US and Japanese capitalists.

In other words, Suharto has been forced to recognise that his interests, if not his skin, lies with the international capitalist class and not the Indonesian people. The IMF will call the shots, which will include economic and military sanctions if Indonesia does not repay its debts.

Suharto was appointed as a stooge for the US in 1965 when he was aided by the CIA in the slaughter of up to 1 million communists and dissidents. But he has been able to hide behind a façade of nationalism until now. Growing opposition to Suharto over the last few years is clearly opposed to his comprador role as agent of foreign capital. Not only has his family and their cronies profiteered from Indonesian working people, but he has facilitated the locking of Indonesia in to the global capitalist economy.

Peoples’ Power?

The popular alternative to the Suharto’s oligarchy and the IMF package is the peoples’ power strategy of the democratic opposition forces around Megawati Sukarnoputri. Like the recently elected President of South Korea, Kim Dae Jung, Sukarnoputri looks to “progressive” forces (including imperialist powers and puppets) outside Indonesia to bring pressure on Suharto to democratise the regime. Some of the militant unionists jailed by Suharto are appealing the IMF to withhold loans until Suharto introduces democratic reforms.

This is a tragic betrayal of Indonesian workers and peasants. It accepts that they have to pay back the debts owned to foreign banks. It sows illusions that the IMF as the economic hit-squad for US imperialism can play a progressive role. It creates a cover for US imperialism, which can get rid of Suharto and replace him with a more popular figure like Sukarnoputri, and lock into place the IMF package under the guise of ‘human rights’ and ‘democracy’. The result would be the consigning of the masses of Indonesia’s 200 million to further super-exploitation , misery and death in order to create imperialism’s super-profits.

In order to overthrow Suharto revolutionaries must participate in all mass demonstrations against him trying to strengthen and radicalise them. Even though it is necessary to participate in joint demonstrations with the “democrats” (and even to do some entrist work amongst its tanks), our goal is to separate the working class from these bourgeois forces. In Indonesia it is important the call for the workers and peasant organisations to be independent from the capitalists and to establish a new party. The only way to smash the IMF and Suharto is tough mass action including a general strike and the formation of strike committees and workers and peasant councils and militias.

Workers’ and poor Peasants’ Power!

It is necessary to mobilise the working people around democratic and transitional demands to oppose the IMF imperialist package and to get rid of Suharto.

– Overthrow the dictatorship! Call for a Democratic Constituent Assembly.

– Build militant workers and poor peoples councils and self defence militia!

– Troops out now from east Timor and West New Guinea! Self-determination for all the nations of the archipelago!

– Repudiate the national and foreign debts! Break with the IMF!

– Nationalise landlords land under working peasant control!

– Socialise private and multinational assets under workers’ control!

– For a Workers’ and Poor Peasants’ Government! – – For a socialist federation of South East Asia!

From Class Struggle No 21 April/May 1998

Written by raved

August 26, 2007 at 10:17 pm