From Cold War to new imperialist order: World politics and economics from the 1960s to the 1990s

A book-length analysis of the development of world capitalism from the 1960s to the collapse of the Soviet Union

By | | Trotskyist International issue 5

Resolution adopted by the Internatlonal Executive Committee of the LRCI, July 1990. First published in Trotskyist International, issue 5, Autumn 1990.

Contents

From the end of the long boom to Reaganomics

The decline of US imperialism

For some twenty years after the Second World War, the USA was the unchallenged leading economic power in the capitalist world. It supervised and underwrote the reconstruction of European and Japanese imperialism as a bulwark against Stalinist influence. 

Its multinationals ruthlessly penetrated and exploited the semi-colonial world and dominated the European and Japanese markets. The USA exercised absolute hegemony and supervised a tripling of world output in 25 years. 

By the late 1960s the contradictions embedded in this leadership role broke to the surface and destroyed the absolute economic rule of US imperialism. The massive export of US dollars, which financed European and Japanese growth, unwittingly re-created rivals as well as allies. Under-investment inside the USA caused a relative decline in its output and trading position. In time this gave rise to a balance of payments and trade crisis. 

The attempt to avert this crisis while sustaining a world military presence and fighting a costly war in Vietnam led to the abuse of the printing press to print dollars and thus to escalating inflation. 

European countries holding dollar reserves refused to maintain the devalued dollar and bought gold. The declining fortunes of US imperialism meant that it could not maintain the fixed dollar-gold exchange rate and so abandoned it, together with global monetary stability, in the period 1971–73. 

During the course of the 1970s the USA adopted an aggressive unilateralist attitude to its rivals in Europe and Japan. By its actions the US government destabilised world economic relations. Between 1971 and 1978 the USA manipulated the exchange rates to devalue the dollar and restore its own export competitiveness. 

But in the same period its industrial productivity continued to fall away badly while that of Japan, and especially of West Germany, improved considerably. By the late 1970s the USA was in a slightly better position compared to Europe but in a worse position relative to Japan.

Europe versus America in the 1970s 

Throughout the long boom the USA had encouraged the growth of a strong European imperialist market for US goods and capital. During this period the key economic alliance for the North American giant ceased to be with Britain and became that with West Germany. But West Germany eventually developed into a strong competitor for the USA in the world market. Europe had grown at 6% a year in the decade before 1973 and had seen its share of world GDP go up from 11% to 15% while the US share fell from 40% to 30%. 

The rupture in the early 1970s was prompted by the inflationary policies of the USA. West Germany refused to support the dollar when it was being used as a weapon to defraud those who held it. The USA retaliated against this lack of support with a vigorous devaluation and an export drive, including a demand that Europe purchase more US arms. 

One conflict begat another: over agricultural subsidies, over energy policy towards the Middle East, over German penetration of South America. The Carter administration’s attempts to seek economic co-operation between Europe and USA during 1977 and 1978 foundered on these conflicts. 

Europe versus itself in the 1970s 

As the long boom ended, serious problems arose in making progress towards federation or unity in Europe, as had originally been envisaged in the Treaty of Rome (1958). The European multinationals were very slow to emerge during the post-war period, and the early political impetus for unity, stemming from the memory of the war, began to falter. As the Cold War weakened during the 1960s, so too did the negative political bond that tied the European economies together. As the boom progressed so too did the distinct and uneven development of each particular economy, giving rise to conflicting national interests. West Germany became the biggest and most productive economy, dominating the European market and rivaling Britain as a capital exporter. 

The “Luxemburg compromise” of 1965 was a decisive step away from federation and back towards purely inter-governmental collaboration and conflict. In 1969 the European imperialists set themselves the goal of economic and monetary union by 1980. But the disruption of economic relations by the recessions of the 1970s made progress impossible. 

The abandonment of the Bretton Woods gold standard in 1971 gave rise to wild fluctuations between the levels of European currencies. Despite a formal commitment to monetary union, most governments feared being tied to the superior West German economy and thus being converted into its fiefdoms. There was no co-ordinated EEC response to the 1973–75 recession. 

By 1977 the crisis of the EEC budget and farm price support policy gave rise to further disunity between member states. In the absence of strong political leadership pushing towards unity or federation, market forces were leading further away from integration. No strong leadership transcending the national governments was forthcoming in the 1970s. The Council of Ministers was all-powerful over the Commission and became the battleground for representatives of the major European imperialist powers, each hemmed in by rigid national mandates. 

Thus the EEC members approached the 1979 recession seriously at odds with one another and unable to articulate a common set of interests in opposition to the USA. The consequence of this policy became clear in the 1970s as Europe declined relative to the USA, and even more so with regard to Japan. 

Japan: a power in the making 

The long boom ended with only two major centres of the world capitalist economy, as measured in terms of economic size and political power—the USA and Europe. Yet under the spur of the USA, Japan had grown impressively in the 1950s and 60s. 

In a sustained spurt of productivity and export-led development Japan had progressed from textiles to consumer electronics and had undertaken sizeable multinational penetration of East Asia, as well as beginning to dominate certain sectors of the world market for these goods. But it was not yet a world economic power. 

Japan reacted to the 1973–75 recession by making major structural changes in its industry. Hit hard by soaring energy costs it compensated by a major development of, and export drive in, high technology goods. 

During the recession and recovery of the 1970s Japan increased its world share of manufactures by 50%. In the context of a global contraction Japan’s rate for new capital investment declined dramatically in the 1970s compared to that of Europe and of the USA. But despite this temporary setback Japan proved to have enormous built in advantages over its North American and West European rivals. 

Japan increased its competitiveness by social security, armaments and low levels of environmental protection. Japan’s defence expenditure was only 1% of its total budget as compared with the figure of 10-20% for most of its competitors. Its industry was not hampered by the need to spend money on environmental safeguards, with the result that Japan is one of the worst polluters and the most anti-ecological countries in the world. The Japanese ruling class has achieved an almost monolithic political unity within its own ranks: the Liberal Party has a forty-year unbroken grip on power. 

Japan’s advantages included a high degree of interlocking between state and finance capital in the form of privately-funded research, government-controlled low interest rates and barriers to entry into Japan’s commodity and capital markets. Thus armed, Japan was able to steal a march over its federal and “welfare-burdened” rivals in the field of product innovation and application, marketing, exploitation and productivity. Hence it had improved its industrial and market position substantially by the end of the 1970s. 

Differentiation in the semi-colonies 

During the twenty or so boom years after WW2 the semi-colonies also experienced growth and many countries saw significant transformations in the structure of their economies, especially their exports. But there was a great unevenness. In some cases (Central America, parts of Africa and East Asia) local oligarchies, together with foreign owned multinationals, exploited the raw materials of these countries to meet the demand from imperialism. In other countries, especially in Latin America and India, state capitalist regimes sought to build up native manufacturing behind protectionist barriers and to increase their internal market via a substantial growth in the working class. 

Although these countries were unable to break their dependency on imperialism for capital goods, they did experience substantial economic growth. Nevertheless, the gap in per capita income and in the terms of trade (i.e. the relative gap between imperialism and the semi-colonies) continued to widen during the boom. 

It was the one-sided course of the boom itself, rather than its end, that seriously disrupted those economies of Latin America which had gone furthest in the pursuit of indigenous industrial development. None had broken their reliance on the export of primary products. When the relative prices of primary products compared to the cost of capital goods fell during the boom, these countries were still obliged to import capital goods in order to foster development. 

Massive balance of payments crises eventually hit one country after another. From the mid-1960s to mid-1970s many regimes faced growing discontent from the land-hungry masses and the urban poor. In response, their ruling classes resorted to installing military and Bonapartist dictatorships, the preferred agency of stabilisation. These dictatorships were often used also to open up the economy to exploitation by the multinationals. 

By contrast, the 1960s witnessed a few countries—especially in East Asia—lacking an internal market but possessing cheap labour, military regimes and a good infrastructure, beginning to develop subsidiaries of multinationals which produced goods for re-export. 

The reaction of finance capital to the recession of the mid-1970s spurred on the development of certain semi-colonies, especially in Latin America. As the multinationals restructured their industries, investment in the semi-colonies increased to twice the level inside the imperialist countries. This caused even further differentiation within the semi-colonial world. 

During the post-war years huge oil revenues had accrued to what were originally semi-feudal regimes in the Middle East. This process turned these countries into semi-colonial rentier states, incapable of internal productive investment and obliged to place their vast funds with the commercial banks. In turn, the banks re-cycled this capital in the form of loans, especially to trusted military regimes in Latin America, with aim of creating markets for the recession-hit industries of the imperialist countries. 

In the wake of the mid-1970s recession, industrial restructuring—especially by the USA and Japan—led to the further relocation of labour-intensive industry in certain semi-colonies, notably in East Asia, and to the further growth of a modern proletariat. In the 1960s certain semi-colonies witnessed a substantial agrarian reform programme which released peasants for urban development and accelerated the productivity of capitalist agriculture. Despite impressive growth rates in these countries in the second half of the 1970s, however, enormous problems were building up. 

Mounting debt could only be serviced by a continued high level of economic development, especially in the export sector. But the relatively weak recovery of 1976–79 barely sustained this sector and the recession which followed was to devastate it. Most of the countries of the semi-colonial world declined in the post-1973 period, suffering from the collapse of non-oil commodity prices and not benefiting from inward investment. 

Beyond uneven development 

The years 1969-73 were a major watershed in the world capitalist economy. The years before and after can be designated distinct periods in the imperialist epoch. These five years encompass the first significant US recession, a major acceleration in inflation, the end of fixed exchange rates, the declaration of economic unilateralism by the USA and the first generalised world economic recession of the post-war era. 

Before these years US imperialism was absolutely dominant; after them it was only relatively so, the first among equals. 

Before this transition period the USA could sustain world growth unilaterally; after this period it could do so only with the co-operation of first Europe, and later of Japan. 

These years marked a watershed in other respects Before this period, growth in the OECD countries was sustained, high and without significant inflation: in the 1960s world trade grew at 8% a year, compared with only 3% between 1973 and 1981. 

Growth rates for the imperialist countries over the last two decades have been at around half the rate of the two decades before 1973. Moreover, even at this lower level, growth was accompanied by massive inflation, the average level of the 1970s being three times that of the previous two decades. 

Profitability, whether measured in terms of proportion of national income or rate of return on commercial and industrial capital, also suffered a major decline in the 1970s. With the exception of Japan the average rate of return on capital for OECD countries was between half and two-thirds that of the pre-1973 period. 

Faced with these problems of production, profitability, trade and financial instability, the political leadership of the various national bourgeoisies were un-able to find common ground for a united attack upon their working classes in the second half of the 1970s. They needed to coordinate their fiscal, monetary and trading policies to their mutual benefit on the basis of reshaped relations of exploitation. 

The ending of fixed exchange rates, together with a massive influx of new OPEC funds into the commercial banks, gave rise to a qualitative leap in the inter-nationalisation of finance, banking and equities which was outside of the control of national governments and central banks. This added to instability and in-creased the problems of policy co-ordination. 

Placed on the defensive by a strong working class and saddled with governments that reflected the Keynesian, reflationary orthodoxy of the boom years long after the boom had gone, the various imperialist nations were forced into state capitalist policies to res-cue ailing private capital. Unable to confront their own workers at home, they were forced to offload the costs of their recovery onto the backs of their rivals.

World politics from Vietnam to Reagan 

Confrontation between the USA and the USSR 

The years of the long boom were also the years of the “American Century'”. After the first Cold War, with its associated “losses” for world capitalism, the USA created a military cordon sanitaire around the degener-ate workers’ states through NATO, CENTO and SEATO. 

The development of the H-bomb and intercontinental delivery systems led to a stand-off in strategic terms from 1957 onwards. The Soviet bureaucracy offset its encirclement by seeking friendly relations with bourgeois nationalist regimes: Nasser in Egypt, the Ba’athists in Syria and Iraq, Nehru in India and Sukarno in Indonesia. The Non-Aligned Movement helped to break the isolation of the USSR and China. 

The Cuban Revolution was used by Khruschev to plant missiles ninety miles from the USA. This led to a humiliating climbdown by the USSR which, in turn, had a threefold effect. 

Firstly, Cuba, which had not been consulted about the withdrawal of the missiles, reacted by pursuing an independent policy of trying to stimulate guerrilla struggles in Latin America, and even in Africa, between 1966-68. Secondly, China deepened its split with the USSR and, for a while, posed itself as a radical alternative pole within Stalinism. 

Finally, the Soviet bureaucracy began an arma-ments programme, the aim of which was to achieve parity with the USA in order to avoid nuclear black-mail in the future and also to avoid the need for adventures and forced retreats like Cuba. Nevertheless the Kremlin lost its unchallenged “leading role” within world Stalinism. 

The effect of the “loss of Cuba” on US policy was two-fold. Kennedy, with his “Alliance for Progress”, tried to stimulate conservative reformers in the semi-colonial world to carry out land reform and development projects in order to undercut the social base of “communist” insurgency. But civilian reform governments often proved unstable and the CIA turned to the imposition of military dictatorships. 

In 1964, Goulart was outed in Brazil and the country was converted into a US gendarme for South America, with spin-off coups in adjacent Latin Ameri-can countries over the next five years. In the Congo, Lumumba was murdered and replaced by Mobuto. In Indonesia, Sukarno was overthrown and the Indonesian CP (PKI) was massacred. A series of regional US gendarmes heading brutal military dictatorships was promoted. 

The overthrow of Diem in South Vietnam (1963) was also part of this process. But Vietnam proved to be one coup too many. The US “advisers” were soon replaced by more and more combat troops until by 1968 there were half a million. North Vietnam pro-vided an influx of regulars and the war reached mas-sive proportions with the Tet, Offensive of 1968. Be-tween 1968 and 1970 the USA anti-war movement made the deployment of more ground troops impossible. 

The USA was thus obliged to try a policy of “Vietnamisation” coupled with massive bombing of Cambodia and Laos and the mining of the North’s har-bours. Despite huge expenditure this also failed. By 1972 it was clear that another strategy was necessary. Thus was born the Kissinger-Nixon détente-concessions to the Soviet and Chinese rivals in return for their good offices in strangling and restraining revolutions in the semi-colonial world. Even then nothing could save Vietnam, Laos and Cambodia, which were finally lost to US imperialism in 1975. 

Resurgence of class struggle in Europe 

The impact of the USA’s humiliation in Vietnam, coupled with the economic effects of the end of the long boom, stimulated democratic, anti-war and class struggles on a world-wide scale not seen since the onset of the Cold War. In the USA the black movement and the student anti-war movement were radicalised but met with little response from, and made few connections with, the working class. In Japan the militant student movement was also socially isolated. 

But in Europe a connection was made, symbolised by the May-June 1968 demonstrations and the ten million strong general strike in France. In 1969 in Britain and Italy waves of rank and file-led strikes ruptured the class peace of the boom years. Social democracy was discredited by its conservatism and slavish loyalty to the USA. The Wilson Government in Britain and the Grand Coalition in the Federal German Republic drove young workers and students to the left, to extra-parliamentary opposition and into sizeable centrist parties and groups. 

In Italy and Britain shop stewards’ movements and factory committees radicalised and expanded trade union activity. From 1968-75 Italian workers pushed up their real wages to general European levels, achieved considerable social welfare gains and almost forced a unification of the politically divided union federations. All these concessions were forced from a weakened Christian Democracy. 

In Portugal in 1974 a militant junior officers’ movement spearheaded the destruction of the Caetano dictatorship. Attempts by the High Command to terminate the activity of the Armed Forces Movement (MFA) by counter-coups produced massive fraternisation between the working class and the rank and file soldiers. An embryonic dual power situation existed from March 1975 to December/January 1975-76. 

Marked by land seizures, factory occupations and workers’ control, this first fully revolutionary situ-ation in Europe since the immediate post-war period was the high-point of the radicalisation in Europe in the early 1970s. But although the monopoly of the reformist parties and trade unions was shaken, it was not broken. In part this was because the centrist forces did not know how to change the situation: they adopted sectarian tactics, regarding the Social Demo-cratic and Communist Parties as merely bourgeois parties. 

They were unprepared for the “left turn” of the European Social Democracies or for the Stalinists’ criticisms of the CPSU, which was deeply discredited by events in Czechoslovakia and Poland. The Com-munist, Social Democratic and Labour Parties were not only able to argue for peace in Vietnam and to espouse workers’ participation, they were able to of-fer the prospect of taking power (i.e. office). Millions of workers and students developed illusions in the project of a reformist government. 

The decisive stimulus to the revival of reformism in its leftist disguise was the crisis of 1974-75. The European bourgeoisie, frightened by class struggles and the evident end of the long boom, resorted to reformist governments, to coalitions or to accepting bigger public role for the reformists. Social democratic governments-Schmidt in Federal Germany, Wilson in Britain, Soares in Portugal demobilised and disoriented the labour movement and isolated the more combative elements. 

In Spain and Italy, the Eurocommunist CP’s did not achieve “power” but nevertheless performed the role of restraining the workers whilst conservative governments “solved” the crisis at the expense of the working class. When the job was done, around 1979, the bourgeoisie drove their erstwhile lackeys into the political wilderness.

In Europe, then, the first half of the 1970s was marked by radicalisation, spontaneity, rank and file struggles and left and centrist ferment. The second half saw reformism regain the initiative with left phrases, then break the impetus of the working-class fightback against the economic crisis. It did this by its usual implementation of Keynesian counter-cyclical measures and, when these produced inflation and huge tax increases, by resorting to cuts and austerity programmes. A partial exception to this was France, where the warfare between a reborn Socialist Party (PS) and the Communist Party (PCF) obstructed PS’ electoral success and delayed and telescoped this process into the early 1980s. 

The rise of the workers’ and students’ mobilisations after 1968 and the armed struggle in Indo-China also led to the development of a wave of nationalist movements in Europe (the Basques, Gallicians, Irish etc), around demands based on unfulfilled national aspirations. Because of their bourgeois or petit bourgeois leadership, these movements could only end in com-promise or capitulation to the imperialist state. 

Movements also developed which resorted to selective terrorism. Vanguard armed elites sought to electrify the masses and shake them out of their quiescence via spectacular actions. As in the past, petit bourgeois voluntarism scorned the proletariat and its methods and strategy of struggle. These currents were structured either around a nationalist ideological basis (IRA, ETA), or a “Marxist” one (the Red Brigades in Italy and the RAF in West Germany etc). The majority of these groups were annihilated by the state. The ETA and the IRA survived ina weakened condition. 

US imperialism on the offensive 

In 1968 Brezhnev crushed the Prague Spring and enunciated his doctrine of “limited sovereignty” and the right of the USSR to intervene to “preserve social-ism”. This had a powerful effect throughout Europe, east and west. In the west, it fuelled Trotskyist, Maoist and libertarian currents and minimalised the influence of the hard-line Stalinists in the ranks of the youth and younger shop-floor militants. In Eastern Europe, especially in Poland, it fuelled student (1968) and then worker (1970) resistance, bringing about the fall of Gomulka. 

In the USSR it initiated the first semi-public move-ment of opposition: the varied dissidents who, although subject to severe repression, survived thanks to the détente period of pressure for human rights via the Helsinki agreement. Most of this opposition was bourgeois nationalist or Zionist in character but it created an underground press (samizdat) and a ferment among the intelligentsia. 

On a world scale, however, the Soviet bureaucracy was at the pinnacle of its influence and power. Despite the rivalry with China in the 1960s and armed clashes on the border in 1969, the USSR maintained its influence over most sectors of the semi-colonial world. It strengthened its role in Egypt after 1967, extended it to Aden and Somalia after 1971 and gained influence in Southern Africa after the collapse of Portuguese rule in 1974-75. This was especially so in Angola, the weakest and most divided of the libera-tion movements: to ensure MPLA survival against UNITA, Cuban troops were sent in force in 1975. 

The entry of the Soviet Navy into the Indian Ocean and the victory of its Indian allies over the US gendarme, Pakistan, in 1971 with the secession of Bangla-desh, made the USSR an influential force in the Middle East, South East Asia and Africa. The USA, tied down in Vietnam until 1973 and then suffering internally from the “Vietnam Syndrome” (i.e. unwillingness of both population and Congress to envisage any direct US military involvement abroad), was un-able to take much effective action against semi-colonial revolutions in the mid-1970s except in Latin America. 

Because of its weakness, the USA was forced into a policy of détente. Nixon and Kissinger sought to offset the USA’s inability to maintain interventions through-out the globe against the growth of “communism” by stimulating competition for US favours between China and the USSR. In 1972 Nixon and Brezhnev signed SALT 1 which recognised the existence of So-viet nuclear parity. Negotiations started on SALT 2 and went on from 1973 to 1979, when Carter initialled the agreement but Congress refused to ratify it. 

The USA’s loss of strategic superiority was to be-come a focus of right wing pressure and campaigning from the late 1970s, and finally resulted in the massive re-armament drive under Reagan. But in the mid-1970s this loss was accepted with little resistance. The reason for this was that the USA was unable to undertake a big arms spending programme, unable to intervene militarily against semi-colonial revolutions and was desperately in need of Soviet and Chinese bureaucratic aid to stabilise the world order in the aftermath of Vietnam. 

The Soviet bureaucracy undertook a re-evaluation of its position, adopting a more “adventurist” policy in the semi-colonial world. From the mid-1960s to the end of the decade the USSR had looked to bourgeois nationalist regimes as its main allies in the semi-colonial world, but it had suffered notable reverses in Iraq, Indonesia and Benin and was later to do so again in Egypt. By the mid-1970s Cuba-much admired and emulated in the semi-colonial countries-seemed a more useful ally for Soviet foreign policy. In Ethiopia, Angola, South Yemen and Mozambique left-Bonapartist military coups or the victory of guerrillaist regimes resulted in one party states with “Marx-ist-Leninist” ideologies and a pro-Soviet orientation. 

The Brezhnevite ideologists, whilst not considering these countries to be “socialist” countries (which would have entitled them to be protected by the Soviet Armed Forces if necessary), did categorise them as “states of a socialist orientation”, giving them arms, advisers and a certain limited protection, and even surrogate intervention from Cuba. Whilst Moscow lost Sadat’s Egypt it did gain Gaddafi’s Libya as a Mediterranean foothold and strengthened its military alliance with Syria and the PLO. 

The period of détente from 1972-78 was not a period of stability, whatever the wishes of US imperialism and the Soviet bureaucracy. Revolutionary struggles continued and even resulted in victories for indigenous Stalinism (Vietnam, Laos and Kampuchea in 1975), and for petit bourgeois nationalism with a Stalinist colouration (Angola, Mozambique, Guinea-Bissau, Somalia, and Ethiopia). Bourgeois “socialist” regimes were created or consolidated in Syria, South Yemen, Burma and Bangladesh. These regimes were based on one party dictatorships and strong state intervention in the economy. During the same period, anti-imperialist guerrilla movements developed in Palestine and Lebanon. 

The growth of struggles in Latin America 

In Latin America the late 1960s and early 1970s saw an upsurge of nationalist resistance to US imperial-ism. In Peru, Bolivia and Panama bourgeois national-ist governments came to power and in Chile the Popular Unity popular front government took office. In their limited confrontations with imperialism these governments tricd to mobilise and control the masses whilst getting closer to Cuba and the USSR. In Pan-ama the Torrijos dictatorship sought to mobilise and channel popular opposition to US control of the canal and to demand its nationalisation. 

In 1968 Velasco took power in Peru by a military coup. He nationalised the oil industry, the mining complex in the centre of the country and dozens of companies (banks, fishing industries, mining, newspapers, etc), and set up the “industrial community” through which a minor class collaborationist workers’ participation scheme was allowed. The latifundia were broken up and various types of agricultural co-operatives were created. This agrarian reform ex-cluded large sections of the peasant communities and it did not touch the capitalist structures of credit, commercialisation, technological supply and the market. It ended by creating new chains of oppression. 

As with any bourgeois nationalist movement that attacks imperialism, “Velascoism” ended up subordinating itself to the USA in order to defend the bourgeois system from a proletarian offensive. Nationalist dictatorships always persecute the workers and with the overthrow of Velasco in 1975 by Morales’ military coup this persecution was reinforced. In 1977-80 the country went through a revolutionary period. Gen-eral strikes forced the military to hold elections for a constituent assembly in 1978. 

The left forces won a third of the seats and the “Trotskyists” around Hugo Blanco were the leading force in the left electoral bloc. Instead of calling for and helping to build workers’ councils they indulged in the purest electoral cretinism. Turning their back on the mass struggles, the left electoral bloc split into five mini-blocs thus handing the masses over to Belaunde, the bourgeois candidate, who carried through pro-IMF austerity measures. 

The Velasco “revolution” in Peru had repercussions in Bolivia. In 1969 General Ovando, who was the co-organiser of the reactionary dictatorship installed in 1964, took the presidency. In a nationalist turn similar to that of Velasco he nationalised the oil industry. In 1970 the masses organised a general strike that smashed an attempted right wing military coup. The result was the weak left Bonapartist regime of General Torres. 

The workers’ mobilisations were so powerful as to give birth to a Popular Assembly in May 1971. This organisation inaugurated a period of dual power but it lacked a soviet-type structure with delegates elected and recalled by the rank and file. Furthermore the parties that formed the Popular Assembly were popular frontist in programme and practice. Lechin, the Bolivian Communist Party and its centrist ally Lora wanted to enter Torres’ bourgeois government. They approved the stageist political programme of the COB in 1970, generating wide illusions that the Bolivian Armed Forces could be “Bolivianised” and block the road to reaction. They also reduced proletarian de-mands to purely economic ones plus participation in management. 

As a result the subsequent coup by Banzer succeeded and was consolidated thanks to the left, which had created illusions in the “patriotic” officers of the armed forces. Banzer’s dictatorship led to the creation of the FRA, a popular front in exile subordinated to bourgeois nationalism. 

The defeats in Chile and Argentina 

Large working class struggles took place in Argentina and Chile. In May 1969, insurrectional general strikes hit the large industrial cities of Cordoba and Rosario. In 1971 a second movement in Cordoba heralded the collapse of the Argentinian military dictatorship which had been installed in 1966. The period 1969-72 was punctuated by mass class struggles and the emergence of an anti-bureaucratic leadership in the unions, composed largely of Maoists and “Independent” or “Combative” Peronists. 

Their inability to create a working class political party enabled Peron and the Peronist bureaucracy to capitalise on and take over the movement. The result was another Peronist regime, that of Campora, General Peron (and, after his death, of Isabel Peron) which was in power from 1973-76. Argentina was wracked by economic crisis and class struggle. A mass left Peronist youth movement developed with a guerrilla wing, the Montoneros.The right wing mobilised through the army which sponsored “anti-communist” death squads. The lack of a working class solution led to Videla’s coup in 1976 and the years of the “dirty war” and the “disappearances”. 

In Chile the Popular Unity government, elected in 1970, elicited massive working class and peasant mobilisations which pressured Allende into national-ising key sectors of the economy against the resistance of the Chilean Congress. Workers and peasants seized and occupied factories and land. Significant sector of the petit bourgeoisie turned against the government and a period of working class and petit bourgeois mobilisation and counter-mobilisation paralysed the state and the economy. 

Whilst Popular Unity was clearly a popular front Allende had demagogically promised an “Advance Towards Socialism” along a specific Chilean road which was neither communist nor social democratic. The nationalisation of copper proved to be the crucial turning point. The USA and its financial institutions effectively blockaded Chile, whilst the CIA ordered the only too willing Chilean military into organising the bloody coup of September 1973. The large centrist forces that had arisen in Chile-the MIR etc-despite their guerrillaism, supported the popular front from the left and failed to call for a working class offensive to make a coup impossible. Caught on the defensive the Chilean labour movement suffered a historic defeat which it was not able to overcome for over 15 years. 

The radical regimes and revolutionary movements of the late 1960s and early 1970s all had as their aim a statist development strategy based on the nationalisation of imperialist holdings. This programme was es-sentially a development of the import substitution industrialisation strategy worked out by bourgeois nationalists in the early 1960s but which had been sabotaged by military coups d’état and by IMF intervention. The lesson that radical petit bourgeois movements had drawn rom their previous experience was reinforced by events in Chile: they considered it necessary to seize control of the state and install a one party system in order to carry out a development project based on land reform, literacy and health campaigns coupled with state capitalist industrialisation. 

This course was only viable in the more backward semi-colonial states where a large peasantry and an unresolved land question enabled weak and corrupt pro-imperialist regimes or colonial administrations to be toppled. When this strategy was attempted in countries like Chile or Argentina, in however marginal a manner, it simply reinforced the débâcle of reformism and led to the installation of a new wave of right wing dictatorships. In Chile the result was the first experiment of the Friedmanite open door policy under Pinochet’s “Chicago Boys”. 

Limited economic successes in some semi-colonies 

There were some limited and partial exceptions to the failure of this strategy. In the 1960s and early 1970s Egypt, with Soviet aid and assistance, create an industrial base and infrastructure largely by state capitalist measures. The main result was the strengthening of the Egyptian proletariat. However, by the mid-1970s Sadat was determined to open (infitah) Egypt to imperialist investment, that is, to loans and massive indebtedness. This caused a series of bitter and bloody struggles with students and workers in the late 1970s. 

Another partial and limited success for state capitalism was India, where the period of state capitalist sponsored growth gave the country a powerful industrial base. The “Green Revolution” in the Punjab created a powerful kulak class but also enabled the population to avoid severe famines for the first time in history. In the early 1970s India’s one party democracy” seemed stable under the Nehru dynasty. However, the oil crisis hit India very hard and by 1975 Indira Gandhi had introduced a state of emergency, frozen wages, banned strikes and imprisoned trade unionists. 

This situation- unusually repressive for India- resulted in the short-lived Janata regime (1977-79) after which the Gandhi dynasty was restored. Its subsequent rule was based upon a cynical exploitation of national and communal antagonisms. This short-sighted policy was to cost it dear in the 1980s. 

The real economic success story of the 1970s was that of the “Little Tigers” (South Korea, Taiwan, Singapore and Hong Kong). Taking advantage of a large and reasonably educated workforce, weak or non-existent trade unions and a consequent high rate of exploitation relative to Japanese and western workers, these countries became the site for industrial expansion by the multinationals, which created locally-based subsidiaries. 

The political prerequisite for this development based on super-exploitation was the existence of a series of vicious military regimes: Park in South Ko-rea, Chiang and his successors in Taiwan, the authoritarian governments of Lee Kuan Yew in Singapore and the undemocratic Crown Colony regime in Hong Kong. These states were also all redoubts against the advance of the Stalinists in the Far East, and had re-ceived huge military and economic investment, nota-bly from US and Japanese imperialism. They became a real paradise for the imperialists, with huge tax re-liefs and extremely favourable anti-worker legislation. 

Low costs facilitated high profits for repatriation to the imperialist heartlands. These enclaves also developed markets in the most populous zones of the planet in the period before China and Indo-China were opened up. Under US pressure, Japan began to play a more forward economic role in the region as capitalism expanded in the Pacific rim. 

US-Soviet relations: from détente to Cold War 

The main inspirer and protagonist of US foreign pol-icy in the years 1969-76 was Henry Kissinger. He held office throughout this period, first as National Security Adviser to Nixon and then as Secretary of State under Ford. The objectives of his policy of détente were fourfold. He sought to end the involvement of US forces in Indochina whilst “saving” the region from communism, to halt or slow down the Soviet advance towards nuclear strategic parity, to restore internal social peace and ideological hegemony for the US ruling class and to concentrate on restoring the world economic primacy of the USA. 

Kissinger succeeded with SALT 1 and the withdrawal from Vietnam but was unable to prevent the loss of Cambodia, South Vietnam and what was left of Laos. The great failure of the strategy was the USA’s inability to extract what the imperialists termed “linkage” from the Soviet bureaucracy. This involved Soviet good behaviour in other theatres of world conflict, most importantly in the Middle East and in southern and eastern Africa.

No longer subject to nuclear blackmail, the Soviet bureaucracy did not sever its links or liquidate its prestige with semi-colonial bourgeois regimes and with petit bourgeois nationalist liberation struggles. Wherever decisive clashes between such movements and imperialism threatened to disrupt vital Soviet interests, the USSR urged restraint(e.g. with Sadat in 1973).But it did not halt or reverse all anti-imperialist struggles. In short, it did not relinquish its role as the second superpower, as Kissinger had effectively demanded in order to allow the USA to regain its absolute hegemony. 

Although détente was unsuccessful in Asia and Africa it had far greater success in Europe. The Helsinki Agreements (1975) between the USA and the USSR involved access for imperialist propaganda, economic links that promoted the integration of some East European economies into the world market and gave the USA and the EEC the pretext of “human rights” to stimulate the growth of opposition. The growth of Solidarnosc at the end of the decade was a product of this. 

Carter, who became President in January 1977, intended to deepen and extend détente. He emphasised the “human rights” side of the policy, appointing ex-Martin Luther King lieutenant Andrew Young as his UN ambassador. The restrictions on the CIA and the covert activities of US embassies, especially in Latin America, meant that there was no longer clear-cut US support for the dictatorships that they had installed or sustained over the previous decade.

A process of liberalisation began in many countries. In some cases popular mass movements took advantage of this. Weakened dictatorships fought on, but were uncertain as to how much, if any, support they could expect. The years 1977-80 saw successful and unsuccessful movements to remove such dictator-ships. The greatest blows for the USA were dealt by the victories of popular insurgence in Iran (1978-79), in Nicaragua (1979), in Grenada (1980) and the negotiated end to white rule in Zimbabwe (1980). 

The popularly supported PDPA coup of 27 April 1978 in Afghanistan reinforced the view within the US ruling class that they were losing the game of détente. They began to come to the conclusion that US imperialism’s world empire of semi-colonies was more vulnerable than the Soviet Union’s buffer zone. 

The failure of détente, combined with the failure of Keynesian counter-cyclical measures (inflation, stagnation, no growth in the income of the working class and petit bourgeoisie), turned the tide within the US ruling class against both these strategies. The rise of the “New Right” during the Ford and Carter years was based on an alternative strategy to that originated by Kissinger. Its essential elements were: neo-liberal economic measures; cuts in welfare spending, taxation and state regulation; an emphasis on anti-communism at home and abroad; a renewal of the Cold War and massive rearmament; an ideological offensive against the progressive movements of the 1960s (gay rights, abortion, equal rights etc) in the name of conservative, protestant, religious values. 

The growth of the “new right” and its populist mass base, organised through the political action caucuses reflected a change in the social and economic balance within the USA itself. 

There was a shift from the Rust Belt/North East, with its Europe-oriented economy and politics and its traditional alliance with labour, to the Sun Belts of the South and West coasts. Between 1970 and 1980 the population of the Sun Belts increased by over 20%, whilst that of the North East and mid-West rose by only 1%. The big corporations of the Sun Belt were Pacific and Latin American-oriented, “free labour” (non-union), closely linked to defence spending and many ties with far right regimes in Central and South America. In addition, the Zionist lobby moved further towards the new right camp and away from the lib-eral Democrats. The main force within the liberal Democrats became the strongly bourgeoisified Jackson movement. 

Even within the Democrat fold the hard right was again on the march. The notorious Committee on the Present Danger, which prepared the new Cold War. was co-chaired by Lane Kirkland, head of the AFL CIO union federation. Within the unions the catholic trade union network gained in strength. 

By early 1978, after only a year in office, Carter was making moves towards a new Cold War policy. The US Senate became more and more hawkish and, whereas from 1970 to 1975 it had repeatedly cut de-fence budget requests, from 1978 it did the exact op-posite. A hysterical debate greeted the proposal in Carter’s Panama Canal Treaties to hand over the canal in the 1990s. 

A tremendous press campaign ensued over the “Decline of US power (and what we can do about it)”. The loss of Iran and Nicaragua led to the proclamation of the Carter Doctrine in January 1980. This promised US military intervention in any area of strategic importance to the USA and especially in the Gulf oilfields. The US Rapid Deployment Force was set up to carry this out. But the hapless Carter was unable to “do a Truman” and ensure that the Democrats monopolised the Cold War. 

In large measure this was due to the occupation of the US embassy in Tehran. Both the last year of Carter’s administration and the 1980 presidential election campaign were dominated by this long exercise in humiliation and impotent rage. Reagan’s landslide was no surprise and with the resolution of the hostage crisis the new President was free to launch Reaganomics and the full scale new Cold War in January 1981. 

The 1970s were a bad decade for US imperialism. It lost its absolute military hegemony over the USSR and its absolute economic hegemony over its imperi-alist allies and rivals. The semi-colonial world was wracked by revolutions and by “anti-imperialist” Bonapartist regimes which defied imperialist rule. Moreover, the USA failed to restore order with the aid of the Soviet and Chinese bureaucracies. But in 1981 it had achieved a unified command and purpose, with the will and the means to roll back Soviet and “anti-imperialist” gains, to re-establish its armed might and to put the Soviet bureaucracy back in its place.

From “new Cold War” to new detente: imperialism’s counter-attack

The main success of the USA in the 1980s was to diminish the power and influence of the Soviet bureaucracy and to induce a prolonged and deep crisis in the degenerated workers’ states. Capitalism’s victories over the working classes of the imperialist states and its successful containment of struggles in the semi-colonial world have been less thorog and less permanent. 

Furthermore, the crisis of the Stalinist bureau is not solely, or even principally, a gain for imperialism since it opens up the real possibility of political revolution. It brings the Soviet, Chinese and Eastern European working classes onto the stage of history once more, with all the world-shaking and world-transforming potential that they possess. 

Eastern Europe under pressure 

Imperialism always saw the East European buffer zone as the Achilles’ heel of the Soviet system. The populations of these countries-including the work-ing classes-had not voluntarily chosen incorporation into the Soviet bloc. It was easy for external and inter-nal agents of imperialism to link together nationalist slogans, democratic aspirations and exasperation at the low standard of living caused by the malfunctioning of the bureaucratically planned economies. 

Certain bureaucracies were desperate for economic expansion, notably those in Poland and Hungary, which had experienced political revolutionary crises. In 1971 and 1976 the Polish bureaucracy felt the work-ers’ wrath at the massive price increases that were necessary to “rationalise” the economy. 

Gierek turned to the western banks for huge loans and did deals with major imperialist companies such as Fiat and Massey Fergusson. His strategy was based on the hope that exports of cars, tractors and consumer durables would repay the debt, raise real wages and consumer spending and in the process create a modern technological base. The world crisis of 1974-75 revealed this to be an illusion. The result was a crippling accumulated foreign debt. Similar strategies produced similar, if not as pronounced, results in Hungary and Romania. 

With the exception of Poland there were few signs of spontaneous resistance from the working class of the Eastern bloc from the end of the 1960s an through the next decade. There was certainly nothing to compare with the struggles of the period 1952-62, the high point of which was the Hungarian Revolution of 1956. 

Opposition was limited principally to the intelligentsia. Currents such as those represented in the USSR by Plyush, Medvedev and Grigorenko were reformist in the sense that they basically accepted the Soviet system but sought democratic reforms. Brezhnev’s crackdowns, first after the invasion of Czechoslovakia in 1968 then again at the end of the 1970s, fragmented the opposition and drove many into the arms of outright reactionary ideologies: Zion-ism, western “democratism” and Russian nationalism and mysticism. The years of détente between 1972-78 were marked by greater access for the foreign press, as allowed for in the Helsinki agreements. This in turn placed certain limits on repression. Although the regimes still drove oppositionists underground they did not destroy them. 

In Poland an alternative, semi-legal forum for dissent existed in the shape of the church. The principle currents within this forum were the militant syndical-ist traditions of dissent and organisation created by the workers’ actions of 1956,1971 and 1976; social democratic ideology among the intelligentsia, and the social teaching of the Catholic Church and the Polish nationalism of worker-oriented priests. Solidarnosc was born out of a hybridisation of these currents. The huge strikes and factory organisation gave the move-ment a working class character despite the bourgeois and petit bourgeois politics of the leaders. 

SolidarnoSc was born in the events of the summer of 1980. Inter-factory strike committees sprang up and mass strikes and occupations persisted for two months until the government surrendered and signed the Gdansk accords. This agreement recognised the right to form an independent trade union and the right to strike and conceded a string of improved conditions. Solidarnosc was formally a trade union with the factory committees as its base units. But in the context of the degenerate workers’ state its role and political weight also gave it elements of the character of a political party, and the elements of workers’ democracy within in it recalled an embryonic workers’ council. 

The Solidarnosc leadership drew the masses into negotiations with the bureaucracy, using barren Polish nationalism and wretched grovelling to the priests and the hierarchy as their stock-in-trade. The various opposition factions could not oppose this orientation The result of this acute crisis of leadership was that the inter-strike committees, which were embryonic workers’ councils, became atrophied. Despite its eight million members Solidarnosc’s powers of resistance as a union movement were weak. 

The government sensed that Solidarnosc had ceased to advance and that its members were con-fused and disoriented by the depth of the economic crisis. Realising that the leadership had no plan of action, the Stalinists launched the coup d’état of 13 December 1981 which suppressed the union and jailed its cadres. 

This defeat demoralised and disorganised the syndicalist and social democratic elements, drove the militants into the protective embrace of the church and diminished the mass character of the union. The Solidarnosc experience signalled to the world bourgeoisie that they could find a uniquely powerful and unexpected ally within the degenerated workers’ states- a labour movement led by social counter-revolutionaries. A new phase of the struggle was fore-shadowed: the fight for the consciousness of the worker and peasant masses. In this imperialism sought the aid of workers’ leaders in order to destroy the workers’ states. 

The question of Solidarnosc was rapidly taken up by Reagan, Thatcher and the Polish Pope. It became a pretext for tightening the embargo on new technology to the workers’ states, for Cold War hysteria and for a rearmament drive. This included the Strategic Defence Initiative (Star Wars) which would prove to be ruinously expensive for the USSR as the Stalinist bureaucracy sought to keep pace. 

Brezhnev died in 1982. In searching for a successor, the Soviet bureaucracy decided that corruption and graft had to be ended and discipline in production restored. The key role in this policy shift was played by the KGB, which was the most accurately informed sector of the bureaucracy with regard to imperialism’s intentions, the state of the Soviet economy and the moods and tolerance levels of the Soviet masses.

Andropov was chosen to carry forward this plan but it met the tremendous passive resistance of the bureaucracy and he only lived for 14 months after taking office. The choice of the non-entity Chernenko as his successor represented the revenge of Brezhnevism. But this was to prove only a temporary victory: Chernenko’s reign was even shorter than that of Andropov-a mere 13 months before the final jour-ney to the Kremlin wall. 

Afghanistan: imperialism pushes forward 

Afghanistan was the most costly conflict of the new Cold War for the Stalinists. Reagan was able to exercise extremely effective pressure on the Soviet bureaucracy. Pakistan, a confessional state composed of four major nationalities, became a vital gendarme for the USA, especially after the Iranian revolution. It was and is the main indigenous policeman of the region with 500,000 men under arms, 10% of them seconded to the armed forces of the Gulf States and Saudi Arabia. 

Under General Zia Pakistan became a favoured tool of US imperialism. Its reactionary but pro-imperialist islamic fundamentalism enabled it to marshal the tribal Pushtun armed rebellion in Afghanistan into a full-scale war against the Russian-backed PDPA regime, weakened as it was by a bloody factional struggle between its rival Stalinist wings. US expenditure on this reactionary project soared to over $7 billion after 1981. 

Faced with the impending collapse of the pro-Soviet government the USSR invaded Afghanistan. Its immediate action was to replace Amin, the leader of the Khalq faction by Karmal, leader of the Parcham grouping. Moscow’s aim was that Karmal would broaden the base of the regime by making concessions to the mullahs and the tribal chiefs. The project initially backfired as the Soviet invasion provided imperialism, Pakistan and the tribal rebellion with the rallying point for a spurious “Afghan National Resistance”. 

In the early stages the resistance had considerable successes as the Soviet acted out the traditional rôle of an occupying army. Subsequently, Soviet-directed measures to win over sections of tribal society and to rebuild the Afghan army began to take effect. The CIA responded by arming the Mujahedin with Stinger missiles, giving them an enormous advantage. 

Gorbachev’s accession in 1985 marked a change of Soviet strategy. From 1985 onwards Moscow sought to “Afghanise’ the conflict and so find a basis upon which the troops could be withdrawn. The key aim of this policy was the creation of a stable and formally neutral regime which guaranteed representation of Soviet interests via the inclusion of the PDPA. Imperialism and Pakistan for their part were determined to achieve a regime friendly to Pakistan and the US. 

Despite the Soviet withdrawal of 1988 they have continued the war, thus revealing the essentially ag-gressive and reactionary role of imperialism and its gendarme. Similarly, the progressive nature of the PDPA as against the reactionary Mujahedin, already apparent from the bloody civil war, has been reinforced by recent events. The whole episode has been staggeringly costly for this already impoverished and very backward country. 

Imperialism’s projects in Southern Africa and the Middle East 

Imperialism’s gendarmes also played crucial roles in destabilising or checking the advance of Soviet allies in Southern Africa and the Middle East. In both cases. superpower conflict was modified by the independent rôle and interests of the gendarme states, imperialist South Africa and the advanced semi-colony Israel. 

In both cases imperialism was engaged in suppressing national liberation struggles (the South African revolutionary upheavals of 1984-86 and the Palestinian intifadah after 1987, the latter being inspired by the former). Both revolts had gained or maintained a degree of independence from either superpower rivalry or collusion. 

The deals by Bush and Gorbachev, coupled with pressure on their allies and agents, have exerted a reactionary influence. In both cases, the struggles brought about a modification of the guerrilla strategy advanced by the bourgeois nationalist/Stalinist armed popular front. 

The Palestine Liberation Organisation (PLO )increasingly abandoned its initial radical bourgeois nationalist claims. It accepted the existence of the Zionist state and sought only to have a less significant and powerless bourgeois mini-state on the West Bank and in Gaza. 

In South Africa the African National Congress (ANC) developed the civilian popular front of the United Democratic Front with the clergy and the nascent black bourgeoisie. However, the real force behind the struggles since 1985 has been the new black trade union movement. The Stalinists were initially hostile towards the new unions because they feared their trajectory towards class independence and anti-capitalist goals. When unions like the metalworkers union and leaders like Moses Mayekiso called for a workers’ charter and a workers’ party the Stalinists were obliged to focus all their influence on winning over the new COSATU trade union federation to the Freedom Charter – that is, to playing a subordinate role in the popular front and accepting a stage of black bourgeois rule. 

As Gorbachev turned towards making deals with imperialism the ANC’s demagogic leftist talk had to be abandoned. The defeat represented by the imposition of the state of emergency in the summer of 1986 gave the ANC room to manoeuvre to the right, opening the door to some form of negotiations Pressure on both sides from the Kremlin and the White House led to the De Klerk takeover and the 1989-90 period of détente. With Mandela released the return of the exiled leaders’ and the partial ending of the state of emergency, the scene was set for negotiations to begin. 

During the period 1986-89 there was a downturn in the mass struggles. These years saw the decline of the syndicalist and black consciousness rivals of the ANC in the unions and in the youth and township organisations. The newly formed COSATU accepted the Freedom Charter. The “workerist” leaders abandoned their opposition to the Charter and in the process scuttled their project of independent workers’ organisations and a workers’ party. 

The shift of the leaders of NUMSA and other trade unionists towards the South African Communist Party and the ANC alliance indicated the temporary triumph of popular frontism in the union movement. With these conquests behind it, the ANC entered into talks fully intending to settle for far less than the demands of the Freedom Charter. They were willing to accept continued white domination of finance, industry, and the land and to abandon the demand for equal úniversal suffrage in favour of guarantees to the privileged and oppressive white minority. 

The road to an agreement is fraught with dangers for both the ANC and the Nationalist Party. The Pan-African Congress on the one hand, and the conservative hardliners in the Afrikaaner camp on the other are waiting for the first false step from Mandela or De Klerk. The brutal thugs of the police force will be ready to unleash repeated provocations. The AWB fascists may likewise be a factor for de-stabilising the “peace process”. 

None of this, however, negates the fact that important class interests – those of South African, British and US imperialism, of the bourgeoisies of the front-line states and last, but not least, of the nascent black bourgeoisie in South Africa – all favour a compromise. 

This would take the form of a pro-capitalist settlement which liquidates legal apartheid but leaves the black masses super-exploited, disadvantaged and politically oppressed. South African imperialism’s major corporations (Anglo-American, De Beers etc) all have growing aspirations to dominate the resource-rich semi-colonial regimes of Southern Africa. The USA and Britain wish to see their African investments underwritten by a strong subaltern. 

The Nicaraguan débâcle 

Nicaragua was a further crucial theatre of the new Cold War. It was to prove a liability to Reagan both in Congress and in his relations with his European allies. Somoza’s dictatorship crumbled in July 1979, resulting in the formation of the Government of National Reconstruction (GNR), a popular front between the “anti-Somoza” bourgeoisie and the FSLN. The FSLN’s founders had been Stalinist-trained and Cuban-in-spired. By 1979 they were dominated by the “Tercerista” faction (the Ortega brothers) who wanted an ex-tended popular front, a democratic stage to the revolution. 

The overthrow of Somoza destroyed the National Guard, armed the striking workers and peasants and created a dual power situation. The CNR and the FSLN initially repressed the independent unions, the Maoist and “Trotskyist” groups and set about incorporating and disarming the civil defence committees which had developed the characteristics of embryonic workers’ councils. 

From mid-1980 onwards pressure mounted from the workers and peasants for the nationalisation of industry and for land reform. The Sandinistas proved ineffective as direct agents and defenders of bour-geois and landowner property, so the US embassy and the church fomented bourgeois resistance and sabotage. After Reagan’s inauguration the bourgeois figures left the government in increasing numbers and by July 1980 the Sandinistas held power alone. 

In March 1981 the CIA allocated $19 million to fund the Contras and the war escalated. Events did not follow the Cuban road because neither the Russians nor the Cubans would financially and politically under-write a bureaucratic social overturn or risk facing the wrath of US imperialism if they did. A “socialist state” would not be a strategic gain (as Khruschev thought Cuba would be in 1961-62) but a strategic liability. It would have incensed all the Latin American bourgeois states which were being courted by Cuba and the USSR. 

Reagan categorised Nicaragua as a colony of the “Evil Empire” but he could not enforce a total blockade. Mexico and the Contadora Group, the Organisation of American States and the EC would not join an all out crusade. Once Gorbachev launched his peace campaign the Democratic Congress and Senate, incensed by Irangate, put a tourniquet on aid to the Contras. In 1988 they finally turned it off altogether. 

The Contras were unable to gain a foothold inside the country, and eventually Reagan’s project was dropped in favour of the strategy of pressurising the Sandinistas into economic and political compromises as proposed by the European imperialists, the US Democratic Party and the Central American states. 

Nevertheless, the defeat of the Sandinistas in the March 1990 elections first and foremost represented a clear victory for US imperialism in Central America. The economic blockade, combined with the Contra war, had led to a growing economic crisis in the country. Given that the Sandinista government was committed to the preservation of capitalism, the costs of this crisis fell increasingly on the masses. Living standards fell dramatically and a series of austerity packages pushed up prices and led to tens of thousands of government jobs being cut. 

Mass disillusion with the FSLN led to the election of the UNO, a 15-party right wing coalition which included the Communist Party and was led by Violetta Chamorro. 

Chamorro’s election victory and her subsequent attempts to erode the gains of the masses on employment and trade union rights, led to a series of important working class struggles against the government. These included a major general strike in July 1990 with barricades in the streets. The Sandinista leadership, seeking an informal coalition with UNO, was initially able to contain the struggles within a defensive framework. 

This imperialist victory in Central America, together with the international retreat of the USSR, encouraged a new aggressiveness on the part of the USA in Latin America and elsewhere. Under the pre-text of the fight against drug trafficking the US ex-tended its police/military intervention, especially in Columbia, Bolivia and in Peru where it is establishing permanent army bases in collaboration with the government. The invasion of Panama to overthrow the government of Noriega and the increasing military and economic harassment of Cuba are just two more examples of the US’s new offensive policy in the hemisphere.

Semi-colonies: from dictatorship to democratisation

During the 1980s the major imperialist powers not only changed their strategy in relation to the Soviet bureaucracy but also transformed their approach to dominating the semi-colonies. Reagan did not return to the old pre-Carter policy of fomenting coups and encouraging the installation of military regimes. 

Although Haig and Kirkpatrick abandoned Carter’s practice of preaching human rights sermons to their military dictators they did not encourage the multiplication of such regimes. For example, the Garcia-Mesa coup in Bolivia provoked two years of disintegration within the military. The USA reacted to these events with an indifference verging on hostility, revealing the US imperialists’ distaste for such coups as a “solution”. 

For most of the 1980s the rampant corruption of the “gorilla” regimes and their deep involvement with the narcotics trade led the USA to look for civilian agents and allies throughout Latin America. Using the “successful” example of Spain in the late 1970s, Reagan’s administration cautiously advised “openings” to democracy in the countries with military regimes. This involved a slow and well controlled passage of power to conservative civilian bourgeois parties via “democratic” sections of the military. 

The purpose of the policy of a “transition to democracy” embodied by such regimes was threefold. Firstly, it aimed to preserve the repressive apparatus, including its secret police and torture apparatus, and to discipline the working class. Secondly, it sponsored the creation of bourgeois parties with a mass base capable of operating the free market open door policies demanded by the IMF and the World Bank, to enforce the austerity packages to repay the huge debts accumulated in the 1970s. Thirdly, it involved the creation of cautious, reformist bourgeois nationalist or social democratic parties that can isolate the revolutionary vanguard from the masses. Imperial-ism’s auxiliary agencies-the AFL/CIO the Catholic Church and the Socialist International-have a crucial role in the latter two tasks. 

A heightened rivalry between US, EC and Japanese capital in certain Latin American markets also gave civilian regimes some room to manoeuvre. They threatened or even temporarily enacted limitations or moratoria on debt repayment. US imperialism, wary of allowing its rivals to appear the exclusive champions of democracy, was prepared to reschedule the debt to ensure continued US domination of the region. 

The land question 

In both Latin America and South East Asia the pre-capitalist agrarian question has been resolved for the majority of the population by imperialism and the indigenous capitalists. This fundamental change has had enormous consequences, including a shift in imperialism’s tactics. 

The resolution of the land question by the capitalists involved enormous expropriation, suffering and displacement for the peasantry. The rural population flooded into the cities. Urbanisation on a truly mas-sive scale made the longstanding threat of rural guerrilla warfare based on a land hungry peasantry more peripheral. In the 1960s and 70s industrialisation created a powerful proletariat and a dangerous sub-proletariat of shanty-town dwellers. 

Faced with this potential threat, imperialism’s pup-pets need not only to be able to crush strike waves and insurrections but also to incorporate proletarian and popular organisations via nationalist, reformist and religious leaders. For this purpose extended periods of carefully controlled bourgeois democracy are necessary. The pre-requisites for bourgeois security under such “democracy” are the maintenance of a powerful Bonapartist element within the constitution (executive presidency, conservative senate, judiciary and bureaucracy), together with a powerful and vigilant military as a permanent recourse. 

Crisis and the possibility of democratisation—the example of Bolivia 

Economic cycles in most semi-colonial countries give rise to violent fluctuations with dramatic cuts in real living standards, sudden increases in unemployment and the “need” for governments to impose extremely harsh austerity packages which alternate with sudden spurts of growth ending in hyper-inflation. This situ-ation means that the ruling classes cannot hope to achieve the kind of stable, conservative bourgeois democratic regimes that have become “normal” in the wealthy imperialist countries. 

Yet it would be wrong to argue that bourgeois democracy is permanently impossible in the semi-colo-nies, that the proletariat has no illusions in it and that there is no need to develop tactics to fight within such a context. The 1980s proved the error of this position. 

In 1982 in Bolivia the military dictatorship inaugurated by Garcia Mesa collapsed. The revolutionary masses were restrained by the Popular Front led by Siles Zuazo and by the class collaboration of the COB trade union federation leaders. In 1985, the revolutionary situation reached the threshold of dual power with the general strike and miners’ occupation of La Paz. Yet the COB leaders would not seize power or even create organs of an alternative power to the enfeebled feebled state forces and the impotent Siles government. 

The union let the decisive moment pass when Siles Paz and Banzer went for elections. The COB refused to put forward worker candidates and meekly ab-stained in the elections, allowing the MNR/ADN to form a constitutional counter-revolutionary government that adopted the infamous Decree 21060. 

The general strike of September 1985 was belated and badly led and went down to defeat after heroic resistance. As a result the MNR/ADN government was consolidated. When the full horror of the mine closures and the disintegration of the mining company Comibol became clear, the masses again forced their leaders into action. 

The March for Life and Peace involved some 15,000 miners and their supporters marching to La Paz. When halted by government troops the Stalinist and reformist COB/FSTMB leaders abandoned the struggle and thereby inflicted one of the heaviest de-feats the Bolivian proletariat had suffered since the 1952 revolution. It is enough to record that the number of Comibol miners was cut from 27,000 in 1985 to 4,200 in 1990. 

All this was carried out by a constitutionally elected government. In the summer of 1985 and the spring of 1989 the presidency changed hands without a military coup. This remarkably long period of bour-geois democracy was accompanied by a period of historic and unprecedented defeats for the proletariat on top of unprecedented opportunities to take power. 

The MNR/ADN government was the first of the new wave of elected right wing governments committed to massive privatisations and free market liberalism and to working closely with the IMF and US imperialism. In the 1989 elections the MNR was re-placed by the MIR of Paz Zamora which governed alongside Banzer’s ADN on the basis of free market liberal policies. The MIR’s rightward move from Castroite guerrillaism in the 1960s to slavish capitulation to US imperialism in the late 1980s reflected similar right wing shifts of parties throughout Latin America (the “Marxist” Barrantes in Peru, the MR-8 of Brazil). While the 1985-86 defeats severely weakened the Bolivian proletariat, especially its vanguard, the miners’ struggles in the late 1980s and early 90s indicate the partial recovery of the Bolivian trade union move-ment from these defeats. 

Argentina 

Military rule was imposed in Argentina in 1976. It was three years before the base of the labour move-ment could reconstruct itself: shop stewards and un-ion activists were “disappeared” and striking workers sacked. The military rapidly adopted the newly fashionable monetarist policies; there was a rapid cut back in industrial production which reduced the number of industrial workers from 1,000,000 in 1976 to 790,000 in 1980. 

Within a year of the coup wages were slashed by 50%. Resistance mounted in 1979 with a one day general strike followed by a wave of sectional strikes which continued in 1980. 

From 1981 the labour movement was engaged in a counter-offensive against the military which forced Galtieri into the Malvinas adventure in 1982. British imperialism’s unexpected resistance and the defeat of Argentina deepened the social crisis. Rank and file trade unionists, students and the Mothers of the Plaza de Mayo all fought back against the regime. The Per-onist labour bureaucracy was temporarily divided as to whether to collude with the military or lead the mass protests. The military were forced back to bar-racks and elections took place in October 1983. 

The victory of Alfonsin and the Radicals indicated that the masses desired bourgeois democracy and had illusions in it, and that the Peronist bosses had under-gone a relative loss of prestige. Alfonsin’s attempted “democratisation” of the unions was defeated by strengthened Peronist bureaucratic control. 

A wave of economic strikes marked 1984-85 and ended in government anti-inflationary packages which fatally undermined the Radicals’ economic base. The regime was further destabilised by a rash of military putsches aimed at putting an end to the at-tempts to prosecute the butchers of the dirty war. 

In 1989 Menem came to power in an electoral débâcle for the radicals. Despite his pre-election rhetoric Menem cynically adopted a vicious neo-liberal austerity programme. Unemployment soared, but there was only momentary economic success for the capitalists. The price of this meagre victory has been a cold split with the trade unions and divisions within Peronism. There is now a new opportunity to win the working class from Peronism. 

Brazil: the birth of a new workers’ movement 

In Brazil the emergence of a powerful new labour movement was signalled by the wave of strikes in 1978, the founding of the Workers’ Party in 1979 and the strike wave which culminated in the São Paulo general strike of 1983. The working class was strengthened by the industrialisation of the 1960s and 1970s and was able to oblige the Brazilian military to beat an orderly retreat from power. 

The chosen means was again an indirect and grossly undemocratic system with the hope of ensur-ing that power would pass to the generals’ direct nominees. This did not work. Although mass popular pressure was unable to force the immediate direct election of the President, the military was obliged to accept first Tancredo Neves and then José Sarney, candidates of the civilian bourgeois party, the PMDB. The result of this first step of controlled democratisation (1984-85) only benefited the Brazilian workers to the extent that it allowed a broader and freer battle-ground for the class struggle. 

The first and second Crusado Plans (February and December 1986) and the even more draconian Bresser Plan (une 1987) forced down real wages, slashed public sector jobs and provoked waves of working class action. There was a general strike in August 1987, a wave of steel strikes of November 1988 and a general strike involving 35 million workers on 14-15 March 1989. 

Controlled democratisation also led to the growth of more radical left reformist and centrist forces, notably the CUT union federation and its associated Workers’ Party (PT). By this stage the PT was 450,000 strong and had 36 mayors and 2,000 municipal councillors. Other forces, such as the Brazilian Communist Party, the pro-Albanian PCdoB and the Democratic Labour Party, which dominate the other union federation (CGT), also grew. Sarney’s regime of democratic opening was unable to resolve the staggering problems of the Brazilian economy-the foreign debt had reached $122 billion by the end of 1988. Against his intentions Sarney’s programme opened the way to an intensification of the class struggle. 

The December 1989 elections saw the narrow victory of the right’s candidate, Fernando Collor de Mel-lor, over the PT’s candidate, Lula. The election campaign forced Collor to engage in demagogic left talk, combining neo-liberal and anti-oligarchic slogans. More importantly it forced the PT to the right-to open and unvarnished reformism. The PT formed its own popular frontist alliance with bourgeois groupings and made appeals to Brisola’s bourgeois nationalist PDT, COVAŠ and even to the “progressive” military around the slogan of a “democratic peoples’ government”. 

Since the election Collor’s radical free market re-forms have caught the PT off guard. The CUT, with many of its leaders now in regional and national parliaments, is not organising a militant fightback. The rapid process of bureaucratisation and the development of parliamentary cretinism within the leader-ship of the PT and CUT clearly indicate that the new workers’ parties of the semi-colonies can have but a short life as centrist formations capable of playing a positive role in the creation of a revolutionary van-guard. The PT is now a bourgeois workers’ party, albeit of a less stable type than those which exist in imperialist countries. 

Peru: the austerity to come 

As in Brazil the 1990 elections in Peru resulted in the election of a “new” political figure, less tainted than the old right wing leaders, but totally committed to neo-liberal, open door economic policies. 

The background to Fujimori’s victory was the dis-crediting of the APRA after five years of government and the alarm of important sections of the bourgeoisie at Vargas Llosa’s programme of massive privatisation and an open door policy to multinational capital. Fujimori was elected on a programme of opposition to the short, sharp shock. Important sectors of the left and the United Left (Izquierda Unida) supported him and the unions signalled their preparedness to do likewise. 

Once in office he changed his tune. Like Collor, Paz Zamorra and Menem, Fujimori is following the path of savage austerity measures. These attacks have provoked desperate resistance by the working class and the sub-proletariat of the shanty towns. This lays the basis of a challenge to the rotten reformist, Stalinist and bourgeois nationalist leaderships of the labour movement. 

Chile, Uruguay and Haiti 

In Chile, mass struggles by students and workers in 1986, including a successful general strike, split the military over Pinochet’s future and revealed US imperialism’s desire for him to go gracefully. Stalinism and social democracy sought to limit the movement to a Philippines-style “People Power”- mass pressure to force the patriotic section of the military to allow democratic reforms. In the event of a democratic election the reformists proposed to support any austerity programmes and they demobilised the masses at critical conjunctures, frittering away the pre-revolution-ary situation. 

Despite the reformist misleadership Pinochet was unable to fully restore his personal dictatorship. His defeat in the 5 October 1988 referendum allowing him to stand again as President opened a very slow and conservative “democratic opening”- slow because of the role of the Stalinist and socialist parties leaders and their respective popular fronts. 

Similar processes of democratisation have taken place in Paraguay and Haiti, where long established dictatorships (Stroessner, the Duvaliers) were re-placed by new military regimes pledged-if only in words-to a process of democratisation. In Mexico, the Caredenas presidential campaign split the PRI and created a de facto two party system in which the workers’ parties are marginalised and bourgeois nationalism has been re-vitalised. 

Imperialism and Latin America 

Military dictatorships were the norm of the 1970s and early 1980s in Latin America. But the pattern of the late 1980s and early 1990s is one of democratically elected civilian regimes carrying out savage IMF dictated austerity measures. Their “states of emergency”, the continued licence of the military to “disappear”, detain and torture leftists, working class and peasant militants, all show the extremely limited nature of “democracy” in these countries. 

With sickening regularity, troops and police have been unleashed on spontaneous mass protests against austerity measures in Brazil, Argentina and Venezuela. In Peru and Colombia the army has free reign in the countryside and is increasingly taking complete control of the cities. The result has been a death toll mounting into tens of thousands over the last few years. If Latin America has experienced democracy it is a militarised democracy, democracy at gunpoint, a democracy which is nakedly in the service of imperialism. 

The economic pillage of Latin America proceeds apace. The total flow of funds out of the continent continues. In the six years to 1987 $150 billion were paid out to the imperialists. This represents 5% of the total product of the continent and 25% of its savings; twice the equivalent war reparations paid by Germany to the Allies in the decade before Hitler came to power. 

The Baker Plan, first floated in 1985, sought to ease debt repayments, resume foreign investment and open markets for Latin American countries to enable them to renew and sustain growth. 

So far the opposition of the big banks and the luke-warm response of the US administration has led to a stalemate. In Venezuela, Peru and Argentina this has directly led to hyper-inflation and crisis. World inter-est rates have been put up to protect the imperialist economies, forcing South America to repay its debt at much higher rates than those at which it was contracted. 

Even the “boom” of the later 1980s crucified the economies of Latin America. A slump, with a shrinkage of Latin America’s already restricted markets for its exports, could prove catastrophic. 

The Asian masses on the move 

Struggles for democracy have also forced changes in Asian regimes. In South Korea the seven year dictatorship of Chun Doo Hwan faltered under mass stu-dent demonstrations as he attempted to pass control to his successor Roh Tae Woo in the summer of 1987. The result was democratic elections in which divi-sions in the bourgeois opposition (Kim Dae Jung versus the more conservative Kim Young Sam) allowed Roh to win and continue with a very repressive and slow process of democratisation. 

Korea’s young and combative proletariat has utilised the relative freedom to good effect. In the summer of 1987 there was a massive strike wave which led to the formation of “genuine” or “democratic” unions, initially at a factory level, which have broken in practice with the yellow union government federation FKTU. 

In 1986 the mass movement in the Philippines forced the exit of Marcos. Unlike Iran the army was not destroyed: a coup d’état left the state apparatus not only intact but able and willing to ride shotgun with the Cory Aquino administration. Aquino performed a very useful service for imperialism and the Filipino bourgeoisie by infusing the masses with democratic illusions and isolating the masses of the cities and some rural areas from the Stalinist NPA guerrillas. 

Disoriented by its guerrilla strategy, the NPA was unable to present an alternative leadership either in the streets or in the polling booths. It veered between opportunistic concessions to Aquino and sectarian abstention from “democratic” political life at a time when the masses were full of illusions in this process. Even in its “left” variety and at its most tactically diverse and eclectic, Stalinism once again proved its inability to lead the workers and poor peasants to victory and the creation of democratic working class power. 

In 1988 a student-led mass movement launched a bloody but unsuccessful attempt to overthrow Ne Win in Burma. Misled by both the “democratic” bourgeoisie and Bhuddist monks, the masses were crushed despite their enormous heroism.

Turkey’s militarised democracy 

Turkey plays the role of US imperialism’s gendarme on the USSR’S southern borders, in the Aegean and East Mediterranean. In the second half of the 1980s it experienced controlled and limited democratisation. 

The brutal military coup of 12 September 1980 sup-pressed the 300,000 strong militant trade union centre (DISK) and both bourgeois and proletarian political parties. However, the treatment meted out by the military was far from even-handed: whilst Demirel and Ecevit only suffered detention,60,000 alleged revolutionaries were arrested and 1,200 killed. 

This bloodletting and torture rocked the Turkish left which was already wracked by deep internal cri-sis. Despite the undoubted heroism of their cadres, both pro-Moscow and pro-Beijing Stalinist parties had shown the political bankruptcy of their strategy for fighting both “left” bourgeois nationalism (Ec-cevit’s RPP) and the far right (Turkes’ National Action Party/Grey Wolves). 

The process of democratisation has been slow, par-tial and under strict military control. There were elections in 1983 which banned all the old parties and gave the military president a seven year term. Legis-lative assembly elections took place in 1987 and Tur-gut Ozal gained a five year mandate. A new president will be elected by the centre-right dominated parliament in 1990. The Stalinist parties are still banned, as is the DISK. Entry into the EC, a key objective of Ozal’s plans to continue economic expansion and modernisation, will require continued restoration of democratic rights. The rise in the number of strikes and the growth of “independent” unions like the 60,000 strong Metalworkers’ Union indicate a revival of workers’ struggles. 

Africa 

In October 1988 Algerian youth rose in protest against food shortages and the lack of democracy. The move-ment was bloodily suppressed with more than 500 deaths, but Chadli was forced to promise economic reforms and a democratic opening, pluralism etc. Unfortunately, as the local elections of 1990 showed, the immediate beneficiaries were the Islamic funda-mentalists, able to capitalise on the crisis of leadership caused by the dead-end of FLN “anti-imperialism” and the slavishly pro-bourgeois politics of the Algerian Communist Party. 

Sub-Saharan Africa has not escaped the imperialists’ pressure for democratic reform. World capitalism seeks to use demands for democracy as a battering ram against regimes which have pursued development atrategies based on “independent industrialisation” and heavily statified economies -Angola, Mozambique, Tanzania, Zimbabwe and Zambia. Many of these countries relied on aid and military support from the Soviet bloc in order to achieve a degree of independence from imperialism. 

“Democratic” propaganda is also used by the imperialists against pro-imperialist regimes such as Kenya and Nigeria, to ensure that corrupt and dictatorial regimes do not provoke the masses into struggles that threaten imperialist interests. In this policy the imperialists have been aided by a number of factors. 

The crisis of Stalinism has contributed to the discrediting of the one party systems which were already weakened by their manifest economic failure in many parts of Africa. Over the last few years the regimes hitherto supported by the USSR or the other Stalinist states have either found that support withdrawn, or have come under pressure to make their peace with imperialism. 

The World Bank and the IMF aim to open up these statified economies to the market and increase opportunities for profitable investment. The institutions of world capital are now attaching political conditions to their aid. “Structural adjustment programmes” are accompanied by pressure for political reform to ease the path of these programmes. “Popular participation” and “political conditionality” have become the watch-words of African political and development theory. The EC countries have indicated their intention to follow the same line in their aid programmes. 

Pressure is also growing internally. This is obviously linked to the effect of imperialism’s intervention. In some cases sections of the bourgeoisie who feel excluded from political power are waging a struggle to gain access to the spoils of office that only a parliamentary regime can bring them. 

The urban petit bourgeoisie, led by students and the intelligentsia, is pressing home its demands for an increased political voice and influence. At the same time, dissatisfaction amongst workers and the semi-proletariat has found expression on the streets and in the workplaces. Ironically one of the main causes of protest and unrest is precisely the distress caused by the Structural adjustment programmes. 

The steps towards an imperialist peace and settlement in Southern Africa hold out the prospect of an end to the warmongering of the apartheid regime. The proposed settlement aims to postpone the threat to bourgeois order posed by the black South African working class. A renewed South African imperialism would dominate the southern part of the continent. 

Enormous obstacles remain in the way of these imperialist sponsored moves towards stable bourgeois democratic regimes in Africa. The problems include chronic economic difficulties – negative growth, dependence on a handful of commodities, relatively low agricultural productivity, etc. In both privatised development projects and industries and in the state sector, mismanagement and corruption are the rule. 

The national question in Africa remains unresolved. The heightened national unity forged around independence struggles has tended to disintegrate under the pressures of semi-colonial status. In some countries the oppression of minority nationalities has given rise to movements for self-determination. In others the differential allocation of resources, the control of the state by one section of the bourgeoisie and widespread corruption and nepotism have all exacerbated ethnic hostilities. 

These threaten the fragile national unity of the bourgeoisie and the class unity of the proletariat an its allies. They can also weaken the pro-democracy forces. 

While we can expect the democratisation process to continue and deepen in the next period, bourgeois democracy can have only a precarious existence in many of the states. A recurrence of forms of Bonapartist rule will be inevitable. 

The continued hardship and impoverishment experienced by the masses, together with the growth of the semi-colonial working class, fuel the growth of proletarian militancy and social unrest. But even where the working class has substantial social weight and traditions of independent organisation, the crisis of leadership has thus far prevented the workers from enforcing their own solutions to the social and eco-nomic crises. 

“Democracy” and capitalism cannot solve the underlying problems of poverty, super-exploitation and oppression. Every serious mass movement of the working class and the urban and rural poor has the potential to go beyond the limits laid down by the bourgeois and petit bourgeois campaigners for democracy. The perspective and programme of permanent revolution retain all their validity. 

The “democratic revolutions” and the misleaders 

Throughout the non-imperialist world the second half of the 198Os was marked by a wave of mass struggles. These were often initiated by students but rapidly supported by workers, recently unionised and drawn into politics. This upsurge was deeply marked by the prior discrediting of Stalinist and bourgeois national-ist Bonapartism and as a consequence was centred on democratic slogans. 

Freedom of the press, freedom of parties and trade unions, and free elections were combined with demands to increase the masses’ living standards. Political leadership at street level remained with the reformist workers’ parties, inexperienced and ad hoc student organisations or unbureaucratised trade union leaders. None of these forces have been able to chart the way forward. 

These “democratic revolutions” have been halted at a stage similar to that of the February 1917 revolution. They have been marked by a naïve generosity of the masses towards their class enemies and a lack of class polarisation. The working class has not been able to emerge as an independent class force. The immediate beneficiaries have often been bourgeois nationalist or even neo-liberal parties. Nonetheless, such revolutions indicate an enhanced role for the working class in the semi-colonies in the future. 

The most dangerous influence for the new proletariat in the imperialised world is bourgeois democratic nationalism which frequently masquerades as social democracy or real reformist “socialism”. Stalinism’s popular front strategy remains an enormous obstacle at the level of the trade union apparatuses and in the mass organisations. The world crisis of Stalinism, emanating from events in Moscow and Beijing and their repeated concessions to imperialism, all indicate a prolonged crisis of leadership in the newly strengthened labour movements of the semi-colonial world.

Under Gorbachev and Deng Stalinism is exerting an ever more pro-imperialist influence on the semi-colonial bourgeoisie.  turn to the market by Moscow and Beijing has led bourgeois nationalists throughout the semi-colonial world to capitulate to neo-liberalism. In the name of the end of “world polarisation” between the USA and the USSR the semi-colonial bourgeoisie has tended to distance itself from Moscow and become more friendly towards imperialism. 

Turning their back on the import-substitution industrialisation strategy of the 1960s and 1970s, these regimes are calling for more multinational investment as the only road to development. According to their new credo the cause of underdevelopment is no longer imperialist super-exploitation, parasitic oligarchy and social inequality. Instead, lack of incentives for attracting foreign capital, too many social reforms and the absence of inducements for the local capitalists to enrich themselves are pin-pointed as key problems. 

For the semi-colonial bourgeoisie in the 1990s the IMF is no longer the main enemy. It is scen as the only source of support and in return its loan re-payment conditions have to be respected above all else. In the past the semi-colonial bourgeoisie paid lip service to the idea of raising the wages of the poor to increase demand in the internal market. Today the stress is on offering cheap labour as a magnet for foreign capital. The bourgeois nationalists advocate de-nationalisation, cutting real wages, the sacking of “uneconomic” workers and the establishment of free economic zones where all labour protection is abolished and taxes and tariffs are non-existent. 

A decade or so ago, such measures could only have been implemented by a vicious right wing dictatorship such as that of Pinochet. Today bourgeois nationalists seek to carry out this ultra-reactionary package through “democratically” elected governments relying on extensive military repression to enforce its measures.

The death agony of Stalinism in the degenerated workers’ states

During 1989 a series of mass popular revolutions swept through the countries of Eastern Europe. The power of the Stalinist bureaucratic dictatorships was weakened or destroyed.

The heart of the crisis of Stalinism is Gorbachev’s USSR, which is wracked by a prolonged factional struggle between marketising reformers of varying degrees of radicalism and bureaucratic conservatives. This five year struggle has allowed the growth of social forces independent of the apparatus and of embryonic political parties from the social democratic through the liberal to the fascist.

The Soviet federation is on the brink of breaking up into its component republics. The nationalist movements have gone beyond the stage of purely political unrest: some have initiated armed actions against other nationalities as well as against the central state. Most importantly the Soviet proletariat has re-awak-ened. We have witnessed the re-birth of a Soviet labour movement free of bureaucratic control.

This is indeed the death agony of Stalinism. The process may turn out to be more or less protracted but its outcome is not in doubt. A momentary triumph of bureaucratic counter-revolution, even if bloodily executed, could only preserve a restricted and shrunken area of Stalinist rule for a few years. Unlike previous crises that have wracked one or another of the degenerate workers’ states, this is a general crisis affecting them all. Its outcome will determine the character of the international class struggle for an entire historic period.

The origins of the crisis in the USSR

The roots of the present crisis go back at least 15 years. From 1975 onwards the creeping stagnation of the USSR economy was exacerbated by the political immobilism of the Brezhnev gerontocracy. Despite the unprecedented world role of the USSR a mounting crisis lay behind the confident façade of the Brezhnev era. In the early 1980s the new Cold War launched by US and British imperialism included a massive round of rearmament. This placed new burdens on the USSR at a time when it was least equipped to meet the challenge. The imperialists’ declared aim was to break the back of the Soviet economy and force a major political retreat upon the Kremlin. In essence this strategy has proven successful.

Up to 1985 the Soviet bureaucracy saw no alternative to the continued attempt to mobilise the planned economy to meet the full cost of the Cold War arms race with the USA. It had some success against imperialism. The war drive put considerable economic and political strains on the NATO alliance. Massive peace movements in Germany and Britain created a sympathetic response to Soviet peace propaganda. Opposition to Reagan’s Star Wars programme grew within the US Congress; his West European allies were openly sceptical about it. Often Reagan had only Thatcher whole-heartedly behind him. For AndropoV and Chernenko the continuation and intensification of the “peaceful offensive” was the only possible re-sponse to Reagan.

When Gorbachev was chosen by the bureaucracy he immediately launched a more active disarmament offensive designed to force US concessions or, failing that, to increase tensions and splits between Reagan and his European allies. In addition, the USSR indicated its willingness to co-operate in solving the “crisis points” in Afghanistan, South East Asia, the Middle East, Central America and Southern Africa. Then Gorbachev was obliged to turn to internal matters.

In 1985-86 press censorship was relaxed to allow criticisms of Brezhnev and the “years of stagnation” and to open the attack on corrupt and incompetent bureaucrats. As early as mid-1986 differences erupted between Gorbachev and Ligachev, indicating deep divisions within the bureaucratic caste. Ligachev stuck to the Andropov formula of a highly centralised drive for discipline and production on the East Ger-man model.

Gorbachev counterposed to this perspective a cautious move towards concessions to the market-inde-pendent enterprises obliged to make a profit, with a much weakened role for Gosplan. Bukharin was reha-bilitated and often invoked to support this policy. The struggle between the two factions became especially intense in the period of October1986 to January 1987.

Faced with an impasse in the bureaucratic faction fight Gorbachev used the media to encourage the mobilisation of the intelligentsia. Ligachevite and Brezhnevite old-guardists in the Ukraine, Armenia and Leningrad were identified and attacked by anti-corruption campaigns. In spring and summer 1988 wave of de-Stalinisation was unleashed. The full scale of the Stalin atrocities began to be revealed. Informal groups and clubs were formed and a campaign for a monument to Stalinism’s victims was set up.
The new groups ranged from the fascist Pamyat to the Social Initiatives Club of Boris Kagarlitsky (now called the New Socialist Party) which defined itself as “the left wing of perestroika” and called for pluralist democracy and self-management. Despite receiving considerable behind the scenes support from the KGB and the “conservative” wing of the bureaucracy Pamyat is essentially a restorationist organisation.
In autumn 1987 the nationalities began to stir. In Armenia, the first of the republics to be touched, the movement had reached such proportions by November 1988 that it had to be repressed. Nationalist agitation spread to the Baltic states. The People’s Front in Estonia and the Sajudis in Lithuania grew enormously in influence, the latter claiming 100,000 members and winning 30 out of 42 seats in the March 1989 elections to the Congress of People’s Deputies.
Gorbachev’s pursuit of glasnost and a series of constitutional changes, centring on a general attempt to separate party and state structures, has gone much further than a simple restructuring of the economy.
Nevertheless, certain areas have resisted the reform programme. Agriculture has barely been touched. Given the absence of large scale market relations in the USSR and given the social weight of the proletariat Gorbachev’s economic plan faces enormous obstacles. Attempts to turn kholkhozniks (collective farm-ers) into private farmers or to sponsor co-operatives have so far evoked little response, either because of their lack of appetite for small scale land ownership or due to obstruction by the kholkhoz bureaucracy.
A rational pricing system is impossible without a convertible rouble, but this would require huge price rises and real wage cuts. It would lead to the opening up of staggering inequalities as unprofitable enter-prises went bankrupt and workers became unemployed. Gorbachev and the entire bureaucracy have repeatedly temporised and retreated whenever they approached the decisive moment for unleashing such measures. Gorbachev has also been obliged to devote much time to weakening and removing his factional opponents within the bureaucracy before he dares to take the full risk of unloading the crisis of bureau-cratic planning onto the backs of the working class.

The crisis in Eastern Europe

For years the existence of old-style hardline regimes in Eastern Europe was a thorn in the side of the Gorbachev faction. Economic reform dictated a massive scaling down of the Soviet troop presence there and Gorbachev needed leaderships committed to his policy firmly in place throughout Eastern Europe. He hoped to carry out a slow controlled reform of the degenerate workers’ states to advance this objective. But resistance from the frightened conservative bureaucrats and increasing pressure from below for the legalisation of opposition groups, created an explosive situation throughout Eastern Europe. The apostle of reform unwittingly and unwillingly became the herald of revolution.
The entire peaceful reform project of the East Euro-pean bureaucracies is now in ruins. Gorbachev’s plans to restructure the Soviet economy are in total disarray as a result of the revolutions which shook Eastern Europe and now threaten to engulf the USSR itself.
The revolutionary situation in Eastern Europe was initially focused on the struggle for democratic goals, and led by a coalition of liberal democratic, social democratic and reformist Stalinist opposition groups. Unified in a series of Forums, these amorphous bod-ies were initially devoted to organising mass demonstrations.
Elements of independent proletarian organisation appeared in every country during the opening months of the revolution. Thanks to the misleadership of the opposition in the first phase these movements were restricted to fighting for democratic rights and bourgeois parliamentary-type institutions, instead of for working class power.
With the granting of “free” elections the independent organisations were demobilised. The potential for proletarian political revolution which these organisations created was not realised due to the absence of a revolutionary leadership determined both to defend the instruments of the planned economy and to over-throw the Stalinist dictatorship.
In every country the outcome of the initial phase of revolutionary upsurge resulted in the self-limitation of the masses to democratic goals, the demobilisation of mass struggle and its diversion into electoral activity. The result of this failure was the triumph of pro-market restorationist forces, the emergence of far right nationalism on the fringes and the almost total marginalisation of the centrist anti-Stalinist left.
The course of democratic counter-revolution in Eastern Europe followed the law of uneven and com-bined development. There was considerable unevenness in the outcome of the 1990 elections. In Hungary, Czechoslovakia and the German Democratic Republic (GDR) even the most market-orientated Stalinists were clectorally crushed. In Hungary and Czechoslovakia centre-right bourgeois governments committed to a programme of capitalist restoration were in-stalled. In the GDR the sweeping victory of the CDU led to a popular front government with the SPD committed to capitalist restoration and unity. By early July the former was achieved and the latter was only a few months away.
In Poland the Stalinists still clung to a major share of power thanks only to the fact that the bureaucracy made concessions before the wave of revolutionary events of late 1989. With the prompting and aid of imperialism Walesa has declared open war on this popular front compromise. He aims to utilise Solidarnosc to oust the Stalinists by getting himself elected President. He seeks to purge the nomenklatura and subject the Polish economy to another- this time decisive -“big bang”
In contrast, in Bulgaria and Romania the Stalinists still cling to a monopoly of political power. In Romania the dissident ex-RCP members and the “reform” Stalinists put themselves at the head of the mass revolt against Ceaucescu and benefited from the prestige this bestowed. Drawing lessons from this event the Bulgarian Stalinists pre-empted revolution by instigating a programme of controlled but radical reform. In both countries the weight of the peasantry and the relative weakness of the petit bourgeois intelligentsia enabled the Stalinists to retain power.
Nevertheless, the Stalinist-led governments in Bulgaria and Romania are bureaucratic pro-capitalist workers’ governments. Both have issued restorationist declarations of intent yet their final orientation is not decided. Political life remains dominated by a more or less intact bureaucracy which is not yet ready for an immediate capitulation. The governments vacillate between this state bureaucracy – loath to give up its privileges and its monopoly of power – and imperialism and its local agents. Both countries have made concessions to the IMF and the EC, without decisively splitting from the conservative bureaucracy.
Imperialist pressure, economic disintegration and developments both internally and in the USSR will all contribute to resolving this unstable equilibrium.

The events of 1989–90

The initial results of the popular upsurges of late 1989 could be characterised as a kind of “dual power”. The Stalinists at first remained in office even where they were a minority in the new governments, but their power was withered. The party militias were rapidly dissolved and the police and the army dared not en-force a crack down.
The possibilities for proletarian political revolution as well as for social counter-revolution were created by the disintegration of the Stalinist apparatus of re-pression. But the class nature of the state did not change as a result of the Stalinists’ loss of power; the post-capitalist property relations did not change over-night as a result of these actions. In all the degenerate workers’ states the form of the state apparatus had always been bourgeois. As a result of the democratic revolutions it became a less reliable weapon for the Stalinists and opened itself up to penetration by pro-bourgeois forces.
With the rie to power of openly or entirely pro-bourgeois governments, or popular front governments committed to restoration, or even to bureaucratic workers’ governments pledged to capitalist restoration, the situation entered a new phase. All the new governments proclaimed their intention to restore capitalism. But they do not all possess the same means to do so in the short term.
The various right wing governments in Eastern Europe are conducting a holding operation over the statified property relations, pursuing various preparatory reforms and austerity measures but not as yet decisively dismantling the apparatus of the bureaucratic workers’ state and integrating it into the imperialist camp. This remains true even in Hungary where, at the moment of writing, the plan still determines the allocation of resources between the big state industries. In Romania and Bulgaria we are undoubtedly likely to witness an even more protracted period of restoration.

The phases of restoration

The destruction of the workers’ state and the restoration of capitalism involves several interlinked political and economic tasks. First, the restorationists struggle for complete control of the state machine. They have to secure and deepen political pluralism and win free elections, secure the abolition of the leading role of the party, dissolve the party militias and the Stalinist controlled secret police. They also have to totally destroy the Stalinists’ hold over the Interior and Defence Ministries. Once a government establishes this control over the state machine the hardliners are thereby deprived of any base within it for organising a come-back.
The establishment of a government able and willing to separate the state power from the Stalinist bureaucracy and use its monopoly of armed force to defend private property constitutes the bourgeois political counter-revolution. From this point on, the state apparatus is bourgeois. It must then proceed to dismantle the remaining proletarian property forms the state monopoly of foreign trade and central planning. After ths is accomplished, private property can be restored to a commanding position in economic life over a more or less prolonged period.
For a long period a large state capitalist sector can co-exist with newly-privatised industry. The restoration process can and will involve an extensive stage liquidating the remnants of the command economy. During this time the full gamut of the horrors of actually existing capitalism will descend on the working class creating the objective basis for mass resistance and the rediscovery of political class consciousness.
In Poland, although the state apparatus is not yet completely in the hands of pro-bourgeois elements, the Masowiecki government has set about preparing the ground for a decisive onslaught on the planned
economy. There have been massive rises in prices and taxes, and reductions in state subsidies for health, transport, housing and food.
The aim of these measures is to restore a balanced budget, conquer inflation and forge a stable convertible currency. This has gone hand in hand with legislation to allow private and foreign ownership of industry. In addition the right of foreign owners to repatriate their profits exists although in a restricted form. In Hungary and Czechoslovakia much more has been achieved in this direction. But even here capitalism has not yet been restored.
These measures prepare the ground for a restoration: without them no major investment and accumulation can be undertaken, no stable native capitalist class can emerge, no extensive pattern of trade with the capitalists’ world will evolve, no viable long term market for goods and services can be built.
Overlapping with this phase, but taking longer to fully implement, will be the radical restructuring of industry and finance. A national capitalist class will have to be created by stimulating small private commercial enterprises and by creating entrepreneurial industrial capital. This process will be accompanied by the wholesale closure of unprofitable industries, particularly in the sector of heavy industry.
Even in Hungary and Yugoslavia most or all of industry remains in the state sector. Those factories that can be made profitable will be privatised. Some will fall into the hands of the imperialist transnationals, some will be sold to bolster an indigenous capital-ist class, others will be closed down.
In Hungary, Yugoslavia and Poland this process is actually impeded by the chosen method of privatisation: the parcelisation of enterprises between small shareholders as well as western capitalists. In these countries the closure and privatisation programme is creating a huge reserve army of labour. Despite its socially explosive potential it provides a pool of workers essential to the creation of a genuine “free” labour market and a fully stratified system of wage rates, without which a competitive capitalism is impossible.
When industry is pared down to its narrow, potentially profitable base then a fully functioning stock market would need to facilitate and regulate the free movement of capital in each of these countries. The bureaucratic planning mechanisms will be dismantled in direct proportion to the success of this process of restoration. If the restorationists get their way the centralised regulation of investment, prices and labour will end, although an indicative planning system may remain for residual state industries. The conversion of the statified economy into a mixed economy composed of private and state capitalist trusts would mark the final definitive act of the restoration of capitalism.
Only in the GDR is this process complete. Here there has been no organic indigenous process of creating a capitalist class or of steadily introducing pro-capitalist measures. The whole process has taken place all at once by the simple act of surrendering the economic sovereignty of the GDR to the West German state and capitalist class.
These special circumstances cannot be reproduced elsewhere in Eastern Europe. The pre-existence of a German bourgeoisie with a history of political and economic ventures in the GDR, the illegitimacy of the division of Germany, the GDR workers’ opportunity to be incorporated into one of the world’s strongest imperialisms, were conditions uniquely favourable to a rapid restoration. Here alone has a quick, legal and peaceful destruction of a workers’ state taken place.
The greater power and weight of the imperialist state apparatus will be used to complete the purge of any remaining Stalinist personnel in the ex-CDR who cannot be trusted to make the transition to civil servants of the German bourgeoisie or who are simply surplus to requirements. This task will be completed by or soon after formal unity between the two states.

“Peaceful” counter-revolution

In the GDR capitalism has been restored. In Hungary, Poland and Czechoslovakia the post-capitalist property relations are under attack from all sides. In all these countries privatisation of state industry has begun in earnest. All this has happened so far without class-wide resistance, still less civil war. The conditions which allowed this to happen and which could enable it to continue are:
a) The disintegration of the military/police power of the bureaucracy and the declared unwillingness of the Soviet Armed Forces to defend its clients.
b) The working class voluntarily accepts the restoration of capitalism and does not feel that the gains of the post-capitalist society are worth defending because they have become synonymous with privileges for the nomenklatura
c) Imperialist political and economic support is on a sufficient scale to prevent economic collapse during the transition period.
d) Pro-capitalist leaderships are installed in the workers’ movement and are able to survive through the long and painful process of restoration.
All four conditions applied in the GDR and account for the peaceful overthrow of the degenerate workers’ state. Struggles against the effects of capitalist restoration are inevitable, but their timescale will depend on the effects of restoration on the working class. The fact that the Federal Republic of Germany (FRG) is an imperialist state and the richest one in Europe at that, means that a revolutionary development of these struggles in a newly united Germany is the least likely outcome in the near future.
Will these conditions be repeated in the other countries of Eastern Europe? Already we can see that important, even decisive differences exist. Whilst the Soviet bureaucracy has abandoned all hope of retaining its Eastern European buffer zone, let alone of preserving a bureaucratic planned economy there, the other factors for a rapid restoration are as yet generally absent.
Whilst the working class – with the partial exceptions of Romania and Bulgaria – generally fails to identify the planned property relations as a gain, and has illusions in capitalist prosperity and bourgeois democratic freedom, the actual course of restoration will not realise these hopes. Millions will face unemployment and austerity on a scale outside of their previous experience. They will face semi-colonial poverty and servitude, not the relative prosperity of an imperialist country.
To push through savage austerity programmes the bourgeois governments will be forced to resort to ever greater armed force. These actions will clash with the democratic illusions of the masses stemming from the initial period of the mass struggle.
There will not be sufficient imperialist aid to enable the governments to avoid such confrontations. Apart from the GDR, imperialist economic intervention in Eastern Europe remains weak-far smaller in scale than the Marshall Plan. Powerful objective forces tend to undermine the present pro-bourgeois consciousness of the masses.

The prospect of political revolution

Revolutionaries should not complacently take comfort from a supposedly objective process of political revolution any more than they should abandon the battlefield because of the bourgeoisie’s initial successes. The experience of Solidarnosc indicates that the bourgeoisie can establish powerful agents within the new trade unions. Turning defensive struggles against privatisation, mass unemployment etc, into a conscious struggle against the restoration of capitalism – into a proletarian political revolution – requires the resolution of the crisis of leadership, namely the ousting of the pro-capitalist existing leaderships.
The revolutionary period which opened up with the fall of Honecker and Jakés is not permanently closed by the election of the restorationist governments and the success of the democratic counter-revolution. It is a counter-revolutionary phase within a more general revolutionary period in Eastern Europe.
Everything points to a renewed upsurge in mass struggles with the possibility of breaking the masses from their illusions in capitalism and bourgeois democracy during the drawn out crises of capitalist restoration. To ensure victory in these struggle the creation of revolutionary Trotskyist parties is a burning necessity.
In addition to all these obstacles to any peaceful process of restoration the USSR is now on the eve of a revolutionary crisis. A history of national coercion, forcible annexation and Russian settlement has meant that the USSR is not a free federation of peoples. The right of self-determination up to and including separation, although contained in the constitution, is completely fictitious.
Gorbachev initially won the support of the nationalities for his exposure of Stalin’s crimes against them. This enthusiasm rapidly faded when it became obvious that his deals with republic and all-union conservatives meant that he could not deliver any real concessions on national independence. The movements are now out of his control.
Secession and independence are the order of the day from Lithuania to Azerbaijan. The Popular Fronts
in these countries were generally formed as a bloc between pro-perestroika party officials and pro-bourgeois nationalists. In the Caucasus the incumbent Brezhnevite bureaucracy played with the fire of national chauvinism in order to deflect mass anger. As the crisis has deepened the various Fronts have given birth to crystallised separatist and restorationist forces – for example in Azerbaijan, Georgia and Lithuania. Both conservative and Gorbachevite bureaucrats have been outflanked, despite their attempts to outbid the nationalists in chauvinist demagogy.
The struggle for the right to self-determination, and against all forms of national oppression, are an integral part of the programme of political revolution. Nevertheless, a struggle for secession also contains a potentially reactionary dynamic. Not only does it contain the danger of capitalist restoration: given the present leaderships it poses the far more immediate threat of the persecution of the national minorities which exist in virtually every Soviet republic, and even of pogroms against them.
Far from being the focal point of the anti-bureaucratic political revolution the mass nationalist agitation threatens to divert the workers away from revolutionary struggle. If the Soviet proletariat steadfastly defends the right to self-determination with deeds as well as words then it can still win the oppressed nationalist masses from their reactionary leaders and lay the basis for an all-USSR political revolution.

The USSR at an impasse

If in 1989-90 Eastern Europe was the main focus for events shaking the old world order, in the coming period the USSR’S own crisis and how this is resolved will have a massive effect on the further course of events in Eastern Europe. The first victim of this approaching crisis is Gorbachev himself. Within the USSR his prestige stands at an all time low. All his projects – political and economic – have merely un-leashed greater and greater crises.
The politics of Gorbachev and his factional grouping have developed in a desperate pragmatic response to the deepening crisis of bureaucratic rule, the failure of successive proposals for change and confrontations with various bureaucratic oppositions. He has constantly adjusted his economic policies to what it is possible to gain a concensus around given the existing balance of forces within the bureacracy. The economic changes involved in perestroika have not satisfied any section of the bureaucracy, and they have made life ever more unbearable for the masses. Large elements of the old system have been dismantled but no attempt has been made to create a functioning new system. The laws on co-operatives and on leasing property and enterprises have failed to meet the demands of the marketeers. At the same time these measures have alarmed the bureaucratic conservatives, who have it in their power to obstruct and sabotage any reform. In the aftermath of the 1989 miners’ strikes the central planners, from Rhizkov through to Ligachev, were able to postpone and stall
certain reforms.
The outline of the Thirteenth Plan published in November 1989 was far from a victory for the pro-market faction. The strike wave of summer and autumn 1989 put the pro-market faction on the defensive. Yet the measures of Rhizkov and the planning ministries failed to galvanise the economy. The Rhizkov proposals of spring 1990 on price rises failed to secure sufficient support in the Soviet parliament. They were recognised as aiming to boost the central state bureaucracy’s revenues without doing anything to introduce structural changes in the economy. The Abalkin faction resisted price rises until and unless they were accompanied by major reforms of the planning ministries (i.e. the destruction of their power to regulate economic life).
Abalkin’s alternative measures of a sweeping pro-gramme of legislation to create a stock market, denationalising and deregulating the state sectors and encouraging capital accumulation failed to convince the forces of conservative opposition within the bureaucracy itself. The stalemate continues.
Whereas in Poland Solidarnosc has been used to sell a restorationist austerity package to the workers, it will be difficult to convince the newly emergent Soviet trade union movement to sell its members cuts in real wages and introduce mass unemployment. This workers’ movement is already a battleground be-tween the advocates and the opponents of Abalkin-style shock marketisation.
The acute crisis of the bureaucrats’ plan has driven many workers to seek to destroy its grip on their fac-tories and mines. Hence the popularity of the slogans of workers’ self-management on a factory by factory basis, with co-ordination and distribution left to market forces.
This is the point of entry for Abalkin’s influence. Self-management can be combined temporarily with co-operative ownership or even worker shareholders. It is a short step from this utopia to “popular capitalism”. Whilst these bourgeois ideological influences cannot indefinitely grip the new labour movement, they could disorient it at a crucial moment.
Boris Yeltsin was elected to the presidency of the Russian Republic by an unholy alliance of anti-Gorbachevite radicals and conservatives. This is reflected in his demagogic opposition to the Rhyzkov Plan both because of the price rises it involved and because it did not move decisively enough toward a complete market economy. Yeltsin and the conservative Poliakov, elected as party chief of the new Russian party, have faced Gorbachev with a dilemma. He cannot continue to fudge the choice between market and plan for much longer.
Only an alliance with Yeltsin and the new mass forces outside the CPSU could break the log jam for Gorbachev. Yeltsin could probably win a year or so of leeway for an Abalkin-style plan with the working class, the nationalities etc.
This would mean all out war with the conservatives and the leaden rump of the 18 million strong army of bureaucrats, but the alternative would mean a struggle against the vast array of social forces that perestroika and glasnost have mobilised. A decisive choice and a decisive struggle are approaching.

Gorbachev’s weak Bonapartism

Gorbachev has created a power base outside and independent of the party and the state apparatuses. His creation of the executive Presidency and the Presidential Council give him a new constitutional authority on an all-Union basis.
This was supposed to put him beyond the reach not only of a conservative majority in the Central Committee but also of the CPSU Congress. Gorbachev hoped thereby to overcome conservative bureaucratic resistance and to be able to move against mass organisations should they escape his control.
Despite the fact that his rhetoric has come closer to that of the radical marketeers, Gorbachev cannot yet be characterised as an outright restorationist. He still searches to harmonise bureaucratic interests and those of the reformers. His base still consists of the bulk of the bureaucracy, whose immediate caste interests are opposed to the restoration of capitalism. In contrast Yeltsin bases himself on the lower ranks of the bureaucracy and especially the labour aristocracy. In a Bonapartist fashion Gorbachev has tried to stand above the contending forces of bureaucratic conservatism and proletarian political revolution while serving the interests of the former.
But Gorbachev’s Bonapartist authority has proved a broken reed. The oppressed nationalities, the civil rights activists and the working class have all taken action in defiance of his decrees. The workers are fighting for their democratic rights, for free trade unions, freedom of assembly, the right to strike, for improvements in wages, for greater equality, and against bureaucratic corruption. The foundation of an independent miners’ union and of the Confederation of Labour representing millions of Soviet proletarians, opens a whole new phase of the crisis.

The coming revolutionary crisis

The USSR is moving rapidly towards a revolutionary situation. This is shown by the mounting economic shortages, the mushrooming of independent workers’ organisations and the results of the spring 1990 local elections which saw wholesale defeats for party candidates. A split in the CPSU at its July 1990 Congress was avoided, but the way is now open for the formation of rival parties. In vast areas of the USSR inde-pendent parties will easily obliterate the CPSU in any free elections.
Faced with this growing crisis of bureaucratic rule and the threat of revolution, it is not impossible that the inner core of the bureaucracy may launch a pre-emptive strike in the form of a Bonapartist coup led by Gorbachev himself or by one of his opponents. But as long as the period of mass struggles continues and even intensifies a coup could be only a temporary bureaucratic solution. It would inevitably call forth massive protest and resistance. The crackdown would probably be repulsed and create in the process an outright dual power situation such as occurred in Eastern Europe in 1989.
Gorbachev’s role as the holder of the balance be-tween the decaying caste and the growing mass forces still gives him some room for manoeuvre. But itis increasingly clear that his Bonapartism expresses the senility of the bureaucratic caste. He is the Kerensky of the political revolution: his rule will merely be an interlude in the inevitable decline of Stalinism. What comes after him will depend on the ability of the Soviet proletariat to achieve historic class consciousness as expressed in a programme and a party.

China

The 1970s witnessed an uneasy truce within the Chinese bureaucracy presided over by Mao and the Gang of Four. The result was a steady decline in growth rates in all sectors except heavy industry. It was against this background that a radical turn towards reliance on market forces to stimulate production was adopted under Deng Xiaoping in 1978.
The first phase of this strategy effectively restored private farming in China and, by virtue of removing the straitjacket of bureaucratic supervision, gener-ated a rapid increase in output. Increased rural prosperity necessarily entailed stratification as capital was accumulated by a minority of farmers. Continuing central control based on state procurement at below market prices antagonised farmers and encouraged corruption within the bureaucracy.
The second phase of Deng’s strategy was aimed at repeating the market experiment in the industrial sphere. Bureaucratic controls were relaxed on the basis of increased enterprise autonomy, and investment was increased by encouraging foreign capitalist investment and loans. Although some branches of production saw rapid growth this was by no means uniform, nor was it beneficial to the economy asa whole. By 1988 the consequences had spilled over into agriculture.

The road to Tiananmen Square

The technical intelligentsia played a central role in the growing political crisis of 1988-89. Based in factory management, in the university and research institutes and in the ministries, this stratum demanded freedom of speech and of publication as it tried to grapple with the contradictions andrigidities of the economy. Leading sections of the bureaucracy recognised the importance of such academic and scientific freedoms. They encouraged discussion as a way of mobilising mass support for their own factional battles, in par-ticular against the proponents of a return to more traditional centralised planning.
Against a background of steadily mounting economic disorder the debate broke out of the ordained bureaucratic channels and flooded onto the streets and into Tiananmen Square. It was the students who opened the floodgates and generalised the demands into an attack on bureaucratic rule, privilege and
nepotism which was then taken up by workers in all the major cities of China.
It is a measure of the disunity of the bureaucracy that more than two months of steadily developing mass mobilisations passed before the movement was broken under the People’s Liberation Army’s tank tracks. It is also testimony to the deep social roots of Chinese Stalinism in the countryside, and thus in the army, that it was able to muster such a crushing blow to so widespread a movement.
The prime mover behind the repression of the democracy movement was Deng Xiaoping, but he had to rely on other forces-principally the PLA gen-erals-whom he had attacked in carlier phases of his economic plans. In the aftermath of Tiananmen these forces have insisted on having their say and have proclaimed a return to centralised planning and tight restrictions on all economic development. Neither the army nor the CCP is able to fully enforce these decisions. They are split over the question and key agents, particularly in the foreign and economic ministries, are fundamentally opposed to them. Whilst no mercy has been shown to plebeian opponents of the regime there has been no systematic purge of the bureaucracy. The factions battle on behind closed doors.

The aftermath

Repression has driven the opposition underground but it cannot eradicate that opposition, nor enthuse the workers to raise production. The growth of working class organisation during the spring of 1989, ex-pressed in strikes throughout China after the massacre of Tiananmen, was too great to be bureaucratically liquidated. The bureaucracy tried to limit coverage of the downfall of Ceausescu; nevertheless there were demonstrations in support of the Romanian Revolution, showing that an organised opposition still exists.
The political character of this underground movement is far from crystallised. The Federation for a Democratic China – the leading force in the external opposition – clearly shows the influence of the overseas Chinese bourgeoisie through its overtly restorationist programme. The decision of the major imperialists to continue to negotiate with Beijing has tended to abort the development of a coherent and organised opposition leadership.
The decline in industrial production – 2% per month since September 1989 – shows the hostility of the working class and the economic impasse created by the bureaucracy’s attempt to return to greater central planning, Unlike the East European regimes, Beijing is not dependent on Moscow for its short term survival. It will not collapse overnight like Honecker’s or even Jakés’: the accumulating contradictions will be resolved on the basis of their own rhythms and tempos. Nevertheless, the contradictions of bureaucratic planning which produced the crisis in the USSR also operate in China.
China has been subject to more frequent and greater crises than those of the USSR. Since the 1950 they have occurred at virtually ten year intervals. The principal contradictions of the Chinese economy lie between the political and economic forces rooted in extensive free market developments in the countryside and the attempt to return to a more highly centralised control of industry. Imperialism has decided to return to its strategy of continued economic assistance and trade links, in the firm belief that in the long run they will re-kindle a pro-western political movement and, at the same time, corrode the economic controls and power of the bureaucracy.
The longer the bureaucratic dictatorship suppresses the political expression of the dynamic tendencies within Chinese society, the greater will be the explosive pressure that will be created. This fact, together with the extensive state resources still held by the bureaucracy and its continued base of support within the peasantry, indicates that the political revolution in China will be more convulsive and socially divisive than was the case in Eastern Europe in 1989-90.

Vietnam: on the Moscow road

Vietnam’s version of perestroika (bo dai) has taken the country down the road of restoration at a brisk pace. Dollar parity for the currency, the elimination of many subsidies and the encouragement of capitalist investment-including changes in labour legislation enabling redundancies-have led to unemployment reaching 20%.
These changes, coupled with diplomatic overtures to the same US imperialism which massacred so many Vietnamese during the war,are sure signs of Hanoi’s intention of following Moscow’s lead. An integral part of this policy shift has been the with-drawal of Vietnamese troops from Kampuchea and negotiations which are aimed at opening the road to a pro-imperialist National Unity government involving the monarchists and the Khmer Rouge.


The Last Bastions? Cuba, Albania and North Korea
In Cuba Castro has resisted the marketising reforms that are sweeping Eastern Europe and the Soviet Un-ion, despite pressure from Moscow. He has character-ised a number of East European CPs as “betrayers of socialism” and has tried to present himself as the guardian of the “socialist system” against those preaching a return to capitalism. Castro’s “defence” of planned property, however, is typically bureaucratic and counter-revolutionary.
He has sought to win support for his regime from various semi-colonial bourgeois governments by sug-gesting that the continued existence of his dictatorship will act as a counter-weight in their negotiations with their imperialist bosses. His state visit to Brazil gave left cover to Collor’s anti-working class meas-ures and he supported Peres in Venezuala against the Caracas food rebellion. He also bears a large measure of responsibility for the systematic concessions made by the FSLN and the FMLN to the bourgeoisie and for facilitating the Moscow-sponsored settlements favourable to imperialism in Southern Africa (e.g. Namibia and, potentially, Angola).
The Cuban economy faces a deepening crisis. Although the USSR maintained its commitments up until 1990, it has declared that starting from 1991 its enormous subsidies will be phased out. The changes in Eastern Europe and the insistence of the degenerate workers’ states that they must be paid in hard currency, have led to considerable dislocation in the Cuban economy and growing discontent, especially amongst the youth.
Castro hopes that by recreating the revolutionary enthusiasm of the “Bay of Pigs” era by calling on the masses to fight to the death for “socialism” and against US imperialism he will arouse mass support for his regime. But without subsidies at least as big as those currently received from the USSR, the Cuban degenerate workers’ state will collapse. The exiled Cuban bourgeoisie and its US bosses are eager to reclaim the only workers’ state in the western hemisphere; but the coming crisis will also open up the possibility of the revolutionary overthrow of the Castroite bureaucracy.
In the first half of 1990 the last remaining bastions of the Stalin cult, Albania and North Korea, both showed signs of beginning to follow their fellow bureaucrats down the road of reform. Mass demonstrations in the Albanian capital of Tirana were greeted with repression on the one hand and concessions on the other. Hard-line ministers were fired, dissidents were allowed to emigrate via western embassies and the first economic and political overtures were made towards imperialism (e.g. the request to join the Euro-pean Security Council).
It seems unlikely that the Tirana bureaucrats will be able to resist the tide of change for long. North Korea’s desire to improve relations with the South is currently blocked by the latter’s intransigence. Here too the pressure on the North from imperialism, from the USSR and from internal opposition will eventually lead to change.

The world capitalist economy in the 1980s

From slump politics to the long recovery

During the second half of the 1970s – the economic recovery period – British Conservatives and US Republicans both found themselves in opposition. They set out to fashion a new economic policy, often given the name “monetarism”, which was their emblem as the capitalist trailblazers of the 1980s.
Monetarism was never a coherent concept nor was it ever consistently put into practice. Its high point was the application of pro-cyclical monetary meas-ures during he 1979-82 recession. Its objective was to force inefficient firms out of existence and compel the rest to radically improve the relations of exploitation under the pressure of mass unemployment. Government was to aid this process by a fierce anti-union policy, by radically reducing the tax burden on capital and by reducing the level of welfare programmes.
By means of a severe slump it was hoped to squeeze inflation down to pre-1970s levels. Despite rhetoric about promoting small enterprises the effect of all these policies was to encourage the centralisation and concentration of capital.
The USA’s use of high interest rates after 1978 ensured that from 1980-82 the world capitalist economy was plunged into the deepest world recession since the Second World War. It was a more generalised recession than that of the mid-1970s. By 1983 inflation within the OECD countries was half that of the average 1970s level. Real wages fell in the USA by 6% during 1979-82.
In 1982 these policies were abruptly abandoned in the USA. As the biggest market for goods and serv-ices in the world the USA sought to stimulate a global recovery.
To boost world demand and revive production in Japan and Europe it adopted a policy of budget deficits, tax cuts and increased defence spending, stimulating consumer credit. The policy largely succeeded and Japan and Europe expanded as a result.
Between 1982 and 1985 the USA acted as the locomotive of the world capitalist recovery. But the budget deficits could only be covered by absorbing over half of domestic savings and by a massive inflow of capital from abroad.
In order to attract these funds US interest rates had to be maintained at a high level. The dollars exchange rate thus remained high. In turn, however, high interest rates depressed domestic industrial investment and the high dollar decimated US exports while boosting imports. The result was a burgeoning trade and balance of payments deficit.
As a consequence of these policies the USA went from being the world’s biggest creditor nation in 1981 to becoming the world’s biggest debtor by 1985. This situation could not continue and demand for the dollar fell away from spring 1985. This was a signal for a major change of policy.
Not daring to further boost interest rates the US administration forced the dollar down in order to boost exports and cut the deficits. This policy was also designed to force the hand of Europe and Japan to take some responsibility for sustaining the global recovery.
A mini-recession took place in 1986 as global macroeconomic policy co-ordination between the major powers faltered under the impact of the change of US policy. However, new agreements on exchange rate levels and a huge reflation programme by Japan allowed a new equilibrium to appear and the recovery to continue to the end of the decade.
The recovery was further prolonged by the co-ordinated response to the October 1987 stock market crash.The imperialist countries worked in concert to reduce interest rates, in order to prevent the crash precipitating a slump in the USA, which in turn would have dragged the world economy into recession. The essential reason for the crash was the weak profitability base of the major companies which could not indefinitely sustain the post-1983 speculative surge in world stock market values
The markets recovered because Japan was able to take the strain. The Far East giant was already acting as the major locomotive of world investment and demand by pursuing a policy of high levels of busi-ness investment and domestic demand together with the liberalisation of trade. After October 1987 the USA and Japan acted to lower interest rates, thereby easing the debt situation of companies in the wake of the crash.
Those countries with the strongest currencies-Japan and Germany-were obliged to reduce their interest rates further than those in countries with weaker currencies (i.e. with trade deficits) such as the USA and Britain.
This differential decrease in interest rates also served to further deepen the unevenness between Japan and Germany on the one hand and the USA and Britain on the other. In Japan and Germany interest rates fell sufficiently to encourage new capital investment and production, thus helping to prolong the cyclical upturn still further.
After 1987 the role of Japan became even more decisive. Nowhere else were interest rates lower. No-where else did the speculative bubble rise higher after 1987. At its peak shares rose four times higher on the Japanese stock exchange than anywhere else.
But this situation made it increasingly difficult for the Japanese speculators to rake in the mega-profits they were used to. The result was that they increasingly turned their attention abroad. Cheap yen flooded out of Japan. As long as the trade surplus could support this outflow then all was well. But by mid-1989 the flood of yen leaving Japan far surpassed the surplus on trade. As a result the yen began to lose its international value.
Economic reality began to make its unwelcome presence felt. The Japanese banking authorities were forced to raise interest rates. Unfortunately for the imperialists this coincided with a sharp slowdown in the growth of profits.
The breathing space afforded by the growth of easy money thus lasted exactly two years. In October 1989 the stock exchanges crashed again. The 27% fall in Tokyo exceeded that of 1987, but elsewhere the crash was milder. That the crash would once again begin in the USA was predictable, given that US imperialism was experiencing the sharpest contraction in profita-bility at that time. But once again Japan was resilient enough to bear the strain.

The further erosion of US hegemony

The cost to the USA of sustaining the post-1983 recovery has been great. It has involved becoming dependent on countries with surplus capital (especially Japan) for the continuation of its current levels of domestic spending. In part this indebtedness has served the interests of Europe and Japan, helping the former to finance NATO.
In part it reflects a wariness about launching an all-out attack- in the first place via a programme of tax increases on the bloated privileges that US world dominance has bought for the North American middle class and labour aristocracy. The erosion of real wage levels and the cuts in welfare have been designed to hit only the urban poor and small sections of the employed working class.
US imperialism’s share of world trade and manufactures continued to decline in the 1980s cyclical upturn. The post-1985 change of policies has only slowed the tempo of the growth of US deficits. It has not reversed the trend. The competitive effect of various exchange rate movements in the 1980s had can-celled themselves out by 1987.
Yet, real wage cuts and higher productivity than any imperialist country apart from Japan, together with a revival in investment, have ensured that US imperialism has restored a more profitable and productive place for itself, albeit in a narrower range of the world market.
This sums up the successes and failures of the US economy in the 1980s.

Inward looking, slow growth Europe

The late 1970s witnessed a change of direction within key sectors of the European bourgeoisies and govern-ments. Their relative decline in the international industrial and financial spheres during the 1970s brought home to them the need for greater cooperation.
In the 1980s the European Community (EC) was enlarged to 12 member states. In 1978 the it agreed to establish a common monetary system which most countries joined. The conservative Bundesbank pur-sued a deflationary policy which in turn obliged the French, Greck and Spanish governments to abandon expansionary state backed economic policies and produced a general liberal market consensus.
During the 1979-82 recession there was a concerted drive to reduce over-capacity in heavy industries and, after a series of crises, an agreement to limit Common Agricultural Policy spending. Building on these successes a majority of EC states agreed in 1985 to allow the enthusiastically federalist European Commission to steer the EC towards a single market in goods, services and capital by 1992. In addition, there was a noticeable increase in research collaboration between EC countries throughout the 1980s.
Whatever the future of these policies it is clear that they have stimulated an increase in intra-EC trade and, at the same time, increased the reluctance of member states to take responsibility for boosting the global recovery through reflation. There is a consensus that European capital is best served by preparing for and taking advantage of the further liberalisation of the European market.
Perhaps because of this conservative approach, the greater co-operation shown during the 1980s did not prevent European capital from falling further behind Japan and the USA in market share, technological in-novation and productivity. In addition, both the unification of Cermany and the prospect of EC-dependent East European states may present problems for the EC in the 1990s.

Japan in the passing lane

When the post-war boom ended there were only two centres of world economy: Europe and the USA. To-day there are three, with Japan, together with the East Asian countries under its economic sway, proving to be the fastest growing regional bloc in the world.
It will now be essential for the USA to elicit a co-ordinated response from Japan as well as from Europe in order to maintain or restore global economic equilibrium. On the eve of the last recession Japan was a dynamic exporter of an ever broader range of increasingly sophisticated manufactured goods. Its capital exports to the USA and Europe were negligible although it had built up a significant presence in East Asia alongside the USA.
In the 1980s all this changed. In the first half of the decade Japan exported its massive capital surplus to finance US deficits and thereby became banker to US imperialism. After 1985, with a sharply rising yen, Japan expanded the volume of its direct investments in Europe and the USA. Despite the rising yen, Japanese exports have remained strong due to Japan’s ability to make sharp structural adjustments to its industrial priorities under the guidance of a strong state-finance capital complex.
As a result Japanese imperialism is stronger than ever before. Its productivity is better than that of Europe and the USA, and its industrial structure is more broadly based. Its capital has penetrated the Latin Ainerican markets on a large scale and has broken into Africa for the first time. It has consolidated its economic dominance in East Asia and, on the basis of investments in industry and banking, it has gained a leverage inside the USA and the EC that it did not hitherto possess. Finally, Japan has become the world’s biggest financial power.

The semi-colonies: further differentiation, general decline

The high interest rates that precipitated the 1979 recession pushed many Latin American and African economies over the edge. The recession brought a slump in export earnings at the same time as a mas-sive increase in the burden of repayments. By 1982 the debt problem had become an explosive political issue in Brazil, Argentina and Mexico and threatened a number of over-committed commercial banks in the imperialist countries with collapse.
The immediate consequence in Latin America and in Sub-Saharan Africa was austerity for the masses. Between 1982 and 1986 problems for these workers mounted relentlessly. A strong and rising US currency increased the dollar debt, while the recovery in de-mand for primary commodities was unable to fully restore export earnings. After 1982 banks stopped lending new money and the era of complex negotiations over re-scheduling began.
Since 1986 the Baker and Brady Plans for dealing with the debt have revealed ever more imaginative ways of easing the pain of repayment. But the debt burden ratio remained exactly the same at the end of the 1980s as it had been in 1982. Meanwhile, the standard of living for the masses of Latin America fell through the floor: workers experienced up to a 25% decrease in real wages and a savaging of their mini-mal welfare benefits, together with mass unemployment. The staggering poverty in the shanty towns increased.
The post-1986 recovery in primary product prices eased the pressure to a degree, although in 1987 primary product prices (including oil) were 55% of their 1979-81 average. Consequently the situation is still so bad that not only countries like Argentina are in crisis, but previously secure oil rich nations like Venezuela have joined the list of those imposing savage austerity packages.
World Bank development loans have dried up and IMF backed “structural adjustment programmes” have taken their place. This has resulted in the privatisation of state industries and mass sackings, such as in the Bolivian mining industry in 1985-86. Wages have been pegged well below inflation, which has often been replaced by hyper-inflation, as in Peru, Brazil and Argentina. Amongst all the countries of South America, Chile alone bucks the trend of stagnation and decay, while Brazil only sustains growth due to the size of its internal market.
Agrarian reform under IMF supervision has created a kulak class, especially in certain African countries. Since this class has been integrated into the world market at the time of the post-1986 revival in commodity prices, pockets of prosperity are to be found in Nigeria, Kenya, the Ivory Coast and Uganda. On the other hand, the industrial infrastructure of these countries is rapidly declining. The economic level of sub-Saharan Africa is being thrown back decades: its GDP was negative for the 1980s; the debt service ratio leaped from 14% to 34%, whilst investment declined at 2-4% a year.
During the 1980s imperialist multinationals feverishly relocated their sub-assembly operations in the semi-colonial world. This stimulated rapid and sustained industrial growth in certain East Asian semi-colonies. The Little Tigers are in the forefront of this process of manufacturing for re-export. South Korea grew at over 6% a year during the 1980s, doubling its industrial output in two mid-decade years alone. Due to the length of the cyclical upturn the Korean bourgeoisie was able to develop significant monopoly capital of its own, foreign branches of which are penetrating South East Asia and even Europe and the USA. As yet, however, South Korea remains a semi-colony, albeit of the most.
Certain semi-colonial countries in the region are also experiencing economic growth but at the cost of the decimation and even exhaustion of their natural resources and with little compensating industrialisation (e.g. Indonesia, Philippines). Other countries (e.g. Thailand, Malaysia) occupy an intermediate place between the case of South Korea and the others.
In all of these countries we are witnessing the rapid growth of a modern super-exploited proletariat alongside a brittle and autocratic political system. The end of the economic upturn threatens great upheavals in this part of Asia.

Beyond unevenness: the growth of protectionism, parasitism and profits

By the end of the 1980s the cyclical global economic upturn was enjoying its eighth year. But its uneven-ness and low rates of growth compared to the 1970s ensured that world output of goods and services fell away from an annual average rate of 3.9% bet ween 1971-80 to a rate of 2.2% in the 1980s. Similarly world trade increased by 5% a year in the 1970s but only by 3% in the 1980s. Moreover, the recovery in the imperialist nations has exacted a heavy price from most of the semi-colonics. During the 1980s their overall growth rate was only just over 1% per annum, as compared to 5% per annum in the 1960s and 1970s.
The world recovery has been concentrated in the OECD countries and a few semi-colonics, where profitability has been restored to the best levels of the post-1973 period. But this has only been possible on the basis of continued mass unemployment and a failure to add substantially to the stock of new productive capacity. In the post-1973 period investment generally involved boosting productivity rather than expanding capacity; most new jobs in the imperialist countries are in services not industry.
The tendency to financial parasitism is greater than it has ever been this century. The mountain of national debt owed by sovereign governments to financial institutions grows ever higher. The biggest imperialist country is the biggest debtor. Corporate and personal debt are also at historic highs, adding to the difficulty of mobilising savings for investment. Inter-est rates remain high, thus depressing demand. From being a stimulus to production in the long boom debt has become a major barrier to the expansion of the productive forces.
The 1980s recovery did not eliminate excess capacity in key industries (e.g. steel, textiles) and this fact led to a growth of protectionism, especially of the non-tariff variety. US capitalism has also experienced an erosion in its share of world markets for high technology goods This has ensured that GATT has be-come as much a forum for restraining the growth of protectionism as an arena for negotiating further liberalisation of international trade. The multilateralist free trade ethos of GATT is increasingly giving way to a proliferation of bilateral, “fair trade” arrangements, threatening the world economy with division into regional blocs.

Relations between the empires

One of the most important political developments since the mid 1980s has been the global partnership between Japanese and American imperialism. This is rooted in a fundamental economic change in the structure of the world economy: the ever growing financial and industrial interdependence between Japan and the USA.
The economic integration of the USA and Japanese economies, which accounts for 30% of global output, has been dubbed the “Nichibei cconomy”, and even involves corporate alliances between US and Japanese firms. As an example of this interdependence, Japan supplies 40% of all US orders for components in cars and electronics.
This relationship has given rise both to conflict and co-operation. The conflict is based on the growing superiority of Japanese industrial, financial and trading capital. This periodically causes anxiety within sectors of US industry and commerce. The tensions be-tween the USA and Japan reflect the strategic difficulty US imperialism experiences in having to accept its diminishing global economic strength. The situation is made worse for the USA in that it relies upon the main source of its economic eclipse -Japan- to sustain its declining position.
The scale of the co-operation is shown by the willingness of Japanese imperialism to open up its internal markets to the USA, to furnish the dollars to balance the US deficits, and to engage in domestic reflation in order to sustain a global recovery. All this occurs in the context of Japanese imperialism showing little sign of wanting any more political power than the USA thinks fit. Even in East Asia the USA remains the dominant political power, not Japan.
This collaboration, however, contains the seeds of further disintegration. The USA is trapped in a vicious circle. The deficits require Japanese capital imports, which in turn require a high dollar to attract them. The high dollar further erodes US domestic industrial investment and ensures continued relative decline. This decline reinforces the need for foreign capital to bridge the gap between US economic ambitions and its ability to satisfy them from within its own domestic resources.
When will the crunch come? For the moment collaboration ensures an unstable equilibrium. But the kind of radical solution necessary to restore US trading and budgetary surpluses is impossible for Japan or Europe to accept. The cost of this-in terms of inflation, unemployment, loss of US markets for their goods-is unacceptable to Japan and the EC.
The next recession will push the USA into a more aggressive stance towards the EC and Japan. Unilateral retaliatory actions will occur as the USA attempts to halt its further fall from pole position. Conflict with Japan may then break out. Japanese imperialism would be forced to strike out on a more politically independent road. This will probably appear in relation to its dealings with China, USSR, and Africa.
An alternative solution would be a US-Japanese alliance in the context of agreements over cartelisation of the whole Pacific and North American markets, in opposition to a post-1992 Europe. This, however, would require a major shift in the political outlook of the US ruling class, since it would entail abandoning US relative world hegemony and recognising that it would have to share world dominance with one partner or another.
For the moment the major source of economic conflict is to be found between Europe and America Conflict over agriculture is top of the list, together with fear of European protectionism after 1992. European imperialism is much less committed to the maintenance of economic liberalism on a global scale and increasing tension is likely.
There is no spontancous tendency within Europe leading to the creation of a European capitalist class. The specific attempts at cross-border multinational collaboration (Hoesch-Hoogovens, Agfa-Gevaert Pirelli-Dunlop etc) have collapsed. Aggressive take-overs are more typical. A new international division of labour is being established, with cach country proving to be strong in certain sectors and succumbing to their rivals in others. The economic and legal restrictions that stand in the way of the emergence of a European capitalist class transcending the existing national states remain legion.
The moves towards greater economic unification require enormous political intervention and leadership. A large measure of economic integration will be achieved by 1992 but much more (e.g.a European federal bank, fuller budgetary and tax harmony etc) will remain the music of the future. And it is precisely these kinds of developments which will be necessary before a distinctly European capital can emerge.
For the moment the imperialists prefer sectoral cartelisation by the multinationals within the context of protected markets. Conflict will break out when a recession reduces market share and the existing agreements collapse. In the short-term (i.e. over the next five years) the extent of European- and here we mean overwhelmingly a united German-penetration of Eastern Europe and USSR will be limited in its economic rewards. But favourable political developments for imperialism over this period could eventu-ally lead to the capturing of major markets and raw materials in the second half of the decade.
For the immediate future, despite Britain’s Atlanticist “Trojan horse” tactics, Franco-German political leadership will steer the EC to a considerable measure of economic liberalisation. If other factors do not in-tervene this should extend the economic recovery via the boost to intra-European (and Japanese) investment in EC countries. Moreover, the whole dynamic is drawing EFTA and certain Mediterranean nations to the same process.

The immediate results and prospects for the major imperialist economies

For how long can Japan sustain the burden of pro-longing the global cyclical recovery? Although Japan remains the world’s banker its financial institutions are heavily involved in a speculative boom both at home and abroad. They are particularly vulnerable to any collapse in land prices in Japan. Were such a crash to occur then it would imperil the world financial system as Japanese banks- the world’s largest-would have to repatriate funds to cover their losses at home. The ability to prevent a massive crash in Japan is pivotal to determining the course of capitalist development in the short term. This is even more true today than it was in 1987.
Can the cycle can be prolonged by business investment, consumer demand and the exploitation of new profitable markets by all or any of the three major imperialist powers? The state of the US economy does not give their bosses much reason to hope that it can be the locomotive of growth. From 1988-90 between a quarter and a third of its states have been in recession at any one time. Its company indebtedness is at an all time high, its financial system has been rocked by the $500 billion bail-out of Savings and Loans.
The post-1986 deficit stabilisation and currency devaluation which led to increased US export competitiveness has now been eroded. New taxes and spending cuts together with low profits are restricting growth in the US economy to very low levels, and have pushed it to the verge of a nationwide recession. Not even the present low interest rates can inject a new dynamism into the US economy.
Can Eastern Europe breathe new life into the world capitalist economy by allowing Europe, especially a united imperialist Germany, to take over as the new locomotive? On their own the gains to be acquired from Eastern Europe cannot do more than prolong the current cycle in Europe. Most of the means of production in Eastern Europe are less productive than the mass of capital scrapped in the west during the 1980s. Productivity is less than half that of the west and the quality of production is highly suspect. Even after the restoration of capitalism productivity wil still be far below the average in the imperialist west.
Could imperialism underwrite a new Marshall Plan to rebuild Eastern Europe, thereby creating markets for the multinationals? Indebtedness will also limit this possibility. The American government will not have adequate funds in the next few years. Its hands are full with the growing US budget deficit, although in the long run reduced military expenditure may release some funds for investment. Japan’s recent stock market crashes and the need to support the yen has impaired its ability to act as banker to Eastern Europe. The British government is restricted in its actions by its trade deficit.
This leaves Germany and France. Collectively they do not have the resources to underwrite a broad reconstruction plan for Eastern Europe. For the immediate future Germany will probably concentrate its attention and its investment on developing the internal economy of a united Germany. European capital will nonetheless be able to take advantage of a number of openings and we can expect a strengthening of European capital relative to American capital, and to a lesser degree to that of the Japanese.
The international banks will not be able to repeat their lending spree of the mid-1970s. They have not yet recovered from the writing-off of the debts owed from the previous round of lending. Their capital to assets ratios are still poor and they are now faced with growing bad debts in the imperialist heartlands, particularly as a result of lending to finance the property boom.
The opening up of Eastern Europe should thus pre-vent a slump in Europe but it will not be able to generate sufficient profits and markets to enable world capitalism to open up a new prolonged new period of expanded accumulation lasting decades. In general over the next few years we will witness a transitional period in which the costs and dangers of reimplanting capitalism in Eastern Europe will be greater than the rewards.
Only the vast resources locked within the economies of the USSR and China could form the basis of a new period of world capitalist expansion. However these resources could only be tapped following the overthrow of the bureaucratic plan and the historic defeat of the working class. This period still lies ahead. Renewed capitalist prosperity is a potential outcome if the imperialists and their agents inflict a massive defeat on the world working class, are able to maintain social peace in their own countries and can sustain the savage semi-colonial austerity of the 1980s. At the moment the accumulated contradictions of the post-1982 cycle place major obstacles in the way of the imperialists’ goal: they will find it very difficult to manoeuvre successfully.

The working class in the major imperialist countries

In the major imperialist countries of North America, Japan and Western Europe the effects of the economic cycle in setting the tempo of class struggle have been pronounced. Thatcher and Reagan came to power as slump politicians, determined to use the full effects of the recession to discipline the working class, to in-crease the rate of exploitation and to weaken the power of the trade unions.
The labour movements that these ruling class warriors faced varied enormously, but their fate was generally the same. European workers suffered serious setbacks as the recession was used-by social democrats as well as by conservatives to use the discipline of unemployment to force down real wages and boost the rate of exploitation. In the USA the conservatism and political impotence of the trade union bureaucracy allowed Reagan to impose similar attacks. But a wave of struggles-as yet on a small scale indicates that the tide of defeats and retreat may be turning. If so the class struggles of the 1990s may surpass those of the 1970s.

The US official labour movement in decline

When Reagan took office the US trade unions were already on a downhill slope. Their peak in terms of size lay as far back as 1952-53, and their golden age of radicalism was over four decades ago (1934-48). Tied down by the Taft Hartley Act (1947) and the Landrum-Griffin Act (1959) and hit by the anti-communist witch-hunts, the AFL-CIO became, and has remained, fiercely pro-capitalist.
Through the International Confederation of Free Trade Unions (ICFTU) and the American Institute for Free Labour Development (AIFLD) the AFL-CIO became an international instrument for splitting radical labour movements and promoting yellow unionism. It was an active participant in the coup against Allende in 1973.
It comes as no surprise that the AFL-CIO has experienced a long term decline and continues to shrink. There has been no period of expanded unionisation since 1953. Its great unionisation drives were in 1934-37 and 1944-45. In fact, the year 1974-75 was a watershed year for de-unionisation, setting a trend that took union levels for industrial and service sector workers down from 28.9% to 19.4% in 1982. These are the official figures: The real situation is probably worse, nearer 14% at the end of the decade.
It is scarcely surprising that such an instrument of imperialism as the AFL-CIO should be a poor instrument for defending the interests of the US workers themselves. By the mid-1980s less than 20% of the US labour force of 93 million workers were unionised. Apart from the astronomically privileged bureaucracy the US unions have remained dominated by the white labour aristocracy of the North East/Mid-West.
No serious attempt has been made to unionise the South and the South West where the most modern and expanding industries are located. To do so would have been a hard, even a bloody struggle, given the unbridled savagery of the US ruling class and its resort to arms faced with elementary trade union activity.
Deals with organised crime, as in the Teamsters union, have also helped keep the US unions safe for capitalism and have resulted in the defeat of repeated democratisation attempts. Indeed rank and file militants have been faced with the dilemma of seeking government sponsorship and protection (“Teamsters for a Democratic Union”).

Reagan’s onslaught

Reagan was determined to attack the working class in its strongest bastion, the public service unions. In 1981 Reagan fired all 11,400 striking air traffic controllers, members of the PATCO union. This was a clear warning to all other workers that ifa highly skilled, apparently irreplaceable workforce could be crushed, less skilled and less well organised workers stood little chance. This was the theme of Reagan’s USA.
Between 1972 and 1974 real earnings of US workers fell by 14%. Reagan froze the US minimum wage on taking office and since then it has depreciated by 25%. Reagan’s attack on wages was two-pronged. Firstly, there were outright “give-backs”. The unions “negotiated” these starting with Chrysler in 1979–so that by 1982 60% of all unions had agreed cither to freezes or wage reductions. 25% of all unionised factories were operating “give-backs”.
The second element of the bosses’ strategy was to divide the workforce, with long service workers on one rate and dismissable short-contract workers on another. National and state wide agreements were torn up and replaced by plant level agreements. De-spite all this American bourgcois economists still believe it is necessary to cut the proletariat’s wages by 4-5% per annum for years in order to restore competitiveness with their European and East Asian rivals.
The Reagan onslaught applied to social welfare as well. Health programmes were cut by 25%, unemployment pay by 31%. Despite this the unions have not blocked the offensive let alone led a fightback. Their only concern has been to stem the loss of members.
Since 1982 low unionisation levels have slowly re-covered a few percentage points during a boom that reduced unemployment to 5.9%. Of course, at a local rank and file level there have been magnificent fightbacks, such as that of the Hormel meatpackers and the struggles of Eastern Standard Airlines and the West Virginia miners
These struggles could herald a revival of rank and file militancy but this will require a clear political strategy to defeat the unbelievably privileged and corrupt bureaucrats. A movement of the scale and class independence of the IWW at its height and the early CIO will be needed to overcome these obstacles. However, to break American labor’s enslavement to its own bourgeoisie via the “friends of labor” Democrats will require a revolutionary communist leadership.

The British working class under Thatcher

Thatcher’s achievement has been greater than that of Reagan. She has broken the power of a union movement at the peak of its official strength (although not of its rank and file organisation and combativity). The road to defeat was opened by the class collaboration and demoralisation inflicted by the 1974-79 Labour Government. Thatcher was able to use the full impact of the 1980-82 slump to crush section after section of workers.
First came the steel workers in 1980, then the rail unions, the civil servants, the health workers, the printers and the miners all after long and bitter struggles in which the intensity of class struggle was
greater than any time since the 1920s. Yet these struggles were all defeats and the threat of unemployment plus the Tories’ “free market” policy of letting wages find their own level (usually up) deprived the embattled sections of any easy or spontaneous generalisation of the struggle. Each section fought with the sympathy and support of militants throughout the labour movement but without their active solidarity.
This absence of 1970s style solidarity was increased by a series of anti-union laws that stripped away all the legal protection won since 1876. These were introduced step by step and the TUC did little or nothing to oppose them.
Now workers in Britain face more draconian legal repression than in any other major imperialist country. The result of Thatcher’s onslaught has been a sharp shrinkage of union membership and unionisation levels. Between 1980 and 1984 the unionisation level for private manufacturing industry fell from 76% to 66%. At the end of the 1970s the TUC had over 12 million members. Today is has only just over nine million.
The late 1980s, following the defeats of the miners and the printers (1986-88), were a low point of struggle, with the notable exception of the health-workers’ campaign. However, 1989-90 witnessed a dramatic collapse in the Tories’ political fortunes mainly centred on the deep unpopularity of three measures: cuts in social services, especially health provision; the use of high interest rates to combat high inflation; and above all, a new local tax (poll tax).
A general waning of enthusiasm for rigid neoliberalism in the ruling class has led to open division between the dogmatic monetarists around Thatcher and a more pragmatic approach to state spending on training and infrastructure as represented by Heseltine. However, it is unlikely that Thatcher can be replaced by a palace coup. The Labour Party is tailoring its programme to meet these ruling class needs. A continued crisis of leadership in the working class prevents struggles over wages, social service cuts and the poll tax coalescing into an open political struggle against the government. Increasingly, the working class is turning its hopes and aspirations towards electing a Labour government in 1991-92.

Italy: the bosses on the offensive

In Italy the 1980s were also marked by a counter-offensive against the working class. The campaign was begun by Fiat, which victimised militants in 1979 and a year later defeated a five week strike. This gave a signal for massive lay-offs. In 1984 the Christian Democrat/Socialist Party government, led by Bettino Craxi, set about undermining the scala mobile (index-linking of wages). Following the government’s suspension of this gain from the inflationary 1970s, the Communist Party and trade union leaders diverte mass anger and action into a referendum to re-instate it which they lost.
The result has been stagnant or declining real wages. However, from 1987-88 onwards there has been a recovery of combativity and resistance, first from transport workers organised by rank and file committees (COBAS).

France: austerity with a “socialist” face

In France neo-liberal policies were pursued by a social democratic president to telling effect. Mitterrand was elected after the crushing defeat of the steel strike of 1979. Despite massive demonstrations and armed street battles in the Lorraine, the CGT and CFDT trade union bureaucrats refused to mobilise an all-out general strike and this vital section of the French working class was defeated, setting the tone for the whole of the next decade.
The first phase of the Mitterrand government (1981-84) was marked by the presence of CP ministers in the government and by the adoption in 1983 of a savage austerity programme. Before and after this sea change, leaders of all the union federations held back workers’ struggles. This task was made easier by the fact that, at least in the initial 18 months, large sections of the working class had substantial illusions in the “Union of the Left”‘ government.
The result was a success story for the capitalists: production increased and inflation was reduced to 3%. The situation was far from rosy for the working class: restructuring led to over three million unem-ployed and real wages in the massive public sector were cut by 10% over the decade, all without any class wide working class response. Indeed, the power of the trade unions and of the Stalinist CP was enormously weakened, without recourse to anti-union legislation. The labour bureaucracy was only to eager to do the job.
French imperialist intervention into Africa and the Pacific was maintained, resisting independence movements and wars, and was not opposed by any significant-sections of the working class. Similarly, the racist Front National, led by fascists, was able to spread its poison without any decisive proletarian opposition. The responsibility for this sorry situation lies fairly and squarely with the Stalinist and social democratic misleaders.
Faced with a massive decline in their electoral support, the CP left the government in 1984 and began to try and bureaucratically mobilise workers against austerity. The result was a continued fall in their support and the occasionally spectacular growth of rank-and-file bodies outside of union control during major strikes (1986-87 railway strike, 1988 nurses’ strike).
Despite these signs of combativity, the working class remained on the retreat and strike figures plummeted to a post-war low. The two years under right wing Prime Minister Chirac (1986-88) revealed a slight improvement, but the beginning of Mitter-rand’s second Presidency in 1988 and the subsequent socialist-led Rocard government have been accompanied by a relative downturn on the industrial front.
Faced with a weakened and divided trade union movement, the growth of racism and massive unemployment, the working class has yet to find the political programme necessary to fight back against Mitterrand’s offensive and to free itself of the crushing weight of Stalinism and of social democratic reformism.

Spain follows the French road—with a difference

The general European pattern of a lower level of trade union struggle in the 1980s was contradicted in Spain. On 14 December 1988 Spanish workers carried out their first truly general strike for fifty years. Six million strikers -two thirds of the total working population – took part. Led by the UGT – the traditionally socialist union federation – and the Stalinist-led “Workers’ Commissions” (CCOO) the Spanish state was paralysed, especially the “socialist” government of Felipe Gonzalez.
The strike marked a real rupture between the PSOE, which was carrying out the semi-Thatcherite policies that have become the hallmark of European social democracy, and the UGT. The possibility of such a decisive split had been signalled by the end of the Economic and Social Accord in December 1986.
Since he came to office in 1982 Gonzalez has moved further and further from any identification with the labour movement. Unemployment stands at 20% and the government has replied with forced youth labour schemes identical to those of Thatcher. Spain’s growth rate in the recovery was remarkable (5.2% in 1988) and the integration into the EC has given the PSOE continued electoral credibility.
The Spanish labour movement has clearly recovered from the repression of fascism and the failure to take full advantage of the crisis of the Falangist regime in the mid-1970s. It also appears to be throwing off the influence of social democracy, at least with regard to its trade union struggles at least. In the 1990s the Spanish proletariat can play a key role in the Eu-ropean workers’ movement.

Germany: from social peace to the price of reunification

In less than twelve months the German bourgeoisie has achieved fundamental and unexpected gains-reunification and an end to the post-war subservience towards the “Victor Powers”. It now faces the massive economic task of re-integrating the former GDR into the heart of German imperialism.
The bosses will clearly try to make the FRG workers pay the price. The relatively high standards of living enjoyed by workers in the west will come under attack. There will be no question of these privileges being immediately extended to the German bosses’ newly acquired wage slaves in the East. Quite the opposite: sackings and closures will devastate the ex-GDR working class which will be first in the firing line as imperialism adjusts its plans to meet the new situation.
Unlike the US, British and Italian ruling classes, the German bosses have not spent the last decade settling accounts with the working class. In the 1990s they will have to make up for lost time. Despite the installation of a Christian Democrat/Free Democrat coalition in March 1983, the German bourgeoisie did not launch an all out offensive against the working class.
Instead they workers’ representatives at plant level (“co-determination”) in order to ensure relative social peace. The DGB union federation is solidly dominated by conservative social democrats and has been complacent in the belief that that no major onslaught is intended against the high wages and good conditions of German workers.
A signal of what the German bourgeoisie will face if it tries a serious offensive was revealed at the Krupp steelworks in Rheinhausen in late 1987. The plant was occupied, the Krupp family palace was stormed and massive street demonstrations rocked the country. Although the IG Metall engineering union did not lift a finger to help the Rheinhausen strikers it has proved to be an important focus for militant rank and file activity. In recent years it has shown itself capable of playing a leading combative role in the West German trade union movement (e.g. during the 35 hour week strike of 1984).
The collapse of Stalinism and the German imperial-ists’ rush to unification led to a nationalist resurgence in the consciousness of the German working class, East and West. Unification also pushed the imperialists to concede temporarily to workers’ demands (e.g. a 35 hour week after 1995 in the West, twelve months ob guarantee and wage increases in the East), in order to ensure a period of social pcace and avoid any ross-border united struggles.
Whatever the results of the 1990 all-German elections, major attacks on the working class will be on the agenda from 1991 onwards. It is at this point that the reformist leadership of the working class will be put to the test.
The political leadership of the West German proletariat, the SPD, was initially able to exploit the decline n popularity of the CDU and the Greens in the late 1980s. However, faced with the drive to unification it began to lose ground. Although in the early phases of the East German revolution social democracy seemed to be strengthened, here too the open parties of the bourgeoisie were able to take the initiative on the basis of their clearer anti-communist record and their offensive over the national question.
Splits within the SPD over the State Treaty further weakened it in both the East and the West. Although it seems likely that the PDS’s role in the unified Germany will be that of diverting defensive workers’ struggles into the parliamentary arena, the “reformed Stalinists” will also try to take the initiative from any movements which threaten to escape their control, including by making a “left” turn in the direction of workers’ action against the capitalist offensive.
In the qualitatively new situation facing the German working class the key question will be that of united action of the whole proletariat against the bosses’ offensive, which will fall first and foremost in the East. Both SPD and PDS leaders will work to stop such unity. As elsewhere, the reformist agents of imperialism represent an enormous brake on workers’ ability to defend themselves against the attacks of capital.

European immigrant workers and the threat of racism and fascism

The most oppressed and exploited section of the European proletariat is the vast army of immigrant workers and their families-perhaps 15.5 million in all. In Britain, Germany and France workers from the African and Caribbean ex-colonies, from North Africa and from Turkey were recruited to work in the car factories, chemical plants and in the public service industries – transport, cleaning etc.
These workers often lack civil rights, social welfare and elementary job security. In addition they have been subjected to the racism and outright fascism of the far right. Racist parties like the Front National in France and the Republikaner in Germany lead vicious campaigns against them. The reformist labour movements are often indifferent or hostile. Yet these workers have undertaken militant struggles.
A new element in European racism is the emergence of far right groups and parties in Eastern Eu rope and the USSR. A prolonged restorationist phase, marked by great hardships and unemployment, can – if the crisis of leadership is not overcome –  assist the strong growth of the right.

Japanese workers in the grip of imperialism

In the 1980s Japanese imperialism maintained and strengthened its hold over the proletariat. The capitalists’ domination of the labour movement goes back forty years. A historic defeat was inflicted on the working class after the February 1947 general strike was broken by the US occupation authorities. In the following period trade union and political militants were purged on a massive scale. The Sambetsu union federation lost 75% of its membership.
In 1953 the Nissan car workers’ union was broken in a strike and throughout the 1950s and 1960s trade unions were crushed and yellow company unions (the Domei federation) installed in all the export led growth industries (shipbuilding, steel, car production and electronics). Through an extensive system of patronage and clientelism the Liberal Democratic Party (LDP) manipulated Japan’s “democracy” into a permanent LDP regime that marginalised the Communist Party and the Socialist Party.
Today Japan has one of the most anti-working class bodies of legislation in the imperialist world. This has helped ensure that the unions are excluded from the most important sectors of productive industry. The labour aristocracy have been incorporated by life-time contracts, pay increases through seniority, 50% of wages being determined by performance, company-provided social services and guaranteed employment for workers’ children.
This is the material basis of a fierce feudal-type company loyalty that has corrupted and broken down class consciousness. The propaganda which presents the Japanese people as fanatically hard working and thrifty conceals the super-exploitation to which the vast majority of workers – including the labour aristocracy – are subjected.
The non-existence of a comprehensive social security system obliges workers to devote a great part of their wages to insuring themselves against all eventualities. Japanese workers must work overtime to attain job security and promotion. This goes hand in hand with a modernised version of ancient patriarchal values centring on the oppression of women, the submission to authority in general and to the boss in particular.
In the 1980s there were afew rank and file struggles against plant closures (Nissan Kawaguchi 1986). For this trickle to become a stream of class struggle, Japanese imperialism’s enormous prestige will have to be dented. This could occur through pressure to cut wages and conditions arising from competition with other South East Asian countries- sometimes even with Japanese plants in these countries. Such ruling class attacks could provide the impetus for driving out the yellow unions and unionising the great factories of the giant corporations.
Militant unionism has traditionally been dominant in the public sector. The most active union federation, Sohyo, popularised the spring offensive for the annual contract (the Shunto). One area of bitter struggle has been the railways where strikes are illegal. The last major battle was lost and workers forced to quit the union. A rightward move in the Sohyo saw it fuse with some of the yellow unions into the Rengo federation.
Apart from the labour aristocracy in the multinational plants and in the public sector there is a vast, poorly paid proletariat, including most of Japan’s women workers and the large Korean immigrant workforce. Where organised, these workers are grouped in tiny local “community unions”.
Like the US working class, the Japanese proletariat is a slumbering giant. When it awakes it will shake the world economic order. Its slumber – like that of the British proletariat in the years 1850-1890 and of the US proletariat in the post-1950 decades – is a product of the “economic miracle”and of the class collaboration of the working class leadership. When these two factors are challenged then there will be mass class struggle in Japan once again.

Conclusion: on the threshold of a new period

The imperialist powers, especially the USA and the EC countries, have achieved major victories in 1989-90, far in excess of their wildest dreams when they launched the new Cold War. George Kennan, architect of the first Cold War, has commented: “The Cold War is over. We won.” Obviously he is correct.
A historic change has occurred in Eastern Europe. The Warsaw Pact has been effectively destroyed and the Soviet Armed Forces are being pressured into total withdrawal. German imperialism is shaking off the last of the shackles imposed in the post-war period by the western powers and the Soviet bureaucracy. It has achieved reunification without making any major concessions to the USSR.
The momentous events in Eastern Europe have re-percussions far beyond the boundaries of the continent which will continue to be felt for many years to come. The collapse of the degenerate workers’ states of Eastern Europe and the crisis of the USSR removes from the scene a source of economic and military aid to sections of the semi-colonial bourgeoisie and to petit bourgeois national liberation struggles. Imperialist investment into Eastern Europe will divert funds away from the imperialised world and lead to even greater misery and oppression for hundreds of millions.
The changes in the relationships between the imperialist powers will prove to be of decisive importance in the years ahead. After 1992, in a more economically integrated and enlarged EC, Germany will be by far the strongest economic power. The Bundesbank and the Deutschmark will dominate with or without a new hard ECU. The reunified Germany will seek to open the whole of Eastern Europe – including the USSR – to EC investment and domination. It will seek to organise the new democracies into semi-colonial satellites.
French and Italian imperialism are seeking to achieve the maximum integration of Germany into a fully federal European Community. For the next period this project and the German road to hegemony do not conflict. The principal contradiction within the EC lies between all these powers and Britain, wedded to a world role for the Čity which dictates the continuance of its post-1941 to 1947 special relationship with the USA. Eventually this opposition will be marginalised by the implacable logic of the interests of imperialist capital.
A whole period lies ahead in which the fate of the degenerate workers’ states will be decided. The restoration of capitalism in East Germany was relatively simple for unique reasons. Poland and Hungary will be next to reach the critical juncture. Poland, at least, will face a painful transition to semi-colonial servitude. Whilst imperialism has hitherto had the services of a pro-capitalist leadership of Solidarnosc it will prove difficult for this leadership to retain its hold once the real face of semi-colonial capitalism is revealed.
In Romania and the Balkans the economic consequences of restorationist measures will be even worse and may provide the basis for mass resistance.
The attempted restoration of capitalism in the USSR and in China will be the most fateful imperialist un-dertaking in the next period. A split within the bureaucracy, leading to open civil war, may occur. Direct intervention by the imperialist powers to ensure the completion of the process and to protect their invest-ments would then be very likely, with incalculable consequences.

Turmoil in the semi-colonies

Throughout the semi-colonial world the World Bank, the IMFand the USA, Britain and France are demand-ing the total dismantling of the state capitalist and Bonapartist regimes. They are insisting on an economic open door plus millionaires’ democracy as the price of further aid and the recycling of loans. Via the lever of the debt, the IMF is increasingly becoming a central command planning instrument for US/EC/ Japanese finance capital to direct the economies of the semi-colonial world.

As a consequence the new democratic phase in the semi-colonies is likely to be shortlived and combined with military repression. Revolutionary crises are probable once the masses become disillusioned with the free market policies of the new “democratic” regimes. The democratic struggles in Africa and Asia against the remaining military-Bonapartist regime still have enormous revolutionary potential to mobilise workers, students and the urban poor.
These struggles will all contain the potential dynamic of permanent revolution, but here again the fundamental task will be the resolution of the crisis of leadership and the defeat of enfeebled Stalinism and of nationalist and religious demagogues.

Despite the victories of anti-imperialist struggles in the 1970s and 1980s, and the continued relative economic weakening of the US with regard to Japan and the EC in the 1990s, the USA is temporarily strengthened by the decline of the USSR. With the aid of the Gorbachevite bureaucracy US imperialism is pushing forward a series of counter-revolutionary solutions to the anti-imperialist struggle.

In South Africa, Central America and South East Asia these solutions have – for a period at least – the support of the Stalinist and petit bourgeois nationalist leaderships. Yet so gross is the betrayal of the real interests that the masses have fought for that these “solutions” even if they should reach fruition will rapidly lead to disillusionment and, provoke resistance.

The process of imperialist “solutions” is well underway in South Africa and in Central America. Less advanced is a South East Asian settlement centred on Kampuchea, while the Middle East remains the biggest powder keg of world politics. The most obdurate resistance to a US solution comes from Israel. Though the PLO and the Arab bourgeois regimes have sought to compromise, the Zionist state has not.

The growth of inter-imperialist antagonisms

Imperialism’s plans are, as ever, based on an optimistic and short term perspectives which could easily prove false. The capitalists hope to maintain the boom, a low level of class struggle and their control over the semi-colonies through neo-liberal economics and conservative democratic regimes. However, the unstable and uneven balancing act of the last boom phase is already coming to an end.
US economic hegemony is progressively being undermined by the growth of Japanese economic might. This could turn into an overt challenge if the USA were to seek to restore its hegemony in order to impede Japanese penetration of its East Asian, Latin American or home markets. A similar effect could be produced were the USA to try and block the centralisation of European capital or its penetration of East-ern Europe and the USSR.
Tensions between the USA, Japan and the EC will intensify during the recession when each imperialism is obliged to protect itself and to offload its problems onto the others. The potential creation of new economic and military blocs indicates the possibility of a new period of rivalry different to that of either 1890-1945 or 1945-90.
Britain and the USA were unable to hold back Germany’s rush to unification. Today Germany feels free to negotiate independently with the USSR. NATO is obliged to undertake limited troops and arms cuts, and to renounce its former military doctrines. NATO will not survive in its old form as an instrument of US hegemony in Europe aimed primarily at the East European degenerate workers’ states.
NATO’s political aspects are already being stressed in order to give the USA a continued foothold in Eu-rope. The “world role” of its forces, their potential deployment in “trouble spots”, already suggests a use in the Middle Eastern and African semi-colonies. In addition, its “police role” could be essential for imperialist interests in the revolutionary and counter-revolutionary crises that are to come in Eastern Europe and the USSR.

The question of proletarian leadership

The last decade has seen serious reverses for the working class on a world scale. This has largely been the responsibility of the existing leaderships, all of which-Stalinist, social democratic and petit bourgeois nationalist-have failed. Capitalism, naked and unashamed, is at a new pinnacle of self-confidence. Yet there is much in the balance sheet that indicates that this glory will be short-lived.

Over the last period the motor force of the world revolution, the proletariat, has grown in organisation and size, both relatively and absolutely.

The greater homogeneity and interconnection of the world market creates greater connections bet ween the proletariat and its allies worldwide. New, powerful labour movements have come into existence in Brazil, South Africa and South East Asia and have shown their ability to fight. Old proletariats, from Bolivia to Britain, have fought on a level at least as high as that of the past, even if their treacherous leaderships have led them to defeat.

The relaxation of brutal capitalist military Bonapartism in the semi-colonies, and of the bureaucratic castes in the degenerate(d) workers’ states, raises the potential for the interaction of all these class struggles one with another.
At first this will be spontaneous and instinctive but international solidarity and class action will become more clear and conscious. The terminal crisis of Stalinism and the increasing rightward drift of social democracy mean that these obstacles on the road to revolutionary communism are not insurmountable. On the contrary, they are wracked with crisis and contradiction.

We now stand in a transition period of uncertain duration and full of explosive potential. If this potential is to be realised as a series of political and social revolutions the queston of leadership within the world proletariat must be resolved in a revolutionary fashion.

The death agony of Stalinism could have immediately and overwhelmingly progressive consequences. A new revolutionary mass workers’ International could be founded and a world wide revolutionary period opened up. It is to this optimistic perspective that the LRCI devotes itself in the coming years, straining every nerve and sinew to achieve its goal. 

Notes

[1] The following resolution was written in the midst of collapse of Stalinism, with democratic counterrevolutions completed in parts of Eastern Europe but the USSR still intact and not having restored capitalism. As such some of the analyses and perspectives on this issue were still incomplete – the League’s final analysis on the question can be found in various articles on our website, summarised in our Thirty Theses in Defence of Trotskyism (theses 16-20) at https://fifthinternational.org/30-theses-in-defence-of-trotskyism/. To review the deeper theoretical issues see “Marxism, Stalinism and the theory of the state”, https://fifthinternational.org/appendix-marxism-stalinism-and-theory-state/

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