Unforgettable years -- Kim Il Sung and the Workers' Party of Korea

by Andy Brooks

KIM IL SUNG was an outstanding communist leader and thinker who will always be remembered by working people all over the world. His name will forever be remembered as the founder of the modern Korean communist movement that began amongst the patriotic youth of Korea when he was a student in the 1920s.
From student leader Kim Il Sung became the guerrilla leader; the “Young General” who took up the gun to drive the Japanese colonialists out of the country. When Kim Il Sung gathered a small band of heroes to form the first guerrilla units to take on the might of the Japanese Army no one could have imagined that this would become the People’s Army that brought the American imperialists to their knees begging for an armistice in 1953.
But above all Kim Il Sung was the communist leader who built the Korean communist movement from the grass-roots in the 1920s to the Workers’ Party of Korea that was founded in 1945 and leads the Korean people from victory to victory in the 21st century.
The great leader of the Korean people was one of the giants of communism – the man who led the people in a war of liberation from Japanese occupation and then in 1950 defended that victory against invasion by the United States and its allies in 1950, who had been using the fledgling United Nations as a puppet. He then went on to lead his country in building its own, independent socialism, steering a careful path during the period of Sino-Soviet ideological conflict and managing to remain on good terms with both parties.
And after the demise of the Soviet Union and the loss of the eastern European socialist countries, an enormous setback for communism globally, when parties were becoming demoralised and failing around the world, Kim Il Sung stopped the rot by summoning a global conference of communist and workers’ parties in Pyongyang in 1992.
Comrade Kim Il Sung led the Korean masses to victory against the brutal Japanese colonialists in 1945. He took up the gun again to defend their freedom when US imperialism and its lackeys invaded the north in 1950. The Americans were fought to a standstill and forced to sign a humiliating armistice in 1953. Though the American terror bombers had left north Korea in ruins, the masses rallied round the call of the Workers’ Party of Korea to rebuild their shattered country and lead the drive for a modern, independent socialist republic in the free part of the Korean peninsula.
In the north the WPK led the drive to build a new life for all the working people of the DPRK. In American-occupied south Korea the WPK led the popular forces in their struggle against US imperialism and their local lackeys and pawns.
The Workers’ Party of Korea was founded on 10th October 1945 but the struggle began in those dark days of 1910 when the Japanese army marched into Korea, deposed the feudal ruler and the peninsula became a colony of Japan.
There was always resistance but it was drowned in blood. But the 1917 Great October Russian Revolution had a enormous impact on the Korean people, inspiring a new uprising in 1919. The Japanese occupation forces responded with predictable fury, driving the patriotic forces underground. And while the workers and peasants looked to the Soviet Union for help and inspiration, the bourgeois nationalists hoped that the other Pacific power, the United States, would come to their aid.
Lenin observed in 1920: “Take the two imperialist countries, Japan and America. They want to fight and will fight for world supremacy, for the right to loot. Japan will fight so as to continue to plunder Korea, which she is doing with unprecedented brutality, combining all the latest technical inventions with purely Asiatic tortures. We recently received a Korean newspaper which gives an account of what the Japanese are doing. Here we find all the methods of Czarism and all the latest technical perfections combined with a purely Asiatic system of torture and unparalleled brutality. But the Americans would like to grab this Korean titbit.”.
Korean patriotic groups tried to keep up the unequal struggle against the might of the Japanese Empire. The bourgeois nationalists meanwhile fled to China and set up a phantom “provisional government”. They hoped for aid from American imperialism and their “premier” Syngman Rhee begged Washington and the Nationalist Chinese Government for protection.But Syngman Rhee’s begging bowl approach and his embezzlement of “independence funds”, raised from overseas Koreans in Hawaii, made him an object of ridicule and contempt at home. And he received little concrete help from the Americans though they appreciated that he might be useful to them at a later date.
At that time the communist movement in Korea was small and bitterly divided into warring sects. Groups sent emissaries abroad to try and get recognition from the Communist International (Comintern). All claimed to be the authentic voice of Korean communism while furiously denouncing their rivals. All attempts to set up a united communist party quickly collapsed.
But a new generation of communists was emerging from the patriotic youth and students of the country who wanted to drive the Japanese out and build a new tomorrow for the Korean people. Kim Il Sung was one of them.
Kim Il Sung saw the hopelessness of the sectarians, flunkeyists, dogmatists and factionalists who called themselves communists in the 1920s. So he decided to form a communist movement from the youth and the grass-roots of the villages and factories.
When Kim Il Sung formed the Down with Imperialism Union at the age of 14 in 1926 no one, least of all the Japanese imperialists, could have dreamt that within 20 years Korea would be free. This was a movement that captured the imagination of all Korea’s progressive youth, which soon grew into the bigger Anti-Imperialist Youth League. From this organisation came many of the pioneers of the underground Young Communist League of Korea, directing student strikes and joining in the campaign to boycott Japanese goods.
The divisions amongst the existing Korean communists had left them isolated from the masses. Kim Il Sung strongly denounced their acts, of trying to rely on outside forces and striving for the recognition of others, as a disgrace to the Korean nation.
He stressed that a revolutionary movement was not something to carry on with the approval of others but a work to be done out of one’s own conviction. Problems should be solved by oneself, he said, and only when the struggle was waged well would others recognise it.
In words relevant today Kim Il Sung said: “Factionalism is a product of bourgeois and petty bourgeois ideologies, particularly of self-heroising, fame-seeking and careerism. It has nothing in common with the revolutionary ideas of the working class”.
Rank and file communist cells spread throughout Korea. In the north and amongst the Korean national minority in the Chinese province of Manchuria, also under Japanese occupation, a new guerrilla army was being formed. It soon began to deal telling blows against the Japanese army. In the liberated areas new cadres were trained and mass organisations set up. In the towns and villages under the heel of the Japanese, a broad and united front was growing stronger under the leadership of the communists.
A large working class, over two million by 1939, had grown, partly due to Japan’s exploitative industrialisation of Korea. Workers rallied to the national call, setting up underground committees, disrupting production in the arms plants and carrying out acts of sabotage in the factories, on the railways and at the airports. “Rice riots” erupted in the cities while in the countryside peasants refused to supply the Japanese army. By 1945 the Korean guerrillas had driven the Japanese out of parts of northern Korea.
The Japanese Empire, an ally of Nazi Germany, entered the Second World War in 1941. Its legions had over-run vast tracts of Asia in campaigns noted for their brutality and terror. Now it was facing defeat on all fronts.
In August 1945, the Soviet Union, at the request of its war-time allies, the United States and Britain, declared war against Imperial Japan. Together with the forces of the Mongolian People’s Republic, the Red Army swept down into Manchuria and northern Korea. Within days Japanese resistance collapsed and Korea was free. Or so it seemed.
Under agreement with the United States Korea was divided into two zones. Soviet forces occupied the north above the 38th parallel and the United States moved into the south. The USSR, Britain and the United States had agreed at Potsdam that this would only be a temporary measure to supervise the end of Japanese control and prepare the way for democratic elections and an independent Korea.
In December 1945 the Soviet Union took the lead in calling for an early withdrawal of all occupation forces to allow the Koreans to determine their future for themselves. But this was not to be.
Syngman Rhee’s hour had come. Recalled from Washington the US authorities started to build a reactionary centre around him to act on their behalf in the south.
In the north the Red Army was helping in reconstruction. Japanese plants, mines, power stations and railways were handed over to the people. Popular committees thrived with the assistance of the Soviet Headquarters while Moscow despatched food, transport and money to the fledgling administration. Democratic reforms, nationalisation of industries and land reform giving land to the peasants soon followed.
Giant strides were being made in the north. Unemployment, hunger and slave labour were the lot of the working people in the south while the US Army HQ ruled in the same way as the Japanese, grooming the traitor Syngman Rhee as their lackey.
By 1948 the situation was ready for the elections for a Supreme People’s Assembly. In the north elections took place normally but the south the US military ordered separate rigged elections for their puppet. But secret votes elected southern deputies, who with their northern compatriots proclaimed the Democratic People’s Republic of Korea.
The new assembly called on both occupying powers to evacuate Korea. The Soviet Union immediately agreed and by the end of 1948 all Soviet forces had been withdrawn. The United States is still in the south today.
In June 1950 the US imperialists launched an invasion of the north. The Americans and their puppets used everything at their disposal, including germ and chemical warfare, terror bombing and massacre in their bid to destroy the Korean revolution. But under the leadership of Kim Il Sung the people stood firm and resolutely rebuffed the Americans, who had roped in hertheir Nato allies, including Britain, into hertheir insane adventure.
The Soviet Union, People’s China and the other socialist countries rallied to Korea’s aid. People’s China in particular sent a million volunteers to fight side-by-side with the Korean People’s Army in defiance of US threats to use nuclear weapons and dealt devastating blows to the United States and its satellites. In 1953 the United States bowed to the reality of military failure and world public opinion and sued for an armistice.
As usual the Americans promised speedy talks on the withdrawal of their forces and the reunification of Korea. But to this day US forces still occupy the south and the country is still divided. Syngman Rhee was forced to flee south Korea during the student-led uprising in April 1960. His own finance minister admitted that Rhee had embezzled $20 million in government funds and the Americans found new stooges to take Rhee’s place and divided the country with a concrete wall that runs from sea to sea.
In the decades that followed Kim Il Sung worked tirelessly for the peaceful reunification of Korea while creatively applying Marxism-Leninism to the concrete problems of Korean society emerging from feudalism and colonial slavery in the 20th century. Kim Il Sung’s philosophical works, based on the revolutionary experience of the Korean communist movement and generations of struggle, steered the WPK as it marched forward to build a new way of life for the Korean people.
When the Korean War ended the WPK led the campaign for reconstruction. Industry was restored and expanded. Illiteracy was conquered, unemployment abolished and a comprehensive educational system established. The people began to enjoy free housing and medical treatment. By 1970 north Korea had become a socialist industrialised republic, an achievement that has made it a powerful beacon for socialism in Asia.
Unlike British communist leaders in the past, and indeed many others in Europe and beyond, Kim Il Sung stressed that Marxism-Leninism goes far beyond simple economic formulas and the Soviet “model”.
Kim Il Sung not only grasped Marxism-Leninism but he applied it to the concrete conditions of the Korean people. He knew that once the masses realised their own strength they would become unstoppable. He knew that serving the people was the be-all and end-all for the Korean communists and for the Workers’ Party of Korea that he launched in 1945. He developed Korean style socialism into the Juché idea – which elevates the philosophical principles of Marxism-Leninism as well as its economic theories – and focuses on the development of each individual worker, who can only be truly free as part of the collective will of the masses.
Kim Il Sung knew that material prosperity and ideological strength were of equal importance to the people. He called this the twin towers. Though both couldn’t advance simultaneously, when progress in one was made the other had to be advanced to catch up. This was pointed out by Stalin in the 1930s when he told Soviet shock workers, the Stakhanovites, that working people had benefited concretely from the revolution. All previous revolutions had failed but:
“Our proletarian revolution is the only revolution in the world which had the opportunity of showing the people not only the political results but also material results” he declared.
“It is a good thing, of course, to drive out the capitalists, to drive out the landlords, to drive out the Czarist henchmen, to seize power and achieve freedom. That is very good. But unfortunately, freedom alone is not enough, by far. If there is a shortage of bread, a shortage of butter and fats, a shortage of textiles, and if housing conditions are bad, freedom will not carry you very far. It is very difficult, comrades, to live on freedom alone. In order to live well and joyously, the benefits of political freedom must be supplemented by material benefits”. Stalin said.
But Stalin’s revisionist successors abandoned the ideological tower and failed to even maintain the material benefits for the Soviet masses.
Kim Il Sung was the first to develop the formula now known as “one nation/ two systems” for the peaceful reunification of Korea, based on the withdrawal of all foreign troops and the establishment of an independent, neutral, peaceful and non-aligned Democratic Confederal Republic of Koryo.
The return of Hong Kong and Macau to People’s China in 1997 proved that it can work and it remains the only realistic model for the return of the breakaway province of Taiwan to China and the end of the partition of Korea.
Kim Il Sung was born in a world of oppression and exploitation. He lived and fought to end that rotten system and he lived to see the construction of a modern socialist system in the north of Korea. But he wasn’t just a Korean communist. He was a great internationalist.
The leader of the Democratic People’s Republic of Korea championed the struggle for colonial freedom, non-alignment and Third World co-operation. He pioneered the call for south-south co-operation which is now bearing fruit today in the Shanghai Cooperation Council that includes China, Russia and three former Soviet republics of Central Asia and in the increasing co-operation between the oil-rich countries of Venezuela and Iran with Cuba and other countries confronting imperialism.
Kim Il Sung sent technical and military assistance to the African and Arab peoples struggling for independence and he constantly strove to strengthen the world communist movement.
Kim Il Sung, the great leader of the Korean revolution, died in 1994 but his work lives on in the Workers’ Party of Korea. His successor, Kim Jong Il told the Korean people and the world that they could “expect no change from him” and with Kim Jong Il at the helm, the Workers’ Party of Korea has won great victories in recent years. Natural disasters have been overcome. Diplomatic isolation has been broken and the intrigues of US imperialism have been exposed.
The DPRK stood up to American threats over the so-called “nuclear issue” forcing the imperialists to the negotiating table in Beijing and encouraging the national bourgeois of south Korea to stand up for their own interests. Kim Jong Il has held two summits with the south Korean leadership – the second, only last week, paves the way to easing the tension on the Korean peninsula based on dialogue and co-operation.
The Korean revolution is an inspiration to all communists and freedom-fighters throughout the world. The Korean people, determined to preserve their independence and socialist system, have closed ranks around the Workers’ Party of Korea and the government of the Democratic People’s Republic of Korea in the face of new threats from American imperialism.
The achievements of Democratic Korea today are based on the sacrifices of generations of Koreans in the past and the tireless work of the leadership of the Workers Party of Korea that follows in the footsteps of the great revolutionary leader Kim Il Sung.
We have no doubt that the Korean masses, who are building socialism in the north and struggling for freedom and re-unification in the south, will be victorious in the struggles to come.
And we are confident that with Kim Jong Il and the Workers’ Party of Korea at the helm the Korean people will achieve the end of partition and the re-unification of the Korean peninsula.

International meeting on Party education

REPRESENTATIVES of seven communist and workers’ parties held a successful meeting in Madrid last weekend organised by the Communist Party of the Peoples of Spain (PCPE), to discuss co-operation and co-ordination in party education.
The meeting was attended by comrades from the Communist Party of Greece (KKE), the Communist Party of Bohemia and Moravia (CPBM), the Danish Communist Party, the Workers’ Party of Belgium, the Communist Party of Slovakia, and the Marxism-Leninist Communist Party of Brazil. Andy Brooks, NCP leader, and Theo Russell, from the Central Committee, represented the New Communist Party of Britain.
Two representatives of the Unified Communist Party of Georgia were denied visas by the Spanish government. Several other Latin American parties also expressed an interest in the meeting.
The discussions covered the educational arrangements of the parties present and a wide range of theoretical and practical issues faced by the various parties.
The parties present varied widely in the resources available for education. The PCPE, KKE and CPBM enjoy centrally organised education structures and operate or are considering setting up regional party schools.
Education in the KKE includes short courses for new party members in Marxism-Leninism, more intensive courses spread over six months at the central party school, and seminars spread over five months on topics such as the role of individuals in history, the law of value in socialist society, and tactical alliances.
Selection for the KKE’s intensive courses favours women, young and working class party members.
While the PCPE runs a Central Education School, the party is still in the process of drawing up an education programme and faces problems with insufficient numbers of teachers and educational materials.
However comrade Vassilis Opsimos of the KKE stressed that the theoretical content and direction of courses was more important than the human or material resources available to parties.
There was general agreement on the vital importance of theoretical education in the context of the ideological retreat of social democracy into neo-liberal economic policies, which rules out any return to the welfare state in capitalist countries.
Comrade Fernando Ferraz, the PCPE’s head of education, pointed out that both bourgeois academics and left intellectuals claim that Marxism-Leninism is “old” and “out of date”. He cited writers such as Noam Chomsky, who work entirely as individuals and have a powerful influence on young people in the west.
Ferraz suggested that all the European parties should have a common programme on the most basic subjects for Marxism-Leninist education; future international meetings on particular aspects of theory; and establishing a website similar to Solidnet for educational and theoretical materials.
Carmelo Suarez, general secretary of the PCPE, summed up the proposals decided at the meeting, including a future gathering based on an agreed agenda and the contributions in Madrid, and for the parties present to exchange educational materials.
The meeting was an important and a successful first step in bringing together parties with a common ideological position to develop the vital area of educational work, and to make a clean break with the theoretical legacy of revisionist parties in the international communist movement.

Chinese trade unions work for women

by Wang Xuemei
All China Federation of Trade Unions
A contribution to the discussion at the international trade union conference on working women that was held in Brussels in September.


WOMEN WORKERS are an important force to build a harmonious socialist society, and so are a very important component part of Chinese working class, and of its total employment population of 750 million, women account for about 46 per cent. The total membership of the ACFTU is nearly 170 million and the unionisation rate is 73.6 per cent on the whole, of which we have more than 61 million women members, making 36.4 per cent of the total. Therefore it is very important for Chinese unions to protect the women workers and staff.
The Chinese government has attached importance on the work of working women and intensified its efforts in the formulation, revision and enforcement of relevant laws, policies and regulations to protect the legitimate rights and interests of women in earnest.
China has built a complete legal system concerning the protection of women’s rights and interests, promotion of gender equality, and improvement of women workers’ employment environment based on the Constitution of the People’s Republic of China, the Labour Law of the People’s Republic of China. The Law of the People’s Republic of China on the Protection of Rights and Interests of Women is the main body of law protecting women workers and various separate laws and regulations, local regulations and administrative rules adopted by various government departments give supplementary provisions.
Along with the continuous growth of China’s economy and the overall progress of its society, women are being given more guarantees of enjoyment of equal rights and opportunities with men, and the development of working women’s rights and interest’s protection is being given unprecedented opportunities. The social status of women workers is being improved and the employment environment is getting better.
So the work of trade unions on women workers’ affairs has very good opportunities for development. However, along with the development of economic reform and changes brought by industrial restructure, we recognise that trade unions’ work on women workers’ affairs is also facing serious challenges, especially on the context of globalisation.
For example, the degree of women workers’ participation in national and social affairs, enterprise management and policy/decision-making is not yet high enough. There are more difficulties for women workers’ employment and re-employment than for men due to some extent of gender discrimination in the employment market and encroachment on women workers’ employment rights and interests. These include special care during menstruation, pregnancy, childbirth and lactation periods, and child-bearing – the so called four periods of care for women employees and so on – they are not as well practised as we expect .
It is the basic task of Chinese trade unions especially their women workers’ organisations to protect workers, women staff and workers’ legitimate rights and special interests in particular. In recent years, with the deepening of economic reform and industrial restructure in China, we have seen many changes in social economies, form of organisations, types of employment, interest relations and mode of distribution; they are all getting increasingly more diversified. Labour relations are expected to become more complicated and conflict between different interests groups is increasing.
While the total number of women staff and workers is tending to increase, requests for the protection of women workers’ rights and interests are becoming diversified and more difficult. A large number of women in the rural workforce have shifted to non-agricultural industries and moved to urban areas. Rural women workers have become an important component part of the total workerforce.
Women workers in non public-sector economies are increasing as the non public-sector economy is developing rapidly. The diverse type of employment and intense competition in employment has caused an increase in laid-off and unemployed women workers. According to the Ministry of Labour and Social Security, unemployed women workers account for around 45 per cent of all unemployed workers.
The new changes for women workers have many effects. For example, due to industrial restructuring, the proportion of women workers in organisations with established trade unions, which work relatively well for the women is decreasing. Meanwhile the number of women workers is increasing in non public-sector economies, where women workers’ organisations are relatively weak or non-existent. The establishment of organisations and the form they take, even the working methods of the trade unions and women workers organisations face challenges of innovation to achieve a breakthrough.
Chinese trade unions take whatever pains are necessary to protect women workers. Women workers committees, set up by trade unions at various levels, voice the concerns of women workers and protect their legitimate rights and special interests. For a long time, Chinese trade unions have devoted major efforts to protecting the legitimate rights and interests of women workers related to gender equality, employment, pay, social security and workplace safety. They have offered education and training programmes tailored to the special needs of women workers in a bid to improve their professional and technical competence. Their efforts are largely succeeding.
Recently the ACFTU has adopted a regulation on the work of trade unions in the enterprises which includes one particular chapter on women workers. Now the women workers’ organisations at different levels are working to implement this regulation and through this effort to do a better job, to protect the legitimate rights and special interests of women workers in the enterprises.
Meanwhile the ACFTU pays much attention to the protection women staff and workers regarding their rights and interests of equal employment. The ACFTU now actively focuses on driving forward the special collective contract to protect the rights and interests of women workers, and give prominence to the contents of the following key points: employment, equal pay for the same job, leave and holidays, four periods care, vocational education and skill training and so on. Women workers organisations at all levels take various measures to guarantee the effectiveness of their performance through a good efficient supervisory mechanism.
To target the problems of women workers – say for example, four periods care is not doing well as we expected, conditions of vocational safety and health are not good enough, and their intensity of labour (they are working too hard and need to decrease the amount of human labour) in non public-sector enterprises, especially small and medium enterprises – women workers’ organisations within trade unions participate possitively at different levels . They push up the revision of the regulations on labour protection for women workers and give policy suggestions to government concerned to improve it.They try their best to protect the rights and interests of women workers’ labour safety and health.
Concerning the daily life and difficulties of women workers in need, particularly one-parent women worker, the women workers’ organisations give their personal assistance in concrete forms and push the local governments to solve the problems of re-employment for unemployed women workers, and give assistance when they are in difficulties.
The Chinese trade unions strengthen the investigation and research on women workers, try to unionise women workers, and establish the protection mechanism for women workers’ rights and interests. Now we have established 760,000 union grassroot units of women workers’ organisations, which account for 57.8 per cent of grassroot unions in the whole country.
With the contemporary situation of economic integration and globalisation, with transnational capital transferred from one country to another, women staff and workers in China are affected more than men, for many reasons.
Dear colleagues, sisters and brothers. The ACFTU insists that we will unionise them wherever we have women workers. Let’s fight for women workers legitimate rights and special interests together.

Demand the whole cake -- and the bakery!

Last week Ray Jones, New Communist Party SE District Chair, gave a talk to students at Varndean Sixth Form College, Brighton. The event was one of a series of lectures organised by Roy Cullen of the Politics Department covering a broad political spectrum. About 40 students attended and a lively discussion developed. What follows is the text of Ray’s speech.


LET ME START with a quote: “I don’t see how you can ever get any real justice or prosperity, so long as there’s private property, and every thing is judged in terms of money — unless you think it just for the worst sort of people to have the best living conditions, or unless you’re prepared to call a country prosperous, in which all the wealth is owned by a tiny minority — who aren’t entirely happy even so, while everyone else is simply miserable”.
Does any one happen to know who said that? It sounds quite modern doesn’t it? Phrases like, “everything is judged in terms of money” and “all the wealth is owned by a tiny minority — who aren’t entirely happy even so”, can be heard in our media today.
But it was Thomas Moore in 1515. He went on to be executed by Henry VIII and to be made a saint by the Catholic Church; although not for ideas in the quote in either case!
The point is that socialist ideas have been around for a long time and are not foreign to Britain.
But it was Karl Marx and Frederick Engels who laid the basis of scientific socialism.
In 1848 they published the Communist Manifesto — a call to the working class of the world to get ride of capitalism and replace it with a fairer and more just system — socialism.
Marx pointed out that it is capitalism itself which creates the working class and that ironically they will be its gravediggers.
Industry and mass production bring workers together in factories, mines, mills, offices and social services.
There they get a special education. They learn how employers tend to exploit them for all they can get.
They learn that isolated on their own they can do little about it.
They learn the need to cooperate with each other.
They learn how to organise to resist the employers — first in their own work place, then in their industry and then nationally.
I’m not claiming that all bosses are bastards! Although some of course are, others are not. It is not about “nasty” people, it is the nature of capitalism that forces them to try to increase profit and so try to increase exploitationSo from simple limited trade unionism the whole thing grows to politics on a national scale.
This could be said to be a sketch history of the Labour Party, which was formed initially to take the workers’ union demands for a bigger slice of the cake to Parliament.
But it took something more to move from the demand for more crumbs off the cake to the demand for the whole cake — and indeed the whole bakery!
It took people like Marx and Engels, thinkers and philosophers as well as doers and activists, to show the need for revolution and not merely reform.
The only way of ending the conflict between bosses and workers is for the working people, the vast majority, to win the conflict.
For them to take over industry, offices and services and run them for benefit of all and not the profit of a few.
And to do that they will need to build themselves a new state organisation after the old one is thoroughly smashed.They must spurn the crumbs to win the prize (to paraphrase a socialist song).
You could argue, and many people do — if they happen to be in work at the time, have a home and are healthy — “Well, things aren’t so bad, why rock the boat?
“Why go through a period of change and probably chaos [chaos because the capitalist class will, history shows us, fight tooth and nail to keep its lifestyle, power and privileges] to an uncertain future?”
Communists don’t take this argument lightly. It is probably the biggest ideological barrier to revolution in advanced capitalist countries.
There are however strong arguments against it.
The level of prosperity in countries like Britain is to a very large extent dependent on the super exploitation, and hence abject poverty, of millions of people around the world.
You only have to watch your television carefully, ignoring the vacuous celebrities and presenters, to see that millions of people in Africa, south Asia and South America are living in conditions our medieval ancestors would have known well.
No running water, inadequate shelter, bad sanitary arrangements, poor diets.
This not the fault of our working class, it is the fault of global capitalism, but it is not necessary and we can change it!
Even here in Britain there are far too many cases of extreme poverty — people down-and-out, without a home, who don’t know where the next meal is coming from.
And far too many families, who are struggling on, weighed down by debt and low pay; while the rich live lives which the rest of us can hardly conceive of.
For example I met a garden centre owner the other day who specialises in providing plants for the gardens and homes of the rich and famous. He had recently sold a number of plants and pots to a client for her balcony for £50,000.
After a week or two the plants developed a slight browning on some of the leaves. It was nothing, she was assured, that a little pruning and TLC wouldn’t put right. But no, the whole lot, including pots, had to be thrown out and new ones bought.
Then there is the state of our planet — the phrase “going to hell in a handcart” springs to mind.
Global capitalism is busy destroying our world for profit and any recent conversions to a green perspective are limited and superficial — and only taken up if there’s a quick buck in it.
Capitalists will happily take government subsidies for new wind farms and then build them in unsuitable places or to produce biofuel from crops which are harming the environment or are needed for food.
If we are to have a world worth living on workers must organise and take the power out of their hands.
Also capitalism regularly resorts to terrible wars to try and solve its problems for example to get more resources, such as oil in Iraq, or to increase its spheres of influence from where it can screw its profits.
Wars are useful to capitalism because they use up material and goods at a high rate and stimulate production in the short term.
They can take up surplus labour which might other wise get up to mischief at home.
Wars are not useful to the working people because they kill us and cause untold misery!
The above problems are not simply the result of conspiracies, although conspiracies happen, as do bad people. They are part and parcel of capitalism.
And there is no alternative system to capitalism but socialism.
But even if all these arguments are discounted, we just cannot sit on our hands and do nothing if we value our future and out children’s future.
The capitalist system is inherently unstable. It goes through regular crises, booms and slumps, which it cannot prevent.
From the terrible depression of the 1930s to the recent crash of the Northern Rock Bank which saw people queuing outside for their money (reminiscent of the scenes in Western films when the small town bank goes under after the manager absconds with the money), the history of capitalism can be traced from crisis to crisis.
Capitalism is very brittle in spite of its strength — the housing market in the United States has problems and the whole capitalist world banking system starts to crack.
One day however capitalism will just fail to recover, the whole system will collapse and everywhere will descend into barbarism.
Unless, that is, the workers act first and transform this mad, unjust, unstable system into a rational, fair and cooperative society. Into socialism.
The keys to that transformation are organisation and ideas.
History shows that to be successful the working class must have an organisation that will lead and coordinate its struggles, one that acts in a disciplined way for the whole class and not just part of it.
One that understands and can explain what is happening and can show the way forward.
The New Communist Party is attempting to build that party in Britain.
We are fighting on issues that can unite our class, such as higher wages, better education, better healthcare and against things that divide us, such as racism and fascism, sexism and homophobia.
All around the world other workers are doing the same.
In some places such as Cuba, Vietnam, China and north Korea they have done it and gone further and embarked on the great project of socialism; each in their own way, determined by their own conditions and history.
Naturally the capitalists see the challenge and attack and obstruct them as best they can, but others will follow, must follow — the alternative is unthinkable.

International Trade Union Conference of Working Women

• World Federation of Trade Unions
  
  
  INTERNATIONAL TRADE UNION CONFERENCE OF WORKING WOMEN
• 
  September 13 and 14 2007, Brussels Belgium
  
  
  Final Declaration
• 
  The Conference on Working Women organized by the World Federation of Trade Unions was held in Brussels from September 13th to 14th 2007 and was attended by 95 delegates from 62 countries representing 80 trade union organizations. During two days participants exchanged about the situation of working women in their respective countries and regions, recognizing that there had been "some progress" only for rich and affluent sections among them, leaving the large mass of women for whom there are still many problems remaining unresolved and that there are many obstacles and gaps in terms of gender equality. The conference recognized,
  * that the international finance capital is on offensive through its instruments to circumvent the interests of the workers-farmers and other poor and vulnerary sections of the developing economies and the interests of labour and other weaker and vulnerable sections in the developed world as well. The process of exclusion is impacting women the most.
  * That the attempts of the Multinational Corporations/ Transnations Corporations to appropriate and control the natural resources, the small businesses and enterprises, the farming lands, the knowledge base of diverse societies in various countries are aggressively being pursued and the women are bearing the main brunt of these policies.
  * That we characterize the process being imposed as Capitalist Globalisation, and it has de-humanising impact on the society.
  * That the imperialist wars have been imposed on Afghanistan, Iraq, Lebanon bleeding the mass of people, specially bringing untold miseries on women and children. The people in the Palestine and occupied territories in the Arab World continue to suffer violence and aggression at the hands of Israeli regime with backing from US Administration. The US administration continues to declare any country at its will 'a rogue' and decides its target for ruination.
  * That the militarization, aggression, threat of aggression are continued as matter of policy to pursue the economic exploitation and plunder of nations, regions and the people at large.
  * That the anti-labour policies at international, regional and national levels are deepening the inequalities and there has been a growing gap between rich and poor countries as well as between regions, even within countries and the women have been the most affected group.
  * Today 1.2 billion of the world's 2.9 billion workers are women (40%).
  * While women are massively moving into the labor market, more and more women are being pushed into informal/unorganized/contract/casual/daily labour in indecent work conditions with very low wages/earnings. They are integrated under the worse conditions with low payment and low working status remaining at the bottom of the occupational hierarchy and they also tend to have unsafe working conditions, something that serves as tool for the attack against labor rights.
  * Poverty is increasingly feminized. Women are 60 % of the world's working poor people.
  * More women than ever before are unemployed (81.8 million). They are mostly stuck in low productivity jobs such as agriculture, the field of services and the informal sector.
  * Women are submitted to intense discrimination and they are paid lower salaries than men even for the same job. Globally,women earn 20-30 % less than men.
  * Maternity protection for vast numbers of working women is barely guaranteed and working women who become pregnant are faced with the threat of loosing their jobs, suspended earnings and increased health risks due to inadequate working conditions.
  * Women are increasingly migrating, both legally and illegally, seeking for better employment. They represent almost 50% of all international immigrants and they are among the most vulnerable group exposed to exploitation and abuse.
  * Women are being trafficked for prostitution and leisure including young girls between the ages 7 year to 14 years. This is happening within the countries and across the borders.
  * The child labour and child abuse are on rise, contrary to the claims at various levels.
  * The state has been continuously withdrawing from providing education, health, sanitation, drinking water, rations to poor at cheap rates, housing for poor etc.
  * The reports of suicides by farmers due to deepening agrarian crises and those of unemployed has been phenomenon in various countries.
  * Women participation in trade unions organizations and collective bargaining process is still insufficient in relation to their presence in the labor market. The participants were of the views:
  * That in contrast to this situation, the socialist societies did succeed in solving the immense problems of unemployment and homelessness, the illiteracy and health, the sanitation services and safe drinking water and in meeting the minimum basic needs of food and clothings in their respective countries.
• * That those of the societies which faced reversal from the socialist economies have once again plunged into the cycle of unemployment, homelessness, prostitution, withdrawal of child care services which are vital for working women, expensive education and health depriving specially the girls and women from these basic rights which they once enjoyed.
  The participants recognized that in order to fight against women discrimination it is necessary to create just societies in which human beings may be the centerpiece of developmental policies and all progressive forces may fight for a better world. For a world without exploitation of person by person.The participants also recognized that the workplace is a strategic space in order to create proper respect for gender equality. Trade unions are worker's organizations created to protect and improve workers' social and economic situation by the way of collective bargaining and mobilizations for the benefit of both genders; trade unions can also demand government policies and legislations related to women's equality issues. The Conference examined some experiences, ideas and initiatives introduced by trade unionists in terms of promoting policies geared towards enhancing the working conditions and socioeconomic rights of working women, and as the result of this exchange they agreed:
• * The constitution of a permanent WFTU Working Committee composed of members representing different regions, for the purpose of systematically examining all aspects related to the problems faced by working women. * To develop trade union skills and training programs on gender equality at the workplace, such as seminars on international laws for the protecting and expanding the rights of working women and how these laws can affect legal frameworks, policies, activities and campaigns at the national level. * To strengthen the capacity of class-oriented trade unions so as to include gender issues in their collective bargaining, dialogue and trade union policies as well as to examine the achieved progress.
• * To inform working women about their legitimate rights and help them assure those rights, including legal assistance when presenting claims on violations of the working women's rights and in the supervision of ILO Conventions. * To promote the ratification and implementation of labor standards relevant to gender equality, particularly the No. 100 on equal remuneration, No.111 on non discrimination in employment and occupation, No.156 on workers with family responsibilities, No.183 on maternity protection, convention on home based workers and others conventions. * To promote the occupational, health and safety measures for the women workers. * To struggle for increase of women's participation in trade unions, and also their elections as trade union leaders.
• * To urge the unions to have gender-equality as one of the subject in Trade Union education programme.
• * To urge the unions to involve women trade union leaders also in negotiations at various levels.
• * To look for innovative ways to reach and organize women workers outside the formal workplace who works in precarious conditions.
• * To develop campaigns for equal pay, equality of gender in workplace and in society specially during May Day activities, the International Women's Day and in the framework of other important Conferences and Congress.
• * To plan activities for observing proposed international year 2009 by UN for women and work to have active trade union roles in its observance.
• * To make efforts in order to identify and fight against sexual harassment or violence against women and to seek legislation on the subject matter in respective countries.
• * To create an internet network among all the participants in the Conference for the further exchange of information, experiences and initiatives.
• * To create alliances and close relations with the WIDF and other women's organizations, the WFDY and other movements, both national and international.
• * To organize working women's conference at regional and national levels regularly, to provide women with a space to raise their concerns and for trade unions to adopt concrete policies, actions and results on gender equality.
• * To increase our solidarity actions in strengthening the struggles of various trade unions and groups of people for women workers' rights.
• * To bring out an e-Bulletin for exchange of experiences, for expressing solidarity with fighting women workers, to expose the discriminations and violations of women's rights across the globe.
• * To fight back resolutely and work for elimination of child labour practices.
• * To fight for full employment, dignified wages and work conditions, right to education and health. We call upon to all women militants of the world to act jointly with men inside trade unions. To resist the capitalist globalisation, imperialist wars, destruction of environment. To demand trade union and democratic freedoms. We denounce the attacks of the capital, the corporates, the cartels on the rights of unions and violations of labour rights. We resolve firmly that we would increase our initiative of solidarity with fighting unions and people and strengthen our international solidarity. We address a call to strengthen the WFTU in the new course which started in its 15th Congress in Havana Cuba. We believe that the world working class needs a class oriented trade union movement, democratic, militant and modern, independent from transnationals and the capital.
  
  
  Brussels, 14th September 2007
  
  
  
  40, Zan Moreas street, Athens 11745 GREECE
  Tel. +302109214417, +302109236700, Fax +30210 9214517
  www.wftucentral.org E-mails: info@wftucentral.org, gensec@wftucentral.org

The Feminisation of Poverty

WFTU conference

The feminisation of poverty

by New Worker correspondent

LOW PAY, discrimination, long hours, domestic responsibilities, harassment, violence and lack of opportunities are the major problems facing working women all around the globe. Ninety-five women delegates from trade unions and progressive political parties in 62 countries reported a very similar picture of the situation in their own countries to a two-day conference in Brussels last week organised by the World Federation of Trade Unions (WFTU).
It’s an old, old story but the common themes in the contributions stood out; most countries have equal opportunities legislation and protection for women from violence – but these laws are rarely implemented.
The spread of liberal economic policies, described as global imperialism by WFTU, is having a devastating effect on working class standards of living, wages and working conditions around the globe and women workers are feeling the brunt of this.
These same economic policies have increased the commodification of women, leading to an alarming increase in the trafficking of women and enforced prostitution.
Women living in the former Soviet Union and Eastern Europe who once enjoyed high standards of equality and protection now face some of the worst conditions.
But women living in China, Vietnam, Cuba and Venezuela are enjoying rising standards, though delegates from these countries explained there are still improvements to be made. Maria Fabregas from the Cuba Construction Trade Union reported that the situation for women in Cuba is improving; barriers to equality have come down and government funds have been earmarked to improve the situation for women further.
Wang Xuemei from the All China Federation of Trade Unions, which has 170 million members, of whom 61 million (36.4 per cent) are women, reported that China’s legal system protects women’s employment rights. The shift from rural to urban work in China has led to a greater diversification of women’s employment. But in some sectors the trade union membership of women is low and women who are not in trade unions are vulnerable to exploitation and discrimination.
Amarjeet Kaur from the All India TUC reported very serious problems that are exacerbated by imperialist globalisation, leaving many woman working in slave conditions. She spoke of remnants of feudalism, though there are emerging traces of socialism in a few areas.
She said: “The shenanigans of the neo-liberal economic globalisation, mass privatisation and deregulation have bulldozed the domestic markets, destroying the employment potential of the industries.
“Unemployment, under-employment, casualisation of jobs, sale of state-owned enterprises, mergers and acquisitions of industrial enterprises, exploitation of cheap labour, shifting of jobs in the ‘race to the bottom’, denial of hard-won legislative entitlements including social security, heath care benefits and so on are the worst onslaughts against the workers.
“While the phenomenon of globalisation is pernicious to the whole of humanity, the capitalist system with its inherent characteristic of creating subjugation and slavery is intrinsically anti-women, resulting in the ‘feminisation of poverty’.”
Amarjeet Kaur went on to speak of a rising rate of farmer suicide in India – and among women farmers. But no statistics are kept on women – so they do not get any benefits or relief.
Many are forced into prostitution from as young as 14 and become commodities of men.
She also spoke of deteriorating working conditions in call centres where many Indian women are employed by foreign banks – now making big job cuts in the current global banking crisis.
One delegate from West Bengal spoke of fighting in the streets happening as the conference was taking place, centred on a trade dispute by women in the textile industry. Men trade unionists had come out in force in solidarity with the women in struggle and this was leading to the fighting as police tried to break up marches and support rallies.
Nemat Hassan from the International Confederation of Arab Trade Unions told the conference that Arab working women still have very few constitutional rights; their role is considered to be housewives and they lack civil and personal rights. She said that Arab societies are generally dominated by men and that many women lack political awareness. Those fighting for women’s rights find themselves in conflict with religious ideas.
Anastancia Ndhlovua from the World Federation of Democratic Youth spoke of the diverse backgrounds and problems of delegates – but with common themes.
She also spoke on the effects of imperialist globalisation – of unemployment, the casualisation of work and young girls forced into prostitution. “Prostitution isn’t a job,” she said, “it’s slavery”.
Noluthando Sibiya of the South African Confederation of Trade Unions told the conference that in South Africa a woman’s average life expectancy has dropped from 57 years to 47, largely because of the HIV-Aids pandemic.
She said that the overthrow of apartheid had been a great step forward but now the overthrow of capitalism was needed. Neo-liberal economic policies have increased all kinds of social ills.
She also said that in the trade union movement in South Africa there were many women at rank and file level but too few at leadership level.
Natalia Lisitsyna from Russia Zaschita Truda spoke of the shocking collapse of conditions for working women in Russia now. She said that mass poverty has become a stable phenomenon that has altered the mentality of people.
Women now face a choice – to be employed or to give birth, they can no longer be expected to be able to do both. Working women now have no rest days and no breaks at all during their shifts for meals or to use the toilet. They are expected to spend full eight-hour shifts standing at their lathes. Natalia also told the conference that the population of Russia has decreased by around 30 million since the early 1990s.
Nanuli Kvavadze painted a similar picture of life now in Georgia. She said the privatisation process had been a shock therapy with the International Monetary Fund destroying all economic sectors.
“Society is being destroyed; the education system is so expensive now; it is so different from the Soviet system.”
Daphne Liddle, from the Central Committee of the New Communist Party of Britain, spoke on the devastating effects of high levels of personal debt on long hours, health and child neglect and how such debt undermines trade unions.
Other common factors from the delegates were high levels of political awareness and a deep understanding of the class struggle. All were well aware that the disadvantages of working women arise from a class-divided society and not from any inherent quality of either men or women.
And the evidence showed that where men and women trade unionists stood firmly together in solidarity, conditions improved for both. There was not a trace of bourgeois feminism.
Ncumisa Kondlo from the South African Communist Party called for a different kind of debate in future conferences. She said it was not enough to define the problems of women in struggle everywhere – the problems are the same. What we need is to exchange experiences in combating these problems so that delegates can go away from the conference with constructive strategies and tactics to implement in their own conditions.
Ncumisa is an SACP Member of Parliament in South Africa. She told the New Worker she had first become politicised as a teenager by the Soweto school strike against apartheid in the 1970s.
The conference also included delegates from Afghanistan, Basque, Belgium, Brazil, Bulgaria, Cameroon, Colombia, Congo, Cuba, Cyprus, the Dominican Republic, Ecuador, France, Gabon, Galicia, Greece, Guinea, Hungary, Germany, Iran, Ireland , Liberia, Malawi, Mauritius, Nigeria, Pakistan, Panama, Peru, the Philippines, Poland, Portugal Serbia, Spain, Sudan, Sweden, Tunisia, Venezuela and Vietnam.
There were apologies and messages of good will from many other organisations. WFTU paid all accommodation costs but the price of air fares was prohibitive to many struggling organisations.
The general secretary of WFTU, George Mavrikos, left political campaigning in the Greek general election for a few hours to come and address the conference. He told of the recent revival of WFTU following its 15th congress.
In May 2006 WFTU organised a trade union conference on the “Social phenomenon of economic migration in the 21st century” also held in Brussels and involving dozens of trade union organisations and academics from around the world.
It also organised a European trade union conference of “The truth about Darfur” with representatives from 24 European countries.
There was a solidarity conference with the people of Lebanon held in September 2006 in Athens, which condemned the imperialist policy of Israel and the United States.
In the International Labour Organisation WFTU mounted a defence of Cuba and Venezuela against slanderous attacks. And WFTU took part – along with the AFCTU, OATUU and ICATU – in organising the International Trade Union Forum of Beijing.
WFTU also participates in the United Nations in New York, in Unesco in Paris and the Food and Agriculture Organisation of the UN in Rome.
George Mavrikos told the conference last week: “For us in the WFTU, in the class oriented trade union movement, the role of the working woman is crucial. The role of working women in the production process, in the trade unions, in the political struggle can provide additional strength to the popular struggles now and in the future.
“The class oriented trade union movement has always had a firm position and fought for equal rights for working women, for equality at work and in every aspect of life.
“It struggles to stop the enslavement and trading of women, for the right of women to vote, for their right to participate in unions, in political parties, in government and state positions, for the participation of women in social and cultural activities.
“Many of these rights were realised in socialist countries, where the working woman achieved the status she was entitled to.
“Unfortunately, following the counter-revolutionary developments in the period 1990-91, the international correlation of forces changed to the detriment of the progressive forces. The US and its allies enforced a new imperialist world order and in this way many of the rights and gains of women were taken away.”
He told the conference that the conclusions of the conference will be discussed in all trade unions that are members of WFTU and secretariats for working women will be formed in all trade unions to plan and coordinate struggles.
The conclusions will be sent to international organisations and governments and conferences of working women will be held in every continent next year. The proceedings of the conference will be produced in book form and Comrade Mavrikos called on every trade union to see that it is translated into the language of its country.
The conference produced a final statement that was subject to amendment (mainly additions) during the debate, that described the position of working women and listed essential measures to improve things.

Engels on the English Revolution

Oliver Cromwell
1599 - 1658

Oliver Cromwell, the leader of the English Revolution, died on 3rd September 1658. Cromwell, the MP for Huntingdon, was the leading Parliamentary commander during the English Civil War which began in 1642 and ended in 1649 with the trial and execution of Charles Stuart and the abolition of the monarchy. The Republic of England, or Commonwealth as it was styled in English, was proclaimed soon after. In 1653 Oliver became head of state, the Lord Protector.
The republic he led included England, Wales, Scotland and Ireland as well as colonies in New England and the Caribbean. Cromwell died in 1658 and his son, Richard, succeeded him. Richard was neither a politician nor a general. The new Protector was unable to reconcile the republican generals with the demands of the rich merchants and landowners that wanted to curb the influence of the New Model Army. Richard resigned in 1659. The government collapsed and the monarchy was restored in 1660.
Frederick Engels looked at the English revolution in this article published in Vorwärts! [Forward!], a radical paper based in Paris associated with Karl Marx, in 1844.



The century of revolution has to all appearances passed England by, causing little change. While on the Continent an entire old world was shattered, while a twenty-five-year war cleared the air, in England everything remained calm, neither state nor church were in any way threatened. And yet since the middle of the last century England has experienced a greater upheaval than any other country — an upheaval which is all the more momentous the more quietly it is brought about, and it will therefore in all probability attain its goal more readily in practice than the political revolution in France or the philosophical revolution in Germany. The revolution in England is a social one and therefore more comprehensive and far-reaching than any other. There are no fields — however remote — of human knowledge and no conditions of life which have not contributed to it and which in turn have not been affected by it. The only true revolution is a social revolution, to which political and philosophical revolution must lead; and this social revolution has already been in progress in England for seventy or eighty years and is rapidly approaching its crisis at this very time.
The eighteenth century was the assembling, the gathering of mankind from the fragmentation and isolation into which it had been driven by Christianity; it was the penultimate step towards the self-understanding and self-liberation of mankind, but just because it was the penultimate step it was still partial and remained within the contradictions. The eighteenth century collated the results of the past, which had previously been scattered and appeared to be fortuitous, and laid bare their necessity and inner connection. The jumble of countless scientific discoveries was put in order, classified and the causal connections shown; knowledge became science, and the sciences approached their perfection, that is to say, they took philosophy on the one hand and practice on the other as their point of departure.
Before the eighteenth century science did not exist; the study of nature assumed its scientific form only in the eighteenth century or, in some fields, a few years earlier. Newton created scientific astronomy with the law of gravitation, scientific optics with the decomposition of light, scientific mathematics with the binomial theorem and the theory of infinity, and scientific mechanics with the analysis of the nature of forces. Physics likewise acquired its scientific character in the eighteenth century; chemistry was only brought into being by Black, Lavoisier and Priestley; geography became a science with the establishment of the form of the earth and the many voyages which only now were of benefit to science; with Buffon and Linné natural history too became a science; even geology gradually began to struggle free from the whirl of fantastic hypotheses which threatened to engulf it.
The concept of the Encyclopaedia was typical of the eighteenth century; it was based on the awareness that all these sciences were interconnected but it was not yet able to show these connections, so that only a simple juxtaposition could be achieved. History was in a similar position; now for the first time we find voluminous compilations of world history, as yet without any critical comment, and entirely without a philosophical approach, but nevertheless universal history instead of the previous historical fragments limited both in time and place. Politics was given a human foundation, and political economy was reformed by Adam Smith. The culmination of science in the eighteenth century was materialism, the first system of natural philosophy and the consequence of this development of the natural sciences. The struggle against the abstract subjectivity of Christianity forced the philosophy of the eighteenth century to the other extreme; it opposed subjectivity with objectivity, the mind with nature, spiritualism with materialism, the abstract individual with the abstract universal or substance. The eighteenth century represents the revival of the spirit of antiquity as against that of Christianity. Materialism and the republic; the philosophy and politics of the ancient world, arose anew, and the French, the exponents of the ethos of antiquity within Christianity, assumed the historical initiative for a time.
The eighteenth century thus did not resolve the great antithesis which has been the concern of history from the beginning and whose development constitutes history, the antithesis of substance and subject, nature and mind, necessity and freedom; but it set the two sides against each other, fully developed and in all their sharpness, and thereby made it necessary to overcome the antithesis. The consequence “Of this clear final evolution of the antithesis” was general revolution which spread over various nations and whose imminent completion will at the same time resolve the antithesis of history up to the present. The Germans, the nation of Christian spiritualism, experienced a philosophical revolution; the French, the nation of classical materialism and hence of politics, had to go through a political revolution; the English, a nation that is a mixture of German and French elements, who therefore embody both sides of the antithesis and are for that reason more universal than either of the two factors taken separately, were for that reason drawn into a more universal, a social revolution.
This will need to be elaborated in greater detail, for the position of nations, at least with regard to recent times, has in our philosophy of history so far been dealt with very inadequately, or rather not at all.
That Germany, France and England are the three foremost countries at the present moment in history, I can doubtless take for granted; that the Germans represent the Christian spiritual principle, the French that of classical materialism, in other words, that the former represent religion and the church and the latter politics and the state, is equally obvious or will be made so in due course; the significance of the English in recent history is less conspicuous and yet for our present purpose it is the most important.
The English nation was formed from Germanic and Romance people at a time when the two nations had only just separated from one another and their development towards the two sides of the antithesis had scarcely begun. The Germanic and Romance elements developed alongside one another and eventually formed one nation which contains the two unmediated sides. Germanic idealism retained abundant scope so that it was even able to turn into its opposite, abstract externalism; the fact that women and children may still be legally sold, and indeed the whole mercantile spirit of the English, must definitely be attributed to the Germanic element. In a similar fashion, Romance materialism turned into abstract idealism, inwardness and piety; hence the phenomenon of Romance Catholicism persisting within Germanic Protestantism, the Established Church, the papacy of the sovereign and the thoroughly Catholic manner of disposing of religion with mere formalities.
The English nation is characterised by this unresolved contradiction and the mingling of the sharpest contrasts. The English are the most religious nation on earth and at the same time the most irreligious; they worry more about the next world than any other nation, and at the same time they live as though this world were all that mattered to them; their expectation of heaven does not hinder them in the slightest from believing equally firmly in the “hell of making no money” and in the everlasting inner restlessness of the English, which is caught up in the sense of being unable to resolve the contradiction and which drives them out of themselves and into activity. The sense of contradiction is the source of energy, but merely external energy, and this sense of contradiction was the source of colonisation, seafaring, industry and the immense practical activity of the English in general. The inability to resolve the contradiction runs like a thread through the whole of English philosophy and forces it into empiricism and scepticism.
Because Bacon could not resolve the contradiction between idealism and realism with his intellect, the intellect as such had to be incapable of solving it, idealism was simply discarded and empiricism regarded as the only remedy. From the same source derives the critical analysis of cognition and the whole psychological tendency within whose bounds English philosophy has moved from the outset, and in the end, after many unsuccessful attempts at resolving the contradiction, philosophy declares it to be insoluble and the intellect to be inadequate, and seeks a way out either in religious faith or in empiricism.
Human scepticism is still the form all irreligious philosophising takes in England today. We cannot know, this viewpoint argues, whether a God exists; if one exists, he is incapable of any communication with us, and we have therefore so to arrange our practical affairs as if he did not exist. We cannot know whether the mind is distinct from the body and immortal; we therefore live as if this life were the only one we have and do not bother about things that go beyond our understanding. In short, this scepticism is in practice exactly the same as French materialism, but in metaphysical theory it never advances beyond the inability of arriving at any definitive conclusion.
However because the English embodied within them both the elements which were responsible for historical progress on the Continent, they were therefore able, even without having much contact with the Continent, to keep abreast of development there and at times even to be ahead of it. The English revolution of the seventeenth century provides the exact model for the French one of 1789. In the “Long Parliament” the three stages which in France took the form of Constituent and Legislative Assembly and National Convention, are easy to distinguish; the transition from constitutional monarchy to democracy, military despotism, restoration and juste-milieu [middle way] revolution [The French revolution of July 1830] is sharply delineated in the English revolution. Cromwell is Robespierre and Napoleon rolled into one; the Presbyterians, Independents and Levellers correspond to the Gironde, the Montagnards and the Hébertists and Babeuvists; in both cases the political outcome is rather pitiable, and the whole parallel, which could be elaborated in much greater detail incidentally also proves that a religious and an irreligious revolution, as long as they remain political, will in the final analysis amount to the same thing. Admittedly, this lead the English had over the Continent was only temporary and was gradually evened out again; the English revolution ended in juste-milieu and the creation of two national parties, whilst the French one is not yet complete and cannot be so until it achieves the result which the German philosophical and the English social revolutions have to achieve as well.
The English national character is thus substantially different both from the German and from the French character; the despair of overcoming the contradiction and the consequent total surrender to empiricism are its peculiar characteristics. The pure Germanic element converted its abstract inwardness into abstract outwardness, but this outwardness never lost the mark of its origin and always remained subordinate to inwardness and spiritualism. The French too are to be found on the side of materialism and empiricism; but because this empiricism is the primary national tendency and not a secondary consequence of a national consciousness divided within itself, it asserts itself nationally, generally and finds expression in political activity. The Germans asserted the absolute justification of spiritualism and hence sought to set forth the universal interests of mankind in religious and later in philosophic terms. The French opposed this spiritualism with materialism as something absolutely justified and consequently considered that the state was the eternal manifestation of these interests.
The English however have no universal interests, they cannot mention them without touching that sore spot, the contradiction, they despair of them and have only individual interests. This absolute subjectivity, the fragmentation of the universal into the many individual parts, is admittedly of Germanic origin, but, as we have said, it is cut off from its roots and therefore only takes effect empirically, which is precisely what distinguishes English social empiricism from French political empiricism. France’s actions were always national, conscious of their entireness and universality from the start; England’s actions were the work of independent coexisting individuals — the movement of disconnected atoms — who rarely acted together as one whole, and even then only from individual motives, and whose lack of unity is at this very time exposed to the light of day in the universal misery and complete fragmentation of society.
In other words, only England has a social history. Only in England have individuals as such, without consciously standing for universal principles, furthered national development and brought it near to its conclusion. Only here have the masses acted as masses, for the sake of their interests as individuals; only here have principles been turned into interests before they were able to influence history. The French and the Germans are gradually attaining a social history too, but they have not got one yet. On the Continent too there have been poverty, misery and social oppression, this however has had no effect on national development; but the misery and poverty of the working class in present-day England has national and even world-historical importance. On the Continent the social aspect is still completely hidden by the political aspect and has not yet become detached from it, whilst in England the social aspect has gradually prevailed over the political one and has made it subservient. The whole of English politics is fundamentally social in nature, and social questions are expressed in a political way only because England has not yet advanced beyond the state, and because politics is a necessary expedient there.
As long as church and state are the only forms in which the universal characteristics of human nature are realised, there can be no question of social history. Antiquity and the Middle Ages were also therefore without social development; only the Reformation, the first, as yet biased and blundering attempt at a reaction against the Middle Ages, brought about a major social change, the transformation of serfs into “free” workers. But even this change remained without much enduring effect on the Continent, indeed it really took root there only after the revolution of the eighteenth century; whereas in England the category of serfs was transformed during the Reformation into villeins, bordars and cottars and thus into a class of workers enjoying personal freedom and as early as the eighteenth century the consequences of this revolution became evident there. Why this happened only in England is explained above.

Don't look now but the cracks are showing

This article is based on an opening delivered by Alex Kempshall, New Communist Party National Chair, to the July 2007 Central Committee meeting.

IN Socialism, Utopian and Scientific, chapter three, Engels illustrated how capitalist crises continually recur: “Little by little, the pace quickens. It becomes a trot. The industrial trot breaks into a canter, the canter in turn grows into the headlong gallop of a perfect steeplechase of industry, commercial credit, and speculation, which finally, after breakneck leaps, ends where it began — in the ditch of a crisis. And so over and over again.
“In these crises, the contradiction between socialised production and capitalist appropriation ends in a violent explosion. The circulation of commodities is, for the time being, stopped. Money, the means of circulation, becomes a hindrance to circulation. All the laws of production and circulation of commodities are turned upside down. The economic collision has reached its apogee. The mode of production is in rebellion against the mode of exchange.”
It’s been five or six years since the last crisis, which was evoked by the exuberance over the roll out of the internet; so are we now overdue for another crisis?
All eyes are focussed on banking institutions as they announce profit warnings as result of the collapse of the US housing market. Indeed on 29th July a group of publicly and privately owned German banks had to step in to bailout IKB, a German investment fund, which managed to turn, within 10 days, a €280 million operating profit into €3.5 billion of debts five times it’s market value. On the previous Friday share values of a number of US house construction companies collapsed.
So possibly the “steeplechase” is heading for the ditch but in the last five years has it been the “perfect steeplechase”?The short answer is No!

Poverty and debt

One in 10 children lives in severe poverty, according to a report, published in June 2007, by the charity Save the Children. The report classified 1.3 million children as living in families earning an average of £7,000 a year against the national average of £19,000. Based on the Government’s more limited definition of households with incomes below 60 per cent of the national median, during 2005-2006, 2.8 million children were classified as living in poverty. This is an increase of 100,000 on the previous year and is still higher than during the 1970s. Let’s note that child poverty is poverty for families with children and we should add to the 2.8 million the children’s parents, carers and extended family members. Overall 16 per cent of the population live in poverty.
A recent Unicef report on child welfare stated that the worst two industrial countries in which to grow up are Britain and the US!
Income inequality is marginally worse than when Labour took power, mainly because the rising incomes of the top 10 per cent have continuously outstripped everybody else. According to Income Data Services directors at AIM-listed companies awarded themselves average increases of 13.2 per cent.
The average British family now spends more of its household income on servicing debts than at any time over the past 10 years, with the total personal debt now accounting for 164 per cent of their annual income, the highest figure in the developed world, and the highest figure in Britain’s history. In 1997, the figure stood at 105 per cent. We shouldn’t blame workers for getting into debt, after all the Bank of England’s former governor told MPs on 20th March 2007 that personal debt levels are the legacy of a deliberate policy to stimulate consumer spending.
This debt can take two forms – credit cards for daily living expenses such as food and clothes or mortgages for housing. In respect of mortgages this looser lending has shown itself in higher advances as a multiple of income levels. In February 2007 the median loan was 3.13 times the income of the median borrower, up from 2.99 a year earlier and well above the average of the 1980s and 1990s when it was 2.25.
Even with these multipliers, workers are struggling to find affordable homes as the price of an average house is currently 11 times a worker’s annual salary; the price of an average house, even with the Government building programme, is expected to rise to £300,000 within the next five years. In only seven out of 400 local authority areas across England do the cheapest homes cost less than four times average earnings and in London it is 13 times.
With interest rates having risen to 5.75 percentage points, the affordability of mortgages for first-time buyers and home owners has fallen to its lowest since 1992. Interest payments now account for more than 16.6 per cent of gross income, below the peak of 27 per cent in 1990 but much higher than the 11 per cent recorded in 2003.
In the first half of 2006, banks in Britain wrote off more than £10 billion in their retail arms as increasing numbers of consumers defaulted on loans and credit cards, with many opting for bankruptcy or individual voluntary arrangements.
Mortgage debts are rising, The Council of Mortgage Lenders, the industry body, on 3rd August 2007, produced figures showing a 30 per cent jump in the number of properties taken into repossession in the first six months of 2007, compared with the same period in 2006.
Even though banks have to write off these bad loans, banking still remains a very profitable business.
In February 2007, Barclays reported 2006 profits of £7.14 billion but saw bad debts rise 37 per cent to £2.15 billion. Lloyds TSB, which reported profits of £4.2 billion, said bad debt provisions rose by 20 per cent to £1.55 billion.
Earlier in 2007 HSBC said it would take at least two years to fix its portfolio of bad home loans in the US, as the meltdown in that country’s housing market continued to gather pace. Its bad debt provisions increased to £5.5 billion in 2006 but still it managed to report a record pre-tax profit of £11.5 billion.

Wages

Over the last few years the “steeplechase” economy has been growing quicker than household income; for many workers the result of higher inflation and low pay rises is, reduced or stagnant living standards.
In the five years to the end of 2006 real household income grew by 9.3 per cent whereas GDP grew 12.4 per cent. Higher taxes, rising corporate profits and high inflation from energy price increases explain the divergence.
Annual growth in take-home pay during March 2007 was 3.6 per cent whilst annual retail price inflation was 4.8 per cent. Real living standards are declining whilst GDP and corporate profits are rising.
It is not only wages that are being cut back. The Pensions Act of 1995 required pension schemes to ensure that retirement incomes on pension benefits accruing after April 1997 rose in line with RPI up to an annual cap of five per cent. However this has since been cut and now any pension accruing after April 2005 is only subject to a lesser cap of 2.5 per cent. With RPI at 4.8 per cent pensioners are seeing their income, from their company pension schemes, reduced on a year-on-year basis.
Elsewhere, pension schemes are introducing other changes to reduce the costs of honouring their pension promises. This can mean that only a percentage of future pay rises – in the case of IBM 50 per cent – is taken into account for pensions purposes. Others are lengthening the periods over which final salary benefits are calculated from, say, the last three years to the last five years. As salaries tend to rise annually, this effectively cuts benefits. In more extreme examples, some companies are moving to career averages, trimming the positive impact of salary rises later in life.
Whilst worker’s wages and pensions are under attack, British businesses operating outside the financial sector made a net rate of return of 15.2 per cent in the last quarter of 2006, the highest level since 1989.
Roger Bootle, economic adviser to Deloitte, the professional services firm, said companies appeared to have increased their pricing power while they enjoyed lower costs, thanks in part to their success in keeping a lid on wage growth.
Service sector companies made a net rate of return of 20.6 per cent in the last quarter of 2006 and for the same period manufacturers’ net rate of return was 9.8 per cent.
So with record profits Cadbury Schweppes announced, in June 2007, plans to cut about 7,800 jobs and close 10 factories globally.
British Airways has reduced its workforce by about 3,100 jobs, or seven per cent, in the year to March 2007, and expects to cut at least another 3,000 jobs in the next two years and this in spite of record profits.

Fightback

But workers are starting to fight back to defend jobs and livelihoods with 754,500 strike days in 2006, of which more than 80 per cent were strikes involving public sector workers. Also in 2006 there were 1,341 ballots calling for strike action, of which 1,290 voted in favour of a stoppage.
However, this was still well below the number of strike days in the 1970s with an average of 12.9 million days annually and in the 1980s with 7.2 million days annually. There were 29.47 million strike days in 1979 during the so-called “winter of discontent” and a record 162 million strike days in 1926.
Although union membership has fallen, almost half of workers in Britain are still employed at workplaces where a trade union is present, while a third of employees, the majority of them in the public sector, have their pay and conditions affected by collective bargaining. Hourly earnings of union members were also higher, averaging £12.43 in 2006, compared with non-union members who averaged £10.66 an hour. Negotiators in the unionised private sector industries are getting pay rises far in excess of those being achieved in the public sector.
The biggest annual increase recorded during the three months to the end of June 2007 was a 7.9 per cent rise for 600 workers at Drax power station in Yorkshire. Other increases include a 5.35 per cent pay rise for 10,000 Network Rail workers and a 4.7 per cent increase for 60,000 BT staff. It should be emphasised that these are for workers who are highly organised. The other 80 per cent plus unorganised workers in the private sector are lucky to get rises at all.
In the public sector the Government has sought to keep public sector pay rises in line with the Treasury’s inflation target of two per cent; with retail price inflation currently at 4.8 per cent, public sector workers are taking a substantial pay cut.
If we consider GDP, which is increasing at 12.4 per cent, even the 7.9 per cent increase for Drax workers is a pay cut!

Monopolisation

Monopolisation continues to pick up speed. The volume of merger and acquisition activity worldwide surged 50 per cent to reach $2,780 billion (£1,390 billion) during the first six months of 2007. Buy-outs by private equity groups amounted to $568.7 billion, about 20 per cent of the overall total.
This activity includes banking and insurance, where the $100 billion (£50 billion) battle for ABN Amro, the Dutch banking group, is a continuation of consolidation in Europe at all levels of industry and banking. When the bosses talk about consolidation what they mean is job losses – not for directors but for workers.
In Engineering, Babcock International has agreed the £350 million acquisition of Plymouth’s Devonport dockyard – a deal that gives it a dominant position in support and maintenance work for the Royal Navy’s submarine and warship fleets.
Babcock already owns the Rosyth shipyard on the Firth of Forth and runs the navy’s submarine base at Faslane on the Clyde.Babcock will pay for Devonport through debt and a £90 million share issue. In the year to 31st March, Babcock sales rose 18 per cent to £988.3 million and pre-tax profits rose by 38 per cent to £57 million. They are also expected to win a £3.9bn contract for two aircraft carriers, to be assembled at Rosyth.

Housing

House prices have doubled over the past five years, far outpacing the growth in earnings and Britain has now the world’s second most overvalued housing market, according to a report by Fitch Ratings, the credit rating agency. Rising interest rates have added to the strain. A couple with two incomes buying their first home at the end of 2006 would have found mortgage payments absorbing 34 per cent of their take-home pay, the highest level since 1990. That’s of course if they could afford the deposit, an average first-time buyer now has to save up more than three quarters of one year’s salary to afford the initial cost of buying an average home.
A typical mortgage holder has to spend 17 per cent of their income on paying the interest on their mortgage, compared with 15 per cent a year ago and this does not take into account repaying the capital.
The four interest rate rises mean the cost of servicing an interest-only mortgage with a variable rate has risen 22 per cent since August 2006. Add to this house price growth of, say, 10 per cent, and the cost of getting on to the property ladder has risen by almost a third in less than a year.
The financial press and money lenders encourage “shopping around” for the cheapest interest rates and warn prospective borrowers not to get tied into long duration deals. Although mortgage lenders may have low interest rates their arrangement fees can be up to £1000, so it is no wonder, as Alistair Darling the Chancellor pointed out, that lenders encourage these deals, as borrowers come back every two years to arrange a new mortgage instead of every time they move house. In 2005 150,000 of this type of mortgages were being taken out every month. Today they total almost 20 per cent of all mortgages and are currently having to be refinanced at appreciably higher interest rates. The Royal Institution of Surveyors estimates that these borrowers will have to pay an extra £100 per month on a typical home loan.
What is making the situation more difficult than in 1988, just before the last housing crisis, is that workers are far more indebted and therefore will feel the interest rate rises much harder. Today total personal debt now accounts for 164 per cent of their annual income; in 1997 it was 105 per cent in 1988 it was considerably less that 100 per cent.
The main reason why house prices and rents have increased so significantly is that not enough houses of the right quality, affordability or for rent are being built. The 2004 review of housing supply found that during the last 30 years of the 20th century, house building rates halved, while demand for new homes increased by a third.
Reports have indicated that affordability is likely to deteriorate under current regional house building plans. This is despite a planned net rise in the number of additional homes from 150,000 to 240,000. The measure of affordability is calculated by dividing the house price of the cheapest 25 per cent of homes by the incomes of the lowest 25 per cent of earners. This ratio has moved up from 5.2 in 2003 to 7.1 in 2006.
According to official estimates, the number of households will grow by 223,000 a year up to 2030. That compares with 166,000 a year during the past 20 years.
The solution is to build more houses, since lack of supply has played a big part in pushing up prices. Brown as Chancellor promised to raise new building from 160,000 homes in 2006 to 200,000 by 2016. Brown as Prime Minister, 11th July 2007, has promised to now increase that to 240,000 by 2016. Out of this total, the Government wants at least 70,000 more affordable homes, including 45,000 social homes built a year by 2010. The logic of this is that they expect that the remaining 170,000 homes built annually will be unaffordable!
In 2001 house building almost reached a post war low of 129,500. That increased to 160,000 by 2006 of which 277, yes two-hundred-and-seventy-seven, were council houses. To put this into perspective, in 1951, the Conservatives’ target of 300,000 new houses a year was achieved in 1953 – taking two years to raise output by 100,000 – as opposed to the current Government’s 10 years to raise it by 80,000.
Labour’s 1960s target of 500,000 houses a year gross was not achieved, but it did manage a peak of 425,000 new houses in 1968.
It remains to be seen whether the Government will meet its own limited targets; it will not unless massive pressure is placed upon them by the labour movement to:
• end the privatisation of council housing, whether it be the sale of houses to private landlords or housing associations;
• allow councils to build decent affordable, secure and accountable council housing backed by government borrowing;
• give councils more rights to manage empty houses;
• allow councils to use the surplus in their housing revenue accounts to enhance the management and maintenance of council housing.
• bring housing association stock under council ownership.
• oppose the marketisation of housing rents.

Pensions

In respect of pensions, the deficits of the Britain’s 200 largest pension funds have fallen by about 40 per cent in the year to March 2007, reducing a deficit of £48 billion to £29 billion. Currently as many as 30 per cent of them are in surplus and there is a 60 per cent chance that all will be by 2010.
The turnaround from the huge deficits of a few years ago has come on the back of rising stock markets. In some cases it has come from rising contributions from employees and employers and reduced benefits.
So with the potential of occupational pensions having a surplus and therefore able to enhance pensions, the Engineering Employers Federation asked the Government, in May 2007 to change the law to allow companies access to pension fund surpluses. The issue is being considered as part of a deregulatory review the Government has set up, which is due to report shortly. This must be opposed; pension fund surpluses should be used only to enhance pensions.

Corporation tax

Of late there has been much talk about the use of the taxation system to fund acquisitions. Tinkering with the tax system is one of the Government’s favourite tools to encourage so-called entrepreneurs and investment – it never achieves the expected results. Time and again, a tax break that is big enough to make a difference to the behaviour of entrepreneurs and investors ends up being exploited in a way that was not intended. Tax officials are left scrambling to close loopholes after too much money ends up subsidising low-risk assets, supporting businesses with no intention of expanding or cutting the tax bills of wealthy individuals.
Early on in this Government the tax regime was changed to exempt from corporation tax all small companies with taxable profits of less than £10,000.
What was the result? Thousands of new companies were formed by individuals, the majority of whom had the sole goal of cutting their tax bills. The beneficiaries ranged from self-employed traders to thousands of affluent middle class parents who set up companies through which to pay their nannies.
Another was taper relief, which reduces capital gains tax over time, resulting in effective tax rates for business assets of just 10 per cent after two years. This ended up costing the Treasury £6.02 billion in 2006-2007, much more than the £3.9 billion collected in capital gains tax. This is the preferred tax saving device used by private equity when buying up companies but it also used by public equity companies like BA, BAe, Virgin and News International. At our Congress in December 2006 the New Communist Party drew up comprehensive demands for the taxation system, under the slogan: “The rich have plenty. They must pay,” to ensure that taxation is progressive.

US subprime

Back to our steeplechase. Over the last few years vast amounts of money has been lent to sections of the US population, encouraging them to move out of the rented sector and to buy their own homes. This strategy by the world’s banks and financial institutions is referred to as the subprime bubble. We have to wait to see what the fallout is from this lending boom and the collateralised debt obligations (CDO) bubble that financed it.
The subprime lending boom was where US and foreign banks and financial institutions provided mortgages to financially stretched borrowers who had no savings and no proof of income. So what is a subprime mortgage?
A worker in a low paid job with no savings, living in a rented property is encouraged by financial institutions to borrow money to get onto the “property ladder”.
Their mortgage broker sells them a mortgage with low initial payments, suggesting that this will allow them to take out other loans to buy furniture and so on. In 2004 interest payments on this type of mortgage were fixed at a “lowly” seven per cent for two years, since short-term interest rates were low in 2004.
By 2006 US house prices started dropping when the two-year deals started to expire and mortgage payments were adjusted. The seven per cent fixed rate goes up to 10 per cent, with a further rise to 12 per cent in prospect. The borrower cannot pay and goes back to the lender. As house prices have fallen there is no equity left. The lender repossesses the property. The house is boarded up and possibly auctioned, which pushes down the prices of other houses in the area even further.
As long as prices rose, equity could be extracted by the lender each time the worker refinanced. Indeed, they had a vested interest in ensuring the loan was unaffordable, thus requiring refinancing as this got them another round of fees.
The scale of the problem is huge; some 52 per cent of loans made to black people in 2005 were subprime. It is estimated that 2.2 million families could lose their homes to repossession because they are unable to pay their mortgages.
The money that was lent to borrowers was backed by among other things collateralised debt obligations (CDOs). These are financial instruments which are designed to be held until they mature and are valued using complex mathematical models and other non-market techniques.
As these CDOs are not traded in the financial markets, fund managers and bankers have shopped around to find the theoretical formula that places the highest value on the paper that they hold, as it is this value that ultimately determines their bonuses at the end of the year. And as the value is not tested in any market who is to know whether the value booked on a financial institutes balance sheet is realistic or not. That means that on the rare occasions that CDOs are traded, a large gap can suddenly emerge between what a buyer is prepared to pay and the book value that the seller has recorded that it is worth.
What makes the CDO sector important is that it has exploded at an alarming rate with about $1,000 billion of CDOs issued in Europe and the US during 2006.
These bubbles, where an over estimation of values has taken place, are rarely corrected in an orderly manner. If banks and other financial institutions are forced to slash the value of the CDOs they hold, panic sets in and a broader repricing of other similar financial assets also takes place, with the process spiralling down without control and with no one able to predict when it will stop.
The last week of July 2007 saw the worst losses on the FTSE 100 and Dow stock exchanges in four years, as banks and other financial institutes were forced to abandon £20 billion of debt sales for two of the biggest private equity deals of 2007 – Alliance Boots and Chrysler. Even so US banks are still looking to offload a further $300 billion of debt obligations. The cost of insuring against a borrower’s default doubled during July 2007 and has triggered a credit crunch were banks want to offload their own debt but are loathe to issue new debt.
The knock-on effect is that financial institutes are selling “good” debt to cover their losses on “bad” debt. With “bad” debt pushing up the cost of borrowing combined with increasing interest rates cheap loans may have had their day and is may kill off private equity acquisitions as they will no longer be able to raise the debt that funded their deals. When the bubble finally bursts the losses could be higher because the parcelling out of risk to so many parties across the financial system makes it more difficult to arrange a rescue, such as that done for the Long-Term Capital Management hedge fund in 1998.
At the beginning of July 2007 Standard & Poor, the credit ratings agency, threatened to downgrade the credit ratings on some $12 billion (£6 billion) of bonds backed by US subprime home loans. This resulted in the dollar tumbling to a record low against the euro, hitting $1.37; it also fell against the yen and sterling after speculation that the continued slump in the housing market would slow the US economy.
To cap the feeling of uncertainty US companies, including DR Horton, the biggest home builder, Home Depot, the home improvement chain, and Sears, the retailer all announced profit warnings. To compound their problems oil prices increased to hit an 11-month high.
In an understatement an analyst from Standard & Poor said: “The level of loss continues to exceed historical precedent and our initial expectations.”

Conclusion

The chaos of capitalist society is there for all to see and its nature hasn’t changed since Engels wrote his analogy about the steeplechase. What has changed is the concentration of capital in fewer and fewer hands, a process described by Lenin at the beginning of the last century.
Every aspect of capitalist control must be opposed whether it be big or small, whether it appears benign or malignant because if we don’t we will end up in the ditch as well but with the capitalists on top of us.
The signs of the next crisis are appearing and already workers are being exposed to the consequences – falling living standards, pay and pension cuts, job losses and sub-standard housing.
As communists we are able to explain that there can be a new and better world: a society where there are no classes, no exploiters, no bigotry and no war. We are also able to explain that that world can only be attained after a bitter struggle against all elements of the capitalist class.