Socialist World #8

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Contents updates

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features

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U.S.: The Struggle for Abortion Rights After Roe p. 2

War and Its Consequences: Five Months after the Invasion of Ukraine

14 18 Global Food Catastrophe Looms Whirlwind of Crisis Engulfs 22 South Asia Parliamentary Elections: 28 French Another Slap in the Face for the China: The Deepest Crisis for 30 Years

Ruling Class

p. 6

p. 14

review

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Ray Dalio, The Changing World Order p. 18

Protests erupted across the country when news dropped that Roe was overturned.

This picture was taken in Miami.

Update

U.S.: The Struggle for Abortion Rights After Roe Erin Brightwell

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he Supreme Court’s decision to completely overturn Roe v. Wade, while not unexpected, was still deeply shocking.

Even though Republican attacks substantially weakened abortion access over the last several decades, the right to an abortion was correctly seen as a cornerstone of feminist progress won by the women’s movement of the 1960s and 1970s. Millions want to fight back against the right wing, and the Biden administration and the Democratic Party leadership in D.C. face a real political crisis because of their total failure to do anything to protect abortion rights.

The immediate effects, as of this writing, are that abortion is now illegal in nine states with a population of 40 million people. This is likely to increase to half of U.S. states in the coming weeks and months. Challenges to abortion bans are working their way through state courts, but in the absence of a major mass movement, the judicial system will not provide any real relief for the millions of women, girls, trans and non-binary people who can get pregnant who will be forced to travel or use illegal means to access abortion care, or who will not be able to access care at all. This will inevitably hit poor

women and women of color the hardest.

This is a historic defeat for women and the working class as a whole. Its effects will be felt around the world and will embolden right-wing and far-right forces to attack the gains of women and LGBTQ people.

Anti-abortion groups in the U.S. say they will not stop with dismantling Roe and will aim for a nationwide ban, and even a federal constitutional amendment against abortion. In the short term, these are both ruled out. However, if Republicans regain control of Congress and the White House, a nationwide ban could become a threat.

The more immediate focus for the right is to try and pass legislation in various states where abortion is banned to prevent women from traveling out of state to obtain an abortion, and also to prevent people from accessing abortion pills. Medication abortion for women in the early stages of pregnancy will be a major issue since it is very safe, does not require a medical procedure, and the pills can be sent in the mail after a consultation with a doctor, which can be done via telemedicine. Medication abortions already account for 54% of abortions in the U.S. (according to the Guttmacher Institute).

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The Reactionary Offensive

There are now widespread and very legitimate fears of other rights coming under attack. The Dobbs ruling attacked the underlying constitutional argument underpinning Roe, that abortion was among the unenumerated rights (i.e. not directly listed in the Constitution) linked to the privacy clause of the 14th Amendment, which was passed in the wake of the Civil War. The ruling says only unenumerated rights “deeply rooted” in American history can be said to be constitutionally protected. So that would mean that other rights including marriage equality and even the right to contraception could also be overturned in the future, unless they are codified in law.

Justice Clarence Thomas, in his concurring opinion, explicitly pointed in this direction.

It cannot be stressed enough that the Supreme Court ruling does not reflect the views of the American population. Polls show a significant margin rejecting the ruling. A CBS/YouGov poll showed Americans considered it a “step backward” by a 20 point margin. The same poll said 60% of respondents and two-thirds of women disapproved of the ruling, and 58% said they would approve of a federal law making abortion legal.

This ruling, and others on guns and climate change by the same court in recent weeks, conclusively show that the Court now has a hard-right, reactionary majority which will attempt to undo a whole series of historic progressive gains. It is the

culmination of a 50 year effort by the highly organized Christian Right.

The fact that the Christian Right has succeeded to this degree speaks mainly to the failures of the Democratic Party, traditional women’s organizations, and the leadership of the labor movement. Not only has the Democratic Party failed to codify Roe over a 50 year period when they controlled both Houses of Congress and the Presidency on a number of occasions, they actually helped to enact the anti-abortion Hyde Amendment in 1980. This legislative provision prevented federal funds from being used to provide abortion. It was the first part of the weakening of Roe.

The Failure of Liberal Feminism

There was every indication that the reactionary majority on the Supreme Court intended to dismantle federal protection for abortion rights when they originally voted to hear the Dobbs case a year ago, again when the oral arguments were heard on December 1, and certainly when Alito’s draft decision was leaked in early May. Scandalously, the biggest and most well-known women’s organizations like NOW, Planned Parenthood, and Women’s March, by doing next to nothing, essentially sabotaged the potential to develop a mass movement to defend abortion rights.

These organizations, as well as the biggest socialist organization in a generation in Democratic Socialists of America

Protest organized by Socialist Alternative in Houston, TX the day Roe was overturned.

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(DSA), should have been in full organizing mode over the last year, launching a major campaign to alert people that Roe v.

Wade was in danger, and to build a movement to safeguard it. Instead, the leadership of the major women’s organizations and DSA have put no real effort into organizing a fightback.

The longtime affiliation of the large liberal women’s organizations with the Democratic Party is at the heart of why these organizations refuse to take any serious approach to building the movement that is objectively necessary. The Democratic leadership is actually afraid of its own base. The last thing it wants is a new mass movement of young women and LGBTQ people filling the streets fighting for abortion rights, and demanding Medicare-For-All, paid parental leave, and free childcare, particularly while a Democratic president sits in the White House.

The extreme impotence of the Biden administration and Democratic leadership has been glaringly obvious in the days since the Dobbs decision. Cynically, Democratic politicians used the moment to send out mass fundraising emails and texts. After 50 years of Democratic failure to defend Roe, it is now clear, particularly to young people, that relying on the Democrats will have catastrophic results. Roe v. Wade was not the result of a progressive Supreme Court, but an expression of the pressure that a series of mass movements, including a powerful women’s movement, put on the political establishment.

What is necesary is a new movement to defend abortion rights that is independent of the Democratic Party.

A New Movement

Socialist Alternative has been warning of the danger represented by the Dobbs case for many months. Our position is that the way to push back on the right wing offensive on women, LGTBQ people, and trans youth is by organizing a mass movement of working class and young people to fight for a program of free abortion on demand paid for by a MedicareFor-All healthcare system that includes full gender-affirming care, all of which should be funded by taxing corporations and the billionaire class. A movement for reproductive justice should also raise demands like free childcare, fully paid parental leave, and fully funded public schools that would allow working class people a real choice in whether to raise a family on a stable basis.

Such a movement, if it is going to be able to defeat the right-wing assault on bodily autonomy and the determined inaction of the Democrats, would have to be massive, and would need to use escalating tactics including protests, walkouts, occupations, and other forms of civil disobedience – and potentially even strikes – to create a political emergency in society that forces the ruling class to act.

It would need organizations of struggle where democratic debate about the way forward could take place and coordinated actions could be planned, and it would need a leadership capable of bold initiative. Given that the right will focus on criminalizing distribution of abortion pills, resistance to those attacks will be very important. Networks will be built to dis-

tribute the pills and to provide safe, illegal abortion. We support these efforts but for them to be fully effective and protected from the vigilant ire of the right, they must be linked to a mass struggle strategy that seeks to bring the issue out into the open and demonstrate the broad support in society for legal, safe abortions.

Thousands in cities across the country came to protests on June 24, which expressed a small fraction of the rage that is developing beneath the surface of society. It is undeniable that the right holds the momentum currently, but this situation will not be permanent. The Dobbs decision, although a serious defeat, is also contributing to the deeper discrediting of the institutions of capitalism among working people. If the Republicans go on to pass laws targeting women who travel for abortion care, and/or other extremely inflammatory measures, from abortion rights to the climate, they will at some stage provoke a much deeper revolt to their reactionary overreach.

Rebuilding the Labor Movement

After years where the U.S. labor movement has been marked by a protracted decline, women, young people, and LGBTQ people have been at the center of a new upsurge in labor activity. Recently, the unionization of the logistics and service sectors has been put on the agenda primarily by young workers. At Starbucks, LGBTQ people and women are playing lead roles in winning union elections in over 100 stores, and young workers at Amazon, where women are a majority of the warehouse and call center workforce, made history by forming the first union at the e-commerce giant.

Workers, organized collectively, have the power to stop the flow of profits to the capitalist class. Organized on a wide enough scale, workers have the power to shut down the entire economy. The social power that women, young workers, and LGBTQ people have contributed so significantly to building in reestablishing the profile of going on strike and in building new unions can be an extremely powerful element in a mass movement. A new movement to secure abortion rights will likely be combined with a movement to win a broader program of demands that represents the needs of low wage workers--who are majority women, as well as LGBTQ people and people of color.

An International Struggle

In many countries around the world, winning or defending the right to abortion access has been a key feature of women’s movements in recent years. From the historic repeal of the constitutional ban on abortion in Ireland in 2018 to the Green Wave movement which won legal abortion last year in Argentina, millions across the world have mobilized to fight for new reproductive rights gains, and to defend abortion rights from right-wing attacks. Significant movements for abortion rights are building in Chile and the Dominican Republic, and in both Mexico and Colombia the decriminalization of abortion was recently won. These victories are part of a longer trend: since 2000, 31 countries have expanded access to abortion.

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Socialist Alternative led a march of 20,000 people in New York City against Roe being overturned.

Campaigns to win abortion rights are part of a broader global women’s revolt which has exploded on every continent in recent years. Women have stepped forward to lead movements fighting for feminist demands, and and have come to play outsize roles in struggles where the primary demands are not around women’s rights, such as in the revolutionary movements in Sudan and Myanmar. In the years just prior to the pandemic, International Women’s Day was revived as a major event with mass rallies and walkouts in many countries.

Attacks by the right wing on abortion have also been a growing feature internationally, including the current one in the United States. In some countries, right-wing parties and governments, often linked to conservative religious forces, are using the issue of abortion to moblize their bases. The 2016 Polish “Black Monday” protest saw over 100,000 workers, mainly women, walk off the job to defeat the right-wing Law and Justice party’s attempt to push through a total abortion ban.

The need for the ruling class to control women’s reproductive choices continues to be a feature of capitalist society.

A number of capitalist regimes today are concerned with the reproduction of the working class and maintaining the population at a level where there will be enough workers to avoid economic stagnation and crisis. In both Iran and China, the regimes are facing long-term trends towards declining population and part of their response has been to strengthen penalties for abortions in Iran, and to begin to restrict abortion access in China.

The implications of the defeat of Roe will extend beyond U.S. borders. The right and far right, particularly those where it is strongly linked to religious reactionaries as it is in a number of Latin American countries, will be emboldened by the overturn of Roe.

Conclusion

The end of Roe marks a stunning defeat for women and working people generally, and specifically to the pro-capitalist liberal feminism which has been promoted by figures like Hillary Clinton. The fiction that, as long as Democrats are elected, U.S. society is steadily and reliably becoming more progressive and just for women has been decisively shattered.

Liberal feminism, with its focus on ensuring that a tiny handful of women can climb to the same heights as men, as CEOs and world leaders, has not only ignored the needs of working class and poor women, but now has utterly failed to maintain the basic level of bodily autonomy that abortion rights provided. The capitalist system as a whole, including the corrupt political establishment that serves it, has been more and more exposed by the series of crises of recent years for its injustice, brutality, and hypocrisy.

The right wing attack on abortion rights is a visceral reminder that women and LGBTQ people will never be liberated under capitalism, and that every gain that oppressed people win under capitalism can be taken back from us. What is needed to defeat the right is a mass movement organized around a program of demands that represents the needs of working class and poor women, is led by organizations of struggle that are independent of the capitalist system including the Democrats, and that fights back using a range of class struggle methods including protests, walkouts, direct action, and strikes. In short, what is needed is a socialist feminist approach that fights against the oppression of women and LGBTQ people as well as against the capitalist system itself, while basing itself on the power of working class people. J

Ukrainian soldiers in a trench on the front lines in Popasna, Ukraine.

War and Its Consequences: Five Months after the Invasion of Ukraine Editorial Statement

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ar in Ukraine is now entering its six month. Entire cities such as Mariupol and Severodonetsk have been annihilated. Thousands of civilians and tens of thousands of soldiers on both sides have been killed, whilst probably ten times more have been wounded. Although some have now returned, over eight million refugees, overwhelmingly women and children, have fled abroad. As many again have been displaced within Ukraine.

The Kremlin’s hopes that it would occupy the whole country were quickly dashed as it met fierce resistance. It was forced to withdraw from around Kyiv, Chernigov and Kharkiv, to concentrate its forces on Donbas. This is the approximately 400 by 200 km area covering the industrial Donetsk and Luhansk regions in East Ukraine. In 2014 part of Donbas was taken over by the so-called Donetsk and Luhansk “peoples’ republics” (DNR/LNR) and since then fighting has continued.

Now Russian and Ukrainian forces are fighting over every kilometer of land in a war of attrition that is likely to last for many months, and possibly longer.

The war is a product of a new period of growing tensions

between the imperialist powers resulting from the economic crisis, retreat from globalization and neoliberalism and the consequent attempts to redivide global spheres of interest, in other words, areas for exploitation. As the new Cold War between the two major imperialist powers – U.S. and China – deepens, military and diplomatic blocs are being realigned, and regional balances upset. The camp led by the U.S. clearly sees the war as the opportunity to weaken Russia and also as a warning to and dress rehearsal for military conflict with China at a later stage.

Russian imperialism has its own aggressive agenda in which Ukraine does not have the right to exist as an independent state. The reality too is that the U.S. and the Western imperialist governments, despite all their promises to the Ukrainian people, see Ukraine as a pawn in their global conflict.

Biden Changes His Tune

Early in the war, feeling emboldened by Russian reverses and NATO’s united response, U.S. president Biden in so many words called for Putin’s overthrow. He and others in the U.S. leadership supported the idea that Russia would be driven out of the whole of Ukrainian territory and decisively defeated.

7 While Putin miscalculated badly in ordering the invasion, it looks very much like Biden miscalculated since. This is especially as the West has seen the wider costs of the war escalate.

But we must also be realistic about the military balance of forces. Despite endless Western propaganda at the start of the war about the Russian military facing imminent collapse, this is far from true.

Without Western backing, it is the Ukrainian military which would have collapsed rapidly after the invasion. For example, the U.S. sent 7,000 Javelin anti-tank missiles. However, Russia would have found it impossible to permanently occupy the whole of Ukraine or even most of it against the determined resistance of its population.

The new phase of the war in the Donbas has favored the Russian approach of using long range artillery to pound Ukrainian cities into submission. While Russian forces are still taking big casualties, Ukrainian casualties are increasingly unsustainable. The West has promised

The war is a product of a new period of growing tensions between the imperialist powers resulting from the economic crisis, retreat from globalization and neoliberalism and the consequent attempts to redivide global spheres of interest, in other words, areas for exploitation.

more high tech military systems to Ukraine. The truth is that the only way to militarily defeat the Russian military and drive it out of Ukraine at this point would be for NATO to send in its own forces, leading the world to the brink of all out war between Russia and NATO. The Western imperialists have made clear they are not prepared to do this, and instead want to confine the war to Ukrainian territory in order to maintain greater control.

So the West is now busy talking down expectations and dashing the illusions of ordinary Ukrainians. This could get worse when the Western imperialists eventually force Zelensky to sign a deal accepting the partition of the country and the effective annexation of a large part or the whole of Donbas into Russia.

Meanwhile, the Western powers are exhibiting tensions and divisions over their next moves given the potential consequences. The war has already dramatically worsened global food and energy crises, worsened inflation and the debt crisis facing many poor countries. This points to massive upheaval as we already see in Sri Lanka.

But the economic and social consequences will not be limited to poor countries. Among the major powers, Germany is particularly exposed as its economic model is based on cheap Russian energy and exports to China. There is now great anxiety in the Western media about whether Russia is about to shut down the Nord Stream natural gas pipeline. Germany relies on Russia for 35% of its gas supplies from Russia, covering the heating of half of the country’s households while France gets 19% of its gas from Russia. As the war drags on, divisions in the Western camp could sharpen with one wing seeking to bring the conflict to an end more quickly, through some form of accommodation with Russia, the other willing to let it drag on.

How the Ukraine Conflict Evolved

Ukrainian refugees line up to cross the border from Ukraine into Moldova on February 26, 2022. (AP Photo/Sergei Grits)

Since the collapse of the Soviet Union, western economic interests have exploited Eastern Europe’s cheap labor for its supply chains, and relied on the region’s energy, minerals, and food commodities. Militarily NATO has expanded across the region. Until the 2008 global crisis, both the West and Russia viewed their relationship as a

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Socialist World Issue 7, 2022

developing “partnership.” Putin even suggested Russia could eventually join NATO. But as globalization began to slow, and Russia benefited from increased oil revenues, increasingly conflicts grew.

Both the “Orange revolution” in Ukraine in 2004 and the Euromaidan crisis in 2013-4 were the result of the conflict between pro-Russian and pro-EU interests within Ukraine’s oligarchic ruling elite. In both cases the pro-EU forces resting on mass protests were victorious. The Kremlin’s response was to annex Crimea, and give military and political support to the breakaway Donetsk and Luhansk “People’s Republics” (DNR/LNR) governments in the east. The resulting war in Donbas from 2014-21 claimed over 15,000 lives. As U.S. and EU imperialist interests have strengthened across the region, the Kremlin elite has become increasingly more aggressive in opposing it.

In launching this brutal war, it claimed its aim was to “denazify” and “demilitarize” Ukraine. It justifies this, as it waged the referendum campaign in Crimea in 2014, with a deluge of horrific allegations about how the Kyiv government had been taken over by fascists. It is certainly true that Ukraine’s far right played a key role in the Euromaidan crisis and in the battles against pro-Russian forces in 2014-6, although, since Euromaidan, the far right vote has reduced from 7% to 2.2%.

A section of the oligarchs however, during the Presidential period of Viktor Poroshenko (2014-19), saw the far-right as a useful adjunct to the usual repressive state apparatus, and many far-right activists, including in the infamous Azov Regiment, have been integrated into them at various levels.

We do not agree with the way the Zelensky regime is characterized by either pro-Russian voices, who say it is far-right/ fascist or by its supporters who whitewash the real nature of Zelensky’s regime, presenting it as a defender of “democracy” against “authoritarianism.” He was elected in 2019 as an outsider, winning the support of all those disgusted by the previous oligarch regimes of Poroshenko and Yanukovich. He promised an end to the war in East Ukraine and a battle against corruption. He quickly met opposition from the far right who opposed his attempts to negotiate peace. At the same time, he continued to implement pro-business, neo-liberal economic policies, sometimes with a light covering of populism – for example proposed measures against the oligarchs.

Although his popularity was falling before the war, his poll numbers have soared because of his refusal to leave Ukraine and the way he is seen as standing firm against Russia. Yet his government continues with its anti-worker policies with a ban on strikes, new laws making it easier to fire workers, and plans to push ahead with pension reforms. The war itself has strengthened the tendencies to militarisation, and has allowed Zelensky to deal more sharply with his political opponents — including the ban on pro-Russian parties. Whatever the outcome of the war, in the absence of a left alternative, it is clear the Russian actions will lead to a dramatic increase in nationalist and right-wing nationalist views. To prepare for this it is

essential the working-class, during the war, develops its own organized political alternative to Zelensky’s pro-capitalist and pro- imperialist policies.

If the Kremlin really wanted to “fight fascism” it should start with its own camp. Among those who first established the DNR/LNR governments were many members of the neofascist “Russian National Unity,” although they have largely been replaced by figures safer for the Kremlin. Today amongst the Russian troops are groups such as “Rusich”, recruited mainly from St Petersburg neo-Nazi groups and the notorious Wagner group – mercenaries used by the Kremlin as “deniable assets,” many of whom wear Nazi and fascist symbols.

The Nature of the War

Some on the left internationally falsely give support to the Putin regime to one degree or another on the basis that it is the weaker imperialist power and echo the idea that the Ukrainian regime is pro-fascist.

However, in the West, there is an even more pervasive false position on the broad left, stretching from Podemos in Spain to AOC in the U.S. which is to give credence to Joe Biden’s claim that NATO is fighting for “democracy against dictatorship.” This leads to supporting the massive military outlays of the Western imperialist powers in the name of opposing Russian aggression. This is also echoed by some on the far left including so-called Trotskyists who combine support for the Western arms buildup with general anti-imperialist rhetoric.

But in reality the arms buildup is inseparable from the broader Western imperialist agenda. By supporting one you support the other.

ISA is totally opposed to all the imperialist powers. Ukraine today faces a long drawn out war of attrition. Zelensky’s approach is to demand more and more weapons from the west, hoping militarily to push Russia out from Donbas. If this was to succeed, it would only be at the cost of a massive level of casualties, and a vast destruction of homes, schools, hospitals and workplaces. It would likely require a much more direct intervention by NATO precipitating a much wider conflict. This would leave Ukraine completely dependent on Western imperialism, which itself could at any time change its approach to demand unacceptable concessions from Ukraine. The reality is that the Ukrainian people in this situation face a choice, either to end up as vassals of Russia, or of Western imperialism.

Unless, of course, the working-class, in defending itself from Russian occupation, can develop new methods of struggle relying on working class solidarity.

ISA fully supports the right of the working class in Ukraine to defend itself from Russian aggression, including, of course, militarily. In areas occupied by the Russians, such as Kherson, there is already developing a nascent partisan movement. But early in the war there were examples of wider mobilization against the occupation. At the Zaporozhskaya Nuclear Plant, workers and local residents came out en-masse to block advancing Russian troops, while in nearby Energodar, firefight-

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Western sanctions hit ordinary people in Russia. ers organized a demonstration in their vehicles after their firechief was replaced by the Russians.

The revolutionary methods that Trotsky generalized from the 1917 Revolution would mean, in today’s Ukraine, extending this through the mass mobilization of Ukraine’s population. But in such a mobilization, the working class must maintain its political independence from all pro-capitalist forces.

As this article is being written Zelensky has announced that an army “one-million strong” is being assembled to take back the occupied territories in the South around Kherson. If this was to happen, and not just remain as a boastful claim, it is difficult to see how the Russian army could maintain control of the South.

Nevertheless, this top-down, and in all likelihood one-off, mobilization is not the same as a mobilization based on, and organized by the working-class. By linking it, as Zelensky does, to the provision of weapons by the western imperialists means that, in effect, the imperialists would control how effective such a mobilization could be. Once reoccupied, the region would be handed back to the same owners, those responsible for exploiting Ukrainian workers and rural laborers before the war, and leaving the way open for the return of a better prepared Russian army at a later stage.

There would be a different outcome if the mobilization was completed by the working class organized in the workplaces and neighborhoods, through strikes, boycotts and uprisings in occupied areas, combined with a direct class appeal to the Russian soldiers, making it impossible for the occupation to continue. This would leave the working class able to defend and fight for its own interests — kicking the oligarchs out of the factories, allowing it to establish its own political party to

fight for political power. If this was to happen, there would be a massive boost in working class solidarity across the world, and in Russia too making it much more difficult for the regime to continue the war.

But the Zelensky regime, basing itself on bourgeois nationalism and neoliberal ideology, is completely opposed to this path, instead relying entirely on Western imperialism.

Repression in Russia

Now the emphasis of the Kremlin’s propaganda is changing. Claims it is “denazifying” and “demilitarizing” Ukraine have not gained traction in public opinion. The Foreign Ministry now says Ukraine is waging a “proxy war in the interests of the U.S.” against Russia.

The state controlled opinion polls, like Russian elections, are rigged. It is now even a criminal offense to call the “military operation” a “war.” Even so it is clear that there is not a strong mood for war. A majority of those asked do not want them or their families to be involved. While support for the war is highest amongst the wealthy and older sections of the population, the majority of young and working class people are against it.

The anti-war protests in Russia have for now died down having faced widespread repression. However, so far there has been only one day since the start of the war in which no-one was arrested for speaking out. Many soldiers have refused to go to Ukraine, others have disobeyed orders, and some who have already fought in Ukraine have refused to go back for a second tour. There have been arson attacks on recruitment centers. Opposition to the war, however, is spontaneous and sporadic, as yet not taking on an organized form.

10 Socialist World Issue 7, 2022 In part this is due to the absence of any opposition parties or organizations able to translate the latent discontent into active opposition. The so-called “systemic parties,” those which operate in agreement with the Kremlin to divert opposition into safe channels are in the “party of war” – the Communist Party being the most war-mongering of them. They have acted to relieve the pressure on the Kremlin. In the early stages, many rumors of opposition within the ruling elite, the military and security services circulated. Leading generals, including from the FSB, have, reportedly, been fired, and even in a few cases arrested. But as the conflict has entered a new drawn-out phase, and opposition at the time of writing remains under the surface, pressure on figures near Putin to take action against him has been reduced.

While in the short run Putin has strengthened his dictatorial domination over Russian society, this is at the cost of undermining the base of the oligarchic regime in the longer term.

Even if it manages to secure what Macron calls a “face saving” agreement with Ukraine, based on Russia holding on to at least part, if not all, of Donbas it will have been at a very high cost. The Russian economy has been isolated to a large degree from the world economy. It now finds itself cold-shouldered by former allies. Even Belarusian dictator Lukashenko has not been able to openly support the attacks on Ukraine. None of the Central Asian republics have recognised the break-away republics in Ukraine, and the Kazakhstan President KassymJomart Tokayev even dared to state this publicly to Putin at the recent St Petersburg Economic Forum.

Despite the “no limits” cooperation agreement between China and Russia announced in January, China too has held back from too openly supporting the Kremlin at this stage.

Despite its alleged opposition to any attack on the territorial integrity of a nation, clearly with an eye on Taiwan, which it considers part of China, it has not uttered a word of criticism of the invasion. It blames the U.S. and its allies for the war dragging on and opposes the sanctions regime that has been imposed. But it is avoiding anything that can be interpreted as directly helping Russia, either militarily, or to avoid sanctions, as, in the run up to this year’s CCP Congress, Xi Jinping needs global stability.

Chinese banks and high-tech companies such as Huawei are even withdrawing from the Russian market. A joint China-Russian project to design and build a wide-bodied jet to compete with Airbus and Boeing also appears to be finally collapsing. It is true that China and India are taking advantage of Russia’s excess oil supplies by buying them at large discounts, but even a senior Biden administration official (anonymously) told Reuters recently: “We have not seen the PRC (People’s Republic of China) engage in systematic evasion or provide military equipment to Russia.”

The Effect of Sanctions

The Western imperialist powers were, initially, united in

launching unprecedented economic sanctions against Russia.

Over 1,000 companies have withdrawn or scaled down their business, whilst the EU and U.S. have both banned oil purchases, although the actions will be phased in over the next eight months.

The Kremlin now gloats that sanctions are hurting the West more in terms of inflation, and the energy and food crises.

Indeed, the ruble has been the “best performing” currency this year — on 24 February 24, the dollar-ruble exchange rate was 85, it fell to 139, but has since strengthened to over 60.

The reasons for this are threefold. Firstly, despite the decrease in oil volumes exported, the oil price has increased dramatically, by 60%. This means the EU is now sending more money to Russia than it has agreed as assistance to Ukraine!

Consequently, Russia’s current account surplus reached $110 billion in the first five months of 2022 – 3.5 times higher than in 2021. Secondly, the government immediately implemented capital controls, limiting the export of cash and increasing the bank rate to over 20%. Although these restrictions have since been relaxed, they helped to strengthen the ruble. And of course, thirdly, the actual effect of sanctions was to lead to a rapid decline in imports, again leaving currency in Russia and strengthening the current account. The ruble is now so strong, the Central Bank is trying to weaken it.

But stabilizing the financial market is not the same as the wider economy, where ordinary people usually live. Inflation is currently 17%, the third highest amongst G20 countries – after Turkey and Argentina. Even according to government statistics, unemployment is expected to grow from 4.5% to 7% by year end while the RosStat statistics agency reports that the number of Russians living in poverty doubled in the first five weeks of the war. There are now 21 million living in poverty – which, given the fluctuating exchange rate, is between $100 and $200 a month. The unemployment figures are always understated as employers are persuaded by the government not to fire people- instead their wages are cut. In addition, it is estimated that maybe a million Russians have fled the country since the start of the war.

It is clear that a recession is looming. Some sectors are in danger of being wiped out – last month, only two of Russia’s 22 car factories were operating. Even the Russian manufacturers, who have raised prices by 30% cannot produce as, firstly the market has collapsed, and secondly, they can not get the necessary parts such as microchips from abroad. Car production fell by 97% in June. While the government is planning to take over some of the abandoned plants, the models it will be able to produce will, in the words of a Central Bank expert, be “technologically degraded”. They will no longer have airbags, APS systems or navigation units. This will be the situation in many sectors – Russian airlines, for example, expect that they will have to “cannibalize” up to a third of their aircraft for parts to keep the rest of the fleet flying in the coming years. There are now reports that even the arms manufacturers are facing

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Indo-Pacific leaders attend recent NATO summit in Madrid. difficulties. Workers at one factory in the Urals have recently been on strike as they have not been paid for two months- the director curtly warned them that workers did not expect wages during World War 2!

Forecasts by the Central Bank that Russia is entering a recession, and that it will take a decade to recover are probably pretty realistic.

War and the World Economy

The Ukraine war, now in its fifth month, has accelerated a series of processes on a global scale. First and foremost of these are the effects of the war on the world economy, particularly because it has triggered a massive energy and food crisis.

As we explain elsewhere in this issue, hundreds of millions of people in poor countries are facing food insecurity and famine in part because grain from Ukraine and Russia as well as key supplies of fertilizers from the region are not making it to the world market. Rising energy costs are also exacerbating the crisis in agriculture.

The energy and food crises in turn are fueling inflation which has reached a 40 year high in the U.S. and the UK. In many other countries inflation is even higher. It is important to stress that inflation does not have an even impact across populations. The rise in food prices affects poor families the most because food makes up a much higher part of their household budget. This is true even in advanced capitalist countries like the U.S. where millions are turning to food banks but it is a far more desperate situation in large parts of South Asia, the African continent and Latin America.

In the attempt to tame inflation the central banks in the advanced capitalist countries are now turning, as we said they would, to sharply raising interest rates. The polite explana-

tion is that by raising interest rates, the cost of borrowing for businesses and ordinary people will rise and this will reduce spending. But this covers up the brutal truth that the real goal is to hold down wages and if necessary increase unemployment even if that means risking a recession. The Bank of International Settlements recently stated that in order to prevent inflation becoming entrenched, central banks “should not be shy of inflicting short-term pain and even recessions.” The former U.S. Secretary of the Treasury, Larry Summers, recently declared even more bluntly, “We need five years of unemployment above 5% to contain inflation—in other words, we need two years of 7.5% unemployment or five years of 6% unemployment or one year of 10% unemployment.”

In this way the capitalists seek, as always, to make working people pay for the crisis of their system. But the effect of the Federal Reserve and the ECB raising interest rates will not be felt just by workers in the U.S. and Western Europe. Debts owed by poor countries to institutions like the IMF or to private lenders are largely denominated in dollars. Rising interest rates will immediately make servicing these debts harder. The consequence of spending more of the national income on debt servicing to foreign banks and financial institutions means local capitalist governments will impose cuts in education and health care for working people making the crisis even more dire.

The combination of inflation, unpayable debts and the corruption of local capitalist elites has already brought Sri Lanka to the brink of collapse. More countries will follow this grim path. With large sections of the population in country after country driven into destitution and with the threat of mass hunger, social upheaval is inevitable.

The IMF now predicts economic slowdowns for 143 coun-

12 Socialist World Issue 7, 2022 tries, accounting for four fifths of the world economy. We are on the edge of a global downturn for the second time in two years, only a year after the capitalist media was full of rosy talk about a stimulus-fueled recovery.

Of course everyone knows that inflation did not begin with the war. The rise in global inflation began with supply chain chaos triggered by the pandemic. But at a deeper level it is also the result of “easy money” policies pursued by the main central banks since the deep recession of 2008-9. This involved central banks pouring trillions into the financial markets to prevent a complete collapse. One of the inevitable by-products was to re-inflate various asset bubbles including in property and cryptocurrency as the capitalists invested the money in the financial casino rather than in expanding production, rebuilding infrastructure, etc.

Bizarrely, this also meant that the inherent inflationary effect of this expansion of liquidity was kept out of the “real economy” for a whole period, continuing the low inflation, low interest rate environment that was a key part of neoliberalism. But the pandemic changed that as the crisis was not primarily driven by the financial markets but by a collapse of demand. The stimulus packages of 2020-1 included more astronomical sums poured into financial markets but also huge amounts given directly to corporations and, to a much lesser degree, ordinary people. This inevitably contributed to laying the basis for an inflationary spike.

At bottom, the capitalist class is now lurching from one crisis to the next, with the measures taken to “fix” one situation directly contributing to the next phase.

The Effect on the Wider Cold War

Some may have thought that the Ukraine war and the U.S. response meant that it was again focusing on Europe and away from the Indo-Pacific. This is clearly wrong. In reality, we are seeing a significant escalation of the new global Cold War conflict. The war in Ukraine has accelerated this process and is also part of it.

At the end of May, Biden went to Japan and South Korea. During this trip he declared that the U.S. would militarily come to the defense of Taiwan if it is invaded by China.

While this was partly walked back by American officials and the media talked of it being another Biden “gaffe,” it is part of a pattern where Biden “lets the cat out of the bag.”

During the trip, Biden met with the leaders of the “Quad,” security alliance including India, Japan, Australia as well as the U.S. He also launched the Indo Pacific Economic Framework with 12 Pacific rim nations. This is in part meant to be a replacement for the Trans Pacific Partnership, begun

by Barack Obama, that was meant to isolate China but that Trump abandoned. However, it is not a traditional free trade agreement and focuses on voluntary cooperation in areas like technology standards.

Then, at the end of June, the NATO summit in Madrid for

the first time was attended by the prime ministers of several key Indo-Pacific nations, including Japan, South Korea, Australia and New Zealand. As the Financial Times headlined, this meeting represented a “return to ‘cold war mission’.” They go on to summarize its conclusions: “a goal of sevenfold increase in NATO forces on high alert; first permanent U.S. base on alliance’s eastern flank [in Poland], an invitation to Finland and Sweden to join, and a new 10 year guiding strategy that ditches any illusion of partnership with Moscow.” The new NATO mission statement also declared China to be a systemic “challenge.”

This is the first time NATO as a body has directly referred to China. Along with the presence of representatives of key Indo-Pacific countries, it shows how Western imperialism is drawing further conclusions about a long-term conflict with a Chinese-led bloc. There is now open speculation about an “Asian NATO.” This may not be on the cards yet but the development of the Quad and the Madrid summit point clearly in this direction.

In a complementary move, the recent G7 meeting pledged to raise $600 billion to expand global infrastructure investment in “developing countries.” This is not an act of benevolence but clearly a belated attempt to push back on China’s massive Belt and Road Initiative (BRI) which has been used by China to build close ties with regimes in Asia, Africa and even Latin America. While this is not a particularly large sum, given that it is to be raised over five years, it is more of a recognition that to push back the growth of Chinese imperialism’s influence in the neocolonial world it will be necessary to engage in building “soft power” not just expanding military budgets.

Of course the Chinese regime is not standing idly by. Xi Jinping promoted his own “Global Security Initiative” at the recent BRICS meeting which includes Brazil, Russia, India and South Africa, as well as China. The CCP regime also continues to push aggressively to develop security arrangements with Pacific island nations. A prime example is the recent agreement with the Solomon Islands which allows the local regime to call in Chinese “security forces” to help it quell local unrest in exchange for granting China, in the words of the New York Times, “a base of operations between the United States and Australia that could be used to block shipping traffic across the South Pacific.”

The trend towards deglobalization has sharpened. The clearest expression of this is the radical decoupling between the West and Russia, the world’s 11th largest economy. The decoupling of the U.S. and China also continues although at a much slower pace. We have seen a certain shift of production out of China and some evidence of “reshoring” and “nearshoring” production, that is bringing critical sectors nearer to key imperialist countries where they are more “secure.”

There has been much talk of the U.S. government investing large sums in cutting edge technologies, particularly microprocessor production, yet very little has materialized. But while the results have been meager, the turn to nationalist “in-

13 dustrial policy,” a form of state-driven capitalism, is inherent in the situation.

Instead we have seen ever more restrictions placed by the U.S. government on investment in China even while there is some talk of easing tariffs. Both in Europe and the U.S., the energy crisis has meant governments ripping up any remaining pretense at a transition away from fossil fuels in favor of developing oil, natural gas and even coal resources at a breakneck pace. This shows how the Cold War compounds all other crises.

War and Politics

lands, would tend to wane. By the middle of May, even the Biden-loyal New York Times was sounding concerned, warning in an official editorial about the danger of “all out war with Russia,” that “U.S. support for the war is not guaranteed” and that “inflation is a much bigger issue for American voters than Ukraine.” Biden’s sinking poll numbers fully confirm those points. Incredibly he is less popular than Trump at this point in his presidency.

The first round of the French presidential election in June was also a warning sign for NATO. A majority of voters supported either candidates on the far right or to the left of social democracy. While Macron spent his time presenting himself as a “European statesman” trying to find a solution to the war within the framework of Western imperialism, French voters focused on the cost of living and offered a stinging rebuke to the bourgeois “center.”

The war is deepening all aspects of the crisis of capitalism.

While the people of Ukraine suffer, both imperialist camps face serious problems. Putin on the surface seems to have squashed all opposition but only at the cost of further eroding the foundations of the regime. Russia’s ally China faces an enormous economic and social crisis. And while the U.S. and NATO’s aggressive and initially united response showed apparent strength, as the months pass, the complications in their position have accumulated.

It is inevitable that the inter-imperialist conflict which flows from capitalism’s deeper contradictions will act to exacerbate domestic crises within the imperialist states themselves. But the main victims will be the masses of the neocolonial world, facing a drastic increase in food insecurity and savage austerity as regimes seek to make their debt payments. As people face literal starvation, the imperialists will seek to blame each other for the catastrophe. But the truth is that it is the entire system of imperialist capitalism which is to blame and which must be overthrown to prevent further and even worse catastrophes. J

Some may have thought that the Ukraine war and the U.S. response meant that it was again focusing on Europe and away from the Indo-Pacific. This is clearly wrong. In reality, we are seeing a significant escalation of the new global Cold War conflict. The war in Ukraine has accelerated this process and is also part of it.

At the beginning of the war, there was an outpouring of sympathy for the Ukrainian people in Western countries. This was manipulated by Western governments to support a militarist agenda including expanding military spending and, in the case of Sweden and Finland, joining NATO. However, in many other parts of the world, including the Middle East, sub-Saharan Africa and much of Latin America, there was far less support for NATO’s agenda, given completely justified suspicion of Biden’s claims that this was a fight between “democracy and autocracy.”

Many have not missed the utter hypocrisy of Biden denouncing Putin as a dictator while cozying up to the Saudi monarchy in order to get them to increase the supply of oil.

Biden is visiting Saudi Arabia in July and has dropped all criticism of the brutal role they have played in Yemen, an even worse humanitarian disaster than Ukraine. Talk of U.S. “leadership” in the fight for democracy also rings pretty hollow in the wake of the reactionary majority on the U.S. Supreme Court overturning the 50 year old Roe v Wade decision which guaranteed the right to abortion. This shows U.S. society heading backwards in terms of basic human rights.

We pointed out that as the consequences of the war, in particular the effects on the economy, became more dire, popular support for military escalation, even in the imperialist heart-

Shanghai was on lockdown for months in early 2022 as the CCP pursued it’s paralyzing “Zero COVID” policy.

China: The Deepest Crisis for 30 Years Vincent Kolo, chinaworker.info

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succession of economic and political disasters is casting a dark cloud over Xi Jinping’s impending coronation as China’s dictator-for-life. Paralyzing “Zero COVID” lockdowns of major cities, collapsing GDP growth, record unemployment levels, and accelerating imperialist conflict in the shadow of the Ukraine war have plunged Chinese society into its deepest crisis for thirty years. All social classes have a sense of deep economic pessimism and fear of what the future holds. The brutality of the “Zero COVID” policy has stoked anger on an unprecedented scale against the regime.

Xi has reportedly instructed senior officials that this year’s GDP must at all costs come in above the U.S. figure, an improbable outcome unless the U.S. economy has a hard landing. Bloomberg has downgraded its China GDP forecast to 2% while forecasting 2.8% for the U.S. No international forecasting agency now predicts growth above 4.3% for China in 2022, far short of the government’s 5.5% target.

At the five-yearly congress of the so-called Communist Party (CCP) to be held later this year, Xi will extend his rule with a third term as general secretary or possibly by reviving the long dormant post of CCP chairman. The congress is no more than a rubber-stamping ritual, with its main business de-

cided in advance through a process of trade-offs among the 40 or so main leaders of bureaucratic capitalist clans and factions.

Xi’s concentration of personal power and abandonment of the “collective dictatorship” model of the past four decades, since the CCP under Deng Xiaoping initiated the process of capitalist restoration, is an expression of deep crisis within the regime and Chinese society. Social, political, and regional tensions are reaching a bursting point. These internal pressures are one of the drivers of imperialist conflict, as Chinese capitalism is forced to seek a bigger global role. At the same time, the imperialist U.S.-China Cold War exacerbates internal contradictions. Xi wanted stability more than anything else this year, to realize his lifetime-rule project as smoothly as possible. The word “stability” was mentioned 76 times in the government’s annual work report, delivered by Premier Li Keqiang to this year’s National People’s Congress (pseudo-parliament) in March. But stability is nowhere to be seen.

“Zero COVID”. Who Pays?

This year’s outbreaks of the highly transmissible Omicron variant have brought forth a policy of dystopian shock and awe from the dictatorship. The mass lockdowns of 2022 have no parallel in human history. Over 300 million people have been directly affected, enduring weeks of house arrest, loss of

15 income, food shortages, denial of non-COVID medical treatment and bureaucratic bullying. But even far away from the lockdowns the impact is big – as shown by the collapse in consumer spending – because people fear they may be next.

State censorship means it’s not possible to question Xi’s “Zero COVID” policy. Even the WHO’s mild criticism of the policy as “unsustainable” has been expunged from public view. Global capitalism has gradually come to the realization that Xi’s regime will persist with “Zero COVID” at least until after the CCP Congress, despite its staggering economic costs.

These are reflected in the sharp economic downturn with second quarter GDP likely to show a contraction, but also in the additional burden on overstretched local governments, which have to fund mass nucleic acid testing of citizens every 72, or even every 48, hours. A report from Soochow Securities puts the cost of regular COVID testing for all of China’s first and second-tier cities (combined population 505 million people) at 1.7 trillion yuan a year, or 1.3% of GDP. That’s more than China’s defense budget of 1.45 trillion yuan. This does not, of course, include the much bigger cost to the economy as a whole from lost output, lost consumer spending, and severed supply chains.

Most local governments are in a state of serious financial distress as a result of the drastic reduction in land sales (due to the real estate meltdown) and tax revenue (due to lockdowns and government tax relief). Japanese bank Nomura says the total local government funding gap will reach six trillion yuan (US$895 billion) this year. Local governments across the country are imposing wage cuts on their staff and even demanding repayment of bonuses from 2021.

Shanghai, with an economy the size of Argentina’s, has been locked down since late March. The lockdown was officially lifted at the start of June but then reimposed, and is still in force in many areas of the city. In Beijing, which is officially not in lockdown, over half the city’s districts have been in full lockdown at different times since the end of April. Due to a massive public backlash especially in Shanghai, which flooded onto social media despite the best efforts of the censors, the media are not allowed to use the term “lockdown” in relation to Beijing.

For the working class, the “Zero COVID” policy means increased exploitation, loss of wages, and increased indebtedness. Shanghai, for example, has almost five million migrant workers from poorer provinces. During lockdown, most of these workers have had no work and no income. To afford to live in major cities like Shanghai, most migrants will share a room – not an apartment, but a room, or even a bed – with several others. In normal times, these workers only come

home to sleep, working long hours of overtime to eke out a living wage. But, in lockdown, such overcrowded conditions become unbearable.

To meet the demands of the capitalists, especially foreign capitalists who are increasingly shifting production out of China, a “closed loop” system has been introduced at designated factories during lockdown under which workers maintain some level of production in a sealed environment. Instead of working from home, the “closed loop” system means living at work. At Tesla’s Gigafactory in Shanghai, for example, thousands of auto workers have been sleeping on the factory floor during lockdown to put in 12-hour shifts, six days a week. At Apple supplier Quanta, which employs 40,000 mostly low-paid migrant workers at its Shanghai plant, around 100 workers fought with security guards to stage a breakout in early May after Omicron infections began spreading inside the compound. Workers accused the company of hiding the outbreak and not isolating positive cases. This example laid bare how the “closed loop” system protects profits for billionaires like Tesla’s Elon Musk at the expense of workers’ health and livelihoods.

There have been at least seven other pandemic-related protests by workers in Shanghai since March. One online video shows a protest in June by dozens of hazmat-suited dabai enforcers (“Big Whites”) marching to demand unpaid wages.

Another protest in May saw clashes between dabai and police, after a promise that these workers would be allowed to quarantine in hotels before returning to their hometowns was broken, sending them instead to the spartan, overcrowded quarantine centers they themselves had worked in.

These incidents disprove the regime’s claim that its pandemic policy puts “people first”. This also answers misguided groups on the left internationally who uphold China’s COVID policy as a progressive alternative to the disastrous pandemic mismanagement of Western governments. The CCP’s stance is equally reactionary, anti-working class, and pro-capitalist.

The Xi regime’s emphasis on mass nucleic acid testing has triggered a gold rush for businesses in this field. That includes over 400 new companies launched last year alone, many of which are naturally linked to the CCP elite. Caixin Global reported huge profits for testing companies in the first quarter of 2022. Dian Diagnostics Group saw its profits rise 122%. Beijing Wantai Biological, a producer of rapid antigen tests, saw its profits increase 198%. The net profits of 20 companies listed on the Shenzhen Stock Exchange’s COVID-19 Detection Index doubled in 2021. Among China’s top 50 billionaires, ten are from the pharmaceutical or biotech industries.

The mass lockdowns of 2022 have no parallel in human history. Over 300 million people have been directly affected, enduring weeks of house arrest, loss of income, food shortages, denial of non-COVID medical treatment and bureaucratic bullying.

16 Socialist World Issue 7, 2022

A Tool of Social Control

Xi’s regime is not only persisting with “Zero COVID” but entrenching it into a system for the longer term. The infrastructure of mass testing and quarantine is being massively expanded, with hundreds of thousands of permanent testing centers being built across the country.

In so doing, Xi’s regime is significantly upgrading its apparatus of social control and repression under the pretext of fighting the virus. Restrictions on citizens’ movements are reinforced by the electronic tagging of the whole population through the obligatory COVID health code app. A green health code in your smartphone is needed to go shopping in a supermarket or to walk your dog in the park. This technology did not exist during the first phase of the pandemic two years ago. The Wuhan lockdown, which shocked the world at the time, was much softer than this year’s iterations in Shanghai and elsewhere.

of the depth of mass discontent. This threatens to explode as the economic crisis worsens and brutal COVID policies continue.

Economy in Freefall

The economic crisis is not solely or even mainly due to Xi’s “Zero COVID” policy, even if this has greatly aggravated the situation. The decisive economic turning point came last year when the housing bubble finally burst. This sector accounted for 28% of China’s GDP. It was the main motor of the CCP’s debt-driven state capitalist economic model and that motor is now broken. A related problem is that current debt levels, at more than 300% of GDP, are constricting the regime’s ability to reflate the economy with financial stimulus. Global capitalists and their Chinese counterparts are increasingly frustrated by the lack of a “big bazooka” stimulus package on the scale of 2008 or even 2020.

Xi Jinping and other CCP leaders.

In the hands of a police state, this technology will inevitably be used to suppress workers and others who challenge the authorities. This was highlighted in Zhengzhou, the capital of Henan province, where the collapse of a Ponzi-type scam at four regional banks has left a million customers without access to their accounts. In May, hundreds of protesters arrived in the city from across China to demand their money back.

When a new protest was called in June, depositors found their health codes turned from green to red upon arrival at Zhengzhou’s railway station. This is a city with no current COVID cases. Police rounded up and quarantined the protesters before sending them back to their hometowns the following day.

The Zhengzhou incident provoked a rare backlash in state-controlled media, with China Daily slamming the city authorities for “crossing a dangerous red line.” Even the nationalist CCP tabloid Global Times warned that such abuses of the health code will “damage the government’s credibility.”

That such limited self-criticism is taking place is a recognition

In past debates in the Committee for a Workers International (CWI, the forerunner of International Socialist Alternative) the previous leadership of the International Secretariat believed the high degree of state control in China, a legacy of its Stalinist past, afforded the regime a unique ability to manage the economy to avoid crises. The CCP could do things no other government could do, they reasoned.

This was true, but only up to a point. Overstating the case could lead to missteps in analysis and perspectives. Comrades including those from China, Hong Kong, and Taiwan argued it was not enough to point to the “unique” characteristics of China’s state capitalist economy (not a planned economy, but a capitalist economy ruled by a dictatorship with significant bureaucratic and state interventionist features), but also to stress their limitations. These differences do not bestow economic invincibility or immunity from crises as even some capitalist commentators imagine. Ultimately, although processes can play out on a different timescale, the laws of capitalist economics assert themselves.

17 The bursting of the property bubble shows the up and down sides of Chinese exceptionalism. Valued at US$55 trillion, China’s housing market is now twice the size of its U.S. equivalent. This is the result of an unprecedented debt-fueled expansion that was only possible because of the degree of CCP control over the banking system in conjunction with the decisive role of city and regional CCP administrations in driving up land prices through rapid infrastructure construction.

State policies provided the framework for a vast privately-owned property market to grow while simultaneously amassing jaw-dropping wealth for millions of local CCP bureaucrats through financial speculation. But today, with the property market dangerously overextended (few buyers, an unfolding population crisis, and debts in every direction), the same state-owned banks refuse to fund the struggling property companies, while local governments are themselves facing a historic debt crunch.

Sales of new homes have fallen for eleven months in a row and by a record 59% in May, year-on-year. The market collapse is accelerating despite a number of stimulus measures from Beijing and many local governments to tempt buyers back into the market. Last year, the property bubble’s exhaustion first revealed itself as a liquidity crisis at big developers like Evergrande Group. That this was just the tip of the iceberg – as we explained – has been confirmed. Over 13 million housing units were sold last year and in the four preceding years, but this year’s total could fall by a third or more.

The collapse in consumer spending has the same roots as the housing crisis. The demographic crisis, falling birth rate, and falling marriage rate are important factors. Workers and much of the middle class are significantly worse off than in 2019. Many have been hit by wage cuts and job losses. There is much greater reticence to take on more debt. Households like many companies are prioritizing paying down existing debts over new spending. The pandemic and lockdowns are reinforcing a paradigm shift in consumer habits, rooted in lower incomes and increased job insecurity. The popular buzzword tangping (“lying flat”) is one expression of this trend, especially among the young, who are turning away from consumerism, debt, and Chinese capitalism’s high-pressure lifestyle in general.

Retail sales have shrunk in the past three months, by 3.5, 11.1, and 6.7% respectively, compared to last year’s figures.

Mobile phone sales fell 14.1% year-on-year in the first quarter as young people reject the hysteria of always buying a new model (“lying flat”). Total sales of new vehicles are down by over 12% in the first five months of 2022. These figures make grim reading for the CCP regime, which for two decades has boasted of making domestic consumption the main engine of economic growth as opposed to fixed asset investment and exports. Yet private consumption only accounted for 38.5% of GDP in 2021, a lower ratio than twenty years ago.

Xi Jinping repackaged this idea when he launched his “dual circulation” economic strategy at the start of the U.S.-China

trade war in 2018. The irony is that during the pandemic it is China’s strong export growth rather than domestic consumption that has carried the economy. This growth was based on a temporary trend as lockdowns and working from home created a huge market for Chinese made laptops and other electronic equipment. This trend is now fading as expected. China’s exports of laptops are down 16% so far this year.

Whole-of-Society Crisis

Soaring unemployment is the most alarming gauge of China’s economic problems. A June report by academics at Peking University warned China’s unemployment rate could reach similar levels to 2020, when 12% of the labor force were out of work. The official unemployment data undercounts the real situation by excluding 290 million migrant workers. The most explosive ingredient is unemployment for 16–24-year-olds, which in May hit a historically high 18.4%. This is more than double the rate of youth unemployment in the U.S. (7.9%) and higher than in the EU (13.9%).

Ten million university graduates will enter the labor market in the next three months and to date only 20% have secured a job, compared to 60% at the same point last year. A new level of economic hardship and uncertainty is molding the consciousness of young people, workers, and migrants, whose faith in the ability of the CCP to manage economic affairs is being shaken to the core. The radicalization of the younger generation is reflected on social media – the only channel for limited public discussion and social commentary in China.

The online buzzword of 2020 was neijuan (“involution”), meaning race to the bottom due to lack of resources. In 2021, it was “lying flat” which even more starkly rejects China’s capitalist rat race, although in itself this does not amount to a clearly class-conscious understanding. This year’s buzzword is “run,” even called “the run movement,” although it’s not a movement but rather a powerful social mood, as are the other examples mentioned. To “run” originated in the public backlash to the brutality of the Shanghai lockdown in particular, a yearning to escape repression and totalitarian rule by fleeing the country.

These shifts in mass consciousness mark a critical change in the situation: mass alienation from CCP rule and awareness of a whole-of-society crisis. This is naturally only the first phase, not yet a coherent alternative, but nevertheless a decisive break with old norms and illusions.

The next period of Xi’s rule, as he attempts to cement his control for the coming decades, will be much stormier. China’s demographic crisis – fewer workers and consumers – and its stalling debt-ridden economy looks more and more likely to wreck the regime’s grand ambitions to overtake U.S. imperialism, while the latter faces its own serious problems. For socialists, these developments are of enormous significance as the two biggest economic and military powers of world capitalism enter a phase of unprecedented crisis and political upheaval. J

Displaced women and children gather a displacment camp in Baidoa, Somalia where a catastrophic food crisis is looming.

Global Food Catastrophe Looms Grace Fors

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he world is approaching an unprecedented food crisis that will put the lives of millions of people at risk. This comes on top of, and is compounded by, myriad other crises created by capitalism including climate change, supply chain dysfunction, pandemic stress, and soaring prices. But while all of this poured lighter fluid on the world’s food systems, Putin’s invasion of Ukraine set it ablaze.

The unprecedented public health crisis that the food shortage will soon present is a symptom of the new era of global disorder characterized by deglobalization. If recent years have shown us anything, it’s that the world economy is a Jenga tower constantly on the brink of collapse from new developments.

When it hits such a basic necessity as food, it can only further feed into the cycle of volatility, conflict, and destabilization.

The only way out is through the socialist transformation of society.

Fuel to the Fire

Food security has been on a downward spiral for many years, with climate change-induced droughts, floods, fires, cyclones, and hailstorms a key driving factor. Food production all over the world has been relentlessly jeopardized by damaged ecosystems, diminishing crop yields, unstable temperatures, and too much or too little rain. The Horn of Africa is currently seeing its worst drought in 40 years, heat waves have compromised India’s wheat harvest leading to a ban on wheat exports, and floods battering South Asia have utterly

destroyed crops and farmland. La Niña-induced droughts have been devastating agricultural activity in a number of countries throughout Africa and Asia, among them Afghanistan which was just hit with a major earthquake.

According to the latest UN report, in 2021 an estimated 29.3% of the global population — 2.3 billion people — were moderately or severely food insecure, and 11.7% (923.7 million people) faced severe food insecurity. World Food Program director David Beasley, points to the even more shocking number who are “marching toward starvation” which shot up from 80 million to 276 million over the past several years.

As a result of the war, it has increased again and stands at an estimated 323 million. Beasley further warns that 49 million people in 43 countries are “knocking on famine’s door.” Famine is defined by the UN as an extreme deprivation of food where “starvation, death, destitution and extremely critical levels of acute malnutrition are or will likely be evident.”

Extreme food insecurity and malnutrition has been concentrated in places like northeastern Nigeria, South Sudan, Somalia, and Yemen, but its scope will only grow as the course of events points toward major wheat importers across Africa and the Middle East paying dearly for the war’s impact on the price and supply of traded grains.

The UN suggests that South Sudan, engulfed in ongoing conflict and extreme weather, is headed toward the “worst hunger crisis ever.” According to the Wall Street Journal, the situation in Somalia has hit devastating new highs. “The young victims of an intensifying global food crisis are being buried in unmarked graves. In crowded malnutrition wards, families are

19 waiting for one ailing child to be discharged before bringing in the next.”

According to Oxfam, COVID-19 had already caused a sixfold increase in people suffering famine-like conditions.The economic shock of the pandemic with its impact on production and supply chains has imposed a number of major strains.

Lockdowns in China, for example, reduced the availability of labor, fertilizer, and seeds in the country, putting it in a desperate situation to produce and harvest wheat. An outbreak of swine fever has swept Thailand’s pig farms, devastating small farmers and halving their herds. All this while, new waves of COVID variants continue to break out, and a large part of the world remains unvaccinated.

Climate disasters and the effects of the pandemic on supply chains in turn drove up food prices dramatically even before the war. There has been a 40% price increase across major food crops since December. In turn, climate disasters and food shortages are associated with increased conflict. While war has contributed to an 88 percent spike in people living in these crisis conditions, the current war in Ukraine takes the crisis to a whole new level.

War Threatens Global Food Supply

In addition to the millions displaced and thousands killed in Ukraine itself, far more could be displaced or die globally from the war’s impact on energy and food supplies.

Russia and Ukraine together supply 28% of the wheat, 29% of the barley, 15% of the maize, and 85% of the sunflower oil traded globally, altogether 12% of all calories in the world market. North Africa and the Middle East are heavily reliant on these exports with more than 26 countries relying on one or both for more than half of their grains.

Ukraine alone provides food to 400 million people worldwide and supplies half the grain for the UN’s World Food Program. With the onset of the war, its supply has virtually disappeared. Wars drive people off land, kill crops, destroy infrastructure, create shortages, and drive up prices.

In late June, as Ukrainian farmers harvest wheat they planted in winter, everything stands in the way of the product making it to the market. Half of it is in occupied or contested territory in the southeast, where unexploded ordnance in fields is a real hazard and farmers work armed in helmets and bulletproof vests. The yield is expected to be 20-30% smaller than in normal times as applying fertilizer and addressing diseases and pests have been abandoned.

What can be salvaged and harvested among Ukraine’s agricultural products has nowhere to go. Truckers have been enlisted to fight. Fuel, water, and power that has been cut off by Russia is in short supply. And the country’s grain silos are half full with over twenty-two million tons stranded by the Russian naval blockade. The Black Sea ports needed to transport Ukraine’s massive share of the world’s agricultural products have become a battleground, holding massive resources hostage.

This is to say nothing of the war’s impact on the supply of fertilizer globally, the costs of which had already doubled to disaster levels before the invasion. Rising energy costs had begun forcing European fertilizer plants to curtail production for months before the war. But the widening energy crisis and the impact of sanctions have made things much worse.

Russia and Belarus between them account for more than 40% of the global exports of potassium fertilizer, a key nutrient for major crops like corn, soybeans, and produce. U.S. sanctions on Belarus, which exports 10-12 million tons annually and accounts for a fifth of global supply, took effect in December forcing producers to back out of their contracts.

Russia alone is the largest fertilizer exporter in the world, responsible for 15% of the world’s traded nitrogen and phosphorus fertilizer. Russia for its part is still able to sell its grain, but is disrupted by sanctions and lacks seeds and pesticides usually bought from the EU, spelling future shortfalls. Russian farmers are being instructed to use home grown seeds instead, which have a productivity 30% lower than imported seeds. Western sanctions and Putin’s ban on fertilizer exports in early May will have global reverberations, driving a huge contraction in agricultural productivity worldwide, with many farmers scaling back the use of fertilizer and the amount of land they’re planting.

On top of this the energy crisis triggered by the war is making transport of food and fueling of agricultural activity prohibitively expensive or impossible. This is a perfect storm of missing animal feed, fertilizer, fuel, and financing in the midst of a record-breaking affordability crisis that will leave no corner of the world unscathed. The world hasn’t run out of food or the capacity to produce food, but obstacles and shortages created by inter-imperialist conflict are directly imperiling the supply of food. Masses of people are left to drown in misery and deprivation.

Food Wars: A Global Battlefield

The humanitarian disaster resulting from millions sliding into food insecurity will be unfathomable. Acute malnutrition, stunted development in children, starvation, and a severely weakened immune response — in an era of devastating pandemics — will rise to epidemic levels. People in low- and middle-income countries, in regions experiencing conflict and economic crises, and those who directly experience the most catastrophic effects of climate change will be worst impacted.

Households in poor countries spend 25% of their income on food. With massive price hikes on the one hand, and extreme weather diminishing people’s ability to rely on their own production, local sources or to earn income on the other, direct aid is desperately needed. Their governments — many deeply indebted to rich countries and with depleted financial reserves — will be under immense strain and have limited resources to provide the assistance needed.

It is certain that the masses of people will not take this sitting down. Protests are already rocking Sri Lanka, Indonesia,

20 Socialist World Issue 7, 2022 Pakistan, and Peru. Fear of uprisings, and of new refugee crises from mass displacement, has begun to raise alarms for the ruling class. Major multinational financial institutions like the World Bank have begun pledging billions in aid to address the food crisis, but the problems are intensifying far faster than the sums pledged. While food aid increased by nearly $667.7 million in 2020, the number of undernourished people also increased, and this trend is expected to continue. A UN Security Council press report stressed “the international community must coordinate a global response and eschew a ‘to each their own mentality.’” They also noted the rising danger of “political instability” should mass movements become powerful enough to challenge the system starving them.

However, the level of international coordination required to stave off total chaos from the food crisis is completely foreign to capitalism, especially in this period of sharpening inter-imperialist rivalry and economic protectionism. Instead, we’re seeing the mirror image of “vaccine nationalism” in the new and alarming trend of food nationalism. Twenty-three countries have declared severe restrictions on food exports since the start of the war, removing a further 10% of globally traded calories from the market. India, the world’s second-largest wheat producer, has banned food exports. Such protectionist measures will only make the crisis much worse by further reducing the supplies available for those countries most in need and raising prices even more. Global inequality will worsen as richer countries hoard or buy up energy and supplies while leaving the rest of the world to fend for themselves.

Meanwhile, the major imperialist powers are playing a blame game. And it won’t just be poor countries that are hit.

The U.S. and Europe are going to see empty shelves and higher prices as their farmers are also being hit by rapidly rising fuel and fertilizer costs. Biden’s only response is to place the blame squarely on Russia, as have NATO members and allies in the UN. Indeed the shortages and price rises will only get worse the longer the war goes on. Meanwhile Putin, with some support from China, blames Western sanctions for impeding the global trade needed to feed the world. Both are unequivocally to blame, but the much more important reality is that the system was already failing.

starvation, immediate and direct aid is needed to countries in or nearing famine. We also need an immediate end to the war in Ukraine and its blockade of the Black Sea, as well as all wars which spell nothing but deprivation and chaos for working people. The existential threat posed by the climate crisis to our food system mandates a total overhaul of our food system worldwide toward renewable energy, diversified crops, and sustainable agriculture. This must include bringing the corporations that dominate global agriculture, energy, and food distribution into public ownership under democratic workers control.

Capitalism breeds famine and climate catastrophe, as well as imperialism and war. It is prone to shocks and lacks shock resilience. As this crisis wears on and capitalist nations resort even more to the “each nation for themselves” approach, we need to mobilize on the basis of working class internationalism to point the way toward the socialist reconstruction of society. J

Peruvian people protest to demand government support for soup kitchens in Lima.

Fight the System That Starves Us

We are living through a particularly devastating stage in capitalism’s long declining ability to meet even humanity’s basic survival needs. We produce enough food to feed 10 billion people at 3,000 calories a day, but 2.5 billion are malnourished or hungry and 30-40 percent of the world’s food production goes to waste. The world’s food supply is over-reliant on very few commodity crops, and controlled overwhelmingly by a small number of multinational corporations.

This crisis could not be a more clear and urgent demonstration of the need for the working class to run society and democratically plan the use of resources in the interest of people and the planet. To prevent the worst-case scenario of mass

Ukrainian Armed Forces volunteer walks inside a grain storage damaged during a Russian military strike.

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World to Win - International Socialist TV (available on Youtube) And sign up for our weekly socialist newsletter: tinyURL.com/ISAnews Get weekly updates from revolutionaries fighting for socialist change around the world and working to bring together all the struggles and movements against capitalist oppression, inequality and exploitation!

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Crowds storm into the Sri Lankan president’s official residence in Colombo in early July, leading to his resignation.

Whirlwind of Crisis Engulfs South Asia Since this article was written, mass revolt has erupted again in Sri Lanka in response to intolerable social conditions created by the energy, food, and debt crisis and the bankrupt regime’s only response: repression, appeals to the IMF, and more austerity. Hundreds of thousands of people descended onto the capital Colombo on July 9, culminating with the mass storming of the hated President Gotabaya Rajapaksa’s palace, forcing the latter to flee. The recently appointed Prime Minister, Ranil Wickremesinghe, is also resigning after his residence was set on fire. The burning question now is the need for working class leadership to point a way out of the crisis by canceling the debt, overturning capitalism, and appealing to the masses of the region for support. Read our ongoing coverage on InternationalSocialist.net.

Serge Jordan

U

p until 2019, South Asia enjoyed the tag of the “fastest growing region in the world.” Neo-liberal institutions praised the region for its strong growth, increased capital inflows, and stable governments. The consecutive global blows of the Covid pandemic and of the war in Ukraine, the intensifying power struggle between the U.S. and China, and the ev-

er-worsening climate crisis are all exposing the hollow foundations underneath this narrative, and dragging the region into a perfect storm of crises.

According to the UN, four out of five people in Sri Lanka have started skipping meals because they cannot afford to eat, as the country is in the throes of the worst economic crisis in its post-independence existence. The mountain of debt that had been built up over the previous decade to help the Sri Lankan ruling elite buy political support, weather a widening trade deficit, and track its way out of an expensive war of attrition against the Liberation Tigers of Tamil Eelam (LTTE) has collapsed like a house of cards. The global shockwaves of the last two years have considerably swollen the country’s import bills, dried out its tourist and remittances revenues, and limited its export outlets. In May, Sri Lanka became the first country in the world to default on its sovereign debt since the beginning of the war in Ukraine. Nepal and Pakistan, both facing a crippling debt crisis, a collapsing currency, and depleted foreign reserves, are now teetering on the edge of similar scenarios.

In India, the government’s assertion of a “full economic recovery” after the Covid-triggered slump clashes against the reality experienced by hundreds of millions of people. While India’s ultra-rich have handsomely profited off the pandemic —the country’s 100 top billionaires have accumulated $178

23 billion more in wealth since the first lockdown in 2020— poverty has exploded, inflation has remained in double digits for 13 months in a row, small businesses have faced widespread battering, and unemployment figures are at their worst in half a century. Symptomatic of the dire situation on the job market, Prime Minister Narendra Modi’s announcement in June of “Agnipath,” a new army recruitment scheme to hire soldiers on four-year contracts (after which 75% would be relieved from duty) sparked riots and violent protests across the country — especially in the northern states, the BJP’s political strongholds, which have also some of the country’s highest unemployment rates. Many young people, especially from the lower castes and rural areas, depend on the army for secure jobs.

Over the last period, the region’s financial markets have seen significant foreign capital outflows, a phenomenon compounded by the U.S.-driven tightening of interest rates and the end of ultra-loose monetary policies by the main central banks. Foreign portfolio investors have sold close to $12 billion worth of Indian stocks so far in 2022, while total foreign investment into Pakistan has declined by 59% over the last year, as capitalists are seeking safer heavens to make a profit.

South Asia has also become a hotspot for climate-induced disasters, which are occurring at an increasing pace. The British Meteorological Office estimates that global warming “increased the likelihood of extreme temperature anomalies by a factor of about 100” in South Asia.

This April was the hottest in Pakistan in 61 years and the hottest in India in 122 years. These countries experienced such scorching temperatures that birds fell dead from the sky.

Wheat crop yields fell by up to half in the worst hit areas, such as in India’s northern “bread-basket” regions of Punjab and Haryana, exacerbating already high levels of food insecurity across the region. The utter lack of planning meant that merely a few weeks after Modi had bragged about India being able to “feed the world with its grains,” the Indian government went on to ban all types of wheat exports to secure its falling inventories, provoking a new bump in the prices of grain on the global market in the process. The rainy season, meant to bring some relief from the historic heatwave, brought its own devastation with massive floods submerging large swathes of Bangladesh and northeast India, displacing hundreds of thousands and killing dozens.

Political Instability Across the Board

Even before the pandemic, a protracted crisis of political rule had gripped the region, expressed by the severe decline of longstanding traditional bourgeois forces which had once commanded significant support and dominated the regional political landscape for decades — such as the United National Party (UNP) in Sri Lanka, the Congress Party in India, and Pakistan’s two main political families, the Sharifs and the Bhuttos.

But the deep crisis capitalism has plunged these countries

into, precipitated by the major global events of the last two years, is provoking renewed political turbulence. This is putting to the test the right-wing populist forces and rulers that had emerged from the demise of these traditional forces. In the last months, prime ministers have been evicted in both Pakistan and Sri Lanka. Their successors, determined to carry on with IMF-aligned policies unloading the burden of the economic crisis onto the shoulders of the masses, are already facing political turmoil themselves.

In Sri Lanka, the ruling class has been battling with a groundswell revolt of historic proportions in reaction to the unfolding social catastrophe. This revolt has shaken to the core the Rajapaksa political dynasty that has ruled the island for most of the past two decades. The Rajapaksas and their party, the Sri Lanka Podujana Peramuna (SLPP), won presidential and parliamentary elections with a landslide in 2019 and 2020 in the Sinhalese-majority parts of the country. They are now vomited out in every corner of the island. The incredible speed of this political turnaround is a warning to the ruling classes in the region and everywhere that in these times of profound crisis, nothing can be taken for granted.

The social uprising in Sri Lanka reached a high point when two powerful nationwide general strikes uniting workers and poor from all communities totally paralysed the island on April 28 and May 6. A revengeful attack by violent goons on the regime’s payroll against the central protesters’ site in the capital Colombo a few days later triggered a furious counter-response from the streets, which took on near-insurrectionary proportions. The workers and youth of Colombo spontaneously rallied in mass self-defense in the streets of the capital and imposed a humiliating defeat on the regime’s thugs. These events precipitated the resignation and hasty evacuation from the city of then Prime Minister Mahinda Rajapaksa. The last standing figurehead of the ruling family, President Gotabaya (Mahinda’s younger brother), is now battling for political survival.

Gotabaya’s appointment of longtime politician Ranil Wickremesinghe as prime minister has failed to even moderately alleviate the suffering of the masses. The excruciatingly long power cuts and lines for gas and gas cylinders have become even longer, and Wickremesinghe himself made clear that Sri Lankans had to prepare for even worse days ahead. He then announced an interim budget whose central objective will be to “cut expenditure to the bone.”

In Pakistan, infighting between competing sections of the ruling class reached a new level in April against the background of a deepening economic and social crisis. The once cricket star/now ex-Prime Minister Imran Khan and his Pakistan Tehreek-e-Insaf party (PTI) came to power in 2018 based on promises to reorient Pakistan’s economy toward the needs of the people, to end corruption and break the “begging bowl” of the IMF. Khan quickly caved in to the latter’s diktat, and generally failed to deliver on the aspirations for change.

Having lost the confidence of the country’s powerful military after he attempted to remove the army’s Chief of Staff Gen-

24 Socialist World Issue 7, 2022 Farmers participate in a protest at the Delhi Singhu border in Delhi, India on Dec. 18, 2020

eral Qamar Javed Bajwa, Khan was ousted in April in a parliamentary coup and replaced by an unstable, unwieldy, and corruption-ridden coalition government involving a dozen political parties, led by Shehbaz Sharif — the brother of former Prime Minister Nawaz Sharif. The aggressive, austerity-driven policies conducted by Sharif’s new government, purposely aimed at making Pakistan a “paradise for investors” again and resulting in repeated increases in the price of fuel, gas, and electricity, have already made it very unpopular.

In the event of protracted political turmoil, the Pakistani military top brass could well decide to take over the reins of power itself, as it has done many times in the country’s history. Although much riskier for the ruling class, a similar move cannot be ruled out in Sri Lanka either. The Rajapaksa regime has already imposed a huge militarization on public life — a militarization which has been put into overdrive in response to the current economic collapse and to the masses’ fightback.

Such “solutions,” however, would not fix the underlying political crises, nor would they address the plight of the hungry and angry millions.

From last year’s military coup in Myanmar to the Taliban takeover in Afghanistan, from the recurrent clampdowns on political and human rights activists in India to the draconian emergency measures imposed by the state in Sri Lanka, a general assault on democratic rights and a growth of authoritarian methods of rule is underway all around the region.

Yet this process can and will also contribute to galvanizing mass anger, especially in the context of depressed economic conditions. In Sri Lanka, while democratic rights have been under severe attack, the new cabinet has also undertaken a set of constitutional reforms aimed at removing some of the presidency’s overarching powers. This is an attempt from the

top to placate the deep opposition that has matured against the ultra-centralised system of executive presidency, and to stave off any genuine attempt to overhaul this system from below. All the proposals to amend the deeply undemocratic — and chauvinist — constitution, however, fall very short of the need for a radical break expressed by millions of people.

This constitution should be scrapped entirely, and elections to a revolutionary constituent assembly, drawn from the mass movement and fully representative of all the diverse sections of the population, should be counterposed to such maneuvers from the establishment.

Fallout of the New Cold War

The global power contest between U.S. imperialism and Chinese imperialism is having a major impact on the entire Asian continent. The current crises in Sri Lanka and Pakistan, two countries that have both strengthened their economic relations with China over the preceding decade, as well as the Chinese regime’s current internal problems, are seen as opportunities by the U.S. and its regional ally India to advance their own geopolitical interests.

The unraveling of Sri Lanka’s debt bubble, in which China played a critical role, and the objective weakening of the Rajapaksas’ rule are elements which Modi’s regime is trying to play to its own advantage. India and Sri Lanka have signed many new deals in the last months and the former has been the principal source of foreign assistance to the latter this year, already totalling more than $4 billion by way of currency swaps, loan deferments and credit lines.

This is no free humanitarian gesture but a calculated attempt by Modi’s government and the Indian bourgeoisie to expand their own influence on the island. Protests broke out in

25 Colombo in mid-June after revelations were made that notorious Indian corporation Adani was being favored for an energy contract in the Mannar district after Modi essentially blackmailed the Sri Lankan President.

The appointment of Ranil Wickremesinghe as prime minister was met with satisfaction in Delhi and Western capitals — but with much more reservations in Beijing, as he is seen as more pro-Western than the Rajapaksas. For similar reasons, the Biden administration hopes that the new government in Pakistan will help it turn the page on the Afghan fiasco and inaugurate a new period of rapprochement with the U.S. in the wake of Imran Khan’s departure. The Pakistani military also sees India’s balancing act between Washington and Moscow over the war in Ukraine as a chance to reset relations with the U.S. administration.

Foreign Minister Bhutto said the U.S. and Pakistan need to engage in a “far broader, deeper and more meaningful relationship.” However, the same individual also toured China calling it his “second home.” Pakistan is heavily indebted to China —which has made major investments in the country via the $60 billion China-Pakistan Economic Corridor, a key part of its “Belt and Road Initiative” and has now become Pakistan’s largest military supplier. Khan, for his part, is now using demagogic anti-U.S. rhetoric to mobilize his support base in the streets to try to find a way back to power, portraying his removal as a U.S.-orchestrated conspiracy. In these conditions, Pakistan’s uneasy balancing act between the main powers is likely to face much greater strains moving forward.

More generally, the clash of interests between the U.S. and China will become a stronger factor of political instability amongst the region’s ruling elites. This is the case in Nepal as well. The recent push for Nepal to sign Washington’s “State Partnership Program” between the Nepalese Army and the U.S. National Guard brought out divisions within the political establishment and provoked a backlash. Facing significant opposition, Prime Minister Sher Bahadur Deuba had to reject the program, whose obvious intent was to embed Nepal into a military alliance against China. This decision is a setback for the U.S.’ attempts to extend its reach in South Asia, in a strategic area on the immediate periphery of its global rival.

Growing Threats of War

With the tectonic shift in global relations and the raging new Cold War comes a growing threat of “hot” conflicts between competing and nuclear-armed regional powers. Illustrating this dangerous trend, Indian Defense Minister Rajnath Singh declared in May that his country needed to be “ready for a full-scale war in the future.” The past years already saw the flaring up of deadly violence between China and India for the first time in decades along their disputed border in the Himalayas. Despite a precarious stand-off, the military build-up has continued on both sides of the Line of Control (LOC), and new clashes are inherent to this situation.

While tensions between India and Pakistan somewhat sub-

sided in the recent period, they can flare up again at any time.

Neither government has any real accomplishments on the economic front, and the ruling Bharatiya Janata Party’s sectarian Hindu-chauvinist agenda, which contains a strong anti-Muslim component, has shown it can quickly take on international dimensions. The recent upsurge of violence in Indian-occupied Kashmir, including a wave of targeted killings of minority Hindus which the Indian state has tried to lay at the door of Pakistan, is a direct result of such policies and of Modi’s brutal clampdown on the Muslim-majority region. Incidentally, this has also exposed the fraudulent claim that the clampdown was carried out for the sake of local Hindus’ “security.”

Alongside the growing threat of military conflicts, huge military expenditures are a major feature across the region.

For example, despite the sheer dilapidation of public services, Sri Lanka’s defense budget continues to dominate government spending — the government’s defense allocation for 2022 is in fact a 14% increase over the allocation in 2021. Thirteen years after the brutal end of the civil war, tens of thousands of Sri Lankan soldiers also continue to occupy the country’s Tamil North and East.

Despite a deadly pandemic, governments across the region spend ridiculously paltry amounts on public healthcare, while military expenses have shot up virtually everywhere in recent years. In Pakistan, the defense sector and the servicing of the debt account together for about 60% of the country’s annual budget. The ruling classes ruthlessly prioritize the means to protect their rule and profits, suppress dissent, and conduct wars while the majority of the population cope with hunger, disease, mass inflation, shortages, power cuts, and climate-related afflictions.

Right-Wing Reaction vs Working Class Resistance

The undeterred hijacking of resources by corporations, by local and international creditors, and by state machines and governments that are unable to provide for the most basic needs of their populations are unmistakable signs of a degenerate social system. The deepening of the crisis of this system is leading to deepening social anger and radicalisation, but also to more extreme forms of reaction. Exploiters and ruling forces that are facing mounting social opposition are more easily tempted to backslide into jingoist, nationalist, militaristic, and communalist provocations.

In India, reactionary communal incitement and violence

by BJP politicians and their Hindu supremacist allied groups have been on the rise in recent months. This has included a ban on hijabs for female student in the state of Karnataka, Hindutva groups vocally urging their supporters to commit genocide against Muslims, an increase in state-sponsored mob lynching of Dalits and religious minorities, and, most recently, a wave of bulldozer demolitions of homes of activists who have expressed their opposition to bigoted public comments

The United States Supreme Court

26 Socialist World Issue 7, 2022

Indian Prime Minister Narendra Modi made by BJP officials against Allah and Islam.

At the same time, cutting across these communal divisions, the past two years have also seen regular outbreaks of militant protests as well as strikes involving workers from all parts of India — most notably in the car industry, coal mining, health care, and banking sector — to oppose precarious contracts, poor wages, job losses, and Modi’s privatization agenda. Last year, millions of farmers led a successful and inspiring yearlong struggle against the government’s pro-corporate farm laws.

With two general strikes in the space of less than ten days, the Sri Lankan working class has also reasserted its power of resistance, laying the foundations for a rebuilding of the labor movement after many years of retreat. Despite the current lack of working class political organization and the still feeble state of most trade unions, every sector has witnessed an unprecedented wave of struggle that will leave its imprint on events to come, from the poor fishing communities to the tea plantation workers, from public sector workers to the industrial workforce of the Special Economic Zones.

In Nepal, the recent decision to hike fuel prices has led to student and workers’ protests in Kathmandu and other major cities and towns. In Bangladesh, thousands of workers from the huge garment workforce have been engaged in strikes and protests over inflation and wages.

Explosive struggles, revolts, and even revolutionary upsurges are being prepared across South Asia because of the intolerable objective conditions imposed by capitalism on hundreds of millions of people. The formidable challenge is to build a political force from these mounting struggles. Such a force must be rooted in the working class, programmatically and organisationally independent from the pro-capitalist establishment, opposition parties, and populist strongmen. It must also seek to counterpose an internationalist agenda to the dead end of nationalism and imperialist conflict.

The main Indian opposition parties and the regional parties

Mahinda, Chamal and Gotabaya Rajapaksa during a Cabinet swearing-in in August 2020 that run many state governments, like the Congress Party, have no fundamental disagreements with the BJP’s government’s whipping up of tensions with China and with the sacrifice of people’s lives and the environment on the altar of corporate profits. The Indian left parties have compromised themselves in a long series of betrayals and political alliances with neoliberal parties. In Nepal, the Maoist “Communist” Party has integrated itself into the ruling elite. In Sri Lanka, the main opposition parties do not fundamentally object to the IMF’s criminal imposition of the burden of the economic crisis on working people, and refuse to connect the current struggle for better economic conditions with the longstanding struggle of the Tamil people to break the chains of national oppression.

Despite his attempts to exploit the current anger at the soaring inflation, Imran Khan’s “opposition” campaign in Pakistan has no serious alternative to the economic disaster the new ruling coalition is presiding over. These examples speak to the urgent need to rebuild fighting and genuinely socialist organizations across the region that can chart a way forward for the upcoming struggles. Unless this is done, the scourges of economic plunder, war, hunger, environmental destruction, communal violence, national, caste and gender oppression are set to intensify.

The plea by a government minister to the Pakistani people to “drink less tea” in order to help save on imports, or the extra day off given to government workers in Sri Lanka to allow them time to grow their own food (!) bears testimony not only to the contempt and disconnect of the corrupt political elite vis-a-vis the suffering faced by the region’s majority, but also to their sheer helplessness in addressing the crisis of their own bankrupt system. The only way out for the hundreds of millions of workers, poor, and oppressed masses of South Asia lies in their own struggles, in organizing in implacable opposition to the decrepit rule of capitalism, as part of a worldwide struggle for a socialist reorganization of society. J

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Marine Le Pen (left), Emmanuel Macron (center), and Jean-Luc Mélenchon (right).

French Parliamentary Elections: Another Slap in the Face for the Ruling Class Two months after the French presidential elections, which delivered a historic slap in the face to the political representatives of the capitalist class, the result of the legislative elections in June is also explosive with gains for the left but also dangerous gains for the far right.

Stéphane Delcros

M

ore than half of eligible voters simply decided not to participate in the election, in effect revealing that they saw no hope in the policies offered by candidates either in the first or second rounds. Those who did vote decided above all not to give an absolute majority to President Macron, instead electing a historic number of “anti-system” MPs or those seen as such. Among them, Le Pen’s extreme right-wing party Rassemblement National (RN) made a breakthrough in the Assembly.

Faced with rising interest rates and budget deficits, Macron’s second term will certainly not be less right-wing, especially if we look at who his allies will be in carrying out his

policies. His government promises more austerity, while purchasing power is already dealt a heavy blow by inflagtion. The only way out is to build struggle - in the streets, workplaces, neighborhoods, colleges and schools - to reverse the balance of power between labor and capital.

The organized labor movement and the radical left - that is, a left which aims to break with the one-sided policies in favor of the rich and the bosses - must take the lead in the struggle against Macron’s anti-social promises, to push back the false Le Pen alternative, and to show the way forward towards the necessary social change.

The Ruling Class Faces a Major Political Crisis

The Macron years continue to make history. After a first round marked by the historic increase in inequality, social and police brutality, and the exacerbation of oppression and discrimination, Macron becomes the first recently re-elected president not to win an absolute majority of MPs (50%+1).

His party is now 40 deputies short of a majority, which means that his government will be weak. It will need, if it is to carry out its policies, to rely either on an alliance with another par-

29 liamentary force, or on sporadic agreements with unaligned deputies.

This electoral result is yet another confirmation of the fact that the political institutions of the bourgeoisie are undermined, and not only in France, after decades of austerity policies. It is also a confirmation of Macron’s extremely weak result in the first round of the presidential election in April was not an accident.

It is true that in the first round of the Presidential election he gained 4% more votes than in 2017, but overall the share of the vote won by parties of the broad “center” committed to the management of capitalism shrank, collecting for the first time less than 50% of the vote. The same happened in these elections. Once again, the two traditional parties of the Fifth Republic achieved a historically low score: the Republicans (LR) and the Socialist Party (PS) together won only 88 deputies - i.e. less than Marine Le Pen’s National Rally (RN).

The traditional right-wing Les Républicains (LR) lost half of its representation, ending up as only the fourth largest party in the Assembly. Their relatively strong local base meant they saved 64 single-mandate deputies, winning 85% of their second round races. LR finds itself in a position holds the balance of power in the Assembly, being the only former government party, apart from the Parti Socialiste (PS) and Les Verts (Greens) having the potential to give Macron a real majority, either by forming a coalition, or providing him support on specific issues. Given the budgetary crisis and the unfolding economic crisis, LR will probably have no choice but to act “responsibly” in the interests of the capitalist class, by voting in favor of austerity policies.

This slap in the face for Macron and the ruling class is also illustrated by the eliminations of other figures. In the first round, those eliminated included former prime minister under Hollande, Manuel Valls, and the unpopular ex-minister of education, Jean-Michel Blanquer, lost their seats. In the second round: Christophe Castaner, minister of the interior during the Yellow Vests movement and Richard Ferrand, president of the National Assembly and of the Macronist alliance. Similarly, three ministers of Elisabeth Borne’s current government were defeated and thus forced to resign.

The second round also saw the elimination of the Macronist ex-sports minister Roxana Maracineanu by the France Insoumise (FI) candidate Rachel Keke, a cleaning lady and CGT union activist. She was the leader of the 22-month strike at the Ibis hotel in Batignolles, a struggle that achieved a huge victory in May 2021.

NUPES Does Well, but Could Have Done Better

Rachel Keke is one of more than 70 newly elected FI MPs, an increase from 17 five years ago. They make up about half of the new team of 142 Nouvelle Union Populaire Ecologique et Sociale (NUPES) MPs. This coalition, initiated by FI leader Jean-Luc Mélenchon, was intended to avoid left-wing candidates stepping on each other’s toes, and possibly to try to set

up a future government. NUPES included the Parti Communiste Francais (PCF), the PS and the Greens around France Insoumise.

FI’s campaign was dynamic, motivated by the possibility of preventing Macron from applying his policies for another five years. In particular there was strong opposition to the increase of the retirement age to 65, and the plan for 20 hours of forced work for benefit recipients. This campaign did not succeed in its objective of obtaining a majority in the Assembly, which was unrealistic, but it did contribute to preventing Macron getting an absolute majority. FI succeeded in matching the Macronist coalition in terms of votes in the first round, and by electing more than four times the number of deputies it gained in 2017.

There is still some disappointment, as before the election most polls showed the possibility of electing even more MPs, possibly as many as 200. But even if the result may seem disappointing, it should be remembered that just a year, or even six months ago in France, the whole political situation revolved around Macron and the extreme right, and the competition between them concerning security and immigration.

A major change has taken place since the end of February, as demands over purchasing power and social questions have come to the fore, driven by inflation. This was matched by a dynamic electoral campaign around Mélenchon since the presidential election, and the creation of a certain enthusiasm.

There has been a relative change in the balance of power in society for a few months now, although without any generalized struggle or any initiatives either to stimulate and regroup the struggles that are breaking out in an isolated way, on wage issues among others. However, the current situation is extremely fragile and does not yet allow us to realize the full potential for left-wing ideas and demands.

Macron’s Policies Are to Blame for the Gains of the Far Right

Macron’s political brutality against workers and young people and his sharp shift to the right has been a real factor in creating the space for the growth of Rassemblement National (RN). For years, there has been a heavy climate of division and brutal police violence against trade union and social movements in general, as well as against youth, especially of immigrant origin. State racism and permanent stigmatization have increased: whether through the global securitý law and law on “separatism,” which both targeted the Muslim population, or through the hunt for “Islamo-leftism.” Macron and his governments have not ceased fueling division and making promises to the far right.

If the dramatic entry of this RN bloc into the Assembly is a surprise, it is only so because of its magnitude. From eight deputies in 2017, it has risen to 89, with big victories in the more rural constituencies and the former working-class bastions of the North. It is the immense scope of social despair caused by the neoliberal policies pursued by both the tradi-

30 Socialist World Issue 7, 2022

High school students in Paris block the entrance to their high school in protest of what they describe as false choices in the presidential elections. tional right and the governmental “left” since the 1980s that has fueled the growth of support for Le Pen. In the face of the worst announcements made by Macron, the RN puts forward a false populist program on social policy, which it has no intention of applying in practice if it comes to power. In every municipality controlled by RN elected representatives or its associates, division, insularity and repression reign. To fight against the extreme right and racism, the only solution is to fight against the roots of the division with a radical left-wing policy that breaks with the capitalist system.

The “republican front,” the idea of “blocking the extreme right,” by a coalition of all other major parties, seems to have been dropped. Faced with the second round, the Macronists chose to demonize “all the extremes”. This was a conscious strategy, aimed at trying to break the momentum and the potential of the NUPES. Moreover, Macron does not exclude accepting specific support from the RN group. On the evening of the second round vote, the Minister of Justice, Eric Dupond-Morett,i raised the possibility of agreements with the RN on reforms concerning the police and justice. Marine Le Pen does not seem to be against this: “I told President Macron that the group of 89 RN deputies is in opposition, but does not want to be in systematic obstruction.”

NUPES: Strong Points, but also Dangerous Weaknesses

Many FI and NUPES activists are now drawing the conclusion that the result of the legislative elections is due to the

fact that the Macronist leaders did not make a clear call to vote against the RN. It is true that the vast majority of En Marche voters abstained in the second round in those areas where there was a NUPES-RN duel. But this is an erroneous analysis. Of course, it is clear that the Macronists are hugely hypocritical.

They reproached Mélenchon for saying only “no votes for Le Pen” without making a call to vote for Macron. But the left does not have to rely on a carry-over of votes from Macronist supporters to win. Other potential voters need to be convinced.

There were those who abstained in the first round, but turned out for the second.

In both the presidential and legislative elections, Mélenchon’s campaigns succeeded in creating a dynamic that involved young people and those from poorer neighborhoods.

Although a majority of these abstained, particularly in the legislative elections, those who did participate, voted in large numbers for FI and NUPES. Despite these positive dynamics, those weaknesses that developed in FI in recent years were reinforced after the presidential elections. Clearly one problem is the formation of coalitions at the municipal level including the PS and the Greens, without carrying out any real policies that break with traditional politics. This tendency has obviously been reinforced in this legislative campaign, since these parties are now directly allied to the FI in the NUPES. It was these parties that carried out the neoliberal policies of the Jospin government, supported by the PCF between 1997 and 2002, and of Hollande between 2012 and 2017. They are responsible for the electoral successes of Le Pen in 2002 and 2017. It will be difficult to beat Macron and Le Pen by allying

31 with those who have applied the policies that paved the way for them.

Many have rejected the proposal to vote for those parties that are more part of the problem than the solution: the PS, even purged of its most right-wing elements, the Greens, and even to some extent the PCF. From this perspective, it is understandable that some were not convinced to vote for an FI candidate, since it allies itself with those parties that are more part of the problem. At the same time, some activists from working class neighborhoods who were supposed to be candidates for the FI were pushed aside to make way for NUPES candidates from other parties.

PS and the Greens have been educated to co-manage the system and are deeply integrated into it. It would be extremely surprising if they, in a crisis situation, were prepared to take the necessary measures by unequivocally choosing the workers’ side over that of the bosses and the market. The supporters of capitalism will know who to talk to. The NUPES has been formed topdown, by party apparatuses. It can only be developed further by mobilizing the enthusiasm which, fortunately, is not lacking among important segments of the population.

agement and control of the working class, starting with the financial and energy sectors, to be able to have real control over prices and at the same time finance ecological planning.

No Other Choice: Change the Balance of Power to Change Society!

In contrast to what happened during the first months of the mandate of the France Insoumis deputies five years ago, there is an absence on the part of most of the FI leaders to call for an organized and generalized struggle, or to encourage the workers’ movement to enter into mass action to block Macron’s policies. The potential is there, every week many social conflicts break out particularly over wage increases, but they are usually conducted company by company and in isolation.

This weakness, unfortunately, also marked the election campaigns in 2022.

Contrary to what was claimed, voting for the left is not an alternative to struggle; on the contrary, voting for the left and stimulating the struggle could have been complementary. This could have increased the electoral potential for Mélenchon, by convincing and mobilizing potential abstentionists. This would ensure that we could use the parliamentary platform and media visibility to support those struggles of the working-class, to fight back against each attack that a government under Macron’s orders will try to make and to create a favorable balance of power, in which workers and youth can rely on each other in their struggles.

This would also allow for a permanent vigilance from below against the inevitable betrayals of those elements within the NUPES that are not prepared to challenge capitalism.

There is a huge space for the FI to initiate and conduct the fightback after the innumerable (but uncoordinated) struggles in recent years. There is also a space for the leadership of the trade unions to engage in the struggle, coordinated with the IF and NUPES. But so far there has been no real initiative since the powerful movement against the pension reform at the end of 2019 - and thus nothing or almost nothing during the Covid 19 pandemic, despite the social emergency.

Today, the enormous weakness of the political institutions of the capitalist class can give workers confidence to enter into struggle. This can open up opportunities, especially in the fight to defend pensions, as any attempt to “reform” the system in the past has led to mass movements. This implies the need for preparation and organization of a mass struggle that puts forward ambitious social and ecological demands. It is urgent that the left and the labor movement take initiatives in this direction! J

Contrary to what was claimed, voting for the left is not an alternative to struggle; on the contrary, voting for the left and stimulating the struggle could have been complementary.

For a Real Program to Break with the System

At the programmatic level, NUPES made demands that were generally similar to those contained in the FI’s “L’Avenir en commun” program, although sometimes slightly scaled down. But the signing of the NUPES agreement also meant some changes in attitude and rhetoric were made. References to the “plural left” under Jospin became more conciliatory on the part of the FI. There was no criticism, and even praise, for Jospin’s 35-hour reform, which not only was not fully implemented, but was also not entirely in the interest of the working class, as it was mainly introduced in exchange for more flexibility in the labor market.

The program of the FI and the NUPES contains some very good demands, such as retirement at 60, the allowance of 1,063 euros per month for students, the increase of the minimum wage (SMIC) to 1,500 euros, the freezing of prices of basic necessities, ecological planning, the repeal of the Labor law (“El Khomri”) implemented under Hollande, the restoration of the solidarity tax on wealth (ISF), and a 1 billion euros programme to combat violence against women. This is a radical left-wing program, but unfortunately without the ambition to end capitalism. To really respond to the needs of the working class and youth and at the same time challenge the interests of the capitalist class, it is necessary to make demands for the nationalization of key sectors of the economy under the man-

Review: “The Changing World Order” by Ray Dalio Rob Rooke

R

ay Dalio puts the odds of a revolution in the United States in the next 10 years at around 30%, adding, to his readers, that those odds “are dangerously high.”

Dalio is a multi-billionaire and CEO of Bridgewater Associates, the world’s biggest hedge fund management firm. He is essentially the U.S.’ top investment banker and has amassed his wealth, in part, by speculating on the direction of economies, markets, and geopolitical trends. His current New York Times bestseller which we review here is The Changing World Order.

Dalio is certainly a rarity. He is a far-sighted, serious capitalist that has attempted to write an objective study of the decline of American imperialism. He argues that the last 70 years of relative peace, prosperity and stability for the United States is coming to a close. He also argues that the last 30 years of neo-liberal policies has reached its limit: that globalization is ebbing, that unprecedented debts are about to cause global financial instability, and that China’s ascendance to become the biggest economy changes almost everything that came before it.

Writing his book, Dalio drew on his friends and cohorts in the American ruling class: people like Henry Kissinger, Paul Volcker and Larry Summers, as well as East Asian Prime Ministers and top economists. His book’s conclusions won an echo among billionaires like Bill Gates and Michael Bloomberg, who each lauded the Changing World Order.

Navigating the Decline of U.S. Imperialism

The book is essentially a treatise; one that attempts to figure out what measures declining U.S. imperialism should take to

swim along with the inevitable rising tide of Chinese dominance without that rivalry escalating into war. It is mostly a serious attempt to gauge, objectively, the current stage of capitalism on a world scale. It is clear that Dalio feels the starting point for the U.S. ruling class must be for it to accept its own decline to be better able to navigate it.

The Changing World Order argues that American capitalism has been in decline for decades, accelerated by the financial crisis of 2008. America has been able to mask and, to a certain degree, delay its decline because it is the richest nation in the world and holder of the world’s reserve currency, the dollar. The dollar is the currency in which the majority of the world’s savings are held and the majority of transactions are carried out in. This financial dominance has allowed the U.S. to print trillions of dollars that are borrowed by the rest of the entire world, including China, allowing the U.S. to go into massive debt to camouflage its own decline.

The book describes how the U.S. reached its zenith in the 1970s. Its economic dominance allowed it to free its currency from being tied to gold in 1971, when Nixon walked away

33 from the 1944 Bretton Woods agreement. This allowed the U.S. to print more money than it had gold in the bank. This moment ended the era of the U.S. as a net exporter and opened a period of consistent and growing trade deficit with the world, which was accelerated with globalization. The uncoupling of the dollar from gold also contributed to the dramatic increase in inflation in the late 1970s.

The Downside of Holding the World’s Reserve Currency

A new unipolar world emerged after the 1990s collapse of the Soviet Union. This new world led by the U.S., saw a resurgence of the U.S. dollar. The public industries and the wealth of the former Stalinist countries were quickly privatized, creating billionaires overnight. The looting of those economies was mostly dollar-denominated looting. This gave a new lease of life to capitalism.

The rise of the dollar over the past 30 years, Dalio points out, gave the U.S. disproportionate geopolitical power. But there were also downsides of being the owner of the world’s reserve currency. Dalio explains that any reserve currency over time tends to organically debase that currency. The British Pound in the last century, once the world’s reserve currency, had a very bumpy decline with regular devaluations and chronic inflation.

Dalio identifies the decline of productivity growth as a key factor in the decline of U.S. imperialism.Dalio identifies the decline of productivity growth as a key factor in the decline of U.S. imperialism. The only real way to continuously create wealth is by increasing productivity. However, with the dollar faucet available to the U.S. ruling class, it makes printing money by far the easier choice. U.S. productivity growth began to decline by the 1980s and then reversed course in the 90s and has been nearly flat since 2010 (0.8% pa).

The Changing World Order explains that despite other signs of decline, the reserve currency usually sticks around long after that country has begun its decline because the “habit of its usage lasts longer than the strengths that made it so commonly used.”

The Current Bubble

While the U.S.’ ownership of the world’s reserve currency has many apparent, temporary advantages, those advantages inevitably become long term deep disadvantages. Printing and lending trillions of dollars, total U.S. government debt has leapt from 37% of GNP in 1980 to almost 140% of U.S. GNP. This borrowing has enabled the U.S. government to heavily subsidize U.S. big businesses, make the rich almost entirely untaxed, as well as massively inflate the real estate and stock market bubbles. Through the recent pandemic Quantitative Easy (opening the dollar flood gates wider) those bubbles are becoming more and more unmanageable.

Dalio argues that the bubble that U.S. society is sitting

atop is part of the current era of decline he characterizes as the “bubble prosperity phase.” He reminds us that in 1928 and 1929 the U.S. Federal Reserve Board inched up interest rates to try to ease the air out of the bubble on the stock market. That of course did not end well.

The Rise of China

At its heart, the Changing World Order is a study of past empires. Dalio details what he calls the “Big Cycle Rise and Decline” of past capitalist “empires.” Beginning with what Marxists consider the first capitalist state, the Dutch state, then Britain, the U.S. and ending with China. In each of these examinations Dalio traces common features in their rise, their peak and their decline. He breaks each of those phases down to specific stages, such as the increased reliance on borrowing in the “peak” era that is a sign of it moving onto the next phase, to decline.

It is clear through the book that Ray Dalio is utterly enamored with the rapid rise and scale of capitalism in China.

He has sent his kids to China every summer. Like ‘empires’ that preceded China, Dalio points out that the emerging power always draws from the declining power all that is useful for its ascent. The British empire hired Dutch shipbuilders, and U.S. capitalism used manufacturing techniques drawn from the British Industrial Revolution. And so too, China has been able to supersede the U.S. in areas of industry and innovation that U.S. capitalism first developed.

In an empire’s period of rise Dalio concludes that certain ingredients are critical: strong education and infrastructure, low levels of class conflict, low levels of debt and a relatively peaceful world. The peak of an empire is marked by declining investment in education and infrastructure, the beginnings of economic wealth gaps, along with increasing class and international conflicts. And finally the period of decline in each of the past empires is riven with intense class conflict, with rising right or left populism, eventually culminating in a moment of civil war or revolution.

Karl Marx and Ray Dalio

In recognizing the long term decline of U.S. capitalism, Dalio distances himself in many ways from traditional bourgeois economists. This is linked to his willingness to attempt to understand capitalism as a series of processes.

Dalio argues that the failure of most historians or economists is that unless they have lived on the cusp of world change, they are unlikely to see beyond the stability of their own lifetime’s experiences. “The times ahead will be radically different from those we’ve experienced in our lifetimes,” he repeats.

While studying the regime in China, Dalio was exposed to Marx and discovered dialectical materialism, the method of investigation of Marxism. “The way Marx appeared to see things and the way I see things aren’t radically different,” Dalio writes, adding that “the conflicts between the classes (is)

34 Socialist World Issue 7, 2022 bulent post war era of 1945, revolution was enormously popular and capitalism was on the back foot. U.S. capitalism brought its rivals in Germany, Italy and Japan back to life so as to undermine the global road to revolution that working class people were heading towards.

By 1975 almost half of the world’s population lived under regimes that had economically rid themselves of capitalism. Entirely absent in Dalio’s book is any kind of economic explanation of those regimes, bar his superficial characterizations. Genuine Marxism described those regimes as deformed workers’ states. These were states where capitalism is overthrown, but where the working class do not have political power and instead a bureaucratic caste rules.

On capitalist economics, Dalio has a fundamental flaw. He accepts that the development of the productive forces and productivity is a central determinant to progress and that the role of money or capital is essential to accelerating development.

Dalio does not recognize that a key reason for economic crises under capitalism is the tendency towards overaccumulation and overproduction of wealth, including goods, in periods of boom. This leads to bursting financial bubbles or to crises of demand when workers who are paid far less than the value they create can no longer absorb the mass of goods produced.

Bust inevitably follows. Marx identifies the ultimate source of crises in the sphere of production where the working class creates surplus value that is the basis of capital. The working class is the central social force in modern society, the force which can change the direction of world history, but this force is barely mentioned by Dalio.

Dalio instead argues that economic cycles are driven by credit. Credit he points out is “near-term stimulating and longer-term depressing.” He agrees, without crediting Marx, that finance capital allows production to partially and temporarily overco me its crises, but only to increase the gravity of the crisis when debts need to be repaid. This speaks to Dalio’s overly Monetary view of capitalism. Essentially he misinterprets the monetary crisis (high debt, devaluation of currencies) as the crisis itself, rather than it being a financial expression of a deeper crisis: the crisis of overproduction.

Dalio barely mentions the crisis of the environment. This speaks both to his unwillingness to grasp its gravity, as much as his silent recognition that climate change can never be resolved by the market system. His platitude to global warming is that it “lends itself to the kind of adaptation and innovation that humanity is uniquely able to do, though often too slow-

Ray Dalio puts the odds of a revolution in the United States in the next 10 years at around 30%, adding, to his readers, that those odds “are dangerously high.”

among the main drivers of the rise and decline of empires, and hence the progress of history.”

Revolutions and the Revolutionary Party

Like Marxist revolutionaries, the far-thinking billionaire author has spent years studying revolutions, but with the opposite motive: to understand and assist in defeating those revolutions. “From studying 50-plus civil wars and revolutions….the single most reliable leading indicator of civil war or revolution is bankrupt government finances combined with big wealth gaps.” He sees the rise of populists like Trump and also Bernie Sanders as significant, “Watch populism and polarization as markers. The more (they) exist the further along a nation is in Stage 5 and the closer it is to civil war and revolution.”

“When all these forces line up - indebtedness, civil war/ revolution at home, war abroad, and a loss of faith in the currency” Dalio warns, that “a change in the world order is typically at hand.”

The Flaws of the Changing World Order

Dalio oversimplifies the factors that led to the huge postwar economic upswing of 1950-75, resting on the explanation that it was demand created by the destruction of the war. He doesn’t explain why U.S. Imperialism went against its own narrow interests and used its resources to bring industry back to life in Germany, Italy ,and Japan after having crushed it.

This speaks to the book’s huge blindspot: its lack of analysis for the regimes in the former USSR, Eastern Europe and internationally whose very existence as post-capitalist societies represented a threat to the ruling classes in the West. In the tur-

35 ly and only in response to pain. I am inclined to believe that slowly and reactively is how it will happen.”

Flimsy Conclusions

Dalio, smitten by the rise of China, fails to sufficiently recognize that China entered the world during the long term historical decline of capitalism. China is both in its rise but also tethered with aspects he associates with decline: specifically its massive indebtedness. The crisis facing contemporary Chinese imperialism is deep and multifaceted and could prevent China reaching the dominant position even as the decline of U.S. imperialism continues. As a bourgeois himself, he naturally does not foresee a trend which is central to a Marxist view of China: the growth and development of the 500 million people who make up the biggest proletariat in the world.

The Chinese bourgeoisie are also somewhat hemmed in by the existing division of the world, a world dominated in part by the U.S. dollar and in part by U.S. military bases spread all over the world. Into this world the Renminbi is having an existential struggle to gain an increased share in those willing to bank or trade in their currency, and to abandon the dollar.

The author-billionaire’s concluding advice to the U.S. on its increasing rivalry with China is almost farcical: “As time passes the risks increase. If the U.S. continues to decline and China continues to rise, what matters most is whether or not each can do so gracefully.”

The conclusions to “The Changing World Order” will be a disappointment to serious readers. Dalio, as a great beneficiary of the current economic system, makes general commentaries but stops short of concrete suggestions for systemic changes.

Instead he aims his conclusions at individual investors with awful generalities: “think about the worst case scenarios,” “diversify,” “put deferred gratification ahead of immediate gratification” and “triangulate among the smartest people possible.” Such advice is empty.

Dalio’s book is useful on many levels, however his key failing is quite understandable. However much he tries, he is incapable of standing outside capitalism and looking at it entirely objectively. That is the task of the working class: to understand capitalism and build a revolutionary party capable of overthrowing the reactionary regimes in China, the U.S. and the world. J

36 Socialist World Issue 7, 2022

Capitalism is killing us.

It’s destroying our health, our happiness, and our planet. While socialist forces are growing, they are small. But as a new generation comes of age in an era where capitalism’s rotten nature becomes ever more clear, powerful mass movements can win huge changes in society.

To fight a global capitalist system, we need internationalist revolutionary socialism.

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