48 minute read
Whirlwind of Crisis Engulfs South Asia
Crowds storm into the Sri Lankan president’s official residence in Colombo in early July, leading to his resignation.
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
Up 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 ever-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
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-
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
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 subsided 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
Indian Prime Minister Narendra Modi Mahinda, Chamal and Gotabaya Rajapaksa during a Cabinet swearing-in in August 2020
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 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
More 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-
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-
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
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. 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 management 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
Contrary to what conflicts break out particularly over wage increases, but they are usually conducted was claimed, voting for the left is not an company by company and in isolation. This weakness, unfortunately, also marked the election campaigns in 2022. alternative to struggle; on the contrary, Contrary to what was claimed, voting for the left is not an alternative to struggle; on the contrary, voting for the left and stimuvoting for the left and stimulating the lating the struggle could have been complementary. This could have increased the electoral potential for Mélenchon, by construggle could have been complementary. vincing 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
Review: “The Changing World Order” by Ray Dalio
Rob Rooke
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.”
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
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.
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)
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 turbulent 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.
Ray Dalio puts the odds of a revolution By 1975 almost half of the world’s population lived under regimes that had in the United States in the next 10 years at economically rid themselves of capitalism. Entirely absent in Dalio’s book around 30%, adding, to his readers, that is any kind of economic explanation those odds “are dangerously high.” 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-
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
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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