Global Crisis & Obama

Article appeared in Hindustan Times 23rd October 2008 Sitaram Yechury Box the Slide The euphoria following Berlin Wall’s collapse has been surpassed exponentially by the despair at the collapse of capitalism’s `impregnable’ Wall Street. The unabashed votary of capitalism, The Economist describes the present crisis as “Capitalism at bay”. The spate of bailout packages clearly point towards (though The Economist “hopes profoundly that this will not happen”) “a larger role for the State and a smaller and more constrained private sector”. Britain, that heralded modern privatization, nationalized most of its banking sector. USA is pumping in $ 2.5 trillion of tax payers money. France’s Nicholas Sarkozy, says, “Laissez-faire is finished”. (Indeed, shaming former USSR!) There is a profound paradox here. Defending capitalism means greater State intervention. This may be a paradox for capitalism’s ideologues, but the fact remains that the State of the ruling classes has always defended and enlarged the avenues for super private profits. All this is done behind the illusory mask of `States’ `neutrality’! These bailouts, as the future will testify, are designed precisely to first save and then to create new avenues for profit generation. This column (April 23, 2008) had anticipated the potential havoc that the hugely inflated balloon of finance capital can do with its speculation. The total value of derivative trade shadow economy then was $ 516 trillions, ten times larger than the global GDP and five times larger than the actual trading in stock markets. Despite the eruption of crises and the impending avalanche, this was allowed to grow to over $ 600 trillion by September 2008 (Bank of International Settlements). It is this speculative financial bubble pumped to inflate to infinity that had to burst, and, it did. Reams of analysis seek a fault line (obfuscating the systemically inherent dynamics of the capitalist system), in the greed of a few, a violation of some ethical norms, or, the lack of transparency and the weakness of regulatory mechanisms and credit rating agencies. Karl Marx’s penetrating analysis of capitalism is reportedly being sold much more in the western capitals today than any time in recent memory (profits are to be made here too!). In Das Kapital, Marx notes: “With adequate profit, capital is very bold. A certain 10 per cent will ensure its employment anywhere; 20 per cent will produce eagerness; 50 per cent, positive 1

audacity; 100 per cent will make it ready to trample on all human laws; 300 per cent and there is not a crime at which it will scruple, nor a risk it will run, even to the chance of its owner being hanged.” Under globalization, by arm twisting all independent countries to embrace financial liberalization, the avenues for super profits were enlarged through hitherto unknown levels of speculation. Post crisis, this pressure intensifies seeking greener pastures in the third world. Thus, this process of globalization is simply unsustainable. If profits were reemployed into enlarging productive capacities, then through the consequent employment generation, the purchasing power of the people will grow leading to larger aggregate demand, which, in turn, would give a further impetus to industrialization and growth of the real economy. Under globalization, with sharp decline in the purchasing power in the hands of the majority of the world’s population (like the growing hiatus between `shining’ and `suffering’ India), finance capital, in its eagerness for quick profits, chooses the speculative route of artificially enlarging purchasing power by advancing cheap (subprime) loans. Profits are made while these loans are spent but when repayment is due comes default, ruining the loan taker, also crippling the system. To put it simply, this is precisely what happened on a gigantic scale. Capitalism’s supreme diabolic irony lies in the fact that in the name of protecting those who have already been ruined, the banks and financial institutions are bailed out using tax payer’s resources! Indeed, privatization of profits and the nationalization of losses! Marx summarises the inherent dynamics of capitalism and its historical direction: “The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralisation of the means of production and socialization of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.” In the absence of a powerful socialist political alternative, however, capitalism reemerges from every crisis, through new expropriators, by destroying a part of the productive forces, to keep intact, or, create new profit avenues rather than using these resources for people’s welfare. Reemergence, however, at what cost? Remember, the great depression of 1929 laid the foundations for the rise of fascism.

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In the meanwhile, independent sovereign countries like India can protect only by insulating ourselves from such speculation. To a large extent, if India has been spared a full throttle devastation, it is because the Left parties prevented the current UPA government from embracing greater financial liberalization. (Even the `devil’ must be given its due!) It would, indeed, be suicidal if the government embarks, as it appears to do, on a path of relaxing the regulation on the flow of international finance capital in the name of injecting greater liquidity into our economy. This is expected to generate greater expenditures and, hence, boost aggregate demand, thus, fuelling growth. This process cannot be done through importing speculative capital. This needs to be done through greater public investments generating employment and, thus, feeding the cycle of demand led growth. The Indian economy and the UPA ostensibly seeking “inclusive growth” can ignore this caution only at its peril. Article appeared in The Indian Express on November 6, 2008 History Made But Does This Mean a Better Future? Sitaram Yechury The remarkable ascendancy of Barack Hussein Obama as the 44th President of the United States of America brings to mind an ancient Chinese curse, “May you live in interesting times”. While my generation was growing up, Hollywood, in late 1960s, captured in the film `Guess Who’s Coming to Dinner’, the dilemma of an all white family whose daughter invites her African American boyfriend to dinner, the conflicts American society then. Sidney Poitier poignantly conveyed the insecurities of racial prejudices. This film strengthened the resolve amongst many of us to fight discrimination of all sorts. On my first visit to New York in early seventies, it was common place to find an African American on the streets asking for change. Today, one has walked into the White House on a popular mandate for Change. In this sense, history is, indeed, being made. Fidel Castro had described Obama as “the most progressive candidate for US Presidency” from the “social and human points of view”. At the same time, he warned that it would be an illusion to presume that the character of US imperialism would undergo any decisive progressive shifts. Marx had once said, “Men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly encountered, given and transmitted from the past”.

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Obama inherits a past: US imperialism’s hegemonic drive to impose a global unipolarity under its tutelage; US strategic doctrine of `preemptive strike’ against any sovereign independent country in the world; USA’s self-declared right to militarily attack and occupy any country in the name of `global war against terrorism’. He inherits the notorious history of `State terrorism’ practiced by successive US governments. He has, himself, declared to continue the criminal economic blockade against Cuba. He inherits the Presidential sanction for the gruesome torture of other human beings as in Abu Gharib, or, Guantanamo. US support to Israel has denied the Palestinians their `home land’ all through the 20th century. Will this change now? Pertinent to us, in India, is that, with this unprecedented Democratic sweep in the US Congress and Senate as well, the pressures for resurrecting the Comprehensive Test Ban Treaty will mount. With the Indo-US nuclear deal’s attendant pressures on India, this has serious implications. Further, Obama has already displayed keen interest in resolving the Kashmir dispute when India has consistently maintained that there is no scope for any third party intervention in this Indo-Pak bilateral issue. Obama has declared this as a priority in order to have Pakistan’s undistracted attention in helping the US militarily to combat the Taliban. Surely, on these and many other important issues, the official US position will be known once Obama assumes the reins of office. So also will the world know how the US administration, under him, intends to tackle the current crisis of global capitalism. A recession has already begun in the USA and fast spreading to other industrialized countries. Definitive positions can only be taken subsequently. The moot question, therefore, is : will any of this change? While there are hopes and expectations, the past track record of US imperialism renders all such hopes to remain as illusions. US imperialism’s earlier pre-occupation with its `war on communism’ led to the unilateral aggression against Vietnam, will the pressures of the current `war against terrorism’ propel the Obama administration into more horrendous acts of `State terrorism’? Obama concludes his book, `The Audacity of Hope’ by dedicating himself to the process that built the USA : “those like Lincoln and King, who ultimately laid down their lives in the service of perfecting an imperfect union. And all the faceless, nameless men and women, slaves and soldiers and tailors and butchers, constructing lives for themselves and their children and grandchildren, brick by brick, rail by rail, calloused hand by calloused hand, to fill in the landscape of our collective dreams. “It is that process I wish to be a part of.” Indeed laudable. But will this process be confined to some 300 million people that account for less than 5 per cent of the world population. The fate of the remaining 95 per cent of humanity, war or peace, air that may be fit to breath or not, their quality of life, as Fidel Castro said, will depend to a great extent on the decisions of the Empire’s institutional leader.

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Return to the Chinese curse. It contains a belief that in every crisis situation, there is also the path for hope. Will this be used for creating a better world? The past experience of US imperialism, however, has shown that the leopard never changes its spots. If so, then the struggle shall continue for the triumph of hope over experience. Eom Article appeared in livemint.com on November 6, 2008 Will Obama Rise to the Occasion or Not? That is the Question Sitaram Yechury The US electorate has created history by sending the first non-white President to occupy the White House. Whether Barack Obama will create history or not is crucially dependent on how he tackles the current global economic crisis, which by far, is the deepest crisis outstripping the great depression of 1930s. According to The Economist, USA is at the “start of a painful recession”. Since the crisis is global, the recession is bound to engulf other developed countries and adversely affect all countries of the world. Speaking of the crisis, Obama said, “The decline in our GDP didn’t happen by accident. It is a direct result of the Bush administration’s trickle down, Wall Street first, Main Street last, policies”. This gives a hint of correct identification of the major culprit for this crisis being international finance capital and its unbridled speculative activities in search of quick super profits. Earlier, he had said, “The engine of economic growth for the past 20 years is not going to be there for the next 20. That was consumer spending. Basically, we turbocharged this economy based on cheap credit”. But the days of easy credit are over, Obama said, “because there is too much deleveraging taking place, too much debt”. A new economic turbocharger is going to have to be found, and “there is no better potential driver that pervades all aspects of our economy than a new energy economy…..That’s going to be my No. 1 priority when I get into office”. Until concrete prescriptions emerge after his assumption of office, we can only infer from these comments two simultaneous directions in which the USA may proceed. The first, of course, is the fire fighting injection of liquidity to stem the further collapse of financial markets. The US has already pumped in $ 2.5 trillion. The Bush administration will leave behind for Obama a staggering national debt of $ 10.3 trillion. Given this, the options for a further fiscal stimulus appear very limited, as estimates of budget deficit next year already spiral above $ 1 trillion. The injection of liquidity, however, will not be able to stem the crisis, because of the increase in the lenders’ perception of risk. This is so because the solvency of the borrowers has become suspect owing to the presence of a plethora of “toxic” securities in the system. What is required, therefore, is to improve the solvency of the borrower and not inject liquidity for the lender. This can only be done through massive doses of public investment that improves the quality of life of the people

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through greater employment generation and consequent expansion of aggregate demand. In other words, President Obama has an opportunity to offer a new `new deal’ a la President Roosevelt following the great depression of last century. This, however, would mean the recognition of the bankruptcy of neo-liberalism that provided the ideological prop for finance capital led speculative growth bubbles that have burst one after the other culminating in the current crisis. Will President Obama rise to the occasion? Or, will he preside over the efforts of the giants of international finance capital to emerge from this crisis heaping further miseries on the peoples in the third world. Needless to add, the choice that President Obama makes will define the people’s response to US imperialism globally. 91st Anniversary of the October Revolution Capitalism’ Collapse is inevitable but not automatic Sitaram Yechury The 91st anniversary of the Great October Socialist Revolution comes in the wake of the deepest crisis of world capitalism since the great depression of 1929. The current crisis of international financial capital that spearheaded imperialist globalisation in the last two decades is, by many estimations, far graver than any other crisis in the history of capitalism. The crisis is still unfolding and its full ramifications will be realized only much later. Many feel that we, as Marxists, must feel resoundingly vindicated that Karl Marx’s penetrative analysis of capitalism has, once again, proven itself to be true. Marxists do not derive satisfaction for the vindication of their world view and revolutionary analysis at the expense of the ruin and misery of millions of victims of this capitalist crisis. As Marx himself once said, “nothing human is alien to me”. Marxists work to ensure that the common working people are not subjected to such inhuman trepidations being at the mercy of the rule of Capital. This shall happen only when we “change the world”, not remaining satisfied with the correctness of our “interpretation of the world”. Capitalism, as Marx has shown, is a system that is based on the exploitation of man by man and nation by nation. It can never be a crisis-free system. Hence, the true emancipation of humanity from such miseries is possible only through a liberation from the capitalist system. We shall return to this aspect later. Two decades ago, the capitalist world was in a state of delirious euphoria in the build up to tearing down the Berlin Wall. This was accompanied by vituperative ideological offensive : End of History, End of Ideology etc. There was great delight at the collapse of this wall that symbolized, in many ways, the Cold War and world socialism’s power to confront imperialism in all respects. The collapse of the Berlin Wall has been eclipsed by the virtual deletion of capitalism’s so far considered impregnable wall – the Wall Street. The `big five’ global investment banks – Bear

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Sterns , Lehman Brothers, Merrill Lynch, Morgan Stanley and Goldman Sachs – that led and lorded over the world of imperialist globalisation have either been liquidated or severely emasculated. Such has been the gravity of the crisis that the most unabashed votary of capitalism, The Economist describes it as “capitalism at bay”. Referring to the spate of bailout packages advanced in various western capitals, it says that the future points towards “a larger role for the State and a smaller and more constrained private sector” and hoping “profoundly that this will not happen”. World capitalism has embarked on a spate of nationalizations that would have surprised the former socialist USSR. When the time to defend capitalism from such a crisis comes, all ideological attacks against State or public property and nationalization with the accompanied extolling of the virtues of private capital and their laser beamed God - market – appear to be mercilessly abandoned. Britain, that heralded modern privatization, nationalized, today, most of its banking sector. (Recollect that Margaret Thatcher once said, “It is not the business of the government to be in business”.) USA is pumping in $ 2.5 trillion of tax payers money to shore up its financial system. France’s Nicholas Sarkozy, says, “Laissez-faire is finished”. There is a profound paradox here. Defending capitalism, in this present crisis, means greater State intervention. This may be a paradox for capitalism’s ideologues, but the fact remains that the State of the ruling classes has always defended and enlarged the avenues for super private profits. We, in India, have our own experience of the State establishing the public sector to promote private capitalism. At a later stage, with this objective largely achieved, the State embarks on large-scale privatisation, again to benefit private capital. All this is done behind the illusory mask of `States’ `neutrality’! These bailouts, as the future will testify, are designed precisely to first save and then to create new avenues for profit generation. Current Crisis: Marxist Understanding This crisis is an inevitable consequence of the path of globalization that was unfolding in recent decades. In order to understand this, it is necessary, in the light of our assessment and experience of the socialist USSR to briefly recapitulate the CPI(M)’s understanding of the science of Marxism-Leninism and its relevance in analyzing contemporary developments. This essence is contained in the CPI(M)’s 14th Congress resolution, `On Certain Ideological Issues’ adopted following the collapse of the USSR in January 1992. The CPI(M) firmly believes that Marxism-Leninism is inherently materialistic, creative and intrinsically dialectical. It is hence supremely anti-dogmatic. It is a world-view that embraces the vision of liberation and expresses emancipatory ideals. It is a tool for understanding and analysing the multitude of phenomena that constitute changing historical situations. It is a guide to action that defines programmatic objectives for the people's struggle against all forms of exploitation, subject to the necessary adaptations as required by changing historical situations.

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As a creative science, Marxism-Leninism identifies the tendencies and directions of development. In doing so it provides the possibilities for popular mass intervention in these developments in the pursuit of establishing an exploitation-free society. It is, hence, incumbent upon all Marxist-Leninists to make a concrete analysis of the concrete conditions, both internationally and domestically, in each country and on that basis to chart out the course of human liberation. Following this, in 1993, the CPI(M) had organised an international conference at Calcutta with the participation of 25 Communist and Workers Parties from all over the world to underline the continued relevance of Marxism in understanding contemporary world realities. In 1998, at the initiative of the Communist Party of Greece, regular annual meetings of similar nature began leading to the regrouping of the Communist forces in the world. This has now become a regular annual feature with this year’s meeting being held in Brazil this month end. At the 1998 meeting discussing the role of the Communist Parties in the current conditions, the CPI(M) presented the following: “The main new element in the present phase of capitalist development is the emergence of globalisation of finance capital. It has specific features, in our opinion, which distinguish it from the period when Lenin analysed imperialism. The present process is not a nation-state based finance capital engaged in struggle with rival imperialist nation-states. In a sense, it has transcended the nation-state. This, however, is not to suggest that the relevance of the nation-state and its sovereignty has ceased, as some seek to argue. “It is, however, important to note that the present day finance capital is highly globally mobile sucking in finance capital from individual countries dominated by finance capital originating from the advanced countries. Further, this finance capital is more pre-occupied in its search for quick speculative gains rather than its amalgamation with industrial capital leading to economic development. It, therefore, truly represents the parasite that thrives at the expense of real economic growth. “The emergence of this finance capital is an important factor that explains the relatively low growth rates accompanied by high unemployment rates in the advanced countries. This happens because in order to appease international speculators, there is a competitive reduction in tax rates and restrictions on the size of the fiscal deficit. In other words, governments are forced to cut back expenditures and thereby deflate both employment and domestic demand leading to lower rates of growth. “This, in turn, leads to a situation where the advanced countries turn to the third world economies and intensify exploitation. The imposition of neo-liberal policies serves this purpose of removing obstacles to the free operation of internationally mobile finance capital. In addition, it seeks to impose a new form of international division of labour, this time not through direct colonial occupation but through coercing third world economies to dovetail to imperialist interests.” It is the consolidation of this process over the last decade that laid the basis for the current crisis. Marx’s analysis of capitalism tells us that as capitalism develops, there is the tendency for concentration and centralization of capital. As he said, over a period of time, there

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will be “fewer and fewer but larger and larger capitalists”. Accumulation under capitalism is, thus, a coercive process. So is the process of technological innovations. Without either of these, the capitalists cannot survive the rat race where the `big fish consumes the small fish’. It is this processes that has led to the internationalization of finance capital to gigantic levels, hitherto unknown in capitalism’s history. It is this process of globalisation that imperialism utilizes to seek its political objective of economically recolonising the developing countries. Two important features of globalization, however, require attention to understand the present crisis. First, this process has been accompanied by growing economic inequalities both within countries between the rich and poor and between the rich and the poor countries. Secondly, globalization has given rise to the phenomenon of `jobless growth’. This is so because the trajectory of profit-maximisation invariably replaces human labour by investing more in developing technology rather than developing human resource capacities. The growth of employment, during this period, has always been lower than the GDP growth rate globally. Both these features put together mean that the purchasing power of the vast majority of the world’s population has been declining. Now, capitalism inevitably plunges into a crisis when what is produced is not sold. Under these circumstances, the only way that capitalism can sustain its levels of profits is by encouraging people to procure loans whose spending will maintain the levels of economic activity. However, when the time comes to repay these loans, there is the inevitable default. This is precisely what happened in the USA in the current sub-prime (loans given at interest rates lower than the prime rates initially to lure borrowers, only to be re-set higher later or loans given to borrowers whose credit worthiness is suspect.) crisis leading to large scale defaults. Defaults should not have really come as a big surprise. The Wall Street Journal, reported on October 12, 2007 that the wealthiest one per cent of Americans reportedly earned 21.2 per cent of all income in 2005. This increased from 19 per cent in 2004 and exceeded the previous high of 20.8 per cent in 2000. In contrast, the bottom 50 per cent earned 12.8 per cent of all income which was less than 13.4 per cent in 2004 and 13 per cent in 2000. The consequence of such growing inequalities would lead, according to Merrill Lynch, to a fall of $360 billion in consumer spending during 2008-09. Obviously, Merrill Lynch, now emasculated, did not take its own assessment seriously. Capital, in search of higher profits, continuously creates new commodities through which it expands its market operations. As Marx had said, `production not only creates objects for the subjects, but also creates subjects for the objects’. The present day advertising industry is testimony of this. Under the rule of international finance capital, capitalism creates new financial commodities. One of these that has played havoc and generated the current crisis is known as the `derivatives’. Derivatives are shadow financial instruments that include futures, options, forwards trading etc. If one buys or sells a share in the stock market, then it is actual trade. However, if one buys or sells the option to buy or not to buy a share, then it is

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derivative trade. The seller of the option, believe it or not, need not own that share. Likewise, the buyer need not pay the full money for the share. According to the Bank of International Settlements, as of September 2008, the total value of derivative trade stood at a staggering $ 600 plus trillions. This has grown from $ 100 trillion in 2002. Thus, this shadow economy is 12 times larger than global GDP ($ 50 trillion) and more than six times larger than the actual trading in shares in the world’s stock exchanges ($ 100 trillions). While these are the figures from the official commodity exchanges, it is variously estimated that the total value of financial exchanges including in derivatives, whose trade takes place even outside of the commodity exchanges, was a staggering 40 times the total global GDP. It is this speculative financial bubble, pumped to inflate to infinity, that had to burst, and, it did. Indian Response In the meanwhile, independent sovereign countries like India can protect only by insulating ourselves from such massive speculation. To a large extent, if India has been spared a full throttle devastation, it is because the Left parties prevented the current UPA government, during the last four years, from embracing greater financial liberalization. Even our worst detractors are forced to admit this, though most reluctantly! It would, indeed, be suicidal if the government embarks, as it appears to do, on a path of relaxing the regulation on the flow of international finance capital in the name of injecting greater liquidity into our economy. This is expected to generate greater expenditures and, hence, boost aggregate demand, thus, fuelling growth. This process cannot be done through importing speculative capital. This needs to be done through greater public investments generating employment and, thus, feeding the cycle of demand led growth. Systemic Crisis Reams of analysis seek an explanation for this crisis (obfuscating the systemically inherent dynamics of the capitalist system), in the greed of a few, a violation of some ethical norms, a la Nobel laureate Paul Krugman’s “moral hazard” or, the lack of transparency and the weakness of regulatory mechanisms and credit rating agencies. Karl Marx’s penetrating analysis of capitalism is reportedly being sold much more in the western capitals today than any time in recent memory (profits are to be made through these sales too!). Marx shows that despite appearances of decisions and choices being taken or made by `free’ individuals, capitalism functions on the basis of laws that operate independently of the will or desire of individual capitalists. Take the issue of exploitation under capitalism. Exploitation does not take place under capitalism because the dishonest capitalist cheats the worker in the market place by giving lower wages. Even if the capitalist is supremely honest (rarest of the rare possibilities though) exploitation, nevertheless, takes place. This is so because in the capitalist production process, the value of the product produced by labour is always greater than the value this labour power (measured as wages) commands in the market. This surplus value generated by the labour process under capitalist

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production is the source of profit whose maximization is the raison d’etre of capitalism. Profits, thus, can be generated only through exploitation. The overthrow of capitalism is, therefore, not only a moral question, it is a scientific necessity if exploitation of man by man must end, if human emancipation has to be achieved. In Das Kapital, Marx concluding his chapter on the genesis of the industrial capitalist states: “Capital comes dripping from head to foot, from every pore, with blood and dirt”. He buttresses this with a quote, in a footnote, from a worker and trade union leader (Marx consciously drew on the writings and experience of workers to validate his analysis) T. J. Dunning : “With adequate profit, capital is very bold. A certain 10 per cent will ensure its employment anywhere; 20 per cent will produce eagerness; 50 per cent, positive audacity; 100 per cent will make it ready to trample on all human laws; 300 per cent and there is not a crime at which it will scruple, nor a risk it will run, even to the chance of its owner being hanged.” It is this pathological drive to maximize profits at any cost, the inherent character of the capitalist system and not the individual greed of some or weakness of regulatory mechanisms that is the root cause for the present crisis. Neo-Liberalism’s Bankruptcy Under globalization, by arm twisting all independent countries to embrace financial liberalization, the avenues for super profits were enlarged through hitherto unknown levels of speculation. Post crisis, this pressure is bound to intensify seeking greener pastures in the third world. Thus, this process of globalization has, once again, shown itself to be simply unsustainable. Consequently, globalisation’s ideological mask – neo-liberalism – has shown its thorough bankruptcy. If profits were reemployed into enlarging productive capacities, then through the consequent employment generation, the purchasing power of the people will grow leading to larger aggregate demand, which, in turn, would give a further impetus to industrialization and growth of the real economy. The gigantic accumulation of international finance capital, however, given the inherent laws of capitalism, supercedes this process, seeking predatory profits through speculation. It, in fact, decimates this process by enveloping it under the speculative financial bubble. This is similar to when monopoly capital emerging from free competition, decimates the latter completely. To summarise: under globalization, with sharp decline in the purchasing power in the hands of the majority of the world’s population (like the growing hiatus between `shining’ and `suffering’ India), finance capital, in its eagerness for quick profits, chooses the speculative route of artificially enlarging purchasing power by advancing cheap (subprime) loans. Profits are made while these loans are spent but when repayment is due comes default, ruining the loan taker, also crippling the system. To put it simply, as seen above, this is precisely what happened on a gigantic scale. Capitalism’s supreme diabolic irony lies in the fact that in the name of protecting those who have already been ruined, the banks and financial institutions are bailed out using tax payer’s resources! Indeed, privatization of profits and the nationalization of losses! In the process, intensifying exploitation further.

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Marx summarises the inherent dynamics of capitalism and its historical direction: “The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralisation of the means of production and socialization of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.” In the absence of a powerful socialist political alternative, however, capitalism reemerges from every crisis, through new expropriators, by destroying a part of the productive forces, to keep intact, or, create new profit avenues rather than using these resources for people’s welfare. The true inhuman character of capitalism. Capitalism’s Collapse Inevitable, Not Automatic CPI(M)’s 14th Congress resolution notes: “The inevitability of capitalism's collapse is not an automatic process. Capitalism has to be overthrown. An erroneous understanding only blunts the need to constantly sharpen and strengthen the revolutionary ideological struggle of the working class and its decisive intervention under the leadership of a party wedded to Marxism-Leninism -- the subjective factor without which no revolutionary transformation is possible”. In those countries where this process is advancing, like in Latin America, we have already seen the electoral defeats of the neo-liberal forces. In the absence of the advance of the revolutionary movement, capitalism will remerge, in a different form, to consolidate its predatory search for profits. As Marx and Engels said in the Communist Manifesto: "the bourgeoisie cannot exist without constantly revolutionising the instruments of production and thereby the relations of production and with that the whole relations of society". But such a reemergence of capitalism would be at a tremendous cost. Remember, the great depression of 1929 laid the foundations for the rise of fascism. Clearly, therefore, the current phase of imperialist globalisation and its ideological construct – neo-liberalism – appears to have run its full course. Whatever be the form and content of its restructuring, capitalism is inherently an exploitative and a crisisridden system. This is engendered in its fundamental contradiction between its social nature of production and the individual nature of appropriation. As the CPI(M) updated Programme notes: “Despite the fact that the international correlation of forces favour imperialism at the end of the twentieth century and capitalism continues to develop productive forces with the application of new scientific and technological advances, it remains a crisis-ridden system apart from being a system of oppression, exploitation and injustice. The only system, which is an alternative to capitalism, is socialism.” On this occasion, on the 91st anniversary of the October Revolution, learning from its experiences and drawing the correct lessons from its disintegration, we have to carry forward the struggle for socialism. This requires, as noted above, the sharpening of class struggles to advance the popular revolutionary movement. The experience of socialism in the 20th century demonstrates that the disintegration of the USSR and former socialist countries in Eastern Europe negates neither the revolutionary science of Marxism-Leninism nor the pursuit of the socialist ideal. The current capitalist

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crisis, on the other hand, tellingly demonstrates the vacuity of the “eternality” of capitalism. New Delhi, November 7, 2008 Article appeared in Hindustan Times Open the War Chest Sitaram Yechury Unfortunately, instead of concentrating energies to meet the challenges of the current global capitalist crisis, congenital anti-Left bashing is doing the rounds. Their main thrust is that the Left’s thwarting of many neo-liberal financial reforms proposed by the UPA government has little to do with India escaping a full throttle devastation. A former Advisor to the Prime Minister says: “The Left’s claim is like the head of a monastery saying she had saved her nuns from pregnancy. Celibacy is not a virtue in economics”. To put the record straight, the Left never staked any claims. All that was said in this column last fortnight was that even the devil must be given its due. That said, what about the ruling neo-liberal hedonistic testosterone prime pumping that turbocharged the race towards a catastrophic collapse with AIDS. Any rethinking on this neoliberal agenda? If no, then such critiques suffer from a different type of AIDS – Acute Intelligence Deficiency Syndrome. Another rightwing columnist, with pretensions of an ideologue, says: “The Left got some things right. But even a dud clock records the right time ….”. The job of any clock is to record time. Why gripe if the job is well done? Further the Left can “certainly take some credit in stalling the complete opening up of the insurance sector and preventing the rupee from being fully convertible. But credit must also go to the former RBI Governor…”. Please take credit where it is due. Likewise, stop being cussed and give credit where it is due. Substantive issues, please. Legislations were introduced in the Parliament for reforms in the financial sector. Now be clear of one aspect. Once a legislation is introduced in the Parliament, no other office can prevent it from becoming a law, except the parliamentarians. The Banking Regulation (Amendment) Bill was introduced on May 13, 2005 and returned from the Standing Committee on Finance with strong dissenting notes by the Left on December 13, 2005. It was listed for consideration and passing in the budget session of 2006. This has not happened. If this was enacted, foreign banks could have acquired 74 per cent equity stake in private Indian banks with corresponding voting rights. Imagine the consequences. The Bill to reduce the government’s stake in the State Bank of India was similarly stalled. The pension fund Bill was introduced on March 21, 2005 and not passed. It had proposed to permit the transfer of pension funds, the hard-earned life long savings of employees, to the share markets. The global meltdown would have virtually wiped out the future of crores of Indian workers and employees. The Union Cabinet, post crisis, proposes to increase the foreign investment cap in the insurance sector from 26 to 49 per cent, which so far was prevented by the Left. Its note to the UPA-Left Coordination Committee in 2005 warned: “Countries which enthusiastically opened

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up their financial sectors in order to attract capital inflows often experienced enhanced volatility in their financial markets and speculative attacks on their currency.” Grant this wisdom, even in retrospect, and rescind this proposal. The UPA government, however, was pushing ahead with its efforts. On March 18, 2006, the Prime Minister told a global audience in Mumbai that India would prepare a roadmap on full capital account convertibility to fully integrate the Indian financial system with the global. Earlier, the Finance Minister on October 21, 2005 said: “We will press on with the financial sector reforms”. Post global meltdown, the Prime Minister, on September 30, 2008 says: “The foremost challenge is to insulate India from the ill-effects of the international financial crisis”. From integration to insulation, indeed, a complete `U’ turn, nevertheless, in the correct direction. With the record set right, how do we proceed to meet the challenges before India? The official mindset, unfortunately, continues to remain within the neo-liberal framework. There is this refusal to accept the fact that the ideology of neo-liberalism that sanctioned the predatory greed of financial speculation has been rendered bankrupt. The solution does not lie in injecting greater liquidity into the economy, which seems to be the reigning philosophy. The global crisis has occurred, amongst many factors, primarily because of the increase in the lenders’ perception of risk. This is so because the solvency of the borrowers has become suspect owing to the presence of a plethora of “toxic” securities in the system. What is required, therefore, is to improve the solvency of the borrower and not inject liquidity for the lender. This can only be done through massive doses of public investment that leads to greater employment generation and consequent expansion of aggregate demand. The Left’s opposition to the neo-liberal economic policies, during the four years of its outside support to the UPA, was characterized as `Keynesian fundamentalism’. We had characterized the UPA as pursuing `fiscal fundamentalism’. On his return from China, the Prime Minister, surprisingly, spoke of pump priming the economy with larger doses of public investment. Please do it.

US Electorate Creates History

Extraordinary change, but will it change ordinary lives for the better? Sitaram Yechury THE US electorate has created history by sending the first non-white president to the White House. The remarkable ascendancy of Barack Hussein Obama as the 44th President of the United States of America brings to mind an ancient Chinese curse, “May you live in interesting times”.

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Consider the reality that when Obama was born (1961), the right to vote for the African American people was not universally granted in many Southern states. Equality before law came only in the 1964 Civil Rights Act. Voting Rights Act came in 1965. Inter racial marriages were legalised in 1967. In early seventies, it was not uncommon to find an African American on the streets asking for change. Today, one has walked into the White House on a popular mandate for Change. In this sense, history is, indeed, being made. Fidel Castro had described Obama as “the most progressive candidate for US Presidency” from the “social and human points of view”. At the same time, he warned that it would be an illusion to presume that the character of US imperialism would undergo any decisive progressive shifts. Marx had once said, “Men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves, but under circumstances directly encountered, given and transmitted from the past”. Obama inherits a past: US imperialism’s hegemonic drive to impose a global unipolarity under its tutelage; US strategic doctrine of `preemptive strike’ against any sovereign independent country in the world; USA’s self-declared right to militarily attack and occupy any country in the name of `global war against terrorism’. He inherits the notorious history of `State terrorism’ practiced by successive US governments. He has, himself, declared to continue the criminal economic blockade against Cuba. He inherits the Presidential sanction for the gruesome torture of other human beings as in Abu Gharib, or, Guantanamo. US support to Israel has denied the Palestinians their `home land’ all through the 20 th century. Will this change now? Pertinent to us, in India, is that, with this unprecedented Democratic sweep in the US Congress and Senate as well, the pressures for resurrecting the Comprehensive Test Ban Treaty will mount. With the Indo-US nuclear deal’s attendant pressures on India, this has serious implications. Further, Obama has already displayed keen interest in resolving the Kashmir dispute when India has consistently maintained that there is no scope for any third party intervention in this Indo-Pak bilateral issue. Obama has declared this as a priority in order to have Pakistan’s undistracted attention in helping the US militarily to combat the Taliban. Surely, on these and many other important issues, the official US position will be known once Obama assumes the reins of office. So also will the world know how the US administration, under him, intends to tackle the current crisis of global capitalism. A recession has already begun in the USA and fast spreading to other industrialised countries. Whether Barack Obama will create history or not is dependent on how he tackles this crisis which, by far, is the deepest crisis, outstripping the Great Depression of the 1930s. Speaking of the crisis, Obama said, “The decline in our GDP (gross domestic product) didn’t happen by accident. It is a direct result of the Bush administration’s trickle down, Wall Street first, Main Street last, policies.” This gives a hint of correct identification of the major culprit for this crisis being international finance capital and its speculative activities in search of quick super profits.

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Earlier, he had said, “The engine of economic growth for the past 20 years is not going to be there for the next 20. That was consumer spending. Basically, we turbocharged this economy based on cheap credit.” But the days of easy credit are over, Obama said, “because there is too much deleveraging taking place, too much debt”. A new economic turbocharger is going to have to be found, and “there is no better potential driver that pervades all aspects of our economy than a new energy economy… That’s going to be my No. 1 priority when I get into office”. Until concrete prescriptions emerge after his assumption of office, we can only infer from these comments two simultaneous directions in which the US may proceed. The first is the fire-fighting injection of liquidity to stem further collapse of the financial markets. The US has already pumped in $2.5 trillion (Rs118 trillion). The Bush administration will leave behind for Obama a staggering national debt of $10.3 trillion. Given this, the options for a further fiscal stimulus appear very limited, as estimates of the budget deficit next year already spiral above $1 trillion. The injection of liquidity, however, will not be able to stem the crisis, because of the increase in the lenders’ perception of risk. This is so because the solvency of the borrowers has become suspect owing to the presence of a plethora of “toxic” securities in the system. What is required, therefore, is to improve the solvency of the borrower and not inject liquidity for the lender. This can only be done through massive doses of public investment. In other words, Obama has an opportunity to offer a new “New Deal” a la president Roosevelt following the Great Depression. This, however, would mean recognition of the bankruptcy of neo-liberalism that provided the ideological prop for finance capital-led speculative growth bubbles that have burst one after the other, culminating in the current crisis. Will president Obama rise to the occasion? Or, will he preside over the efforts of the giants of international finance capital to emerge from this crisis heaping further miseries on the peoples of the third world? The choice that Obama makes will define the people’s response to US imperialism globally. Obama concludes his book, `The Audacity of Hope’ by dedicating himself to the process that built the USA : “those like Lincoln and (Martin Luther)King, who ultimately laid down their lives in the service of perfecting an imperfect union. And all the faceless, nameless men and women, slaves and soldiers and tailors and butchers, constructing lives for themselves and their children and grandchildren, brick by brick, rail by rail, calloused hand by calloused hand, to fill in the landscape of our collective dreams….It is that process I wish to be a part of.” Indeed laudable. But will this process be confined to some 300 million people that account for less than 5 per cent of the world population. The fate of the remaining 95 per cent of humanity, war or peace, air that may be fit to breath or not, their quality of life, as Fidel Castro said, will depend to a great extent on the decisions of the Empire’s institutional leader. Return to the Chinese curse. It contains a belief that in every crisis situation, there is also the path for hope. Will this be used for creating a better world? The past experience of US imperialism, however, has shown that the leopard never changes its spots. If so, then the struggle shall continue for the triumph of hope over experience.

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