AT the end of the Globalization and Development event, with the presences of more than 1,500 economists, outstanding scientific figures and representatives of international organizations meeting in Havana, I received a letter and a document from Atilio Boron, a Doctor of Political Science, senior professor of political and social theory, director of the Latin American Program for correspondence courses in the social sciences – PLED, as well as other important scientific and political responsibilities.

Atilio, a firm and loyal friend, had participated on Thursday the 6th in the “Roundtable” Cuban television program together with other eminent international figures who attended the Conference on Globalization and Development.  

I found out that he was leaving on Sunday and decided to invite him to a meeting at 5 p.m. the day before, Saturday, March 7.

I had decided to write a reflection on the ideas contained in his document. I will use his words in the summary.

“…We find ourselves facing a general capitalist crisis, the first of any magnitude comparable with the one that broke out in 1929 and the so-called ‘Long Depression’ of 1873-1896. A crisis that is integral, of civilization and multifaceted, whose duration, profundity and geographical reach will surely be of a greater scope that the ones that preceded it.

“It is a crisis that goes far beyond financial and banking aspects and is affecting the real economy in every department. It is affecting the global economy, and goes far beyond the borders of the United States.

“Its structural causes: it is a crisis of overproduction and at the same time of under-consumption. It is no coincidence that it broke out in the United States, because this country has been living for more than 30 years from external savings, from external credit and these two things are not infinite: companies got into debt over their heads; the state also got into debt over its head in order to deal with not one but two wars, and not just without increasing taxes, but cutting them. Its citizens are systematically pushed, by way of commercial publicity, into getting into debt in order to sustain exorbitant, irrational and wasteful consumerism.

“But in addition to these structural causes others should be added: the accelerated financialization of the economy, the irresistible tendency to foray into increasingly risky speculation operations. With the discovery of capital’s “fountain of youth,” thanks to which money generates more money based on the value given to the exploitation of the workforce, and taking into account that enormous masses of fictitious capital can be achieved in a matter of days — or weeks, at the most — capital’s addiction is leading it to set aside any calculations or any scruples.

“Other circumstances favored the outbreak of the crisis. Neoliberal deregulation and liberalization policies made it possible for the most powerful actors roaming the markets to impose the law of the jungle.

“Enormous destruction of capital on a world scale, characterizing it as a ‘creative destruction.’ On Wall Street, this ‘creative destruction’ meant the devaluation of companies listed on that market to reach almost 50%; a company that was previously worth $100 million in capital on the market now has $50 million. A fall in production, prices, wages, purchasing power. ‘The financial system as a whole is about to explode. We already have more than $500 billion in banking losses, a billion more is to come. More than a dozen banks have gone bankrupt and hundreds more are expecting the same fate. At this point, more than $1 billion has been transferred from the FED to the banking cartel, but $1.5 billion more will be needed to maintain the liquidity of banks in coming years.’ What we are seeing is the initial phase of a long depression and the word recession, so much utilized recently, does not capture what the future holds for capitalism in all its dramatic dimension.

“Ordinary Citicorp stock lost 90% of its value in 2008. The last week in February, it was worth $1.95 per share on Wall Street!

“This process is not neutral, because it will benefit the largest and best-organized oligopolies, which will oust their rivals from the markets. The ‘Darwinian selection of the fittest’ will clear the way for new mergers and business alliances, sending the weakest into ruin.

“Accelerated increase in unemployment. The number of unemployed in the world (some 190 million in 2008) could rise by another 51 million throughout 2009. Poor workers (who earn just two euros daily) will number 1.4 billion; that is, 45% of the economically active population on the planet. In the United States, the recession has already destroyed 3.6 million jobs, half of them in the last three months. In the EU, the number of unemployed stands at 17.5 million, 1.6 million more than one year ago. By 2009, it is projected that 3.5 million jobs will have been lost. Because of their close ties with the U.S. economy, several Central American states such as Mexico and Peru, will be hard hit by the crisis.

“A crisis that affects every sector in the economy: banking, industry, insurance, construction, etc. and that is spreading throughout the international capitalist system as a whole.

“Decisions that are taken in world centers and which affect the subsidiaries of the periphery, generating massive layoffs, interruptions in the chain of pay, a fall in demand for supplies, etc. The United States has decided to support the Big Three (Chrysler, Ford, General Motors) of Detroit, but only to save their plants within the country. France and Sweden have announced that they will condition aid to their automotive industries: only the centers located in their respective countries will be able to benefit. The French minister of the economy, Christine Lagarde, stated that protectionism could be ‘a necessary evil in times of crisis.’ The Spanish minister of industry, Miguel Sebastián, is urging ‘Buy Spanish products.’ Barack Obama, we would add, is promoting ‘Buy American!’

“Other sources of the propagation of the crisis in the periphery include the fall in prices for commodities exported by Latin American and Caribbean countries, with their recessive consequences and higher unemployment.

“A drastic diminishment in remittances from Latin American and Caribbean emigrants in the developed countries. (In some cases, remittances are the most important item in international hard currency income, over and above exports.)

“The return of emigrants, depressing the labor market even more.

“This is combined with a profound energy crisis that requires the replacement of the current one, based on the irrational and predatory use of fossil fuel.

“This crisis coincides with growing awareness of the catastrophic scope of climate change.

“Add the food crisis, sharpened by capitalism’s attempts to maintain an irrational pattern of consumption, which has led to taking land suitable for producing food and allocating it for producing agro-fuels.

“Obama admitted that we have not yet touched bottom, and Michael Klare wrote recently that ‘if the current economic disaster turns into what President Obama has called the lost decade, the result could be a global landscape full of convulsion caused by the economy.’

“In 1929, unemployment in the United States reached 25%, as agricultural and raw material prices fell. Ten years later, and despite radical policies implemented by Franklin D. Roosevelt (the New Deal), unemployment remained very high (17%) and the economy could not climb out of the depression. Only World War II put an end to that stage. And now, why should it be shorter? When the 1873-1896 depression, as I explained, lasted 23 years!

“Given this background, why would we now come out of the current crisis in a matter of months, as some Wall Street publicists and ‘gurus’ predict?

“We will not come out of this crisis with a couple of G-20 or G-7 meetings. If there is any test of their radical incapacity to solve the crisis, it is the response of the world’s stock markets after each announcement or each law passed for a new bailout: invariably, the response of ‘the markets’ is negative.

“As George Soros attests, ‘the real economy will suffer the secondary effects, which are now gaining force. Given that in these circumstances the U.S. consumer can no longer serve as the driving force of the world economy, the U.S. government should stimulate demand. Given that we are facing the threatening challenges of global warming and energy dependence the next government should direct any stimulus plan toward energy savings, by developing alternative energy sources and building environmentally-friendly infrastructure.

“A long period of tug-of-war and negotiations is opening up to define how to get out of the crisis, who will benefit and who will pay the price.

“The Bretton Woods Agreements, which originated in the framework of a Keynesian stage of capitalism, coincided with the stabilization of a new model of bourgeois hegemony, which, as a product of the outcome of the war and anti-fascist struggle, has as a new and unexpected backdrop the strengthening of the gravitation of trade unions, leftist parties and states’ regulating or intervening abilities.

“The USSR is gone; its sole presence and the threat that its example could spread westward tipped the balance of negotiations in favor of the left, popular sectors, trade unions, etc.

“Currently, China holds an incomparably more important role in the world economy, but without reaching a parallel importance in world politics. The USSR, in contrast, despite its economic weakness, was a formidable military and political power. China is an economic power, but with little military or political presence in world affairs, although it is beginning a very cautious and gradual process of reaffirmation in world politics.

“China may come to play a positive role for the re-composition strategy of countries on the periphery. Beijing is gradually reorienting its enormous national energies toward its internal market. For many reasons that would be impossible to discuss here, it is a country that needs its economy to grow at an annual rate of 8%, whether as a response to the stimulus of world markets or to those that originate in its immense — only partially exploited — internal market. If that turn were to be confirmed, it is possible to predict that China will continue to need many products from Third World countries, such as oil, nickel, copper, aluminum, steel, soy and other raw materials and foods.

“In the Great Depression of the 1930s, in contrast, the USSR had a very weak insertion in world markets. China is different: it could continue to play a very important role, and like Russian and India (although these to a lesser extent), to buy the raw materials and foods that it needs, as opposed to the case of the USSR in the times of the Great Depression.

In the 1930s, the ‘solution to the crisis was found in protectionism and world war. Today, protectionism will come up against many obstacles due to the inter-penetration of the great national oligopolies in different spheres of world capitalism. The formation of a global bourgeoisie, rooted in gigantic companies that, despite their national base, operate in a countless number of countries, causes the protectionist option in the developed world to have scant effectiveness in North-North commerce, and policies will tend — at least for now and not without tensions — to respect the parameters established by the WTO. The protectionist card appears to be much more probable when it is applied, as it surely will be, against the global South. A world war driven by ‘national bourgeoisies’ of the developed world ready to fight amongst themselves for market supremacy is virtually impossible, because such ‘bourgeoisies’ have been displaced by the rise and consolidation of an imperial bourgeoisie that periodically meets in Davos, and for which the option of military confrontation is a phenomenally stupid thing to do. That does not mean that that global bourgeoisie does not support, as it has to date with the military adventures of the United States in Iraq and Afghanistan, the realization of numerous military operations in the system’s periphery, necessary for the preservation of the profitability of the U.S. military-industrial complex and, indirectly, for the great oligopolies of other countries.

“The current situation is not the same as the one in the 1930s. Lenin (said):

‘Capitalism does not fall without a social force that makes it fall.’ That social force today is not present in the societies of metropolitan capitalism, including the United States.

“The USA, UK, Germany, France and Japan settled their struggle for imperial hegemony on the military field.

“Today, hegemony and domination are clearly in the hands of the USA. It is the only guarantee of the capitalist system on a world scale. If the USA fell, it would produce a domino effect that would cause the collapse of almost all metropolitan forms of capitalism, let alone the consequences in the system’s periphery. If Washington were to see itself threatened by a popular insurgency, they would all rush to its rescue, because it is the last bastion of the system and the only one that, in case of necessity, can help the others.

“The United States is an irreplaceable actor and unquestionably the center of the world imperialist system: only it has more than 700 military missions and bases in some 120 countries, which constitute the system’s final reserve. If all other options fail, force will appear in all its splendor. Only the United States can deploy its troops and its war arsenal to maintain order on a planetary scale. It is, as Samuel Huntington said, ‘the solitary sheriff.’

“This ‘shoring-up’ of the imperialist center has the invaluable collaboration of its other imperial partners, or its competitors in the economic realm and even the majority of Third World countries, which accumulate their reserves in U.S. dollars. Neither China, Japan, Korea or Russia — to mention the largest holders of dollars in the world — can liquidate their stock in that currency because it would be a suicidal move. Of course, this is also a consideration that should be made with much caution.

“The conduct of the markets and savings-holders throughout the world is strengthening the U.S. position: the crisis is deepening; the bailouts are demonstrating their insufficiency; the Dow Jones on Wall Street is falling below the psychological barrier of 7,000 points — falling below the mark it fell to in 1997! — and despite that, people are seeking refuge in the dollar, with the value of the euro and gold falling!

“Zbigniew Brzezinski has said, ‘I am worried because we are going to have millions and millions of unemployed, many people really having a difficult time. And that situation will be present for some time before things eventually improve.’

“We are in the presence of a crisis that is much more than an economic or financial crisis.

“It is an overall crisis of a model of civilization that is economically unsustainable; politically unsustainable, without appealing increasingly more to violence against the peoples; environmentally unsustainable, too, given the destruction, in almost all cases irreversible, of the environment; and socially unsustainable, because it degrades the human condition to unimaginable limits, and destroys the very fabric of social life.

“The answer to this crisis, therefore, cannot just be economic or financial. The ruling classes will do exactly that: use a vast arsenal of public resources to socialize the losses and set the great oligopolies afloat again. Occupied with defending their most immediate interests, they lack even the vision to conceive of a more comprehensive strategy.

The crisis has not touched bottom,” he says. “We find ourselves facing a general capitalist crisis. There has not been a larger one. The one that took place between 1873 and 1896 lasted 23 years; it was called the Long Depression. The other, more serious one was the one of 1929. It also lasted no less than 20 years. The current crisis is all-embracing, of civilization, multifaceted.”

He immediately adds, “It is a crisis that goes far beyond the financial and banking aspects and is affecting the real economy in every department.”

If anyone were to take this summary and carry it in his or her pocket, read it over once in a while or learn it by heart like a small Bible, he or she will be better informed about what is happening in the world than 99% of the population, where citizens live under siege from commercials and saturated with thousands of hours of news, and real or false soap operas or fiction films. (Translated by Granma International)

Fidel Castro

March 8, 2009