(excerpted from The Internationale, Issue No. 8)
In his tweet to the women’s marches that took place across the United States on January 20, 2018, President Trump hailed the “unprecedented economic success and wealth creation that has taken place over the last 12 months!”
Three months earlier, in late October 2017, Trump had sent out a tweet with a similar message: “The U.S. has gained more than 5.2 trillion dollars in Stock Market Value since Election Day!”
This is true. The stock market has been soaring. But the stock market boom is resting on thin ice: The world economy is on the verge of an even greater collapse than the subprime crisis of 2007-2008.
Daniel Gluckstein, leader of the French TCI, explained this well in his introductory speech to the Second International Conference of the Organizing Committee for the Reconstruction of the Fourth International (OCRFI) in Paris in early November 2017, brief excerpts of which are published below.
Gluckstein’s full speech is published in Issue No. 8 of The Internationale, the theoretical magazine of the OCRFI. To order, send $8 to The Organizer, PO Box 40009, San Francisco, CA 94140. — Ed.
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By DANIEL GLUCKSTEIN
The New York Stock Exchange is breaking record after record. In early November 2017, the world’s stock market capitalization set a new record of US$88 trillion — i.e., more than the global Gross Domestic Product (GDP). In other words, the stocks and shares held on the world’s stock exchanges represent a value that is higher than all of the wealth produced in the whole world over the course of a year.”
This process is being fed particularly by an increasingly considerable debt. According to the Institute of International Finance, the total global debt (the sum of State, corporate and household debt) today is said to be US$226 trillion, or three times the global GDP.
And it is still growing. We know that the subprime mortgage crisis officially started in the United States (in fact, it was a trigger element of a much bigger process) through the misuse of forced loans by U.S. bankers and speculators, loans taken out by households that were no longer able to repay the mortgages on homes they had bought. Now officially, private debt in the United States today is higher than it was just before the subprime mortgage crisis. It is slightly lower in terms of housing loans, but it is significantly higher for loans linked to auto vehicles, education and healthcare. So, the U.S. population, which was in an insolvent situation in 2007, is virtually in an even worse situation today.
We need to include the developments in China when talking about the threat facing the world economy. For the last 25 years, China has been pushed by finance capital onto the path of significant development of its production capacity. We can understand the capitalists’ interest in having available a cheap workforce without trade unions, etc. But here again, the barrier of capital is capital itself. The production capacity of Chinese industry increasingly exceeds the market’s capacity to absorb it.
In order to avoid an immediate collapse, and to allow finance capital to continue to have a market — driven parasitically, of course — available to it, China was encouraged by international finance capital to take on more and more debt. Finance capital’s demands were relayed to varying degrees by the Chinese leadership.
In 10 years, total debt in China increased from 1.5 times GDP to 2.5 times GDP. This is a significant increase in terms of the Chinese economy. But this situation of growing debt also applies to other countries. I am not talking about Africa, Latin America or Asia, where we have known for decades the role played by the external debt. Let us take Europe. The European Union rests on the three Maastricht “criteria.” One of these is that government debt must never exceed 60 percent of GDP. Of the European Union’s 28 countries, this requirement is being met by one or two countries. Everywhere else, indebtedness has exploded. It is higher than 70 percent, or even 80 percent or 90 percent of GDP.
To this we need to add what is referred to as “shadow banking,” namely huge financial loans that are not granted by officially regulated lending bodies. I include in this examination the recourse to “quantitative easing” (QE), the injection into the markets of huge amounts of capital — sometimes real, sometimes fictitious — which the U.S. Federal Reserve has begun to slow down a little bit, and which the European Central Bank is thinking of slowing down, while terrified of the consequences of that slowing-down.
The economists are talking a lot about a “soft landing.” They are saying: The world economy is immeasurably addicted to free money; it needs to gradually start kicking the habit, so the QE tap needs to be closed a little bit, but people are very worried, because the economy is not doing well as it is, and if they stop giving free money to the speculators to speculate with, there will be nothing left.
It is obvious that when the next bubble bursts, there will be terrible consequences. But we need to ask ourselves one question: How is it possible, in a situation of “secular stagnation,” to pump tens of billions of dollars more into the financial markets every day — the extra US$5.2 trillion that Trump was so pleased about? Last week, global capitalization went up by US$800 billion. Where did those gigantic flows of money come from?
There is only one answer. Every worker knows the answer, at least empirically: from cutting jobs in sectors judged to be insufficiently profitable; from off-shoring to countries where the workers are underpaid; from the counter-reforms that are destroying social security and pension systems and collective bargaining agreements — and the attacks on recognized job-grades, and pay scales. … Around 90 percent of the private-sector workforce in India is involved in the “informal economy.” In the imperialist countries themselves, the “developing” forms of work are jobs that are part-time, insecure and without benefits.
Generally speaking, the origin of this acceleration in the expansion of financial flows in the stock exchanges is what is being taken out of the value of labor-power. …
[And] when wages drop and working time thus becomes part-time work, when healthcare expenses are no longer reimbursed, when overtime worked is no longer paid, the working class’s capacity to consume is reduced. This means that the capacity to absorb the commodities produced is reduced. Therefore, the means by which Capital seeks to overcome its crisis are, as the Transitional Program of the Fourth International states, means that make the crisis worse.
Is this not the verification of what Marx wrote, I think for the first time in 1846-47, namely that: having reached a certain stage of development, the productive forces tend to “no longer [be] productive but destructive forces (machinery and money)”? To these two terms, Rosa Luxemburg added a third: the arms economy.
Today, are we not in a situation where these three major elements of the destructive forces are expanding dramatically? And, again, by these three element I am referring to are (1) money, i.e. stocks- related and financial speculation together with the manipulations of the central banks producing phony money; (2) machinery, i.e., using the internet as a factor for deskilling and destroying the working class through teleworking, for atomizing it, and replacing human labor-power with machines; and (3) the arms economy, which by definition becomes a war economy.
Do these elements not confirm emphatically that the survival of capitalism through debt, super-exploitation, the destruction of the working class’s gains, the spread of wars and the carving-up of nations is leading humankind into barbarism and destruction? And that, consequently, the affirmation in the Program of the Fourth International, that “without a socialist revolution, (…) the whole culture of humankind faces disaster”, is truer than ever today? And when I say “humankind”, I include both the human race and its environment.
Because those who try to set up so-called “environmental” questions as a category that is cut off from the emancipatory struggle of the working class are manipulators. More than 150 years ago, Marx and Engels wrote that the capitalist system threatens humanity as a whole, the human race and its environment. This is nothing new. Yes, humankind is threatened today by the worst kind of dangers, including from the point of view of its environment. But this is not the result of bad consumer habits, of not sorting one’s rubbish correctly, or a lack of respect for nature; it is the result of a capitalist system that is prepared to do anything it takes to realize its profits, including making humankind disappear.
This issue cannot be treated separately — political solutions must be addressed as a totality.
 Hedge-fund titan Ray Dalio of Bridgewater Associates described it this way in an interview published in the Wall Street Journal on January 3, 2018: “The money that’s made from manufacturing stuff is a pittance in comparison to the amount of money made from shuffling money around.”
 In the January 3 interview with the Wall Street Journal, Bridgewater hedge-fund manager Ray Dalio described the effects of this process on the U.S. economy: (1) “the ‘elevated stock valuations’ have not translated into higher long-term economic growth, let alone improvements for the bottom 60 percent of the population … which is ‘on edge’ due to stagnant wages and higher household debt.” Dalio went on to warn his billionaire cronies that “the immense, and ever-growing, levels of inequality are generating deep social discontent; they are feeding resentment and political polarization.” – Ed.