International Committee of the Fourth International
Fourth International Vol. 15 No. 1 (March 1988)

Political Report on the Perspectives of the International Committee of the Fourth International

This is an edited transcript of a report given September 1, 1987 at the Workers League summer camp.

The question of perspectives was at the very center of the struggle which erupted inside the International Committee. In January 1984, the Workers League wrote to Banda, expressing concern that “we do feel that the International Committee has for some time been working without a clear and politically-unified perspective to guide its practice. Rather than a perspective for the building of sections of the International Committee in every country, the central focus of the IC’s work for several years has been the development of alliances with various bourgeois nationalist regimes and liberation movements.”

The letter further warned that “no matter how promising certain developments within the national work of the sections may appear—such as our own experiences in various trade union struggles—these will not produce real gains for the sections involved unless such work is guided by a scientifically-worked out international perspective.”

And finally, the letter concluded that “the new stage in the crisis of imperialism and Stalinism and the breakup of revisionism poses the necessity of a great development in our theoretical work and practical activity. We believe that this development requires a renewal of our struggle against Pabloite revisionism—above all, against the manifestations of its outlook within our own sections. Let us begin this work by availing ourselves of the opportunity presented by the scheduled IC meeting to prepare the foundation for an exhaustive discussion on international perspectives, aimed at the drafting of a comprehensive international resolution.”

As comrades know, it was not possible to obtain the type of discussion we asked for. In fact, we went to the IC meeting two weeks later in February 1984, and elaborated on these points. The response of the WRP leadership—Healy, Banda, Slaughter, Pilling and Mitchell—was to threaten the Workers League with a split unless these criticisms were withdrawn. Healy simply could not tolerate a discussion on international perspectives. There was deep and intractable opposition within the WRP to the development of a scientific perspective oriented toward the building of a proletarian party based on an independent and revolutionary program. Behind this opposition was an orientation to other class forces. The political alliances which had been formed by the WRP leadership with the bourgeois nationalists, the trade union and Labour Party bureaucracies, and its behind-the-scenes overtures to the Soviet bureaucracy could not have survived a perspectives discussion inside the International Committee.

This situation was the outcome of a long-incubating crisis inside the Workers Revolutionary Party. One might say that its systematic work on perspectives came to an end in the period following the decisions announced by Nixon on August 15, 1971. Prior to that, there had been regular work done on perspectives by the Socialist Labour League, and it had made a careful study of the developments in the monetary crisis, particularly since the devaluation of the British pound in 1967, the Paris gold crisis of 1968 and leading up to the end of dollar-gold convertibility in August 1971. In late 1972 or early 1973, the SLL produced a statement on the dollar crisis. But after that, work on perspectives became increasingly episodic. An analysis of the further development of the crisis was replaced with ritualistic references to the breakup of the Bretton Woods system on August 15. Nothing was really required except to await the collapse. This increasingly abstract perspective degenerated into a schema, in which the economic crisis arising from the end of dollar-gold convertibility would provoke revolutionary situations, first of all in Britain. This became the justification for an increasingly nationalist orientation by the WRP.

From 1975, the development of the debt crisis (to which the Workers League first drew attention in late 1975) supplemented the end of dollar-gold convertibility as the central feature in the world capitalist crisis. But the capitalist crisis was presented by the WRP as simply a monetary crisis, which was fundamentally incorrect. It is always necessary to trace these forms of appearance back to their essential source in the fundamental contradictions in the capitalist mode of production. Trotsky wrote on this question very emphatically.

Within the ICFI, the late 1970s saw the end of any detailed attention to questions of perspective. As we have explained, the WRP was taken completely by surprise by the sharp turn in capitalist policy in 1979-80, and the political forms taken by that change, especially with the election of Thatcher. This produced a protracted period of disorientation and demoralization.

The Tenth Congress perspectives document adopted in January 1985 was the outcome of the political and ideological decay of the WRP. It is a remarkable document when read today, in the sense that there was a complete absence of concrete analysis. In 1985, it asserted that economic contradictions “have now broken through the ‘dam’ of Bretton Woods with irrepressible force, and the dam cannot be reconstructed. That is the key to the international situation and it is the content of the political struggle in every country.”

Some 14 years had passed since the decisions taken by Nixon in August 1971. To simply repeat that those decisions mean an imminent collapse was the expression of the WRP’s failure to actually study how the contradictions of capitalism had developed on the basis of the new arrangements that had been worked out following the 1971 decisions. It was perfectly true to state in 1971 that Nixon’s decisions had profound implications, and the International Committee would never have to be embarrassed about the analysis it made. But the decisions taken by the bourgeoisie on August 15 did not simply doom the capitalist system.

While these decisions did lead, as we had anticipated, to great upheavals, one had to recognize that in the course of the decade that followed 1971, as a result of the betrayals of the Stalinists and social democrats, a new modus operandi had been created. But there was no further analysis. References were simply made to the breakup of Bretton Woods. And yet, those 14 years had seen extraordinary changes in the structure of international capitalism.

This is not to say that August 15, 1971 was not important. It certainly was. One leading bourgeois economist, I.M. Destler, who is a specialist on world trade, recently referred to the decisions of August 15, 1971 as the beginning of a “new era,” and noted:

The 1970s and 1980s brought far-reaching changes to the world economy. US firms and workers became much more exposed to foreign competition in both home and overseas markets. The relative position of the United States declined, as European rivals were joined by Asian ones—first Japan, then rapidly industrializing countries like Korea ... the world Americans faced after 15 August 1971 was clearly one of greater economic insecurity and turmoil.

Yet, not a single reference is to be found in the Tenth Congress perspective to the rise of Japan as an economic power, the enormous expansion of capitalist industry in the Asian Pacific and the general significance of the shifts in the balance of world trade. In the 1920s, Trotsky had devoted great attention to the significance of America’s new role in the world economy, and he specifically criticized the original draft program of the Comintern for having failed to subject that new phenomena to a serious analysis. In the 1980s, the WRP acted as if one of the most significant developments in world capitalist economy—the enormous industrial and financial growth of Japan—had not even occurred. It was as if this was a development that did not merit our attention, or that it was possible to elaborate a world perspective without examining the implications of these economic changes in a sector of the world where more than half its population lives. Similar indifference was exhibited toward the implications of the development of trade between China and the United States and other capitalist countries, which has grown from a few hundred million dollars to 50 billion dollars in just the last few years.

Nor was there any reference to the implications of the increase in Japan’s economic might for interimperialist relations. Incidentally, the WRP refused to address the question of interimperialist antagonisms, as if the existence of these contradictions, to which Marxists in the past always paid great attention, had been totally subsumed by the conflict between world imperialism and the USSR. In fact, in 1981 Cliff Slaughter produced a draft document on imperialist war. It was to be a document produced by the International Committee defining our attitude to the danger of imperialist war. This document was rejected by the delegates of the International Committee.

Among the criticisms raised was that the danger of war was presented only from the standpoint of the conflict between what he called—in what I thought was an extraordinary phrase—the “two superpowers.” I had never seen in a document produced by the Trotskyist movement reference to the Soviet Union and the United States as the two superpowers. We never accepted that kind of parallel characterization of a workers’ state and an imperialist state. Superpowers is a typical journalistic phrase which conceals the essential class contradictions between the two countries. At any rate, we asked why there wasn’t any attention given to the growing antagonism between the imperialist powers. At that point, Banda became quite angry and said, “Look, that doesn’t play the role that it did in the past. The real conflict is between the USSR and the United States.”

Of course, that is the most fundamental contradiction, but it would be wrong, dangerous and disorienting to rule out and dismiss the existence of profound contradictions between the major imperialist states. Without an understanding of the forms taken by these conflicts and their historical significance, it is impossible to understand not just the development of the world socialist revolution, but also the actual conditions which confront the working class in every country. I then sent a letter to the WRP, proposing certain revisions in this perspectives document. It was never replied to, and there was never a document produced by the International Committee on imperialist war.

Moreover, and perhaps most serious, the Tenth Congress document made no reference to the new economic forms assumed by the growth of the productive forces within the imperialist epoch: that is, the internationalization of production on a scale unequaled in history and the emergence of truly global production, in which the manufacture of a single commodity is the outcome of integrated transnational production. The transnational or multinational corporation is an economic reality which has profound implications for the development of the class struggle in every country and for the development of revolution. And yet this new economic form and its implications were not even considered by Healy, Banda and Slaughter to be worthy of analysis.

These developments, rather than being seen as challenges to Marxism, requiring fresh work that builds upon and enriches the already existing theoretical capital of the Fourth International, were simply ignored. Underlying that stagnation of theoretical work was a deep-rooted petty-bourgeois pessimism in relation to revolutionary prospects. Working off appearances whose essential content were not subjected to analysis, these uncomprehended changes in world economy became the source of the most demoralized conclusions. Failing to understand the nature of the changes in the world economy, hollow declamations of the type which appeared in the Tenth Congress resolution served as a mere cover for despair. That is generally the content of the failure to analyze and examine the source of political transformations.

Let us consider the character of Lenin’s work during the First World War. At a time of almost universal disorientation—the collapse of an international, the transformation of great and famous leaders into the most craven and cowardly opportunists, under conditions in which millions were being exterminated in the bloodiest war in history—Lenin sought to analyze the objective source of these explosive developments, and to reveal within these developments, the existence of contradictions that were driving inevitably to world revolution.

For Lenin, the development of imperialism, the emergence of the big banks, world production, the growth of finance capital and so on meant that mankind had been brought to the brink of social revolution. He had to find the deeper sources of revolutionary development.

In fact, those who do not carry out such work inevitably become the victims of petty-bourgeois, impressionist modes of thought. They accept uncritically the appearance they see around them. They adapt themselves to the commonplace petty-bourgeois point of view, which oscillates between euphoria and demoralization. But the working class cannot base itself on either euphoria or pessimism. It must base itself on a scientific appreciation of the actual development, in a historical sense, of the crisis of the capitalist mode of production.

The necessity of such work becomes clear when one considers the political problems of the past decade. The last 10 years have been, it goes without saying, a period of exceptional difficulty, not just for the International Committee of the Fourth International, but for the international working class as a whole. The isolation of the revolutionary elements within the proletariat has been exceptionally great, under conditions in which the bourgeoisie has been engaged in an offensive against the working class, abetted by a petty bourgeoisie which has been gorging itself in a frenzy of consumerism.

The unprecedented wave of corporate mergers, and the policies of deregulation and privatization have been bound up with a drastic increase in the exploitation of the working class. The impact upon class relations has been massive: the distribution of social income has been redirected, as the bourgeoisie has plundered and depleted the assets of the welfare state, removed barriers impeding the most brutal exploitation of the working class, and used mass unemployment as a strategic weapon for the undermining of trade unionism.

Gloating over the impoverishment of ever broader sections of the working class and the decline of its organizations, the bourgeoisie proclaims a new epoch of capitalism and the final defeat of Marxism. In the old days, when the defeat of Marxism was proclaimed, it was generally on the basis of the supposed capacity of social reformism to satisfy the needs of the working class and moderate, if not eliminate, capitalist exploitation. Now, no such claims are made. Only 22 years ago, Johnson declared the “War on Poverty,” claiming that it would be wiped out within a generation. Today, no bourgeois politician would dream of making such a claim. If any of the present Democratic candidates would promise that if he is elected, he would wage a war on poverty, the capitalist press would immediately demand his withdrawal from the race, his resignation from politics and insist that he commit himself to an insane asylum. Social reformism is not even taken seriously as a viable policy. Comrades must understand the implications of that. The real content of the crisis of the labor movement is not the failure of Marxism, but the bankruptcy of social reformism.

Gazing uncritically and uncomprehendingly upon the external forms of capitalist society, the middle-class deserters from the ICFI accept the supposedly decisive defeat of the proletariat at the hands of the bourgeoisie. What generations of capitalist tyrants failed to do has been accomplished by Reagan and Thatcher, or so the renegades from the International Committee think!

In the early part of the century, Lenin defined liquidationism as a specific form of opportunism which explicitly renounces the building of the revolutionary party. It was applied to the Menshevik position of opposing illegal work in czarist Russia and of subordinating the proletariat to bourgeois liberalism. Today, liquidationism has become renunciationism: nothing less than a full-scale collapse, a complete surrender to capitalism that runs the gamut from social democratic reformists to Stalinists and centrists. All principles are on the auction block, sellable to the lowest bidder.

The renegades are political and moral cripples who dedicate themselves to spreading despair and cynicism throughout the workers’ movement, insofar as they are capable of rousing themselves to do anything.

The ICFI rejects their bankrupt position. We base ourselves on a scientific analysis of the contradictions that have been building up uninterruptedly throughout the long postwar period. In this sense, the 42 years that have elapsed since the end of World War II have certain similarities with the final period of organic capitalist development: the 40-odd years between the founding of the German Empire and the defeat of the Paris Commune in 1871, which signified the consolidation of the bourgeois state system in Western Europe, and the eruption of World War I in 1914. The social foundations of the political conservatism that had been built up over decades of adjustment and readjustment was suddenly blown to bits by the eruption of the war in 1914.

The war opened up a period of the greatest social upheavals in human history. For the next 31 years, capitalism was rocked by an unending chain of explosive crises in its imperialist centers. Only by the late 1940s, with the vital assistance of the Stalinists and social democrats, did capitalism manage to establish a new, though fragile, international equilibrium, on the basis of the unchallenged ascendancy of American imperialism. But herein lies a principal source of a new eruption of revolutionary upheavals. The entire framework of postwar adjustment and readjustment is coming to an end.

The fourth plenum of the International Committee set out to identify the essential driving forces of a new era of revolutionary upsurge in both the advanced and backward countries. There are six interlinked factors which must be studied:

1. The unprecedented integration of the world market and internationalization of production, which has raised the fundamental contradiction between the world economy and the nation state system, and between social production and private ownership, to a historically unprecedented level of concrete intensity. The absolute and active predominance of world economy over all national economies, no matter how large, is an unchallengeable fact of life.

2. The loss by the United States of its global economic hegemony, in both relative and absolute terms, symbolized by its transformation from the world’s principal creditor into its largest debtor. This transformation, which manifests itself directly in the devastating decline in workers’ living standards, opens up a period of revolutionary class confrontation in the US, of which the Iran-contra constitutional crisis is only a political harbinger.

3. The rise of Japan as the most potent industrial power and largest exporter of capital, challenging American capital in every corner of the globe and thus spearheading an enormous intensification of interimperialist antagonisms.

4. The extraordinarily rapid development of the economies of the Asian Pacific Rim, which has brought into existence large working classes that are being thrust into revolutionary conflicts against the native bourgeoisie, whose economic position is entirely dependent upon unsustainable export markets.

5. The horrific impoverishment of the backward countries and the utter collapse of the myriad “development” strategies of the impotent national bourgeoisie, which must produce revolutionary confrontations.

6. The turn by all the Stalinist bureaucracies to the policies of the market economy, especially in China and the USSR, which opens up a period of revolutionary confrontation between the bureaucracies and the working class.

Let us review some of these points in greater detail. Each of them, of course, comprise a vast area of specialized study. Moreover, having isolated them for purposes of analysis, they must be examined as well in their mutual interaction—that is, as they actually develop within the framework of the world economy, imperialist politics and the international class struggle. The first point, in a sense, stresses the underlying foundation and historical setting of the crisis as a whole.

The world market is not a theoretical abstraction, but a real, concrete material force that directly determines the economic conditions within countries and, of course, the conditions of work and life of the working class. The internationalization of virtually all aspects of production in all major manufacturing industries is the culmination of the vast expansion of world trade during the postwar period. Commodity production is organized on a world scale, with multinational corporations scouring the globe to discover those areas where the maximum levels of exploitation can be achieved in order to establish their international primacy. It is now commonplace for American firms to relocate all or part of their operations overseas in order to produce, at cheaper cost and greater profit, for the US market.

The development was recently subjected to an analysis in the Wall Street Journal in an article entitled “The Transnational Economy,” by Peter Drucker, published on August 25, 1987.

To maintain a leadership position in any one developed country a business—whether large or small—increasingly has to attain and hold leadership positions in all developed markets world-wide. It has to be able to do research, to design, to develop, to engineer and to manufacture in any part of the developed world, and to export from any developed country to any other. It has to go transnational.

This new need largely explains the world-wide boom in transnational direct investments. The front-runners are the British. Since 1983, British companies have spent at least $25 billion on acquiring American businesses—the most massive British thrust into the world economy since Victorian times. The West Germans may not be far behind. Unlike the British they concentrate, however, on smaller, closely held companies. And, contrary to popular belief, many of the US multinationals are advancing, rather than retrenching in Western Europe and Japan.

Another study of transnational production, prepared by the Brookings Institute, has noted:

While production overseas to serve local markets—stimulated by protection and transport costs and, in some instances, lower production costs—has long been a feature of direct foreign investment by US producers of manufactures, volume manufacture in foreign locations for reexport to the home market or other export markets is a qualitatively new feature of foreign manufacturing operations that emerged in the late 1960s. In developing Asia, more than a quarter of sales of US affiliates went to the United States in 1977, up from less than 10 percent in 1966. In electrical machinery, in particular, some 70 percent of output was shipped back to the United States in 1977.

Thus, those observers who claim that the 1960s and 1970s marked a new stage in the evolution of the world capitalist system appear to be correct, insofar as the operations of US multinational firms seem to have switched, on a fairly large scale for the first time, to overseas production of manufactured exports for the home market. Asia and Latin America became the primary locations for these operations and electrical machinery the principal product....

Semiconductors alone account for about 40 percent of the value of US components re-imported into this country after overseas assembly, and more than 80 percent of US semiconductors is probably assembled abroad.

These are crucial developments. No corporation today can survive if it is dependent on its own home market or if its production is rooted entirely in the national soil. All major corporations must plan on a truly global scale. Transnational production by multinational corporations does not negate the nation state structure of capitalism, in the sense of creating a supranational imperialist bourgeoisie. That is theoretically and, more to the point, practically impossible. No bourgeoisie can lift itself up by its own hair out of its national soil. Rather, it reveals the organic tendencies toward unified international production that can only be achieved on the basis of social revolution. These organic tendencies intensify, rather than mitigate, the conflict between the necessity of world production and the national-rootedness of the bourgeoisie.

In the final analysis, every bourgeoisie depends upon and is tied to its “own” national state. On the other hand, these state barriers are unacceptable to the needs of production in the present period. For example, while the United States has accumulated massive deficits which threaten its entire economic structure, no small part of that deficit is the product of imports produced by American-owned companies operating in Asia. In fact, under capitalism, the irreconcilable nature of the contradiction between the world market and the needs of world production and the continuing existence of the nation state expresses itself in a stagnation of world trade and growing tendency toward protection, trade war and military conflict.

I want to stress this point. The social revolution, the culmination of the historical development of mankind, is not an event which takes place because of purely conjunctural changes in the economic situation. The proletariat is the revolutionary class and is therefore compelled to confront and solve great historical problems. Moreover, it has a historical “right” to overthrow the bourgeoisie, because at the most fundamental level of the development of the productive forces, the bourgeoisie has become an obstacle to their further development. To give the devil his due, the bourgeoisie has created a massive world market and internationalized production. The working class, once it takes power, is certainly not going to return to archaic forms of national production. It has an interest in integrating all aspects of production on a global scale, and it will make use of the technology developed by the bourgeoisie.

Capitalism has created the preconditions for integrated global production, but that same capitalism stands as the greatest obstacle to its realization. Only the working class can resolve this contradiction. And for this reason, these developments in the world economy do not, as the petty-bourgeois skeptics believe, signify the end of the labor movement. Rather, the crisis of the working class movement today, in fact, is an expression within the workers’ movement itself of the bankruptcy of reformism and the outmoded forms of national organization to which it confines the struggles of the working class.

Trade unions are not equipped to confront this new situation. They cannot defend the working class insofar as they conduct the class struggle exclusively on the national soil. In fact, the development of transnational organizations require the international organization of the working class. American, Japanese, Korean or German workers find it increasingly impossible to conduct nationally isolated struggles. And just as the bourgeoisie seeks to organize production on a world scale, the working class will be compelled to organize its own struggles on a world scale, and therefore create new and more advanced forms of organization.

The development of the world capitalist crisis is bringing mankind objectively closer to socialism, not in a peaceful and evolutionary way as conceived of by the reformists, but in an explosive way. All the developments which the petty-bourgeois apologists of capitalism see as proof of the end of revolutionary prospects are the opposite. These conditions confront the working class with the necessity of taking hold of the means of production, putting an end to capitalism and transforming the productive forces from private to social ownership.

I would now like, in this context, to deal with the second factor: the crisis of US imperialism.

Postwar economic development took place under the wing of US imperialism. I don’t have to repeat what many comrades here already know about the extraordinary position which America occupied in world economy at the end of the Second World War. This enabled the United States to undertake the task of restabilizing world capitalism. The US did not do it for altruistic reasons, but to save Europe and Asia from socialist revolution. New contradictions developed within the new economic framework created after the war, in which the gradual deterioration of the American position took the form of a growing balance of payments crisis that finally led, in August 1971, to the suspension of dollar-gold convertibility. Allow me to stress again that the end of Bretton Woods was not the working out of simply a monetary crisis. It was the expression of the fact that in the course of the 20 odd years after the war, the United States had lost, to a large extent, its old dominant position.

It is necessary to grasp the speed of that development. I would like to review some statistics which underscore the deterioration of the global position of American capitalism.

In 1960, US exports to the rest of the world totaled $19.7 billion. In 1985, exports totaled $214 billion. During this same period, US global merchandise imports rose from $14.8 to $338.3 billion. Even when adjusted for inflation, these figures represent a threefold increase in exports and a sixfold rise in imports.

More significant is the increase in the overall weight of trade in the US economy. In 1950, the US exported just 6.3 percent of its total production of goods. This percentage rose to only 7.7 percent in 1960 and 9.2 percent in 1970. Then it rose to 19.7 percent in 1980. The corresponding figure for imports were 5.6, 5.8, 8.7, and 21.9 percent.

Now consider the expansion of trade with Japan. In 1960, the US sold $1.4 billion in goods to Japan and purchased $1.1 billion. By 1985, the US was exporting $22.6 billion and importing $68.8 billion. When adjusted for inflation, this represents a fivefold increase in exports and an eighteen-fold increase in imports.

In relation to its “trilateral” competitors, the nations of the EC and Japan, US international trade counted for one-third of the trilateral total. This had dropped to 27 percent in 1960, 23.5 percent in 1970, and 22.1 percent in 1980.

In 1960, per capita income in Japan stood at just 30 percent of the US level, about equal to that of Mexico. Nineteen years later, it had grown to 70 percent of the US. Between 1960 and 1980, Japan’s total share of the world GNP grew from 3 to 10 percent.

The decline in the US position is expressed most acutely in its transformation into a debtor nation. Let us consider the changes in US trade balances. From 1950 to 1976, the trade balance oscillated between a surplus of $6 billion and a deficit of $9 billion; from 1977 to 1981, there were persistent trade deficits of between $25 billion and $34 billion; from 1982, we have seen an explosive growth in the size of deficits. The absolute value of US exports declined in 1982 and 1983. As of mid-1986, US exports had not regained their 1981 level. The trade deficit increased from $36 billion in 1982 to nearly $125 billion in 1985. There was another record in 1986 and we’re well on our way to a new record in 1987.

The international investment position of the US peaked in 1981 at $140.7 billion. Its overseas assets totaled $719.7 billion, while foreign assets in the US were $579 billion.

The balance of goods and services moved into deficit in 1982, forcing the US to finance the overall deficit and selling assets and going into debt. Between 1981 and 1985, foreign-owned assets in the US rose by $480 billion, to over $1 trillion. By the end of 1985, a positive balance of $140 billion was transformed into a negative balance of $107 billion, with an additional debt burden of $130 to $140 billion expected for 1986.

These are developments of which the impressionists take no note. They walk around in their deep funk, not understanding what is taking place in the real world. Vast changes have taken place in the structure of world economy within the space of just 15 years. The decay of American capitalism is no less astounding in the area of manufacturing. I quote from an economic journal:

Despite the deterioration of the merchandise trade balance, the manufactures component of the US merchandise trade remained in the black through the early 1980s (except for 1978). In 1980, US manufactures exports still exceeded imports by $14 billion; but in 1981, the surplus shrank to $6 billion. Then the roof fell in. The perennial surplus turned to a deficit of $13 billion in 1982—followed by ever-growing deficits of $41 billion in 1983, $88 billion in 1984, $13 billion in 1985, and an estimated $138 billion in 1986.

Until the 1970s, the US imported raw materials and petroleum and exported manufactured and capital goods. This is remarkable for an industrial country, one of the largest in the world. The US is now exporting raw materials and agricultural goods and importing manufactured products. In 1985, its five leading exports to Japan were yellow corn, soybeans, bituminous coal, wheat and cotton, while its imports from Japan were motor vehicles, office machines, consumer electronic products and semiconductors.

Developments in communications and transport have drastically lowered costs of shipping, thus facilitating the penetration of the US market.

The US share of world auto production fell from 65 percent in 1965 to 20 percent in 1980, while Japan’s share has moved from near zero to 27 percent, and that of semi-industrial countries (especially Spain, Brazil, Mexico, Poland and South Africa) has risen from 2 percent to 15 percent. More than one-third of all engines in US produced automobiles are produced overseas, mainly Brazil and Mexico.

It is widely believed that the US, despite the decline of its old “smokestack” industries, is thriving in the area of “high-tech.” Not so. The position in high-tech manufacturing is also deteriorating very rapidly. In 1980, the high-technology industries produced a trade surplus of $27 billion, but this surplus has declined in every year since. In 1985, the high-tech surplus had shrunk to $4 billion. And the report which I am citing estimated that by 1986, for which I do not have figures, high-tech would be in deficit as well.

All US markets have deteriorated drastically. One major element in the American trade deficit has been the impoverishment of Latin America as a result of the debt crisis. This has sparked a very bitter conflict between different factions of the bourgeoisie. While the American banks have been insisting on the payment of interest on outstanding loans, this has caused a virtual drying up of US exports to Latin America.

At its peak, Latin America consumed 15 percent of all US exports, and its imports had risen by $70 billion between 1976 and 1981, of which the US supplied $28 billion, or more than half of the increased Latin American imports from the major industrial countries. But between 1981 and 1985, Latin American imports fell from $123 billion to $82 billion, a decline of $41 billion, or 33 percent. US exports to the region fell by 26 percent. Here we can see the interaction between the debt crisis and the decay of US manufacturing.

The long-term implications of the debt have been a matter of serious concern to bourgeois economists. They are anticipating that this debt will remain above $100 billion through at least 1989, with the debt reaching approximately $1 trillion by 1990. At interest rates of 7 percent to 8 percent, the additional $300 billion of debt will mean interest payments of another $20 billion to $30 billion.

The dangers of this debt were described by Alfred E. Eckes, Commissioner of the US International Trade Commission: “At the rate we are going, this country could face the difficult task of meeting payments on a foreign indebtedness exceeding $1 trillion by approximately 1990.”

A report recently issued by the Democrats, entitled “The Economy At Midyear: A Legacy of Debt,” warned:

The external debt also weakens US influence throughout the world, since a debtor must strive to accommodate its creditors for fear that the needed financing might stop. No country has ever managed to be a great power and a great debtor at the same time, and two great powers (Britain in this century and Spain in the 16th century) lost their stature as world leaders when they moved from creditor to debtor status. Mr. Bergsten asked in a recent article:

‘Can the world’s largest debtor nation remain the world’s leading power?... Can the United States continue to lead its alliance systems as it goes increasingly into debt to those countries that are supposed to be its followers? Can it push those countries hard it pursuit of its economic imperatives while insisting on their allegiance on issues of global strategy?’

The Democrats go on to say:

For the first time in our history, we depend on foreign capital to finance day-to-day operations of our government. In 1986, almost half of our budget deficit of about $180 billion was financed by foreign purchases of treasury securities, mainly by the Japanese.... It is worth noting that, even if we were able to reduce our trade deficit by $20 billion per year, by 1995 our external debt would be about $1.5 trillion and the interest on that debt about $120 billion annually.

The drastic decline in the living standards of the working class is the direct product of this devastating deterioration in the world position of American imperialism, all the more significant by virtue of the speed with which the transformation has been effected. The present weakened state of the American labor movement is not simply the product of the policies of the Reagan administration; or to put the issue more precisely, the reactionary policies of the Reagan administration express the desperate position of American capitalism, which cannot afford the luxury of class compromise. The deterioration of living standards is the direct product of the crisis of world capitalism.

The implications of this situation for the working class could not be clearer: every measure taken by the American bourgeoisie to restore its position, recapture its markets, can only be at the expense of the working class. In its own assessment of the causes of its decline, the American ruling class places the blame on past concessions to the working class. It is very worthwhile for comrades to read occasionally some of the statements which appear in the more professional journals of the bourgeoisie, in specialized studies. For example, an authority on the world steel industry, Ingo Walter, wrote the following in a major study published recently:

“The global preeminence of the American steel industry lasted for over seventy years, based on the existence of a large domestic and export market, international technological leadership, low cost raw materials, plentiful skilled labor, capital adequacy, and significant economies of scale. That era ended in the late 1950s, when the industry gradually began to lose its international competitive position. This occurred for a number of reasons:

“First, and perhaps the most important, has been the key role of monopoly labor,”—that is, the existence of trade unions.

Walter is, of course, an apologist for capitalism, but it is important to have an idea of the extent of the decay of the steel industry, which was one of the foundations for the growth of American capitalism. Look at the facts which are provided in one of the supplemental pages. There is a list of the world’s largest blast furnaces in 1977, furnaces with over 2 million tons capacity. In 1977, Japan had twenty-five, with nine under construction. The Soviet Union had nine, with five under construction. The European Community had seven, with six under construction. The United States had none, with none under construction. Poland, Brazil and Austria had such blast furnaces under construction.

Then there is a list of deep-water world scale steel plants in the early 1980s. The eight largest are in Japan. Out of the seventeen plants listed, ten are Japanese. Among them are two French plants, one Italian, one Korean, one Dutch and one Brazilian. The last plant on the list is an American plant, the facility at Burns Harbor.

Walter then cites the rise in US wage levels, the inadequate rate of productivity increases, and even the impact of “government enforcement of environmental and worker health and safety standards [which] has seriously affected US steelmakers, who are engaged in an inherently dirty and dangerous business.” In other words, the steel industry would be competing more effectively on the world market if the steel bosses were permitted to murder more workers on the job! In fact, one of the statistics he presents deals with air quality in US steel plants as compared to those in plants in other countries. He complains that air quality in US plants is unreasonably good, and that is one of the reasons for the decline of the US steel industry.

Anticipating the future of the steel industry, Walter predicts a bright future only for the so-called minimills, which he describes as “generally nonunion, flexible, low-cost, efficient plants able to undersell both the domestic integrated suppliers and imports in their respective region markets.”

The conclusions at which the liberal Brookings Institute arrives, in relation to the impact of global competition on the American as well as the Western European worker is along the same lines:

Most current trends thus appear to point to the end of relatively high wages and standards of living for the unskilled in manufacturing in the Western industrial societies. Growing efficiency in the newly industrialized countries may enable them to carry on ever larger portions of manufacturing process that have been the province of advanced industrial countries. And growing automation will have similar effects on the work force in the industrial country.

The significance of the international reorganization of product flows within a single industry is that present high wages for unskilled labor in the United States will no longer be insulated from international competition.

So get ready for even more drastic wage cuts and attacks on the living standards of the working class. This historic decay of American imperialism must give rise to revolutionary class confrontation in the United States, which will be heralded by a turn by the working class to political struggle. None of the problems confronting the working class can be resolved either through simple trade unionism, not matter how militant, nor by any form of reformist tinkering. This perspective can be rejected only by those who believe that the working class will accept the complete destruction of its trade unions, and its reduction to a level of semi starvation without a real struggle, in other words, by those who believe the situation is hopeless.

This is the analysis upon which we base our revolutionary perspective. The American working class is being driven into revolutionary struggle by the altered position of US capitalism in the world market. The American worker is no longer insulated by the great productive capacity and the old wealth of US capitalism. That is gone, as are the days when American workers did not have to concern themselves with politics. American workers will move into political struggles, and those struggles will assume revolutionary dimensions very rapidly. It is upon this perspective that we must base our political work in the fight for the labor party and in the fight to invest that labor party with a revolutionary socialist program.

We will now consider the third element of our perspective, dealing with the rise of Japanese imperialism, the expansion of capitalism into the Asian Pacific and the growth of interimperialist conflict.

First of all, it is necessary to place Japan in the context of the enormous postwar expansion of capitalism into Asia. During the past 25 years, the Asian Pacific Rim has become a major world center of commerce, industry and economic activity. The facts which I will now present are taken largely from a recent congressional study on the Asian Pacific.

If we take the Pacific Basin as a whole, that is the Asian Pacific and the five Pacific states of the United States, its Gross Domestic Product between 1960 and 1982 rose from 16 percent of the world GDP to almost 25 percent. This indicates the significance of the trade that crosses the Pacific as against the trade that passes across the Atlantic.

Considering now the Asian Pacific itself, that is, Japan, Taiwan, South Korea, Hong Kong, Singapore, Indonesia, Malaysia, Thailand, the Philippines and China, their GDP rose during the same period from 7.8 percent of the world GDP to 16.4 percent. The Asian Pacific GDP rose between 1960 and 1982 from 18 percent to 53.2 percent of the US GDP. The Asian Pacific GDP rose between 1960 and 1982 from 27 percent to 54 percent of European GDP. Now within that, Japan’s GDP is 66 percent of Asian Pacific GDP.

These Asian Pacific economies have become major economic centers of capitalist production. In 1965, the combined Asian Pacific economies produced $183 billion in goods and services, a level 75 percent below North America—Canada and the United States—and 60 percent below Western Europe—Belgium, France, Germany, Italy, Ireland, the Netherlands, Spain and the United Kingdom. By 1983, total production in the Asian Pacific Rim economies had soared over eightfold to $1.7 trillion, a level only 50 percent below North American production and less than 30 percent below West European production.

The Asian Pacific region’s share of world exports has more than doubled from 1960 to 1984, rising from 7.5 percent to 17 percent. Japan led the way by accounting for more than half of that growth. By contrast, the US share of world exports increased by only 2.5 percentage points and the European Community’s (EC) share dropped by 1 percentage point.

US imports from the Asian Pacific Rim are predominantly manufactured goods. US imports from Indonesia, which consist primarily of oil and rubber, are the major exception. Japan’s biggest exports, of course, are cars, consumer electronics, office equipment, computers and steel.

Imports from Asian Pacific Rim countries totaled $130 billion in 1985 or more than 35 percent of total US imports. This represents a more than 20 percentage point increase since 1960, when imports from the region totaled $2 billion. Some portion of the increase is accounted for by US multinationals mostly involved in production of electronics or processing crude oil and natural resources.

By contrast, US exports to Pacific Rim countries as a percentage of total US exports have increased only 9 percentage points, from 14 percent of total US exports in 1960 to 23 percent in 1985. As a result, the region’s economies today account for more than half of the $150 billion global US trade deficit.

The speed with which Japanese capitalism has emerged as a dominant force on the world market is somewhat staggering. The rapidity of its development mirrors the speed with which the crisis of American imperialism has developed. I am citing facts and statistics taken from various articles that have appeared in the Far Eastern Economic Review.

After years of export surpluses, Japan’s net foreign assets now are close to $300 billion, compared with a net foreign debt of $264 billion for the US. Japan’s overseas assets could triple by the middle of the 1990s. This signifies the emergence of Japan as a major exporter of capital.

According to the Far Eastern Economic Review, “The Bank for International Settlements estimates that Japan’s $1.2 trillion worth of foreign banking assets have climbed 60 percent in the past year and are now close to double those of US banks abroad.

As Japan’s role in global finance has grown, the yen’s prominence as an international currency has risen apace. The yen comprised nearly 8 percent of international currency reserves at the end of 1985 vs. 65 percent for the dollar. Less than a decade ago, when the dollar played a more dominant role in trade and finance, the yen comprised barely 2 percent of the world’s reserves....

With Japanese purchases of American equities expected to reach $15 billion or more this year, up from $2.2 billion as recently as 1985, Japan has also blossomed as a power to contend with on Wall Street. Indeed, as the soaring yen coincided with an explosion in Japanese equity prices, Tokyo this spring muscled out New York to become the world’s largest stock market. The market capitalization of Nomura Securities Co. alone has ballooned to $54 billion, more than 10 times that of Merrill Lynch & Co., the largest US securities broker....

Tokyo now accounts for more than one-third of world stock value. Take New York out of the picture, and Tokyo is bigger than the London and all other exchanges in the world combined.

In 1977, average daily trading volume on the Tokyo exchange was 248 million shares. Now trading on the Tokyo exchange generally tops one billion shares each day.

Now let us consider the position of the Japanese banks. The Far Eastern Review reports: “Seven of the eight largest banks in the world are Japanese, as measured by assets. Using this measure further, there are 25 Japanese banks in the world’s top 100, and 98 in the top 500. Ranked by value of deposits, seven of the 10 largest banks in the world are Japanese. As rated by market capitalization, nine of the 10 largest banks in the world are Japanese.

Japanese banks now account for 25 percent of all international bank loans, and their share in this business is still growing, according to recent studies by the Basle-based Bank of International Settlements. US banks have just 18 percent of all international loan assets.

In Britain, 12 of the 25 largest banks operating in the City of London are Japanese. In the US, American Banker magazine has declared Fuji Bank subsidiary Fuji Bank & Trust to be the ‘most efficient’ American bank in three categories. Three of the top banks cited in this context were Japanese.

While the world has been flooded openly by Japanese manufactured products, the rise of Japanese banks to the position of the world’s biggest and strongest financial force has occurred rather more quietly.

Most of the recent overseas buy-outs or buy-ins by Japanese banks have targeted US financial institutions....

Acquisitions of California banks, Waterhouse says, have provided Japanese banks with a ‘strategic beachhead for their assault on the US banking market. Japanese banks are now believed to manage over US$22 billion in assets in California alone, where five out of the 11 largest banks are Japanese-controlled. California has become particularly important to the Japanese because of the recent change in legislation which will allow California-based banks to extend their branch networks into 11 neighboring states from 1991.’...

Japanese banks, for example, are estimated to hold more than 8.4 percent of all commercial loans outstanding in the US, and they underwrote US$18 billion worth of US municipal bonds issued in 1986, or about 50 percent of the total.

On the British front, Japanese banks are just as active. They have enlarged their share of the market, in terms of banking assets, from 15.5 percent in 1981 to over 22 percent in 1985, according to Bank of England statistics....

Japanese banks are deeply exposed to developing country debt. JEI [Japan Economic Institute] says that Japan holds 10-15 percent of all Third World debt, with two-thirds of that exposure in Latin America. They also have the biggest portion of Philippines’ debt on their books, and 25 percent of Indonesia’s and 15 percent of Mexico’s.

The conflict between the US and Japan is intensifying rapidly, and it may assume a form no less violent than that of the 1930s and 1940s. In every corner of the globe, competition between the two countries is becoming increasingly bitter.

For example, how are the Japanese responding to growing protectionist sentiment in the United States. The Far Eastern Economic Review made the following points:

To outrun protectionism and the strong yen, Japan’s manufacturers are scouring the world for components and fortifying their overseas facilities.... The surge in offshore investment by Japanese companies means they will be able to reach the US and other markets via cheap export bases like South Korea, Taiwan, Spain, and Mexico. Japan’s import of agricultural and low-tech goods from Asia, Europe, and even the US are increasing, but not fast enough. Japan’s higher value-added exports—from home entertainment systems to entire automated factories—will still come from Japan.

Experts suggest Japan’s $100 billion trade surplus with the world might shrink by as much as two-thirds over the next four years, as its economy restructures and its markets opens more to imports. But that won’t help the US if a torrent of Japanese goods winds through third countries to the American market, simply redistributing the US deficit over a wider geographic area.... Japan’s offshore manufacturing will more than double from 3.5 percent of total output to 8.7 percent by 1990....

It will be also next to impossible to measure with any precision the volume of Japanese goods coming into the US. The Japanese are not likely to ship their full quota of 2.3 million autos to the US this year, for example. But Japanese production of autos and auto parts in North America, South Korea, and Taiwan—many for the US market—could easily compensate for any shortfall in direct exports from Japan.

Japan’s growing appetite for ‘reverse exports’ is another major dimension to its new trade patterns. For years, companies have been buying calculators, camera bodies, and electronic parts from subsidiaries in Asia for re-export to other countries. But now the scale of those purchases is gaining and the target is the Japanese home market.

These “reverse exports” intensify the conflict with the United States. The movement of Japan into overseas production has vast implications for the class struggle inside Japan itself. In order to maintain its world position, Japan will be compelled to launch the same kind of attacks on Japanese workers that have been used by the American bourgeoisie against workers in the United States.

In an article which appears in the current issue of Foreign Affairs, it is stated: “The decisions which lie ahead for Japan ... threaten to reopen the dangerous fissures of the 1920s and 1930s between big business and small business, between sophisticated corporations which live in a modern world and traditional Japanese businesses which are still struggling with modernization.

But the greatest challenge posed by the economic decisions ahead is the challenge to the social compact on which Japanese society and Japanese domestic peace largely rest: lifetime employment....

Exports of manufactured goods ... makes redundant thousands of today’s blue-collar jobs in the steel, automotive, consumer electronics and machinery industries. Because of the export boom of the last ten years, these industries proportionately far more people in Japan than they do in most countries of the West. They pay the best wages by far, and are most heavily unionized. Above all, they are the industries that preeminently offer lifetime employment....

But it would not take much hallowing out of industry to force Japanese industry into massive layoffs. Indeed, they are already in the making. The Japanese National Railroads—notoriously overstaffed for decades and operating at a horrendous deficit—will lay off around one quarter of their total work force in the next few years. The steel industry will lay off one third. Similarly, with the shift of automobile production for the export market from Japan to plants in the United States and Spain, the automotive industry—Japan’s largest single industrial employer—may face forced reductions of up to 50 percent.

The frenzied competition for control of markets, which Japan is presently engaged in, not only leads to conflict with American and European imperialism. It also means a drastic intensification of social contradictions within Japan.

It is impossible to review the statistics on trade and investment without recognizing that this desperate competition for markets is one form of the classic crisis of overproduction. The world market as it presently exists cannot absorb all the commodities that are being produced, and there is a frantic drive by each country to sell as much as it can. They are being driven to what is known as the “beggar-thy-neighbor” policy of the 1930s. The entire postwar period from 1945 on was marked by an attempt to integrate the world market. Under the hegemony of American imperialism, the world bourgeoisie sought consciously to suppress the type of bitter conflicts which had given rise to the Second World War. The state of world trade is the highest expression of the position of world capitalism as a whole. In world trade, one sees the reproduction in the most developed form of all the fundamental contradictions within the capitalist system itself.

Marx, in his famous commentary on the American economist Carey, mocks the way Carey justifies his demand for the protection of US industry. He said that Carey was the archetypical economist of the American bourgeoisie. He accepted all the dislocations of capitalism as they express themselves within the national boundaries. But when the dislocations expressed themselves within the world market, he became very angry, insisting that they should not occur. He saw the disequilibrium of world trade, which arises organically out of the contradictions of capitalism itself, as something wrong, whereas, in fact, they represent the highest working out of the basic contradictions within the capitalist mode of production.

Once again, the world market is being fractured. In 1930, Congress passed the Smoots-Hawley tariff. It played a major role in deepening the world depression. In 1934, the Congress passed the Reciprocal Trade Agreements Act, which didn’t repeal Smoots-Hawley, but moved in the opposite direction, toward the trade liberalization that was to become the general policy of the American bourgeoisie after the war.

During the entire postwar period, the issue of trade and tariffs was not a matter of political discord with the bourgeoisie. There was a bipartisan agreement that the United States would favor a general reduction of tariff barriers. Now that consensus has ended. Prior to 1930, the tariff question was traditionally one of the most bitter questions fought out within the bourgeoisie. Then it receded for a long period. But once again it emerges, and in this sense, the candidacy of Representative Gephardt has international significance. It means that a sizable faction of the bourgeoisie is openly advocating protectionist measures, while those who oppose them state that they would mark the beginning of an irreversible slide to bitter trade conflicts, world depression and ultimately, military conflicts between bourgeois states.

These growing tensions are not merely between the United States and Japan. They are almost as bitter between the United States and Europe and even between the United States and Canada. It is interesting to read the transcripts of some of the congressional hearings on American-Canadian trade. In the past, the chairman of the committee would open a hearing on this subject by saying that he is very pleased and delighted to discuss American-Canadian trade and would make the traditional references to the special relationship between the two countries. Now, the hearings are charged with tension, congressmen refer bitterly to unfair trade practices, and warn in so many words that if the Canadians don’t watch out, the United States will have to smash their economy. The same thing takes places in relation to the United States and Europe.

At the present time, there is a bitter conflict between Europe and the United States over agricultural policy. According to a study conducted by the Congressional Research Service:

EC Farm products, backed by export subsidies, are successfully competing in world markets once dominated by the United States. This, plus recent actions that further limit access to the European market, have prompted the United States to consider retaliatory measures....

The value of total United States agricultural exports reached a peak of $43.78 billion in 1981 and has since declined to a projected $28 billion in 1986, a 54 percent decline. Agricultural exports from the United States to the EC have declined from $10.33 billion in 1980 to a projected $5.30 billion in 1986, a 49 percent decline. Certainly, more is involved in the decline of US exports than just EC policies. However, trade tensions have become so strained that there is frequent mention of US retaliation and EC counter response. At the same time, both the United States and EC recognize the importance of maintaining a certain level of both economic and political harmony....

Competition between the United States and EC over third country markets for wheat and wheat flour has become a serious source of trade tension. The US has long dominated the world’s export grain trade. During the decade of the 1970s a growing world demand and several poor crops elsewhere created a strong world market. With higher prices and encouragement from the Government to plant fence to fence, farmers responded by increasing their production. The domestic market was reasonably stable, thus the surplus went into export channels. US grain exports grew from 39.3 million metric tons (mmt.) to 111.5 mmt. The United States share of world exports went from nearly 40 percent to nearly 60 percent. Though not on the same scale as the United States, the EC benefited from the growing world demand for grain by expanding its exports from 6.7 mmt. to 19.9 mmt.

The increase in prices in the 1970s caused a world wide production increase and a subsequent decline in prices. This, combined with high interest rates, helped bring about a dramatic reversal in market conditions with the beginning of the 1980s. US grain loan rates became the maximum world prices. When prices dropped below these levels, US farmers put grain into storage while other countries took the opportunity to fill the void. World grain purchases started declining in 1981, but US export sales dropped even further. In contrast, EC grain exports held about constant and even increased in 1984, when world imports rebounded. In 1985, world export volume dropped 30 mmt. US grain exports dropped nearly 24 mmt., accounting for 80 percent of the decline in total world grain exports.

The United States now accuses the EC of unfairly using export subsidies to maintain its high volume of grain exports. The EC counters that the United States has simply lost markets due to its high prices, where there have been problems of economic recession and excessive debt, or where local production has increased. In fact, Argentina, Australia and Canada have all increased their share of world wheat markets. In the case of soybeans, the United States accuses the EC of imposing protectionist import barriers. The EC counters that its CAP (Common Agricultural Policy) is not unlike the domestic farm policies of the United States, and some import restrictions are needed to help balance its domestic supply with utilization.

In this tense situation, one trade authority, Robert J. Schaetzel, advised the House Committee on Foreign Relations:

Before we begin to trash the Europeans we ought to consider for at least a moment where we might be vulnerable. We still have a substantial surplus in our agricultural account with the EC. Should we elect to live dangerously and launch an attack on the Community we should first reflect on the possible consequences....

One lesson we should have learned is that trade conflicts are easy to launch but hard to control. Emotions rise, politicians are pushed by events to take extreme positions and in an overheated environment efforts to return to the status quo ante involve real political costs. Nor can a conflict that begins with agricultural products be restricted to the trade area. All aspects of transatlantic relations—base right, missile sites, industrial exports and investments—are likely to be swept into the dispute as tempers rise and rhetoric inflates.

Similar testimony is offered on the question of American-Canadian trade. According to testimony and evidence submitted at a hearing before the Subcommittee on Monetary and Fiscal Policy of the Joint Economic Committee on United States-Canadian Trade, on March 12, 1986, the United States, in 1985, accumulated a trade deficit of $24 billion with Canada. It exported $45 billion and imported $69 billion. This deficit was exceeded only by the US-Japanese deficit. The total 1985 trade between Canada and the US, $114 billion, is almost 27 percent more in value than trade with Japan. It grew by 36 percent between 1981 and 1985. A US merchandise trade surplus of $7.6 billion in 1981 deteriorated to a $24 billion deficit four years later, which accounts for 18 percent of the total US trade deficit.

Again, these figures indicate the magnitude of the crisis and demonstrate the inevitability of intensified interimperialist conflict. There is no country in which the working class can escape massive assaults on its living standards by its own bourgeoisie. The imperialists are fighting for their lives, and this situation must produce profound changes in class relations in every capitalist country.

At the same time, and most important, they create the conditions for the international unity of the working class.

I would like briefly to touch on the implications for the class struggle of the expansion of capitalism into the so-called newly industrialized countries of the Pacific Rim. While noting the enormous growth of export industries in countries such as Taiwan, Hong Kong and Korea, we cannot seriously credit those claims by the bourgeoisie that these areas represent, in a historical sense, a new progressive era of capitalist development. These are countries which give the appearance of being afflicted with a sort of economic elephantiasis. They have blown up, almost overnight, on utterly rotten social and political foundations.

As we all know, these economies are built upon the most brutal exploitation of the working class. Brutal police dictatorships, rooted in state systems that are still at least partly mired in semifeudal relations that have never been swept away by genuine democratic revolutions, have adopted the “export strategy” favored by the IMF, in place of the traditional import substitution policy. In this way, they have created massive production centers to supply the advanced capitalist countries with cheap industrial goods. They function as crucial reservoirs of cheap labor for the multinational corporations.

When we discussed this development at the recent fourth plenum of the International Committee, we were convinced that it would lead inevitably to a powerful upsurge of the working class. In none of these countries have any of the most basic democratic questions been resolved. In Hong Kong, Taiwan, South Korea, the Philippines, Thailand, Indonesia and Singapore—the ASEAN countries and “mini-Japans”—there are fundamental unresolved democratic questions that can only be answered through socialist revolution. All of them are, to one extent or another, under the grip of American, European and Japanese imperialism. So, far from providing a new basis for the development of capitalism on a world scale, these areas of the world must become centers of great revolutionary upheavals.

That is the significance of what is taking place today in South Korea.

There is no longer any basis for some sort of organic expansion and peaceful evolution of capitalism. That is a petty-bourgeois fantasy. Moreover, one must stress that all these economies are extraordinarily vulnerable to the development of the economic crisis in the major capitalist countries. If you take the enormous growth of exports from Japan and from the other countries of the Pacific Rim, one is confronted with another astonishing contradiction. Despite the immense decline of US capitalism, it still remains the major market for all these export-oriented economies. The United States functions as a vast sponge soaking up excess production from all over the world.

Thus, we do not see in the expansion of capitalism into the Pacific Rim a new period of capitalist development. Rather, it represents above all an enormous growth of the proletariat on a world scale. While the revisionists draw the most pessimistic conclusions from the decline in the membership of trade unions in the United States and in European countries, they ignore the massive growth of the proletariat on a world scale. Moreover, the very nature of the present crisis, the world integration of commodity production, objectively brings together the workers of the most oppressed capitalist countries and the working class in the advanced countries.

Precisely because of the internationalization of production, it is not possible to maintain high wages in the United States, Britain and Germany alongside the low wages which exist in the superexploited countries of Asia, Latin America and Africa. The tendency is toward a leveling of wage scales. Recently, the New York Times ran a column which reported that a consensus existed within large corporations on the necessity of lowering wage levels in the United States to those that exist in Asia.

The national barriers between the working class of different countries are being shattered by the changes taking place in the structure of world economy. This is a fact of the greatest historical significance.

As I stated earlier, there are still two more elements of our world perspective. First, the impoverishment of the masses of the backward countries. I will leave this area to other comrades who have accumulated very important data on this subject. They will show that the levels of impoverishment are historically unprecedented. Latin America has been drained over the last decade of its financial resources to repay the debts to the American and international banks. But despite its payments, the debts are higher than ever. The more the Latin American countries pay, the more they owe. The unbearable conditions must lead to massive revolutionary upheavals throughout Latin American, Asia and Africa.

Finally, there is the crisis of Stalinism, which will be the subject of special reports later in the week. This relates not only to the USSR, but also to China. As regards the latter, it should be noted that the imperialists are enthusiastic about the economic changes that have taken place during the last decade. There has been a vast increase in the level of trade between China and the West. It is now in the area of $50 billion. Free economic zones have been established within China. Moreover, in a development of potentially great significance, China has entered into an agreement with British imperialism to guarantee the capitalist nature of Hong Kong after it reverts back to China. The Stalinist bureaucracy has officially agreed to become the custodian of capitalism in Hong Kong, and this has potentially far-reaching implications for our analysis of this bureaucracy. It certainly underscores the counterrevolutionary role played by Stalinism, and the danger which it presents in terms of capitalist restoration.

Taken together, we see that all these interconnected elements of the world crisis are driving toward socialist revolution. This perspective, which we are in the process of elaborating, is the scientific basis upon which we construct the sections of the International Committee. A perspective is not drawn up out of the morning headlines, no matter how sensational they may be. It is not a matter of identifying superficially the latest “big shock” and predicting that that will be the event that gets everything going. I heard Healy do that many times. I once recall receiving a phone call from Healy where, in the course of the conversation, some new event was raised, perhaps a sharp rise in the price of gold. And he suddenly declared, “The next two weeks will be decisive.”

That is not perspectives. We’re not talking about this or that shock. It’s a question of characterizing the nature of the epoch and understanding the real driving forces which move great masses of people into revolutionary conflict.

As we said the other night, if Healy, Banda and Slaughter were here, and if we could persuade them to tell us exactly what conclusions they have really drawn from the experiences of the past two decades, they would say that the situation confronting the working class is hopeless and that Trotskyism just doesn’t work.

But look at the great changes that have taken place in the space of just 20 years. These changes have deepened the contradictions that are leading inexorably to worldwide revolution. The problems of the working class, far from demonstrating the failure of Marxism and its revolutionary perspective, arise from the new situation which compels the working class to break from reformism and seek revolutionary answers. It is not Marxism that has failed the working class, but the old organizations based on nationalism and reformism. Thus, the working class must coordinate its struggles on an international scale. It will become commonplace in the coming period for workers to organize strikes and other forms of struggle based on an international strategy. It will be looked on as something hopelessly outdated to enter into great struggles against capitalism without having sought to coordinate every aspect of those struggles with other sections of the international working class, that is, with workers outside the national borders.

Workers will have to develop their own international strategy, their own international forms of organization. But these forms cannot be created spontaneously. And they cannot be created by the existing leaderships. There is an organic, historically-created drive for the creation of an international proletarian party. The working class must step into the twenty-first century. It can’t base itself on forms of organization developed in the nineteenth. The international party is not a phrase. It is a reality based on these developments. That must be the center of our perspectives. And the whole struggle through which we have passed has had as its aim the elaboration of this truly international perspective. In 1984, we asked Healy, Slaughter and Banda for discussions on perspectives. It took an enormous split within our movement in order to make that discussion possible. Before we could begin to elaborate our international perspective of proletarian revolution, we first had to break ruthlessly with the petty-bourgeois forces inside the International Committee. That is what actually happened.

Now it is a question of explaining our perspective to the advanced workers. This is our approach to the working class. It is not a matter of predicting this or that terrible event. It is a matter of explaining to the workers why and how they must prepare themselves for the inevitable socialist revolution. We cannot predict with complete accuracy the dates of each explosion. But Marxism can predict and anticipate the general course of developments. And these developments are leading inevitably to socialist revolution. The Workers League and the International Committee must prepare accordingly.

We counterpose to the pessimism and demoralization of the petty bourgeoisie a confidence that is scientifically grounded. Politics must always have that objective scientific basis. It is, as Trotsky said, the science of perspectives. Revolutions can only take place if they are objectively necessary, and we are the conscious agents of that necessity. In other words, our own work, the struggle within the International Committee, is one of the objectively-created forms taken by the conflict at the economic base of society, between the productive forces and the social relations.

At this meeting and in all our work, we are not just appealing to people’s hearts. We are appealing to their minds. Workers must understand what is taking place, because struggles that are based on convictions—convictions that are scientifically grounded—are far more powerful and enduring than those which rest upon euphoria.

This, then, is the outline of the perspectives of the International Committee, which I hope will open up a very intense and serious discussion.