The crisis of American capitalism is only one expression of a general crisis of the world capitalist system, a process which the WSWS has analyzed in detail. The eruption of the so-called Asian financial crisis in July 1997, and the collapse of the dot.com bubble in the US, revealed the explosive contradictions arising from the creation of a global financial system and ever-increasing financialization of the American economy. As a report delivered by Nick Beams, the national secretary of the SEP in Australia, to a conference in Sydney in January 2000, noted:

Over the last 10 years we have seen a series of deepening crises in global financial markets. First there was the recession of the early 1990s which opened a period of corporate job destruction that has continued unabated, despite claims that unemployment levels are being reduced. In 1992 we saw the crisis of the British pound and the European Exchange Rate Mechanism and the crisis of the Scandinavian banking system. Then came the bond market crisis of 1994, followed by the Mexican crisis of 1994-95 and the emergency $50 billion bailout organized by the Clinton administration on behalf of the US banks. No sooner had the Mexican crisis been ‘resolved’ than it was followed by the so-called Asian financial crisis of 1997-98, which led to the Russian default, the bankruptcy of the US hedge fund Long Term Capital Management in September 1998, and the intervention of the US Federal Reserve to head off the threat of a systemic crisis of the US and global financial system. Of course the designation of these events as the Mexican crisis, the Asian crisis and the Russian default is something of a misnomer. What we are witnessing are different manifestations of a crisis of the global financial system. Just as gout first strikes at the extremities of the body before reaching the heart, the global financial crisis is now expressing itself in the events now unfolding in the United States.

After the recession of 2000-2001, the US and world economy enjoyed a period of expansion, with some of the highest global growth rates since the post-war economic boom. But this capitalist upswing was based on increasingly unstable foundations, manifested above all in the growth of debt in the US and the creation of a series of bubbles-stock market, dot.com, property. The contradictions of capitalism erupted in open form once again in the financial crisis of 2007-2008. A report by Nick Beams explained in January 2008:

The financial crisis in the US and the expanded growth of the world economy, especially over the past seven years in the less developed countries, are not separate events, but different sides or aspects of a single process. ... The expanded growth of China (along with other countries) would not have been possible without the massive growth of debt in the US. But this growth of debt, which has sustained the US economy as well as global demand, has now resulted in a crisis. At the same time, low-cost production in China and other regions, and the integration of these regions into the world economy, lowered inflationary pressures. This process created the conditions for lower interest rates, thereby fueling the expansion of credit that has played such a vital role in sustaining the US economy and the world economy as a whole.^[1]

Sixteen years after the collapse of the USSR, world capitalism is in a state of crisis, concentrated, above all, in the center of imperialism, the United States. As it entered 2008, the SEP drew a balance sheet of the objective crisis and the tasks of the party. It was noted that the extraordinary growth of social inequality over the last three decades “is rapidly approaching the point of open and violent class conflict.”

The sclerotic American political system, administered by two political parties that serve as instruments for the implementation of the interests of the ruling plutocracy, is organically incapable of responding in any sort of credible, let alone progressive, manner to the demands of the people for significant social change. In the final analysis, the demand for social change, even of a reformist character, runs up against the unyielding determination of the ruling elite to defend its wealth and social privileges...

Regardless of who is ultimately nominated by the bourgeois parties and elected president, the logic of social and political developments is leading inexorably toward an intensification of class conflict. Moreover, the protracted deterioration in the social position and living standards of the working class, its ever-decreasing share of the wealth of society, and the unrelenting intensification of its exploitation by those who own and control the means of production have laid the foundations for a profound change in the political orientation and allegiances of the working class. Those who fail to see or who even deny that the profound changes in economic life over the past 30 years have left deep marks in the social consciousness of the American working class expose not only their demoralized skepticism, but also their ignorance of history. Indeed, the absence of open social and class conflict during the past quarter century stands in sharp contradiction to the general pattern of American history. But this prolonged period of social quiescence, rooted in a complex and exceptional interaction of national and, above all, international economic and political processes, is now drawing to a close. The central task of the Socialist Equality Party in 2008 is to prepare in all aspects of its work—theoretical, political and organizational—to meet the challenges posed by the eruption of class conflict....

The Socialist Equality Party, in political solidarity with the International Committee of the Fourth International, anticipates with confidence the resurgence of working class struggles. We are convinced that the objective crisis of the capitalist system will provide the impulse for the upsurge of the American and international working class. But the coming upsurge will not automatically solve the problems of developing socialist consciousness.

As the initial struggles of the working class in recent months demonstrate, there remains an enormous gulf between the objectively revolutionary implications of the crisis and the present level of political consciousness. Objective conditions will propel the working class into struggle and create the conditions for an immense leap in consciousness. But it would be a mistake to underestimate the degree of struggle that must be conducted by the party to raise the political consciousness of the working class and overcome the reactionary influence of the bureaucracies, which, while weakened, remain a dangerous and critical prop of capitalist rule. Nor can we ignore the role played by myriad “radical” petty-bourgeois tendencies, which persistently seek to disorient the working class and maintain its subordination to “progressive” sections of the bourgeoisie. The influence of all these different political agencies of the ruling class can be overcome only by fighting for the assimilation of the strategic experiences of past revolutionary struggles and for an understanding of the implications of the developing crisis of world capitalism.^[2]