World Perspectives 2016: Chapter II. The Decay of the Productive Forces and the World Historic Revolutionary Period which Opened in 2008

Note of the Editorial Board: The following document is an extensive study of the present state of the world economy and the global class struggle. It contains 55 figures, 9 tables and one diagram. The figures can only be viewed in the pdf version of the document here for technical reasons.

 

6.             As we have outlined in numerous documents during the past seven years, a world historic revolutionary period opened in 2008 with the start of the Great Recession which brought about the acceleration of class contradictions and exacerbated inter-imperialist rivalry. [1] The political phases within this historic period are impossible to understand without a clear picture of the period itself since it is such periods – lasting for years, if not decades – which constitute the economic and political contexts of the fundamental dynamic of class contradictions and is the result of the development of the productive forces and the relations between the oppressor and oppressed classes as well as between the imperialist powers.

 

7.             Most fundamentally, the new historic period which opened in 2008 is characterized by a dramatic decay of the productive forces. While the epoch of imperialism is generally marked by a stagnation of the productive forces, within it there are periods of varying tempos and dynamics for the development of the productive forces. For example, a period of relative growth, as was the case during the “long boom” in the 1950s and 1960s, was an exception to the overall trend of the epoch, and was attributable to the revitalization of productive forces which had been utterly devastated during the preceding decades by two world wars. Furthermore, the groundwork for this resurgence of capitalistic growth was laid by the historic defeats of the working class, the establishment of the US’s absolute political, economic and military hegemony in the imperialist camp, and the reactionary Yalta agreement between the victorious imperialist powers and the Stalinist bureaucracy. However, such an exceptional period of a “long boom” could not last for very long. It ended in the late 1960s with the revolutionary events in 1968, the collapse of the Bretton Woods system, and a recession in 1974/75. A new period of crisis, depressed accumulation of capital, and ever-strengthening contradictions of capitalism created the preconditions for the eventual financial meltdown of 2008 and the opening of the new historic period. [2]

 

8.             The fundamental cause behind depressed capital accumulation (or over-accumulation) and the consequent crisis-ridden business cycle of the capitalist world economy is the law of the tendency of the rate of profit to fall. As Marx elaborated in Capital Vol. III, this means that, in the long run, the share of surplus value becomes smaller relative to all of the capital invested in production (in machinery, raw materials, etc., as well as wages as wages paid to workers). Therefore, the surplus value which can potentially be used for the reproduction of capital on an extended level becomes less and less. This inevitably leads to disruptions and crises and a historic tendency of decline. While numerous left-reformists and centrists (e.g., the CWI) openly or clandestinely ignore this law, Marx emphasized:

 

This is in every respect the most important law of modern political economy, and the most essential for understanding the most difficult relations. It is the most important law from the historical standpoint. It is a law which, despite its simplicity, has never before been grasped and, even less, consciously articulated.“ [3]

 

9.             A number of Marxist economists – like Andrew Kliman, Michael Roberts, Guglielmo Carchedi, Alan Freeman, Minqi Li, Feng Xiao, Andong Zhu and Esteban Ezequiel Maito – have demonstrated in their works the historic validity of the law of the tendency of the rate of profit to fall (see e.g., Figure 1, 2. 3 and 4). Naturally, over-accumulation of capital and the tendency of the rate of profit to fall is not a linear process, but its tempo and dynamics are influenced by various counter-veiling tendencies – most importantly by the relation of forces between the classes, i.e., the political class struggle. [4] However, while such factors can for some time slow down or temporarily halt the fall of the rate of profit (as happened in the 1990s, for example, as a result of the coalescing neoliberal offensive, advance of imperialist globalization, and the collapse of the Stalinist workers’ states), they cannot stop – or even reverse – the decline for in the long run.

 

 

 

Figure 1. World Rate of Profit and Average Rate in Core and Peripheral Countries (1869-2010) [5]

 

Figure 2. World Rate of Profit (G20 Countries), 1950-2011 -Simple Mean, in % [6]

 

Figure 3. Profit Rate and Accumulation, "World" 1870-2005 [7]

 

Figure 4. Inflation-Adjusted Before-Tax Profit Rates, 1947-2009 (US Financial as well as Nonfinancial Corporate Sector) [8]

 

 

 

 

 

10.          The tendency of the rate of profit to fall led in turn to a decline of the rate of capital accumulation, i.e., the expanded reproduction of capital, as well as of output. In Table 1 we see the decelerating dynamic of the growth of the global Gross Domestic Product from an annual average of +3,8% in the 1970s to +3,2% (1980s), +2,8% (1990s), +2,6% (2000s) to +2.4% (2011-2013). The industrial sector, which is a better indicator for the dynamic of capitalist output because it represents the core of capitalist value production, shows an even clearer declining tendency in the old imperialist countries. As Table 2 demonstrates, industrial growth has declined in the imperialist centers from a positive range of 5–13% in the 1960s down to an actual reduction in the 2000s.

 

 

 

Table 1. Average Annual Growth Rate of the World Gross Domestic Product, 1971–2013 (in % p.a.) [9]

1971–1980           +3.8%

19811990           +3.2%

1991–2000           +2.8%

2001–2010           +2.6%

2011–2013           +2.4%

 

 

 

Table 2. Growth Rate of Industrial Production in USA, Japan and EU-15, 1961–2010 (in % p.a.) [10]

                                USA                       Japan                    EU-15

1961–1970           +4.9%                    +13.6%                  +5.2%

1971–1980           +3.0%                    +4.1%                    +2.3%

1981–1990           +2.3%                    +3.9%                    +1.7%

1991–2000           +4.0%                    +0.1%                    +1.6%

2001–2010           -0.2%                     -0.4%                     -0.3%

 

 

 

11.          The tendency of capitalist decline becomes even more pronounced if we examine the dynamic of capital accumulation in the imperialist metropolises during the same period (see Table 3 as well as Figures 5 and 6). While the growth rate of capital accumulation in the US, Japan und EU-15 was between 5% and 15% in the 1960s, it declined to between 2% and 5% in the subsequent decades. In the first decade of the new millennium, there was outright stagnation or even decline (with a growth rate of between +0.4% and -1.9%). Figure 7 shows the marked slowdown of growth of the capital stock in Germany. On a global scale, capital investment as a share of GDP declined from 26.1% in the 1970s to 21.8% in 2009. [11]

 

 

 

Table 3. Growth Rate of Gross Fixed Capital Formation in USA, Japan and EU-15, 1961–2010 (in % p.a.) [12]

                                USA                       Japan                    EU-15

1961–1970           +4.7%                    +15.7%                  +6.0%

1971–1980           +3.3%                    +3.5%                    +1.9%

1981–1990           +3.5%                    +5.7%                    +2.8%

1991–2000           +5.4%                    -0.6%                     +1.8%

2001–2010           -0.4%                     -1.9%                     +0.4%

 

Figure 5. Nominal Net Fixed Capital Formation in Western Imperialist Countries, 1991-2014 (as % of GDP) [13]

 

Figure 6. Net Investment and Capital Stock Growth before and since the Great Recession [14]

 

Figure 7. Germany: Capital Stock Growth Rate Declining [15]

 

12.          To this we should add that, in bourgeois economic statistics, the category of Gross Fixed Capital Formation is a figure distorted upward since it includes dwellings (the “value” of which can be unjustifiably high given the speculative nature of the property market) and intangible assets (which includes “investments” to buy trademarks, copyrights and patents from others). In its recent outlook on the global economy, the United Nations points out that official investment figures massively overestimate productive capital accumulation: “Investment in productive capital has been even weaker than the total investment figures suggest, as dwelling and intangible assets account for the majority of investment in developed economies. According to OECD data on fixed capital formation, investments in intangible and intellectual property assets together represent the largest share of fixed capital formation in a number of developed economies in 2014, including in Germany (47.2 per cent) and the United States (42.3 per cent). Acquisition of intangible assets, such as trademarks, copyrights and patents, may increase financial returns to firms without necessarily increasing labour productivity or productive capacity.” [16] In addition, a decreasing share of investment is used to expand capital stock, and instead is increasingly directed to replacing depreciated fixed capital. According to the McKinsey Global Institute, 56% of global gross capital formation is used to replace consumed capital, while only 41% is channeled to net capital investment. (The remaining 3% is invested in replacing inventory). [17]

 

13.          As the rate of profit declines, capitalists prefer not to invest their money in the real economic production but instead use it to speculate in the financial sector. This trend has been particularly observable in recent years. As we have discussed in previous World Perspective documents the US administration reacted to the Great Recession with so-called quantitative easing (QE). [18] This means that central banks buy up government, corporate and mortgage bonds by “printing” money by the central bank in the hope of injecting “liquidity” into the economy. It was nothing less than this state-capitalist financial Keynesianism which kept interest rates low so that the capitalist class, which is deeply in debt, would have to pay only minimal interest and while at the same time boosting the prices of bonds and shares, thereby increasing the profits of financial capitalists. However, it did not revitalize the accumulation of capital in the real economy. The United Nations, expressing their narrow bourgeois view considers this development as “surprising”. It reports: While QE injected liquidity into the financial system, a significant portion of that additional liquidity actually returned to central banks’ balance sheets in the form of excess reserves, which possibly explains why QE has had only limited effects on boosting aggregate demand or investment rates in many developed countries. Between January 2000 and August 2008, the excess reserves of banks on the Fed’s balance sheet averaged $1.8 billion. The total volume of excess reserves in the Fed reached $1 trillion by November 2009. As of October 2015, the Fed has excess reserves of $2.6 trillion, which represents nearly 75 per cent of total assets purchased by the Fed since the onset of the financial crisis. The ballooning of excess reserves since the crisis demonstrates that financial institutions generally chose to park their cash with the Fed instead of increasing lending to the real economy[19] (see Figure 8).

 

 

 

Figure 8. Excess Reserves of Financial Institutions Held with the United States Federal Reserve [20]

 

14.          Finally, we can also verify the declining dynamic of the productive forces by looking at the development of labor productivity. As we can see in Figure 9, 10 and 11 the average growth of labor productivity has gradually declined in nearly all capitalist countries since the 1950s. This long-term tendency has particularly accelerated in the new historic period of capitalist decay which opened in 2008. As we can see in Table 4, labor productivity (measured in output per hour worked) declined significantly in nearly all major capitalist economies since the beginning of the new period.

 

 

 

Figure 9. Labor Productivity Performance in Long Run Comparative Perspective, 1950-2013 (GDP per hour worked; annual average growth) [21]

 

Figure 10. Labour Productivity Growth, 1990-2013 (Growth in GDP per hour worked) [22]

 

Figure 11. Labor Productivity Growth in Western Imperialist Economies, 1973-2014 (Growth in GDP per hour worked) [23]

 

Table 4. Growth of Labor Productivity, Before and After the Great Recession in 2008/09 [24]

Average percentage change per year (Measured as real GDP per hour worked)

Country                                                2001–2007                           2009–2014

France                                                   1.5                                          0.9

Germany                                             1.3                                          1.2

Japan                                                    1.6                                          1.2

United Kingdom                               2.2                                          0.3

United States                                     2.0                                          0.9

China                                                    9.5                                          7.4

India                                                     4.4                                          7.0

Russian Federation                          5.4                                          2.0

South Africa                                       3.1                                          1.5

 

15.          This decline of productivity has been caused by the falling rate of profit and depressed capital accumulation, and not by rising wages for the working class. In fact, quite the opposite is true: world-wide wages grew less in 2009–13 than in the years 2000–08, i.e., before the Great Recession. According to the United Nations, the gap between the average annual growth of global wages and of labor productivity was +0.2% in the period 2000–08 but +0.6% in 2009–2013. In other words, the capitalists were able to substantially increase the rate of surplus in the new historic period. [25]

 

16.          Finally, another feature which reflects the decline of the productive forces is the significant slowdown in world trade. In the past few years, world trade grew less than half of its rate of growth before the Great Recession: “At 3.6 percent in 2014, global trade growth continued to be substantially weaker than its pre-crisis average of about 7 percent.[26] In Figure 12 we show a graph of the Credit Suisse which compares global trade with the dynamic of industrial production. Such a development has similarities to the inter-war period in the 1920s and 1930s. While world trade grew substantially before 1914, it was massively reduced after the World War I. This reflected the general decline of the productive forces at that time. Obviously, the bourgeois economists today don’t think in such historic terms. But they do manage to indicate the cause of the decline of world trade. In a recently published essay, the World Bank economists identify “weak demand” as an important factor, which is just another way of expressing the negative consequences of the present crisis on investment and consumption. In addition they point out that the period of advancing globalization of trade is over and protectionism is on the rise: “There are signs that protection continued to rise even after 2009. For instance, in the year leading to May 2014, Group of Twenty (G-20) members put in place 228 new trade restrictive measures. Worryingly, while the measures imposed since 2009 were meant to be temporary ones, the vast majority of trade restrictive measures taken since the global financial crisis have remained in place.[27]

 

 

 

Figure 12. Global Trade in Relation to Industrial Production [28]

 

 

17.          Finally, the slowdown in world trade reflects the rise of China as an economic power. Today, Chinese enterprises produce much fewer parts and components for foreign corporations than they did in the past. Instead Chinese corporations increasingly complete the production of commodities themselves in their own country before exporting them (see Figure 13). The World Bank comments: “The decline in China’s trade elasticity can be explained by the rising amount of domestic value added in its exports. For instance, the share of Chinese imports of parts and components in China’s total exports has declined from a peak of 60 percent in the mid-1990s to the current share of approximately 35 percent, implying a diminished fragmentation of the production process. Further evidence of this change is the substitution of domestic inputs for foreign inputs by Chinese firms, which underpins the rise in domestic value added to trade.[29]

 

 

 

Figure 13. China’s Imports of Parts and Components as a Share of Total Exports of Merchandise [30]

 

18.          Furthermore, the deceleration of the growth of world trade is not only a reflection of the decline of the productive forces; it also directly affects them negatively. As we know, the capitalist world economy is dominated by a small number of monopolies. Some years ago, economists published a study which was widely discussed in the academic community and which came to the conclusion that 147 alone corporations controlled 40% of the global economy: “They discovered that global corporate control has a distinct bow-tie shape, with a dominant core of 147 firms radiating out from the middle. Each of these 147 own interlocking stakes of one another and together they control 40% of the wealth in the network. A total of 737 control 80% of it all.” [31] Clearly such mega-corporations need a large, i.e., global, market to produce and sell their commodities, to invest their capital, etc. Any reduction of the world market has massively negative consequences for prospects of increasing their profits. Under such circumstances, it is unavoidable that the capitalist monopolies, and the Great Powers as their political instruments, will increase their aggressive efforts to outmaneuver their rivals, to protect “their” markets and spheres of influence and to launch wars if necessary for their interests. Trotsky remarked at the beginning of World War I:

 

The forces of production which capitalism has evolved have outgrown the limits of nation and state. The national state, the present political form, is too narrow for the exploitation of these productive forces. The natural tendency of our economic system, therefore, is to seek to break through the state boundaries. The whole globe, the land and the sea, the surface as well as the interior has become one economic workshop, the different parts of which are inseparably connected with each other. This work was accomplished by capitalism. But in accomplishing it the capitalist states were led to struggle for the subjection of the world-embracing economic system to the profit interests of the bourgeoisie of each country. What the politics of imperialism has demonstrated more than anything else is that the old national state that was created in the revolutions and the wars of 1789-1815, 1848-1859, 1864-1866, and 1870 has outlived itself, and is now an intolerable hindrance to economic development.[32]

 

If such an assessment was correct in 1914, it is ten times more correct today, when the monopolies have accumulated so much power, and when capital accumulation and technique have developed so much in the past 100 years!

 

19.          However, the decay of capitalism manifests itself in manifold ways. When Marxists speak about the decay of the productive forces, they do not limit this phenomenon to economic development. They also mean, first and foremost, the working class and humanity in general as the most important productive force. Marx himself emphasized this idea repeatedly: Of all the instruments of production, the greatest productive power is the revolutionary class itself.[33]

 

20.          According to the United Nations, 100,000 people die of hunger every day and about 852 million people suffer from chronic hunger. [34] This scandalous situation exists despite the fact that the world already produces more than 1 ½ times enough food to feed everyone on the planet (and even the estimated population of 9–10 billion in 2050). [35] However, in a world in which 2.2 billion people live on less than US $2 a day (in 2011), many can not afford to buy sufficient amounts of food. [36] Furthermore, since agriculture and the food industry are dominated by multinational corporations who plan production solely to increase their profits, the quality of food is increasingly degraded. As a result, regardless of the fact that global agriculture produces 17% more calories per person today than 30 years ago, the urban and rural poor are increasingly forced to eat cheap und unhealthful fast food. Hence, according to the WHO, obesity and overweight have become an epidemic. In 2014, more than 1.9 billion adults, 18 years and older, were overweight. Of these over 600 million were obese. In other words, worldwide obesity has doubled or tripled, especially in developing countries, since 1980. Today most of the world's population lives in countries where overweight and obesity kill more people than malnutrition. [37]

 

21.          Furthermore, as a result of capitalist domination, humanity as a whole is increasingly exposed to the destructive character of many productive forces. Marx and Engels already pointed out in The German Ideology that as long as capital owns the means of production, the productive forces are increasingly transformed into destructive forces: „We have shown that at the present time individuals must abolish private property, because the productive forces and forms of intercourse have developed so far that, under the domination of private property, they have become destructive forces, and because the contradiction between the classes has reached its extreme limit.[38] As it is well known today, the capitalist system of production for profit is increasingly destroying the climate. As a result, climate change is a accelerating, posing an increasing danger for humanity. In 2008, 36 million people were displaced by natural disasters. At least 20 million of those people were driven from their homes by disasters related to climate change, like drought and rising sea level. But this was only the beginning: according to different projections, the consequences of climate change will have devastating consequences for many countries and their population. With a global warming of three degrees, twelve countries around the world could lose more than half of their present land area and about 30 countries could lose one tenth of their area. A scientist explains: “If that sea-level rise occurred today, more than 600 million people would be affected and would have to find a new home.[39] Other sources estimate that, “unless strong preventative action is taken, between now and 2050 climate change will push the number of displaced people globally to at least 1 billion.[40]

 

22.          The Climate Vulnerability Monitor estimates, “that climate change causes 400,000 deaths on average each year today, mainly due to hunger and communicable diseases that affect above all children in developing countries. Our present carbon-intensive energy system and related activities cause an estimated 4.5 million deaths each year linked to air pollution, hazardous occupations and cancer. (…) Continuing today’s patterns of carbon-intensive energy use is estimated, together with climate change, to cause 6 million deaths per year by 2030, close to 700,000 of which would be due to climate change. This implies that a combined climate-carbon crisis is estimated to claim 100 million lives between now and the end of the next decade” (see Table 5). To this human tragedy one has to add the financial costs. According to the OECD “Inflation-adjusted insurance losses from weather-related natural hazard losses have increased from an annual average of around USD 10 billion in the 1980s to around US$50 billion over the past decade. [41] Concerning future perspectives, the Climate Vulnerability Monitor states: “Climate change caused economic losses estimated close to 1% of global GDP for the year 2010, or 700 billion dollars (2010 PPP). The carbon-intensive economy cost the world another 0.7% of GDP in that year, independent of any climate change losses. Together, carbon economy- and climate change-related losses amounted to over 1.2 trillion dollars in 2010. (…) The world economy therefore faces an increase in pressures that are estimated to lead to more than a doubling in the costs of climate change by 2030 to an estimated 2.5% of global GDP. Carbon economy costs also increase over this same period so that global GDP in 2030 is estimated to be well over 3% lower than it would have been in the absence of climate change and harmful carbon-intensive energy practices.” Most affected by this catastrophe will be those countries which contribute least of all to the climate change – the poor semi-colonial countries. “Least Developed Countries (LDCs) faced on average in excess of 7% of forgone GDP in 2010 due to climate change and the carbon economy, as all faced inequitable access to energy and sustainable development. Over 90% of mortality assessed in this report occurs in developing countries only – more than 98% in the case of climate change[42] (see Figure 14).

 

 

 

Table 5. Number of Deaths per Year, 2010–2030 [43]

                                                                                                                                2010                                       2030

Climate                Diarrheal Infections                                                        85,000                                   150,000

                                Heat & Cold Illnesses                                                     35,000                                   35,000

                                Hunger                                                                                 225,000                                 380,000

                                Malaria & Vector Borne Diseases                              20,000                                   20,000

                                Meningitis                                                                          30,000                                   40,000

                                Environmental Disasters                                               5,000                                      7,000

                                Air Pollution                                                                       1,400,000                              2,100,000

Carbon                 Indoor Smoke                                                                    3,100,000                              3,100,000

                                Occupational Hazards                                                   55,000                                   80,000

                                Skin Cancer                                                                        20,000                                   45,000

World                                                                                                                    4,975,000                              5,957,000

 

Figure 14. Total Deaths and Costs as a Result of Climate Change and the Carbon Economy, 2010 and 2030 [44]

 

 

23.          In addition, the capitalist decay has increased the number of wars and, as a result, there has been a huge and rapid increase of the number of refugees. The UNHCR reports that for most of the past decade, “displacement figures ranged between 38 million and 43 million persons annually. Since 2011, however, when levels stood at 42.5 million, these numbers have grown to the current 59.5 million – a 40 per cent increase within a span of just three years[45] (see Figure 15).

 

 

 

Figure 15. Displacement in the 21st Century, 2000-2014 (in Millions) [46]

 

24.          The alarming number of displaced persons is the result of local wars and repression. However, given the accelerating economic rivalry between the Great Powers – mainly the US, EU, Japan, Russia and China – it is unavoidable that there will be growing military tensions between them. Given the fact that these imperialist powers – in contrast to semi-colonial countries – possess the most modern nuclear, chemical and biological weapons of mass destruction, any war between them could lead to the death of many millions of people, up to the complete extinction of the human species.

 

25.          Last but not least, we emphasize the increasing inequality between the classes and between the nations on a global level. According to figures from the Credit Suisse – a source which no one could suspect of anti-capitalist ideology – an insignificant minority (0.7% of the population), representing largely the global capitalist class, owns 41% of the world’s wealth. The global middle class (7.7% of the world population) owes together about the same amount (42.3 of the world’s wealth). The next 22.9% of the world’s population, probably representing the significant share of the working class of the imperialist countries and the middle class of the semi-colonial world, own 13.7%, and the huge majority of the world’s population (68.7%) – representing mostly the working class and the poor peasants of the South – own the little which remains (only 3%) of the world’s wealth (see Figure 16)! Likewise, the latest OXFAM study concludes: “In 2015, just 62 individuals had the same wealth as 3.6 billion people – the bottom half of humanity. This figure is down from 388 individuals as recently as 2010. The wealth of the richest 62 people has risen by 44% in the five years since2010 – that's an increase of more than half a trillion dollars ($542bn), to $1.76trillion.Meanwhile, the wealth of the bottom half fell by just over a trillion dollars in the same period – a drop of 41%.[47] OXFAM has demonstrated that this rising inequality is closely connected to the rising exploitation of the working class and the parallel growing share of profit reflected in the globally declining share of labor income (see Figure 17). This decline is particularly noteworthy, since the share of wage laborers in total employment is steadily growing in all regions of the world, representing today about 51% globally (see Figure 18). The progressive economist Thomas Piketty, regardless of his reformist outlook, has also provided a number of valuable statistics which show the massive increase of inequality both in the imperialist as well as in important semi-colonial countries. The following three graphs plot the share of respective national incomes for the top 1% of those countries’ populations during the last century. Note the extended slope downward (i.e., the reduction in inequality) during the “long boom” following the Second World War, but the steep rise during the past 30 years for the English speaking countries and key countries of the South in particular (see Figure 19, 20? and 21).

 

Figure 16. How is the World’s Wealth shared amongst its Population? [48]

             

 

Figure 17. Labor income as a share of GDP in countries of different income levels, 1988–2011 [49]

 

Figure 18. Wage and Salaried Employment (% of Total Employment), World and Regions [50]

 

Figure 19. Income Inequality in English Speaking Countries, 1910 – 2010  [51]

 

Figure 20. Income Inequality in Continental Europe and Japan, 1910 – 2010  [52]

 

Figure 21. Income Inequality in Emerging Countries, 1910 – 2010  [53]

 

26.          The increasing exploitation of the global working class has gone hand in hand with accelerating inequality within the working class. As we have already pointed out in our book The Great Robbery of the South, the wage gap between the labor aristocracy (and sectors of the salaried middle layer) on one hand, and the mass of the middle and lower strata of the proletariat on the other, has widened substantially during recent decades. [54] This has been demonstrated by the UN in its latest issue of its Human Development Report (see Figure 22). At the same time, unemployment rates are two to four times greater among low-skilled workers than among those who are highly-skilled (see Figure 23). This increasing differentiation within the working class also manifests itself in today’s historically high levels of youth unemployment. According to official figures for 2015, 74 million young people (aged 15–24) were unemployed worldwide. The Arab world is a region that had a youth unemployment rate of 29.8% in 2015. However, there are also countries in southern Europe which also face dramatically high rates of youth unemployment, like Greece (52%) and Spain (53%). [55]

 

 

 

Figure 22. Declining Share of Wages and Increasing Wage Inequality between Highly-Skilled and other Workers [56]

 

Figure 23. Unemployment Rates of High-Skilled and other Workers in Imperialist Countries 1999 and 2011 [57]

 

 

 

 

27.          To summarize, capitalism is in the throes of a historic period of decline which threatens not only the world economy but also the living standard of the popular masses, and even puts the survival of humanity in danger. The current period is characterized by what Trotsky described as a “declining curve of capitalist development[58] (see also Trotsky’s diagram below). It is the decay of the productive forces which constitutes the fundamental, the most important factor, for the acceleration of the contradictions between the classes which is so characteristic of the historic period since 2008. It is because of the declining dynamic of capital accumulation and the growth of profits that the bourgeoisie is forced, lest it face ruin, to relentlessly attack the working class. For the very same reason the imperialist bourgeoisie is forced to relentlessly strangle the semi-colonial countries of the South and to wage more and more military interventions and occupations. And it is for the very same reason that the rivalry between the imperialist Great Powers is accelerating, since they have to struggle against one other to gain a larger share of the relatively decreasing production of global capitalist value. Finally, if the imperialist Great Powers are not smashed by revolutionary international working class, their rivalry will lead to World War III. The working class can only end this continuous chain of misery, wars and catastrophes via a world socialist revolution. Rosa Luxemburg’s statement that humanity is faced with the alternative “Socialism or Barbarism” is more relevant than ever. Under the conditions of the early 21st century, the concretization of Luxemburg’s statement means: “Socialism or Widespread Death through Climate Destruction and World War III”!

 

 

 

Diagram 1: Leon Trotsky’s ‘Curve of Capitalist Development’ written in 1923 [59]



[1] See on this e.g., chapter 14(i) in Michael Pröbsting: The Great Robbery of the South. Continuity and Changes in the Super-Exploitation of the Semi-Colonial World by Monopoly Capital. Consequences for the Marxist Theory of Imperialism, RCIT Books, Vienna 2013, pp. 372-394, http://www.great-robbery-of-the-south.net/great-robbery-of-south-online/download-chapters-1/chapter14/; See also Michael Pröbsting: Building the Revolutionary Party in Theory and Practice. Looking Back and Ahead after 25 Years of Organized Struggle for Bolshevism, RCIT Books, Vienna 2014, pp. 81-84 and pp. 101-103.

[2] In the above mentioned parts of our books The Great Robbery of the South and Building the Revolutionary Party in Theory and Practice we have summarized the elaboration of our analysis of the different historical periods and have defended it against various critics.

[3] Karl Marx: Grundrisse der Kritik der politischen Ökonomie; in: MECW Vol. 29, p. 133

[4] See on this e.g., Richard Brenner, Michael Pröbsting, Keith Spencer: The Credit Crunch - A Marxist Analysis, London 2008

[5] Esteban Ezequiel Maito: The historical transience of capital The downward trend in the rate of profit since XIX century, 2014, p. 13

[7] Minqi Li, Feng Xiao, Andong Zhu: Long Waves, Institutional Changes, and Historical Trends: A Study of the Long-Term Movement of the Profit Rate in the Capitalist World-Economy, in: 2007, Journal of World-Systems Research, Vol. XIII, No. 1, p. 41

[8] Andrew Kliman: The Failure of Capitalist Production. Underlying Causes of the Great Recession, London 2011, p. 84

[9] FAO: Global Trends in GDP and Agriculture Value Added (1970-2013), May 2015, http://www.fao.org/economic/ess/ess-economic/gdpagriculture/en/

[10] European Commission: Statistical Annex of European Economy, Spring 2012, p. 53 as well as Statistical Annex of European Economy, Autumn 2015, p.33. Since there are no figures for the EU-15 for the years 1961–70 and 1971–80 in these EU statistics, for these years we have used the arithmetic mean of the figures for Germany, France, Great Britain and Italy.

[11] McKinsey Global Institute: Farewell to cheap capital? The implications of long-term shifts in global investment and saving, December 2010, p. 10

[12] European Commission: Statistical Annex of European Economy, Autumn 2015, p. 49

[13] Michael Heise, Arne Holzhausen, Rolf Schneider: The productivity slump in the advanced economies: Explanations and need for action, Allianz Working Paper 194, 24.11.2015, p. 15

[14] OECD: Economic Outlook, No. 97, Volume 2015/1, p.209

[15] Michael Heise, Arne Holzhausen, Rolf Schneider: The productivity slump in the advanced economies: Explanations and need for action, Allianz Working Paper 194, 24.11.2015, p. 16

[16] United Nations: World Economic Situation and Prospects 2016, New York, 2016, p. 19

[17] McKinsey Global Institute: Farewell to cheap capital? The implications of long-term shifts in global investment and saving, December 2010, p. 62

[18] See on this e.g., RCIT: Aggravation of Contradictions, Deepening of Crisis of Leadership, 9.9.2013

[19] United Nations: World Economic Situation and Prospects 2016, New York, 2016, pp. 10–11

[20] United Nations: World Economic Situation and Prospects 2016, New York, 2016, p. 11

[21] OECD: The Future of Productivity, Paris 2015, p. 16

[22] OECD: The Future of Productivity, Paris 2015, p. 19

[23] Guido Baldi and Patrick Harms: Productivity Growth, Investment, and Secular Stagnation, Deutsches Institut für Wirtschaftsforschung 2015, p.2

[24] United Nations: World Economic Situation and Prospects 2016, New York, 2016, p. 21

[25] International Labour Office: World Employment and Social Outlook: Trends 2015, Geneva: ILO, 2015, p. 25

[26] World Bank: Global Economic Prospects, June 2015: The Global Economy in Transition, p. 24

[27] World Bank: Global Economic Prospects, January 2015: Having Fiscal Space and Using It, p. 172

[28] Credit Suisse: Global Equity Strategy, 15 July 2015, p. 44

[29] World Bank: Global Economic Prospects, January 2015: Having Fiscal Space and Using It, p. 171

[30] World Bank: Global Economic Prospects, January 2015: Having Fiscal Space and Using It, p. 171

[31] See The 147 Companies That Control Everything, 22.10.2011 http://www.forbes.com/sites/bruceupbin/2011/10/22/the-147-companies-that-control-everything/; S. Vitali, J.B. Glattfelder, and S. Battiston: The network of global corporate control (2011), ETH Zurich, http://arxiv.org/pdf/1107.5728v2.pdf

[32][32] Leon Trotsky: The War and the International (1914), in: Leon Trotsky: The Bolsheviks and World Peace, Boni and Liveright, New York 1918, pp. 20–21

[33] Karl Marx: The Poverty of Philosophy. Answer to the ‘Philosophy of Poverty’ by M. Proudhon; in: MECW Vol. 6, p. 211. One can find the same idea in the writings of Trotsky and Bukharin.

[34] UN News Centre: UN expert decries 'assassination' by hunger of millions of children, 28 October 2005, http://www.un.org/apps/news/story.asp?NewsID=16407#.Vo01SFLepWo; see also FAO: The State of Food Insecurity in the World 2015, Rome 2015, p. 10

[35] Eric Holt Gimenez: We Already Grow Enough Food For 10 Billion People –and Still Can't End Hunger, 05/02/2012, http://www.huffingtonpost.com/eric-holt-gimenez/world-hunger_b_1463429.html

[36] World Hunger Education Service: 2015 World Hunger and Poverty Facts and Statistics, http://www.worldhunger.org/articles/Learn/world%20hunger%20facts%202002.htm

[37] See WHO: Obesity and overweight, Fact sheet N°311, Updated January 2015, http://www.who.int/mediacentre/factsheets/fs311/en/; Dr Muhamad Hanafiah: Obesity: A Public Health Threats in Developing Countries, International Journal of Public Health and Clinical Sciences, Volume 2, No. 2, March/April 2015, p. iv

[38] Karl Marx: The German Ideology. Critique of Modern German Philosophy according to its Representatives Feuerbach, B. Bauer And Stirner, and of German Socialism according to its various Prophets; in: MECW Vol. 5, p. 439

[40] A Christian Aid: Human tide: the real migration crisis, May 2007, p. 22

[41] OECD: Economic Outlook, Vol. 98 (2015/2), p.69

[42] DARA and the Climate Vulnerable Forum: Climate Vulnerability Monitor 2nd Edition. A Guide to the Cold Calculus of a Hot Planet, Madrid 2012, pp. 17–18

[43] DARA and the Climate Vulnerable Forum: Climate Vulnerability Monitor 2nd Edition. A Guide to the Cold Calculus of a Hot Planet, Madrid 2012, p. 17

[44] DARA and the Climate Vulnerable Forum: Climate Vulnerability Monitor 2nd Edition. A Guide to the Cold Calculus of a Hot Planet, Madrid 2012, p. 16

[45] UNHCR: World at War. Global Trends. Forced Displacement in 2014, Geneva 2015, p.5

[46] UNHCR: World at War. Global Trends. Forced Displacement in 2014, Geneva 2015, p. 5

[47] OXFAM: An Economy For The 1%. How privilege and power in the economy drive extreme inequality and how this can be stopped, Oxfam Briefing Paper, 18 January 2016

[48] Amina Mohammed: Deepening income inequality; in: World Economic Forum: Outlook on the Global Agenda 2015, p. 10. We will elaborate more on the historic development of global inequality in the forthcoming book by Michael Pröbsting on Imperialism.

[49] OXFAM: An Economy For The 1%, p. 13

[50] International Labour Office: World employment and social outlook. The changing nature of jobs, Geneva 2015, p. 29

[51] Thomas Piketty: Capital in the Twenty-First Century, The Belknap Press of Harvard University Press, Cambridge and London 2014, p. 316

[52] Thomas Piketty: Capital in the Twenty-First Century, p. 317

[53] Thomas Piketty: Capital in the Twenty-First Century, p. 327

[54] See Michael Pröbsting: The Great Robbery of the South, pp. 228-240, http://www.great-robbery-of-the-south.net/great-robbery-of-south-online/download-chapters-1/chapter9/

[55] See International Labour Office: World employment and social outlook: Trends 2015, Geneva 2015, p. 35 and p. 51; UNDP: Human Development Report 2015, pp. 63-64

[56] UNDP: Human Development Report 2015, p. 101. We are certainly aware that not all highly-skilled workers belong to the labor aristocracy and, conversely, that this latter layer also includes workers with lower levels of education. Nevertheless, these figures are indicative since there is a strong overlap between the two.

[57] McKinsey Global Institute: The world at work: Jobs, pay, and skills for 3.5 billion people, 2012, p. 28

[58] See on this Trotsky very thoughtful essay The Curve of Capitalist Development, written in 1923, in: Leon Trotsky: Problems of Everyday Life. Creating the Foundations of a New Society in Revolutionary Russia, Pathfinder, New York 1973, pp. 275–276. Trotsky made the following thoughtful comments on the role of periods in history:

We observe in history that homogeneous cycles are grouped in a series. Entire epochs of capitalist development exist when a number of cycles is characterized by sharply delineated booms and weak, short-lived crises. As a result we have a sharply rising movement of the basic curve of capitalist development. There are epochs of stagnation when this curve, while passing through partial cyclical oscillations, remains on approximately the same level for decades. And finally, during certain historical periods the basic curve, while passing as always through cyclical oscillations, dips downward as a whole, signalling the decline of productive forces.

[59] Leon Trotsky: Problems of Everyday Life, p. 278; we have taken this graph from the US-Trotskyists’ theoretical journal Fourth International, Vol. 2, No. 4 (May 1941), p. 113, which can be found on the website https://www.marxists.org/.