Crisis of the real estate, financial crisis?
Or more simply a capitalist crisis of overproduction?

A very convenient explanation

The firedamp explosion which struck the whole of the world markets, of the change markets and the world economy during this summer was charged, noisily, to the now famous risky loans known as "subprime mortgage". Initially, in any case, what the media proposed is a scenario according to which, in a world economy whose fundamentals were healthy, where the prospects for growth, drawn by the emergent countries like China or India, were bright, some North-American companies of real estate loans would have had doubtful practices, granting ill-considered appropriations to not very reliable debtors. The non-payments of an increasing number of these borrowers would have put the financial system as a whole at the edge of collapse.

If there is not a doubt that a certain number of real estate loans companies (in particular US ones, for what one can see today!) agreed credits without being too much concerned with capacity of the borrowers to refund them, we cannot ignore :

* on the one hand that these establishments could do it only because they "re-sold these debts" 1 at banks and other financial institutions which benefited from it while ensuring a credibility for these operations;

* on the other hand, and above all, that it is the capitalist logic which forces these establishments of loans to carry out these operations whatever is the risk, since it is their raison d'être.

However, and without going in the details of the development of this new convulsion which extends to all the financial system, it seems significant to us to underline here a certain number of topics of the bourgeois propaganda.

All kinds of lies

The first of these lies (intentional or not in the mouth or under the pen of such or such journalist or "specialist" in economy, it does not matter!) thus consists, we saw it, in accusing some establishments of mortgage loans. The fact that those which are known today for these practices are North-American is moreover an excellent topic of nationalist propaganda for the bourgeoisie of the other countries. It is forgetting a little bit too quickly, firstly, that it is the US household consumption which "draws" the world economy and the venerated world growth rate. That this consumption is made on credit and that the policy of the weak dollar aims to make carry the weight of this debt to the other countries, no one ignores it, especially among the "great specialists" in economy.

And secondarily, it is to give very little importance to the fact that, globalisation obliges, all the large banks and financial institutions are implied in this policy of "subprime" and draw considerable profits of it2.

Another sizeable lie consists in wanting to make us believe that this crisis came like a flash in a serene sky. To speak only of the 20 last years, one can quote the crashes of 1987 on the actions markets, then in 1990 that of the American savings banks (Savings and Loans), that of 1994 with the crash of the US bond market, those of 1997 and 1998 with the financial crises which had touched countries like Thailand, Korea and Hong Kong, then Russia and Brazil, and finally the bursting of the bubble known as "of Internet" in 2001-2003.

The idea according to which the successive crises would be anomalies is an idea deeply anchored in the vision of the economists and other flatterers of the bourgeois society (and not only them, moreover). The crises are perceived by them like incidents, accidents of a system whose vocation is of going towards always more wealth, without major hitch.

This idea is not new and it has been smashed up by Rosa Luxemburg, more than a century ago in her fight against Berstein's revisionism :

"For him [Bernstein], crises are simply derangements of the economic mechanism. With their cessation, he thinks, the mechanism could function well. But the fact is that crises are not "derangements" in the usual sense of the word. They are "derangements" without which capitalist economy could not develop at all. For if crises constitute the only method possible in capitalism–and therefore the normal method–of solving periodically the conflict existing between the unlimited extension of production and the narrow limits of the world market, then crises are an organic manifestation inseparable from capitalist economy." (Rosa Luxemburg, "Reform or Revolution" Chap. V, marxist.org)

Thus, the crises are not anomalies but an urgent necessity for a mode of production aiming essentially the increasing of the value by the mean of extracting surplus value to the workers.

Moreover, Rosa goes on like this :

"In the "unhindered" advance of capitalist production lurks a threat to capitalism that is much greater than crises. It is the threat of the constant fall of the rate of profit, resulting not only from the contradiction between production and exchange, but from the growth of the productivity of labour itself. The fall in the rate of profit has the extremely dangerous tendency of rendering impossible any enterprise for small and middle-sized capitals. It thus limits the new formation and therefore the extension of placements of capital.

And it is precisely crises that constitute the other consequence of the same process. As a result of their periodic depreciation of capital, crises bring a fall in the prices of means of production, a paralysis of a part of the active capital, and in time the increase of profits. They thus create the possibilities of the renewed advance of production. Crises therefore appear to be the instruments of rekindling the fire of capitalist development. Their cessation–not temporary cessation, but their total disappearance in the world market–would not lead to the further development of capitalist economy. It would destroy capitalism" (Rosa Luxemburg, Idem).

This illusion of a capitalism progressing without major jolts that the capitalists of the 19Th century defended (as well as the revisionists) has turned today in an ideology according to which, in spite of the "small disadvantages" of the repetitive crises, capitalism is the only real and possible issue for humanity. That does not prevent, each time, from finding a specific cause and "guilty persons" because these crises cannot be ignored and that, after each one of these crashes, each one of these "crises", the "solution" consists in adopting measures which take up and amplify the practices which had brought to these crises : approximately, to inject fresh money in the system, to resort to a debt even more massive. This cannot but lead to a new "crisis" after having destroyed a certain mass of capital and to involve measures against the population of the countries concerned and in particular against the working class.

Still more, one of the characteristic features of the entry of capitalism in its declining phase is precisely the impossibility of outstripping its regular crises by purely "economic" mechanisms (devaluation of capital, setting to the unemployment of companies and geographical expansion in the search of new markets). The first imperialist world war (1914-1918) showed that, henceforth, capitalism could escape only temporarily the economic stagnation of the crisis on a worldwide scale through a generalized "setting of score", directed by the great capitalist powers. The cycle of the crises followed by an increasing expansion let the place to the cycle crisis-war-rebuilding-new crisis; declining capitalism thus leads humanity to an increasing barbarism.

In this sense, the "crashes" and "recessions" of the last decades are not "accidents" or "errors" in the "normal" life of capitalism but inevitable convulsions, increasingly more generalized and deep, which touch each time more countries –including the main ones – which mark the progressive sinking of the system in the world-wide crisis and which push in an increasingly imperious way the social classes to give them a final "solution".

There is no doubt that the jolts in process (because one should know that we are yet only in the first phases of this episode) will lead to the same results (destruction of capital, anti-workers measures); that the bourgeoisie will not be able to find another "remedy" but the injection of liquid assets on the market and its corollary: a new step in the massive debt; and that, in the long term, another jolt of the crisis will follow this one… as far as this one, precisely, could be outstripped.

A last lie that we want to pick out here consists in "uncoupling", to some extent, visible phenomena of the crash of the "subprimes" of the other manifestations of the capitalist crisis about which we heard of only through the true economic war that the companies are indulging in on an international scale and who results in the various takeover bids, purchases and sales of companies, in a word by the logic of the capitalistic intensive concentration in accelerated course since a few months. Everyone remembers the Mittal-Arcelor case, the battles carried out around the repurchase of Euronext by the New York Stock Exchange or the operations around the Russian oil for which the battle is hard between the Russian State and the international companies for the exploitation of the richness of the basement.

These fierce struggles which are carried out for the repurchase or alliance between various companies are the form that the concentration, the run for influence and for economic power of these companies takes.

We did not forget, either, the role of the Pension Funds (in particular the US ones) in this unrestrained race which results systematically in redundancies, attacks against the wages and working conditions of the workers.

All these facts express the depth of the economic crisis and the obligation that the bourgeoisie of all the countries has to carry out an economic war without mercy, with the risk to see itself preceding by competition and to disappear.

In the last years, one could observe the increasing role of the States and their direct or indirect intervention in the commercial battles which are carried out. That expresses the rise of the imperialist tensions whose essential cause is the deepening of the economic crisis.

Economic crisis and imperialist tensions

We have evoked the Mittal-Arcelor episodes in which the French state attempted (without success, it should be underlined) to counter the repurchase of the Arcelor company, partly French, by the Indian industrialist Mittal. Other States, in other situations, seek to influence the course of the matter with an acknowledged aim to defend the "national interests". One can quote many cases among which that of EADS is typical, or that of the seizure of the USA on the rebuilding or oil markets in Iraq, so as many cases of sharing of competence as regards of the industries of the armament or that of space, for example.

Each time, one can see that, through the alliances or the fusions of great companies of key sectors of the economy, the states intervene, according to their capacity, of course, not only to put forward the economic interests of the national bourgeoisie but also, and above all, with a political preoccupation

For this reason, and while the crisis of the "subprimes" was going full swing this summer, a highly significant fact has been a little overlooked: the Russian adventure in the North Pole and the standing, by a submarine, of the national flag by several hundred meters down in the sea. The potential richness in hydrocarbons of the basement of this area as its strategic situation shows what are, in reality, the ecological fusses of all the protagonists.

In front of the USA which follow a definite policy to ensure a control as broad as possible on raw material resources (and oil in very first place), Poutine's Russia seeks to benefit the maximum of its gas and oil resources. The European countries –in particular Germany and France – which are very dependent on this provisioning, seek on the one hand to obtain stable and advantageous conditions of provisioning of these goods and on the other hand to join to the Russian giants of the sector by investing capital in these companies. That implies not to be too much fastidious on the conditions under which the Russian oil companies and the State ensure their domination on the market. The thing is usual.

What results of all that is that the jolts of the crisis proceed on a background of competition increasingly exacerbated between the various capitalist States, this competition leading to an economic war in which all the blows are allowed, and which causes, in return, a deepening in the economic crisis.

The staggering debt of the States, the resorting to the banknote plate [printing money] to try to prevent that the current phase of the crisis is prolonged and deepened, the war of the currencies between the US dollar and the Euro, aim firstly, for each national capital, to place best - or the least badly possible - while making the other States bear the maximum of the load.

For the time being, it is the proletariat who will undergo the effects of this crisis of the "subprimes".

Consequences for the working class

If, as wrote Rosa, "the crises are an organic manifestation inseparable from capitalist economy", if they "cause precisely, by depreciating the capital periodically, while cause a drop in the price of the means of production and by paralyzing part of the active capital, to increase the profit, consequently creating the conditions of new investments, of a new extension of the production" they have, as an other consequence,

If, as wrote it Rosa, "the crises are organic demonstrations inseparable from the whole of the capitalist economy"; if they "cause precisely, by depreciating the capital periodically, while cause a drop in the price of the means of production, and by paralysing part of the active capital, to increase the profit", they result also in throwing out hundreds of thousands of proletarians because they are –at least temporarily – useless. They will also have as a consequence, this time, to increase the price of the food products most necessary to the survival of the workers. Unemployment, rise in the cost of living on a side, increase in the profits on the other. Here are the most immediate results of this new rise of the crisis

Later, it is as well the consequences of this other aspect of the crisis that the rise of the imperialist tensions constitutes that the working class will have to face. Plainly and while several thousands of American young people are already the victims (without speaking about the Iraqis, Afghans, Chechens and other populations), it will be the price of the blood that the capital will require, and in a generalised way.

But the sinking in the crisis, on the contrary, is also the condition of the overthrowing of capitalism. Let us quote again Rosa Luxemburg :

"It is not true that socialism will arise automatically from the daily struggle of the working class. Socialism will be the consequence of the growing contradictions of capitalist economy and of the comprehension by the working class of the unavailability of the suppression of these contradictions through a social transformation. When, in the manner of revisionism, the first condition is denied and the second rejected, the labour movement finds itself reduced to a simple co-operative and reformist movement. We move here in a straight line toward the total abandonment of the class viewpoint." (op. cit. Chap 5)

In this perspective of overthrown of capitalism, the role of communist minorities is essential.

What policy for the communists ?

The episode of acute crisis which started this summer is only at its beginnings, we said it.

Analyses, explanations and interpretations of this phenomenon which we can read and listen on all the medias of the bourgeoisie aim at first at drumming us the character allegedly impassable, irreplaceable and, let us say the word, "eternal" of capitalism and its economy.

And if, additionally, such national bourgeoisie insists on the North American origin, it is only a question of adding a dose of this nationalist and anti-US poison so convenient today, notably to the former "allies" of Washington.

For the Communists, the economic crisis is, first of all, the revealing of the dead-end which constitutes the capitalist system. It is, then, the means by which they have the task and the duty to make progress in extent and in depth consciousness within the class, of the need to finish with this system, by the way of struggle and revolutionary insurrection. In no case, of course, it can be a question of awaiting only that this crisis (as deep as it can be) leads automatically to a kind of collapse of the capitalist system, that the bourgeoisie and its States put the key under the door and declare the bankruptcy of the system.

The crisis announces implicitly the end of capitalism, for the working class to execute the judgement.

That's the profound meaning of the concern that the communists have always had to understand and analyse the evolution of the economic situation of capitalism. If "The Capital" is, according to the word of Marx himself, the obituary of the bourgeois society, much more than its anatomy, it is appropriate to base ourselves on the laws discovered by the fathers of the communist theory to detect, in the metabolism of capital, the evils which condemns it to involve humanity towards the abyss.

To understand the hazards of the capitalist crisis it is, for the communists, to give the means to make clear, for the eyes of their class, the vital necessity of knocking it down.

To finish let's speak, one more time, Rosa Luxemburg from her book "Reform or Revolution? ". In her combat against the incipient revisionism, she denounces the idea according to which socialism could be gradually imposed by means of reforms favorable to the working class. Reaffirming, after Marx and Engels, the imperative need for the violent destruction of capitalism by the proletariat, she defends the point of view according to which this overthrowing could be done only under conditions of crisis of the capitalist society.

"But then the question arises: Why and how, in that case, can we attain the final goal? According to scientific socialism, the historic necessity of the socialist revolution manifests itself above all in the growing anarchy of capitalism, which drives the system into an impasse. But if one admits with Bernstein that capitalist development does not move in the direction of its own ruin, then socialism ceases to be objectively necessary."

The Fraction, Sept 22nd. 2007


1. The expression appears paradoxical; it means in fact, for these establishments, to create funds mixing these high-risk loans with others less risky (or even without risk at all) and to sell shares of these funds at banks or loan credit companies which, in their turn, can operate in the same manner. It results a spreading out from it from the risk which, in the case of major crisis, propagates this crisis to the whole of the system.

2 . One could see in last August the bank BNP Paribas closing 3 of his funds "supported" on this "subprime". A proof that this bank, like numbers others, was implied in this delirious game.

Internal Fraction of ICC - Communist Bulletin (Nš 41)