The End of the Corporations

The End of the Corporations (in spanish El Fin de las Multinacionales, FdM)

(2012) New Edition 2021

Index

Introduction

Chapter I Bailouts

Chapter II Trends

Chapter III 1929 and 2007

Chapter IV Globalization

Chapter V Forms

Chapter VI Accumulation

Chapter VII Additional Notes

National Directorate of Copyright (Argentine) - Made the deposit on 3/28/2011

Foreword

"The accumulation possibilities of the system have peaked. We can be sure that in 30 years we will no longer live under the capitalist world-system. But what system will we live in then? It could be a much better system or a much worse one. possibilities are open"

Immanuel Wallerstein 1/31/09


The economic crisis that the world economy has been going through since 2007 is the most important in the history of capitalism. Its most spectacular expression is bailouts, a massive fund injection operation that exceeds 60 billion US $, and is still under development. This operation carried out by capitalist governments to save multinational corporations from bankruptcy is of a colossal magnitude, of such a proportion that it would make it possible to rebuild Haiti 40 times, banish hunger in the world, put an end to the destruction of the environment and grant housing to all the inhabitants of the planet. 

The crisis is installed in the center, in the economy of the G7 countries. This occurs because the heart attack was suffered by the heart of the world capitalist system, global corporations, large companies and banks in the US, Europe and Japan. For decades the heart of the world capitalist system has been the modern multinationals and large companies, banks and investment funds whose interests are increasingly deeply and intimately intertwined. From the collapse of the current crisis, they could only be revived with the massive intervention of the G7 states and the backward countries. 

This crisis is the product of a long process of decline of capitalism, which began at the beginning of the 20th century, which after World War II established the supremacy of the United States in the world economy and the emergence and development of multinationals. From there to today, the world capitalist economy went through two phases or regimes of uneven accumulation and combined development with the aim of counteracting its decline and historical crisis. The first that started in the 40s, continued in the '50s,' 60s and was exhausted in the '70s, was known as the Keynesian model or "welfare state"

The second regime was called "Globalization", or "Neoliberalism" began in the '80s, the' 90s, and begins to run out in this first decade of the XXI century. Both regimes of accumulation contributed to sharpen, in different ways, the historical contradictions of capitalism and were exhausted. The current crisis, which began in 2007, shows the exhaustion of the globalization regime and the Global Corporations which, had it not been for the massive intervention of the central banks and the support of the G7 states, would have disappeared. 

Global corporations are the highest expression of capital appreciation and private property that concentrate high percentages of GDP and world trade. Their massive bankruptcy revealed what they apparently hide, that they are an obstacle to the development of the productive forces, a parasitic outgrowth of high destructive power, whose defense of profits and benefits constitute a serious danger to man, nature and drags barbarism to humanity. 

The multinationals will continue to exist, despite having collapsed, because they emerged with the support of the most formidable imperialist state in the history of mankind, the US The G7 countries will continue to support them with massive funds, with their overwhelming technological dominance and the military might of their armies. They will only disappear if the states that sustain them disappear. And although the vulnerable nature of transnationals as an economic entity has never been shown as in this crisis, it is a reflection of the increasingly vulnerable political situation in which the governments and states that support them find themselves, fundamentally that of USA.

The current crisis shows that multinationals are unviable and need to be expropriated and nationalized, which would allow a colossal development of the productive forces. The objective situation of the capitalist system requires these measures in such a way that at the peak of the crisis, General Motors, the emblem of the domination of the multinationals and of the hegemony of the United States, had to be rescued with state funds, in order to that can continue to exist.

But expropriating the multinationals is a measure that should be part of a program that can only be carried out by governments with class interests diametrically opposed to the current capitalist governments, both in the G7 and in backward countries that act in defense of the interests. of the great industralists and boards of the multinationals. Never have economics and politics been so closely intertwined. For this reason, precisely, the explanation for the crisis cannot be reduced merely to the economic sphere. 

Let us leave these explanations to journalists, economists and vulgar Marxism, who try to explain development and economic crises separately and in isolation from class struggle and political processes, as if economic processes were developed in a laboratory, or as if they were a cold process, isolated from political and social phenomena. 

In this book we are going to delve into and analyze the long decline that capitalism has been developing, without which the current crisis cannot be understood. Nor can this be understood without linking it to the revolutionary processes that, since the last century, have questioned capitalism and moved the world. Marx's concept of political economy is precisely that of economics deeply intertwined with political events and the class struggle. If with the birth of Marxism, political, social and cultural facts begin to be explained from the economy, with the decline of capitalism, this relationship is reversed, and politics begins to explain the economy.

This is how Nahuel Moreno raised it with the Causality Reversal Law: "... In relation to the great historical epochs and the normal development of societies, Marxism has argued that the red thread that explains all phenomena is economic processes . But in a revolutionary and crisis time, this general law has a particular refraction that reverses causal relationships, transforming the most subjective of factors, the revolutionary leadership, into the fundamental cause of all other phenomena, even economic ones ... Summing up, The two determining elements of all contemporary phenomena, the ultimate and first causes, which determine all phenomena with their different combinations, are the revolutionary rise of the struggles of the working class and backward peoples on the one hand, and the crisis of revolutionary leadership for the other ". (1) 

Precisely, it is about understanding the current crisis in the framework of the time of the economic decline of capitalism that went through different phases, stages, moments and even rebirth such as the postwar "boom". After the first and second world wars, senile capitalism acquired the physiognomy that we know it today. In turn, it is necessary to analyze the concatenation and intimate connection of each of these moments or phases with the respective political events. The fall of the Berlin Wall and the current crisis of capitalism, in which the myocardial infarction occurs at the heart of the world capitalist system, are the most important events of this new world stage. And preparatory, for the advent of the most important political and social events in history.

 

Notes

(1) Nahuel Moreno. Transition Program Update. (1980) 

 

 Chapter I BAILOUTS

"A moment ago, the citizen, carried away by his rationalist chimera and his intoxication of prosperity, proclaimed money as an empty illusion. There was no money other than merchandise. The cry that now resounds from one end of the world market to another is There is no other commodity than money! And like the deer for fresh water, his soul now howls for money, the only wealth " 

Karl Marx Capital, Vol I 

The world crisis of capitalism began in March 2000 when the "dot.com" bubble burst. But the sharp peak of this crisis happened broke out on August 9, 2007 (1) when the French bank BNP Paribas announced that its funds ran out of money. The announcement was preceded by serious events such as the withdrawal of the New Century mortgage from the stock market due to insolvency and alleged accounting crime, the bankruptcy of Bear Stearns hedge funds, the bankruptcy of Blackstone, German bank IKB and National City Home Equity. That day the general bankruptcy shot up throughout the capitalist system and began a chain process of bankruptcies of multinationals and investment banks. 

Although many warned about the existing imbalances in the economy, no economist, nor governor, nor official, wrote, nor did they foresee, about the direction and magnitude of the crisis that erupted from that moment on. The crisis was the product of the fall in sub-prime loans, bad debts, which began to mercilessly hit banks and investment funds. But it infected all the papers, debts, assets and derivatives of the world. The entire world financial system, with different rates and inequalities, went bankrupt. 

This forced the central banks, the Federal Reserve (Fed), the European Central Bank (ECB), the Bank of Japan and the Bank of England to intervene jointly, which, as if following Walter Baguehot's advice (2), began the bailouts. From the outbreak of the crisis, the intervention of the Central Banks became chronic, and the bailouts a permanent maneuver. Interbank credit, one of the most important institutions of capitalism, immediately broke down. 

US President George W. Bush declared: "the foundations of the American economy remain solid", but the banks ignored him, they did not lend more money; or they did it reluctantly, at very high rates, out of mutual mistrust. The Bank of England saved Northern Rock whose clients withdrew 3,000 million euros in a weekend, the Swiss Global Conglomerate UBS announced losses of 3,400 million US $, Merril Lynch 7,900 million US $. The British Global Conglomerate Barclays lost assets of 1,818 million euros, the Citigroup for 3,100 million US $.

The Swiss insurer Swiss Re announced losses of 733 million euros, the British bank Royal Bank of Scotland (RBS) announced bad debts of 1,737 million euros. In Spain its own housing bubble collapsed, the banks of Iceland and Ireland collapsed. The Global Corporation and holder of the second Investment Bank in the US Morgan Stanley, reported losses of 9,000 million US $ and the sale of 10% of its shares to the Chinese government. The interest rate, an expression of the rate of profit, collapsed since the beginning of the crisis and remains almost at zero until today. 

The bankruptcy of interbank credit, of credit in general, and the collapse of interest rates affected the process of capital circulation, vital for the functioning of capitalism, similar to the process of blood circulation in the human organism. The central banks tried through bailouts to revive the capital circulation process, but the damages were immense, requiring operations of enormous magnitude to stop them. 

The year 2007 closed with a serious disturbance in the process of expanded reproduction and circulation of capital, which prepared the conditions for the heart attacks that occurred in the capitalist system in 2008. That year the heart of capitalism collapsed, because between March and September the Investment Banks began to fail. In March the Bear Stearns Global Corporation collapsed, which had survived the Wall Street "crash" of 1929, was the "most admired" in the Fortune rankings, but had debts in the billions and a leverage ratio of 35.5 to 1. Several managers faced criminal charges and the Fed gave JP Morgan a loan to buy Bear. 

The crisis of the sub prime papers did not stop deepening. The Association of Mortgage Banks of the USA revealed that the number of defaults was 6 million contracts for 600,000 million US $. Home prices fell 8.9%, the biggest drop in 20 years. Mortgage Bankers Association raised the social gravity of unprecedented magnitude in US history: the executions and expulsions of families who lost their homes reached the record level in history. 

After Bear's bankruptcy there was the largest bailout in US history, with state funds rescued the giant Global Mortgage Corporations Fannie Mae and Freddie Mac. Fannie Mae is the popular name of the National Federal Mortgage Association, created in 1938 under the Roosevelt government. Freddie Mac is the Federal Residential Mortgage Loan Corporation created in 1970. Both handled a volume of US $ 5 billion, equivalent to the GDP of Latin America, with more than 50% of the mortgages in the country. 

The bankruptcy of the two mortgage lending giants threatened the Sovereign Bank, Pimco, the world's largest fixed-income fund manager, the State of China, numerous Central Banks and Sovereign Investment Funds linked to the mortgage giants for owning credits in US foreign debt papers, made up of Treasury Bonds, and Fannie and Freddie bonds. Yu Yongding, an advisor to the People's Bank of China, China's central bank, warned: "If the government allows Fannie and Freddie to go bankrupt and international investors are not adequately compensated the consequences would be catastrophic." (The Privateer, 8/08). (3)

The graph shows the short "V" movement that expresses the sharp peak of the world crisis of capitalism between 2007-2008-2009. After the brutal fall to -3%, the world GDP once again suffered from the impact of the bailouts. The caption reads: "Global GDP Growth in Volume". Source: French Office for National Statistics 



Bush invested billions of dollars in the purchase of shares in Fannie and Freddie, defending the interests of businessmen in the US and the world. The multi-million dollar bailout plan was designed by the president of the Federal Reserve, Ben Bernanke, the head of the Federal Housing Finance Agency (FHFA) James Lockhart, the CEOs of both mortgages and the Secretary of the Treasury, Henry Paulson. The tranquility that the intervention produced in Freddie Mac and Fannie Mae lasted a week. 

On September 15, there was an entire economic earthquake: the Lehman Brothers Global Corporation went bankrupt. The company had weathered the civil war and the Great Depression but was full of debt and lost 73% of its value. Its fall was of such importance that many analysts consider that day as the beginning of the crisis. The fall of Lehman was a blow to world trade because it issued hundreds of billions of dollars in short-term debt, a fundamental cog in the trade that is short, 30-day, 60 and 90-day credits. 

The Lehman papers acted as the lubricant and fuel of the trade, but without Lehman, they plummeted. World trade came to a halt, and it is still struggling to recover. As the World Trade Organization (WTO) reported in its 2008 report: "The months that followed last September have seen world production and trade plummet, first in developed economies and later also in developing countries. developing". At the end of 2008, world trade contracted by 40%. Following Lehman's collapse, American International Group (AIG), the world's largest insurer, went bankrupt following the collapse of its market for credit default swaps (CDS) derived from credit risk. 

AIG offered advice on sophisticated tax avoidance techniques because the conglomerate is intimately linked to offshore financial centers, or "tax havens." (4) The US took control of almost 80% of the shares of AIG and Nouriel Roubini, ironically: "... with the nationalization of AIG ... the United States is now the world's largest insurance company ... socialism for the rich ... Wall Street, the place where profits are privatized and losses socialized. "

After the bankruptcy of AIG came the one starring Washington Mutual. Until 2008, the largest bank collapse in American history had been the fall of the Continental Illinois National Bank and Trust in 1984. But it paled against the one starring Washington Mutual, known as WaMu, the largest savings bank association. The largest US bank, at 119 years old, it became the largest bank failure in history. 

If Lehman impacted on commerce, Fannie and Freddie on credit and AIG on insurance, Washington Mutual did it on commercial banking. WaMu sold deposits and subsidiaries to JP Morgan Chase, an operation that aroused all kinds of suspicions because for the second time in 6 months, JP Morgan Chase took over the deposits and assets of a financial institution, which made it the largest bank in the United States. by deposits. 

The first global bailout of Bush and the G7: The QE1 is born

Until then, the policy of the powers and their Central Banks was to come to the aid of multinationals and corporations to the extent that they required financial assistance and were heading or directly declaring bankruptcy. This policy of "random bailouts", putting out the fires that occurred in Europe, the US and Japan as they were occurring, began to prove insufficient. To face a crisis of this magnitude, larger operations were necessary. Between the months of September and October 2008, the first coordinated and global salvage process took place. 

With this policy, the "random" rescue stage ended and this new stage was entered thanks to the Emergency Economic Stabilization Act ("The Emergency Economic Stabilization Act 110- 343") on 10/3/08, promoted by Bush by an approximate amount of 700,000 million U $ S. This first bailout was prepared by Secretary of the Treasury Henry Paulson who was a member of the board of directors of the Goldman Sachs Investment Bank, together with Fed Chairman Ben Bernanke and agreed with the 9 largest banks in the US (5)

The bailout included the Troubled Asset Relief Program, (in English, Trobled Asset Relief Program, TARP), aimed at the purchase of troubled papers with the aim of strengthening banks, recovering credit and reviving the flow of capital. To oversee the bailout, the Office of Financial Stability was created and Paulson appointed another Goldman Sachs man, Neel Kashkari, as interim incumbent of the new Office. With Paulson and Kashkari at the highest level of decision, the investment banks took control of the entire bailout operation. Europe, Japan, China and the BRIC'S followed in the footsteps of the US, the Federal Reserve (FED) and Wall Street set the orientation that all countries adopted. 

The EU and the ECB had to put out the fires that threatened all the most important European Investment Banks and multinationals. The 1st EU Summit in September 2008 launched a bailout of almost US $ 4 billion to help and curb the threat of financial bankruptcy in several Eastern European countries such as Poland, Hungary, Ukraine, Latvia and Lithuania. That's how he was born the QE1.  The movements of the Central Banks of the United States and Europe are called QE (in English, Quantitative Easing, QE, in Spanish, Quantitative Flexibilization)

These measures were risky, but motivated by even greater risks: if some of these countries declared bankruptcy, they could cause the collapse of creditor banks such as UBS in Switzerland, Austrian bank Raiffeisen, Commerzbank AG, Deutsche Bank in Germany or the BNP Paribas of France. There was also the case of countries that sought to become financial havens and suffered a currency leakage shock like Ireland. Or Iceland whose stock market sank 76% after being closed for a few days. 

The blow of the crisis in China forced Premier Wen Jiabao to promote a bailout that reached the figure of 5 billion US $, with the main objective of developing public works and credits to reactivate the economy. The shock suffered by China due to the decline in its exports translated into the closure of factories in the south of the country and the destruction of thousands of jobs. Growth went from 11.4% in 2007 to 9% in 2008. As we will see later, the Chinese bailout was transformed, among other things, into a powerful real estate bubble. 

The crisis made it possible to corroborate the central role that the United States maintains as a world protector of capitalism. The dollar and Treasury Bonds became the main havens from the global collapse. Despite the fact that the crisis broke out in the heart of the US economy, paradoxically the reaction of investors and countries was to safeguard their assets and reserves in dollars. The dollar strengthened because it began to be demanded by banks around the world, after the successive paralysis suffered by interbank loans.

The Bank for International Settlements (BIS) central bank of central banks, assessed that the dollar came to represent 55% of assets and liabilities, more than 70% of reserves, 80% of transactions, the 70% of imports and almost all of the oil trade in the world. At the same time that Russia, Brazil, India, South Korea and Taiwan came to lead the global accumulation of reserves in dollars, this currency became, according to the definition of the BIS, the "favorite currency of central banks".

At the most acute and dramatic peak of the crisis, nothing more quickly refuted the groups of intellectuals and analysts who were beginning to propose the "Decoupling Theory" and the "loss of US hegemony." The exclusive fact of reality is that in the midst of the greatest crisis in the history of capitalism and the US economy, the only thing that strengthened was the dollar. All the G7 countries, and most of the backward countries rushed to take refuge and protect their dollar reserves and US Treasury assets. The demand for the dollar in the midst of the crisis is the clearest sign that large companies, countries and capitalist powers consider the United States with its 7 fleets, its military dominance and arms power as the greatest guarantor of last resort of capitalism, against any eventuality that questions it.

On November 14 and 15, the G20 met in Washington, a body that, although it had existed since 1999, became an important instrument for the actions of capitalist governments together with the G7. At the G20 in Washington, the US imposed the world bailout line, of giving money to multinationals and Investment Banks, adding words of commitment in the final document, such as "establishing financial regulation standards", that is, setting controls to unbridled speculation, an issue that ultimately never happened.

The G20 consolidated US dominance. It consolidated bailouts as a policy to save Global Corporations at any cost. The G20 in Washington included the incorporation into decision-making of smaller capitalist countries such as China, Brazil, India, Russia, Australia or South Africa, which is a distorted expression of the blow suffered by the imperialist countries and the historical degree of the magnitude of the crisis of capitalism, which forced the G7 governments to appeal for the support of backward countries to go ahead with their plans.

The Obama administration the second part of QE1 and the global bailout of 2009 

Obama continued Bush's economic policy, a course made clear when he appointed Timothy Geithner as the 75th Treasury Secretary to replace Paulson. Geithner, from Kissinger Associates, a consultant for Henry Kissinger and Brent Scowcroft, (6) was serving at the time of his appointment as President of the New York Fed, where he was appointed by Bush. From that position, Geithner actively promoted the bailouts for corporations, which earned him complaints about the diversion of funds to different investment banks. 

Obama appointed Lawrence Summers, who was Reagan's adviser, Chief Economist at the World Bank and Clinton's Secretary of the Treasury, as his chief economic adviser. Together with him, he appointed a Board of Advisors made up of the most distinguished members of the financial oligarchy. In the presidency of the Board he summoned Paul Volcker, linked to the Rockefeller Group, an American economist who served as Fed director during the Carter and Reagan presidencies. 

He also appointed Robert Rubin from Citigroup, William Daley from JP Morgan Chase, Roger Ferguson from TIAA-CREF, Anne Mulcahy from Xerox, Richard Parsons from Time Warner and Eric Schmidt from Google, among others. Obama decided to replace the head of the bailout oversight office appointed by the Bush administration, Neel Kashkari, with Herbert Allison, a man from Fannie Mae Global Corporations and TIAA-CREF. 

The Bush bailout had prevented the bankruptcy of multinational corporations, but the crisis continued to worsen and to gradually affect the entire world economic and political system in its different dimensions, dragging new parts of the capitalist system into crisis. There was a general collapse, the growing loss of asset value, mistrust in indicators and measurement instruments, in rating agencies, in governments, suspicion, disappointment and confusion prevailing in many sectors.

The sharp peak of the world crisis of capitalism expressed in the spectacular fall of the Gross Domestic Product between the years 2007/08/09 reflected in the "V" 


The fall in all indicators, the drop in retail sales in the US and the prospect of bankruptcy of large companies forced Obama to launch a new bailout of 8 billion US $ through the US Recovery Act and the Reinvestment Law. In March, Geithner launched a "public-private investment program" to buy assets and loans, "toxic" and uncollectible papers, which caused great euphoria in the stock market. 

After the enactment of the law, the US carried out the purchase of shares in the company General Motors (GM), which formalized its bankruptcy filing in June 2009. Fearing the fall of the automotive industry with axle In Detroit, Obama rescued GM, which for 77 years was the world's No. 1 automaker and an emblem of capitalism. The US controlled 60% of the company, Canada and the province of Ontario kept 12% of the shares. The bailout involved a violent attack on workers, reduction of its dealer network, plant closures, and the elimination of thousands of jobs. In Europe, too, governments came to the aid of their automakers. 

The credit rating agencies Standard & Poors, Moody's and Fitch began to have a great role as their ratings decide which debts and papers have value and which ones are not, which in a time of large debts like the one that opened with bailouts, it is vital to the destiny of capitalist companies and states. In April, the new G20 summit took place in London, which decided to provide an additional half trillion dollars to the IMF to reinforce its role as an international lender. 

Given the contraction in world trade caused by the Lehman Brothers crash, the G-20 decided to inject US $ 250 billion destined to reactivate global trade and US $ 100 billion for international development banks, with the aim of rebuilding it. At the G20 in London he did not reach any agreement on the reform of the financial system, and tax havens. 

In the third and fourth quarters of 2009, huge bailouts caused a slight rebound in the global economy, but global imbalances continued. In November, Dubai World, the official company of the Emirate of Dubai, one of the seven emirates that has made up the United Arab Emirates since 1971, caused by a speculative bubble that was saved by the Abu Dhabi bank, went bankrupt.

The world movement of capital movement continued to decline. If by 2007 the flow was estimated at 1.2 trillion US $, it was reduced to in 2008 to 707 billion US $. The projections of the World Bank, in its report "The world economic crisis seriously affects capital flows to developing countries" of June 2009, placed international capital flows in decline to reach 363,000 million US $ in 2009, which brought to the fore the dangers affecting capitalism. To avoid the brutal decline in capital flows, which continued to decline sharply, the most likely prospect was another global bailout, coordinated between the various governments of the capitalist powers and the central banks. 

The bailouts carried out between October 2008 and April 2009, were denominated in economic jargon QE1 (in English, Quantitative Easing, QE, in Spanish, Quantitative Flexibilization) that is, monetary issuance without gold backing. That fabulous injection of money weakly reactivated the world economy, and many economists spoke of recovery, relying on the trend that was reflected in the drawings of the famous "V" that indicated that the indices were going up again, after the spectacular decline in the years 2007/08. 


Economic growth of capitalism between the years 1790 and 2020. The purple circle shows the fall in world GDP in the year 2000, which marks the beginning of the current world crisis of capitalism. Source: Real Investment Advice 


But together with the weak growth indices that developed throughout 2009 and 2010, other indices exploded that pointed to the deepening of the crisis. On the one hand, a global wave of unemployment, inflation in backward countries and rising food prices was triggered, exacerbating the food crisis around the world. 

The crisis was descending from Investment Banks, multinationals and Central Banks to companies, real estate, regions, cities and municipalities. In the interior of the United States, the crisis of the states and local municipalities began. US municipal bonds, known as "Munis" that serve to finance municipal transportation, health, education and sanitation infrastructure, began to collapse due to the increasing inability of municipalities and states to pay their debts, which also affected the financial entities that had "Munis" in their coffers. 

And all this deterioration of conditions occurred on the basis that QE1 was coming to an end and neither the US economy, nor the world economy had been reactivated. Neither had consumption, production, or trade been reactivated. The weak recovery that QE1 produced was over with the bailout itself. Faced with this critical panorama, the G20 Summit of Finance Ministers and Central Bank Governors that met in Busan (South Korea) in May failed, as did the G20 Summit in Toronto, Canada in June. 

The failure of these summits did not have to do with the magnitude of the crisis only, but with the development of the crisis in Europe that posed an unresolved historical problem of European capitalism. Unlike the US, which is a single state that dominates the world economy and can issue currency with its Central Bank to implement bailouts, Europe is not a single country, but the sum of countries with very unequal economies. Powers such as Germany and France coexist in the EU, powers in decline, such as Italy, Portugal or Spain, or backward countries such as those of the East. And although there is a Central Bank, the ECB, there were no clauses in the Union treaty that allowed their countries to financially rescue another (7) 

The magnitude of the crisis forced the dominant imperialist countries Germany and France to confront the historical contradictions and unresolved problems of European capitalism and establish measures to overcome them even in a precarious way. The crisis of the so-called PIGS (Portugal, Italy, Greece and Spain) caused the implementation of bailouts to avoid a collapse of the common currency, the euro. 

After a long round of negotiations, back and forth struggles, a bailout of € 1.1 trillion was implemented in May to help Greece and it was agreed to create the European Financial Stability Fund (EFSF) through a combination of contributions from different governments and the IMF composed of a fund of up to US $ 7.5 trillion. The creation of the EFSF was a political change for the European institutional structure, since it meant the constitution of a supranational entity that began to make decisions that involve the more than 500 million inhabitants of the EU. 

The EFSF meant an undemocratic leap, to the detriment of the interests of the population and in favor of the interests of the bankers. In the days of the announcement of the creation of the EFSF, the stock markets soared and the Euro achieved its biggest gain in 18 months. 

The ECB also changed its credit rating policy and announced that it would accept all outstanding debt as collateral, regardless of credit rating. But even so, the friction between the European countries, Great Britain and the United States, reflected not only the inequality in the course of the crisis, but also the beginning of a global political crisis in the G7 governments. The growing pressure of the discontent of the masses and the questioning of the bailouts of the Global Corporations began to act as a factor.

Discontent began to express itself in mobilizations, general strikes and protests of all kinds, in the US and Europe. From Paris to Berlin, from Lisbon to Dublin, from the United States to Bucharest, from London to Rome, the popular workers' struggles began, against adjustment plans and budget cuts that affected retirees, state workers, students and the unemployed. These first signs of resistance showed the discontent of the peoples and were the prelude to a great wave of mobilizations and protests that began to travel the world. 

Beyond occasional and conjunctural frictions, the capitalist governments launched adjustment packages that affected the health, education, retirement and public works budgets, in the common consideration that the crisis should be paid for by the workers and peoples of the world. After the bailouts, as of May 2010 Portugal, Italy, Greece and Spain announced severe cuts in public spending and tax increases. Great Britain, France, and Germany, too, made their own adjustments. The growth of poverty, unemployment and the deterioration of the living conditions of millions, aroused worldwide outrage over the bailouts of corporations. 

This wave of disapproval of the policies implemented by the G7 governments was the trigger for the political crises that began to develop in the US and led to the first wear, discontent and disillusionment of the population in the Obama administration. This led to resignations from the cabinet of Herbert Allison, Larry Summers, Christina Romer and Peter Orzsag. Allison was replaced by Tim Massad of the New York firm of Cravath, Swaine & Moore LLP. 

The same attrition and political crisis unfolded in the EU, causing a round of downfall of the governments of the UK, Ireland, the Netherlands, in Finland twice, in Denmark, Portugal, Hungary, the Czech Republic, in Slovakia twice, too. in Belgium, Spain, Greece and Italy, since the beginning of the crisis. In Romania, which received bailouts of 25,000 million euros between 2009 and 2012, the prime minister fell at the beginning of 2012. 

In November 2010, when all economic indices showed that the world economy was once again approaching a collapse, a new round of bailouts or QE2 began. The Obama administration injected US $ 6 trillion into the economy, the Fed acted by massively buying US Treasury Bonds (T-Bonds). With this maneuver, the Fed's coffers aggravated the character of its balance sheet and added mountains of fictitious capital to the already existing mountain of fictitious capital.

The Bank of England acquired almost 1.5 trillion US $, also the Eurozone began a round of bailouts. Ireland, which had suffered the failure of the six main banks to finance a housing bubble with losses of 1 trillion euros, received a bailout from the IMF, Great Britain, Denmark and Sweden of 67,500 million euros. Portugal in serious situation also received a bailout of 78,000 million euros. The European Council in December agreed to modify article 136 of the Treaty on the Functioning of the EU signed in 1992 in Maastrich to allow bailouts of countries whose currency is the euro. 

The year 2011 was the year that Japan, the world's third largest economy, was also severely hit by an earthquake and tsunami on March 11 that left 12,157 dead, 15,496 missing and 161,000 refugees. Faced with the tragedy, investment funds and speculators bet on the "reconstruction business" around 15 trillion yen, speculating that Japanese insurers would repatriate funds to pay compensation and carry out public works for which it began to cause the rise of the yen. 

The cost of reconstruction impacted on Japan's huge public debt, of more than 200% of GDP, the largest in the world, and triggered the risk of a default by the state. After the tsunami there were two big "bailouts" one of 5 trillion and another of 8.9 trillion yen by the Bank of Japan, to avoid the bankruptcy of insurers and banks. The Japanese disaster affected the US and China because Japan is the buyer of 10% of the exports of both countries. 

The road to QE4 "whatever it takes"

Summarizing, the first salvage tranche was called QE1, and began in September 2008, until 3/31/10. When the world economy showed recession symptoms again, the second round of bailouts began on 3/11/10 called QE2 until 6/30/11. But it did not manage to ward off the danger of crisis which led to a third round of bailouts called QE3, which began on 9/13/12 until 10/29/14, when it stopped in the US In Europe the QE was developed during 2015. 


Balance Sheet of the US Federal Reserve between the years 2003 - 2017. Note the development of the bailouts, QE1, QE2, and QE3. Source: Federal Reserve & J. P. Morgan Chase


As the QE had avoided bankruptcy, revived circulation and avoided recession, by 2015 all the economic authorities, analysts and officials of capitalism assured that the crisis had been overcome.  Janet Yellen, the president of the Fed, went so far as to say that there would be no more crisis "for many years, and perhaps never again." A whole chorus of charlatans argued that we were facing the "longest economic growth since the postwar period," that the "worst was over," and that the time had come to "normalize" the economy.

However, the reality was the opposite. What produced 10 years of injection of trillions of dollars was a veritable disaster that pushed capitalism into greater and more serious dangers. If what had caused the outbreak was a crisis in US mortgages, now that mortgage crisis had multiplied by 12 and spread to 11 countries. 

On the other hand, one of the reasons for the crisis was the size of the companies that dominate the world economy. It is these companies that over-accumulate capital and push capitalism into crisis. But after years of injections of monstrous masses of capital, the "Too Big to Fall" are now bigger and more dangerous. Having injected these huge financial parasites with bailouts, I exploit the development of old speculative maneuvers such as share buybacks, and all kinds of fraudulent activities. Criminal financial activities multiplied, which according to capitalist analysts themselves are "weapons of mass destruction." 

Risky speculative plays develop so-called speculative "bubbles". The over-accumulation in a few hands of the 1% of aristocrats caused that a bubble has been mounted on a global scale that bourgeois analysts call the "Bubble of the whole". Financier Jared Dillian explains it like this: "... In 2000, we had the dot-com bubble. In 2007 we had the housing bubble ... In 2017, we had the everything bubble ..." (Capital Bolsa 6/29/17 ). And in China a gigantic bubble was formed which is called "the mother of all bubbles." 

But the bosses of capitalism faithful to their belief that "the worst of the crisis is over" in November 2017 began an economic operation called Quantitative Tightening (QT, Quantitative Tightening). In a reverse process to QE, instead of printing money to circulate the QT, it is withdrawing money from circulation. The Fed assured that the transition from QE to QT would be so gradual that it would not cause any problems. Philadelphia Fed Chairman Patrick Harker announced that the process would be as boring as watching the paint dry. Along with the QT, the Fed carried out five interest rate hikes.

The title of the chart reads: "China has the mother of all bubbles" The imposing Chinese real estate bubble of 15 trillion dollars is appreciated, with a growth of 685% 


Contrary to everything the officials raised, with the QT capitalism exploded. To the extent that the Fed restricted the flow of money, and raised interest rates, it became a vacuum cleaner that absorbed all the dollars that circulated in the world. By attracting dollars from around the world, it caused a crisis in the currencies of developing countries because dollars began to flee from the economies of poor countries. 

Turkey and Argentina collapsed. Indonesian, Indian, and Egyptian currencies began to shake, and conditions in hundreds of countries worsened. Developing country bonds sank. On February 5, 2018, Wall Street's biggest crash since 2000 took place, and the VIX index, which measures the uncertainty of the world economy, soared. Three months after the beginning of the QT, the whole mirage of the "end of the crisis" collapsed. 

When in July 2012 the then president of the European Central Bank (ECB), Mario Draghi, was asked how far he will go in his maneuver to print money to support the Global Conglomerates, the former Goldman Sachs official said: "The ECB will do everything necessary". Mario Draghi's words were prophetic. The authorities of world capitalism to stop the debacle caused by the QT, were forced to carry out "Whatever it takes" and desperately inject billions. This is how the QE4 was born 

Increasing and accelerating bailouts

The bailouts are the greatest expression of the collapse of capitalism. It is a phenomenon completely unknown by the overwhelming majority of the population: 99% of the world population knows about the Coronavirus, but does not know about the bailouts. And the bailouts are a thousand times more dangerous than the Coronavirus, they kill more people than the pandemic. This is hidden from the peoples by the capitalist governments, their political parties, the social and union leaders who support capitalism. 

The reason why the bailouts are hidden is because the people should not know that while they are demanding adjustments, plans for hunger and misery, the capitalist governments give millions of dollars to the aristocracy of the 1% that dominates the world. In addition, they are hidden because the peoples should not know the real dimension of the depth of the crisis that capitalism is going through. 

It is hidden from the peoples of the world that the Corporations went bankrupt en masse between the years 2007/2008. And that from then until the beginning of the pandemic in 2019 they received a total of 30 billion dollars, during 14 years. The majority of the world's population does not know this. And he does not know that capitalism lives with an artificial respirator because capitalism could not survive for a minute if the bailouts were suspended.

But the delivery of "cheap" and "easy" money to the global aristocracy is not only a tremendous injustice that aggravates social inequalities minute by minute, but has also become a permanent, accelerated, vertiginous maneuver that shows that capitalism is in the midst of a serious collapse In 14 months more bailouts than in 14 years Between the first months of 2020 and April 2021, the capitalist governments of the world have injected more bailouts than in the last 14 years. 

This speaks to the clear of the vertiginous convulsive, and accelerated dimension that the world crisis of capitalism is reaching. The Central Bank of the United States, called the Federal Reserve (Fed) injected for 14 years between 2007 and 2019, a total of 4.5 trillion dollars. But since the pandemic broke out in December 2019 until today, the Fed injected three bailouts: One in March 2020 under Donald Trump of 2.1 trillion, another of 0.9 trillion when Joe Biden won the elections in December 2020, and a third of 1.9 billion in March 2021, already with Biden assumed president of the United States 

The argument of the capitalist governments was that the injection of money was to solve the COVUD-19 pandemic. This is false, the pandemic continued in the world with new strains of coronavirus such as the Delta variant, the British strain, the South African strain, the Mu variant, and others, the money was essentially destined to save the Corporations that dominate the world economy from bankruptcy. 

For the purposes of a better political understanding of the phenomenon, we call this entire set of bailouts operations produced between 2019 to today, QE4, which adds up to the amount of 4.9 billion dollars, which is a figure higher than what was injected in the previous 14 years. If we add the 4.9 trillion of QE4, to the 4.5 trillion injected since the years 2007/2008, it all adds up to the immense sum of 9 trillion dollars, only in US.

The title of the painting says: "The greatest bailouts in history." You can see the magnitude of the salvages in the last 50 years. You can see the Savings and Loan between 1980 and 1990 and the "effects" or LTCM, in the 90's. The Salvages that begin in 2008 (QE1, QE2 and QE3) were so far the largest in history. 2020 QE4 is equal to all previous salvages put together. Source: Deutsche Bank, and IMF 


And if we add to all this what was injected by the central banks of England, Japan, Canada, the European Central Bank, China, Switzerland, etc., which follow in the footsteps of the Fed, the joint action of the main central banks of the world It is bringing the total money injected since the acute peak of the crisis in 2007/2008 to around $ 60 trillion. 

Some economists, political and social leaders claim that capitalism had a crisis in 2007/2008 when Lehman Brothers went bankrupt. Then he recovered and 14 years later he "relapsed" again due to the outbreak of the Coronavirus pandemic. This is false. The crisis of 2007/2008 and the current one are the same crisis. Capitalism never emerged from this crisis. The best expression that the crisis of the years 200/2008 and that of today are the same, is the fact that the bailouts have not stopped developing in these 14 years. 

The capitalist governments of the world unite to sustain capitalism 

All capitalist governments contribute to the bailouts to the Corporations and to the support of capitalism. No government is outside of these plans, even if they want us to believe otherwise. Along with the governments of the United States, France, Germany, Japan, and Canada, there are also the governments of China or Russia, which carry out bailouts, participating in the daily rescue of capitalism. 

For those who believe that the US is facing China or Russia, or the latter against world imperialism, the reality of the Salvages, and the daily rescue of capitalism, shows that this is false. In fact Xi-Jinping, China's top leader, who is supposedly at "War" with the United States, was part of the launch of the "Great Reset" in Davos. 

Putin's governments in Russia, or Iran also contribute to the maintenance of capitalism when they favor the investments of the Corporations in their countries or they keep agreements with the IMF, like all capitalist governments in the world. Even those capitalist governments that present themselves as "left" or "progressive" such as those of López Obrador and Morena in Mexico, Fernández in Argentina, Maduro in Venezuela, or Díaz Canel in Cuba, contribute to the rescue of the Corporations.

They do so by promoting the investments of multinationals in their countries, or by contributing dollars when they pay external debts to the IMF. This agreement of all the capitalist governments of the world to support capitalism is what explains the silence about the bailouts and the hiding of them from the masses, from all the governments and leaders of the political and social leaders of the world. 

The QE4 is assured of its failure 

But it would be a mistake to believe that the 2020 collapse is the fault of the QT. The crisis exploded because QE1, QE2 and QE3 had made a mess. The QT was a kind of financial coronavirus that revealed the magnitude of the disaster. In just 3 months the objectives that the QE1, QE2, and QE3 had costly achieved in 10 years were erased at a stroke of the pen. The assertions of the bosses of capitalism that the crisis "is over" were buried by reality. 

But if QE1, QE2 and QE3 made a mess, what effects will QE4 have? With QE4, the equivalent of half of the bailouts that were implemented in the previous 10 years were injected in two years. At an even faster and more breakneck speed. In the midst of a pandemic and a colossal level of destruction of the productive forces. That is, if QE1, QE2 and QE3 made a disaster, and led capitalism towards collapse, QE4 is going to cause an even greater disaster, and its failure is already assured. 

If the circulation was revived with the QE1, QE2 and QE3 now it depends on the artificial respirator of the QE4 to continue day to day. If the bankruptcy of the Global Conglomerates was avoided with the QE1, QE2 and QE3, with the exception of Lehman Brothers and Bearn Sterns, now all the Conglomerates depend on the day-to-day life of the artificial respirator of QE4 to avoid bankruptcy. And if before the beginning of QE4 the outlook for the world economy was recession, now it is depression. 

This is the grim expression of the collapse of the capitalist mode of production. But meanwhile the crisis continued its development, and nothing, not even the serious deepening of it, prevented the big capitalists who control the world economy from losing their juicy bonuses and benefits. As bankers practice the frenzied dance of awarding millionaire prizes, a worldwide debate has raged about the nature and prospect of the crisis. 

The questions follow one another in search of answers: Where is this crisis going? Why did it happen? Can capitalism overcome it? We will answer these questions successively. The future panorama of the crisis of capitalism, beyond its conjunctural movements, the deep processes that unfold and its fundamental tendencies are reasons for analysis in the next chapter.

Notes 

(1) As George Soros points out: "The outbreak of the 2008 economic crisis can be officially set in August 2007 when central banks had to intervene to provide liquidity to the banking system." George Soros. "The new paradigm of financial markets" Taurus 2008 

(2) Walter Bagehot, 1826-1877 English economic journalist, was one of the first editors of "The Economist". In his book Lombart Street, Bagehot argued that the fundamental mission of the Bank of England was to use all its gold reserves to, in times of liquidity crisis, acquire all the assets it could from commercial banks and thus restore credibility to the banking system . Source: https://www.juandemariana.org/estudio/ 

(3) There are different versions of why the government did not rescue Lehman and if it did it with Merryl Lynch, Bear Stearns, Fannie and Freddie. The behavior of the Fed and JP Morgan after the bankruptcy of Lehman raised suspicions among analysts. Whatever the reason, it was JP Morgan who benefited from the operation, which had an exposure of almost 90 billion US $ of derivatives, was technically bankrupt and in fact underwent a process of disguised recapitalization.

(4) The Wall Street Journal also indicated that the real beneficiaries of the successive bailouts of AIG were two dozen large financial institutions, which received payments worth US $ 50,000 million since the bailouts of the insurer began in September. . The list is headed by Deutsche Bank and Goldman Sachs, but there are also Merrill Lynch, SG, Royal Bank of Scotland, Morgan Stanley or HSBC, etc. Congressman Christopher Dodd, D-Connecticut, protested: "It is not clear who we are rescuing." Source: https://edicion4.com.ar 

(5) The Investment Banks JP Morgan Chase, Bank of New York / Mellon, Merrill Lynch, State Street, Morgan Stanley, Goldman Sachs, Bank of America, Citigroup and Wells Fargo, were part of the agreement. 

(6) Henry Kissinger was Secretary of State in the administrations of Presidents Richard Nixon and Gerald Ford. He played a dominant role in US foreign policy in the Vietnam War, the bombing of Cambodia, and relations with China. Brent Scowcroft was a National Security Advisor under Presidents Gerald Ford and George Bush. He also served as a military assistant to President Richard Nixon and as Deputy to the President for National Security Affairs in the Nixon and Ford administrations and assisted President Barak Obama in the election of his national security team. 

(7) The ECB was established on 1 June 1998 by Belgium, Germany, France, Ireland, Italy, Spain, Luxembourg, the Netherlands, Austria, Portugal and Finland. As of January 1, 1999, the economies of the Member States adopted the single currency, the euro.

                           Chapter II TRENDS


"The actual internal connections of the capitalist process of production is an extremely intricate question ... it goes without saying that ideas must be formed in the minds of the capitalist agents of production and circulation about the laws of production that diverge entirely. of those laws ... The ideas of a merchant, a stock market speculator, a banker are, necessarily, completely wrong" 

Charles Marx: Capital, Third Book, ch. XVI, Book III 


After the bailouts, the world literally changed. It changed not only in the economic field, the bailouts had an impact on social relations, production relations, political and economic trends, the location and agreements of social classes and class sectors, countries and their relationships throughout the world. Everything has definitely changed. 

But while in essence everything has changed, in appearance everything remains the same. Capitalism continues to function, multinationals move, the population consumes, commerce continues its march, apparently, everything continues, except for some announcements of bankruptcies and disappeared companies. Even at certain times there is economic growth. This appearance of the crisis is one of the elements that causes the greatest confusion among analysts and economists around the world. 

Most of them are disoriented. They are permanently perplexed by a reality that they do not know, without a doubt they are moving in unknown territory. They look for parameters to find answers, they compare the crisis with others, "it is the same as the Nasdaq of 2000" some say. "It is the same as that of the oil crisis in the '70s" affirm others. All the time the statistics confuse them, "We are coming out of the crisis" they affirm, but then the data refutes them. "It is part of the end of a long cycle of growth" say some. .

Others refute them: "It is part of a long cycle of stagnation". Statistics give data to assert both one thing and the other. It is the same statistics that lead analysts and economists, even some so-called "Marxists", to such a state of confusion. It is important to compare this crisis with others that have occurred in capitalism, but the answers cannot be sought only in comparisons, because the current crisis has elements of all the previous ones. Statistical data cannot explain the deep laws of economics, they are very important, but they only serve as a support. 

The outlook is bleak in the lands of Marxism, where most economists refer to describing the crisis as one of overproduction. Although it is true that there are millions of goods on the market that are not consumed, that does not explain the crisis, because overproduction is the external expression of the profound phenomena of capitalism. Those who describe the crisis of overproduction confuse appearance with essence. 

In truth, the crisis is very complex, the interaction of conjunctural, structural, and historical elements of capitalism have found an intersection, not coincidentally, in the first decade of the 21st century. It is the only mitigating factor that we can give our analysts that justifies their confusion. And in the case of those who defend capitalism, they also make the recurring mistake of confusing reality, with their wishes and interests.

But before them, the changes that are taking place firm, unshakable, are here to stay, and have drastically modified the reality and the economic prospects of capitalism. From the bailouts, from the injection of fabulous masses of capital into the economy as a whole, nothing will be the same again. Even data on the crisis in the first years of its development have been recorded of such severity that we have to go back many years to find antecedents of a similar magnitude in capitalism, which were not recorded in decades or even centuries. 

The main ECRI indicator produced by the Economic Cycle Research Institute, has come to show falls in the US economy that are around -6.9, pointing to a contraction and a speed of fall that the most important capitalist economy has not known since the postwar period. 

In 2009, all the G-7 economies registered negative growth in unison, something that had not happened in 100 years. Also in 2009, more than 100 nations registered zero or negative growth, for the first time in the history of capitalism! 

The Baltic Dry Index indicator, which reflects the evolution of world trade, was close to 12,000 points in May 2008, but at the end of that year it suffered a historic drop and collapsed, collapsing to 660 points, progressively reaching 4,500 points at the end. 2009. Since then, the decline has been continued, and at the beginning of October it reached 2,478 points, in a clear sign that the world economy is still moving away from the pre-crisis indexes, since in relation to the period 2006-2007 the volume of global trade fell 25%. This fall is the worst since ... 1945!

The fall in the prices of oil and other commodities was the fastest and deepest since the record began in 1956. If in the Great Depression of 1929, in the United States the percentage of debt over GDP was 186%, in the current crisis, the debt / GDP ratio is calculated ... 379% !, More than double that of the Great Depression! And if future retirement debts are added, the percentage rises to 800%! Japan's GDP in 2009 registers indices ranging from -6% to -10%. These data are the worst since 1945. 

Interest rates are practically zero in the US and almost all the major economies, since the outbreak of the crisis, are at their lowest level in ... 100 years! The ones that broke all the historical records are the British interest rates that have reached their lowest point since ... more than three centuries! Exactly since when the Bank of England was founded, in 1693! In 2008 the Caisse des Dépôts, the financial arm of the French State since 1816 and under all regimes (monarchy, empire, republic, ...), experienced its first annual loss ... in 193 years! 


The Baltic Dry Index shows the spectacular decline in trade after the bankruptcy of Lehamn Brothers Source: Baltic Dry Index 

We can synthesize the fundamental tendencies that have taken place in the capitalist system from the salvages, grouping them into 4 items that incorporate a series of issues in turn, linked: 

1) Jump in poverty and inequality indices in the G7 and the world 

2) Devaluation and decomposition of the world economy 

3) Crisis of credit, money, and general bankruptcies of companies and states 

4) Permanence and institutionalization of bailouts 

1) Jump in poverty and inequality indices in the G7 and the world World poverty and inequality indices, which were already serious, after the bailouts are skyrocketing with indices that are also historic. As of 2012, out of a total of 6.7 billion inhabitants in the world population, 1 billion "survive" on an average of $ 2 per day, of which 70% are women. Three billion are not enough to cover basic needs in food, housing and health. More than 24,000 people die of hunger every day, 840 million people are malnourished, of which 200 million are children under five years of age. More than 1.8 billion human beings do not have access to safe water. 

More than 1 billion lack a worthy home, 2 billion people suffer from iron deficiency anemia, 880 million people do not have access to basic health services, and 2 billion people lack access to essential medicines. At the other extreme, those who pocketed the bailout money, the top twenty super millionaires on the Forbes list, collect together a figure estimated at US $ 109.5 trillion (1), which is equivalent to more than is necessary for the end. of hunger and poverty in the world. 

The select club of super millionaires of the Forbes ranking went from 1,125 members in 2008 to 793 in 2009. Those 109.5 billion US $ of accumulated wealth in the hands of the "millionaires" exceeds the world GDP, that is, the annual wealth produced for all countries, which is around US $ 100 billion. These data show that the bailouts exacerbated social inequalities, the data of which are worsening day by day. 

After the "bailouts" the indices of social inequality, human and nature destruction, skyrocketed, which heralds the danger to which this phase of the capitalist system is leading us. The devastating data on the world economy are so serious that we can affirm without a doubt that no phase, stage, or period of capitalism has existed until now that signifies such a serious drop in the living conditions of billions of inhabitants of the world. planet simultaneously, as we currently live with the situation open after the bailouts. 

With the chilling indices in hand and comparing them to 25 years ago, we could easily declare Ronald Reagan and Margaret Thatcher "benefactors of humanity." This is recognized by officials defending capitalism such as the then managing director of the IMF in 2009, Dominique Strauss-Kahn: "Since the crisis in the US began in 2007, 30 million jobs have been lost in the world ... really we face the risk of losing a generation. " 

With the bailouts, economic, political and social forces were unleashed, which are modifying social relations between classes and sectors of them, but also impacting and modifying relations between countries, nations and states. Before the salvages, the existence of a "First World" made up of an elite of 7 countries, the United States, England, France, Canada, Germany, Italy and Japan, and a "Third World" made up of 192 countries, was always considered. The remaining ones that, apart from inequalities, always had the most important poverty rates on a world scale.

Poverty and unemployment rates, although not yet the same as in Third World countries, tend to equalize and approach rapidly. For this reason, and taking as a definition of a country the social formation made up of social classes and class sectors at a time in the historical process, we can affirm that after the "bailouts", in the countries or social formations of the United States, France, England, Canada, Japan and Italy tend to increase the rates of poverty and unemployment typical of the social formations of the countries of the "Third World".

Relationship between states and multinationals

Different is the situation in relation to the states. After the bailouts, the existence of a few states, qualitatively richer and more powerful militarily and economically, than the remaining 192 states is strengthened and deepened. These imperialist states are the richest in the world, not only because of the accumulation of wealth that they have historically carried out, as a result of the plundering of the most backward countries, colonies, and possessions, but also because of the control of trade, industry, distribution, finance, communications, combined with its military and technological might.

The immense bureaucratic and military machinery of these states is now experiencing a greater overlap with the multinationals. The bailouts have involved the injection of giant masses of capital into them, which has united more deeply and intimately the constituent elements of the states and multinationals. From the bailouts, the situation of the imperialist states and the multinationals became even more deeply interrelated, the future of the states depends on the future of the multinationals and vice versa.

It is a permanent tendency of senile capitalism to unite the states with their multinationals, as expressed by the fascist states of Hitler and Mussolini, in which large companies and national monopolies reached a deep unity with the states. While multinationals were not predominant at the time, the trend is the same and the analogy can be perfectly established, albeit in completely different social and political contexts. For Trotsky: "The corporate state ... is nothing more than the agent of monopoly capital ... Mussolini makes the state run with all the risks of the companies and leaves the capitalists all the benefits of exploitation" (2)

What we analyze is a trend of which "bailouts" are its expression. It follows from this relationship that just as the generalized collapse of multinational corporations affects the imperialist states. The deep interweaving of these with the corporations supposes that the destiny of the states is also the destiny of the corporations. This unity between imperialist states and multinational corporations gives rise to changes in the relations between states, economies and nations. 

A study by Sarah Anderson and John Cavanagh of the Institute for Policy Studies finds that of the 100 largest economies in the world, 51 are corporations and 49 are countries. A comparison of corporate sales and countries' GDP reveals that General Motors is bigger than, for example, Denmark or that Wal-Mart is bigger than countries like Norway and General Electric, also associated with JP Morgan is, for example, greater than Portugal. 

This tendency of the G7 states, their role as imperialist states, their deep entanglement with multinational corporations, their entanglement with the armies that depend on them, their renewed arms development, and the existence of a bourgeois class sector with a bureaucratic component of officials of the imperialist state machinery, develops another trend. These states will tend to dissociate themselves from the social formation that they dominate, and will seek to modify the relations of production and the structure of said social formation in order to stabilize themselves, to impose new relations of force between the classes. 

For this reason, the development of the rich imperialist states is necessarily accompanied by social formations of increasing poverty. The contrasts that previously characterized the "First World", the "Third World", are now the contrasts between the countries and states of the G7 with the social structure that they dominate. The population of the G7 countries, and fundamentally the working class and popular sectors, after the "bailouts" began to experience phenomena and situations unknown to the inhabitants of northern Europe, North America and Japan, although quite common for any citizen from the third world.

At the same time, and as we saw in Chapter 1, with the bailouts, relations between the imperialist states are drastically changing, developing an accelerated process of colonization of the EU, China and Japan by the US The colossal infusions of capital of the Fed, act to reinforce the hegemony of the United States, which imposes its policy on the EU, China, Japan and the BRIC'S. 

Growth of poverty and changes in social structures in the G7 

In the United States, the trend is toward an increase in the number of poor people as well as the number of Americans without health insurance. Among minorities such as Hispanics, African Americans, immigrants, women, youth, Hispanic children, poor immigrants, the elderly and poverty in the US is on track to mark a record increase with numbers of people without resources of working age, rates rise to levels. from the time of the Great Depression. 

Poverty rates are the most important since the government began accounting for poverty in 1959, surpassing the previous highest statistics recorded in 1965 and 1980. More than 2.8 million people lost their homes in 2009 through foreclosure or foreclosure. banking. The same trend is unfolding in Britain, with millions of people currently unemployed and millions more working part-time. 

A study published by the British newspaper The Independent proposes that the level of poverty in England would be at levels similar to those of the Victorian era of the years 1837 to 1901. One of the most serious problems of the workers and the people in Great Britain is housing, which has worsened as a result of government measures that led houses to go from more than a third in the hands of the State in 1982, to only 14%, 20 years later. 

In Germany unemployment is rising, and as reported by the Federal Employment Office in Nuremberg, 1 in 4 immigrants living in Germany lives threatened by poverty, with young people and children among the most affected. The German Institute for Economic Research (DWI) estimated that 1 in 7 Germans lives in conditions bordering on poverty, 1 in 4 Germans between the ages of 19 and 25 are threatened by poverty, and 40% of the single mothers or fathers live in poverty.

In Japan, the end of lifetime employment and the deterioration of the social security system are the main factors that are impoverishing important social sectors of a country that was considered immune to poverty. After years of economic stagnation and growing income disparities, according to data from the Ministry of Labor, there are 20 million poor people, considering the authorities the poverty limit at about US $ 22,000 per year for a family of four, which represents half the income of an average household in Japan. 

More than 80% of those living in poverty in Japan are poor and temporary workers, with no security and few benefits. There is also a marked advance in job insecurity, which has opened a huge rift through which millions of Japanese have fallen and place, according to official data, Japan in the fourth highest poverty rate among developed countries. 

In France, poverty advances hand in hand with unemployment, the fragility of work and precariousness that afflict more than 4 million people, in 2010, there are already 8 million French, almost 13.4% of the population, living below the poverty line, and once they paid for rent, gas, electricity, transportation and insurance, they only have $ 2.70 per day per person left to eat and clothe themselves. Out of a population of 65 million inhabitants, unemployment in France affects 2.7 million people, equivalent to 10% of the active workforce. The percentage of poverty is particularly high in immigrant households, reaching 36%. 

In Canada, inequality and poverty are also growing, especially among the thousands of immigrants estimated at more than 10,000 Hispanics who immigrate to Canada annually and the demand for residency visas continues to grow. A person in Toronto or Vancouver who lives alone and earns only about $ 30,000 a year can live only modestly. In Vancouver, Toronto, Montreal and Ottawa, the sector of the so-called "working poor" advances, people who work but do not generate enough income to be above the poverty level.

Pyramid of world wealth according to Credit Suisse data in 2020. The 1% of the population concentrates almost 45.8% of the world's wealth. The next 11% segment holds 39% of the world's wealth. 12% of the global population holds 85% of the world's wealth. Source: Credit Suisse


According to United Way studies, 30% of the families in the municipality of Toronto are poor, taking as a parameter those households whose income is 50% below the average income in their community, and using the so-called LIM - Low Income Measure. Given the high cost of living prices in Canada, income is considered precarious.

In Italy, millions of people live in absolute poverty, 4.9% of the population according to reports from the Italian Institute of Statistics (ISTAT). Poverty in the south is almost five times that of the rest of the country. These changes are taking place rapidly in the social formations of the imperialist countries, with elements that are constant in almost all of them: Poverty advances, health, education and housing indexes fall, they hit the weakest, most vulnerable, and defenseless sectors. of the population. 

2) Devaluation and decomposition of the world economy: The salvages cause the birth of the so-called "zombies" or "living dead." What are they? This is how the Global Europe Anticipation Bulletin defines them: "In the streets of large North American and European cities ... a significant number of brands are found that continue to shine to attract the buyer, but which in fact are nothing more than deceptive appearances of bankrupt companies, artificially kept alive by dint of public money or restructuring of an uncertain future, such as CIT, GM, Chrysler, Saab, Opel, Karstad, Quelle, Iberia, Alitalia, etc ... On the surface, it works as if everything was normal, but in fact ... real zombies, all "economic living dead" (Global Europe Anticipation Bulletin 39).

After the bailouts, the "zombies" are generalized. Several economists have dubbed these companies, which, still bankrupt, continue to exist as "zombies" or "living dead". Given the size of the bailouts as a result of which the multinational corporations that dominate the world economy are being saved, the magnitude of these dead bodies dragged by capitalism is also enormous and of great weight and importance in relation to GDP and the whole of the world economy. 

This is how David Troman, head of financial services at PA Consulting, an IT industry consultancy, analyzes the situation of zombie Investment Banks:"The simultaneous existence of zombies is something that has not happened before in the working life of any of the financial services ... banks, despite appearances, only limp in a semi-alive state .... We are all going to learn to live with zombie banks " (3) 

Bailouts open an unprecedented situation in many ways, with the existence of entities, companies, states, banks, etc. that of content are in bankruptcy, but formally they do not declare it. A new situation arises in which these entities whose economic operations have failed and are destroyed, do not disappear and in a certain way continue to participate in the profit sharing process to claim part of the capital and the existing surplus value. 

The effect that the existence of these dead bodies dragged down by capitalism is that they keep the organic composition of capital high, because an enormous mass of fixed capital, machinery, workshops, infrastructure and capital continues to subsist that do not obtain a rate of profit and therefore therefore, they act as an obstacle to the production of new value. 

The rise in the organic composition of capital caused by the bailouts acts as an obstacle to capitalism's exit from the crisis. Historically, every crisis of capitalism is solved with a process of bankruptcies, auctions and foreclosures that means that the strongest capitalists survive and the companies and banks that have operated without success disappear and the erroneous investments are liquidated.

This is how Karl Marx posed the phenomenon: "... the conflict between the antagonistic driving forces is periodically released by crisis. How, then, would this conflict be resolved and the conditions for the" healthy "movement of capitalist production reestablished? It includes putting fallow and even annihilating a part of capital ... But under any circumstance the equilibrium would be established by inactivation and even by annihilation of capital to a greater or lesser extent " (4) 

Evolution of the debts of zombie companies. Source: Bloomberg

 

Marx argues that the way out that the capitalist system finds to resolve the crisis and find a new equilibrium that allows the development of the economy is the outright destruction of a sector of capital. But from the Salvages this is the historical mechanism that capitalism used to overcome the crises, it could not develop, therefore, the crisis is prolonged and worsened, extending the agony of the capitalist mode of production. 

"Too big to fail" 

Without a doubt, had it not been for the "bailouts", the capital annihilation that took place would have been of a qualitatively higher magnitude and would have reached global corporations and a banking sector. This massive intervention by the G7 states, mainly the US, acted by disturbing and altering the process of annihilation and destruction of capital that would have allowed capitalism to regain part of the lost balance. 

In the absence of a process of "natural selection" of capitalists and capitals, bailouts prevent the destruction of surplus capital. And by hindering the burning of capital, it hinders the way out of the crisis. In this way, the bailouts become another structural factor of the same that hinders the entry of investments to relaunch the world economy. 

From the point of view of the process of burning and annihilation of capital, which Marx analyzed, we can answer the question: Why did the bailouts take place? And the answer would be: They are explained because the magnitude of the crisis that broke out is such that it could have triggered a process of destruction and annihilation of capital that endangered the existence of the capitalist system itself. 

For example, General Motors (GM) had to go bankrupt, but if GM had disappeared, it would have impacted on a production of millions of cars and trucks in 34 different countries, 463 subsidiaries and 234,500 workers, 91,000 in the US that provides health coverage. and retirements to almost half a million retired workers. And together with GM they had to go bankrupt multinational corporations whose size in relation to GDP and portions in branches and sectors of the world economy is of such importance that their disappearance affected the very foundations of the world economy. 

From there came the expression "Too big to fail" of economists defenders of capitalism. The problem is that many of the "Too big to fail" after the bailouts are now "dead-alive", and their need for survival requires huge and growing masses of capital. And as if this were not enough, since there was no burning of capital, the exit of the same becomes more difficult, and the dead bodies that the salvages produced, act as an obstacle to the solution to it. 

The definition of zombies in turn extends corporations to countries, some of which are "unviable" for international credit agencies. Even some once powerful like Spain, Italy, Portugal today are considered zombie nations. The bailouts exacerbate the devaluation of the world economy With the "bailouts", the capitals contained in the Global Corporations are devalued. That is, if the banks calculated future earnings that did not occur, this acts by devaluing their assets immediately. 

This is how Marx explains it: "The part of the capital value that is only found in the form of allocations on future shares in the surplus value, in the profit in fact as mere debt securities on production under various forms, is devalued from immediately with the decrease of the entries on which it is calculated " (5)

By not generating value, another element that zombies cause is that they make it difficult to restore the rate of profit. The high organic composition of capital causes the rate of profit to fall, because if the percentage of fixed capital remains high in relation to the variable and is not destroyed, it is an element that acts by collapsing the rate of profit. 

To recover the rate of profit, the bankruptcy process of a sector of the capitalists plays an important role, reducing competition and optimizing the profits of the surviving capitalists. By surviving capital that should have gone bankrupt, the destruction of surplus capital is impossible, a process that is fundamental to counteract the fall in the rate of profit. 

Bailouts compound the dangers of capital over-accumulation 

To the extent that this wealth, given in advance, which the bailouts signify, is not created in the field of production and valued, it is only a mountain of papers, bills, and bonds that have no value. And if they fail to generate value, they provoke tendencies towards the general devaluation of the economy and the consequent symptoms of inflation, a new wave of bankruptcies, default and crisis, in a world economy that is already seriously hit.

The accumulation and over accumulation of capital generated by the billionaire bailouts, to the extent that they do not translate into the creation of new wealth, generate new speculative bubbles. The set of trends towards devaluation, decomposition, concentration and financial speculation can be seen by seeing the explosion of illicit activities such as smuggling, drug sales, arms trafficking, etc., which act together with the accompanying fraud elements to the salvages. 

Take the example of BlackRock (Black Rock), a New York-based investment firm that manages a portfolio of US $ 3.35 trillion equivalent to the nominal GDP of Germany, today the world's largest money manipulator. BlackRock is apparently controlled by the BofA (Bank of America with 34% of its assets), by PNC Financial Services with 24.6% of its assets and by the British Barclays PLC, with 19.9% ​​of its assets. 

The trend towards the decomposition of the world economy is expressed in the fact that giant global banks, such as the BofA and Barclays triangulate operations through a financial entity such as BlackRock, whose CEO is Lawrence Fink, who in turn was the creator of the financial instruments called MBS (in English, Mortgage-Backed-Security).

BlackRock has inaugurated the euphemistic term of "opacity" for entities that are not well known, nor can their money management be observed in a crystalline way. Thus the other euphemistic term of "opaque" entities is added to those of "creative accounting" or "toxic assets", not to speak plainly of money launderers, white-collar thieves, professional scammers or rotten merchandise, the terms that they really should be used in relation to these activities. 

Hedge funds act by exacerbating social inequalities, and require funds from their investors in amounts ranging from 500,000 to 3 million US $. After the "bailouts" they continue to generate huge speculative bets, swindling millions and looking for a way to legally evade taxes. For this reason, after the bailouts there is a worsening of scandals, swindles, usurpations and embezzlements that put all the miseries, excrescences and the degree of profound decomposition that the world capitalist system is going through. 

On 12/12/08 the financial scandal perpetrated by the American financier Bernard Madoff, who was president of the Nasdaq New York index, broke out and was sentenced to 150 years in prison. There are allegations of diversion of funds from the rescue of AIG to the French Bank Société Générale and to Wall Street firms such as Goldman Sachs, Merryl Lynch, Barclays and Bank of America or the German Deutsche Bank. 

There were also complaints about JP Morgan Chase and UBS for fraud in the "guaranteed investment contracts" that states, communes and school districts took. The multimillionaire Investment Banks did not hesitate to defraud states, municipalities and educational institutions, paying less interest to these entities. The explosion of illicit activities is also part of the process of decomposition and devaluation of the world economy. 

3) Crisis of money, credit and general bankruptcy of companies and states

With the outbreak of the crisis in 2007, as we saw in chapter I, the circulation process, money and the credit system suffered successive collapses. As Marx put it: "This disturbance and stagnation paralyze the function of money as a means of payment, a function given simultaneously with the development of capital and based on those presupposed price relations, they interrupt the chain of payment obligations at a hundred points in certain terms. .. " (6) 

But capitalism has depended more and more on the financial sphere, credit and especially consumer credit since the 1980s. The credit crisis is key because in addition to being one of the fundamental institutions of capitalism in this era, it has also been the privileged tool to which capitalism has appealed in recent decades to achieve GDP growth.

From the successive collapses, a situation arises in which money is "paralyzed in its function", according to Marx, more and more, there is an absence of it due to permanent interruptions in capital flows. What the bailouts attempt is to restore the flow of capital, but since the investment process does not depend purely and exclusively on economic factors, but on political factors and the class struggle, what the "bailouts" achieve is a partial recovery, precarious, which prepares a new crisis.

The interruption of capital and money flows is intimately disturbing the expanded reproduction of capitalism. Attempts to sustain expanded reproduction with successive bailouts and injections of money solve the problem in precarious and partial ways. At the same time, the fear of bankruptcy prevents the Banks that dominate the world economy from lending to each other and as soon as the credit wheel slows down, all the erroneous investments or overvalued assets begin to surface. 

The "bailouts" and the direct purchase of bonds and assets by the Central Banks are only a temporary patch to avoid the collapse and postpone the outbreak. Credit defaults, added to the fall in tax collection and increase in government deficits and bailouts, lead to the devaluation of the currency and the masses of capital. If capitalism does not manage to break the resistance of the workers, and qualitatively modify the relationship between the classes, it has to resort to patches, and continue to flee forward by issuing more money. 

The Global Corporations control through infinite communicating vessels the same groups that control the Federal Reserve and the US Treasury. With the bailouts, the State supported financial speculation by allowing the network and set of private banks that make up the Federal Reserve to act as a supra-borrowing entity that manages a billion-dollar fund aimed at doing business. 

After the financial collapse in the United States, this is the monetary expression, in the banking field and of capital flows, of the growing interlocking of multinational corporations with the G7 states. The same process is used in backward countries where capitalist governments repeat the same scheme, using public money to bail out banks and private companies, which adds the economies of backward countries to the world speculative bubble.

The graph shows the evolution of the balance sheet of the central banks of the US, Europe, Japan, China, and England, from the years 2007-08 and 09 until 2018. Source: Bloomberg


That is why this process of crisis of money, credit, and loans, to the extent that the crisis is not resolved, will continue to disturb the process of capitalist expanded reproduction. For Marx: "... in certain periods, they are intensified even by the consequent collapse of the credit system developed at the same time as capital, and thus lead to violent and acute crises, sudden forced devaluations and a real stagnation and disturbance of the economy. reproduction process, and with it to an effective reduction of reproduction" (7) 

The financial indicators are so distorted that interest rates should not be at 0%, but -5% as revealed by reports from the San Francisco Fed. Consumer credit is reduced for the lower income sectors of the world population whose restrictions are increasing, which translates into a drop in consumption in some segments of the population and damages the chances of a solid economic recovery of the economy. 

In the credit crisis, the credit rating agencies both S&P, Moody's Investors Service and Fitch Ratings have a great responsibility, which gave excellent ratings to securities that defined insurance but were not, and also despite having lied about it, they earned millions of dollars. Moody's, for example, earned more than $ 3 billion between 2002 and 2006 for rating mortgage-based securities, while other underwriters obtained multi-million dollar numbers, blatantly lying about the reality of the companies they rated. 

The money crisis expresses that the masses of banknotes that circulate around the world are suffering a permanent devaluation as a result of the bailouts. For the US, the devaluation of its currency is the product of the issuance of currency without gold backing, so the bailouts are a brutal and persistent devaluation of the dollar. The EU, on the other hand, has its currencies tied to the Euro, and the countries that are in the Euro zone, have to have a lot of money in the central banks to sustain themselves within the euro. In order to accumulate reserves in their central banks, these countries have to receive loans all the time and apply strong adjustments in expenditures.

The euro crisis expresses the contradictions of European capitalism. As we saw in chapter I, Europe is a complex of countries with very unequal economies, dominated by Germany and France, where there are declining powers, such as Greece, Portugal or Spain, and very backward economies such as in the East. The money crisis in the EU can be expressed in that if the adjustment plans in the most backward or poor countries fail, and they do not have money to sustain themselves, the convertibility with the Euro is broken, and they return to the old and devalued currencies local. 

Generalization of bankruptcies 

Along with the money and credit crisis, it has also triggered a bankruptcy process that began in 2007, but continues to develop and encompasses not only banks but also companies and states. With the development of bank failures, the process of buying shares in the bank also develops. In 2010, the FDIC (Federal Deposit Insurance Corporation) took control of 118 banks, and the rate of bankruptcies of financial institutions in 2010 was higher than in 2009. The 2009 bankruptcies cost the FDIC close to US $ 30 billion and it is estimated that it will have to disburse an additional US $ 60 billion between 2010 and 2015 in the intervention of financial entities, because the list of bankrupt banks continues in ascent. 

Along with the bankruptcy of the companies, the bankruptcy of the states also begins to occur, both of countries, such as provinces, municipalities, counties and all kinds of national and local governments. Some of the most notable are the bankruptcy of the Dubai World Holding, of the city-state of Dubai and in charge of executing some of the pharaonic real estate projects that this city-state undertook.

The bailouts led to a jump in state indebtedness and fiscal deficits. Instead of 'cleaning' bad debt 'toxic assets' from their balance sheets, banks now incorporated new assets in the form of government securities. The gigantic injection of funds that the bailouts meant are actually a tremendous injection of credit, which paradoxically liquidated credit globally. That level of debt raises the prices of a country's debt insurance papers against defaults. 

4) Permanence and institutionalization of bailouts 

Bailouts are credit. The G7 governments apply monstrous credit injections into the economy, which is a latent and constant trend as the world economy fails to overcome its crisis. And they are today the fundamental strategy of the US and the states that dominate the capitalist world economy, to alleviate the crisis. We understand bailouts to be all variants of credit and the creation of fictitious capital in the service of supporting companies, states and bankrupt banks that dominate the world economy, especially multinational corporations. That is, bailouts have several mechanisms. 

We can group as bailouts: 

1) The QE, or the gigantic money issues of the US Federal Reserve, or the remaining Central Banks or international credit organizations. Also rescue packages promulgated by law or by government decree. 

2) Variations such as bond swaps via the Federal Reserve's "primary dealers" (8), or other variants of obtaining money through different informal windows, without the need for it being through economic packages voted in by parliaments.

3) The huge injections of masses of money called "stimulus" to companies or credit variant countries such as the injection of billions to stimulate the economy, as in the case of "Operation Twist" in the US or loans for housing, in China, or "stimulus" plans to face Covid-19 between the years 2020/21, or the contribution of Special Drawing Rights (SDR) for poor countries resolved by the IMF Board of Governors in August 2021. 

4) The purchases of stock packages of multinational corporations and large companies, or national monopolies, by capitalist governments of both the first world and the third world. They are called "nationalizations", "nationalizations" or "expropriations" by economic agents and governments, but they are in reality the coordinated action of states and banks to defend private property and the interests of multinationals.


The Balance Sheet of the Central Banks of Switzerland, England, the United States, Japan, and Europe, in trillions of dollars. If you add the Balance of the Bank of China that totals 30 trillion dollars

The deceptive effect of bailouts 

The bailouts were unanimously supported by the population at the beginning, which, upon observing the severity of the crisis, turned to support quick and forceful actions by the governments to confront it. But after the initial enthusiasm, the population of all countries began to become disillusioned and to regard with indignation the rescue packages to the corporations as their problems continued to worsen, while the bankers and big businessmen saw their profits grow. 

The bailouts policy has been consolidated and diversified since then. Since the subprime crisis began in mid-2007, the aggregate balance of the 8 main Central Banks has gone from just over 5 trillion US $ to more than 30 trillion US $. The massive intervention with bailouts has created the image that the G7 governments have become "statizers", thus renouncing the "privatist" values ​​typical of globalization. 

Different currents of opinion speak of a "return to Keynesianism" or of a state interventionism that would go against globalization. In the G7 countries, governments buy stock packages of large banks and companies in the name of "defense of jobs", as in the case of General Motors and call this nationalizations and nationalizations. These purchases of stock packages of companies would be for many analysts the demonstration of the "Decoupling Theory". 

For this theory, the world is heading towards a kind of "decoupling" of the countries of the US domain to the extent that the "US hegemony" is in decline and it would be the BRIC'S (Brazil, Russia, China , India and South Africa), those destined to take their place. This theory holds that backward countries are decoupling from the dominance of the US and the G7. The partial "nationalizations" or "nationalizations" would be the confirmation of this tendency.

These purchases of stock packages of companies would be for many analysts the demonstration of the "Decoupling Theory". For this theory, the world is heading towards a kind of "decoupling" of the countries of the US domain to the extent that the "US hegemony" is in decline and it would be the BRIC'S (Brazil, Russia, China , India and South Africa), those destined to take their place. This theory holds that backward countries are decoupling from the dominance of the US and the G7. 

The partial "nationalizations" or "nationalizations" would be the confirmation of this tendency. he Decoupling Theory proposes the end of the dollar as a currency and the beginning of a basket of currencies to replace it, and even some variants of this theory insist that China will become a new "empire" that will dominate the world. But there is nothing further from the truth, that the salvages are a "decoupling". 

Or that they mean the emergence of new states that dominate the world economy in replacement of the US Or that herald tendencies of governments to take action against multinationals, or a new wave of "nationalization" that heralds the return to the Keynesian regime. There is no data from reality that indicates that. Far from the deceptive effect they show, the salvages appear like a mirage, which reality data quickly disproves. All the data on the economy indicate that the policy of "bailouts" has reaffirmed the hegemony of the United States, has aligned all capitalist governments with a common policy under their dominance and has caused a historic worldwide wave of privatizations of magnitude. higher than the one lived in the '90s. 

The difference between that privatization wave and the current one is that the epicenter of privatizations is not now in the backward countries, but for the first time in history, this wave is being led by the G7 countries, especially the US. The US, which now becomes the world leader in privatization. In 2009, the total amount generated by the sales of public capital companies set a new record with 265,170 million US $, which made the United States the most privatizing country for the first time in history. 

In second place in the ranking of privatizations is the EU, where there is a privatization wave that crosses Spain, Portugal, Ireland, Greece, etc. of magnitudes that were not seen in Europe for a long time. It is exactly the opposite, the bailouts develop the deepest tendencies towards the privatization and concentration of branches of production and commerce in the hands of the same economic groups that generated the crisis. 

The graph shows the impressive jump in privatizations in the world in 2009 and 2010, as a result of the bailouts and the measures of the governments of the backward countries. State interventions, far from being "nationalizations", have caused the wave of privatizations that register rates that double or triple those of the 90s. Source: Privatization Barometer. 


The emergence of supranational entities that decide the destination of billionaire funds, which in turn decide the destiny of the lives of millions of people in Europe, the United States, Japan or developing countries, are the institutional expression of political strategy, for now privileged, used by the governments and states of the G7. 

Bailouts impact the consciences of millions 

Due to their historical magnitude, the salvages have caused an enormous impact on the consciences of millions, of the same importance as all the most momentous events in history. 

In the same way that events such as the Great Depression, the world wars, the Russian revolution, the fall of the Berlin Wall, or the fall of the Twin Towers have impacted. The bailouts reveal to the eyes of millions what was hidden for decades: that the contribution and support of the imperialist states have been the basis of the development of capitalism since the Second World War. 

The bailouts expose the lies about the existence of a "democracy" in the US The same financial oligarchy that dominates the world economy, is perfectly represented by the aristocracy of the leaders of the Democratic and Republican parties, made up of patricians. families, true dynasties of billionaires, who perfectly interpret the needs of the world's ruling class. The careers of these political professionals are generously funded by multinationals to control the oligarchic two-party political system in the US.

Before millions of North Americans, Europeans and inhabitants of Third World countries, the governments of the richest countries clearly appear, helping the capitalist system. That is why the bailouts are the end of the "American dream", the end of the dream of capitalist social ascent, while poverty and misery advance relentlessly. The capitalist state that once acted in a veiled and discreet defense of the rich and powerful, now with the bailouts makes its contribution in a public and shameless way. 

The bailouts relate for the young generations to the word capitalism with injustice, unemployment, poverty, loss of rights and future. They represent the end of the propaganda of the "triumph of capitalism", and of the "failure of socialism". In the United States today, 43% of Americans under the age of 30 almost 50% have a negative perception of capitalism, and minorities such as blacks and Latinos react positively to the term socialism to an even greater margin throughout the United States. 

The bailouts are an irrational immorality, only explicable by the decomposition in which the dominant oligarchy of the world capitalist economy finds itself, taking into account that hunger in the world would end up with allocating only 1% of what is contributed by governments to rescue to multinational corporations. 

The bailouts provoke outrage in millions because they happen at the same time that governments cut wages and jobs. The bailouts subject millions of humble men and women of the world to the harsh demands of capital, at the same time they strike on their consciences, showing them the grossest possible spectacle, that of politicians, even those considered most "progressive" and "liberal", working openly for the corporations, desperate to sustain the capitalist order, shaken by its contradictions. 

Marxists know that the definitive solution to the crisis will not come from the hand of bailouts, these are the policies that today the large states that dominate the capitalist economy carry out, as a result of the margins that the world political situation imposes on them. We will see if the imperialist states manage to obtain other margins to impose a way out of the crisis. As long as they do not succeed, the central strategy will continue to be that of bailouts.

The solution to the crisis of capitalism

Undoubtedly, the ideal economic model to which capitalist governments aspire is constituted by a front of which both the multinational Wal-Mart and the Chinese state are part, which are at the forefront in the super-exploitation of workers, job insecurity, low wages. and the elimination of the most elementary democratic rights. Bodies like the IMF express their goals blatantly.

On 4/11/12 the IMF in its annual report on World Financial Stability says the following: "The elderly live too long and that is a risk for the global economy ... a financial risk for the world economy increased longevity in the countries of the globe, which is why it recommends reducing pensions and increasing the retirement age ".

It is difficult to know what forms the world economy would take if the offensive that the capitalist governments of the world carry out against the masses were definitively imposed. But if we can know its content: An unprecedented worsening of the social and living conditions of peoples throughout the world. Capitalism seeks to solve its crisis and get out of it through a brutal offensive against the masses in Europe, the US and the world. 

Can capitalism come out of the crisis and impose a brutal adjustment to the living conditions on the masses of the world? This is what is at stake in the process of strikes and mobilizations that are going through the US and Europe, in China and throughout the world. The struggles question the model of super- exploitation and dismantling of social conquests that capitalism carries forward, if the capitalist governments defeat the struggles of the workers, and peoples of Europe and the United States, the hypothesis could be considered that the capitalist powers could impose global adjustment and overcome this crisis.

These are the trends that are developing in the direction of ending the crisis, an objective that capitalist governments can achieve if they succeed in this offensive. That is to say, two sets of trends and possible perspectives are developing: One is that by increasing the super exploitation of the masses, lowering the standard of living especially in the G7 countries, the mountain of papers and over accumulation of capital that means the bailouts are "valorized", which would allow a way out of the crisis and open a new period of expansion, economic development and growth. 

The other perspective is that the necessary rates of exploitation, creation of value and surplus value, or production of real wealth are not achieved, which opens the perspective of the growth of enormous masses of capital dedicated to speculation, which can lead to production. of one or more financial bubbles, of colossal and powerfully destructive dimensions, which can aggravate the crisis of capitalism. 

Both trends are developing simultaneously and interrelated. But as soon as they find possibilities and can impose another relationship of forces on a world scale, the capitalist governments will appeal to other ways out of the crisis. Are there other ways out of the crisis of capitalism outside of the bailouts? Indeed, these exist. 

And to know them we must begin to sink our analysis in the previous crises of magnitude experienced by capitalism in history. Our analysis will begin by studying the crisis of capitalism of 1929, the nature and development of which we analyze in the next chapter. 

Notes 

(1) Boston Consulting Group (BCG) World Wealth Report 2008 

(2) Leon Trotsky. The Revolution betrayed Chapter IX. What is the USSR? 

(3) PA Consulting Group The Zombie Economy: Leadership in Times of Uncertainty 

(4) Karl Marx: Capital, third book, ch. 15, Development of the internal contradictions of the law. 

(5) Karl Marx: Capital, third book, ch. 15, Development of the internal contradictions of the law. 

(6) Karl Marx: Capital, third book, ch. XV, Development of the internal contradictions of the law 

(7) Karl Marx: Capital, third book, ch. XV, Development of the internal contradictions of the law 

(8) The "primary dealers" are the Banks that trade US Treasury bonds in the world. These are: Bank of Nova Scotia, New York Agency, BMO Capital Markets Corp, BNP Paribas Securities Corp, Barclays Capital Inc, Cantor Fitzgerald & Co, Citigroup Global Markets Inc, Credit Suisse Securities (USA) LLC, Daiwa Capital Markets America Inc, Deutsche Bank Securities Inc, Goldman Sachs & Co, HSBC Securities Inc, Jefferies & Company Inc, JP Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Mizuho Securities USA Inc, Morgan Stanley & Co. LLC, Nomura Securities International, Inc, RBC Capital Markets LLC, RBS Securities Inc, SG Americas Securities LLC, UBS Securities LLC. 

Chapter III 1929 Y 2007

"Since 1848 capitalist production took root in Germany every time, and today it has already transformed this country from dreamers into a nation of swindlers"

Karl Marx, Capital, Volume I Preface to the first German edition 


Any observer of the serious crisis that the world economy is going through can ask: Why did it happen? What caused it? Is it like 1929 or is it superior? Can capitalism find a way out? It is important to specify similarities and differences between the current crisis and that of '29 in order to answer these simple questions, the answers to which are complex. 

The first answer is that both crises are the product of a long stage of capitalism's decline, the imperialist stage, which began in 1903 and has been going on for more than a century. The capitalist mode of production began its rise and shift from the feudal mode of production after its collapse in the 14th century, 7 centuries ago. 

The imperialist stage covers the last century of its development and in it the two most important crises that capitalism faced are that of 1929 and the current one. The debate on similarities and differences between the two crises is not idle, it seeks to understand the changes that have occurred in the capitalist system between the two crises. In this chapter we are going to see the concepts of Forms of Accumulation, Regime of Accumulation, Pole of Accumulation, and Axis of Accumulation that are part of the General Law of Capitalist Forms of Accumulation, a law that we will develop extensively in Chapter V. 

The differences between 1929 and 2007. Concepts of Forms, Regime, Axis, and Pole of Accumulation 

The structure of the world capitalist system in 1929 was very different from what we know today. The US was one of the most important economies in the world, but it did not dominate the capitalist economy on a world scale as it does now. Britain had dominated capitalism for centuries, but by then its decline was clear, and a battle began between the capitalist powers to decide who would occupy the throne of Great Britain, which was defined in the Second World War. 

That is to say, in the crisis of 1929, the structure of the world capitalist economy presented a panorama of several dominant imperialisms, Great Britain, the United States, Germany, France, which were vying for dominance. On the other hand, in the current crisis, the structure of world capitalism is absolutely different, it is determined by the undisputed predominance and hegemony of US imperialism. 

The other substantial difference between 1929 and 2007 is the structure of the monopolies, the companies that dominate and are located at the center of capitalism. What are monopolies? A group of companies that come together to dominate a branch of production in a country and agree on prices, production goals, distribution, benefits, etc., to eliminate competition. 

For Lenin: "... they agree with each other regarding the conditions of sale, payment terms, etc. Sales markets are divided. They determine the quantity of products to be manufactured. They establish prices. They distribute profits. between the different companies, etc" (1) With the emergence of monopolies, the stage of "free competition" in capitalism ended. Through these agreements, the companies formed a kind of league or union that allowed them to advance in the dominance of a branch of production in their country, while also trying to extend that dominance internationally. 

These leagues or unions developed from 1860 on, especially in the US under the name of trusts and in Germany under the name of cartels. In the US they had a central leadership of magnates like the Mellons, Morgans, Rockefellers, etc. According to Lenin, the emergence of monopolies went through three moments: "1) 1860-1880, the culminating point of the development of free competition. Monopolies constitute only barely perceptible germs. 2) After the crisis of 1873, a long period of development of the cartels, but these are still an exception, they are not yet solid, they still represent a temporary phenomenon. 3) The rise of the late nineteenth century and the crisis of 1900-1903; the cartels become one of the bases of all life economic. Capitalism has been transformed into imperialism "(2) 

Monopolies constituted a Form of Accumulation different from those known by capitalism until then. We define as Form of Accumulation the companies that the capitalist class uses to accumulate capital in a given period. As a result of the fact that there are many sectors of the capitalist class, they reflect the different Forms of Accumulation that dominate, that is, the different commercial, productive and financial companies that operate.

But always in every period of the development of capitalism, there is a predominant Form of Accumulation around which the entire economy is structured. We define this as a Regime of Accumulation, that is, a form of operation of capitalism, around the predominant Form of Accumulation, during a period. 

In relation to monopolies, as we saw, although they arose since 1860, they became the predominant Form of Accumulation only from the beginning of the 20th century. The structure they presented turned out to be complex, as a result of the fact that, although they dominated one branch of production, they are combined companies that concentrated within them several branches based on the dominance they acquired over one of them. 

This is how Lenin explains it: "an extremely important characteristic of capitalism, which has reached its highest degree of development, is the so-called combination, that is, the gathering, in a single company, of different branches of industry that represent themselves or successive stages in the production of a raw material ... or different branches that play an auxiliary role in relation to each other ... " (3) 

But although monopolies are combined companies, we must not lose sight of the fact that the combination is at the service of the control of one branch of production. For example, taking the metallurgical branch, its cartelization is based on the fact that the unionized group of companies agrees on the distribution and advances in the control of commercial companies; agrees production goals and advances in the control of companies that provide raw materials, machinery and supplies; agrees loans and credits and advances in the control of banks. 

In other words, the cartel incorporates companies from various branches of production into its structure, but at the service of controlling one branch. That is why we define monopolies as a group of companies that establish agreements to dominate a branch of production in a country. As these enterprises became the predominant Form of Accumulation from 1903 onwards, the capitalist system entered, historically speaking, its highest and final stage of decline. 

Since the fourteenth century in which capitalism began its rise and battle to displace feudalism, it had gone through 2 major stages until 1903:

1) The original accumulation between the 10th and 16th centuries

2) The boom or bust, around the seventeenth and nineteenth centuries

Lenin defined that as of 1903 a third historical stage began, imperialism, the stage of decadence of capitalism, with 5 characteristics: 1) "Monopolies arise that are placed in the center of the economy and play a decisive role in the economic life 2) Monopolies are the product of the fusion of bank capital with industrial capital, which gives rise to a financial oligarchy 3) The process of exporting capital acquires exceptional importance 4) Monopolies tend to be international and share the world 5) The territorial division of the world among the greatest imperialist powers culminates and the domination of monopolies and finance capital is established ... " (4)

Monopolies tended to be international because of the existence of the capitalist world market, but the scope of their international domination of the branches of production, commerce and finance at the beginning of the 20th century was still very limited. Some of them had branches in other countries, in the oil industry for example, and they tried operations for their worldwide expansion. But their world dominance did not achieve the dimensions that the multinationals did, as we shall see, achieved in the postwar period or the multinational corporations from 1980 and 1990, which are superior monopolistic forms.

Differences in the politics of capitalist governments in '29 and 2007

Hoover's Republican government policy in the US for '29 was diametrically opposed to that of Bush-Obama in 2007-2008. Hoover and the governments of the capitalist powers did not implement bailouts, but rather their policy was that "the laws of the market will act" and drop the companies that had to fall. Hoover admitted the serious problems of the American economy, but considered the crisis as fleeting and that the fight against unemployment and widespread poverty was a responsibility of local governments or charities.

Capitalist governments refused to intervene in the economy to solve the crisis in '29, fearing that such a policy would be counterproductive. Even Hoover dared to forecast in the early 1930s that "recovery was just around the corner", arguing that the US economy would recover by its own means, which led him to strongly oppose state intervention. He even criticized European countries such as Great Britain and France for adopting measures to protect the unemployed. His popularity plummeted, Hoover began implementing reforms at the end of his term, but could not appear in public because he was booed. 

Roosvelt prevailed in the presidential elections of November 1932 with a vast victory of the Democratic Party and the policy of the US government changed 180 degrees. Roosvelt launched the New Deal policy (new agreement) consisting of stimulating public spending through investment in infrastructure, executing all kinds of projects such as hydroelectric plants, highways, schools and, in general, all kinds of public works. 

Roosvelt's policy did not bring the economy out of the crisis, but it was vital to contain poverty and unemployment through subsidies and public works. Undoubtedly, the leaders of capitalism have learned from 1929. At the outbreak of the current crisis, the politics as we saw in chapter I were absolutely different, the governments of the capitalist powers promoted the bailouts and acted in the opposite way to Hoover, trying to prevent big business from going bankrupt and the economy from hitting a slump. 

The way out of the crisis of '29: the enormous destruction of productive forces in the 2nd world war 

The New Deal did not lift the US economy, or the world's economy, out of crisis. On the contrary, between 1937 and 1938, the economy suffered a serious relapse: "Against all the forecasts and efforts to reactivate the economy and control the stock market, restrict large operations etc., the depression had not closed. On the contrary , from August 1937 to March 1938, there was a 50% drop in the stock market and unemployment exceeded the figure of 10 million ... " (5) 

The Great Depression found no way out in the measures of the capitalist governments of its time, it was not the plans of Franklin Delano Roosvelt, nor that of Edouard Daladier in France, nor Neville Chamberlain in England, nor Hitler in Germany, which brought out the economy of the crisis. For Galvao: "What put an end to the Great Depression was not the return to production for consumption, but the recourse to the means of destruction of capital liberated with World War II. Unemployment ceased to be a problem only when the millions of workers were absorbed into the armed forces and war production" (6) 

The outbreak of World War II in September 1939 was what began to reactivate the economy of the main capitalist countries that invested enormous sums in military expenses. It is estimated that the investment made by the states ranged between 260,000 and 338,000 million U $ S at the time, almost 4 to 5 trillion U$S today. The millionaire investments of the capitalist governments were an enormous change in the capital investment flows from the preparation of the war budgets that supposed enormous sums for the preparation of the warlike conflict. 

These budgets assumed adjustment plans that caused hardship and suffering to the masses, because they consisted of cuts in social spending and tax increases. Even so, all of this was insufficient for the resources of the time, the vast majority of governments had to borrow heavily to meet war expenses. The indebtedness led governments to resort to issuing money without gold backing, which generated strong inflation. 

International trade had operated since 1870 with a gold standard, that is, the use of gold to settle international transactions and debts, as a "standard value", nations set the parity of their currency with this standard value. But the belligerent countries practically ran out of gold in their coffers, committed almost entirely to the purchase of weapons, and undertook the replacement of these fixed rates by floating rates, that is, the price of financial transactions and exchange rates. were set by governments unilaterally 

Given what happened in the powers that were preparing for war, the neutral countries, net exporters of weapons or raw materials and food to the countries that were preparing for war, were filled with gold in their reserves. For example, the United States went from having 26% of the world's gold reserves in 1913 to 39% in 1918. The powers that ran out of gold in their coffers began to use fiat money, printing on paper without gold backing, which caused the great hyperinflationary processes of the 1920s, for example, in Germany and Austria. 

The lack of a stable payment system caused the fall of world trade and the pound sterling, which had been the reference currency until then, began to be displaced by the dollar. In turn, in the field of industrial production, the needs of the war definitely introduced mass production techniques in Europe, as well as numerous other improvements in the organizational techniques of industry. There was also the development of advertising and the rapid expansion of the advertising and propaganda poster as a means of communication. Large amounts of money were allocated to the research and development of all types of weapons and as a result of that, the chemical industry advanced notably. 

The need for soldiers, as well as their mass death already during the course of the war, left a rapidly expanding industry without a workforce. This fact led to the emergence of women in heavy industry, which became more than 40% of the total composition of workers, and gave a formidable boost to the movement for the demand for equal rights for women. 

Capitalism thus began the way out of the crisis that began in 1929, through a colossal development of the arms industry, that is, a colossal development of the destructive forces of humanity. The Second World War involved more than 100 million mobilized soldiers, equivalent to almost the entire population of the United States at the time, destruction of cities, infrastructure, concentration camps and the Holocaust, in addition to the use of weapons for the first time. nuclear power in a military conflict. The end result was between 50 and 70 million victims between dead and injured. 

After six years of war, much of Europe was devastated because the fighting had taken place practically throughout its geography, covering an area much larger than that affected in the First World War. Because of the aerial bombardments, the cities were badly damaged and the industrial areas that had been the main targets of the bombings as well. Berlin and Warsaw were reduced to mountains of rubble; London and Rotterdam were badly destroyed, the economic structure of the continent, which for centuries was the center of the development of capitalism, was reduced to ruins, with millions of people destitute.

Famine broke out in 1944 as a result of the general devastation of agriculture that caused a wave of famine first in the Netherlands and then throughout Europe, exacerbated by the harsh winter of 1946-1947 in the northeast. The threat of death from hunger was a reality for millions of people, the shortage of food was one of the most serious problems, and the situation became especially worrying in Germany, because between 1946 and 1947 the average daily consumption was just 1,800 calories per person, insufficient for long-term good health.

The shortage of coal was also aggravated, its reserves greatly diminished after the winter of 1946-47. In German homes, without heating of any kind, hundreds of people died of cold. Railways, bridges and roads, which had been the main target of aerial bombardments, were destroyed. The cargo ships had been sunk, the small municipalities, due to the lack of transport networks, were practically isolated, physically and economically. 

As a result of the lack of growth of the economies, the high unemployment rates and the shortage of food, strikes and revolts occurred in all countries, revolutionary movements that questioned capitalism. Two years after the end of the war, economies had not yet reached prewar levels, agricultural production was 83% of what it had been in 1938, industrial production was 88%, and exports only 59%.

The Marshall Plan, the Keynesian regime, and the "boom" 

The Second World War was the end of an economic period of capitalism marked by crisis, stagnation, and paralysis. But after the war in 1945, capitalism resumed its march and entered an opposite period, that of enormous growth with high rates for almost 30 years, known as the post-war "boom." How did capitalism get out of the crisis? from '29 and go from there to the "boom" ?. What changes occurred in the world economy that made this possible? With the end of the Second War, 3 fundamental changes that had been incubating in the world capitalist economy were consolidated and produced the "boom": 

1) The US imposed its hegemony and came to dominate the world economy 

2) The Keynesian accumulation regime emerged 

3) The multinationals emerged, a form of capitalist accumulation superior to monopolies, but typical of the monopoly stage of capitalism 

1) US hegemony and domination of the world economy: After the 2nd world war, US imperialism imposed its world hegemony, as Nahuel Moreno explained: "... All the old men have been completely destroyed from the war. existing colonial empires ... From the post-war period, the entire capitalist world, including the imperialist countries, has to accept North American leadership and domination ... The logical anti-imperialist friction cannot change this situation, American hegemony is imposed on the world capitalist and his leadership" (7)

The growth of US hegemony was a trend in the world economy and political situation of capitalism that had been developing for several decades. Leon Trotsky had already anticipated in 1926 this trend in the structure of the world capitalist system that was completely modified after 1945: "In recent years, the economic axis of the world has shifted considerably. Relations between the United States and Europe have shifted. radically modified ... "" ... this evolution had been in the making since ancient times, there were symptoms that pointed it out, but it has only recently become a fait accompli, and now we are trying to realize this formidable change in the economy human and, consequently, in human culture ... America is the masters of the capitalist world" (8) 

In 1945 in the middle of a world in ruins after the 2nd war, the US economy constituted one third of all the export operations that took place in the world, it had in its possession two thirds of all the existing gold reserves and it was the producer of 50% of all merchandise in the world market for manufactured goods. The hegemony and colossal development of the productive forces of the United States was the lifeline found by the postwar capitalist economy and the lever to rebuild capitalism. 

2) The Keynesian accumulation regime emerged. The concepts of Pole of Accumulation and Axis of Accumulation: Along with the hegemony of the United States, the other important change was the emergence of the Keynesian regime. We have already defined as a Regime of Accumulation a form of operation of capitalism, around the predominant Form of Accumulation, during a period. Since the Marshall Plan, senile capitalism emerged from the Second World War functioning in a peculiar way, an uneven and combined developed phase of the world economy, which we call the Keynesian accumulation regime. 

This regime was a form of operation of the capitalist system or historically given economic formation, also known as the "welfare state". It consisted of high wages, full employment, economic concessions to the masses, social conquests and increases in social wages, public works plans and a great industrialization process imitating aspects of the model imposed by Roosvelt in the United States in response to the crash of '29. . The Keynesian regime began in the '40s, developed in the' 50s, '60s and was exhausted in the' 70s. 

We define the branch of production and technology as the pole of accumulation, around which the entire economic regime is structured, while we define the geographic region as the axis of accumulation, and the set of economies or countries that capitalism uses as a platform. for its development in a given period. From this point of view, the Keynesian regime had the automobile and war industries as a pole of accumulation. How and why did the Keynesian regime emerge? To understand the political reasons that gave rise to the Keynesian regime, we must go back a few years and analyze the responses that capitalism had to the crisis of '29. 

From the political point of view, capitalism had two responses to the crisis of '29, at that time the most serious of the capitalist system. In the US the answer was the New Deal, while in Germany it was the Nazi regime. Both political regimes, although diametrically opposed, had as a common denominator that they sought to respond to the global crisis. While the New Deal sought a way out of the crisis through agreements and maneuvers against workers and their organizations, the Nazi regime, on the other hand, through the crushing of workers and their organizations, with concentration camps where the most efficient production methods were tested aberrant with the aim of optimizing the profits of monopolies and large companies. 

The Nazi regime obeyed the defeat of the workers' revolution in Germany, while in the US the New Deal was a defensive regime of the US bourgeoisie, a product of the resistance of the working class that big companies had not been able to do. break. This is how Leon Trotsky explained it: "Currently there are two systems that compete in the world to save capital ...: they are Fascism and the New Deal (New Pact). Fascism bases its program on the dissolution of workers' organizations, on the destruction of social reforms and the complete annihilation of democratic rights ... The policy of the New Deal, which tries to save imperialist democracy ... is only accessible in its great breadth to the truly wealthy nations, and in such sense is a North American policy par excellence " (9) 

Another common denominator between both political regimes was Wall Street. Large US corporations, monopolies and bankers promoted the war industry to relaunch the economy in both Germany and the US and financed Hitler's rise to power. Wall Street financed the development of the arms industrial monopoly I.G. Farben, which was the basis of the power of the Nazi war machine. 

This is how Antony C. Sutton explains it "... Without the support of the German industrial cartel IG Farben, Hitler would have remained a dark historical note ... Without the capital supplied by Wall Street, there would have been no IG Farben in the first place, and almost with certainly no Adolf Hitler ... Farben's industrial cartel was created by three Wall Street corporations: Dillon, Read & Co., Harris, Forbes & Co, and National City. The Duponts, Standard Oil, International Harvesters, General Motors and Ford, which were companies controlled by JP Morgan, had facilitated the rearmament of Germany ... companies like the International Telephone and Telegraph (ITT), General Electric, International Business Machines (IBM), Alcoa and Dow Chemical also were involved ... " (10) 

Toby Rogers, a journalist for The Guardian, published in September 2004 on the history of the Bush family: "The grandfather of former President George W. Bush, Senator Prescott Bush, was a director and shareholder of companies that benefited from their relationship. business with Nazi German funders ... During the decades of the Bush family's public life, the American press has endeavored to ignore a historical fact - that through the Union Banking Corporation (UBC) , Prescott Bush, and his brother-in-law, George Herbert Walker, along with the German businessman Fritz Thyssen, financed Adolf Hitler before and during World War II " (11) 

The Nazis and the Nazi regime were crushed in the war by the allied armies, the product of a formidable mobilization of the European masses, with which they disappeared as a possible alternative to capitalism. Meanwhile the Keynesian regime developed in the US, taking advantage of the low wages and unemployment of the working class after the depression and relied on new technologies that allowed the development of mass production for mass consumption. 

The impulse to the war industry made it possible to massively export tanks, planes and weapons to the allied states and to develop "the military-industrial complex" and accumulation pole of the Keynesian regime, which was essentially American. But from the years 1945-47, as the US imposed its hegemony in the world capitalist economy, this way of functioning of capitalism was established on an international scale.

In order for the US to impose the Keynesian regime on the entire world, it first had to establish international agreements with the retreating powers, such as England, and fundamentally, it had to agree with Stalin and the Communist Party of the Soviet Union. It would have been impossible for the US to start the investment round that the Marshall Plan entailed, without previously agreeing with Stalin, since during the war and at the end of it, great revolutionary processes were taking place in Europe, first to defeat the Nazis and liberate the countries of Nazi-fascism, and later, to face hunger and generalized post-war misery. 

Processes such as the Maqui resistance in France, or the partisans in Italy and Yugoslavia had allowed the workers to have power in their hands in France and Italy after the Second World War, and the Red Army seized control of Berlin and liberated the East of Europe. Communist militants had been part of the leadership and led the resistance and defeat of the Nazis in most European countries. An order from the Kremlin was enough for Europe to become socialist, and the main economies of the world such as France, Germany and Italy, were transformed into Workers' States, which would have completely changed the destiny of humanity. 

But the government of the USSR, led by Stalin and the Stalinist bureaucracy that led the victory against the Nazis, decided to make a pact with the allied powers, the United States and Great Britain, and start the capitalist reconstruction of Europe. This constituted one of the greatest betrayals of the world proletariat and the international socialist revolution on the part of Stalin and the bureaucracy that led the USSR. 

Stalin agreed with Churchill, representative of the old English imperialism in retreat up to there exercising the leadership of the world capitalist economy and Roosvelt the US president, representative of the emerging imperialist power. Thus was born the "world order" with the Yalta and Potsdam agreements. 

As Nahuel Moreno put it: "... a front is established ... between imperialism and the Kremlin bureaucracy, on the basis of peaceful coexistence, concretized in Yalta, Potsdam and the new world order: the UN, the distribution of areas of influence ... Although there is a "cold war" and deep friction ... they act in general in agreement and defending this new world order ... Stalin and Roosevelt divide the world into two blocks controlled by US imperialism and the Kremlin with the aim of stopping, diverting, crushing or controlling the workers' revolution in the world" (12)

After the international agreements of Yalta and Potsdam starting in 1947, the "Marshall Plan" was launched in Europe, through which the US invested millions of dollars, which allowed the reconstruction of the world economy, taking advantage of the massive liquidation of productive forces, famine, brutal unemployment and low wages of the proletariat and the European masses after the war. We insist that the US was able to implement the Marshall Plan because after the 2nd war its economy represented one third of all world exports, possessed two thirds of the gold reserves and produced half of all manufactured goods. 

After the launch of the Marshall Plan, the world capitalist economy grew at historic rates for several decades. The possibilities of obtaining a high rate of exploitation for capitalist companies, product of the brutal reduction in the conditions of life, work and wages that had been consolidated with the war, among the masses of Europe, were a magnet for investments and the capitalist governments of Europe used these "comparative advantages" to their advantage to attract them. 


Evolution of the Standard and Poor's 500 index from 1881 to the current crisis, linked to the most important political and economic events in the history of capitalism. Source: GMO 


The "German miracle", for example, was the product of US investments taking advantage of the brutal reduction in the proletariat's standard of living, achieved, among others, by Hitler and his concentration camps, as well as by the division of Germany. and its working class, the most powerful in Europe, which facilitated the exploitation of the German working class. The name of the plan went down in history by the surname of the US Secretary of State, George Marshall, who participated in the summit and inspired the model, along with the English economist Lord Keynes. 

The hegemony of the United States was made clear in the way in which world trade was restored after the war, under the conditions imposed by Washington. In July 1944 a new international monetary system was established at the Bretton Woods International Conference, which established agreements to replace the international monetary system, with floating rates that was imposed after the Great Depression of the 1930s for war spending. 

The main objective of the new adopted financial system was to return to the fixed convertibility of currencies tied to the gold standard and Bretton Woods established the dollar as the standard currency of the international monetary, commercial and financial system, backed by the gold that was stored in the Federal Reserve of The USA Together with the dollar-gold parity, it was agreed to create the International Monetary Fund (IMF), the World Bank (WB) and the International Bank for Reconstruction and Development (IBRD) to regulate the newly created system. 

The postwar "boom" 

The Keynesian regime as the Accumulation Regime, allowed the "boom" of the world economy, with historical growth rates for several decades. This was the economic basis for the enormous social conquests achieved by the masses in the US, Europe, Japan and some backward countries. The "boom" gave stability to the political situation of the imperialist countries, based above all on the important public works plans for the reconstruction of Europe and Japan, whose infrastructure had been badly destroyed by the war.

During the "boom", the world economy reached very important growth peaks, in Great Britain a rate of 17.5%, in the United States a peak of 17.7% in 1950 and 17.0% in 1969. In Japan, a peak of 36.5% in 1969, while in Germany and the rest of Europe the economy reached growth rates of 19% in 1968. (13) Toyotism and Taylorism became basic techniques of the technological pole, for increase labor productivity and both trade and the international division of labor were structured around the US-Europe axis.

The exploitation of the proletariat of both regions placed them at the center of the world economy and consolidated the Atlantic as the center of world trade. Regarding finance capital, the Keynesian regime was characterized by a strong repression of speculative capital with the sanction in 1933 of the Glass-Steagall Act, in 1936 the Robinson-Patman and in 1937 the Miller-Tydings, which were combined with previous ones such as the Sherman anti-trust of 1890 and Clayton 1914. 

These laws sought to separate deposit and investment banks, curb large chains, unfair competition and veto the participation of bankers in company councils. The anti-trust legislation of the US Keynesian regime repressed speculative capital that was located in the City of London. In any case, large US companies were able to monopolize the branches of production and commerce because the monopolies of the other powers were destroyed.

We already have the general picture of the Keynesian regime. Its success was based on the super-exploitation of the workers of the United States and Europe, the largest, most concentrated and most culturally important proletarians in the world, whose wages and living conditions were very deteriorated by the crisis of the 1930' s and the war. 

3) Multinationals became the predominant Form of Accumulation: The third reason, and from the economic point of view the most important, why capitalism was able to get out of the stagnation of the 1929/1945 period and move on to the post-war boom, was the emergence of multinationals as the predominant Form of Accumulation. This fact resulted in a qualitative change in the capitalist production process, since it made possible an accumulation of capital and profits never seen before, and caused enormous changes in the structure and functioning of capitalism.

How did multinationals become the predominant Form of Accumulation? The emergence and development of monopolies from 1860 allowed a development and expansion of capitalism for several decades, which was crossed by crises between the years 1873-96 although these crises were part of the process of expansion and growth itself. On the other hand, as of 1907, both the crisis of that year, as well as those of 1914-18 and the outbreak of the 1st world war, expressed that capitalism had entered a period of decline and stagnation that led to the crash of '29. 

The process of stagnation of capitalism occurred as a consequence of the exhaustion of monopolies as a Form of Accumulation. Why did the exhaustion of cartels and trusts occur? Because to the extent that they took control of the economy, they exacerbated all the contradictions of capitalism to the extreme, in the first place, because by specifying the concentration and centralization of capital in the different branches of production, they sharpened the contradictions between the social character of the production and the individual character of the appropriation of the wealth produced. 

The socially produced wealth was concentrated in a few hands, those of the owners of the monopolies, in a magnitude much higher than what capitalism had done in the industrial period, in which it developed the exploitation of child and female labor and they were thrown growing masses of workers to misery and poverty, which crowded into large cities and towns.

The monopolies brutally exacerbated these existing social inequalities, not only because of the extreme social differentiation between rich and poor, but also because of the tensions and confrontations within the capitalist class itself, as a result of the economic concentration also leading to bankruptcy and disappearance of minor capitalist sectors, at the hands of the most powerful trusts and cartels. The generalized poverty and the fall of the middle layers of the population aggravated by the monopolies, caused the drop in consumption and a general brake on the economy. 

Second, monopolies exacerbated the contradiction between the global character of production and national states because they came to dominate branches of production and trade at the country level, while at the same time they tended to develop internationally. As they began to dispute the world market, brutal fights arose between them for the markets, which was at the base of both the 1st and 2nd world war. These contradictions showed the limitations of cartels and trusts to dominate the branches of production and world trade. 

The wars were clashes and confrontations between the imperialist states, to decide which of those states would impose their monopolies, and in turn the clear demonstration that monopoly as a form of accumulation had entered the stage of its exhaustion. Capitalism needed a superior form of accumulation, which would make the leap to domination of entire branches of production and trade on a world scale, and this magnitude of centralization and elimination of capitals and capitalists was only possible through war. 

The shift from the predominance of monopolies to the predominance of modern multinationals 

As we have seen after World War II, all imperialism emerged shattered and it was only the United States, with its extraordinary development of the productive forces, that was in a position to take command of the world economy. This materialized with the implementation of the Marshall Plan that produced a change in capitalism: modern multinationals displaced monopolies from the center of the world economy. 

The Marshall Plan, economic assistance to Europe, from the US was not disinterested, it sought to extend its monopolies and finance military bases abroad to consolidate its world dominance. The US monopolies took advantage of the capitalist reconstruction of Europe to massively export their goods to European countries, promoting economic reactivation and at the same time they were implanted, using Europe as a bridgehead for their world expansion. 

This is how Peter Dicken puts it: "It is not surprising that US corporations were at the forefront of postwar expansion, building on the unprecedented might of its domestic economy, its technological superiority, and its huge reserves of investment capital. In 1960, the United States accumulated almost 50% of the direct foreign investments in the world (the participation of England was 18%, and that of Germany and Japan a meager 1.2% and 0.7% "... ) (14) 

For Noam Chomsky: "... The Marshall Plan" created the framework for the investment of large amounts of American money in Europe, laying the foundation for modern multinationals ... As the Reagan Department of Commerce later explained, the Plan Marshall "set the stage for large amounts of direct private investment into Europe from the United States," laying out the groundwork for the Transnational Corporations that increasingly dominate the world economy" (15) 

In other words, with the contribution of the US state to Europe, the US monopolies were transformed into multinationals. A good example is the car-producing monopoly Ford, from the United States, which created an organization throughout Europe as early as 1967. The mutation of monopolies into modern multinationals is the fundamental, structural change, in the productive field, of the division. international labor and trade, which is developed under capitalism with the Keynesian regime.

Thus, the capitalist system adopted the physiognomy that we know today, as Nahuel Moreno pointed out: "... The fact that I want to point out to you is the emergence of transnationals ... This is a new phenomenon. Until the 2nd World War, no monopoly it had branches ... with the exception of the oil companies ... that is to say, they are companies that have ten, twenty companies in different countries and all coordinated working together" (16) 

Lenin had pointed out that monopolies are national entities, but that they tend to spread internationally since the beginning of the 20th century. Thirty years later, and after the great imperialist conflagration of World War II, the United States imposed its monopolies globally, as part of the development of the Keynesian regime. What are the differences between multinationals and monopolies? 

As we saw, monopolies are essentially the cartels and trusts, unions or leagues of companies that dominate a branch of production in a country. Multinationals are not a league of companies, they are a single company that dominates a branch of production on a world scale, and therefore they constitute a superior form of accumulation, containing and exceeding monopolies. 

The 2nd war allowed capitalism to go from a lower form of accumulation and concentration of capital to a higher one, since monopolies such as General Electric, Ford, Coca Cola, etc., which had managed to dominate a branch of production in the United States through a complex process of mergers and acquisitions of companies that lasted decades, they were transformed into a single global company, with a strongly centralized command. 

The shareholders board and its presidency in multinationals are no longer bodies that engage in complex negotiations within the companies union to agree on production and marketing goals as in cartels and trusts. For the period 1945/47, the US multinationals are a single command, which imposes production and marketing goals, counting in its favor that it has an immense world market almost without limits and without competition, because the monopolies of others Imperialist countries are devastated after World War II, and therefore economically and financially disadvantaged. 

Second, the boards of the US multinationals imposed production and marketing goals in 1946/47, counting in their favor the existence of a very high rate of exploitation as a result of the deteriorating living conditions of the masses of Europe and USA. 

They also had a political agreement, Yalta and Postdam, which guaranteed investment and implementation because it acted as a political shield against revolts or revolutions that could have expropriated them or undermined their interest in obtaining profits. The political and economic conditions of the 1945/46 conjuncture were more than favorable to come to dominate the world market. 

The company directory is a centralized command, which in turn leads to production and marketing units in different countries, in which it has branches and can plan the development of production with an international division of labor within the company. It can manufacture different parts of the goods and assemble them in different nations, calculating in advance its benefits according to the conditions of exploitation that it obtains by negotiating with the different governments. 

That is to say, from the point of view of capital accumulation and the supreme objective of capitalism, which is profit, multinationals are a form of capital accumulation qualitatively superior to cartels and trusts, the monopolies that emerged in the 19th century. These new forms of accumulation were found in 1946/47 with the enormous possibilities of super-exploitation of workers in Europe and the US, with the Yalta and Potsdam agreements and with the investments of the US imperialist state, which puts money to facilitate all the infrastructure, transport, routes, bridges, supplies, etc., everything necessary for its development. What more can a capitalist ask for?

That is, the transformation of US monopolies into multinationals, and the existence of these companies as the predominant Form of Accumulation, is the most important, structural explanation of the changes that occur in capitalism after the 2nd world war. The implantation of the hegemony of the United States, the Keynesian regime and the multinationals are the three elements that explain the postwar "boom" and the historical rates of growth, investment and production reached since 1945.

The multinationals sharpened the fundamental contradictions of capitalism

But we must not forget for a moment two key elements in the transition from the dominance of monopolies to the dominance of multinationals. One is that both the hegemony of the United States, the Keynesian regime and the multinationals are the product of the brutal destruction of productive forces that the Second World War brought about. In other words, as a result of the existence of private ownership of the means of production, the entire process of capital centralization that meant the passage from the predominance of the monopolies to the predominance of the multinationals, was carried out at a high cost to humanity.

That is to say, the overcoming of one form of accumulation by another, meant the liquidation of classes and class sectors, not only between dominant and dominated classes, but also between the same sectors of the dominant class through wars, which meant a colossal destruction productive forces. When studying the passage from monopolies to multinationals, the economic and political laws that Marxism formulated are those that explain why the cost of sustaining private property, meant millions of deaths for humanity, liquidation of infrastructure and devastated productive forces.

The postwar "boom" (1945- 1975) measured in dollars Geary Khamis, a standard measure, with data from the imperialist countries and the Soviet Union. Source: World Bank


The second element is that the post-war "boom" in no way meant that capitalism came out of its imperialist stage, of decadence. On the contrary, it occurred within that stage indicated by Lenin, for which the multinationals are a form of monopoly accumulation and, like the monopolies that emerged in the 19th century, are Forms of Accumulation of the imperialist stage of capitalism. 

This is of fundamental importance to understand why the postwar "boom" ended up aggravating the crisis of capitalism. The development of the predominance of multinationals did not act to solve the historical crisis of the capitalist system, but on the contrary, it acted aggravating it and opened a huge crisis in capitalism at the end of the 1960s. Let's see how it came about. With the reconstruction of Europe and the "boom", multinationals as a form of accumulation became generalized to the extent that the imperialisms that had been destroyed in the war, England, Germany, Japan, France, etc., who developed their own multinationals. 

The multinationals first aggravated the contradiction between the global character of production and the national states. For Nahuel Moreno: "... The transnational more than ever responds to the monopoly law, that is, it needs the national state. ... There are tendencies and semi-Marxists who say they are colossal because they will inevitably destroy the nation states ... then they will unify Europe, and then Europe with the United States, and then the United States with Japan, and then we go to the famous empire made by the transnationals ... That is a lie, the transnationals they sharpen the competition between them, it is more and more brutal .... " (17) 

The other contradiction that the multinationals exacerbated to the extreme is the contradiction between the social character of production and individual appropriation, given that in the field of wealth accumulation in few hands, the multinationals provoked an unprecedented process of capital over-accumulation. 

This was explained by Nahuel Moreno: "The process of internationalization of the economy and its centralization of US imperialism and the large international monopolies -the" transnationals "-, added to the speed of communications, allows a dizzying rate of obtaining surplus value, distribution of profit and accumulation and over accumulation of capital. This same rhythm accelerates the crisis of the imperialist economy" (18)