For the first time in history, the economic crisis affected all humans spread throughout the world. This crisis which is not yet over is being experienced everywhere and it is explained as a crisis in capitalist globalisation. No territory including Lanka is spared. In global capitalism the economic, social and political factors are interrelated. The economic crisis is not an incidental crisis. This is a systemic, structural crisis: this is the most serious crisis since 1929. The United States has lost 35% of its financial wealth and the Euro zone 25%. When governments speak of “emerging from crisis” we simply cannot agree. There may be short-term recoveries, related to state capitalist policies carried out in this or that country, but the countries of the centre — the USA and Europe — are still not emerging from the crisis. The explosion of public debt in southern Europe — in Greece, Spain — and the banking and financial uncertainty demonstrate the instability of the situation and the new phase of the crisis, at least in Europe. The current crisis is not a relative cyclical crisis; it is part of a long-term structural crisis. In fact it is a crisis of the “productive order” put in place by neo-liberalism introduced at the end of the 1970s. The phases of “recovery” and “recession” have alternated for several decades but crises are increasingly deeper. Now they tend to follow an increasingly accelerated pace, and strike the heart of the system.

Historic limits

The current crisis shows a deepening of the contradictions and “historic limits” of the system. This crisis began in the financial sphere, but it could not be reduced to a banking and financial crisis. Why because, it results from the combination of a crisis of over-production of commodities, over accumulation of capital and under-consumption. At the end of the 1970s, when the phase of growth of the previous three decades came to an end, the bourgeoisie launched an offensive to restore the rate of profit. This was attempted by lowering wages, massive privatization, developing mass unemployment, and deregulating social relations. However, this pressure on wages, employment, and social expenditure resulted in a reduction in demand which, in turn, caused a surplus production. Therefore a problem of profitability was created for industrial production. It was less profitable to invest in industry and more cost-effective to do it on the financial markets. To offset this dual crisis, that of surplus production with the decline of industrial profitability, and that of the realization of surplus value with the fall in consumption, the global capitalist system engaged in a headlong rush forward. It searched for profits on the financial markets both private and public. This was what cracked in 2008; Banks and financial markets were first in line. But what caused this spiral was the logic of capitalism itself: the quest for profit, searching for the best rate of profitability for invested capital, competition between capitals, and private ownership of the key economic sectors.

Those mechanisms have resulted in a long-term crisis marked by the following characteristics:

(a) Growth limited to around 3-4% on a world scale with significant inequalities between only 1-2% in Europe, 2-3% in the USA and 8-10% for India and China. Without China and India, world growth is very low.

(b) Maintenance of unemployment: 50 million and more unemployed in the OECD countries; over 217 million unemployed worldwide according to the ILO; 20% unemployment in a country like Spain; Irreversible loss of jobs in the USA and Europe, between 3 and 5% of jobs.

(c) Reduced and limited consumption related to pressure on wages. Net increase in all emergency food aid services in the USA and Europe. Increase in expenditure on food aid in the 27 major cities of the USA.

(d) Huge public deficits to contain the crisis (between 8 and 13%).

This continued crisis leads the employers and the dominant classes to redouble attacks against workers and peoples. This time of crisis, has become a time of a new offensive by the international capital. At the same time labour migration has increased. There is now a global market of the labour force, which requires more competition. There is competition between the bourgeoisie and the proletariat. The crisis of 2008 has accelerated the restructuring of enterprises, with plans often already envisaged for the reorganization of production in the main branches of activity, with layoffs, and more flexibility. This exerts downward pressure on wages and workers’ rights. These attacks will continue and further degrade the living conditions of hundreds of millions of workers. On the other hand, attacks on public services are growing. The bourgeoisie goal is to sharpen attacks on social protection, health, pensions, throughout the world especially in Europe. The corollary of these social attacks is worsening security policies, police control and social control over populations with an increase in state violence. There is no way out for Lanka except organized resistance with international solidarity.