CONTRADICTIONS IN THE WORLD CAPITALIST SYSTEM
AND THE NECESSITY OF SOCIALIST REVOLUTION

By Jose Maria Sison
Founding Chairman
Communist Party of the Philippines

Brussels International Seminar
3 May 2001

My assignment is to analyze the new economic, political and social contradictions that have emerged in the world capitalist system in recent decades and to present the necessity of socialist revolution and the contradictions in the process of realizing socialism.

I propose to give a brief historical background on the stages of the general crisis of monopoly capitalism or imperialism in the 20^th century. Then, I concentrate on the last two decades of that century and up to the present. Finally, I deal with the necessity of waging the socialist revolution. In brief, I shall discuss the era of imperialism and proletarian revolution.

This era continues and will continue for a long time to come. The epochal struggle between the proletariat and the monopoly bourgeoisie has by no means stopped, despite the revisionist betrayal of socialism and restoration of capitalism in former socialist countries. The general crisis of world capitalism has in fact entered a new stage.

I shall deal with the basic contradictions in the imperialist system: those between the monopoly bourgeoisie and the proletariat in imperialist countries, those among the imperialist powers and those between the imperialist powers and the oppressed nations and peoples.

As Lenin pointed out, imperialism is the highest and final stage of capitalism. It is an utterly parasitic and moribund kind of capitalism. The monopoly bourgeoisie is a rentier class. Apart from owning capital, it contributes nothing to the process of social production but reaps profits from the extraction of surplus value and from the export of surplus goods and surplus capital.

In the few countries where monopoly capitalism became dominant after developing from free competition capitalism, industrial capital merged with bank capital to make the ruling bourgeoisie fundamentally a financial oligarchy. On top of the export of surplus manufactures, the export of surplus capital in the form of direct and indirect investments gains importance.

The monopoly firms of each imperialist country look after their own interests. But they combine and compete with those of other imperialist countries for control of the sources of raw materials, fields of investments, markets and positions of strength. The monopoly firms in various imperialist countries have always engaged in global expansion and in various combinations, such as cartels, trusts, syndicates, mergers and alliances. The phenomenon of the so-called multinational corporation is not new. What is new is the magnification and intensification of the phenomenon.

The imperialist states protect and promote the interest of their respective monopoly bourgeoisie and the various international combinations into which it goes. They maintain a power structure between imperialist and client-states in charge of an economic structure by which the monopoly bourgeoisie can exploit the proletariat and the oppressed nations and peoples.

Since the beginning of the 20^th century, no part of the world has remained uncovered by one or several imperialist powers. The world has become too small for monopoly capitalism. It is pure nonsense to speak of globalization as if it were a new phenomenon. Monopoly capitalism or modern imperialism has always operated on an international scale, first appropriating the old colonial methods and then using the methods of neocolonialism to nullify the formal independence of former colonies, semicolonies and dependent countries.

The imperialist powers struggle constantly among themselves for economic territory. The struggle for a redivision of the world intensifies when the crisis of overproduction intensifies and at worst breaks out into interimperialist wars.

The aggressive and rapacious character of imperialism made the 20^th century the most exploitative and the most violent in the entire history of mankind. But the economic crisis, repression and world wars generated by imperialism have also led to anti-imperialist and class struggles and to proletarian revolution. The general crisis of the world capitalist system has undergone three stages, culminating in social upheavals and revolutionary victories of the proletariat and the rest of the people.

On the way to the first interimperialist war, the monopoly bourgeoisie of the various imperialist countries accelerated the international flow of investments and trade, the concentration of capital and the use of state monopoly capitalism to aid private monopoly capital. It sought to override the domestic crisis of overproduction and the intensifying class struggle between itself and the proletariat by clamoring for a bigger share of the world market.

Imperialist powers that had more colonial possessions raised the anachronistic flag of "free trade" to camouflage their own protectionism while those that had less were blatantly protectionist and demanded to have a greater share of global economic territory. One group of imperialist powers was driven by economic competition and economic rivalry to make war preparations and to collide violently with another group as the struggle for a redivision of the world sharpened.

The first stage of the crisis of the world capitalist system was characterized by crisis leading to interimperialist war and by interimperialist war leading to revolutionary civil war and further on to the triumph of the proletarian revolution in Russia, the weakest link in the chain of imperialist powers. For the proletariat and the people, the happy ending of the first stage of the crisis of the world capitalist system was the establishment of the first socialist state in one-sixth of the globe.

As soon as the Great October Socialist Revolution of 1917 triumphed, the imperialist powers banded together against the Soviet state and launched a multinational war of intervention. The revolutionary alliance of the proletariat and the peasantry withstood the attacks of the imperialist powers and enabled the Bolsheviks to take advantage of interimperialist contradictions in order to preserve and consolidate the gains of the proletarian revolution.

The Soviet Union faced continuous encirclement, embargo and the threat of intervention. But it succeeded in solving the problems of socialist revolution and construction, going through the period of New Economic Policy and proceeding to a series of five-year plans of socialist industrialization and agricultural collectivization and mechanization.

After World War I, the world capitalist system entered the second stage of its general crisis. Eventually, the Great Depression started in 1929, preceded by the boom years of the "new era". It was an extended crisis of overproduction and financial collapse. It generated an unprecedentedly intense class struggle between the monopoly bourgeoisie and the proletariat in imperialist countries, fierce interimperialist contradictions and renewed war preparations, the rise of fascism and the invigoration of national liberation movements in colonies and semicolonies.

The slogans of "free market" and "free trade" were discredited as all imperialist powers proclaimed the need for state intervention and protectionism in economic affairs. State monopoly capitalism had in fact grown far from its embryonic stage at the advent of the era of modern imperialism. The imperialist state increasingly used public finance to provide contracts and subsidies to the private monopolies and build armies for aggression.

To cope with the Great Depression, the imperialist powers turned to what would be conveniently called Keynesianism. This pertains to the use of state intervention and stress on fiscal policy in order to pump-prime, stabilize and stimulate the domestic economies of the imperialist countries. The state undertook public works to generate employment and raise consumption, provided contracts and subsidies to private monopoly firms or nationalized them for a while in order to justify the delivery of public resources to the monopoly bourgeoisie.

Independently of the British economist John Maynard Keynes, the New Deal economists of US president Franklin Delano Roosevelt devised state intervention through public works projects and so did Schacht of Hitlerite Germany. In Anglo-American economic history, Keynes took credit for providing the conscious theorizing and mathematical formulations for state intervention through a fiscal policy of pump-priming.

Until the 1970s, the US monopoly bourgeoisie cited Keynesianism as the policy for using the state to cope with the crisis of monopoly capitalism, to combat the rise of the working class movement and socialism, to build a strong military machinery and to frustrate the demand of underdeveloped countries for industrial development. But Keynesianism has never succeeded in solving the fundamental crisis of monopoly capitalism.

On the way to the second interimperialist war, as the entire world capitalist system was gripped by a grave economic crisis, the imperialist powers engaged in intense war preparations. Rather than Keynesian public works, war production would revive the depressed US economy during World War II just as war production had buttressed the more aggressive schemes of Germany and other Axis powers.

Hitlerite Germany stood out as the most brutal enemy of the world proletariat as it destroyed the German communist party, promoted fascist counterrevolution on an international scale and proceeded to launch the war of aggression aimed at destroying the Soviet Union. But the Soviet Union prevailed. It made heavy sacrifices but delivered the most fatal blows on the German invasionary forces and broke the backbone of the entire lot of Axis Powers.

World War II would be settled in favor of the Allied powers mainly because of the decisive role of the Soviet Union. For the proletariat and people, the happy ending of the second stage of the crisis of the world capitalist system was the emergence of several socialist countries and the great upsurge of national liberation movements.

As a late entrant in the war, whose exports had fed the war production of both Allied and Axis powers, the US emerged from World War II as the strongest economic and military power among the imperialists. US policymakers feared that a grave US economic crisis would follow should its war production end or slow down. The fear was compounded by fear of the unprecedented rise of several socialist countries and the national liberation movements. Thus, the US was in a hurry to declare the Cold War, confront the Soviet Union, intervene in China and launch a war of aggression on Korea.

In the aftermath of World War II, it was quite easy to recognize that the world capitalist system had gone through two stages of its general crisis, each breaking out in an interimperialist war and leading to proletarian revolution. It was also easy to discern that the world capitalist system was moving into the third stage of its general crisis as a consequence of the ravages of war and the continuing rise of revolutionary forces.

In the Moscow meetings of communist and working class parties in 1957 and 1960, there was a general sense that the newly emergent socialist camp would defeat the capitalist camp. There was high optimism that the cause of socialism and national liberation would make further great advances in the rest of the 20^th century. Indeed, great advances would be made. The people’s democracies engaged in socialist revolution and construction among one-third of humanity. Many countries in Asia and Africa declared their national independence.

In waging the Cold War, the US maintained military bases and troops abroad and built military alliances like the NATO, the US-Japan security alliance, CENTO and SEATO. It stepped up military research and development, challenged the Soviet Union to an arms race and engaged in bullying, intervention and aggression. By breaking the nuclear monopoly of the US in 1949, the Soviet Union neutralized US nuclear blackmail.

Compelled by its strategy of containing the Soviet Union and the entire socialist camp, the US promoted the reconstruction of Germany and Japan as soon as the Cold War started. Subsequently, the rapid revival of Japanese and German industrial production gave rise to another crisis of overproduction and finance capital. Recessions became more recurrent. The heavy costs of military production and overseas military forces and the market accommodations to its imperialist allies undermined the US economy.

The phenomenon of stagflation (simultaneous stagnation and inflation) afflicted the US economy throughout the decades of the 1970s. The proponents of monetarism and neoliberalism gained favor among US policymakers as they harped on the failure of Keynesianism and blamed the working class for so-called wage inflation and the government for supposedly big social spending. All along they obscured the cost-push effect of military deployment overseas, wars of aggression and the arms race.

The powerful trend of national independence against colonialism, imperialism and neocolonialism combined with the world proletarian revolution to challenge US imperialism and the world capitalist system. With the US at the head, the imperialist powers were obliged to increasingly adopt neocolonialism in order to coopt the newly-independent countries. They negated the independence of these countries through control of their economy, finances, security forces and cultural institutions.

They waved the flag of "development" under the auspices of the UN, the IMF and World Bank and used the Eurodollar and then petrodollar surpluses to hook most of the newly-independent countries into heavy foreign borrowing for infrastructure-building and improvement of raw-material production for export. These served to draw the third world countries away from industrial development and frustrate their demands for a new international economic order.

Consequently, the mounting crisis of overproduction in raw materials and foreign debt debilitated these third world countries. Throughout the 1960s and 1970s, the imperialist powers also used brutal puppet regimes to suppress the people when neocolonial methods of economic and financial manipulation did not suffice.

The world proletarian revolution and the broad anti-imperialist movement reached their peak in the simultaneous advance of the wars of national liberation in Indochina and the Great Proletarian Cultural Revolution in China from the 1960s to the 1970s. For the proletariat and people, the victories of these revolutions were the happy ending of the third stage of the crisis of the world capitalist system. However, they overlapped with the continuous deterioration of economic, social and political conditions in the Soviet Union and Eastern Europe due to the betrayal of socialism by the ruling revisionists since 1956.

From the latter half of the 1970s, the adverse consequences of the betrayal of socialism became conspicuous. In the Soviet Union, the rise of the bureaucrat monopoly bourgeoisie and the arms race led to an all-round deterioration of the Soviet economy, especially agricultural production and civil industrial production. Factors for the disintegration of the Soviet-bloc countries were stimulated by foreign loans and trade concessions from the West, especially West Germany.

In China, the Dengist ruling clique rose to power and reversed the socialist line of Mao soon after his death. Since then, China has openly restored capitalism faster and in a more deepgoing way than had the Soviet Union from the time of Khrushchov. The Dengist line of counterrevolution harped on the big comprador line of modernization through integration into the world capitalist system.

The betrayal of socialism by revisionist ruling cliques is definitely a strategic setback for the socialist cause. But it does not spell the end of the socialist cause. On the contrary, it means the aggravation and deepening of the general crisis of the world capitalist system. This system cannot accommodate too many industrial capitalist countries without aggravating the crisis of overproduction.

The conversion of socialist countries to capitalism does not simply mean more ground for capitalist expansion. Under conditions of monopoly capitalism, the increase in the number of capitalist countries with some industrial base, means the increased recurrence of the crisis of overproduction. This leads to economic stagnation, destruction of productive forces and political turmoil not only in the less developed industrial capitalist countries, but also in the entire capitalist world.

In the latter half of the 1970s, the world capitalist system entered the fourth stage of its general crisis. The imperialist, the revisionist-ruled and the third world countries, were generally afflicted by economic, social and political crisis and proceeded on a course of continuous deterioration.