A CYCLE OF NEW BATTLES

Interview with Karl Heinz Roth on the current crisis and its consequences

[This interview published in: ak-analyse & kritik, 12/19/2008 is translated from the German on the World Wide Web, www.linksnet.de/de/artikel/24004.]

“We are moving into a world-historical situation where all the points of social, economic and political life will be reset. For my generation, this will be the second epochal upheaval after the years 1967 to 1973,” Karl Heinz Roth said in a seminar of the interventionist left in the middle of December 2008. On this occasion we spoke with him about possible crisis scenarios, approaches and arising challenges. In the spring of 2009, a detailed study on the present crisis and the consequences by Karl Heinz Roth will be published in Germany by VSA.

Ak: In the last ak, Mario Candeias spoke of the end of neoliberalism and a new quality of state interventionism. Do you share this judgment?

Karl Heinz Roth: No. In the past, there were two stages of state intervention. The bailout operations for financial capital were one stage. This was a very traditional bailout policy. The support for the banks seems striking because these gigantic sums are called guarantee sums. However a form of long-term state intervention was not established.

The anti-cyclical economic programs in China, Great Britain and Spain were somewhat different. These were truly state interventions. President Obama’s state intervention also involves Keynesian policy. But whether this becomes a permanent phenomenon, a sudden qualitative change in the sense of a mixed economic system as Paul Mattick described the western industrial states of the 1950s and 1960s is very doubtful. This is an “open box.” What will happen cannot be predicted. Several determinants of the crisis are completely unclear. State interventions are strengthened in one partial area as emergency operations without any new program for a new cycle.

We experience the third great worldwide economic crisis after 1929 and 1974. Massive class struggles in the metropolises preceded or accompanied the crises of 1929 and 1974. These struggles have not occurred this time. What will be the political consequences?

Before 1929 there weren’t any really great class struggles. The 1920s had one crazy analogy to the first decade of the 21st century, namely the defeat of the working class. The first workers’ revolution in the world happened in 1917-21. We always forget this. We only speak about Russia or the Soviet Union. We forget a gigantic class war took place in the US between 1916-1919/20 that ended with a strategic defeat with mass deportations of thousands upon thousands of communists and anarchists from the US, restrictions of immigration laws and so forth.

I see strong analogies to the worldwide economic crisis of 1929. There were relatively intense battles in Germany but the working class was outmaneuvered so to speak. That is also the reality today in a certain way. I also think there is a damming up of battles through the enormous credit expansion in many countries. The low-wage strategy and lower mass income were hidden. Therefore I believe a new cycle of workers’ struggles is coming.

The economic – and bailout packages must be paid somehow – either through a new accumulation push – perhaps a Green New Deal – or intensified exploitation and shifting costs of the crisis to the subordinate classes. You speak of a new cycle of struggles. What is coming to us?

The crisis has reached a depth that is outrageous. I am horrified about the perspective of the next months and years. An enormous state indebtedness looms on the horizon. This can be shifted to the subordinate classes in two ways, firstly through tax increases and secondly through an inflation process, that is by making the crisis into a stagflation, a stagnating economic development with extreme inflation tendencies.

This development blocks a twofold constellation: on one side, the symbiosis between China and the US. When the growth process in China collapses – and it is collapsing –, a situation arises in which Chinese state despotism will say: “The shirt is closer than the coat.” China will stop buying US-government bonds because it has to pay for its own growth program. This means the symbiotic China-US relation, the creditor-debtor situation, will break open and China will suddenly not finance the indebtedness of the US any more.

Social battles in China could shake the whole model in no time, like massive battles in the US that cannot be excluded as a possibility. A green ecologically oriented capital innovation strategy exists. Barack Obama surrounds himself with clever people, for example an economics professor from Berkeley, Christina D. Romer who has concentrated on the economic history of the Great Depression and the new Treasury secretary Timothy Geithner who speaks Japanese and Chinese fluently.

If the class struggles do not develop further, workers will pay the bill in the next 15 to 20 years. This will be a gigantic bill. Iceland shows this: the country is bankrupt. A radical austerity policy for Iceland could initiate a widespread impoverishment process leading to extreme pauperization. A third possibility would be a bloody counter-revolution against a revolutionary process. We come into rather dramatic waters.

Since a new Keynesian welfare state is only conceivable beyond the nation state, this concept is utopian as you wrote two years ago at the founding of The Left Party (Die Linke). Worldwide efforts to check the consequences of the crisis appear. Given these developments, do you still regard this concept as illusory?

No. A revolutionary process is only possible when a radical reform gets going. For reasons of time alone, it is completely illusory that people who knuckled down for decades so they hardly dared develop their own ideas begin a revolutionary program in no time. Time and experience are necessary for a radical reform. Only in this way can there be a qualitative leap.

Whether the G20 constellation stabilizes is completely open. The predictions made by some leftists are very superficial. Only the tandem US-China would be left at the end of the crisis process. The rest of the threshold countries like Brazil, Mexico, South Korea and India would revert to the status of a developing country.

Today’s threshold countries – China plays a special role today – have learned enormously from the crises in the 1980s and 1990s and invest vast currency reserves against exchange rate risks. For years, they profited from the raw material boom. However this is massively breaking down at the moment. Because of this, the deficit trade balances necessary to accelerate the growth process are becoming insufferably high.

Thus several components endanger the threshold countries. The most important is the dramatic capital withdrawal of capital investors. South Korea is practically insolvent. International capital withdraws as in all other threshold countries with the exception of China. In a year, there could be a scenario in which the currency reserves are gone, the raw material prices fall more, the balance of payment advantages cease and the capital withdrawal of international capital continues. Such a situation would very suddenly destabilize these countries.

Still this development is entirely open. Making predictions is like making conjectures. All the crisis scenarios are very possible. That is a catastrophic perspective.

What would be radical in a radical reform perspective that goes beyond what we are forced to do now? What are the points for maintaining, forcing and organizing a revolutionary perspective to counter the danger of becoming stuck in the reform process?

To speed up and radicalize the process of anti-cyclical state intervention, a simultaneous base mobilization is necessary. What I propose cannot be institutionally realized: expropriating all owners of capital assets and progressively taxing all recipients of high incomes to avoid falling in the state indebtedness trap. A radical redistribution from top to bottom must be carried out. That is a radical step that can only succeed through mass processes. In other words, radical redistribution must be fought for.

The second step is restoration of fixed rates of exchange and introduction of a world monetary system. This is not Bretton Woods II because only the gold bond of the US dollar was introduced as the key currency in Bretton Woods 1944, not a world currency. The system in effect up to 1973 represented a complete deformation of the global anti-cyclical program of Keynes who wanted to introduce a world currency, the Bancor. Realizing this today is only possible when radical developments are set in motion that go far beyond what is considered progressive today. Thus simultaneity is vital for the reform process.

The revolutionary process can only start locally and in combination with international forms of the self-organization of workers. The processes of the communal socialization of production and reproduction should concentrate on the so-called public goods. Freedom in production, as Marx said, only becomes freedom when the immediate producers organize production and their metabolism with nature themselves. This revolutionary perspective can only be implemented when it is internationally interwoven. This should be organized in the framework of global federations of workers – above all in the strategic sectors IT, media and transportation. This is impossible without coupling. In this perspective, points of intersection arise that actually make a global revolutionary process irreversible. So I envisage the linking of processes. Thus a simultaneous process that strengthens each other is vital, not first reform and then revolution. I do not see any other possibility.

Who should be proponents of this program?

The immediate producers, the class of workers, the world working class including knowledge workers, technicians and engineers should be the proponents. That is the perspective of self-organization that I call autonomy, not socialism. The latter term is discredited.

Who ensures they adopt this perspective?

We must do this, ak, wildcat, leftist unions and so forth. I also hope for a new militant women’s movement that returns to the social question. We all must do this. We have this responsibility because we stand before a strategic window. Unless we act, it will be very dark.