The world crisis of capitalism dominated the annual meeting of the World Economic Forum in Davos this week.
The splits between US imperialism and its former allies in the UK and Europe erupted before US president Donald Trump even landed in the Swiss mountain resort following his pledge to take over Greenland, an autonomous territory of Denmark, by force.
This threat of the US military invading a NATO ally caused an eruption, both politically and economically for world capitalism.
Immediately, EU countries threatened retaliation against Trump’s threat to impose a 10% tariff on all goods from the EU and UK if they stood in the way of this attempt to annex Greenland.
French president Emmanuel Macron threatened to invoke the EU’s ‘big bazooka’, the Anti-Coercion Instrument which in theory could ban all trade and investment with any nation attempting to meddle ‘with the legitimate sovereign choices’ of EU member states.
Canadian prime minister Mark Carney received a standing ovation at Davos for a speech on Tuesday where he warned that the old ‘rule based’ world order has become ‘fiction’ and that the ‘old order is not coming back’ following Trump’s stated pledge to annex Canada.
Meanwhile, stock markets plunged across the world with Wall Street’s S&P 500 falling by 2.1% and the tech-focused Nasdaq plunging by 2.4%.
The US dollar, traditionally a safe haven for investors, also fell on Tuesday while the price of gold reached a new record high of $4,700 an ounce as the money markets reacted in horror at the prospect of an all-out tariff war and military invasion of an EU nation.
On Wednesday, Trump dramatically rowed back on his threat to invade Greenland and said: ‘I will not be imposing the tariffs that were scheduled to go into effect on February 1st,’ leading to a slight improvement in the stock markets as dealers breathed a sigh of relief that this immediate threat had been avoided, at least for the time being.
European countries, including the UK, hold twice as many US government bonds and equities as the rest of the world. The US is dependent on trillions of dollars of investment from foreign countries to prop up its economy and finance its massive national debt of $38 trillion.
If this investment were to dry up or stop completely, American capitalism would collapse into bankruptcy overnight. But the effect of this would be to crash the economies of Europe, the UK and the rest of the capitalist world.
An article by Allister Heath in The Daily Telegraph newspaper summed up the crisis facing world capitalism, saying: ‘There is a real danger that Trump’s imperialistic over-reach could trigger a catastrophic chain reaction. A concerted boycott of US treasury bonds, as some are demanding, would destroy not just America but the European and world economy.’
In another article in the Telegraph on the same day Ambrose Evans-Pritchard, the paper’s International Business Editor, argues that this is precisely what is required.
This article, headed: ‘Trump has crossed all lines: It is time to cut off his global credit card,’ argues that only by the international money markets cutting off funding for the US can Trump be stopped from his war against the world and his invasion of American cities – ‘with the clear purpose of provoking civil unrest and justifying recourse to the Insurrection Act, a precursor to suspending future elections if need be’.
Cutting off Trump’s ‘global credit card’ will not resolve this historic crisis.
The only force with the power to put an end to capitalist crisis is the international working class.
The burning issue today, is for the working class across the US, Europe and UK to unite by demanding their trade unions take action by calling mass general strikes to bring down their bankrupt capitalist governments and go forward to workers governments and socialism.
The immediate issue of the hour is to build up the WRP and Young Socialists in the UK and sections of the International Committee of the Fourth International in every country to provide the leadership for the victory of the World Socialist Revolution.
