Socialist revolution is only way to resolve the ‘epic clash’ between bankrupt capitalism and working class

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It is not just British capitalism that is facing a financial crisis; the entire world capitalist system is being strangled by  debt, and with no way out governments and the international speculators who finance this debt are in the midst of ‘an epic clash’ according to an article in the Telegraph newspaper.

In the immediate aftermath of last Wednesday’s budget delivered by Labour chancellor Rachel Reeves, the international financial speculators and hedge funds – who finance government debt by buying bonds – reacted by immediately pushing up the interest rates they charge.

With Reeves pledged to borrow £50 billion from these speculators, the cost to the UK economy in increased interest payments is massive. The interest costs on the government debt are now forecast to exceed £100 billion in each year.

Reeves justified this massive expansion of the UK national debt on the old promise that this money would be invested to ‘grow the economy’.

As the Telegraph article by Matthew Lynn points out, this fiction will no longer cut any ice with the world finance speculators who are ‘rebelling against overspending governments’ adding: ‘this means we are in for a long spell of financial turbulence and potentially a full-blown crisis.’

Lynn makes it clear that this is a crisis hitting not just the UK but across the world, saying: ‘The backlash against this budget is simply part of a global trend. Driven by left-leaning bodies such as the IMF, many political leaders fell for the line that markets automatically supported bigger government.’

The International Monetary Fund (IMF), established as the world ‘banker of last resort’ to ensure stability in the capitalist financial system, has rarely, if ever, been described as ‘left leaning’ before.

What upsets Lynn is the fact that the IMF for some time has been urging governments to act with caution over carrying out savage austerity cuts to workers’ wages and social gains in order to ‘shrink’ the welfare state.

The IMF is rightly scared of the revolutionary implications of a working class rising up in defence of its hard-won rights.

This fear is dismissed by the representatives of world finance capital who are demanding real action to deal with the massive debt crisis by smashing all rights and gains and driving the working class back to conditions last seen in the 19th century. As Lynn correctly states, this is not merely a crisis affecting the UK but across Europe and, most crucially, the US.

In France, a massive public borrowing binge under president Macron has led to the international ratings agencies downgrading twice, ‘bond yields have soared and it can’t borrow any more’.

Germany, the EU economic ‘powerhouse’, is collapsing into recession with the once mighty car producer Volkswagen on the point of closing at least three of its plants, throwing tens of thousands out of work.

In the US, the national debt stands at a colossal, and unrepayable, $35.7 trillion and is projected to reach $36 trillion by the end of the year – an increase of $1 trillion every 100 days!

With interest rates on government debt soaring across the globe, Lynn insists: ‘So far we have only seen the first skirmishes’ – presumably a reference to the bond vigilantes coming close to crashing the UK economy following Liz Truss’s 2022 budget of borrowing for unfunded tax cuts to the rich.

But now, Lynn insists, ‘we are about to witness an epic clash between government and investors’ while he confidently predicts: ‘Eventually the markets will thankfully prevail, and governments will have to stop borrowing and spending money as if it had no consequences.’

Lynn is right about one thing – the time for skirmishes has ended and the situation has moved rapidly from pre-revolutionary struggles by workers to defend their gains into an era when socialist revolution is the only way forward.

The working class internationally is vastly more powerful than the bankers and bosses and will not allow itself to be driven into the gutter to keep bankrupt capitalism from collapse.

This demands building sections of the International Committee of the Fourth International in every country to provide the leadership required to dump capitalism into the dustbin of history where it belongs, with the victory of the World Socialist Revolution.