AN ARTICLE in the Business section of the Daily Telegraph yesterday laid bare the historic depth of the crisis of world capitalism today.
The article, ‘Why the world needs a new Bretton Woods moment’, states bluntly: ‘The global economy faces its greatest upheaval since the Second World War as coronavirus trashes businesses and jobs across the planet. Billions of workers are under threat, debts are exploding and the full scale and timeline of the crisis are as yet unknown.’
‘But’, the article continues, ‘there is something of a blueprint on how to respond. Seventy-five years ago the Allied powers came to victory with a plan already in place to rebuild the shattered economy. Their Bretton Woods system, devised at a conference in 1944, paved the way for decades of globalisation and growing prosperity.’
Bretton Woods was a conference convened to rescue world capitalism by establishing a series of international agencies that would artificially stimulate the post-war world economy through inflationary measures.
The International Monetary Fund (IMF) was set up to provide a pool of money to be used to bail-out any country drowning in debt and so prevent state bankruptcy from spreading across the world.
Central to Bretton Woods was the US dollar, guaranteed at a fixed rate of $35 to an ounce of gold. The dollar became the main reserve asset for the world with every currency aligning itself to gold, the only real repository of value, via aligning itself to the dollar.
On top of a very small amount of gold, a massive inverted pyramid of paper dollars was created, under the boast that the dollar was ‘as good as gold’.
This all came crashing down in the late 1960s when European governments, led by France, started demanding gold in return for the billions of dollars they held.
In August 1971, the Bretton Woods Agreement collapsed when US president Richard Nixon was forced to end the convertibility of gold into dollars and ushered in a period when paper money had no relationship to any real value.
American capitalism shouldered the responsibility for propping up the entire world capitalist system against the threat posed by the working class.
World War One had seen the working class seizing power in Russia under the leadership of Lenin’s Bolshevik Party, and revolutionary confrontation across the world in Germany, China, France, Italy, Spain and in Britain with the general strike of 1926.
These attempts to continue the October revolution were defeated, not through the strength of capitalism but through the betrayals of the Stalinist and reformist leaderships that dominated the working class.
It was this fear of post-war revolution that drove on the Bretton Woods agreement and since its collapse capitalism has survived through constantly piling on debt, creating a debt mountain that is crashing the world economy and strangling the productive forces of the world.
The IMF, which is supposed to rescue countries, has reported it faces immediate requests for loans from a record 102 countries with more to follow in the coming months, money which it doesn’t have. The US is in no position to bail anybody out.
The US Federal Reserve Bank has its own debt mountain of $20 trillion while its economy is diving into recession, and with 40 million unemployed it is facing a working class revolution at home.
It is fear of a workers’ revolution at home, that is driving Trump forward. He has stopped US contributions to the IMF money pot and, instead of the international unity the article calls for, American imperialism has declared war on all its capitalist rivals, and against its main external enemy, which it has now identified as the Chinese revolution.
The unity arrived at in Bretton Woods came on the back of a war that had cost the lives of hundreds of millions of workers. The imperialist unity sought to prevent revolution at home, and pursued a Cold War against Russia, while imperialist interventions fought communists in Malaya, Korea and Vietnam, and revolutionary nationalists in Cyprus, Aden, and Suez.
These wars were the other side of Bretton Woods as the US, aided by ‘Little’ Britain, sought to become the master of the planet.
All this has come crashing down! The only way to resolve the crisis of world imperialism is to overthrow it with the world socialist revolution.