The Guardian November 7, 2001


Globalisation brings global recession

Far from being a panacea of growth and development and riches for all, 
globalisation has in no way altered the basic fundamentals of the 
capitalist system and the inevitability of periodic crises of 

Many economists are now beginning to admit that the major capitalist 
countries are sliding into recession and that it is not a matter of months 
to a revival but perhaps years.

The US, during the September quarter, went into what is misleadingly called 
"negative growth"  actually a drop in production. It has been announced 
that in the September quarter about 400,000 American workers lost their 
jobs, the largest single drop for decades. And the figures have yet to 
include significant job losses in the aircraft industry and the slide in 

Although some may attempt to blame everything on the terrorist attack on 
the World Trade Centre, the storm clouds were there for all to see long 
before that event. The American Reserve Bank had embarked upon a series of 
cuts in interest rates in an attempt to stimulate the economy just as the 
Australian Reserve Bank has been doing. They failed to give a lift to the 
economy and for the reason that, in themselves, interest rate cuts do 
nothing to solve the real causes of recessions and depressions.

But the growing crisis is not limited to the US. The Japanese economy has 
been floundering for more than 10 years. Germany and France are also 
feeling the hot winds of the gathering storm.

Bank interest rate cuts and, more recently the attempts to bail out 
floundering private enterprises by government payouts are typical 
capitalist methods of dealing with what is a much more fundamental problem 
and which no government wedded to capitalism can solve. 

The Australian Government's handling of the Ansett collapse is a typical 
example of how not to deal with the situation if the economy is to be 

Millions have been pumped into Ansett by both the Australian and New 
Zealand Governments and a levy imposed on current air travellers ostensibly 
to pay entitlements due to workers. Already upwards of $10 million has been 
collected by way of the levy but not a cent has been paid to the workers 
concerned who are being forced to exist without any pay coming into their 

How can the families concerned pay the rent, buy goods on the shelves, pay 
for electricity and all the other inevitable household expenses if they 
have no income? To the extent that they do not buy what is available on the 
market means that unsold good pile up.

The Ansett example is only a small one but it is being multiplied every day 
in every capitalist country.

Another reality is that huge sums of money are sloshing around the world on 
money markets, by those out to make a speculative profit trading in stocks 
and shares futures and currency markets. This money does not produce 
anything of value. It creates millionaires while turning others into 

Nor is it used to lift the living standards of the overwhelming number of 
people in the world. To the extent that money is going towards any 
productive purpose, the owners of capital look for that country which can 
offer the cheapest labour or whose government offers tax incentives and 
hands out other types of "corporate welfare".

This means that the majority of the world's people are becoming poorer and 
poorer. How much can the millions of poverty stricken people of most Asian 
countries, or those of Africa and South America buy? Virtually nothing.

This is the root cause of the recession which the owners of capital and 
governments such as the Howard Government of Australia. refuse to 
recognise. They will attempt to "solve" the crisis by sacking workers and 
cutting pay and working conditions. That course will only make it worse. 
But they have no other solution.

That is why the Communist Party calls for a change of the direction of 
government  to one that adopts policies that serve the interests of the 
people rather than those of the profit interests of the big corporations. 
The solution is as simple as that.
Back to index page