Ten Reasons for Not Legalizing Prostitution And a Legal Response to the Demand for Prostitution

by Janice G. Raymond

[PLEASE NOTE: The Revolutionary Spirit journal reprints this article solely for educational purposes. The reprinting of this article should not be taken as an endorsement of all opinions expressed by the author in her other work.]

(Published in simultaneously in hard copy in Journal of Trauma Practice, 2, 2003: pp. 315-332; and in Prostitution, Trafficking and Traumatic Stress. Melissa Farley (Ed.). Binghamton: Haworth Press, 2003.

Summary

The following arguments apply to all state-sponsored forms of prostitution, including but not limited to full-scale legalization of brothels and pimping, decriminalization of the sex industry, regulating prostitution by laws such as registering or mandating health checks for women in prostitution, or any system in which prostitution is recognized as sex work or advocated as an employment choice.

As countries are considering legalizing and decriminalizing the sex industry, we urge you to consider the ways in which legitimating prostitution as work does not empower the women in prostitution but does everything to strengthen the sex industry.

1. Legalization/decriminalization of prostitution is a gift to pimps, traffickers and the sex industry.
2. Legalization/decriminalization of prostitution and the sex industry promotes sex trafficking.
3. Legalization/decriminalization of prostitution does not control the sex industry. It expands it.
4. Legalization/decriminalization of prostitution increases clandestine, hidden, illegal and street prostitution.
5. Legalization of prostitution and decriminalization of the sex industry increases child prostitution.
6. Legalization/decriminalization of prostitution does not protect the women in prostitution.
7. Legalization/decriminalization of prostitution increases the demand for prostitution. It boosts the motivation of men to buy women for sex in a much wider and more permissible range of socially acceptable settings.
8. Legalization/decriminalization of prostitution does not promote women's health.
9. Legalization/decriminalization of prostitution does not enhance women's choice.
10. Women in systems of prostitution do not want the sex industry legalized or decriminalized.

ARGUMENTS:

1. Legalization/decriminalization of prostitution is a gift to pimps, traffickers and the sex industry.

What does legalization of prostitution or decriminalization of the sex industry mean? In the Netherlands, legalization amounts to sanctioning all aspects of the sex industry: the women themselves, the so-called clients and the pimps who, under the regime of legalization, are transformed into third party businessmen and legitimate sexual entrepreneurs.

Legalization/decriminalization of the sex industry also converts brothels, sex clubs, massage parlors and other sites of prostitution activities into legitimate venues where commercial sexual acts are allowed to flourish legally with few restraints.

Ordinary people believe that, in calling for legalization or decriminalization of prostitution, they are dignifying and professionalizing the women in prostitution. But dignifying prostitution as work doesn't dignify the women, it simply dignifies the sex industry. People often don't realize that decriminalization, for example, means decriminalization of the whole sex industry not just the women. And they haven't thought through the consequences of legalizing pimps as legitimate sex entrepreneurs or third party businessmen, or the fact that men who buy women for sexual activity are now accepted as legitimate consumers of sex.

CATW favors decriminalization of the women in prostitution. No woman should be punished for her own exploitation. But States should never decriminalize pimps, buyers, procurers, brothels or other sex establishments.

2. Legalization/decriminalization of prostitution and the sex industry promotes sex trafficking.

Legalized or decriminalized prostitution industries are one of the root causes of sex trafficking. One argument for legalizing prostitution in the Netherlands was that legalization would help end the exploitation of desperate immigrant women trafficked for prostitution. A report done for the governmental Budapest Group* stated that 80% of women in the brothels in the Netherlands are trafficked from other countries (Budapest Group, 1999: 11). As early as 1994, the International Organization of Migration (IOM) stated that in the Netherlands alone, nearly 70 per cent of trafficked women were from CEEC [Central and Eastern European Countries] (IOM, 1995: 4).

The government of the Netherlands promotes itself as the champion of anti-trafficking policies and programs, yet cynically has removed every legal impediment to pimping, procurement and brothels. In the year 2000, the Dutch Ministry of Justice argued for a legal quota of foreign sex workers, because the Dutch prostitution market demands a variety of bodies (Dutting, 2001: 16). Also in the year 2000, the Dutch government sought and received a judgment from the European Court recognizing prostitution as an economic activity, thus enabling women from the EU and former Soviet bloc countries to obtain working permits as sex workers in the Dutch sex industry if they can prove that they are self employed. NGOs in the Netherlands have stated that traffickers are taking advantage of this ruling to bring foreign women into the Dutch prostitution industry by masking the fact that women have been trafficked, and by coaching the women how to prove that they are self-employed migrant sex workers.

In the one year since lifting the ban on brothels in the Netherlands, NGOs report that there has been an increase of victims of trafficking or, at best, that the number of victims from other countries has remained the same (Bureau NRM, 2002: 75). Forty-three municipalities in the Netherlands want to follow a no-brothel policy, but the Minister of Justice has indicated that the complete banning of prostitution within any municipality could conflict with the right to free choice of work (Bureau NRM: 2002) as guaranteed in the federal Grondwet or Constitution.

In January, 2002, prostitution in Germany was fully established as a legitimate job after years of being legalized in so-called eros or tolerance zones. Promotion of prostitution, pimping and brothels are now legal in Germany. As early as 1993, after the first steps towards legalization had been taken, it was recognized (even by pro-prostitution advocates) that 75 per cent of the women in Germany's prostitution industry were foreigners from Uruguay, Argentina, Paraguay and other countries in South America (Altink, 1993: 33). After the fall of the Berlin wall, brothel owners reported that 9 out of every 10 women in the German sex industry were from eastern Europe (Altink, 1993: 43) and other former Soviet countries.

The sheer volume of foreign women who are in the prostitution industry in Germany, by some NGO estimates now up to 85 per cent, casts further doubt on the fact that these numbers of women could have entered Germany without facilitation. As in the Netherlands, NGOs report that most of the foreign women have been trafficked into the country since it is almost impossible for poor women to facilitate their own migration, underwrite the costs of travel and travel documents, and set themselves up in business without outside help.

The link between legalization of prostitution and trafficking in Australia was recognized in the U.S. State Department's 1999 Country Report on Human Rights Practices, released by the Bureau of Democracy, Human Rights and Labor. In the country report on Australia, it was noted that in the State of Victoria which legalized prostitution in the 1980s, trafficking in East Asian women for the sex trade is a growing problem in Australia. Lax laws, including legalized prostitution in parts of the country, make [anti-trafficking] enforcement difficult at the working level.

3. Legalization/decriminalization of prostitution does not control the sex industry. It expands it.

Contrary to claims that legalization and decriminalization would regulate the expansion of the sex industry and bring it under control, the sex industry now accounts for 5 percent of the Netherlands economy (Daley, 2001: 4). Over the last decade, as pimping became legalized and then brothels decriminalized in the Netherlands in 2000, the sex industry expanded 25 percent (Daley, 2001: 4). At any hour of the day, women of all ages and races, dressed in hardly anything, are put on display in the notorious windows of Dutch brothels and sex clubs and offered for sale -- for male consumption. Most of them are women from other countries (Daley, 2001: 4) who have in all likelihood been trafficked into the Netherlands.

There are now officially recognized associations of sex businesses and prostitution customers in the Netherlands that consult and collaborate with the government to further their interests and promote prostitution. These include the Association of Operators of Relaxation Businesses, the Cooperating Consultation of Operators of Window Prostitution, and the Man/Woman and Prostitution Foundation, a group of men who regularly use women in prostitution, and whose specific aims include to make prostitution and the use of services of prostitutes more accepted and openly discussible, and to protect the interests of clients (NRM Bureau, 2002:115-16).

Faced with a dearth of women who want to work in the legal sex sector, the Dutch National Rapporteur on Trafficking states that in the future, a proposed solution may be to offer [to the market] prostitutes from non EU/EEA countries, who voluntarily choose to work in prostitution. They could be given legal and controlled access to the Dutch market (NRM Bureau, 2002: 140). As prostitution has been transformed into sex work, and pimps into entrepreneurs, so too this potential solution transforms trafficking into voluntary migration for sex work.The Netherlands is looking to the future, targeting poor women of color for the international sex trade to remedy the inadequacies of the free market of sexual services. In the process, it goes further in legitimizing prostitution as an option for the poor.

Legalization of prostitution in the State of Victoria, Australia, has led to massive expansion of the sex industry. Whereas there were 40 legal brothels in Victoria in 1989, in 1999 there were 94, along with 84 escort services. Other forms of sexual exploitation, such as tabletop dancing, bondage and discipline centers, peep shows, phone sex, and pornography have all developed in much more profitable ways than before (Sullivan and Jeffreys: 2001).

Prostitution has become an accepted sideline of the tourism and casino boom in Victoria with government-sponsored casinos authorizing the redeeming of casino chips and wheel of fortune bonuses at local brothels (Sullivan and Jeffreys: 2001). The commodification of women has vastly intensified and is much more visible.

Brothels in Switzerland have doubled several years after partial legalization of prostitution. Most of these brothels go untaxed, and many are illegal. In 1999, the Zurich newspaper, Blick, claimed that Switzerland had the highest brothel density of any country in Europe, with residents feeling overrun with prostitution venues, as well as experiencing constant encroachment into areas not zoned for prostitution activities (South China Morning Post: 1999).

4. Legalization/decriminalzaton of prostitution increases clandestine, hidden, illegal and street prostitution.

Legalization was supposed to get prostituted women off the street. Many women don't want to register and undergo health checks, as required by law in certain countries legalizing prostitution, so legalization often drives them into street prostitution. And many women choose street prostitution because they want to avoid being controlled and exploited by the new sex businessmen.

In the Netherlands, women in prostitution point out that legalization or decriminalization of the sex industry cannot erase the stigma of prostitution but, instead, makes women more vulnerable to abuse because they must register and lose anonymity. Thus, the majority of women in prostitution still choose to operate illegally and underground. Members of Parliament who originally supported the legalization of brothels on the grounds that this would liberate women are now seeing that legalization actually reinforces the oppression of women (Daley, 2001: A1).

The argument that legalization was supposed to take the criminal elements out of sex businesses by strict regulation of the industry has failed. The real growth in prostitution in Australia since legalization took effect has been in the illegal sector. Since the onset of legalization in Victoria, brothels have tripled in number and expanded in size; the vast majority having no licenses but advertising and operating with impunity (Sullivan and Jeffreys: 2001). In New South Wales, brothels were decriminalized in 1995. In 1999, the numbers of brothels in Sydney had increased exponentially to 400-500. The vast majority have no license to operate. To end endemic police corruption, control of illegal prostitution was taken out of the hands of the police and placed in the hands of local councils and planning regulators. The council has neither the money nor the personnel to put investigators into brothels to flush out and prosecute illegal operators.

5. Legalization of prostitution and decriminalization of the sex industry increases child prostitution.

Another argument for legalizing prostitution in the Netherlands was that it would help end child prostitution. In reality, however, child prostitution in the Netherlands has increased dramatically during the 1990s. The Amsterdam-based ChildRight organization estimates that the number has gone from 4,000 children in 1996 to 15,000 in 2001. The group estimates that at least 5,000 of the children in prostitution are from other countries, with a large segment being Nigerian girls (Tiggeloven: 2001).

Child prostitution has dramatically risen in Victoria compared to other Australian states where prostitution has not been legalized. Of all the states and territories in Australia, the highest number of reported incidences of child prostitution came from Victoria. In a 1998 study undertaken by ECPAT (End Child Prostitution and Trafficking) who conducted research for the Australian National Inquiry on Child Prostitution, there was increased evidence of organized commercial exploitation of children.

6. Legalization/decriminalization of prostitution does not protect the women in prostitution.

The Coalition Against Trafficking in Women International (CATW) has conducted 2 major studies on sex trafficking and prostitution, interviewing almost 200 victims of commercial sexual exploitation. In these studies, women in prostitution indicated that prostitution establishments did little to protect them, regardless of whether they were in legal or illegal establishments. The only time they protect anyone is to protect the customers.

In a CATW 5-country study that interviewed 146 victims of international trafficking and local prostitution, 80% of all women interviewed suffered physical violence from pimps and buyers) and endured similar and multiple health effects from the violence and sexual exploitation (Raymond et al: 2002).

The violence that women were subjected to was an intrinsic part of the prostitution and sexual exploitation. Pimps used violence for many different reasons and purposes. Violence was used to initiate some women into prostitution and to break them down so that they would do the sexual acts. After initiation, at every step of the way, violence was used for sexual gratification of the pimps, as a form of punishment, to threaten and intimidate women, to exert the pimp's dominance, to exact compliance, to punish women for alleged violations, to humiliate women, and to isolate and confine women.

Of the women who did report that sex establishments gave some protection, they qualified it by pointing out that no protector was ever in the room with them, where anything could occur. One woman who was in out-call prostitution stated: The driver functioned as a bodyguard. You're supposed to call when you get in, to ascertain that everything was OK. But they are not standing outside the door while you're in there, so anything could happen.

CATW's studies found that even surveillance cameras in prostitution establishments are used to protect the establishment. Protection of the women from abuse is of secondary or no importance.

7. Legalization/decriminalization of prostitution increases the demand for prostitution. It boosts the motivation of men to buy women for sex in a much wider and more permissible range of socially acceptable settings.

With the advent of legalization in countries that have decriminalized the sex industry, many men who would not risk buying women for sex now see prostitution as acceptable. When the legal barriers disappear, so too do the social and ethical barriers to treating women as sexual commodities. Legalization of prostitution sends the message to new generations of men and boys that women are sexual commodities and that prostitution is harmless fun.

As men have an excess of sexual services that are offered to them, women must compete to provide services by engaging in anal sex, sex without condoms, bondage and domination and other proclivities demanded by the clients. Once prostitution is legalized, all holds are barred. Women's reproductive capacities are sellable products, for example. A whole new group of clients find pregnancy a sexual turn-on and demand breast milk in their sexual encounters with pregnant women. Specialty brothels are provided for disabled men, and State-employed caretakers who are mostly women must take these men to the brothels if they wish to go (Sullivan and Jeffreys: 2001).

Advertisements line the highways of Victoria offering women as objects for sexual use and teaching new generations of men and boys to treat women as subordinates. Businessmen are encouraged to hold their corporate meetings in these clubs where owners supply naked women on the table at tea breaks and lunchtime.

A Melbourne brothel owner stated that the client base was well educated professional men, who visit during the day and then go home to their families. Women who desire more egalitarian relationships with men find that often the men in their lives are visiting the brothels and sex clubs. They have the choice to accept that their male partners are buying women in commercial sexual transactions, avoid recognizing what their partners are doing, or leave the relationship (Sullivan and Jeffreys: 2001).

Sweden's Violence Against Women, Government Bill 1997/98:55 prohibits and penalizes the purchase of sexual services. It is an innovative approach that targets the demand for prostitution. Sweden believes that by prohibiting the purchase of sexual services, prostitution and its damaging effects can be counteracted more effectively than hitherto. Importantly, this law clearly states that: Prostitution is not a desirable social phenomenon and is an obstacle to the ongoing development towards equality between women and men.**

8. Legalization/decriminalization of prostitution does not promote women's health.

A legalized system of prostitution that mandates health checks and certification only for women and not for clients is blatantly discriminatory to women. Women only health checks make no public health sense because monitoring prostituted women does not protect them from HIV/AIDS or STDs, since male clients can and do originally transmit disease to the women.

It is argued that legalized brothels or other controlled prostitution establishments protect women through enforceable condom policies. In one of CATW's studies, U.S. women in prostitution interviewed reported the following: 47% stated that men expected sex without a condom; 73% reported that men offered to pay more for sex without a condom; 45% of women said they were abused if they insisted that men use condoms. Some women said that certain establishments may have rules that men wear condoms but, in reality, men still try to have sex without them. One woman stated: It's regulation to wear a condom at the sauna, but negotiable between parties on the side. Most guys expected blow jobs without a condom (Raymond and Hughes: 2001).

In reality, the enforcement of condom policy was left to the individual women in prostitution, and the offer of extra money was an insistent pressure. One woman stated: ;I'd be one of those liars if I said "Oh I always used a condom." If there was extra money coming in, then the condom would be out the window. I was looking for the extra money. Many factors militate against condom use: the need of women to make money; older women's decline in attractiveness to men; competition from places that do not require condoms; pimp pressure on women to have sex with no condom for more money; money needed for a drug habit or to pay off the pimp; and the general lack of control that prostituted women have over their bodies in prostitution venues.

So called "safety policies" in brothels did not protect women from harm. Even where brothels supposedly monitored the "customers" and utilized "bouncers," women stated that they were injured by buyers and, at times, by brothel owners and their friends. Even when someone intervened to control buyers' abuse, women lived in a climate of fear. Although 60 percent of women reported that buyers had sometimes been prevented from abusing them, half of those women answered that, nonetheless, they thought that they might be killed by one of their "customers (Raymond et al: 2002).

9. Legalization/decriminalization of prostitution does not enhance women's choice.

Most women in prostitution did not make a rational choice to enter prostitution. They did not sit down one day and decide that they wanted to be prostitutes. Rather, such choicesare better termed survival strategies. Rather than consent, a prostituted woman more accurately complies to the only options available to her. Her compliance is required by the very fact of having to adapt to conditions of inequality that are set by the customer who pays her to do what he wants her to do.

Most of the women interviewed in CATW studies reported that choice in entering the sex industry could only be discussed in the context of the lack of other options. Most emphasized that women in prostitution had few other options. Many spoke about prostitution as the last option, or as an involuntary way of making ends meet. In one study, 67% of the law enforcement officials that CATW interviewed expressed the opinion that women did not enter prostitution voluntarily. 72% of the social service providers that CATW interviewed did not believe that women voluntarily choose to enter the sex industry (Raymond and Hughes: 2001).

The distinction between forced and voluntary prostitution is precisely what the sex industry is promoting because it will give the industry more security and legal stability if these distinctions can be utilized to legalize prostitution, pimping and brothels. Women who bring charges against pimps and perpetrators will bear the burden of proving that they were forced. How will marginalized women ever be able to prove coercion? If prostituted women must prove that force was used in recruitment or in their working conditions, very few women in prostitution will have legal recourse and very few offenders will be prosecuted.

Women in prostitution must continually lie about their lives, their bodies, and their sexual responses. Lying is part of the job definition when the customer asks,did you enjoy it? The very edifice of prostitution is built on the lie that women like it. Some prostitution survivors have stated that it took them years after leaving prostitution to acknowledge that prostitution wasn't a free choice because to deny their own capacity to choose was to deny themselves.

There is no doubt that a small number of women say they choose to be in prostitution, especially in public contexts orchestrated by the sex industry. In the same way, some people choose to take dangerous drugs such as heroin. However, even when some people choose to take dangerous drugs, we still recognize that this kind of drug use is harmful to them, and most people do not seek to legalize heroin. In this situation, it is harm to the person, not the consent of the person that is the governing standard.

Even a 1998 ILO (UN International Labor Organization) report suggesting that the sex industry be treated as a legitimate economic sector, found that prostitution is one of the most alienated forms of labour; the surveys [in 4 countries] show that women worked "with a heavy heart,""felt forced,"or were ";conscience-stricken" and had negative self-identities. A significant proportion claimed they wanted to leave sex work [sic] if they could (Lim, 1998: 213)."

When a woman remains in an abusive relationship with a partner who batters her, or even when she defends his actions, concerned people don't say she is there voluntarily. They recognize the complexity of her compliance. Like battered women, women in prostitution often deny their abuse if provided with no meaningful alternatives.

10. Women in systems of prostitution do not want the sex industry legalized or decriminalized.

In a 5-country study on sex trafficking done by the Coalition Against Trafficking in Women and funded by the Ford Foundation, most of the 146 women interviewed strongly stated that prostitution should not be legalized and considered legitimate work, warning that legalization would create more risks and harm for women from already violent customer and pimps (Raymond et al, 2002). "No way. It's not a profession. It is humiliating and violence from the men's side. Not one woman interviewed wanted her children, family or friends to have to earn money by entering the sex industry. One stated: Prostitution stripped me of my life, my health, everything.

CONCLUSION

Legislators leap onto the legalization bandwagon because they think nothing else is successful. However, as Scotland Yard's Commissioner has stated: 'You've got to be careful about legalizing things just because you don't think what you are doing is successful.

We hear very little about the role of the sex industry in creating a global sex market in the bodies of women and children. Instead, we hear much about making prostitution into a better job for women through regulation and/or legalization, through unions of so-called sex workers,and through campaigns which provide condoms to women in prostitution but cannot provide them with alternatives to prostitution. We hear much about how to keep women in prostitution but very little about how to help women get out.

Governments that legalize prostitution as sex work will have a huge economic stake in the sex industry. Consequently, this will foster their increased dependence on the sex sector. If women in prostitution are counted as workers, pimps as businessmen, and buyers as consumers of sexual services, thus legitimating the entire sex industry as an economic sector, then governments can abdicate responsibility for making decent and sustainable employment available to women.

Rather than the State sanctioning prostitution, the State could address the demand by penalizing the men who buy women for the sex of prostitution, and support the development of alternatives for women in prostitution industries. Instead of governments cashing in on the economic benefits of the sex industry by taxing it, governments could invest in the futures of prostituted women by providing economic resources, from the seizure of sex industry assets, to provide real alternatives for women in prostitution.

NOTES:

*Budapest Group. (1999, June). The Relationship Between Organized Crime and Trafficking in Aliens. Austria: International Centre for Migration Policy Development. The Budapest process was initiated in 1991. Nearly 40 governments and 10 organizations participate in the process, and about 50 intergovernmental meetings at various levels have been held, including the Prague Ministerial Conference.

**The National Rapporteur on Trafficking at the National Swedish Police has stated that in the 6 months following the implementation of the Swedish law in January 1999, the number of trafficked women to Sweden has declined. She also stated that according to police colleagues in the European Union that traffickers are choosing other destination countries where they are not constrained by similar laws. Thus the law serves as a deterrent to traffickers. Quoted in Karl Vicktor Olsson, Sexkopslagen minskar handeln med kvinnor, Metro, January 27, 2001: 2.

REFERENCES

Altink, Sietske. (1995). Stolen Lives: Trading Women into Sex and Slavery (London: Scarlet Press).

Budapest Group. (1999, June). The Relationship Between Organized Crime and Trafficking in Aliens. Austria: International Centre for Migration Policy Development.

Bureau NRM. (2002, November). Trafficking in Human Beings: First Report of the Dutch National Rapporteur. The Hague. 155 pp.

Daley, Suzanne. (2001, August 12). "New Rights for Dutch Prostitutes, but No Gain. New York Times, pp. A1 and 4.

Dutting, Giseling. (2000, November). Legalized Prostitution in the Netherlands Recent Debates. Women's Global Network for Reproductive Rights, 3: 15-16.

IOM (International Organization for Migration). (1995, May). Trafficking and Prostitution: the Growing Exploitation of Migrant Women from Central and Eastern Europe. Budapest: IOM Migration Information Program.

Lim, Lin Lean (1998). The Sex Sector. International Labour Office, Geneva, Switzerland.

Raymond, Janice G., Donna M. Hughes, Donna M. and Carol A. Gomez (2001).
Sex Trafficking of Women in the United States: Links Between International and Domestic Sex Industries, Funded by the U.S. National Institute of Justice. N. Amherst, MA: Coalition Against Trafficking in Women.
Available at www.catwinternational.org

Raymond, Janice G., Jean d'Cunha, Siti Ruhaini Dzuhayatin, H. Patricia Hynes, Zoraida Ramirez Rodriguez and Aida Santos (2002). A Comparative Study of Women Trafficked in the Migration Process: Patterns, Profiles and Health Consequences of Sexual Exploitation in Five Countries (Indonesia, the Philippines, Thailand, Venezuela and the United States). (2002).
Funded by the Ford Foundation. N. Amherst, MA: Coalition Against Trafficking in Women (CATW).
Available at www.catwinternational.org

South China Morning Post (1999, September 10).Brothel Business Booming at a Legal Red-Light District Near You.

Sullivan, Mary and Jeffreys, Sheila. (2001). Legalising Prostitution is Not the Answer: the Example of Victoria, Australia. Coalition Against Trafficking in Women, Australia and USA.
Available at www.catwinternational.org

Tiggeloven, Carin. (2001, December 18). Child Prostitution in the Netherlands. Available at www.nw.nl/hotspots/html/netherlands011218.html.

Ernesto "Che" Guevara: A Rebel Against Soviet Political Economy

by Helen Yaffe

In January 1962 Guevara told colleagues in Cuba's Ministry of Industries (MININD): 'In no way am I saying that financial autonomy of the enterprise with moral incentives, as it is established in the socialist countries, is a formula which will impede progress to socialism'.[1] He was referring to the economic management system applied in the Soviet bloc, known in Cuba as the Auto-Financing System (AFS). By 1966, in his critique of the Soviet Manual of Political Economy, he concluded that the USSR: 'is returning to capitalism.'[2] This paper will demonstrate that Guevara's analysis developed in the period between these two statements as a result of three lines of enquiry: the study of Marx's analysis of the capitalist system, engagement in socialist political economy debates and recourse to the technological advances of capitalist corporations.[3] At the same time Guevara was engaged in the practical experience of developing the Budgetary Finance System (BFS); an alternative apparatus for economic management in MININD.

Guevara was head of the Department of Industrialisation and President of the National Bank in 1960 when all financial institutions and 84% of industry in Cuba were nationalised. His BFS emerged as a practical solution to problems thrown up by the transition from private to state ownership of industrial production. Cuba had an unbalanced, trade dependent economy dominated by foreign interests, principally from the United States. The production units which passed under the Department's jurisdiction ranged from artisan workshops to sophisticated energy plants. Many faced bankruptcy while others were highly profitable. Guevara's solution was twofold: first, to group entities of similar lines of production into centralised administrative bodies called Consolidated Enterprises. This allowed the Department to control the allocation of scarce administrative and technical personnel following the exodus of 65-75% of managers, technicians and engineers after 1959; and second, to centralise the finances of all production units into one bank account for the payment of salaries, to control investment and sustain production in essential industries which lacked financial resources. With the establishment of MININD in February 1961, the BFS evolved into a comprehensive apparatus which embedded these organisational structures in a Marxist theoretical framework, to foster Cuba's industrialisation, increase productivity and institutionalise collective management.

Advanced technology

Guevara set up the BFS with compañeros who understood the internal accounting practices, administrative centralisation and productive concentration of US corporations and their subsidiaries in Cuba. Guevara examined the documentation from these companies as they fell into state hands. He was impressed with their management structures, the use of centralised bank accounts and budgets, determinate levels of responsibility and decision-making, and departments for organisation and inspection.[4] He told colleagues that the BFS had an accounting system similar to the pre-1959 monopolies operating in Cuba, with their efficient control systems: 'it's not important who invented the system. The accounting system that they apply in the Soviet Union was also invented under capitalism.'[5]  

Guevara first travelled to the USSR in 1960. His deputy Orlando Borrego recalled that they visited an electronics factory which did accounts by abacus. Having studied the US-owned Cuban Electricity Company, Shell, Texaco and other corporations which used the latest IBM accounting machines, Guevara was struck by the backwardness of Soviet techniques. He believed that advances achieved by humanity should be adopted without fear of ideological contamination.

With the imposition of the US blockade, Cuba was forced to buy factories from the socialist countries, especially the USSR. This assistance was essential, but the relative backwardness of the equipment clashed with Guevara's desire for advanced technology transfers. He did not criticise the Soviets for this backwardness per se. Rather, he complained about the contradiction between the high level of research and development in military technology and low investment applied to civilian production. He objected to their ideological resistance to appropriating advances made in the capitalist world. This was a costly mistake in terms of development and international competitiveness.[6] For example: 'For a long time cybernetics was considered a reactionary science or pseudo-science... [but] it is a branch of science that exists and should be used'.[7] He added that in the US the application of cybernetics in industry had resulted in automation - an important productive development.

Basing a management system for socialist transition on capitalist technology was consistent with Marx's stages theory of history, which predicted that communism would emerge from the fully developed capitalist mode of production. Marx showed how the tendency to concentration of capital, that is, to monopoly, was inherent in the system. Therefore, the monopoly form of capitalism was more advanced than 'perfect competition'. The Soviet system originated from predominantly underdeveloped, pre-monopoly capitalism. A socialist economic management system emerging from monopoly capitalism could be more advanced, efficient and productive. The origin of the BFS was the multinational corporations of pre-1959 Cuba and it was therefore more progressive than the AFS which was adapted from pre-monopoly Russian capitalism.

Marx's analysis of the law of value

While Guevara argued for the adoption of advanced technology he opposed the use of capitalist mechanisms to determine production and consumption. He challenged the Soviet's reliance on capitalist categories to organise the socialist economy, particularly the operation of the law of value. The dispute about the law of value in transition economies is central to the question about the feasibility of constructing socialism in a country without a fully developed capitalist mode of production. It is integral to problems of accumulation, production, distribution and social relations. Communism implies a highly productive society in which conditions exist for distribution of the social product based on need, not surplus-generating labour time. However, the countries which have experimented with socialism have been underdeveloped, lacking the productive base for the material abundance implied by communism. The Soviet solution was to rely on the operation of the law of value to hasten the development of the productive forces, applying the profit motive, interest, credit, individual material incentives and elements of competition to promote efficiency and innovations. Guevara argued that these were not the only levers for fostering development. The BFS was the expression of his search for an apparatus to increase productive capacity and labour productivity without relying on capitalist mechanisms which undermine the formation of new consciousness and social relations integral to communism.

Between 1963 and 1965 these questions were examined in Cuba during the Great Debate on socialist transition. To the extent that commodity production and exchange through a market mechanism continued to exist after the Revolution in Cuba, it was clear to all participants in the Great Debate that the law of value continued to operate. The social product continued to be distributed on the basis of work done. However, the disagreements were about the conditions explaining the law's survival, its sphere of operation, the extent to which it regulated production, how it related to the 'plan' and whether the law of value should be utilised or undermined, and if so, how. This discussion was linked to practical questions such as how enterprises should be organised, how workers should be paid and whether goods should be exchanged between state enterprises as commodities.

Guevara agreed that the law of value remained under socialism but argued that measures taken by the Revolution to undermine the capitalist market meant that the law could not serve as the dynamic catalyst to productivity and efficiency in the same way as it did under capitalism.[8] Socialisation of the means of production and distribution had 'blunted' the tools of capitalism.[9] Marx described a commodity as a good which changes ownership, from the producer to the consumer. Consistent with this definition, Guevara insisted that products transferred between state-owned enterprises did not constitute commodities because when they were transferred from one state factory to another there was no change in ownership. The state itself should be considered as one big enterprise.[10] For Guevara commodity-exchange relations between factories threatened transition, via 'market socialism', to capitalism. He stressed central planning and state regulation as substitutes to such mechanisms.

The Soviet's argued that commodity production, the law of value, and money would disappear only when communism was achieved, but that to reach that stage it was necessary to use and develop the law of value as well as monetary and mercantile relationships. Guevara disagreed:

'Why develop? We understand that the capitalist categories are retained for a time and that the length of this period cannot be predetermined, but the characteristics of the period of transition are those of a society that is throwing off its old bonds in order to move quickly into the new stage. The tendency should be, in our opinion, to eliminate as fast as possible the old categories, including the market, money, and, therefore, material interest - or, better, to eliminate the conditions for their existence.'[11]

 For Guevara the task was not to use the law of value nor even hold it in check, but to define its sphere of operation and make inroads to undermine it - to work towards its abolition, not limitation. He developed many policies within the BFS to attempt just that.[12] In February 1964, Guevara concluded: 'We deny the possibility of consciously using the law of value, basing our argument on the absence of a free market that automatically expresses the contradiction between producers and consumers... The law of value and planning are two terms linked by a contradiction and its resolution.'[13] For Guevara, centralised planning was the fundamental characteristic of socialist society. He conceded only: 'the possibility of using elements of this law [of value] for comparative purposes (cost, "profit" expressed in monetary terms)'.[14]

The protagonists in Cuba were well-informed about the broader debate on incentives and financial autonomy contemporaneously underway in the eastern European socialist countries - a response to the problems of economic stagnation, low productivity and efficiency, particularly in comparison with economic growth in the developed capitalist world.  In July 1964 Guevara told colleagues that he had been reading analyses from the socialist bloc, including the resolutions of the 14th Congress of the Polish Communist Party: 'The solution that they are proposing for these problems in Poland is the complete freedom of the law of value; that is to say, a return to capitalism.'[15] Commenting on the push to 'liberalise' the socialist economies Guevara said: 'The theory is failing because they have forgotten Marx'.[16] Instead of Capital, the Soviet Manual of Political Economy had been turned into a bible.

Marx characterised the psychological or philosophical manifestation of capitalist social-relations as alienation and antagonism; the result of the commodification of labour and the operation of the law of value. For Guevara, the challenge was to replace the individuals' alienation from the productive process, and the antagonism generated by class relations, with integration and solidarity, developing a collective attitude to production and the concept of work as a social duty. Capitalist competition created the drive to increase productivity through technological innovations and increasing exploitation. Alienation and antagonism increase with productivity. Under socialism, the development of the productive forces could be less accelerated, but it should be accompanied by a growth of consciousness. For Guevara, efforts to change consciousness must be incorporated into socialist transition at the earliest stage.

Critique on the Soviet Manual of Political Economy

In April 1965, Guevara left Cuba to lead a Cuban military mission in the Congo. The guerrillas were defeated and Guevara stayed in Tanzania and the Czech Republic between 1965 and 1966 where he began work on a comprehensive analysis of the political economy of socialist transition. In preparation for this work, Guevara took notes on the Soviet Manual, applying his theoretical arguments expounded in the Great Debate to that text. The notes were not written for publication, nor brought together as text. They were comments responding to specific paragraphs of the Manual; notes to himself, including indications of areas for further study.[17]  

Guevara criticised the Manual's mechanistic adaptation of classical Marxist conceptions of class relations between the bourgeoisie and the working class, without considering the effects of imperialism which created a privileged working class in the advanced capitalist countries as well as beneficiary sectors in the exploited nations. He denounced as opportunism the Manual's attempts to air-brush the inherent violence of class struggle integral to the transition from capitalism to socialism.

Turning to the period of transition, Guevara argued that the USSR's Kolkhoz collective farm system was not a characteristic of socialism and that cooperatives were not a socialist form of ownership - they generated a capitalistic superstructure which clashed with state ownership and socialist social relations imposing their own logic over society. Guevara systematically refuted the so-called laws of socialism cited by the Manual, particularly the law of constant rising worker productivity - which he called an outrage: 'It is the tendency that has driven capitalism for centuries.'[18]  He condemned as 'dangerous' the Soviet's policy of peaceful co-existence and economic emulation with the advanced capitalist countries and pointed to serious disagreements between the socialist countries, blaming them on unequal exchange and the imposition of capitalist categories in trade relations.[19]

While declaring his daring, respect, admiration and revolutionary motives, Guevara announced that Lenin was the ultimate culprit because the New Economic Policy (NEP) which he had been forced to introduce in 1921 imposed a capitalist superstructure on the USSR. The NEP was not installed against small commodity production, Guevara stated, but at the demand of it. Small commodity production holds the seeds of capitalist development. He was certain that Lenin would have reversed the NEP had he lived longer. However, Lenin's followers: 'did not see the danger and it remained as the great Trojan horse of socialism, direct material interest as an economic lever.'[20] This capitalist superstructure became entrenched, influencing the relations of production and creating a hybrid system of socialism with capitalist elements that inevitably provoked conflicts and contradictions which were increasingly resolved in favour of the superstructure - capitalism was returning to the Soviet bloc.[21]

Guevara's notes offer a profound criticism of Soviet political economy. He himself warned that some would misinterpret his proposed work as rabid anti-communism disguised as theoretical argument, but asserted that the inability of bourgeois economics to criticise itself, pointed out by Marx at the beginning of Capital, was seen in contemporary Marxism. He dedicated his work to Cuban students who go through the painful process of learning 'eternal truths' in eastern European manuals. He concluded that: Humanity faces many shocks before final liberation, but we cannot arrive there without a radical change in the strategy of the first most important socialist powers.[22]

Conclusion

This paper has summarised the analysis which led Guevara to forewarn the collapse of socialism in the socialist bloc. He made an important contribution to both the theory and practice of constructing socialism. He hoped to persuade socialist countries to gradually replace capitalist mechanisms during transition and offered alternative policies to serve this function. His warnings were not heeded and, for the reasons which Guevara predicted, among others, capitalism returned to all those countries. In Cuba, his analysis was revisited in the mid-1980s in the period known as Rectification which pulled the island away from the Soviet model before it collapsed, arguably contributing to the survival of Cuban socialism.

Notes

[1] Ernesto 'Che' Guevara, 'Reunion Bimestrales', 20 January 1962, in El Che en la Revolución Cubana: Ministerio de Industrias, tomo VI. La Habana: Ministerio de Azúcar, 1966, 147.

[2] Guevara, Apuntes Críticos a la Economía Política. La Habana: Ciencias Sociales, 2006, 27 & cited by Orlando Borrego in El Camino del Fuego, la Habana: Imagen Contemporánea, 382.

[3] This paper assumes knowledge of the laws governing the operation of the capitalist system expounded by Marx in Capital.

[4] Miguel Figueras, interview, 27 January 2006, Enrique Oltuski, interview, 15 February 2006 & Alfredo Menéndez, interview, 17 February 2005.

[5] Guevara, Bimestrales, 21 December 1963, 420.

[6] Guevara, Bimestrales, 14 July 1962, 289.

[7] Guevara, Bimestrales, 28 September 1962, 318-9.

[8] Guevara, 'On the Concept of Value' in Bertram Silverman (ed) Man and Socialism in Cuba: The Great Debate, New York: Atheneum, 234.

[9] Guevara, 'Socialism and Man in Cuba' in Silverman (ed) Socialism, 342.  

[10] Guevara, 'On the Budgetary Finance System', in Socialism, 143.

[11] Guevara, Budgetary, 42. Guevara's italics.

[12] My book, Che Guevara: The Economics of Revolution, details these policies.

[13] Guevara, Budgetary, 143.

[14] Guevara, 'The Meaning of Socialist Planning' in Socialism, 109.

[15] Guevara, Bimestrales, 11 July 1964, 505.

[16] Guevara, Bimestrales, December 1964, 566-9.

[17] First published in Havana, February 2006 as Apuntes, cited above.

[18] Guevara, Apuntes, 52.

[19] Guevara, Apuntes, 91-2, 185-6, 192-3.

[20] Guevara, Apuntes, 112.

[21] Guevara, Apuntes, 27.

[22] Guevara, Apuntes, 25-28 & Borrego, Camino, 381-383.

Resolution on the Situation in Syria

by International Conference of Marxist-Leninist Parties and Organizations (ICMLPO)

The plenary of the ICMLPO, held for the first time in Africa, reaffirms its support for the right of the Syrian people to live under a democratic regime: a regime that guarantees freedom, equality, social justice and dignity, as well as assures the unity and total independence of the country, including the recovery of the Golan Heights occupied by Zionism since 1967.

The ICMLPO:

1. Denounces the dangerous development of events in Syria. The popular movement of protest has been transformed into a destructive civil war. The bloodthirsty repression is striking the people, and since the beginning, the Assad regime has rejected any democratic reform that would satisfy the aspirations of the Syrian people. This situation is the consequence of the foreign reactionary, imperialist and Zionist intervention, through Turkey, Qatar and Saudi Arabia, which masked by the so-called “Free Syrian Army” and under the pretext of “saving the Syria people”

2. We reaffirm that this war has nothing to do with the interests of the Syrian people and their aspirations. On the contrary, it serves the reactionary forces of the country, the region and internationally. Syria is at the moment the place of confrontation between, on the one side the U.S., France and Israel and Arab and Turkish reaction that are trying to subject Syria to Western rule and make it break its ties with Iran and Hezbollah. On the other side, Russia and China are supporting the regime to preserve their strategic interests in Syria and the region, after having lost their influence in Libya.

3. We reject all intervention by NATO in Syria under any pretext, given the dangers that this represents for the Syrian people, the peoples of the region and world peace in general. The Conference calls on the Turkish people to oppose Turkey’s intervention in Syria. It sends a call to the workers and peoples of the Western countries, in the first place of the United States, Great Britain and France, whose leaders are threatening military intervention in Syria, to pressure their governments to stop them from carrying out their criminal strategy that caused disasters in Iraq, Afghanistan, Somalia, Libya, etc. in the past

4. It is up to the Syrian people, in all cases, to determine their own future. The ICMLPO calls on the Syrian patriotic and democratic forces to unite to save their country from the claws of the Assad regime and the armed gangs and to prevent the foreign powers from mortgaging their future and making use of a part of their minorities to undermine their unity. The ICMLPO calls on those forces to strive to build a new, democratic, secular, independent and united Syria in which the different religions and nationalities live together in freedom and equality.

5. Calls on the patriotic, democratic and progressive forces of the region to urgently mobilize and to undertake the necessary measures of solidarity to support the patriotic and democratic forces of Syria, forces that must act to end the slaughters perpetrated against the Syrian people, to stop the destruction of the country and prevent the foreign intervention, to facilitate dialogue among its inhabitants to achieve their aspirations and break with the tyranny and foreign domination.

Organisation pour la construction d’un parti communiste ouvrier d’Allemagne

Parti Communiste des Ouvriers du Danemark – APK

Parti Communiste d’Espagne (marxiste – léniniste) – PCE(ml)

Plateforme Communiste d’Italie

Parti Communiste des Ouvriers de France – PCOF

Organisation Marxiste Léniniste Révolution de Norvège – Revolusjon !

Parti Communiste Révolutionnaire de Turquie - TDKP

Parti des Travailleurs de Tunisie - PT

Parti Communiste Révolutionnaire de Côte d’Ivoire – PCRCI

Resolution on the West African Region and Mali

by the International Conference of Marxist-Leninist Parties and Organizations (ICMLPO)

Since 2010, the West African region and particularly the sub-Saharan zone has been marked by the armed interference and intervention of the imperialist powers. The objectives of those actions are:

* Political, geostrategic and military, related to the struggle for the redivision of the world and of the African continent.

* Economic (access to the petroleum of the Gulf of Guinea and the Ivory Coast; to the uranium of Niger and the precious metals that abound in the region; to solar energy; cacao, coffee, etc.

* The struggle of the Anglo-Saxon (U.S. and Great Britain) and French imperialists to prevent the penetration into the region by new actors such as China, India, Brazil, etc.

* The will of the imperialist powers to crush any type of protest by the popular masses, who are condemned to misery and lacking in political freedom, as well as the repression that they suffer carried out by the corrupt puppet powers, and their desire to crush any revolutionary insurrectionary movement.

The military-political crisis after the military coup d’état of the National Committee for the Defense and Restoration of the State (CNRDE) of March 22, 2012, as well as the military occupation of the North of Mali, begun January 22, 2012, which covers two thirds of the national territory, an occupation carried out by the National Movement for the Liberation of AZAWAD (MNLA) and the “jihadists” (AQMI, ANSAR, DINE, MUJAO, BOKO, HARAM…) must be put in this context.

The military-political crisis in Mali has grave consequences for the neighboring countries, particularly Algeria, Niger, Burkina Faso, Ivory Coast, Mauritania, etc. and the group of the countries of the west African region (destabilization of States, proliferation of arms, massive displacement of populations towards the South of Mali, and thousands of refugees in other neighboring countries).

The military-political crisis in Mali is also a threat to the interests of imperialism, particularly French imperialism, in that country and the whole region. That is why there are preparatory maneuvers for an open military intervention that the troops provided by the members countries of the Economic Community of West African States (ECOWAS) can carry out, with the consent and logistical support of the great imperialist powers (France and U.S.A.) and of the UN under the pretext of “making a secure transition,” of “restoring constitutional life” and of “restoring Mali’s territorial integrity.” This is a reactionary plan by the imperialist powers and their allies in the region to maintain and reinforce their domination.

Faced with this serious situation, the International Conference of Marxist-Leninist Parties and Organizations (ICMLPO):

* Denounces and condemns the puppet powers that have opened their territories (particularly in Mali, Burkina Faso, Ivory Coast, Niger, Mauritania and Senegal) to the troops of imperialist aggression.

* Denounces and condemns the proclamation of independence of the State of AZAWAD by the MNLA, instrument of French imperialism.

* Denounces and condemns the crimes perpetrated against the peoples of the North of Mali by terrorist group AQMI and the Islamist groups ANSAR-DINE, MUJAO and the MNLA.

* Supports the brave resistance of the peoples, particularly of the youth, against oppression and medieval and obscurantist practices.

* Denounces and condemns the reactionary plan of the ECOWAS in Mali.

* Calls on the proletariat and peoples of the imperialist countries, particularly France, to support the Malian people in their struggle for a revolutionary solution of the military-political crisis.

* Calls for solidarity and support for the struggle of the peoples of the West African region against imperialist domination and their African lackeys.

Tunisia, November of 2012.

On the International Situation

by the International Conference of Marxist-Leninist Parties and Organizations (ICMLPO)

The most significant development in the world capitalist economy, since the last meeting of our Conference is undoubtedly the intensification of the symptoms that prove the trend toward a new recession in all fields, after a certain rise in the second quarter of 2009, followed by a period of stagnation. Despite the trend towards a rise in the second quarter, world industrial production shrank 6.6% in 2009 and rose 10% in 2010. The industrial production of June 2010 exceeded its previous level before the crisis of 2008. But starting from the first quarter of 2011, the growth lost momentum and fell to 0.4% in the last quarter of that year. In 2011, world industrial production declined by half (5.4%) compared to the previous year. In the first quarter of 2012, after a weak rise, the growth declined. The growth was 1.8% in the first quarter, 0% in the second and 4% in the last quarter of 20l2. All the data show that, despite fluctuations, a decline persists that began in the first quarter of 2011, which led to zero level in the middle of this year [2012] and is heading for a new period of decline.

Industrial production in the European Union, which is a larger economic power than the U.S.; in Japan, which is third largest world economic power; in India, one of the largest economies in Asia, have had consecutive declines in the third quarter of 2011 and in the first two quarters of 2012 compared to the same period last year. Industrial production in Brazil, the largest economy in Latin America, has also entered into decline in the last two quarters. North African countries like Tunisia and Egypt, and other countries such as Argentina, Colombia and Peru, are in similar situations.

The rate of growth of industrial production in China, in the first and second quarters of 2012, was 11.6% and 9.5%, while it was 14.4% in 2010 and 13.8% in 2011. The downward trend continued in July, 9.2% and in August, 8.9%. China, which grew by 12.9% and 12.3% in the crisis years (2008 and 2009), was, along with India, one of the factors that prevented a further sharpening of the crisis and that allowed the world economy to enter into a new period of growth. The situation in that country has changed considerably. Now it is a country that is accumulating stockpiles in the steel industry, which is facing a slowdown in the construction sector, which has important holes in the financial sector. Those countries that saw lower growth rates despite the stimulus measures to revive the domestic market, are now unable to play the same role as before. The industrial production of Mexico and the Confederation of Independent States (CIS), including Russia, continues to grow. However, while the industrial production in the major countries and the volume of international trade are falling, for these countries also, a decrease is expected.

Unlike simple commodity production, a more rapid growth in the production of the means of production, compared to consumer goods, is a condition for expanded reproduction. But with the capitalist mode of production producing for an unknown market, with the sole purpose of obtaining profits, a consistent development of the two sectors is impossible and this is one of the factors that makes crises inevitable. In the last three years, as well as before, these two sectors have not developed consistently. In the first sector, demand has fallen, the volume of growth has fallen, stockpiles are accumulating and capacity utilization has fallen. In 2010 and 2011 the steel industry, an important component of the production of means of production, grew faster than the consumer goods sector. According to data from the World Steel Union, the growth rate in production was 15% in 2010 compared to the previous year, but in 2011 the figure fell to 6.2%. In January raw steel production saw a sharp drop to 8%, and it has stayed at 0.8% in the period from January to May of 2012. In August of 2012 raw steel production fell 1% in relation to 2011. In the same period, raw steel production rose 3.3% in Japan (a significant increase if one takes into account the major fall due to the tsunami) and 2.6% in India. It has fallen by 1.7% in China, 3.8% in the U.S., 4.4% in the EU, 7.1% in Germany, 15.5% in Italy and 3.8% in the Confederation of Independent States (CIS). The iron stockpiles in Chinese ports reached 98.15 million tons (an increase of 2.9%) belonging to the steel complexes. And stockpiles of Chinese coal are at their highest level in the last three years.

In manufacturing, a very important element of the production of the means of production, production and demand have declined in many countries. This decline has been one of the reasons for the cooling of industrial production in Germany, for example. In the capitalist mode of production, the agricultural sector, by its level of development and its technical basis, is always behind industry. Agricultural production is largely affected by the natural conditions, climate changes, droughts, storms and other natural catastrophes. Agricultural production is increasingly under the control of the monopolies and the speculative maneuvers of finance capital. In 2010 world agricultural production, including the production of cereals, has shrunk due to various factors such as bad weather or the expansion of plots reserved for bio-fuel production. On the other hand, in 2011, agricultural production has progressed thanks to better weather conditions, and also to increased demand and higher prices due to speculation. For example, wheat production increased by about 6%.

In 2009 the volume of world trade has declined 12.7%. According to data from the World Trade Organization (WTO), that volume registered a growth of 13.8% in 2010, and only 5% in 2011 (according to figures from the CPL, the growth was 15.2% in 2010, and 5.8% in 2011). The volume of world trade has grown by 0.5% in the final quarter of last year, and by 0.9% and 0.5% in the first and second quarter of 2012 respectively. During the first two months of the third quarter (June and July), the volume of world trade recorded a negative growth of -1.5% and -0.2% compared to the previous months.

World industrial production reached and surpassed the pre-crisis level of 2008, in June 2010, while the volume of international trade did not surpass this until November 2011. If we compare the data of July 2012 with the level reached before the crisis of 2008 (that is, April 2008), we see an increase of 9.5% in world industrial production and an increase of 5% in the total volume of growth in world trade.

The data on the increase of the volume of world trade is one of the most important that shows an evolutionary trend, although it does not exactly reflect the volume of growth of world trade. These data show that for the last three years, the world capitalist production has increased rapidly and that the capitalist world is once again facing the problem of overproduction, which is the source of all its crises. Decreased production, closing or reduction in work capacity of enterprises, rising unemployment and poverty; needs in abundance and the restriction of markets are the inevitable consequences of overproduction. The sharp slowdown in world industrial production has been shown above. The events in North Africa and the austerity measures taken in countries like Greece, Spain, Italy, Portugal, etc., are factors that are aggravating this process and its consequences.

Towards a New Financial Crisis

The crisis of 2008 broke out as a financial crisis, at the same time as the crisis deepened in other sectors, such as industry and trade, it developed with contacts in the finance sector with serious consequences for the following period. The most destructive consequences for the monopolies and the eventual collapse of the financial sector were avoided by transferring of billions of dollars into the coffers of the monopolies by the capitalist States. This rescue operation was only possible by accepting a debt to financial markets with very high interest rates, and the issuance of money into the markets. The end result is an extreme State debt, an increase in the debt and interest burden, a rise in the price of gold and the loss of value (devaluation) of almost all currencies.

Countries at different levels have entered a vicious circle that has elements of new currency and financial crises, in which they can finance their budget deficit, their debts and interests, having to borrow again. The capitalist world began a period of growth starting in the second quarter of 2009, with the weight inherited from the 2008 crisis. However, this period of growth has enabled recipient countries to breathe a little, turn the wheel that was on the verge of suffocating them. The growth of the world economy stopped and even lowered the price of gold for a moment. In some countries, such as China that had a significant growth rate, the ratio of the public debt to GDP decreased. But in other countries, such as Japan and the U.S., a substantial debt has continued, even during the period of growth of the capitalist world economy. The U.S. public debt represents the sum of $16 billion (the debt of Germany, which grew until the second half of this year, is 8 billion). Other capitalist countries are in a similar situation. The increasing debt is almost the condition of financial sustainability and economic growth. And this is the path that is leading directly to a new financial crisis that may profoundly affect all sectors of the economy.

The highly indebted countries have not been able to achieve a period of growth after the financial crisis and the fall in world industrial production that took place between the second quarter of 2008 and the second quarter of 2009; this period has led to a financial crisis that has affected the other sectors of the economy that has led them to bankruptcy. The first example of this process was in Greece, where the weakness was such that the industry, very weak, was largely liquidated when it joined the EU. After the 2008 crisis, in 2009, the economy of this country did not grow, and by the end of the year it was on the verge of bankruptcy. This country, followed by others such as Portugal, Spain, Hungary, etc., has not been able to get out of the crisis and stagnation. However, important differences should be noted in its debt in relation to the GDP.

Austerity measures never seen before, except in times of war or crisis as deep as 1929, have been imposed on the indebted countries. The result of these measures has been to impoverish the people, destroy the economy and reduce the internal market and foreign trade. These austerity plans have been applied (despite the opposition and struggle of the working class and peoples) under the control of the creditor imperialist powers, the international institutions such as the IMF, World Bank and European Union, and above all with the support of the collaborator monopoly bourgeoisie and its representatives, these enemies of the people. They have transferred billions of dollars to foreign banks, completely betraying the national interests. The national pride of the people, their right to sovereignty and independence have been trampled upon. A country like Britain that had a strong financial sector, but since mid-2011 has seen its industrial production and its economy reduced, has been forced to march along with the countries implementing austerity measures.
The significant decrease in the volume of growth of world industrial production, which began in the second quarter of 2011, is developing the elements of a new international financial crisis and is contributing to the degradation of the situation of the highly indebted countries. They failed to enter a period of growth parallel to the process of growth of the world capitalist economy following the crisis of 2008-2009. While the debate over the future of the Euro and the European Union is sharpening, the communiqués on the economic trends of the advanced capitalist countries and the indebted countries have sown confusion in the stock markets, barometers of the capitalist economy. Although world industrial and agricultural production and the volume of international -trade have exceeded the highest level before the crisis of 2008, the indices of the most influential stock markets remain below that level.

Although we are not yet experiencing the outbreak of a financial crisis of major proportions, everything makes it appear that the process is advancing towards such an eventuality. The U.S. Federal Reserve Bank (FED) has announced that it will not raise interest rates and that it will start a process of purchasing bonds for an amount of $2,000 billion dollars, at the rate of $40 billion per month. Japan has announced a similar measure and has begun a program of buying bonds to the tune of $695 billion.

Germany has had to relax its rigid policy towards the indebted countries and the European fund for the intervention in countries facing difficulties has increased. China, along with measures of revival that it has already applied, announced a new investment package to renovate its infrastructure. The price of gold is rising again. In 2008, the intense intervention of the capitalist States began after the outbreak of the crisis. Now, however, the capitalist States have gone into action before the shocks and bankruptcies at the same level as in 2008 start in the major capitalist countries and worldwide. However, these interventions, which can have some influence on the process of development, cannot change the orientation and the inevitable outcome.

The Sharpening of the Inter-Imperialist Contradictions and the Growing Danger of Conflicts

Uneven, unbalanced development is the absolute law of capitalist development. This process after the crisis of 2008 was not balanced, it deepened the antagonistic contradictions in the evolution and development of the relations between sectors, countries, regions, production and markets, etc. The industrial production of the advanced capitalist countries, including the U.S. and Japan, except Germany (ignoring the high level of 2008), did not reach the level of 2005. Germany, which has exceeded the pre-crisis level and has had a growth in industrial production of 11.5% in 2010 and 9% in 2011, has consolidated its position within the European Union and the Euro zone. Without separating itself from the bloc led by the United States, it has penetrated into new markets, new fields of investment, sources of raw materials, basing itself on its economic and financial strength, and above all, on its technical superiority in the industry of machine construction.
As in previous years, China, both because of its industrial production and its economy in general, was the country that had the most significant growth among major economies. It has modernized and increased the technical basis of its industry, and it continues to reduce the difference in its level of development with the other imperialist powers. Russia is going through a similar process. For the United States and its allies, these two countries, one considered as a vast market and production area with a trained and cheap work force, and the other a solid country, appear today as their main rivals to fight against.

The inevitable result of the change in the balance of power is the great demand for a piece of the pie by the emerging forces, using all means to get it and a new redivision of the world according the new balance of power. The recent development of the world economy is another factor that exacerbates the contradictions and the struggles among the major imperialist powers. Last year in the Middle East, in Africa and the whole world, the rivalry and struggle to expand their sphere of influence has accelerated. The production of weapons, the arms race is intensifying. China and Russia have renewed the technical basis of their arms industry. According to a report by the Congress of the United States, arms sales by these countries have tripled in 2011.

China, which increasingly needs more raw materials, energy and fields of investment for its growing economy, and Russia, which is slowly recovering, are intensifying their expansionist desires and their efforts to get their piece of the pie. Therefore, it is a top priority for the U.S. and its allies to prevent China, a young imperialist power in full development, and Russia, from achieving new markets in the field of energy and raw materials. When the Obama administration states that beginning next year the priority strategic objective for the United States will be Asia, and that the deployment of the U.S. military will be renewed according to the new situation, this is merely affirming that reality. The crisis of the archipelagos shows the level of tension between Japan and China; Japan has declared its intention to improve its military capability. The military maneuvers in the region have intensified.

The consequences of the change in the balance of power in the world have been clearly visible since last year. Russia and China were forced to accept Western imperialist intervention in Libya, even though that intervention was contrary to their interests. The intervention ended with the overthrow of the Gaddafi regime, the near collapse of the country, the destruction of its economy, the degradation of working and living conditions, the transfer of the country's wealth into the hands of the Western imperialist States, etc. Russia and China lost a good part of their positions, including their oil agreements. After the fall of the Gaddafi regime, Mali has been dragged into war and divided. But the main objective is Syria. The attempts by the Western imperialist powers to topple the Syrian regime and put in a puppet government to fully control the country are intensifying. The United States and its allies have mobilized all their forces within Syria and outside of it in Turkey, Jordan, Saudi Arabia and Qatar. They are stirring up the religious contradictions, they use and manipulate the popular discontent towards the regime and they try to prepare the ground for a military intervention as in Libya. Meanwhile Russia is arming Syria, strengthening its military base located in that country and sending more warships to the Mediterranean.

To bring down the Syrian regime, put in place a puppet government, dominate the oil-rich Middle East, control the eastern Mediterranean, block the expansion of China and Russia in the region and expel them as they did in Libya, to encircle Iran, weaken its influence and liquidate its closest allies, are very important objectives. Syria is the only country in the Middle East and the eastern Mediterranean where Russia has a military base. This small country has become a place of intense struggle between Russia and China on the one hand, and the United States and its allies on the other. The Middle East is a powder keg on the verge of religious conflicts.

Contrary to what they did in Libya, Russia and China are opposing a military intervention that would alter the balance in the Middle East and result in the domination of the United States and its allies over Syria. But they have left the door open for a possible compromise that would guarantee their interests and renew the Syrian regime which is having more and more difficulties to survive.

As the case of Afghanistan, former Yugoslavia, Iraq, Ivory Coast and Libya show, the imperialist interventions that have had the support of the liberal "defenders" of freedom and democracy, of the pseudo-socialist parties that emerged from the former revisionist parties, have resulted in increased military budgets at the expense of the workers, in the destruction of the productive forces of those countries, in many disasters, the impoverishment and decline in all social aspects. The aspiration of the peoples for the right to sovereignty and national independence, democracy and freedom has never been the concern of the occupiers. Their objective was to further prolong their system maintained by the defeat inflicted on the working class in the middle of the last century, a defeat that guaranteed their super-profits, the expansion of their spheres of influence and the weakening of their rivals. The imperialist powers, which are using all means to achieve this goal, do not lack in demagoguery and low maneuvers to disorient the people's anger.

Now a period of sharpening of inter-imperialist contradictions is beginning, which economic-financial and political-military interventions will multiply. It is increasingly important to fight against such intervention, to develop the united fight of the workers and peoples, in both the advanced and backward countries,.

Organize the Resistance of the Workers in the New Stormy Period

The army of unemployed is growing on the world level, especially in countries in total-debt crisis, in the countries in which the economy is declining, stagnating or is in crisis. In Greece and Spain, unemployment has reached 25%. In these countries, unemployment among the youths, including college graduates, reached 50%. In the Euro zone in the second quarter of 2012, the level of unemployment reached 11.2%, according to official figures. In countries such as Egypt and Tunisia, where manufacturing has fallen from 9.6% to 7.5% in the first quarter of this year (2012), the number of unemployed continues to grow. In South Africa, the most developed country on the continent, the unemployment rate exceeds 25%.

In the current period, in almost all fields, from education to health care, drastic measures have been taken, the retirement age has been delayed and pensions have fallen. The gains of the working class worldwide are targeted for cuts or elimination. While direct taxes on the workers are increasing, no measures are taken to disturb the local and international monopolies, when even within the framework of this system one could increase taxes on the banks and the local and foreign monopolies. Wages continue to fall, etc. Many countries are suffering from a process of absolute impoverishment.

In recent years practices have been imposed worldwide such as sub-contracting labor, precarious and part-time work, an increase in the age for retirement, etc. In Germany, for example, one of the most developed countries in the world that has had significant growth rates in industrial production, according to the Federal Administration of Statistics, 15.6% of the population lives below the poverty line, a figure that rises to 26% among the immigrant population.

Last year, on a world scale and in each country, the workers and peoples movement has developed with various demands, in different forms and also at different levels. The struggles carried out in those countries with a “debt crisis” have been outstanding for their broad social base, for their responses and the experiences gained. The miners' strike in South Africa, the youth movement and the strikes in Chile, the popular movements in Tunisia and Egypt, etc. are powerful examples of the workers and peoples struggles.
Starting with Greece, Spain and Italy, in various countries with a “debt crisis,” strikes, general strikes and huge demonstrations have taken place. In Greece and Spain, hundreds of thousands of people have expressed their anger in front of the parliaments on the days when these were voting for austerity measures. But the workers and peoples movement, despite some more advanced attempts, has remained within the framework of peaceful demonstrations, general strikes of one or two days and limited resistance. The strikes of long duration, the resistance or occupation of factories, have been limited to one enterprise or one sector.
The austerity measures have affected not only the proletariat and semi-proletarian masses of the cities and countryside; they have also affected the petty bourgeoisie and non-monopoly bourgeois strata. Even the less dynamic strata, the traditional base of the bourgeois parties, have been mobilized given the current situation. The social base of the struggle against the bourgeoisie in Power and against imperialism has expanded, to the point where in some dependent countries the mobilization has taken the character of a movement of the whole nation, except for a handful of monopolists. The conditions are maturing for the working class and its revolutionary parties, as representatives and the vanguard of the nation, to decide to organize and advance the movement and the united front of the people.

But despite the great movement, the groups of international finance capital and the local monopoly bourgeoisies have not given in (except in the recent delay of the austerity measures in Portugal). They have decided to implement these measures even at the cost of demeaning the image of the parliaments and weakening their social base. However, the masses are realizing through their own experience the impossibility of repelling the attacks with one or two day strikes or through peaceful demonstrations. Sharper forms of struggle and unlimited general strike are beginning to be considered by the more advanced strata.
It is clear that the bourgeoisie in Power, with their hostile character towards the people, is assuming a position of national betrayal. The traditional parties of the bourgeoisie and parliaments have lost credibility and the mass support for those parties is weakening (especially toward those in government that are implementing austerity measures). The social basis of monopoly capital is weakening. Among the masses who have felt their national pride hurt by the imperialists, the discontent, anger and will to struggle against the major imperialist powers, beginning with the United States and Germany, against institutions like the IMF or the EU, and against the local monopoly bourgeoisie that is collaborating with them, is developing.

The trade union bureaucracy and reformist parties and social trends are following a backward line of "least resistance," not only in their forms of organization and struggle, but also at the level of political demands and platform. Clearly, this attitude is contributing to weakening their influence among the workers. The attacks and harshness of the social conditions are also affecting the lower strata of the labor bureaucracy and aristocracy and are sharpening the contradictions within their ranks.

The struggles in the countries with “debt crisis” are being developed on a program of protest against the bourgeois governments and parties, against institutions such as the IMF and the EU that are imposing draconian measures and they are demanding their withdrawal. At first this was natural and understandable in the context of a spontaneous movement. But the inability to go beyond those narrow limits is one of the major weaknesses of the movement. This weakness can be overcome with the work of agitation that shows the masses the way out of this difficult situation in which the people and the country find themselves, denouncing the social forces that are an obstacle to that way out. This work of agitation is reinforced by putting forward appropriate demands, slogans and forms of struggle among the masses.

Especially in Greece, certain small groups (that also have weaknesses) have proposed relatively advanced demands and platforms. But the forces capable of influencing the movement are not even concerned with organizing the work necessary to promote the fight on all fronts. The absence or great weakness of a revolutionary class party, has been felt strongly, as it cannot influence the movement.

Linked to the evolution of the world economy, the period that is beginning will be one of further degradation of the living and working conditions for the workers and peoples, a period of intense economic and political attacks, of discontent, anger and militancy among workers, as well as sharpening of inter-imperialist contradictions and conflicts. We must draw lessons and conclusions from the recent developments and the historical experience of the working class and peoples; we must advance, renewing our work and reorganizing our parties.

Tunisia, November 2012