What has changed in 40 years?

January 26 marked the 40th anniversary of the Aboriginal Tent Embassy in Canberra. The establishment of the Tent Embassy in 1972 represented an historic watershed in the Indigenous struggle for self-determination.

The mainstream account of history teaches that it was the 1967 referendum that finally afforded rights and equality to Aboriginal people. This, however, was not the experience of Aboriginal people.

Aboriginal poet and activist Oodgeroo Noonuccal (formerly Kath Walker) said after the referendum: “Looking back, the only major improvement has been the 93% ‘Yes’ vote of the referendum of May 1967; but this improvement did not benefit the black Australians though it eased the guilty conscience of white Australians in this country and overseas.”

By Mel Gregson, Socialist Party

Racism and exploitation remained widespread after 1967. In many areas Aboriginal workers were still being paid as little as 50% of the minimum wage. Police brutality, incarcerations and deaths in custody continued as common occurrences. The living standards of Aboriginal people remained drastically below those of the non-indigenous population. The reforms promised by the 1967 referendum were not forthcoming.

Frustration at the lack of real change increasingly led to a more militant mood amongst Aboriginal activists.

Throughout the late 1960’s and early 1970’s, groups of young Aboriginal activists started organising in the urban centres of Sydney, Melbourne and Brisbane. Inspired by international upheavals, anti-colonial national liberation struggles and the American Black Power movement, this new generation of activists was eager to directly confront their own subjugation.

Angry and politically astute, the Aboriginal ‘Black Power’ movement established itself through successful campaigns such as forming the Redfern Aboriginal Legal Service and playing a prominent role in the anti-Apartheid protests. Most significantly, these young militants demanded control over their own affairs and fought for Aboriginal leadership of the various Aboriginal rights organisations.

The culmination of this upswing in Aboriginal militancy came in early 1972. On January 25th, the eve of Australia Day (i.e. ‘Invasion Day’), then Prime Minister William McMahon announced the Government’s main Aboriginal Affairs policy.

Hoping to cut across the growing confidence of Aboriginal people, McMahon offered up hollow promises that could not even scratch the surface of Aboriginal aspirations for genuine land rights and self-determination. The response from the young Aboriginal Black Power movement, to the horror of McMahon and the rest of the Australian ruling elite, was to travel to Canberra that day to confront the issue head on.

As Aboriginal historian and protest participant Gary Foley recalls:

“Upon arrival in Canberra early on the morning of 27th January 1972 the Koori [Aboriginal] men pitched a beach umbrella on the lawns outside Parliament House and proclaimed the site the office of the “Aboriginal Embassy”. They declared that Prime Minister McMahon’s statement the day before had effectively relegated indigenous people to the status of ‘aliens in our own land’, thus as aliens ‘we would have an embassy of our own’.”

This protest, through its boldness and ingenuity (and sheer luck of finding a loophole in ACT camping laws) shamed the racists in Government and captured the attention of millions of people. For first time in such dramatic fashion Aboriginal grievances were being expressed to a mass audience articulately and without pretense from the mouths of Aboriginal people themselves.

It was this protest and the dramatic events that followed that forced the issue of land rights and Aboriginal self-determination into the political mainstream.

The 40th Anniversary protest last month highlighted that in the four decades that have passed since the first Aboriginal Tent Embassy was erected on Parliament lawns, not a lot has fundamentally changed.

While the same issues remain in Aboriginal communities, non-solutions like re-wording the constitution are still being used to direct attention away from real problems.

The approach of the political establishment today is to continue to dispossess, socially and economically isolate, and victim-blame Aboriginal people while big business interests plunder the land. This can be no clearer than in the case of bipartisan support for the Northern Territory Intervention, a ruse concocted to force Aboriginal communities off valuable, mineral rich land.

In a country like Australia where mining interests dictate political outcomes, the struggle for land rights and self determination needs to go beyond the current system of private ownership. A socialist society built on genuine democracy and collective ownership is the only system able to ensure Aboriginal self-determination whilst ending unnecessary destruction of land for profit.

Frequently asked questions about Socialism

With the rise of the Occupy movement, opposition to the existing political and economic order has gone mainstream. It’s hard to imagine that the bandana-clad woman on the cover of Time magazine – representing “The Protestor,” Time’s “Person of the Year” – has many nice things to say about capitalism, and the ubiquity of the Guy Fawkes mask – popularized by “V for Vendetta” – further underscores how widespread the idea of revolution has become.

However, this growing support for system change has not yet been matched by a serious public dialogue about what an alternative might look like. A new Pew poll published in December indicated that people in the US who are under 30 or black are more likely to favor socialism than capitalism, but this does not correspond to clear ideas of what socialism is or how a socialist economic and political system would work. We offer up this FAQ as a contribution to the discussion.

By Brandon Madsen

How would a socialist economy work?

Under capitalism, institutions where immense wealth is concentrated (corporations) run the economy, exploiting working people to increase their own concentrated wealth. The essence of a socialist economy is to flip this relationship upside-down, with working people running the economy, utilizing the enormous wealth and productivity of society to enrich their lives. To do this, we would have to take over all the biggest banks and corporations and put their resources into public ownership and democratic control.

Employing those out of work and reallocating investment and jobs towards social priorities – healthcare, education, clean energy, etc. – would give a huge boost to productivity and wealth in society. Democratic planning of the economy would allow us to make sure everyone had a good-paying job, high-quality health care, free education at all levels, and, of course, basic physical necessities like food and housing. It wouldn’t be limited to just the basics, though; we could choose to invest in empowering people to make music, art, writing, film, fashion, and all sorts of other forms of cultural development.

This type of economic system would require conscious planning, but this is already true to a large extent under capitalism. Corporations larger than entire countries are able to plan out their levels of production, spread of distribution, pricing schemes and so on without falling to pieces, so there’s no reason working people shouldn’t be able to do the same.

The difference is that planning under capitalism is fractured, incomplete and undemocratic, with the goal of maximizing profit for the individual firm. Under socialism, we could structure investment of the world’s wealth with a big picture, bird’s eye view of the whole economy, with the goal of fulfilling human needs, sustaining the environment and enabling a liberated human existence.

A socialist economic system would have to be globally integrated. This is also the case already under capitalism, where we live in a globally interdependent world. Right now globalization on a capitalist basis means brutal exploitation of the weaker economies, and a race to the bottom for workers everywhere. Under socialism, global economic integration would be part of the plan to enrich people’s lives on a global scale.

A socialist economy would handle the environment very differently. Today, companies don’t care about environmental costs because they are able to externalize them onto the public. The costs associated with contaminated air and drinking water are real, but they don’t show up as a red number on Monsanto’s balance sheet. That is why no corporation will ever undertake the necessary steps to save the environment on the basis of “free market” principles.

Democratic planning of the economy would eliminate the profit motive behind externalizing the costs of pollution. Instead, efficiency, environmental sustainability and meeting the basic needs of all would form the core principles of economic decision-making. Instead of inadequate measures like energy-efficient light bulbs and recycling-awareness programs, a socialist economy could invest in completely overhauling the way everything is produced, utilizing all the latest green technologies for maximum sustainability and creating millions of jobs in the process.

How would a socialist democracy work?

As most of us currently experience it, “democracy” boils down to voting once every couple years for which wealthy career politician will make all the decisions for us. Of course, there’s nothing democratic about this at all, especially when the whole process is corrupted by corporate money.

In contrast, socialist democracy would take place day to day, week to week, in every workplace, school and community. Workers would rotate management tasks, and elected managers would be subject to recall and replacement whenever the workers saw fit. All decisions could be overturned by majority vote.

School curriculum and policy would be jointly agreed upon by parents, teachers and students, rather than imposed by distant administrators and bureaucrats. Neighborhood assemblies would decide who is and is not empowered with policing authority and instruct elected officers how to prioritize their efforts.

All investment and economic decisions should be made democratically. Workplace and neighborhood assemblies would elect representatives to massively expanded local and regional councils, which in turn would elect national representatives. Elected representatives should have no special privileges or pay above their electorate, and they should be subject to instant recall.

In order to facilitate this process of democratic decision-making, there should be space roped off in regular work and school schedules for decision-making meetings and discussions. With the increased wealth created, the work-week could be shortened without loss of pay to allow people time and energy to become engaged politically, and to pursue their other life goals outside work and school.

Wouldn’t a bureaucratic elite just take over?

Undoubtedly, in the first stages of a socialist society, a struggle against careerists and corruption within the system would be necessary. The poisonous ideological baggage inherited from centuries of class rule would not just fade away overnight. However, by establishing public ownership of society’s productive resources, eliminating privileges, and creating bottom-up structures of democratic management and control, the obstacles to prevent aspiring bureaucrats seizing power would be immense.

The main example driving fear of a bureaucratic takeover is Stalin seizing power in the Soviet Union only a few years after Russia’s working-class revolution in 1917. This tragic degeneration of the Russian Revolution is something Marxists have grappled with in numerous books. The basic conclusion supported by a serious historical analysis is that this degeneration was neither natural nor inevitable, but the result of particular circumstances.

Russia was among the poorest countries in the world at the time of its revolution, and it was even further devastated when the deposed capitalist rulers, backed by 21 foreign armies, tried to violently retake power from the democratic workers’ movement, resulting in a bloody civil war. Though revolutions took place elsewhere across Europe, most notably Germany, they were all defeated, leaving Russia poor, broken and alone.

This was not a healthy ground upon which socialism could be built. The whole basis of socialism is having enough to go around, but Russia didn’t have that. In this context, the democratic structures in the Soviets (workers’ assemblies) ceased to function. Who wants to go to political meetings when you’re worried about where your next meal is going to come from?

It was this vacuum of workers’ power from below, fueled by the isolation and economic starvation of the country, that spawned the bureaucratization of Russian society and the rise of Stalin as this bureaucracy’s dictatorial figurehead. Even then, it was not a natural progression. Stalin had to jail, murder, exile, or otherwise force into submission literally millions of people whose only crime was adherence to the democratic principles of the 1917 revolution.

This experience shows the importance of building the fight for socialism as a global movement. Because of imperialist plundering of resources around the world, some countries may lack a stable economic basis for socialism, and will need to trade with and get help from the richer countries. If Russia had been joined by a successful revolution in even one other country, such as Germany, history would have turned out very differently.

Wouldn’t it be easier to reform capitalism?

Unfortunately, contrary to official accounts, the history of capitalism is not one of consistent progress towards ever loftier heights of democracy and prosperity. Rather, every serious reform has required mass struggle, often shaking the system to its core.

Reforms are not granted out of the kind hearts of well-meaning politicians, but are concessions grudgingly granted to appease or distract rising movements of working people hungry for real change. Whether we’re talking about civil rights, the weekend off, or the right to organize a union, every one of these required an all-out fight against the profit-driven logic of capitalism, where countless innocents were murdered by elites desperate to put down their struggles.

Under capitalism, even these partial reforms are not permanent, not a foothold or new baseline to work from. As we have seen in the last few decades, the capitalists and their politicians will roll back reforms as soon as they think they can get away with it.

Social programs that people fought tooth and nail for in the past are being dismantled or undermined via budget cuts. After almost destroying unions in the private sector already – where less than 7% of workers in the US are in a union – corporate politicians in state after state are now going after the public sector, where over a third of workers are still unionized.

A stable basis for ongoing reforms will require working people to take political power out of the hands of the capitalists and wield it themselves – that is, overthrow capitalism and establish socialism. There’s no way around it; the fight for reforms and the struggle for socialist transformation are one and the same.

Socialism sounds great on paper, but is it realistic?

The only constant in history is uninterrupted change. From ancient slave states to the feudal landowner lordships to the global capitalist system of today, people have repeatedly overthrown old systems after they became a brake on progressive development. The truly unrealistic and utopian idea is that problems like war, poverty and environmental devastation will be solved on the basis of capitalism.

Though socialism is realistic, it’s not inevitable. Again and again, crisis-ridden capitalism has forced workers and the oppressed into revolutionary uprisings. Several have happened in the last year, most prominently in Egypt and Tunisia. But while many revolutions succeed in toppling governments, few have achieved system change. Capitalism will always find a way out on the backs of workers, youth and the poor if we fail to replace it with something better.

That’s where socialists come in: We take seriously the study of history, learning from both defeats and successes of revolutions and mass movements. We aim to spread these lessons widely so that future revolutions succeed in establishing socialism. That doesn’t just mean reading a lot of books. It means actively building and engaging with the movements that exist right now, boldly bringing in socialist ideas while learning from others in struggle, working out the way forward together.

If you agree with these ideas, consider joining the Socialist Party today!

Since the 18th century, capitalism and its supporters have tried to ‘blame the victim’ for the horrors of their system. Arguing that over-population is a key contributor to scarcity has been the key point made by these types - from Malthus in Marx’s day to sections of the environmental movement and the political Right today. (Malthus falsely argued that population grows exponentially while food supply only grows arithmetically).

By Stephen Jolly

In Australia today some Greens and anti-development groups blame a rising population for climate change and urban squalor. This lets big business, greedy developers, and the big polluters off the hook and diverts attention away from the real issues.

This ‘mystification’ provides value to the propertied classes, as Angus and Butler point out. “While population is by no means irrelevant, giving it conceptual pride of place not only inflates its explanatory value but also obscures the essential factors that make for ecological degradation and makes it impossible to begin the hard work of overcoming them.”

It’s rich people and capitalist profit-first production in factories and farms that is the cause of most carbon emissions, not ordinary people. What Angus and Butler have done is take this basic truth and fleshed it out from many different angles.

They write: “Populationist policies focus on symptoms, not causes. Worse, they shift the blame for climate change, and the burden for stopping it, onto the poorest and most vulnerable people in the world.”

They show how “poverty was the cause of rapid population growth in the 20th century, not an effect – and poverty itself was the result of centuries of colonialist plunder.” The Industrial Revolution in the rich countries eventually led to a fall in population growth as “children were no longer economic assets and improved pension and social services means that parents didn’t need to depend on their children’s support in their old age. This natural result was a reduced birth rate, which occurred even without the benefit of modern methods of contraception.”

One simple fact from the book demolishes the central tenant of over-polulationists. Between 1960 and 2000, while the world’s population doubled, food production increased by about two and a half times. In the same period, the global death rate fell from 15.5 to 8.6 (annual deaths per thousand people).

It’s therefore clear that food scarcity stems from inequality and the nature of capitalist distribution rather than a lack of food.

Angus and Butler show that isolating and linking population growth to a rise in carbon emissions only shows correlation, not causation. This correlation, “that seems obvious when we consider only global figures, turns out to be an illusion when we look at the numbers country by country.”

For example Sub-Saharan Africa had 18.5% of the world’s population growth and just 2.4% of the growth in carbon dioxide emissions. On the other hand high-income nations had 7% of the world’s population growth and 29% of the growth in carbon dioxide emissions. Therefore carbon dioxide emissions are primarily a problem of rich countries, not poor ones.

“Too Many People?” also has four very useful appendixes including on ‘The Malthus Myth’ and a brilliant tract on immigration from US socialist Eugene V. Debs written in the early 20th century.

Socialists before have made all of Angus and Butler’s points but never in such a systematic, clear and concise way. This book should be on the shelf of every active socialist, as well as anyone serious about tackling climate change.

Too Many People?
Population, Immigration and the Environmental Crisis
By Ian Angus and Simon Butler
Haymarket Books, 2011
RRP $24.95

CWI’s Zhang Shujie speaks out at hearing in Sweden’s parliament

“I was warned that I could get several years in prison for ‘contact with a banned organisation’ and for ‘crimes related to national security’ ”. Zhang Shujie, a socialist from China, explained his ordeal at a hearing at the Swedish parliament on Thursday. He and subsequent speakers underlined how repression in China increased sharply early in 2011, when the regime was alarmed by the revolutions in Egypt and Tunisia.

By Committee for a Workers’ International (CWI) reporters

A long distance guest at the hearing, ‘Long Hair’ or Leung Kwok-hung from Hong Kong’s parliament – called on Sweden’s politicians and authorities to ensure that Zhang is granted permission to stay in Sweden. He told the audience about a friend of his who, in the 1980s, was arrested in China and refused to work for the secret police as a spy. He had been sentenced to 10 years in prison.

The hearing on the struggle for democratic rights and the Chinese state repression was organised by the Left Party and its spokesperson on refugee policy, Christina Höj Larsen. Other speakers included a representative of the Independent Chinese Pen Club, an Amnesty International spokesperson and the experienced lawyer in many Swedish refugee cases, Sten De Geer.

Zhang explains his case

Zhang was the first speaker. “In early 2011, the Chinese dictatorship was terrified of the waves of global protest following events in Egypt and Tunisia. Almost exactly eleven months ago, I was arrested and accused of having links with a ‘banned organisation’, the Committee for a Workers International (CWI). I was taken secretly by police from the State Security Bureau to a hotel. Police performed a full body cavity search and took my belt, mobile, keys and others things in my pockets.”

Nobody knew where he was and the police threatened that they could hold him indefinitely, he could “disappear”. He was interrogated for nearly 30 hours, often standing, without food and without his glasses. The police demanded information about the CWI in China and the sister organisation of the Socialist Party in Hong Kong (Socialist Action), but also about the legislator, Leung Kwok-hung, in Hong Kong. They threatened Zhang with a long prison sentence.

“With no alternative, I agreed to the police demands at that time. However, I contacted my CWI friends secretly the day after the summons, and told them what happened. Rather than become a spy for the dictatorship, I chose to leave China – to break from the chain the police had placed around my neck. This was the only way I could defend my right to speak out; not to be silenced as so many are being silenced by state repression.”

The opportunity to get away arose when police pushed for him to go to a meeting in Hong Kong to spy on the participants. He was able to escape with the help of Joe Higgins, Socialist Party member of the Irish Parliament, and ‘Long Hair’.

Zhang also gave the political background to the regime in Beijing being afraid of socialists and workers’ struggles: “One reason why the Chinese government is able to exercise this degree of repression today is that most countries and governments are far more concerned about business than repression, torture, or dictatorial rule. So, the dictatorship is well supported outside China, by the big corporations. In return, these corporations have made China the world’s sweatshop.”

Zhang has written articles and co-authored a book on the workers’ situation and struggles in China. “The situation is so bad that workers have even threatened to commit mass suicide, as we saw in Hubei province at the start of this month. This was at Foxconn – the Taiwan-owned company that makes iPhones for Apple. The boss of Foxconn last week told the press it was hard to manage ‘one million animals’ – he was talking about his 1 million employees in China!”

“Political change – real democracy – will not come from above, as a gift from so-called ‘reform-minded’ leaders. This is true in China and everywhere else – as we are seeing in Egypt. Democratic change has always come from below – it must be won through mass struggle. This is why I am a socialist – an international socialist – and this is why I have been persecuted by the Chinese police state.”

Christina Höj Larsen, Left Party MP, thanked Zhang for his testimony: “I want to give a special thankyou to Mr. Zhang Shujie for his very courageous and personal speech that gave a picture of what life is like for many in China.”

Others prosecuted and ‘ disappeared’

Zhang Yu from the Independent Chinese Pen Club showed how punishment for government critics has become harder in recent years. The most famous of them - Liu Xiaobo - who received the Nobel Peace Prize in 2010, was sentenced in 2008 to 11 years in prison and his wife ‘disappeared’ a year ago. It is the same with several other people such as Uighur Hailate Niyazi and Dokru Tsultrim who sounded the alarm after the earthquake in Yushu. Nobody knows where they are. In the last month, three dissidents have been sentenced to between 9 and 10 years in prison, including for “contact with a Chinese organisation based abroad”.

The severe sentences meted out to writers and artists are relatively well-known. But there is no doubt that the regime fears the potential power of workers even more and that there are numerous worker activists who are victims of state repression.

‘Long Hair’, Leung Kwok-hung, referred to the two Swedish journalists who were recently sentenced to eleven years in prison in Ethiopia - Martin Schibbye and Johan Persson. He said that Sweden must demand freedom for them, but equally grant Zhang Shujie the right to stay in Sweden . “Zhang is one of the victims of the escalating repression in China. Domestic security in China this year for the first time has a budget larger than the military budget. 1.3 million websites were closed in 2011,” said ‘Long Hair’, who also told the hearing that he has been forbidden to visit China since two decades ago.

Elisabeth Löfgren, press officer at Amnesty International in Sweden, gave examples of how major IT companies like Yahoo and Google are sitting in the lap of the regime in Beijing. They say they will not collaborate, but then “Money talks,” she said. “130 people were arrested after a call was made for a protest in February last year”, Elisabeth said. Another example is Chen Wei, who recently was sentenced to 10 years in prison after publishing an article on the internet. Another activist, lawyer Chen Guangcheng, is surrounded by up to 100 security guards who literally beat back any visitors to his residence.

The MPs and journalists who attended the hearing received extensive information about the increased repression in China. Zhang Shujie was encouraged by the strong support expressed for his appeal: “I intend to campaign to expose the true role of the state security forces and a dictatorial regime that has nothing in common with socialism or the interests of workers and the poor.”

Masses in Cairo and other cities demand end to military rule

Yesterday, 25th January, marked the first anniversary of start of the revolutionary movement of the masses in Egypt, which eventually led to the fall of the dictator Hosni Mubarak. Yesterday, millions of Egyptians again took to the streets, celebrating the achievements of the revolution and remembering the martyrs killed by the police and army. Many protesters also demanded the removal of General Mohamed Hussein Tantawi, the leader of the ruling Supreme Council of the Armed Forces (SCAF), as well as calling for genuine democratic rights, real social change and to end poverty and joblessness.

An Eyewitness Report

A CWI member from Austria is visiting Egypt and sent this report on the enormous demonstrations in Cairo yesterday, commenting on the mood and demands of protesters in Tahrir Square.

According to Al-Jazeera, on January 25th 2012, a countless number of people rushed to Midan Tahrir, the huge square in central Cairo, which became the symbol of the Egyptian revolt of early 2011. From early morning, people from all parts of the megacity marched towards Tahrir (which means ‘Liberation’ in Arabic). By around midday, the place was so crowded with people that it was impossible to cross the square from one side to the other. And now, as I send this report – late afternoon in Cairo, January 25th – there are even more demonstrations arriving from the far edges of the city to the square. Many of the demonstrators I spoke with said that today there are more people present than during the height of the revolt, last year.

The mood was nervous the day before the anniversary. People queued at ATMs to get cash and to buy food for a couple of days. I asked people queuing at an ATM why they took these precautions. They answered, ‘You never know, maybe the banks will close the ATMs, like they did last year.’

Shop windows and restaurants near Midan Tahrir were covered with wood and metal. The streets leading to the government department districts were blocked with barbed wire and walls. But neither the police nor army forces were on the streets.

When I arrived in Cairo a week ago, the military rulers announced that they would not allow a ‘second revolution’ and that they would allow the police to use life ammunition, if necessary. Shortly after this, they made public their plans to ‘celebrate’ the revolution: a big ‘party’ in Midan Tahrir, including an army parade. But Egyptians made clear that they would demonstrate themselves and that the army would not be welcome.
On the evening of the 24th January, the square was filled by tens of thousands, despite heavy rainfalls and cold winds. The mood at this demonstration was great. People shouting with pride and joy that they were part of such an iconic movement and directed anger against the military rulers. They are angry at the continuing rule of General Mohamed Hussein Tantawi, the leader of the Supreme Council of the Armed Forces (SCAF), who assumed power after the fall of Hosni Mubarak. The evening of the 24th January was test for the protesters – can they mobilise in large enough numbers? The answers was a clear Yes! There was no room for doubt.

Overwhelming roar

On the morning of 25th January, I woke up because of the chants of protesters. Thousands remained in Midan Tahrir overnight. And then millions of people streamed into the square during the morning. The mood was a mixture of a party and a demonstration. Street vendors sold everything, from flags and stickers to cigarettes, tea and food. People celebrated their “free Egypt”. At the same time, they demanded the end of military rule. The noise in the square reached an overwhelming roar when the masses chanted, ‘Down with Tantawi!’ and ‘Down with the military!’ I have never witnessed such a large or noisy demonstration.

From blogs and the Egypt media I saw reports of demonstrations in other parts of Cairo. At Dokki, a neighborhood in Giza, on the other side of the Nile from Tahrir, a demonstration of several tens of thousands waited to start making its way to Tahrir because the bridges across the river were already congested with demonstrators. There were also several demonstrations from southern parts of Cairo – each of them several thousands strong – that could not reach Tahrir for a long time because streets were jammed with protesters.

And where were the armed forces and the government? They obviously realized that they could not use exploit the anniversary as they had wished. I did not see a single policeman or army officer at Tahrir or anywhere nearby. I only spotted some police in the streets that are blocked near the parliament building. But their numbers were tiny. The government decided to do nothing about the anniversary celebrations apart from providing vehicles with drinking water and ambulances.

The Egyptian media reported that more than half a million demonstrators marched through Alexandria and tens of thousands through the streets of Suez. It was reported from Port Said that ‘the whole town is on the streets’. Indeed in every major town of the country, there are demonstrations.

Western media reported that protesters are split between those who demand a kind of ‘second revolution’ and those who support the elected parties like the Muslim Brotherhood. Yes, there are a lot of different currents in this movement, but one thing was shown on 25th January in an overwhelming way: Egyptians are not tired of their revolution and they are still willing to demonstrate for what they fought for one year ago.

A celebration but revolution has a long way to go

Ahram Online, a major news agency in Cairo, reported that “the streets in downtown Cairo are packed with people, many chanting against military rule. People sitting in street cafes are joining in with the charged atmosphere against the military rulers”.

The Muslim Brothers called their members to go back home on the evening of 25th January, to demonstrate that they would not support a re-occupation of the square, as it is proposed by the ‘revolutionary youth’. But by 7 pm, the square was still bustling with people, with no sign of an end. On the contrary, more demonstrators were still arriving.

The so-called ‘Salafists’ – more hard-line political Islamists - were reportedly thrown out of several demonstrations by angry youth, most notably in Alexandria. In Midan Tahrir, Cairo, I saw just a few obvious Salafists. During the evening of the 24th, there were a couple of hundred shouting, “Allah Al Akbah”, for a few minutes. But a huge roar, ‘Down with Tantawi!’, showed what the vast majority of protesters were marching for.

The 25th January anniversary mood in Cairo was one of celebration but it also seemed clear to most of the people that the revolution has still a long way to go. The next step in view of many is to get rid of the military rulers, who are trying to salvage as much of the old regime’s privileges as possible. But social issues, like jobs, homes, healthcare, as well as questions like, ‘Who elected my boss?’ or ‘Why didn’t we elect our managers’, increasingly come to the fore.

The well-known writer, Ayman El-Sayyad, tweeted on 25th January: “I remind all media that they have to be accurate; we are not celebrating the first anniversary of the revolution; we are reviving the revolution in its first anniversary. Listen to the slogans and chants carefully.”

Total shut down across the country as the working class shows it owns society

On Monday 9 January, 2012, tens of thousands of Nigerians marched through the streets of Lagos in a demonstration against the removal of the fuel subsidy by the Nigerian government. As a result of this policy, the petroleum price has shot up from N65 to between N140 to N200. The cost of food, transport and basic services have soared by several percentage points as the market reacts.

Meanwhile salaries remain fixated despite soaring inflation while the N18, 000 (around US$120) national minimum wage remains unpaid in a lot of states. It is against this background that the huge burst of anger of the mass of working and poor people so early in the New Year can be understood.

By Democratic Socialist Movement (CWI in Nigeria) reporters

This vicious anti-poor policy has sparked mass protests (some spontaneous) across the country since January 2nd. In Kano and Abuja attempts have been made to occupy public places, emulating of the ‘Arab Spring’ and the mass protests against austerity across Europe and the US. Many of these courageous actions by enraged masses of working people, poor and youths have been met with brutal police repression like in Ilorin in Kwara State where the first killing of the movement was recorded.

As early as 5am, tens of people could be seen gathered around bus-stops in Lagos and across the country. Bonfires and barricades announced to people in the community that the mass revolt had started.

It was the biggest and most widespread movement in Nigeria and in particular Lagos since the return to civil rule. In Lagos, tens of thousands marched from the Nigeria Labour Congress (NLC) Secretariat in Yaba. Those who could not make the central protest organized pockets of actions in their communities and neighborhoods.

Both working class and middle class elements were actively involved in the protest march. Associations of medical doctors and lawyers were ably represented. The medical doctors provided an ambulance while musicians came to Gani Fawehinmi park (the ‘terminus’ of the movement) to entertain protesters.

Everywhere, every major and even community roads were deserted. Shops, markets and offices were closed. The ubiquitous danfo buses were on holidays, as were the Bus Rapid Transport (BRT) buses which attempted to break the Joint Action Front (JAF) protest on January 3rd. On most roads inside the communities, young people could be seen playing football.

Unlike other mass protests in which trade unionists and activists exert effort to barricades to enforce the directives of the strike, in this case the masses came out on their own to junctions and barricade points. At Agbotikuyo bus stop for instance where DSM comrades played prominent roles, efforts by the police to break the barricade were frustrated, when the mass of people came out. About 1,000 marched from the bus stop, close to the DSM national secretariat, to other areas in Agege. By the time the march got to Iyana-Ipaja along the Lagos-Abeokuta expressway the number of protesters grew to 3,000.

Also in the Ijaye area of Lagos, as soon as the members and leaders of the Joint Action Front arrived at the bus-stop, the protest began. Lanre Arogundade, a member of the Democratic Socialist Movement, addressed the crowd at the bus-stop. He explained the economic implications of the anti-poor policy and called on on-lookers to join the demonstration. This was followed by the chanting of anti-government songs, distribution of fliers and display of placards carrying different messages.

The placards carried by protesters bore messages like “Nigerian masses say no to fuel subsidy removal”, “Deal with the cabal not the masses”, “N65 fuel price not negotiable”, “Jonathan must go”, “For a mass workers party” etc. Those who could not join the demonstration expressed their support for the nationwide strike and mass action and called on President Goodluck Jonathan to immediately reverse the fuel subsidy removal in the interest of the already impoverished Nigerians. Onlookers also joined in chanting anti-government songs. In fact, a particular song became the anthem of the protest, “Jonathan ole PDP ole”, a Yoruba song meaning Jonathan is a thief, PDP is a thief. One middle-aged woman expressed her disappointment with the Jonathan presidency and demanded for her vote. In her words “Jonathan has disappointed me, I voted for him in the last presidential election and I want my vote back”.

The leaflet produced by the Democratic Socialist Movement (DSM) condemns the present economic system and called for its replacement with an alternative socialist system based upon to the nationalization of the commanding heights of the economy to allow the democratic control and planning of the use of the country’s resources in the interests of the majority.

As we moved through the streets of Lagos, some streets were turned into football fields. Roads, markets and workplaces were deserted. Some of those who gathered at newspaper sales joints to read the dailies eventually joined the protest train. The officers of the Nigerian Police Force behaved themselves and did not interfere with the protest; in fact, some openly expressed their support for the nationwide strike and demonstrations.

However one young man, identified as Aderinola Ademola, was shot dead by a trigger-happy policeman while three others were injured and are presently recuperating in a private hospital. According to eye witness accounts, they were reportedly shot by CSP Segun Fabunmi while playing football peacefully on the road. While the State Police Commissioner claims the CSP has been arrested and detained, this cannot really be verified.

There is the need to open a campaign against this brutality against protesters. This becomes more important given the vicious police brutality in other places like Kano where at least one protester was also reportedly shot dead today. There are reports of others dead around the country. In Enugu, the state Governor, Chime, issued a decree banning all public protests.

In Lagos, the protest train later converged at the Gani Fawehinmi Park, Ojota, where several union leaders, human right activists, entertainers and clergymen addressed the protesters consecutively.

Reports from other states show essentially the same shutdown. Over 2,000 marched in Benin, Edo State where 214 copies of SD (“Socialist Democracy”, the DSM’s paper) were sold. In Osun State about 3,000 marched; comrades sold over 468 copies of SD. Over 600 copies of SD were sold in Lagos. In Lagos, the Agege community action committee meeting on Sunday, initiated by DSM comrades, was attended by over 70. In the Ajegunle district of Lagos, 55 copies of SD were sold in the community on the eve of the general strike at the public meeting organized by DSM comrades and others. In many communities, action committees initiated by different affiliates and collaborators of the Joint Action Front (JAF) are meeting and mobilizations and actions carried out independent of the central plan. All this shows the depth of anger in society.

In our materials, the DSM is calling for the building of democratic mass action committees in communities, workplaces and campuses to act as the platform to involve more people in the struggle. We are also calling for a consistent struggle against this attack and other anti-poor policies. While noting the correctness of the demand for immediate reversal of pump price of fuel to N65 per litre, we argue that even this is not enough.

While the January 1st removal of fuel subsidy acted as a spark, the real basis of peoples’ anger is the anti-poor and neo-liberal attacks of the last one decade and more. Youth unemployment is a frightening 42% (over 28 million). Education and health is commercialized, road networks and public electricity have virtually collapsed. For many, especially the youth, the future is bleak under the ferociously anti-poor policies of capitalism.

This is why socialists call for a struggle not just against the fuel subsidy removal/fuel price hike but also against all anti-poor policies. Our slogan is “Down with Jonathan’s anti-poor government, for a workers and poor people’s government”.

We believe that to ensure total liberation from this miserable life where just 1% consume over 80% of society’s resources, there is the need for a revolution to chase out the government of capitalist looters and put in their place a workers and poor peoples’ government that can run society in the interests of the millions and not the millionaires. Part of this struggle is the building of a mass workers’ party armed with a socialist programme and policies of public ownership of the oil sector and the economy under the democratic control and management of the working masses.

Jonathan and co. hope to be able to sit this struggle out, hoping that poverty, food shortages etc. will break the strike. This is why it is essential that the Labour movement continues to go onto the offensive. This capitalist society is going no-where, it is at a dead-end, Labour must use this moment to build its own alternative that can swept away the thieving gangs that loot this country and the capitalist system that has proved incapable of developing the nation. Such is the power of the current strike that it is possible that the government may offer concessions, but we have seen before temporary concessions being used by the ruling class to buy time for themselves by damping down the struggle. Instead of allowing the ruling class to continue to rule and exploit, Labour must utilize this mass movement not just to reverse the fuel price hike but as a springboard to create workers and poor peoples’ government that can begin a real revolution by breaking with capitalism.

The occupy movement brought opposition to capitalism from the margins into the mainstream

Despite near universal demonisation of socialist ideas in the corporate media and political establishment, according to a new Pew Research Center Poll half of young people aged 18-29 view socialism positively while only 43 percent react negatively to the term. In the same age group, only 46 percent have positive views of capitalism, while 47 percent view capitalism negatively.

While these numbers remain close, its notable that just 20 months ago, last time Pew asked the same questions, the numbers were reversed. At that time, according to Pew’s findings, a slim majority of young people, 49 to 43 percent, viewed socialism negatively.

By Ty Moore, Socialist Alternative (US section of the CWI)

Undoubtedly the impact of Occupy Wall Street on consciousness is an important factor. In a matter of weeks, the occupy movement brought opposition to capitalism from the margins into the mainstream. With that has come growing interest and demand for a real political alternative to this system.

Pew breaks their findings down by race, income, age, and political affiliation. Notably African Americans view socialism most favorably, at 55 to 36 percent. While over all the U.S. population - particularly those over 30 - still has a negative view of socialism (60 to 31 percent, a 19 point spread), among the lowest income bracket (less than $30,000) positive and negative views are almost even at 43 to 46 percent. Meanwhile, half of the poorest Americans view capitalism negatively, while just 39 percent support capitalism.

These numbers underscore the tremendous potential to build a mass socialist movement in the U.S. today. After decades of Cold War propaganda and the confusion created by the warped legacy of Stalinism, the re-emergence of widespread socialist sympathies since the onset of the financial crisis is especially significant. While the corporate-sponsored politicians of both mainstream parties remain ardent defenders of capitalism, their constituents - particularly the rising generation - are increasingly hostile to the system.

As fresh struggles of working people and youth erupt in the coming months and years, support for socialist ideas will undoubtedly grow further. The efforts of the corporate media and capitalist political parties to marginalize and shut out socialist voices are no longer sustainable.

Still, for most youth and workers searching for a way out of the mess capitalism has created, positive views of socialism do not yet indicate a clear understanding of genuine Marxist ideas. Views undoubtedly range from support for European welfare state systems and other “mixed economy” models to simply general longing for more wealth equality and a spirit of social solidarity. As of yet, only a small minority clearly aims to build a democratically planned socialist economy.

So for those who want to see system change, however, the historic challenge is to transform passive, general support for the ideas of socialism into active participation in the socialist movement and clarity on how society can be transformed.

If you are among the un-organised supporters of socialism, now is the time to step forward and join the struggle.

Government debt soars to ‘European’ levels following massive stimulus programme

As the global economy lurches towards renewed recession and financial turmoil, concerns are growing over the state of China’s largely state-owned banking system. For more than two years an unprecedented surge of bank credit has powered the biggest construction boom in history, sucking in raw materials from around the globe and ‘supersizing’ GDP (gross domestic product) growth rates for commodity exporters. But the chickens are now coming home to roost as Beijing’s mega-stimulus also sent debt levels soaring.

For over a year the government has imposed a credit squeeze to rein in rising debts especially at local government level, and to bring inflation under control. But Beijing’s clampdown has in turn led to a dramatic growth of the shadow banking system – of so-called underground banks (which are illegal) but also ‘off-balance sheet’ lending by state-owned banks.

By Vincent Kolo, chinaworker.info

The shadow banking system now accounts for a staggering 40 percent of all loans in China, as banks and financial institutions seek ways to bypass government controls. The growth of informal or ‘shadow’ finance also represents what some commentators call a “stealth liberalisation of financial markets” – as banks chase after “market-determined” interest rates much higher than those set by the central bank.

This explosive growth of informal lending compounds the problems for China’s government as it struggles to avert a massive bad loans crisis. In a December poll of global financial speculators (or ‘investors’ as they prefer to be called) by Bloomberg, 61 percent said they anticipate a crash in China’s financial sector within the next five years, with only one in ten predicting China’s banks will escape trouble.

When the debts of local governments, the railways, and other items such as unfunded pension liabilities are factored in, China’s overall debt levels have rocketed. Standard Chartered Bank’s chief economist for Asia, Nicholas Kwan, calculates that China’s current debt levels are now similar to European countries at around 70-80 percent, compared to about 20 percent of GDP three years ago. He argues it would not take much extra spending to push China close to the debt-to-GDP level of the United States, of 100 percent.

Stimulus, inflation and economic imbalances

For over two decades, as the Chinese regime shifted from the former model of a bureaucratically planned economy to a form of ‘state capitalism’, the banks have been its main tool for setting the pace of economic growth. When the global financial crisis struck with full force in 2008, it was an unprecedented splurge of bank credit that financed the regime’s stimulus measures.

This credit expansion, channelled mostly through local governments and state-owned companies, not only lifted China out of recession but also, alongside stimulus programmes in most major economies, helped avert or postpone a global ‘Great Depression’. Although the method and forms of state-financed investment differ, China’s lending programme came, as in other countries, with a gigantic price tag. The masses have paid for this through an upsurge in inflation, nightmarish property speculation and other effects that combine to reinforce China’s record-low level of domestic consumption (just 35 percent of GDP, compared to 57 percent even in India).

Bank credit expanded 71 percent during the two-year stimulus period, or by 26.7 trillion yuan (US$4.12 trillion), while China’s credit-to-GDP ratio rose to 166 percent by March 2011, from 120 percent at the end of 2008, according to Credit Suisse.

One effect of this credit tsunami has been an additional and unwanted surge in the money supply, a key factor causing inflation. According to Southern Weekly, China’s broad money supply (M2) rose to 71.03 trillion yuan (US$10.71 trillion) at the end of 2010, larger than that of the US and almost double the size of China’s GDP. This excess liquidity has flooded into the property market and other financial assets – sending prices for land, housing, and commodities skywards.

This massive expansion of bank credit has therefore introduced further serious distortions into the Chinese economy, which already suffered from severe imbalances (overinvestment, overcapacity, inefficient use of energy and natural resources, a widening incomes gap and suppressed level of consumption due to extremely low wages).

Far from a conscious and directed policy, this explosion of credit took place in a frenzied and haphazard fashion, with few controls or checks either by the banks or by central authorities; enabling local governments and state-owned companies to milk their access to easy credit in order to indulge in everything from the extravagant (‘vanity’ projects such as lavish sporting events and ten storey police stations) to the purely speculative (a huge proportion of stimulus funding was syphoned into the property market and other forms of speculation).

Average house prices nationwide have risen 140 percent since 2007 (that is the average increase, with prices in some major cities more than tripling in the same period). A widely reported figure is that China has an estimated 64 million empty apartments, bought as financial investments, not as homes, by wealthy individuals (including a great many government officials) and by companies. Meanwhile, in the capital city alone an estimated one million ‘mice people’ live in underground tunnels and converted cellars due to the lack of affordable homes.

Record profits for banks

As Credit Suisse (June 2011 report) pointed out, “… the problem is that while the central government originally planned for about 4 trillion yuan stimulus investment in two years, total infrastructure investment during this period was 18.3 trillion yuan, four times the size of the stated stimulus programme. Of this amount, we estimate about 14.5 trillion yuan was invested by local governments. In case such lending becomes problematic, it is doubtful whether the central government will foot the entire bill, and if the central government does not bail them out, this will become a private sector problem, and it will impact the banking system.”

The banks rushed to extend new loans in the stimulus period not least because it was hugely profitable. Chinese banks’ profits soared by 95 percent over the three years 2009-11, and now account for over a fifth of global banking profits, according to The Banker magazine. ICBC’s profit of US$32.5bn in 2010 eclipsed all other banks worldwide. Second came China Construction Bank, with profits of US$26.4 billion. In third place globally was JPMorgan with $24.9 billion (Wall Street Journal, 13 October 2011).

Providing the borrowers were government-linked entities such as state-owned enterprises (SOEs) or local government financial vehicles (LGFVs), the banks cared little for the viability or even authenticity of the projects concerned. In Western banks such behaviour invokes what is called ‘moral hazard’ – reckless lending in the belief that the state will step in to cover any losses. In China, corruption and misuse of funds has reached new record levels. This was symbolised by the former heads of the Railway Ministry who were purged in February, accused of corruption on a massive scale while also piling up unprecedented debts (see box below).

Local government debt has ballooned from negligible levels before the stimulus package, to an estimated 10.7 trillion yuan, or 27 percent of GDP. An altogether new network of over 10,000 largely unregulated local government financial vehicles sprang up in the past three years to tap the cheap credit available under the stimulus package. The central government acknowledges that 3 trillion yuan (US$472bn) worth of local government debt is unlikely to be repaid, while Standard Chartered estimates that 9 trillion yuan (US$1.41 trillion) is at risk of default. “In other words, the potential defaults could be even larger than the US$700 billion US bailout programme during the 2008 crisis,” warned Reuters (24 October, 2011).

Local government debt is not the only category causing alarm, however. Loans to property developers (many of whom may go bust in coming months), to industries with high levels of overcapacity, to home buyers and to businesses that diverted funds into property or stock market speculation – these are all areas harbouring significant default risks.

In an attempt to avert a banking crisis, the Chinese government has since last year imposed tighter controls on bank lending and on real estate transactions. This has led to many infrastructure projects being axed due to insufficient funds and banks cutting credit lines to local governments and their financial vehicles.

The railway sector is the most glaring example, with cutbacks to around a third of planned projects and many of the industry’s six million casually employed migrant construction workers going unpaid for months. At the same time, the debt crisis is being used to push the envelope on privatisation, with the ‘reformed’ railway ministry in the wake of February’s purge launching proposals for more private investment, joint ventures and asset sales in exchange for new funding.

Roads and expressways are another example of indebted infrastructure projects. Despite the ‘Great Leap’ in motor vehicle usage (China overtook the US as the biggest auto market in 2009), vehicle numbers in no way justify the untrammelled growth of toll road construction. There are many stories of gleaming new highways without any traffic. Recent reports from 12 provinces reveal a combined debt of 759.3 billion yuan (US$118.65 billion) from building toll roads, usually built under partnership deals between road operators and local governments. In just one province, the Beijing municipality, are the roads generating a profit. The fear is, according to Shenzhen Daily (19 October 2011), that “the payback time could linger and create a persistent burden for local governments, which are already burdened with other debts.”

Monetary tightening gives way to ‘fine tuning’

Since 2010, with the State Council (China’s cabinet) applying the monetary brakes, the central bank has increased interest rates five times and reserve requirements (the amount of a bank’s capital that it must deposit with the central bank) nine times. Last month, the central bank lowered the reserve requirement for the first time in three years – with a 0.5 percent cut – perhaps signalling a shift towards loosening policies as the accelerating economic downturn adds to the regime’s anxieties. For now, however, Beijing insists its restrictions on the property market will stay in place.

While the central government may now be ‘fine tuning’ its tight monetary policies, partly claiming that inflation has been beaten, the problem of excessive levels of credit remains. Fitch Ratings predicts total lending including non-bank credit will run to 18 trillion yuan in 2011, dwarfing the government’s 7 trillion target. This is further fuelling tomorrow’s bad loans crisis.

In order to get around Beijing’s credit curbs and maintain their profits, the banks have innovated new practises – massively expanding their ‘off-balance sheet’ activity and rolling out new ‘investment products’ that ape the financial trickery of Wall Street. The staggering scale of these financial ‘innovations’ has only recently begun to emerge and set alarm bells ringing in China and globally.

Zhejiang private sector crisis

The last period has seen a phenomenal expansion of the shadow banking system, in which many state-owned companies and local governments are active players. Part of the shadow banking system is comprised of private ‘underground’ banks and trusts that charge usurious rates of interest mainly from privately owned small and medium enterprises (SMEs).

These illegal financial institutions have grown rapidly, exploiting the government squeeze on the state banks. According to the central bank, underground banks hold around 2.6 trillion yuan (US$410bn) in loans, but this is likely an underestimate. They attract investments from other capitalists and from wealthy government officials (who also provide protection), drawn by the high returns from interest rates of up to 100 percent. Xinhua quoted the owner of an 800-million yuan illegal bank, who said that 80 percent of her depositors were local government officials.

It has also become increasingly common for state-owned companies (with much easier access to bank credit) to muscle in on this ‘market’. Due to low returns in their core businesses as a result of excess capacity and raging price wars, many state-owned companies have this year switched – in response to Beijing’s clampdown on the property market – from property speculation to ‘loan shark’ activity in order to boost profits. This would be illegal accept that it is increasingly carried out under the auspices of the banks themselves, acting as middlemen for ‘entrusted loans’ between one (usually state-owned) company and another (usually privately owned).

Recent developments in Zhejiang province, with its high concentration of private companies, have lifted the lid on this phenomenon. The central government recently announced a 160bn yuan (US$25bn) bailout for the SME sector in Zhejiang, which is being bled white by its dependence on shadow finance. Over 200 highly indebted Zhejiang company bosses have fled in the first nine months of this year, owing wages to 15,000 workers. Some of the province’s private capitalists have committed suicide. In the manufacturing city of Wenzhou, one-fifth of 360,000 SMEs have reportedly stopped operations this year due to cash shortages, and many Wenzhou capitalists are demanding the underground banks should be legalised so that the market can be regulated.

Unofficial estimates suggest that at least half the loans from underground banks have been channelled into financial speculation: “Several entrepreneurs in Zhejiang said the unreasonably high interest rates levied by the underground banks meant that no one could afford to borrow from them from a manufacturing point of view…” reported Daniel Ren (Yangtze Briefing, SCMP, 15 October 2011).

Zhejiang is far from unique. A recent survey from the Pearl River Delta (Guangdong province) reported that 72 percent of SMEs would not make a profit in the coming six months. “Many SME owners say business is now worse than during the depths of the global financial crisis in 2008,” reported the South China Morning Post (15 October). Economists warn that Inner Mongolia could be the next province to experience a wave of collapses in the private corporate sector.

According to the State Council’s Development and Research Centre, SMEs create 80 percent of urban jobs, develop 70 percent of China’s patents, and contribute 60 percent of its GDP. The economic weight of this sector is such that the government is now rushing out a series of bailout measures, as seen in Zhejiang, and ordering banks to increase their lending to this sector, while stepping up controls to prevent more capitalists absconding to escape their debts.

Growth of shadow banking

“Shadow finance in China has been around for years, but the recent surge in such lending is unprecedented,” noted the Wall Street Journal (13 October). According to this newspaper the shadow banking system has more than doubled in size since the end of 2009, accounting for 17 trillion yuan in outstanding loans – or 40 percent of GDP. This means that four-tenths of the credit generated in China in the last 18 months has come from the shadow banking system.

Interest rates charged in this wholly unregulated sector are running at 25 percent or more (some loan sharks charge 180 percent), raising the prospect of a wave of defaults by private borrowers as property prices begin to fall and manufacturing output slows.

The following are some of the financial innovations widely practised by banks – private and state-run alike – to circumvent Beijing’s credit controls and reap greater profits from higher, ‘market-determined’ interest rates:

• Wealth management products

US ratings group Fitch warned in October it could downgrade the credit standing of Hong Kong’s banks because of increased exposure to mainland China. Mainland banks and corporations now account for 24 percent of the Hong Kong banking system’s total assets, double the level of two years ago. Especially Hong Kong-based subsidiaries of Chinese state banks are rapidly increasing their lending on the mainland. This is also partly a response to Beijing’s credit curbs (which do not apply to Hong Kong banks) but also involves speculation in ‘arbitrage’ given the lower interest rates in Hong Kong and its currency’s falling value against the yuan.

Bad loans crisis

China is therefore heading for a new bad loans crisis and very probably the need for a banking system bailout in some form. The effects of this can be a long-term drag on economic growth, by soaking up funds that would otherwise be used for investment or to finance basic welfare provisions that have been promised for many years, but remain largely undelivered. The likelihood of this rises as the economy slows, property prices fall and local governments sink deeper into debt.

The shaky state of the banks as a result of ‘stimulus overreach’ has spooked the speculators, triggering a collapse in the value of Chinese bank shares. The equivalent of 128 billion US dollars has been wiped off share values of the four largest banks this year, with the MSCI China Financials Index falling 43 percent. The stock market slide for Chinese banks has been bigger than for European banks – despite widespread expectations of bank collapses on that continent in the coming period.

For Beijing, the collapse in share prices matters, because it plans more multi-billion-share offerings to help the banks replenish their capital and make provision for eventual debt write-offs. The biggest banks may need to raise up to 500bn yuan in additional capital in the next five years, according to Wu Xiaoling, a former central bank official.

Non-performing loans (NPLs) will probably increase to 8 to 12 percent of total debt in the “next few years,” according to Credit Suisse. Moody’s however give a much higher estimate of 18 percent. Zhang Yi, an analyst at Moody’s, says the government estimates of local government debt may be 3.5 trillion yuan too low. The current official level of NPLs is just 1 percent of total debt, according to the central bank, a figure that cannot be taken seriously.

This raises the prospect of a re-run on a much larger scale of China’s banking bailout at the turn of the century, when the central government spent US$650 billion (around 40 percent of GDP) on recapitalising the banks and writing off bad loans. This time around all the financial sums are much greater as the economy, bank assets, but also credit-to GDP levels, have ballooned. Another crucial difference this time around is the global environment: of an economic system mired in sovereign debt crises, stagnation, and with national protectionism on the rise, limiting China’s possibilities to export its way out of crisis, as it did in the period 2000-07, when its exports more than tripled.

China’s own debt crisis is unfolding alongside an economic slowdown, with its current investment-heavy growth model no longer sustainable. Barclays Capital warns the Chinese economy may be heading for its first hard landing in two decades, with growth slowing to around 6 percent next year. Nouriel Roubini recently said that avoiding an economic hard landing was “mission impossible” for China.

This has major implications for global capitalism, not just for the Chinese economy, which has accounted for around 30 percent of global GDP growth in the last three years. The rise in problem loans within the banking system means it may not be possible for the Chinese regime to repeat its stimulus feat of 2009-10, at least not in the same way. This makes it highly unlikely that China can be the ‘white knight’ to again rescue global capitalism, something Europe’s leaders in particular seem to be hoping for. The unfolding crisis at the heart of Asia means all sectors of the global economy are threatened with upheaval and crisis in the period ahead. The need for a working class response – a mass party with a socialist alternative – is greater than ever.

Railway ministry’s high-speed debts

Unbalanced and poorly coordinated growth, commodity speculation that has inflated raw material costs, and endemic corruption in awarding contracts have frittered away vast sums of money. This has driven up the ministry’s debt to 2.1 trillion yuan (US$330bn) – more than 5 percent of China’s GDP.

Stalinist nightmare continues

The death of the long time Stalinist dictator of North Korea brings no relief to the workers of the country. They suffered many years under Japanese occupation (1905-1945), then during the Korean war (1953-1955) and many, many years of the most ruthless Stalinist rule. After the collapse of the Soviet Union, the economy of North Korea suffered setbacks and it is estimated that more than two million people lost their lives during famines at the end of the 1990s. North Korea is now one of the poorer countries in the world, but until well into the 1970s, the income per head of the population was higher than in South Korea.

By Gerbrand Wisser, Ofensief (CWI in Netherlands)

Stalinist rule in North Korea adheres to the “Juche“ ideology, of ‘self-sufficiency’. The North is unsuitable for food production, because it is mountainous and cold. It has many minerals in its soil, even quite rare ones. The Chinese government prefers the present regime because it gives them relatively easy access to these minerals, and North Korea provides it with a buffer. If North Korea ceased to exist, China would border a country that houses a large contingent of American military forces.

For Japan and South Korea, the presence of the Stalinist regime is discomforting, but it provides a useful excuse for obscene military expenditure. One of North Korea’s military trump cards is that it possesses a nuclear bomb. This seems to be a fairly primitive thing, like the American nuclear bombs in their early stages of development. It is probably too big to fit on a missile, but the North Koreans conducted two test blasts after the US invasion of Iraq, to show the world that they too had the bomb. North Korea’s large land force is meant to defend the country and to repress the population; there is no credible air force or navy.

Most of the expenditure of North Korea is on its military apparatus. This will not change. The new leader, Kim Yong Un, is young and there is no doubt that the military council will firmly hold on to the reins of power. If they do not fall prey to dissension, they could hold on to power for quite a while - the regime has shown itself to be quite tenacious. The regime has effectively isolated the country and ruthlessly repressed any independent working class activity.

Life in North Korea is a nightmare for workers: a harsh struggle for survival in a country with has almost no heating and extremely low temperatures in winter, little and/or very primitive food, and almost no lighting (often one bulb for an apartment). Life is difficult for workers even if you do not take into account the horrendous repression, the concentration camps, the controls over the family and the workplaces, the total lack of information (mobile phones and internet are prohibited) and the ubiquitous secret police.

The death of this tyrant has again provided the representatives of capitalism with an excuse to besmirch the ideas of socialism, despite the brutal reality that this regime, among the most horrific and oppressive band of despots ever to have falsely bore the name. The CWI stands for a struggle to overthrow the brutal corrupt Stalinist dynasty, an integral part of the international struggle to end the poverty, repression, dictatorship and conflict which dominates the region. Asia, through mass struggle. Such a struggle to establish a workers’ democracy and genuine socialism in Korea, based on the democratic control of government, and planning of the economy, may seem far away at this point in time, but like the North Korean football team, the Korean workers always manage to surprise.