Communist Platform

The "public" debt: Gordian knot of capitalism,
to be cut with a revolutionary mass movement

On the nature of the current economic crisis

1.1 The economic crisis continues to shake the capitalist world. It is a crisis of relative overproduction, characterized by an excess of capital in all its forms (means of production, commodities, loan and fictitious capital, etc.).

This serious and prolonged cyclical crisis has developed in the context of a prolonged tendency of the fall in the average rate of profits – evidently since the 1970s – which is attributable to the increase in the organic composition of capital, that is, to the development of the social productivity of labour.

The insufficient appreciation of capital in the productive process is continuing despite the counter-tendencies brought to bear by the bourgeoisie in recent decades: intensification of exploitation, export of capital to countries where greater profits can be made, privatization, neoliberal deregulation, etc.

That has led to the creation of an excess of monetary capital that has been used in the short term in mergers and speculation.

The over-accumulation of capital is seen in the repeated and increasingly serious crises, flowing into the current crisis, expressed at first in the financial sphere and then in the general reduction in manufacturing, contraction of trade, etc. The United States is at the heart of the crisis, the imperialist country in historic decline and from which the crisis originated in the summer of 2007 and then spread around the world.

In the current crisis the influence of the general crisis of capitalism is forcefully manifested, a phenomenon that embraces all aspects of social life – the economy, ideology, politics, culture, morality, the relationship with the environment, etc. – expressing the bankruptcy and decomposition of imperialism. At the same time, the destruction and disequilibrium caused by the cyclical crisis further aggravate the general crisis of the system, strengthening the revolutionary process.

1.2 Finance capital and its national and international institutions are trying to get out of the economic crisis by placing its whole weight on the proletariat, the working masses and the peoples.

The measures and policies adopted are similar throughout the world: mass dismissals, reduced wages, elimination of the rights of workers, cuts in pensions and social spending, restructuring of the market for labour-power, financial support to the banks and companies, tax relief for the capitalists, etc.

However, the mixture of liberalism and Keynesianism in supporting the financial monopolies and against the workers has not succeeded in getting the capitalist system out of the crisis, which is now getting worse.

The cause for this is that the solution of the current crisis in the capitalist environment would require:

• a huge destruction of capital, both productive and fictitious, which has not yet happened;

• a vast investment in the use of new technologies, the adoption of alternative energy sources to renew fixed capital, to create new products, new needs and to solve the energy problem;

• an increase in the production of surplus value and the conditions for extracting the maximum profit, the fundamental aim of monopoly capitalism.

It is evident that the government debt to save the financial monopolies, the consequent adoption of austerity policies, cannot by itself save the capitalist system. On the contrary, this creates conditions for the prolongation and worsening of the crisis, pushing it to a more destructive level. Let us see why.

2. The use of the public debt, mark of the system of capitalist exploitation

2.1 The system of public debt is found in the very origin of capitalism. Karl Marx wrote in Capital:

National debts, i.e., the alienation of the state – whether despotic, constitutional or republican – marked with its stamp the capitalistic era. The only part of the so-called national wealth that actually enters into the collective possessions of modern peoples is their national debt. Hence, as a necessary consequence, the modern doctrine that a nation becomes the richer the more deeply it is in debt. Public credit becomes the credo of capital. And with the rise of national debt-making, want of faith in the national debt takes the place of the blasphemy against the Holy Ghost, which may not be forgiven…. the national debt has given rise to joint-stock companies, to dealings in negotiable effects of all kinds, and to agiotage, in a word to stock-exchange gambling and the modern bankocracy." (Marx, Capital, Volume I, Chapter 31).

In the era of imperialism the use of the debt has further developed, creating a system of relationships of oppression and subjugation for the workers and peoples. A handful of imperialist powers are playing the role of international usurers against the mass of debtor countries, which are subordinated economically and politically.

The foreign debt is an essential tool to gain "super-profits", to increase the exploitation and robbery of the peoples, to support the comprador and corrupt national bourgeoisies in the service of the imperialists.

At the same time, the imperialist powers, first of all the United States, have to borrow heavily to further develop their role as global thieves, to maintain a monstrous military machine and a high level of domestic consumption. This has led to a consistent annual growth in the national debt and an increase in the imbalance between debtor and creditor countries.

2.2 In the past decades, capital has sought an escape from the tendency of the rate of profit to fall by trying to invigorate the economy through domestic consumption, rewarding capital that had difficulty in realizing profit, etc. This has led to the progressive increase of the public debt.

With the outbreak of the current crisis, the situation has been aggravated. The states and the central banks have "introduced liquidity" into the system, approved "rescue packets" for the banks and companies, and artificially stimulated the recovery, using funds from the state treasury.

This has failed to lead to a positive situation, but rather it has exacerbated the existing problems, since the debt of the banks and other private financial institutions has been transferred to the States. The average level of public debt of the imperialist countries is increasing, exceeding the ceiling of 100% of GDP, with the risk of systemic bankruptcy (the Armageddon feared by Obama).

This means that as the crisis persists, the imperialist system is facing more serious problems and with less economic margins at its disposal.

The issue of the public debt is also connected with the intensification of competition and inter-imperialist competition, in the form of contrasts among the monetary areas of the U.S., the EU, China and Japan. The hegemony of the dollar, the current division of the world and the predominance of the United States are all in contention, with the dangers of imperialist war that this entails.

2.3 The crisis is worsening the economic and political situation of the principal imperialist and capitalist countries.

In 2011 the public debt of the United States reached an all-time high. To get around the problem, the United States Congress raised the debt ceiling. That did not put an end to the problem, but postponed it and aggravated it, preparing the conditions for new outbreaks of financial bubbles and a profound depression.

In the imperialist European Union (EU), countries such as Greece, Portugal, Italy, Spain and Ireland are today in danger of bankruptcy; the financial crisis has also struck strong States such as France and Germany, whose banks are full of "toxic" assets and State bonds at a heavy risk. The recent downgradingof France, Austria, Italy, Spain, etc., decided by the US Agency Standard & Poor's, will aggravate the crisis, affecting the capital of the big private banks and putting the project of the "European Bank" in difficulty.

The situation has become so serious and convoluted as to place the EU itself in crisis; it has been shaken up internally by the law of uneven economic and political development and externally by the manoeuvres of its rival imperialist powers.

On October 11, the President of the European Central Bank (ECB), Trichet, stated that the crisis is "systemic" and that the EU is the "epicentre of the global crisis."

Until today, the bourgeois leaders of the EU have not found a clear strategy to resolve the crisis because of their divisions. The summit in Brussels last December 9, which saw the consolidation of the French-German axis and the breakaway of Great Britain – despite the measures and resources approved – has not served to ward off the crisis in the euro zone, which has been aggravated and may break it apart.

The project of the Eurobond, supported by Italy and Spain, has been rejected by Germany, which is following a direct policy of support of its exports and does not want to shoulder the burden in terms of the cost of the debt.

Along with the iron control by the most powerful imperialist countries over the EU, the myth of a ”social Europe”, nourished by the Social Democrats for decades, is collapsing.

2.4 At the outbreak of the public debt crises, the imperialist EU imposed rigid measures to achieve the rapid reduction of the public debt below 60% and the reduction of the deficit to 3%. To make the anti-popular austerity policy permanent, France and Germany pressed for the introduction of the "golden rule" in the Constitutions of the countries of the euro zone: the control of the public deficit. This would mean structural cuts in the budget for public health and social expenses, dismantling of the social gains won by the working class and further anti-popular attacks. For the workers of our country this has meant cuts of 40-50 thousand million per year, through looting and the reversal of social gains.

The "rescue and improvement plans" imposed by the international political and financial institutions and the national governments, the economic measures adopted with an aggressive neoliberal policy, will not lead to the resolution of the economic crisis; rather they will worsen the phase of stagnation, with low investment, wage reductions and increase in long-term unemployment.

In this situation, the resistance and the struggle of the proletariat, of the young people "without a future" and of the oppressed peoples is developing.

The Italian public debt, a chronic disease of the bourgeoisie

3.1 In Italy the public debt began to grow with the end of the post-war period of expansion. It has had a first period of growth with the oil crisis of the 1970s and it has been aggravated by the policy of Christian Democracy (DC) and the Italian Socialist Party (PSI), which favoured cronyism and parasitism and has given rise to a huge tax evasion to benefit the capitalists and to create a "cushion" stratum against the workers’ and communist movement.

A second period of growth of the debt began in 1981 when the governments of the DC and PSI decided to leave the fate of the State bonds to the market. That led to a rise in interest rates and consequently in the public debt. Among the biggest beneficiaries of the high rates of interest of the State bonds was the monopoly FIAT.

Because of the growing economic difficulties, between 1998 and 2007 the public debt increased by about 30%, reaching 1,600 thousand million euros. Such dynamics were facilitated by all the successive bourgeois governments using "corporate welfare" to brace up the structural faults of the Italian monopolies and to fatten an army of parasites.

We should point out that the increase in the debt has never corresponded to an increase in revenue, due to the huge tax evasion practiced by the bourgeoisie as a whole, more than 200 thousand million euros a year. Furthermore, the neoliberal policies have led to a lower tax burden on capital. This placed a greater debt burden on the shoulders of the workers.

3.2 With the outbreak of the current economic crisis, the growth of the Italian debt has accelerated, with annual rates of increase of 4-5%. The latest growth in the debt occurred because the Italian State, as well as the other bourgeois States and the ECB, assisted the indebted financial institutions, up to their necks with toxic assets and the capitalist monopolies, by offering guarantees on deposits, increasing their liquidity, subsidizing them for free, providing public aid, etc. With the money received – taken from social services – the bankers and entrepreneurs acquire State bonds issued to subsidize the greater public debt and thereby pocket the interest that the State has to pay. The interest is, in the final analysis, surplus value extorted from the workers, taken over by the State to pour it into the hands of the financial oligarchy.

It is not true that social spending increases the public debt (health care, pensions and unemployment compensation are, in fact, deferred wages that are financed largely by contributions from wages). The imbalances stem from the massive use of resources needed to save the capitalist monopolies from collapse and the payment of usurious interest. And it is also not true that the debt created by the bourgeois governments has gone to benefit the population: it has gone to the exclusive benefit of capital.

3.3 In July of 2011 the Italian public debt reached an all-time high of 1,911 thousand million euros (the fourth largest debt in the world after the United States, Japan and Germany), equal to 120% of GDP (it was 114% in 2008). Along with the increase in volume of State bonds, their average duration has increased, to 7 years today. The interest paid to the holders of these bonds was about 80 thousand million euros in 2010. According to some estimates, this will rise to 97.7 thousand million euro in 2012 and to 108.7 thousand million in 2013, an unsustainable weight and one destined to grow.

The Italian state bonds have become among the most desirable targets of the attacks of speculative capital and international loan sharks, the weak link in the competition between the dollar and the euro. The growth in the interest of State bonds on the one hand reflects the distrust of financial investors in the ability to repay, and on the other hand it is closely linked to the need for increase in value of the financial monopolies.

3.4 The Italian public debt is composed of 83% (about 1,580 thousand million euros) of State bonds. The holders are in their great majority, about 87%, big banks, insurance companies, investment funds and capitalist companies. More than half of the debt is held by large foreign financial investors – French, Germans, British, Americans, Chinese, etc. – employing surplus capital in the acquisition of high-yield State bonds.

These big sharks are the same ones involved in speculative operations on the markets to realize huge profits with the rise of the spread (the interest differential between the Italian Multiannual Treasury bonds, MTB, and the German Bund) and the increase in value of the Credit Default Swaps (financial instruments that also ensure the value of State bonds).

Therefore it is a mistake to speak of the "national debt"; it is in fact private socialized debt whose interest is financed through the policy of cuts in public spending and in workers’ pensions, and tax increases that fall on the workers. We are witnessing a gigantic transfer of wealth from wages to short term profits of the vandals of the financial oligarchy, carried out by government and state policies.

3.5 The financial crisis, which has worsened in recent months and the enormous public debt that is strangling the Italian popular masses, has led to political consequences of exceptional gravity. Capitalist Italy is now a country under the control of the ECB, the EU and the IMF (International Monetary Fund) which impose their "structural adjustment plans.” The government of technocrats established by the financial oligarchy has an intensely anti-democratic character. The same ruling class that speaks of "sovereign debt" has sold the remaining national sovereignty and independence to the financial markets, with the active support of the liberal-reformist forces and the highest institutions of the State ("dogmatism and schematism that must be overcome" according to President Napolitano).

As in other countries, the painful sacrifices imposed on the working class and the popular masses are proving unable to have any positive and long-lasting effects, and even to soothe the "speculative" attacks. After the three mega-austerity measures adopted in five months (two under Berlusconi and one under Monti) for a total of more than 80 thousand million euros of sacrifices, the spreadhas remained beyond the quota of 500 points, equal to a usurious interest of about 7% for the MTP, leaving Italy at the risk of default. The downgrading of the Italian rating from A to BBB+ will determine the further increase in the spread and therefore in interest rates.

3.6 In theory the reduction in the mountain of debt would be possible with a stable economic growth exceeding 2%. But since 2000 until today Italy has never reached this level, and the GDP is now negative once again, and is expected to be still lower during 2012. The decline in industrial production, currently 20 points below the pre-crisis level, and the increase in unemployment involve the increase in the deficit and the debt. Under such conditions, the payment of the growing interest is economically unsustainable and ruinous in every aspect for the interests of the working class. The payment of the debt by the State entails enormous hardship for masses, the strangulation of the workers and of future generations, the sinking into decline and a still deeper economic and social deterioration.

If the policy of "endless sacrifice to pay the debt” continues, the conditions of life and work of the proletariat and the working masses will worsen dramatically, while bankers, financiers and speculators, with the interest earned, will have further capital to shore up the global casino, to reinforce the privileges of the parasitic classes and the power of a greedy minority, to finance war missions and devastate the environment.

To the blackmail of the bourgeoisie: "pay the debt or there will be a disaster", we must answer that the real disaster for the workers is to pay the State debt, produced by the policies of the capitalist monopolies and their institutions, a corrupt and parasitic ruling class.

3.7 The working class and the working masses are faced with a vicious circle, which in the current situation it is necessary to break with a strong demand: refusal to pay the interest on the debt of the banks and financial companies, of the owners and the rich, of the parasites.

This is a political proposal that we direct to the exploited and oppressed masses, to their organizations, in order to unify and develop their struggle against the financial oligarchy. It is a proposal of rupture that must be linked to a contextual withdrawal from the EU, the ECB and the euro, because these institutions are there to enforce the usury demanded by the global imperialist system, and because the economic crisis is tied with double thread to the "euro zone".

We communists propose this objective of political struggle, whose achievement constitutes an immediate and definitive demand by the class of wage workers and is connected with more advanced goals. We propose this regardless of its compatibility with the economy of the parasitic oligarchy, with their inexhaustible desire for profits, income and interests. The revolutionary policy counter-poses the vital needs of the masses to the needs of the rotten imperialist society. And it is with this policy that the proletariat – the class that must fulfil the historic task of universal liberation – will acquire a fundamental consciousness: for humanity to live capitalism must be buried.

The rejection of the debt and the positions put forward

4.1 As we have seen, the debts are nothing more that the usurious interests of monopoly finance capital, which the workers have paid dozens of times over. The demand "we will not pay the debt" is beginning to be put on the agenda by part of the forces and anti-liberal and workers movements, breaking the taboo of their repayment at all costs. Constantly new and growing sectors of the masses – the working class, the unemployed, the other exploited working people, the youth and women of the people – are going out in the street shouting against the yoke of the debt. The mobilization is taking place in many European countries (Greece, France, Spain, Belgium and Portugal), and also in the United States, as well as in the countries dependent on imperialism.

Obviously, the movement for the non-payment of the debt is also developing in Italy. On October 15, 2011, a huge demonstration in Rome (of more than 300,000 demonstrators) placed the rejection of the debt clearly among its slogans. An organized movement "No Debt – No Monti" has been formed, which includes many political, trade union and social forces and left-wing militants, in which we are participating. New demonstrations at the local, national and European level are being promoted. An interesting level of unity of action against the austerity measures is beginning to develop.

4.2 Within the anti-debt movement, as well as in the workers’ and trade union movement, a debate is taking place about strategies to follow to get out of the debt and the crisis. Presently, there is confusion between abolition, moratorium, freezing, renegotiation, etc. of the debt, as well as about measures to solve the problem. In this confusion, a result of the existing political and ideological limitations, the reformist petty bourgeoisie, the social democrats and the revisionists distinguish themselves by putting making proposals that are weak, erroneous and dangerous. Let us see some of these that have relevance at the international level.

4.3 A first position demands the suspension of the repayment of the debt in order to perform an audit, under the control of the citizens, to determine how much of the debt must be cancelled or renegotiated because of its illegitimacy or its "odious" nature. This position however is limited and partial, because it is based on a logic of "renegotiation" of the debt and does not at the same time put forward the objective of the abandonment of the euro and the rupture of the jail of the imperialist EU that is imposing the payment. The aim of the promoters of this position consists in making the financial oligarchy accept a reduction in the debt for reasons of "social justice," but also in reviving foreign investment and capital accumulation. This is the position of the social democrats and activists of the petty bourgeoisie who are fighting against the debts without opening up for discussion imperialism and its institutions, instead looking for alternatives within the system. The model they propose in the European imperialist countries is that adopted by Kirchner in Argentina and Correa in Ecuador. In other words; they are behind the national bourgeoisies of the dependent countries.

4.4 A second position proposes to solve the debt question by forcing the Central Bank to control speculation. It proposes a progressive democratization of economic decisions within the EU, the modification of the statute of the ECB and a policy of economic development on the model of Obama’sJob Act.” It is a position supported by sectors of both the reformist and conservative bourgeoisie that aim at replacing the neoliberal model with a Keynesian one and argue for a "conditional freedom" for capital. They are the brave defenders of capitalism and their attitude to the working class and the working masses is the same as that of a society for the protection of animals.

4.5 A third position is supported by sectors of the Catholic world and left liberal intellectuals seeking to solve the problem of the debt by freezing it, suspending interest payments on the part owned by large investors and the creation of a commission of inquiry that would shed light on how the debt arose and the legitimacy of all its parts. This position, similar to the first, looks at the debt not as a socio-economic question but as a primarily legal and moral one, to be solved without the participation and revolutionary mobilization of the working class. Its objective is limited to reducing the extent of the debt, to repaying part of the debt at “acceptable interest rates.” The "new model of development" proposed by the pitiful supporters of this option is a fraud and a scam, because it seeks to solve the problem of the debt while preserving the rule of monopoly capital and lulling the masses to sleep.

4.6 There is still another position that is apparently more radical. It starts from the need to "change the rules of the existing monetary and financial system", it proposes the "organized" withdrawal of the peripheral and weaker States from the euro – but not from the imperialist EU – and the creation of a new alternative currency, with the simultaneous reduction of part of the debt. In essence, it proposes the formation of another pole made up of the imperialist and capitalist countries of southern Europe, supported by the countries of Eastern Europe (which are governed by reactionary regimes) and by the Arab countries of the Mediterranean (also in the hands of reactionary and liberal forces). This would be a pole that would be parallel with the bloc led by the French and German bourgeoisies. According to the revisionists who support this position, the proletariat should follow such a multiclass utopian proposal, supporting the perspective of a coalition government with the social democrats and the reformists, which is sold as "a first step in a possible transition to a different mode of production." This is a position that is as illusory as it is dangerous, which paves the way for chauvinism with the characteristics of restarting a fragile imperialism, such as that of Italy in respect to the stronger imperialisms.

4.7 Beyond their different political programs, all these trends and positions aim to keep the working class hitched to the chariot of the bourgeoisie and petty bourgeoisie, to contain the demands and struggles of the masses within the capitalist-imperialist social order and prevent them from going beyond the bourgeois and reformist policy, from advancing to the revolutionary policy of the proletariat, the struggle for socialism. Therefore they should be criticized and fought from beginning to end.

The revolutionary alternative and the tasks of the communists

5.1 We Marxist-Leninist communists call for a class opposition against the capitalists and their governments, we turn to the fight to reject the dictates of the financial oligarchy and to reject the manoeuvres by which they want to place the debt on the shoulders of the working class; we support the struggle for the non-payment of the interest, the repudiation of the debt and the withdrawal from the EU and the euro.

In this activity we are striving to make the working and the popular masses understand that the refusal to pay for the crisis and the debt must have a class content, it must be part of the general fight for the expropriation of the expropriators and the building of socialism.

In other words, for us the political question of the repudiation of the debt is closely linked to the question of the historical limits of capitalism and the inevitable economic and social transformation that only the revolutionary advance of the proletariat and the popular masses can realize. The alternative is not to return to the past, to the period of the lira and the state holdings, or the impossible reform of the present capitalist-imperialist mode of production, to try to resolve its profound crisis. The alternative is to make a profound and radical revolutionary rupture with a system that promises us only an increase in exploitation and social backwardness, impoverishment and wars of plunder. We must do this by developing the organization and program of the class, without allowing ourselves to be influenced or diverted by the reformist and petty bourgeois forces.

5.2 Consequently, to deal with the question of the debt it is necessary to:

• actively participate in the mass mobilizations, yesterday against Berlusconi’s government and today against Monti’s, to resolutely defend the economic and political interests of the working class, on the basis of the slogan "the crisis and the debt must be paid for by the guilty ones – the owners, the banks, the rich, the parasites – and not by the victims, the workers and the peoples";

• systematically link the battle for the immediate and unilateral suspension of the payment of the debt to the struggle for the withdrawal from the imperialist supranational institutions and against their anti-popular and warmongering policies: "We reject your debt and your war; Out of the euro, the EU and NATO;"

• build the united front of struggle of the proletariat and bring about, on this basis, a broad revolutionary popular front that rejects the reactionary offensive of capital and the dictates of the EU-ECB-IMF, to promote the formation in factories, workplaces and neighbourhoods of organizations such as committees of workers, of the unemployed, of the people, etc.;

• stating forcefully that the resolution of the problem of the debt and the implementation of strong measures against the monopolies and for the working masses can only be adopted by a government of the proletarian united front or a revolutionary popular front, a government that would be the political culmination of the movement of struggle of the exploited and oppressed and based on their mass organizations;

• develop relationships of solidarity and coordination with the workers struggles and anti-debt movements that are developing on the European and global level, supporting the total cancellation of the debts of the countries dependent on imperialism;

• link the current struggles to the process of formation of the Communist Party of the proletariat of Italy, essential tool to lead the process of emancipation and liberation of the exploited and oppressed masses. Therefore we call on the most advanced and conscious sector of the working class to break openly, completely and definitively with opportunism and move forward with its reorganization on revolutionary bases. No coexistence, no collaboration of the communists and the best elements of the proletariat with the revisionists, the social democrats, the reformists, the opportunists, with those who agree with them, but rather a militant union on the basis of Marxist-Leninist principles to form the Party. Let us organize!

January 2012

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