People Over Profit Campaign
March 2024
Introduction
In 2024, humanity is riven by ever sharper conflicts, with rapidly growing inequality and higher levels of exploitation provoking inter-imperialist clashes and military adventures, and fomenting an upsurge in anti-immigrant, white supremacist, anti-woman and anti-LGBTQI organisations and actions. Progressive movements are on the defensive and are still in the process of strengthening their ranks.
Never has the productive capacity of humanity been greater, and yet the unequal distribution of this output has also never been worse, with hunger and disease stalking the earth, while super- billionaires try to travel in space.
Capitalist economic growth continues to rely on fossil fuels for energy, chemical inputs and fertiliser, and relies on unsustainable exploitation of soils, rivers and seas, which have fed humanity for millennia. The unfolding climate catastrophe is the telltale sign that the planet’s environmental systems cannot sustain capitalism in its current form. Socialists are yet to pose a credible challenge to this dire situation.
Economic crisis
According to the World Bank, global economic growth has been very weak since the global financial crash of 2008-09. In 2010 the figure was 4.3 per cent, and in 2019 it was 2.3 per cent. But it was Chinese economic resilience with 5.9 per cent growth in 2019, which made the average look good. In the US, Europe and Japan, GDP growth was hovering just above 1 per cent. This was a recession, the continuing Great Recession. Following the upheaval of the COVID-19 pandemic, global GDP growth according to the World Bank was estimated to be 2.6 per cent in 2023, and forecast to slow to 2.4 per cent in 2024.4 Again, China, also slowing sharply, is holding up the average.
While the core industrial economies are slowly growing, some of the precarious poorer countries are unable to recover due to large debt burdens. The Chinese economy in particular is slowing due to a residential property collapse, deeper debt problems for local government units, and over- investment in some industrial sectors. All countries are vulnerable to increasing climate disasters.
The International Labour Organization (ILO) reported that by 2019 global employment levels had barely recovered to the level prior to the Great Recession in 2008. Officially there were 172 million unemployed and a further 100 million underemployed. Gender inequality in the labour market was widest in the Arab States, Northern Africa and Southern Asia subregions.
The ILO reported that the global unemployment rate in 2023 was 5.1 per cent, with number of unemployed and underemployed close to 435 million, remaining high. Average hours worked remain below their 2019 pre-pandemic levels.
Despite lower unemployment and increasing jobs after the pandemic, real wages continue to fall because of inflation. The limits of the present trade union movements capacity to claw back these reductions have added to the issue. The ILO noted that the number of workers living in moderate poverty – earning less than US$3.65 per day per person – increased by about 8.4 million in 2023. The number of informal workers reached 2 billion people because of the growing global labour force.
Global debt in 2019 was US$255 trillion, which was 322 per cent of global gross domestic product (GDP), according to the Institute of International Finance (IIF) in April 2020. Central banks continued to finance government economic stimulus while private capital largely failed to invest. Over $15 trillion was added to the global debt mountain in 2023, bringing the total to a new record high of $313 trillion. The global debt-to-GDP ratio was 330 per cent.
Global foreign direct investment (FDI) flows slid by 13 per cent in 2018, to US$1.3 trillion, according to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2019. This was part of the global economic slow-down, and was made worse by the Trump trade wars with China, Japan and Europe. Yet, despite the FDI decline, the United States remained the largest recipient of FDI, followed by China.
Global trade growth was virtually stagnant in 2023, with goods trade contracting. Services trade continued to recover, but slower than forecast. Overall, the recovery in global trade in 2021-24 is projected to be the weakest following a global recession in the past half-century.
Working-class and trade unions
Since 2012, according to the ILO, global trade union membership has increased by 3.6 per cent, but overall union density has declined because of rising labour force numbers. Increased union membership is attributed entirely to greater recruitment of self-employed and own-account workers, including waste pickers, translators, journalists, actors, musicians, interpreters and other professions. Trade union density figures vary considerably across countries and regions, ranging from less than 1 per cent in Oman to 91 per cent in Iceland. For the first time, the total female union density rate is higher than the male density rate.
The wars in Ukraine and Gaza, the global cost of living crisis and the lingering pandemic have disrupted economies and higher interest rates have increased debt pressures. For many countries, the debt distress presents stark choices between repaying loans, investing in development and coping with climate change.
Crisis and urbanization
Global economic conditions remain below 2008 crisis levels, with the COVID19 pandemic making life more difficult for the working people. The 2008 and the COVID19 pandemic both contributed to the growth of army of the unemployed, the growth army of the working poor, and downward pressure on the wages and salaries on the lower middle class, transforming them into the working poor.
The narrative of think tanks and apologists of imperialists, including the economists and scholars from the ILO, IMF and World Bank Group, the Asian Development Bank and other conservative global institutions is that development has been ongoing since World War 2. After post-WW2 reconstruction, economic powerhouses such as Japan and Germany (later becoming the main power in the EU) have recovered and now lead the globe in manufacturing, as well as finance. As testament to these supposed developments under capitalism are the growth of cities, oftentimes called urbanization, where previous paddy fields surrounding factories and workplaces have become concrete areas with corresponding infrastructure development (e.g. transport).
Countries in East Asia, where the supposed Tiger Economies of the 1990s (Taiwan and South Korea) emerged, have had their share of urbanization. ADB bragged about development in Asia, stating “[d]eveloping Asia has achieved spectacular progress in reducing poverty. Between 1990 and 2010, Asia lifted 786 million people out of poverty, bringing down the headcount ratio to 20.8% from a high of 55.2%.
In 2010, Asia’s share of the poor in the world’s [developing countries] total poor stood at 62.4%, roughly equal to its share in population, yet still an impressive performance since 1990 when Asia accounted for 81.0% of the world’s poor.” Yet the same paper admits that “1990–2008 period registered an increasing share of the urban poor in Asia’s total poor.”
The favourite term “urbanization” is flaunted to signify that economies, especially from the Global South, are experiencing development, wherein agriculture becomes less of a contributor to the economy compared to industry, thus shifting from agricultural production (backward) to industrial (developed) production. The image purported is that of a farmer (including the farmers family) leaving the countryside and becoming part of the urban population. Upon arrival in the urban centers (even the peri-urban), they start to experience new realities not available in the farms, such as necessities like piped-in water, electricity, concrete housing, nearby schools and medical care, connected via fast and efficient transport. Such is the occurrence of economic development under capitalism.
Despite the massive infrastructure projects in Mumbai, including the Mumbai Trans Harbour Link (MTHL), dubbed the engine of economic growth for Mumbai and the Mumbai Metropolitan region, poverty, specifically urban poverty cannot be covered up. Amidst the touted mega projects are the Mumbai dharavi (slums) where workers and the lower middle class can be found. Around Cape Town in South Africa, you have Khayelitsha slum, where according to a report from an international organization, “1 toilet is shared by five families”. Besides the Manila Harbor Center, designated as the busiest port in the Philippines, there is Happyland, where pagpag (leftover food from the garbage) is sold and consumed.
In these slums, the workers, the working poor of such societies, the urban poor, go home to poverty. Poverty has not allowed them to find a better place for themselves and their family. But even the lower middle class, whose income continues to be eroded daily, see the slums as their home. Despite having better income compared to workers, there are like Nikolai Gogol’s Akaky Akakievich Bashmachkinin character in the novel The Overcoat, who has a job in the government in St. Petersburg, yet with such a meager salary, cannot even afford to replace his overcoat to survive the brutal Russian winter. Just like the workers, the lower middle class is being hard- pressed by capital, their wages pushed down in order to increase profits. As the crisis of capitalism intensifies, more and more part of the upper classes are becoming glued together with the workers and becoming the urban poor.
There is a plethora of studies and research, even by conservative intellectuals and organizations, focusing on the urban poor and urban poverty. Most of these studies misrepresent that the urban poor only exists in the developing economies of the Global South, like India, South Africa and the Philippines among others. The phenomena of urban poor and poverty is painted as endemic to the developing economies, yet as the working-class is pushed down to poverty, the urban poor becomes bigger in the developed economies.
The urban poverty in the US has been on the rise in the past two decades, and during the COVID- 19 pandemic, more and more urban poor have been pushed out of the cities to the peri-urban. Gentrification of many areas in the US, as well as other cities in the Group of Seven countries, are pushing the urban poor out. With skyrocketing prices of rent and basic commodities, coupled with stagnant or decreasing real wages, workers and the middle class see cities as no longer viable. Cases of public school teachers having to live in their cars because they cannot make rent, despite having jobs, are modern-day Akakievich.
Finance Crisis
Finance capital dominates the overall capitalist system, a power demonstrated most recently in the coordinated rapid increase by central banks in official interest rates in 2022 and 2023. When the COVID-19 pandemic broke out in March 2020, massive new finance was issued again in a coordinated way to soften the impact of lockdowns, production cuts and shocks to trade flows. And now austerity measures to claw back this massive government stimulus are also coordinated.
During 2020 alone, the first year of the pandemic, governments, private companies and households added US$19.5 trillion to global debt. Central banks slashed interest rates to zero or negative.
The World Bank decided in March 2020 to provide up to US$160 billion over the next 15 months to support poorer countries’ responses to COVID-19. It was done through new loans, restructuring existing loans, the triggering of catastrophe drawdown options, and support for private sector restructuring and recovery. This included US$47 billion from the International Finance Corporation to support the private sector, and a Multilateral Investment Guarantee Agency US$6.5 billion fast- track facility to help private sector investors and lenders tackle the pandemic in low- and middle- income countries.18 The resulting increased debt burden to poorer countries already saddled by debt was in reality support for transnational corporations.
As well, as of August 2021, the International Monetary Fund (IMF) provided credits of US$113.2 billion to 34 countries, but only US$15.6 billion of this was drawn down.
The financial lifeline to poor countries was just US$175 billion out of the US$19.5 trillion in that first year of the pandemic, showing just how biased towards the core industrialised countries the global financial system is.
As real interest rates increased in 2023, the debt burden on many poorer countries became unbearable. Since the outbreak of the pandemic, Argentina, Zambia, Ethiopia, Ghana, Lebanon, Sri Lanka and Ukraine have defaulted on their government debt, and Kenya, Egypt, Pakistan and Tunisia are in danger of defaulting.
Financial Power and Trade wars
International trade in goods and services is a focus of much economic analysis, and is a measure of the power of different national capitalist classes. However, it is international flows of capital which even more clearly demonstrate global economic power. One important measure is known as Foreign Direct Investment (FDI) – funds invested overseas in productive plant and equipment, rather than loans or purchases on share markets.
From 2003 to May 2023, US multinationals have invested more than US$3 trillion in overseas markets. The combined total of the next three largest FDI source countries — Germany, Japan and the UK — was only marginally higher, at US$3.35 trillion over the same period.
Even with the Belt and Road Initiative (BRI), China’s global infrastructure development strategy launched in 2013, total Chinese FDI at US$843 billion, is about a quarter the level of the US.
Only four other countries have provided more than US$500 billion in FDI. They are France (US$833 billion), South Korea (US$598 billion), the UAE (US$511 billion) and Canada (US$508 billion).
Right now levels of international trade and investment are low, and have been for many years, a sign of deepening crisis in the system.
Historically, access to markets for trade and investment has been determined by either negotiation between states or war between states. The last great division of markets was settled after World War II, with US capital dominating, followed by Europe. The stalemate in the World Trade Organisation (WTO) since the Marrakesh Treaty set it up in 1994 shows that negotiation is no longer enabling growth in market access for the main players, the USA and Europe. China has strongly challenged the division of global trading markets, and is experiencing push-back from both the USA and Europe.
While Biden’s initiative for an Indo-Pacific Economic Framework (IPEF) appears to be largely political cosmetics, it was aimed at shifting supply chains away from China. Biden’s sharpest move against China was in October 2022, when his administration required that companies obtain a license for the sale of advanced semiconductors to entities within China. These licences are very hard to obtain. The goal is to cripple China’s ability to develop Artificial Intelligence. This move by Biden rankled Asian countries with electronics industries that supply China.
The climate and environmental crises
In 2023, global carbon emissions were at an all-time high of 37.55 billion tonnes, surpassing the previous high of 37.04 billion tonnes in 2019, prior to the pandemic. Despite all the rhetoric, conferences, laws and programs of the 32 years since the United Nations Rio Earth Summit, despite all the investment in renewable energy, the climate catastrophe continues to grow. This failure was demonstrated again at COP28 in Dubai.
Ever rising carbon emissions are now increasing global temperatures by more than 1.50C above pre-industrial levels. The consequences include massive crop and fishery collapse, the disappearance of hundreds of thousands of species, and entire communities becoming uninhabitable. Only a radical change of direction will avoid these outcomes. Climate change is already causing suffering and death, through raging wildfires and supercharged storms, massive floods, crop failures and coral reef damage.
Those living in the world’s poorest countries, and the poorest communities in the rich countries – who have contributed least to the problem – are the most climate-vulnerable. They have the fewest financial resources to respond to crises or adapt, and they’re closely dependent on a healthy, thriving natural world for food and income.
There is a huge people’s movement to cut carbon emissions, challenging the political power of the fossil-fuel industries, which are also closely connected to the military-industrial complex. However, organised labor is not yet mobilised for this vital struggle. While parts of finance capital have decided to support climate action, and most parliaments have an active group demanding real change, there is not yet a strong enough political movement to overcome the fossil-fuel industry, and to enable the great mass of the people to shift away from carbon-based energy. Among all the struggles for livelihood, equality and freedom taking place, the struggle for climate safety will grow in intensity and transform all these struggles. The socialist movement has a vital contribution to make if this transformation is to succeed.
Conclusion
US imperialism is under challenge, most clearly from other imperialist powers, China and Russia. But it remains manifestly more powerful than its competitors combined. However, the global capitalist system is in crisis at many levels, in production, finance, and environmental sustainability, as well as politically because of the massive inequality and racist and sexist violence it unleashes. These crises increasingly limit the capacity of US imperialism and all imperialist powers.
While it is true US Imperialism remains powerful, the objective conditions of the crisis of capitalism itself poses the greatest challenge to its continued global hegemony. As the crisis intensifies, the magnitude of the destitution and exploitation of working people grows. The crisis of capitalism, together with destitution and exploitation of the working people are prime movers for the broadening of the ranks of anti-imperialist fighters and resistance movements.