[OPE] The crisis of the global economy: Institute of Globalisation and Social Movements, Moscow

glevy@pratt.edu

The crisis of the global economy 
A report of the Institute of
Globalisation and Social Movements, 
Moscow 
By Vasily Koltashov

Translated by Renfrey Clarke, Links &ndash; International
Journal of 
Socialist Renewal (http://links.org.au) 

Moscow, June 9, 2008 -- In the early weeks of 2008 virtually all 
Russian and foreign experts viewed the situation in the world economy

favourably. Warnings from a few analysts that a major economic
crisis 
lay ahead were not taken especially seriously by
optimistic-minded 
populations.< 

On January 22 the
stock exchanges were shaken by the first slump, 
followed by a series
of new collapses. The world's share markets were 
destabilised.
Inflation accelerated, with food prices beginning to 
rise sharply. A
number of American and European banks announced 
colossal losses in
their results for 2007. The scale of the economic 
problems in the US
became evident. A new world crisis had begun. The 
emergence of its
first symptoms provoked numerous questions 
concerning the nature of
the crisis, the reasons behind it, and the 
logic shaping its
probable development. 

1. Major Conclusions 

The Development of the Global Crisis 

1) At
present the world economic crisis is at an early stage, 
manifesting
itself primarily in the area of finance (destabilisation 
of stock
markets, bank losses, growing inflation, and rising interest 
rates);

2) The worst effects of the crisis have been felt by the
economy of 
the US, where a commercial crisis and a decline in
industrial output 
are in prospect; 

3) Following the fall
in demand on the American market, the crisis 
will spread to the
"new industrial countries", where production will 
start
coming to a halt; 

4) The contraction in sales and in world
industrial output will 
lead to new collapses on the world's stock
markets and a shift from 
inflation to stagflation. Oil prices will
fall, the number of 
unemployed will rise, and a massive decline in
consumption will take 
place; 

5) The crisis will affect
all countries that are part of the world 
economy, and will usher in
a prolonged depression. The global 
economic destabilisation will
have enormously destructive 
consequences; 

6) The likely
time-frame for the development of the crisis is as 
follows. The year
2008 will see a recession in the US and the 
beginning of an
industrial downturn in other countries. The peak of 
the crisis (the
most severe decline) will be experienced in 2009 and 
2010, while the
years from 2010 to 2013 will see depression and a 
restructuring of
the world economy for new development; 

7) The governments of
the countries of the world do not have 
strategies for overcoming the
crisis, and because of their 
underestimation of the crisis and their
lack of interest in carrying 
through indispensable changes, the
likelihood of their developing 
such strategies before the crisis
reaches its peak phase is extremely 
remote; 

8) There is
no reason to expect that the crisis will pass quickly, 
and its
drawn-out character will aggravate political and social 
conflicts in
most countries of the world; 

The Nature and Consequences
of the Crisis 

9) The world economic crisis which has now
begun is systemic in 
nature. It is conditioned by the contradictions
of the neoliberal 
model of capitalism, with the world economy unable
to develop further 
in the old manner. The potential of economic
policies based on 
systematically lowering real wages while
stimulating consumption has 
been exhausted; 

10) The
decline of consumption in the "old industrial countries" 
has brought about a loss of effectiveness of the economic model based

on exploitation of cheap labour power in the Third World. Further

reductions in commodity prices through the superexploitation of 
labour power are impossible, since the scope for intensifying this 
exploitation has been almost exhausted; 

11) Inflation is one
of the manifestations of the global crisis, 
and arises from changes
in the relationship between the volume of 
commodities and of money
in the economy. Housing is being devalued, 
as are many shares. With
the American mortgage crisis, the buying 
power of the population has
fallen; 

12) The crisis heralds the replacing of a downward
trend in the 
development of the world economy with an upswing; as a
crisis of 
shifting waves, it will be severe and drawn-out; 

13) The crisis will not be overcome until the contradictions that 
caused it are resolved, and until the development of the world 
economy receives a new technological impulse (above all in the area 
of industrial innovation, which will bring about a cheapening of 
commodities); 

14) As a result of the global crisis world
energy consumption will 
grow. New sources of energy will be
developed, and the importance of 
hydrocarbons will decline; 

15) The crisis will lead to the breaking down of isolated labour

markets, and will expedite the formation of a single world market
for 
labour; 

16) The crisis will help to strengthen
global monopolies, and will 
increase their role in the world
economy. The importance of medium 
and small business will decline
still further; 

17) The crisis will lead to a resurgence of the
policies of 
protectionism, which will become a powerful tool of
global corporate 
competition; 

18) The international
division of labour will become more marked. 
It is logical to expect
reindustrialisation in the "old industrial 
countries"; 

Impact of the Crisis on the Russian Economy 

...

<http://links.org.au/node/517> 

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