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The crisis of the euro resembles a long drawn-out death agony. There is one “decisive” summit after another, each proclaiming a definitive end to the euro crisis. The markets rally for a few hours or days and then fall once more. The index of the European stock markets resembles a thermometer that tracks the process of a terminally sick patient.

This turbulence in the markets is an accurate reflection of the state of mind of the bourgeoisie, characterized by extreme nervousness. This in turn is a reflection of the fact that the present crisis is unparalleled in its scope. The bourgeoisie finds itself adrift in uncharted waters with no map or compass.

The future of the euro

We must never lose sight of the fact that the real barriers to growth under capitalism are: (1) Private ownership of the means of production; and (2) the nation state.

The creation of the EU was an attempt on the part of the European bourgeois (mainly the French and Germans) to overcome the limitedness of the nation state by creating a common market, which was supposed to lead to greater union. The introduction of a common currency was supposed to constitute a major step in that direction.

However, as we explained in advance, on a capitalist basis, the attempt to create a rigid currency arrangement that was supposed to be equally applicable to economies as different as Germany and Greece was bound to fail. It could work as long as the boom lasted, but the advent of a slump has brought to the fore all the national contradictions and antagonisms. The drive towards European union has reached its limits and is going into reverse. The euro (and even the EU itself) is facing collapse.

The euro is not the cause of the crisis of European capitalism, but it has enormously exacerbated the problems, especially of the weaker economies like Greece and Italy. In the past, the Greek and Italian bourgeoisie could partially get out of trouble by devaluing the currency. Now this route is barred to them. The only alternative is what they now refer to as an “internal devaluation”. As products cannot gain competitiveness through the devaluation of the currency, wages must be driven down instead, in both the public and private sector. This means a regime of permanent austerity and attacks on living standards.

No matter what the rulers of Europe now do, they will be wrong. If they continue to attempt to prop up the euro, it will place an intolerable burden on the financial resources of the EU. It will mean years and decades of cuts, austerity and falling living standards. This is a finished recipe for the class struggle. But if the euro collapses, it will be an economic catastrophe that will plunge the whole of Europe (not just the eurozone) into an even deeper crisis.

This dilemma expresses itself in splits and tensions between the different national bourgeoisies, notably between France and Germany. François Hollande won a sweeping electoral victory in both the presidential and parliamentary elections. He will be under pressure to carry out at least some of the reforms he promised in the election campaign. But he has also promised to reduce the public deficit to 3% next year. These two objectives are mutually exclusive.

On the other hand, Angela Merkel is demanding the full implementation of austerity and cuts. The German bourgeoisie is demanding discipline and balanced budgets. Hollande demands growth; Merkel demands cuts. More precisely, the French ruling class wants the German ruling class to pay to stimulate the economy of other European countries, while the German ruling class wants the other capitalists to make their workers pay for the crisis. How can the two sides agree? Thus there is an open split in the heart of Europe.

The pessimism of the ruling class was expressed by the words of the Guardian's economics editor Larry Elliot on the G20 summit:

“It would be naive to imagine that the G20 is preparing a blueprint for global recovery or that the euro zone crisis will soon be over. Central banks are on high alert to cope with the fallout from Greek elections. Why? Because at the moment the global economy can be divided into nations that are in recession, about to go into recession or rapidly losing momentum. For the moment there are no good outcomes, just bad and really bad." (The Guardian, 17 Jun. 2012)

The question of debt

The most graphic expression of the crisis is public debt. However, this is not the cause of the crisis but only a symptom of the sickness of capitalism. Public debt and above all budget deficits have significantly grown as a result of the bail out of the banks and the economic recession itself (which decreases tax revenues, while it increases social expenditure in unemployment benefits for instance).

In every capitalist boom there is an element of speculation, which is only revealed with the onset of crisis. The only difference with this crisis is the truly vast scale of the speculation. For the past three decades the bourgeois attempted to avoid a slump by an unprecedented expansion of credit. In particular the bourgeoisie of the USA indulged in a veritable orgy of speculation based on a huge expansion of credit and low interest rates. This was actively encouraged by Alan Greenspan and the Federal Reserve.

Marx explained that the role of credit under capitalism is to allow it to go beyond its normal limits. A crisis of overproduction can be delayed for a time by artificially expanding demand through consumer credit. The banks actively participated in this orgy by extending credit to people who would never have been considered eligible in the past. This was the basis for the property bubble in the USA and other countries.

The same phenomenon occurred in Europe, especially in Iceland, Spain, and Ireland. But in all countries the banks were active and enthusiastic participants in what amounted to a gigantic swindle. As long as the upward spiral continued, everyone was happy. Credit was easy and large profits were being made. But in the end the limit was reached and the whole unsound structure began to collapse.

The result was the banking crisis of 2008. The attempt to save the banking system by injecting huge amounts of state money is one of the main factors behind the recent massive increase of state debt, which now the working class is being asked to pay for. All the factors that combined to push the world economy upwards now combine to push it into an uncontrollable downward spiral. The bourgeoisie is now confronted with the consequences of its previous excesses. The consequence is a mountain of accumulated debts: private, corporate and public. The question is: who pays? It is the same question that was posed in France in 1789 and, just as then, the answer will have revolutionary implications.

Marx explains that when the crisis breaks, credit dries up, productive investment grinds to a halt, factories are closed and workers are laid off. The bourgeois now demands that all debts be paid. The moneylenders are merciless. Promissory notes are no longer accepted: give us hard cash! That is their implacable demand, which applies to countries and governments as well as companies and individuals.

Germany and the euro

The euro was the brain-child of the German ruling class. The reunification of Germany gave new life to old ambitions. Although in theory France and Germany are equal partners, everyone knows that Germany is the boss. The German bourgeoisie has in its hands a powerful economy based on a strong industry. The Bundesbank holds the purse strings of Europe.

During the boom living standards generally went up in Europe, but it was a very uneven process. Even in the boom the bourgeois put remorseless pressure on the workers to increase productivity, to work harder for longer hours. There was an inexorable process of casualization, with full-time employment being displaced by part-time contracts on lower wages and worse conditions. The workers felt better off because of overtime working, the employment of entire families, the lowering of the prices of consumer goods, partly as a result of cheap Chinese imports and, above all, the unrestrained expansion of credit.

In Germany, which is heavily dependent upon the export of its industrial products, the capitalists squeezed the workers mercilessly to extract the last ounce of surplus value. In the decade prior to 2008 unit labour costs rose by 30% in Italy, 35% in Spain, 42% in Greece, but only 7% in Germany. German real wages were held down, productivity soared and exports boomed. But somebody had to import what Germany exported.

The creation of the euro therefore benefitted the German capitalists. It provided them with a big market for their exports (60% of which go to EU countries), which were made highly competitive by a combination of lowering wages and the application of the most modern machinery. In order to expand the market for its exports, Germany pressed other countries to accept loans to increase demand. The money that was lent to Greece and other countries was used to purchase German goods, which they did on a massive scale.

Now the German bourgeois moan that they were deceived. They complain that the Greeks falsified the books to gain entry into the eurozone. That is very likely true. But can the German bourgeoisie not do simple arithmetic? Can they not add up? Or, if the answer is negative, did they not possess competent accountants? Of course they did. But in 2001 they were not interested in examining the figures too closely, any more than the bankers in the USA, Spain and Ireland who were foisting loans for houses on families with little or no disposable income.

If Germany is an exporter and a creditor, other European nations must be importers and debtors. That debtor-creditor relationship was all very well while the economy was booming. But the crisis of 2008 cruelly revealed the real situation. The moment of reckoning had arrived. But when the bill was presented, there was no money with which to pay it.

The weakest link

Every chain always breaks at its weakest link. Greece is the weakest link in the chain of European capitalism. It is the sick man of Europe. But there are many sick men in this particular hospital. Some are already in intensive care (Greece, Ireland, and Portugal). Others are almost in the same condition (Spain and Italy). France and Belgium are not too far behind. The others are in the waiting room. But all will fall sick in the end.

The idea that it is possible for countries like Germany, Finland, and Austria to cut themselves off from the general European malady is a delusion. There are no longer any national markets left in Europe. Europe has been shaped as a single market with a high degree of economic integration. The destiny of one will have a serious effect on the destinies of all. That is true of even the smallest, like Greece.

It may seem a paradox that the recent G20 summit in Mexico was obsessed by the Greek problem and especially by the outcome of the Greek elections. But even more paradoxical was what happened later. The bourgeoisie (in particular in the USA) was worried that a victory of SYRIZA would signify the immediate exit of Greece from the eurozone, provoking a concatenation of circumstances that would put in danger the future of the euro itself, provoking a deep slump on a world scale.

When this outcome was avoided by the narrow victory of Samaras and the New Democracy, the bourgeois breathed an audible sigh of relief. It might be expected that the EU (that is, Angela Merkel) would have thrown a lifeline to Samaras, or at least give some signal that he could interpret as a promise of future relief for the suffering Greek people. Instead, the German chancellor turned a stony face to Athens and warned that there was no question of renegotiating anything.

Merkel originally agreed to “help” Greece pay its debts, not out of generosity but because most of these debts are owed to German and French banks. The “aid” was made conditional on a ferocious package of cuts that has pushed Greece into a deep recession and reduced it to beggary. Far from solving the problem, it has made things far worse. Yet Merkel continues to demand austerity and “discipline”.

In reality, the German ruling class finds itself in a dilemma. On the one hand, they do not want to underwrite the debts of Europe and would be glad to see the back of Greece. On the other hand, they fear the consequences of a European banking crisis that would be the inevitable result of a Greek exit from the eurozone. This dilemma leads to a kind of paralysis of the will and constant vacillations, when decisive action is called for. We saw this again in the most recent EU summit. The leaders of the EU resemble the emperor Nero who fiddled as the flames rose on all sides.


The flames have reached Spain, which now finds itself in the eye of the storm of the European economic crisis. Greece, Ireland and Portugal are, in a literal sense, peripheral countries of the EU. But Spain is bigger than all three together. And Italy is one of the core countries of the EU itself. An economic collapse in these countries would therefore have the most serious consequences for the whole of Europe.

For 14 years (1994-2008), Spain avoided a recession. It had one of the highest rates of growth in Europe and was creating more jobs than any other country in the EU. It seemed as though the boom would last forever. But the boom was largely propelled by a speculative housing bubble, feeding on cheap and easy credit from the banks and particularly the cajas de ahorros (saving banks).

The end of the boom has brought all the contradictions to the fore. The Spanish housing market has collapsed. House prices have slumped and many families have lost their homes while thousands of properties stand empty. As a result, the construction industry is in crisis and many building workers have lost their jobs, swelling the ranks of the unemployed.

Unemployment now officially stands at 25%, the highest in the EU. More than half the youth of Spain are jobless. The growth of unemployment means a steep fall in demand and also in tax revenues. Further cuts will only aggravate the problem, as we have already seen in Greece.

Before 2007 Spain had a primary budget surplus and was actually paying off its debts. Now the deficit is the equivalent of 9% of GDP, and this is supposed to be cut down to 3% by next year.

Spain has been in recession for four years. Soon the unemployment benefit will run out, and many families will not be able to continue to keep up their mortgage repayments. This will lead to a new wave of repossessions, increasing homelessness, a further fall in house prices and the banks and cajas will be left with an even greater number of empty flats that nobody wants to buy.

As a result, the Spanish banking system is in a deep crisis. In order to prevent a total collapse, the EU was forced to hand over up to €100-billion, although this huge sum will not be enough to plug the black hole in the balance sheets of the Spanish banks. Nobody knows the true extent of the bad debts of the banks: 150 billion? 250 billion? It is impossible to say. But it is clear that the €100-billion loan is just the beginning.

This is clear to the markets, which have reacted accordingly. Nobody wants to buy Spanish debt unless they receive a punitively high rate of interest. The rate of interest has already reached 7%. Such ruinous rates of interest are impossible to sustain for long.

Even before the massive austerity cuts of the new PP government were announced we already saw wave after wave of strikes and regional and sector-wide mobilizations: the education sector in Madrid, civil servants in Catalonia and Valencia, the movement of the students in Valencia, the nationwide education sector movement, etc. The indignados movement, with mass demonstrations in May, June, and October 2011 was also a reflection of this build up of anger and helped change the general mood amongst the working class.

Spain is following the same path as Greece, and the results will be similar, but on a much bigger scale. The Rajoy government is a government of crisis. Its electoral base is shrinking fast. With the leaders of PSOE being pushed towards national unity, the main beneficiary has been the Izquierda Unida (IU, United Left) coalition — to the left of PSOE — around the Communist Party which has significantly increased its votes. In the national opinion polls the IU has gone up from 6.9% in the November 2011 elections to 11.6% now.

This confirms the same leftward trend we have seen in Greece and France. The serious strategists of Capital are already warning of the revolutionary implications of massive cuts in public spending. A Financial Times article signed by Wolfgang Münchau and entitled “Spain has accepted mission impossible”, puts it in stark terms:

“Spain’s effort at deficit reduction is not just bad economics, it is physically impossible, so something else will have to give. Either Spain will miss the target, or the Spanish government will have to fire so many nurses and teachers that the result will be a political insurrection.” (Our emphasis, Financial Times, 15 Apr. 2012)


The situation facing Italian capitalism is, if anything, even worse than in Spain, which has at least partly recapitalized its debts with the aid of the EU. But the level of indebtedness of Italy is still higher. This has been the case for many years, but now the situation has become critical.

Italy’s debt has reached 120% of GDP in the past, yet it did not cause serious problems because they could always devalue the lira to gain a competitive advantage for Italian exports. In part, the Italian bourgeoisie bought social stability by maintaining a high level of debt. They could always find buyers for Italian debt in international markets. But all that has changed.

The advent of the euro has blocked that exit. Italy has lost competitiveness to Germany, and the problem has been exacerbated by competition from China. The Italian economy has been stagnant for a long time. The lack of growth has led to a collapse of confidence in the markets, leading to a sharp increase in the interest Italy must pay to pay bondholders.

If we exclude interest repayments, Italy has a primary surplus. Under the “Left” government of Romano Prodi, Italy actually began to pay off its debts. But with interest rates of six or even seven percent, the burden of debt becomes unsustainable. After a decade of economic stagnation, Italy cannot afford to finance its debt, which totals €1.9-trillion. They are now finding it difficult to sell bonds that nobody wants to buy.

Since the road of devaluation is blocked, the only alternative is to launch an all-out attack on living standards. A few years ago, even before the crisis began, the Economist stated that, in order for Italy to recover its international competitiveness, it would have to sack half-a-million workers and those who remained would have to accept a wage cut of 30%. This is the real meaning of what is called an “internal devaluation”. It is the real program of the Italian bourgeoisie.

The case of Italy highlights the central problem of the European bourgeoisie: the strength of the working class. For decades the workers of Europe have become used to a certain standard of living. They have conquered the conditions of at least a semi-civilized existence. The ruling class now finds it very difficult to take back the reforms and concessions of the past.

The problem is that the Italian bourgeoisie lacks a strong party and a stable government to implement this programme. Berlusconi failed to carry out what was needed. The “Left” government of Prodi went further, but was destroyed in the attempt. The “national unity” government of Monti has seen its support collapse in just a few months. All have foundered on the resistance of the Italian working class.

The road is open to an explosion of the class struggle in Italy, which will present the Italian Marxists with great opportunities.


The prospect of a SYRIZA government caused a wave of panic in the bourgeoisie of Greece and internationally. They organized a massive campaign to drive people away from SYRIZA, warning of economic catastrophe if they came to power. That was sufficient to panic wide sections of the middle class, older people and backward layers into voting for the New Democracy.

However, the election result has solved nothing. The economic problems remain as they were before. There is a very fragile and temporary calm in the situation, which will not last long. The mood amongst the broad masses is just as sceptical and pessimistic as it was before the elections. Even among those who voted for the New Democracy few believe that Samaras will achieve anything. This is not a very solid base from which to launch a new series of attacks on the living standards of the Greek people!

After three years of continuous fights and upheavals there must also be an element of tiredness among the Greek masses. There may be a temporary lull. But new upheavals are inevitable in the next period. In reality, Tsipras was lucky he did not win the elections. A SYRIZA government would have been immediately put under enormous pressure from the bourgeoisie and the masses. But now Samaras will be responsible for solving a crisis that on a capitalist basis cannot be solved.

The electoral support for New Democracy will soon begin to erode. In opposition, SYRIZA will grow. This is already beginning to happen. There are many reports of people who are trying to find SYRIZA in their areas and beginning to organize themselves. These are especially the advanced militants but also include thousands of young people, especially the unemployed and students.

However, SYRIZA itself is still an empty shell. Many of its cadres are reformist bureaucrats, ex-Stalinists who have brought with them the worst traditions of the Party they have come from and a fair number of old eurocommunist reformist sceptics. The problem is aggravated by an influx of sectarians whose only experience is of running around without doing any serious effort to organize the members. These are serious obstacles to building a genuine communist party. But the party will be built in any case, and the masses will know how to deal with these people.

Inside SYRIZA there are different tendencies: on the right as well as the left. Tsipras himself stands on the left but his programme is confused. And in a situation like this, confusion is very dangerous.

The decisive element is the work of the Greek Marxists within SYRIZA. Starting from a relatively weak base, they are beginning to grow and sink strong roots in the movement. As always it is necessary to combine Party work with independent revolutionary activity. The fact that SYRIZA did not win the election is favourable because it gives us the time we need to build our forces. We must participate actively in the building of SYRIZA, while simultaneously conducting agitation and propaganda in the neighbourhoods, schools, universities and trade unions.

In the last elections SYRIZA won 52% of young people of 18-24 years. That is a very important fact. We must now concentrate on this layer. In 1917 the Mensheviks accused the Bolsheviks of being a “party of kids”, which was largely true. The membership of the Bolshevik Party was very young. The Mensheviks were mainly older trade unionists, inclined to reformism.

Our main slogans are: Get organized in SYRIZA! For a revolutionary SYRIZA! Build the revolutionary Marxist tendency of SYRIZA! On that basis we will recruit the best elements and conduct a fight for a consistent Marxist policy. The first step is to fight for our programme in the founding congress that will take place in November and to intervene energetically in the assemblies organized to set up the new Party in September and October.

We must never lose sight of the fact that the main aim is to strengthen the Marxist tendency. We will, of course, be loyal members of the Party, the best and most active members, working in the elections, recruiting new members and building branches. All that we ask is the right to put forward our ideas. We are confident of the superiority of Marxist ideas and programme, and we are sure that over a period of time, on the basis of experience, we can eventually win the majority.

A crisis of the regime

Trotsky explained that it is sudden and abrupt changes in the situation that creates revolutionary consciousness in the masses. The crisis is shaking the masses out of their apathy everywhere. There is a growing ferment in society. A critical mood is developing and a questioning of the system, which was not the case before.

The present crisis is rapidly exposing before the eyes of the masses all the rottenness of the existing society and its institutions. One layer after another of the establishment is being summoned before the judgement seat of public opinion and found guilty: bankers, politicians, prime ministers and presidents, press barons and bishops. Those who were respected and revered are despised or loathed.

The masses are looking for a way out of the crisis. This is reflected on the electoral plane in violent swings to the left and to the right. One after another, governments rise and fall. Every possible combination is tried and fails, because on a capitalist basis there is no way out of the impasse. Thus, over a period, politicians, parties, programmes and ideas are put to the test. The masses gradually learn what lies behind the hollow promises.

A mood of scepticism is beginning to develop, which places a question mark over parliamentarism and politics in general. However, in Europe illusions in parliamentarism are deeply rooted. The masses will not easily abandon the organizations that they identify with. But every one of these organizations will be put to the test. There will be a whole series of crises, ferment and splits, with the rise of new political formations, like SYRIZA, Die Linke, and the Front de Gauche, out of the old. We must follow such developments attentively and be prepared to intervene energetically to reach the most militant layers of the class and the youth.

The next period will see a sharp polarization to the left and to the right, as we already see in Greece and France. For reasons we have explained many times, there is no possibility of fascist or Bonapartist reaction in Europe in the immediate future. However, the rise of Golden Dawn is a warning of what to expect if the working class fails to take power in Greece. In the immediate future, the bourgeoisie is compelled to rule through the mechanisms of bourgeois democracy. In reality, they must lean for support on the tops of the trade unions and the Left parties.

However, as the crisis becomes deeper, the bourgeoisie will decide that there are too many strikes, too many demonstrations, too much chaos. Then the slogan of order will be advanced. Plots and conspiracies will be hatched, like the Gladio Conspiracy in the 1970s. But long before the question of Bonapartist reaction could be posed, the working class will have had many opportunities to take power. A premature attempt at a coup, for example in Greece, would provoke ferocious resistance that could lead to a revolutionary upsurge.

It is true that the crisis is unfolding unevenly. That is always the case. It unfolds faster and with greater intensity in the weaker capitalist countries, like Greece, Ireland, Portugal, Spain, and Italy, while Germany and Austria lag behind, and Britain is somewhere in between. But all countries will be dragged into the general crisis at one time or another.

Everywhere we see the heavy burden of the past, which weighs like an Alp on the consciousness of the masses and is particularly noticeable in the leadership of the mass organizations. The reformist leaders of the trade unions and the Left parties are living in the past. But even the minds of the shop stewards and union activists are clouded by the memories of past defeats. They are infected with moods of scepticism and cynicism.

That is even more the case in the active layers of the Left parties, who were miseducated by Stalinism and reformism in the past and have no confidence in the working class. It will take great events to revive this layer, and many will simply drop out of politics altogether and be replaced by a new generation that is not burdened by the memories of the past.

In general, the weight of capitalist crisis falls most heavily on the shoulders of the youth. In Spain half the youth are unemployed. In Britain, Cameron wants to take away housing benefit from the under-25s, etc. From the ranks of the youth the best fighters will come. They will be attracted to the trade unions and the Left parties as a means of changing society. That is what we must base ourselves on. In the words of Lenin: He who has the youth has the future.

No way out

Some think that the sole aim of the ruling class is to save the banks. That is too simple. There are contradictions between different sections of the capitalist class, and the bankers represent only one section. In Britain the weight of finance capital is very great because of the destruction of British manufacturing industry. But even in Britain the Tory-LibDem coalition has been forced to put pressure on the banks, investigating the affairs of Barclays and RBS after the latest interest rate fixing scandal. Cameron demanded the resignation of the head of Barclays, while the timid Labour leader Milliband wants to see him in jail.

In Germany, it is the industrial wing of the bourgeoisie that rules the roost. They are putting pressure on the banks to pay up and accept losses. In Spain, the shares of Bankia lost between 80-90% of their value, even though the value of these shares was supposed to be “guaranteed” by the state, and the government was in the hands of the right-wing People’s Party.

On all sides we see insoluble contradictions. The demand is being raised for eurobonds. But somebody will have to underwrite these hypothetical bonds. Who will that be? Why, Germany, of course! When the debtor nations propose the establishment of eurobonds, Merkel answers, “Not in my lifetime.”

The German finance minister says Greece has received more money than Germany got from the Marshall Plan after World War Two. This is a lie. After 1948, Germany received far more from the USA to pay off the vast debts she had accumulated before and during the war. Yes, but that was at a time when the USA held two thirds of the world’s gold in Fort Knox and the capitalist world economy was in a tremendous upswing.

What is the position now? The world economy is in the deepest crisis in history. The USA has a huge deficit — both externally and internally. The biggest creditor nation in the world has become one of the biggest debtors. And as for Germany, there is not enough money in the Bundesbank to bail out Spain and Italy. The debts of Italy alone amount to almost two trillion euros.

Germany does not want to pay, but it cannot simply allow the euro to collapse. On the one hand, German (and American) banks hold large amounts of Greek, Spanish, and Italian debt. On the other, Germany exports its goods to the eurozone.

To the insistent demands for eurobonds, Merkel replies: Certainly, but we demand that all debts must be agreed by the EU (that is, by Germany) before being presented to the national parliaments. We further demand that the EU (that is, Germany) must have the right to interfere with your budgets and veto unacceptable spending, etc. That is to say: Germany will only agree to underwrite your debts when you agree to hand over your national sovereignty to us.

With an astonishing mixture of cynicism and insolence, Cameron says: We agree that there should be closer union of the eurozone states to save the euro [and protect British interests] but we British will not be part of it and will not pay a single penny to help you. However, what Cameron says or does is of little consequence to Europe nowadays.

It is highly unlikely that France, Italy, and Spain would agree to sign away their independence to please Merkel and the Bundesbank. Even if Hollande, Rajoy, and Monti were to agree to it, it would have to go before their national parliaments for ratification, and probably would have to be put to referendums, which would take years and lead to interminable arguments. However, the crisis of the euro is taking place right now and the markets will not wait until the cumbersome workings of parliamentary democracy decide the issue.

Markets and investors are losing patience. There has been what can only be described as a “slow motion” run on the banks in Greece and Spain. That shows what the future holds. The European banks are poised on the edge of an abyss. Sooner or later a big bank will fail, as happened with the Kreditanstalt of Vienna, which collapsed in May 1931. Such an event can be the trigger of a general European banking crisis and a deep slump, which will have the most serious consequences for the whole world economy.

Utopianism of the reformists

The reformists have no solution for the crisis. They have accepted the capitalist system and all its workings. In their blindness they believe that the cuts are the product of ignorance or “ideological motivation”. Some have attempted to blame the rating agencies. This is like blaming a thermometer for registering a fever. If you break the thermometer, the fever will not go away. If you ban the rating agencies, the markets will continue to operate just as before. And under capitalism, how can one legislate to stop the bourgeois taking their money out of dangerous or unprofitable markets and transferring it to safer or more profitable ones?

Slogans like “tax the rich” can have a positive effect as agitation, but they lack any scientific content. Hollande proposes to raise the tax on high earners to 75%. This undoubtedly won him votes, but if he tries to put it into practice, it will lead immediately to a massive outflow of capital from France to Switzerland, or even to Britain, where Cameron says he will welcome it with open arms (this did nothing to improve relations between Paris and London).

The problem with reformism (especially of the Left variety) is that, by interfering with the market, without eliminating it, it makes it impossible for capitalism to function normally. In the case of France, if Hollande attempts to put his program into practice, he will be met with a massive strike of capital that will force him to change course. That is what happened to François Mitterrand in the past. But the situation is far worse now than in 1981, and Hollande’s volte face will be much faster and more abrupt. This will cause a new explosion of the class struggle, with a growth of the Front de Gauche and ferment in the ranks of the Socialist Party.

What is the problem? The working class has shown that it is willing to respond to a bold call to action when it is made. But the leaders have no confidence in the working class or in themselves. Even the best of the Lefts are reluctant to go all the way. They are always looking for some “clever” solution that will allow them to avoid a direct conflict with the ruling class. But without such a confrontation no way out is possible, and these “clever” slogans will only result in an even worse crisis.

Tsipras has become very popular through projecting a left image and opposing austerity. But his program is completely utopian. He wants Greece to stay in the eurozone, while rejecting the terms dictated by Brussels and Berlin. The leaders of the KKE want Greece to return to the drachma. But the first option is rejected by the bourgeois leaders of the EU, while the second is a finished recipe for economic collapse. In reality, there is no solution for Greek capitalism either inside or outside the euro. To argue anything else is to deceive the working class.

The idea that the solution is to refuse to pay the debt while remaining within capitalism is typical of the utopian notions of the radical petty bourgeoisie. Unless this slogan is linked to the expropriation of the bankers and capitalists it would lead to economic collapse. This shows the limited nature of the program of Tsipras, who seems to believe that Greece can avoid paying its debts to the German and French bankers and yet remain in the Eurozone. This is utopian in the extreme. Greece would soon find itself outside, not just the Eurozone but also outside the EU, cut off from international money markets and unable to borrow money to pay wages and pensions.

The only correct transitional slogan is for the nationalization of the banks without compensation. These parasites have already had too much public money. Not a single penny or cent for the bankers! Only by nationalizing the banks and insurance companies will it be possible to move towards a rationally planned economy.

The expropriation of finance capital will provide many opportunities to solve the problems facing society. However, the nationalization of the banks is, in itself, insufficient. Even if the entire banking system were nationalized it would not end the anarchy of capitalism. It is necessary to nationalize the big monopolies that dominate the economy, under democratic workers’ control and management. The “commanding heights” of the economy must be in the hands of the state, and the state is in the hands of the working class. Only then will it be possible to plan the productive forces in a rational and harmonious manner.

We must tell the truth to the working class of Greece: there is only has one option — to take power and then appeal to the workers of Europe to follow their example. Down with the Europe of the bankers and capitalists! For the socialist United States of Europe! That is our slogan. If the Greek workers take power into their hands, it would have an electric effect on the workers of all Europe, beginning with Spain, Italy, Portugal, and France. It would have at least as big an impact as the Russian Revolution in 1917. The whole situation would be transformed.

In countries like Greece, Spain, Portugal, Ireland, and Italy, the budget deficit and the national debt are becoming key issues as the ruling class is forced to implement massive austerity cuts. We demand an immediate halt to any payments of interests on the national debt and for a repudiation of the debt altogether (as opposed to the reformist slogan of an audit). This would immediately raise the question of how these governments would fund their spending. We answer: through the expropriation without compensation of the whole of the banking and insurance sector and its centralization into one national state bank to be used for the planning of the economy.

The nationalization of the means of production, distribution and exchange would allow these forces, which are left idle by the anarchy of capitalism, to be used. In Spain the banks and cajas own thousands of empty properties. At the same time, there is a large and growing number of homeless people. We demand that the empty houses be handed over to the homeless.

There are millions of unemployed (11% across the EU) and plenty of social needs to be fulfilled. The immediate introduction of a 35-hour week without loss of pay would enable us to mobilize the millions of unemployed workers to build houses, schools, roads and hospitals to satisfy the needs of society.

However, there is nothing magical about transitional demands, which, as Trotsky says are not enough:

“Of course the sliding scale and workers’ self-defence are not enough. These are only the first steps necessary to protect workers from starvation and from the fascists’ knives. These are urgent and necessary means of self-defence. But by themselves they will not resolve the problem. The main task is to pave the way to for a better economic system, for a more just, rational and decent use of the productive forces in the interests of all the people.

“This can’t be achieved by ordinary, ‘normal’, routine methods of the trade unions. You cannot disagree with this, for in the conditions of capitalist decline insulated unions turn out to be incapable of halting even the further deterioration of the workers’ conditions. More decisive and deep-going methods are necessary. The bourgeoisie, which owns the means of production and possesses state power, has brought the entire economy to a state of total and hopeless disarray. It is necessary to proclaim the bourgeoisie bankrupt and to transfer the economy into fresh and honest hands, that is, into the hands of the workers themselves." ("Discussion with a CIO organizer", 29 Sep. 1938, our emphasis)

These words of Trotsky express the essence of transitional slogans, which is that they point the way to the socialist revolution as the only way out. The seriousness of the crisis is such that already in countries like Greece many people – not just the advanced workers and youth – are drawing revolutionary conclusions. We must hammer home to the advanced workers and youth the need for the working class to take power.

It is hardly necessary to explain to people who have lost everything that a fundamental change is necessary: not partial solutions or “clever” slogans but the complete overthrow of the present system is needed. What is needed is to build the forces of Marxism as quickly as possible, to win over the workers and youth to the Marxist tendency through systematic and energetic work.

London, 4 July, 2012