We are publishing a speech made by Alan Woods in January. The main emphasis was on the extreme volatility of the present epoch. The state of the whole world system has reached a point where even small events can unleash massive movements. This has been clearly demonstrated by Spain in the last few days with rapid changes and swings in the mood of the masses taking place literally within a few hours.

The world is entering into a new and explosive phase. This is an extraordinary moment in world history. There is no real comparison with anything that went on in the past. There are no parallels or very few parallels for the present situation and certainly not in the last 50 or 60 years. This fact creates certain difficulties for the working out of perspectives, and these difficulties exist not only for us but also for the bourgeoisie and the imperialists. The strategists of capital are perplexed, and look to the future with deep foreboding.

Engels explained that there are periods in history where 20 years pass like a single day - periods where nothing much seems to happen. Let us remember that Marx and Engels referred to the 40 years "Winter Sleep" of the British proletariat following the defeat of the revolutionary wave of 1848-9. But he added that there are other periods in which the history of 20 years can be summed up in 24 hours.

When we speak of perspectives, we are dealing in reality with world perspectives. This does not signify a mere compendium of national events. Here the whole is far greater than the sum of the parts. The function of a discussion on world perspectives is to deal with the process as an integrated phenomenon. It is not the function of the world perspectives document to deal with this or that event, taken in isolation. We must deal with fundamental processes. That is the function of a discussion of world perspectives.

What is the main feature of the world situation? It is certainly not a period where nothing much is happening! From our point of view, too much is happening: we find it difficult to keep up with events. There is a colossal acceleration of the processes on a world scale. This is the first thing that must be registered. The whole world situation is undergoing a fundamental change. That is a self-evident fact, which cannot be denied.

What is the reason for this sudden change? What it means is that all the contradictions that have been accumulating for decades are now coming to a critical point. It is a dialectical process that can be observed also in nature. Engels explained that dialectics are the most general laws of motion, nature, human society and human thought, and that is absolutely correct.

The correctness of the dialectical method is demonstrated by a very simple experiment in physics. It involves the addition of one grain of sand after another grain of sand, which creates a mountain until it reaches a critical point in which the addition of one extra grain of sand - just one - causes a landslide. This may be a small avalanche, or it may be a large avalanche. This cannot be predicted. It's impossible to say.

I believe this is called the physics of non-equilibrium systems. From that point of view you could say that the whole of the world is a non-equilibrium system. The whole situation is extremely unstable. The main characteristic is the most colossal unprecedented instability and volatility. This has many expressions at many levels, which was not the case before.

For a long period following the Second World War, world capitalism established a position of relative equilibrium and stability. In the last analysis this reflected the growth of the productive forces internationally. There was a big development of the economy in the advanced capitalist countries including Japan, the United States and Western Europe, which to some extent at least benefited the more backward capitalist countries.

This was the basis for a relative stability in the relations between the classes that lasted for decades in the advanced capitalist countries. It is true that even at this time there were explosions of the class struggle, as in France in 1968, but that was not the general picture.

On the other hand, in this period, world relations were frozen. For a period of half a century the domination of the world by US imperialism and the Soviet Union guaranteed this. But now all that has changed. Instead of stability, you have wild fluctuations at all levels: in the world economy, in the stock exchange, in the world financial system, in the relations between nations and in the relations between the classes.

Just to give an example of the colossal development of the productive forces in that period, we can quote the following figures. In the 10 years that preceded the first post-war recession of 1973-1974, the Japanese economy grew by almost 150%. That is an astonishing figure for a capitalist economy. Canada grew by almost 70%, France by 69 % the USA 48%. The average rate of growth of the OECD countries (the advanced capitalist countries) was 63 % over the decade. This was achieved with full employment and rising living standards.

This was the objective basis for the success of reformism at that time. It permitted a period of reforms, important reforms, and significant concessions, at least in the advanced capitalist countries. Although there were several reasons for this economic growth, the fundamental reason was the enormous development of world trade or, to put it in another way, the enormous intensification of the international division of labour. For a long period there was an upward spiral: cause becomes effect and effect becomes cause, pushing the whole thing upwards. But that is now decisively finished. As a matter of fact the capitalists have never recovered the kind of figures comparable to those achieved before 1973.

The boom-slump cycle is important, but the nature of the boom-slump cycles will vary according to the general framework. For example there were recessions in the 1950s and 1960s, but they were shallow and fleeting so that you hardly noticed them Now it is a different position. After the boom of the second half of the 1990s they are struggling to emerge from recession.

They are talking about a recovery in America. In my opinion, this may or may not be the case. Of course, sooner or later they will come out of even the deepest slump. There is no such thing as a final crisis of capitalism. However, it is striking that at least at this stage the recovery is confined mainly to the USA. And despite the claims they make, it is not clear whether this is going to take off or not.

But in any case, we must not take the economic question in isolation. This would be a mistake. We must see the general position. The general picture is one of a deep crisis on a world scale. And the reason for this is not the boom-slump cycle, but the contradictions that have been accumulating steadily for a period of 20-30 years, which has reached a critical point. Any shock - a military crisis, a political crisis, the class struggle, or any additional disturbance - will have a disproportionate effect. It will shake the system violently, producing the equivalent of earthquakes and avalanches. That is what we have to understand.

In a context like this, sudden and sharp changes are inherent in the situation. There will be one shock after another. Whereas in the period of upswing like the period from 1945 until 1973, these shocks could be absorbed, in this situation that is not the case. These shocks have a profound effect, shaking up society and producing sudden changes in consciousness. From our point of view, in the last analysis, the most important thing is the effect of these crises on the consciousness of the working class.

Let us just take the events of the last year. Twelve months ago, we saw the colossal and unprecedented mass demonstrations against the war in Iraq. We must analyse this correctly. We must not have a routinist attitude toward this, by saying that it was just a few million people demonstrating – "very good, pass the mustard please". Let us leave aside the inevitable confusion of the masses at this stage, and the bad political programme of the leaders. As a symptom of the developing crisis and its effects on consciousness, these mighty demonstrations were a phenomenon of the first order of importance.

What is the meaning of these mass demonstrations? Two million people demonstrated in London. This was the biggest demonstration in British history. It was bigger than the demonstrations of the Chartists in Britain in the 19th century or of the mass demonstrations in the 1970s. In Spain there were 6 million people on the streets, and about 3 or 4 million in Italy. What was the reason for this? Was it the brilliance of the petty bourgeois organizers? As we say very graphically in the English language, they would not be capable of organizing a drinking party in a brewery. In fact, they were the ones who were most astonished at their success. It had nothing to do with the organizers. It showed a process that is developing in the bowels of society, as we have explained many times.

In Britain, people are fed up with Tony Blair, although paradoxically they vote for him, because there is no alternative. There is a seething subterranean discontent amongst the masses in Britain and in all other countries without exception. But because of the absence of the subjective factor this discontent can take all kinds of peculiar forms. If there were a mass Leninist party, the problem would be very quickly solved. But no such party exists. That is the nub of the question.

The central problem is the collapse of the political authority of Marxism everywhere. There is not even the caricature, which existed in the form of Stalinism in the past. This at least bore some vague resemblance to revolutionary ideas. Despite all its crimes, it served as a point of reference for leftward-moving workers and youth. Now even that has disappeared. There is a colossal vacuum that is temporarily filled by all kinds of confused petty bourgeois tendencies: pacifism, anarchism, and so on.

It is a dialectical paradox that precisely at this moment, when the forces of revolution are quickly maturing, when the objective conditions for revolution are developing, particularly in Latin America, that the leadership of the official organizations are moving far to the right. Therefore, with the collapse of the authority of Marxism, the first mass movements will inevitably be tinged with all kinds of confusion, especially amongst the youth, how could it be otherwise? Here we have the first beginnings, the early, uncertain steps in the reawakening of the masses.

There is a colossal contradiction, which is the same contradiction that Trotsky explained in 1938 between the maturity of the objective conditions for revolution and the extreme weakness of the subjective factor. This is expressed in a crisis of the leadership of the traditional parties and organizations of the proletariat. Decades of capitalist upswing have set the final seal on the reformist degeneration of the leaders of these parties and also of the trade unions. There has been a collapse of the old policies of reformism. These were predicated on the upswing in capitalism. But the crisis of capitalism spells a crisis of reformism. Instead of reforms we have counter-reforms, as we see most clearly in Britain and Germany.

All the governments of the world, whether they are left wing or right wing, no matter what they call themselves, are pursuing fundamentally the same policy. That is not an accident. It reflects the reality of the crisis of capitalism. They can no longer give meaningful reforms. Even if there is an upturn, which there will be at a certain stage, it does not mean that everything is going to be resolved and that they will be able to give reforms. The situation will not be stabilized.

As Michael Roberts pointed out in his article published on Marxist.com, the figure of 8% growth in the US is exaggerated: The real figure is closer to 3%. But even if we accept the official figures, which certainly exaggerate the tendencies towards recovery in America, unemployment continues to rise, the sackings and closures continue and all the time there is merciless pressure on the working class.

This means that an economic recovery will not be a recipe for social peace, quite the contrary. If there is a recovery with these characteristics, it would be a recipe at a certain stage for an outbreak of strikes and struggles on an economic front. The American workers will turn to the ruling class and say, "you say there is a boom, that's wonderful! You people are making profits, we want ours". That is also not a recipe for stability.

US imperialism appears to be completely dominant, and Bush appears to be supremely confident. In fact, he is a bit like Mr. Macawber in Charles Dickens' novel David Copperfield, that cheerful bankrupt who was always "confidently expecting that something will turn up" to solve his problems. I think it is not excluded that Bush might be re-elected. It is possible, although it will be a close thing. The reason it will be so close is that American society has never been as polarized as it is at present.

One cannot say that he may or may not be elected because a lot of things can happen between now and the Presidential elections. Bush is relying on economic recovery, but that is not at all clear. The present economic recovery is very fragile. It has no sound basis and may yet collapse. He is also relying on the fact that the USA had a relatively painless victory in Iraq (painless for the Americans, that is). In Iraq they say, "We won!" They say the same in Afghanistan: "We're in complete control", though neither statement is true. As the list of casualties grows, so the realisation begins to dawn on the American public that they are bogged down in a quagmire with no end in sight.

With colossal power comes the colossal arrogance of these people. We see this in the treatment of their so-called Allies. As we predicted these have been completely excluded from the Iraqi reconstruction. Everyone expected the Americans to take the lion's share of the loot. But it would have been prudent to give some crumbs at least, to others, starting with the British. In the end, reluctantly, they have given a few minor contracts to the British to keep them quiet. But the others have all been frozen out. They are all gangsters, of course, but the American gangsters are blatant in their behaviour. They have given 1.8 billion dollars' worth of contracts to two US companies, which just by coincidence are important contributors to the Republican Party. This is overt robbery and imperialist plunder.

The US imperialists have colossal superiority. There has never been such a situation in world history, where there was just one super power. There were always at least two or three powers, constantly forming alliances, and changing alliances. This is not the case now. American military power is truly staggering. Its power is disproportionate to the rest. In the past, the British imperialists had a policy of maintaining a navy that would be stronger than the combined fleets of its two nearest rivals. Now the USA enjoys greater military power than the next 24 countries.

The USA accounts for 38% of world arms expenditure, as opposed to 5% each for the main European Powers (Britain, Germany and France) and only 6% for Russia. Moreover, it accounts for 40% of world arms production, including all the most modern and sophisticated weapons. By comparison, the weaponry of the Europeans looks fairly pathetic. They can only grind their teeth in impotent rage, while striving to put together some kind of "European defence force".

The relative intelligence of the leaders of the bourgeoisie is not a decisive factor when we are talking about fundamental processes. One can have capable bourgeois leaders and you can have fools, just as one can have labour leaders or revolutionary leaders who are more or less capable. Ultimately that is not decisive, of course. But it does play a role in complicating matters. The present occupant of the White House is probably the most obtuse leader the American bourgeoisie has ever had.

Just look at the political representatives of the American bourgeoisie today: Bush, Rumsfeld and Cheney. On their faces you can see the narrowness, the avarice and the stupidity of the typical American businessman. They are both arrogant and ignorant as pigs. This was not always the case. In the past there were some quite smart people in the White House like FD Roosevelt, the author of the New Deal. This American aristocrat was quite a clever man and able to dominate the world stage with ease. Now compare this narrow bourgeois, Bush. He really is not capable of seeing further than his own nose.

It is the same story in Britain. In the past the aristocrats dominated British political life. Now it is the ignorant petty bourgeois who set the tone. Blair and Thatcher are typical examples of this horrible middle-class species. Napoleon said that England was a nation of shopkeepers. These are two shopkeepers, with the shopkeeper mentality - narrow and greedy, basing everything on short-term calculations. And like a shopkeeper grovelling before a wealthy customer, these middle-class upstarts grovel before US imperialism. The so-called "Special Relationship" with America is only a fig-leaf to disguise a relation of abject dependence.

Now Bush is talking about putting a man on Mars. I think we should give critical support to this proposal, as long as the man that is sent is George W Bush, and he is issued with a one-way ticket. In any case he might only need a one-way ticket because it seems likely that anyone sent on such a mission would be killed by solar rays.

He is proposing a space programme with a station on the moon and a man on Mars, but he hasn't costed this or, if he has, he has written his calculations down on the back of his menu after dinner in a restaurant. Such a project would cost hundreds of billions of dollars, at a time when America has a huge budget deficit. This shows the light-mindedness of the American bourgeoisie and of its representatives.

It is very unlikely that the Americans will proceed with such a mission on both economic and technical grounds, particularly when they are getting excellent results from unmanned flights. It is only a political manoeuvre to increase Bush's standing in the opinion polls. The man on Mars is intended to go no further than November. After that they will quietly drop it. Even so, this proposal was probably calculated to show the rest of the world in a clumsy way that the USA has an unbeatable superiority in technology in general and military technology in particular.

Of course, the Bush administration does not cause the worldwide instability. That is a product of objective circumstances, as we have explained. But the policies of this administration certainly complicate things. It makes a bad situation a hundred times worse. It introduces new elements of instability. Bush has developed a new military doctrine, which, on its own, is enormously increasing the level of turbulence in the world.

This Bush doctrine tears up the whole basis of international law, which has existed for about three hundred years. It was laid down by the Treaty of Westphalia, which says that you must not intervene in the internal affairs of a sovereign state. Now Bush declares that American imperialism has the right to intervene against any country which it thinks represents some kind of a threat to the USA. This is an astonishing affirmation. It would mean that North Korea has the right to attack South Korea or that Russia has the right to attack Georgia, arguing that it is a threat to Russia (which they have actually raised). It would be a recipe for endless wars.

On this basis, Bush and Blair argued that Iraq was a threat to their security and invaded and occupied it. There is just one little problem: they haven't found any weapons of mass destruction. They've quietly withdrawn this accusation, but at the same time they are still occupying the country. By the standards of bourgeois international law, this occupation is illegal, but they are occupying it anyway, and they want to plunder it. They want the Iraqi people to pay for their own enslavement! It's good old-fashioned imperialism, like the imperialism of the British 200 years ago.

Not long ago they announced they had given another huge contract to Cheney's old company, Halliburton. There is only one little problem with that plan. They are faced with an implacable guerrilla war on the part of the Iraqi people. There is no doubt about this. The American imperialists themselves say it is a guerrilla war. Coalition troops are being killed every day. More troops have been killed since the war than during the war itself. And that is going to continue.

The discontent of the Iraqis is growing all the time for obvious reasons. In the first place, for all the Iraqis – Shiites or Sunnis - it is an affront to be occupied by a foreign force. In the second place over 50% of the population are unemployed. There have been riots and demonstrations in the south, in Basra, where the British forces are in control. This is ironical. The Shiites were supposed to be in favour of the allies. Now demonstrations are put down in blood by these nice democratic British imperialists. They shot some unarmed demonstrators, and now we will see what happens in Basra.

The Americans, and the British, and all the others, are facing growing casualties. The Italians have already suffered the consequences of sending troops to Iraq, and they can expect further shocks. Some equally disturbing shocks await the Spanish, the Poles, and all the other smaller imperialist powers who are eager to play the role of the jackals of US imperialism in Iraq. Sooner or later this must have an effect on public opinion in all these countries, especially in America. That is why it is impossible to determine exactly what will happen in this year's elections.

What has been achieved by the invasion of Iraq? They've got rid of Saddam Hussein, whom they finally arrested. They publicly humiliated him. This shows yet again the hypocrisy of the imperialists. Just remember the scandal that was raised when the Iraqis showed some American prisoners of war on television. But the far worse treatment of Saddam Hussein is deemed to be quite acceptable by these Christian gentlemen. The public showing of Saddam Hussein was designed to humiliate him. It caused an outrage in all Arab countries.

The US imperialists must be a little bit mentally defective if they think that the capture of Saddam Hussein was going to stop the guerrilla war. It is a complete misconception. A movement of national resistance that takes the form of a guerrilla war, by definition, does not have one head. There are many groups involved. They are contradictory groups, but they are united on one thing, the foreign imperialists must leave Iraq. This movement will not finish until this objective is achieved.

The Americans have a big difficulty here. They'd like to fix up a puppet government, and now they are rushing to get a "constitution" approved. Before they were in no hurry. The difference now is that they can feel the fire under their backside. They are trying desperately to find some way out of the situation. No matter what they do now will be wrong. If they stay there it will be wrong, it will be like the West Bank, with permanent uprisings and terrorist attacks. But if they withdraw the situation will be even worse. A puppet government will not last long. Whatever government emerges in the end, it will certainly not be friendly to the United States. Therefore they are stuck. This could go on for quite a long time, until sooner or later they are forced to withdraw. But they'll have to do so at some point.

Apart from the lives it has cost, the occupation of Iraq is also costing them a lot of money - 4 billion dollars a month. It's a huge economic haemorrhage. Even a country with such vast resources as the United States, cannot stand a drain of that character. There will also be a steady increase in deaths, with more Americans and Iraqis killed.

Some of these people in Washington seem to actually believe their own propaganda, which is a fatal mistake. They wanted to get rid of Saddam Hussein, and establish "democracy". But what sort of democracy is this? The masses are demonstrating and correctly demanding elections and democracy. The US says, "You can't have elections! You are not allowed to vote - have some Democracy instead!" The Iraqis are very concrete people and don't understand this – and neither does anyone else. This is "democracy" a la George W. Bush.

Bush proclaimed a "war against terror". But how can you defeat small groups of fanatical terrorists or guerrilla fighters with tanks and guns and planes? Bush now says they are winning the war against terror. Where is the evidence of this? He said this one week ago. I don't know what planet Mr. Bush is living on – maybe it is Mars! How are they winning the war against terrorism? They have not captured Osama Bin Laden; they have not defeated Al Qaeda. In fact they are the best recruiting sergeants for Al Qaeda.

Al Qaeda was not in Iraq before the invasion, now they are in Iraq. That's what the "war on terror" has achieved: to encourage terrorism to grow and spread everywhere. They have put in danger every pro-Western Arab regime, and have undermined them. The regime in Saudi Arabia, for example, is hanging by a thread. It is impossible to say how long that regime is going to last. Thanks to Bush, the Arab youth in that country must be queuing up to join Al Qaeda.

In the next period there will inevitably be new terrorist acts. The fact there hasn't been another September 11, is not to say that there won't be one. The terrorists will not repeat the same tactics, but they'll find other tactics. They can take their time, and they will attack American interests everywhere, as well as British interests, Spanish interests, and Polish interests. This is yet another factor in the general instability.

Trotsky explained long ago that in any country where terrorism is endemic, that is a symptom of a profound crisis of society. Now we have, not just a single country, but an entire world in which terrorism is endemic. As a symptom the spread of terrorism shows the general crisis of capitalism. It is an expression of two things: 1) that the capitalist system is at an impasse on a world scale, and 2) the collapse of the political and moral authority of Marxism.

US imperialism is the most monstrous and barbarous regime in the entire world. After the invasion of Iraq, it has shamelessly bullied Iran, and shamelessly bullied Syria. Colonel Ghaddafi, the Libyan leader, has admitted to having his own "weapons of mass destruction" and has agreed to inspectors coming in and is prepared to destroy them. But the Americans have still not lifted their economic sanctions against Libya. What they want in Libya isn't Ghaddafi's WMDs, but his oil. Let him open up the oilfields to our big companies, then we'll talk! Such is the language of the Washington Mafia.

Washington has also threatened North Korea. However, although Pyongyang makes no secret of the fact that it has got nuclear weapons, they didn't threaten North Korea too much, because the North Koreans possess lots of missiles that could devastate S. Korea and which could probably hit the west coast of America. The imperialists only attack small and weak nations. They did not dare invade North Korea. Instead, they are negotiating with Pyongyang through China.

In Afghanistan nothing has been solved. Even while they were talking about a constitution for Afghanistan, Kofi Annan publicly stated, that the whole peace process was in danger in that country because of the security situation. They don't like to talk about this, and they don't put it in the press, but there is fighting going on all the time in Afghanistan.

The instability in Afghanistan is spreading to other countries, particularly Pakistan - where they have tried to kill Musharraf on at least two occasions in recent months. He was lucky. What that shows is that the regime in Pakistan is split, that the state is split. The Pakistan bourgeoisie thought that they were so clever in intervening in Afghanistan, they thought that they would control Afghanistan. Instead the situation in Afghanistan is controlling them.

Latin America

Latin America shows the whole world situation. Do you want to know what the future of Britain is, or the future of Sweden, or the future of Italy? Then look at Argentina, look at Bolivia, look at Peru. The developments in South America show the advanced capitalist countries their own future as in a mirror. In Bolivia the working class could have taken power a dozen times. In reality they had the power in their hands, but the power slipped through their fingers. We saw the same thing in Ecuador, and two years ago in Argentina.

The situation in Venezuela it is a tragedy that would make you weep. After the defeat of the first counter-revolution, there could have been a peaceful revolution in Venezuela. Nobody could have resisted it. Hugo Chavez just had to raise his little finger, and that would have been the end of it. But the opportunity was missed. As a result there was a second attempt by the counterrevolutionaries in the so-called strike, which was really an attempt by the bosses and the right wing union leaders to sabotage the economy and prepare the way for another reactionary coup.

Again the masses defeated the counterrevolution, and again a golden opportunity was missed. As a result the counterrevolutionaries are again attacking, using the referendum as a rallying cry. It is too soon to say what the outcome will be. But the situation is very dangerous for the Revolution. It is still possible that, in spite of everything, the masses will succeed in defeating the reactionaries and taking power. That task would be immeasurably easier if there existed a revolutionary party with a genuine Marxist Leninist leadership. Of course, the Venezuelan revolution could not succeed in Venezuela alone. In order to succeed it would have to spread to other countries. But it would give a powerful impetus to the revolution everywhere.

We have a similar situation in Peru. There is not a single stable bourgeois regime anywhere in Latin America. But what is a real tragedy is that the POR in Bolivia, which was a big party, did not maintain the Trotskyist programme. Had they done so, they could have taken power. They did not maintain the Trotskyist position, and therefore they are finished. We have to rebuild the forces of genuine Marxism, i.e. Trotskyism, in Latin America and build a genuine revolutionary Marxist international movement by returning to the policies of Trotsky and the policies of Lenin.

There has been a violent upheaval in world relations in the last 12 months, which is quite astonishing. Cracks and fissures have opened up in all the international institutions that have been built up painfully over the past 50 years. The UN, the Security Council, NATO, the European Union – all are affected. Precisely when the EU is expanding it enters into crisis. In fact, it is precisely this expansion that is undermining it further. It is aggravating all the splits and cracks between the main powers.

Here again one sees that this is an organic crisis. We pointed out that the Euro was really a utopian venture, because it is impossible to unify economies that are moving in opposite directions. It is true that the movement towards monetary union has gone further than we expected. But we pointed out that it remains impossible to unify capitalist economies and countries that are moving in different directions. As we pointed out that will be made clear in a period of recession.

The European bourgeois tried to tie all the economies of the EU into one rigid monetary system. They thought they were being very clever, establishing rigid rules. But you can't establish rigid rules for a free market economy. They said, "you must not have a budget deficit of more than 3%." This scheme is really a method of permanent austerity.

Poor Portugal had to pay a fine when it had a budget deficit over 3%. But of course, now Germany has got a deficit, they don't want to pay, and they won't pay. The same goes for France and Italy. The European Commission says they will take them to court and make them pay. The Germans and French will tell them what they can do with their court. They won't pay, and then the whole thing will be thrown into crisis. In the end the Maastricht treaty will be torn up.

The fault line between Europe and America is deepening all the time. A sharp conflict is developing between America and France. The Americans are behaving like the Romans at the time of the Roman Empire. They have challenged the French in the Middle East. That is the reason for the conflict with France over Iraq. The Americans wanted to eject France and Russia from Iraq and at least for the present they have succeeded in doing so.

The conflict between Washington and Paris is also manifested in Africa, where bush fires are breaking out everywhere. The whole of Africa is in a state of collapse. The imperialists are intervening behind the scenes, jockeying for positions and access to Africa's raw materials, and thereby exacerbating the instability with appalling results. In the Congo an estimated four million people were killed in the civil war. Liberia, Sierra Leone, Uganda and other states have experienced similar horrors.

The US economy

The US economy is experiencing a certain recovery, on the basis of the policy pursued by the Federal Reserve with a view to expanding consumption that is the main basis of this so-called recovery. Consumer spending is kept going on the basis of credit. This recovery is not based on a firm foundation. The Fed's fiscal policy in the past would have been considered completely irresponsible from a bourgeois point of view. In the short term it has given results but in the longer term it is unviable.

Bush has cut taxes three times in three years, at the same time that he has increased public expenditure, mainly military expenditure and expenditure on things like "homeland security". As a result of this the budget deficit has soared. It now stands at $450 billion and is moving towards 5% of GDP. This is a huge and unsustainable figure. True, it is not the biggest deficit the USA has experienced. Under Reagan, at the beginning of the 1980s, the budget deficit was 6% - but what is alarming about the present situation is the speed of the deterioration.

Reagan and the Congress took measures to solve the deficit and they did solve it. But this time the whole thing has been much more sudden and dramatic. Don't forget that in 2000 there was a budget surplus of 2.4%. So in only three years they have moved from a 2.4% surplus to almost 5% deficit. This is an alarming situation from the standpoint of the bourgeois, and one that cannot be sustained.

They were so desperate to get out of the recession that they decided to let the deficit rip, and to hell with the consequences. As we predicted, the result of that has been a sharp fall in the dollar, particularly against the euro. Bush and Greenspan regard the downfall of the dollar with complete indifference. The explanation of this remarkable conduct is simple. They have decided to solve America's problem at the expense of the rest of the world.

This is an expression of the same imperialist arrogance that we see in the diplomatic and the military field. It is the same phenomenon, carried over to the field of economics. It's economic bullying. The devaluation of the dollar is neither more nor less than an attempt to export unemployment to Europe, to Japan, to China and the rest of the world. There is a noisy campaign against China in America. This is quite amusing because until recently the Americans saw China just as a market for their own exports.

China is a huge market of course. It has developed quite significantly. They have had a 7% or 8% growth rate. Inside China this has led to an enormous increase of tensions, huge problems and insoluble contradictions. There are about 150 million unemployed in China, extreme inequalities in both town and countryside. The conditions for the workers are terrible. And there have been important strikes and peasant uprisings.

The bureaucracy is acquainted with the history of China and knows perfectly well that China has got a history of peasant uprisings. Therefore there is a sharp division among the bureaucracy itself between that wing that wants to go rapidly down the capitalist road and another wing in the bureaucracy that is resisting that because they are afraid of the consequences. This inner conflict will have to be resolved one way or another, and the results are bound to be explosive.

China and Asia have done quite well out of the expansion of consumption in the States. They depend upon exports and therefore any sharp fall in the dollar could have serious effects in China. Bush and Greenspan, as we have said, are behaving in an irresponsible manner, from a bourgeois point of view. This seems to be typical of the political representatives of capital in this epoch. It is very short-sighted conduct. They lack a coherent strategy and are reacting in an empirical manner to events on a world scale.

The right wing Republican clique that has taken power in the USA are anxious to demonstrate America's world superiority. In the old days Theodore Roosevelt had a slogan "Speak softly and carry a big stick". But now they wave the big stick before the noses of the rest of the world, while shouting and swearing at the top of their voice. They say to the rest of the world: "You are nothing. We are the strongest. We decide everything." On Iraq they said: "We must invade them, smash them, bomb them, crush them." The Europeans, who had a bit more sense, were horrified at this conduct. Of course, they had no fundamental difference with the USA but they wished to proceed with more finesse, hoping to conceal their imperialist ambitions behind the façade of the UN and tie the hands of the Americans. The US imperialists came into collision with the Europeans over this. "The United Nations, who needs the United Nations?" That's what Bush and co. said. Now of course, they want the UN to go back in, because Iraq is a mess, which they didn't anticipate.

On economic policy they conduct themselves in the same manner. Really what they are saying is, "These Europeans, they didn't want to support us in Iraq, so we will keep them out. Moreover, we will let the dollar fall and solve our problems at their expense!" Allowing the dollar to fall is really a protectionist measure against Europe, Japan and China.

There is a football team in London called Millwall. It is more famous for its supporters than its skills on the football ground. One fan is supposed to have said: "I was in a fight last Saturday and a football match broke out". Now Millwall fans have a slogan, which goes like this: "Nobody likes us, and we don't care". Bush and co. are behaving in the same way as our football hooligans. Their motto is the same: "Nobody likes us and we don't care". But so doing, playing with fire, and this could react against them.

They have not understood the fact that for last 50 years, the main motor of growth for the world capitalist economy was the expansion of world trade. This can be demonstrated with facts and figures. But the fabric of world trade is extremely delicate, just as the fabric of international relations and world diplomacy is a very delicate thing. You can't drive a coach and horses through these things without suffering severe consequences.

Despite all the trumpeting about the recovery, there is a wing of the international bourgeoisie - a minority it is true - who are seriously worried. They are not worried about the boom-slump cycle, because there has always been a boom-slump cycle. They are worried about a collapse of world trade and the growth of protectionist tendencies that is emerging from the situation - and those tendencies already exist.

It is not an accident that the last two world economic summits have collapsed. The advanced capitalist countries blamed the "irresponsible demands" of the Third World as the reason for the collapse of the talks at Cancun. In fact, the US imperialists deliberately engineered the breakdown of the WTO talks, along with the Europeans, because it didn't suit them to reach an agreement. It is a monstrous state of affairs, where the poorest countries are being plundered, because of the terms of trade, while the imperialists become rich.

The alleged sympathy of the advanced capitalist countries for the Third World is pure hypocrisy. They talk incessantly about free trade, but when poor countries want the abolition of protectionism on American textiles, which discriminates against poor countries, the Americans immediately close the door. Just look at the European and American agricultural policies. They are an abomination, in which the wealthy farmers of America, Europe and Japan are heavily subsidized, and are keeping out products from poor countries.

The WTO, which is supposed to represent the whole world, - and the poor countries are represented - is in reality still dominated by the rich capitalist countries. So they took advantage of protests from countries such as Pakistan and Zimbabwe, and basically said "okay, finished, go home; we will pursue bi-lateral trade agreements". But that is a very dangerous situation. Now it is entirely possible that the whole WTO will collapse. "What is the point of this forum if we can't reach an agreement?" they will say. The US have in fact already started pursuing bi-lateral trade agreements.

This fall of the dollar has begun, and the danger is that they will not be able to control it. It is not like a tap that you turn on and off. It's a question of confidence in the US economy. Foreign capitalists hold large amounts of dollars while the US government is cheerfully leading the state to bankruptcy. If it were any other country in the world with this budget deficit, or this current account deficit, or these private and corporate debts, the IMF would be knocking on the door demanding austerity measures. They cannot do that because it is America.

People are selling dollars, and those who still hold dollars know it will fall further. This will lead to a downward spiral. Those who hold dollars will say, "I'm going to sell dollars because the dollar is falling". When they sell dollars, they will push the process further, and then others will sell. No one wants to hold a currency that is going to fall. This is a very dangerous state of affairs because a sharp and uncontrolled fall of the dollar can produce a chaotic situation in world money markets, with a chain of competitive devaluations unleashing protectionist tendencies everywhere. The damage to world trade would be incalculable.

There are already enormous trading tensions between the US and Europe, on steel, textiles and in other fields such as agriculture and genetically modified foods. The Europeans said "we don't want this Frankenstein food", allegedly on the grounds of health concerns and the environment. The US says this is a protectionist measure, and of course they are quite right. All the time tensions are building up and therefore a very serious situation is being created.

The Middle East

In the Middle East nothing has been solved. The situation in Iraq has not helped the Americans at all. The Palestine issue remains unresolved and acts as a permanent ulcer poisoning the political life of the entire region. To pacify Palestine the Americans talked about a Road Map. But it turned out not to be a very good road map, because the vehicles are completely off the road. Now they are talking about the Geneva Accord, which is a further manoeuvre. We will make a prediction. There will be constant attempts to put together a deal, and they will constantly break down. There is no way of solving this crisis on a capitalist basis.

So we are left with a situation everywhere where there is colossal instability, which is reflected at the present time in Haiti, where there are mass demonstrations against Aristide, although this is clearly a reactionary movement. We saw something similar earlier in Georgia. The mass movement was manipulated by the reaction, and now the US has a stooge in place in Tbilisi, but he won't last very long. There are colossal social problems in Georgia, which he can't solve, in addition to which Russia will begin to put pressure on Georgia now, which they can do very easily through Abkhazia, and Ossetia.

Movements of that character express a colossal discontent that exists everywhere, and what it shows - for example the speed with which Schevardnadze was overthrown – is what can happen at a certain stage in one country after another. The combination of economic crisis and war at a certain stage must lead to a crisis of the regime, particularly in America, where we can see explosive developments. I have already mentioned the question of Bolivia, where we have seen strikes, demonstrations, and roadblocks. What more do you want of the working class? What more can one ask of the workers than what we saw in Venezuela?

Very often if you repeat a correct idea it can lose force and it can sound like a cliché. But it is not a cliché to say that the movement in Venezuela and the movement in Bolivia were only defeated by one thing – the absence of leadership. The same was true of Argentina two years ago. Just think: it would have been so easy to take power. The reformists try to frighten the working class by stressing how difficult a revolution is: "The state is too powerful. It will crush us". They offer an easy road – which always turns out to be a very difficult and painful one.

It is not necessarily the case, however, that a revolution is difficult. With the correct leadership, the most powerful state can be easily - even peacefully - overthrown. This was the case in Hungary 1919, or in a peculiar way in Eastern Europe in the late 1980s. The speed with which apparently powerful Stalinist states were overthrown was quite astonishing. In Poland, East Germany and other countries, which had a very powerful state, with a police force and a secret police and so on, the possibility seemed remote. But once the masses began to move that was the end of the story. They collapsed like a house of cards. These are quite astonishing events, and it shows the way history is moving.

What is the real significance of the general strikes that took place in Europe in one country after another over the past 18 months? Firstly, they were not accidental. If just one country were affected, you could say that is was an accident and was of no real significance, but general strikes have taken place in Greece, Italy, Spain, Portugal, and there have been mass strikes in France, as well as important movements in Germany and Austria. That being the case, it cannot be maintained that this is an accidental phenomenon.

These strikes are an expression of something objective. It is similar with the mass demonstrations against the war in Iraq. It is unthinkable that this could be just an accident. It reflects a deep crisis, and it is reflected in other ways. Even in Israel it is astonishing to see movements of army officers protesting against the activities of the Israeli army in the occupied territories. This indicates the existence of a profound ferment and unease among the population.

Fascism and Bonapartism

The movement has a very wide sweep, affecting even sleepy old Social-Democratic, reformist Austria. Received wisdom tells us that the class struggle wasn't supposed to take place in Austria and in fact the class struggle did not take place in Austria for a long time. But in "nice, peaceful, democratic Austria", we also had a warning, with the inclusion of Haider in the government. That is an expression of the polarization between left and right in Austria, at least a beginning of it. It is beginning to be similar to the situation in the 1930s.

As always, the sectarian ultra-left get everything wrong. The moment that there is the rise of a right wing demagogue in any country, they start beating the war drums and shouting hysterically "fascism, fascism fascism!" Even for Holland there was supposed to be a danger of fascism, if you can imagine that! Of course this is nonsense. Long before the ruling class of Europe moved towards open reaction - and under present day conditions this would take the form of Bonapartism, a military police state, not fascism - the workers will have many chances of coming to power.

There is no possibility of the victory of fascism or Bonapartism in any advanced capitalist country at this stage. The present class balance of forces does not permit that. After a period of 50 years of economic growth, the proletariat has never been stronger in history. On the other hand the middle layers, particularly the peasantry, which in Austria played a very reactionary role in the past, has been reduced to a small minority. The working class is the decisive force in society.

The situation of the middle layers of society is also different to the past. The white-collar workers – teachers, nurses, civil servants – have moved closer to the proletariat and are organised in trade unions. The students in Austria before the Second World War were mainly fascists, as they were also in Germany. This is not the case now. The students were in the first line of the demonstrations against Haider.

But this does not mean that there cannot be a movement in the direction of reaction in the future. The depth of the crisis does not allow the bourgeoisie to rule as they did in the past through concessions and class collaboration. The Austrian bourgeoisie was trying to push the political balance of forces gradually to the right. If this had succeeded, they would have later begun to move in the direction of a reactionary regime of parliamentary Bonapartism at least. That's what they were trying to do when they included Haider in a coalition. But the action of the masses was immediate, and they couldn't do it. Haider had to be removed from the scene, and his party split.

In France also there is the phenomenon of Le Pen. This is the price the workers of France have had to pay for reformism. Le Pen is a vicious reactionary and a right wing racist demagogue. He is not a fascist, but like Haider he can be a pacemaker for fascism, or rather Bonapartist reaction in the future. Karl Marx pointed out that France is the country where the class struggle is always fought out to the finish. If the workers of France do not take power, sooner or later the French bourgeois will draw the conclusion that they cannot tolerate all the strikes and demonstrations. They will demand "Order". But at this stage, the working class is on the offensive. They cannot move towards reaction, and are attempting to stop Le Pen coming to power. They are afraid that le Pen will provoke the workers. They saw what happened in Austria and also the violent reaction of the French workers and youth after the rise of Le Pen in the last Presidential elections. Unfortunately, this movement was diverted by the reformist leaders into support for Chirac, allegedly as the "lesser evil", although his policies are essentially no different to those of le Pen.

Fascism is the last resort of the bourgeoisie, not the first resort, as the brainless sectarians imagine. It is used only when there is no other alternative. It is a very serious step to take. It is also very costly. Normally the bourgeoisie prefers a regime of formal democracy, which they can control through pressure, behind the scenes intrigues and direct and indirect corruption. They do not relish the thought of handing power to fascist madmen and adventurers.

They saw what happened in Germany, where the bourgeoisie lost control of the state to Hitler with ruinous consequences. By 1943 Germany had lost the war. The bourgeoisie wanted to reach a deal with the British and Americans, but Hitler and his gangsters wanted to fight to the end. As a result Germany was smashed and they lost the whole of East Germany. They will not be in a hurry to repeat this experience. Therefore, when the time arrives to dispense with democracy, they will try to hand power to the military officer caste instead. The latter is recruited from the ranks of the bourgeoisie and is tied to it by a hundred threads. They would hope to control it, at any rate to have more control over it than they had over the Nazis.

The main thing that prevents the bourgeois from moving directly to dictatorship is the colossal power of the labour movement, which remains undefeated. Any attempt to move in the direction of Bonapartism would provoke the workers and students to take to the streets. It could even end in a civil war, which they could not be sure of winning. This would pose a question mark on the future of the bourgeois regime. For all these reasons they would not light-mindedly move in that direction, at least at the present stage.

Here, however, we must strike a warning note. In the same way that the structure of the world economy is fragile, and the structure of world relations is fragile, so-called bourgeois democracy is also very fragile. Bourgeois democracy is a luxury that is normally reserved for wealthy countries. It is a rare and delicate plant that cannot prosper under extreme conditions. That is why it is an exception in the poorer capitalist countries.

Under conditions of developing class struggle in the next period, if the workers do not take power, in Austria for example, or in Italy, a section of the ruling class will undoubtedly be considering some kind of a coup. We have to be prepared for that, but the way that you do not prepare for it, is by continuously shouting, "the wolf is coming, the wolf is coming", like the little boy in the fairy story. In that story, when the wolf really did come, nobody paid any attention. That is why the hysterical conduct of the sectarians on this issue is so damaging.

How do we prepare for a fight against reaction? There is only one way: to prepare the workers and youth for an all-out struggle against capitalism. In the period that opens up, there will be one attempt after another by the working class to take power. If the workers fail to transform society, the bourgeoisie will inevitably move towards reaction in one form or another. It goes without saying that Marxists will be in the front line of every fight against reaction. We will fight against racism, but we will do so with our own class methods, not with the methods and ideas of the petty bourgeois and the liberals.

We will fight for every democratic right and oppose all attempts of the bourgeoisie to limit rights under the excuse of the war on terrorism or any other pretext. But for us the main purpose of this struggle is to raise the consciousness of the workers and youth and to make them aware that fascism and racism are rooted in a rotten system that breeds unemployment and bad housing and fosters divisions among the workers in order to keep them weak and thus perpetuate their class rule.

We will naturally oppose all the attempts to replace the existing bourgeois democracy with an open bourgeois dictatorship. The reason is simply that a bourgeois democracy gives the working class greater scope to develop the class struggle and build its forces. But our aim is not to shore up the corrupt system of formal bourgeois democracy but to replace it with a genuine workers' democracy. Therefore under no circumstances will we advocate blocs like the electoral bloc with Chirac put forward by the reformists and disgracefully supported by some so-called Trotskyist groups in France. Such methods do not represent a genuine struggle against reactionaries like le Pen, but actually play into his hands.

Nature of the present period

So how do we characterize the situation of the workers' movement in Europe at this stage? What we are witnessing is the beginning of a re-awakening of the working class. It is the beginning, but we must emphasize, only the beginning. The movement is being reactivated after a long period of virtual inactivity. Although in the previous period there were some strikes in some countries, this was not however the main characteristic. The present situation is on a far higher level.

When the masses enter into action, they need time to stretch their muscles like an athlete that begins to warm up before entering into a serious competition. They will have to learn new lessons, and they will have to relearn all the lessons of the past, which they have forgotten. This will take time and many experiences, not all of them pleasant. Events, events and more events are needed to educate the working class.

What mechanism is there which can transmit the experience and the lessons of the past to the new generation? In animals there is instinct, which has a genetic origin. It is innate. But there is no automatic mechanism by which the lessons can be transmitted to the working class. The only mechanism is the revolutionary tendency – the party. This is the memory of the working class, the only way in which the lessons of the past are preserved and handed down.

Unfortunately, the Marxist tendency has been thrown back by the objective conditions – and partly by mistakes – in the past period. As a result, our voice is very small and cannot be heard by the masses. In order for the masses to be reunited with the revolutionary tendency, they must first go through a whole series of experiences. Only in this way can they begin to arrive at revolutionary conclusions. What is needed is, on the one hand, the experience of the masses, and on the other, the patient and systematic work of the Marxists, who must find a road to the working class, beginning with its most active and conscious vanguard: the organised workers in the shop stewards committees, the trade unions and the Socialist and Communist Parties.

We must try to reach the advanced elements of the workers and the youth. We must be patient and go through each experience with the working class helping them to draw the correct conclusions at each stage. To use Lenin's expression, we must "patiently explain". The advanced layers will begin to draw conclusions, especially to the degree that we will be able to build a serious force, as we have in some countries like Pakistan, We must work out flexible tactics and put forward the ideas of Marxism in such a way that it gets an echo among the workers, beginning with the advanced layers.

Nothing has been settled or resolved, either in France, or Britain or in Venezuela. Therefore there will be new movements and new strikes. Trotsky wrote an interesting article about Spain in 1930, when there were big strikes against the dictatorship of Primo de Rivera. He said that it was an absolutely unavoidable stage. But he added that even the stormiest strikes don't solve anything fundamental, let alone those strikes that are defeated. And many more strikes are defeated than are won.

We must not have an empirical attitude towards the mass movement. We can make two kinds of mistakes here. The worst mistake is to say that these strikes and demonstrations are not important. That is not true. They are extremely important, and we must emphasize that and re-emphasize that. But we should also not exaggerate. We should bear in mind that strikes and demonstrations, in and of themselves, cannot solve the basic problems.

We saw this with the anti-war movement. There were huge demonstrations and many people said: "Now things will change!" But nothing changed. The war went ahead anyway. As a result many people were disillusioned and fell into inactivity. This applies particularly to the middle class pacifists, who understood nothing. They do not understand that what is needed is a fundamental change of regime. That is what we must hammer home continuously.

The main thing about strikes and demonstrations is not what they can achieve in the short term (sometimes they can obtain concessions if sufficient pressure is applied) but what the workers and youth can learn in the course of struggle. Our role is to help them draw the necessary conclusions and win them to the Marxist tendency.

We must give enormous importance to each and every movement of the workers. However, we must have a sober-minded attitude and understand the limits of a strike and a demonstration. We must not create the impression that everything is wonderful and that the revolution will take place on Monday morning at nine o'clock because there are strikes and demonstrations. Such exuberance does not help people understand the real situation.

The crisis of capitalism is deep but it does not allow serious concessions. That is the point. But most workers don't understand this. We are materialists, not idealists, and we understand the reason for this. In general, human consciousness is enormously conservative. People tend to look backwards and not forwards. At this stage, most workers think that the crisis will be temporary, and that somehow it will be solved, and that we will go back to the good old days. But the good old days are finished. This is a very difficult idea for people to accept. A lot of hard knocks will be needed before they understand that it is so.

In the last period unfortunately, the working class forgot many of the lessons of the past. In Europe in particular there is a certain softness, and that must be burned out of the consciousness of the workers. It must be burned out with a hot iron. It will be a painful process, and there will be many defeats. With this leadership, how could it be otherwise? But through this experience and these defeats, beginning with the active layer, the working class will begin to draw revolutionary conclusions. They will begin to draw the same conclusions as the Marxists. So far we have been swimming against the stream, but now we will begin to swim with the general current of history.

The mass organizations

In a period like this, we must learn to expect the unexpected. Sudden and sharp changes are inevitable. We have to be prepared to move into action quickly. On a world scale, it is impossible for the bourgeoisie to re-establish the old equilibrium. There will be lulls of course: a war is not just one long battle. Between one battle and another there can be periods of lull, and that is also the case in the class struggle. We have to be prepared for that. There is a regrettable tendency that if there is not a major development every two weeks some people begin to get a bit nervous. That is a mistake.

Actually, lulls play a very important part in war. We need periods of lull, the same as an army needs a space between two battles to clean its weapons, to train, and to make new recruits, to dig trenches and prepare for the next offensive. Unfortunately there will not be many lulls in this period, because under present conditions a lull immediately is the prelude to a new explosion. This conclusion inevitably flows from our general analysis.

You can express this in the form of a political equation or axiom: Any attempt of the bourgeoisie to restore the economic equilibrium, will destroy the political and social equilibrium. We see this now: they are all talking about a recovery, and they are mercilessly attacking social spending in the advanced capitalist countries, and not only there. They are attacking health, housing, education and pensions. Here in Europe they are saying to people who have worked all their lives: "We can't afford pensions. You can't have pensions at 65 – you must work till you drop!" They are saying they we must have pensions at 70. Of course, many people will die before they are 70, but that is the purpose of the exercise. And if they are applying this policy in Germany and Austria, well naturally they will apply it in Argentina, Peru, Venezuela and Bolivia.

"We can't afford this!" That is the general theme. So we can express another political equation – the bourgeoisie cannot afford any further concessions, they cannot even afford to maintain the present concessions, which have been built up over the last 50 years of struggle, but the working class cannot afford the abolition of these concessions. It is as simple as that. It is a finished recipe for the class struggle everywhere.

All the old stability will break down everywhere. The nice little cosy relations between the trade union leaders and the bosses and the government, which were only possible because the bourgeoisie was able for a long period to give some important concessions, are finished. It's finished in America, it's finished in Sweden, it's finished in Austria. Therefore there will be sharp conflicts, which cannot be easily resolved.

Finally, the most decisive question is the future of the mass organizations. At this stage the mass organizations are lagging behind the movement of the working class. They reflect the past, not the present or the future. In the last period the mass organizations were empty and this is still the case. The workers were not participating in these organizations, because they didn't see any need for it, or because they were repelled by the conduct and policies of the leadership. However, they did not participate in any other organizations either.

It is law that when the workers are not participating, the pressure of the bourgeois on the upper layers of the workers' movement is enormously increased. This is the main explanation for the extreme degeneration of the leaders of the workers' parties and unions in the last period. Under the pressure from the bourgeoisie the leaders and the bureaucrats have gone far to the right. This in turn reinforced the prevailing mood of scepticism and even cynicism that still exists. This will be blown away once the fresh winds of the class struggle begin to blow.

The sectarians have naturally drawn all the wrong conclusions. They conclude that the mass organizations are finished. In Britain they argue that the Labour Party is now a bourgeois party like the American Democrats. In fact, Blair has done everything possible to achieve this. He has tried to split the Labour Party from the unions. But he has failed. At most one or two small unions may end up outside the Labour Party. However, the sects are pursuing a criminal policy of encouraging the unions to break away from Labour, instead of pointing out that the unions could easily transform the Labour Party by kicking out the Blairite infiltrators. In fact, they have the same policy in this regard as Blair himself!

We have a peculiar phenomenon in Britain. The worker activists in the Labour Party and the unions actually hate Blair. Even among the mass of workers, after the experience of a New Labour government, Blair is unpopular. But they still vote for him, because there is no alternative. They certainly don't turn to any of the ultra left groups. Outside the Labour Party there is nothing. Therefore, once the masses begin to move into action, this will be reflected inside the Party.

There is already a big ferment in the unions in Britain. In one union conference after another, the old right wing leaders are being removed and replaced by Lefts. Although in many cases the credentials of these Lefts are dubious, this means that Blair is in serious trouble. The reason is that reformism without reforms doesn't make any sense. Therefore an enormous internal crisis is being prepared in the Labour Party.

Importance of the subjective factor

We must ask ourselves the question: "why is it that the forces of genuine Marxism on a world scale were thrown back and isolated for a long period?" After the Second World War the scenario that Trotsky predicted was falsified by history. The old Stalinist and Social Democratic leaderships were able to derail the revolutionary wave that came after the Second World War. That established the political conditions for a revival of capitalism in Europe and on a global scale. The unprecedented upswing in world capitalism after 1945 gave it a new lease of life and strengthened reformism for a whole historical period. This was the main objective reason for the isolation of the forces of genuine Marxism.

We faced a difficult situation. That is true. However, it would be wrong to say that this is entirely due to the objective situation. We cannot leave the subjective factor out of the equation. The degeneration of the old Fourth International played a fatal role. The difference is this: in a war when the armies are advancing good generals are extremely important, but the importance of leadership is even greater when the army has to retreat. With good generals you can retreat in good order, keep your forces together, and prepare for an advance at a later date. You learn the lessons and you develop theory. With bad generals you turn a retreat into a rout. And that's what happened with the old Fourth International.

The Fourth International had a certain base. For example in Sri Lanka, they had a mass party, which they threw away. In Bolivia it is a tragic case, which I will not deal with because it is a separate subject. It remains a fact that after the death of Trotsky all the leaders of the Fourth International failed to raise themselves to the level of the tasks posed by history. The result was that the International founded by Trotsky was stillborn. The cadres were miseducated along either opportunist or sectarian and ultra-left lines.

We can see the importance of the subjective factor from the British experience. There was a very strong Marxist tendency in the Labour Party, which was built up over decades of patient work. But this was destroyed by an ultra-left deviation among a part of its leading figures. If that tendency, the Militant Tendency, had been maintained, it would now be in a very powerful position. Unfortunately, this was irresponsibly thrown away. This is yet another example of the disastrous influence of sectarian and ultra-left tendencies on the movement.

The forces of genuine Marxism in Britain have regrouped and are conducting work in the mass organisations and amongst the youth. At present the unions are being radicalised under the pressure of the working class. Tomorrow the same will happen in the Labour Party, which will be shaken from top to bottom.

Our ideas are spreading and getting an ever-increasing audience internationally. Everywhere the conditions for the victory of the ideas of genuine Marxism ("Trotskyism") are maturing. Communist and Socialist militants, trade union activists and youth looking for the revolutionary road are able to distinguish between the ideas and methods of genuine Marxism and the caricature presented by the ultra-left sectarians.

For a whole period the forces of Marxism were isolated from the working class. But now this is beginning to change. The knot of history is being retied. We look to the future with complete confidence. We base ourselves firmly on the heritage of Marxism, which has been entirely borne out by the present world situation. We have unshakable confidence in the working class, and also complete confidence in ourselves. Provided we maintain an implacable defence of the ideas of Marxism, combined with the necessary tactical flexibility, which allows us to connect with the class, our future will be guaranteed.

The knot of history, which was broken for a long period after the death of Leon Trotsky, will be retied by this international tendency. That is our historical task. Our political and moral authority has never been greater. We must translate this political and moral authority into action and growth. We must translate quality into quantity. Quality becomes quantity, and quantity in turn becomes quality. And one final word, there is no room here for complacency. There is no room for wasting time. There is no room for navel-gazing or discussing the sex of angels. It must be a question of full strength at the point of attack. There is an enormous responsibility on the shoulders of everyone present at this meeting. We must go away from here determined to build the international Marxist tendency in all countries, and to rise to the level of our great historical responsibilities.