I.2. World Economy and the EU: Myths and Facts

Our basic position is that the attacks on the working class are rooted in the capitalist’s desire to increase their profits in a period characterized by the decline of capitalism. Contrary to the illusions spread by various left-reformists and centrists, these attacks are not the result of specific national forms of domination of the imperialist bourgeoisie. Or, in other words, irrespective of membership in the European Union, all capitalist classes are forced to attack their working class precisely because of the decline of their system. This being the case, it is a merely a social-imperialist deflection of the proletariat by the petty-bourgeois anti-EU left to spread the myth that the EU is responsible for Europe’s economic stagnation and that Britain – or any other imperialist country – would fare better outside this imperialist federation.

Let us first look at the development of wealth and compare Switzerland, a very rich imperialist country which has never been a member of the EU, with other Western imperialist countries. In Table 1 we see that in the period from 1950 to 1973 Switzerland managed to double its Gross Domestic Product per capita. Other Western European countries grew even faster including Germany, France, Belgium, and the Netherlands which were all members of the European Union (in fact the EEC, its predecessor organization) from the founding of the federation. Britain, which did not join the EU before 1973, grew less rapidly during this period. However from 1973 until 2008, Britain, now a member of the EU, more than doubled its GDP per head, while other EU members and the US experienced slightly slower growth. However, Switzerland’s per capita GDP grew much more slowly during this period – by only 37.9% in fact. In sum, we see from these figures that there is no empirical evidence that imperialist states prosper better when they are not a member of the EU.

Table 1: Western GDP per capita in international comparison 1950 to 2008 [1]

                                                GDP per capita in 1990 Geary-Khamis dollars

                UK          USA       France      Germany      Belgium       Netherlands          Denmark                Switzerland

1950        6939       9561       5186           3881           5462            5996                     6943                      9064

1973       12025    16689      12824        11966          12170          13081                    13945                    18204

1990       16430    23201      17647        15929          17197          17262                    18452                    21487

2008       24602    31251      22057        20801          23701          25112                    24789                    25104

In Table 2 we examine the development of industrial production and compare the old EU (the so-called EU-15) with other imperialist countries, the US and Japan. [2] As we see, over the course of five decades there has been a general downward trend of industrial growth in these capitalist countries, one which is not confined to the EU but which is rather a global feature of capitalism. [3]

Table 2: Growth Rate of Industrial Production in the Imperialist States (Percent per annum) [4]

                                Growth rate of industrial production (percent per annum)

                                                USA                       Japan                      EU-15

1961-1970                            +4.9%                    +13.5%                  +5.2%

1971-1980                            +3.0%                    +4.1%                    +2.3%

1981-1990                            +2.2%                    +4.0%                    +1.7%

1991-2000                            +4.1%                    +0.1%                    +1.5%

2001-2010                            -0.2%                     -0.4%                     -0.3%

We get a similar picture if we examine the rate of capital accumulation during these same five decades (see Table 3). Again, we note a general downward trend and not one limited to the EU.

Table 3: Capital Accumulation in the Imperialist States (Percent per annum) [5]

Gross fixed capital formation at 2010 prices; total economy (percent per annum)

                                                USA                       Japan                      EU-15

1961-1970                            +4.7%                    +15.7%                  +6.0%

1971-1980                            +3.5%                    +3.5%                    +1.9%

1981-1990                            +3.5%                    +5.7%                    +2.8%

1991-2000                            +5.4%                    -0.6%                     +1.8%

2001-2010                            -0.4%                     -1.9%                     +0.4%

Another myth spread by the petty-bourgeois anti-EU left is that the European Union would be a qualitatively more vicious, pro-austerity enemy of the working class than imperialist nation-states. In fact, the capitalists’ offensive against the workers has as its source the historically declining rate of profit and the general crisis of their system (see below), not by any specific form of political organization of the imperialists (like the EU). To illustrate this, let us examine the relative decline in the percent which wages constitute in the overall expenses of corporations (i.e., wage share in Table 4). As we can see, wages have declined in all imperialist regions, not only in the European Union. In Japan, the decline of wage share has been even more dramatic than in the EU.

Table 4: Adjusted Wage Share; Total Economy; in Imperialist States [6]

                                                As Percentage of GDP at Current Factor Cost

                                                USA                       Japan                      EU-15

1960-1970                            67.2%                    73.8%                    69.8%

1971-1980                            66.8%                    77.7%                    71.1%

1981-1990                            65.2%                    74.0%                    67.8%

1991-2000                            64.9%                    70.8%                    64.8%

2001-2010                            63.3%                    65.5%                    63.6%

As Marxists have noted again and again, the fundamental cause for this decline is the historic tendency of the rate of profit to fall. This is because in the long run the share of surplus value – which is the only basis for profit – declines in relation to the total invested capital (both constant and variable). As Marx explained:

As the process of production and accumulation advances therefore, the mass of available and appropriated surplus-labour, and hence the absolute mass of profit appropriated by the social capital, must grow. Along with the volume, however, the same laws of production and accumulation increase also the value of the constant capital in a mounting progression more rapidly than that of the variable part of capital, invested as it is in living labour. Hence, the same laws produce for the social capital a growing absolute mass of profit, and a falling rate of profit.“ [7]

Marx characterized the law of the tendency of the rate of profit to fall as the most important law of capitalism:

In every respect, this is the most important law of modern political economy, and the most essential one for comprehending the most complex relationships. It is the most important law from the historical viewpoint. Hitherto, despite its simplicity, it has never been grasped and still less has it been consciously formulated.“ [8]

In Figure 1 we show that Marx’s statement about the historic character of the law of the profit rate to fall has been proven by studies on the rate of profit during the past century and a half. The Argentinean Marxist economist Esteban Ezequiel Maito recently published an interesting study on this subject.

Figure 1: Average Rate of Profit in Imperialist Core Countries (1869-2010) [9]

Michael Roberts, another serious Marxist economist living in Britain, has also verified this tendency in an analysis of the world economy during the past six decades. (See Figure 2)

Figure 2: A world rate of profit (G20 countries), 1950-2012[10]

[1] Christian Stohr: Let’s Get This Right: Swiss GDP and Value Added by Industry from 1851 to 2008, September 2014, University of Geneva, WPS 14-09-1 Working Paper Series, p. 39

[2] The so-called EU-15 compromises the old Western European states of which nearly all have an imperialist class character.

[3] See on this e.g. Michael Pröbsting: Imperialism and the Decline of Capitalism (2008), in: Richard Brenner, Michael Pröbsting, Keith Spencer: The Credit Crunch – A Marxist Analysis (2008), http://www.thecommunists.net/theory/imperialism-and-globalization/; Michael Pröbsting: World economy – heading to a new upswing? (2009), in: Fifth International Vol. 3, No. 3, http://www.thecommunists.net/theory/world-economy-crisis-2009/; Michael Pröbsting: The Great Robbery of the South, Vienna 2013, chapter 3, http://www.great-robbery-of-the-south.net/great-robbery-of-south-online/download-chapters-1/chapter3/.

[4] European Commission: Statistical Annex of European Economy Autumn 2006, p.52 respectively, for the years 2001-2010, European Commission: Statistical Annex of European Economy Spring 2015, p.33. Because there are no figures for the EU-15 for the years 1961-70 and 1971-80 in these EU statistics, for these years we have used the arithmetic mean of the figures for Germany, France, Great Britain and Italy.

[5] European Commission: Statistical Annex of European Economy Spring 2015, p.49

[6] European Commission: Statistical Annex of European Economy Spring 2015, p.73

[7] Karl Marx: Capital, Vol. III; in: MECW Vol. 37, p. 217

[8] Karl Marx: Grundrisse der Kritik der politischen Ökonomie; in: MECW Vol. 29, p. 133

[9] Esteban Ezequiel Maito: The Historical Transience of Capital. The Downward Trend in the Rate of Profit since XIX Century, Universidad de Buenos Aires 2014, p. 9. The author takes Germany, USA, Netherlands, Japan, United Kingdom and Sweden as core countries.

[10] Michael Roberts: Revisiting a World Rate of Profit, Paper for the 2015 Conference of the Association of Heterodox Economists,

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About RCIT Britain

What the RCIT stands for Revolutionary Communist International Tendency (RCIT) The Revolutionary Communist International Tendency (RCIT)is a revolutionary combat organisation fighting for the liberation of the working class and all oppressed. It has national sections in a number of countries. The working class is composed of all those (and their families) who are forced to sell their labor power as wage earners to the capitalists. The RCIT stands on the theory and practice of the revolutionary workers’ movement associated with the names of Marx, Engels, Lenin, and Trotsky. Capitalism endangers our lives and the future of humanity. Unemployment, war, environmental disasters, hunger, and exploitation are all part of everyday life under capitalism as are the imperialistic oppression of nations, the national oppression of migrants, and the oppression of women, young people, and homosexuals. Therefore, we want to eliminate capitalism. The liberation of the working class and all oppressed is possible only in a classless society without exploitation and oppression. Such a society can only be established internationally. Therefore, the RCIT is fighting for a socialist revolution at home and around the world. This revolution must be carried out and lead by the working class, for only this class has the collective power to bring down the ruling class and build a socialist society. The revolution cannot proceed peacefully because a ruling class never has nor ever will voluntarily surrender its power. By necessity, therefore, the road to liberation includes armed rebellion and civil war against the capitalists. The RCIT is fighting for the establishment of workers’ and peasants’ republics, where the oppressed organize themselves in councils democratically elected in rank-and-file meetings in factories, neighbourhoods, and schools. These councils, in turn, elect and control the government and all other statue authorities, and always retain the right to recall them. Authentic socialism and communism have nothing to do with the so-called “socialism” that ruled in the Soviet Union and Eastern Europe, and which continues to do so in China and Cuba, for example. In these countries, the proletariat was and is dominated and oppressed by a privileged party bureaucracy. Under capitalism, the RCIT supports all efforts to improve the living conditions of the workers and oppressed, while simultaneously striving to overthrow this system based on economic exploitation of the masses. Towards these ends, we work from within the trade unions where we advocate class struggle, socialism, and workers’ democracy. But trade unions and social democracy are controlled by a bureaucracy perniciously connected with the state and capital via status, high-paying jobs, and other privileges. Thus, the trade union bureaucracy is far from the interests and living conditions of its members, based as it is on the top, privileged layers of the working class – a labor aristocracy which has no real interest in replacing capitalism. Therefore, the true struggle for the liberation of the working class, the toppling of capitalism and the establishment of socialism, must be based on the broad mass of the proletariat rather than their “representative” from the upper trade union strata. We also fight for the expropriation of the big land owners as well as for the nationalisation of the land and its distribution to the poor and landless peasants. Towards this goal we struggle for the independent organisation of the rural workers. We support national liberation movements against oppression. We also support the anti-imperialist struggles of oppressed peoples against the great powers. Within these movements we advocate a revolutionary leadership as an alternative to nationalist or reformist forces. While the RCIT strives for unity of action with other organizations, we are acutely aware that the policies of social democrats and pseudo-revolutionary groups are dangerous, and ultimately represent an obstacle to the emancipation of the working class, peasants, and the otherwise oppressed. In wars between imperialist states we take a revolutionary defeatist position: we do not support either side, but rather advocate the transformation of the war into a civil war against the ruling class in each of the warring states. In wars between imperialist powers (or their stooges) and a semi-colonial countries we stand for the defeat of the former and the victory of the oppressed countries. As communists, we maintain that the struggle against national oppression and all types of social oppression (women, youth, sexual minorities etc.) must be lead by the working class, because only the latter is capable of fomenting a revolutionarily change in society . Therefore, we consistently support working class-based revolutionary movements of the socially oppressed, while opposing the leadership of petty-bourgeois forces (feminism, nationalism, Islamism, etc.), who ultimately dance to the tune of the capitalists, and strive to replace them with revolutionary communist leadership. Only with a revolutionary party fighting as its leadership can the working class be victorious in its struggle for liberation. The establishment of such a party and the execution of a successful revolution, as it was demonstrated by the Bolsheviks in Russia under Lenin and Trotsky remain the models for revolutionary parties and revolutions in the 21st century. For new, revolutionary workers' parties in all countries! For a 5th Workers International to be founded on a revolutionary program! Join the RCIT! No future without socialism! No socialism without revolution! No revolution without a revolutionary party!
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