On the precipice

Issue: 177

Joseph Choonara

What are the prospects for left politics as 2023 begins?1 To say that the coming year will be one of crisis is simply to state the obvious, a point now accepted across the political spectrum and echoing through end of year feature articles in the mainstream press. Indeed, the world has been trapped in a seemingly endless series of crises since the economic meltdown of 2008. One thing a Marxist analysis can add to this picture is to identify the intertwining, long-term processes, inherent in capitalism, that are driving these eruptions.

First, there is the ecological crisis, whose roots lie in the transformation and degradation of ecosystems resulting from capitalism’s relentless logic of profit-making and competitive accumulation. The impact of this—driving the emergence of novel viral pandemics, mass extinctions, disruptive weather patterns and climate change—has become an ever more apparent feature of the world we inhabit. The point has been made especially well in a series of writings and speeches by John Molyneux, a long-standing member of our editorial board whose sudden death came just as we were preparing this issue to go to press. For John, ecological breakdown signalled the necessity and urgency of the revolutionary transformation of society that he polemicised for during a half century of socialist activity.2 He wrote in a final contribution to Irish Marxist Review:

The environmental crisis…has many different dimensions, ranging from river and air pollution to toxic waste in working-class neighbourhoods and the biodiversity crisis, all of which are symptomatic of the metabolic rift between capitalism and nature…but…climate…is the leading and most devastating edge of the overall crisis… In Durban, severe flooding and landslides caused by heavy rainfall between 11 and 13 April of this year caused the death of 448 people, displaced over 40,000 people, and completely destroyed over 12,000 houses in the southeastern part of South Africa. In July, a total of 38 people were killed in Kentucky as a direct result of floods, and these in turn were part of wider flooding that claimed 48 lives in all. In Australia, there were, in this year alone, life-claiming floods in January, February, March and July. As I am writing these words, on 23 September 2022, the Flood List website reports deadly floods over the past few days in Nigeria (300 dead, 100,000 displaced), Niger (168 dead, 227,000 displaced), Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

Unfortunately, the most important, ultimately decisive facts about climate change can only be expressed in the language of dry, “abstract” statistics, not emotive human consequences… Carbon dioxide levels are now comparable to the Pliocene climatic optimum, between 4.1 and 4.5 million years ago, when they were close to, or above, 400 parts per million. During that time, sea levels were between five and 25 metres higher than today, high enough to drown many of the world’s largest modern cities. Temperatures then averaged seven degrees higher than in pre-industrial times.3

Second, repeated episodes of economic turmoil are also rooted in the long-term development of capitalism. In particular, the prolonged decline in profit rates across the historical core of advanced capitalist economies during the decades following the Second World War has never been fully reversed. These economies have instead been trapped in a period of relatively low profitability since the early 1980s, which has weakened the dynamism of the system. This is reflected in low productivity growth, a mass of unprofitable zombie firms undermining investment, intensifying class inequality, unstable accumulations of credit and bloated, fragile financial systems.4

This pattern has now spread to other major capitalist economies of the Global South, in particular China. Here, extremely rapid accumulation of capital in the boom years has also had the long-term effect of undermining profitability. After the 2008-9 recession destabilised the country’s economic model, which had been based on high levels of exploitation and intense investment in sectors producing for export markets, growth became weaker. As had happened earlier in economies such as Britain and the United States, Chinese growth became increasingly dependent on credit expansion. The turmoil caused by the impact of Covid-19 and the state’s response to it has further intensified the problems.

Third, global politics have been destabilised with the passing of the moment of unrivalled US hegemony at the end of the Cold War. Growing tensions between the US and China provide by far the most serious faultline.5 This is combined with the efforts of other imperialisms, such as Russia, and sub-imperialist powers, such as Turkey, Saudi Arabia and the United Arab Emirates, to assert themselves at a regional level. Such tensions helped drive the brutal dismemberment of Syria and, more recently, the Russian invasion of Ukraine. In the latter case, as International Socialism has argued, a war of national defence on the part of Ukrainians is entangled with a clash between Russia and the NATO military alliance. This broader inter-imperialist conflict is an essential part of the context for the war now raging and has intensified during the course of the fighting.6

Combined with this escalation of inter-imperialist conflict is further political instability as antipathy towards the neoliberal policy consensus, forged in the 1980s and 1990s, has grown. In the Global South, where this “consensus” was often imposed in particularly brutal forms, this has resulted in periodic explosions of anger, notably in the cycle of protests in 2019, which was partially interrupted by the Covid-19 pandemic before re-emerging in the struggles taking place in countries such as Sri Lanka and Sudan. In the Global North, too, we see political polarisation as the neoliberal centre erodes. Sadly, alongside the emergence of new left-wing political forces and radical protest movements, these developments have also fostered the growth of far-right formations. Today, this includes the movements associated with Donald Trump in the US and Narendra Modi in India, together with their European counterparts.7 The latter include the fascist Marine Le Pen in France, who recently took over 13 million votes in the presidential run-off, and the Sweden Democrats, a far-right party rooted in the fascist tradition, which now forms the second largest party in the Swedish parliament after its breakthrough in 2022. Even more chillingly, a century after Benito Mussolini’s march on Rome, Giorgia Meloni, a member of another fascist outfit, the Brothers of Italy, is prime minster, heading up a right-wing governing coalition.8

Although these events do not amount to the imposition of fascist dictatorship on these countries, they will undoubtedly foster the further development of far-right forces that could, in moments of crisis, offer themselves to the ruling class to smash dissent and impose order.9 Indeed, the threat from fascist groups was underlined by the German police’s recent claim to have uncovered a far-right conspiracy to hoard weapons, storm the Bundestag and overthrow the constitution, with a judge and a former high-ranking special forces officer among 25 people arrested across the country on 7 December.10

Prospects for 2023

The way that these drivers of crisis can intertwine is evident in the inflationary crisis that began to emerge in 2021 and whose full force has been felt over the past year. A recent study by Joseph Stiglitz and Ira Regmi argues that inflation is a result neither of excessive aggregate demand nor of a “wage-price spiral”. After the lockdowns associated with the pandemic ended, consumption and investment did briefly bounce back, but this pent-up demand was quickly spent, and these indicators quickly settled down to long-term trend levels.11 Similarly, despite tight labour markets in many countries, wage growth remains below inflation. Rather, it was the disruption to supply chains due to the pandemic and the war in Ukraine that helped initiate the current surge in prices.12 In other words, a combination of ecological factors and inter-imperialist tensions helped to drive the economic crisis. Firms bolstering their profitability, along with financial speculation, then played a role in sustaining inflation.13

However, the policy response from central banks follows what Siglitz and Regmi call the “conventional wisdom”, which is to increase interest rates “whatever the cause” of inflation. The key channel through which this operates is to crush demand and “induce a major contraction in the economy, which is a cure worse than the disease”.14 This is, unfortunately, the prospect we can look forward to in the year ahead. The impact of interest rate rises is made all the worse by the reliance of the global economy on cheap credit to bolster growth over recent decades. Because this has spread to the Global South, we are now seeing the beginning of a wave of debt crises affecting some of the poorest countries on the planet. According to the United Nations, 54 countries, which account for over half of the number of people in extreme poverty in the world, will be hit by this.15 This adds to the food and energy crisis already afflicting many of these states.

In the Global North, most central bankers and politicians acknowledge, at least in private, that their policies will lead to recession. As Marxist economist Michael Roberts writes of a speech in November by Jay Powell, head of the US Federal Reserve:

Powell again spelt out the Fed strategy. Ignoring the fact that it was weak supply…that has been the main cause of the spike in post-pandemic inflation, he continued to argue that hiking interest rates would slow aggregate demand and bring inflation down as households and businesses reduced spending growth in the face of rising interest costs on borrowing. But this approach could only mean intensifying the hit to the supply side too—in other words, driving the US economy into a slump. As Powell admitted in his speech, “Slowing demand growth should allow supply to catch up with demand and restore the balance that will yield stable prices over time. Restoring that balance is likely to require a sustained period of below-trend growth.” The words “below trend” mean recession and rising unemployment.16

The recession could well be a deep and protracted one. Not only has the long period of subdued profitability weakened the dynamic of capitalist expansion, but many economies are also still suffering the scarring effect of the pandemic. States have already spent vast sums on seeking to ameliorate the impacts of Covid-19. Moreover, an important tool for capitalist crisis management in recent decades has been the ability to offer ultra-low interest rates or engage in quantitative easing (central banks electronically creating money and pushing it into the financial sector by mopping up bonds and other assets). However, these approaches are no longer possible in a world of “quantitative tightening” and rising interest rates. In other words, ruling classes now have very limited room for manoeuvre in responding to the crisis.

Alongside the dire economic prospects ahead, we should also be attentive to the possibilities for resistance. As noted above, Sri Lanka, one of the countries where pre-existing tensions have been exacerbated by the debt crisis, has already witnessed an impressive uprising. In Iran, as our interview with Peyman Jafari in this issue shows, there has also been a major struggle, triggered by the death in custody of a Kurdish woman, Jina Mahsa Amini, who was accused by the Islamic Republic’s “morality police” of failing to wear a headscarf correctly. Faced with this movement, the regime is torn between repression and concessions, with some of the country’s rulers considering disbanding the morality police or even making changes to the headscarf laws.

In China, a wave of protests over lockdown measures seems to have forced the government to reconsider its Zero Covid policy.17 The movement involved both public demonstrations, which spread through at least ten cities, and more localised protests in locked-down residential areas and on university campuses.18 The anger intensified when a fire in a locked-down residential compound, mainly housing members of the oppressed Uyghur population in Urumqi, Xinjiang, killed ten people.19 Although China’s Zero Covid approach drew some approval internationally earlier in the pandemic, it is now increasingly evident that it is driving intense anger and bitterness. Relaxing restrictions may alleviate some of these social tensions, but it also risks a huge wave of cases across the country, potentially unleashing further unrest. This is particularly the case because there has been such a limited take-up of vaccines, especially among the elderly, and a lack of access to and imports of the sophisticated mRNA vaccines used in other parts of the world.20 We have already seen protests among workers faced with rising infections. This includes migrant labourers at the giant Foxconn plant in Zhengzhou, the capital and largest city of the central province of Henan. Many of these workers fled the factory in the face of a mishandled outbreak, later engaging in clashes with security forces over new regulations that would mean forgoing the Lunar New Year holiday or losing their bonuses.21

The British dimension

Britain is far from exempt from the wider upheavals discussed above. Rather, recent times have been very stormy indeed. In analysing the tensions facing incoming prime minister Liz Truss and her chancellor, Kwasi Kwarteng, and the problems with their economic programme, in last quarter’s analysis I concluded:

This should put paid to any idea that the turmoil at the top of society, including rows involving Downing Street, big business and the Bank of England, which characterised the periods of the Boris Johnson and Theresa May governments, will ease under Truss. On the contrary, we should expect a highly volatile politics, reinforced by the clash between the rival approaches to economic policy and the brutal reality of an economy dependent on state intervention.22

Little did I anticipate that by the time that issue of the journal arrived on people’s doormats, Truss would be gone. Her gamble on “supply-side” measures, involving massive tax cuts for the rich and corporations, subsidised through a sharp rise in state debt, met with a ferocious market response. The collapsing value of Treasury bonds, which threatened to bring down pension funds that invest heavily in these, and which further drove up the cost of borrowing, forced the Bank of England to intervene with an emergency programme of bond-buying. Amid the chaos, Truss first sacked Kwarteng, replacing him with Jeremy Hunt, and then resigned herself, which triggered a process that would ultimately install Rishi Sunak as prime minister. Hunt reversed the key decisions made by Kwarteng. Humiliatingly for Truss, Hunt began this process while she was still in office before continuing it alongside Sunak.

To a large extent the bond markets were calling the shots, disciplining a Tory government in much the same way that the markets have sought to discipline social-democratic governments in the past.23 The continued power of these markets demonstrates one of the tensions built into the capitalist system in its contemporary phase. On the one hand, states, and the central banks associated with them, have become increasingly active in intervening in the economy, dropping much of the rhetoric familiar from the heroic era of neoliberalism in the 1980s and 1990s. This is both a response to growing inter-imperialist rivalry and a result of efforts to manage crises through state interventions. On the other hand, they do so in circumstances constrained by intense, global competition and extensive, integrated financial markets that can threaten to engender debt crises and currency collapses if they consider debt-financed state expenditure to be excessive.24 This tension, between intervention and deregulation, creates problems for Sunak and his chancellor. As the Financial Times’s Martin Wolf pithily summed up the change of policy announced in November:

Hunt’s autumn statement had two audiences: creditors and voters. It needed to convince the former that the British government can be trusted with their money, and it needed to convince the latter that the Conservative government is doing its best to limit the damage to them and their families from a global economic storm.25

To bolster the public finances, there were tax rises: stealth rises through preventing tax thresholds increasing, along with an increased windfall tax on energy firms. Holding down pay and other expenditure during an inflationary crisis will also, in real terms, reduce the scale of the state. Then there was the promise of a sharp turn back towards austerity, which, only three years earlier, Johnson had pledged to end. However, although there will be curbs on public spending in the coming year, the most painful cuts envisaged by Hunt are scheduled for after the next general election. As Wolf acerbically comments, “Promises of future fiscal chastity cannot be taken seriously”.26 Nonetheless, they do constitute a trap for Labour leader Keir Starmer, whose party is now way ahead in opinion polls, and who is currently on a charm offensive towards business leaders. Starmer and his shadow chancellor, Rachel Reeves, appear to accept the need to rein in spending as well as the notion of a £55 billion black hole in the government’s finances that needs to be plugged. Yet, as left-wing economist James Meadway points out, this is a political choice, rather than an economic necessity, and it is reliant on government forecasts and fiscal rules, which can be changed.27 There are alternatives available, but they would likely involve imposing significantly higher taxes on the rich and a broader break from the kind of policies currently advocated by Starmer.

As if all this were not bleak enough, it now seems as if the British economy will be hit especially hard by the developing recession. Government forecasts expect economic contraction to last a year—and to presage the biggest decline in household’s disposable income since records began, along with the loss of half a million jobs.28 Of course, these impacts are not inevitable; it depends on whether workers are able to struggle collectively to protect their livelihoods. The cost of living crisis has already triggered a series of important battles by unionised (and in some cases un-unionised) groups of workers, as detailed by Charlie Kimber in his article in this issue. He argues that large set-piece battles—on the railways, in Royal Mail, across the university sector and now in the National Health Service—have so far taken the form of episodic strikes under the authority of union bureaucracies, which often act as a barrier to the full development of the strike movement. Going beyond this limitation requires socialists finding creative ways to use the uptick in workers’ militancy to argue for escalation and coordination of action, and to try to shift control of the strikes away from union bureaucracies and towards rank and file members.

This needs to be combined with vigilance and organisation to counter the racism the government is directing against refugees. As the crisis deepens, scapegoating of this kind will surely intensify as part of an effort to shore up the government’s base of support and deflect from its culpability for the crisis.

Given what is likely to hit us in 2023, the work of the socialist left in these areas is more vital than ever.

Joseph Choonara is the editor of International Socialism. He is the author of A Reader’s Guide to Marx’s Capital (Bookmarks, 2017) and Unravelling Capitalism: A Guide to Marxist Political Economy (2nd edition: Bookmarks, 2017).


1 Thanks to Richard Donnelly, Jacqui Freeman, Gareth Jenkins and Sheila McGregor for comments on an earlier draft.

2 Molyneux, 2022a. I was fortunate to count John Molyneux as a friend and a comrade. His death is a colossal loss to the political tradition associated with this journal, and we plan to write about his contribution to the Marxist tradition in a future issue. We send our condolences to all those who mourn him.

3 Molyneux, 2022b.

4 Choonara, 2018.

5 The Financial Times’s Edward Luce, 2022, refers to Joe Biden’s effort to isolate China’s high-tech sector, for instance, by blocking the use of technology required to create the most advanced silicon chips, as “a full-blown economic war on China, all but committing the US to stopping its rise”—Luce, 2022.

6 Choonara, 2022a.

7 On Modi and Trump, see, respectively, the articles by Barry Pavier and Virginia Rodino in this issue.

8 For a brief account of the Brothers of Italy’s fascist roots, see Basketter, 2022. We hope to run a longer article on the nature of contemporary fascist and far-right formations in a future issue. For earlier accounts, see Thomas, 2019, and Callinicos, 2021.

9 Alex Callinicos offers a useful antidote to the complacency of those on the left who claim that the absence of the mass working-class struggles of the 1920s and 1930s negates the danger of fascism—Callinicos, 2021, pp61-62.

10 Kirby, 2022.

11 Stiglitz and Regmi, 2022, pp12-17.

12 For my own thoughts on the drivers of inflation, see Choonara, 2022b. See also my talk from summer 2022, alongside Michael Roberts, which is available online at www.youtube.com/watch?v=YBtUve71-TA

13 Choonara, 2022b.

14 Stiglitz and Regmi, 2022, p5.

15 Elliott, 2022.

16 Roberts, 2022.

17 For an assessment of the impact of Zero Covid policies around the world, see Kambiz Boomla’s account in International Socialism 175—Boomla, 2022.

18 White, Hale and McMorrow, 2022.

19 For an account of the oppression of the Uyghurs, see Simon Gilbert’s article in a previous issue of International Socialism—Gilbert, 2o21.

20 Olcott, Yu and Xueqiao, 2022.

21 Hioe, 2022.

22 Choonara, 2022c, pp8-9.

23 Bond markets tend to be treated by the media and politicians, in terms that Karl Marx would recognise, as depersonalised, almost “natural” phenomenon. We should recall that they are in fact the expression of the interests of capitalist firms and traders.

24 Indeed, one of Hunt’s more eye-catching announcements has been his intent to strip back the post-2008 restrictions on banking and finance through his “Edinburgh reforms” to turbocharge these markets—Makortoff, 2022.

25 Wolf, 2022.

26 Wolf, 2022.

27 Meadway, 2022.

28 Isaac, 2022.


Basketter, Simon, 2022, “A Warning from Italy—Fascist Giorgia Meloni on Course for Victory”, Socialist Worker (26 September), https://socialistworker.co.uk/international/a-warning-from-italy-fascist-giorgia-meloni-on-course-for-victory

Boomla, Kambiz, 2022, “Was Zero Covid Ever Feasible? How Capitalism Deals with a Pandemic”, International Socialism 175 (summer), http://isj.org.uk/zero-covid

Callinicos, Alex, 2021, “Neoliberal Capitalism Implodes: Global Catastrophe and the Far Right Today”, International Socialism 170 (spring), http://isj.org.uk/implodes-catastrophe

Choonara, Joseph, 2018, “The Political Economy of a Long Depression”, International Socialism 158 (spring), http://isj.org.uk/the-political-economy-of-a-long-depression

Choonara, Joseph, 2022a, “The Devastation of Ukraine: NATO, Russia and Imperialism”, International Socialism 174 (spring), http://isj.org.uk/devastation-of-ukraine

Choonara, Joseph, 2022b, “The Gathering Storm”, International Socialism 175 (summer), http://isj.org.uk/the-gathering-storm

Choonara, Joseph, 2022c, “Trussonomics Confronts the Crisis”, International Socialism 176 (autumn), http://isj.org.uk/trussonomics

Elliott, Larry, 2022, “‘Time May Be Running Out’: Global Debt Crisis Reaches Critical Point”, Guardian (13 October), www.theguardian.com/business/2022/oct/13/time-may-be-running-out-chronicle-of-a-debt-crisis-foretold

Gilbert, Simon, 2021, “China, the Uyghurs and the Left”, International Socialism 172 (autumn), http://isj.org.uk/china-uyghurs-left

Hioe, Brian, 2022, “Protests Take Place Across China in Wake of Zhengzhou Clashes, Urumqi Fire”, New Bloom (28 November), https://newbloommag.net/2022/11/28/china-protests-covid-zero

Isaac, Anna, 2022, “Worst Fall in UK Living Standards Since Records Began, Says OBR”, Guardian (17 November), www.theguardian.com/business/2022/nov/17/obr-confirms-uk-enters-year-long-recession-with-half-a-million-job-losses-likely

Kirby, Paul, 2022, “Germany Arrests 25 Accused of Plotting Coup”, BBC News (8 December), www.bbc.co.uk/news/world-europe-63885028

Luce, Edward, 2022, “Containing China is Biden’s Explicit Goal”, Financial Times (19 October).

Makortoff, Kalyeena, 2022, “Jeremy Hunt’s City Deregulation Plans are ‘Dangerous’ Mistake, Warns Expert”, Guardian (9 December), www.theguardian.com/business/2022/dec/09/jeremy-hunt-sets-out-sweeping-reforms-to-financial-sector

Meadway, James, 2022, “The ‘Fiscal Black Hole’ is a Dangerous Myth to Justify Austerity”, New Statesman (10 November), www.newstatesman.com/quickfire/2022/11/fiscal-black-hole-myth-justify-austerity

Molyneux, John, 2022a, “Apocalypse Now! Climate Change, Capitalism and Revolution”, in John Molyneux: Selected Writings on Socialism and Revolution (Bookmarks).

Molyneux, John, 2022b, “Capitalism in Decay—Dimensions of the Crisis”, Irish Marxist Review, volume 11, number 34, https://irishmarxistreview.net/index.php/imr/article/view/473/458

Olcott, Eleanor, Sun Yu and Wang Xueqiao, 2022, “China Warned to Accelerate Approval of Updated Jabs to Tackle Covid ‘Tsunami’”, Financial Times (12 December).

Roberts, Michael, 2022, “Powell’s Pivot and the Impending Slump”, Michael Roberts blog (5 December), https://thenextrecession.wordpress.com/2022/12/05/powells-pivot-and-the-impending-slump

Stiglitz, Joseph E, and Ira Regmi, 2022, “The Causes of and Responses to Today’s Inflation”, Roosevelt Institute (6 December), https://rooseveltinstitute.org/publications/the-causes-of-and-responses-to-todays-inflation

Thomas, Mark L, 2019, “Fascism in Europe Today”, International Socialism 162 (spring), http://isj.org.uk/fascism-in-europe-today

White, Edward, Thomas Hale and Ryan McMorrow, 2022, “Xi Jinping Faces Stiffest Challenge to Rule as Covid Outrage Sparks Mass Protests”, Financial Times (28 November).

Wolf, Martin, 2022, “Jeremy Hunt Offers No Jam Today and None Tomorrow”, Financial Times (17 November).