THE COURSE OF THE WORLD CAPITALISM RG 2025 – May 23-25

THE COURSE OF CAPITAL IS INEVITABLY CHAOTIC AND CATASTROPHIC.

Everything seems to be accelerating; the crisis of global capitalism is leading not just to a general imbalance, but to disorder and general chaos, before pushing the various imperialist states towards a murderous confrontation and a third world war.

One of the pillars of the world order that emerged from the Second World War, the uncontested dominance of the dollar in international transactions and as a reserve currency, has just been called into question! And by whom? By Chinese imperialism? No, by the US government itself, which sees the dollar’s role, particularly as a reserve currency, as a millstone around its neck, and one of the causes of the United States’ de-industrialization: the constant demand for dollars, which accounts for 90% of foreign exchange transactions, 75% of foreign currency-denominated bonds and three-fifths of international bank loans, is driving up the value of the dollar, making American industry less competitive on the international market. Hence the US government’s desire to weaken the dollar to make its industry more competitive, and even to challenge its role as the foundation of the international monetary system.

This upheaval comes on top of many others, not least the Trump administration’s staggering taxes, which prompted the newspaper Les Echos to write that “Trump is scuttling the historic foundations of world trade”.

For years, the United States has been suffering from record trade deficits, the latest of which, in 2024, amounted to $900 billion! An all-time record, compounded by a staggering budget deficit of $1,800 billion!

However, if the United States was the world’s creditor in the 1970s, it is now the world’s biggest debtor! Similarly, while in the past the largest foreign exchange reserves were held in the coffers of the United States and its European allies – Great Britain, France, Germany, etc. – today the ten largest holders are, in descending order: China, Japan, Switzerland, India, Russia, Taiwan, Saudi Arabia, Hong Kong, South Korea and Mexico! None of the great imperialist states of former glory are to be found here.

And foreign investors hold almost 20% of US equities, an all-time record, and 30% of US debt, compared with a third less in 1971.

These imbalances are compounded by the fact that entire regions are now impoverished and transformed into industrial wastelands. To combat the downward trend in the rate of profit, a whole part of the industrial production apparatus has been transferred to low-cost countries, where workers are obliged to accept any working conditions. This has made the fortunes of European, Japanese and American multinationals. This is what has allowed world capitalism to gain thirty years of respite, at the cost of increasing impoverishment and precariousness of a whole section of the American, European and Japanese proletariat.

The result has been a shift in the economic center of gravity from the Atlantic to the Pacific Ocean. The fantastic economic development of South-East Asia, based on the ferocious exploitation of cheap labor, has been positive: this economic development has led to an improvement in the living conditions of the working masses and laid the economic foundations for communist society, even if this has been done, as always, in an ignoble manner.

At the same time, new imperialist states have emerged, while the old imperialist states have gone into relative decline. And a new superpower has emerged, China, which aims to replace the United States and subjugate Europe.

Globalization, hailed by the champions of the European and American upper classes as a source of fabulous profits, is now turning against them.

The new administration in the United States, aware of this danger, is calling into question the globalization that has so far enabled its multinationals to make fabulous profits.

By seeking to force its foreign competitors to rebalance trade, the new US administration could lead to a major trade and financial crisis worse than that of 1929.

Every year, the US government is forced to issue ever-increasing amounts of debt, but calling into question the almighty dollar, by shaking the international financial system, can only lead to mistrust of the dollar and the risk of bankruptcy for the US government. Similarly, the closure of the US market can only lead to a serious global overproduction crisis, given the importance of this market. Likewise, forcing US multinationals such as Apple to resume production on US soil can only lead to a fall in their profits and an overproduction crisis.

We say bravo, Mr. Trump, go ahead! We do not know how far this clown and his team will go, but there is no doubt that the crisis of overproduction of global capitalism and the new inter-imperialist balance of power can only lead to a trade war, a prelude to a titanic crisis of overproduction, before the world heads toward a third world war in ten to fifteen years, unless, in the meantime, the proletariat returns to the glorious path of class struggle and communism.

Before going into certain points in more detail, as is our custom, we will take a look at the global economic situation.

INFLATION

After reaching a historic peak in June 2022 in the United States, at 9.1%, and in Europe in October of the same year, at 10.6%, inflation fell to 2.4% in the United States and 2.2% in Europe in March 2025. China, which experienced deflation from April 2023 to April 2024, saw inflation pick up again to reach a peak of 4.4% in October 2024, before falling back to 3% in March 2025.

In Europe, inflation in the eurozone ranges from 0.8% in France to just over 2% in Germany. The United Kingdom stands out with relatively high inflation of 3.4%. Low inflation in the eurozone will allow the ECB to continue lowering interest rates to stimulate the economy, particularly the construction sector, which is still in recession.

INDUSTRIAL PRODUCTION

Despite strong financial incentives from the Biden administration, industrial production in the United States is stagnating at 0.2% in 2023 and will experience a slight recession of -0.3% in 2024. And the trade war triggered by the Trump administration is not going to help capital accumulation in industry. Instead, we should expect a decline, especially if things are pushed to the limit. Let’s not forget that industrial production is driven by shale gas and oil, of which the United States has become the world’s leading producer. But manufacturing output was down 7.5% in 2023 compared to 2007, while overall industrial production, thanks to oil and gas, gained 1% compared to 2007.

To see the global trend, we have compiled a table showing the increases in industrial production in key countries from 2019 to 2024. Obviously, we do not have the figures for China and Russia.

What emerges is that the old imperialist states were in recession or near stagnation in 2019: ranging from -3.3% for Germany to +0.5% for Spain. Belgium is the exception, thanks to the young capitalism of Flanders, with +4.9%. Poland, which had been growing at a very steady pace, saw an increase of 4.1%. Turkey, on the other hand, had a negative growth rate of 0.6%.

The recession will obviously worsen in 2020 with the lockdown. Apart from Turkey, which is showing growth of 2.2%, all the others are in the red. This will be followed in 2021 by a strong recovery with increases ranging from +25.6% for Belgium to 3.9% for Portugal and Brazil. However, after a decline of 7.8% in 2020, the United Kingdom will see its production continue to fall by a modest 0.7% in 2021. Then, in 2022, the recovery will slow sharply and even turn negative for many countries. Poland will obviously see +10.3%, Turkey +5%, the United States +3.4%, as we have seen, and Spain +2.3%. For the others, the increases range from -6.4% for the United Kingdom to -0.3% for France. Japan will experience stagnation with 0%.

In 2023, almost all countries will be in negative territory with increases ranging from -7.5%, surprisingly for Belgium, to -0.9% for the United Kingdom. The countries still showing positive growth are Turkey with 1.6%, France with 0.4%, the United States with 0.2% and Brazil with 0.1%. However, this is virtually stagnation for the latter three countries. In 2024, almost all countries are in the red, mainly the old imperialist countries, or are experiencing virtual stagnation. The only exceptions are South Korea with 4.1% and Brazil with 3.1%.

The last two columns compare industrial production in 2024 with that achieved in 2018 and 2007, respectively. Looking at the comparison with 2018, we see that all the old imperialist countries are in the red, with production falls ranging from -17.3% for the United Kingdom to -0.3% for the United States, thanks to gas and oil. The exception is Belgium, with a staggering +15%, thanks to Flanders. And, of course, Poland leads the way with a 29.3% increase in production, followed by Turkey with +26.7%, then Korea, but behind Belgium, with +11.2%, and finally Brazil with a meager 0.7%, which is almost stagnation.

Now, if we look at the last column, which compares industrial production in 2024 with the peak reached in 2007, the situation in the old imperialist countries is deteriorating even further, and not just a little! Portugal, Spain, and Italy are down almost 23%, followed by the United Kingdom and Japan at 21%, then France at 12.3%—but we can assume that the reality is much worse—then Brazil, which has experienced a long period of recession, at 8.3%, and finally Germany at 9.1%. The same Germany that had exceeded its 2008 peak in 2018 with 8.5% has fallen sharply and is also experiencing a deep crisis of overproduction. The United States is doing well thanks to hydrocarbons, with a small increase of 1.1%. But manufacturing output is estimated to be 10% below its 2007 peak.

Among those who have managed to come out on top thanks to offshoring are Turkey with +111%, Poland with +97.3%, and Belgium with +30.3%. South Korea beat Belgium with a spectacular 53.5%, thanks to its membership of Southeast Asia, which has seen a strong accumulation of capital over the last 30 years.

To complete this overview, we present two tables showing the average annual increments in industrial production from cycle to cycle. The first table looks at the old imperialist countries and is divided into four cycles: 1950-1973, 1973-2007, 2007-2018, and finally 2018-2024. The last two columns are those we have already seen, comparing industrial production in 2024 with that achieved in 2018 and 2007, or 2008 in the case of Germany.

It can be seen that in the first cycle, immediately after the post-war reconstruction and when industrial production had returned to its pre-war peak, the increases were not only sustained but even considerable in South Korea, Japan, Germany, and Spain, which had just emerged from civil war. The increases ranged from +16.4% for South Korea – in other words, production grew by an average of 16.4% each year during those 23 years – to +8.5% for Germany. For France, the figure was 6.1%, which was lower but still very respectable. Finally, for the old lion – the United Kingdom – the figure was a modest 2.7%, in line with its age and the lesser destruction it had suffered. America, already bloated, nevertheless galloped ahead at an annual rate of 4.3%!

Next, we can see very clearly, for all capitalist countries, a sharp slowdown from cycle to cycle, ending with negative growth in the last cycle of 2018-2024. The exceptions are South Korea with +1.8% and Belgium, which beats South Korea with an average annual growth rate of 2.4%! Dear Belgium will surprise us all.

In the second table, we report the cycles of Eastern European countries.

This second table includes three cycles: 1998-2007, 2007-2018, 2018-2024. The starting year, 1998, is when all these countries, which had experienced a recession with the overproduction crisis that led to the collapse of the Russian empire, returned to their pre-crisis production levels.

For each cycle, we have two columns: the first shows the total increase between the two years, and the second shows the average annual increase for the cycle calculated from the total increase given in the first column.

Thus, for the 1998-2007 cycle, Poland saw a total increase of 78.9%, corresponding to an average annual increase of 6.7%. For Hungary, we have 102.9% and 8.2%. For Estonia, we have 107.5% and 8.4% increase. For Latvia, we have 57.5% and 6.7%. For Lithuania, we have 55% and 5%. And for Romania, we have 44.2% and 4.2%.

When we move from cycle to cycle, we see a steady decline in increments, which even become negative in the last cycle for Lithuania with -0.1% and even -1.5% for Romania. In fact, the latter has been in recession since 2019.

What is interesting to see is the total increase since 1998. Poland leads the way with a total increase of 253% and an average annual increase of 5%. Next comes Estonia with a total increase of 183.9% and an average annual increase of 4.1%. Then we have Hungary and Lithuania with total increases of 155.7% and 157.8% respectively, which corresponds to an average annual increase of 3.7% for both countries. Finally, Romania comes in with 101.8%, which corresponds to an annual increase of 2.7%. And finally, we have Latvia with a total increase of 94.1%, giving an average increase of 2.8%.

For the purposes of constructing the table, the cycle dates indicated are those for the majority of countries. However, some countries may have different cycle start and end dates and therefore different cycle lengths, which explains why, for a smaller total increase, there may be a slightly higher annual increase, as in the case of Latvia compared to Romania.

To get a better picture of the real industrial growth of these countries, it will be necessary to compare them with the peak reached before the great overproduction crisis of the 1990s. Romania, for example, only managed to exceed its 1988 peak in 2017, as it saw entire sectors of industrial production, such as steel, collapse. Russia, for example, has never regained the peak it reached in 1989. But for the other countries, there is no doubt that joining the European Community has been beneficial and has enabled a real industrial take-off.

A quick glance at the following table tells us that there was no industrial miracle for the countries of Latin America; Brazil experienced a long recession from 2018 to 2024, with a total drop in production of 13.5%. And Mexico, despite having become a major producer of automobiles for the US market, is showing quite asthmatic growth rates.

On the other hand, Turkey has benefited fully from industrial relocation, with annual increments ranging from 6.5% for the first cycle to 4% for the last.

We report on India in a separate table, as its cycles are very different from those of the previous three countries. For the cycle running from 1972 to 2011, we have a total increment of 930% and an average annual increment of 6.2%. Figures worthy of a still young capitalism. Nevertheless, the aging process is reflected in a drop in increments to 3% for the latest cycle. This is still respectable compared with the ageing rhythms of the old imperialist countries, where the capitalist mode of production is in the process of putrefaction.

INTERNATIONAL TRADE

Exports

We have compiled a table showing exports in current dollars. We can see that, after a decline in exports in 2019 and 2020, exports recovered in the following years. Thus, in 2024, exports in current dollars compared to 2018 increased for almost all countries except two: Japan, with a decline of 4.2%, and the United Kingdom, with a decline of 1.8%. The winner is China with a total increase of 43.1%! For the others, the increase ranges from 24% for the United States to 7.8% for Germany. However, these increases are mainly due to inflation.

We have therefore included a second table expressed in 2019 dollars. And here everything changes: China remains the winner, but with a more modest increase of 13.6%. All the others are in negative territory, with increases ranging from -24% for Japan to -1.6% for the United States. This result is more in line with what we have seen for industrial production, which has fallen sharply in all these countries.

It is interesting to note that the US became the second largest exporter of goods, replacing Germany in 2010, largely thanks to hydrocarbons. Notably, Italy overtook France to take fifth place in 2020. Apparently, France has not recovered from Covid. Otherwise, Italy, France, Korea, and Belgium are very close in terms of the volume of their goods exports.

The third table shows the annual increments for the years 2018 to 2024. Without going into detail, we see the same trends as for industrial production. And this trend is even clearer when exports are expressed in constant dollars, thus eliminating the effect of inflation.

Imports

The United States is well ahead with $3.267 trillion, followed by China with $2.585 trillion. Further behind, in third place, comes Germany with no less than $1,421 billion in imports of goods. Then, with half as much, come in this order, France, Japan, the United Kingdom, South Korea, Italy, and finally Belgium with $514 billion.

Looking at the annual increments, we see that they are all negative in 2023 and 2024, with the exception of the United States and China in 2024. The United States is up 6.6% and China is up 1.6%. All the others countries are therefore in recession.

The Trade Balance

China leads the way with a staggering trade surplus of $992 billion! It is followed more modestly by Germany, but nevertheless with a more than respectable surplus of $260 billion! Italy, Belgium, and Korea also have trade surpluses, but at a much more modest level of around $50 billion. Next come France with a deficit of $111 billion, the United Kingdom with $292 billion, and finally the United States with a monstrous deficit of $1,202 billion! It is thanks to this gigantic deficit that global capitalism continues to function. If the United States turns off the import tap, everything will collapse!

RUSSIA AND CHINA

We can’t end this overview without saying a few words about the economic situation in Russia and China.

The Kremlin boasts of GDP growth of 3.6% in 2023 and 4.1% in 2024, despite the embargo! But with official inflation at 9.5%, despite the Central Bank’s astronomical discount rate of 21%, real growth is negative. If we take the official figure of 9.5%, growth turns into a decline of almost 6%! And given the discount rate, average real inflation is practically double, but let’s take the minimum of 16% use by some economists – some basic foodstuffs are close to 40%! -, which gives us a 13% fall in GDP!

The war effort, which corresponds to unproductive investments, can only generate inflation in an economy that is already stretched to the breaking point. Production cannot be magically increased, which means that a whole part of the production that is used indirectly or directly to produce consumer goods is diverted to the war effort for purely imperialist interests, to the detriment of the working population.

The Central Bank’s discount rate of 21% translates into bank rates approaching 30%! This makes credit for businesses unsustainable and pushes them to the brink of bankruptcy. Similarly, such rates make access to housing impossible and paralyze construction. In a sure sign of the economic situation, Moscow’s stock market collapsed by 23% in 2024, before recovering slightly in recent months following hopes of a return to peace under Trump’s proposals. If we look at exports, we see a fall of 28% in current dollars and 26% in 2019 dollars in the year following the start of the war, i.e. 2023. In 2024, there is a small recovery of 2%, but exports remain 24% below the peak of 2022 and 22.5% below 2018 in 2019 dollars.

The increase in war efforts, which account for 40% of the state budget, is leading to a growing state deficit and depletion of the “National Provident Fund”, whose reserves are down to around $40 billion. This is a small amount compared to the military budget, which is expected to reach $140 billion by 2025. As for the banks, which are obliged by the State to support the war effort, they find themselves in debt to the tune of 200 to 250 billion dollars. In short, all good news from Russian imperialism.

Russian imperialism is an important counter-revolutionary center in Europe, and its collapse would be very good news: it would most likely lead to a general uprising. This would have enormous repercussions in China, Iran and Europe, especially Eastern Europe. The collapse of the Russian regime is the great fear of the European and American bourgeoisies, which is why they have been unwilling to arm Ukraine seriously in its struggle against Russian imperialism. They prefer to contain the bear in its attempt to expand and reach a compromise, even if it means sacrificing part of Ukraine, but so far this plan hasn’t worked, despite all the attempts at dialogue under Merkel and Hollande, and now with the new American government.

The idiots in the Kremlin would rather sacrifice the Russian economy than their own imperialist interests, as they always did during the Cold War. And American imperialism was able to play it perfectly at the time to weaken Russia, which it then saw as a competitor. Today, things have changed: Russian imperialism has become a regional power, falling into the orbit of Chinese imperialism, which is careful not to depend on Russia, its great “ally”. Unlike Germany, which had bet everything on cheap Russian gas, Russia accounts for less than 20% of China’s oil imports and less than a third of its gas imports.

The ruble, which has recovered slightly against the dollar under the Trump administration, has devalued by 20% against the yuan, the currency in which Russia must pay for its imports from China. China’s share of Russia’s foreign trade is set to rise from 18% in 2021 to 37% in 2024.

In short, only good news from Russian imperialism, and the fall in oil prices can only accentuate this trend. So a collapse is not impossible; time will tell.

In China, the picture is rosier, but the situation is nevertheless deteriorating. With the crisis of overproduction in the housing sector and the bankruptcy of the two major real estate players – Evergrande and Country Garden – the middle classes have seen a large part of their savings go up in smoke. This led to a fall in consumption and a rise in unemployment. On the car market, the world’s largest, a veritable price war has broken out between manufacturers. For the time being, the only growth market for China is exports. But the looming trade war can only cast a shadow over export prospects.

CONCLUSION

It is very clear that, under the pressure of the crisis of overproduction, things are accelerating. We do not know how far the new US government will go to force reindustrialization and rebalance its trade and payments balance, but we hope it will go as far as possible, leading to a gigantic commercial, financial, and overproduction crisis. The situation is such that it won’t take much for the whole edifice to collapse.

We know that the international proletariat will only find its way back to class struggle and communism when the situation becomes unbearable. The earth must open up beneath its feet. The old Mole has done a good job and we are heading straight for it. If not, woe betide us, for it will be World War III.