Vulnerability of imperialist economy exposed in attack on US
US imperialism's declaration of a "war against terrorism" is being done in the context of an economic crisis consequent to the bursting of the "new economy" bubble. Even before the September 11 attacks, the US had already begun to slip into recession, marked by a shrinking market, growing losses among big businesses, worsening unemployment and other negative economic indicators. It is also the US' malicious intent to divert the attention of the American people who are restive over the fact that their country's economy continues to sink into recession. A war of aggression in the form of a "war against terrorism" is a desperate albeit an old method resorted to by US imperialism to revitalize its moribund economy.
Early this year, the cyclical recession or decline of the US economy and the international capitalist system was already approaching a new stage. This process has been exacerbated by a crisis of overproduction due to accelerated improvements in technology and the pace of production in the face of the market's inability to consume the resulting excess production. This has now led to a worldwide collapse in capitalist production.
In the second half of this year, the international capitalist economy suffered a negative growth rate, the first in 20 years. Worldwide industrial production declined by 6%. In the past 10 months, industrial production in the US has been plagued by continuously dwindling growth rates. This period of decline has been the longest since 1983. In the second quarter, annual overall production in the US grew by a mere 0.2% - the lowest since 1983. In the same period, investments dropped by 15%, company profits declined by 67% and 271,000 more swelled the ranks of the unemployed in the US. From a higher growth rate, overall production in Europe has also dropped to 0.2%. A steeper decline has been noted in Japan where industrial production has plummeted by 15% and investments have fallen by 18%. The export-based "emerging markets" of Brazil, Argentina, Mexico, Singapore, Taiwan and Malaysia had all gone ahead in plunging into recession. The same internal trend in the US economy and in the international capitalist system has been overtaken and worsened by the attacks in New York and Washington DC on September 11.
Number of laid off and to be laid off workers in
specific US industries (September 11-26) | | US Industry | Total Number | | Airline | 106,290* | | Aerospace/ Defense contracts | 38,900 | | Finance | 1,300* | | Manufacturing | 4,300 | | Technology | 3,790 | | Tourism | 1,200 | | Total | 155,780 | | * More job cuts have been announced but no definite figures have been given. (Data from Washington Post) |
Because of the fear and instability accompanying the terrorist attacks and the Bush government's militarist response, the travel industry has further collapsed, especially the airlines industry and related services. Airlines lost $550 million in the mere two days after the incident when not a single airplane flew. The main airport in Washington DC as well as smaller airports adjacent to it remain closed.
The incidents have had staggering consequences especially on workers in the airline and airplane manufacturing industries. As of September 26, up to 150,000 workers in the airline, aerospace and other related industries have been laid off or are set to be dismissed in the next months in the US alone. The number of laid off workers continues to rise. The 4.9% unemployment rate in August is the worst since the widespread financial crisis that exploded in Asia in 1997. This figure is now estimated to reach 7.1%. Boeing, the leading manufacturer of aircraft for military and commercial use, is set to lay off the biggest number of workers (30,000).
Aside from the airline and aircraft manufacturing industries, also terribly hit were the travel and related industries in the US, such as hotels and resorts, shopping malls, gambling casinos in Las Vegas and other areas. Bush has called on the people of the US to travel and go to shopping malls, supposedly as a patriotic activity.
Five days after the stock market opened following the attacks in the US, the overall stock market fell by 14.3% in the US with a loss of $1.4 trillion.
The insurance sector has likewise been intensely affected. Insurance companies around the world have lost an estimated $30-$40 billion or 30% of their total capital. Companies with the biggest insurance coverages of those who died, of the airplanes and buildings that were destroyed as well as the other casualties of the attacks on the US are in danger of complete collapse. They will attempt to recoup losses by raising insurance premiums, charging this to passengers and airline companies. This will result in higher plane fares.
Because of these industries' losses, the US government is estimated to have lost $50-$60 billion in taxes, tariffs and other fees due it this year.
The US economy is estimated to have incurred $100 billion in direct losses. An estimated $60 billion is needed to repair damaged buildings in New York and at the Pentagon. For saving the overall airline industry alone, the US government would need up to $24 billion. The US government estimates that it would need a total of about $180 billion to prevent the decline of all industries affected by the attacks. Nonetheless, it is helpless to avert the certainty of a recession that is sure to worsen, along with the ongoing recession afflicting the entire international capitalist system.
The negative trend already manifested in the international capitalist economy in the middle of this year is now set to worsen due to the events that have transpired in the US. The international capitalist economy is expected to suffer an absolute decline of 2.2% this year and in 2002.
Further worsening of the economic crisis in the Philippines
In the face of developments in the US, the Philippine economy is expected to be mired deeper in crisis. The IMF has forecast a 2.5% gross domestic product growth rate for the Philippines in 2001. The IMF had optimistically set a growth rate of 3%. The Macapagal-Arroyo regime had previously set its sights on a 3.3% growth target.
The Philippines' already low credit rating is likewise set to deteriorate. Leading imperialist institutions concerned with making economic analyses and investment advisories on various countries have classified the Philippines among countries that investors should shun. International investment company ING Barings also considers the Philippine economy as fourth in its list of "newly emerging economies" that are most vulnerable to being pulled down with the further decline of the US economy. This is due to the Philippine economy's excessive dependence on the US economy and, in particular, on its exports to the US.
With the expected worsening of the already dismal situation besetting export-oriented industries, the Employers Confederation of the Philippines (ECOP) has warned of a new round of layoffs in this sector. The dismissals are a reaction of capitalists to lower than expected orders from the US. In the past 18 months, up to 43,000 workers have been laid off in the electronics and construction sectors. Recently, the country's overall exports of electronic spare parts fell by 30%.
In this regard, more companies are expected to close shop. Even before the September 11 attacks in the US, up to 1,300 companies had closed down in the face of a slowdown in worldwide production. This number is higher than the 1,100 companies that closed shop in the whole of 2000.
Even prior to the September 11 attacks, businessmen in the country were already constantly talking about the need to lessen the country's dependence on the US economy and the US export market. Even Macapagal-Arroyo, in her State of the Nation Address, has admitted that the country's export economy had no chance of recovering. But the sole and seemingly simple way they see of lessening such dependence is to encourage the people to patronize Philippine-made products. The leading problem of imperialist domination over the country has not even been remotely considered.
But before any favorable resolution of the country's economic problems could be expected, it is first necessary for the country to be liberated from imperialist rule and for the imperialist-dominated semicolonial and semifeudal system in the country to change through a people's democratic revolution. Any hope of resolving the country's economic problems before national liberation is achieved will be elusive.
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