From Neoliberalism’s Old Normal to the 21st Century New Normal

Colin Todhunter

Sold under the pretence of a quest for optimising well-being and ‘happiness’, capitalism thrives on the exploitation of peoples and the environment. What really matters is the strive to maintain viable profit margins. The prevailing economic system demands ever-increasing levels of extraction, production and consumption and needs a certain level of annual GDP growth for large firms to make sufficient profit.

But at some point, markets become saturated, demand rates fall and overproduction and overaccumulation of capital becomes a problem. In response, we have seen credit markets expand and personal debt increase to maintain consumer demand as workers’ wages have been squeezed, financial and real estate speculation rise (new investment markets), stock buy backs and massive bail outs and subsidies (public money to maintain the viability of private capital) and an expansion of militarism (a major driving force for many sectors of the economy).

We have also witnessed systems of production abroad being displaced for global corporations to then capture and expand markets in foreign countries.

The old normal

Much of what is outlined above is inherent to capitalism. But the 1980s was a crucial period that helped set the framework for where we find ourselves today.

Remember when the cult of the individual was centre stage? It formed part of the Reagan-Thatcher rhetoric of the ‘new normal’ of 1980s neoliberalism.

In the UK, the running down of welfare provision was justified by government-media rhetoric about ‘individual responsibility’, reducing the role of the state and the need to ‘stand on your own two feet’. The selling off of public assets to profiteering corporations was sold to the masses on the basis of market efficiency and ‘freedom of choice’.

The state provision of welfare, education, health services and the role of the public sector was relentlessly undermined by neoliberal dogma and the creed that the market (global corporations) constituted the best method for supplying human needs.

Thatcher’s stated mission was to unleash the entrepreneurial spirit by rolling back the ‘nanny state’. She wasted little time in crushing the power of the trade unions and privatising key state assets.

Despite her rhetoric, she did not actually reduce the role of the state. She used its machinery differently, on behalf of business. Neither did she unleash the ‘spirit of entrepreneurialism’. Economic growth rates under her were similar as in the 1970s, but a concentration of ownership occurred and levels of inequality rocketed.

Margaret Thatcher was well trained in perception management, manipulating certain strands of latent populist sentiment and prejudice. Her free market, anti-big-government platitudes were passed off to a section of the public that was all too eager to embrace them as a proxy for remedying all that was wrong with Britain. For many, what were once regarded as the extreme social and economic policies of the right became entrenched as the common sense of the age.

Thatcher’s policies destroyed a fifth of Britain’s industrial base in just two years alone. The service sector, finance and banking were heralded as the new drivers of the economy, as much of Britain’s manufacturing sector was out-sourced to cheap labour economies.

Under Thatcher, employees’ share of national income was slashed from 65% to 53%. Long gone are many of the relatively well-paid manufacturing jobs that helped build and sustain the economy. In their place, the country has witnessed the imposition of a low taxation regime and low-paid and insecure ‘service sector’ jobs (no-contract work, mac-jobs, call centre jobs – many of which soon went abroad) as well as a real estate bubble, credit card debt and student debt, which helped to keep the economy afloat.

However, ultimately, what Thatcher did was – despite her rhetoric of helping small-scale businesses and wrapping herself in the national flag – facilitate the globalisation process by opening the British economy to international capital flows and allowing free rein for global finance and transnational corporations.

Referring back to the beginning of this article, it is clear whose happiness and well-being counts most and whose does not matter at all as detailed by David Rothkopf in his 2008 book Superclass: The Global Power Elite and the World They Are Making. Members of the superclass belong to the megacorporation-interlocked, policy-building elites of the world and come from the highest echelons of finance, industry, the military, government and other shadow elites. These are the people whose interests Margaret Thatcher was serving.

They set the agendas at the Trilateral Commission, Bilderberg, G-7, G-20, NATO, the World Bank and the World Trade Organization.

And let us not forget the various key think tanks and policy making arenas like the Council on Foreign Relations, the Brookings Institute and Chatham House as well as the World Economic Forum (WEF), where sections of the global elite or their representatives forge policies and strategies and pass them to their political handmaidens.

Driven by the vision of its influential executive chairman Klaus Schwab, the WEF is a major driving force for the dystopian ‘great reset’, a tectonic shift that intends to change how we live, work and interact with each other.

The new normal

The great reset envisages a transformation of capitalism, resulting in permanent restrictions on fundamental liberties and mass surveillance as livelihoods and entire sectors are sacrificed to boost the monopoly and hegemony of pharmaceutical corporations, high-tech/big data giants, Amazon, Google, major global chains, the digital payments sector, biotech concerns, etc.

The great reset is being rolled out under the guise of a ‘Fourth Industrial Revolution’ in which smaller enterprises are to be driven to bankruptcy or bought up by monopolies. Economies are being ‘restructured’ and many jobs and roles will be carried out by AI-driven technology.

The WEF says the public will ‘rent’ everything they require: stripping the right of ownership under the guise of a ‘green economy’ underpinned by the rhetoric of ‘sustainable consumption’ and ‘climate emergency’.

At the same time new (‘green product’) markets are being created and fresh opportunities for profit extraction are opening up abroad. For instance, World Bank Group President David Malpass has stated that poorer countries will be ‘helped’ to get back on their feet after the various lockdowns that have been implemented in response to the Covid-19 crisis. This ‘help’ will be on condition that neoliberal reforms and the undermining of public services are implemented and become further embedded.

Just a month into the COVID crisis, the IMF and World Bank were already facing a deluge of aid requests from developing countries. Scores of countries were asking for bailouts and loans. Ideal cover for rebooting the global economy via a debt crisis and the subsequent privatisation of national assets and the further ‘structural adjustment’ of economies.

Many people waste no time in referring to this as  some kind of ‘Marxist’ or ‘communist’ takeover of the planet because a tiny elite will be dictating policies. This has nothing to do with Marxism. An authoritarian capitalist elite – supported by their political technocrats – aims to secure even greater control of the global economy. It will no longer be a (loosely labelled) ‘capitalism’ based on ‘free’ markets and competition (not that those concepts ever really withstood proper scrutiny). Economies will be monopolised by global players, not least e-commerce platforms run by the likes of Amazon, Walmart, Facebook and Google and their multi-billionaire owners.

Essential (for capitalism) new markets will also be created through the ‘financialisation’ and ownership of all aspects of nature, which is to be colonised, commodified and traded under the fraudulent notion of protecting the environment.

The so-called ‘green economy’ will fit in with the notion of ‘sustainable consumption’ and ‘climate emergency’. A bunch of billionaires and their platforms will control every aspect of the value chain. Of course, they themselves will not reduce their own consumption or get rid of their personal jets, expensive vehicles, numerous exclusive homes or ditch their resource gobbling lifestyles. Reduced consumption is meant only for the masses.

They will not only control and own data about consumption but also control and own data on production, logistics, who needs what, when they need it, who should produce it, who should move it and when it should be moved. Independent enterprises will disappear or become incorporated into the platforms acting as subservient cogs. Elected representatives will be mere technocratic overseers of these platforms and the artificial intelligence tools that plan and determine all of the above.

The aim here is not to discuss COVID-19 as a public health issue and the lockdowns and restrictions we have seen since March 2020. But it is clear that the lockdowns, restrictions and ‘relief packages’ doled out have helped boost the bottom line of global chains and the e-commerce giants and have cemented their dominance. Many small and medium-size independent enterprises have been pushed towards bankruptcy. At the same time, fundamental rights have been eradicated under COVID19 government measures.

Politicians in countries throughout the world have been using the rhetoric of the WEF’s great reset, talking of the need to ‘build back better’ for the ‘new normal’. They are all on point. Hardly a coincidence. Essential to this ‘new normal’ is the compulsion to remove individual liberties and personal freedoms given that, in the ‘green new normal’, unfettered consumption will no longer be an option for the bulk of the population.

It has long been the case that a significant part of the working class has been deemed ‘surplus to requirements’ – three decades ago, such people were sacrificed on the altar of neo-liberalism. They lost their jobs due to automation and offshoring. They have had to rely on meagre state welfare and run-down public services.

But what we are now seeing is the possibility of hundreds of millions around the world being robbed of their livelihoods. Forget about the benign sounding ‘Fourth Industrial Revolution’ and its promised techno-utopia. What we are witnessing right now seems to be a major restructuring of capitalist economies.

With AI and advanced automation of production, distribution and service provision (3D printing/manufacturing, drone technology, driverless vehicles, lab grown food, farmerless farms, robotics, etc), a mass labour force – and therefore mass education, mass welfare, mass healthcare provision and entire systems that were in place to reproduce labour for capitalist economic activity – will no longer be required. As economic activity is restructured, labour’s relationship to capital is being transformed.

In a reorganised system that no longer needs to sell the virtues of excessive individualism (consumerism), the levels of political and civil rights and freedoms we have been used to will not be tolerated.

Neoliberalism might have reached its logical conclusion (for now). Making trade unions toothless, beating down wages to create unimaginable levels of inequality and (via the dismantling of Bretton Woods) affording private capital so much freedom to secure profit and political clout under the guise of ‘globalisation’ would inevitably lead to one outcome.

A concentration of wealth, power, ownership and control at the top with large sections of the population on state-controlled universal basic income and everyone subjected to the discipline of an emerging biosecurity surveillance state designed to curtail liberties ranging from freedom of movement and assembly to political protest and free speech.

Perception management is, of course, vital for pushing through all of this. Rhetoric about ‘liberty’ and ‘individual responsibility’ worked a treat in the 1980s to help bring about a massive heist of wealth. This time, a public health scare and ‘collective responsibility’ for the well-being of others is being used to help move towards near-monopolistic control over economies by a handful of global players.  

And the perception of freedom is also being managed. Once vaccinated many will begin to feel free. Freer than under lockdown. But just how free remains to be seen.

Nationalism on the Decline

Lawrence Wittner

Although, beginning in about 2015, nationalist political parties made enormous advances in countries around the world, more recently they have been on the wane.

The nationalist surge was led by a new generation of rightwing populist demagogues who, feeding on public discontent with widespread immigration and economic stagnation, achieved startling political breakthroughs. Matteo Salvini of Italy, Geert Wilders of the Netherlands, and Marine Le Pen of France catapulted their fringe political movements into major party status. In Britain, Nigel Farage’s United Kingdom Independence Party (UKIP) startled mainstream parties by winning a referendum calling for Britain’s withdrawal from the European Union. Donald Trump, championing an “America First” policy, shocked political pundits by emerging victorious in the 2016 U.S. presidential race. Two years later, in Brazil, the flamboyant Jair Bolsonaro, campaigning under the slogan “Brazil Above Everything,” was easily elected president of his country. In May 2019, Narendra Modi’s BJP, a Hindu nationalist party, won a landslide election victory in India.

As the acknowledged leader of the rightwing, nationalist uprising in these and other nations, Trump forged close contacts with his overseas counterparts and pulled the U.S. government out of international treaties, as well as out of global institutions. “Wise leaders always put the good of their own people and their own country first,” he admonished the UN General Assembly in September 2019. “The future does not belong to globalists. The future belongs to patriots.”

But, even as he spoke, the nationalist momentum was beginning to falter. In Europe, every nationalist political success during 2019 was matched by a defeat. Although, in Spain, the small, anti-immigrant Vox Party gained seats, in Austria, the nationalist Freedom Party experienced major setbacks, while Britain’s once-powerful UKIP and Greece’s rabid Golden Dawn movement virtually disappeared. Meanwhile, in Turkey, President Recep Tayyip Erdogan’s nationalist party suffered stinging election defeats in the nation’s three largest cities.

Things went further downhill for the nationalists in 2020. A loss by Modi’s BJP in Delhi that February added to its string of regional election defeats. In Italy, Salvini’s Northern League suffered an election rout and the center-left Democratic Party replaced it in the coalition government. Meanwhile, in France, Le Pen’s National Rally party went down to a resounding defeat in the July 2020 local elections and, in November, Brazil’s Bolsonaro was humiliated when most of the candidates he campaigned for failed to win election. Perhaps the most significant nationalist defeat occurred that November in the United States, where Trump lost his presidential re-election campaign by 7 million votes and his radicalized Republican Party failed to recapture the House of Representatives, which it had lost in 2018.

This year, the nationalist defeats have turned into a rout. In January, Trump’s Republicans lost special Senate elections, ending their party’s control of the U.S. Senate. In March, Erdogan’s political control of Turkey crumbled still further, as polls found support for his nationalist party slipping dramatically. This May, Modi’s BJP lost another regional election.

Much the same occurred this June. In Germany, where the nationalist Alternative for Germany was projected to score an upset victory in a state election, it drew a disappointing 20.8 percent of the vote—not much more than half the percentage garnered by the Christian Democratic victors and considerably less than the total secured by the leftwing parties. In Brazil, clear signs emerged that the Bolsonaro regime, with record unpopularity, was tottering toward collapse. Finally, in France, where Marine Le Pen’s party was predicted to have a good chance of triumphing in six of the country’s 13 regional elections, it ended up defeated in every one of them.

As the nationalist tide has receded, governments have turned to reviving the international institutions and agreements battered during the previous years. These include the United Nations, the World Health Organization, the Paris Climate Accords, and key nuclear disarmament agreements. In another sign of their willingness to engage in global action, major governments have proposed a global minimum tax on corporations.

How can this change in the fortunes of nationalist parties be explained?

One factor behind the political turnabout is that the style, policies, and behavior of some of the leading nationalist politicians set off alarm bells in the minds of many people and political parties about authoritarianism, and even fascism. Some of these politicians, in fact, displayed fascist tendencies and, also, encouraged violent, right-wing action by their supporters. Consequently, uneasy voters and parties, anxious to preserve democracy and political freedom, were willing to make political compromises, such as uniting behind the most electable alternative to the nationalist candidate.

A deeper reason, though, is that, in a world faced with global problems such as a disease pandemic, climate catastrophe, a nuclear arms race, and economic inequality, a nationalist approach doesn’t make much sense. Recognizing this, most of the public gravitates toward global solutions. A Pew Research Center poll in the summer of 2020 found that 81 percent of the 14,276 people interviewed in 14 nations thought that “countries around the world should act as part of a global community that works together to solve problems.” Some 76 percent approved of the role of the United Nations in promoting human rights and 74 percent in promoting peace, while 63 percent said that the WHO had done a good job handling the COVID-19 crisis.

Of course, despite the recent setbacks experienced by nationalist parties, they are far from dead. They have succeeded in establishing themselves as part of the political landscape and today govern a variety of countries, including Brazil, Hungary, India, Poland, and Turkey. In the United States, the Trump-dominated Republican Party controls numerous state governments and stands a reasonable chance of recapturing control of the federal government.

Even so, the political tide has recently turned against nationalism and, consequently, possibilities have re-emerged for addressing global problems on a global basis.

South Africa’s top court sentences former ANC President Jacob Zuma to 15 months

Jean Shaoul

South Africa’s Constitutional Court has sentenced former African National Congress (ANC) President Jacob Zuma to 15 months imprisonment for contempt of court. He was convicted for defying its order to appear at an inquiry into corruption during his presidency.

Should Zuma fail to hand himself in to police within five days, the police minister must order his arrest.

The pending imprisonment of the former president some 30 years after the end of the hated apartheid system and the rise to power of the ANC expresses the protracted crisis gripping the entire South African bourgeoisie. It takes place as public anger mounts over the ANC’s handling of the public health crisis and vaccine rollout, systemic corruption within the ruling party and the escalating economic crisis.

Jacob Zuma in 2017 (Credit: Kremlin.ru)

The 79-year-old Zuma has denied any wrongdoing. Apart from one brief appearance when he left before being questioned, he not only refused to attend the inquiry led by Deputy Chief Justice Raymond Zondo examining corruption allegations relating to his period in office, but also failed to mount a defence. Instead, he wrote a 21-page letter to the chief justice, accusing the court of bias and Zondo of conducting a personal vendetta against him. This prompted the inquiry's lawyers to seek an order from the constitutional court for his imprisonment.

In an hour-long speech setting out the court’s decision, Justice Sisi Khampepe criticised Zuma, saying that his attacks on the court were unprecedented and that “Never before has the judicial process been so threatened.” She added, “If his conduct is met with impunity, he will do significant damage to the lost rule of law.”

It was Zuma who had set up the inquiry into “allegations of state capture, corruption, fraud” that focused on the Gupta family and its associates who won lucrative government contracts and were allegedly even able to choose cabinet ministers.

A longstanding member of both the Stalinist South African Communist Party (SACP) until 1990 and the ANC that has ruled South Africa since the end of apartheid in 1994, Zuma has for years being mired in scandals and corruption. He served as Deputy President of South Africa under President Thabo Mbeki from 1999 to 2005, when he was fired after his financial adviser was convicted of bribery. This was amid a bitter struggle within the ANC between the factions around Mbeki and Zuma, who was backed by the SACP and the trade union federation COSATU.

Elected president of the ruling ANC in 2007, Zuma became President of South Africa after winning the 2009 elections. His government was characterized by corruption and nepotism with some $32 billion reportedly stolen during his period in office. At the same time, Zuma presided over a sharp decline in the nation’s economy, conditions that made international capitalists nervous about investing in South Africa, as unrest grew over rising unemployment and poverty and a strike wave spread across the country.

This flowed inexorably from the ANC’s agreement with the white South African elite to preserve capitalism while empowering a wealthy black elite, under the mantle of programmes like “Black Economic Empowerment,” —a political arrangement that significantly benefitted both Zuma and current President Cyril Ramaphosa, and the rest of the ANC’s leaders at the expense of the working class. South Africa became one of the most socially polarized countries in the world, worse even than under apartheid.

Cyril Ramaphosa [Credit: Tasnim News Agency]

In December 2017, amid mounting corruption scandals and bitter in-fighting, he lost the ANC presidency to former trade union leader and multi-billionaire businessman Ramaphosa. Two months later, the ANC forced Zuma to resign as State President, fearing it would lose support in the 2019 elections. While Ramaphosa made pro-forma statements about rooting out corruption, he has largely targeted his political rivals.

Last November, Ramaphosa’s main rival, ANC secretary general Ace Magashule, appeared in court charged with corruption, money laundering and fraud in relation to the looting of public funds under Zuma. Last month, Health Minister Zweli Mkhize was forced to resign as an investigation into his alleged “impropriety” in the awarding of Covid-19 contracts gets under way.

Zuma faces another trial, which has been repeatedly postponed, on 16 charges of fraud, corruption and racketeering relating to a 1999 $5 billion purchase of fighter jets, patrol boats and military gear from five European arms firms, brokered when he was Mbeki’s deputy. The charges, that he accepted $34,000 annually from the French arms company Thales in return for protecting the company from an investigation into the deal, were reinstated after the ANC forced him out of office. The alleged bribe was part of a broader corrupt relationship between Zuma and one of the consortium members that won a major bid to provide combat suites for new navy frigates.

These exposures are just the tip of the iceberg of the corrupt operations of the ANC government, which has used programmes like Black Economic Empowerment to turn party officials and their business cronies into multi-millionaires.

While the Zuma ruling is expected to strengthen Ramaphosa’s faction, it will not end the corruption or lessen the crisis within the ANC which is haemorrhaging support. The Ramaphosa government’s handling of the pandemic has only intensified the bitter class divisions, as, like its counterparts around the world, the ANC has sought to place the full burden of the global recession that has hammered the mining and manufacturing sectors of the working class.

The economy contracted 7 percent last year amid the impact of the global recession, the fall in demand for minerals and raw materials—South Africa’s main exports—and lockdown restrictions. It follows a years-long decline in GDP per capita as growth failed to keep pace with the increasing population. The government’s budget deficit for 2020-21 reached 11 percent of GDP, with more than a fifth of the budget going to servicing debt that has reached nearly 65 percent of GDP. According to official statistics that are a vast underestimate of the real situation, around one third of South African workers are now unemployed, trapping millions in poverty and contributing to the obscene levels of inequality that persist nearly three decades after the end of apartheid in 1994.

Petrochemical workers in Iran strike over pay and conditions

Jean Shaoul

Petrochemical workers across Iran have been waging strikes since June 19 to demand higher pay, the payment of back wages, the elimination of intermediary contractors and better health and safety conditions.

Thousands of workers in Iran’s vast energy industry have gone on strike over the past week to press demands for better wages and conditions at oil facilities, Iranian media reported Wednesday, June 30 2021. (AP Photo/Vahid Salemi, File)

The workers, mainly technicians and tradesmen such as scaffolders, fitters, welders and electricians, want monthly wages increased from $300 to $500 to keep up with Iran’s soaring inflation rate, which has reached 50 percent. They are also calling for the implementation of 2010 labour law provisions that give fixed-term contract workers 10 days off for every 20 workdays. This would allow them to return from oil rigs and offshore facilities to their homes often far away. Currently, only permanent workers—whose numbers have fallen precipitously in recent years due to contracting out—are given the legally mandated time off.

The strike is part of a broader movement of opposition among workers across the country to the decades-long assault of Iran’s bourgeois-clerical regime on their economic and social conditions. This assault has continued and deepened amid the coronavirus pandemic, which is now surging for the fifth time in Iran, as the new more transmissible and deadly Delta variant takes root.

According to a recently published Interior Ministry report, there were around 43,000 protest demonstrations in Iran between 2013 and January 2018, or 30 protests per day. The protests in November-December 2019, triggered by an overnight hike in gas prices and widespread economic hardship, were only suppressed by the security forces’ use of extreme lethal force. At least 1,500 people were killed, 2,000 wounded and 7,000 arrested during the government crackdown.

The strike, the oil workers’ most extensive industrial action to date, was called by the Coordination Council of Oil Industries Contract Workers, an advocacy group for 41,000 contract workers in the oil industry. It has spread to at least 70 oil and gas installations and refineries and petrochemical plants, with tens of thousands of workers reportedly staying at home or in their dormitories.

Most of the strikers are employed as casual labourers or on short-term contracts by contractors and sub-contractors of the National Iranian Oil Company (NIOC), National Iranian Gas Company (NIGC), and National Iranian Oil Refining and Distribution Company. Workers claim that around 154,000 temporary workers or 80 percent of those employed in the sector do not have regular contracts.

Over the last twenty years, the government-owned INOC stopped employing workers on regular contracts as older workers retired, turning thousands of new hires into short-term contract employees. This practice spread among smaller, newly emerging companies in the sector, as the INOC, like its counterparts internationally, moved to access lower-waged workers by outsourcing many of their operations.

The Contract Oil Workers Council issued a statement on June 26 saying, “We want to be involved in the decision-making process that helps to realize our demands,” adding “We have seen that sometimes, the management of some companies has ruthlessly fired the striking day-workers and replaced them immediately.” There are reports that 700 workers employed by contractors at the Tehran Refinery have been fired.

The Iranian Labour News Agency (INLA) cited one worker as saying that contractors in southern oil projects such as Asalouyeh, in Bushehr province, had cut salaries to levels in the rest of the country where working conditions are not as harsh as in the oil and gas fields. Temperatures at remote oil fields in the south of Iran can exceed 50 degrees centigrade (122 Fahrenheit) in the summer. Other workers said that contractors frequently paid wages late and only “every few months.”

The strike movement, dubbed “Campaign 1400,” as the year 2021 is known in the Iranian calendar, and launched under the banner “We Do Not Give Up Our Rights,” is the continuation of a struggle that began in July 2020, when workers at 15 refineries, petrochemical companies and power plants took part in a nationwide protest. Days later, workers from other industries, including auto manufacturing and power generation, joined the “1400 Protest” campaign, with permanent workers in the oil industry saying they would join the strike on June 30. Last Wednesday, permanent NIOC employees held rallies at refineries and petrochemical plants in Abadan, Ahwaz, Mahshahr, Damavand and Asalouyeh, in support of their demands for higher wages and better retirement conditions.

Mahmoud Ahmadinejad, Iran’s Shiite populist president from 2005 to 2013, issued a statement Sunday voicing support for the contract petrochemical workers and warning the government about the implications of a strike by such a key section of the working class. It was the oil workers’ strike that erupted in late 1978, amid a wave of mass protests by workers, students and the urban poor, that broke the back of the blood-soaked US-backed regime of Shah Reza Pahlavi. Ahmadinejad described the energy workers as among the most committed and technically qualified group of workers in the country, and said they are right to demand they be treated like regular employees.

The strike has clearly roiled the authorities. The government, led by President Hassan Rouhani, whose second and final term ends in August, has called on the workers to end their strike in view of the importance of the oil industry and Washington’s continuing efforts to strangle Iran’s economy through punitive sanctions. It has promised a review of their demands. The Iranian Parliament’s Energy Committee held an extraordinary session with Oil Minister Bijan Namdar Zaganeh on Sunday June 27 to discuss the strikes and find ways to end the unrest in the oil sector.

According to Parvin Mohammadi, the Deputy Secretary of the Iranian Independent Workers Union, strikes in the oil sector have spread to 70 companies in eight provinces. She told London-based Iran International TV that the authorities had not addressed the workers’ demands, while adding that they have made empty promises and arrested workers for refusing to end protests or strikes. Independent unions and workers organizations are not recognized by the government and have been repressed, often savagely, since the bourgeois-clerical regime consolidated its rule in the early 1980s.

The contract oil workers’ strike started the day after Iran’s presidential elections, which saw a record abstention rate. Ebrahim Raisi, Iran’s chief justice and a prominent conservative connected to the Islamic Revolutionary Guards Corps (IRGC) and Supreme Leader Ayatollah Ali Khamenei, prevailed in a race from which all but a handful of candidates were arbitrarily excluded. According to Kahyan.London, a right-wing opposition newspaper, workers delayed the start of the strike until after the elections because “security and judiciary authorities [always target] striking workers with security charges and prosecute them” as part of heightened pre-election security measures. They had also avoided slogans that would lead their actions to be interpreted as a political protest.

The Iranian-focused Human Rights Activists News Agency (HRANA), which is part funded by the US-sponsored National Endowment for Democracy, a notorious locus of imperialist intrigue, claims that in the week since the start of the strike there have been a number of protests against the results of some of the municipal elections held in conjunction with the June 18 presidential election, as well as actions by other workers protesting poor labour conditions.

The growing support for the strike testifies to Iran’s deep-going political, social, and economic crisis. The Iranian bourgeoisie fears an eruption of class struggle driven by declining living standards and a dramatic increase in social inequality, as those at the top have sought to place the full burden of the US sanctions on the working class. Some 1,600 US sanctions targeting Iran’s oil and gas exporting sectors as well as its banks and financial institutions were imposed and/or reimposed after President Donald Trump unilaterally abrogated the 2015 Iran nuclear accord in May 2018, costing the country between $300 to $400 billion, as part of Washington’s “maximum pressure” campaign for regime-change in Iran.

In the process, Iran’s corrupt elite have continued to enrich themselves, while working people have faced death, disease, unemployment and impoverishment. According to a parliamentary report, Iran’s super rich, who account for just 0.1 percent of the 82 million population, have over 5,000 trillion rials ($20 billion) stashed away in their bank accounts that earn them a whopping annual income of 1,000 trillion rials ($4 billion) in interest. The report suggests that even a 10 percent tax take from the 83,000 super rich would make up for the financial shortfall in the lives of low-income Iranians. At least 60 percent of Iranians live in poverty, many in extreme poverty.

Adding to the crisis, the rial fell further following the election of Raisi, trading at more than 250,000 to the US dollar in Tehran’s unofficial exchange market as the likelihood of Tehran reaching a deal with Washington to revive the 2015 nuclear accord recedes.

Divisions emerge over central bank policies

Nick Beams

Divisions are starting to emerge in the policy-making bodies of the world’s two major central banks, the European Central Bank and the US Federal Reserve, over the future direction of monetary policy.

The combined actions of the ECB and the Fed have pumped trillions of dollars into the financial system since the onset of the pandemic last year, but amid increasing signs of inflation and rampant speculation in commodities and financial assets there are concerns over where this is heading.

Federal Reserve Board chairman Jerome Powell testifies on the Federal Reserve's response to the coronavirus pandemic during a House Oversight and Reform Select Subcommittee on the Coronavirus hearing on Capitol Hill in Washington, Tuesday, June 22, 2021. (Graeme Jennings/Pool via AP)

Long-simmering differences in the ECB came to the surface again this week as two leading members of its governing body put forward opposed assessments as to where the central bank should go.

On Monday ECB executive board member Fabio Panetta, who is aligned with the bank’s president Christine Lagarde, said monetary officials should retain the “unconventional flexibility” developed during the pandemic crisis and keep interest rates low.

Dismissing the prospect of rising inflation in an address to a conference of central bankers from Mediterranean countries, he said: “We do not seem to be on track to ‘run the economy hot’” and that the “slack in the economy was likely to remain large for some time.”

Governments and the public, he continued, should recognise that the present monetary and fiscal policies, aimed at providing a stimulus, were “clearly superior” to those in force before the pandemic when the focus was on reducing debt.

His remarks echoed those of Lagarde who said last week to European Union leaders that they needed to “water the green shoots” of economic recovery and it was too early to even begin talking about ending the central bank’s crisis measures.

In March 2020 the ECB launched a €1.85 trillion pandemic emergency program to support financial markets and still has just over €700 billion left to spend before it expires in March 2022.

Just hours after Panetta’s remarks, the head of Germany’s Bundesbank, Jens Weidmann advanced an opposed perspective in a speech.

Weidmann, who leads a group of northern European representatives in the ECB who have been critical of the ultra-loose monetary policies, said there were “upside risks” for the inflation outlook and the central bank’s stimulus program should end “as soon as the emergency situation has been overcome” and 2022 will not warrant designation as a “crisis year.”

As the Financial Times noted: “His remarks set up a clash with other members of the central bank’s governing council about the future path of its policy.” The ECB is set to announce the future direction of its policies in September.

On the other side of the Atlantic there are also signs of divisions in the leading bodies of the Fed over whether the present level of financial asset purchases, running at $120 billion a month, should be eased back.

Despite the predictions by some Fed members that interest rates should start to rise in 2023, as opposed to previous forecasts of 2024, Fed chair Jerome Powell has insisted that the present policies will remain in place until there is “substantial further progress” in meeting the Fed’s goals. He has maintained that the spike in inflation, which saw prices rise by 5 percent year-on-year in May, after a 4.2 percent rise in April, is “transitory.”

But the escalation in house prices in the US has led to calls from some Fed members that the purchasing of mortgage-backed securities (MBS), running at $40 billion per month, should start to be wound back.

On Tuesday it was revealed that house prices had risen by a record amount. The S&P CoreLogic Case Shiller national home price index, which measures house prices in major metropolitan areas rose 14.6 percent in the year ending in April, the highest level of annual growth since the index was started in 1987. This followed a report by the National Association of Realtors that the median price for an existing house had risen by 23.6 percent in May from a year earlier.

In an interview with the Financial Times published on Monday, Eric Rosengren, the president of the Boston Fed, expressed concerns about the implications of the boom in house prices.

“It’s very important for us to get back to our 2 percent inflation target but the goal is for that to be sustainable. And for that to be sustainable, we can’t have a boom and bust in something like real estate.”

The house price boom, which is reflected in Europe, as well as in Australia and New Zealand and elsewhere, has been fueled in large measure by the ultra-low interest policies of all central banks.

With the subprime crisis of 2007–2008 no doubt in mind, Rosengren recalled that “boom and bust cycles in the real estate market have occurred in the United States multiple times, and around the world, and frequently as a source of financial stability concerns.”

Rosengren said that when the purchasing of securities was eased, mortgage-backed securities would have to be included in the reduction.

Others have gone further. Dallas Fed president Robert Kaplan has said that MBS purchases should end “sooner rather than later” because of the rise in the housing market, and the St Louis Fed president James Bullard has also called for the Fed to re-evaluate its support for the housing market because of concerns that a bubble was developing.

While Powell has not entered the debate some of his supporters have. San Francisco Fed president Mary Daly told reporters that MBS purchases were “not directly affecting” the interest paid on mortgages.

According to a report in the Wall Street Journal, Powell and other Fed officials are reluctant to specifically target the MBS market for a reduction in purchases because it would “suggest the Fed is using monetary policy to address a concern about the stability of the financial system arising from elevated house prices.”

In May, a key Powell supporter, New York Fed president John Williams pointed to the broader effects of the MBS program which had “pretty powerful spillovers into other financial conditions such as corporate bond rates and other similar kinds of securities.” He underscored that assessment in further comments last week that Fed MBS purchases are not “specifically tied to the housing market.”

Another aspect of the speculation set off by the ultra-cheap monetary policies of the Fed and other central banks is evident in commodities markets.

Bloomberg has reported that its Commodities Spot Index, covering 22 raw material processes is up 78 percent from its March 2020 low. The price of oil is now $75 a barrel amid predictions it could return to $100.

Bloomberg reported that commodity traders who poured in cash had been “showered” with money. Cargill, the world’s largest trader in agricultural products “made more money in just the first nine months of its fiscal year than in any full year in its history” with net income going over $4 billion. The Trafigura Group, a major oil trader, posted a net profit of $2 billion in the six months to market, nearly as much as it had made in its previous best-ever full year.

The chief concern of the central banks and governments around the world, as these price hikes are already being translated into high consumer prices, is that inflation will fuel the drive of the working class for higher wages. Consequently, while continuing to pump money into the coffers of the financial elites and promoting speculative bubbles, they will be ever more directly relying on the trade union apparatuses to suppress this movement.

New Zealand government “complacent” over deepening COVID-19 danger

John Braddock

Several New Zealand health experts have warned that Jacinda Ardern’s Labour Party-Greens coalition government has become “complacent“ over COVID-19 and didn’t act fast enough to suspend travel with the Australian state of New South Wales after a positive case from Sydney surfaced in Wellington last week.

The New Zealand capital went from alert level 1 to 2, which mandates some social distancing measures, on June 23 after an Australian visitor who spent the previous weekend in the city tested positive on his return to Sydney. That city had been under limited restrictions following an outbreak that began on June 16.

New Zealand Prime Minister Jacinda Arden speaking at a press conference in September 2020. (Image Credit: Jacinda Arden/Facebook)

Governments on both sides of the Tasman Sea ignored the dangers as the highly infectious Delta variant spread from a cluster in Sydney’s eastern suburbs throughout much of the city. Despite concerns among health experts, the New Zealand government took no action to suspend flights from Sydney after previously halting them from Melbourne during an upsurge in cases there.

Despite the Ardern government’s international reputation as a “success” story for its control of the spread of COVID-19, the country’s systems are severely compromised. Relatively low case numbers have been used to justify relaxing restrictions in the interests of “the economy.” In April, borders were recklessly opened for quarantine-free travel with Australia, at the expense of public health safety, after a clamour by the tourism industry and other businesses.

Auckland University Professor of Medicine Des Gorman told Radio NZ on June 23 that the government was tardy in “pausing” the travel “bubble,” even after the Delta variant was identified in the Wellington case. “What a shame they didn’t close the bubble several days earlier when it was clear Sydney was dealing with a Delta outbreak and there were loose ends,” he said.

The tourist visited a series of restaurants, bars and tourist attractions over two days, leaving behind 20 “locations of interest” and 420 people identified as close contacts. At this point there are 950 people self-isolating but no further positive cases have been uncovered. The fact that the man had received his first vaccine shot prompted speculation that he may have been, somewhat fortuitously, less contagious.

The man reported feeling unwell on his return flight on the morning of June 21, indicating he had been infectious during the visit. However, it took most of last week before authorities confirmed that he had the highly virulent Delta variant. Last Sunday it was revealed that his partner had also tested positive, prompting NZ officials to impose a further 48 hours under Level 2 restrictions in the capital.

Warning that “we are not in the clear yet,” epidemiologist Michael Baker described the episode as “a close call.” With the visitor attending multiple indoor venues alongside hundreds of others his trip “could have turned into multiple super-spreading events,” Baker said.

The case had exposed “major gaps” in the system and New Zealand needed to upgrade its approach to dealing with COVID-19, Baker warned. “The virus has changed markedly and our response needs to change with it,” he added.

Public health Professor Nick Wilson also told Radio NZ “the government has missed things.” It had been a mistake not to make indoor mask-wearing mandatory as well as the use of QR scanning in higher-risk settings as Wellington went into alert level 2. A review of the trans-Tasman “travel bubble” settings was needed, and an urgent upgrade of New Zealand’s alert-level system.

Virologist Jemma Geoghegan emphasised that people who have not been vaccinated were “up to twice as likely to be hospitalised if they’ve been infected with the Delta variant, compared to the other variants.”

While the government claims its vaccine rollout is “ahead of schedule,” according to OECD figures New Zealand ranks with Australia among the slowest in the developed nations. As of June 24, among 4.2 million people aged 16 and older, just 9.08 percent were fully vaccinated and a further 6 percent had received one dose. The low numbers are attributed to “constrained” supply issues with the imported Pfizer vaccine, which will continue until late July.

Each of the 20 District Health Boards are left mostly to their own devices. In Wellington, a cohort of over 65-year-olds and people with underlying health conditions is still waiting for a call-up after previously being scheduled for vaccination in May. Had the Delta variant grabbed hold in the capital last week, thousands would have been left dangerously exposed.

When trans-Tasman travel was opened up on April 18, and with the Cook Islands in May, Ardern boasted that it was “a new chapter in our recovery.” “We are world-leading ... We are opening at exactly the right time,” she declared. COVID Response Minister Chris Hipkins falsely maintained that the risk of transmission between the two countries was deemed to be “low.”

In fact, the risk to public health was completely over-ridden. The policy was imposed in the midst of a renewed surge of the virus across South Asia and with Australia’s own vaccine rollout especially shambolic. Flights have repeatedly, but only reluctantly, been suspended as COVID-19 flare-ups have occurred in Australian cities. Many travelers have been left stranded due to sudden border closures, often being forced into quarantine at their own expense.

The last Wellington scare has proven how ill-prepared the authorities are for a major outbreak. Testing facilities in the capital were quickly overwhelmed as thousands of concerned people queued up over several days to get COVID tests. Healthline telephone enquiries were backed up for hours. Fewer than 10 percent of possible contacts could initially be found through the QR scanning system, which has not been made compulsory.

Microbiologist Siouxsie Wiles warned that New Zealand will have to take “different and more extreme measures to stop it [the Delta variant] from taking off.” The earlier Alpha variant had “stress tested” the country's systems and exposed “shortfalls” in several aspects, such as ventilation in hotels used as quarantine facilities and Delta is even more infectious, Wiles said.

Hipkins announced on Tuesday that the Level 2 restrictions in Wellington would be ended that evening. Gorman, however, insisted the city should stay in level 2 for another two weeks. “That gives you some confidence there’s not going to be a tail that’s going to come back and bite you,” he said. Business owners would not want to hear this, he added, but with “one or two smouldering cases” possible, an outbreak would require a return to level 3 or 4 restrictions.

Meanwhile flights to and from the states of Victoria, South Australia, ACT and Tasmania are set to resume on July 4, even though the Sydney cluster has spread across Australia. Pre-flight testing is now required, but Wiles has warned “it’s not the silver bullet.” She said this has been proved by travelers who tested negative before their flights but were later found to have COVID-19 while in quarantine.

The gathering crisis, which was preventable, is an indictment of the corporate profit-driven response of governments everywhere which have failed to implement effective lockdown, quarantine and vaccination measures. The entire Asia-Pacific region is now seeing a renewed surge of infections based on the Delta variant with Australia, Taiwan and Fiji, all previously considered “safe,” struggling to contain serious outbreaks.

Hundreds die in Pacific Northwest heat crisis

Patrick Martin

Hundreds have died of heat stroke and hyperthermia in British Columbia and an unknown number in the US states of Washington and Oregon in a five-day heat wave that began to subside on Wednesday—or rather, to pass further east into the less populous mountain areas of Idaho, Montana and eastern B.C.

The chief health officer of British Columbia put the death toll from the first four days of the heat wave at 233, the bulk of them in the Vancouver metropolitan area. The death toll in Oregon was estimated at 60, including a farmworker, a recent immigrant from Guatemala, who died working outdoors on Saturday at a plant nursery north of the state capital at Salem. The state of Washington, with the largest number of people exposed to the lethal temperatures, did not even bother to issue an official estimate of the death toll.

Paramedics Cody Miller, left, and Justin Jones respond to a heat exposure call during a heat wave, Saturday, June 26, 2021, in Salem, Ore. (AP Photo/Nathan Howard)

As temperatures mounted over the weekend, newspapers in Portland, Seattle and Vancouver displayed an almost schizophrenic character. One side of their front pages carried dire warnings about the heat wave and the need for precautions to stay cool. The other side carried celebratory reports of the end of COVID lockdowns and the “reopening” of the local economies—meaning that tens of thousands of workers are being forced back into workplaces that are little more than ovens.

The Boeing factory in Everett, Washington, where jumbo jets are assembled, is reputedly the largest building in the world. It is also entirely without air conditioning. When the weather is hot, management orders the doors opened, which meant on Monday, letting in 108-degree air. International Association of Machinists District 751, which “represents” the workers at Everett, issued a one-paragraph statement urging workers to take more water breaks and linking to “Boeing documents dealing with high temperatures,” in other words, health and safety information provided by the company.

The tragic events of June 25-29 are the product of two interrelated processes: the formation of a “heat dome” over the region, due to instabilities in the movement of the jet stream in the upper atmosphere; and the systematic neglect of critical infrastructure and public services by capitalist governments in both the United States and Canada.

The heat dome is itself not primarily a “natural” process but rather a byproduct of climate change, a man-made process, which, in addition to raising the overall temperature of the atmosphere, also facilitates extreme weather phenomena of all kinds, including tornados, hurricanes, floods and more violent erosion of coastlines.

This is the underlying connection between such disparate events as the early start to the Gulf hurricane season (four “named” storms before the official July 1 starting date); the collapse of a 12-story residential building in Surfside, Florida (due in part to rising sea levels, undermining the soil of the former sandbar on which the high-rise was built); the flooding of highways, homes and factories in Detroit (a sudden rainstorm dumped as much as seven inches in a 12-hour period); and the heat dome over Oregon, Washington and British Columbia.

The heat dome is perhaps the most obvious byproduct of climate change, although according to meteorologists the connection is not a straight line. Warmer atmospheric currents did not directly and immediately produce temperatures that reached 116 degrees Fahrenheit (46.7 Centigrade) in Portland, Oregon, on Monday, 108 degrees (42.2 C) in Seattle, and 121 degrees (49.4 C) in the village of Lytton in central B.C., the hottest temperature ever recorded anywhere in Canada.

Rather, global warming produced an indirect result, through a process described as the creation of an “omega block,” as powerful currents of air, the jet stream in the upper atmosphere, wobble under the impact of warming air in the north polar region, allowing a north-south flow of air which then loops back, in the shape of the Greek letter. The air in the nearly closed circle sinks towards the surface, trapping heat for a period of time (the heat dome). Temperatures rise far more sharply than would be expected based on previous weather patterns.

At its worst, portions of British Columbia, usually temperate, forest-covered and ocean-cooled, were hotter for several days than Las Vegas, Nevada, nearly 1,500 miles to the south, and located in the Southwestern desert, without either significant vegetation or much cloud cover.

Climate change is a byproduct of human activity, particularly the burning of fossil fuels and other processes connected with industrialization. Alleviating it requires coordinated action on a global scale, action that would introduce the necessary changes into economic life. These are completely feasible from a technical standpoint and would not require any reduction in the standard of living of the great mass of the population. They would, however, impact on the profits and wealth of the capitalist class.

Global warming, like COVID-19, pays no attention to national borders. The global coordination needed to fight climate change collides with the framework of the capitalist nation-state system and, above all, with the drive by American imperialism to maintain its world domination against both its main rivals, China and Russia, and lesser imperialist powers like Germany, Japan, France and Britain.

The venality and incompetence of the financial elite is demonstrated in their response to the heat dome. Neither state and federal governments in the US nor provincial and federal governments in Canada have mobilized the necessary social resources to prepare for the type of extreme climate event seen over the past week or to alleviate its impact.

Washington and Oregon are under Democratic Party rule, as is the US federal government. These Democratic administrations have done little or nothing to safeguard their populations. Washington Governor Jay Inslee, who based his abortive presidential campaign on a single-issue emphasis on climate change, cannot even provide a count of the number of heat-related deaths in his state.

In Seattle, the largest city in the state, paramedics responded to 165 emergency heat-related calls on Monday alone, overwhelming the system, which handled only 91 such calls in all of 2020. As the heat wave moved east, driving temperatures to 109 degrees in Spokane on Tuesday, and 115 degrees in Lewiston, Idaho, the power company in that region, Avista, began “rolling blackouts” because its system could not handle the demand.

President Biden, at a previously scheduled meeting with Western state governors to discuss the upcoming wildfire season Wednesday, made only a passing reference to the heat crisis in those states. He announced, as his major initiative, raising the starting pay for those fighting forest fires to a miserable $15 an hour—the same as his proposed minimum wage.

Things are no better on the Canadian side of the border. British Columbia Premier John Horgan aroused widespread popular outrage when he commented, in response to the hundreds of heat-related deaths in the province, “Fatalities are part of life.” He went on to suggest that the danger of the heat wave was well known, and that people had to exercise “a level of personal responsibility” to stay safe—this in a region where relatively few people have home air conditioning.

Horgan heads a government of the New Democratic Party, the union-based social democratic party that has long abandoned any support for actual progressive reforms and competes with the Liberal and Conservative parties for the favor of big business. His remarks are just as crude and callous as the notorious statement by British Tory Prime Minister Boris Johnson, opposing any new lockdowns: “let the bodies pile high in their thousands.”

No section of the ruling class, or any of its political servants, has any solution to the crisis of world capitalism, which underlies global warming and such catastrophes as the heat dome, which are a warning of things to come. Extreme weather phenomena, like the coronavirus pandemic, demonstrate the completely outmoded character of world capitalism, and the necessity to put an end to this bankrupt system and its insatiably corrupt ruling class, and replace them with world socialism.