Voices on Global Economic & Social Crisis

Southern Trade Unions':
Voices on Global Economic & Social Crisis
Presented by: Karl Cloete
Numsa Deputy General Secretary obo Cosatu
Sogang University, 9 November 2010,
South Korea

Dear Comrades

On behalf of the Congress of South African Trade Unions (COSATU), we wish to extend revolutionary greetings to fellow activists who stand for global and social justice and who have at great risk decided to descend on South Korea to go into combat with the forces of monopoly capital and neo liberalism.

As we know, some of our comrades have been arrested on arrival in Incheon International Airport and deported back to their respective countries. This act of intimidation and victimisation on the part of the powerful against trade unionists and activists, who are only armed with truth to power, must be condemned and struggled against.


As we meet on the occasion of the November 2010 – G20 convention in South Korea, we must be reminded of the global financial capitalist crises which started with a series of shocks to the USA economy in general and the financial sector of the US economy in particular. As we now this capitalist financial crises was never going to be confined to the US because of the globalised nature and character of capitalism such that it created a ripple effect around the globe.

It is from this development that we wish to commence this conversation with a profound perspective (and perhaps a bit of an extensive quote) by the Communist Party of Sweden who had this to say about the capitalist financial crises;

“The capitalist system has experienced about 30 serious crashes since the mid-19th century. The magnitude of the present crisis is traceable to an unprecedented expansion of credit and financial services, which are obviously closely interrelated. But the crisis itself, like all the others, is rooted in one of the basic contradictions of capitalism – the disparity between the buying power of the working class and the value of the goods and services that are offered for sale.

This disparity in turn results from the accumulation of capital by the owners of the system, as they appropriate the lion’s share of the social surplus by exploiting the working class. Some of this capital is consumed, some is invested, and some is used for speculation together with the fictitious capital generated in the financial-services sector.

Karl Marx described fictitious capital as: “money that is thrown into circulation as capital without any material basis in commodities or productive activity”.

Speculation is thus a house of cards based only partly on the operation of the real economy, i.e. the production of goods and non-financial services. The disproportionate accumulation of capital in the hands of the owners has been an integral element of every capitalist crisis. It is a prime factor in the waves of speculation that precede and sometimes accompany large-scale declines in mass purchasing power.

Karl Marx pointed out that maximizing capital accumulation requires continuous expansion of production, which tends to increase as if there were enough mass purchasing power to absorb it. When the gap between production output and purchasing power becomes great enough, the system crashes. Production has to be reduced, workers lose their jobs, purchasing power declines even more, and real capital is destroyed.

The financial-services sector is rocked by an earthquake. Fictitious capital goes up in smoke. The self-destructive cycle continues until output and purchasing powers are roughly in balance, the cycle is reversed, and the system starts to grow again, enabling a restart of speculation.”

It is thus critical, from COSATU’s point of view, to analyse and unpack the G20’s formation, its many resolutions/agreements and its inability to fulfil and implement its own agreements from this particular class perspective.

Given the limited time to speak on the subject matter it is something this paper would not go into, but it is an examination that we shall engage with in the plenary discussions as part of a collective effort to confront the continued existence of the G20 in the midst of unfulfilled intentions and the misery that the poor has been reduced to.

1. Periodization of the crisis:

Whenever the recent global economic crisis is spoken about, the way it is periodized is such that it is traced to the sub-prime crisis that emerged in the US in 2008 and which spread to other sectors and the rest of the world in 2009 and 2010.

As Unions from the Global South we want to question such periodization. The periodization that traces the global and social economic crisis to developments in the US in 2007/8 ignore important events that took place in earlier periods and that could be seen as part of the same process. Countries in the Global South were hit by crisis long before 2008 in which case the Communist Party of Sweden has been quoted above.

Firstly, you have African and Latin American countries whose economies were devastated by Structural Adjustment Programmes (SAP) and debt crisis in the 1980s. Then you had the Mexican financial crisis of 1994-1995 which led to a loss of thousands of jobs, reduced the purchasing power of wages between December 1994 and July 1995 by 54% and drove millions in that country into poverty. The Mexican crisis was then followed by the crisis of Southeast and East Asian countries like Thailand, Indonesia, Malaysia and South Korea where massive currency and stock markets experienced severe declines. These led to the devastation of these economies.

Those who live in the Global South will know that well before the headlines on the “sub-prime crisis”, prices of basic commodities shot up between 2006 and 2008, making essential foodstuffs unaffordable for a vast majority of people.

Between 2007 and 2008, the food import bills of the least developed countries (LDCs) increased by 37%, not because of increased volumes of food imports but as a result of skyrocketing prices of rice, wheat and vegetable oil. According to the Food and Agriculture Organisation (FAO), these increases added 75-million people into the ranks of the hungry and drove an estimated 125-million into extreme poverty.

Raising these developments is not an attempt to deny the effects of what happened in North America in 2008 on the Global South but to show how limited it will be to see the recent crisis as just having started in the US. Many people in Africa, Asia and Latin America have been victims of the crisis long before it broke in the North America and Europe.

For us, it is more useful to see what happened in the US and Europe as a manifestation of a global capitalist economic crisis that marks an end of a global development cycle which began in the early 1950s and that began to falter in the 1970s. We in the Global South have been in the coalface of the crisis since the 1980s.

2. Our reality in the South:

Emphasising and amplifying the point above, we must say that for trade unions in the South, long before the global economic crisis and for more than 30 years:

a. We lived through neoliberal restructuring of the work place,

b. We suffered retrenchments and redundancies,

c. We saw a rapid decline in incomes,

d. We experienced the trauma of the replacement of labour by machines and robots,

e. We suffered the experience of the withdrawal of state support for social services,

f. We generally lived through hell as millions of workers lost their jobs through privatisations and commercialisation.

Thus the global economic crisis has merely compounded our situation in fact our situation was already worse-off even before the crisis. In response to the crisis:

g. Many trade unions saw the rapid decline in membership, and thus a drastic whittling down of their power to protect their members,

h. Trade Unions have lived through hard times of the growth of informal sector employment at the expense of formal secure and decent jobs;

i. We have witnessed the erosion of the place of trade unions in the social and political sphere as their numbers dwindled due to the loss of jobs through the combined effects of workplace restructuring and massive privatisation,

j. At the bottom of this chain of events are the youth, women and workers with disabilities who are relegated to the bottom of the jobless queue!

The neoliberal phase also saw southern governments tighten labour laws in favour of international speculative capital that speculated in privatisation.

While there has been some solidarity from northern unions, this has not been enough – southern trade unions have experienced quasi solidarity – northern unions have tended to protect their jobs by preventing the movement of real jobs to the south by campaigning domestically for “worker rights” as a precondition for foreign investments by companies originating in their countries.

Global Union Federation’s (GUFs) have thus far failed to even open up space for equal pay for the same job globally, let alone for real solidarity with the South by demanding the transfer of real science and technology that would enable southern economies to graduate from being primary commodities exporters.

More importantly there is a half hearted attempt to demand for the harmonisation of the same wages and conditions of employment from Multi National Companies (MNCs).

With the end of apartheid in South Africa, the North has tended to use South African trade unions as “representatives” of African unions, thus creating possibilities for tensions between South African and other African unions.

ITUC has thus far failed to begin to open up space for giving southern trade unions a greater voice and share of resources. Southern unions in GUFs continue to have very little influence.

Where they could, as in South Africa through COSATU, southern unions have used their muscle to compel governments to have specific policy responses to the global economic crisis to protect jobs and to save companies from going under.

The global economic crisis has created fertile ground for southern unions to demand to be heard on both the global economy and related issues such as global warming and climate change and “green jobs”.

Further possibilities for south/south solidarity forged during the days of struggle against neoliberalism growing are increased by the global economic crisis and it must therefore be nurtured.

3. The limitations of responses by Northern unions and Left forces:

As indicated above, many of the unions in the North have either sunk/retreated to protectionism or have been at the helm of calls for tighter regulation as if these were solutions.

There are numerous examples of unions in the North who have opted to go into bed with their ruling classes where the call has been to close plants of MNCs outside of their home countries. We have also seen Northern unions resort to demands to state bailouts for companies in distress.

The net effect of this has been a retreat by advanced capitalist countries from commitments to give aid to developing countries and to contribute to funds vital to fight HIV/Aids and poverty in developing countries.

4. What then should be the responses of unions from the South – What is to be Done?

We can’t respond by only calling for protection of existing jobs. In Sub-Saharan Africa, the majority of people are either self-employed or unemployed.

This requires a different approach; an approach that goes beyond the shop-floor. While unions in the Global South must fight at the national level, they can’t ignore the need to fight for a new and alternative world order.

Here are some of the things that we know that the G20 countries would reject as alternatives to eradicate unemployment, eradicate inequality, the widening gap between the rich and the poor, eradicate poverty and restore the basic worker and human rights so that freedom may not just be a political illusion but something that should find expression in the economic emancipation of the working class and the poor;

1) An end to Structural Adjustment Programmes which sees the commodification of basic services such as health care, provision of clean water, provision of electricity, education and other essential services for decent human existence through privatisation;

2) The support for the solidarity economy so that ordinary people can benefit without the profit motive in Cooperatives and other forms of alternative economic activity;

3) Fair trade that has at its centre respect for basic trade union and human rights, decent work for decent wages, a safe and healthy working environment, equal pay for equal work, etc.

4) Anti neo liberal policies which put people before profits;

5) Social welfare programmes as a redistributive tool and Social Wage to eradicate inequalities and poverty in all societies;

In Conclusion:

If we suggest that another world is possible then this very statement requires that we appreciate the class nature of our struggles and therefore we cannot use blunt instruments to fight a very resilient and sophisticated capitalist system.

We need to educate, mobilize and arm the working class with the right theoretical and political tools to wage the oncoming new wave of class struggle.

There is no substitute for preparing workers to struggle and to wage the necessary working class struggle in defense of their incomes, their living standards, their families, their communities and in defense of their right to a life of dignity, of work.

All of this is necessary so they workers may appreciate the fact that this is not the usual crisis of capitalism we “normally” deal with; this is the struggle of the working class against a terminally sick capitalist system!

We must as matter of course insists on international solidarity so that we may answer the rallying cry of Karl Marx who said:


As Cosatu and speaking on your behalf, we want to offer solidarity to the Korean workers who are still subjected to, amongst others;

• Precarious and insecure jobs (like all of us);

• Free Trade Agreements (FTA’s) with the USA which is not in the interest of the working class and the poor;

• Free Economic Zones which is likely to just become a resort for investors where worker rights are not respected (like in the Jeju development).

We thank you for allowing COSATU to add its humble opinion to a very serious discourse and class struggle that would necessarily pit us against the powerful, the rich and the powers of exploitation and oppression.

Long Live Working Class International Solidarity Long Live

Long Live the Workers of Korea Long Live

Down with the G20 Long Live




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