Overcoming the crises of capitalism

We live in a challenging time.

The collapse of the Soviet Union in 1989 shifted the balance of class forces to the right. In the past 32 years, the biggest capitalists have restructured the global economy to further benefit the billionaires.

The large corporations outsourced their production to low-wage countries, thus boosting their profits.

Massive outsourcing of industrial jobs decimated the previously powerful unions of the developed world. Union influence over the social democratic parties of the developed countries became weaker, resulting in these parties shifting to the right and adopting neoliberal policies.

Over the past 15 years, we have seen quantitative easing for the richest corporations but austerity for the ordinary people. The safety net in the developed countries has been steadily cut back – health benefits, free tertiary education, old age pensions and many other benefits have been reduced over time.

Thirty-five years of neoliberal dominance has reshaped the global economy. The richest and largest multinational companies have won many concessions through World Trade Organization conventions and free trade agreements.

These agreements have made it more difficult for developing countries to develop their own industries. We are now required to give what they term “national treatment” to the multinational companies. Developing countries have to give the same terms to the multinational companies as we give to our local companies.

At the same time, intellectual property rights have been heightened making it more difficult for developing countries to build an indigenous industrial base.

As a result, industrial development in most third world countries is tied to global chains that are dominated by the multinational companies. These companies push down the prices of the products produced in developing countries, thus transferring a large share of the surplus to their coffers.

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The minimum wage in California is now $14 per hour. If you calculate based on an eight-hour day and 22 working days a month, and an exchange rate of 4.2 ringgit to the US dollar, the minimum wage in California is over RM10,000 per month.

The minimum wage in Malaysia is now RM1,200 per month – less than an eighth of the minimum wage in California.

This gross undervaluation of labour in the third world has resulted in a massive transfer of wealth to the multinational companies, which are in the US, Europe and Japan. The pillaging of Asia, Africa and Latin America that started 500 years ago continues today.

Wage suppression in the developing world is the reverse image of super-profits of the largest multinational companies. The distribution of global income has become even more skewed, with the top 0.1% receiving a larger share of global income every year.

Governments can compensate for low wages by providing subsidised social services. But to do this, governments need to have a decent revenue.

Unfortunately, corporate taxes have been slashed all over the world – in Malaysia it was 40% of profits in the 1980s. From 1988 onwards, it has been reduced in stages. Corporate tax is now only 24% of profits in Malaysia, and our government wants to reduce it further because in Thailand corporate tax is only 19% of profits. And we are competing with Thailand and Indonesia for investors. This reduction in corporate tax rates is happening all over the world.

Many governments are afraid that introducing wealth taxes will result in a relocation of their biggest companies to other countries. Recently, Dutch Shell decided to relocate its headquarters to Britain as Shell was unhappy about the 15% tax on dividends that the Dutch parliament enacted.

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As a result of falling corporate tax rates, governments do not have enough funds to strengthen the safety net for citizens.

Neither do governments have the funds to invest in renewable energy, electric buses for public transport and reforestation.

Governments give lip service to combating climate change but have trouble walking the talk as they do not have sufficient funds. Many governments, including mine, indulge in quite a lot of greenwashing.

There is an urgent need for the left to step forward and provide ideas and leadership to steer our societies in a more just and sustainable direction. To do this, we need to be clear about the transitional programme we are putting forward to our people.

This programme has to be something that the majority of our people can understand and identify with. We cannot copy and paste slogans that were relevant 60 years ago. We need a realistic analysis of what should be done now – of what can be done – in the near and medium term.

We need to be able to tell our people what we would do differently from the government in power, if we came to power in our respective countries. And how we plan to do it.

Malaysia is a relatively small country which is hugely dependent on trade. The value of our exports is about 65% of the nation’s gross domestic project (GDP). If the Socialist Party of Malaysia (PSM) is serious about becoming a dominant political force in Malaysia, we need a convincing narrative regarding several issues including:

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How would a socialist coalition manage the Malaysian economy so that a larger share of the wealth created is returned to the people through better wages and more comprehensive social protection – but without causing capital flight and unemployment?

How would we empower ordinary people in workplaces as well as in the neighbourhoods in which they live?

How would we tackle the ethnic divide – we are at present a badly fractured society? How would we deal with the legitimate but sometime conflicting demands of different ethnic groups?

How would we deal with the efforts of imperialist powers to stir up trouble using conservative religious groups?

What would we do immediately regarding climate change?

Where would we find the financial resources for these initiatives?

How would the left coalition ensure that its parliamentarians and other leaders are not bought over by the corporate class?

Only when we give clear and credible answers to these questions will we be able to win people to our side and emerge as the dominant political force in the country.

These discussions will help in building our understanding of our times and that will help us in formulating a vision for our countries that is achievable and that resonates with the aspirations of ordinary people.

Let us over the next two decades focus on changing our societies. Hopefully, the ideas that we discuss will help us in building our movements to bring about that change. – Think Left, PSM

This is a slightly abridged transcript of the opening speech at the recent Socialism 2021 conference



AGENDA RAKYAT - Lima perkara utama
  1. Tegakkan maruah serta kualiti kehidupan rakyat
  2. Galakkan pembangunan saksama, lestari serta tangani krisis alam sekitar
  3. Raikan kerencaman dan keterangkuman
  4. Selamatkan demokrasi dan angkatkan keluhuran undang-undang
  5. Lawan rasuah dan kronisme
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