Since October 2008 the global capitalist economy has been caught in the biggest crisis of the last seventy years. Crores of people all over the world have been thrown out of jobs. Hundreds of crores of people have seen their life-long savings diminished. It is being widely predicted that 2009 will be worse than last year for the global economy and for working people of the world.

The current crisis is comparable with the biggest economic crisis of the last century – the Great Depression, which lasted nearly five years. However, the people are being consoled that the current crisis is not as big as the crisis of the last century. The ruling class is hiding the fact that at that time, one-sixth of the globe was outside of the world imperialist system. When the capitalist economy of America was struggling to survive in 1930, the socialist economies of Russia and other peoples of the Soviet Union were thriving. The force of globalization imposed by imperialist powers during the last few decades has, however, ensured that the current crisis does not spare any country and any people of the world.

The centre of the current crisis is in the United States, the leading consumer market of the world.  Americans saw their household wealth reduce by $13 trillion in 2008, erasing a decade of gains. In earlier severe recessions, households lost about 5% of their wealth, compared to 20% lost in this crisis. Losses are already twice as high as during the last big crisis in 2001 (IT bubble), and half as much as in the Great Depression.

The US economy shrank at an annualised rate of 3.8 percent in the fourth quarter of 2008 – its worst performance since 1982. Virtually every sector of the US economy recorded a sharp decline. Consumer spending, which accounts for two thirds of the U.S. economy, fell by 3.5 percent in the final quarter, on top of 3.8 percent in the third quarter – the first time that purchases have declined by more than 3 percent in two consecutive quarters since the data compilation began in 1947. Spending on durable goods such as vehicles, furniture and domestic appliances plunged far faster – by 22.4 percent – the largest fall since 1987.

People are apprehensive of the future and are cutting down expenditure even on basic necessities. Purchases of food and clothing by American people dropped by 7.1 percent – the steepest quarterly decline since 1950.

Economies of Europe and Japan have also been badly affected. Industrial production sharply fell in Europe during December, contracting over the past year by 17% in Spain, 13% in UK, 9% in France, Italy & Russia and 6% in Germany. In Britain, December showed decline of 3.3% in retail sales making it the worst shopping season in last 25 years. Car sales in Britain dropped 21% in the same month. 

Japan’s economy is heavily dependent on exports which fell by a staggering 35 percent in December. Japanese Economic Policy Minister Kaoru Yosano was forced to admit: “We’re in a very grave situation. Japan is being hit by a wave of weakening global demand.”

US has now registered 13 consecutive months of job losses. On one single day on 26 January, as many as 74,000 layoffs were announced. Barack Obama announced on February 10, 2009 that since October 2008, 3.6 million Americans have lost their jobs.

Large job losses have also been reported in Britain, Japan, Australia and other countries. More than 5000 export-oriented factories have been closed down in China. According to reports, 15% of China's 13 crore workers working in the export sector have lost their jobs and returned to their villages.

Bank of America economist Holger Schmieding says these job losses are only the start and will get substantially worse in 2009. In Europe, he says, “the down sizing in the financial sector and other industries, including cars and machine tools, is only beginning. Merryl Lynch chief economist David Rosenberg predicts US will lose another 35-45 lakh jobs in 2009. Unemployment rate is likely to be over 10% in US. If discouraged and part-time workers are considered, the unemployment rate is expected to be at least 16%.

Burden of the current crisis is being shifted on to the backs of working people in various forms. Pension funds, where savings for retirement of workers are kept, have lost billions of dollars in their investments in shares and real estate. California Public Employees’ Retirement System (CalPERS) is the largest pension fund in the US and the fourth largest in the world. It manages pension and health benefits for more than 16 lakh retirees and their families. In October 2007 it had $260 billion in assets. At the end of 2008 the value of its assets had fallen to $186 billion, one of its worst annual falls since the fund’s inception in 1932. Crores of retired and soon to retire workers all over the world now face the prospects of much reduced pension, or will be forced to continue working past their retirement age. An employee of America’s largest telephone company, AT&T, expressed the anxiety of working people when she said, “If I were to retire, my retirement benefit would be one-quarter of what I make today for the rest of my life.”

Every time the bourgeoisie faces a crisis, it tries to pass on the entire burden on the shoulders of the working people both directly and indirectly. People are thrown out of jobs. Working conditions are worsened. Wages are cut. Small producers get squeezed out of credit and markets. Huge dole-outs of public money are made to big corporations in the name of bail-outs.

The working class must wage a concerted struggle against the attempts of the bourgeoisie to shift the burden of the crisis on our backs. We must refuse to bear the burden of the crisis.  We must demand that the State stops protecting capitalist profits and instead protects jobs, wages and livelihoods. We must wage the struggle with the aim of preparing to replace capitalism by socialism, a system where social production is geared to fulfil people’s needs and not the maximization of private profits of a minority.