Over the last decade or more, this consciousness has been supplanted, due to the combined effects of the decline and decay of the Stalinist bureaucracies on the one hand, resulting finally in their collapse, and the extended capitalist boom of the 1980s on the other. This boom appeared superficially to be a continuation of the prolonged organic upswing of 1970-75, relegating the recessions of the 1970s to the status of mere accidental interruptions caused by extraneous factors in the Middle East. These processes temporarily rehabilitated the credibility of capitalism in the popular consciousness as a viable world-historical system, and tarnished the earlier appeal of socialism. Even in many of the colonial countries, where the local capitalists are still held in general contempt as crooks and parasites, illusions have become reinforced in the seeming successes of capitalism in the USA, Europe and Japan, and in foreign investment by the monopolies of these countries as a key to the regeneration and development of the colonial economies.

This change in consciousness, attested by developments in both the former Stalinist and in the imperialist countries, manifests itself most strikingly in the colonial world by the abandonment of all their earlier professions of "socialism" by national-bourgeois governments, and by their attempts to adopt policies of privatization and liberalization; by the conspicuous absence of any further steps in the direction of proletarian Bonapartism despite a wave of uprisings, overthrows, coups and social crises; and by the disintegration of existing proletarian Bonapartist regimes one after another.

In terms of the subjective factor, too, our earlier documents on the colonial revolution survive from a bygone epoch when our tendency was confined to a single island and our role was necessarily limited to passive commentaries and theoretical preparation. At that time we had no forces on the ground in the colonial world. In these conditions we correctly presented our ideas in broad brush-strokes, emphasizing fundamentals and overlooking secondary and episodic details. As the tendency has matured, so our tasks have become more exacting.

For most of the colonial countries, the period of the 1980s boom was a catastrophe. It took place at the cost of the intensified plunder of the colonial world. There was a drastic fall in the prices of primary products, i.e. raw materials (generally, and inaccurately, termed "commodity prices"), which continued through the 1980s boom and is now further worsened by the recession. In mid-1991 The Economist index showed its lowest-ever commodity price index (excluding oil). Meanwhile, the cost of manufactured imports to the colonial world is rising. The IMF index measuring the purchasing power of a basket of 30 commodities (excluding gold and oil) in terms of the manufactured goods that they can buy has fallen inexorably since 1950, and plummeted overall by one third between 1957 and 1985. The only brief exception to this pattern came in the years 1973-4, due to a surge in metal prices and then in oil prices.

The sharply worsening trade terms of the 1980s helped to sustain the boom in the metropolitan countries. The fall in commodity prices was not due to the vagaries of the blind play of market forces, which (other factors being equal) during a boom would obviously tend to raise prices, but to a conspiracy by the imperialists after the shocks of 1973-4 to weaken the primary producers and drive down commodity prices. This was achieved by a combination of factors. They sought alternative sources, for instance prospecting and exploiting the oil reserves in Alaska and the North Sea. Japan managed to reduce by 40% its dependence on oil. They also developed research and investment into the production of synthetic substitutes, e.g., plastics for metal, fiber optics for copper wire, artificial sweeteners for sugar, etc. Between 1971 and 1991, world consumption of copper thus fell by 25% per unit of GDP, of iron ore by 40%, and of tin by 50%. "Consolidation" further enabled the multinationals to artificially fix prices both of purchases from the colonial world and of sales to it. More directly, the imperialist powers dictated prices by deliberate manipulation of the markets, by the bribery of corrupt stooge regimes (e.g. their undermining of the OPEC cartel through surrogate regimes in Kuwait and Saudi Arabia), and by bullying and outright military intervention (most notably in the 1991 Gulf War). Another factor in the fall in commodity prices was the terminal decline and finally the collapse of the Stalinist powers, which disastrously weakened and disarmed the bourgeois colonial regimes, as well as the proletarian-Bonapartist regimes. It undermined whatever feeble bargaining power had been previously enjoyed by the primary producers, by denying them alternative markets, sources of aid, and a diplomatic dimension for playing off the super-powers. Conversely, with the end of the Cold Was, US imperialism has abandoned an entire generation of puppet regimes throughout the colonial world, thus still further reducing their room for maneuver.

The debt crisis began with the 1974 oil price rise. To meet the increased cost of energy imports, the governments of the non-oil producing countries were forced to borrow from the banks, which found themselves suddenly awash with petrodollars. They were then induced by initially low interest rates, combined with high inflation rates, to borrow further to finance grandiose prestige projects and massive military expenditure. The banks for their part considered infallible the security of national governments backing these loans.

Later, the debtor nations were hit by the introduction of floating interest rates and their sharp rise in the mid-1980s, the sharp decline in their export earnings due to falls in commodity prices, and the strong dollar in terms of debt servicing costs were offset by the corresponding devaluation of export earnings.

These factors combined to turn a net transfer of $36.5 billion to the colonial countries at the beginning of the decade into a negative transfer of $42.9 billion by its end. The accumulation of the colonial countries' debts doubled between 1980 and 1990, from $639 billion to $1,341 billion. Today the total "Third-World" debt is equivalent to nearly half of its collective GDP.

Despite the fact that the total "third-world" debt is proportionately low in relation to total global debts - the USA's foreign debt alone amounting to more than half of this figure and its overall national debt being three times higher - the imperialists refuse to cancel this debt outright. They deliberately exploit it for the political leverage it gives them. Not only does it enable them to extort huge payoffs in various forms from corrupt colonial regimes; more generally, through such devices as the Brady plan and debt/equity swaps, they enforce deals in which the colonial countries obtain limited debt relief at the cost of opening up their economies to outright plunder. Thus, while in the past outstanding debts from countries were collected by diplomatic pressure and ultimately by military force, the assets of weaker economies today are seized through a process of privatization and liberalization, through "structural adjustment programs" imposed under the supervision of the IMF. The imperialist moneylenders are in effect foreclosing on the mortgaged national economies of these countries.

All these factors combined to effect a massive disinvestments from the colonial world. The net capital influx of the postwar period was reversed as a result of the debt crisis, followed by structural adjustment programs, which broke down whatever flimsy trade protection had previously existed and opened up the way to the direct stripping of national assets by imperialism. The fear of currency collapse sucked capital out into the safe havens of the metropolitan countries, which could offer unprecedented high interest rates and the chance to make huge fortunes out of currency speculation.

Protectionism has already placed a gigantic blockade around the most lucrative markets for colonial exports. The breakdown of GATT negotiations and the other harbingers of a coming era of protectionism, trade wars and the establishment of heavily fortified regional trading blocks threaten catastrophe.

The process of disinvestments was aggravated by the various aid agencies. The IMF's net money flow crossed into minus in 1985 and the World Bank's in 1990. The IMF is currently siphoning off a net $6 billion a year from the colonial countries, and the World Bank another $0.5 billion. The United Nations Development Program estimates that the total annual inflow of aid, amounting to $54 billion, is currently offset nearly tenfold (by some $500 billion) as a result of higher real interest rates, negative capital transfers, unequal competition in international services, restricted access to metropolitan labor markets and restricted access to trade. This figure leaves out of account the effects of worsened trade terms.

All the factors that had afforded the colonial bourgeoisie at least some shelter in the past have thus been undermined. They had found themselves too weak to survive without the support of a large nationalized sector, bureaucratic controls and licensing, limits on foreign equity holdings, high tariffs and other protective barriers. They had been helped by the opportunity to play off the Stalinist states against imperialism in securing markets and trade agreements, infrastructure development, military and economic aid, etc. The collapse of Stalinism together with the economic aid, etc. The collapse of Stalinism together with the economic factors has left them defenseless.

The renewed ascendancy of imperialism over the colonial world was expressed in the growing arrogance of US imperialism, as shown in the military attacks on Grenada, Libya and Panama; the so-called "drug wars"; and above all in the 1991 Gulf War - the greatest attack on the colonial world since the end of the Vietnam War in 1975. Apart from the devastation caused to Iraq, the war came as a catastrophe for a number of colonial countries. Forty countries suffered a loss of more than 1% of GDP - the standard criterion of a national disaster. 16 countries lost more than 2%. Jordan lost 25% of GDP, and Yemen the equivalent of 150% of export earnings. The Gulf War shows the increased arrogance of imperialism in the post-Stalinist world. But it should not be regarded as the opening of an era of colonial wars. The conditions for this year were exceptionally favorable to imperialism. It was a limited success in that oil prices were driven down, but it exposed the limits of imperialist power. US imperialism has itself recognized the futility of its earlier hopes of imposing a "new world order". (See World Relations in a New Epoch for further analysis.)

A ransom has been extracted under IMF auspices, whereby a portion of the sub-continent's $400 billion debt has been swapped for government bonds backed by US Treasury collateral, opening up the way to deregulation, free trade pacts, tariff cuts and wholesale privatization. Only the primary mineral assets of these countries have so far escaped complete privatization: Mexican oil, Bolivian tin, Chilean copper, etc. There is now again a certain net capital inflow, though mostly in the form of new loans or returning flight capital, attracted by the sale of privatized state assets at bargain prices. The economies of the sub-continent have been largely de-industrialized as a result of the flight of capital and the influx of cheap US imports. In Chile, the extra surpluses squeezed out of the proletariat under the junta are being used to buy up cheap assets throughout Latin America. The current exceptional growth rates of Argentina and Chile, based on short-term speculative foreign investment, cannot be maintained for long.

The debt crisis led to a sudden capitulation by the Indian bourgeoisie at the hands of the IMF and the adoption of an instant Latin-American program, including devaluation, partial currency convertibility, budget cuts, reduced tariffs, liberalized foreign equity restrictions, abolition of licensing, deregulation and privatization. Similar policies have been adopted in Pakistan and the rest of the sub-continent. The resulting hardship has led to a sharp upturn in communal disturbances, and also to massive workers' mobilizations.

Hopes of a substantial regeneration of these economies through foreign investment are false. Even leaving aside global factors, they do not represent attractive capital havens. It is true that they offer a relatively large potential market and a superabundance of cheap though unskilled labor. But they suffer an archaic infrastructure, resulting in power and water shortages, unreliable telecommunications, transport breakdowns and vulnerability to all manner of natural disasters. Moreover, they are completely unstable, prone as they are to strikes and massive demonstration, to say nothing of secessionist movements, guerilla wars, terrorism, national uprisings and the worst communal riots since 1947, with governments precariously perched in power and liable to hall at any time, and the constant threat of possible impending war. Paradoxically, these economies cannot successfully compete for foreign capital with neighboring China, which offers a bigger market, cheaper and better educated labor, more efficient infrastructure and (for the moment) greater political stability. The trickle of inward capital flow which has temporarily topped up foreign exchange reserves comes mainly from IMF subventions, plus a limited investment by expatriates and return of flight of capital.

Islamic fundamentalism has in some countries emerged as a complicating factor in the colonial revolution. In the context of deepening economic hardship, the political vacuum at the head of the mass movement, the collapse of Stalinism, the rottenness of the corrupt colonial bourgeoisie and the anti-imperialist rhetoric of many of the fundamentalists, they can have a popular appeal. Though a diverse phenomenon, common to all Islamic fundamentalists groups is their lack of any coherent political or particularly economic program. Though in many countries they may come to power at the head of mass movements to overthrow vicious Bonapartist dictatorships (e.g. in Algeria), and could be forced initially under mass pressure to take steps against imperialism, they are ultimately counter-revolutionary in character and will undoubtedly try to subjugate the workers' movement, as they did in Iran.

The existence of giant deformed workers' states in the USSR and China had provided, not only an ideological model, but also practically an alternative market and source of aid. Long before their final collapse, the decline and decay of these states had undermined their prestige. As the morale of the bureaucracy was sapped, it strained ever more desperately towards making an accommodation with US imperialism. It was prepared increasingly openly to betray its potential allies in the colonial world. It began to intervene increasingly actively to block the road towards proletarian Bonapartism by withholding diplomatic support and refusing trade agreements or military aid. Transitional regimes in Egypt, Ghana and elsewhere met with a veto to their tentative proposals to carry through the expropriation of landlordism and capitalism and "join the Soviet camp". The Soviet bureaucracy reinforced the pressure from the USA on the Sandinista regime in Nicaragua to hold back the completion of the revolution. These events further dimmed the appeal of Stalinism in the colonial world.

Nevertheless, it cannot be ruled out that, in conditions of world depression, new proletarian-Bonapartist regimes could be established in the future. In its day, the trend towards proletarian Bonapartism testified to the impasse of capitalism and the straining of the masses, even in the world's most desolate areas, towards socialism. In the absence of the development of mass Marxist proletarian parties, we could see a movement of some of these societies back towards proletarian Bonapartism, and elsewhere too a new wave of guerilla wars and radical junior officers' coups tending in this direction. In spite of the false perspectives of the guerilla organizations, which led them on many key occasions to stand aside with fatal consequences from mass movements in the cities (in the Philippines, El Salvador, Peru, initially in South Africa, etc.), and their political degeneration in many cases - their exploitation of the drug trade, their tendency towards extortion, their nationalist prejudices, etc. - in extreme conditions some of these could come to power, most notably Sendero Luminoso in Peru. One such victory could temporarily give a new momentum to illusions in guerilla struggle. Once in power, such a regime could only hold out for a period against an economic blockade or even military intervention by US imperialism on the basis of an internationalist appeal for solidarity. Without the alternative diplomatic and economic strategy that was available to Castro in 1959 in a different era, in isolation it could not transform the social foundation and hold out indefinitely against imperialist pressure.

Proletarian-Bonapartist regimes were established for the most part in countries where there was neither a real bourgeoisie nor a developed proletariat. A more classic manifestation of the permanent revolution began to assert itself from the late 1970s, as economic crisis began to hit the more developed colonial societies and as the political grip of Stalinism on the labor movement began to weaken. The proletariat began to stir in South Africa, Iran, Brazil, Argentina, Nigeria, India, South Korea, etc.

The crisis throughout the colonial world today throws into sharp relief the law of permanent revolution, which explains that the bourgeoisie can no longer develop society and that in the colonial world too it is the mission of the proletariat, at the head of the oppressed masses and with the solidarity of the world proletariat, to take the helm of society and carry through the democratic and socialist tasks posed by history. For a period, the bourgeoisie were enabled to obscure the simple truth of this law with various confusions: the transfer of political power to colonial bourgeois regimes in the Indian sub-continent and in most of Africa; the industrialization of the larger Latin American countries; the development of the South-East Asian "Tigers", etc. But the truth is clearer than ever today: the colonial bourgeoisie can offer no way forward out of imperialist slavery.

Parties like the Mexican PRI, the Argentine Peronists, the Indian Congress, the Pakistan People's Party, the Sri Lanka Freedom Party, etc., in the past adopted varying degrees of a demagogic "anti-imperialist" rhetoric, and in some cases gained a base in the working class. Today, with the material erosion of the national bourgeoisie, these parties have adopted policies no less subservient to world imperialism than any feudal puppet, as we see with the cases of Salinas, Menem, Narasimha Rao or (when in power) Benazir Bhutto. However, given the dimensions of the impending social crisis, the fiasco of the privatization program in many countries, and the prospect of mass pressure, some of the bourgeois parties could once again adopt a superficially radical "populist" stance. Without room for even the limited reforms of the past, however, they will be incapable of maintaining political authority and they will cause shattering disappointment among their working-class supporters. This is clear from the experiences of the Argintine Peronists, the Pakistan People's Party, etc.

In the colonial countries as elsewhere, undoubtedly there has been some disorientation, especially among proletarian activists, as a result of the collapse of Stalinism. We should not underestimate the shock dealt to the consciousness of even the less active layers by the fact that there can no longer be said to exist a society that operates outside the laws of capitalism. But Stalinism had been rotting over a long period. The worst mistake would be to imagine that theoretical speculations over this issue will either dampen down mass struggles or weaken the effect of out intervention in building our forces. Certainly the bourgeois are afraid of the revolutionary consequences of the fact that, as Marx predicted, the disparity between rich and poor is growing.

The Socialist International collapsed in 1914. Worker militants throughout Europe were devastated by the Socialist leaders' betrayal. A wave of reactionary chauvinism swept the continent. As late as January 1917, Lenin said that his generation might not live to see the next Russian Revolution. Nine months later Lenin was in power and a new International was being founded. Why did hundreds of thousands of young workers come so readily to the ideas of Bolshevism? Because the exigencies of the world war gave them no respite, no room for the luxury of ideological skepticism. The situation today, especially in the colonial world, is no less urgent and compelling. The workers have no choice but to fight. We will win the best militants to our banner on the basis of the authority we can build in the course of their struggles, by our slogans, our program, our judgment, our capacity for leadership, etc. We will carry through the education of the new cadres on the wing.

Our forces are tiny. But out ideas alone correspond to the reality facing the working class. In the volatile conditions of the colonial world, out tendency can grow with lightning speed. This has been attested many times in the history of the colonial working class; before the First World War with the formation of workers' parties in Indonesia, the Philippines, Chile, Argentina and Uruguay; after the Russian Revolution, in China, India and Indochina; in the 1930s in Chile and Ceylon; more recently with the development of the CPI(M) in India, COSATU in South Africa and the PT in Brazil. With clear ideas and bold initiatives, our International will establish itself firmly in the colonial world as the only hope for humanity.

Resolution from the IEC
Adopted by the Congress

First Draft March 1993