International situation and Radical Alternatives

8th CADTM South Asian workshop

18 February 2020 by Eric Toussaint

(CC - “#youthClimateStrike March 15, 2019 Morristown, NJ” by lo.ags)

On 18 February 2020, in Colombo, 8th CADTM South Asian workshop

We are facing a multidimensional crisis of the global capitalist system

Economic crisis : Stagnation or recession in Europe; recession in Japan; slowdown in the US economy; slowdown in India and in China; deep crisis in the car industry at a global level.

Huge increase of private debts in particular for the big corporations including big international banks and corporations like Apple.

Public debt has also raised a lot.

Creation of bubbles (stock exchange bubble, corporate bonds Corporate bonds Securities issued by corporations in order to raise funds on the Money Markets. These bonds resemble government bonds but are considered to be more risky than government bonds and other guaranteed securities such as Mortgage Backed Securities, and therefore pay higher interest rates. bubble,…) in consequence of the policies implemented by the Central Banks of the most industrialized countries.

Ecological crisis : the dramatic character of the consequences of climate change are very clear and the decrease of the economic growth is not producing a reduction of the toxic emission of gases in the atmosphere.

Trade crisis : there is a commercial war between China and the US, but also at a lower level between Europe and the US.

Crisis of several international institutions which are part the system of capitalist domination of the planet :

Political crisis in important countries : Crisis in the US between the two capitalist parties: the Republicans and the Democrats impeachment;

  • Crisis within the European union;
  • Crisis between different factions of the big Capital in the UK around the question of the Brexit;
  • Political crisis in Algeria and Sudan
    and in India and Sri Lanka;…

First Conclusion:

The capitalist system is really in crisis. In the mind of a large number of people in a lot of countries the rejection of the capitalist system is higher than it has ever been over the last 4 decades from the beginning of the neoliberal offensive under Pinochet, Thatcher and Reagan.

The offensive of the big capital against working people is still going on

But in different regions of the planet this offensive is challenged by massive mobilizations of the population.

Peoples are protesting against the increase of inequalities in a lot of countries;
People are also protesting against the authoritarian and repressive tendencies of capitalist governments.

Usually there is a spark that provokes mobilization: a price increase (e.g. for public transport as in Chile), or the imposition of an unpopular tax (such as the whatssapp tax in Lebanon) or a combination of both, such as a fuel price increase (announced in France in November 2018, in Ecuador in September 2019, in Iran at the end of 2019) or an authoritarian measure.

The list of countries where there have been massive mobilizations in 2018-2019 is impressive :

Algeria (for one year)
Lebanon since October
Iraq since November
Iran in the last months

Nicaragua between April and July 2018
Chile from October 2019
Ecuador in September-October 2019
Colombia in November 2019
Haiti in 2018 and in 2019
Puerto Rico in July 2019

Russia (against pension counter-reforms in 2018 and for democratic elections and against repression in 2019)

Pakistan: student mobilizations from November 2019

Hong Kong
We have to add the Big Mobilizations of the youth against the ecological crisis in the most industrialized countries: European countries, Canada, Australia, but also some Latin American countries,…

Also the Big mobilizations of women’s movements and feminist movements in different countries like the USA in 2017, in Argentina since 2017-2018, in Spain in 2018-2019 with a massive feminist strike of 6 million women, in Poland against the penalization of abortion, and other European countries.

Leftist ideas received an important echo in the population of several highly industrialized countries: see the support to the Corbyn Labour program in 2017 and to the campaign of Bernie Sanders in the USA in 2016 and now in 2020.

Second conclusion:

Peoples want radical solutions against the profound multidimensional crisis of the capitalist system
Radical right wing extremism can gain the political battle with the Left if the radical left is incapable of proposing radical leftist solutions.
The radical left should be clearly anticapitalist, antiracist, internationalist, feminist and ecologist/socialist.

There is a crisis of the radical left program and the militants and activists should be part of rebuilding a program towards democratic ecologist-feminist-socialism.

Third conclusion

The question of opposing the Debt System is vital
We must oppose the Debts whenever they are illegitimate.
More and more people are suffering around the planet because of the increase of public illegitimate debts.
And because of the increase of the private debt provoked by microcredit agencies; resulting from abusive mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral.
loans; because of abusive lending to peasants; because of abusive lending to students.

The CADTM is calling for the abolition of illegitimate public debts and urges citizens to mobilize in order to audit the debt.

According to the odious debt Odious Debt According to the doctrine, for a debt to be odious it must meet two conditions:
1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
2) Creditors cannot prove they they were unaware of how the borrowed money would be used.

We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.

(See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).

The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”

Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”

So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts.
doctrine that Alexander Sack formulated in 1927 a debt may be considered odious if it fulfils two conditions:

1) The population does not enjoy the benefits of the loan: the debt was incurred not in the interests of the people or the state but against their interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. and/or in the personal interest of the leaders or persons holding power.

2) Lenders’ complicity: the lenders had foreknowledge, or could have had foreknowledge, that the funds concerned would not benefit the population.

The democratic or despotic nature of a regime does not influence this general rule.

The father of the odious debt doctrine clearly states that « regular governments (may) incur debts that are incontestably odious ». Sack defines a regular government as follows: « By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with » (my bold - ÉT). Source : Les effets des transformations des États sur leurs dettes publiques et autres obligations financières : traité juridique et financier, Recueil Sirey, Paris, 1927. . Abridged document freely available on the CADTM website (in French)

Sack says that a debt may be considered odious if: “a) that the purpose which the former government wanted to cover by the debt in question was odious and clearly against the interests of the population of the whole or part of the territory, and
b) that the creditors, at the moment of the issuance of the loan, were aware of its odious purpose.”

He continues: “Once these two points are established, the burden of proof that the funds were used for the general or special needs of the state and were not of an odious character would be upon the creditors.” (see

This doctrine has been applied several times in history.

The CADTM is also calling for the abolition of private illegitimate debts.

The main reason why CADTM is organizing this 8th CADTM South Asian workshop here in Colombo ( is because Sri Lanka is affected by a huge amount of illegitimate public debt and because the exploited people of Sri Lanka is suffering a high level of household private debt, in particular the women

This South Asian workshop is the fourth one organized since 2008 in Sri Lanka by the CADTM international network.

Public indebtedness is not in itself a bad thing. Public authorities can use loans to:

- Finance the complete closure of thermal and nuclear power plants;
- Replace fossil energies with renewable sources of energy that respect the environment;
- Finance a conversion from current farming methods, which contribute to climate change and use a lot of chemical inputs which are responsible for the decrease in biodiversity, favouring local production of organic food to make farming compatible with our fight against climate change;
- Radically reduce air and road transport and develop collective transport and the use of railways;
- Finance an ambitious programme of low energy social housing.

Public debt could be used to finance ambitious programmes of ecological transition instead of to enforce anti-social, extractivist, productivist policies that foster competition between nations.

Public borrowing is quite legitimate if it serves legitimate projects and if those who contribute to the loan do so legitimately.

A popular government will not hesitate to force corporations (whether national, foreign or multinational) as well as richer households to contribute to the loan without drawing any profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. from it, i.e. with zero interest and without compensation in the case of inflation Inflation The cumulated rise of prices as a whole (e.g. a rise in the price of petroleum, eventually leading to a rise in salaries, then to the rise of other prices, etc.). Inflation implies a fall in the value of money since, as time goes by, larger sums are required to purchase particular items. This is the reason why corporate-driven policies seek to keep inflation down. .

At the same time, a large portion of households in the popular classes will easily be persuaded to entrust their savings to the public authorities to fund the legitimate projects mentioned above. This voluntary funding by the popular classes would be remunerated at a positive actual rate, for instance 4%. This means that if annual inflation reached 3%, the public authorities would pay a nominal interest rate of 7%, to guarantee an actual rate of 4%.

Such a mechanism would be perfectly legitimate since it would finance projects that are really useful to society and because it would help reduce the wealth of the rich while increasing the income of the popular classes.

Abolishing illegitimate debts must be part of a much broader programme of further measures which would trigger the adoption of a transition to a new, post-capitalist and post-productivist model. Such a programme would include abandoning austerity policies, socialising the banking and insurance sector, implementation of an overall tax reform with heavy taxation of capital, an overall reduction in working hours with compensatory hiring and maintaining wage levels, socialisation of the energy, water and health sectors, measures for ensuring gender parity, development of public services and social benefits and the implementation of a strongly determined ecological transition policy.

Eco-socialism must be put at the heart of the debate, not left aside. Immediate and concrete proposals must emerge. We must wage the struggle against austerity and embark on the path of an eco-socialist transition. It is of absolute and immediate necessity.

Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.

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