The end of the crisis requires an end to the war in Ukraine

The war in Ukraine had an extraordinary one disruptive impact on the world economybeyond the material dimensions of Russia and Ukraine, and in the first place profoundly affected commodity markets and global financial and inflationary conditions (“WB / Global Economic Prospects / June-2022”).

The result was a sharp slowdown in the world economywhich this year would grow by only 2.9% per year (from 4.5% forecast a year ago), while emerging countries have also seen their projection downwards, with an increase of 3.4% this year (almost 1 and a half points less than what was diagnosed 12 months ago).

This clear declining trend of the global economic boom coincides with a rising inflation rate which has reached a minimum level of 8% per year in the United States, in Europe and generally in the global economy.

Therefore, what is foreseeable now for the next 10 years is a situation of low economic growth coupled with high inflation; and this dire prognosis is directly related to the war in Ukraine and its continuation, according to World Bank estimates.

The latest global inflation data for April 2022 are as follows: the global rate is 7.8%, the highest level since 2008; and it rose to 8.5% in advanced countries, even reaching 9.1% in the United Kingdom.

What triggered this wave of inflation around the world was the Global energy shock caused by the war in Ukraineespecially after the invasion of February 24, 2022, accompanied by the sanctions imposed on Russia by the United States and European countries.

Something similar happened with world economic growth, which after growing by 5.7% per year in 2021, after the virtual collapse experienced by the pandemic, fell to 2.9% in 2022, and would remain at the same level in 2023. and in 2024.

What is really worrying is the 2% annual increase in the long term (second half of the 1920s), as an expression of a generalized debilitation of potential boom capacity, especially in advanced countries.

The truly critical point of this prognosis is the highly disruptive impact of the energy and food shocks caused by the war in Ukraine, with the addition that its severity is directly related to the duration of the conflictor.

What is remarkable is that this happens when the technological change of the last 20 years is truly extraordinary; and the global economy much more flexible and efficient, including in energy terms, than it was two decades ago.

Automation has spread and Artificial Intelligence (AI) has become the most comprehensive technology of the time, which means this the technological revolution has triggered a generalized process of structural disinflation.

In short, this decline in potential growth caused by the war in Ukraine and its aftermath occurs in the full swing of the Fourth Industrial Revolution (CRI).

The intensely disruptive peculiarity of the war in Ukraine and the sanctions against Russia is its strictly exogenous and exclusively geopolitical character, completely extraneous to the organic process of capitalist accumulation.

This means ending the conflict a negotiation process between the partiesit can eradicate in one movement and practically immediately the underlying causes of the world crisis.

But what’s happening right now is exactly the opposite. There is a general collapse and a total lack of cooperation in the world economy.

The 2008/2009 international financial crisis, which arose with the collapse of Lehman Brothers on Wall Street, was resolved by a phenomenal cooperation and coordination effort in the worldled by the US and China, using the Group of 20 (G-20) as a platform for global governance.

The two superpowers, acting in close cooperation, have mobilized all world institutions – World Bank, IMF, WTO, ILO, etc. -; and what they did was a preview of what is involved in creating a world governance system.

None of this exists today, quite the contrary. Between the US and NATO there is a global war situation with Russia and China; and all the Bretton-Woods institutions are today deeply divided, or have been emptied of real content.

Today, instead of a process of cooperation to resolve the crisis, there is rupture and confrontation; and this is what turns the current crisis into the most serious in the history of the capitalist systemmuch higher than that of 2008/2009.

This is what makes the current situation extremely dangerous, even from a military point of view, and profoundly unstable. War is not achieved by bad will, but by a set of errors, resulting from ignorance or ideological prejudices.

But in situations of crisis the rule is always the same in the history of the world: “Where it burns, where it hurts, there is the way to salvation”.

In short and in short: the war in Ukraine must end with political negotiations as soon as possible.