The following is an excerpt from Communist Party USA National Chairman Sam Webb's keynote address to the CPUSA's 27th National Convention, which was held July 6-8 at the University of Wisconsin-Milwaukee. For the full text of Webb's keynote, go to www.cpusa.org or call 212-989-4994, ext. 226.

By Sam Webb

People's Weekly World

Comrades, it wasn't that long ago that the apologists of capitalism extolled, almost with a zeal worthy of an evangelical preacher, the good news of the "new economy."

Thanks to the revolution in information, communications and transportation, we were told, the days of rising prices, slow growth and cyclical downturns that plagued the U.S. economy in earlier times were a thing of the past.

Indeed, out of the ashes of the old economy, a "new economy," it was said, had arisen. And apparently by magic, for no one was able to offer a plausible explanation for this new phenomenon.

In this "new economy," a long-term productivity slowdown and unemployment were both vanquished, inflation was tamed and nasty cyclical ups and downs were overcome.

The soaring of stock and bond prices to unheard of levels was seen as the most obvious sign that U.S. capitalism had entered an era of nearly limitless possibilities. Any concerns about speculative excess and bubbles on Wall Street were patronizingly dismissed as the tired views of some outworn thinker whose mindset was hopelessly stuck in an earlier period.

The only flaw with all this is that eventually reality asserted itself. The economic laws of motion of capitalist society, which Marx so brilliantly uncovered long ago, rained on the parade of the "new economy" and dot-com crowd.

Boom gave way to slowdown. Investment in hi-tech and manufacturing dried up. Profit expectations dimmed. Unemployment began to creep up. And the consumer price index, which measures inflation, was traveling north while the stock market was plunging southward. By the time the market reached a point of unstable equilibrium a trillion dollars of value had been lost. Don't you feel for these internet billionaires and multi-millionaires!

But this precipitous fall of stock prices is more than a passive mirror of a faltering economy. It measurably aggravates the economic crisis. Just as the debt-driven financial bubble on Wall Street was a major stimulant to the longest expansion in this century, the bursting of the bubble will considerably worsen the economy's slide on the downside of the economic cycle.

How bad will economic conditions get? We don't know exactly. But we do know that they continue to worsen as we speak. The establishment media would like us to believe that the cyclical downturn is only a momentary blip in an otherwise healthy economy. But this is an instance of the wish getting far ahead of the reality.

A recent issue of The Economist quotes Lawrence Summers saying that the present day economic cycle will more likely mirror the cyclical patterns of the pre- rather than the post-World War II world. In other words, the downturns may well be longer and steeper.

The present weakness in our economy, moreover, coincides with a slowdown in the world economy and an energy crisis. Both could worsen the economic situation in this country considerably, particularly if war breaks out in the Middle East. More and more, capitalism is an integrated world economic system, thereby bringing about a closer synchronization of economic crises on a global level.

The unfolding economic crisis, combined with the right wing anti-democratic offensive, will bring enormous economic hardship to tens of millions and especially working-class and minority women, racially and nationally oppressed people and immigrant workers.

Making matters worse, many forms of relief have been eliminated during the last decade. Consequently, the grimmest features of a capitalist economic crisis - homelessness, hunger, dire poverty, family crises - will reappear on a much broader scale. Elementary survival will be a daily concern of millions of people.

What kind of White House and Congress allows tens of millions of people to go to bed hungry at night? No person, and especially no child, should be ill fed, ill housed, ill clothed, ill schooled and ill cared for medically. Do you agree?

Clearly, we can't wait for the crisis to worsen before we act. We must respond now, take initiatives now, join with others now and struggle now.

Notwithstanding the claims of its proponents, economic globalization is accompanied by fierce exploitation, economic instability and crises. In its wake, problems of vast dimensions have arisen - AIDS, poverty, hunger, debt bondage, labor migration, global warming, marginalization of whole regions and continents and the heightening of national and racial oppression.

Consider for a moment the AIDS crisis. In Africa alone, 17 million men, women and children have died and another 25 million are infected with the HIV virus. One would think that, given the deadly and devastating impact of this killer disease, the world community would respond on an emergency basis.

But that hasn't happened. So the question is why? Suffice it to say that the AIDS crisis in Africa and elsewhere is not only a health problem, but also a problem of political economy, a problem of racist oppression, a problem of capitalist globalization and a problem of imperialism's utter inhumanity. This convention should strongly condemn the Bush administration for the meager resources that it has pledged to the AIDS crisis.

The contemporary global economy is not an arena of freedom and free exchange, but rather of coercion and unequal power, with a few nations and powerful transnational corporations like General Electric, Microsoft and Citicorp, sitting at the top and the vast majority of nations and people occupying a subordinate status.

Despite all the hype about the magic of the market, the structure of the global economy is not the outcome of some inevitable, seamless and pure economic process.

Instead, it is fraught with contradictions, winners, losers, crises and struggles, all of which have a bearing on the overall trajectory of economic globalization.

In fact, the evolution of the global economy is as much a political process as an economic one. Capitalism follows general laws of development to be sure, but these laws operate in a particular political and economic context and are modified to one degree or another by the particular distribution of political and economic power among competing classes.

We would make a huge mistake if we neatly separated the economic substructure of the global economy from the politics of capitalist globalization.

The transnational corporations, which are the main structural underpinning of the global economy, don't walk up to a line separating economics from politics and say, "We can't go any further; politics is for others."

To the contrary, they control and utilize the state apparatus and supranational organizations - like the International Monetary Fund - not to mention their own economic might, to structure the objective process of economic internationalization in their own selfish interests.

In fact, the pronounced tendency in the political sphere toward reaction, fiscal discipline and violence in our country is closely connected to the needs and pressures of a global economy dominated by huge concentrations of economic power.

It's not small town and rural America, but rather the most reactionary sections of capital that are the architect and driving force behind the lean and aggressive role of the state.

Moreover, with the collapse of the Soviet state a decade ago, there is no counterweight to the aggressive tendencies of U.S. imperialism. Feeling unrestrained and triumphant, U.S. imperialism let its dogs out.

Somewhat to the surprise of the U.S. ruling class, however, a powerful protest movement has arisen in response to this new global configuration of political and economic power. This new movement has no single center.

It is multilayered and contains many political tendencies. Its demands and forms of struggle are wide-ranging and radical. It is developing somewhat spontaneously, which has both positive and negative aspects to it.

Nearly all the currents in this movement see the transnational corporations and supranational organizations as the main cause of the crises associated with globalization. Some go further and point to the system of capitalism itself.

There is no shortage of issues around which millions can be mobilized. Blocking the Free Trade of the Americas Agreement, making child and sweatshop labor illegal, protecting the world's rain forests and food supply, defending the land and cultural rights of indigenous peoples, abolishing the debt of the developing countries and de-militarizing the border between Mexico and the United States are a few of the issues that draw people into struggle.

We should have a very positive attitude toward this movement and find ways to raise the level of our involvement. Our experience as well as our understanding of the nature of capitalism should allow us to make an important contribution to this tremendous movement.

To look for a historical parallel to present-day developments, we might go back to the turn of the last century. The country at the time was going though an economic transition much like it is today. The changeover was from locally and regionally organized markets to a nationally integrated economy.

At the center of this process was a new economic actor - powerful corporations that were able to dominate whole lines of industry and consolidate heretofore disjointed local markets. It was the age of the robber barons, like Rockefeller, Carnegie and Morgan.

Facilitating this process were technological breakthroughs in manufacturing, communications and transportation. Of these technologies, the most notable was the railroad, which made possible the transporting of goods from distant sites to consumer markets.

This restructuring of the economy brought in its train enormous dislocation and hardship for millions of the country's working people, farmers and other class strata.

A way of life for tens of millions was forever destroyed. Out of this wrenching experience grew a powerful people's movement to challenge the growing control of the economy by these new corporate trusts.

Today, we are in another transition, from a nationally integrated economy to a globally integrated one. Like a century ago, a new economic actor - the transnational corporations - is the main economic form organizing this transition. New technologies are facilitating the process.

It is happening in an incredibly short space of time and an old way of life is disappearing. And again in response, a labor-led coalition has emerged - this time to challenge the transnational corporations and the global institutions that they control.

In both instances, the transition was driven by the core characteristics and deep structures of capitalist exploitation.

At the same time, there are differences between the earlier transition and the current one.

The scale of the previous transition was national while the current one is global. The corporate form structuring the transitions is different.

The contemporary working class is bigger and more diverse than its predecessor of a century ago. New social movements have arisen in recent years that didn't exist 100 years ago.

The level of development of the productive forces and productive technique is vastly different in the present transition. Thus, we find both continuity and change in this historical process.

Our emphasis in studying economic processes, however, should be on what is new and changing - not to the point where we lose sight of the underlying processes from which the new emerges, but, in striking a balance between continuity and change, our accent should be on what is changing.

The reason is simple. Changes in the productive forces and relations alter the terrain of the class struggle.

It is sometimes said that capitalism has always been a global system, so what's the big fuss about globalization. It's just the same ole, same ole.

Sure, capitalism has always been a global system, but not in the same way, not to the same degree and not with the same effects. It changes and moves through different phases of development.

Without taking into account the specific features that distinguish one period of capitalist development from another, we will be unable to project strategic and tactical concepts of struggle.

As a reaction to the transition to a nationally integrated economy in the early 20th century, the populist and reform movements constructed a mechanism with rules, regulations, and institutions whose function was to restrain the power of the corporate beasts of that time.

The anti-globalization movement is faced with a similar challenge. But in this instance, the regulatory rules and institutions to harness transnational corporate power have to be fitted to the present-day concrete circumstances.

For example, can the global economy be brought under social control without reversing the pronounced trend toward financial deregulation and liberalization?

Doesn't finance capital have to be brought to its knees in order to mitigate, let alone eliminate, the harsh effects of globalization?

If the answer is yes, then social control over capital movements has to be one of the core elements of any alternative program to capitalist globalization.

Of course, there will be other elements, including new forms of international working-class unity. But without radically curbing the power of transnational corporations and banks, any new regulatory regime will lack teeth.