ECONOMY
EDITORIAL
PERHAPS YOUVE SEEN HIM.
HES THIS TALL, BLACK
ANDLOOKS LIKE
ANY ORDINARY
Before the
BULL crash comes, invest in IV!
IV could be the biggest favour you can do for them in the near future. The stockmarket crash this month is undoubtedly only a harbinger of worse things to come. As capitalism's crisis deepens, it's more important than ever to get socialist analysis and ideas across.
A world recession
An internationalist understanding of imperialism's crisis and a is on the horizon clear working class response are vital for workers and the oppressed who, as usual, will be the ones made to suffer when
BLACK MONDAY, October 19, was an extremely hard the world economic blow for the international capitalist economy. On that situation worsens. We are planning more thorough and the following day, the stock exchanges witnessed a coverage of the recent fall in share prices greater than that of Wall Street's crash and the economic
"Black Friday" in October, 1929.
crisis in the near future.
The total loss of US shareholders alone is evaluated at
So there can be no better time than the present for
$1,000,000 million. To give an idea of the scale, private helping us to extend our investors have lost the equivalent of nearly half of the sales. Our autumn sales total public debt of the United States. Total losses on a campaign got off to a good world scale are greater than $1.5 trillion, 50 per cent start with subscriptions more than the whole so-called "third world" debt.
increasing every issue.
With the help of our readers making an effort
ERNEST MANDEL to win new subscribers, we to win new subscribers, we should be able to increase our print run - and maybe
ECAUSE the stock exchange reeven bring back the issues
B covered part of the loss in the days we lost because of cuts that followed does not signify that last year.
these losses were cancelled out —
A little investment in IV the people who lost money were not the will bring in good same as those who won some back. The dividends. We are still overwhelming majority of small- and mekeen to receive donations dium-size shareholders lost without reto our standing fund drive.
purchasing or regaining anything in the
We could make even more days after the crash.
The violent fall in prices, which spread to improvements in the all the stock exchanges in the capitalist quality of the magazine world, reflects the enormous monetary inwith a relatively small stability that rules the international capitalamount of cash. So put.
ist economy today. It is linked to the your money on us, and bourgeoisie's growing anxieties. Pracinvest in "people's titioners of the method of self-delusion, socialism" for a secure starting with Margaret Thatcher, commentfuture! * ed that there was no need to be worried because the "real economy" would be OK. This view is marked by blindness, if not a deliberate wish to deceive the public.
Fears of new recession justified
What is particularly distinctive about stock market speculation is that it never reflects the current situation. It anticipates — that is, it expresses predictions about what will happen tomorrow. In this sense, the crash in stock market prices corresponds to increasingly widespread fears of a new generalized recession. In terms of the "real 3 economy", these fears are entirely justified. November 9, 1987 • International Viewpoint
ECONOMY • USSR
Is all this to say that a "new 1929" has already begun? Will the plummeting prices in Wall Street trigger off an economic crisis as grave as the one in October 1929? These questions are badly put for two reasons.
First, for a collapse of stock market prices to set off a serious crisis of overproduction, there must be a number of accompanying factors. The stock market certainly shows itself to be the weakest link in the chain. But other links must crack before the chain will give way. Financial institutions have to go down, abruptly stopping credit expansion; big industrial firms must go bankrupt; orders, current production and jobs have to decline noticeably. All that has not yet happened, but it could in the months to come.
Neither in 1929 did everything change from "Black Friday" to 30% unemployment in the United States, and to 40% in Germany in one go. It took more than two years to get to this catastrophic result. Nobody dares to predict what the state of the world economy will be looking ahead two or three years from now.
A new expansion in the debt mountain
Paradoxically, for capitalism, the method that the imperialist governments have envisaged to stop the crash in Wall Street is more serious than the crash itself: the injection of new credits, swelling the amount of money in circulation again, and a new expansion in the debt mountain. The fact that these measures are accompanied, against all logic, by a momentary lowering of interest rates only serves to underline the "after us, the deluge" character of this pseudotherapy.
The persistent US balance of payments deficit inundates the world with depreciating dollars. Is it possible to "attract" foreign capital to the United States by lowering interest rates? We can expect the Japanese and European capitalists to react in their usual way. The other day it was learned that in greater Los Angeles, three-quarters of big property holdings already belong to foreigners!
This is crunch for the short-sighted policies of Ronald Reagan. He is plugging the gaps in the fortress by filling them with dynamite — hardly a way to prevent future explosions.
More than ever, the debt spiral is widening. In the short term one can foresee a reduction of consumer's buying power — a new step towards recession.
Also, there are the debts of the third world, of the US, of the Japanese banks and stock markets, of the public authorities and social security in Europe, which are beginning to tumble.
The whole snowball has been rolling for over a year. The rest is only a question of 4 chronology: generalized crisis in 1987 or 1988? * International Viewpoint • November 9, 1987