orld economy is coinciding with the emergence of the inherent crisis of the economies of the postcapitalist countries, as well as with a sensational turnabout in the evolution of oil prices and in the balances of payments of the
OPEC countries.
Under the combined impact of the recession and long-term effects of the search for alternative energy sources (oil outside the OPEC countries, natural gas coal, nuclear energy, the beginnings of solar energy, etc.), the excessive increases in the price of oil had an easily predictable result.
A drop in OPEC's share of total world exports (to less than 50%) has
(Far Eastern Economic Review, January 1 and 8; February 19 and 26, been accompanied by a general oil glut, leading to a drop in prices and production (to 50% lower than the historical maximum). The total demand for oil will undoubtedly drop by 7% more in 1982. The per barrel price in Rotterdam dropped from 42 dollars at the start of 1981 to 28 dollars at the end of February
So, the balance-of-payments pluses of the OPEC countries began to fall headlong. They went from 100 billion dollars in 1980 to 60 billion in 1981, and may disappear altogether in 1982. (The surplus enjoyed by Saudi Arabia and the Gulf emirates is counterbalanced by the deficits of other states, now including
So, now this "substitute market" threatens to shrink severely. remains East Asia and South East Asia, all the classical "substitute market" of rearmament.
INTERIMPERIALIST RIVALRY
While over 1978, 1979, and the first half of 1980, the decline of the dollar enabled U.S. industry to improve its performance somewhat on the world market, the later rise of the dollar stimulated by the high interest rates in the United States has caused a sharp deterioration of the U.S. balance of trade. It has been mainly Japan and West Germany that have profited from this, increasing their share of world trade at the expense
Underlying these fluctuations engained a large lead in video cassettes, but the market for this product remains limited and cannot play the same role in stimulating an upturn as the products that brought the brightest days of the export
The Japanese economy depends more and more on public spending and a considerable budget deficit, as is indicated by the following comments:
"The Bank of Japan report accords a special attention to the stagnation of exports that has become apparent over recent months. It also points to the stagnation of industrial production...of private consumption, and construction." Japan Economic Journal, February 23,
The Common Market has been severely tested by the current recession. The European Monetary System has been subjected to two shocks-the first in October 1981, with the devaluation of the French franc; and the second in February 1982, with the devaluation of the Belgian franc (the Danish krona on both occasions was tied to the currency devalued).
The retreat to "national" solutions has been marked in the steel industry. In the event of a Labour victory in Great Britain, there would be a danger that the country could leave the EEC, which obviously would be much more important
Greece joining the Community. However, the ability of the Common Market to resist centrifugal dencies remains strong, owing to the importance that exports to member countries now have for all the component states. What is more, integration in the represents for a capitalist economy in cri-
The austerity policy is being reinforced by the shift from social to military spending. On the other hand, tax breaks for the middle and big bourgeoisie are going hand in hand with a very big boost in military expenditures. This results in a colossal budget deficit, unprecedented in peace time, a hundred billion dollars for the current year, and doubtless still more in the two years ahead.
This is the reason for raising the interest rate by restricting the money supply in the face of strong demand for credit on the part of both private and public sectors. It is also the reason for throttling any chance of an upturn, at least in the short term.
A NEW "COPROSPERITY ZONE"
IN EAST ASIA?
### Japanese imperialism waged world war under the slogan of creating a "coprosperity zone" in East Asia. slogan was only a cynical cover for the superexploitation to which it subjected the peoples of the occupied countries. It that Japanese colonialism-an Asian power-would be more beneficial for the peoples of East Asia than the colonialism of the old European imperialist powers or the United States.
Over the last twenty years, nese imperialism seems to have gained by peaceful means, that is, by financial and commercial penetration, most of the objectives that it sought to attain previousgendered by monetary instability, is a more fundamental economic fact. Industrial productivity in the United States is continuing to decline relative to that of political level, it is hard to envisage a 1945. the United States' principal competitors. While calling for "a reconquest of to almost the whole Pacific area, includ-
Attention has been focused Japan's economic performance, which many advocates of the capitalist system have seen as heralding a new expansion. The important point here is not so much that the higher rate of growth in Japan in recent years is essentially the effect of a higher rate of profit, which is the result primarily of the fact that for equally productive work, wages in Japan remain
West Europe and the United States. This is to say nothing of the fact that employer and public expenditures for social security are thirty years behind those in Japan's competitors.
What is essential is to understand that, contrary to appearance, Japan is no
It was hit by the present rerealm of arms production, both military aircraft and tanks, indicates that on the breakup of the Common Market. the internal market" by French industry, Mitterrand is trying to substitute a "triumvirate"-West meirate. If this ae,
"duumvirate. tempt were successful, it would mean a definite consolidation and more cohesiveness against the U.S. and Japan.
The special situation of the U.S. is expressed above all in the contradictions of the Reagan administration's economic and monetary policy. The Reagan government is in the forefront of the international drive of capital to restore a high rate of profit by means of an austerity policy, that is, by an assault on direct and indirect wages (social expenditures). But it is also in the forefront of the imperily by military conquest, and which it lost when it went down in military defeat in
It has become the leading exporter ing Australia. Its operations extend from Mexico to Chile, and have even made a perceptible impact on the west coasts of Canada and the United States. After two decades of such imperialist expansion, something resembling a "coprosperity zone" seems to be emerging in East Asia.
While the average growth rates are declining for the world capitalist economy as a whole, they are increasing for a series of East Asian and Southeast Asian countries. In 1980-82, at a time when almost all the industrialized or semiindustrialized capitalist countries were going through a recession, the East Asian countries and some of those in Southeast Asia have been undergoing a rapid expanalist drive to expand the supreme "sub- sion, as is shown by the figures in cession in the third quarter of 1980 and stitute market" that arms expenditures Table 2.
in the second quarter of 1981. And it is in danger of being hit again in the second quarter of 1982, as a result of a decline in
GNP Growth in Percent its exports to the United States, owing to
In fact, the boom in Japanese exports is beginning to run out of steam.
The automotive industry cannot increase its foreign sales any further.
tionism stimulated by the recession is beginning to be felt, as well as the difficulty of finding new products for mass consumption, like color TV sets. Japan has
of the world economy away from the tion, however, is only very partial. The
On closer examination, the picture becomes more variegated. South Korea experienced a grave recession in 1980, and it is, of course, the most industrialof the eight countries mentioned. In 1981, the textile industry along other manufacturing industries in
Hong Kong were hit by recession, followed by a stock market collapse (Far
Eastern Economic Review, July 29 and
October 2, 1981).
sentially agricultural character of countries such as Indonesia and Thailand or the Philippines makes their figures for gross national product and growth scarcely comparable with those for industrial-
Carworkers strike at British Leyland (DR)
in the Philippines, economic growth has slowed down sharply.
The balance-of-payments deficit nearly doubled between 1979 and 1981. foreign debt rose from 5.5 billion dollars in 1976 to 15.5 billion in 1981, and will doubtless reach 19 billion in 1982. There have been a series of spectacular business failures in the mining and banking sectors (Far Eastern Economic Review, December 11, 4, 1981; The Economist, December 12, 1981; the Financial Times, January 21,
In the case of Taiwan, there has been a full-fledged recession in a series of industries, which has led to massive layoffs (Far Eastern Economic Review, February 26, 1982).
However, with all these reserva. tions, it is no less true that in East Asia. economic growth has far exceeded the average elsewhere. This is so notable that it has led authors such as Jacques Attali to see this rise as one of the key factors in a worldwide restructuration of capi-
This recalls an old prediction by Friedrich Engles about a century ago that envisaged a shift in the center of gravity
Atlantic and toward the Pacific after the penetration of capital into China.
Will the expansion of the capitalist economy in East Asia really become a moving force in the entire international capitalist economy? What is the explanation for such growth in the face of the
1980-82 and in the context of "the long.
wave tendency to depression" of the incapitalist economy over the The weight of the eight countries mentioned in the world capitalist economy is much too limited for them to be able to alter the overall dynamic.
1981, their total imports added up to
135 billion dollars, or 6.1% of total world OFFICIAL
SPUTE imports, less than those of Great Britain and Canada combined. Their total gross products barely exceed that of Italy alone. And it is obvious that neither Italy nor Great Britain could by itself cause a turn in the international conjunc-
As for the causes of the East Asian boom, there is nothing mysterious about
They involve the following: absence of the land question in Hong Kong and Singapore, or its partial resolution in Taiwan and South Korea. The superexploitation of industrial labor power, made possible by an abundance of labor (exodus from the land, Chinese refugees) and despotic control (the lack of free trade unions, the existence of authoritarian political regimes, bloody repression). And finally, there is the contribution of foreign capital, mainly in the form of bank credits (more than direct investment), which has made possible industrialization in direct competition with the imperialist countries that supply these funds (2). This is linked to the important role that the state plays in the process of industrialization, which has been the case, moreover, in Mexico, Argentina, and
The solution of the agrarian quesresult is that the internal market remains very limited, and economic growth is essentially based on exports.
doxically, it is not the special spurt of economic growth in East Asia that will capitalist economy toward a restructuring and a new phase of sustained rapid growth. It is, to the contrary, the long-term growth rate of the world capitalist economy that will decide the fate of the boom in East Asia.
So far, appearances to the contrary, this boom has bolstered production and employment in Western Europe and in the imperialist countries in general, rather than having a harmful effect.
most, there has been a shift of investments and employment from the textile industry, the shoe industry, electronics assembly, watch making, and toys toward the engineering and electrical construction industries and the industry that provides ready-made factories.
But now a turning point has been reached. It is illustrated by the second "multifibers accord" which restricted the outlets for the Asian textile industry in Europe (Far Eastern Economic Review, January 1, 1982; The Economist, December 12, 1981). The chances for filling special niches in the world market are narrowing. It is unlikely that any of the eight countries in question, including South Korea, which for the moment is in the best position, will be able to follow the "Japanese route" to the end. (That is, the path of textiles, assembly industries, steel and shipbuilding, automobiles, machines, and electrical construction; the technologically advanced sectors.)
The cases of the shipbuilding and automotive industries are significant in this respect. South Korea made a big effort to create a powerful shipbuilding industry (its current production is the selargest in the capitalist Taiwan is following on its heels.
But in 1981, the whole shipbuilding industry experienced a decline in activity
Total world orders, according to Lloyds Register of Shipping, not add up to 17 million tons in 1981, as against 19 million in 1980.
At the end of December 1981, the order books contained orders for no more than 35 million tons, as against 37.5 miltons for the end of June 1981. Thus, the possibilities for new advances by the South Korean and Tai. wanese shipbuilding industries are quite limited. (See Table 3.)
As for the automotive industry, the situation is still clearer. The capacity exists in South Korea to build 280,000 pro-
The government projects the building of a giant factory capable of producing 300,000 more cars. 1980, only 58,000 cars came off the assembly lines and this level was scarcely exceeded in 1981. Moreover, the export possibilities are very limited (Neue Zurcher Zeitung, February 9, 1982).
Attali, Jacques. Les trois mondes. See the studies of Patrick Tissier published in Critique de economie politique (New Series, No. 14, January-March 1981).
has been better. Industrial growth con- nued to experience growth in their indus-
Ship Building in Thousands of Tons 4585 (La Libre Belgique, March 2, 1982) THE UNDERDEVELOPED COUNTRIES
The second general recession of the world capitalist economy hit the semicolonial and dependent semi-industrialized countries primarily through the decline in raw materials prices. This fall-off was especially marked in mid-1981, as is shown by the drop in the Moody Index (United States) from 1,140 in February 1981 to 992 at the end of February 1982, and in the Reuter Index (Great Britain) from 1,742 at the end of February 1981 to 1,606 at the end of February 1982 (Neue Zurcher Zeitung, March 5, 1982).
Since the price of gasoline for nonexporting countries has continued to go up as a result of the rise of the dollar, the deficit in the balance of payments of most semicolonial countries has further
And this trend has not been compensated for by an increase in these countries' exports of manufactured proand the income from Latin America has been hit much harder by the present recession than by one in 1974-75. In fact, industrial production has declined in all the major countries, with the exception of Mexico. In Brazil, it dropped by 10% in 1980 and by another 5% in the first half of 1981. Despite a strong increase in exports, the official unemployment rate reached 9% in the Rio region and 8% in the Sao Paulo region, to say nothing of the extent of unofficial and hidden unemployment, which is considerably higher.
The situation is worse in Argentina, where the 1981 figures are expected to show a 15% decline in industrial produc-
The official unemployment rate reached 13%, which again is far less than
According to the magazine Economica, internal consumption has dropped by more than 20% since
In Chile, the output of the manufacturing industry is estimated to have dropped by 3 to 4% in 1981, while the registered unemployment in Greater Santiago is estimated to have reached 13.5% (Neue Zurcher Zeitung, February 12, 1982).
The situation in Mexico, which had benefitted from an exceptional oil boom, tinued in 1980 and 1982, although at a slower rate in the second year. Nonetheless, the acceleration of inflation, combined with a very high exchange rate for the peso, produced both an enormous deficit in the balance of payments (which went from 1.6 billion dollars in 1977 to 4.9 billion dollars in 1979 to 11 billion dollars in 1981) and a jump in the foreign debt of the public sector, which increased by 16 billion dollars in 1981 alone. government has been forced to react by devaluing the peso (which will increase inflation) and slowing down investment will increase unemployment), since with the world oil glut and the drop in prices, Mexico oil revenues are on the
India was hit by the recession in 1980. The situation improved somewhat in 1981, especially as regards production of food and energy (coal and electricity). But the economic difficulties have forced Mrs. Indira Gandhi's government to make a 180 degree turn with respect to its strategy for long-term growth. India applied to the Asian Development Bank for a very high loan (on the order of two bil-
For those Black African countries that do not export oil, the economic situation is continuing to develop in a disastrous way. This goes not only for the countries of the sub-Sahara belt, as well as Zaire, Tanzania, and Zambia, but also (where Portuguese advisors and investors are increasingly in evidence) and Ghana.
The economy of Ghana is in ruins. Raw materials production is being diverted toward the black market. The country can no longer pay for essential im-
Mining and industrial production is coming to a standstill because of the lack of spare parts. ket, the national currency, the cedi, has dropped to 80 per pound sterling, whereas the legal rate is 5 cedi to the pound
POST-CAPITALIST ECONOMIES
ON THE WORLD CAPITALIST CONJUNCTURE In previous studies (3), we have primarily the effect of the world economic conjuncture on the economy of the workers states. Now, it is interesting to look at this question from the opposite point of view the effect of the economic evolution in the USSR, in Eastern Europe, and in the People's Republic of China on the international capitalist
The 1980-82 recession confirmed in general the structural difference between the capitalist and the postcapitalist sectors of the world economy, as well a the different dynamics that flow from
With the exception of Poland, which in any case has been hit by a crisis of underproduction and not overproduction, all the workers states have contitrial production, while the industrialized semi-industrialized capitalist countries have suffered declines in their pro-
At the same time, most workers states have shown a long-term tendency to declining growth rates, accompanied by a severe crisis of agriculture and food supply to the population. This slowdown is a result of intrinsic weaknesses in the economy of these countries, that is, the more and more ineffective functioning of the bureaucratic system of management, aggravated by the indirect effects of the capitalist crisis (4). played the role of an additional safety valve for the world capitalist economy, with the expansion of exports to the workers states attenuating somewhat the tendency to stagnation or even decline in exports among capitalist countries. Like "aid to the third world," the bank credits financing East-West trade represent more a subsidy to the export industries of the imperialist countries than economic aid to Moscow, Peking, or the "people's de-
However, because of the interaction between the capitalist economic crisis and the slowdown in growth for specific reasons in the workers states, the expansion of East-West trade has run up against a more and more insurmountable barriergrowing indebtedness of the European countries, their great difficulty even in keeping up payments, and the threat of default that is beginning to hang
As a result of this, the rate of expansion of East-West trade is going to slow down. Even a reversal in the trend toward expansion cannot be excluded.
In the case of the postcapitalist "integrated" world market, that of Yugoslavia, such a reversal seems to have already begun. For several years, trade with COMECON has been playing a larger and larger part in the Yugoslav economy.
For the moment, however, at the beginning of the present recession, the outlets in the East have still played the role of a "substitute market" for the eco. nomy of the imperialist countries, as i indicated by Table 4.
Exports to the USSR in 1980 (in billions of dollars) (Financial Times, December 31, 1981) nia in Inpreco 8 on i Detention 7. 1981, and February 22, 1982.
21
(Sources: Perspectives Economiques de l'OCDE, No. 30, December 1981, p. 156 for all figures except those for the second half of 1981, whick come from Economie Europeenne, No. 2, February 1982, and from The Economist of February 27, 1982.)
The very different reactions by the imperialist countries to General Jaruzelski's crackdown can be easily understood in the light of these figures. This is especially true if you also take into consideration of the expansion of Japanese exports to the People's Republic of China, which are expected to total 10 billion dollars in 1982 (5).
However, the risks of unmanageable indebtedness are growing. With the exception of the USSR, all the countries concerned are already beyond the danger point where servicing on the debt absorbs more than 20% of their normal income in Western currencies. If the present tendency were to continue, the total indebtedness of these countries, which has already grown from 7 billion dollars in 1975 to 70 billion in 1980, will reach 123-140 billion in 1985, according to the Wharton Econometric Forecasting Associates (Neue Zurcher Zeitung, 10, 1982). So there will be slowing in the expansion of East-West trade, despite
Siberian natural gas agreement. It is in the realm of agriculture that the interlocking between the international capitalist economy (with its two "subsectors"!) and the economies of the postcapitalist countries is most marked, and where the effects are most complex. The East European countries, especially the USSR, are suffering from disastrous forms of underproduction. While in 1970-74, the USSR produced an annual average of 190 million tons of cereals, this year production will not reach 165 million, almost 60 million less than planned for! Livestock herds (and therefore meat production) have remained practically stagnant since 1977, at around 155 million head. This is primarily the result of the lack of livestock feeds.
In the United States, on the other hand, there is overproduction, and the threat of price collapses if exports to the East European countries were to stop, which has not happened. Even with these grain deliveries, the Reagan administration has decided on a drastic reduction of acres sown in order to "maintain prices."
Now, the threat of scarcities is looming for the poorest countries of the Third World, and this is being accompanied by the threat of Washington that it will cut off food aid to governments that do not submit to its diktats. weapon" is being used cynically (like that of gold) to counterbalance the political weight of the semicolonial countries.
Immired in its so-called peaceful coexistence policy, and dependent itself on capitalist food shipments, the Soviet bureaucracy have essentially let the imperialists get away with this, resting content with a few verbal protests.
INFLATION IS FAR FROM BEING OVERCOME Since before the 1980-82 recession, almost all capitalist governments have been applying a deflationary policy. While this did not cause the downturn, it certainly has aggravated it. The excuse was that priority had to be given to fighting inflation. This choice-"better massive unemployment than inflation"- is a class choice, despite all the preaching of experts that increased inflation will result in the long run in more unemployment than that presently registered. But the results are there to be seen. Deflation has aggravated the recession; and it has by no means overcome inflation.
The failure of the monetarist policy is particularly glaring everywhere that governments have striven to put all their weight to bear to reduce the much-talkedabout "volume of money" (which becomes more and more difficult to define, if it has not become something incomprehensible altogether).
The truculent preachers policies waste their breath in proclaim-
TABLE 5
Consumer Price Increases by Half Years ing that you have to give them time to work. Nothing is happening. Despite the recession, despite the slowdown in the growth of the money supply, the prices continue to rise. And if the phenomena of overproduction are unquestionably slowing down intlation, it remains at a higher level than before the recession of 1974-75 (see Table 5).
The general tendency is clear. Except for Japan, in the second half of 1981 (after three half-years of recession) inflation was higher than it was in the second half of 1975.
There is, moreover, a very clear threat of a new acceleration of inflation in the second half of 1982. Such an acceleration will be fueled, on the one hand, by the policies of moderate stimulation to which the Schmidt cabinet in West Germany and the Mitterrand regime in France have resigned themselves. And the Thatcher government, and even the Reagan administration may soon follow in their footsteps for electoral reasons. Such an acceleration will be fueled also by the enormous budget deficit in the U.S.
It is not surprising that in such conditions experts and politicians seeking a new miracle cure for recession, are raising the possibility of a return to the gold standard. What a blessing it would be to go back to an "automatic mechanism" that would assure monetary stability for and against everyone! But what price would have to be paid for this in terms of the disorganization of international trade, or even in an aggravation of the depressive economic trend? No one would real-
5. The press (Neue Zurcher Zeitung of September 11, 1981 and Le Monde of February 21, 1982) have reported the sale by American businessmen of microcomputers for Soviet war planes, as well as the fabrication in the USSR-with U.S. technology-of the miniaturized ball bearings essential for the guidance system in U.S. MIRV missiles! This is how private special interests can be pursued at the expense of general class interests within the American bourgeoisie.
(percent by comparison with the preceding period in annual rates,
1970
1980
II
I
U.S.A.
6.1
5.3
11.2
Japan
9.3
4.4
32.2
West Germany
5.4
2.2
8.6
7.7
6.9
Britain
19.0
Italy
4.5
5.5
19.9
Canada
3.4
1.7
10.3
Holland
5.2
10.6
3.8
Belgium
4.5
2.8
13.6
Sweden
9.2
6.2
9.4
Australia
4.2
4.5
13.1
All EEC
6.2
4.9
14.8
22 adjusted for seasonal variations.) 1974 1975
II I II I 12.4 8.3 7.6 15.1 17.6 11.5 7.3 9.5
4.9 7.2 4.4 6.6 16.5 28.7 23.2 19.4 25.5 16.8 9.8 24.3 12.6 9.6 11.5 9.9 10.2 10.7 9.3 7.2 16.7 12.1 10.5 7.1 9.3 11.1 11.0 17.0 19.3 15.2 11.0 10.6 13.7 11.4 9.1 14.3
1981 1981
II I II (whole year) 10.4 10.6 8.6 10.3 6.8 4.8 3.0 4.9 4.1 7.1 4.8 5.9 12.4 12.0 9.9 12.0 19.0 21.7 15.0 19.6 11.8 13.0 11.5 6.6 6.6 7.2 6.9 6.8 7.7 9.4 7.6 11.3 14.6 9.0 8.9 9.4 11.5 10.6 11.0 10.6
ly dare take this road, despite the fact debts of 200 million dollars.
But there are a whole series of economic crisis, the power that a committee has been set up to study it in the American administration and the fact that Reagan himself is supposed to have agreed to this scheme, supported by
"supply-side economics," Laffer and Company (6).
THE DANGERS OF A COLLAPSE
OF THE CREDIT SYSTEM Despite the application of a deflationary policy by practically all the governments of the imperialist countries, with the exception of France, the merrygo-round of indebtedness spin at a more and more dizzying rate. As we have often noted, this avalanche of debt has its origin in the debts of firms and households much more than in public debt. This is shown graphically by the following table published in the December 1981 issue of the American magazine Monthly Review, which is edited by Paul other giant firms that have accumulated enormous debts and brink of bankruptcy (7).
When the dangers are evoked of a bank crash setting up a chain reaction leading to the collapse of the international credit system, what people generally think of is the default of the big borrowers in the "Third World" or the so-called socialist countries. Zaire is presently in default. If Poland is not in the same situation, this is not only because of advances from COMECON but also and primarily because of the intervention of the U.S. treasury, which has paid the interest coming due for a series of bank loans that the bureaucracy did
This was an attempt to prevent a declaration of bankruptcy, which would have forced banks-above all, West German and Austrian ones-to write off enormous losses, with unpredictable re-
The paradox is that in a period of capital, often exercised directly by banks, is growing inordinately. This is because many firms are operating at a loss and can only survive if the banks grant them credit. But, the least that can be said, is that those making these decisions-often on the basis of inadequate or arbitrary criteria-have not shown great discernment in recent years!
The ease with which the big banks have granted loans to dubious debtors is owing entirely to a profit squeeze. is, the banks want to take advantage of the high interest rates by loaning the abundant funds that they are getting from the OPEC countries, the central banks, the pension funds, and other investment institutions. But the result of the slowdown in productive investments is an insufficiency of solvent demand for investment capital.
So, it is this combination of the
Sweezy (Table 6).
Cumulative Debt of the Non-Financial Sector in the United States
1950
Public authorities
241.4
Private
TABLE 6
(in billions of dollars)
1960
1970
308.3
450.0 potential insolvency of big foreign deb-
1980
1980 by comparison with 1950
1,063.3
+ 340% sector
164.8
Total
406.2
(Source: various Flow of Funds Accounts bulletins published by the Federal Reserve Board.)
These figures show a snowball effect that has terrifying implications for the future of the capitalist system.
416.1
975.3
724.4
1,425.3
However, the facts have to be
The dangers of a banking crash
2,841.9
+1,624%
3,905.2
+ 861% tors, big imperialist firms, and the weakest parts of the banking system itself that
Between 1960 and 1970, private debt dou- tential "bad bled. On this basis, there was a 90% growth in the GNP. Between 1970 and 1980, private debt tripled. But the GNP growth was slightly less than it was in the preceding decade.
It has to be understood that this avalanche of debt is generated not only by small and middle-sized companies as well as households. It is also being generated by a welter of big companies, including most of the most imposing "multinationals." Everyone knows about the cases of Chrysler, International Harvester, and Massey-Ferguson, whose survival depends increasingly on bank credits that are more and more out of proportion to the assets of these virtually bankrupt trusts.
Chrysler's losses mount up to 2.2 billion dollars just for 1980 and 1981! On the day that Freddie Laker's difficulties came to light, we learned that his
"little fish" in airline traffic, had half a billion dollars in
There is another case to liven up It is the example of Ludwig, considered one of the world's five richest men, who launched a gigantic enterprise to open up the Amazon to agriculture in Brazil. He threw in the sponge, leaving come not only from these sources.
debtors" also exist in the Western countries. In this category must be put all those big firms that have recklessly run up huge debts and have been severely hit now by the increase in the infor big businesses as a whole, Business Week has calculated that the ratio between debt charges and profits before taxes has declined dangerously from 5.5 in 1979 to 4.2 in 1981. It is presently negative for the automotive industry and the airlines. It is only 2 for the building societies and building material firms (Business Week, March 1,
In total, the big American companies have run up 73 billion dollars more in debts in the last 18 months. charges will be particularly heavy
And they will have to be paid out of sharply declining profits.
The case of savings banks specializing in mortgages is well known. were on the brink of bankruptcy in the United States, caught between the anvil of the decline in building starts and the hammer of the rising interest rates. Less well known is the actual collapse of "wildcat" private banks in Turkey, which cost small private savers a hundred million dollars (8).
is keeping the threat of a major banking crash suspended like the Sword of Damocles over the world capitalist economy:
"The world's export credit agencies are getting near breaking point. A rash of claims from unpaid exporters and private banks is fast outstripping their cash
So far in 1982, claims are running on average 20% higher than in the 1981 financial year.
"The crash last week of Laker Airways in Britain will force America's Export-Import Bank to fork out more than 150 million dollars, since it guaranteed to stand behind loans for Laker's of five McDonnell Douglas "Last year's trickle of claims against Poland could soon turn into a
Since January, West Germany's France's Coface and Austria's have each paid out more than 75 million dollars on claims made against Poland.... turn to the gold standard, see Business Week of December 7, 1981, and February 8, 1982; and
7. The Thyssen trust in declared a loss of 150 million dollars. from 15 billion yen in 1980 to 1.5 billion in
8. Le Monde, January 13, 1982 23
"Laker's collapse, and the possibility of worse defaults yet to come from Poland and among American airlines, forest product companies, farm machinery makers and others, have jolted western governments into doing something about their export banks sickly finances." ("The Pole in the taxpayer's pocket," The Economist, February 13, 1982.)
THE GROWTH OF STRUCTURAL
UNEMPLOYMENT AND ITS CONSEQUENCES The second general recession of the capitalist economy has markedly the scope of unemployment and its social consequences. To give an idea of the scale of the problem involved, it can be said that roughly the number of unemployed in the imperialist countries has gone from 10 million at the time of the 1970 recession to 20 million in the 1974-75 recession to 30 million in the alization in agriculture, there was an explosion of new jobs in the so-called tertiary or service sector, which were as well paid as others in general. At least this was true in the imperialist countries (the explosion of "tertiary" sector jobs in the semicolonial countries reflected rather concealed unemployment).
Now the advances in the electronics industry, which has gone into the stage of will bring major job losses in this "tertiary" sector. This goes not only for the banks, the insurance companies, and the accounting and sales departments of the big firms. goes for public administration, and even teaching and some sectors of the health
Thus, far from compensating the job losses in material production, the growth of the "tertiary" turn become a source of unemployment. This development seems already to have
Finally, there is a demographic facenterprises and sectors in clear structural
However, as the depression has persisted and as structural unemployment has worsened, the effects of the crisis are coming to strike at the very heart of the working class adult, married, male workers with children, with average and aboveaverage skills, working in the big plants.
Over the past two years, the bosses and the bourgeois state have deliberately provoked tests of strength in the main bastions of the working class-FIAT in Turin; Chrysler and General Motors in the United States; British Leyland in Great Britain; the Walloon steel industry in Belgium; the Ruhr steel industry in West Germany; and the steel industry in Lorraine in France.
The capitalists are counting on the long-term effects of unemployment, on the fear of unemployment, on the disarray of the workers in the face of the lack of perspectives and the successive capitulations of the union leaderships immired in class collaboration, to strike a major official figures are the fol- tor that should be mentioned. lowing (Table 7).
Several factors combine to explain this constant rise of unemployment. The first and most serious is the general and long-term slowing down of
Moreover, this slowdown coincides with a pronounced speedup in technological innovation, that is, a constant increase in the average productivity of labor. Fewer and fewer working hours are needed to produce a volume of goods and services that is stagnating, declining, or increasing only very slowly. The result of this is that while the number of jobless rises sharply in phases of recession, it does not fall back to previous levels in periods of upturn, so long as the recovery remains only moderate. This produces another phenomenon, that is, the correlation between productive investments and the creation of jobs is broken, since a lot of this investment is going into restrucwhich eliminates rather than creates jobs.
So, the consequences are There is a pool of permanent unemployed that grows from recession to recession. And this trend is not about to be re-
To this must be added another phenomenon that makes the jobs outlook particularly grim for the remainder of the
In the preceding decades, which were strongly marked by the tendency to semiautomation in industry and industri.
sults of the postwar baby-boom have
Rate of Unemployment beyond education, including university level, and are being profoundly felt on the "labor market." The number of youth looking for work is rising sharply, and in many countries has passed the number of annual retirements.
Therefore, it is necessary to create additional jobs to maintain a given level of unemployment. In a period of depression, this can only increase the extent of
The growth of structural ployment over a long period-in reality since 1970 in the imperialist countrieshas finally begun to fray the much talked
"security net" economists and politicians, as well as the reformist trade-unionists think should guarantee the "well being"
During the 1974-75 recession and in the subsequent years of economic recovery, the "heavy battalions" of the working class in the imperialist countries rewell protected as regards unemployment, buying power, and social secu-
The effects of the crisis fell with full force only on the weakest layers of the working class, which were left poorly defended by the workers movement as a whole-the immigrant workers, women, youth, men and women workers in small blow and structurally weaken the workers movement. That is, they want to deprive it at least of the additional power that twenty years of expansion and full employment have given it.
This austerity offensive is directed primarily at achieving the following ob-
Maintaining a high level of unemployment in order to force the workers to accept stricter discipline and additional exploitation (more intense labor,
"rationalizations," Carrying through direct cuts in real wages (wage contracts involving lowty, pay; elimination or "greater flexibili.
of sliding scale mechanisms). backs in social spending, including unemployment benefits. Massive "shifting" of public spending to military expenditures or subsidies to the bosses. The Reagan budget is symbolic in this regard. similar operations, albeit more moderate, are taking shape in almost all the imperialist countries.
The working class is resisting and defending itself, but it has undeniably suffered some defeats, especially in the United States, in Japan, in Britain, and in
The impact of unemployment, combined with the lack on the part of the trade-union leaderships of any overall anticapitalist strategy for responding to the crisis, makes a counterattack difficult.
Such a fightback, however, is essential if the workers are to prevent the offensive from going into its final phase-the attempt to break some unions (eg. PATCO in the United States), to severely restrict trade-union and even democratic rights in The present crisis will be a grave and prolonged one. The increase in the rate of exploitation necessary to surmount it in a capitalist way would be considerable. A working class that mainessentially intact its organized strength and democratic rights would not allow the capitalists to intliet such super-exploitation on it.
pendent countries (10). The creation of sis or recession. Nine times out of ten,
Therefore, powerful class battles will go on for a long time before either capital or labor can decisively alter the present relationship of forces. The capitalists would have to break the organized strength of the working class.
The working class would have to solve its crisis of leadership.
N BONNY WE ARE STILL FAR FROM
A WORLDWIDE RESTRUCTURING
OF THE CAPITALIST ECONOMY
The long-term economic depression in which the world capitalist economy has sunk since 1967-68 is expressed primarily by a long-term decline in the average profit rate. This is obviously an irregular and not a linear decline. The business cycle continues throughout the long wave of depression, just as it did during the long wave of expansion. We have gone through periods of economic recovery (1971-72, 1976-78) after phases of IG-Metall workers strike in defence of social gains (DR) recession, as in 1970, or 1974-75 and 1980-82. A new upturn, albeit moderate, is probable in 1983.
But over and above these ups and downs, the growth rate remains clearly lower than it was in 1948-68 in West Europe and Japan, and in the period 1940-68 in the United States. The fundamental cause of this decline lies in the fact that the average profit rate has dropped too low, combined with the relative stagnation of the market (the slowdown in the expansion of world trade, the stagnation in demand by the "final consumers").
In order to get out of this declinethat is, to achieve a much longer economic upturn than the present short, hesitant, and very modest ones-to get out of the impasse in which world capitalism has been caught for more than ten years, a fundamental restructuring is necessary. This would have to change substantially what some have called "the conditions of accumulation" and others "the modes (or models) of regulation," and what we call more generally the social framework in which the capitalist mode of produc-
"free export zones" is part of this restructuring The most important of
"free zones" is undoubtedly Mexico, just across the United States border. The big U.S. automotive trusts dream of transferring a major part of their production there. zones, especially in Asia, including the People's Republic of China, where the joint ventures with foreign capital that are being set up are worthy of note.
I have already indicated the obstacles that the continuation of this transfer is running into, especially in Latin America and East Asia, as a result of the stagnation of the world market itself. The grave crisis that is hitting the automotive industry in Brazil and Argentina, where production is falling sharply, and the difficulties in the takeoff of automotive production in South Korea (where current production was far below productive capacity in 1981) are symbolic of such obstacles. It is scarcely possible to talk about a real restructuring in this respect.
2) The emergence of an unreguunregulated jobs involve the total elimination of social security payments markedly lower nominal wages.
In a nutshell, what such unregulated employment involves is the superexploitation of labor, which is being reintroduced into the imperialist countries, where it declined during the postwar boom.
In some cases, such as the Paris garment industry, which exploits the precarious situation of undocumented immigrant workers, capitalist competition is bringing back into the imperialist countries themselves the working conditions and wages of dependent semi-industrialized countries.
A similar phenomenon is developing in some industries in the United States, with regard to Mexican and Puerto Rican workers.
again, this phenomenon remains marginal in the economies of the imperialist countries and in world capitalist production as a whole. It probably involves no more than 5% of production in the imperialist countries. So, again, it is tion operates(9). This concept embraces lated jobs sector and a "parallel econo- impossible in this respect to talk about a both external factors (the geographic environment, the area of operation of capitalism, that is, today essentially the relations with the noncapitalist sectors of the world economy), as well as internal factors that have a certain autonomy in the present situation, because they are relatively rigid products of the past development of the system. The economic and sociopolitical relationships of forces between capital and labor in the imperialist mother countries are the most important internal factors in the capitalist environment.
The efforts of capital to carry out a restructuring that would enable it to escape from the long depression have so far been classed by analysts in the following three categories:
A new international division of labor, with the transfer of the plants of relatively labor intensive industries to semicolonial and semi-industrialized deas well as an expansion of "part-time" work in the main capitalist coun
In the semicolonial countries, this is of course a well-known phenomenon that has been studied for a long time.
Some stress above all the sociopolitical import of this development, the conscious attempt by capital to decentralize labor while it itself is becoming more centralized. Others-more correctly in my mainly to the spontaneous reaction of the opinion-attribute jobless to the persistence of unemployment, as well as the struggle of small capitalists to escape ruin in a period of crisis.
aspect is stressed, this phenomenon is a particular manifestation of a more general development-the drive of capital to lower "labor costs" by pushing down direct and indirect wages. a drive is a feature of any period of cri-
"restructuration" of capital in the real
3) A massive devaluation of capital through a credit squeeze and the strangling of inflation. The objective expression of this massive devaluation and the scarcity of capital that it is supposed to lead to is said to be the appearance, after long years of "negative real interest rates"
9. On this subject, see the following: David Gordon, "Stages of Accumulation and Long Economic Cycles" in The Political Economy of the World System, Beverly Hills, 1980; Michel Aglietta, Regulation et crises du Capitalisme, Paris, 1976: Ernest Mandel, Long
Waves of Capitalist Development, Cambridge, 1980.
10. Frobel, Heinrichs, Kreye, Die neue internationale Arbeitsteilung, Rowohlt, 1977.
the example of synthetic
One could also cite fibers. West Europe's share of world production 29.5% fell to between 20.7%; that 1978 of the and 1981 U.S. from from
29.7% to 26%; that of Japan from 15.7% to
12.0%; while "the rest of the world" rose from 25% to 40.6%.
25
----- pull-quotes on this page -----
ESBAHN EINHEN SUGENe UN SIERT VeN SPD*+ 2A00CN GESSENT TERESSEN
political theses with three central tasks: of youth.
(that is rates of interest below that of inflation), of a "positive real rate of interest" fluctuating around 4%. In fact, this explains the persistence of high interest rates in the U.S., since the inflation rate remains higher than 10%
This argument is not very convincing, at least so far. Despite all the intentions proclaimed by the monetarists, and
Swedish youth congress the efforts of Mrs. Thatcher and Ronald Reagan, such a devaluation is far from having been achieved. There has not been a massive drop in the prices of commodities (finished goods), and the decline of raw materials prices remains modest. The prices of "refugee values" (gold, diamonds, art objects, etc.) are a bit higher, but they remain linked nonetheless to the fluctuations in the inflation rate in the United States.
Bankruptcies are hitting primarily the small and middle-sized enterprises. The White Elephants, that is, the big trusts operating at a loss, are continuing to be massively subsidized by the banking system and the government authorities. In this respect also, no real restructuration" is in sight.
There remains a more important trend that in the long term could be decisive a new technological revolution based on microprocessors, industrial and domestic robot mechanisms, electrical cars, and solar energy. This would represent, in general, passage from semiautomation to a stage of more complete
From the technological standpoint, where they could begin to be produced on a large scale (11). question, from the standpoint of the logic of the capitalist, remains producing them with a high enough profit for a large enough market. There's the rub. The obstacles represented today by an insufficient average profit rate, the existence of excess capacity, and the stagnation of the market seem likely to delay this tech.
The Ungsocialisterna (Young Socialists), the youth group associated with the Swedish section of the Fourth International, held its congress over the May 1 holiday in Stockholm.
The major activity projected for the organization was support for the campaign by the Socialist Party (Swedish secfall parliamentary elections.
"We can't put out hundreds of thousands of campaign brochures and buttons, t-shirts, or shopping bags. But for us the main thing is enthusiasm," the resolution on the elections said.
The second major campaign projected was for the elections in the schools, where the delegates saw an opportunity to make a breakthrough in building the organization. adopted was "Every school a revolutionary bastion."
The other campaigns discussed were against unemployment, defense of the right to abortion, and building the peace
A number of the delegates were interviewed in the May 13 issue of Internationalen, weekly paper of the SP. One of member of the newly elected leadership.
"For me, as a punk, the Ungsocialisterna's position as an independent youth group was the main thing when I decided to join. The Ungsocialisterna was wanted a youth organization o). not set up because some fossils
Magnus worked with the Ungsocialisterna over the last year in the industrial town of Sodertalje:
"Up till now, the main task has been to build the club, work out statutes, and get things functioning less anarchisti-
Now that we have done that, I think we have good possibilities to win youth, especially during the election cam-
"In a city such as Sodertalje, obviously work at the Saab-Scania factory is very important. I am sure that the rationalization that is coming will bring a lot of young workers to us."
Magnus went on to say: "It is very exciting to know that we are part of an international youth movement. Our work with the Fourth International gives us a chance to get an international experience, which is very important.
French youth plan nological revolution, that is, the massive application of these innovations,
Most serious commentators talk about this as a possibility for the end of the twentieth century or the beginning campaign against wardrive of the twenty-first.
However, in the meantime, the persistance of unemployment and depression and the acceleration of the bourgeoisie's course toward austerity and remilitarization put the focus on the big social battles that are going hand in hand with the long economic depression, battles between the working class and the bourgeoithe anti-imperialist On the outcome of these struggles depends not only the "solution" (a capitalist or a socialist one) of the crisis. The very fate of humanity depends on this outcome, since the capitalist "solution" involves the threat of nuclear world war.
*No to the military budget, yes to six months service' was a central theme of the discussions at the 3rd conference of the Jeunesse Communiste Revolutionnaire (JCR, French youth organisation in solidarity with the Fourth International), which took place on May 15/16.
Over 200 delegates representing 600 members spent two days discussing the new political situation since the election of Mitterrand and the tasks of revolutionary youth. The conference de-
-To prepare a welcome for Reagan in Paris on June 5 by mobilising thousands of youth in the streets.
-To organise for the autumn around the slogan 'No to the military budget! Yes to six months service!' In November the National Assembly will discuss and vote on the proposed military budget which represents 4% of the Gross National Product.
-To prepare a national conference cided to continue with its active cam- in November or December for young
11. On the new technologies and their diffusion, see W.
Wolf and P. Bartelheimer in
Internationale, Frankfurt, March 1979.
26 painging directed at turning Mitterrand's election promise to reduce military service to 6 months into reality in adopting workers and youth in jobs training schemes to carry through a turn of the organisation towards the most active sectors
----- pull-quotes on this page -----
W