[page 3]
4 MIR Winter 1988: Editorial" US economy boosted the world market by its demand for imports. In the last few years, growth in Japan, the EEC and the other countries of western Europe was increased by 1% by this massive market alone.
Another 1% increase in the growth of these economies was provided by a $750,000 million per from the underdeveloped world due to the fall in the price of food and raw materials. The growth of the developed economies during the last two or three years was roughly 2% per annum. In other words, there would have been a slump in America and in the world two or three years ago if it had not been for the above factors.
However, even given this favourable position, the rate of growth was very sluggish in comparison with the economic upswing of 1950-75. Such a situation could not last indefinitely-either it would break out into a genuine boom, or else it would have to collapse. A new boom was ruled out, and therefore the present collapse was inevitable. The shadow of the impending slump has been shown by the impasse of the productive forces. The fact that the productive capacity of the economy cannot be used to the full and that productive forces are destroyed are indications of the impasse of world capitalism. The productive forces have clearly outgrown the barriers of the nation state and private ownership of the means of production.
Capitalist crisis The crisis is caused by the fundamental Achilles heel of capitalism. The fatal weakness of the whole system is that the working class-the only producer of real wealth-cannot buy back the whole product of its labour. The system can work, provided that the surplus extracted from the labour of class is being ploughed back into industry. The problem for capitalism is that, at a certain point, this must result in more wealth being produced-through the productivity of labour, the introduction of machinery etc-than can be absorbed by the limited market of the masses. They then are confronted with a dilemma: either to cut the share of the capitalist class, which means a limitation of investment, or to cut the share of the working class, which further reduces This point is reached at varying times in the history of capitalism. There are factors which can counter-act it for a period. But inevitably the crisis point is reached, and a collapse follows. The fact that even during the 'boom' the capitalists were already dimly aware of The New York Stock Exchange, Black Monday. this process is revealed by the deliberate destruction of productive forces that went on uninterruptedly in the last 8 years. There is no such thing as a 'final crisis of capitalism'. Unless capitalism is overthrown, the mechanism of economic recovery eventually comes Into play again.
The partly conscious, partly unconscious destruction of the means of production, through the simple process of decay, rusting, and the development of new and more advanced machinery to replace the old, prepares a revival at a certain stage. However, whereas the period of capitalist ascent was marked by a strong rhythm of growth, the present epoch of capitalist decay which opens up is characterised by deeper slumps and more periods of recovery and "boom' In spite of the urgency of the economic crisis with which they are faced, and in spite of the collapse on the stock exchanges, there has been no meeting of the seven big capitalist powers because there is no possibility of an agreement. There may be meeting in a few months, but this will only be after the Americans have succeeded in forcing down the dollar to a level which would make the goods of other countries uncompetitive on the American market and make American goods cheaper in the European and Japanese markets.
The situation has now been reached where the US, having already put the colonial countries on 'hunger and starvation rations' in the last few years through the IMF and World Bank, intends to put the economies of Europe and Japan on rations. US financial politicians and bankers are constantly attacking West Germany and Japan for not playing the role which was played by the US as the 'locomotive' of the world economy. But they do so in vain. America, via policies of rearmament, accidentally acted as a temporary boost not only for its own, but for the world economy. They did not do it for the benefit of their rivals, but to increase the power of American imperialism vis-a-vis the colonial revolution and their mighty rival, the bureaucracy in Russia.
Dollar Falls In spite of its weaknesses, American power on the globe and in world economy. As JK Galbraith stated in the Sunday Times, 25 October 1987, we have a recesssion here in United States, the world effect will be more prompt and greater than it was in the 1930s. Then the United States was a relatively small player on the international trade scene. Now, it is a much greater factor." But al! the capitalist powers are helpess in the face of the impending crisis.
In reality, the US has no intention of fundamentally redressing its budget The dilemma before the US imperialists is that if they heavily into the budget deficit, by cutting demand they would produce a deep slump in the US. The deficit cut which they have carried out so far-$30 billion in 1988 and $45 billion in 1989 is mainly cosmetic. In fact, even if the cuts were carried out to the full it would still leave a deficit of more than $150 billion, bigger than in 1986 ($148 billion). On the other hand the huge budget deficits and trade deficits, bigger than anything ever seen in any country in history before. cannot be continued indefinitely.
The solution that the strateg sts of US imperialism have decided an as the
[page 4]
A mass rally in the Philippines. The years ahead wlll see a tidal wave of revolt, general strikes, uprisings and guerilla wars throughout Asla, Africa and Latin America.
"lesser evil' is to deliberately allow the dollar to fall. After the last meeting of the 'group of seven' the dollar was stabilised for a temporary period, but that policy has now been abandoned, particularly after the collapse of the stock market. If the dollar falls enough it will increase the competitiveness of US goods, so long as they can avoid the inevitable inflation which would follow from devaluation. The central banks of other countries have spent massive sums trying to prop up the dollar to shore up the competitiveness of their own currenand economies. The US participated in this only to a token extent and has now virtually abandoned any attempt to keep up the value of the dollar. The Americans have determined that if a slump comes they will unload the burdens of it onto the shoulders of the European countries and Japan. But though they want to avoid the effects of a '1929' catastrophe by unloading a deep slump onto Western Europe first, it would undoubtedly react on them later. The EEC and Japan will not just accept the slump once it begins to affect their economies. It will result in veiled and then open trade conflicts between the powers; competitive devaluations and even open tariff and non- It is impossible to say in advance exactly what the depth of the new BO: SUMIL 20X79.
пОр HORLD •WE NEED C WE LOVE VICTORY!
JUSTICE slump will be. However, even a small slump will have profound political and social consequences. A fall in production in the OECD countries from 1974- 75 of less than 1% was followed by revolutionary developments in Portugal, Greece, Spain and throughout the ex-colonial world. But one thing is, absolutely clear-the new downturn will be of a greater depth and intensity than any of the post-war slumps. Of course, within a few years there will be a new 'boom'. But this will be of an extremely fragile nature, preparing the way for an even steeper collapse a few Debt defaults We are now in a period of organic succeeding each other in rapid succession. This, by its very nature, will be a revolutionary epoch which will far exceed anything seen in the post-war years. It is a return to the period of the 1920s and 1930s, but on an infinitely higher level. The years ahead will see the greatest radicalisation of the world working class since 1917-20, with ferment among the intellectuals and ongoing crises in the mass organisations of the class. The swing to the right in the advanced capitalist countries in recent years will be compensated by an even greater swing of the THE VOI UF THE PEOPIF Ur GOR Photo: Piers Cavendish (Reflex). pendulum to the left. The youth, the students and the working class draw the most radical conclusions from the situation.
If this will be the case in the advanced capitalist countries, then there will be a tidal wave of revolt, general strikes, uprisings, and guerrilla wars throughout Asia, Africa and Latin America. In the last period these countries have amassed total debts of more than a trillion dollars ($1 million millions) which can never be repaid. In the general catastrophe, they will be swept away in a series of defaults. The burden of the repudiated debts will then be transferred by the Western governments in collusion with the banks onto the shoulders of the workers and middle class in the developed world. The banks of course, will be part bailed out by the governments to avoid a financial disaster. In Britain and America the big banks have already made preparations for this, setting aside funds to deal with 'bad debts'. This comes out of taxes on profits, which effectively comes out of the pockets of the workers and middle class. The banks, as always, lose nothing All the efforts of the capitalist powers to reach an agreement to find a way out of the crisis are foredoomed to failure. The ever increasing disagreements between the powers, as well as
[page 5]
Opportunities ahead to build the MIR 6 MIR Winter 1988: Editorial increasing conflict between the different sections of the ruling class within each country-as in the conflict between Reagan and Congress-are a symptom of the crisis.
While one could not theoretically rule out the possibility of a temporary agreement which would only serve to postpone the slump a year or two, while making it more severe when it finally arrives, at the present time, all the signs point in the opposite direction. The deal between Reagan and Congress for a small cut in the deficit has not served to strengthen business Meanwhile, 'confidence'.
all the leaders of the Western world are falling over each other to place the blame for the crisis on the shoulders of their rivals. Thus the British Chancellor Lawson reads sermons to the Japanese and West Germans, advocating that they use their surpluses to re-float the world economy, while the latter, quite naturally, do nothing of the sort. They are not willing to pull the chestnuts out As explained elsewhere in this edition of the MIR, October 1987 will go down in the pages of history as heraldturning point in the ing a decisive development of world capltalism. It wlll also be recorded, in the footnotes, as the month when the 'theoretical' journal of the British 'Communist' Party, Marxism Today, launched a financlal supplement for 'soclalist investors' on the stock exchange demonstrating once again that, for workers seeking a way forward, the "Communist' Party has nothing to offer.
Last year also saw the temporary demise of New Soclallst, the Labour Party's theoretical magazine. Its financlal position had steadily deteriorated since 1984. Despite the Installation of professional editors and sales personnel, and a new rule to boost Its 'mass appeal' that no article should exceed three picture-filled pages, sales fell to nearly half their 1982-83 level and by 1987 the magazine was losing £8,000 per issue.
The decline of New Socialist from the early 1980s shows the importance of a theoretical journal having a firm anchor In the Ideas of Marxism. Marx- Ism Is indispensable for preparing individuals and the movement as a whole for future events for setbacks as well as victories. It was precisely this lack of Marxist theory and perspectives that lead to the collapse of the largely middle class lefts who were the movbehind New Soclallst.
Ing force of the fire for US imperialism, preferring to husband their resources in anticipation of a slump.
When world capitalism was going forward, it was possible for the rival groups temporarily to sink their differences and reach agreement on tariffs and trade. But now they all feel the fire under their backsides, it is a case of 'every man for himself and the devil take the hindmost.
The enormous intensification of the world division of labour since World War Two has created a situation of interdependence beunparalleled tween all the capitalist powers-and partly the Stalinist states also. All the factors which made for boom in the past have now been dialectically transformed into their opposite. The USA, as the strongest capitalist power, far from being the locomotive of the world economy, is now fast sliding into recession and is pulling all the others down with it. Thus, as Trotsky prophetically wrote in 1938, all the capitalist Business Manager's Report Clubbed on the head by events they could not explain Labour's election 'economic defeats, the so-called success' of Thatcher, the defeat of the miners, the counter-reforms of the Mitterand government-they became demoralised, either dropping out of activity or moving to the right. Attendance at the New Socialist Editorial Advisory Panel fell to as low as two out of 39! Indeed, how could a journal survive when Its perspective, as in the post-election analysis of 'left' academic Jeremy Seabrook, was that "the most likely development in the next four years is the consolidation of the present situation-a permanently minoritised poor, with the rest maintaining or Improving their living standards"? "Of course," this far-sighted professor added, the "crlsis of capitalism could always supervene, but It would be unwise to place too much falth In that rather remote possibility." Certainly, a theoretical Joumal must examine new develop continualty ments including the actual prospects for the word economy acting. in the words of Trotsky, as a laboratory where all questions. even the most complex, are analysed and sharply focused." But only by starting out from the standpoint of Mandsm-the systematisation of the collective experience of workers over generations can current developments be appralsed and the correct perspectives, programme, strategy and tactics be drawn to ad- • Secretary, James Baker.
US Treasury governments are toboganning to disaster with their eyes closed. A new and convulsive chapter in human history has now opened, in which the future of mankind will be decided vance the movement.
Is being Now New Soclalist relaunched as a bi-monthly on a 12 month trial basis. However, It is clear that the Labour NEC's right wing major- Ity are not committed to developing a journal of genuine debate and analysis. Their approach was summed up in the election 'theory' of EEPTU Officlal John Spellar, that Labour could only win in London If constituency Labour Partles are "faced with clear alternatives, conformity or closure." Who needs tiresome discussion when bureaucratic command will do? Yet this verbal thuggery was singled out as a "thought-provoking contribution" by New Soclallst editor Nigel Williamson, formerly the editor of Tribune! Of course, the MIR must not be judged against the 'theoretical' contributions of the 'Communist' Party or the Labour leaders, right or left. But the right of the Labour move to the leaders Just as great events Impend which will produce profound shifts in the consclousness of wide sections of the population-opens up enormous opportunitles for a Journal of genuine Marxism. Sales are there for the ask- Ing In trade union meetings, the Labour Partles, Womens Sections, LPYS branches and student Labour Clubs. Wherever the Militant is on sale, the MIR should be sold as well. 1988 must be the year all our readers help us to move forward to the bi-monthly MIR!
[page 6]