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The Great Reckoning A book by William Rees-Mogg provides an insight into how the capitalists themselves see the years ahead. Mike MAGINE A TOUR guide of the US that concludes with the advice: "If you are wealthy enough to afford it, consider purchasing a property in Switzerland, such as a chalet or a condo. This would be a valuable insurance against unrest and megapolitical breakdown". Or, "if you are very rich, it might be prudent to hire a personal bodyguard. As an alternative, you should consider acquiring weapons as a last resort to your family if you live in an area where public order is breaking down".
These cheerful conclusions are the ultimate advice offered to the rich in the recently re-published book, The Great Reckoning, the most apocalyptic perspective written by capitalist commentators for the capitalists themselves. It is the perfect antidote to any notion of capitalist triumphalism that may still be around.
The authors are well known commentators: William Rees-Mogg, peer of the realm, former editor of The Times and then Independent columnist; and James Dale Davidson, amongst other things, an economic advisor to the government of Belarus. One of their activities is to produce a newsletter called Strategic Investment, currently with a 30,000 circulation. "In a sense"
, they say, "this book is an advertisement for our view of investment" which is that 'instability means prizes. So, for example, although they don't rate Russia's chances of success they nevertheless recommend investing some Waddington writes.
The Great Reckoning How the World will Change Before The Year 2000, By William Rees-Mogs and James Dale Davidson.
Re-published by Pan Books, 1994, 7-89. money there: "We are investing small sums in Belarus and other former Soviet republics... while the odds are stacked against success, that is only part of the story. For an investment that does work, the profit payoff would not be 10% or even 10:1. It could be 100:1 or even 1,000:1". So these two are seriously into making money, even if they are not too hopeful for the rest of society. However they make clear that "we have tried to be objective and not merely say what would sell. We have forecast wars, revolutions, recessions and even depression. Sometimes we have regretted having to forecast these unpleasant developments. We would have preferred not to have to tell you about a world falling apart. But given that it was falling apart, we wished to find ways to help put it back together" (p208).
The inspiration for the book came in one of those typically English bourgeois experiences; Lord Rees-Mogg's attempt to take tea at the New York Waldorf Hotel. "He was trying to order tea in the Waldorf Hotel... After waiting a long time for service, he observed that the condition of the famous Review 29
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New York Hotels was a metaphor for the decline of empire... the sense of encroaching ruin was so palpable that he said that one could not have been suprised to learn that there were barbarians in the basement." Fortunately they substantiate their argument with a little more detail than the tale of Rees-Mogg's thirst: and what a story it is. OBERT A SIRICO is a troubled priest. He R recently had an article published in The 'Capitalism Must Seize Financial Times, the High Ground' (9 August, 1994). In it he argued that while "few would dispute that events in the past few years have demonstrated the practical desirability of markets over socialism, yet there is good reason to doubt that capitalism's victory is total... (it) has not captured the moral or high ground... Thus its security as a system of economic organisation is not guaranteed anywhere in the world... no one dreams of capitalism". Rees-Mogg and Davidson answer these points. Dreams? You should be so lucky. They quote Jeremiah, "the harvest is past, the summer is ended and we are not saved". The real flavour of the economic depression they predict is summed up in their opening dedication from the 13th century, "Day of Wrath and doom impending... Heaven and Earth in ashes ending".
Were it not for the fact that this book is written by serious people, you would be forgiven for thinking we are dealing with some bizare religious cult we are - they are capitalist or sect. In a sense fundamentalists. To Sirico's concerns about things going wrong, they say, don't worry about things Review 30 going wrong, they've gone wrong - and badly. "We expect the nineties to be a decade of escalating economic and political disorder."
"We are living in a period which has the authentic feeling that the world could come to an end, or at least that some immense change could occur" (pxi). "We believe it will prove impossible to sustain a political economy which attempts to prevent anyone losing" (p17). We are in for a "decade of depression" (p13). "There is a widespread assumption that economic progress since World War II has been permanent... We expect the nineties to be a decade of escalating economic and political disorder unparalleled since the 1930s.. We fear the economic, social and political consequences of depression" (pp47-50).
In other words the brilliant lights of capitalist victory were just that, temporary blinding flashes of the fall of Stalinism. "Although Marxism is dead, the market has not triumphed as a matter of ideas... A Marxist mist... still hangs over our intellectual culture and clouds the vision of many" (p42).
"Even a cursory overview... should be enough to show that the world economy is far more vulner-
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able to a system failure than most people would imagine. The day before an earthquake, the great city gleams in the sun, with scarcely a hint that beneath the surface, pressures are building along the fault lines" (p264).
HIS BOOK COVERS a great many of the defining themes of this new period in history which Militant Labour has analysised - the collapse of Stalinism, the decline of US economic power, the colonial revolution - but from a completely opposite point of view. The dire warnings of catastrophe from these prophets of profit forget that for every statistic of economic slowdown, somebody's job goes. For every forecast of depression, or of a return to the 1930s, the lives of millions of working class people will be squeezed, and many crushed.
Their cares are not ours: "make-work jobs and the like can be understood as attempts to buy-off violence prone, poorly skilled people", part of the "blackmail, the exploitation of the capitalists by the The contempt continues: "We hear very little overt criticism of the unwillingness of the poor to apply themselves. Quite the opposite. The common response is to exonerate the poor for their part in economic decline, while the more successful are blamed. This makes about as much sense as a farmer beating his most productive milk cows because the rest of his herd has gone dry" (p408). As for the 'underdeveloped world, the authors write: "Overall consumption in Latin America dropped by 13% over the decade of the 1980s and it could plunge even further in the 1990s as world depression lowers prices". The "death of commuforeshadows a significant drop in the level of Western aid... because these countries will no longer be able to play off east-west rivalry". They predict a depression, the causes of which start in the US, especially the federal government's unsustainable budget deficit. In 1992 62 cents in every tax dollar went to pay interest on this debt. At this rate by 2015 service charges would consume 100% of GDP. In the mid-1980s the American budget deficit alone was greater than the economies of 158 countries (out of a total of 167). Every family on average lives $10,000 beyond its means.
Every family on average lives $10,000 beyond its means and corporate debt stands at 40% of US GDP: "It will be wiped away. Either an economic deflation will cause the financial system to implode, or a political inflation of an extreme kind will obliterate much of the value of debts denominated in dollars".
The US, the authors argue, is going through the same process of decline that Britain went through. Seventy-five years ago only the US was 'richer' than Britain, now 20 countries are. The Economist magazine calculates that had the US grown at the same rate as up to 1973, incomes would now be 50% higher. Under George Bush 69% of households experienced a fall in income. In 1948 the US had 44% of world industrial output and its economy was eight times larger than Japan. No longer. The US invests around one third of the Japanese rate. For every ten lawyers that graduate in the US there is one engineer. In Japan it is exactly the other way round. According to the Harvard Business Review, for every one fault on a Japanese assembly line, there are 70 in the US. They also comment on the political leadership of America: "US Congressmen in the 1980s had more job security than the politbureau in North Korea* The top six US exports to Japan are cornseed, soybeans, coal, wood, cotton and wheat. Whereas Japanese exports to the US are cars, tape recorders, trucks, office machinery and computer The US allowed many Asian countries unrestricted access to the US market after the second world war as part of its effort to halt the spread of Stalininsm, to hold off revolution. Now the US wants some pay-back. But how? "Unless the US is actually prepared to employ military force against Germany and Japan, its super-power capacities will avail little in economic competition" (p35). THE RISE OF Japanese economic muscle has brought other consequences, including Japanese banks financing the US budget deficit for speculative ends. Twenty-five percent of world credit growth is from Japanese banks. The potential consequences are spelt out: "A trigger of the second and deeper stage of depression this time will be the withdrawal of Japanese investment as a consequence of the collapse of asset markets" Japan invested three trillion dollars between 1986 and 1991 in its economy, and now has massive overcapacity.
Basically, Japanese capital expanded in the 1980s as land prices rocketted in Japan (boosting the value of the assets backing the loans). Before the Tokyo market crashed a single prefecture (district) in Tokyo was valued as greater than the whole of Canada. Since 1992 prices have probably fallen by around 50% (p159). This leaves the Japanese banks more exposed than the Savings and Loans institutions that Bush had to step in to save in the US: in 1990 US banks had 25% of their assets in land.
"Japan will have to re-invent a military. It will have to spend hundreds of billions to rehouse much of its population (some mortgages in Japan already cover two generations - MW)... the world depression will be more severe in Japan than in any other Review 31
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Subscription rates for the Militant International Review are £7-50 for six issues, UK/Ireland, or £9 overseas. Fill in the form below or write to us with your name and address and a cheque or Return to: World Socialist Books, 3/13 Hepscott Road, London E9 5HB. country... likely to encourage the militancy of unions, a slackening of work effort and investment in education and more extensive income redistribution" (p167).
A shortage of capital in Japan could result in money being called back in. The authors point to the fact that in November 1992 Germany went to Japan for loans and came back empty handed. "Now that the assets crash has wiped away their loan loss reserves... they will be unable to lend at accustomed levels... it peaked with the Japanese stock market in 1989 and has since fallen in half, to $100bn annually".
Russia needs 15 years of west German investment levels to catch up a to to bring In total they calculate that three to four trillion dollars worth of excess debt still needs to be liquidated - there are 204 US banks waiting to be liquidated with 1,044 more on its problem list. No one economy has the power to stabilise the world. German re-unification cost six times more than estimated. Russia needs 15 years of west German investment levels to catch up - it can't be done. Their only hope is to let the system work its own way through. They use the analogy of the Florida pine, which only releases its seed in a fire (p267)! There is a lot of talk of cycles in the book, to justify the view that there is hope at the end of it. They point out that prices fell overall in the nineteenth century: 47 years of infation and 53 years of deflation.
Prices this century are up 3,000% (mainly because of 50 years 'cold war'). They 'rediscover' dialectics or as they say 'nonlinearites' (p68) to show how small changes can have a profound effect - in all directions both up and down. This leads them to say of Marx: "Wrong though Marx was in many ways, part of his theory of historical development is valid. He was right in postal order made payable to World Socialist Books. Name Address 32→ Review Rees Mogg.
thinking that historic change is sometimes caused by changes in the underlying means of production. This is one of the truffles of truth to be dug for in the enchanted forest of Marxism... It does seem to be true, as Marx argued, that 'social revolution' results when the 'material forces of production in society came into conflict with the existing relations of production'."
Adam Smith, an early prophet of capitalism, always believed that capitalists had a mission; a historical mission to develop the world. The new prophets like Rees-Mogg and Davidson show the exact opposite; short termism. The long term is unthinkable; capitalism points down; society unwinds; it breaks down.
Rees-Mogg says eat green and yellow vegetables, cut your income by 75% and read the bible - the only possible preparation for the depression. Alternatively, take comfort from their nightmares and let their crisis be our opportunity to overthrow the lot of them.
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For the background to Haiti, read; The US invasion of Haiti has once again put Latin America and Central America in the limelight. World Socialist Books has selection of books on the history and struggles of the region. For either of the books above, or a complete list, write to us at World Socialist Books, 3/13 Hepscott Road, London E9 5HB. HATE FAMILY BUSINESS Haiti - family business The story of Papa and Baby Doc £3.99 + 40p p&p The Black Jacobins The slave revolt of Toussaint L'Ouverture £10.99 +£1 p&p C. L. R. JAMES The Black Jacobins Toresaint I/Cheverture and the San Dossingo revolution