The beginning recession the June level. That was the third consecutive month of decline, and the cumulative drop amounted to 9%. As for sales of completed housing units, that has also been falling since March 1986.
The specialized bourgeois press concurs about this trend. According to Business Week of September 1,
THE BRIEF economic upturn of 1983-1985 has been reflected by a general growth of industrial production, under the stimulus of the enormous US budget deficit. (1)
The high-interest rate policy that the Reagan administration has pursued in order to attract capital to the US has led to an overvaluing of the dollar compared with other imperialist currencies, and favored exports to the American market. The result has been a veritable boom in imports from other imperialist countries and from semi-industrialized dependent countries.
However, this shaky upturn has not solved the basic problem, or eliminated the structural weakness of the world capitalist economy.
There has been neither restructuration, nor any basic expansion of the world market, nor any fundamental reorganization of the labor process and the production of surplus value, nor any deepgoing alteration in the social relationship of forces that would make it possible to drastically increase the rate of profit. This fragile upturn has not stopped the continuing decline in productive investments or the rise of unemployment - two distinctive features of the long depression that capitalism is going through. Likewise, the problem of the indebtedness of the dependent countries is far from being solved. The world economy is adrift on a sea of debt, with the
American economy in the deepest water of all. (2)
Finally, the 1983-1985 upturn has confirmed the shift in the inter- imperialist relationship of forces against the US. All these general features, which define the contours of the economic crisis, are being accentuated by the recession that is beginning. [Quotations originally in English have been retranslated from the French.]
ERNEST MANDEL
The first months of 1986 were marked by a distinct mini-recession.
Over the first quarter of 1986, industrial production dropped in all the big imperialist countries. In some of them, this setback extended into
April and May, or indeed throughout the entire second quarter, as is shown clearly by the table opposite. (3)
With the exception of Mexico, which after a brief upturn in 1985 experienced a sharp decline in its industrial production, the major semiindustrialized countries have up till now escaped the mini-recession. Brazil even experienced an outright has boom, with a growth rate of over
8% in 1986. But this is a temporary deviation from the general trend, an exception that occurred previously in the world recession of 1980-82.
20
Since these countries all depend on exports for their growth, their econoperspectives largely determined by what happens in the imperialist countries. In South Korea, for example, exports already dropped by 22% during the first quarter of 1986, and this will not fail to have repercussions on industrial production.
The course of the economy in the capitalist world. At the end of August 1986, practically all the economic indicators were in the red. During the final months of the second quarter -May and June - household incomes had declined by about 6 billion dollars. If durable goods orders were still on the rise, that was owing entirely to arms industry orders.
Overall, only 78% of industrial
1986, "industry is virtually in recession." The Japan Economic Journal of September 6 stresses that "the [Japanese] government recognizes the slide into a period of recession." In its July 16 issue, the London Times specified that in Britain "industrial production remains depressed Manufacturing production has stagnated over the first five months of the year and at a level below that of the first half of last year."
Despite the obligatory optimism expressed in the annual report of the Organization for Economic Cooperation and Development (OECD) in May 1986, on the basis of the facts given in it several observers expect a full-scale recession in the international capitalist economy in 1986 or 1987.
Stephen Morris, who was one of the OECD's main economists and T now heads the International Economic CI Institute (IEI), is even predicting a very grave recession, without however attempting to predict when it will begin.
The high exchange rate for the dollar opened up the US market wide to exports from the rest of the capitalist world in 1983-1985. That was the main locomotive of the economic upturn in those years. The extent of the US balance of payments deficit that resulted from it has forced the Reagan administration to change its tune. It is now counting on adjusting the exchange rate of the dollar drastically downward.
The "orthodox" free-enterprise doctrine of floating exchange rates,
1. On the analysıs of the economic upturn 1983-85, see Ernest Mandel's article *The world economic situation in 1985" in International Viewpoint, No. 74, April 22, 1985.
2. On the debt question, see Ernest Mandel's article "The infernal logic of the debt crisis," *IV,' No. 98, May 5, 1986.
3. Source: The Economist' of May 10. June le Zurner June 28, and September 1986; "Neue Zeitung' of August N° 1986; 'Business Week' for the whole month of August 1986, as well as Septem ber 1.
4. The figure of The Economist' for Spain is very controversial. Felipe Gonzolez's government is even projecting a growth of 7% for the whole of 1986. But it has to be noted, however, that this country has th highest rate of unemployment per ecom mically active population in all Europ 21%, or more than 3 million people. International Viewpoint 13 October 1986
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ECONOMY
According to the Italian Statistical Institute (STAT).
International Viewpoint 13 October 1986 which claims that the play of "market forces" alone will automatically bring about a balance, has been abandoned, just as the "pure" monetarist doctrine had been earlier.
The dollar reached its peak in the week of March 4-8, 1985. A year later it had dropped by 25% against
"basket" *a of various national currencies. In the same period, the yen and the German mark rose by 55% against the dollar. (5) The effect of this drop in the value of the dollar has yet to affect the US balance of payments. In May 1986, the deficit rose to 14.2 thousand million dollars, which, annually adjusted, amounts to 150 thousand million dollars.
The deficit was, thus, higher than in 1985. In July, it even reached an annually adjusted rate of 170 thousand million dollars. At the same time, the Japanese and West German surpluses continued to rise, in part, it is true, under the impact of the drop in oil prices. Failure of Tokyo summit
This situation, which represents a failure of the September 1985 Tokyo summit (which had promised closer coordination of the monetary, commercial and industrial policies of the great imperialist powers), might be attributed to the "every man for himself" principle that always prevails in a period of prolonged economic depression. Such an explanation is not wrong, but it is incomplete.
That explanation tends to exaggerate the importance of the role of the economic policies of the bourgeoisies (and of the bourgeois states) in the present conjuneture, and to underestimate the decisive weight of the capitalist economy's own implacable internal logic. It leads to underestimating the interdependence of the various components of this economy.
Far from being a lasting victory, the present performances of Japanese and West German exporting industries can only prove fleeting. The fundamental logic calls for these to drop and for the US recession to spread to these two countries.
This dynamic is clear in the case of Japan. The rise in the value of the yen is having a disastrous effect on the competitiveness of Japanese commodities. The big trusts specializing in export are seeing their profits worn drop in japanese between January and June 1986 was the following:
Cold-pressed steel products
Personal calculators
Machine tools Only exports of cars, video cassettes, watches, cameras and parts for electronics industry preciable rise. But since then the trend has reversed for cameras and watches (the Seiko firm 6,000 workers and has cut its produc-
The situation of the video cassette industry, which exported 80% of its production in 1985, is hardly better. This industry is projecting a sharp decline in its exports for 1986. While it hopes to make up for this by increasing sales by 11% on the home stepped-up competition will bring sharp price reductions. The total turnover of the industry will probably fall by 6%. (7) As for the electronic in particular semiis already in full recession.
In the auto industry, according to the Financial Times of September 9, 1986, Japanese manufacturers are expecting the value of their exports to the United States to drop by an amount greater than the total profit of these trusts in 1985. Moreover, Japanese industry has to face tough competition from semi-industrialized countries where wages are lower and whose products are overflowing from
This competition threatens Japan's home market but also some of export markets. For example, "Japan's navy yards are rapidly sinking under the waves of South Korean competition and the high value of the yen."
The understand this logic, you have to start off from a fundamental fact - the stagnation of the world market as a whole. According to the report of the GATT (General Accord on Tariffs and Trade) in March 1986, world trade grew by only 3% in 1985, that is, by less than the increase in industrial production.
In constant dollars, world trade was below the level of the 1981
1,910 thousand dollars compared with 1,960 thousand an absolute decline from the 1984 level in the volume of agricultural and mining exported, including oil drop in US exports in May 1986 owed primarily to the in the exports of agricultural products. For the first time, the United States had a trading deficit in these products. This is the source of the American inclination to engage in a bit of an agricultural trade war with the EEC and of Reagan's efforts to secure the Soviet market for cereals.
In conditions of sharpened international capitalist competition, and given the stagnation of the market overall, the gains made by some almost automatically correspond to losses for others. And the effects
INDUSTRIAL PRODUCTION
First quarter 1986
(compared to last quarter 1985)
USA
Japan
West Germany
France
Britain
Italy
Second quarter 1986
(compared to 1st quarter 1986)
-2.9% (*)
-2.9%
-1.0%
-2.8%
-3.7% (**)
+4.6% (***)
-5.8%
+5.1%
+5.2%
+1.9%
-1.9% (****)
+5.5%
-0.1%
-5.1% that is, phenomena of recession the stagnation or decline exchanges, which tend as a result to spread recession.
In 1985, West Germany became the leading exporter of industrial products, closely followed by Japan. The United States fell into third
'Perspective economiques de l'OCDE,' No. 39, May 1986.
Canada
Spain (4)
(%)
February-May 1986 with three preceding months
The
'Neue Zurcher Zeitung' of August 15, 1986, estimates the drop at onl
0.6%
And the rise was only 1,8% compared with the same period in 1985.
(***)
****)
1986.
+7.5%
-15.7%
'La Repubblica', June 11,
According to the
'Japan
Econ-
1986, omic
Journal' of
July
26, the
Japanese exporting firms fear the loss of profits in the wake of the
30% of their
For Japanese firms revaluation of the yen.
as a whole, the lowest profits are expected since 1973-74.
The figures in the table are taken from the
'Japan
Economic Journal' of August 16, 1986.
Economic Journal', July
Japan
12, 1986.
Ibid, July 26, 1986.
8.
21
the point of absorbing the Bank of America (the second largest US bank). The Bank of America was in severe financial difficulties. It had just suffered 640 million dollars in losses in the second quarter of 1986.
COUN
CHANGES
86400
FATE JINIS
DER
Moreover, given the rise in Japanese wage costs calculated in dollars, Japan's big trusts are shifting their subcontracting and even their production units to South Korea, Singapore, certain European countries such as Spain or Britain and even to the United States. Thus, the first victims of the rise of Japanese finance capital may be the Japanese workers themselves, who are suffering more from unemployment than in the past. The famous principle of "a job for life" is being more and more put in question in the big Japanese concerns.
The plummeting rate of exchange for the dollar - the base currency of the international monetary system -is obviously dealing a new blow to the whole system, and by a ricochet
The US dollar in trouble - speculation comes before a fall (DR) place. This is a long-term trend. It is not explained fundamentally by monetary factors, by artificial exchange rates or by the misdeeds or errors of governments or private speculators. It is the result of the decline in the rate of growth of industrial labor productivity in the United States.
The very nature of the capitalist mode of production, in which money. capital is the point of departure and the ultimate destination of the whole circulation of capital - involves an exporters and those of the bankers States and Britain, Japan in turn is feeling the effects of this contradiction. World's leading exporter of of payments -and indirectly its budget converting the Japanese balance of 1984-85, that capital exports to the United States. Japanese imperialism thus became the world's leading exporter of capital.
In 1985, Japan had a net credit balance of 130 thousand million dollars in overseas holdings over the debts owed to foreigners. credit balance was 90 thousand million dollars, and West Germany's was 50 thousand million dollars, while the United States had a negative balance of 100 thousand million dollars. (9)
But since these holdings are often in the form of public loans and obligations denominated in dollars, the 22 fall in the exchange rate of the dollar means a drop of nearly 50% in the real value of these holdings, if the Japanese massively, which they are obviously trying to avoid. The debtor thus "holds" the creditor by the fear of catastrophic losses. The "third world" have the imperialist countries in that position. The United States has the same hold on Japan.
However, it would be wrong to deduce from this that the debtors have gained a lasting "power" over their creditors. The response of the depreciation of its American paper holdings, has been classic holdings into "real values,
For land in the United States and elsewhere.
fact, when the yen rose by 50% against the dollar and the pound sterling, that meant that American bargains for the Japanese, so long as there is no flareup of inflation in the United States.
Between March 1985 and March
Japanese investment in States increased by 55% (10), going above all into the purchase of small and middle-sized firms specializing in high technology. (11) But Japanese banks have also acquired major banking establishments abroad, as the Banca del Gottardo in Switzerland, the Heller group and J. Henry Schroder in London, the Bank of California in the United States,
1986, it was rumored that the Dai-Ichi Bank - which has become the world's leading bank by virtue of the value of its holdings denominated in dollars — was on effect to the world capitalist economy as a whole. First of all, it represents a prodigious devaluation of capital for those who hold dollars or credit paper denominated in dollars or even dollar bonds of private firms and governments. This mass of creditors is not just outside the United States, it is above all within the country itself. (12)
It is true that this devaluation (as well as the momentary decline in the interest rate in the United States) is offering some relief to the most indebted countries of the "third world." But this beneficial effect is largely neutralized by movements in the other direction provoked by the US recession - greater inflation of local currencies compared with the dollar and a new deterioration in the terms of trade.
The collapse of the tin cartel and tin prices and the new disaster this has caused in Bolivia is a striking illustra-
According to the 1986 World Bank Report, "third world" countries suffered a 1.1% decline in their exports because of
9. Ibid, June 7, 1986. 10. "Far Eastern Economic Review*, September 4, 1986
11. 'Wall Street Journal', August 11 1986.
12. It could of course be argued that the loss of effective demand of owners of assets in dollars and in pounds sterling with regard to Japanese, West German, Dutch, Swiss or even French, Italian, Belgian or other goods is counterbalanced by the gains in purchasing power of holders of yen, marks, guilders, etc. with respect to US and British commodities. The same remark would apply to the revaluation of assets in yer and marks, which could compensate for the devaluation of assets in dollars and pounds sterling. This argu ment is not valid because the US hom market is bigger than the home markets o Japan and West Germany put togethe and the volume of assets in dollars pounds sterling is much greater still the volume of assets in yen and marks. International Viewpoint 13 October 1986
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ACHAT
the deterioration in the terms of trade in 1985, which means a loss of close to 6 thousand million dollars. At the same time, just for service on their debt they spent 22 thousand million dollars more than all the capital inflows (public and private loans and even investments) that they received in that year.
For the capitalist economy as a whole, this devaluation of moneycapital denominated in dollars is like a deflationary puncture aggravating the trend to falling prices that flows fundamentally from the existence of enormous surplus production capacity. (13) The sharpening of international competition owing to the fall of the dollar is forcing exporters to cut their profit margins, which in itself increases the trend to falling prices.
The fall in the oil price is having the same effect on the international economy. But since the recession has started, any deflation only increase the tendency to falling production, employment and income.
Moreover, as is the case for "third world" countries, the growing debt in the United States is pulling country into a veritable avalanche that nothing will be able to stop. For the years 1986-1990, in the US a cumulative balance of payments deficit of a thousand thousand million dollars is
The United States no longer has the gold and exchange to settle this colossal debt. It can find the means for keeping up appearances only by borrowing abroad. But, seeing the devaluation of the dollar, the foreign bourgeoisie is not inclined to lend money to the United States unless the interests on the loans includes a growing insurance premium against losses in the exchange rate.
The more this premium rises, the more the pressure will mount to push up interest rates again in the United States. In turn, a rise in the the US recession, which will tend to spread all the capitalist countries, thereby choking off world trade. That will the need to perverse effects of the dollar crisis on the US economy and the world capitalist economy are increasing the tendency to move capital from the productive sector to unproductive and purely speculalive ones. Thus they are aggravating the crisis of accumulation (overaccumulation) since only capital inrested in production makes it possible to produce additional surplus value.
Public debt in the United States has exceeded the astronomical level at 2,000 thousand million dollars.
International Viewpoint 13 October 1986
The service alone on this debt is approaching 200 thousand million dollars a year. It is aggravating the budget deficit and it feeds regularly off the balance of payments deficit, which continually swells the volume
The net US foreign debt, which amounted to 3% of the Gross National Product (GNP) at the end of 1985, threatens to reach 14% of GNP (800 thousand million dollars) in 1991. But only the tiniest proportion of the 200 thousand million dollars in interest collected every year by the US government's creditors are invested productively. To get an idea you need only compare this money with the 5.5 thousand million invested in the United States by the Japanese bourgeoisie. No substitute for the dollar
It might be supposed that the "positive" effects of the rise of the yen and the mark would neutralize at least some of the punctures in the international economy. There is in fact a trend toward an internationalization of the yen, toward the internationalization of the
The share of international credit operations (including the emission of risen to 7.7%, as against 6.7% for the mark. In absolute figures, these operations have risen from 2,300 thousand million yen in 1983 to 5,200 thousand million in 1985. At the present rate of that represents roughly 33 thousand million dollars.
The proportion of exchange reserves in all the capitalist central banks made up of yen has risen in the same interval from 4.9% to 6.2%. (14) It should be about 7% today. Some 10% of Japanese imports are already billed in yen.
you put these figures in their context, you see that they are modest or even insignificant shifts, given the extent of the dollar holdings of the Japanese capitalists. On March 31, 1981, the total holdings of the ten biggest Japanese banks to 250,000 the current exchange rate 1,500 thousand million
This volume was 75% greater than it had been a year earlier. (15) The share of foreign assets in this total already amounted to 40%, as against 30% a year before and 25% two years earlier. It is said that the big Japanese banks already hold 25% of all banking assets in the City of London. (16) Given these orders of magnitude, the relative importance of the yen as an international reserve currency, or its world trade, seem insignificant. There is still no substitute for the dollar as the base currency for the international monetary system, since in the final analysis there is still no imperialist power (or imperialist alliance) that has replaced the United States as the dominant power. And by the same token the crisis of the dollar can only accelerate the crisis of the international system of capitalist money, credit and trade.
It is apparent that the dynamic indebtedness and production are tightly intertwined in the age of late capitalism. This results in the last analysis from the aggravation of contradictions inherent in the capitalist mode of production, well above and beyond the problem of the so-called third
In a letter sent to US Senator Proxmire, Paul Volcker, president of
Federal Reserve Bank, at the end of 1985 that the paid-up capital of US businesses representno more than 51.5% assets, as opposed to 62% in 1981. US consumer debt has reached record level of 19.2% of disposable income. In Britain, a third of consumer spending is on credit, as against 25% ten years ago.
Half of German households are in debt, and 4 million households are behind in their payments. total of 20 thousand million marks recoverable. the households defaulting ment. But if consumer credit would rise still more.
"mini-recession" a "normal" recession of the type of the one in 1974-75 or 1980-82 comes down to the question of whether the markets of Japan and West
13. An article published on August 1, 1986, 172 the West German weekly magazine 'Die Zeit' characterized the situation on the world market for electronic components with the following lapidary formula: "A wrong projection of demand has led to enormous surplus capacity. the same time, we have seen a precipitous decline of the prices for these components on the world market. To halt this catastrophic drop in prices and profits, big Japanese and US semiconductor trusts have just formed a veritable exporters' cartel.
Neue Zurcher Zeitung, August 20, 1986.
15. The share of Japanese banks in the cumulative paper holdings of the capitalist world's ten biggest banks has climbed in the space of a year from 50% to nearly 60%.
16. Neue Zurcher Zeitung, July 22, 1986.
17. 'Neue Zurcher Zeitung,' November 23-24 1985; 'Sunday Times, January 12, 1986; 'Der Spiegel,' No. 12, 1986.
23
NO
BOTH, INTEREST Germany can replace the US domestic market as locomotives of the international capitalist economy. A further expansion of these countries' exports would lead to new surpluses in their balance of payments, which would manifestly have a perverse effect on the international conjuncture.
The Reagan administration is making energetic, not to say desperate efforts to get Tokyo and Bonn to give more thrust to their expansion. Japan and West Germany are called upon to pursue a policy of systematically lowering their interest rates ("cheap money") in order to swell internal demand in their countries, which would thus suck up more US commodities. So, here are our monetarists of yesterday relapsing into the crudest Keynesianism, not only on the national but on the international level.
Until now, Tokyo and Bonn have been turning a deaf ear to these pleas, showing once again that absolute American hegemony vanished long ago. It is hard to imagine them refusing to bow to such pressure in 1955 or even in 1965. Their rejection of these proposals is clearly inspired by their own interests as competitors. But they can also base themselves on solid "technical" arguments, that is on arguments of bourgeois economic policy in general that are well-founded from a theoretical point of view.
Would lower interest rates in Japan and West Germany have a real effect on the volume of investment, employment, production and national income? That is dubious. The level of these interest rates is already much lower than in the United States. The volume of money is moreover swelled rapidly in the United States, where it is growing annually at a rate of 13%.
Nonetheless, credit granted to businesses is tending to slow down, not because there is a lack of supply of money-capital, but because demand is not keeping up. The increase in the quantity of paper money is being neutralized by a decline in the velocity of circulation of money, despite falling interest rates. (18)
Contrary to the illusions of most 24 bourgeois economists, the quantity of paper money are only partially independent variThe effects of their variation depend in the final analysis on the extent of utilization of productive capacity, markets for commodities, and profit rates, as well as the volume of profits anticipated. If these factors do not capitalists to invest no drop in the interest rate is going to modify their behaviour.
What is pushing down the profit of the big Japanese trusts and leading them to moderate their investment - to "provoke" investment - is not just the high exchange value of the yen and the end of the export boom that this is above all excess chemicals, shipyards, and marginally as well) and the high-tech Fall in demand
According to the Japan Economic Journal of August 23, 1986, "with the decline following two years of investment in the semiconductors branch, the Japanese semiconductors industry is experiencing hard times. Capital invested by industrialists in the industry dropped 50% in 1985." In 1986, a further reduction of 28%
Even a strong expansion of demand in West Germany and Japan would only compensate for the fall in these countries' exports and export revenues. It could scarcely compensate also for total losses resulting from the drop in
America and in the "third world." But without that, overall world demand would remain slack or even spark a real upturn of the world capitalist economy as a whole.
If there were a real expansion of in Japan and West Germany it would only offer a stimulus to the economy through giving a new impetus to private consumption, since there are hardly any immedate hopes for a rise in productive investment. However, relaunching private consumption in such countries is impossible without a rise in real wages and employment.
But, since the start of the long depression, the entire economic policy of the bourgeoisies of these countries has been directed at precisely opposite objective. That is they are obliged to bring back up the rate of surplus value and of profit, which cannot be achieved if there is a significant increase in wages.
The attacks on the level of employment, the maintenance of a high level expansion, such as 1983-1985, were designed precisely to boost the rate value and profit. (19) The Japanese and West German bourgeoisies are not going to sacrifice these prime objectives for the sake of strictly US interests. Their deafness to Washington's appeals reflects a very
An expansionist monetary policy in Japan and West Germany would tend to wipe out all or a part of the competitive advantages that the bourgeoisies of these countries have gained over the United States, France and and long-term interest is to preserve these advantages. So they are hardly inclined to sacrifice them for a short-term consideration, such as avoiding a recession at any cost.
It cannot be ruled out that the immediate effect of the fall in prices and in the prices of raw materials denominated in dollars will give a greater competitive advantage to West German industry and, secondarily, to that of other EEC countries, to an momentarily counterbalance the immediate effects dollar on their capacity for export, even to the
In that case, there would be a timelag between the continuation of the "mini-recession" in North America and Japan and its extension in Europe. Helped along by the lag that has become habitual in the recessions to the semi-industrialized countries, this would lead to a desynchronization of the international business cycle for a few quarters. But it is unlikely that such a desynchronization could extend for 12 or still less for 18 months.
The most optimistic prognosis for the world capitalist economy -continued expansion in West Europe, Southeast Asia and Brazil during
18. 'Business Week,' August 4, 1986. 19. Unemployment remained practically unchanged over the entire period of the 1983-1985 upturn in the imperialist countries, or else rose. The reactionary French minister Philippe Seguin did not hesitate to tell Le Monde (August 8, 1986) that in France there was an "irremovable" residue of 2.5 million unemployed. This statement has no relationship to economic science. Rather it cynically expressed the aim pursued by the French bourgeoisie.
20. It is true that in Japan there is room for an increase in public investment
(social and infrastructural), which is very behind that in Europe. There is also room for reducing the rate of savings of the middle classes and white-collar workers. which is much greater than that in the other imperialist countries. However, the multiplying attacks against joo security in the big companies and the growing fear of unemployment explains why Japanese white-collar WOTRETS remain cautious in this respect. International Viewpoint 13 October 1986
International Viewpoint 13 October 1986 the whole of 1987 — is less probable because of the convergence of four
• The depressive effects of excess productive capacity on the volume of productive investment in all the imperialist countries.
•An inclination on the part of the bourgeoisies reducing employment and direct and indirect wages, in particular under the pressure of deficits in public budgets, which are growing everywhere.
•The immediate effects of the US and Japanese recessions, as well as the fall in the oil price, on the volume of world trade.
•The pernicious effects of the capitalist economy.
To these factors should be added the threat of a new inflationary thrust. Everywhere the swelling of the volume of paper money in circulation is exceeding the predictions of the central-bank authorities and the needs, properly speaking, of the productive
The principal cause of this expansion is the growing deficit in public systems, which is the result of the long-term economic depression, and in the United States, of the new spurt in the arms race. But this is also aggravated by increased recourse to consumer credit to cushion losses of income caused by the austerity policies being pursued by all the bourgeois governments.
In the United States, the increased cost of imports is also pushing prices up. But above all the new monetary "laxness" could stimulate inflation. In order to revive their sales, the US auto trusts drastically cut the cost of credit to consumers at the end of August, with the full approval of the banks, including the Federal Reserve
Some economists and particularly politicians think that a new rise of inflation is hardly dangerous, given very low level to which it has
This argument is doubtless valid for the world economy as a whole s if there "coordination" among the capitalist powers. But this presupposes a soli-
La common scarcely exists in conditions of competition and private property.
Since there is competition among the capitalist powers and them and the dependent semi-industrialized countries, every government calculates the effect of inflation on the competitiveness of "its" bouron the balance of payments of "its" country, on the ship of social forces in "its" state. They act this way not out of blind-
For ignorance, but under the pressure of competition. In these conditions, a new rise in inflation is a factor in increasing instability. opinion - including in the OECD -revival of inflation, which coincides with the end of the upturn of 19831985 in some countries, on a rise has no scientific validity. The increase in wages at the end of the upturn did not even compensate for their decline over the preceding recession. Moreover, this happened only in a few Inflation not caused by wage increases
Overall, when they have not declined, wages have risen more slowly would not have brought on a revival unutilized productive resources.
It is obviously the "laxness" of the banks and the monetary authorities toward the monopolistic conerns that enables the latter to onto the market any increase in their costs so as to maintain their profits.
What lies behind the demagogic wage increases generating inflation is the imperialist bourgeoisie's disappointment with the effect of the crisis on the evolution of wages. While they have fallen catastrophically in most of the "third world" countries, in some cases as much as 50% - Taiwan, South Singapore being the exceptions they have only declined slightly in the imperialist countries, except for Spain and Portugal.
Despite the extent of unemploythe relationship of forces has not shifted substantially in favor of capital. And the attacks on social security, which are inevitable in view deficit of public finance, are running up against fierce even in the United States. conditions, a relatively rapid exit from the crisis at the exof the working class similar to what happened in 1940-45 (and in
Germany and Japan) cely the foreseeable future. (22) Also unlikely is an exit from the depression through a general revolution, with restructuring of the world market accompanied by an expansion. The is, therefore, rather for the depression lasting a considerable
In this regard, significant. Great prospects have been held up for the future that this new industry is supposed to offer. They were supposed to mean a transformation of society as a whole, even a tendency to the disappearance of living human labor.
today, the bosses have to sing a different tune, starting with those in the robotics industry itself. Robotization has been advanced at a snail's pace and not by leaps and bounds, precisely because produetive investment as a whole is tending to studies made by the bourgeois magazines confirm this by registering the excess capacity in this simple fact that robot revolution has been promore slowly than
From now until the end of the century, such mechanical slaves will only eliminate a few per cent of whether the present recession could be accompanied by a collapse of the international credit system resembling that of 1931. I continue to think that that is unlikely. The US government cannot let banks like the Citicorp or Morgan Guarantee Trust go under for the simple reason that the US governis Citicorp and Morgan Guarantee Trust. As Professor Galbraith recently restated: "It can be said, in the broad sense, that no industrial or financial establishment is in of going under if it is big enough." (24)
there are limits to the and the speed with bourgeois governments can "come to cannot be excluded. Such an evenfactors. The first is the extent of the of capital, especially productive capital, in the imperialist countries themselves (first of all the United States), that is the number of big firms that go bankrupt or are swallowed up for a fraction of the value of their fixed assets. The second is the extent of the next crisis of insultries of the third world, debtor insolvency
Triumph of Politics,' Harper Row the former head of Reagan's Bureau of the Budget, David Stockman, expressed his "disillusionment' with the behaviour of pro-Reagan members of congress who opposed any substantial cuts in sickness insurance (Medicare, Medicaid) out of fear of the reactions of their constituents
22. Armstrong, Glyn and Harrison in their book 'Capitalism since World War II, Fontana Books, 1984, expressed a similar 1986; and the Travail, ' No. 1, 1986
24. 'New York Review of Books,' June 26. 1986. John Kenneth Galbraith,
Keynesian economist, is the author of 'The Affluent Society' (1961) and 'New Industrial State' (1986), among other books.
25