An unhappy new year
WORLD ECONOMY
The abolition of customs is not in and of itself the bearer of a new dynamic of accumulation, which is determined by factors lying elsewhere.
A third economic myth has just been exploded. The reunification of Germany and the general opening up of the markets
THE world economy is currently experiencing a sluggishness which is giving increasing cause for concern.
A recent editorial in the Economist, while attempting to be reassuring, was nevertheless entitled "Free fall?". It is well known that economic forecasts record fluctuations which are likely to be even more important than the economic phenomena themselves. Thus, after having doubted the onset of a new recession in the United States in the mid-1980's, then having proclaimed that the crisis was over towards the end of the decade, economists tried to convince themselves that a recovery, which has yet to appear, was imminent.
MAXINE DURAND
HE Organization for Economic
T
Cooperation and Development
(OECD) has had to revise its forecasts downwards. Growth in
1991 was very slow; 1.1% for the capitalist world as a whole, with unemployment rising by 3.4 million in a year.
The OECD predicted that the situation would be a bit better in 1992, with a growth-rate of 2.2% and, as usual, they claim that the following year should be even better with growth at 3.3%.
But in reality no perspective of harmonious growth of the world capitalist economy can be seen. As L'Expansion has written, "the recovery, if it occurs, will be fragile and lacking in vigor: the economies of the big industrial countries are beginning a detoxification cure."
A debate is closed
This morose state of affairs provides several lessons. In the first place it ends the debate which opened around the rather good economic performances recorded between 1988 and 1990.
These could be explained in one of two ways. The optimists thought that liberal policies would bear fruit. "Structural adjustments" had sufficiently cleaned up economies which could finally attain a
The second feature of the current phase appears in table 1, which shows that the big countries are beginning to evolve in different ways. This unequal development helps explain how the world economy has been able to avoid a generalized third recession where all the economies would shrink at the same time.
If we examine closely the evolution of each of the big countries we notice that the economic year 1991 laid to rest three illusions. A liberal illusion to begin with: it is striking to note that the slow-down is particularly noticeable for the United Kingdom and the USA, to the point that we can speak of a true recession.
The countries of triumphant liberalism have therefore reached their limits. They now have much more limited perspectives and the days when they were an example to others are over.
The myth of 1992
The second illusion which has been shattered by economic reality is that of the formation of a big European market. The myth of 1992 had been promulgated by the Brussels technocrats who promised at least two million new jobs.
In 1991 in the East was supposed to give capitalism the breathing space it needed to overcome the crisis. This too was a disappointment: the reunification was more costly than anticipated and German growth, after having powerfully advanced in 1990, is now slowing down.
The balance of payments worsened and the result was a rising rate of interest, which speaks volumes on the coordination of monetary policies which has been talked about so much over the last few months.
The supposedly open markets in the East continue to collapse. During the first half of 1991 industrial production declined by 29% in Bulgaria, 14% in Czechoslovakia, 17% in Hungary, 9% in Poland and 17% in Rumania. In the ex-Soviet Union, the national product declined by around 12% over the same period.
Explaining the downturn
How can this downturn on the international level be explained? It should be seen as essentially the effect of various contradictions which have until now been contained. The most fundamental is the following: the restabilization of profits realized during the decade that has just ended could not be accompanied by a sufficient dynamic of market openings. The growth of demand rested on various mechanisms at least two of which are reaching their limits.
The growing imbalance of the distribution of income to the detriment of wage earners cannot be indefinitely deepened. In the same way, the tendency towards indebtedness helped to maintain the level of demand, especially in the United States, can no longer be prolonged. Capitalism is therefore in the process of rediscovering th Famous contradiction between profits anc Another element that must be considered involves the reduction of financial
Table 1: Growth of Gross Domestic Product (GDP)
rhythm of growth similar to that before the crisis.
1983-1989
But this period could also be interpreted as a simple phase of replacement of investments and conclude that it actually amounted to a conjunctural upturn. The current downturn shows that the latter interpretation was correct. The turnaround dates from before the Gulf war and its date varies amongst different coun tries. It can be dated at mid-1988 for the
United Kingdom, from mid-1989 for the
United States, and from the end of 1989
4 for France and Italy.
International Viewpoint #223 • March 2, 1992 the number of jobs in the Europe-
Ecoan nomic
USA
3.9
Communit
Japan
4.6
Ex-GDR y stagnated while the
France unemploy
Italy
3.1 ment level
3.5
Great Britain went from
OECD
8.9% to
9.3% of the
Source: DECD active population.
1991
1992
1990
-0.5
1.0
4.5
5.6
4.5
1.8
2.8
1.4
1.0
2.0
0.8
- 1.9
2.2
2.6
1.1
2.2
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2.7 2.1 3.7 2.2 2.4 3.2 2.1 2.0