"The capital
• Is the present upturn for real? Does it imply that we are entering a period of growth?
• Ernest Mandel: There are two kinds of fluctuation in capitalist economies. As well as the obvious short cycle of boom and slump we can distinguish "long waves" of recession and growth. Despite short-term fluctuations, there was essentially one long wave of growth from
.... welcome you to the latest st installment of of "economic highlights" sustained growth.
Very high interest rates are a logical consequence of the strict monetary policy applied in most advanced capitalist countries in an attempt to reduce inflation and stabilise the exchange rate of the national currency. But this is not the whole story. High interest rates are also a consequence of an oversized financial sector in 1990s capitalism.
Consider the figures: in 1980 the total foreign liabilities (debts and promises to pay) of the seven most industrialised countries (U.S.A., Japan, Germany, France, Italy, Great Britain, Canada) were less than SUS 2 billion. By 1993 they exceeded $9 billion! It is true that foreign assets (money owed to these seven countries by the rest of the world) rose just as fast, but the point is that the total volume of volatile financial capital
With interest rates high, and capital increasingly free to switch from country to country in search of speculative gains, investment in production is unlikely to grow quickly and steadily, to the point where effective demand can pull the advanced economies up. Export
The last possibility, then, is for the advanced capitalist countries to increase their exports. The whole process of trade negotiations, new international regulations, measures to increase competitivity, and keeping domestic wages low is geared towards one thing opening foreign markets to the goods and services produced in the advanced capitalist countries. As exports rise, there is a reason to invest, an increase in profits, and the possibility of allowing wages to rise just enough to stimulate domestic consumption.
But exports from the advanced 18 industrial countries grew faster than their total production all through the recession. The problem for the capitalists, of course, is that imports rose as quickly if not faster than exports. So the volume of international trade went up, but no-one in particular benefited in terms of international competitivity. The new exports contributed only 0.9% to the Gross Industrial Product of the European Union, 1.3% in Japan, and failed to prevent a current account deficit in the United States.1 abroad. The imperialist countries opened up the "Global village"for their own benefit, but none of them proved consistently more competitive than the others, and as a result they all stayed more or less where they were.
We can see, then, that no component of effective demand could compensate for the new structural weakness of private consumption created by neo-liberalism. Capitalism now faces a demand-side crisis and a supply-side crisis. The only solution would be the discovery of a new foreign market, generating a significant, consistent demand for the goods and services of the advanced capitalist economies. In the short term. no such market seems to exist.
Note
1. The current account balance of payments of the European Union grew from an average 0.4% of Gross Industrial Product in the period 1961-73 to only 1.3% of Gross Industrial Product in 1994. In Japan it increased from 0.6% to 2.7%, and in the U.S.A. an average surplus of 0.5% in 1961-73 was transformed into a 1.7% deficit in 1994.
1949 until the beginning of the 1970. And when we consider that, boom or slump, core or structural unemployment has INTERNATIONAL INSTITUTE FOR
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Interview with Ernest
lists don't know what to do"
International Viewpoint #266 May 1995 st Mandel increased steadily since 1973, we can say that the last 22 years represent a long wave of recession. Official statistics lie, we all know how they eliminate all kinds of groups from their calculations. But in my opinion - shared I think by many analysts in the international labour movement, is that underlying, core unemployment represents over 50 million workers in the imperialist countries alone In the third world, we are talking about hundreds of millions of men and women.
There is also a steady underlying growth in the "new poor" - 10-30% of the population, and a phenomenon even Switzerland and Sweden will face in the near future. The imperialist countries have not known this level of marginalisation since the 1930s.
The evidence for a long wave of recession is even clearer in the third world. In Mexico the standard of living of the majority is now as low as before the second world war. In some other countries child labour is increasing, in conditions of semi-slavery.
The current upturn is a chance for the trades unions to follow the example of the German metalworkers and say "production is increasing, your profits are increasing — now we want our share!" This is a moment when we can win real advances. But we shouldn't forget that this is only a short cyclical upturn, and that the prognosis is still recession, certainly until • But profits have increased by 12-13% Since 1991-93. Why doesn't this provoke a longterm shift in economic behaviour?
Durable growth requires a significant increase in productive investments. And before capitalists will invest, they need two things — rising profits and a growing market. For the moment what we see is a concentration of capital in the main financial centres. Some of the multinationals are now so powerful that we should be talking about the reprivatisation of money* — these companies are less and less controllable by any government or group of states. Imagine that no-one even knows how much 'free' capital there is in the world today — not just to the nearest % point, but in terms of the nearest billion dollars!
What you don't know, you can't control.
On the one hand multinationals have huge financial resources, and on the other hand there are very tight limits on the kind of productive investment that can be profitable nowadays. This is resulting in over-liquidity - an important part of commodity capital is being transformed into liquid or semi-liquid money capital.
This surplus money capital is tied up in speculation. Communications technology means this capital can be transfered round the world at a moment's notice. The combined turnover of the major stock markets in a single day is equivalent to the turnover in international trade in a whole year. This "liquefaction' of capital has also allowed the expansion of debt to almost unimaginable proportions.
Marxists often speculate about the crisis of the subjective factor — the inability to
6 We always knew they were corrupt, but realising that we could do the job better is something new! " think as a class and act in the common interest — as far as the working class was concerned. But what we see now is a crisis of the capitalist class. They don't know what way to go, what to do. How far can they push their anti-worker and anti-union policies? How high is the risk of a revolt of the exploited and the oppressed? The bourgeoisie is divided and indecisive. • How likely is a revolt of the exploited and the oppressed?
These groups are on the defensive. If they win a few defensive struggles, they might become more aggressive. But if there is another increase in unemployment, another capitulation to austerity policies by the leadership of the labour movements, then the capacity for resistance will weaken even further. Then we would run the risk of a far-right offensive - not necessarily fascist, but certainly a qualitative reinforcement of a repressive "strong state'.
Secondly, there is of course a crisis of
World Economy credibility of the socialist project as such.
The working class has seen the failure of Stalinism, Maoism, post-Stalinism, social democracy and third world pseudoprogessive nationalism. And for the moment the workers can see no force to the left of all those failures, capable of at least trying to impose an anti-capitalist solution on the global scale.
As a result, what resistance movements there are are intermittent and isolated. As such, they can dissolve easily, or be coopted in the short term. But some forms of resistance are stronger than ever before
- when the U.S. Supreme Court ruled to limit abortion rights, more than one million women came into the streets to demonstrate!
Another new element is the growing minority of working people who say those in charge are corrupt AND incompetent', We always knew they were corrupt, but realising that we could do the job better is something new! Overqualified workers are frustrated with their chief engineers and managers. Students have realised that they are wasting their time in schools that do not teach them anything, and that they are heading for the unemployment line. We need to nurture this element, and help it develop.
Back to the German metalworkers -IG Metall is the largest, richest trade union in the world, but a six month strike of all 3 million members is more than they can afford. But by identifying and bringing out a few key workers — maybe 6-7% — in a small number of enterprises with a specific role in the industry, they paralysed the whole of production. Suddenly, the bosses are paying for the strike and the lost production.
We might be on the offensive, but that doesn't mean we are powerless! *
Ernest Mandel was interviewed by Gabriel Maissin for the 8 April issue of the Belgian magazine La Gauche.
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