The conclusion should not be drawn from this that the financial crisis that is hitting the third world countries does not constitute a threat to the world capitalist economy as a whole. It does in two
First of all, because the insolvency into which one after the other of these countries is sinking - Argentina has in fact suspended payments of interest owed since October 1983, Mexico is now going through a new crisis in its foreign currency account - is leading them, notably under the pressure of the IMF, to drastically reduce their imports, thereby contributing to the stagnation of the world market and to the persistence of the long economic depression. Secondly, because a considerable part of these are held by private banks and exceed the banks' own capital and reserves, so that a suspension of payment of current (7) interest would threaten to bring bankruptcy for these institutions. (See Table V)
It is simply important to realize that the problem of debt goes beyond that of the third world countries alone, including as regards the accumulation of paper money, as Table VI shows, although it does not include the foreign bank debts of France, Sweden, Belgium and Denmark, which are very high.
Should it be concluded from this that a banking crash is inevitable? No. The banks in Saudi Arabia, Kuwait and Bahrein, which hold and place directly a part of their petro-dollar reserves, as well as the Banco do Brasil. 4. Let us recall that in Kuwait, the richest country in OPEC in view of the low density of its population, unbridled speculation on the so-called Souk al-Manakh "parallel stock market" led to a crash of uncovered checks to the tune of 93 billion dollars. (Le Monde, August 17, 1983.) 5. According to the Neue Zuercher Zeitung of March 21, 1984, the merger operations in the US oil industry, of which the profits went
Standard Oil of California. Texaco and Atlantic Richfield, were financed by 35 billion dollars in bank loans, which is higher than the combined international bank debt of the Philippines, Indonesia, Nigeria, Egypt, India and Turkey!
The Economist, May 19, 1984 one talks any more by the way of repaying the capital itself, because where would the third-world countries find the 700 billion dollars to repay all the capital that has been lent to them.
International Viewpoint 30 July 1984
TABLE V Loans to the four main Latin American debtors (Brazil,
Mexico, Argentina, Venezuela) as % of the bank's own capital.
Manufacturers Hanover Bank (USA) 240 % Lloyds Bank (GB) 228% Midland Bank (GB) 213 % Chase Manhattan Bank (USA) 175% Citicorp (USA) 170 % Chemical Bank (USA) 165 %
Bank of America (USA) 145% JP Morgan (USA) 125 % First Chicago (USA) 115% Continental Illinois (USA) 110 % National Westminster (GB) 100% Barclays Banks (GB) 75%
TABLE VII: American exports of manufactured products to the Third
World (in billions of dollars) 1981 1982 1983 To Latin America 31.5 23.2 16.9 To Asia 14.8 16.3 16.2 To Middle East 10.7 11.2 9.5
Bankers Trust (USA) 150 % Source: Sunday Times, June 3, 1984.
Total gross interest payments as % of total exports of goods and services 1978 1979 1980 Brazil 24% 31% 32% Mexico 20 % 21 % 20 % Argentina 11 % 14 % 22 % Source: OECD speed with which the US monetary authorities advanced the 6 billion dollars to Continental Illinois - in contrast to the fuss that is made over every minor rescheduling of debts to dependent countries - confirms that the imperialist governments would do practically anything to prevent such a crash.
The American government cannot let Chase Manhattan or Citicorp go under, because Chase Manhattan and Citicorp are the American government. So, the losses would probably be nationalized and internationalized. The whole question is who is going to have to pay the bill, and what may be the incalculable consequences of paying the price for a refloating of the imperialist banking sys-
There has been no restructuring of the world market. The fundamental cause of the financial threat flows from the fact that the constant expansion of banking credit is essential to keep the two basic contradictions of the world capitalist economy from becoming explosive. One is the falling rate of profit, that is the insufficiency of the total surplus value being currently produced to assure capital
TABLE VI: Main debtor countries of the private imperialist banks at end of December 1982 (in billions of dollars) Mexico 61.5 Brazil 60.0 Argentina 24.1 Spain 23.0 Venezuela 22.8 South Korea 19.0 USSR 17.0 South Africa 14.8 Poland 13.8 Australia 12.8 Norway 11.4 Yugoslavia 10.1 Chile 10.8 Portugal 10.0 Greece 9.8 West Germany 9.1 Finland 9.0 Philippines 8.5 source: OECD and the Bank for International Settlements. Joint note of April 1984. International Viewpoint 30 July 1984
1981 1982 1983 1984
(predictions) 39 % 50% 39 % 40% 26 % 31 % 31% 35 % 34 52 % 42% 44 % as a whole, especially newly accumulated capital, the rate of profit counted on. The other is the appearance of excess productive capacity in more and more industries, that is, the insufficiency of demand by the "final consumer" to absorb consumer goods that the system the more this expansion of credit "breaks loose" from real revenues and production, the more the profits and overproduction crises threaten to lead to a financial crisis that would in turn further aggravate them. A new world division of labor?
It is by constantly keeping your eye on the real causes - and not just the apparent ones - of the long economic depression that began around the end of the 1960s and the start of the 1970s that you can best understand why all the hopes of a more or less automatic "restructuring" of the world capitalist economy have proved in vain up till now, and will continue to do so for many years.
At first glance, the expansion of the industrial production of the semi-industrialized dependent countries, in particular Southeast Asia and Brazil, but also to a lesser extent, Mexico and India, seems
Restrictions on dollars to the Latin American and African led to plummeting of Anerican exports to these while on the other hand their exports to
United States are continually ex-
In 1983, for the first time in history, US imports of manufactured commodities from the third world exceeded US exports of manufactured commodities to these same countries. (See Table VII) It can be seen from this table that exports to Latin America are declining, while they are increasing to southern and eastern Asia. So, it is not just the Latin American countries that are suffering from the policies of the IMF but also the US export industries.
At the same time, it can be seen how
To Africa 4.5 3.9 2.7 Total 61.5 54.6 45.3 American imports of manufactured products from the Third World 35.0 36.8 45.7 Source: Le Monde, June 5, 1984. much the Latin American crisis is going hand in hand now with a new Countries such as South Korea, Singapore, Hong Kong, and even Malaysia are experiencing annual growth rates of the order of 6% to 7%, as a result of increases in the exports of more than 25% for South Korea, Taiwan and Hongkong, and 7% for Singapore.
However, if you pose the question of why this boom is occurring, the answer is clear: besides the overvaluation of the dollar, it is mainly the relatively low wages in Southeast Asia that explain it. In South Korea, despite the modest regular increase, wages are on a level equivalent to 50% of Japanese wages and 35% of American and European wages. This means that it is not real gains in productivity that explain the redistribution of productive capacities but differences in current costs and thus in revenues, which, by the way, are partially neutralized by a lower productivity.
By the same token, the shift of productive capacity to these countries has not brought an increase but a reduction in overall world demand. This is reflected clearly by a shrinking in the volume of world trade, followed by a stagnation, then by an expansion of this volume less than the expansion of production in the countries where the upturn is furthest along. (See Table VIII)
TABLE VIII: World exports (in billions of dollars) 1982 1983 1984 (predictions) 1,850 1,810 between 1,900 and 1,980 share of imperialist (OECD) countries 1,147 1,133 ₺ 1,200 Source: GATT report quoted by Neue Zuercher Zeitung, May 25, 1984.
An example will illustrate this evolution. South Korea is trying for the second time to get automobile mass pro8. Far Eastern Economic Review, June 14. 1984.
27
that would neutralize any increase in the rate of surplus value, because only living wage labor produces surplus value, robots hardly do so.
The limits within which more surplus value can be extracted from industrial
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It aims to produce 1.2 million vehicles in 1991, of which half are to be exported. But if the world market for automobiles continues to stagnate relatively, these 600,000 cars exported by South Korea will replace 600,000 cars previously sold by Japanese, American or West European firms. Moreover, the production of these 600,000 cars will generate only half as much "final" revenues [wages] as the 600,000 cars they will replace. This, therefore, means a shrinking and not an increase in overall world demand, even if the increased production and the relative expansion of the South Korean internal accompanying it actually take place, which is in fact quite proble-
Another good example is the petrochemicals industry. This industry, which is suffering from enormous excess capacity on a world scale, has been led to drastic shutdowns of productive facilities in Western Europe and Japan. The consequence was an upturn in production on the order of 15% in Western Europe in 1982-1983 and of the same order in
But next year, big newly built petrochemical installations will start operating in Saudi Arabia, taking advantage of very low-cost local raw materials. both the West European and Japanese trusts are expecting a new crisis and new cutbacks in productive capacity. (9)
As is evident, it is in the last anlaysis the long-term depression that is imposing limits on capitalist "restructuration" and not the latter that is making it possible to overcome the depression. There is no
"regulatory" operating, reflecting a basic reorganisation of the labor process.
Those who believe that the capitalist system can attain a "correction" of the conditions for accumulation capital, or more precisely for relaunching capital accumulation on a grand scale, because that is what is needed to get out of a long depression that has been going on for 10 to 15 years, often correctly stress that to get that you need a fundamental reorganization of the labor process, of the reorganization of work within the en-
History confirms in fact that this is the only way to achieve a considerable simultaneous increase in the volume and rate of surplus value.
So far, the results scored by capital internationally in the reorganization of work are more than modest. This is, moreover, despite a constantly growing number of unemployed, which for the imperialist countries together went from 10 million at the start of the 1970s to 35 million at the present time, and will undoubtedly soon go to 40 million.
To be sure, real wages are stagnating or declining in nearly all the imperialist
They are collapsing in a series of semi-industrialized countries, with the exception of Southeast Asia and the richer countries in OPEC. (10) As a result, -there has been a veritable explosion of capitalist profits.
According to Business Week of June
1984, gross profits, that is profits before taxes, rose in 1983 by 44% in Canada, by 24.4% in Great Britain, by 13.2% in West Germany, by 10% in the Netherlands, and by 8.7 % in France. In 1984, they will rise by 31.7% in Italy, nearly 20% in Great Britain, France, and close to 10% in West Germany. For the United States and Japan, the figures are of the same order.
However, this is a purely conjunctural movement, which does not reflect structural changes in the labor process. While such changes are taking place - largely as a result of robotization - their effects on the production of surplus value are only positive for the firms concerned insofar as they remain marginal and result in a simple redistribution of surplus value.
If these changes were to become general, which does not seem to be on the cards for several decades, the result would be a drop in the volume of surplus value labor, whose volume is declining, stagnating, or growing only slowly, are thus very narrow. This is all the more so since working class resistance is increasing as a result of the duration of the economic crisis itself and the spread of its effects to the big battalions of the working class.
The past gains of the working class by way of social security, which up till now have limited the impact on the crisis on the spending of working class households, are beginning in turn to be worn
But this, on the other hand, is stimulating working class resistance to the effects of the austerity policy.
The largest reserve available for increasing the production of surplus value, in the age of the third technological revolution and micro-electronics is the industrialization of services, the transformation of the providing of services into the sale of commodities, whose production involves producing increased surplus value.
This is a far cry from the so-called Post Industrial Society. It will happen, notably, in the fields of health, education, distribution, banking services, But it is accompanied by a triple effect that generates working class protests -reducing employment, reducing health services and a lowering of the quality of these services. In this area also, therefore, there will be increased working class resistance. earlier. In order for capital to be able to get out of the long depression that is underway, it would have to succeed in breaking the resistance of the workers to a major reduction in their standard of living and in their level of organization, as well as the resistance of the peoples of the third world to increased superex ploitation. reintegrate the workers states in the world capitalist market to a qualitatively greater degree.
However, capital is still far from having achieved its objectives today in a single one of these three fields. The least that can be said is that it would need a lot of time to accomplish these objectives. And it is the outcome of the social and political struggles among very live class forces that will decide how far the capitalists are going to get in this respect, and not any automatic regulating mechanism inherent in the capitalist system. •
Ernest MANDEL 9. The Economist, June 16, 1984. 10. It should be noted, however. that the drop in oil incomes has brought down the per capita income in Libya by 25%, that wages have been frozen for three years, and that even full employment seems threatened. This no doubt is not unrelated to the political crisis the regime of Colonel Qaddhafi is going through at the moment.
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