'voodoo tinance economic governhis in Western to track record 1s Agreement Japan are each becoming trade takes economic disintegration. controllers means there is such a belief.
time. The spiral of madness; goods are produced that business cannot sell; to save their falling profits they sack and cars. Australia wants a 'Pacific basin trading zone involving South East Asia, South Anterica, and itself.
siege. Western Europe, where 43 percent of world place, is threatened with surprising, then, that the Financial Times issued the following 'It would be nice to belleve that an obstinate recession, and the consequent fall in inflation, has restored the machine to working order. But precious little, evidence for In short, we are not only back in the hungry thirties; we aren't going to There will be no 'return to normal' for a long How can we begin to make sense of this? The 'experts' are not very helpful. Throughout the sixties they goods.
told us that slumps had been cured refuting the 'backward Marxists.
of their current explanations and solutions? First, the most persistent myth of all; they claim oil price rises caused the slump. The top 100 banks worth $150bn; they owed $50bn more this by 'bad risk' rowers But a Bank of England study makes the obvious point: *In 1974 the UK was still importing all its oil, and shared the common eXOCECICC other oil importers. But by 1979 it was near to oil self-sufficiency so that the 1974-type longer plies. Dead right: but if the 1980 slump wasn't caused by oi! prices; workers and cut wages; and then wonder why they cannot sell their ihen why assume the 1974 slump was? Indeed, if either slump was caused by oil price rises, they would be unique in history amongst the twenty or more recessions so far recorded.
on the 'Arab are mess' school. For they are now worare OPEC and they, too, want to keep oil ried that the pound will fall with than prices up. "The industrial countries bor- have a common interest with OPEC in avoiding a too sharp fall in oil price rises, said the Financial Times on 19 January, But about that most mystical of totems, the money supply? If it was so important to control it before, why is Thatcher now letting the pound drop to its lowest ever? What was all the fuss ap- about? And will devaluation or inLCI COL damage, as Labour's leaders think? rate cuts now ment Thatcher their the bankers, Rico.
can no longer pay.
slumps.
And recession.
IN g growth rates.
to contemplate third Economist dustry.
History has played an ironic joke Sheikhs caused this of total most if oil is not to blame, what counterparts! panson restore the
The spiral of war; last time the world entered such a crisis, only fascism and because investment in machinery is far too low A 1973 survey showed for example, that each Swedish worker created £4,600 as against £2,700 created by her or his British counterpart. But in the five previous years their bosses invested 2½ times as much! A British assembly line worker compete' with a robot factory than a one-horse plough with a combine harvester. Investment, not wage-cuts, is the answer.
used monetarism to bring back unemployment and force uncompetitive firms to the wall. They hoped this would cut back the burden of debt. But the bankers merely lent abroad, driving Mexico and Brazil to the wall: world debt now stands at $560bn and the crisis is no nearer solution.
can no more put forward just one-sided government The spiral of debt; America and Britain planned, socialist economy.
But wage cuts also fail to deal with a basic problem; how to sell what is produced. If you cut wages, as Keynes pointed out when all this began, no-one can buy what you make. You prolong the slump instead of ending it.
Yet the opposite to this argument Alternative Economic Strategy supporters sumer They call for spending and mone creation to ensure that goods are sold, war resolved it. The alternative is a stimulating growth. The problem is that they cannot offer the capitalists higher profits, which are the only guarantee of fresh investment.
Indeed, the two "Keynesian' conditions for a boom, which the AES supporters have been demanding since 1979, are both now present and the boom is not happening.
spending is rising much as 3 percent — and interest rates are falling. Yet no new growth or investment is taking place. and what are recovery?
The most important thing socialists is to understand that this crisis is generated from within the private enterprise system. tor external causes such as an shock' or "monetary ment' or even Thatcherism are all attempts to avoid the unpleasant conclusion that whatever temporary improvement can be made by alternative policies, ultimately we can only solve today's problems by doing away with this system altogether, and in particular by taking investment right out of the hands of private individuals and corporations.
beginning of a return to the classica course of the capitalist trade cycle as analvsed by Marx, onwards has not solved capitalism's problems, but postponed them and brought them back in a much sharper form. production.
This. 15 most senseless things about it. thirds of the world is starving. Poor people the world over are crying out goods are being stockpiled, factories are closing, and workers thrown on the dole.
There will be no 'return to normal' 26 November it was reported that the USA has stockpiled 120m tons of grain and butter. This is a year's supply. On 30 November 1,086m tons of skimmed milk were added to the list. •A major trade war with Europe loomed when the US treatened to unload this at cheap prices on European and third world markets; the EEC stopped this so as to maintain farm prices. prices.
leading European man-made textile 500,000 tonnes by 1985, bringing total cuts this decade to nearly one third of output. Excess polythylene in 1,850,000 1,300,000 tonnes, and in Polystyrene at 700,000 tonnes. 30m too many tonnes of steel are produced each year in Europe alone.
the starving millions of India that they 'do not need' Europe's butter mountains, or What sense does it make for Reagan to offer US farmers gigantic subsidies to cut back production by up to 30 Con- percent when tamines are about to Dy as break out in countries? Capitalist crisis is always overproduction, not of use values but of exchange values. Our system cannot sell these goods and it is therefore forced to destroy them and the machines that make them.
to the decline in their value caused by the introduction of new machinery in the boom.
difference from the thirties. In all slumps prior to the war, overproduction always led to slumps in prices. This is the cleansing mechanism by which capitalism eliminates backward producers and restores profitability.
ed for two reasons: first, because monopolies gang up to prevent price falls by restricting because governments help them by printing money to maintain demand for their goods.
British bosses want a 20 percent wage cut What, then explains the recession the prospects for for transporting Searches oil prices, mismanage. gone cartels than prices.
The BCS •pci When the Second, the recession marks the and Marxists, Keynesianism inter-firm Third, this is a crisis of overThis one of the cruellest and Twofood, houses and clothing and tarriffs.
The biggest tragedy is in food. On WORKS Nina capitalists Nor was it just food. This year cut capacity by latest slump.
LabaciLy
Europe stands PVC ed Are these goods 'not needed"? Tell capital America's grain surplus!
the grain-importing This is the only way it can 'adjust"
However, there is one important The poorer because they Since the war this has not happenoutput; second, competition policy This It was to be expected that a 'tight economic basis.
Some falls outside raw materials have been even mo dramatic; for example the rate 50,000 tonnes of the USA to Japan fell l year from $28.50 to $11.20. Howe the prices for finished goods, ret and manufactures have no down. By and large, the often co-ordinated government action - have moved cut capacity and production rath most blatant case is the s called "Davignon Plan' for Europea Steel production which ordinating Steel closures of 30m to vear throughout Huro Tories say that closures are to maintain steel p fitability, and the philosophy of f enterprise they omit to mention th the closure is being settled by clos agreements co-ordina by EEC officials!
Parallel plans are going through cars, petrochemicals, artificial fibre and many other areas.
extends to retailing. principle function of the EEC's Co mon Agricultural Policy is to ke farm profits up by a combination sales restraint (hence the lakes mountains) subsidies and restricti That's the reason you don't lower prices in shops, a damning co demnation of the hypocrisy involv in the Tories' 'free market' polici But nowhere is the hypocrisy mo evident than in the attitude taker the OPEC producers, whose against the interests of more powerful cartels of oil retailer OPEC countries were doing no mo than carrying out normal economic capitalist practice.
What is going on is that, as usual slump, competition between capitalists grows far fiercer and some win OLHICES lost Monopoly and cartels arrangement supra-national government interve tion, are being used as a form of con petition to determine who will be th losers and who the winners in th Competition, this time round • Driving the so-called Advanc Developing Countries' Mexico and Brazil back down the road to penury • Driving a wedge between th three great continental blocks of America, Europe and South East Asia • Forcing the two imperialist political leaders America and Britain - out of their position of world dominance and CI8T0 creased reliance on their financial and military might as a bludgeon in the commercial war • Driving Britain, as the oldest and weakest imperialist power, to the brink of the abyss Who wins out of this struggle?
You don't win, because you have to pay the artificially inflated retai prices fixed by the big distributor countries don't wir do have economic clout of the big buyers.
And between the big imperialis countries, a politico-economic strug gle is raging, on the verge of outrigh trade war, to decide who will step u the ladder and who will step down.
Everv instrument of governmer policy becomes a weapon in this wal so that all the phenomena of capitalis are also. expressed political level, in the formation o customs unions, trade blocks, foreigi struggles for political allegiance and trading favours.
struggle Buri can only a may have