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THE COURSE OF WORLD IMPERIALISM
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Content:

The Course of World Imperialism
The Necessity of Capitalist Crises
Periodical Recurrence of Crises and the Cycle of Capitalist Production
The Illustration of the Present Crisis
Industrial Production

The Movement of Prices
World Trade
The impoverishment of the Working Class
Unemployment
The Worsening Living Conditions of the Working Class
The Crisis and the «Socialist» Countries
The Catastrophic Course of World Capitalism
Notes
Source


The Course of World Imperialism
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(The report published below has been presented at the General Conference of the Party, May 1975. The statistical data have been updated to include those available as of September 1975.)

After thirty years of bourgeois «prosperity» - a prosperity measured in the sweat of the working class and in the blood of peoples who have been massacred by imperialism - capitalist production is struck once again by a general crisis. The ruling classes thought that by abolishing all of the obstacles to the development of commercial exchanges and to the free circulation of capital they had finally achieved conditions for the stability of capitalism and had driven away the spectre of the convulsions which periodically paralysed the whole productive machine. But that which they attributed to the sobering up of the capitalist monster rid of its childhood maladies, or to the final achievement of an imaginary mastery over its mechanisms, was in reality only a momentary respite. With its massive destruction's of capital, the blood bath of the second imperialist conflict had been a true shower of youth for world capitalism. But as Marxism had foreseen and predicted, the three decades of frenzied accumulation and of the development of the productive forces could only lead and have only led to a new period of conflicts and crises - and these conflicts and crises, if the proletarian revolution has not previously imposed its own solutions, can only lead to a new imperialist war.

The Necessity of Capitalist Crises
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The bourgeoisie has always pretended to explain the economic crises by the existence of obstacles to the free development of capital. Once it is rid of these obstacles - which according to the bourgeoisie are inherited from the past or else caused by human ignorance - then everything would work perfectly well. Opportunist reformism, whose theory is in fact fundamentally the same, reproaches the ruling class for not having surmounted these obstacles, for being guilty of «bad management» of the capitalist machine which it itself claims to know how to manage in order to avoid the dangers. In reality we must search for the cause of the crises neither in the external obstacles to the development of capital nor in the incompetency of its managers but instead in the heart of the capitalist system itself; it lies in the contradiction between the productive forces developed by capital and the bourgeois production relations, in the antagonistic nature of a mode of production which can only develop the productive forces in an enormous way by giving their products a form such that the system must periodically violently reject them. While vast proletarian and semi-proletarian layers are abruptly plunged into poverty in the heart of the most developed capitalist nations and while vast areas of the planet vegetate in backwardness and slow death, capitalist production finds itself suddenly paralysed because it cannot find markets! The explanation of this revolting mystery resides in the very nature of capital: capital is only value seeking to generate value. Capital produces products which can only have the form of commodities, that is to say of use values which are at the same time exchange values. These commodities are not produced with the aim of satisfying the needs of human beings but in order to realise a certain surplus value on the market: that is to say, they are produced with the aim of being sold for money at a certain price and therefore with a certain profit in order to be thus retransformed into a money-capital superior to that advanced at the beginning, then once again into productive capital in order to begin the cycle of capitalist accumulation all over again... and thus it continues. Overproduction does not signify that too many means of production and consumption have been produced in relationship to the needs of society. It signifies instead that the market - whose capacities of absorption in relationship to the requirements of the valorisation (self-expansion) of capital are only known a posteriori and on which new masses of commodities from individual or collective producers are ceaselessly thrown - is no longer in a position to pay the price, and therefore the profit, that these commodities «normally» should yield. But commodities are only a metamorphosed form of capital. Behind the overproduction of commodities in relationship to the value that the market can yield, there is nothing other than the overproduction of capital in relationship to its own needs of self-expansion or valorisation. In short, the capitalist production relations themselves hinder the self-expansion of capital. As Marx wrote, «the real barrier of capitalist production is capital itself» (1). In other words, capital as a relation of production hinders the self-expansion of capital as a productive force tending to develop in an unlimited way.

In proportion to the development of the capitalist mode of production, which is accompanied by the increase of the organic composition of capital and the growth of productivity, there is a sharpening of this contradiction with the fall of the rate of profit: the latter expresses, in effect, precisely the degree of valorisation of capital, and its tendency to fall shows that this valorisation historically becomes more and more difficult. The revolt of the productive forces of capital against the capitalist production relations - that is to say the mercantile relations, capital and wage labour - inevitably bursts out into crises of capitalist production:
«Too many means of labour and necessities of life are produced at times to permit of their serving as means for the exploitation of labourers at a certain rate of profit. Too many commodities are produced to permit of a realisation and conversion into new capital of the value and surplus-value contained in them under the conditions of distribution and consumption peculiar to capitalist production, i.e., too many to permit of the consummation of this process without constantly recurring explosions.»

«Not too much wealth is produced. But at times too much wealth is produced in its capitalistic, self-contradictory forms» (2).

The very existence of capital therefore is only a succession of periodic crises in which all the contradictions accumulated by the capitalist mode of production erupt in a more or less violent way. In Volume I of Capital Marx describes this cycle which inevitably recurs, with all its consequences for the working class:
«The enormous power, inherent in the factory system, of expanding by jumps, and the dependence of that system on the markets of the world, necessarily beget feverish production, followed by overfilling of the markets, whereupon contraction of the markets brings on crippling of production. The life of modern industry becomes a series of periods of moderate activity, prosperity, overproduction, crisis and stagnation. The uncertainty and instability to which machinery subjects the employment, and consequently the conditions of existence, of the operatives become normal, owing to these periodic changes of the industrial cycle. Except in the periods of prosperity, there rages between the capitalists the most furious combat for the share of each in the markets. This share is directly proportional to the cheapness of the product. Besides the rivalry that this struggle begets in the application of improved machinery for replacing labour power, and of new methods of production, there also comes a time in every industrial cycle, when a forcible reduction of wages beneath the value of labour power, is attempted for the purpose of cheapening commodities» (3).

Periodic crises therefore are not «accidents» in the life of capital: they are necessary and inherent to it just as breathing is for the life of a human being. They regularly dash to bits the advantages which capital pretended to «guarantee» to the working class in periods of expansion; they make uncertainty and instability the normal situation of the working class and periodically worsen its living conditions, since crises always result in throwing a part of the proletarians in the street and in lowering the wages of the whole. This simple passage of Marx inflicts a formidable lashing to all the opportunists who pretend that capital and its state could «guarantee» something to the working class or that it is in the interests of the working class to «defend the national economy» or the «enterprise», whereas these very national economies and enterprises defend themselves precisely through layoffs and wage reductions.

Periodical Recurrence of Crises and the Cycle of Capitalist Production
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The periodic crises of capital give a cyclical movement to the life of capitalist production, which consists of a succession of periods of medium activity, of prosperity, of overproduction and of crisis and stagnation. In Volume 2 of Capital, Marx shows how this cycle materially takes shape:
«As the magnitude of the value and the durability of the applied fixed capital develop with the development of the capitalist mode of production, the lifetime of industry and of industrial capital lengthens in each particular field of investment to a period of many years, say of ten years on an average. Whereas the development of fixed capital extends the length of this life on the one hand it is shortened on the other by the continuous revolution in the means of production, which likewise incessantly gains momentum with the development of the capitalist mode of production. This involves a change in the means of production and the necessity of their constant replacement, on account of moral depreciation, long before they expire physically. One may assume that in the essential branches of modern industry the life-cycle now averages ten years. However we are not concerned here with the exact figure. This much is evident: the cycle of interconnected turnovers embracing a number of years, in which capital is held fast by its fixed constituent part, furnishes a material basis for the periodic crises. During this cycle business undergoes successive periods of depression, medium activity, precipitancy, crisis. True, periods in which capital is invested differ greatly and far from coincide in time. But a crisis always forms the starting point of large new investments. Therefore, from the point of view of society as a whole, more or less, a new material basis for the next turnover cycle» (4).

The tendency of fixed capital (plants, machinery, etc.) to become heavier and heavier is a fundamental law of the capitalist mode of production which expresses the increase of the organic composition of capital linked to the growth of productivity and which results in the tendency to lengthen the life of fixed capital. But on the other hand, fixed capital often undergoes a «moral» depreciation, that is to say it becomes technologically outmoded because of the creation of new processes and new machines before being materially worn out. The celebrated «competitiveness», i.e. the forward race which is spurred on by competition, requires fixed capital to be replaced while it still could have long years of service. One can imagine the enormous waste of social labour caused by this race for accumulation. The result of these two opposite tendencies, in the epoch when Marx wrote, was a cycle where the average life of fixed capital was ten years.

In reality, the duration of life of fixed capital is very different according to various branches of industry and the various techniques, and it would be absurd to imagine that every ten years all the capitalists would simultaneously renew their equipment. But the crisis always forms the starting point of a large new investment, or in other words the movement of investment is one of the instigators of the periodic cycles. Is there any reason to be surprised in this? Certainly not. This law is in perfect coherence with another law of capitalism demonstrated by Marx and recalled by Lenin in many polemics against the Russian populists (5), namely that the development of capitalist production grows essentially on account of means of production, or in other words that department I, which produces the means of production, is the true motor of capitalist production. Incidentally, here is another argument of petty-bourgeois and opportunist economics which Marx has already annihilated: could the crisis, as the opportunists claim, «be avoided» through the increase of «popular consumption»? But «popular consumption» is quite incidental to the functioning of the capitalist machine and therefore it is the last thing that its agents would worry about; it is not the motor which could set the whole machinery moving again! As for increasing it - that is to say improving the conditions of life of the proletarians - this is something that can only be achieved through the class struggle and not through pieces of advice or petitions addressed to the exploiters state by the servile reformist and parliamentarian puppets.

The movement of investment is not the only intervening factor in the cycles of production. There are other factors, as

Marx enumerated:
«
With accumulation, and the development of the productivity of labour that accompanies it, the power of sudden expansion of capital grows also; it grows, not merely because the elasticity of the capital already functioning increases, not merely because the absolute wealth of society expands, of which capital only forms an elastic part, not merely because credit, under every special stimulus, at once places an unusual part of this wealth at the disposal of production in the form of additional capital; it grows, also, because the technical conditions of the process of production themselves - machinery, means of transport, etc. - now admit of the rapidest transformation of masses of surplus-product into additional means of production. The mass of social wealth, overflowing with the advance of accumulation, and transformable into additional capital, thrusts itself frantically into old branches of production, whose market suddenly expands, or into newly formed branches, such as railways, etc., the need for which grows out of the development of the old ones» (6).

And Marx goes on to say:
«
If the low price of these commodities first results in new markets being opened up for them and in the enlargement of old ones, their overabundance progressively constricts the general market up to the point where they are abruptly rejected. The commercial vicissitudes thus combine themselves with the alternating movements of social capital which in the course of its accumulation either undergoes revolutions in its composition or increases on the basis of the already achieved technical level. All these influences contribute to provoking sudden expansions and contractions of production» (7).

The commercial vicissitudes, the overabundance of commodities, and the constriction of the markets following their

expansion are only the manifestations, through capitalist competition and anarchy (or according to Engels, planlessness), of the contradiction between the development of the productive forces and the relations of production: as soon as the markets open up, commodities are produced in such quantities and sold at such prices that they are over-abundant in relationship to the capacities of the market to absorb them. All the phenomena inherent to the development of capitalism result in the sharpening of this contradiction by allowing it to manifest itself unhindered: credit instantaneously mobilises the existing capitals bringing a flood of new capitals with each boom and it thus allows the overproduction of capital and of commodities to manifest itself still more completely and more rapidly; the technical progress which allows money-capital to be transformed into productive capital in a flexible and rapid way, and the rapidness of transportation which allows for the acceleration of the realisation of commodities and the reconversion of commodity-capital into money-capital, all contribute to the same effect; it is the same as concerns the increases of productivity which allow for the opening up of new markets and the «expansion of the old» through the lowering of prices. The mechanisms of competition among the capitals combine with the movement of renewal and growth of fixed capital, thus causing the alternating periods of expansion and contraction which are the very life of capitalist production: slow recovery and investment; acceleration of the recovery with the interaction of the various branches of production; flow of capitals, feverish investments, frenzied speculation in all spheres, or in other words, a boom; glutting of the market and drastic reversal of the situation: crisis and depression. Once this movement has come into being it repeats itself mechanically, with each crisis marking the end of one cycle and the starting point of another:
«
As the heavenly bodies, once thrown into a certain definite motion, always repeat this, so is it with social production as soon as it is once thrown into this movement of alternate expansion and contraction. Effects, in their turn, become causes, and the varying accidents of the whole process, which always reproduces its own conditions, take on the form of periodicity. But only in the epoch where mechanised industry, having established sufficiently deep roots, exercises a predominant influence on the whole of the national production; where thanks to it, foreign trade begins to take precedence over internal trade; where the world market successively annexes vast areas of the New World, Asia and Australia; and where the number of industrial nations entering into competition with each other is sufficiently numerous - only in this epoch can we date the beginning of the recurring cycles whose successive phases encompass years and which always result in a general crisis that marks the end of one cycle and the starting point of another» (8).

In other words if crises are an absolute necessity for the capitalist mode of production taken at its most abstract level, their recurrence in a cyclical movement appears historically, once capitalism has reached a certain degree of development and expansion, through the combination of a series of phenomena arising from the laws of capital and their application in a certain concrete geographical, historical and political material context. This movement draws in those nations which are in competition with each other, that is to say those nations which are tightly linked together through their relations of exchange and competition on the world market. It can be manifested in a violent manner, as Marx and Engels noted and analysed in 1847, 1857, and 1867. It can diminish or even apparently vanish at certain moments, as Engels noted for example in regards to England in the second half of the 19th century when competition from British industry's young continental rivals was so strong, at certain moments, that the depression was continuous in England (9). But this situation is the exception. In his report on «The World Economic Crisis and the New Tasks of the Communist International» at the 3rd Congress of the Comintern (10), Trotsky quoted a table published by the London Times, January 1921, which showed that between 1783 and 1921 the British economy had gone through 16 cycles, that is to say 16 crises and 16 phases of «prosperity»; each cycle on the average covered approximately 8 2/3 years. According to the official US government statistics, the American economy has gone through 17 cycles from 1892 to 1969 (the deepest of which was obviously that of the great crisis of 1929) with an average duration of 4 1/3 years (11).

This subject has caused great rivers of ink to flow from the pens of the bourgeois economists who evidently have difficulty in reconciliating this reality of the contradictory and convulsive development of capital, which regularly throws millions of workers in the street, with the vision (which it is their job to diffuse) of a harmonious mode of production that brings prosperity and security for all. But for all those whose vain mission consists of attempting to foresee and alleviate the convulsions of the capitalist machinery, there can be no hiding from the reality of the cycles. For instance the very official Organisation for Economic Co-operation and Development (OECD), which includes all the developed capitalist countries of the western world, has begun to devote an entire part of its monthly statistical bulletin to the cyclical indicators for the manufacturing industries. Likewise the official American and British «experts» have developed a composite index of the leading indicators, that is the economic indicators which are intended to predict some months in advance the trend of the business situation (12). The poverty of bourgeois «science»! The most powerful imperialist power in the world is reduced to attempting to predict the economic future six months in advance - and it doesn't succeed even in this (13)! What an admission of powerlessness by the bourgeoisie in front of its own mode of production!

After the second imperialist war, the cycle did not appear immediately throughout the world because the needs of reconstruction after the massive destruction's of goods, and thus of capital, had created enormous outlets for American capitalism and had given a new youth to the capitalism's which had been entirely or partially destroyed. Then the alternating expansions and contractions began to manifest themselves in all the western capitalist countries, as we have shown in the figures and graphs for the United States, Great Britain, Germany, and Japan (14). But at this point the cycles were out of step in the different countries: expansion for one could correspond to a recession for another, which to some extent allowed each national economy to «limit the damage», thanks to its exports, when it was in difficulty. But this very mechanism must inevitably tend to synchronise the different cycles. With the end of the 1960's, with reconstruction achieved, with the principal customs and monetary barriers abolished (and notably the return to the convertibility of the principal currencies), with the German and Japanese imperialism's rebuilt on the economic plane and entering en force on the world market, the era of bourgeois illusions engendered by an unprecedented phase of good business and high profits gave way once again to the era of confrontations and crises. The monetary and commercial war of 1970-71 (the devaluations of the dollar, the American-Japanese confrontation, and the monetary chaos) was the product of a still relatively mild crisis centred on the United States, with a slackening or decline of industrial production, a contraction of world commerce, a growth of unemployment, etc.

After this «little» crisis, which instigated western capital to attempt to accelerate East-West trade in the hope - a vain hope - of escaping the more serious crises which were on the horizon, there has been an economic recovery and then a boom which culminated in 1973-1974 in all the major countries and which brought a high inflation, soaring prices of raw materials, etc. Through commercial exchanges on the world market, the economic cycle had become synchronised; the simultaneous (and therefore all the more accentuated) boom has unavoidably led in 1975 to a crisis which is all the more profound. The world capitalist economy has resumed its characteristic spasmodic course with more and more abrupt jolts.

The Illustration of the Present Crisis
Industrial Production
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The simplest barometer of the development and of the convulsions of capitalism is the index of industrial production which is calculated in all the developed countries. In previous works of the party, this index has been used in order to demonstrate the historical dynamic of capitalist development, which is more rapid for the younger capitalisms and which slows down with the development of capital. Among other things this allowed us to demonstrate the senselessness of the Stalinist theories which attributed the high growth rates of industrial production in Russia to an imaginary «socialism», when in actuality this phenomenon was due to the youthfulness of Russian capitalism, as had been clearly demonstrated by the later decline of the growth rate. Capitalism develops the productive forces in an uneven manner, more rapidly for the younger capitalisms and more slowly for the older; this uneven development (in which other material, historical, geographical, and political factors intervene) constitutes the material basis for the changes in the inter-imperialist balance of power which result in confrontations and wars that alternate or coincide with crises of production.

When observed over a long period, the index of industrial production confirms the law of the senescence of capitalism and of its uneven development. Thus in the period from 1955 to 1973 the average rate of the annual growth of industrial production for the six major western countries has been the following (15):

Japan
13.1 %
Italy
7.2 %
Germany
5.8 %
France
5.8 %
United States
4.6 %
United Kingdom
2.9 %

The cycles of expansion and crisis for each country represent, more or less, oscillations of the economic seismograph on one side or the other of the trend line characterising the growth of the productive forces. In giving the average annual rate calculated on the basis of 18 years, we have arbitrarily supposed that the trend of this growth was straight and uniform between 1955 and 1973. But in reality it has a historical tendency to curve with the deceleration of the growth rates.

In order to now show the convulsive course of the capitalist economy, we must leave aside the movement of long-term growth. We will not observe the index of industrial production itself but instead the percentage change of each monthly index in relationship to the index of the same month of the previous year. This will allow us to follow the vicissitudes of production month by month. Table 1 compiles the annual growth rates, calculated month by month, for the United States, Great Britain, Japan, Germany, France and Italy from January 1970 to the last figures available (16). These figures show the recovery which has followed the recession of 1970-71, they show the boom of 1972-73, then the downturn in the second half of 1973, and finally the general drop of industrial production in the second half of 1974 and in 1975.

Table 1 - Industrial production

Percentage change, month on corresponding month of previous year.

   
Jan.
Feb.
Mar.
Apr.
May
Jun.
July
Aug.
Sept.
Oct.
Nov.
Dec.
U.S 1 970
-0,7
-1,4
-2
-2
-2
-2,7
-3,4
-3,4
-4,8
-6,8
-6,9
-4,8
  1 971
6 2,1
-2,1
-2,1
-1,4
-0,7
-0,7
-0,7
-2,1
0,7
2,9
2,9
2,9
  1 972
2,9
4,3
5
5,7
5,7
5,7
6,9
8,7
8,5
10
10,7
10,6
  1 973
9,8
9,7
9,6
9,4
10,3
11,3
11,2
10,1
9,1
8,1
7,2
6,2
  1 974
2,6
0,8
0
0,8
0,8
0
-0,8
-1,5
-1,6
-1,7
-4,4
-6,5
  1 975
-9,3
-10,8
-11,9
-12,4
-13,1
-12,6
-11,7
-9,7
       
U.K 1 970
0,8
2,4
4,1
2,4
-0,8
0
0
1,6
2,4
3,2
0
1,6
  1 971
3,2
0
-2,3
0
2,4
1,6
1,6
0
-0,7
-0,7
0,8
-0,7
  1 972
-2,3
-8,8
2,4
2,3
3,9
2,3
4,7
4,7
5,5
6,3
7,1
7,9
  1 973
8
20,8
10,9
6,8
4,7
6,7
5,7
5,7
4,7
4,5
2,7
0
  1 974
-7,4
-6,3
-4,4
0
0
-0,9
0,9
1,8
0
-2
-2,7
-2,1
  1 975
4,9
3,8
0
-4,7
-6,7
-8,1
-8,3
         
JAP. 1 970
18,7
18,8
21,4
18
17
20
17,7
16,9
14,7
11,4
9,7
10,3
  1 971
10,3
8,1
9,2
5,1
0,4
3
3
3,8
4,9
2,2
6,9
3,7
  1 972
5,2
6,4
6,2
7,4
13,7
8,4
7,6
8,3
7,8
10,5
11,2
14,9
  1 973
18,2
17,1
18,7
17,7
19,4
18,3
19,4
18
17,8
18,4
17,2
12,6
  1 974
9,8
9
3,1
2,4
2,3
-1,5
-1,1
-5,3
-6,1
-9,7
-13,4
-13,8
  1 975
-18
-18,3
-15,8
-14,4
-14,7
-11,7
-11,2
         
GER. 1 970
8,6
9,3
10
8,5
11,1
4,8
7,6
4
3,4
3,3
1,3
0
  1 971
3,3
3,9
1,9
3,9
-1,8
3,2
1,9
-0,6
3,3
3,2
1,9
-3,3
  1 972
2,5
-1,2
1,2
1,2
3,1
0,6
1,2
3,2
2,5
3,8
6,4
15,6
  1 973
8,6
12,7
6,6
8,5
5,6
10,5
3,8
8,7
11,3
5,5
5,5
6,3
  1 974
1,8
0,8
0,8
0
0,8
3,5
2,5
-2,1
-2,7
-4,4
-3,5
-8,9
  1 975
-8,5
-8,5
-4
-12,9
-5,5
-14,2
           
FRA. 1 970
7,9
7,9
9,4
7
4,2
4,9
2,7
2,7
6,3
3,4
6,3
5,5
  1 971
2
3,3
6
1,9
2,6
6
7,4
7,4
8,6
8,6
8,6
7,2
  1 972
8,4
6,4
5
7,7
11,1
7,6
8,1
8,1
5,5
5,5
6,7
8,6
  1 973
9
10,9
10,1
7,2
10,6
9,8
9,5
9,5
9
8,7
7,6
1,6
  1 974
2,5
2,5
0
3,3
0,8
2,5
4
4
0,8
0
-3,2
-4,2
  1 975
-7,2
-7,2
-8,9
-9,6
-12,7
-10,4
           
ITA. 1 970
4,1
7,1
4,1
2,7
3,4
0
2,7
0
10
14,5
17,7
11,7
  1 971
0
-1,3
-2,6
-4,6
-2,6
-2,7
-5,9
-6,2
-2
-0,6
-1,9
-0,6
  1 972
1,3
0,6
0,6
2,8
3,4
4,1
2,1
5,2
-2
5,3
4
1,9
  1 973
3,9
5
6,1
15,4
14
18
23,7
20
18,3
12,4
12,5
11,4
  1 974
20
16,1
17,8
12,5
8,9
7,2
2,6
-4,2
4,3
-2,8
-7,3
-11,1
  1 975
-12,5
-7,3
-14,3
-9,8
-18,7
             

Sources:O.E.C.D, Main Economic Indicators, and official figures published in the press.These data have been calculated on the basis of the seasonnaly adjusted monthly indexes of industrial production.

The graphs of these growth rates have been superimposed in the graph page 19 (purposely avoiding to identify each country). This graph is better than long commentaries in showing the extent to which the crisis is international and simultaneous - and those gentlemen who theorise the «specificity» of their own country and the «national ways» are invited to put on their spectacles.

The principal western capitalist countries are competitors on the world market at the same time that they are linked together through this market, since the greatest part of the commodities which they produce are exchanged among themselves; they draw each other into the crisis just as they drew each other in the phase of expansion which had preceded.

The nations which dominate the world market likewise draw along the smaller capitalist countries into the crisis, as is shown by the generalised fall of the production indexes of the latter. Thus between June 1974 and June 1975 industrial production dropped as follows:

Canada 6.1 %
Belgium (May) 14.6 %
Australia 11.8 %
Netherlands 8.1 %
Austria 11.7 %
Spain (May) 8.7 %

The statistical figures in Table 1 also show the depth and duration of the crisis which is without equal in the period since the second imperialist war: as of June 1975, industrial production (compared monthly with the year before) had dropped for 12 consecutive months in the United States, 13 months in Japan, 11 months in Germany, 9 months in Italy, and 8 months in France (the case of Great Britain is slightly different since the comparisons were distorted for the first three months of 1975 due to the miners strike and the three day week in the beginning of 1974 which resulted from it). In the last month for which figures are available, industrial production had dropped 11.7 % in the US, 8.1 % in Great Britain, 11.7 % in Japan, 14.2 % in Germany, 10.4 % in France and 18.7 % in Italy and there is nothing to indicate for sure that the deepest point of the crisis has been reached.

The Movement of Prices
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The alternating movement of expansion and crisis of capitalist production affects the prices, tending to give them also an alternating movement of increase and decrease:
«
Crises are usually preceded by a general inflation in prices of all articles of capitalist production. All of them therefore participate in the subsequent crash and at their former prices they cause a glut in the market. The market can absorb a larger volume of commodities at falling prices, at prices which have fallen below their cost-prices, than it could absorb at their former prices. The excess of commodities is always relative; in other words it is an excess at particular prices. The prices at which the commodities are then absorbed are ruinous for the producer or merchant» (17).

The fact that the market is in a position to absorb the commodities once their prices have fallen, when it could not (which can be empirically verified in each crisis), clearly shows that we are not faced with crises of overproduction in itself but instead with crises of overproduction of capital in relationship to the valorisation permitted by the capitalist and mercantile relations. Therefore, the only way out for capital taken as a whole is the fall of the prices of commodities which results in a loss for the sellers, ruin and bankruptcy for certain producers, and thus the depreciation in the value of global capital until the point is reached where it will be possible once again to rebegin its cycle of self-expansion.

But the cyclical movement of production is not the only factor to exercise an influence on the movement of prices. On one hand the price of each commodity is determined in the final analysis by its value, which historically tends to fall with the

growth of the productivity of labour. But on the other hand with the development of capitalism, which implies first the concentration and centralisation of capital, then the formation of monopolies and cartels, there appears a persistent tendency of the prices to rise: this tendency appears historically as the result of the generalisation of monopolist practices of capital faced with the falling rate of profit, and it has the advantage for capital of tending to constantly rob the workers of a part of their wages.

The result of the combination of these trends, as the experience of the years 1973 and 1974 has amply shown, is a galloping inflation in the period of the productive boom and a resistance to the fall of prices in the period of crisis and depression. This «resistance» is only a general tendency: prices can fall in the sectors where monopolies and cartels are not very developed; and it is also true that since competition is inherent to capital, no cartel is guaranteed of holding out in an extremely profound crisis and the cartels can abruptly crash after having momentarily resisted the tide.

But because of this «resistance» the crisis does not manifest itself immediately through a general fall of prices but instead it is first manifested by the fall of the prices of certain commodities (i.e. those for which there is free play of competition) and by the slowing down or the cessation of the rise in the prices of other commodities. It is precisely this which can be verified by observing the prices of raw materials and the wholesale prices, both of which closely reflect the variations of production.

Prices of Raw Materials. We will utilise the index of the price of metals (in dollars) regularly published by The Economist. Table 2 shows the evolution of this index (with 1970 = 100) for the last 18 months. In May 1974 it was at its all-time high of 245.8: the price of the metals on which the index is based had increased by 102.5 % in one year, that is to say it had doubled. This was the boom. After the peak of May 1974 the fall was very rapid, and one year later, in May 1975, the index had diminished by 52 0/0: in other words the prices had lowered by one half, which means that they had fallen almost to the level of May 1973. This was the crisis. After May 1975 the fall in the prices continued although it slackened slightly: in September the index was at 111.8, down 19 % from the same month of the previous year and down 54 % in relationship to the peak of May 1974.

Table 2 - Index of the world price of metals

  Month Index % change on the year
1 974 May 245,8 +102%
  July 158,7 +14%
  September 139,3 -4%
  November 131,9 -19%
1 975 January 117,8 -26%
  May 116,5 -52%
  July 111,5 -40%
  September 111,8 -19%

Sources:The Economist, dollar index (1970 = 100), first week of each month.

Wholesale Prices. Table 3 compiles the wholesale prices, country by country, for the last 9 months. For all the countries except Great Britain this verifies a slackening in the rise of prices and a stabilisation beginning approximately in November 1974 with the index for the United States remaining near 156, that of Japan near 156-157, Germany near 143-144, and Italy near 190; the index for France (which is calculated in a different way) has decreased since July 1974. On the other hand, for the same countries, the annual increase is obviously slackening: in 7 months it diminished from 18.9 % to 12.1 % for the United States, from 31.3 % to 4 % for Japan, from 16.1 % to 5.8 % for Germany and from 43.8 % to 9.7 % for Italy; for France there is no increase at all but a fall instead.

Table 3 - Index of the wholesale prices

(1970 = 100)

  Sept. 47 Nov. 74 Jan. 75 March 75 May 75 July 75
United states 151 156 156 154 157 159
% change on the year 18,9 23,8 17,3 12,4 12,1 8,8
United Kingdom 159 165 172 179 187 192
% change on the year 24,6 27,9 28,3 26 25,5 24,6
Japan 156 157 157 156 156 156
% change on the year 31,3 24,6 10,5 5,4 4 1,3
Germany 137 139 143 143 144 144
% change on the year 16,1 15,8 13,5 8,3 5,8 5,8
France 161 159 155 152 147 147
% change on the year 28,8 19,5 7,6 -2,5 -9,2 -9,8
Italy 187 190 190 191 190 191
% change on the year 43,8 39,7 25,8 13 9,7 5,5

Source: O.E.C.D., Main Economic Indicators.

World Trade
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The present crisis is also manifested by a contraction of exchanges on the world market, which always reflects the cycles of production.

Growth of the Volume of World Exports

1968: + 13 %
1969: + 10 %
1970: + 9 %
1971: + 6.1 %
1972: + 8.5 %
1973: + 14.5 %
1974: + 5 %

After a large increase of the volume of world exports in 1973 (+ 14.5 %) the deceleration became very acute in 1974 with an increase of only 5 %. For 1975, the GATT experts predict, for the first time since the end of the second imperialist war, a decrease in the total volume of exports.

This contraction of world commerce inevitably signifies an aggravation of the competition between the rival imperialism's, and a new outbreak of the commercial war, protectionism, monetary manoeuvres, etc.

The impoverishment of the Working Class
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For the working class the cycles of production signify permanent insecurity under capitalism. The periodic crises mean layoffs and unemployment for some, an increase in the intensity of work for others, and a reduction of real wages and impoverishment for all.

Unemployment
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With the decline of production, capital abruptly rids itself of the part of the labour force which has become superfluous. It also reorganises its productive machinery in order to increase the productivity and intensity of the labour of the workers who have not been laid off: it can thus reduce the expenses of variable capital still more and increase the rate of surplus value. The swelling of the reserve army of labour allows capital to exert a pressure on wages and to increase still more the intensity of exploitation.

In spite of the cynical falsifications of the bourgeoisie, the official statistics cannot hide the dramatic increase in unemployment, as is shown by Table 4. In one year, from June 1974 to June 1975, the official number of unemployed has increased by 65 % in the United States, 60 % in the United Kingdom, 48 % in Japan, 122 % in Germany and 94 % in France.

Table 4 - Official unemployment statistics

  Sept. 74 Apr. 75 May 75 June 75 July 75 Aug. 75
United states 5 303 000 8 176 000 8 538 000 7 896 000 7 838 000 7 794 000
% change on the year 25 80 82 65 60 58
United Kingdom 613 000 823 000 834 000 862 000 928 000 985 000
% change on the year 13 36 50 60 66 63
Japan 690 000 980 000 910 000 920 000 870 000  
% change on the year 9 42 44 48 45  
Germany 557 000 1 087 000 1 017 000 1 002 000 1 035 000 1 031 000
% change on the year 154 92 122 122 110 93
France 535 000 757 000 737 000 738 000 765 000 797 000
% change on the year 27 82 89 94 92 86

Source: O.E.C.D., Main Economic Indicators, and official figures published in the press.Not seasonnaly adjusted, except for the U.S.

Starting from the hypothesis that the distortion caused by the falsifications is constant, we can assume that the official bourgeois statistics give reliable indications of the trend of unemployment. However the absolute figures give us only a pale image of the real situation. They do not take into account the immigrants who have been sent «home» through various means, from the legal restrictions at the borders, to legal or semilegal terrorism (such as the murders of Algerians in France); neither do they take into account the workers who have not registered because they knew it was of no use, nor the latent unemployment, nor the partial unemployment which ranges from forced vacations to the reduction of the hours of work. A real estimate of the size of the industrial reserve army would require an exhaustive study. Therefore we will simply try to make an estimate of the real number of unemployed on the basis of bourgeois data.

In the United States, the official number of unemployed in May 1975 was 8,538,000 (seasonally adjusted), or more than 9 % of the labour force. But government officials admit that approximately 1,500,000 unemployed do not enter into the statistics because they have been discouraged from looking for work due to the crisis. According to Senator Humphrey the real unemployment figure in February was 10,800,000 (18) as compared to the official government figure of 7,500,000. In applying the same «conversion factor» to the statistics in the month of May, we arrive at a minimum estimate of 12,000,0000 unemployed. It is necessary to add to this number the partially unemployed workers, hundreds of thousands of «illegal» immigrants who are deported because the police suddenly become more diligent when the economy no longer needs their cheap labour force, and also the unemployed black population a good part of which is not taken into account in the official statistics.

United Kingdom. The OECD figures greatly underestimate the real situation, since they do not take into account either the young people arriving on the labour market after having finished school, or those who are employed part-time. Total unemployment in the UK had already reached the figure of 1.25 million people in August.

France. The official figures (737,000 unemployed in May, 765,000 in July) are also well below the actual number. An estimation according to the criteria used by the International Labour Office revealed nearly 1 million unemployed in March 1975, not taking into account 265,000 part-time workers (19). Another study by the Bank of England tried to unify estimates by adjusting for differences in the methods of calculation used by the various countries; according to this study there were 1,150,000 unemployed in France in April (20). All these figures do not take into account the deportation of immigrants.

Germany. The official figures (1,017,000 unemployed in May, 1,035,000 in July) do not take into account either the massive deportation of immigrants, whose number diminished by 300,000 from March 1974 to March 1975, or the partial unemployment which was nearly 1 million people in April.

Japan. The bourgeois experts themselves acknowledge that the Japanese unemployment statistics are hardly representative because they do not take into account the seasonal workers who have been laid-off, the part-time employment, the workers who have been pressured into «voluntarily» quitting, or the forced «holidays» which mask temporary plant close-downs. The Mitsubishi Bank recently acknowledged that «the labour market is in an extremely serious state [...] the rise in unemployment rate in Japan constitutes an extremely serious situation» (21). Taking into account the above factors, a labour force which numbers over 50 million people, and the severity of the industrial slump, the official figure would have to at least be tripled to reach a minimum estimate of unemployment.

A quick estimate of the minimum number of unemployed in the six major western countries at the end of the first quarter of 1975 therefore gives the following result:

USA
12,000,000
Japan
2,700,000
France
1,200,000
UK
1,100,000
Germany
1,500,000
Italy
1,500,000
Total 6 countries
20,000,000

With at least 1,300,000 unemployed in the other developed countries of western Europe, and 1,400,000 in Canada and Australia, the estimate for the principal western capitalist countries is at least 22-23,000,000 unemployed towards the end of the first quarter of 1975. This figure is due to significantly increase until the end of the year and even afterwards.

The Worsening Living Conditions of the Working Class
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Under the banner of the so-called «struggle against inflation», most bourgeois states have undertaken an action in order to reduce real wages and thus increase the rate of surplus-value and the rate of profit which is diminishing. The crisis accentuates this tendency, since the capitalists who attempt to achieve «a forcible reduction of wages beneath the value of labour-power» (Marx) are helped in this by the pressure which is exerted on wages by the existence of the reserve army of labour.

In the United States, the offensive of capital against wages has begun well before the crisis proper. According to the US Department of Commerce Statistics (22), the average hourly earnings per worker was $ 4.44 in May 1975. However expressed in 1967 dollars (that is taking inflation into account) it has constantly diminished since September 1973, falling from an index of 109.9 (1967 = 100) to 106.3 in April 1975, or a reduction of 3.3 %.

Another indicator is still more explicit because it takes into account the reductions of the workweek: this is the «spendable earnings of a worker with 3 dependants». Expressed in 1967 dollars, it was at $ 97.50 per week in October 1972. It has constantly diminished since then; in April 1975 it was at $ 87.46 per week, or a reduction of 10.3 % in 2 1/2 years. And it must be remembered that these figures, as well as those which will follow, officially express the real wages of the workers who have a job. This means that with the dramatic increase of unemployment, there is a much more severe reduction in the average incomes of the whole working class.

In France, according to the official statistics of the Ministry of Labour (23), the buying power of the worker's wages had begun to fall at the end of 1974 and the beginning of 1975. Between October 1974 and April 1975 the official index of hourly wages in the manufacturing industries had risen from 176.7 to 190.4, or an increase of 7.7 %. When corrected with respect to the rate of inflation, the hourly wages had officially increased by 1.8 % for the same period. But with the workweek shortened from 43.7 hours to 42.7 hours, or a decrease of 2.3 %, the real buying power has diminished and especially so since the shortening of the work week affected overtime hours for which the workers receive a proportionally higher wage.

In Japan, the state and the employers had decided beforehand to offer a maximum wage increase of 15 % in the yearly wage negotiations in the Spring of 1975. While the real rise in the cost of living, according to the unions, had reached 18.9 % in one year from March 1974 to March 1975 (24) as opposed to the official figure of 13.9 %, the workers have been granted an average annual wage increase of only 13.2 %. In the textile industry, the unions have even accepted a total wage freeze in exchange for the «promise» that they would not be laid off. Commenting on the results, the Mitsubishi Bank recognised that the unions have made «big concessions on wage demands because of the worsening economy» and that «the level of wage increases is in line with the views of management» (25).

In England, in spite of the indignant protests of the bourgeoisie who blames the «exaggerate» rise in wages on all the diseases of old British capitalism, the buying power of the hourly wage, calculated according to the official figures of the OECD, had begun to diminish in August 1974. The fluctuations of this decline reflected the combativity of a working class little disposed to «voluntarily» consent to the sacrifices required of it by the united front of capital, its state, the Labour government and the TUC Judging the decrease in wages to be too slow for the needs of survival of British capitalism, the Labour government with the agreement of the TUC has centrally imposed a ceiling of £ 6 per annum on the weekly wage increases, while the consumer prices rise at a rate of about 25 % per year.

Even with the figures available at the beginning of the crisis we can see already that in all the western capitalist countries the famous bourgeois «prosperity» has only led to a growth of unemployment and a worsening of the living conditions, in short to an impoverishment of the working class. These trends will inevitably continue to intensify from now to the end of 1975 and in 1976.

The Crisis and the «Socialist» Countries
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Can the Russian economy, those of the countries of Eastern Europe which are in the zone of influence of Russian imperialism, and that of China be spared by the crisis which hits the western capitalist economies so deeply?

In order to answer this question, we must refer back to what our party wrote in 1956 to explain why the great crisis of 1929 spared the Russian economy:
«
In 1929 there was no channel of communication to link the rising Soviet capitalism and the international market. This would only be re-established, in a appreciable way, ten years later with the war of 1939.»

«This explains the fact that the crisis did not spread to Russia which was in a serious period of underproduction (production was a twentieth of what it is today and a tenth, or even less, of the per capita production of the other capitalist countries at that time). Therefore a crisis of overproduction could not appear in the interior of Russia, nor could it enter Russia from the exterior. The tragedy took place entirely outside of its frontiers.»

The fact that the crisis of 1929 had spared Russia was not at all due to the pretended «socialist» nature of its economy. But as we wrote «once the «iron curtain» is transformed into a sheer veil through competition, the universal mercantile crisis will strike the heart of the young Russian industry» (26).

The entire explanation of the present situation can be found in these lines.

As Marx has showed, the cycles of periods of expansion and crisis emerge and begin their course in the most developed countries once a certain degree of capitalist development is attained. These cycles are transmitted and unified by the medium of the world market throughout the countries which are deeply integrated in it.

But Russian capitalism, even if it is much more developed than it was in 1929, nevertheless is still relatively backward in relationship to western capital. Its development is handicapped by the backwardness of its agrarian structure and the low productivity of its agriculture. Above all it is still compelled to buy most of its technologically advanced equipment from the West since it is incapable of producing it itself, and it must finance these purchases through borrowing capital. The fact that Russia lags behind the other major capitalist countries does not signify that the Russian economy does not know crises: the anarchy of production reigns there just as in the West and it suffices to read the Russian press to know that mountains of the most diverse commodities regularly rot away here and there because they have been produced without foreseeing the needs of the market. But these are still crises which strike branches and sectors of production according to the caprices of capitalist anarchy. They are not general crises which strike all the important sectors of production, generalising themselves throughout the whole of the economy. The overproduction of capital and commodities remains localised and episodic; it is not yet general. A general crisis of overproduction cannot yet - in 1975 - develop and burst from inside Russia.

Could the crisis, as a second hypothesis, be transmitted from the exterior through the intermediary of exchanges on the world market? In order to answer this question it is necessary to refer to the statistics. For the western countries East-West trade made new progress in 1974. But as is shown in table 5, the volume of their exports towards the East in relationship to the whole of their exports still remains low: 2.2 % of American exports, 3.1 % of British exports, 4 % of French, and 5.8 % of Italian. Only Japan and Germany allot a more considerable portion of their exports to these countries. As these figures show, the development of East-West trade has been insufficient to prevent the crisis in the West.

Table 5 - Export among the major capitalist countries

Percentage of exports from:

Going towards: USA UK JAPAN GERMANY FRANCE ITALY RUSSIA

(1973)

USA --- 10,7 23,3 7,5 4,8 7,6 0,9
UK 4,6 --- 2,7 4,8 6,5 5,1 3,4
JAPAN 10,8 1,9 --- 1,4 1 1 3,9
GERMANY 5 6,1 2,7 --- 17,2 18,4 2,9
FRANCE 3 5,5 1,3 11,8 --- 12,5 1,7
ITALY 2,8 3 0,7 8,1 11,6 --- 1,9
- the 6 above + benelux 32,6 38,3 33,6 52,9 57,8 52,9 17,7
- the <socialist> countries 2,2 3,1 7 8,4 4 5,8 57,7

Sources: O.E.C.D., Statistics of Foreign Trade; Vneshnaïa Torgovlia S.S.S.R., Moscow, 1974, 1974 figures, except for Russia.

The greatest part of the commerce of the developed western capitalist countries, as is shown in the preceding row of figures in the same table, is still carried out among themselves. The same is also true for the eastern (or so-called «socialist») countries as is shown by an examination of the last column of table 5: in 1973 Russia still directed less than 1 % of its total exports towards its American partner; it directed only a little less than a sixth of its total exports (a proportion which will have increased in 1974 but without going beyond one fifth) towards the six developed capitalist countries which are the centre and the motor of world capitalism, while it directed more than a half towards the other so-called «socialist» countries.

Russia continues to immerse itself more and more into the world market but the «iron curtain» has not yet become the «sheer veil» which we spoke of in 1956, even if it is well on the road to becoming that. Russia's degree of integration in the world market is not yet such that the crises of the West are directly transmitted to its economy. This is why Russian capitalism does not experience the deep crisis which hits western capitalism.

This does not signify that the crisis will spare it entirely. Even the crisis of 1929 was not without an influence for due to the slump in the world market, Russian exports fell with a corresponding drop in imports (essentially machine tools and equipment) since exports served to pay for imports. This effect is shown in the figures of table 6.

Table 6 - Russia's exports and imports

(in million of rubles)

Year Exports Impots
1 929 724 691
1 930 813 830
1 931 636 867
1 932 451 552
1 933 389 273
1 934 328 182

Source: Statistitcheskii Sbornik, Moscow, 1970.

The same mechanism must also intervene in the crisis of 1975 (although the soaring prices of oil, of which Russia is an exporter might compensate in part for what is lost on other exports) thus probably delaying somewhat the purchase of the equipment which Russia so greatly wished to acquire. The crisis of western capitalism does not serve the interests of Moscow.

On the whole the same thing holds for China whose degree of integration in the world market is still relatively very weak but 80 % of whose exports (which serve to finance the purchase of equipment) go towards the western capitalist countries.

On the other hand certain Eastern European countries such as Hungary and above all Poland are already quite integrated in the world market and carry out a large proportion of their foreign trade with the great western countries. The contraction of world trade will have an inevitable repercussion on their industrial production just as inflation has already had a repercussion on their prices.

But if Russian capitalism has escaped the crisis of 1975, it only remains a question of time. The massive purchase of equipment and the borrowing of capital from the West contribute to the development of Russian capitalism. Its integration in the world market continually progresses as is shown by the figures below:

Proportion of Russian foreign trade (imports + exports) with the developed western capitalist countries

1950
15 %
1972
22.6 %
1960
19 %
1973
26.6 %
1971
21.5 %
1974
31 % (est.)

Sources: Statistitcheskii Sbornik, Moscow, 1970; Vnechnaïa Torgovlia S.S.S.R., 1972 and 1973; Financial Times, April 25, 1975 (for the 1974 estimate).

Some commodities produced in Russia thanks to western equipment and capital have already made their appearance on the world market, thus contributing to the aggravation of the crisis. Thus this irony of history (but an irony that we had already foreseen from the beginning): Agnelli, the chairman of Fiat, recently asked for a more rigorous legislation of the EEC against the import of the Polski 125P and the Lada (the Polish and Russian «Fiat») which were sold, according to Agnelli, at «unfairly» low prices in Europe (27). And this is only the beginning. When the point is reached where all the main branches of Russian industry are directly interconnected with the world market, they will contribute to the glutting of the markets and to the crises; and reciprocally the crises of the world market will be directly transmitted to the Russian market and economy.

The Catastrophic Course of World Capitalism
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What is the short term future of capitalism? The duration and the severity of a crisis are not dependent only on the cyclical movement of capital, but also on whether or not there is an eruption of the whole series of contradictions and explosives situations that have been accumulated by the capitalist system in various domains: the international monetary system which the bourgeois economists periodically announce is in danger of collapsing; the huge pyramids of credit which have been accumulated on the basis of the growing debt of the enterprises in all countries and which could crash one after the other when bankruptcies begin to occur; the settlement of enormous speculative operations on the monetary markets; the Stock Market speculations which can unleash movements of panic, etc. The barriers which the capitalist states have erected against the danger of a general monetary and financial crash have been able to resist up to now (as has been shown for example by the settlement of several bank failures in the summer of 1974 in Germany and the United States). The only Marxist certainty that we can have is that these barriers will not be able to indefinitely resist the growing pressure of the contradictions of the whole of the capitalist system. If the present crisis strains these barriers to the point of breaking then world capitalism will without doubt undergo a long and severe depression that will be worse and deeper than that of 1929. But even if they resist, and the crisis is followed by an economic recovery, the situation would be such that the most aware of the bourgeoisie, far from rejoicing, would fear the consequences.

Let us examine this hypothesis. The world cycle such as we have observed from 1971 to 1975, has an average duration of about four to five years. All things being equal, this would indicate that there would be an economic recovery, at first country by country then generalised, beginning around the end of 1975 and the beginning of 1976. This is the forecast that has been made by most of the bourgeois experts and it is substantiated by some economic indicators.

In this hypothesis, the recovery, slow at the beginning, would accelerate around 1977 through the play of the synchronised cycle and through the fact that various national economies would draw each other in; the deeper the crisis has been, the stronger the recovery should be, resulting around 1978 in a new productive boom. Does the bourgeoisie sing about victory because of this prospect? Far from it. Here is what The Economist writes:
«
This 1977 boom [as forecast by The Economist] may reproduce all the worst features of the previous one - a bigger commodity price explosion and so the return of domestic wage-push inflation [...]. The 1977 boom is very likely, in its turn, to breed another big slump. The international economy looks like becoming dangerously unstable. If the cycle is to be stopped, now is the time for governments to put their heads together to see what can be done about producing a controlled boom. It will be no good waiting until the damage has been done and then trying frantically to pick up the pieces» (28).

This jumble of uneasiness within the most lucid fringes of the bourgeoisie as they are faced with the uncontrollable convulsions of their own mode of production, and of petty bourgeois stupidity in regards to means of remedying this situation (for instance an international economic conference among the imperialist robbers) only reveals the impotence of the ruling classes. When the crisis is here, everything goes wrong - but when bourgeois «prosperity» returns, all will go wrong just the same! In effect capitalism can recover from one crisis only to prepare for other still more gigantic crises. If these is a recovery, it can only amplify the worst features of the 1973 boom: the return of galloping inflation, a new rise in the prices of raw materials because of the simultaneous demand of all the consuming countries, frenzied speculation in all sectors, etc., which all will lead, most likely in 1979-1980, to a new crisis - a crisis which will be so much more deep and severe since it will have been simultaneous in all major countries and since the capitalist contradictions will have increased still more.

At the same time, the inter-imperialist rivalry will have sharpened, the economic weight of the German and Japanese capitalism's on the world market will have increased still more, the forward race of capital will be still more rapid. The necessity on one hand of showing always more competitiveness on the world market and on the other the spur of the fall in the rate of profit compels the bourgeoisie all over the world to systematically «rationalise» its productive machinery, that is to say to replace workers by machines on a great scale. This is why even in the hypothesis of an economic recovery the bourgeois experts foresee a world-wide prolongation or growth of unemployment.

United States. The message of Ford to the Congress in February 1975 predicted the following, with the perspective of an economic recovery in the second half of the year:

- 7.9 % of the labour force, or about 7,200,000 workers would be unemployed in 1975;

- 7.5 % of the labour force, or about 6,800,000 workers would be unemployed in 1977.

These forecasts are certainly an underestimation since the American administration predicted a maximum of 7,400,000 unemployed for 1975, while the number had already reached 8,500,000 by May 1975.

In a recent study, Fortune magazine predicted that following the end of the crisis, the United States would be left with «a long and painful period of high unemployment». The author, who based his study on the analyses of the official specialists and advisors to the White House, wrote:
«
However vigorous the coming economic recovery proves to be, the US will be afflicted with unpleasantly high rates of unemployment for the rest of the 1970's. On this grim prospect, economists of almost every stripe agree. [...]...it would take six years of 6 percent growth to reduce unemployment by four points - from, say, 9.5 to 5.5. And by the standards of the past, six years of 6 percent growth would be an extraordinary economic performance. [...] With output per man-hour down nearly 10 percent from its long-term trend, there is ample room to expand output without doing much rehiring. [...] Large gains in productivity in the early phase of a recovery come about mainly because expansion of output is not matched by expansion of white-collar staffs [...] But other influences also help. At the bottom of a recession, supervisors have maximum scope to rearrange schedules, shop stewards are most co-operative about work rules, and the morale of workers lucky enough to have jobs is relatively high. [...]»

«What can public policy do about the long-term unemployment problem? It would help somewhat if Congress would stop raising the minimum wage, which discourages employers from hiring marginal and inexperienced workers. [...] The most valuable thing government can do to help ease the unemployment problem in the years ahead is to encourage vigorous expansion of the private economy» (29).

This only confirms with the most tranquil cynicism that the crisis signifies that American capital is preparing itself to «rationalise» production on a great scale, that is to say to reorganise labour by speeding the rhythm of work, by increasing the intensity of work for those workers who are fortunate enough to keep their jobs, and consequently with the result that millions of workers will be thrown in the street for a long period. As for the proposed «remedies», the first, the reduction of real wages with the lowest paid job categories being hardest hit, cynically expresses the projects that capital has in mind. The second either could not be achieved (as the author himself recognises at the beginning of his article), or else its achievement would lead in a still more rapid way to the glutting of the markets and the next crisis; in any case it does not depend on the «will» of the agents of capital.

England. The last official estimate already predicted 1.5 million unemployed in 1976 because of the crisis. In his Budget speech to the Commons last April, Healey declared that it was necessary to «preserve and improve the international competitiveness» of British industry which is threatened by bankruptcy. In all the important branches, the rationalisation of production has been started in order to attempt to rejuvenate the decrepit British capitalism so that it can sustain a more and more bitter competition on the world market. The essential theme is the «over manning» of the enterprises, that is to say the necessity of massive layoffs in order to increase the intensity and the productivity of labour. Several projects have already been announced:

- in the steel industry, the British Steel Corporation plans to reduce its labour force by about 20,000 because of the slump in steel demand «and has no intention of re-employing many of the displaced workers when the market revives» (30). The corporation plans to invest £ 4.5 billion from now to 1980, and to reduce the total labour force from the present 220,000 to 180,000. According to the corporation's chairman, Japanese steel mills achieve productions rates of 750 tonnes per man each year, compared with a BSC level of 150 tonnes per man: so «the real figure should be 50,000 people producing the 37 million tonnes of steel a year we need by then».

- in the auto industry, British Leyland is to be completely reorganised. According to top management, the company is suffering from «serious over manning», and «the need to reduce manning levels is absolutely paramount» (31). In 1973 British Leyland produced 5.9 cars per man employed, compared with 11.6 for Volkswagen and 14.6 for Renault. Out of a total labour force of 204,000, about 50,000 jobs will have to go if the group is to achieve continental levels of production efficiency (32).

- in the railways, according to a Department of Employment study, total numbers employed are expected to drop from 220,000 in 1973 to 180,000 by 1981 (33).

- in the mining industry, the same study forecasts that there will be only 270,000 employees in 1981, compared with 360,000 in 1973.

- in the chemical industry, Imperial Chemical Industries, which has already cut its labour force by 8,000 in the last 5 years, «must shed still more staff to improve its productivity and bring it in line with its world competitors» (34). The company's sales and profit per employee were $ 34,532 and $ 3,060 in 1974, as compared to $ 92,655 and $ 10,458 for the US group Dow Chemical.

We could add many more examples: in its attempt to rejuvenate itself, to maintain its markets and to re-establish its profits, British capital under its Labour government does not know (and cannot know) any other solution than to increase layoffs to the point of making them become an institution.

France. According to studies that have been carried out on the basis of the official predictions of the level of employment for the 7th economic Plan, in 1980 there would be - in a perspective not of a crisis but of a 3 % to 4 % annual growth of the gross domestic product - an unemployment of 700,000 to 900,000 workers (35). A study carried out by the journal L'Expansion which based itself on the official hypothesis of the 7th economic Plan predicted between 700,000 and 1,400,000 unemployed in 1980. The author writes:
«
The rise of labour costs since 1968 has accentuated the tendency to substitute capital for labour [...] Since 1968, labour productivity has increased almost as rapidly as production itself: thus the increased production per worker accounts for almost all of the supplementary production achieved.»
«
The oil crisis [in fact the capitalist crisis - Ed.] has given a new surge to rationalisation. The sharpening of competition, the pressure of costs, the trimming of the profit margins may, even more than ever, push the firms to make productivity-oriented investments [...]»
«
In the big corporations, up to 10 % of the labour force is said to be superfluous [...] We should get used to living with as high a level of unemployment in 1980 as we have now. And to prevent it from being higher, experts advocate the highest possible growth rate for the 7th plan» (36).

This trend towards «rationalisation» through massive layoffs is not limited to the older capitalisms. Thus in Germany the «savings program» of Volkswagen plans for the layoff of 25,000 workers by the end of 1976, that of the railways plans the elimination of 60,000 jobs out of a labour force of about 400,000 (37). In Japan a recently published Government White Book predicted «possible mass joblessness in the coming 10 years» and emphasised «the need for high economic growth to solve the problem» (38).

• • •

Capital knows neither frontiers nor «national exceptions»; the evils which it engenders and the «solution» which the various bourgeoisie's attempt to use are the same throughout the world. Through the spur of competition, the general laws of capitalist production impose themselves on each individual capital, pushing it to accumulate without mercy, to unceasingly increase productivity, to replace workers by machines and to diminish real wages whenever possible. In the name of the sacrosanct «competitiveness» each national capitalist trust «rationalise» on a great scale and lays off hundreds of thousands of workers, all the while invoking with its incantations a hypothetical «high economic growth» which could only be materialised in the form of a brief blaze leading to a new crisis that would be so much more violent than the growth had been rapid.

At the close of thirty years of bourgeois «prosperity» which was pretended to bring well-being for the workers, here is the beautiful alternative which is offered to them: on one hand, if the crisis is prolonged, general unemployment and poverty because capitalist production is paralysed for want of markets; on the other hand, if an economic recovery follows the crisis, general unemployment because in order to have access to markets, the rival capitalists must lower their costs by ridding themselves of a part of the labour force. On one hand, a systematic and generalised fall in the living conditions; on the other, a resurgence of galloping inflation, simultaneous with the existence of a large reserve army of labour, both tending to lower real wages. On one hand, a gradual deepening and extension of the crisis; on the other, the preparation for a new crisis which will be still more deep and vast than the previous one.

In one case as in the other, the working class has for a future only the aggravation of exploitation, the deterioration of its conditions of existence, the annihilation of the advantages that capital pretended to «guarantee» it and the increasing pressure of a mode of production which can only escape its contradictions by aggravating them and by pressing down, always more heavily, on the backs of the exploited.

But by thus accumulating social dynamite, capitalism undermines its own foundations. By making itself more and more intolerable for the mass of the exploited, it can only draw the hour of the explosions nearer which tomorrow will inevitably begin to shake the ignoble established order of bourgeois society - once again signalling the first steps of the proletariat on the long way towards its revolutionary emancipation.

Notes:
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  1. Capital, Vol. 3, International Publishers, New York, 1967, p. 250. [back]
  2. Ibid., p. 258. [back]
  3. Capital, Vol. 1, International Publishers, New York,1967, p. 453. [back]
  4. Capital, Vol. 2, International Publishers, New York, 1967, pp. 185-6. [back]
  5. Notably, On the So-called Market Question (1893), Works, Vol. 1; A Characterisation of Economic Romanticism (1897), Works, Vol. 2; The Development of Capitalism in Russia (1899), Works, Vol. 3. [back]
  6. Capital, Vol. 1, op. cit., p. 632. [back]
  7. Translated from the French edition of Capital, Vol.1, chapter 25, paragraph 3 (Le capital, Livre I, Editions Sociales, tome III, Paris, 1950, pp. 76-77). This passage can be found only in the French edition which has been revised by Marx. It does not appear in the German or English editions. [back]
  8. The first two sentences are quoted from Capital, Vol. 1, op.cit, p. 633. The last sentence, which does not appear in the English or German editions, is translated from the French edition of Le capital, Livre I, op. cit., p. 77. [back]
  9. «Foreign industry, rapidly developing, stares English production in the face everywhere, not only in protected, but also in neutral markets, and even on this side of the Channel. While the productive power increases in a geometric, the extension of market proceeds at best in an arithmetic ratio. The decennial cycle of stagnation, prosperity, overproduction and crisis, ever recurrent from 1825 to 1867, seems indeed to have run its course; but only to land us in the Slough of despond of a permanent and chronic depression» (Preface to the English edition of Capital, 1886. Capital, Vol. 1, op. cit., p. 6). [back]
  10. Reprinted in The First Five Years of the Communist International, Monad Press, New York, 1973, p. 201. [back]
  11. US Bureau of Economic Analysis, Long-term Economic Growth, 1860-1970, Washington, 1973. [back]
  12. For the OECD, see Main Economic Indicators, Part 3, «Cyclical indicators». For the United Kingdom, see in Economic Trends the section on «Cyclical Indicators for the United Kingdom Economy» which has been included since March 1975. [back]
  13. According to The Economist, April 19, 1975, the American leading indicators have not in the past «been gloomy enough about the economy's prospects» (!), that is to say these indicators did not allow them to foresee the duration and the depth of the crisis. [back]
  14. See Programme Communiste no. 64, pp. 39-43. [back]
  15. The Economist, June 12, 1975. [back]
  16. The same calculations have been made on a quarterly basis instead of a monthly one from 1963 to 1974 in the previous report on «The Course of World Imperialism», Programme Communiste no. 64, pp. 40-41. [back]
  17. Marx, Theories of Surplus-Value, Chapter XVII, Progress Publishers, Moscow, 1968, part II, p. 505. [back]
  18. International Herald Tribune, March 8, 1975. [back]
  19. L'Expansion, May 1975. [back]
  20. Financial Times, June 20. 1975. [back]
  21. Mitsubishi Bank Review, April 1975. [back]
  22. Survey of Current Business, section Labour Force, Employment and Earnings. [back]
  23. Le Monde, June 4, 1975. [back]
  24. Far Eastern Economic Review, April 25, 1975. [back]
  25. Mitsubishi Bank Review, June 1975. [back]
  26. «La Russia nella grande rivoluzione e nella societa contemporanea» [«Russia in the Great Revolution and in the Contemporary Society»], Il programma comunista n° 13,1956. [back]
  27. Financial Times, April 23, 1975. [back]
  28. The Economist, April 12, 1975, [back]
  29. «The Slow Road Back to Full Employment», Fortune,June 1975. [back]
  30. Financial Times, April 24, 1975. [back]
  31. Financial Times, May 8, 1975. [back]
  32. Financial Times, June 10, 1975. [back]
  33. Financial Times, May 30, 1975. [back]
  34. Financial Times, May 28, 1975. [back]
  35. Le Monde, June 26, 1975. [back]
  36. «Une nouvelle pénurie: l'emploi», L'Expansion, May 1975. [back]
  37. Financial Times, June 1st, 1975. [back]
  38. Mainichi Daily News, July 15. 1975. [back]

Source: «communiste program», N° 1, Octobrer 1975

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