KARL MARX

that if I had any money I'd be buying stocks right now will certainly have done Wall Street little good.

It recalls only too vividly John D. Rockefeller's comment immediately prior to the 1929 crash that Believing the fundamental conditions of the country are sound ... my son and I have for some days been purchasing sound common stocks'.

The President's announcement, presumably designed to reassure investors and dampen down speculation, only indicates the near-panic which is beginning to infect sections of the American capitalist class as they attempt to understand the present crisis and hammer out a strategy to deal with it.

And their considerable anxiety is not without cause. Lying behind the tumble of Wall Street shares stands a crisis facing the banks which now threatens the entire stability of American and world capitalism.

It is the banks and other financial institutions which the bankers control who are the major forces operating on the Stock Exchange; latest figures show that these institutional buyers' account for around 70 per cent of all business transacted on Wall Street.

Over 50 years ago Lenin explained the changed role of the banks under imperialism. From being mere financial intermediaries in the process of exchange, by the 20th Century they had assumed dominance over the whole of metropolitan capitalist economy, directly or indirectly owning large sectors of industrial capital, their activities closely allied with the state.

Collapse

It is thus no accident that the 1929 crisis took the form not merely of" a collapse of share values on Wall Street.

This crash was only part of a more general crisis which hit the entire monetary and banking system of America and Europe. It was crisis 'resolved' only through a series of currency devaluations, shrinking of world trade, the creation of a pool of unemployed running into tens of millions, and finally through the resort to war in 1939.

As in all crises, but particularly so with capitalist crisis in the present century, such periods marked by enormous destruction of capital values.

It was only through the wiping out of value on such a scale — which involved the Wall Street crash, banking failures throughout the capitalist world and bankruptcy for large sections of industry--that capitalism provided the basis for a renewed period of expansion after 1945.

This is what Marx means in 'Das Kapital' when he explains that the law of value operates not in a smooth manner, but in a manner not subject to conscious human control and therefore 'blind' in its operation, a mechanism which must bring periodic crises and disruptions in the way that 'the law of gravity ... asserts itself when a house falls about our ears'.

Under imperialism, the last stage capitalism, such crises are inevitably general ir their character and cannot be confined, as the reformists and Stalinists would wish, to any one country.

The overall expansion of capitalism in the post-war period has, of course, rested upon the American economy and particularly upon the great growth of credit which dollar provided after the war.

It was only by means of the vast quantity of dollars circulating in Europe (now estimated at around $30 billion), a great deal of it unbacked by Fort Knox gold, that capitalism was able to stave off the crisis which many expected to follow the end of the war.

Such an expansion of credit was possible only while the AND WALL ST Americans continued to hold a considerable gold reserve and while general confidence in the dollar prevailed.

Neither condition exists any longer.

Inflation has continually eroded the real purchasing power of the dollar since its gold value was first fixed by Washington in 1934 and a worsening balance of payments position since the early 1960s has drained away much of the gold on which the system rested.

Marx's comments on the role of the credit system might make instructive reading for any of our financial 'pundits' seeking an explanation for the growing crisis:

'Hence the credit system accelerates the material development of the productive forces and the establishment of the world market. . . . At the same time, credit accelerates the violent eruptions of this contradiction-crises. and thereby the disintegration of the old mode of production.' As Rosa Luxemburg, basing herself on Marx's 'Das Kapital', be buying stocks right now'.

explained in her polemics with Bernstein, the credit system, far from overcoming the contradictions within the capitalist system, only serves in the long run to give them a more explosive and open form.

Credit accelerates the socialization of production by first speeding up the growth of monopoly and secondly by making available to the monopolists and bankers the entire capital of society which they proceed to manipulate and employ with regard to nothing else but the creation of surplus value.

Marx's comments on the results of this process, even in the last century, indicate that the series of financial collapses, scandals and near bankruptcies which we have already witnessed are an integral part of the crisis:

*(The expansion of credit) reproduces a new financial aristocracy, a new variety of parasite in the shape of promoters, speculators and simply nominal directors; a whole system of swindling and cheating by means of corporation promotions, stock insurance and stock speculation. It is private property without the control of private property' weaken confidence in its stability, so badly shaken in March 1968.

What is at stake is the entire superstructure of financial arrangements built up at Bretton Woods by Keynes and others.

But whatever course the Americans may care to take, they will not and cannot avoid another gold crisis. Paper money can only substitute for gold in the chain of world payments within strict limits.

Once there is general fear of instability in paper currency a collapse of credit is inevitable which restores the 'correct' relationship between gold, the universal commodity, and all other commodities.

'Such a crisis (a monetary crisis) occurs only when the ever-lengthening chain of payments, and an artificial means of settling them, has been fully developed. Whenever there is a general and extensive disturbance of this mechanism, no matter what its cause, money [here Marx means gold] becomes suddenly and immediately transformed, from its merely ideal shape of money of account, into hard cash. Profane commodities can no longer replace it. ... On the eve of the crisis the bourgeoisie, with the self-sufficiency which springs from intoxicating prosperity, declares money to be a vain imagination.

'Commodities alone are money. But now the cry 1s everywhere: Money alone is a commodity! As the hart pants after fresh water, so pants his soul after money, the only wealth.' The sharp decline in share prices which is now afflicting all world stock markets is a subordinate pant of this general crisis. The growth shares and debentures (fixed interest stock) since the war has been part of the general expansion credit which sustained the boom.

But much of the real value which this paper represents has long since disappeared: armaments produced by capital raised by governments have been destroyed, just as much of the plant and equipment raised by loans floated on the stock exchanges have long since ceased to operate.

The mass of paper claims, together with the high degree of over capitalization which exists in many of the monopolies—a device used during the boom to raise extra capital —no longer represents anything. It is what Marx called 'fictitious capital'. It appears as fraction of total social capital and demands its appropriate portion of total surplus value.

But it is precisely now, with the onset of the crisis, that surplus value is not extracted at a rate sufficient to maintain the rate of profit-the driving force behind capitalism and the source of all payments on share capital.

Only through a mass destruction of this fictitious capital and its forcible reduction to a level in line with the mass of surplus value can the rate of profit be restored.

Such a 'mechanism' is, of course, the collapse of share prices and ruin for large areas of capitalist economy and finance.

The onset of the present stage of the crisis is, finally, sounding the death knell for Keynesian economics.

Such economics rested upon the ability of the capitalist state to intervene in the economy and in times of falling profits and restore prosperity through a general expansion of credit and a relaxation of interest rates. Conversely, in periods of inflation, credit would be restricted and price increases checked through action on the money supply.

Techniques

Nixon and his Administration have now found that none of these techniques work any longer.

The more the screws have been put on the economy in order to check inflation, the more rapidly have prices risen.

Unemployment and prices are both rising equally rapidly.

None of the Keynesians are able to understand this new phenomenon.

The dilemma faced Keynesians is a sure indication of the deep seated organic crisis now facing the ist system.

The fact that none of the techniques which guided the economic policies of all leading capitalist governments after the war now contain any solutions indicates that a new and violent stage in the decline of imperialism is being prepared.

Only through a direct onslaught on the standard of living and organizations of the working class will the capitalist system have any hope of restoring even a temporary equilibrium within its crisistorn system.

The tremblings on the stock exchanges are an indication and warning that we have now entered such a period. and just published in paperback by Penguin, is worth reading only because it exposes the crisis of American liberalism so clearly. J. William Ful Pelican, 1970, war on revolution around the world, and the CA-run war in Laos, which Fulbright has said 'scares him to death', prove that imperialism cannot turn back.

As the rate of profit con-