Foreboding year for capitalism

WORLD CAPITALISM has had its worst year since World War II and is now plunging into a deep depression.

An epoch in the post-war capitalist history came to an end when, on August 15, 1971, President Richard Nixon declared dollar nonconvertible into gold, slapped a 10-per-cent surcharge on imports and imposed a wageprice freeze in the United States. - With one carefullyprepared blow, Kellies and from America's and launched at the height of the holiday season, Nixon swept away what was left of the monetary arrangements worked out at Bretton Woods in 1944 and prepared to do battle with the other capitalist powers.

The first half of 1971 had seen a considerable deterioration in the US balance of payments, and the Fort Knox gold reserves had reached the danger level of $10,000m at the then parity of $35 per ounce. Approximately $50,000m, representing claims on this gold reserve, was by that time circulating in one form or another in the rest of the world.

This massive outflow of dollars caused by US military spending and the export of capital was the principal factor in permitting the continued expansion of capitalism after the war. Oniy in this wav was the working class sold out bv its reformist and Stalinist leaders after 1945, held back for a further period by policies of full employment. large-scale consumer credit and inflated money supply.

The succession of monetary crises in the late 1960s came to a head in May 1971 when Germany revalued • the mark.

With interest rates low in the US, in an attempt to combat the recession which had started at the end of 1969, and the high rates in Europe maintained to fight inflation, dollars were being sold for stronger currencies at a hectic rate.

Nixon's aim

Nixon's aim was: first to force other countries to follow the German example and to revalue their currencies by substantial amounts. This would limit their exports and favour US goods.

Secondly, the US Administration set out to wrest a whole series of concessions from the other capitalist countries to bring about a turn-around in the US balance of payments of no less than $13,000m per annum.

Nixon's August 15 measures made the slump in Europe and Japan certain and aggravated tendencies which had already been apparent earlier in the year.

So 1971 saw the start of the great slow-down in the growth of industrial produc ion. This is the trend which will now predominate.

Germany and Japan, held up in the past as glittering examples, were severely hit by crisis. Many businesses, heavily in debt to the banks, were near to collapse by the end of the year.

Especially puzzling for conventional economists was the persistent inflation and an actual leap forward in prices simultaneously with industrial stagnation. According staperience prices should hase sion be dealt with by enabling the recesKeynesian techniques increased government spending lower interest rates, reduced taxation and so on.

But when increased prices and unemployment and stagnating industry combined with overriding international monetary crisis, Keynesianism was helpless.

The contradictions of the capitalist mode of production were asserting themselves in the most powerful way.

The Marxist analysis being proved right, against the claims of those who said that capitalism changed or that it had found a new way of ensuring continued prosperity through spending, intervention or what have you.

The crisis was basically one of value, inherent in the very nature of commodity produc tion itself, Marx had analysed it in the very first chapter of "Capital'.

Nixon's August 15 decree brought to an end the fiction that the dollar was 'as good as gold. The value of every currency in the world was put in question.

To restore value the currency by sweating more surplus value …out of the working class became a necessity for the capitalist class of every nation. But surplus valüe is included in the concrete form commodities which have to be sold on the market.

Capitalist production can only expand if commodities can be sold at a profit and if part of the proceeds are incorporated into new means of production.

A crucial part of total output for every advanced capitalist country has to be sold on the world market. And to sell means to exchange for money.

The downward pressure on profits visible in almost every capitalist country discouraged new investment. Uncertainty about the future value of the currency aggravated the situaUnemployment was growing everywhere. In the Us the oficial rate was over 6 per cent, in Britain 4 per cent. Full employment policy had gone out of the window, and capitalist politicians quietly dropped it from their speeches.

The need to put value back into the currency meant that every effort was made to increase the intensity of work in industry. So productivity began to rise while employment fell.

Fresh problems

But as capitalists struggled to cut costs by turning to more highly-mechanized and automated production methods, they met fresh problems because an increase in the proportion of capital in machinery brings a decline in profit rates.

Nixon tried to cut a path through the economic jungle by forcing the other capitalist countries to revalue and make a bigger place for US exports in the world market by curtailing their own.

In other words, he wanted to export the US recession, his attempts to resort Keynesianism — to which _ he had once announced his conversion - having proved disastrous for the dollar.

More directly and immediately hit by the slump and the currency, crisis were the lessdeveloped countries dominated by imperialism.

Here masses of the population live in indescribable misery and poverty the best of times. In 1971 falling primary product prices and continuing inflation made it impossible for the nationalbourgeois governments obtain sufficient investment capital from abroad to permit economic development to take place. The coming year promises to see the aggravation of the crisis throughout Latin America and Asia.

From September to December, at successive meetings of the International Monetary Fund and the Group of Ten and finally in face-to-face meetings with other political leaders, Nixon and his aides notably Treasury Secretary John Connally-fought to impose the US line on reluctant governments and central bankers who knew full wel what the risks were. The American intransigence arrogance and shocked the Europeans and Japanese and set the tone for the hard bargaining to come.

To carry through the revaluations which Nixon demanded could only mean slump, trade war and the need to do battle with their own working classes. And here there was another problem.

many wos of cla emprith ment and rising wages behind if industrial milite cy, despite was everywhere in a state $10,000m.

Nixon: one carefully prepared blow.

unemployment. Inflation only made the working class more determined to win wage increases to prevent their living standards being driven down, which was what capitalism everywhere now had to do.

But to meet the new situation with the industrial militancv of the boom vears would mean certain defeat. The need is for political understanding based upon Marxist theory and the creation revolutionary parties in the advanced countries.

What is involved is putting an end to capitalism through the struggle for workers' power, not reforms.

After prolonged resistance in which the Americans made out that they would not devalue the dollar, or only by a small amount, the monetary year ended with the formula worked out at the Washington Group of Ten meeting.

As a result, all the major currencies were revalued in terms of the dollar, by vary. ing amounts, and the gold value of the still inconvertible dollar was reduced.

Bv imposing this settlement after a veritable. war of in 1972 to accept changes in 1931. the world monetary and tion for trade war.

shaken the Brussels officials, boding. TODAY'S so uncompromising were the US demands.

No change in the US position on such questions as European trade discrimination and farm policy has taken place.

Quite the reverse. Devaluation of the dollar ends the first stage of the American offensive. Now they are carrying out government-to-government talks to hammer out trading and tariff concessions and breaking up the possibility of resistance, if they can, from blocs like the European The Americans are determined that as far as possible the burdens of the crisis shall be passed on to the Common Market countries and Japan.

The revalued currencies will now be at a disadvantage as compared with the dollar, making it certain that the trade of the countries concerned will fall off.

Far from being solved, the problems inherent in world monetary system are bound to dominate the economic situation in 1972, this time coupled with growing trade depression.

The whole fragile system is No wonder that the supthey are not kidding . themRNOR SL: THE TROTSKYIST attitude towards the colonial question is best illustrated at this point by a couple of references. The first is to the 'Transitional Programme' the founding document of the Fourth International:

In supporting the colonial country or the USSR in a war, the proletariat does not in the slightest degree solidarize either with the bourgeois government of the colonial country, or with the Thermidorian bureaucracy the USSR. On the contrary, it maintains full political independence from the one as from the other.

'Giving aid in a just and progressive war, the revolutionary proletariat wins the sympathy of the workers in the colonies and in the USSR, strengthens there he authority and influence of the Fourth International and increases its ability to help overthrow the bourgeois government in the colonial country, the reactionary bureaucracy in the USSR.:

This quotation does not exhaust the discussion. The most comprehensive theoretical treatment of the problem is, contained in Trotsky's celebrated polemic 'Third International After Lenin' in the section called 'Summary and Perspectives of the Chinese Revolution' (pp. 176-177.)

We reproduce the extract in full. Extensive as it is, it represents the clearest and most instructive exposition of the diaation the nature colonial bourgeoisie:

One unexposed and uncondemned error always leads to another, or prepares the ground for it.

If yesterday the Chinese bourgeoisie was enrolled in the united revolutionary front, then today it is proclaimed to have counterrevolutionary came how 'definitely over to the is not difficult to expose unfounded are these transfers and enfolments which have been effected in a purely administrative manner without any serious Marxian analysis whatever.

It is absolutely self-evident that the bourgeoisie in joining the camp of the revolution does is light-minded its but under the ot accidentally, not because it pressure own class interests. For fear of the masses the bourgeoisie subsequently deserts the revolution or openly displays its concealed hatred of the revolution. But the bourgeoisie can go over •definitely to counterrevolutionary camp, that is, free itself from the necessity of 'supporting' the revolution again, or at least of flirting with it, only in the event that its fundamental class aspirations are satisfied either by revolutionary means or in another way (for instance, the Bismarckian way). Let us recall the history of the period of 18481871. Let us recall that the Russian bourgeoisie was able to turn its back so bluntly upon the revolution of 1905 only because the revolution gave it the state duma, that is, it received the means whereby it could bring direct pressure to bear on the bureaucracy and make deals with it. Nevertheless, when the war of 1914-1917 revealed the inability of the 'modernized' regime to secure the basic interests of the bourgeoisie, the latter again turned towards the revolution, and made its turn more sharply than in 1905.

Can anyone maintain that the revolution of 1925-1927 in China has at least. partly satisfied the basic interests of Chinese capitalism? No. China is today just as far removed from real national unity and from tariff autonomy as it was prior to 1925. Yet, the creation of a unified domestic revisionists' policy on Bangla Desh. the authors of the draft programme.

some people Will never convinced even by the arguments of Trotsky. Thus there were those like Shachtman who during World War Il refused to support China's war with Japan because China was led by Chiang and the Kuomintang.

Despite the support of AngloUS imperialism, that war was no less progressive than the 1911 revolution against the Manchu dynasty which, as Trotsky pointed out, 'was accomplished with the direct participation of the imperialists.

Or we have the example of the French Organisation Communiste Internationaliste (OCI) which in the six-day Israeli-Arab war in 19o, managed to remain inscrutably neutral on the ground that both sides were bourgeois, that there was nothing progressive in • the character of Egypt's resistance to Zionism and that there was no such thing as an 'Arab Revolution' *Palestinian • nation'. because the world economic crisis, far from obscuring these NURLULI LAVALUI TT A11 ALLENALOLLJ them and produce all manner of derivative conflicts, wars etc.

Those who dissent from the Trotskyist standpoint on imperialism and the right of nations to self determination would do well to ponder the meaning of Lenin's last words on this problem:

"The morrow of world history will be a day when the awakening peoples oppressed by imperialism are finally aroused and' the decısıve, long and. hard struggle for their liberation begins.' Today this struggle, in Vietnam, Bangla Desh and elsewhere, is inseparably connected to the struggle of the metropolitan vorkıng class and poses in the sharpest way the task of building the revolutionary Trotskyist party and press against Stalinism and retormism.

That is why the Pabloite and OCI revisionists and abstentionists turn their backs on Bangla Desh struggle.

care of Uncle Sam IF YOU'RE a friend of Uncle Sam's he will take care of you.

You might in a sticky situation, but he'll do to see that you live long enough to do his job. After all, good puppet rulers are hard to come by these days.

Vietnam, President Nguyen Van Thieu, wouldn't be without his US-supplied bulletproof vest during his public appearances.

political rival, Nguyen Cao Ky, has one as well. (Ky got his when he was premier and Thieu was supplied with his vest when he became president.)

For many other Asian leaders, lightweight, American-made bullet protection is an integral part of their wardrobe.

S Korea's President Chung Hee Park wears does President Ferdinand Marcos of the Philippines King Phumiphol Aduldet of, Thailand.

Also included America's and protection list certain unspecified heads of Latin American states.

Apparently, are specially made by the federal laboratories in Saltsburg, Pennsylvania, at the request of the Air Force Office of Special Investigators, They weigh only about 3 lbs each, but are said to be able to withstand point-blank blasts from any known gun.

The vests, it seems, became available because in recent years a number of governments have become concerned about the quality of protection their leaders had.

Working through their US if any US provide their protective forces, and special the US Service which turned Force protection for to bodyguards available on too heavy people of re latively small the Ail Force worked with federal laboratories vest made of Teflonthey use on non-stick plastic plates.

could stand up to direct shots and them for themselves their bodybargain price of $60 each, Unusual strike US CAPITALISM has developed technology to such an extent that it is becoming a bit of a nightmare on occasions. Just one touch of a button here or there and whole automated plants can seize up.

News has now reached us of three maintenance engineers, on strike against computer firm Honeywell,, who allegedly used their knowledge to hit the firm by making a few telephone calls.

Their ingenious elaboration of