U.S. Capitalism Faces A Year of Doubt

In 1957 the great capitalist boom, which had taken on a new lease of life some four years before, faltered and spluttered to its end. In the second half of the year the third, and ‘what seemsicertain to be the most far-reaching, American recession since the war declared itself.

In the. same’ period U.S. prestige also ~ suffered serious setbacks. in the diplomatic ‘and technical fields.. A full-scale economic crisis in 1958 will blast what remains and overshadow the whole political :development of the coming year.

About the. reality of the recession—some already speak bluntly of a ‘depression’—there can be no doubt. And, unless unforeseen factors intervene, the continuation of the downward course can be counted upon for some months. :

According to estimates made in September, outlays on plant and equipment—indicating investment ability—will be down by nearly 7 per cent. on the corresponding period last year for the final quarter of 1957. It is unlikely that the actual figures will show a better performance: they may well fail to attain it.

Steel output—vital key to the well-being of the economy —continued to fall in December, when it was running below 68 per cent. of capacity. Big cutbacks have been made in aircraft. Further decreases in car production may be unavoidable in 1958. Building and textiles have shown marked symptoms of the slackening trend.

Dole. queues are lengthening Conservative estimates anticipate a further one million unemployed in 1958. Others speak of 8 per cent. of the labour force likely to be jobless.

The queues for unemployment compensation in steel and auto towns are lengthening. But they are still composed of reasonably well-fed, well-dressed workers, with years of relatively regular work behind them.

The bread lines and soup kitchens have not reappeared; ‘Brother, can you spare a dime?’ doesn’t figure in the fop ten. More than 27 years separate 1958 and 1931; but the differences may turn out to be of only secondary importance.

Meanwhile there are irregularities. Profits keep up. Some’ sectors remain prosperous, ‘in others recession is only in-cipient; ‘there are seasonal movements; ‘ The investment industries, leaders in- the boom, are like- ; wise the most. seriously hit’ by the recession. The effect in other. sectors is bound to be delayed. It is significant, too, that the seasonal upturn in the latter part of the year did not show itself.

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forward if it is to keep in balance—it cannot stand still for long or it will soon fail back - . :

‘Unless investment or other elements. of effective demand can be continually increased to match the growth in capacity excess capacity and unemployment are likely to. emerge. :

It is not enough for investment to remain constant in volume: it must continue to rise if the system is to keep in balance. Everywhere in’ the. capitalist world to-day, and most forcefully in the American’-citadel of capitalism, this uncomfortable truth is being demonstrated.

What does not move forward slips back:. how far, is: the burning question which agitates the journalists of the capitalist Press to-day. :

Those who have tried anxiously to suggest that ‘contemporary capitalism’, even under the Stars and Stripes, had changed its spots, were very careful not.to exclude the contrary’ hypothesis entirely. : ar ;

Strachey is too astute for that, and events are justifying his caution even as they disprove his own chosen prognosis.

Public-spirited managers, responding to democratic pressures, __ This is the first of two articles by Tom Kemp on the economic situation in the USA.

have not. gone on piling up equipment unlikely to yield the accustomed rate of profit.

They (if ‘they’ exist as a distinct species) have behaved. very . much like the old-style capitalist—perhaps a little ihore speedily—translating revised expectations into reduced investment outlays. This is the harsh truth behind the 30 per cent. fall in. steel output. oO ; :

Indeed, under monopoly capitalism the tendency will be for output to be cut to maintain profits, while reductions in prices are avoided (thus the negative response of the auto manufacturers to Walter Reuther’s proposals for a cut in selling prices).

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Such is the situation developing in important sectors of American industry.

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Falling investment. Below capacity working. Unemployment and short time. Less take-home pay and _less spending money. Difficulty in meeting higher purchase: payments—with all that means for the huge consumer credit total outstanding and‘for -the. manufacturers of consumer durables. A new phase in the struggle of American Labour is on the horizon. :

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