U.S. CAPITALISM: 1HE BIGGEST BOOM

Second World War. The big corporations and banks report bumper profits.

Some are comparing the present boom to the European 'economic miracles' of the fifties and forebodings of eventual recession have given place to fears of inflation.

The boom has been accompanied by sharpening tensions in U.S. society, expressed in the assassination of Kennedy, the growth of extreme right-wing and racialist movements, the rebelliousness of sections of the youth, the agitation against the Vietnam war and insurrections in Negro working-class districts of major U.S. cities.

Contradictions

These are symptoms of the contradictions which lie at • the heart of capitalist society: they express its inner processes of decay and degeneration behind the facade of wealth and power.

The present upward phase of capitalist development in the USA signifies the ability of capital to go on extracting and realising surplus value on an expanding scale from the American working class and those parts of the working class in other countries exploited by U.S. capital.

The great of capital siderable advantages over their foreign rivals of the scale of their operation and their ability to deploy vast resources in the costly research and development projects and large-scale investment made necessary by modern technology.

The maintenance of this system depends upon the possession of immense and destructive military striking power and the willingness to make use of it wherever bourgeois governments are threatened by revolution.

There is thus an inseparable connection between the aggressive foreign policy of U.S. imperialism and the needs of U.S. capital.

The idea of a peaceful capitalism controlled by 'peace-loving' sections of the ruling class is entirely utopian.

It is equally unrealistic to suppose that outlays on armaments are made to sustain the economy; though they have that effect, that is not their intention.

There is no reason to believe that men like Goldberg are insincere when they say that armaments are a burden they would like to get rid of; the fact is that the survival of U.S. capitalism depends upon the possession of overwhelming military power.

State support

It is a fact, however, that a large part of the National Product flows through the hands of the Federal government and that capitalism cannot get along without the support of the state.

Federal spending was high during the periods of stagnation and recession in the fifties.

During the past four and a half years of boom it has been a diminishing proportion of the National Product.

In the past the policy of the Johnson government, which has the full confidence of most sections of U.S. business to a greater extent than that of Kennedy, has been to operate as far as possible through fiscal and interest policies.

Hence tax reliefs, low interest rates and measures to sustain private incomes have characterised the boom, not big new government outlays.

Budget overspill

1965, however, has seen a spending of over 100 billion dollars—the first time this bas been done by the Federal government.

But this budget has also overspilled by seven billion dollars and, Alistair Cooke reported in last Monday's 'Guardian': 'About half of the estimated deficit for this year is blamed on Vietnam.' Johnson's budget 'lapse' is seen as a puny deficit compared with Eisenhower's 1959 deficit of 12.4 billion dollars and even with the: 6.4 billion and 8.2 billion of the: last two Kennedy years consider-. ing the amount of legislation: that has passed through Congress in the last year.

Despite talk about war on: poverty and the like, the policies. of the Johnson Administration: have brought no comfort to the many millions of Americans who lack jobs and live below the: poverty line.

They have been designed to benefit the rich, and especially the very rich; income inequality, already wide, has grown still more manifest during the boom.

The richest fifth of the U.S. population grab 46.6 per cent of personal incomes.

While the rich are getting richer, working-class incomes only grow in real terms because of two factors.

Firstly, continuous employment, overtime, the contribution of women to the family income and 'moonlighting' (i.e., doing two jobs); in other words any increase in real incomes has. had to be worked for and worked for hard.

Its background is insecurity and it is accompanied, even in the boom, by at least 4.5 per cent unemployment-the official figures are generally taken to be an underestimation.

Secondly, the working and middle-class families are getting more and more deeply into debt to the finance houses, mortgage companies and banks.

Debts rising

While in the past five years personal savings (which include those of the rich who normally save a high proportion of income have fallen from 7 per cent to 5 per cent of income, consumer debt has grown by 50 per cent '(and the rich don't use hire purchase).

In short, the relatively high living standards of the American working class rest upon the continued availability of jobs and credit.

Those who are in unions, by minority, are disciplined labour bureaucrats who work closely, indeed more closely than ever before, with the bosses and the Administration.

Most do not not even have the protection of a union card and their future depends on the job market. As for household debt, it is easy to see what that means in a boom-bust economy.

Lack savings

As the conservative 'National ›server' wrote recently:

'Should a recession develop and incomes decline, many Americans may lack sufficient savings to maintain their standard of living while fending off the financial company on loans made this year or last.' From past experience, in a recession past debts are paid off more rapidly than a new debt is contracted - which means, of course, that the market for consumer durables contracts.

It also means a considerable cutback in family spending on food, clothing and other nondurables.

While the boom is on, these are only clouds on the horizon, but the fact that the business press is talking about them is significant.

Nor is it only the fact that everyone knows that booms do not last for ever. This boom, the greatest, perhaps, in U.S. history, depends particularly on a lavish outflow of credit at every level down to the continuous assault on the consumer to later.

Business has to sell, and more resources are thrown into sales campaigns and advertising. It must sell more, not simply stabilise sales, if the debts contracted during the boom are to be paid off and the expected profit rates maintained.

Meanwhile, more investment outlays are being made and planned, involving, to a considerable extent, more borrowing. The thread is being stretched tight.

The growing mountain of debt, public and private, has only been made possible by the easy credit policy pursued by the banking system in line with the guidance of the Federal government.

Industrial expansion and prosperity are closely geared to what amounts to an outpouring of new dollars. This new credit has been the basis of the boom, enabling the process of capitalist reproduction to move forward on an ascending plane.

For example, the key motor industry is very closely geared to the credit situation; money owing on cars amounts to about the value of a whole year's output.

Bumper motor sales No wonder, therefore, that Detroit is highly satisfied at the bumper sales of the 1966 models in recent weeks.

Not only does the pyramiding of debt create problems for the future but it is already having its effects. The more nervous business commentators continually call attention to the dangers of inflation.

Costs are rising and they are rapidly being passed on to the consumer, as is the case in every boom.

But harm is also being done to the dollar, at least potentially.

Despite the efforts of the Administration, the balance of payments is likely to remain in deficit this year.

A continuous struggle has to be waged to maintain the international position of the dollar, upon which the world monetary system depends. But the dollar is depreciating in real terms and the continuance of boom conditions aggravates this tendency.

Tension unrelieved

Hence a main point of tension which the world role of U.S. imperialism makes it impossible to relieve.

Even before the boom reaches its peak it could become necessary for the Administration to take restrictive measures at home to safeguard the international position of the dollar just as British governments have had to curtail expansions based on easy credit in order to save the pound.

Such a step could have far-reaching effects in the U.S. because of the weight of debt and the dependence of the economy on its continued increase. The market would contract sharply and excess capacity and unemployment would signal the onset of recession.

RHODESIA: A DISCUSSION ARTICLE Three