No end to world capitalist slump
Socialist Outlook newspaper1990sPaul ClarkeTranscribed or corrected by hand from the printed page.
WORLD capitalism has been in a deep recession since the late 1980s. Everywhere pro-capitalist pundits are looking for signs that the 'worst is over' and a new boom is round the corner. But the signs are going in the opposite direction.
In the last two weeks, news has been given of planned interest rate cuts in Japan and the United States, in an attempt to kick-start these economies into growth. These were not enough to prevent a mid-November stock market crash in Wall Street and Tokyo, generating fresh fears of a generalised crash.
Output in Japan has declined by about 2 per cent last year; finally it is conceded that even the powerful Japanese economy is in recession.
Japan's problems are compounded by the enormous sum it promised to help finance the Gulf war – about $12 billion. A new tax has been levied to meet this cost.
Predictions during the Gulf war itself that the costs would severely damage the United States economy have not been borne out.
Rather, the US insisted that its most wealthy allies, especially Japan and Germany, pay huge sums towards the war. Japan especially relies on oil from the Gulf, and was compelled to oblige. So while the cost of the war did not hit the US so hard, it is still taking a toll in keeping the world economy in recession.
But for different reasons, the US economy is itself still in recession. This is the legacy of the 1980s debt-led boom, when Reagan instituted his massive rearmament programme, paid for by borrowing.
American borrowing accumulated a mountain of debt, making the US the world's biggest debtor. The eventual and inevitable result was government budget cutbacks, which helped propel the world economy into recession.
To continuing recession in the US and the new one in Japan, recession in Britain can be added to the list. The Tories' hopes of an economic boom before the election have faded fast.
This continued international recession creates an obvious danger. Attempts are being made to overcome it primarily through interest rate cuts, a new reliance on Keynesian money-management techniques.
But cheaper money could easily start inflation raging again. Inflation is at a very low ebb internationally. If it climbs again, 'stagflation', slump plus inflation will be the obvious result.
The emergence of a recession in Japan gives new clues about where we are in the long cycle of capitalist recession.
The first signs of a major recession in world capitalism emerged in the late 1960s. The oil crisis in 1973 led directly to the 1974-5 world recession. A temporary and hesitant upturn after 1976 turned into a new slump from 1979 – which continued until about 1982.
Then Reagan's military Keynesianism intervened, dragging the world capitalist economy into a speculative boom – the yuppie years. Now this has gone into a new slump from which the way out is not clear.
The history of the last 20 years shows that world capitalism is locked into a 'long wave' of recession, a deep-rooted crisis of profitability, which expresses one of capitalism's most fundamental characteristics – the tendency for the rate of profit to fall.
Restoring the rate of profits means a much deeper restructuring of the world economy, requiring much bigger defeats on the working class, than have occurred so far.