What Is the Worker

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The Workers Socialist League was formed on December 22nd 1974 as 'part of the fight to carry forward the method and principles of Trotsky's Transitional Programme, the founding document of the Fourth International. The WSL now represents the continuity of the struggle for these The formation of the League followed the expulsion of over 200 members from the Workers Revolutionary Party, carried out bureaucratically by the WRP leadership in order to prevent discussion of their own abandonment of the Programme both in theory and in practice. These mass expulsions showed that there could be no hope of correcting the WRP - an independent organisation had to be founded to maintain the Such a split came out of particular conditions. The rapid development of the economic crisis of capitalism and the forward movement of the world working class, which has now overthrown imperialism in Vietnam and Cambodia, began to produce the conditions to build revolutionary At such a point the importance of a fight for the method and principles of the Transitional Programme, against both sectarianism and opportunism is paramount in the preparation of revolutionary leadership. After a hard period of isolation from the mass movement, Trotskyism now emerges as the only tendency with a programme and a history of struggle to lead The defence of jobs through the fight for work sharing on full pay, run by trade union committees: the defence of living standards through the fight for all wage agreements to include a sliding scale to compensate for principles in the workers' movement.

fight for Trotskyism.

parties internationally.

the working class in the taking of power.

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Pege 4 United States Britain W.Germany In the economic contulsions of the last few years the relations between both the nations and the classes of the capitalist world have been thrown into a profound disequilibrium. This is reflected in the breakdown of the world monetary system, the oil crisis, the boom and slump in commodity prices and the rebirth of protectionism; in collapsing profits and capital accumulation, raging inflation and the sharpening struggle over jobs and living standards.

High levels of utilisation of productive resources have once again become incompatible with capitalism; and the crisis is now manifesting itself in by far thè most severe recession since the last world war.

In the last year industrial production in the 24 major capitalist countries (the members of the Organisation for Economic Cooperation and Development) has fallen by about 12%; in the last six months the rate of collapse has accelerated to over 16%.

In the individual countries the fall over the last year was:

United States down 12.6% France down 12.7% Tanan down 17.1% W.Germany down Italy down 18.7% Britain down Recessions since 1945 have in the main taken the form of slower growth rather than actual declines. The only previous postwar recession in which total production actually went down was in the late '50s when it fell by around 1½%.

Usually, decline in one country has been offset by increases in others; this time it is happening everywhere simultaneously.

DEPRESSION

The great depression of the 1930s began with three years of falling industrial production in the capitalist world as a whole, followed by a slow recovery. The fall in industrial production in the OECD countries in the last year has been faster than in any of those three years.

The second major indicator of the recession is the level of unemployment. In the last year the number of unemployed has roughly doubled in all the major capitalist countries.

In April of this year (on the British basis of measurement, since in its official figures each country uses a different basis) the levels of unemployment were:

These figures undoubtedly underestimate the real dimensions of unemployment and they have risen (in Britain very sharply), in the last four months. They imply a level of unemployment in the capitalist world of over 15 million workers.

Moreover, the average number of hours worked by those in jobs has dropped in a year by between 2 per cent (Britain) and nearly 9 per cent (America). United Japan W.Germany Italy Britain stagnant prices. The present one coincides with an unprecedented world inflation. In some countries the intensification of the recession has brought some reduction in the rate of inflation.

INFLATION

But in a number of majr countries (Britain, Swedr Germany, the Netherlan the rate of inflation has cont rued climb.

Rates of Inflation (annual percentages)

62-72• ear t ast € ay 7 nont 14.1 10.4 12.1 11.0 19.7 14.2 25.0 33.4 The declining rates of inflation in some countries is not a sign that the crisis is being overcome. It is manifesting itself more acutely in another form (recession) and thereby sharpening inter-capitalist competition which makes price increases more difficult.

The domestic inflations are dialectically related to the collapse of international monetary stability. Differential rates of inflation have helped to produce startling changes in exchange rates; and these changes have themselves accentuated inflation in the devaluing countries.

Accelerated inflation was not simply the result of the collapse of the Gold Exchange Standard in 1971; but the abandonment of fixed exchange rates has meant that inflationary policies have become a more feasible alternative for governments, fearful of working class reactions to the severe deflationary policies which are necessary to maintain price stability during the recession.

The huge recent exchange rate changes are indications of how the crisis has thrown the relations between capitalist countries into disequilibrium and of intensifying rivalries between capitalist countries as they compete to sell exports in a declining world market. (The volume of world trade dropped by over 5 per cent in the first year of the recession.

Since the ending of the gold standard, exchange rates have fluctuated on average by one per cent a week. The change in the value of currencies between the beginning of 1970 and June 1975 was:

Germany up Japan up up United down 182% down 182% Britain down 24 % Italy down 252% down 252% Another destabilising factor in international economic relations has been the oil crisis. The fouror five-fold increase in the price of oil has ied to an annual diversion of 50 billion dollars to the oil producing countries.

A major effect of this has been to change the pattern of world credit, with the major oil producers rapidly becoming the world's major creditor nations. The debtor nations in which they place their money have their balance of payments deficits covered for a time but the stability of their currencies becomes dependent on these loans. • Policies causing recession and thereby helping the balance of payments by cutting imports have partly been response to this.

STABILISE

These policies have had some effect. In the last six months the balance of payments of the major capitalist countries have begun to stabilise. With the onset of the recession imports have fallen more than exports, which are maintained partly because of rising demand from the OPEC countries and to a lesser extent from the workers' states.

In addition the decline in commodity prices brought on by the recession has improved the terms of trade of the industrial capitalist countries.

This relative stability in the balance of payments may be shortlived, since there are indications of new upsurge in commodity prices. This may be a new instance of something which was observable in the last capitalist boom of 1973:

commodity prices for the first time since the war rose much faster than industrial production, partly because of the previous collapse of investment in primary producing industries during the recession of 1970 and 1972, and partly because of the speculative buying of commodities in the inflationary crisis..

In the last two months an increase in commodity prices SOCIALIST PR. seems to have begun before any increase in world industrial production based on the belief that such an increase will soon happen.

Monetary crisis and commodity inflation are not, as the capitalist press often suggests, the basic causes of the crisis. They are themselves in large part the result of more deep rooted contradictions in capitalist production.

But nor are they just passive reflections of the underlying problems of profitability and investment. They themselves come to play an active role. in intensifying the crisis.

The collapse of the international monetary system is on the one hand the result of intensified inter-capitalist competition as each country, through devaluation and other policies, tries to arrest its declining profitability at the expense of other capitalist countries; on the other hand it is a further cause of declining profits as world trade is hit by the monetary crisis and the room for manoeuvre of capitalist states is reduced.

Also, the commodity inflation and the oil crisis are events from which a healthy capitalism could recover. But for a capitalist system already sick with inflation and recession they have been a further severe blow.

But nor is the recession itself the basic crisis - it is only a manifestation of it. The recession is more significant than previous post-war lulls, but not primarily because it is more generalised or because it is accompanied by inflation. These are reflections of more basic developments in capitalism.

What makes this recession fundaméntally different to those in the 50's and 60's is that, rather than being a stage in an - inevitably uneven - period of capitalist expansion, it is part of a major capitalist crisis.

A recession is not the same as a crisis. It is one form that a crisis can take, but not the only one. A recession is defined in a purely quantitative way. The statistics of output provide a fairly accurate measure of how deep a recession is.

• This is not the case with crises. They are defined qualitatively (as a situation in which the reproduction of capital is threatened) and their severity cannot be expressed in numbers alone.

The level of profitability in different periods can be compared numerically but the difficulty of raising profits, which depends on the balance of class forces, cannot be neatly quantified.

The development of the crisis over the last few years has ineluded both booms and recessions. From mid-69 to mid-71 output grew at less than 1% p.a. in the capitalist world.

This mild recession was reversed by reflationary action in all the major capitalist countries in mid-71. From then until late '73 there was an extremely dramatic, if short-lived, boom, with output growing at 9% p.a. Towards the end of '73 the major capitalist states deflated and the present recession UK Germany Italy Japan S, Wednesday September 3rd, 1975 Throughout all this period the crisis intensified. The accumulation of capital continuously declined in relation to the growth of production. Throughout the '50s and up to 1964 output grew at around 5% p.a. in the capitalist world and investment at around 72%. In the "64'70 cycle output grew at 4½% and investment at less than 4% p.a.

Profitability has also suffered severely. The most recent reliable profits figures are shown below:

Profits as a % of net national income 1960 1974 23.0 8.0 (4th qtr) 18.9 16.5 (4th qtr) 21.9 17.0 12.5 11.5 16.0 (1970) 11.5 (4th qtr)

Profitability is being still further reduced as the recession takes hold. And this has led to a further fall in investment because firms have neither the funds nor the incentive to invest when profits are low and the low level of production has led to enormous excess capacity.

INVESTMENT

Investment has fallen by an average of 122% in the 7 major capitalist countries from 19731975 and there is an average 2025% idle capacity. Low profitability has also forced many firms heavily into debt and threatened them with bankruptcy in the absence of state aid.

What makes the present Unsold Chrysler cars economic crisis so historically significant is the fundamental disequilibrium which exists between the two major classes of capitalist society. Through the long post-war boom the working class has become too strong to permit capital to earn a rate of profit sufficient for the sustained accumulation of capital.

As Trotsky said of thé remarkably similar period in the aftermath of World War I:

..speaking theoretically and abstractly, the restoration of capital equilibrium is possible. But it does not take place in a social and political vacuum « it can take place only through the classes. The more restricted becomes the material foundation under their feet, the more fiercely must classes and groups fight for their share of the 'national income' In other words renewed capitalist equilibrium can only be founded on the most thoroughgoing defeat of the working class.

In no country has this defeat been effected.

The recent inflation is a symptom that capitalist governments fear the necessary confrontation with the working class. And the fact that rapidly rising unemployment is leading to short term reflationary measures in a number of countries (the United Stay is a father symptom of that fear.

For several months the bourgeois press has been predicting an imminent upturn in production - though like the end of the

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SOCIALIST PRESS, Fiednes

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