Gloomy bankers meet as crisis deepens

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The financial leaders of the capitalist world are meeting at the conference of the International Monetary Fund this week:

They may derive some satisfaction from the fact that their meeting takes place in one "communist" country (Yugoslavial, and from knowledge that a membership application from another (China) is in the post.

Sluggish

But, beyond that, there is virtually unanimous gloom among finance ministers. In the words of the Financial Times economics correspondent they all think that:

"The world is condemned to another few years of rapid inflation, sluggish output and high unemployment and there is littie that any government or policy maker can do about it."

These entirely justified expectations result from the fact that capitalism is a system based on the thirst for profit rather than the direct meeting of human needs.

Faced with a universal decline in its profitability in the last decade, capitalism itself produces certain "automatic" results which help to generate more unemployment and the destruction of the weaker sections of capital.

Symptoms These classic symptoms of world economic crisis are visible all over the capitalist world.

Last week, for instance, it was announced that in the last three months unemployment in Italy, one of the weaker capitalist economies, has risen by 300,000 to 8.3% of the workforce.

In Britain, too, the latest figures suggested that the ..ai. already enormous ment rate was on again.

Spending cuts

These classic features of slump are . today becoming everywhere more evident as all governments try to deal with public sector deficits through austerity programmes involving huge spending cuts.

This particular problem has itself arrisen because of the way in which capitalist governments up to now have felt obliged to allieviate the classic tendencies towards slump in order to avoid head-on confrontations with the organised working class and also to protect the weaker sections of capital.

Both within the main capitalist nations and between them there is now some tendency for the stronger sections of the capitalist class to force an end unemple the way to these interventionist policies and drive weaker capitalists to the wall.

DODIOnon

Toyota cars awaiting export to USA One effect of that on a world scale is that some coun tries-such as the US-have been last week.

The German Deutschmark was upvalued (and the Danish Krone devalued) in relation to the other currencies of the European Monetary System; and the US dollar again fell sharply in relation to other currencies.

This : fall prompted a new "rescue" agreement between the US and West Germany to hold up the value of the dollar.

Should it continue to fall, it threatens to magnify the USA's rapidly increasing inflation rate (now heading for 12%) and will help to send Carter's popularity rating further down at the same speed.

But a positive effect on inflation must be at the cost of a worsening in US capital's competitive position in world markets.

More fundamentally, this currency crisis shows, each time it breaks out, that it is much Carter more than a question of the relative values of currencies.

It is increasingly a question of a flight from paper money itself-from the Deutschmark as well as the dollar.

That tendency has been very sharply illustrated in the last few weeks by the soaring price of first gold and then of all other precious metals (along with some not so precious ones, like copper).

Thus the growing instability produced by the capitalist crisis and the vain efforts to resolve it becomes expressed in a search for a material store of value other than paper money-a reminder of the insubstantial foundation on which capitalism rests.