Dead End for Capitalism

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US Britain Italy Japan For at least three months bourgeois political leaders and their economic 'experts' have been claiming that the world recession has 'bottomed out' that the world capitalist economy has 'turned the corner towards recovery.

There has certainly been a sharp upturn in production in both the United States and Japan since the early summer, and this has been enough to mean that total production in the 24 major capitalist countries (the members of the OECD) has remained about static since June compared with an enormous fall in the previous year.

This definite change in the immediate world economic situation must, however, be seen in context. After all, even patients with grave illnesses sometimes feel quite well!

In the supposedly 'booming' United States the last three months the utilisation of productive capacity in manufacturing industry has still been below 70 per cent; and there are increasing signs that the reeent speed of the economic upturn will not be maintained. It may be helped by the tax cut that is currently proposed but Ford has said that he will veto that cut if it is not accompanied by cuts in government spending, which Congress is very unwilling to vote.

The world recession has continued, in spite of the American and Japanese upturn, to be much worse than the economists' most sophisticated prediction. Only two weeks ago the OECD yet again revised downwards its previous estimate (made only in July) of production for 1975.

Total gross national product is now expected to be 2.5% below that of 1974. The table below shows the change in industrial production in the first two quarters of this year. % change in industrial production 1975 1st 4¼ 2nd ¼ Retail prices 3 months US Japan Italy Germany Britain In none of the major European countries is any clear evidence of an upturn yet visible.

In Britain, where the development of the crisis has taken a somewhat different form recently, production continued to grow until the last three months of 1974. Since then, unlike the rest of the capitalist world, it has gone on elsewhere and has not slackened off.

Despite the drop in production and depreciation of the pound, the balance of payments remains in deficit, unlike elsewhere.

% increase on 1974 1975 3rd 4th Ist 2nd In 1973 and 1974 deflationary policies were introduced throughout the capitalist world to reduce inflation and the huge balance of payments deficits following the oil price rises and, more basically, to attack the strength and organisation of workers. At that time the British bourgeoisie were too weak to impose such policies.

The Tories were forced out of office by trade union action after a confrontation which, in the three day week, involved capital running at a loss and experiencing severe cash problems. Even if it had been politically possible for Wilson to engineer a recession immediately he took office (which it was not) British capital could not have stood it.

When the attack came it was with: a vengeance. Real wages fell by 10% in the first six months of 1975. The biggest ever recorded fall in a year before this was 6% in 1857! This historically unprecedented fall was combined with savage cuts in social expenditure which also hit workers' living standards and unemployment which is now officially running at 1.2 million.

The fall in demand resulting from these policies will reduce capacity utilisation still more and hence there will be a further fall in profitability and accumulation. Reduced tax revenue and increased unemployment benefit payments will raise the budget deficit and entail more government 'borrowing, much of which is in effect the printing of money which increases inflationary pressure. For capital John Miners forced Tories out of office in 1974 US Britain Germany Italy Japan This is marith the recession as such is no solution.

Hence the partial alleviation of the recession in other countries has not lessened the need for capital to attack working class organisation and living standards. In Europe unemployment is continuing to rise as fast as ever, and even in the United States it has only fallen infinitessimally.

Unemployment in latest available month ('000s) falling more slowly, speed-up, EVEI WILL PAUUUVLIVI MOME rationalisations and redundancies are continuing as before. It is a sure sign that any respite in the slump in production in no way means a respite in the economic crisis which is threatening the continued accumulation of capital.

In fact any upturn in productior will contain forces which worsen the economic crisis of capitalism and pave the way for further convulsions in the process of A generalised economic upturn would produce another upsurge in 1975 7773 1043 1006 a clear indication that, nondurtinn. rising or balance of payments, renew the danger of hyperinflation and help to maintain the strength of thr working class.

It 15 necessary for capitalism to break decısıvely thıs strength before it can recreate the conditions for capitalist accumulation which the contradictions of the post-wat boom have destroyed.

Capitalism has so far been able to do little to solve its basic problem, that of falling profitability. In the present situation both upturn and downturn in production continue in different ways to result in lower profita bility.

This is why, if there is any short-term upturn in the economic situation, it will be on the most insecure possible -basis. acumulation of problems it would bring in its train may suddenly throw it at any time into reverse.

In addition there are major dangers for imperialism of a sudden renewal of the slump lurking in the background in the form of a possible major collapse of international credit (of which the danger signals are increasing) or a full-scale trade war.

The latter possibility is clearly shown by the fact that at present one fifth of all Common Market exports to the United States are being, or are about to be, investigated under legislation which obliges the US government to impose import duties if the exports shown to be damaging to American competitors.

The workers' movement must! realise therefore that an imminent renewal of the world slump is a real possibility. And that, even if the world capitalist economy has turned a corner, then it is a corner into a cul-de-sac. There will bel no let-up in the merciless capitalist offensive against all the rights and material gains of the working class. And the Transitional Programme of the Fourth International is the only weapon capable of resisting this offensive.

In the Communist Manifesto:

crisis placing capitalist society, on trial. It is the historic task of the workers' movement in this trial to ensure that the verdict is 'guilty" and the sentence is 'death'. which means that it can only be implemented in the context of a programme of public works to counter unemployment in general.

For example the Labourdominated West Midlands County Council froze bus fares in 1972 and together with South Yorkshire the fares are now the lowest in the country. The result has been a reversal of the trend from 1954 to 1972 for usage to decline as fares rose and over the period 197274 usage has increased by 4%.

But so has the "deficit" , which is expected to be £15.7 million in 1976, a deficit which the Labour government will refuse to meet, driving the local authority into bankruptcy.

Since the capitalists demand swingeing cuts in state spending.

and the Labour government carries out their every wish, only the independent mobilisation of the working class movement has the power to take up the defence of the deteriorating public transport system. The demand must be for:

*A restoration of all cuts in services.

*Reversal of the fare increases over the last two years and the freezing of fares prior to.

*The working out of a plan to be constructed by elected trade union representatives and expert planners sympathetic to the workers cause for a free public transport system to meet social need. This must carry the power to control and regulate private car movement. Such a plan also requires the removal of control over freight movements from the hands of private haulage companies, the nationalisation of these firms, and their incorporation into an integrated road/rail distribution system.

*Massive injections of finance in accordance with the plan, protected by a sliding scale.

The fight for such a plan can only be taken up as a vital part ol :

ight Ior a programme, of public works to defend working class living conditions and employment against the Labour government intent on reducing state spending and the capitalist system which demands such cuts.

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falling at a rapid and increasing rate. Inflation is much faster than