IMF statutes bid to prop money system

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Carter contemplating new attacks on US workers?

"The Broad Left stand for a revealed the lack of a coherent broad-based do nothing campaign; political challenge to the Broad I'm for a henad hacar An come- Left. it did not bersuade those It was, not inappropriately, April 1 which the capitalist world's leaders had selected as the day when the world monetary system which was born at Bretton Woods in 1944 was finally laid to rest.

This system was based on the American dollar being ixed in terms of gold (one dollar was 1/35 of an ounce oi gold) and all other currencies being fixed in :elation to the American dollar.

Dollar The dollar was to be the almighty god which the capitalist world worshiped. And chat was possible, in fact inevitable, because of the overwhelming economic power of the United States at the end of the Second World War.

Over the next twenty years, however-imperceptibly at first, but precipitately later on-the relative aconomic power of the United States (and Britain) declined. This was partly chrough the more rapid growth of productivity in Western Europe and Japan I not to mention the workers' states) but also as a result of the desperate and costly attempts by the United States to police the world.

Vietnam war

The process culminated in -he Vietnam war-a massively costly disaster for US imperialism.

The dollar and the monet:? system based on it could =ot survive these pressures. By 1971 the huge American expenditure on the war and he declining relative producarity of its industries had led ia an outflow of gold which threatened to leave the dollar completely defenceless.

Nixon was forced to acknowledge the extent of the United States' economic weakness and broke the link between the dollar and gold and let the dollar sink to a new lower level in relation : other currencies.

Collapse

The collapse of the dollar was a signal for the outbreak =: a period of extreme instability in the capitalist *orld. All the moves towards international economic intecation and the relative stabilsation of the previous two decades were dramatically eversed. They have been -eplaced by runaway allation, protectionism, cutaroat intercapitalist rivalry, international slump and dizzy :.accuations in exchange :ates.

In January 1976 at a meeting in Jamaica the Bretton Woods system was *icially declared by the major capitalist governments := be dead. On April 1 this *ear it was finally laid to rest aith little ceremony.

That was the day on which new International Monetary Fund statutes came so force. Unlike the Bretton H3C3S statutes, which s...i.y forced a set of rules .. ide member nations and semblance of **=** out of the previous c5ie ine new statutes are =- simission of the power=i-ii -i -he main imperialSo in the new statutes gold is abolished officially as the bedrock of the international monetary l system and replaced with a "basket' of currencies whose value fluctuates from day to day.

Countries are no longer expected to maintain fixed exchange rates. The IMF pleads desperately, however, that they should not use fluctuating exchange rates for their own short term commercial advantage (i.e. they call on the leopard to change its spots). situation contains the seeds of its own worsening. As the price of the dollar falls and world inflation continues, so the decline in the income of the OPEC oil exporting countries accelerates. A report published last week estimates that the real income of the oil exporting countries will have declined by two-thirds in the five years following the increase in the oil price in late 1973.

Within OPEC, therefore, there is tremendous pressure to raise the oil price, which would immediately throw the American balance of trade even further into deficit.

Tumbling

The OPEC countries in the last week have found that even an announcement that they are going to hold a meeting sends the dollar tumbling. That is one of the things which still holds them back from raising the oil price again-that, and massive diplomatic pressure from Carter (expressed in his visits to Venezuela and Nigeria ten days ago) and the unwillingness of the British government to go along with OPEC on oil pricing policy.

Last line The British government's pricing policy on North Sea Oil, therefore, has become the last line of defence for Carter and the dollar. Although Britain is not yet one of the largest oil producers, its actions are able to make a significant effect on world prices in a situation of excess productive capacity. So some OPEC countries were actually forced to reduce their prices a few days ago in order to compete with North Sea Oil.

The decline in the dollar is increasing profits in the USA and so it is accepted with silent pleasure by many 220 YEN YEN 290 г AGAINST THE DOLLAR 300 iL 1977 industrial capitalists. Carter is still forced to try to halt the decline because of its inflationary effects and its provocation to OPEC:

Force Carter's only way to stem the decline of the dollar without a direct attack on production in the USA is to try to force other capitalist countries-in particular Japan -to reduce their trade surpluses and import more American goods and/or export less Japanese goods.

The Japanese capitalists, however, have not surprisingly shown strong resistance to "Hello, New York?-Get stability at once...

this pressure which has come very forcefully in the last few weeks from both the US and the EEC.

Already in spite of the relative 'success' of Japanese capitalism, the unemployment rate in Japan has leapt from 4% to 8% in the last year.

Far For the working class, the meaning of these economic contortions is that the world capitalist crisis is as far as ever from being resolved It is the inability of the major capitalist states to impose a historic defeat on the working class which intensifies their cut-throat competition with each other.

But for all of them the working class and its economic and political gains remains the overriding strategic target.