inoustrial structure and conjunctura problems
Most encouraging from the standpoint of the struggle against the rulers was the three-week-long strike of 120,000 mine workers. Pivotal in the global strategy of the ruling class is the drive to maintain high world energy prices. The production of vastly increased amounts of coal in the U.S. is a key part of this strategy and the oil trusts (which own a majority of the biggest mining companies) hope to slam a policy of drastic speed-up and other "rationalization" schemes down the throats of coal miners. What was most problematical to the bosses was that in this case the United Mine Workers, for the first time in the history of their union, had a rank-and-file vote on the contract. The strike won a partial cost-of-living clause for the first time. Unfortunately it has a "cap" on it meaning that workers will be compensated for price increases up to 8% a year but no higher. Nevertheless the full potential wage increases for three years stand at 37% in this contract compared to 26% in the 1971 contract. Another encouraging aspect of the strike was the increasing tendency of workers to associate their problems with broader social problems. The miners were quite aware that their enemies in this case were the same energy trusts that perpetrated the "energy crisis" hoax last winter and drove up everybody's heating and driving costs. The coming year does not include as many important wage negotiations as 1974 but the conditions are increasingly explosive. New York's leading financial newspaper, the Wall Street Journal, complained December 18, "The nation's economic misfortunes will make extra trouble at labor-management bargaining tables next year. Most of the conflict won't be earthshaking, but many negotiations may resemble hand-to-hand combat. "Although 1975 is considered a light year for major BRAZIL, ARGENTINA, MEXICO by PIERRE SALAMA The capitalist economies have entered into crisis. There is no longer any room for doubt. France, Germany, Italy, Britain, Canada, the United States, and Japan - that is, the six major countries of the Organization of Economic Cooperation and Development - have together suffered a decline in their gross national products of 0.25% compared with industrial bargaining, the combination of unwhipped inflation and deepening recession guarantees some pretty fierce bargaining. ''The economy may seem to have imposed ... an insoluble problem, declares W.J. Usery Jr., director of the Federal Mediation and Conciliation Service. Workers will be seeking 'very substantial wage increases" because of inflation, and they will be seeking job security because of the recession, he says. At the same time, he adds, employers will require "lower unit labor costs and greater flexibility in managing the work force.""' The coal miners' strike will undoubtedly give a boost to the impending struggles for cost-of-living protection, as well as against the effects of speed-up and other "rationalization." Noteworthy was a full-page advertisement placed in leading newspapers by the Oil, Chemical and Atomic Workers Union whose contract expires in January. Attacking the oil companies for their profit-gouging price hikes, the od calls for opening the books of the oil trusts. "We're going to open one of the most secretive industries in America to public scrutiny, "OCAW states. *We're going to tell you why oil prices are so high. How the oil industry causes the inflation that robs our paychecks. And... what we can do about it. The ad goes on to blast oil company profiteering, and there is not one word in if blaming the Arab regimes for higher oil prices, despite one of the most massive propaganda campaigns around this issue in the capitalist media in recent history. The year 1974 opened with a strike by independent truck drivers demanding a rollback in diesel fuel prices and an immediate audit of oil companies' books. A good way to start the new year would be a renewed struggle against the energy czars in support of the oil workers' demands. 1973. To be sure, this general decline has been unevenly distributed among the seven countries (Japan: -3.2%, U.S.A.: -1.7%, as against a 4.7% increase for France and Italy), but the new feature is that each of these countries has been experiencing a sag in its growth rate since the second half of 1974. Synchronization of the crisis has be-
come a reality. That is what makes things so serious. Consequently, one cannot but recall the crisis of 1929-37. This reference point is all the more interesting if it is recalled that the crisis of the 1930s provoked a certain loosening of the ties of the most developed capitalist economies with the so-called underdeveloped, exporting capitalist economies. Certain Latin American countries were thus able to profit from the crisis of imperialism. There was a vigorous rise in industrial growth in Brazil, Mexico, and Argentina, for example. It thus could be thought that this new crisis, like the one of 1929-37, could serve as the origin of an expansion of the productive forces in certain countries subjected to the imperialist centers, thus altering the socioeconomic contradictions that now reign there. Although a judgment of the possibility of this development can be advanced only very cautiously, the statistical data seem at first glance to suggest that it might occur again. But to understand the present conjuncture, to foresee the future conjuncture, and to grasp the framework within which the projects of the governments of these countries are inscribed, it is necessary to detail the industrial structure of these countries and the forms that capital accumulation takes there. In doing this, we will deal particularly with Brazil, which in its excesses and limits sheds light on the contradictions suffered by the Mexican and Argentine bourgeoisies. (1) Industrial structure The industrial structure of the economies of these countries is special: *First there is the nondurable consumer goods industry. It is there that the most archaic industrial strucfures are found, where wage levels are lowest, (2) and where the strongest concentration of native capital exists. In other words, it is there that the multinational firms have the weakest grip. In the past, just after the crisis of 1929-37, this sector was the dynamic one; today it is "vegetating, " if not declining. Its function is to respond to the effective demand of the workers, unskilled laborers, and partially unemployed. *Second there is the sector producing durable consumer goods, which today is the dynamic sector. Very, very rare is the native capitalist who is accumulating in this sector by controlling his own factory. That is, this sector has been both the prey of foreign capitalists who since the middle 1950s have taken over the enterprises issuing from the 1929-37 crisis, and the place in which the multinational firms have reinvested a significant portion of the profits they have realized within this sector
(construction of new factories). The example of the automobile industry is the most striking. In that sector today, unlike in the past, the wage structure is more diffuse (there is a higher proportion of technical cadros among the total personnel). *Third there is a very important state sector, centered above all around branches in which the organic composition of capital is very high, the initial outlay of capital is large, and the rotation of capital is weak. This sector essentially concerns the infrastructure, the energy industry in certain cases, the semifinished products industry, and certain equipment goods. This sector tightly complements the second sector, distributing many of its products and thus permitting it to realize substantial rates of profit. The function of the state sector is thus to guarantee the best conditions for accumulation in the sector producing durable consumer goods, the sector essentially controlled by the multinational firms. This sort of economic structure is unusual. It is first of all the product of the contradictions of the world economy (the crisis of 1929-37, the second world war). Secondly, it constitutes the more or less easiest way by which capital has resolved to its benefit the ceaselessly growing contradiction between itself and Labor. More precisely, at the end of the war the process of replacing imports of light consumer goods was exhausted. To continue accumulating, the capitalists had to move to local production of equipment and semifinished products, given the impossibility of importing all the commodities they needed to transform their money into capital. Since the prevailing context was determined by the end of the crisis and the war, the local bourgeoisies found themselves once again subjected to the merciless law of profit on an international scale; they were thus compelled to use modern productive techniques. But these techniques wound up creating a productive capacity that increasingly exceeded the volume of effective demand. The result was the development of idle productive capacity (more than 50%1) and a fall in the rate of profit, although a smaller fall than would have resulted from refusal to utilize the modern productive techniques developed in the imperialist centers. Because of this economic contradiction, the native bourgeoisie had to ally itself with foreign capital (to avoid trouble) and develop a state that would be politically capable of reducing certain costs: those represented by wages. Thus, the economic contradiction found its immediate expression at the sociopolitical level. The resolution of this contradiction was not easy. In Brazil it required a coup (1964) that broke the
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LATIN AMERICA workers organizations. In Mexico it required a strong repression against the workers during the 1950s. In Argentina it required a succession of coups, and it still cannot be said that big capital has been able to succeed in carrying out its plans - precisely because of the Argentine proletariat's traditions of struggle. The coup in Brazil permitted the reduction of the minimum wage by 55% between 1964 and 1974; in addition, thanks to a consumer credit policy and a fiscal policy generous to the large enterprises, it guaranteed sufficient effective demand and reduction of costs for the enterprises producing durable consumer goods. The dizzying rise in the rate of exploitation in the productive sector permitted the accelerated development of an unproductive capitalist sector, the one financing the other. In the period 1960-70 the trade sector grew at an annual average of 5.6% (in contrast to 1.7% in Argentina), while the service sector grew by 4.1% (in contrast to 2.9% in Argentina). An increase in the rate of exploitation, when it reaches the heights it did in Brazil, consfitutes the precondition for significant development of a durable consumer goods industry. On the one hand it reduces costs without reducing effective demand, because the workers, given the low level of their income, cannot buy these products. On the other hand, thanks to the redistribution of income effected by the swelling of the unproductive sector (capitalist commerce, state expenditure), which is permitted by the high rate of exploitation, it furnishes effective demand for its producis. Moreover, the big expansion of the durable consumer goods industry, and the role that it progressively is led to play as a motor force, modifies the wage structure. Technical cadres become proportionally more numerous. Because of their salaries, they are customers for a part of this sector and thus constitute an additional factor favoring the realization of high rates of profit in this sector. Thus, there is a reconcentration of wages: Between the richest 5% and the poorest 50% a significant intermediary pole appears and constitutes what is too often referred to as the "middle layers. " The emergence of this third pole thus makes it easier to adjust demand to productive capacity in the durable consumer goods industry. One can thus better understand both the deeper origin of the Brazilian "miracle" and the difficulties of accumulation in Argentina and Mexico. The huge rise in the productive forces is brought about through the capacity to guarantee that the durable consumer goods industry will act as a motor force. This is accomplished through a political capacity to strongly repress (or integrate) the working class. 50
To assure a high rate of profit decisive action is also required by the state in the sectors of equipment goods, semifinished products, and the infrastructure. The reason there was no Argentine "miracle" is that it was impossible to carry out repression on a great enough scale, despite the succession of coups. To be sure, wage rates were held very low. Wages' share in gross product passed from 50% in 1950 to 38% in 1960 to 42.1% in 1970 to 35.9% in 1972; recenfly, without Perón, it has risen back to 42%. These low wages were especially pronounced in 1955-68; in the latter period a state economic policy that directly represented the interests of big capital was carried out (K. Vasena under the Onganfa regime). It was also a period marked by the Cordobazos - and for good reason. The inability to break the opposition of the workers was later to lead the bourgeoisie to recall Perón, with the avowed aim of taking advantage of the mystificafion he could exert over the popular masses in order to deflect their combativity. Perón's premature death opened the rood to a different solution: violent repression. Thus, since it was not possible to sufficiently increase the rate of exploitation, even though wage costs were initially rather high (higher than in Brazil), the durable consumer goods sector was unable to guarantee itself the same rate of profit in Argentina that it had in Brazil; it was thus unable to play the same dynamic role in Argentina that it did in Brazil. The conjuncture The growth rate of the gross domestic product in Argentina is not comparable to Brazil's. Although much lower, it nevertheless remains substantial: 3.6% in 1972, 4.5% in 1973, and 6% (estimated) for 1974 in real terms. (The sources for Argentina are Mercado Annuario, Guia de Consulta 74 (el economista) and Cronista Comercial.) Exports increased from $1, 935 million in 1972 to $2, 920 million in 1973, while imports stagnated ($1,895 million, compared to $1, 930 million in 1973). The opening toward the countries of the East is expanding and has been concretized by a loan from the Soviet Union of $400 million (at the rate of 4,5% over ten years!), by the purchase by the workers states of wheat, rice, etc., by a loan from Poland of $100 million, and so on. The evolution of prices is much more irregular. During the first five months of 1973 - that is, until Cámpora came to power -prices rose 41.5%, that is, a daily increase of 0.27%1 Then measures were taken to reduce this rate (it was -2.6% in June, 0.1% in July, 1.7% in August, 0.7% in September, 0.6% in October, 1.5% in November, and the same in December).
Growth has been more rapid in Mexico than in Argentina, but much slower than in Brazil. Between 1970 and 1973 the rate of growth of the gross domestic product averaged 6% a year (7% for industry), (3) a rate slightly inferior to that of the preceding decade, which was 7% (and 8.8% for industry) . A particularly recent and important fact for Mexico is that this growth has been accompanied by a strong rate of inflation. Between December 1972 and December 1973 retail prices increased 21.4% and wholesale prices 25.2%. It is known that a higher rate of increase for wholesale prices than retail prices indicates the existence of a strong cumulafive process and thus reflects exacerbated contradictions in the process of accumulation of capital. These contradictions were reflected in the workers' response to the student revolt of 1968 (even though the trade unions were integrated into the state apparatus). This divergence increased for some time 29% for wholesale prices as against 25% for retail prices between the first quarter of 1973 and the first quarter of 1974) and then turned around between April and June 1974(0.5%, 0%, and 0.3% for wholesale prices, 1.41%, 0.9%, and 1% for retail prices). This reversal in the tendency resulted both from a deliberate anti-inflationary policy by the state and from the integration of thie trade unions and the agreements that the unions reached with the employers - agreements that are still being contested, and for good reason. Concurrent with this increase in production and prices, there has been a heavy expansion of exports: Between January and November 1973 the value of exports increased 31.8%, as against 22.1% for all of 1972. As in Brazil and, to a lesser extent, in Argentina, this essentially affected manufactured products. (Sales of the transforming industries increased 54.5%, compared with 17.1% for agriculture and a decline of 6.2% for the extractive inuustries.) In Brazil the rate of growth of the gross domestic product for 1973 was 11.4%. (The source for the statistics on Brazil is Conjontura Econômica, A gust and November 1974) The growth rate for the transforming industries (excluding construction) was 15.25% in 1973 and 14.32% for 1974 (estimate as of August) in real terms. Concurrently, prices soared. Between July 1973 and July 1974 the increase was 31.5%, as against 15% between July 1972 and July 1973; there were very high increases in March (4.7%) and April (5.1%). And while exports of basic products sagged (declining 7.2% between the first half of 1973 and the first half of 1974), export of semimanufactured products took an unprecedented leap (up 48.5%), and export of manufactured products increased even more during the same period (68.5%).
It seems, nevertheless, that there will be a turn in Brazil. The model based on the dynamism of the durable consumer goods sector is beginning to reach its limits. This can be seen in the reappearance of inflation and in the balance of trade. There was a balance of trade deficit of $2, 488 million during the first half of 1974, as opposed to a $182 million surplus for the whole of 1973. This deficit is essentially due to a decline in the export of certain so-called basic products and to a swelling of imports of equipment. That is the essential problem! Growth based on the durable consumer goods sector requires growing imports of equipment and semifinished products. Now, taking account of interest on debts (which today are in the neighborhood of $20 thousand million), the amortization of these debts, and the repatriation of the dividends of the multinational firms, it becomes increasingly necessary for this type of economy to have a positive balance of trade - precisely in order to be able to afford this outflow of currency. The contradiction is thus as follows: A considerable increase in imports of equipment, semifinished products, and energy results in the need for even larger increase in exports. Two new faciors therefore emerge: 1) the necessity of exporting more manufactured products and of pursuing a policy aimed at inducing the multinational firms to export a growing portion of their production; and 2) the necessity of ütilizing 90-95% of productive capacity in the equipment and semifinished products industries. Unlike the 1964-67 period, there is no longer any margin of unused productive capacity. A recent inquiry conducted among Brazilian capitalists showed that the obstacles limiting their production in the consumer goods sector were 30% attributable to insufficient productive capacity (therefore, of machinery) and 35% to insufficient supply of raw materials and semifinished products, as against only 25% to insufficiencies in the size of the market. In other sectors, the figures were as follows: 16% and 35% as against 7% for the machine and accessories sector; 27% and 13% as against 8% for the building materials sector; 34% and 14% as against 21% for other semifinished goods industries. Thus, the contradiction is shifting. The vigorous rise of the durable consumer goods sector is no longer clashing with the insufficiency of the market but rather with the inability of the existing industrial structure and trade balance to provide equipment and semifinished products. This is what explains why Brazil's second development plan (1975-79) heavily stresses the development of the production goods sector, thus returning to Kubi-
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