PRELIMINARY
NOTES ON THE
Today, one year later than the imperialist countries and $1,500 million. This year reserves will diminish by
BRAZIL: by JEANETTE MCDONALD the oil-exporting semicolonial countries, Brazil is suffering the impact of the generalized recession of the international capitalist economy. This impact results in a rapid slowdown of the exceptiorial economic growth the Brazilian economy had experienced between 1968 and 1974. The clearest expression of the deterioration of the economic situation is the catastrophic aggravation of the balance of payments. The deficit in the balance of current operations increased from $3, 400 million in 1973 to 58, 000 million in 1974. This year it should hit $9,000 million. In 1973 it was easy to cover the deficit thanks to a gross capital entry on the order of $5, 000 million. In fact, exchange reserves grew by $2,000 million that year. In 1974 gross capital entry, on the order of 57, 000 million, was no longer sufficient to cover the deficit of current operations; exchange reserves diminished by
END OF THE nearly $3,000 million, that is, they will have declined by more than 50% in the space of two years (falling from $6, 500 million to less than $3,000 million).
must be emphasized that while the increase in the ice of oil is part of the cause of the rapid deterioration of the balance of payments, it is not at all the sole cause. First of all, the deficit in servicing loans is increasing alarmingly, rising from S1, 600 million in 1973 to more than $3,000 million in 1975. Second, the cost of imports of machinery has increased more rapidly than that of imports of oil. Finally, the plans for "compensatory" increases in exports have failed on the whole, especially because of the international recession (fall in the price of sugar, sales difficulties for industrial products) and because of the disastrous coffee harvest. The acceleration of inflation in Brazil during 1975, while inflation was deceleroting in the imperialist countries, also weakened the position of the Brazilian econ-
omy on the world market. The dictatorship had succeeded in bringing the rate of inflation down to 21% in 1970, to 18% in 1971, and to 14% in 1972. It even tried to reduce the rate to 12% in 1973. But this objective was not at all attained; the cost of living rose 15% that year. The rate of inflation then rebounded to 34.5% in 1974; it will probably hit 25-30% for 1975 as a whole (forecast based on the figures for the first half of the year). Finally, account must be taken of the growing weight of foreign debt, which is taking on increasingly disturbing proportions, Gross foreign debt was S12, 500 million in 1973. It now stands at more than $20, 000 million. Debt servicing already absorbs 25-30% of export revenues. If total export revenue falls into stagnation, the weight of debt servicing threatens to become intolerable. In October of this year the dictatorship reacted to this situation with a series of medsures announced in a television speech of President Geisel. The overall effect of these measures is to deal another and sharper blow to growth through a deflation of internal demand. The price of gasoline was raised 25%. Luxury taxes on imported products were doubled, Imports were penalized in general. All this means that the domestic market will contract at the very moment that the foreign market is stagnating. The effects of this have already been felt in the automobile industry. Brazil had been the only capitalist country to escape the effects of the international automobile crisis in 1974. In 1975 the situation turned around, Sales on the domestic market declined in absolute figures. Inventories began to pile up. Wholesalems and retailers began to offer rebates. The profits of the big four (Volkswagen, General Motors, Chrysler, and Ford) seem to be disappearing for 1975, and this at a time when Fiat is launching a huge competitive enterprise in Belo Horizonte. It would obviously be wrong to think that the recession that is now beginning to hit Brazil is purely imported. In large part it results from the particular form that had been taken by the accelerated growth of the preceding period. This resulted in a severe redistribution of the national income in favor of capitalist profits and the incomes of well-off layers of the petty bourgeoisie (that is, a total of less than 20% of the population). This occurred at the expense of the immense majority of the billing masses. Real wages of workers had suffered a catastrophic fall ust after the dictatorship came to power in 1964. They mproved a bit after the " launching" of the "miracle, #F sely to descend again beginning in 1973. According to the commercial adviser of the French Embassy in Rio de Janeiro, the minimum wage would have had to be held above 1,500 cruzeiros a month to contain the effacts of inflation; but the set minimum wage varies from 367.5 to 532.8 cruzeiros a month, depending on the date involved. The fall in buying power that this implies is easily grasped. Right now, a workers who makes the minimum wage in So Paulo has to work eight hours to make enough money to buy a kilogram of coffee (2.2 pounds). From the outset, this results in a severe limitation on the domestic market, with obvious implications for the great branches of industry. Here is an example: "One of the best studies, by an English economist, Mr. David Goodman, showed that from the middle of 1968 to the beginning of 1970, 69% of the urban labour force of 4,2 million in the north-east was earning on the average the minimum wage (now equal to about E27 per month) or less. Worse still, he calculated that 18% were earning from 1/4 to 1/2, and 22% less than 1/4 of the minimum wage; in all, that 42% of the urban labor force (that is, 1.8 million workers) were earning such extremely low wages that their physical subsistence could scarcely be guaranteed. Moreover, he calculated that about 12% of the urban labour force was either unemployed or underemployed. ... The absurdities of the present model are evident. For example, the Brazilian footwear industry manufactured 120 million pairs of shoes last year. Of these, 27 million were exported, leaving 93 million for a population of 105 million, that is, less than one pair per inhabitant. Moreover, 70% of production for the domestic market were not proper shoes but sandals and others of the "flip-flop' variety." (Financial Times, September 23, 1975.) The limitation of the domestic market compels the regime to rely on exports. By the very nature of things, the policy of encouraging exports has to be "selective. Now, the exports encouraged require increasingly expensive imports, that is, they worsen the balance of payments deficit instead of improving it, In addition, they necessitate increasingly costly work on the infrastructure, which constitutes one of the main sources of inflation and entails considerable wastes and losses that in turn feed the inflationary spiral. To cite the French commercial adviser in Rio de Janeiro once again: "The program of 'export corridors' launched with great fanfare two years ago has lost practically everything but its name. The trains carrying ore continue to be derailed virtually on a daily basis while running between the Minas Gerais iron mines and the terminals in Vitória or Sepetiba. If is estimated that up to 10% of the sugar harvest is lost because of the inadequacy of transport and stock facilities. Files of 300 to 500 trucks loaded with soya wait for the harvest before being able to unload onto ships anchored in the ports in the southern part of the country. Every day suburban transport around Rio and So Paulo present virtually Dantesque scenes that end in the death of travelers. " ("Problèmes Economiques, " June 18, 1975.) Under such conditions, it is clear that the end of the "Brazilian economic miracle" is not a consequence of unpredictable accidents, but instead results from the very nature of the "miracle, " which inevitably had to be of short duration.
Two seemingly conflicting trends characterize the economic scene in the United States today. Industrial recovery from almost two years of depression is underway. Automobile sales, normally one of the "advanced indicators" of the direction of the economy, were 23% higher this October than a year ago. General Motors registered third-quarter profits fifteen times higher than in the third quarter of 1974. But New York, the country's wealthiest metropolitan center, came close to bankruptcy in November. President Ford's intervention to guarantee New York's bonds became a dire necessity for national (and international) money markets. It will postpone, at least temporarily, a New York default. Yet the promise of financial rescue by the White House did not in any way alter the fundamental components of New York City's crisis. It came only after tens of thousands of city workers had been fired and other workers had been laid off, as municipal construction ground to a halt; after a three-year wage freeze had been imposed on city workers, tearing up their previously negotiated wage contracts without rank-and-file consultation; after educational, hospital, and welfare programs had been cut and in some cases eliminated altogether; and after the responsibility for all of these measures had been accepted by the Democratic party administration of New York State. Moreover it is certain that the people of New York will continue to suffer a sharp deterioration of living standards. The bipartisan antilabor offensive aimed at rescuing New York's creditors is only in the beginning stages. Furthermore, New York is far from being the only American city in crisis. In Detroit the process is further along. "Like other citles around the land, " the July 25 Wall Street Journal reported, "Detroit has been confronted with a budget crisis. Old programs have been cut back or cut out. City workers have lost their jobs, Improvements in city facilities or services have little chance of getting off the ground.... "Detroit's fiscal crisis came earlier than most cities' simply because its recession arrived earlier - nearly a year before the slump hit the rest of the country. The energy crisis in the fall of 1973 cut deeply into automobile sales, and the auto industry has never really recovered." This article will examine these two countervailing tendencies - the beginnings of economic recovery and the crisis of cities in America - through the prism of the auto industry. Here the focus is more on Detroit than New York and specifically on the Black workers of Detroit. But this is precisely to suggest that there are Important links between the present conjuncture of U.S. industrial production, the special exploitation of oppressed national minorities, and the crisis of the cities.
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VAL Auto sales turn up There are signs that a "bottom" has been reached in the devastating two-year downturn of world automobile production.(1) Business Week magazine reported in its November 10 issue, "Sales throughout Europe, with the sad exception of Britain, are perking up. Japanese car makers are producing all that they can. And Brazil, a rising automotive power, will still enjoy a near-record year despite a severe slowdown from several years of 15% annual growth." October marked the first