For the family photo, the finance ministers of the world's ten richest imperialist countries put on beaming smiles. After four months of confusion and uncertainty about the future of the international monetary system, the world capitalist economy had finally achieved new schedules of fixed rates of exchange between all the imperialist currencies.
The ministries and administrative councils must have been seized with a strong feeling of panic for the principal interests to appear so satisfied with the miserable compromise that was reached in Washington. If the rates of exchange were reorganized, none of the basic roots of the monetary crisis were eliminated.
On August 15 Nixon issued an edict. But on December 18 a compromise was reached, after arduous negotiations. "Neither victor nor vanquished," proclaimed this same Nixon. This compromise reflects the change in the interimperialist relation of forces that has evolved over the past decade.
American big capital achieved a general revaluation of all imperialist currencies in relation to the dollar. If some of these were significant (15.5% for the yen, 12.5% for the deutsche mark), they were in general less than those the Nixon administration had expected. They favor the export of American commodities, but will reduce the export of American capital. Above all, they will facilitate the export of European and Japanese capital to the United States.
Nixon's promises and blustering to the contrary, the dollar was in fact devalued— in relation to gold and all currencies that will not themselves de value. The devaluation will reduce the already shaken confidence of world bankers in the stability of the dollar. (Several East European countries will sustain a loss because they imprudently converted their reserves into dollars, as the Chinese government sustained a loss when it, also imprudently, placed its reserves in French francs before the franc's devaluation.) And— depending on the number of semicolonial countries that likewise devalue their currencies- the devaluation of the dollar will raise prices, more or less, on imports of raw materials and the products of light industry coming from those countries.
The international monetary system remains in crisis. The two principal roots of this crisis have not at all been eliminated. The dollar is still not exchangeable for gold. If the capitalist central banks continue to turn their backs on the dollar as a reserve currency - and how could they do otherwise in the wake of such a devaluation! - the international capitalist economy will find itself deprived of an international exchange currency.
In addition, the American inflation continues worse than ever, as the Nixon administration tries at all costs to prevent the recession from being transformed into a grave economic crisis. The American balance of payments deficit will thus also persist, even if it becomes partially attenuated.
In regard to the 10% surcharge on imports imposed by Nixon on August 15, it must be said that this had little weight in reducing imports, attracted by the abundance of liquidity. As a result, prices rose generally as a consequence of the increase in imports. Certain of these, especially in the area of machinery, could not be substituted moreover since the American machine industry does not produce (or no longer produces) some equipment made mostly in Germany and Japan.
From the capitalist point of view the most reasonable way out of the impasse would be to bolster gold by an international reserve currency completely detached from the national economy of any capitalist country - a central bank currency administered, according to strictly objective criteria, by a central bank of the central banks.
But that would be a complete utopia. The realization of such a program presupposes the existence of a world capitalist government independent of the great imperialist powers; that is, the disappearance of interimperialist competition. But it is precisely the exacerbation of that competition that has been manifested since the opening of the monetary crisis.
In the absence of an overall solution the most the imperialist powers can hope for is a gradual extension of the system of Special Drawing Rights (paper-gold, distributed according to the notion that the richest countries should get the lion's share). Moreover, the imperialist countries of the Common Market (reinforced by Great Britain, which has consistently aligned itself with the Six during the monetary crisis) will seek to create a common currency which, all things being equal, could be added to the dollar as an international reserve currency, aimed at supplanting the dollar. But this is not for tomorrow or the day after.
The European and Japanese capitalists did not dare cut the limb they were sitting on-to reply to Nixon's edict with massive retaliatory measures would have run the risk of touching off a chain reaction which, by contracting the world market and aggravating the American recession, could have ended by seriously striking at their own outlets.
Today, in face of the Washington compromise, they have decided to grin and bear it, with the exception of the German industrialists. For them, this is their third revaluation in a short time. They fear a massive invasion of American products and a relative decline in German exports.
France-Soir ran a triumphant headline: "Crisis and unemployment averted." The demagogy is surprising, even coming from a daily of this type.
Far from being averted, unemployment in France has reached its highest level in twenty years, and this is even before a recession. And re cession (that is, a crisis) threatens France not because of the monetary crisis, but because of the mounting West German recession. There is not the slightest sign that the German re cession disappeared after December 18. Everything indicates that it will extend through next winter and spring.
The deterioration of the international capitalist economic situation is not a result of the monetary crisis, but preceded it and in part accelerated its outbreak. The causes of the present recession are more profound - the slackening of technological innovation; the excess capacity in key sectors like steel, auto, petrochemicals, synthetic textiles, naval construction, and undoubtedly also electronics; the fall of the average rate of profit and the consequent decline in investment; the growing gap between the capacity of production and buying power, compounded by increasingly massive indebtedness of both families and companies.
In short, all the classic contradictions of capitalism have reappeared. Monetary and financial manipulations may, at the very most, moderate their immediate effects, but can neither eliminate nor render them harmless in the long run.
Under these conditions the two pre dictions we made immediately after the August 15 decree stand entirely confirmed:
First, that the international bourgeoisie would try to make the workers foot the bill for the damages. The offensive against levels of employment and real wages has now become general. The vigorous response of the West German metalworkers demonstrates that this offensive is not at all assured of success.
Second, that international competition would accelerate and undermine all agreements, including monetary ones. The Bretton Woods system lasted twenty-five years, the last five in death agony. The system born in Washington will not survive a decade. The next recession or the next social explosion in an important imperialist country threatens to precipitate its decomposition.