[The following article appeared in the October 4 issue of La Gauche, the weekly publication of the Ligue des Travailleurs
Révolutionnaire (Revolutionary Workers League), the Belgian section of the Fourth International. The translation is by Intercontinental Press.]
At first sight, the situation seems paradoxical: everyone is calling it a serious crisis, and yet industrial production continues to grow in Belgium. While unemployment is increasing slightly, it still fluctuates around 100,000, which hardly signifies a recession in this country.
An even more obvious paradox is that while the Belgian economy is more integrated into the international capitalist market than the economy of any other imperialist country (that is, it is more dependent on exports), it seems to have avoided for the time being the general recession that has clearly begun in the international capitalist economy.
Yet if we take a closer look, the economic situation in Belgium is less paradoxical than appears at first glance.
While the Belgian economy is very highly integrated into the international capitalist economy, its relations with the "Big Three"- the United States, Japan, and the Federal German Republic— are very unevenly developed. Belgium's exports to the United States and Japan account for only a small part of the country's industrial production, but is exports to West Germany play a significant and growing role in the national economy.
The situation becomes clearer if, in addition, we note that the economie integration of the Belgium-Luxembourg Economic Union, the Netherlands, the Federal German Republic, and France is growing tighter, and that the latter three countries buy almost two-thirds of Belgian exports. In effect, of the "Big Three" in the international imperialist economy, West Germany is today the least affected by the international recession. And France is much less affected than Great Britain or Italy.
It must be added that until 1973, Belgium's inflation rate was one of the lowest in the imperialist world, which helped to stimulate the coun try's exports. Moreover, the Belgian economy, which has long played a "marginal" role in the world imperialist economy, retained reserves of productive capacity that scarcely existed beyond the Rhine or the French frontier. Hence the spectacular growth of Belgian exports in the first half of 1974, reaching the level of 100,000 million francs in exports per month [100 Belgian francs equal US$2.60] in May 1974.
Since then, however, inflation has exploded in Belgium. Its rate is quite obviously higher than in West Germany, the Netherlands, Switzerland, and Sweden. The growth in exports is therefore going to slow down, and even stop altogether. The recession will develop in Belgium, too, although with a certain delay compared with other imperialist countries.
According to a memorandum published by the Central Economic Council in mid-September, demand is already sagging in manufacturing, where several sectors have experienced a simultaneous decline in production and advance orders.
The sectors most affected include:
• Automobiles, where despite an improvement in the market situation during the spring and early summer, production remains below last year's level. There have been layoffs at General Motors in Antwerp, a temporary suspension of production of the Taunus model at the Genk Ford factory, and so on.
• Construction, especially in the public housing sector. Public housing starts were 34 percent lower in the first half of 1974 than in the same period last year.
• Clothing, and consequently textiles. Several companies are in trouble in the Ghent region, and while the production of fabrics (especially cotton goods) remains less affected, it will soon suffer the repercussions of the slowdown in the clothing sector.
More generally, the volume of purchases by consumers in Belgium seems to be in sharp decline, after the surge of buying sparked by fears of shortages at the beginning of the year. In June 1974 the turnover of the big "downtown" stores was only 1.5 percent higher than in June 1973, which, considering that prices have increased by almost 10 percent during that time, represents a serious fall in sales volume.
We can therefore say that Belgium 1476
is on the brink of a recession, or has already gone over the brink.
The unemployment statistics confirm this: The number of workers listed as unemployed -which is lower than the real number since the passage of the infamous Van Acker law, which excludes some categories of married women from receiving unemployment benefits — rose to 96,645 fully unemployed in August 1974, an increase of 11,360, or 13 percent, compared with August 1973. To which must be added the figure for partially unemployed, which has risen to 14,000.
It may have been noted that recently, commentators from a wide variety of professions - university professors, factory managers, bankers, bourgeois politicians, and even Citizen Genot, at the Congress of the Walloon re gional sections of the FGTB [Fédération Générale des Travailleurs de Belgique - Belgian General Federation of Workers] — have described the economic outlook in extremely gloomy terms. One could even say they were scaremongering. To hear them, we are on the eve of an economic crisis as serious, if not more serious, than the crash of 1929.
It is true that share prices on the Stock Exchanges at London, New York, and several other important world capitalist centers have declined during the past year more than they did after the famous "Black Friday" of October 1929. But that simply means one thing: that the capitalists have become very pessimistic as to the immediate future of their economy. There is a big difference between that and concluding that industrial production and employment are going to tumble at the same rate as stocks.
The truth is that as long as capitalist governments do not all simultaneously practice a harsh deflationary policy that "smashes" inflation at the cost of massive unemployment; and as long as inflation doesn't reach the runaway point (that is, the point at which no one holds on to money, everyone stocks up on commodities, and prices are no longer declining in any sector), the recession will not become a "new 1929."
The fact that inflation is not yet raging out of control is shown clearly by the sharp fall in share prices on the Stock Exchange the decline in land values in Great Britain, and the steep fall in the prices of many materials in the last few months.
The imperialist governments are unable to carry out harsh deflationary policies because of the relationship of forces between business and labor in most Western countries. This relationship of forces is radically different from what it was in 1929, not to speak of 1932.
Any rapid rise in unemployment will be sure to provoke sharp reactions from the workers: occupations of factories to prevent closures; rejection of unemployment; radical strikes and violent, politically radicalized movements. In view of the present world situation, the bourgeoisie cannot allow itself the luxury of fifteen million unemployed in the United States, three miliion unemployed in Great Britain, five million unemployed in West Germany, or a half million unemployed in Belgium. Those are the figures comparable to a "new 1929." They would finish off the capitalist system.
Thus, our prognosis is the following: there will be a generalized recession, more serious than anything we have seen since the second world war (no doubt with a total of between thirteen and fifteen million unemployed in all the imperialist countries), but with unemployment considerably below the number left jobless by the 1929 crisis.
As soon as the recession reaches a certain level, there will be an effort to reflate the economy again by increasing inflation.
Only a serious political defeat of the working class in the key countries of the imperialist world could provide the bourgeoisie with the political and social resources to apply the "horse medicine" that is necessary to cure inflation, and that it is unable to apply today.
The present carefully staged scaremongering is intended above all to raise a hue and cry against the unions and the workers, to create a climate that favors "national union for equal sacrifices" - that is, to confront the workers with a choice between voluntarily abandoning the defense of their buying power or facing the threat of massive unemployment.
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