(The following article was originally published in the August 16 issue of the Belgian revolutionary-socialist weekly La Gauche. The translation is by Intercontinental Press.]
De Gaulle leaves - and now comes the devaluation of the French franc. Clearly, the long-range effects of the May 1968 revolutionary upsurge are far from over.
At the time of the alarm over possible devaluation of the franc in November 1968, I indicated the concatenation that would make this move inevitable. (See "The Crisis of the French Franc." Intercontinental Press, December 9, 1968, p. 1,100.] The across-the-board wage increase which the bourgeoisie was forced to grant in May to avert a revolution could not help but slow down exports and increase imports. A balance-of-payments deficit inevitably flowed from this, a hemorrhaging of exchange reserves. The losses incurred by the Bank of France since the beginning of 1968 total more than $600,000,000.
cognit
Valery Giscard d'Estaing
French Franc
In the month of July alone it lost $138,000,000. All this made devaluation inevitable.
A Bonus for Capital
I wrote last November that while the speculators precipitated the crisis of the franc, they did not cause it. They merely accelerated the crisis by anticipating the actual development.
Today everyone admits that the permanent balance-of-payments deficit since May was the real cause of the fall of the franc. But the capitalist system is so constructed that speculators are always rewarded.
On August 11 small savers lost 12.5 percent of the value of their savings as measured in gold or foreign currency. They will soon lose the same amount in buying power as a result of a rise in prices.
On the other hand, all the speculators who placed their capital abroad retain the full value of their assets. By repatriating a part of this capital before the price rise reaches 12.5 percent, their buying power will have increased. An injustice? Obviously. But isn't the capitalist system based on inequality, that is, basic injustice in the relations between capital and labor, between the rich and the poor?
The injustice obviously does not stop there. For the workers, the devaluation offers nothing but rising prices. The results for them are negative up and down the line. The industrialists, businessmen, and property owners will find their assets immediately revalued. Even before the price spiral begins, the prices of land, real estate, jewels, and securities (starting with foreign stocks and bonds) are moving into line with the prices of gold, the dollar, and the
Deutsche Mark.
Next, businessmen and industrialists will try to revalue their predevaluation inventories by selling them or evaluating them in accordance with the new rate. The price through September 15 announced by the French government was aimed at blocking this maneuver. However, its success is not assured in a climate dominated by an inflationary tendency in credit and the means of payment.
Finally, as soon as the French capitalists are compelled to import products at higher costs than previously, they will try to shift this cost onto t French consumers, helping the proce along as best they can. When raw materials account for one-third of the costprice of a product, who is going to prevent a manufacturer or dealer from increasing his sales prices by 5 or 6 percent rather than the 4.17 percent "technically" justified from the capitalist point of view?
The discontent and disquiet of the unions, which merely reflect the general sentiment, are therefore quite understandable. The devaluation represents yet another redistribution of the French national income in favor of capital and at the expense of labor, the latest push by capital to neutralize the concessions granted the workers under threat of revolution in May 1968, if not to reduce the share of labor below the pre-May level.
Tactics and Strategy
In this sense, the devaluation was in the logic of things. It illustrated once again the logical implications of the referendum and the presidential election.
Contrary to the myth widely held among the respectable left, it was not the workers who forced de Gaulle out of office through the referendum. It was the layer of capitalists represented by Giscard d'Estaing, Pleven, and Duhamel who felt that the time had come to get rid of a leader, who had become an incumbrance, having lost his effectiveness.
Pompidou was elected president of the republic thanks to the support of this section of the bourgeoisie. Now they are presenting their bill-devaluation (that is, rehabilitation of the speculators), a European policy (i.e., orienting toward the internationalization of capital required by the big monopolies); sustained inflation (i.e., soaking up the last gains the workers made in May): It was not known whether de Gaulle was prepared to carry out this policy rapidly and without reservations. But in the case of Pompidou, there was not the slightest doubt. The play is being enacted in faithful agreement with the text and the intentions of the authors.
But while the immediate succession of events is perfectly logical- that i it corresponds to the interests of the big French employers - the economic strategy behind the devaluation seems much more dubious.
The timing of the operation has been admired. It was carried out during the vacation period when speculation was at its low point (even the interest rate
1 the Euro-dollar market began to weaken in July, something not seen for a long time), while perfect secrecy was maintained. Nonetheless, the success of a devaluation is not measured by the immediate circumstances surrounding it. When we examinethe broad economic context, we are led rather to conclude that the measure came much too late and the danger is that most of its effectiveness will be lost.
In order to achieve the desired goalthat is, reestablish an equilibrium in the balance of payments- the devaluation would have to result in an increase in the volume of French sales abroad (above all in the neighbor countries and in the United States) and in a drop in imports. But two series of developing economic changes make these results doubtful.
Devaluation, Inflation, Recession
On the one hand, a climate of pronounced inflation prevails in France. The official price index has risen by 3.5 percent since the beginning of the year- that is, at a yearly rate of 6.5 percent - and in reality, prices have risen by almost 5 percent, or at a yearly rate of more than 9 percent. Excess productive capacity is limited. It is not likely, therefore, that a major part of industrial production can be diverted from the domestic market toward foreign markets. The fact that French products will in fact- for the immediate future-be cheaper on the export market will increase foreign demand for these products. This new foreign demand will be added to a demand on the domestic market which is already in excess of supply. The probable result, then, will be an accentuated inflation with only a modest increase in exports.
Moreover, in the United States, the boom has finally been dampened by deflationary measures taken by the government. A downturn is foreshadowed for the next year in West Germany and possibly also in Italy and Great Britain.
The price rises in those countries will, then, probably flatten out. At the first downturn, the German exporters are perfectly capable of giving major discounts in order to "hold" their foreign markets. Thus, imports into France September 8, 1969
threaten to remain as high as they are today. And, despite the devaluation, French products threaten to remain not very competitive-in many branches of industry-with respect to those of most of France's major commercial partners.
The key to success in the operation would have been to devaluethe currency while avoiding inflation, or a rise in prices. But this key is more than ever out of the reach of the government and of French capitalism.
A New Strike Wave
If we consider the social repercussions, things appear even gloomier for French capitalism. After the squall in November 1968, there was no "March meeting,"* that is, the new social explosion that was generally expected did not take place. But there have been hundreds
Jacques Duhamel of strikes in large and small enterprises. These testify to the combativity of the workers which has remained intact since May 1968. Futhermore - and this has been unheard of in France for twenty years— now, in the middle of the vacation period, stubborn strikes are going on among the steelworkers in Lorraine and the building-trades workers in Lacq, to cite only two examples.
Under such conditions, the union federations, which have strained every effort to keep strikes since June 1968 from spreading, will have a difficult time in resisting the more and more widespread demands for wage increases to "recover" the gains of May that have been soaked up by inflation and devaluation. From the standpoint of the class struggle, France appears to be in for a "hot" fall and winter.
If social tensions mount, the bosses will again have to dump ballast, because they are even less capable than they were in May 1968 of holding down the lid on a vast popular upsurge. Any new concession to the workers would immediately wipe out the effects of the devaluation and confront the French bosses and bourgeois leaders with the very dilemma which has terrified them since June 1968 and especially since November 1968.
New 'Alarm' in October?
The death agony of the international monetary system can only quicken after the devaluation of the franc. While the speculation we are now witnessing will doubtless not affect the immediate situation, the bankers and capitalists have their eyes fixed on September 29, 1969, when the results will be in for the legislative election in West Germany the preceding day.
It is no secret that the "specialists" in international monetary relations want a general realignment of currencies. The devaluation of the French franc was to be one of the aspects of this realignment, the kingpin of which would be the upward revaluation of the Deutsche Mark, the Indian lira, and the Japanese
(opinions are more divided on yen where to fit in the Dutch florin, the Belgian franc, and the pound sterling).
It is not hard to understand that such a general realignment would be a windfall for the U.S. capitalists, whose principal competitors would thus find themselves forced to sell their commodities at higher prices on the U.S. domestic market.
If Bonn, Rome, and Tokyo turn down this proposal, the United States has a powerful weapon in its arsenal. It can continue its policy of deflation, of boosting interest rates, which would threaten to touch off a generalized recession in the economies of the imperialist coun tries and would cause them heavier losses than those accruing from the proposed currency revaluations.
We should never lose sight of the fact that monetary crises merely express much more deep-seated capitalist contradictions. And, in face of the threat of a general economic recession which is shaping up on the horizon, we can bet that the directors of the central banks and the ministers of finance of the capitalist countries will do their utmost in their decisions over the coming months to maintain a minimum of cohesiveness - save for yelling "every man for himselt!" if the lightning strikes too closely.
This, in fact, is the reality of capitalism today, confronted as it is with ever more powerful foes and dangers which threaten its very existence. It cannot help but be continually buffeted between the desire for "international solidarity" and the temptations of "sacrosanct selfinterest" which will remain as long as private property exists.
largest city, faced police gunfire in their efforts to hold a peaceful assembly. Two persons were killed by the police.
The Prague Municipal Committee of the Communist party reported in ito official newspaper, Vecerni Praha, A gust 22 that 1,337 persons had been arrested in Prague. Arrests throughout the country totaled 1,893 according to the Czechoslovak press agency CTK.
The Husák regime blamed "fascists" and "counterrevolutionaries" for the demonstrations. Despite the evidence of majority support for the August 21 boycott and token general strike, the
Czechoslovakia
A Turbulent Anniversary
The massive demonstrations in
Prague, Brno, and other Czechoslovak cities August 21 were a clear indication, if any were needed, that a year after the Soviet invasion the Kremlin has failed to turn back the struggle of the Czechoslovak workers and students for socialist democracy. At the same time, the brutal police and military suppression of the popular protests - which left four dead, an uncounted number injured, and hundreds under arrestshowed. the ruthless determination of the Husák regime to impose the dictates of Brezhnev and Kosygin and to preserve its own bureaucratic rule at any cost.
For weeks prior to the August 21 anniversary, high government functionaries publicly threatened to use force to suppress any popular demonstration critical of the Soviet occupation. Despite this campaign of intimidation, more than 1,000 students and workers gathered in Wenceslas Square in Prague August 19. Club-wielding police backed up by tear gas and armored cars were able to clear the square only after a full-scale charge against the crowd.
The next day youths built barricades on Prague's Narodni Boulevard while soldiers armed with submachine guns fired over the heads of demonstrators to disperse them. Two youths were shot to death and an unknown number wounded. Young demonstrators defended themselves with rocks and bottles against advancing troops and armored cars. In many cases they appealed to the Czech soldiers to join the demonstrations. The New York Times re 774
ported August 22 that some soldiers "joined the demonstrators in their shouts of derision and in the defiant singing of the Czechoslovak national anthem."
The most massive demonstrations took place on August 21. A five-minute general strike at noon, called by the left Communist underground, was widely honored. Buses and streetcars were nearly empty all day as people boycotted these services. Stores were almost deserted.
A crowd estimated at upwards of 50,000 persons assembled in Wenceslas Square to commemorate the "Day of Shame." The government ordered more than 100 tanks into the heart of Prague while police and troops used tear gas and clubs to clear the streets and break up all public assemblies.
"One of the most dramatic scenes occurred at the St. Wenceslas statue," an August 21 Associated Press dispatch reported from Prague, "when the police started demanding that the crowd leave. Young people massed around the statue, some climbing it.
"They were dispersed with tear-gas and truncheon charges by the riot troops, but they returned twice. At one point demonstrators outnumbered policemen and attacked them with fists and rocks....
"Nearly 1,000 youths sang their national anthem and chanted 'shame on the Soviets'. ...The crowd hurled coins and cigarette butts in contempt at the helmeted militiamen, who unflinchingly stood their ground."
On August 22 some 5,000 demonstrators in Brno, the country's second government insisted on keeping up the pretense that nothing but a handful of "conspirators" was involved. The party Presidium tacitly identified the popular masses as its "enemy." The bureaucrats even sought to counteract the image of their assaults on the country's youth by hailing the "courage" of the "youth" among the police! (The government issued a statement August 21 declaring: "The enemy forces encountered decisive resistance of Czechoslovak state power- young people from the police and army in their first direct encounter with the enemy intervened courageously and in a brave manner brought the situation under control.")
During the demonstrations the government announced a sweeping series of police-state measures authorizing detention without trial for up to three weeks of any person who "defames" Czechoslovak leaders or leaders of other "socialist" countries, and detention for up to three months of persons accused of disobeying the police, violating law and order, or inciting others to these acts. Ironically this decree was signed by Alexander Dubcek. In choosing the course of compromise with the Stalinist bureaucrats, Dubcek committed himself to help demobilize the masses and defeat the movement for socialist democracy. When he has been squeezed dry he will be discarded in favor of more reliable instruments.
What is remarkable is that all the might of the Soviet Union and of the Czechoslovak state and military bureaucracy has been unable to intimidate and demoralize the Czech masses. This constitutes a continuing political disaster for the Kremlin and shows the potential for the development of a mass antibureaucratic movement, not onl in Czechoslovakia, but in the rest i Eastern Europe and in the Soviet Union itself.
Notes
* The second round of wage negotiations provided for in the Grenelle agreements of May 1968. - IP.