Brussels
Eleven years ago I made the following assessment of the international economic situation: "The dilemma confronting the state in the age of declining capitalism is the choice between crisis and inflation. The former cannot be avoided without intensifying the latter. ...
"The capacity of the currency to resist- which, by definition, is limited in time-thus appears as the insurmountable barrier against which, in the long run, the moderating intervention of the state in the economic cycle is brought up short. The contradiction between the dollar as an anticyclical device in the United States and the dollar as money of account on the world market has already become insurmountable."1
This diagnosis has not been contradicted by the events. It indicates a dilemma that most of the bourgeois commentators on the present monetary crisis seem not yet to have understood.
Filth Stage of Chronic Crisis
In fact, the crisis of the international monetary system set up in Bretton Woods at the end of the second world war has become quasi-permanent. The fifth stage of this crisis opened in 1967. But while the first gusts hit the pound sterling and later the French franc-whereas the pressure on the dollar seemed to be eased by the U.S. halt in gold sales - this time the dollar itself has been caught up in the whirlwind. "The dollar standard," which some insisted on condemning as a permanent drain on the riches of capitalist Europe for the benefit of capitalist America, has not lasted even two years.
On this side of the Atlantic, the bourgeois experts claim to believe that the whole trouble derives from the deficit in the U.S. balance of payments. If
Traite d'Economie Marxiste, Paris, Julliard. Tome II, page 34. (Marxist Economic Theory, New York, Modern Reader, Vol. II, page 532.)
May 24,1971
the house of the dollar were "put in order," everything would presumably be for the best in this bourgeois best of all possible worlds.
The disingenuous advocates of this view forget that in 1970, with a record military budget and an inflation rate of 6 percent annually, 25 percent of U.S. productive capacity went unutilized. They forget, in other words, that the cause of the trouble is not inflation but the inherent contradictions of the capitalist system. The absurd survival of private ownership of the means of production and the commodity character of products means that they can only reach the "ultimate consumer" if they are sold, and sold, moreover, at a price that assures their owner the average rate of profit.
Both inflation and the Vietnam war, in the last analysis, are only a consequence of this chronic disease eating away at the vitals of declining capitalism - the widening gap between the society's productive capacity and the buying power of the workers. The formidable inflationary pyramid was erected long before the Vietnam warwhich only accelerated its growth - in order to overcome this gap. With the U.S. facing six million unemployed even in spite of this inflation, the friendly advice of the European banks to halt the inflationary trend merits a short, four-letter reply. Where would the European capitalist economy be today with twelve or fifteen million unemployed in the United States?
But those on the U.S. side of the Atlantic who pretend not to understand what the fuss is all about are no less naïve. "A mere technical problem caused by speculation," they declare to console themselves. Really? In a society based on private property and thus on competition, the rich (it makes little difference whether they are speculators, bankers, industrialists, or coupon-clippers) are impelled to unload any consistently depreciating currency.
If the dollar is in crisis, it is not only because it is depreciating. It is above all because it is depreciating faster than other currencies (first of all the Deutsche Mark and the Swiss franc). It is not speculation but the uneven rate of inflation that has led at last to the breakdown of the system of fixed exchange rates established at Bretton Woods.
The most notable aspect of this affair is that the main speculators have tall is mat the main speculators nave been the multinational companies, that is, above all the big American companies with numerous subsidiaries abroad. Thus, it is the American capitalists themselves who are speculating against the dollar, as it was the British capitalists who speculated against the pound sterling five years ago. The capitalists have just one fatherlandthe realm of fastest possible profits.
But both the American and European capitalists are fooling themselves, or more precisely fooling their public, because they give only one side of the reality, only one aspect of the situation arising in fact from the insurmountable dilemma noted above.
Coming Challenge to West Germany
Today West Germany holds exchange reserves greater in absolute terms than those of the United States. The sensational climb of West German imperialism back to a position ofdominance in capitalist Europe-already foreshadowed by the role of the Bonn cabinet in the last monetary crisis - is now being openly flaunted.
The German bankers have in fact decided unilaterally to devalue the dollar - that is the underlying meaning last week's crisis.
The fact of that they can do this on their own, that they can impose their will, is a measure of how much has changed in the capitalist world in the last ten years.
But the capitalists across the Rhine do not find their victory in the least reassuring. They have not succeeded in bringing their "little Europe" associates into the project of monetary consolidation. Even the post-Gaullists are saying-a bit belatedly - that a wobbly "greater Europe," with a British counterbalance to German hegemony, is better than a "little Europe" forever under the thumb of Frankfurt and the Ruhr.
The Common Market is experiencing the gravest crisis of its history. The projected monetary and industrial integration -which was supposed to make it possible to create a European currency taking the place of the pound sterling and, who knows, perhaps even the dollar, as an international currency - seems seriously reserve compromised.
The fact is that in the monetary tempest, in view of the purely incipient stage reached by the interpenetration of European capital, every monetary crisis touches off the classic reaction of "sacrosanct self-interest" so characteristic of the private property system. Let me quote myself once again, this time from something I wrote in 1968:
"While inflation-so long as it remains moderate- is not incompatible with a more or less normal functioning of monopoly capitalism in the principal imperialist countries, it contains the danger of increasingly disturbing the world exchanges as soon as it provokes a serious crisis in the international monetary system through the inflation of international reserve currencies. This is the stage now making its debut in the history of neocapitalism. The imperialist powers will search for and apply partial remedies. Each of the remedies will reflect, apart from any desire to reform the system itself, the special competitive interests existing at each specific stage. Inflation itself will not be throttled."2
The French capitalists who had already profited from the devaluation of the franc to improve their positions on the foreign market-above all in Germany -are now hoping to widen their outlets again thanks to the fixed parity of the franc. This calculation is shortsighted. The policy of monetary stabilization decided on by the Bonn cabinet, under the pressure of the banks, threatens to show up as a recession in Germany. And a German recession would mean not an expansion but a contraction of French exports.
"Let the Workers Pay"
The whole precarious stabilizing maneuver now in progress— much more precarious now than even in the fall
January
2. Quatrieme
Internationale,
1969, page 34. ("The Crisis of the International Monetary System" in the International Socialist Review, March-April 1969, page 47.)
of 1968 and in 1969 - has one single fundamental aim: to make the workers pay the costs of "the fight against inflation," above all, the American and West German workers. While inflation is the cause and not the consequence of wage demands, the latter are the favorite targets of the "stabilizers." On this point at least, the Nixon administration, the Pompidou regime, Mr. Heath, and Professor Schiller (the West German economics minister] are unanimously agreed: "The unions must moderate their demands."
Since the monetary crisis combines with a serious slowdown in economic growth (three of the major imperialist countries are now in a recession - the U.S.A., Great Britain, and Italyand a fourth, Japan, has just barely avoided one), the margin of maneuver for the "social conciliators" is shrinking singularly.
The result of this narrowing economic leeway has been an open attack on the right to strike in Great Britain and thinly veiled threats of a similar assault in the United States. In Germany, the Social Democrats are going to change their "stance" fundamentally in the coming weeks in an effort to knock "some sense" into the heads of union leaders caught between two fires - the pressures for "moderation" from Bonn and the radicalizing pressures from the rank and file (i.e., the wildcat and warning strikes of the fall of 1969 and 1970).
It is well to remember that everything that happens in the capitalist economy is not the simple result of automatic mechanisms. The economic class struggle is an important factor, as is the revolutionary struggle. The present crisis results not only from dwindling reserves and sharpening internal contradictions in the system. It also reflects the heroic struggle of the Vietnamese popular masses, which has cost imperialism tens of billions of dollars. Likewise, it reflects the revolutionary flareup of May 1968 in France, the "hot autumn" in Italy, the wildcat strikes in Germany and many European countries, and the rise in the combativity of the workers in Great Britain throughout 1970. The monetary crisis is the reflection of an economic and social system whose very foundations are increasingly under attack.
The long period of neocapitalist expansion and "prosperity" is a thing of the past. The thin cows are following the fat ones. And if the fat cows did not prevent May 1968, the years of the thin cows are preparing still other surprises. "Let the workers pay"? But the Western working class is not ready to pay. It is not demoralized. Its combativity is not on the wane. It has suffered no great defeats. The decline of the dollar foreshadows a rise in workers' struggles, including the
American workers. The worsening international monetary crisis is a serious invitation to meet the international speculations of the capitalists with an international workers' struggle.