Brussels
The July issue of Quatrième Internationale carried an editorial dated July 5, 1971, on the worsening crisis of imperialism.1 The following sentences are of particular interest:
"The capitalists will thus follow a different tack. Their response [to a recession that threatens to become general] will be concentrated in two areas. They will try to increase their foreign markets and to boost the rate of profit at the expense of the working class.
"Increasing international markets means expanding East-West trade, with the U.S. joining in the game (relaxing embargoes against the USSR, resuming exports to China). Likewise, it means stepped-up penetration of the markets of semicolonial countries and a new sharpening of interimperialist competition. The attempt to raise the rate of profit at the expense of the working class involves trying to limit or abolish the only substantial right the workers have under the capitalist system, the right of collective bargaining. The means for this are 'incomes policies,' which virtually all tendencies in the international bourgeoisie have begun to demand."
And further on:
"... in order to strengthen the dollar, American imperialism will combine increased protectionism with a slowdown in real capital outflows and a new effort to retool American industry...."
Six weeks later, these forecasts were borne out by the decisions Nixon announced to the world August 15.
The Marxist analysis of the class nature of the American state, of the fundamental nature of the capitalist system, has been confirmed once
The American bourgeoisie deagain.
fends its class interests - not an ideal of freedom. This defense is mounted today not only against the states that have broken out of the imperialist system and against the colonial revolution that threatens to take several more countries along the same road.
It is directed against what is historically the most redoubtable enemy of Wall Street-the American proletariat. It is aimed at shaking up Wall Street's most precious "allies," that is, its most efficient competitors -Japan, Western Germany. "Freedom," including the famous free trade, is swept aside, as is always the case when the system founded on private property, that is, competition and anarchy, is shaken by a serious crisis.
Disintegration of the International Monetary System
For three and a half years we have been witnessing the slow death agony of the international monetary system founded at Bretton Woods under the banner of supremacy of the dollar. This system sought to escape from the dilemma that has confronted the capitalist economy since the beginning of its historic crisis of decline marked by the first world war: either maintenance of the gold standard with more and more catastrophic crises of overproduction; or abandonment of the gold standard and a retreat toward economic nationalism, protectionism, and inconvertible currencies, which signifies not less disastrous consequences for capitalist international trade.
The solution consisted of basing capitalist currencies both on gold and on the dollar, of maintaining stable rates of exchange, and of installing flexible rules, tolerating in reality a permanent inflation, above all whenever a crisis of overproduction impended, in order to avoid a new 1929.
So long as the inflation remained moderate, and the dollar lost its purchasing power at a slower rate than the currencies of the other important imperialist powers, the system functioned to the satisfaction of all the imperialists.
Already at that time, it is true, the arrangement signified a more and more ruinous indebtedness for the semicolonial countries, the big losers at Bretton Woods. But that the "great" should exploit the "small" is the most natural of all things in the capitalist world.
No imperialist complained about the deficit in the U.S. balance of payments in the fifties - and with reason! Without this deficit, the system invented at Bretton Woods would not have been able to function. The capitalist expansion would have died for lack of dollars and gold, that is, of means of international payment.
Things began to turn sour not because of inflation of the dollar - that had been going on uninterruptedly for thirty years. Things began to turn sour when the decline in buying power of the dollar became greater than that of other currencies, when the rest of the world's holdings in dollars expanded out of all proportion to the rapidly diminishing stock of gold held by the U.s.
From then on it was clear that devaluation of the dollar would occur sooner or later. The international bourgeoisie- including a good part of big business in the U.S., whether through the multinational companies directly or through go-betweens- began to ready themselves for this contingency. In plain language, this is called speculating on devaluation of the dollar. And in a market economy, when many capitalists ready themselves for a contingency, they precipitate it with a sure hand.
The inconvertibility of the dollar into gold — a consequence of the disproportion between dollar holdings in the hands of foreigners and the gold reserve at Fort Knox, which shrank to the "minimum strategic reserve" of $10 billion - did not begin on August 15, 1971. It has been the reality since the end of the "gold pool" (end of 1968).
From that time on, the central banks of the big imperialist powers have in reality stopped exchanging dollars for gold. What was a provisional mutual undertaking has now become a definitive rule because of Nixon's unilateral decision.
The real change announced August 15 was thus not the inconvertibility of the dollar, already in force for three years. The real change was the factual devaluation of the dollar, not in relation to gold but in relation to the other currencies of the imperialist world.
Nixon's decision to let the dollar "float" signifies in reality a decision to depreciate the dollar in relation to other currencies. Because once supply and demand is permitted to operate freely on the exchange market, this outcome is inevitable in view of the current state of inflation of the U.S. dollar in relation to the currencies of the principal competitors of the United States.
The irony of history is that in thundering against the "international speculators," Nixon gave in to them all along the line. It was exactly this depreciation that they were prepared for. In affirming that he was out to defend the stability of the dollar, Nixon did exactly the contrary. He acknowledged urbi et orbi' that the dollar has been devaluated. Double talk comes naturally to the American bourgeois politicians just as it does to the gangsters of the star-spangled republic.
In European capitalist circles-beginning with the Gaullists in Francethe devaluation of the dollar is being denounced as a serious blow against trade for Europe and for Japan. It is certain that Nixon's immediate aim is protectionist in nature. It is designed to help American exports and make imports to the United States more difficult.
But these same circles forget that in the capitalist system, money is not only a means of exchange but a means of payment. Dollars serve not only for world trade; they also serve for the export of capital. What American capitalism gains in the "commodities" column, it loses in the "capital" column. From now on, American capitalism will need more dollars to buy a factory in Europe. And a German or Japanese capitalist will be able to buy a factory in the United States with fewer deutsche marks and yen.
That is why American imperialism long resisted the temptation to devaluate. The Gaullists, who have spouted for a long time against the Yankees for buying "our" factories, are decidedly inconsistent in their ideas. Yesterday's complaints are forgotten in exchange for the new complaints. Today, what is involved above all is to protect "our" foreign markets and to sell "our" goods. If not, unemployment will rise in France and along with it the threat of a new May 1968 at the door...
The different reactions of the various imperialist powers is tied in with their particular interests and their respective levels of power. The West German capitalists, who are the strongest, do not fear a new minor revaluation of the deutsche mark (an inevitable consequence of floating exchange). The British, who are the are seeking to profit from weakest, the confusion and carry out a discreet new devaluation of the pound. The Italians, the most threatened sologan
MEANY: "Robin Hood in reverse because it robs from the poor and gives to the rich."
cially, wish above all to avoid any change in the lira.
As for the French capitalists, who benefited from the effects of the devaluation of the franc during the West German boom, they would like to keep their cake while eating it. Their "twotier exchange" means that French exports would profit from a lower exchange rate for the franc, while the movement of French capital would profit from the lower exchange rate of the dollar.
Such a system, possible in a small country for a short time, quickly becomes impractical in a more important imperialist power. It opens the way to all kinds of speculation, gambling on the stock market, illicit trading and outright frauds (but perhaps that is why the new Société du Dix Décembre, which was already up to its neck in the affair of les Halles and the Garantie Foncière, plunged into the new situation with delight; these gentlemen thieves have long knives, particularly when they are inside the government!). Just who is to compel an exporter to repatriate his deutsche marks in a "commodities" column when he can obtain a larger sum of francs in a "capital" column? Just who is to check up on fictitious imports designed to obtain deutsche marks at a good price to be resold at a higher rate of the "free market"?
The fact that after twenty years of expanding international capitalist trade-which, it should be noted, had only by 1965 brought per capita exports back up to the level of 1913- complete anarchy, insecurity, and disorder again reign says a lot about the insoluble historic crisis shaking the system that survives in the West, thanks to the traditional labor leaders! Behind the Monetary Screen
Marx liked to repeat that monetary phenomena were only reflections of the economic life, and whoever sought to explain crises essentially by these phenomena, was mistaking the appearance for the reality. This observation remains as valid as ever.
When the dollar is depreciated, when the international monetary system set up at Bretton Woods goes down, this is above all not because of wicked speculators, of too imprudent creditors, or too prudent bankers (especially in other countries!). It is not because money is "badly managed" or because the advice of Professor Rueff has not been followed, or because one has not gone back to the exalted philosophy of the French peasants and kept one's savings in a sock, or hidden in a washing machine, in the form of gold coins. It is because the economic system as a whole is sick.
The fundamental cause of the inflation is the indebtedness of governments, businesses, and consumers. This indebtedness has been mushrooming since 1940 (that of the governments since 1914). Without this indebtedness and this permanent intlation, expansion, full employment, economic growth have become impossible in a capitalist system in decline. The armaments economy is the basis of state indebtedness. Abnormally swollen credit is the basis of private indebtedness. For thirty years, neocapitalist "prosperity" has ridden ‹ an ocean of credit. Sooner or late waves of inflation were bound to engulf the ship. The collapse of the dollar has shown that the "stabilizers," constructed with such pain, were no onger able to resist the smashing of these ever more powerful waves.
Capitalist prosperity depends on two conditions — a rising rate of profit and an expanding market. The logic of capitalism is such that these conditions coincide only at certain moments. When they coincide temporarily, this in itself creates the conditions for their subsequent separation. The two coincide momentarily during the course of each economic cycle and periodically on a more general and durable scale. Since 1966, we have entered a long period in which the coinciding of the two is being undermined more and more.
To emerge from the recession that has been hitting the American economy for the past two years, Nixon requested Congress to give a tax credit on investments and to repeal an excise tax on automobiles. The industrialists and bankers, as well as not a few "liberal" politicians, applauded. What's good for profits is good for the United States.
Who would dare think otherwise in the paradise of "free enterprise"?
Right-wing trade-union figures like George Meany protested under pressure from the ranks. What about the freeze on dividends and undistributed profits as a counterweight to the freeze on wages? Where are the guarantees against rises in prices? Where is the compensation for past losses in buying power already sustained by the wage workers?
These protests signify that the American workers are going to battle harder for their standard of living, threatened by inflation, taxes, the consequences of the war in Vietnam, and the repercussions that can be counted on as the American bosses seek to answer international competition. They signify longer and harder strikes. But not only that. They involve above all a new contraction of the domestic American market (the reductions in public expenditures and the increased cost of imported products both serve to reduce overall buying power already under full retraction).
How is unemployment to be wiped out under these conditions? Moreover, n't the bosses at bottom want to maintain unemployment in order to hold down wages? But under these conditions, how can the economy be September 6, 1971
genuinely started up again (and, in passing, assure Nixon's reelection next year)?
The European capitalists are not without guile. They point their fingers at American protectionism. They have become the attorneys of free trade. But at the least economic shock, they too will come out foursquare for sacred self-interest. They will defend their foreign outlets by devaluations one after the other (French franc, pound sterling) or by stabilization measures (deutsche mark) which will end up by provoking unemployment either at home or among neighboring countries.
With Wall Street playing some of its trump cards, the reaction in the Common Market was every man for himself to such a degree that the European bourgeoisie could not lay out any collective defense against American protectionism. Big business may well end up by compelling its politicians to act in the sense of closer European "solidarity" out of fear that Uncle Sam will export his unemployment to the old continent. But how to divide the risks, the losses, and the profits of such solidarity? This is the subject of the current bargaining.
Under these conditions, it is excluded that the inflation will stop. A recession that threatens to become general, increasing unemployment, excess capacity hitting a half dozen key industries cannot be combined with a halt to inflation except at the price of a new 1929, a price that no imperialist power is ready to pay. But persistent inflation joined to exacerbated international competition signifies an erosion of the international monetary system that can no longer be averted. This means that an interimperialist agreement on a sufficient new international reserve money is impossible. And that makes certain the threat that the growth of international trade will be slowed down. The conclusion is accentuation of the reversal of the 1945- 65 expansionist tendency.
The violent perturbation of the dollar means more than devaluation of a symbol and a monetary system. The international capitalist system as a whole has emerged from a long cycle of expansion to begin a long cycle of much slower growth and many more crises.
In reality, since the German recession of 1966-67, the international capitalist economy has not had a single year of general prosperity. There has not been a single year without a recession or monetary crisis somewhere. The merry-go-round has only begun. The long cycles last on an average twenty to twenty-five years.
If the workers so desire, if they provide themselves with a revolutionary leadership that is up to the height of the historic task, this cycle can give rise to the victory of socialism in the West. If their struggles end in defeats because of lack of an adequate leadership, then capitalism will seek to resolve its structural crisis on their flesh and bones, as it did during the thirties and forties. The crisis that has begun is thus both a promise and a warning.
Notes
1. A translation of the editorial appears elsewhere in this issue of Intercontinental Press.
2. "To the city (Rome) and to the world." The words with which the pope formerly accompanied benedictions pronounced on the Catholic world during certain solemn church festivals.