in capital accumulation (that is, a new bers only too well that it was the simultaneous acceleration of inflation in all the imperialist countries which detonated the present recession by provoking a very serious crisis in the international monetary lapse of the dollar and the Bretton the relatively fixed currency ex- allowing a stable expansion of world trade - were based International capitalism rememsystem. In 1971 this led to the col- sion.
Woods agreements of 1944, on which change rates of the post-war period ment. alist economies.
With currencies floating, and without recourse to sharp devaluation to boost exports, all capitalist countries were forced to apply antiinflationary policies at the same time to keep their exports competitive. Hence the generalisation of the recesThis is why all capitalist governments - social democratic ones as well - have proclaimed 'the struggle against inflation' as the number one goal, tacitly abandoning the myth of the priority of full employEven now the relatively modest priming of internal consumption and the bailing out of firms in difficulty means priming through inflation. Inflation has continued, if at a slightly lower rate, in a situation where material production has fallen 5-10 per cent in most major capitches.
Deficits
Increased public expenditure has caused enormous budget deficits to appear: some $ 70,000 million in the US, $ 35,000 million in West Germany, and $ 20,000 million in Britain. The total for all the imperialist countries is somewhere around $ 160,000 million. Covering these deficits demands more borrowing on the capital markets, driving up longterm interest rates even before the industrial upturn has taken hold.
But somebody has got to reflate some time. The whole world cannot break out of recession with export-led growth, because one country's exports are another imports. One of the biggest fears of big business is that if the present 'upturn' fades out in early 1976, if all countries first bring their inflation rates lower and then feel the need to expand capacity at the same time, then the pressure on resources is bound to push up the rate of inflation again.
It was the last roaring boom which pushed world capitalism into generalised recession. Another one could push it still nearer the abyss.
It is these same attempted beggar-my-neighbour' anti-inflation policies that caused the dramatic 10 per cent drop in the volume of world trade in the first half of 1975. Generally speaking, the atmosphere of recession and sharpened inter-imperialist competition has stimulated a rise of nationalism and economic protectionism in all the imperialist countries.
In the United States unfair competition suits have been issued against importers of automobiles and of European and Japanese steel products, while manufacturers are attacking importers of digital and electronic watBritain itself has already made the first moves to introduce controls (and thereby limitations) of imports In the longer term it is highly unlikely that the capitalist economies will again achieve the unprecedentedly high growth rates of the 1950s and '60s. On the whole all the characteristics of a 'long wave of reduced growth, and even of predominant stagnation, are taking shape What lies ahead, therefore, is an increasingly determined struggle over the rate of exploitation of the working class, the only means capital commands to reverse definitively the long-term tendency of the rate of profit to decline, given the irreversible advance of automation.
Thus, all proportions guarded, the economic atmosphere' is coming close to that which prevailed in the early 1920s. The end of this long cycle of class struggle will either be the victory of the socialist revolution or real catastrophes for the human race: socialism or barbarism a sum equivalent to 57 per cent of all they had borrowed in the entire period 1968-73.
Second, there is even greater pressure on the banking system each time a big client can no longer pay its debts. In the United States the bankruptcy of W.T. Grant cost the system dearly, for this trust had borrowed $ 640 million from the Failures If President Ford had allowed New York city, with its $2,000 mil lion worth of loans from the banks to go bankrupt last autumn it could well have brought down several of New York's major banks with it -this real risk of a collapse of the credit system is why Ford eventually had to step in. British banking is scarcely better off. The collapse of the property market caught the banks at the end of 1974 with loans of £5 billion extended to the property and construction industries - moro than half the banks' commitment to all of British manufacturing, compared with one-fifth in 1970.
This time the banks managed to squeak by. The reserves of the capitalist system in the richest imperialist countries have not yet been exhausted by inflation. They still enable the merry-go-round of 'indebtedness-inflation-greater indebNew recession But by the same token, the recession cannot play the objective role it is supposed to play. The devalorisation of capital remains marginal.
The increase in the rate of profit will be mediocre. The conclusion is clear. This recession will not lead to a powerful boom, but instead to a limited upturn leading rapidly to a new recession