generulised recession, the inevitability of which we have proclaimed since 1969.
HYPOCRISY AND IGNORANCE The experts emphasise that inflation is the cause of the sickness and the dangers which weigh on the international capitalist cconomy. But such a diagnosis is based upon a good measure of bypocrisy, and a good measure of ignorance. First the measure of hypocrisy no economist can be ignorant of the fact that the current boom. Lar from being threatened by inflation, is rather an immediate and direct product of it. Take a look, for example, at what happened in the United States and Great Britain (to take only two examples) during the recession of 1969-71, and at how these two countries were able to get out of this reçession. There was a rapid expansion of the money supply, reaching almost 10'6 six months it the United States and 20% in one year in Britain, without any significant increase in the production of material goods. Inflation as a means of 'overcoming" recession was the open and declared policy of the capitalist governments, the central and private hanks, and the most powerful monopolies in these countries. Without this inflation, the current 'boom" could never have taken And then the measure of ignorance — a permanent inflation that has lasted for more than a quarter century cannot fail, after a certain point, to produce the classical phenomenon of acceleration. To blame this or that technical error", this or that minister, or lay it at the door of The selfishness of the trade unions' or 'infla tionary mentality" is to replace explanation with witchcraft.
HUNT FOR 'REAL VALUES' When there is an abundance of the means of payment, a hunt after real values" becomes inevitable. As long as this is limited to works of art, the impact on economic life remains unimportant. But when goid is drawn into this whirl. wind, the economic effects are rather more serious. (In fact, the free-market price of gold materials, inevitably has an effect on the retail prices of all commodities and on the cost of ting- Intlation. which persisted throughout the 1969-71 recession and was accentuated in order to escape from the recession, is now spiralling upwards, fed by is own effects. Annual increases in consumer prices are going from 3 or 43, 10 6, 8 or even 10%.
This intlationary spiral has a decisive impact on interest rates. As soon as governments try to pull back on the inflation of credit a Betle, The rate of interest rises to exceptionally high levels. The experts gasp: eredit rescriction will strangle the boom. The pundits reply: inflation inevitably produces detlation.
While intlation undoubtedly produces some results on its own account, we should not exaggerate the independence of the credit system from the system of production and sale of goods Inflation does not 'automatically' produce a downturn in the coonomy. It is the wearing out of the forces of expansion within the economy that brings on a recession. By opening and closing the tap of credit and inflation at the right or wrong moment, the ruling class political leaders can increase or reduce the seriousness of a recession a little. They can advance or postpone the time of its appearance. But they can no more ensure a permanent boom than they can prevent a recession breaking out in the long run.
What ties together the credic system and the production system is the force that governs the ebb and flow of the capitalist business cycle: fluctuations in the average rate of profit. The 1969-71 recession was the most serious of the post-war period. Unused productive capacity was widespread. By the same token, once inflation allowed the upswing to begin, growth could be very rupid. The rate of profit went up sharply in the USA and Germany. The accumulation of capital received a powerlul.boost, Then the inevitable resulted: once more excess productive capacity appeared; once again the markets became glutted; once again a decline in the
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