April 30--The euphoria in the ruling circles of finance capital which reached dizzying heights just a few weeks ago following the U.S. military destruction of Iraq has now given way to a mood of deep pessimism. Once again the whole world can see that the unbridled expansion of militarism cannot overcome capitalist economic decline.
Instead of the military victory bringing in immediate dollars and cents, the U.S. has to expend billions of dollars to reconstruct the area. Zbigniew Brzezinski, former national security adviser in the Carter administration and protege of the Rockefellers, says the reconstruction calls for outlays on the scale of a new Marshall Plan.
The Marshall Plan, under which the U.S. put $20 billion into Europe after World War II, was explained at the time as a humanitarian measure to assist the people in the former Axis as well as Allied countries. But it was really conceived as a means of snuffing out the rising revolutionary struggles which had explosive potential all over capitalist Europe, not to speak of Asia.
It was also an attempt to set up a formidable barrier, a new cordon sanitaire, to isolate the Soviet Union and the East European revolutionary movements of the time.
But there was a big difference between then and now. At that time the U.S. was the biggest creditor nation in the world. Today it is the world's biggest debtor nation.
Costs exceed benefits
So when it comes to rebuilding the war-torn Gulf area, the U.S. Treasury has to spend billions of dollars on top of all the open and hidden costs of the war itself. A choice few giant multinational corporations are getting extortionate contracts to reconstruct Kuwait, but the U.S. economy as a whole is reeling.
For U.S. finance capital to be able to translate into real profits the acquisition (robbery) of the vast oil fields of the Arabian peninsula, including the now-burning Kuwaiti oil fields, oil would have to be pumped and exported to the mills, mines and factories of the imperialist world and elsewhere. That would increase the gross national product in the leading capitalist countries, especially the U.S. But it's not happening.
Moreover, the establishment by the U.S. military of camps in northern Iraq has added to the cost. And the Turkish government, a pliant tool of U.S. imperialism, is anxiously awaiting some form of payment for the havoc the U.S. has caused by dispersing the Kurds.
Everywhere there are greater expenditures but no sign that the destruction has politically improved Washington's position so far as the masses of the people on the Arabian peninsula are concerned. On the contrary, their resentment is reaching explosive levels. True, a revolutionary overturn by the masses did not materialize in Egypt, Saudi Arabia and other client states that abetted the U.S. invasion. But neither have these countries become transformed into bastions of political support for U.S. imperialism.
The underlying disease
What is the fundamental cause of capitalism's inability to resume growth, of its relentless slide into economic decline?
It is endemic capitalist overproduction. The crisis began even before the start of hostilities against Iraq; the war was supposed to halt it, but instead has actually accelerated the decline.
This can be seen most clearly in the case of oil production from the OPEC countries. Oil production was disrupted in the Middle East as a whole and virtually halted in Iraq and Kuwait during the war. It is understandable, of course, that oil production would be a casualty of the war.
But now the war is over. After a brief rise for barely a month, says an oil analyst cited in the Wall Street Journal (April 29), "Oil production by the Organization of Petroleum Exporting Countries is falling for the first time since last August. . . . There is definitely a drop in supplies from OPEC, at least 600,000 barrels a day."
So, notwithstanding the disruption caused by the war, we have the familiar phenomenon of overproduction. This is in spite of the fact that OPEC attempted to limit production. Some members have broken ranks and continue to produce beyond their quotas.
To this should be added another factor showing the significance of capitalist overproduction from the viewpoint of the struggle for immediate superprofits.
One would think that new drilling and exploration would be halted, but that is not the case. For instance, Triton Energy, a Dallas-based oil company in partnership with British Petroleum, has announced that drilling in the foothills of the Andes mountains in Colombia has unearthed a "prospective multi-billion barrel discovery."
This is only one example of the widespread hunt for oil at a time of glut on the world market. Texas and Louisiana are now well on the road to overproduction, notwithstanding the devastating collapse of the Southwest oil boom just a few years ago.
This is precisely the fundamental malady of capitalist production: not scarcity, but super-abundance.
There is no need to show that auto production, one of the principal indices of the capitalist crisis, is falling. Both General Motors and Ford posted heavy losses in the first quarter of this year. Housing starts are also falling.
The Federal Reserve Board moved at the end of April to bring interest rates down by cutting the rate it charges on loans to banks. This is a concealed form of inflation. All this adds up to a classical, more destructive phase in the developing capitalist economic crisis.
U.S. `quiet revolution'
To counteract all this bad news, a bright spot has now been discovered in the capitalist economy: the emergence of U.S. industry as a low-cost competitor on the world arena. If this were so, it would indeed constitute a turning point for U.S. capitalism and a return to its status as the world's leading engine of economic growth.
In a two-column front-page spread, the New York Times reported (April 21) that a "quiet revolution" has taken place. The U.S. has become the world's foremost low-cost manufacturer, beating out Canada, Europe and Japan in many industries. Says the Times:
"American factories now ship steel to Seoul, transistors to Tokyo, cars to Cologne and bicycle parts to Bologna. Exports ranging from beer and boards to carpets and chips have surged by 76% since 1986. At home, domestically made machine tools, electronics gear and cars . . . are muscling aside imports. As a result, foreign trade is likely to power the economy for years."
The paper quotes C. Fred Bergsten, director of the Institute for International Economics in Washington, who says, "Export-led growth may be the only feasible strategy for the U.S." It goes on to compare the U.S. to 19th century England.
Is this, then, the economic basis for the U.S., the world military leader, to exercise its Pax Americana in the 21st century?
Will the U.S. assume the mantle Britain wore more than a century ago, when it led the world in exports? But England at that time enjoyed a wave of capitalist prosperity. Is that what's happening in the U.S. now?
An attempt to compare the U.S. today to Britain in the years following the Chartist labor movement does not hold up. Britain's lead over France and Germany was powered by its ability to be the low-cost producer and exporter of cheap commodities, as Marx put it, but the cycle of capitalist development after the 1840s was accompanied by a material increase in the living standards of the masses.
This was objectively responsible for dissolving the revolutionary momentum of the Chartist movement. At the same time, however, the effort was characterized by capitalist labor reforms and benefits that came from the repeal of the Corn Laws. All this helped raise the standard of living of the masses. Of course, the gains didn't come to the workers automatically; they had to struggle for them. But there were gains. And they continued, at least up until the First World War.
Furthermore, the entire epoch following the 1848 revolutions was for Europe a period of so-called peaceful growth and development of the capitalist system, frequently alluded to as its progressive, competitive stage as distinguished from its later decadent, monopoly stage.
That epoch resulted in continent-wide gains for the workers. So while the revolutionary momentum of the 1840s was dissolved, labor gains were made, opportunism grew, and a labor aristocracy took root.
While the growth of militarism characterized the so-called peaceful growth of capitalism in pre-World War I days, it was not the fundamental engine of economic growth. This distinguishes it from the contemporary era. It was also a period when world currencies were stable and readily convertible into gold upon demand.
How does that compare with the U.S. today?
U.S. workers squeezed
The increase in U.S. exports is primarily due to the downsizing of the workforce, to cutbacks, layoffs and speedup, and only minimally to increases in labor productivity resulting from technological innovation. The Times story itself has to admit that whereas in the 1970s wages in the U.S. were higher than in Germany and Japan, now they are lower. Also, the purchasing power and standard of living of workers in this country has been cut more severely by inflation than in Germany and Japan.
This is what the Times calls a "quiet revolution."
The scientific-technological revolution has not benefited the workers. High tech has brought the workers low wages, as we showed in our book High Tech, Low Pay (New York: WW Publishers, 1986). The latest statistics by the government confirm this, as does the presentation by the Times.
Furthermore, neither the U.S. lead in low-cost exports, nor the military intervention in Iraq, has reversed the downward trend in the economy as a whole. It still remains depressed.
The recession that started before the war buildup and continues to this day comes from capitalist overproduction. It is seen most clearly in the plight of the many cities undergoing an economic crisis that will not go away even with massive budget cuts at the expense of students, city workers, and the masses.
Even such an enormous development as the collapse of the Soviet economy and the withdrawal of the USSR as an anti-imperialist force in the Middle East has not caused the kind of change that the U.S. expected.
All this shows the helplessness of U.S. imperialism in the face of its endemic problem: the impossibility of coordinating a world capitalist economy. The productive forces are running wildly upward while the living standards of the masses are shrinking.
Capital accumulation, said Marx, is the law of life of capitalism. But it simultaneously undercuts the very basis for its existence by creating havoc, chaos and destitution, which will ultimately undo the system.
What is the fundamental trend? What has been in evidence for more than half a century, emerging again and again no matter how deeply it is covered up? It is that military expansion not only cannot halt economic decline but actually accelerates it after each brief period of huge military explosions.
As far as the workers are concerned, the epoch of so-called progressive capitalism was characterized above all by the stupendous growth and development of powerful trade unions that became the bulwark of resistance to capitalist exploitation and oppression. Today the Times's "quiet revolution" is accompanied by a veritable counterrevolution in labor relations whose magnitude is yet to be assessed. Its severity can be seen in the sanctioning by the U.S. government, its courts and legislators of strike-breaking and scab-herding under such euphemisms as replacement workers.
This counterrevolution is accompanied by the most virulent racism, and has raised the issue of national oppression to the very top of the priorities of the working class movement.
It is the very severity of the repression against labor in general and the oppressed nationalities in particular which lays the basis for the developing resurgence of the working class movement. As history has shown, it's the whip of the counter-revolution that urges the revolution on.