Where is the economic crisis? Oil prices fall, The dollar falls, The recession looms
The text which follows is composed of extracts from the section on the economic crisis of the report on the international situation to the 6th Congress of the ICC. This report was written in mid-1985; the most recent figures it contains thus date from then. However, the analyses and orientations which it defends have been amply confirmed since that time.
In the last few months, the world market has suffered a number of jolts:
-- The fall of the dollar has accelerated and one year after reaching records heights (10.61 Francs on 28.2. ‘85), King dollar has now gone back to its October I977 level (6.19 Francs and 2.20 DM on 28.2. ‘86);
-- Since the beginning of 1986 the price of oil has plunged downwards, the price of a barrel going from $28 to $14, is a reduction by half in the price of black gold;
-- The prices of raw materials in general have fallen and since autumn the London Metal Exchange has been shaken by the collapse in tin prices, which went down in 24.10. 85 without recovering since;
-- Stock exchange speculation has become increasingly acute and everywhere indices have risen: New York, London, Paris, Tokyo, etc ... but this situation is fragile and in January the New York stock exchange sounded a serious alarm when the Dow Jones index went through its most marked downward trend since Black Thursday of 1929.
This list, which could be extended, illustrates the increasingly powerful ravages which the crisis of generalised overproduction is bringing to the world economy; it, expresses the acceleration of the crisis and the growing instability of the world market.
But despite all this, the ruling class keeps telling us that ‘all is well!': politicians of all stripes arc still promising that things will get better tomorrow, and the technocrats try to reassure us that they're in control of the situation. The workers can rest easy: despite the record-breaking levels of unemployment in Europe, despite the poverty spreading over the world, we shouldn't worry because our governments have got the situation in hand!
1n fact, the destabilization of the world economy is producing a growing anxiety, and the empty speeches of the bourgeoisie are no more than a litany with which it tries to convince itself. The fall in the dollar is presented as a way of ‘reviving' the world economy, the fall in oil prices as no more than a ‘hitch'. The reality, however, is much more disturbing, because behind all this the recession is looming up. It's this perspective, whose consequences no one in the ruling class is able to calculate, which is giving rise to such anxiety in the bourgeoisie.
The fall of the dollar after the first meeting of the Group of Five (USA, Japan, Germany, Britain, France) might have given the impression that the great powers have a perfect mastery of currency exchanges. In fact this fall expressed an imperious necessity for the American economy ‑ the need to regain competivity on the world market. It expressed the failure and abandonment of the Reagan government's policy of ‘recovery'. The bourgeoisie's mastery is capable only of provisionally limiting the effects of the crisis. It may be able to slow down the deterioration of the world economy - but it can't stop it. The decline goes on ineluctably.
The consequences of the decline of the dollar are catastrophic for Europe and Japan who are seeing their own competivity being undermined and are facing the specter of recession. In the face of such a situation the second meeting of the Group of Five had the aim of posing the need for a concerted reduction in interest rates in order to relaunch production and domestic markets. This meeting was presented as a failure, because a too-strong and rapid reduction in the American rate of interest would have been too risky for the dollar, resulting in:
-- a crisis of confidence among speculators all over the world
-- an accelerated revival of inflation.
However, it's certainly no accident that right after this meeting there was a brutal fall in oil prices. This fall isn't in itself decided by the bourgeoisie: it is first and foremost the expression of the crisis of overproduction. However, it comes at a moment when it can give a shot of oxygen to the most developed countries. Not only does it make it possible to lower inflation, but above all, it makes it possible to reduce by half the first import of the main developed countries, to make substantial, savings, especially in Europe and Japan. Here are the funds to finance a mini-recovery!
The bourgeoisie of the Western bloc has had a conjunctural interest in accelerating the fall of oil prices. But this ‘policy' expresses the fact that; the bourgeoisie's margin for maneuver is shrinking all the time, since it is now reduced to such expedients to gain a few months respite. In fact, the fall in oil prices signifies a further contraction of the world market, which will be expressed in a new fall in trade, and thus a fall in the exports of the industrial countries, and thus, in turn, of their production. In other words, the recession.
Whatever the reasoning of capitalist propaganda, however much the bourgeoisie maneuver, the crisis is there, it's becoming more and more acute, and all the so-called economic successes only express the growing incapacity of the ruling class to cope with it. Irresistibly, the recession is on the horizon, and the present shivers on the world market herald the future storms which await it.
JJ 23 February, 1986