Economy: Three decades of worsening crisis

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Since the end of the period of reconstruction after the Second World War, the capitalist world has continued to slowly, but inexorably, sink into economic crisis.

In the first part of this article we are going to show the reality of this evolution up to the end of the 20th century.

The second part will try to show that capitalism has entered into a new, more serious, phase of economic recession compared to those that preceded it.

The bourgeoisie is not unprepared. At a time when the economic crisis is again ready to undergo a sharp acceleration, our rulers are trying to corral the working class onto a false terrain: to fight against the liberal or market economy, in the case of continental Europe, or against its “worse excesses”, as in the case of the “Anglo-Saxon” economies. This is to consciously hide from the workers the reality that the great director of the capitalist economy and thus of the attacks against the working class is the capitalist state itself.  Within the lines of the European Constitution we can read that states must reform “the excessively restrictive conditions of employment legislation, which affect the dynamic of the labour market” and promote “ diversity in the forms of working contracts, notably regarding hours of work.”

The rejection, or acceptance, of the Constitution will not modify this policy one iota.  The proletariat is thus being asked to forget the latest recessions and also the financial crash of 2001-2002, all the massive attacks, all the deterioration of its conditions of life since the open reappearance of the world economic crisis at the end of the 1960s and especially since the beginning of 2000. The working class is paying a heavy tribute to bankrupt capitalism, leaving aside the massive attack on retired workers and the dismantling of health care. The bourgeoisie is once again cynically trying to convince the proletariat that if it accepts more sacrifices then all will be better tomorrow, living conditions will improve and unemployment will fall. Here again the lies have only one aim: to make the working class accept and pay in misery and exploitation for the catastrophic plunge of capitalism into its own economic crisis.

The crisis of a system

The recessions of 1967, 1970-71, 1974-75, 1991-93 and 2001-2002 were successively longer and more profound, and this was in the context of a constant decline in the rate of average growth of the world economy. The growth of world Gross Domestic Product has also followed this same downward tendency, going from more than 4% in the 1950s to less than 1% at the beginning of 2000. Following the collapse of the economy which hit the world at the end of the 1920s and beginnings of the 1930s, capitalism drew a maximum of lessons. Since then, and especially after the Second World War, capitalism has organised itself in order to try to prevent a sudden collapse of its economy. We thus see a strengthening of the role of the state in all national economies. The development of state capitalism throughout the world has also been key to the militarisation of society and the disciplining of the working class. On top of this, the bourgeoisie provided itself with international organisms such as COMECOM for the old Eastern Bloc and the IMF for the Western Bloc, responsible for limiting any violent jolts in the economy. In the same sense, and unlike the period before the Second World War, the bourgeoisie strengthened the role of the central banks, which now played a direct role in economic policy through control of interests rates and the money supply.

Less and less vigorous recoveries

Despite what the bourgeoisie tells us, the evolution of the economy is slowly but surely in decline. State capitalism can certainly slow down this process but it cannot prevent its inexorable development. Thus, since the 1960s, economic recoveries have been always more limited and periods of recession more profound. The capitalist world is sinking into a crisis. Beyond their particularities, Africa, Central America, the old Russian Bloc and the greater part of Asia have plunged into a growing economic chaos. For some years now the effects of the crisis have hit the United States, Europe and Japan directly. In the United States the rate of growth by decade between 1950-1960 and 1990-99 has gone from 4.11% to 3% and for the same period in Europe from 4.72% to 1.74% (source: OECD). The growth of world Gross Domestic Product per inhabitant from 1961 to 2003 has gone from practically 4% to less than 1%. After the period of reconstruction following the Second World War (the “golden years” for the bourgeoisie) the world economy has progressively taken the road of recession. If this period has been intercut with periods of recovery (though shorter and shorter, nevertheless real), it is quite simply because the world bourgeoisie has resorted to mounting debt and the use of ever-growing budget deficits. The main world power, the US, is the clearest example. It has gone from a budgetary surplus of 2% in 1950 to a budget deficit today approaching 4%. Thus the total debt of the United States, which has increased slowly from the 1950s to the beginning of the 1980s, has, in twenty or so years, undergone a real explosion. It has doubled from fifteen thousand billion dollars to more than thirty thousand billion. The United States has gone from the main financier of the planet to the world’s most indebted country. But it would be totally wrong to think, despite the specificities of the world’s major power, that this tendency doesn’t correspond to the global evolution of the capitalist economy. At the end of the 1990s, Africa reached more than 200 billion dollars of debt, the Middle East also; Eastern Europe’s debt is more than 400 billion dollars; Asia and the Pacific region (including China) more than 600 billion; the same for Latin America (source Etat du monde 1998).

If we take industrial production, the reality of the slowdown of world economic growth since the end of the period of reconstruction is still more marked.

From 1938 to 1973, or in 35 years, industrial production of the developed countries increased 288%. During the following 22 years, its growth reached only 30% (sources OECD).

The slowdown in world industrial production appears here very clearly. The working class is inevitably forced to pay for this reality. If we look at the five most economically developed countries in the world, we can see a particularly striking evolution of unemployment. This has gone from an average of 3.2% from 1948-1952 to 4.9% in 1979-1981, to end up in 1995 at 7.4% (source: OECD). These figures are those of the bourgeoisie and they tend to consciously underestimate this reality for the working class. Further, since 1995, unemployment has only continued to develop over the whole of the planet.

In order to slow down its plunge into crisis, it isn’t enough for the bourgeoisie to provide itself with new institutions at the international level, or to pile up a mind-boggling debt to artificially maintain some life in a saturated world market. It has also been necessary to try to halt the progressive fall in its rate of profit. Capitalists only ever invest in order to obtain a profit on the capital invested. This is what determines its famous rate of profit. From 1960 to 1980 the latter fell from 20% to 14% for Europe, to rise as if by magic to 20% in the United States and to more than 22% in Europe at the end of the 1990s. Should the working class believe in miracles? Two factors could explain this increase: the growth of workplace productivity or the increased austerity inflicted on the workers. But the growth of productivity at work has been eroded by half over this period. It is thus by attacking the living conditions of the working class that the bourgeoisie has been able to restore, for the moment, its rate of profit. The evolution of wages as a percentage of GDP (Gross Domestic Product) in Europe perfectly illustrates this reality. In the years 1970-1980 this rose more than 76% to fall to at least 66%. It is well and truly the aggravation of exploitation and the development of workers’ misery that lie behind the momentary restoration of the rate of profit in the 1990s.

In the second part of this article we will examine more closely the present aggravation of the world economic crisis.

T, 24/8/05.