TEN YEARS ago they couldn't happen again. the past. Marx was a has-been with nothing to say about today's conditions.
Nobel Prize 'By means of appropriately monetary and fiscal enterprise system can avoid the excesses of boom and slump and can look forward to healthy progressive growth.' No one believes this now.
Two weeks ago, the Guardian carried a report from ITEM, a group of economists using the Treasury's own computer model. It forecast an unemployment level of 2.5 million by mid-1981, and double figure inflation until 1982.
constered outlook looked bleak enough. But we now know that the situation in the first half of 1979 was already worse than we then slump has begun.' The first steps back to the 1930s were taken in the slump of 1974. This is what took place then and in the following years:
*Mass unemployment is back. It rose to 17m in the West, and has never dropped below 15m since 1974.
*Permanent surplus capacity is rising. millions starving in the Third World, over a third of industry in the USA and the UK lies idle.
*The recession hit the whole world economy. Even in miracle' Japan production fell 20 per cent in 1974.
*The imperialists are falling out. America is no longer trusted as a world banker what les behind the collapse of the dollar and the flight to gold. Each national capital now tries to solve its problems at the expense of the others. Summit The ITEM economists summit (in 1979) hardly co-ordinated reflation or balance of pavments strategies... international economic wartare which the world has not seen since the 1920s and 1930s.' Have Keynesian policies stopped working? The fact is they never did.
CLUl wal. counter-revolution; backed technological revolution.
They were used to 'manage' the boom that resulted. But they did not cause it.
Now the boom is over. sinking. The world monetary system is in ruins. Production, trade, and investment are faltering or stagnant. These problems cannot be overcome Socialist Challenge 1 November 1979 were still saying it Slumps were a thing of winner Paul Samuelson wrote:
reinforcing policies, our mixed social peace.
"Four months aco.. the supposed.. The this is wrote: "The Tokyo bothered to discuss The result has been an outbreak of They followed a fascism and up by Chrysler, Profit are another dose of the '30s.
everything the same.
police de let emmense the vester depth governments printed $175 billion ten way our or me recession. stopped a crisis but changed its form.
Capitalism needs slumps. inefficient capital. They bring share prices into line with real assets and they restore profit rates. State intervention blocked this process to buy Chart IX Rate of return on capital (profitability) Post as rest cost of cafete * Bush of Enchane Guattery Bubetin Decerbor T978, 0,54 result, Tementol overvalued capital has built up. For example, the third largest US corporation, only kept alive by giant transtusions trom int government, and its profits run at only 1.5 per cent of turnover.
Furthermore, credit and debt have built up to a fantastic degree. By 1974 private debt in the US stood at $2 thousand billion - more than 1.5 Is l am production.
for the present.
Keynesian Keynesian Western financed by government and bought This has not Walker They shake out the mark.
another 'Great Crash' Estice 1ax Switched and that come and because it's not true.
prizewinner, Milton Friedman.
capitalists do intervention restore profitability by from the middle of the crisis.
backlog health services and keep these resources The capitalist policies fuel this. They borrowing, adding Suber Walker cent on be actor the that the government is too frightened to allow a collapse and will therefore bail them out if they overstep But putting off the day of reckoning only increases the final bill. There is an explosive risk of a world-shattering chain of bankruptcies -If a giant like Chrysler goes down, dragging its bankers with it, no one's credit would be safe.
There is a price that has to be paid now for every new dose of Keynesianism - inflation. The less debts are backed by real assets, the higher what lies behind the double-digit figures of the last decade, now eise coura mulation be snoolle up after four years of working class restraint?
Karl Brunner puts it bluntly: 'If we want to eliminate inflation there will be a price to pay price is unemployment... And don't me there's another way out This is why leading capitalists have switched to the 'monetarist' ideas of the 1976 Nobel But monetarism is not a real alternative. The dare abandon because of the catastrophe that this would lead to. They want to shifting income. from workers to capitalists. The welfare state is being dismantled so that the money which finances social services can line capitalist pockets and bail out ailing giants. Thus Chrysler received £37m last Labour government in the This is a political attack. It isn't inevitable Our economy does have the resources to house the needy, educate the youth, give us all decent capitalism that is at fault because it cannot use There is a way out, Mr Brunner. It's called socialist revolution. Last time round both the capitalists and our own leaders chose the horrors of slump, fascism and war, rather than accepi this way out. The new generation has to see that the bankers and the rest don't get away with it again — there may not be a next time. are % 1970 The U.S. dollar Effective pre-June 1971 1972 1973
res of idged going of * WEL which dl the € '21s were they invested. *inck i rose was involved in it for Monopoly:
hares the •d in himselt on a 20 point margin.
teded accumulated savings into a few shares.
1g the being trusts were in operation if the WORLD'S HIGHEST STANDARD OF LA the loans were assured of a profit on the money Another observer suggested the whole nation this real life playing of 'The rich man's chauffeur drives with his ears laid back in catch the news of the impending move in Bethlehem Steel: he held 50 shares The window cleaner at the broker's office paused to watch the licker, for he was thinking of converting his The window cleaner may not have been ton skilled in kpowing where to invest but that did not matter. By 1928 an estimated 182 investment in which supposed linancial geniuses would invest the money of others. The system grew and grew; investment And then came the Thursday', 24 October 1929, 12 million shares changed hands in the rush to sell. Inevitably prices fell. The capitalist giants who had profited so much from it all made one last effort intervene. A representative of one of the most famous, John P Morgan boughi shares on the floor of the stock exchange in an attempt to boost contidence A few ofber bankers followed sun 29 October the pleaded, 'heed the words of America's greatest bankers'.
It was to no avail. Within a couple of weeks share prices had dropped by 50 per cent. The decline continued and three years later the shares were a sixth of what they were in September 1929.
For the American people people elsewhere, for the US was the lynchpin of the world capitalist system — the promise of Utopia turned to depression, mass unemployment and in some instances fascism.
In fact the ordinary people never shared in the boom in the first place. The image of the window cleaner profiting from the stock market was a figment of the imagination. 1929 only one and a half million people had any dealing with the stock market. population of 120 million. The vast majority of the American people suffered consequences of the crash of 1929 but very few of them benefitted from the orgy of speculative profit which preceded it.
In that there is a clue to the crash. historians now agree that sooner or laler the boom was bound to collapse and that the higher crash. On 'black Wall Street Journal - and indeed for By the summer of That out of a greatly from the All are largely irrelevant; if it