2: Relative vs. Absolute Decline of the Capitalist Economy

There is no better way to distort and mutilate a fundamental truth than to put it in a false historical perspective.

Take, for instance, the decline of the U.S. capitalist position in the world market. Its decline has been steadily accelerating since the early 1970s and has been widely publicized, especially in the journals of big business and finance.

Of late, however, the publicity given to the decline has taken a quantum jump as a result of the sharp and precipitous drop of the U.S. automobile and steel industries, which is the effect of the new economic crisis.

The capitalist press has begun to pull out all stops in what amounts to an ideological offensive by the ruling class to convince the American people that it is necessary for them to sacrifice some of the fundamental gains that they have made in decades of struggle in order to reverse the crumbling position of American finance capital in the world market. To do so however it has begun to falsify some of the basic facts regarding the relative character of the decline of the U.S. position in the world struggle vis-à-vis its imperialist trading partners.

Where it is not obviously falsifying the facts it is so exaggerating them that it makes little difference in the end.

POSITION OF JAPAN'S AEROSPACE INDUSTRY

Take, for instance, the Wall Street Journal article of June 24, 1980. It purports to show that the Japanese aerospace industry 1980. It purports to show that the Japanese aerospace industry is moving so rapidly into the world export market that it is just about ready to "take off."

"Even as Japan takes over world leadership in vehicle output this year," says the Wall Street Journal, "its industrialists are eyeing other fields to conquer. Now it appears that the Japanese aerospace industry is preparing for takeoff."

But what is the actual status of this Japanese industry today? Compared to the U.S., it is downright miniscule. The Journal admits that Japan's total output in aerospace for 1979 amounts to only $1.3 billion. This compares with U.S. sales for the same year of $24.5 billion, almost 20 times as much.

Moreover, the total Japanese employment force in aerospace is a mere 35,000 compared to 1 million in the U.S. Nevertheless, the Journal concludes its article by quoting a U.S. aerospace expert. "If someone is going to compete with Japan in the aerospace industry he had better be prepared."

This is the kind of polished imperialist propaganda which is calculated to raise the level of chauvinism in this country and to spread it wide and deep until it saturates the entire population.

If one were to assume that the Journal article on the Japanese aerospace industry is an isolated example, the June 30, 1980, issue of Business Week is a virtual blockbuster. It devotes almost 20 solid pages, including figures and charts, to sound the alarm, as though the entire U.S. capitalist establishment had suddenly become a besieged fortress in danger of collapse as a result of the aggressiveness of its imperialist rivals which has resulted in a loss by U.S. industry of its competitiveness in world markets.

The decline of U.S. industry in terms of sales is not to be contested. It is true, for instance, that in the 1960s U.S. industry accounted for 95.9% of sales in the domestic market, lost some ground in the 1970s, at which time it had 82.8%, and by 1979 it had only 79% of the U.S. market.

By the same token, U.S. exports of motor vehicles in 1962 were 22.6% of the world total. They shrank to 17.5% in 1970 and fell to 13.9% in 1979. (Figures from Business Week .)

Business Week, however, does not merely single out the auto industry, but goes on to show the decline in steel, apparel, electrical components, farm machinery, consumer electronics, footwear, food processing machinery, all the way down to calculating and adding machines. Again these figures are not to be contested, nor is it to be doubted that the figures Business Week gives for the decline of the U.S. market share of exports -- aircraft, motor vehicles, organic chemicals, telecommunications, and so on -- are as valid as any that can be obtained from capitalist sources.

FALSE HISTORICAL PERSPECTIVE

It is the context in which Business Week puts these figures which presents a false historical perspective. In the first place, the impression is conveyed not that this is a relative decline of the U.S. share of the capitalist world gross product, but rather that this is, an absolute decline of the U.S. gross national product in relation to the capitalist gross world product.

Indeed the amount of automobile production in the U.S. had been increasing until the outbreak of the current capitalist crisis Technological devices and inventions have been increasing on the whole and the enormous productive capacity of the U.S. industrial machine has not declined, although as a result of normal wear and tear and considerable neglect there has been a considerable amount of obsolescence.

Nevertheless, almost all of industry can today produce as much if not more than it did yesterday. It is only when one views the vast industrial productive apparatus of the U.S. from the vantage point of the ferocious capitalist competition with its capitalist rivals, principally Japan, West Germany, and to a lesser extent Britain and France and some of the smaller European capitalist countries, that one can see clearly the relative decline of U.S. industry.

This point can perhaps be easily clarified if one takes into consideration the recent meeting of the seven leading capitalist countries in Venice, Italy. There, these capitalist countries, along with the U.S., concluded what they call an economic summit meeting with a widely heralded commitment to develop sufficient alternative energy sources from coal, nuclear power, and synthetic fuel intended to save them as much as 20 million barrels of oil a day by 1990 and thus cushion them from what they call "being a hostage to the oil exporting countries."

Putting aside temporarily the question of OPEC, this plan or commitment by the seven capitalist countries may be achievable and practical as well as beneficial for the people in the countries involved, provided proper safety and environmental factors are taken into account. However, this is not an agreement by a cooperative commonwealth of countries based on the production of goods for the satisfaction of human needs; it is a loose coalition of predatory, imperialist competitors. So what appears to be a cooperative, friendly agreement is in reality a cover for intense capitalist competition.

In this competitive race it is to be noted that Japan and France have neither coal, gas, nor oil. And neither do some of the smaller European countries. West Germany has coal but no gas or oil. The U.S. has a relative abundance of coal, gas, and oil and it predominates in the so-called energy field as a result of the monopoly exerted by the omnipotent multi-national oil companies. It predominates furthermore because of its military sway over the imperialist allies and of course over the oppressed countries banded together in OPEC.

FALSE REASONS FOR SPIRALING INFLATION

"In the 1970s," says Business Week ,"the U.S. lost 23% of its share of the world market, compared with a 16% decline in the 1960s. U.S. manufacturers' share of the domestic market fell more in the most recent decade than earlier. The losses in the '70s are particularly telling because they came in the wake of a 40% depreciation in the value of the dollar which made U.S. exports cheaper and foreign imports more expensive. The decline of the U.S. position in the '70s alone amounted to some $125 billion in lost production and a loss of at least two million industrial jobs." (Our emphasis.)

It is a pity that Business Week does not explain why the ruling class in the U.S. at the time was practically unanimous in hailing the depreciation of the dollar as a weapon in the struggle against its capitalist rivals in the world market. Nor does it explain the havoc which the depreciation of the dollar ultimately caused in the form of rising prices in the U.S.

It would have been very apropos in the light of the statistics that Business Week crams into its analysis to also show how, by keeping out foreign imports, U.S. manufacturers were enabled to jack up the prices of the various manufactured commodities sky-high Therein lies one of the hidden causes of the deep-seated inflation which is still spiraling. Instead of the false thesis of a decline in productivity, for which the workers are blamed, it is the shutting out of foreign competition which enabled American manufacturers to consistently raise their prices higher and higher over a decade and which is one of the principal causes of the inflationary spiral.

A detailed analysis of how these prices consistently rose industry by industry as well as company by company would have been most illuminating. This, however, would destroy some of the false causes presented by Business Week for the economic decline, such as the "productivity lag" or the "attitudes of American workers."

RELATIVE CHARACTER OF U.S. INDUSTRIAL DECLINE

What has to be understood very clearly in talking about the decline of U.S. industrial power is its relative character -- that is, as it relates to capitalist competition, to the existence of giant monopolies, transnational conglomerates, and vast corporate enterprises, all of which are concerned with producing for a capitalist market in order to obtain huge super-profits.

If, on the other hand, we view the truly vast industrial apparatus of the U.S. from the vantage point of its general utility, of its capacity for useful production for human need, the relative decline of the U.S. share of the world's total production has no significance. The decline has significance only so long as this entire vast and incredibly productive machine is geared to predatory trade wars against its equally predatory imperialist rivals.

Of course, given the cooperative socialist perspective, given a plan to refashion and restructure U.S. industry in order to revitalize the great metropolitan cities of the U.S. and to cleanse the environment of the toxic hazards made inevitable by the utterly chaotic and unplanned character of capitalist competition and production for profit, a certain reindustrialization of some of the older industries of the U.S. would become necessary.

But if it is done on a planned and orderly basis it could not possibly make necessary severe dislocations and the consequent unemployment of millions of workers who are the most vital resource that the country has.

What Business Week has done with its 20-page analysis of the decline of the U.S. position in world economic affairs is to present a completely one-sided view geared specifically to evoke a herculean effort to recoup the vast super-profits which it claims the U.S. ruling class has lost as a result of the relative decline of its imperialist share of the world capitalist market.

Business Week proposes a vast reindustrialization plan to overtake the competitive edge that rivals of the U.S. have in certain industries at the present time.

It is of supreme importance for the vanguard of the American working class to clarify what the industrial decline of the U.S. is all about and not, in the confusion, fall prey to assuming the ideological standpoint of the ruling class, particularly as it pertains to both Japan and West Germany.

NOT RECENT PHENOMENON

The position of Business Week is that the industrial decline of the U.S. is a recent phenomenon, but it is not. What has to be borne in mind is that both Japan and Germany have been capitalist rivals of the U.S. for the better part of the twentieth century. This was also the case with Britain as well as France.

Imperialist competition was the cause of the first imperialist war which caused so much destruction in Europe and in other parts of the world and took 20 million lives. There is scarcely a serious capitalist historian who would dare to deny that the fundamental cause of the First World War was basically the economic competition for capitalist markets and raw materials of which the current U.S. struggle against Japan and West Germany is merely an updated, space-age version.

The basic motivation for the U.S. struggle against both Japan and Germany in the early thirties was not just to defeat Hitler and Tojo but to break the back of German and Japanese competition against the U.S. and its allies. Having defeated both Germany and Japan, U.S. imperialism and its allies found themselves face to face with an invincible socialist fortress in the USSR.

Rather than cripple West German and Japanese industry to maintain its world economic and military supremacy, the U.S. encouraged and promoted their industrial rehabilitation in order to use them in the struggle against the USSR, other socialist countries and the world national liberation movements.

West German and Japanese imperialism utilized the preoccupation of the U.S. in its attempt to subjugate first Korea and then Viet Nam over a protracted period to strengthen their position and modernize their industrial apparatus. The U.S. first welcomed this as a help in its worldwide struggle against the emerging national liberation struggle and against the socialist countries.

Having helped West Germany and Japan to become its competitive rivals, U.S. imperialism now seeks to blame the American workers in particular and the rising expectations of social and economic gains of the mass of people in general for its own failures.

MILITARY DRAINS RESEARCH AND DEVELOPMENT

Somewhere tucked away in the middle of its analysis, the Business Week opus ruefully admits that "foreign competitors of the U.S. have been devoting increasing shares of their gross national products to research and development. Germany and Japan, for example, have both increased their share of their GNP that is applied to research, and are edging up on the U.S." And why? Those nations allocate almost none of their research and development funds to defense spending. Indeed that is one of the most significant factors that accounts for the decline of the U.S. share of the world market.

"In the fiscal 1981 budget," says Business Week ,"defense accounts for some 17 billion in research and development -- about 45% of the total federal research spending."

U.S. defense-related research probably amounts to much more, but Business Week's own figures should demonstrate what a tremendous diversion this is of skill, talent, technology, and general know-how into nonproductive sources.

Yet Business Week decided in this lengthy analysis to completely omit any mention at all of the magnitude of U.S. defense expenditures which admittedly will run to a trillion dollars by 1985 and what an insurmountable problem that is to what is purported to be a reindustrialization of the basic industrial structure of the U.S.

The Business Week opus is more like an exhortatory manifesto of the bourgeoisie to reindustrialize on the backs of the workers than it is a dispassionate analysis of U.S. finance capital's crumbling situation.

In advertisements in all the leading capitalist papers, Business Week advertised its issue for reindustrialization with the challenging title -- "Change or die." Among the many proposals that Business Week offered, there is really one that they are seriously promoting. And what is that? It is a change in the "new attitudes" which Business Week says account for much of the decline of the capitalist economy.

And what are these "new attitudes"? They are, according to Business Week , that the U.S. economy could or should "support an ever-rising standard of living, create endless jobs, provide education, medical care and housing for everyone, abolish poverty, rebuild cities, restore the environment and satisfy the demands of Blacks, Hispanics, women and other groups." There indeed lies the culprit! This is what they are yearning to change.

-- June 24, 1980

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