1975 was a wicked year for the world capitalist economy. through the spring and summer industrial production continued to drop in all the major capitalist countries compared with the corresponding period in 1974. But now the United States, Japan and Germany, the three economies that led the way into the slump at the end of 1973, have started to pull out of their nose-drive.
Japan's industrial production increased by between three and four per cent (an annual rate of 12 to 16 percent) in both the second and third quarters of 1975. In West Germany, industrial production increased slightly; it was two per cent higher in September 1975 than August 1975. In the United States, production turned sharply upwards, with talk of an 11 per cent growth rate in the Gross National Product between July and September 1975.
But at the end of 1975 the international capitalist economy is still dominated by recession conditions. As of November 1975, forecasts on the gross national products (in real terms) for the whole of the year 1975 were as follows:
United States -0.0 West Germany -3.5 Japan + 1.5 France -2.0 -3.0 Britain -0.7 Source: ne cconomist. to Novembel 1975).
The persistence of very high unemployment rates (see graph) and, most important, the stagnation of productive investment in all the imperialist countries has put the brakes on any genuine upturn so far. In the United States, for example, half the July-September growth is attributable to the consolidation of stocks, not to an increase in sales to the "final consumers'. boost to demand was also given by tax cuts in the US, Germany and Japan. But these are only short term palliatives, requiring repeated doses to maintain an increase in growill Tale At the same time such 'pumppriming' helps create massive private and public sector debts latter no less than $ 70,000 million in the US in 1975 inflation. The main cause of inflanon is witnour doubt tie hualon of credit: the sea of debts on which the Western economy sailed to expansion after the Second World War.
In general, capitalist governments have acted as if increasing the money supply would automatically bring about a more or less immediately proportional increase in demand, thus acting as a favourable multiplying factor on overall economic activity. But a considerable portion of the expected growth in national income through the simple inflation of the money supply can escape without producing any significant effects on the level of economic activity:
•I. People may decide to save a portion of the extra monetary income placed at their disposal. In savings of the lower income layers Led since the recession began.
tion may not be accompanied by proportional increases in economic activity if they are accompanied by A temporary a decline in exports. In a period of recession all imperialist countries cannot increase their exports simultaneously.
According to a report of the GATT (General Agreement on Tartrade declined by 10 per cent during the first half of 1975 compared with the volume for the corresthis differential is narrowing, and Japan are continuing to stagnate. and accelerates many during the second half of 1975.
pect of an expanded market and a rise in the rate of profit.
erally imagine (see below).
, to a cumulative move towards uption investments that eliminate more jobs than they create in the production of raw materials. In - 9% Chrysler (8,300) and the British have increased rather than diminish• 2. Upturns in domestic consumpiffs and Trade), the volume of world ponding period for 1974. Although the US market is expanding slightly the markets of capitalist Europe and It is this factor in particular that has prevented a real upturn in West Ger•3. Priming of domestic consumption leads to an upturn in productive investment by capitalist enterprises only if it is accompanied by the prosThe present existence of high excess production capacity constitutes an obstacle that is less easily overcome than the bourgeois and reformist economists gen•4. Finally, even when investment is primed under the impetus of state aid, this priming may not contribute turn if it simply involves rationalisasectors of machine construction and Britain, for example, the largest state hand-outs have gone towards financing massive redundancies in British Leyland (20,000 over the last year),