Amerikai Magyar Szó, 1982. július-december (36. évfolyam, 26-49. szám)
1982-12-16 / 47. szám
8 Thursday, Dec. 16. 1982. AMERIKAI MAGYAR SZÓ Joseph Budish: ON THE MONETARY CRISIS There are two questions dealt with briefly here. 1. What is the present direction of motion of the economy of monopoly capital. 2. Is there any fundamental difference between the basis of operation of monopoly capital today and the 19th and early 20th century capitalism analyzed by Marx, Engels and in particular whether mechanism now exists in the capitalist structure for planning and controlling movements of its economy. 1. Economic data of monopoly capitalism, particularly of its central stronghold, the United States, indicates the beginning stages of development of a full general crisis of overproduction for the first time since World War II. These data should be viewed in terms of their background. In the last such general crisis, the well- known Great Depression, the industrial production index dropped about 46% (47.5% in other tables) from 21.6 in 1929 to 11.7 in 1932. The Roosevelt policy of certain concessions and benefits to the working class may have saved the system from potential revolutionary upheavals but had nothing to do with planning of the capitalist economy. Four years after the start of the New Deal, with all its "planning" features, the industrial production index dropped catastrophically a full 21.3%, from 22.3 in 1937 to 17.6 in 1938, a drop exceeded only slightly by the 21.5% drop from 1931 to 1932, the biggest one year drop of the depression. The enormous depletion and accumulation of deferred demand for both capital and consumer goods in World War II. aggravated further by the Korean and Vietnam Wars, ^ reached beyond the economic effects of World War I, and created a period unlike any other in previous capitalist history. It was a period of 40 years, two generations, without a full general crisis of overproduction, such as appears now in its early stages. The six lesser crises that took place from WWII to 1974-75, all short, were different in essential respects from the general overproduction crisis now developing. They took place while the accumulated forces producing the general expansion of U.S. and international capital were still strong and the overall growth of the capitalist market was not yet exhausted. The biggest post-WWII drop might be called a "war readjustment production drop", a’ feature that has developed at the end of every big capitalist war including WWI. It is readily understandable in the light of the unplanned nature of the capitalist economy and the actual readjustments that industry must go through in such a period. The WWII drop started in 1944, before the war was over, and the production index dropped 25% in the two years from 1944 to 1946. While there were four smaller crises after that and up to 1974, total production and production capacity both rose fairly rapidly in general after the big war. From the first full year of the Korean War, when a few minor commodity shortages were experienced, U.S. production capacity almost doubled (95% increase) by 1965. Az a result the U.S. could inflict the greatest war horrors on the people of Vietnam without any inconvenience of commodity shortages in the U.S. The Vietnam War "readjustment production drop" started, as in WWII, before the war was ended by the victory of the Vietnam forces. From 129.3 in 1974 the industrial production index dropped 9% to 117.8 for 1975, rising again to 129.8 for 1976. This was the only production drop after WWII, incidentally, which produced a sharp jump in unemployment, to an official rate of 8.5% of the labor force. The average from 1947 through 1974 was 4.56%, with a high of 6.8% when production dropped 6.5% in 1957-58. After 1975 production rose until 1979. It held almost level between 151 and 153 from December 1978 through the first three months of 1980, then dropped quite rapidly to 140.4 by July 1980, and rebounded just as fast to a peak of 153.9 by July of 1981. Since then it has been dropping at an accelerating pace which shows no sign of stopping at the moment. The last figure available at this writing is 138.0 for August 1982, a drop of 10% for the year (some tables show 138.1% of 1967 production for June 1982). Officially September unemployment was 10.1%. THE ROLE OF THE FEDERAL RESERVE BANK Looking at the production capacity figures and capacity utilization percentages for the past thirty years it is clear that, in spite of the two big wars that the U.S. started since WWII, expansion of production capacity has outrun market capacity by a substantial margin. This is a development to be expected from the fundamental laws or tendencies of capitalist economy. It indicates again the baselessness of the theory that has developed out of over forty years without a major general crisis of overproduction, a theory that has unfortunately created certain confusion even among progressives. This theory holds that monopoly has produced a basically new form of capitalism that has in its structure mechanisms for control of the economy and counteracting crisis development. (On this basis Capital, Imperalism and all the other studies on them are obsolete and may be thrown out of the window) In the U.S. the Federal Reserve Bank is the principal mechanism said to come into play whenever a crisis begins to develop, to reverse conditions and end the crisis before it gets serious. In point of fact rather than popularly accepted fiction, the only actually existing measure that can be taken by the FRB, of all those referred to as "economy controls" by establishment economists, is the so-called "monetization" of the national debt. This is an indirect way of watering the currency. It is not as obvious as it would be to simply print dollars, as marks were printed in 1922-24 or Argentine pesos today but is has the same effect. It is accomplished by purchase of U.S. Treasury securities from existing inventories of the large banks and securities brokers, by the Open Market Committee of the Federal Reserve Bank, paying for them with a Federal Reserve Bank check that is a piece of paper with no real value behind it at all. The original purchase of the securities was made with token money that represented real value having in the last analysis the essential content of human labor time. The FRB check has no real deposits backing it and represents no value at all, but is legally deposited by the sellers of the securities and becomes an addition to their assets as usable money equal to any other dollars in circulation. The result, of course, is dilution and debasing of the currency and reduction of the amount of real value represented by each dollar in that circulation. The accumulation of Treasury securities owned by the Federal Reserve and diluting the currency in that way has now reached above $140 billion, most of it acquired in the past twenty years. There was a drop from about $ 138 billion to a low of about $124 billion and the rise back to $141-142 billion has taken place during the past two years. The present amount is just a little under one third of the latest Ml money supply figure of $456 billion, and has accordingly diluted the currency (by considerably more than a third, since reversal of the purchase by sale of the securities does not reverse the currency dilution that was caused when they were purchased.) It must be clearly understood that these Treasury security purchases in the open market by the FRB Open Market Committee have nothing whatever to do with planning or control of the economy. They are unavoidable as part of the job of selling the huge new volume of government securities being placed on the market every month. Without relieving the large dealer inventories left over from previous issues of securities it would be very hard or impossible to move the new issues into the market. As for other economic control mechanisms, the FRB has no regulation over interest rates charged by banks on loans, though they do control interest rates, banks may pay on different classes of deposits. As regards regulation of reserve requirements, there has been no change since 1976, and it is a negligible factor in any case. The last item mentioned for supposed FRB influence on credit markets is the interest rate on direct borrowing by member banks from the FRB, called the Discount Rate. The FRB regards itself, and wants the banks to regard it, as the lender of last resort. Therefore the loans it makes are very limited in time. Over fifteen days is "inappropriate" and most FRB loans are overnight or for one or two days. Further, and most important, the borrower must put up security to fully cover the money borrowed. These loans are accordingly a very small fraction of the daily borrowing of banks from each other, known as Federal Funds, which is done without security simply on the general credit standing of the borrower, and is completely unregulated. To be continued Newyorki magyar hentes THOR'S MEAT SPECIALTIES (FORMERLY MERTL PORK STORE) _ . 1508 Secend Ave., NEW YORK, N.Y. 10021 a 78. és 79. utcák kőzott Tel: RH-4-8292 FRISS HÚS,HURKA ÉS FELVÁGOTTAK Az üzlet nyitva lesz december 19-én vasárnap 9-tol 3 óráig Karácsony hetében minden vevő, aki $ 20.-, vagy azon felül vásárol, ajándék csomagot kap. KELLEMES KARÁCSONYI ÜNNEPEKET BOLDOG UJ ÉVET kiván Tibor és Gárdája
