The Guardian April 19, 2000


The longest US economic expansion

by Wadi'h Halabi

The monopoly media has been celebrating the longest economic expansion in 
US history  almost nine years. And yet the US Government estimates 9.6 
million people are unemployed or want work; 55 million US residents are so 
poor and housing costs so high that mass homelessness and chronic hunger 
rose during the expansion.

Two million US citizens are in prison, 44 million lack health insurance. If 
this is "as good as it gets", that tells us about capitalism today.

By one count, of the eight worst economic crises since the 1930s, seven 
have occurred since 1990  all in other countries. Why has the US economy 
been relatively stable?

The first thing to keep in mind is that the world economy is not entirely 
capitalist.

States created by socialist revolutions, including China, Vietnam and Cuba, 
account today for more than 10 percent of world production. The economies 
of these states are not cyclical, because planning predominates, even after 
capitalist inroads.

1990-91 and 1997 marked global turns for the worse in capitalist 
overproduction. Normally such turns would have led to all-out crisis.

But China continued to grow, at the fastest rate of any major economy. Its 
purchases from capitalist countries tripled between 1990 and 1999 and could 
exceed $200 billion in 2000.

China's purchases can act like powerful "anti-clotting agents" that help 
keep the capitalist system from congealing in crisis.

In 1993, the chief international economist for a Wall Street bank even 
admitted that without China's purchases, "there would be world chaos".

Bourgeois explanations for US economic stability include regulation of 
interest rates by the Federal Reserve; government expenditures ("Keynesian 
mechanisms"); advances in technology; and bank-deposit insurance.

All imply that capitalism has learned to regulate if not overcome its 
cycles. Nothing could be further from the truth.

The Japanese economy has been stagnant or in recession for a decade. In 
efforts to revive it, the Japanese Government has been making capital 
available at no interest.

It has spent hundreds of billions of dollars on stimulative packages. The 
economy remains in recession. Now the Japanese Government is neck-deep in 
debt and Moody's just placed it on credit watch.

It is impossible to understand the US stability in national isolation.

A stunning statistic, revealed in Business Week, is that the US 
economy is using 72 percent of the world's savings.

Capital has been flooding into the US since the Gulf War and US capitalists 
use this at effectively no cost to themselves.

The net US debt to the rest of the world tripled between 1992 and 1999. It 
exceeds $1.6 trillion, but net payments on that debt in 1999 came to less 
than one percent of that sum.

In addition, unequal exchange  whereby US monopolies sell their 
commodities above value while buying from weaker parties below value  
almost invisibly draws tens of billions to Wall Street.

Speculation, currency manipulation and other Wall Street maneouvres draw 
billions more.

US industry has grown since 1990. But at least 25 percent of the rest of 
the capitalist world's industrial production has been idled or destroyed in 
the same period.

Much of this has taken place under Wall Street/International Monetary Fund 
"guidance" in Warsaw Pact states now under capitalist rule, including the 
USSR.

But the US has also overseen the "enforced destruction" of Iraq's and 
Yugoslavia's economies, with devastating regional impact. And use of 
industrial capacity in Japan has fallen from 90 percent to 70 percent in 
the face of global gluts.

Headlines blare that the current "boom" is taking place in peacetime, 
unlike previous long expansions. But US imperialism has been the main force 
in two major (and by no means concluded) wars, in the Gulf and the Balkans, 
and countless less-publicised conflicts in Latin America, Africa and Asia.

The Pentagon budget is at wartime levels.

All that capital flowing into the US is trying to escape wars, instability 
and losses abroad. In the three months after the US started bombing 
Yugoslavia last year, capital flooded into the US at a US$1.1 trillion 
annual rate.

Wall Street is using its position of economic and military dominance, and 
the improvements in communications and transport, to push off capitalism's 
toxins  starting with unemployment  onto weaker countries, while 
looting them, cheapening their labour and destroying or idling their 
production facilities.

In a sense, the "Great American Depression" has been pushed off onto 
Africa, onto Iraq and Yugoslavia, onto the Ukraine and Romania, i.e. the 
states that have fallen to counter-revolution since 1989.

Of course, "prosperity" from looting and destruction cannot go on 
indefinitely.

And world capitalism's unfolding crisis of overproduction is bound to 
affect the states created by socialist revolutions  currently China, 
Vietnam, Laos, North Korea and Cuba.

Crisis is an inevitable part of capitalism. The working class-led struggle 
for good jobs and against war and racism, privation and inequality, points 
the way to taking power to meet human needs.

* * *
People's Weekly World, paper of Communist Party, USA.

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