Andrew Glyn

World Capitalism

Stuck in the Stagnant Seventies

(May 1979)

From Militant, No. 456, 18 May 1979, p. 10.
Transcribed by Iain Dalton.
Marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

The Bank of England has just published [Quarterly Bulletin, March 1979] a most revealing table [1] showing how the recent performance of the major capitalist countries compared with the golden years of the ’Sixties and early ’Seventies.

For all the major economies, 1973/78 shows a dramatic fall from the growth-rate of 1960/73.

If manufacturing production had continued to grow in Japan at the same rate as it did during 1960–73 it would now be 70% higher than it is; in the European countries (including the UK) the shortfall was 20–25%, in North America 12–15%.

Productivity growth, the basic indicator of the extent to which capitalism is developing the productive system, slowed to about one half or less of the earlier rate.

This reflects the low rate of investment in new machinery, the inefficiencies involved in low levels of capacity utilisation (estimated by OECD Economic Outlook, December 1978, as varying from 73% (Italy) to 83% (Japan) of the 1973 levels), and the difficulties the capitalists have in rationalising production through plant closures.

Unemployment in the OECD countries has stuck around 5½% – only Japan (2½%) and Germany (3¾%) are below 5%, but in those countries the real extent of the problem is concealed behind underemployment in small scale industry in Japan and repatriation of immigrant workers in Germany.

After the boom of the early seventies the capitalist world achieved no growth at all in 1974 and 1975. A slight upswing followed in 1976 when growth was about 5%, since when there have been two years of semi-stagnation, slow growth of world trade, substantial inflation and a high level of unemployment.

What is in store for 1979? The capitalist economists are all agreed that the prospect is for somewhat slower growth and the same level of inflation and unemployment as during the last two years.

Indeed, the December OECD forecast shown in the table was denounced by the Midland Bank Review (March 1979) as showing “insecure optimism in view of the expect of OPEC price increases and the fact that we have yet to see the major acceleration of growth in West Germany that the government there has been promising for more than a year.” All even the OECD could find to congratulate itself about was that the pattern of growth between the major countries is likely to be even more even.

Mildly expansionary policies in Germany and Japan will boost growth while the US economy slows sown. The National Institute forecasts falls from about $16 billion to $10 billion in both the US balance of payments deficit and the Japanese surplus.

But this really amounts to sharing out the misery more evenly, rather than any overall improvement. The fundamental factor behind the sluggish growth is the refusal of the capitalists to increase their investment sufficiently.

OECD forecasts for 1979 that investment will rise virtually not at all in Britain, about 3% in the USA and 4.7% in the main European countries and Japan. But as the following table [3] shows this leaves it at maximum only 10% above the level of 1973, and well below that level in Japan.

The main factors behind this refusal to accumulate rapidly are the fall in the rate of profit which underlines the crisis and the low level of capacity utilisation which has resulted.

The capitalist governments are prepared to give only feeble boosts to these economies for fear that inflation will accelerate as the capitalists attempt to rebuild their profit margins, making it harder to hold down wages. Of course, investment does not cease completely; even with spare capacity, in some sections new methods of production are being developed which will allow costs to be cut giving an advantage in the competitive struggle for shrinking markets.

But in relation to the growth achieved in the sixties, let alone the possible growth of production under a planned economy, the creeping growth of the capitalist economies represents a monstrous waste of resources and every year of semi-stagnation undermines the confidence of the capitalists; it makes even a temporary boom more difficult to achieve and a lurch into deeper stagnation more likely.

TABLE 1 Output and Productivity Growth in Manufacturing Industry Per cent per annum
	Output		Productivity [a]
	1960–73	1973–78	1960–73	1973–78
United Kingdom	3.0	−0.9	3.6	0.6
United States	4.9	2.5	3.4	2.2
Canada	5.9	2.8	4.0	3.2
Japan	12.0	0.8	8.8	3.7
Western Germany	5.3	0.8	5.0	3.3
France	5.9	1.4	5.6	2.7
Italy	6.1	2.2	5.2	1.4
[a] Defined as output per man not output per hour

TABLE 2 Capitalist Growth
	1962–73	1973–75	1975–76	1976–78	Forecast 1979
Production % growth	5	−½	5¼	3½	3
Exports % growth	8½	1½	10½	5	5
Consumer prices % growth	4	12	8	7¼	7–8
Unemployment level %	3	4½	5½	5½	5½
Source: Midland Bank Review, Spring 1978; OECD Economic Outlook, December 1978; National Institute Economic Review, February 1979

TABLE 3 Capitalists’ Investment [1973 = 100]
	1978	1979 [forecast]
USA	102	105
UK	109	110
Japan	86	91
Germany	105	110
France	98	102
Italy	99	104
Source: OECD Economic Outlooks

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