The world’s stock markets are hitting their highs for the year.
Optimism rules in this sunniest and hottest of summers. The bulls (investors who
reckon stock prices are going to rise) are in the ascendancy and the bears
(those who forecast falling share prices) are in their caves. But is this optimism justified? Profits are up in the oil and the banking sectors. In industry as a whole profits are not up, as companies are finding it difficult to up prices in the world market.
Instead of further integrating the world's economies, the World Trade Organisation (WTO) summit in Cancun actually succeeded in creating more polarisation and deeper divisions between its members. The viability of the WTO, which since Seattle (December 1999) has gone from failure to failure, is more than ever in doubt. Luis Enrique Barrios, from the Mexican Marxist paper Militante analyses the breakdown of talks and future prospects.
Last September 14, world trade talks broke down in Cancun, Mexico. Everybody blamed everyone else. Before the conference, British delegate Patricia Hewitt had predicted, "if we fail, it will be a disaster for world economy." And this is true, for the collapse could stun the already fragile prospects of economy recovery.
As you read this, the papers are probably full of the news that the US economy is growing at the fantastic rate of over 6% a year. No wonder the stock markets of the world have been booming. However, Michael Roberts points out that in reality the economic growth that the US is now enjoying is an illusion. It is based on unhealthy premises of state spending and a massive credit boom, neither of which can last for much longer.
The big financial institutions and investors have become hugely optimistic about the revival of economic growth and employment. They reckon that the weapons of mass growth (WMG) will be found. Everything is looking better, according to the latest intelligence sources, Messrs Bush, Blair, Schroeder and Greenspan tell us. The reality is that US growth in 2003 was artificially created and will prove to be ephemeral in 2004.
If you think things in the USA are bad now, wait till after the US
elections. Once the result is in the bag (either for Bush or whoever stands for
the Democrats) economic policy will switch from the present spending spree
(mainly on arms) to cuts in welfare. The present level of indebtedness cannot be
maintained for ever. Sooner or later the capitalists will make the workers pay.
Has British capitalism has finally overcome what used to be called the British disease: slower growth, higher inflation, continual currency crises and a falling behind in living standards compared with the US, Europe and Japan? Growth figures actually disguise a far more diseased system that the media would like us to see.
The German economy is the largest in Europe. Since the recession of
2001, the German government has been claiming an economic upswing is imminent.
But are these predictions realistic? Christoph Mürdter analyses the real
direction of the German economy.
In the USA, in Britain, even in Japan all the talk is now of economic recovery and boom. But scratch just a little below the surface and a completely different picture emerges - one of longer hours, later retirement, huge personal debt and a growing polarisation between rich and poor. The main European powers have all this and hardly any economic growth to talk of. Michael Roberts looks at the real state of the economy in the advanced capitalist world.
The US and British capitalists are gloating about how their economies are currently growing at 3-4% a year while Europe's big capitalist economies and Japan are hardly managing 2%. However, there is another side to this. Two recent reports show that the US and Britain also hold the record for the highest levels of poverty and social inequality. Capitalism only works for some.
Over the summer, world stock markets trod water. Indeed, the movement
up or down in share prices was the smallest since 1979. That tells us
that investors in capitalism are really unsure whether the world
economy is set for sustained growth (as their political leaders tell
them it is) or not.
The news that Kerry has conceded defeat has just come through. We will
publish a full analysis of the US election results tomorrow. In the
meantime we are publishing this article which looks at the state of the
US economy and traces its long term decline. Whether Bush or Kerry had
won it would not have made a fundamental difference. They both defend
US imperialism. They could not come out with fundamentally different
policies for they are tied to the same basic economic interests. In
fact the extreme similarity between the two explains why Kerry could
not defeat Bush. Any policy based on the US economy as it is today
means one thing: an attack on the living standards of American workers.
To defeat Bush something else is needed – a party of the American