Economy

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 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.

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 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.

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.

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.

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.

Further to the publication of the Introduction to debate between AG and MB on The tendency of the rate of profit to fall and post-war capitalism and A reply to AG by Mick Brooks, we are publishing this piece by Mick Brooks which puts that debate into the context of the decline of British capitalism after the Second World War. It highlights the crisis of bourgeois economic theory and also the limitations in the method of AG.

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.

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.

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.

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.

Marxists are often accused of having a class bias, of having an irrational prejudice against the capitalist class. We must admit, that yes we don't particularly appreciate the fact that while millions go hungry in the underdeveloped countries a handful of super-rich billionaires actually decide on the fate of the world.

The debate over whether Britain should join the Euro is heating up. On both sides of the debate we find a capitalist logic being applied. One side stands for so-called British "sovereignty", the other praises the merits of the wider market. Neither side is defending the real interests of the workers. As Mick Brooks points out, "The answer is surely for us to control the movement of capital by taking over the means of production, not relying on the goodwill of our enemy, the capitalist class."

In the first three months of the year, the US economy grew at a 1.6% annual rate. All the signs are that the economic recession of 2001, from which 2002 saw a recovery, is now returning in 2003. The US economy is heading for what economists like to call a 'double-dip'.