U.S. — and Canada

Our economy in a slump

By BRUCE MAGNUSON

Cyclical economic crises are
an inevitable feature of capital-
ist economy. U.S. _ industrial
production is now in the throes
of the fifth such .cyclical crisis
since the Second World War. As
for Canada, with its colossal
dependence on the U.S. econo-
my, it too has followed the U.S.
developments with almost mono-
tonous regularity.

In 1948-49, the U.S. indus-
trial production index dropped
by 10.5% over a period of 16
months. In 1953-54 the U.S. de-
cline was 10% and lasted seven
months. The third decline took
place in 1957-58 and lasted 14
months with a drop of 16% in
U.S. industrial production. Then
in 1960-61 a drop of 8% took
place over a period of 12
months.

In October 1966 production
declined in certain branches,
such as agricultural machinery,

automobiles, steel, non-ferrous
metals, electrical equipment,
carpets, clothing, ~ footwear,

household appliances, television
sets and radios, etc. This 11-
month decline .has become
known as the U.S. “mini-
recession” which was temporar-.
ily overcome by war production
for Vietnam until the industrial
index showed a rise of 1.1% in
1967; a further rise of 4.7% in
1968; and 4% in 1969.

Serious Drop

But the recovery this time
proved shortlived. Already by
August 1969 it became obvious
that another drop of a more
serious nature than the 1966-67
declined by 26%, agricultural
military orders, the overall in-
dustrial index kept falling, un-
til by May 1970 it had fallen by
3%.

In certain branches of indus-
try the drop was more serious.
In the electrical industry a de-
cline of 32% took place be-
tween July 1969 and March
1970. Production of automobiles
decline by 26%, agricultural
machinery by 13%, and steel by
8%. A 4 to 5% drop took place
in textiles, leather goods, tobac-
co and many other industries
producing consumer goods.

The June 15, 1970 issue of
U.S. News and World Report
stated that by April of 1970,
“new orders to factories had
dropped to the lowest level in
13. months. Shipments were
down to the lowest level in 11
months. Unfilled orders on ma-
nufacturers’ books were the low-
est in 17 months. Inventories in
relation to sales were the high-
est in 30 months. Factory hiring
was at the lowest rate in five
years. Layoffs were at the high-
est rate in more than six years.”

No Sign of Let-up

However, the present crisis,
now in its 16th month shows
signs of dragging on with as yet
undetermined consequences. The
protracted war in Vietnam has
set in motion many adverse
processes. As a _ general rule
war has tended to upset the
pattern of cyclical economic
crises. But the war in Vietnam
has reversed the process. For
the first time in the history of
U.S. capitalism, war has _ be-
come both an economic and po-
litical boomerang for the ruling
class, which traditionally seeks
to pass on the costs to the
working - people by means of

higher taxation and a squeeze |

on living standards.

All this has to be seen on the
background of the technological
revolution and: an ever-increas- <

ing intervention by the state in
the economy. :

Equally unprecedented is the
fact that relative over-produc-
tion and marketing problems

are producing higher, rather
than lower prices. Arms _pro-
duction has increased demand
for raw materials. In six years
the ‘monopolies have doubled
the price of copper, for example.
Copper, steel, aluminum, nickel
and other materials are also
used in the production of civi-
lian goods. Price increases’ in
any one area have a chain reac-
tion throughout the whole price
structure.

Large ‘budget deficits have
brought more paper money into
circulation, plus astronomical
sums for interest on national
debts.

Taxes imposed by the state
on corporate profits and in-
comes have not cut into mono-

poly profits. Instead they have -

been passed on to consumers in
the form of higher retail prices.
Higher interest rates have been
an added factor in price for-
mation.

. The Stranglehold

Price increases, therefore, are
not only the result of inflation
—meaning an increase in paper
money over and above the re-
quirements of normal  com-
modity circulation — but pri-
marily of the stranglehold over
the economy by the capitalist
monopolies and the redistribu-
tion of the national income by
the capitalist state in their
favor. These characteristics of
state-monopoly capitalism have
been accentuated by the war in
Southeast Asia.

On May 18, 1970 the U.S.
News and World Report pub-
lished some data on the move-
ment of weekly wages, taxes
and prices in the U.S. from the
spring of 1968 to the spring of
1970. It showed nominal wages
up by $12.65 per: week, and
federal taxes by $2.85. The in-
crease in prices was 11.5%, or
the equivalent of a $10.63 re-
duction in wages. Therefore, the
increases in prices and federal
taxes took away $13.83, or 83
cents more than the growth in
nominal wages.

Thus even conservative and
Officially admitted _ statistics

prove that real wages went

down. If we add all other direct
and indirect taxes, plus rising
interest on consumer credit, the
drop will be much larger. This
decline in real wages and buying
power now affects the absolute
majority of the population.

While production as a whole
has increased in the years of
the Vietnam war, the buying
power of the population has
dropped, causing disparity be-
tween supply and demand, and
between production and _ con-
sumption — the root cause of
all economic crises.

It is this which has found its
reflection in a sharpening of the

PACIFIC TRIBUNE—FRIDAY, DECEMBER 4, 1970—PAGE 6 _

of the strike movement in the
capitalist. world. During the
1960’s 350 million workers in
capitalist countries clashed in
strike struggles with their em-
ployers and government au-
thorities. Most of these strikes
concerned political as well as
economic demands. The number
of strikes in the United States
has been growing
through the years of the Viet-
nam war—from 3,655 in 1964 to
5,600 in 1969.

Il

Canadian Crisis

For Canada, which in a be-
lated but ‘intensified form has
experienced all the U.S. crisis
phenomena, the situation has
been aggravated by the Trudeau
government’s austerity program,
ostensibly to combat inflation.
Its prescribed cure has worsened
the disease, deepened recession-
ary trends and created mass un-
employment.

Hard core unemployment is
increasing. Those without work
from 4 to 6 months increased
from 42,000 in October 1969,. to
74,000 in October 1970. The num-
ber without work for six months
or more rose from 46,000 in Oct.
69, to 72,000 in-October of this
year. Those looking for work in
the “age group of 14, to 24 in-
creased from 51,000 a year ago
to 150,000 this October.

What is also new about this
present crisis is that it is ex-
tended for the first time since
1929-33 to the stock market and
monetary sphere, Thus the Dow
Jones index dropped from. 985
on Dec. 3, 1968 to 631 by May
1970, and the total market loss
in share trading is calculated at
more than 300,000 million dol-
lars.

Regional disparity in econo-

‘mic development is also widen-

ing very rapidly in Canada. While
public and private investments
in Ontario will exceed $7.1 bil-
lion this year, Quebec with four-
fifths of the Ontario population
will have $3.4 billion. While. 49,-
000 new jobs are created in On-
tario, only 3,000 new jobs have
been found in Quebec where
75,000 new workers have enter-
ed into the labor force this year.

Premier Robarts, speaking in
New York on November 19,
boasted that Ontario accounts
for 53% of Canadian manufac-
tured goods; more than 40% of
Canada’s gross national product;
46% of all Canadian exports and
80% of the fully manufactured
exports. That leaves little, in-
deed, for the other eight prov-
inces and Quebec to divide up
amongst two-thirds of Canada’s
population.

Background of Events

It is on this background that
One must see the October events
in ‘Quebec, and the Trudeau-
Bourassa governments’ reaction
to those events.

Behind the events in Quebec
there is the fact of the denial of
the right to self-determination
and, indeed, the very existence
of a French-Canadian nation
within Confederation. The bank-
ruptcy of the Trudeau-Bourassa
policy of ‘One Canada—One Na-
tion” is obvious. Military occu-
pation and force cannot save it
from collapse. The coming to-
gether of the national democra-
tic issue behind our constitu-
tional crisis, with the recession

and class economic political is-

sues creates a bigger challenge
than can be solved by repres-
sion, legislative or, .otherwise.

class struggle and the growth . All of this is aggravated by U.S.

steadily

oo

Mr. Robert Ford, Canadian Ambassador to the Soviet Union (0" -
photo in centre), at a specialized international exhibition “Modem
Equipment and Instruments for Geological Exploration (Geologora!
vedka - 70). This exhibition was held in Moscow during November !"
one of the pavilions of the exhibition townlet at the Sokolniki Part
The output of 85 foreign firms from 15 countries, including Canada,
Britain, the German Democratic Republic, Italy, the USA, France, thé
Federal Republic of Germany and Czechoslovakia was displayed °"
an area of some 20,000 square feet. :

Of those participating at the exhibition, Canada was the only
country represented by a state stand organized with the assistance
of the Canadian Embassy in the Soviet Union.

Mr. Ford told an APN correspondent that he hoped the presencé
of Canadian firms in Moscow will be a good beginning for many
other contacts between Canada and the Soviet Union in various ©
fields of politics, economics and culture.-

——

Talk is cheap—what
US. foreign aid means

By O. VASILYEV

Following a preliminary pro-
paganda campaign in the press,
the U.S. president sent a mes-
sage to Congress on additional
allocations, mainly for military
aid to foreign countries. Lately
much is being said in Washing-
ton on revising the entire ap-
proach to the question of rend-
ering aid. It is worthwhile to
recall that in the middle of Sep-
tember the White House pub-
lished a widely advertised mes-
sage to Congress in which a
“complete revision” of the pro-
grams for renderng aid to for-
eign countries was promised.
However, behind this pathetic
rhetoric were plans aimed at
further expanding military and

economic aid and using it as a,

tool of U.S. imperialist foreign
policy.

This is borne out by the presi-
dent’s new message. It bears
the imprint of the notorious po-
sitions of strength policy. The
concept of peace is synony-
mous to the strength of Ame-
rica and its friends — it is
pointed out in the very first
paragraph of the message. The
president asked for an addition-
al $1,035 million in aid to other
countries during the current fis-
cal year to carry out the “new
conception” of the U.S. foreign
policy. ;

The “new conception” is a
Nixon doctrine for allocating
millions of dollars for the pur-
chase of cannon fodder, for
strengthening regimes depend-
ent on the United States and for
using them in American armed
gambles. It is precisely for this
purpose that additional funds
over and above earlier request-

ed allocations are being ear-

domination and its war in Indo-
china.

Nevertheless, opportunities are
opening up for curbing mono-
poly power and for strengthen-
ing the influence and power of
the working class in Canada.
That way lies the road to funda-
mental social change, peace and
our socialist future. That way
lies the road to a truly demo-
cratic.and.united Canadaz==

marked for such regimes 4°
those in South Vietnam, South
Korea, Taiwan and Greece.

However, main emphasis» 11
the new message was made 0M
strengthening the Tel Aviv mili-
tary machine. |

The president asked for $500
million dollars to provide IS
rael with credits for financing
arms purchases. Although he
did not inform Congress as t0
the nature of the arms promis
to the Israeli extremists, the
Pentagon makes no secret of
the fact that what is in mind 35
the delivery of military planes:
tanks and electronic equipment.
Incidentally, the new deliveries
will be in addition to the 200
M-60 tanks and the 18 Phantom -
fighter-bombers promised to Tel
Aviv. The delivery of offensive
weapons to Israel, under condi
tions when the ceasefire agree
ment is in operation in the Mid-
dle East, cannot but be regard-
ed as encouragement of the ag-
gressor in sabotaging efforts on —
attaining a peaceful settlement
in that part of the world.

The new program of Ameri:
can military injections for the
puppet regimes cannot in any
way facilitate a relaxation 0
international tensions. It will
hardly meet with a positive re-
sponse from the American pub-
lic. At any rate serious opposi-
tion to it in Congress is already
predicted.

No matter what rhetoric is
resorted to in Washington the —
essence of the new military aid
does not change: U.S. aid was
and remains an implement of
militarism and of the expan-
sionist foreign policy of the
United States.

(Izvestia)

About Bulgaria

The population of Bulgaria is —
increasing by an average of
57,500 a year. By January 1,
1970, it reached 8,464,300. Over
half the people now live in cities,
868,200 of them in Sofia, the
capital. Plovdiv, Varna, Ruse,
Burgas and Stara Zagora each
have over 100,000=inhabitants. |

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