a RY By TOM DRINKWATER N NEW Year’s Day President Johnson announced new measures to cut back sharply the American balance of payments deficit. This move was the direct result of the speculation against the American dollar in the world’s gold markets, and this speculation was in turn the direct outcome of the devalution of the pound. Many people, including leading fin- ancial writers, find it strange that the dollar should command so little con- fidence, in view of the size and un- doubted productivity of the American economy. But there is no mystery here. The clue lies in the nature of imperialism. The U.S. is-a classical example of an imperialist economy pushing out to other countries vast and growing ex- ports of private capital. American big business corporations drive to extend their dominion and profit-making in every corner of the non-socialist world, “developed” and “developing” countries alike. The U.S. Government spends huge sums of money abroad for military purposes, and the cost of the war against Vietnam has soared up and up. The upshot is that the American eco- nomy pumps out to the rest of the world, to finance its various activities —government, business and private— a larger quantity of American dollars than the rest of the world needs to settle its payments to the U.S. ® For a time the capitalist world sec- tor made a virtue out of necessity, and adapted itself to a certain extent to continuous American payments de- ficits. -It did so by adding the surplus Ame- rican dollars to the official monetary reserves kept by each capitalist state. In technical language the capitalist world adopted the “gold-exchange standard”; it accepted a certain official quantity of dollars into official reserves alongside the traditional element, i.e., bars of gold. But monetary experts have explain- ed very clearly that this system is not stable. The larger the American deficit, the more dollars there are available to be accumulated by other countries as reserves. : But it is not here a case of “the more the merrier!” The more surplus dollars the U.S. pumps out, the less confidence that these dollars are really worth any- thing. They are paper claims on the Ame- rican economy. But can they be turned into gold? This becomes more and more dubious as the foreign-owned dollars pile up, and the American stock of gold dwindles away! In theory, of course, these paper claims could be used to buy goods, etc. from the U.S. But in practice, through military spending and capital exports, the U.S. is pushing out to the rest of the world more dollars than the world really wants for the purpose of buying American goods, etc. If this were not the case, it is ob- vious that there would be no American balance of payments deficit; there would be no buck shee dollars, because they would all be spent in this way! Apart from the monetary experts, the capitalist countries themselves have become increasingly unwilling to finance American imperial expansion by simply. soaking up, into their of- ficial reserves, the unwanted surplus of dollars. The sharpest opposition has come from the French Government, which objects to the American war in Viet- nam, and objects to leaving the way open for American big business to buy up those parts of the French eéco- nomy which it fancies. What de Gaulle says out loud other capitalist governments, particularly in the Common Market, mutter among themselves more discreetly. © Despite all the efforts to create harmony in the international capitalist economy, it remains still a jungle of conflicting interests and policies, of contradictions between one capitalist state and another. And at the moment the heat is on the dollar. The new measures announced by Johnson on January | are a further in- stalment of American power politics. If they are put through, they will undoubtedly have some effect in reduc- ing the size of the American balance of payments deficit. But it would be quite wrong, in my view, to consider these measures simply as_ technical economic steps to correct a long-stand- ing weakness in the position of the American economy. There is more to it than that. The measures themselves look for a sharp cut in American exports of Private capital, including loans by American banks; a reduction in the amount spent by American tourists abroad; an increase in the normal sur- plus of U.S. exports over imports; and a reduction in government expendi- tures abroad. But three points of great significance need to be noted. First, the measures were very hur- riedly announced and in some cases (capital exports and tourist expendit- ures) it is by no means clear what legal powers the American president has, or is likely to get, to enforce his proposals. Days after the announcement serious doubts were being expressed on how, and to what extent, the pro- posed measures would actually be im- plemented. Secondly, the measures deliberately FEBRUARY 2, POSE PACIFIC TRIBUNE page ect SB Gener cee ares Buckshee American dolla discriminate against the Common Mar- ket countries in general, and France in particular, The reasons for this are clearly in port political. Thirdly, representatives of the Ame- rican Government have now sped off to visit the other capitalist countries and it is obvious that Johnson’s pro- posed measures are, from one aspect at least, a bargaining weapon. In return for concessions, the U.S. Government may therefore be prepared to manoeuvre, hitting one country ‘more or less hard, depending on its ‘willingness to comply or not with American wishes. The antagonisms between the capi- talist powers are beginning to look ex- tremely dangerous. Move and counter- move are proceeding along lines which threaten to lead to serious disruption of international trade. The whole at- mosphere shows signs of deteriorating. Whereas previously, amid all their squabbles and clashes, the capitalist states were constantly reminding each other that the main emphasis should be on economic growth and the unin- terrupted development of international trade, now the more primitive capital- inst instincts are coming more to the fore. : Individual states and groupings of states are more apt now to take the economic measures that suit their book, and to hell with the consequen- ces for other countries, and therefore for the international capitalist econo- my as a whole. Taking Johnson’s measures as they stand, the U.S. already has a surplus of exports over imports though it is smaller than it used to be. If this surplus is to be increased, this means sharper American competition in export markets. The U.S. Government also has to hand, when it wants to use them, various methods of keeping foreign goods out of America. These are quite apart from its ordinary import duties. ® The American Congress might also decide to enact some of the bills sub- mitted to it, designed to protect this or that sector of the economy from competition from imports. On top of this, tourist receipts are now very important indeed to a num- ber of countries, and American tour- ists are very important customers. If the U.S. government is really de- termined, therefore, that American ex- ports are to go up faster than imports, while American tourists spend less abroad, this could make a very serious dent in the balance of payments of a whole number of countries, in Europe and elsewhere. The export of American capital is a rather different affair. Basically it would be a much health- ier state of affairs, even under capital- ism, if each country financed the de- ”= velopment ‘of*its’own economy, and‘the ’~ socialist solutions.:*’’ <*> * ve Pe steady sprawl of American big busi- ness corporations over the earth’s sur- face were checked. Immediately, however, if other ca- pitalist countries, such as Britain, have - been relying on a certain inflow of American capital as an important ele- ment in their balance of payments, then a check to this inflow will force some re-adjustment. The important point is, then, how this re-adjustment is made. In the case of Britain, for example, this is an ad- ditional reason for eliminating British overseas military expenditures, and clamping down tightly on the export of British capital. e The danger, however, is that capital- ist Governments are likely to react in much less positive ways, for example by chopping down still further on eco- nomic aid to the “developing” coun- tries, or by new steps to force up ex- ports of goods while holding down im- ports. The situation holds very serious threats for working people of the ca-— pitalist and the “developing” countries. It would be quite wrong not to say so. But this is 1968, not 1931. The biggest single contribution to improving the world economic outlook would be, in my view, to force the American Government to make peace . in Vietnam. It is the military activities of the American and British imperialists which are, first of all, responsible for the aggravation of the overall situation in the international capitalist economy. Dig into the reports and the statis- tics of the balance of payments, the international monetary situation and sO on, and you keep coming to this villain of the piece. : The working people also have it very much in their power to insist day in and day out that the purpose of their economic activity is to meet their own needs more adequately. e Against the built-in bias of capital- ism, at the national and international level, to crimp, hamper and confine living standards and the growth of pro- duction and trade, working people can impose through their struggles higher real wages, better housing, more educ- tion, better social and health services, and so on. Carried forward on a sufficient scale, these struggles become a really signi- ficant factor in determining the course of international economic events, be- cause they block any attempts of the capitalist class to impose their own crazy solutions to increasing interna- tional difficulties, such as restriction of trade and production, unemploy- ment, mutual economic warfare and the rest. And, in blocking capitalist solutions, we can begin also to impose our own 194 : r pee | Og ery pg Sod we « ot ee pee mm em