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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

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