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MIR Jan 1985: Economic Notes £ f 1984 WILL go down as the year in the current world economic recovery with the highest recorded growth in output. The US economy grew in real terms by nearly 7% and it was supported by Japan with 5½ % and Canada with 4%. The countries of the EEC however continued to have a very sluggish revival in output after the severe world recession of 1980 - 82. World trade was boosted dramaticalof the US ly by the expansion economy. Fuelled by a massive government spending deficit in order to pay for Reagan's arms programme, the US economy revived, not so much in the basic heavy industries but more in the consumer industries, like motor vehicles and electronics, and most of all in the service sector such as catering, retailing and other services. These latter sectors of the economy were able to absorb a considerable portion of US unemployment, albeit at lower wages than that available in manufacturing. World manufacturing markets leapt forward by 20% in volume, thanks to a massive 30% increase in US imports. The main beneficiary of the US market was Japan who sharply increased their share of the US market. The sluggishly growing European capitalists, including the UK, could not compete.
US growth slows The Americans paid for these imports by printing money and relying on foreign investors, mainly from Europe, to bridge the gap by providing funds. The Europeans with only limited investments possible in their own markets, found greater returns through high US interest rates in investing or lending their money to the US market. the US economy boomed, Thus despite high interest rates which profits and should have restricted dampened investment. Also the dollar remained strong despite a huge trade deficit created by the flood of imports. But this situation could not last indefinitely. Already in the last quarter of 1984 the bubble has burst and production tumbled to below 3% per annum growth rate.
That figure is the maximum growth expected for 1985 in the USA. Economic Notes By Bob McKee 1985-The boom draws to an end Unemployment will stop falling, investment will dry up, profits will grow much more slowly. High interest rates will increasingly affect investment without attracting foreign funds as profits decline. And the massive government borrowing to pay for arms will begin to accelerate price increases. Eventually the dollar will perhaps just as dramatically as it has remained strong during the last two years of the world recovery.
Even if the size of the dollar's decline is not certain, what is clear for 1985 is that the growth of production and trade will slow significantly and by the end of the year the world economy wil! be entering a new recession. Total OECD countries growth will decline from 5% in 1984 to 3% in 1985 with most of the major nations below that average. The collapse of the US boom will not be compensated by any sharp upturn in the European economies. For the UK that can only mean an end to the already weak recovery in production and investment experienced over the last two years. At the beginning of 1984, the government was predicting a 3% growth in output, it achieved only 2.2% (including the production of oil). The government blames this low figure on the miners' strike and predicts 3½% growth for 1985, assuming an end to the strike early this year. Most other experts predict growth closer to 3% and some even lower, still assuming an end to the But when oil production, which reached its peak in 1984, is removed from the figures, the really parlous state of British industry is revealed. In 1984 which will be the peak of this present boom, manufacturing output was still 15% below the 1973 peak level. Not only can British industry no longer compete on worid markets against its rivals in Europe and Japan, it has also lost its share of its own market. 1983 was the year that Britain for the first time since the start of industrial capitalism bought more manufacturing goods from abroad than it exported, by some £2,146m. In 1984 that deficit spiralled upwards to around £4,000m! Since the Tories came to power, i.e. since 1979 until now, the volume of UK manufacturing exports has risen by only 2% while world markets have expanded in 18 volume by 20%!
Without North Sea oil providing revenue to the government to pay for the continuing rise in the number of holding up the pound unemployed, sterling and so keeping down inflation levels, the British economy would have suffered an unmitigated disaster, even during the world recovery. As it is, with 1985 seeing off the present expansion of the world economy; with oil revenues levelling off; and oil prices beginning to fall; the British economy is going to be exposed to the cold winds of recession with little or no The government claims the last few years have made Britain 'leaner and fitter', ready to sustain continued economic growth, as long as workers do not ask for too much money. The truth is otherwise. During 1984 profits rose by 23% in industry, but much of this money went overseas (to the US market). Investment grew, but only by 7% - much smaller than could be expected with such a profit increase. Workers created these profits through increased productivity ie they worked harder for little extra money on old machines with less labour force. Profits go overseas The shake-out of labour continued and unemployment has inexorably risen right throughout the Thatcher- Lawson 'boom'. But the investment has not followed -now only 1½ % of all investment goes on research and development of new techniques in Britain, compared to 2½ % twenty years ago. And in 1985 total investment growth will fall to 4.4% and collapse completely in 1986. Thus the productivity increase in the UK, made on the backs of the unemployed, will stop because there has been no investment in new industrial plant, machinery and techniques. This will leave British industry stranded when the going gets really tough again in world markets. The world boom will finish by the end of 1985 and a new recession or slump will develop during 1986 and pitch downward into 1987 and 1988. The feeble British capitalists and their government (along with the rest of us!) will be thrown into this crisis as we still struggle to come out of the last slump.
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The UK: Land of
K: Land of labour and la standards
ACCORDING TO a report by the National Institute, the UK stands out as a land of cheap labour compared to most other advanced industrial capitalist economies. Labour costs (made up of wages and social insurance contributions) are 86% higher in the USA. West German workers cost 60% more on average, Italians 18% more and French 15% more. Even the Japanese workers cost their bosses 4% more than British workers. For British women workers it is even
Wages,
dole benefits
and unemployment
ONE OF the favourite arguments of Nigel Lawson and the Tories is that British workers have too high wages and ask for too much in wage rises, so that they 'price' themselves out of jobs. If wage demands were reduced, or even better if wage levels were actually reduced, more workers could be employed by companies and unemployment would stop rising and begin to fall, say the Tories. The Treasury has argued that a 1% cut in real wages (ie after taking into account inflation) could increase employment by 75% or 150,000 jobs.
The Tories have relied on the support of the City University Business School whose economists provide much of the theoretical ammunition for the government and for Samuel Brittan, the brother of the Home Secretary, who is the Financial Times economist and strong backer of Tory arguments that if there was no trade union power and wages were forced down, the economy and employment prospects would improve.
Recently the City University's evidence on the relation between real wages and unemployment has been disputed by the National Institute for Economic Research, who deny the assertion that the depression of the 1930s only ended when real wages fell. They say that real wages did not begin to decline until well after the economic recovery started in the midthirties. And the recent drop in US unemployment cannot be attributed to a fall in real wages in the USA. Most of those who have obtained jobs had only been out of one for less than six months. Long-term unemployed and
worse. According to a survey by the Swedish Employers' Federation, British female workers receive pay relative to men lower than in any other EEC country.
But low wages do not make British industry competitive. Because output per head is also so low compared to other countries, unit labour costs ie wages per unit of output, are still much higher than elsewhere. British industry cannot compete because the bosses will not invest and raise productivity, not because workers' wages are too high, as the Tories insist.
Poor production and low wages obviously mean low living standards and the situation for British workers is graphically demonstrated in a new survey of living standards produced by
young people who had never had a job are still without one despite the rise in US employment and they are the people who would be most likely to accept lower wages for work.
As it is when we look at the evidence over the period of the Tory government in Britain, the Tory argument is far from convincing. Unemployment has risen sharply since 1979. Real wages have also increased modestly. But unemployment rose the fastest in 1981 and 1982, at the height of the last world recession. During those years real wages stood still. Anyway the real wage increase for the whole period of the Tory government has been confined to non-manual workers. Manual workers' real wages have fallen since 1979 but unemployment among them has risen the most. Between 1979 and 1983 money earnings for manual workers rose only 5% (much less than increases in prices and taxes). Money earnings actually fell in 1981 and 1982!
UK benefits fall
Another myth that the Tories try to propagate is the idea that unemployment benefit is so high that many of those on the dole do not want to get a job because the wages are only just higher than dole money. It is true that many jobs do not pay well, but compared to average earnings, dole benefit in the UK is lower as a proportion of earnings than in any other Western capitalist country.
According to a recent UN study published in the Economic Bulletin for Europe, September 1984, UK benefits as a percentage of earnings have dramatically fallen in the last decade, from 75% of earnings for a married man with two children in 1972 to 47% in 1982. For a single person it is even worse, from 54% in 1972 to 26% in 1982.
19
the OECD. The UK comes only 15th out of the top 20 capitalist nations in the level of living standards ie the real purchasing power available to each worker, measured in the amount that can be bought from a standard shopping list of goods.
The British worker has only twothirds of the standard of living enjoyed by an American worker. Germans are 13% better off, and even the Japanese are 9% better off, the same as the French. And little places like Belgium, Luxemburg and Finland are more prosperous places to live than Britain. Of the relatively advanced economies only Italian and Spanish workers are poorer. At the bottom are the poorest semiagricultural nations of Europe: Ireland, Greece and Portugal.
The same pattern has been repeated for all countries in the survey. Benefits as a proportion of earnings are generally the same or have fallen - in the very period that unemployment spiralled upwards throughout the advanced world, including the UK. Too high dole can hardly be the reason for rising unemployment-but the Tories will still try to say it is.
Unemployment benefit earnings for a worker with
as a % of three children
Austria Belgium Denmark Finland France W Germany Ireland Italy Netherlands Norway Sweden Switzerland UK Greece Portugal Spain Canada US
1972 50.5 63.7 90.4 58.2 84.7 70.0
43.6 85.0 70.3 69.1 77.3 75.0 56.0
69.0 75.2 58.9
1982 52.2 67.3 92.0 44.0 90.0 75.0 89.8 47.0 89.4 69.3 80.5 80.2 47.0 59.8 75.5 65.4 74.8 63.3
Id
sing
ANOTHER PRODUCT of the UK's poor economic performance and government policies is that a recent study of the International Union of Building Societies revealed that Britain spends less money proportionately on housing than any other country in the world! The world, not just the advanced world.
In 1982 Britain spent only 2.1% of GDP on housing compared to an average in OECD countries of 5%. France and West Germany spent the most.
UK expenditure
K exper on hou
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MIR Jan 1985: Poland THE TRIAL of Popieluszko's murderers has opened up a new crisis within the Polish bureaucracy. The fact that very high officials, such as one of the interior ministers and Politbureau member Lt Gen Mileski, have been implicated has been a source of extreme embarrassment to Jaruselski, who has been falling over himself to try and re-assure the Polish masses that he has liberal intentions towards the church.
The trial is itself a symptom of the weakness and demonstrates their fear of the masses. Thirty years ago the only response from the leadership to such murders would have been to promote the murderers. But Poland of the 1980s is very different from the Poland of 1950.
The working masses stalk the bureaucracy, looking for a chink in its armour, looking for a new opening. Even from the depths of the counter-revolution there is a determination that the bureaucracy be held in check from its worst excesses. The very fact that a section of the secret police, possibly with the backing of certain elements in Moscow felt it necessary to murder Popieluszko is an indication of the blind alley that the bureaucracy were in. He was very popular in working class areas of Warsaw because he had always been outspoken against the regime in his sermons. "Both sides at an impasse"
The bureaucracy were unable to keep the Solidarity activists in prison because this was the basis of activity of much of the opposition. They did not dare put them on trial because they feared the public spotlight. They released them and declared an amnesty but still the opposition did not subside. So a section of the secret police decided to test public reaction to disappearances as in the '30s, '40s and '50s. But the result was to provoke a huge wave of public protest and consequently the bureaucracy were obliged to organise an even more embarrassing trial-not of oppositionists but of their own hench men.
At the same time the publicity around the trial has demoralised the police and the state forces, and made the workers and wide layers of the Polish masses more confident and open to political discussion. In the midst of counter-revolution there has been a slight shift in the balance of forces, a slight upturn in the level of activity within the underground, and a glimpse of hope for the masses. Living standards in Poland are lower than they were three years ago and are falling. Industrial workers complain of a dire shortage of new machines due to lack of foreign currency. For working women it is a completely different situation compared to after the defeat of the movement in '56 or '70. At A régime on trial by Maria Mirska General Jarusalski. The Polish bureaucracy has been shaken by the trail of Popieluszko's murderers. least then there was some improvement in living standards. The system of ration cards now applies to the most essential consumer goods such as meat. (Although manual workers and children get 4kg of meat a month and other adults 2kg, more than in the West). But what is very wearing on the nerves, especially of women is the endless queueing, and the fact that sometimes even things which are rationed are simply not available in the shops. At a press conference for CP members only, Urbans, Minister of Propaganda was asked about the opposition now. He said "Both sides are at an impasse. We don't know what to do. We have no programme to deal with them." This confirms the fact that the bureaucracy have been unable to consolidate their positjon. They are moving very uneasily. They are zig-zagging between greater repression and liberalisation: Fearing to provoke the workers to new strikes yet dissatisfied with the extent of the counterrevolution.
There has been a series of unofficial strikes, estimated at one per week over the past period. Even in small towns and medium-sized workplaces there are strikes.
Urbans was also asked what is the situation with Solidarity now. He replied: "Solidarity itself is no longer a problem, what is worst is the distrust and scepticism of the people towards us. We cannot do anything to attract the youth towards us. The influx into the new trade unions has been disappointingly slow, because we cannot offer them anything like Solidarity could.
"And in some industries the workers are trying to use the official unions to organise strikes. For exam-
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MIR Jan 1985: Poland ple a strike is being prepared in the printing industry for new machines.
Asked about the role of the church, Urbans said: "The Primate is not a problem, the episcopate could be a problem, the priests in the country areas are not a problem, the priests in the big towns could be a problem".
Urbans complained, "None of the talented people are joining us. For example amongst the writers those who come forward to write for us in the official publications are not the best writers." The Intelligentsia These very revealing statements show a ruling caste that lacks perspective, is terrified of the future, living from one temporary expedient to the next. There is discontent at every layer of society. The intelligentsia, who are a privileged layer, in reality a section ot the bureaucracy, reflect the demoralisation of the bureaucracy.
Their totally confused ideas and lack of contact with political reality was responsible for the defeat of the movement in 1981. Some of them are grandchildren of the old exploiting classes. They yearn for the opportunity to exploit the working class again. They have almost a psychotic hatred of anything Russian. They would be completely incapable of organising propaganda for a fraternal appeal to Soviet troops.
For many of them their hero is Pilsudski! They love the Polish workers as long as they are going humbly to church, and gratefully accepting the advice of their superiors".
"intellectual • Their arrogance is nauseating.
They do not dare to openly call for a return to capitalism because they know they would not get any support. But this fantasy underlines their thinking. They support Reagan's arms programme because they hope it will force the Soviet bureaucracy to spend so much on arms that the USSR will go into an economic crisis.
Walesa and the Solidarity leadership were greatly influenced by this layer during '80-'81, and still are. At the time of the Bydgoszcz beating in '81 the mass of Polish workers expected that this would be the start of a general strike and insurrection. Women in the queues were buying up flour and provisions to make ready for civil war. They were a million times more in touch with the necessary tasks of the hour than these cowardly dregs of the destroyed classes. In December '81, at the introduction of martial law most of the advanced workers were prepared to take up arms. The miners in Katowice did arm and occupy their mines. The shipyards and the big factories had to be closed for several weeks. Tanks were sent into the workplaces to cower the workers. In some ways although the mass of Polish workers are more open to political discussion than 30 years ago, the movement is on a lower political level than then. At least in 1956 the first thing the workers did was attack the CP headquarters and arm themselves; 21 they instinctively understood it was an all or nothing Today, thanks to the pernicious influence of the intelligentsia, the movement is hamstrung by hesitation, vacilation and indecision. The influence of the church is not as profound as many bourgeois journalists imagine. It is widespread, about 80% of the population go to church, an increase over the last three years, but it is superficial. Most Polish workers recognise that the church played a moderating role on the movement and it is generally accepted that Cardinal Glemp is a collaborator with the bureaucracy. The importance of the church is that it symbolises opposition to the bureaucracy in a situation where all other open forms of opposition are repressed. Thus pilgrimages of thousands have taken place with the "pilgrims" displaying political placards. However, it is clear that if, within the movement, clear Trotskyist ideas were being put forward, the church would not be able to restrain the growth of correct political conclusions in the minds of the masses.
The workers are experiencing the horrors of counter-revolution. There is widespread depression, and yet at the same time a universal acceptance that there will be another day. In every big factory and workplace there is quite extensive underground organisation of the free trade union. They closed the shipyards for a month. They sacked the most militant layers. They are trying to force out as many as possible of the workforce through low wages and bad conditions, hoping to break the traditions of the organisation. But in every saction of heavy industry there is a core of workers from the old days who hold the union together, collect dues, distribute illegal trade union broadsheets and keep the union alive.
The mood of the workers The dialectical irony for the bureaucracy is that in purging the yards of the best militants they have failed to purge them of the union organisation and at the same time have spread a layer of experienced militants into other industries preparing an even wider and firmer base for the union next time. All the workers, everywhere in Poland, agree that it is not a question of "if", , only a question of "when"
There is an almost insatiable thirst amongst the workers to discuss the lessons of '80-'81. There is a generally very high level of political awareness amongst the masses in comparison to the West. In this situation, against terrible odds there is a very high level of activity in the underground. We have to make a correction to the analysis we have put forward in previous material since 1981. As the mass activity around Popieluszko indicates the bureaucracy have been unable to eradicate the workers' movement as they had hoped. It is a more favourable situation than we thought. There has been a lot of public protest activity since
[page 23]
martial law was introduced. Every month on the anniversary of martial law there have been demonstrations in the big cities, despite curfews and police harassment of the workers.
On May Day last year the Solidarity workers entered the official marches out-witting the authorities. In Gdansk the "Guests from Leningrad" on the platform, who had been assured that the situa tion was now calm and safe again, wanted to run for their lives when they saw Solidarity placards. They thought they were going to be lynched! In Wroclaw the police opened up with teargas against the Solidarity section of the march, but the workers picked up the teargas cans and hurled them into the official platform! In a number of towns when the Zomos attacked the Solidarity workers they dispersed, mingling among the official marchers and the Zomos ended up beating up the party members!
The activity in the opposition
However the good qualities of the movement in initiative and heroism are not matched by the political ideas of its leadership. The authority of Walesa has dwindled somewhat amongst the activists, but he is still greatly loved by the masses. They look back on the period when he was leading the movement as a kind of golden era.
However, more radical elements are developing authority amongst the most advanced layers. For example, Edmund Baluka, a leader in the Ursus tractor factory, and Andrzej Gwiazda in Gdansk. These figures are now very popular. This reflects the groping of the working class towards a more radical position.
Yet the methods of this section of the leadership have been sadly lacking in perspective and an understanding of the stage through which we are passing. They have called demonstrations on almost any occasion regardless of the mood of the masses and with no explanation of the way forward. The bravest of the youth have responded to the call, risking arrest and a beating up but to no avail. These demonstrations have now dwindled and been mostly abandoned.
This radicalism in action is too late. The revolution of '80-'81 has been aborted. The task now is not to try and summon it up out of the midsts of counterrevolution, but to carefully prepare the advanced workers theoretically, for a new turn in events which will open up a period of revolution. This may still be a number of years away and the "precious leaven of mankind" the advanced layers, the activists within the working class must not dissipate their energy with futile ultra-left gestures.
The leadership in the underground mostly are extremely muddled and lack any coherent ideas.
In so far as there are any political programmes in the underground there is a division between right and left. It must be said that the combination of the lies of the official state propaganda and the distortions of the right opposition have laid the basis for quite
a bit of confusion amongst the masses. Many young people, including workers think that capitalism is better than socialism, private ownership better than nationalisation. But this idea amongst the masses is only superficial. It is based on the experience of "socialism" and nationalisation as bureaucracy, corruption and shortages. They only see capitalism from a distance: higher living standards and 'democracy'. This mood is more common amongst students and office workers and less common amongst industrial workers and technicians, but it is to be found quite widely amongst all sections.
Generally workers and technicians the advantages of state ownership they know that they must attempt they did in '80-'81.
All the demands of the April Thesis, against bureaucracy, are implicit in the struggles of the Polish workers. They demand to control the economy themselves instead of decisions being taken by remote, corrupt and out-of-touch bureaucrats. The workers also instinctively seek democratic rights, not just to organise freely and strike, but also for the free expression of political ideas and the right of opposition parties to exist:
In many heavy industries they have shop floor meetings and discuss all the new equipment and machines they needed. They take their demands to management, who tell them how good it is that they are taking an interest in the running of the firm etc and then cynically ignore their demands. The fundamental reason for this is lack of foreign currency with which to buy better technical equipment.
The idealisation of capitalism is superficial and will recede as the crisis in the West becomes more and more evident. (Many people today dismiss it as false state propaganda).
'Revolution Betrayed' circulated
are not blind to and a plan but to control it as
Most of the opposition groups refrain from putting forward a clear political position. The right because they do not dare openly advocate capitalism as they would put off their supporters if they had to spell out its implications in detail, the left for fear of being associated with the bureaucracy.
But there are a few notable exceptions, for example, Revolution Betrayed has been published in the underground in a few thousand copies. Other Trotskyist literature no doubt is also circulating. This indicates the future lines of political development of the movement. If these ideas can find a clear expression amongst the Polish workers they would be eagerly adopted. If the advanced workers of Poland thrash out and develop a clear understanding of the way forward then the next time need not end in the blind alley of moderation and acquiescence, but could result in the seizure of power by the workers, the overthrow of the bureaucracy, and open up a new era with the spreading of political revolution throughout Eastern Europe.
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